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Registration No. 333-
As filed with the Securities and Exchange Commission on August 31, 1998 Registration No. 333- -01
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
SUN CAPITAL TRUST II
SUN BANCORP, INC.
(Exact Name of Registrants as Specified in their Charters)
Delaware Requested
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New Jersey 52-1382541
(States or Other Jurisdictions I.R.S. Employer
of Incorporation or Organization) Identification Nos.)
226 Landis Avenue, Vineland, New Jersey 08360
(609) 691-7700
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(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrants' Principal Executive Offices)
Mr. Philip W. Koebig, III
Executive Vice President
Sun Bancorp, Inc.
226 Landis Avenue, Vineland, New Jersey 08360
(609) 691-7700
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(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Please send copies of all communications to:
John J. Spidi, Esq. Steven L. Kaplan, Esq.
Jean A. Milner, Esq. ARNOLD & PORTER
MALIZIA, SPIDI, SLOANE & FISCH, P.C. 555 Twelfth Street, N.W.
1301 K Street, N.W., Suite 700 East Washington, D.C. 20004
Washington, D.C. 20005
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this registration statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |_|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
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Title of Each Class of Amount to be Proposed Proposed Maximum Amount of
Securities Being Registered Registered Offering Price Aggregate Offering Registration Fee
Price(1)
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_____% Preferred Securities of Sun Capital
Trust II 2,070,000 $10.00 $20,700,000 $6,106.50
_____% Junior Subordinated Deferrable
Interest Debentures of Sun Bancorp, Inc. (2)
Guarantee of Sun Bancorp, Inc. of certain
obligations under the Preferred Securities (3)
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(1) Estimated solely for the purpose of calculating the registration fee
exclusive of accrued interest and dividends, if any.
(2) The Junior Subordinated Deferrable Interest Debentures will be purchased by
Sun Capital Trust II with the proceeds of the sale of the Preferred
Securities. Such securities may later be distributed for no additional
consideration to the holders of the Preferred Securities upon the
dissolution of the Trust and the distribution of its assets.
(3) This Registration Statement is deemed to cover the Guarantee. Pursuant to
Rule 457(n) under the Securities Act, no separate registration fee is
payable for the Guarantee.
The 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 or until the registration statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a), may
determine.
EXPLANATORY NOTE
The prospectus contained in this Registration Statement will be used in
connection with the offering of the following securities: (1)______% Preferred
Securities of Sun Capital Trust II; (2)______% Junior Subordinated Deferrable
Interest Debentures of Sun Bancorp, Inc.; and (3) a Guarantee of Sun Bancorp,
Inc. of certain obligations under the Preferred Securities.
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SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED __________________, 1998
[LOGO]
PROSPECTUS
$18,000,000
Sun Capital Trust II
____% Preferred Securities
(Liquidation Amount $10 per Preferred Security)
fully and unconditionally guaranteed, as described herein, by
Sun Bancorp, Inc.
The Preferred Securities offered hereby (the "Offering") represent
preferred undivided beneficial interests in the assets of Sun Capital Trust II,
a statutory business trust created under the laws of the State of Delaware (the
"Issuer Trust"). Sun Bancorp, Inc. (the "Company") will initially be the holder
of all of the beneficial interests represented by common securities of the
Issuer Trust (the "Common Securities" and, together with the Preferred
Securities, the "Trust Securities").
Concurrently with this Offering, the Company is offering __________
shares of its common stock, par value $1.00 per share ("Common Shares") (subject
to increase up to __________ shares if the over-allotment option is exercised)
in an underwritten public offering through the several underwriters (the
"Underwriters") (the "Common Shares Offering"). The Common Shares Offering will
be made by a separate prospectus. This Offering is not contingent upon the
closing of the Common Shares Offering. This Offering and the Common Shares
Offering are being made to support the growth of the Company through pending
acquisitions. See "Prospectus Summary -- The Company," "Use of Proceeds" and
"Beneficial Acquisition."
(Continued on next page)
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Prospective Investors should carefully consider the factors set forth in "Risk
Factors" beginning on Page _____ hereof.
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THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER INSURER OR GOVERNMENTAL AGENCY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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Underwriting Proceeds to
Price to Public(1) Discount (2) Issuer Trust(3)(4)
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Per Preferred Security... $10.00 (4) $
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Total(5)................. $18,000,000 (4) $
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(1) Plus accrued Distributions, if any, from ______, 1998.
(2) The Company and the Issuer Trust have each agreed to indemnify the
Underwriters against certain liabilities under the Securities Act of 1933,
as amended. See "Underwriting."
(3) Before deduction of expenses payable by the Company estimated at $156,000.
(4) In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures, the
Company has agreed to pay to the Underwriters, as compensation for
arranging the investment therein of such proceeds, $____ per Preferred
Security (or $_________ in the aggregate). See "Underwriting."
(5) The Company has granted the Underwriters an option, exercisable within 30
days after the date of this Prospectus, to purchase up to an additional
$2,700,000 aggregate liquidation amount of the Preferred Securities on the
same terms as set forth above, solely to cover over-allotments, if any. If
such over-allotment option is exercised in full, the total Price to Public
and Proceeds to Issuer Trust will be $__________ and $__________,
respectively. Advest, Inc. will receive a financial advisory fee of $25,000
in connection with this Offering. See "Underwriting."
The Preferred Securities are offered by the Underwriters subject to
receipt and acceptance by them, prior sale and the Underwriters' right to reject
any order in whole or in part and to withdraw, cancel or modify the offer
without notice. It is expected that delivery of the Preferred Securities will be
made in book-entry form through the book-entry facilities of The Depository
Trust Company on or about _________, 1998, against payment therefor in
immediately available funds.
Advest, Inc. Janney Montgomery Scott Inc.
The date of this Prospectus is __________, 1998
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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 sales 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 such State.
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The Issuer Trust exists for the sole purpose of issuing the Trust
Securities and investing the proceeds thereof in ____% Junior Subordinated
Deferrable Interest Debentures (the "Junior Subordinated Debentures," and
together with the Trust Securities, the "Securities") to be issued by the
Company. The Junior Subordinated Debentures will mature on _______, 2028, which
date may be shortened (such date, as it may be shortened, the "Stated Maturity")
to a date not earlier than _______, 2003 if certain conditions are met
(including the Company having received the prior approval of the Board of
Governors of the Federal Reserve System (the "FRB"), if then required under
applicable capital guidelines or policies of the FRB (such shortening of the
maturity date, the "Maturity Adjustment"). The Preferred Securities will have a
preference under certain circumstances over the Common Securities with respect
to cash distributions and amounts payable on liquidation, redemption or
otherwise. See "Description of Preferred Securities -- Subordination of Common
Securities."
The Preferred Securities will be represented by one or more global
securities registered in the name of a nominee of The Depository Trust Company
("DTC"), as depositary. Beneficial interests in the global securities will be
shown on, and transfer thereof will be effected only through, records maintained
by DTC and its participants. Except as described under "Description of Preferred
Securities," Preferred Securities in definitive form will not be issued and
owners of beneficial interests in the global securities will not be considered
holders of the Preferred Securities. The Preferred Securities have been approved
for quotation on the National Market of The Nasdaq Stock Market. Settlement for
the Preferred Securities will be made in immediately available funds. The
Preferred Securities will trade in DTC's Same-Day Funds Settlement System, and
secondary market trading activity for the Preferred Securities will therefore
settle in immediately available funds.
Holders of the Preferred Securities will be entitled to receive
preferential cumulative cash distributions at the annual rate of __________% of
the liquidation amount of $10.00 per Preferred Security (the "Liquidation
Amount") accruing from __________ 1998, and payable quarterly in arrears on
March 31, June 30, September 30 and December 31 of each year commencing
__________ ____, 1998, ("Distributions"). The Company has the right, so long as
no Debenture Event of Default (as defined herein) has occurred or is continuing,
to defer payment of interest on the Junior Subordinated Debentures at any time
or from time to time for a period not exceeding 20 consecutive quarterly periods
with respect to each deferral period (each, an "Extension Period"), provided
that no Extension Period may extend beyond the Stated Maturity of the Junior
Subordinated Debentures. No interest shall be due and payable during any
Extension Period, except at the end thereof. Upon the termination of any such
Extension Period and the payment of all amounts then due, the Company may elect
to begin a new Extension Period subject to the requirements set forth herein. If
interest payments on the Junior Subordinated Debentures are so deferred,
Distributions on the Preferred Securities will also be deferred and the Company
will not be permitted, subject to certain exceptions described herein, to
declare or pay any cash distributions with respect to the Company's capital
stock or with respect to debt securities of the Company that rank pari passu in
all respects with or junior to the Junior Subordinated Debentures, including the
Company's obligations associated with the $28.75 million in aggregate
liquidation amount of 9.85% Preferred Securities issued by Sun Capital Trust
(the "Outstanding Preferred Securities"). During an Extension Period, interest
on the Junior Subordinated Debentures will continue to accrue (and the amount of
distributions to which holders of the Preferred Securities are entitled will
accumulate) at the rate of __________% per annum, compounded quarterly, and
holders of Preferred Securities will be required to accrue interest income for
United States Federal Income Tax purposes in advance of the receipt of cash
distributions with respect to such deferred interest payment. See "Description
of Junior Subordinated Debentures -- Option to Extend Interest Payment Period"
and "Certain Federal Income Tax Consequences -- Interest Income and Original
Issue Discount." The Company has no current intention of exercising its right to
defer payments of interest by extending the interest payment period on the
Junior Subordinated Debentures.
The Company will, through the Guarantee, the Trust Agreement, the
Junior Subordinated Debentures and the Junior Subordinated Indenture (each as
defined herein), taken together, fully, irrevocably and unconditionally
guarantee all the Issuer Trust's obligations under the Preferred Securities as
described below. See "Relationship Among the Preferred Securities, the Junior
Subordinated Debentures and the Guarantee -- Full and Unconditional Guarantee."
The Guarantee of the Company will guarantee the payment of Distributions and
payments on liquidation or redemption of the Preferred Securities, but only in
each case to the extent of funds held by the Issuer
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Trust, as described herein (the "Guarantee"). See "Description of Guarantee." If
the Company does not make payments on the Junior Subordinated Debentures held by
the Issuer Trust, the Issuer Trust will have insufficient funds to pay
Distributions on the Preferred Securities. The Guarantee will not cover payment
of Distributions when the Issuer Trust does not have sufficient funds to pay
such Distributions. In such event, a holder of Preferred Securities may
institute a legal proceeding directly against the Company to enforce payment of
such Distributions to such holder. See "Description of Junior Subordinated
Debentures -- Enforcement of Certain Rights by Holders of Preferred Securities."
The obligations of the Company under the Guarantee and the Preferred Securities
will be subordinate and junior in right of payment to all Senior Indebtedness
(as defined in "Description of Junior Subordinated Debentures -- Subordination")
of the Company and will be pari passu with the Company's obligations associated
with the Outstanding Capital Securities.
The Preferred Securities will be subject to mandatory redemption (i) in
whole, but not in part, upon repayment of the Junior Subordinated Debentures at
Stated Maturity or, at the option of the Company, their earlier redemption in
whole upon the occurrence of a Tax Event, an Investment Company Event or a
Capital Treatment Event (each as defined herein) and (ii) in whole or in part at
any time on or after __________ ____, 2003 contemporaneously with the optional
redemption by the Company of the Junior Subordinated Debentures in whole or in
part. The Junior Subordinated Debentures will be redeemable prior to maturity at
the option of the Company (i) on or after __________ ____, 2003, in whole at any
time or in part from time to time, or (ii) in whole, but not in part, at any
time within 90 days following the occurrence and continuation of a Tax Event,
Investment Company Event or Capital Treatment Event, in each case at a
redemption price set forth herein, which includes the accrued and unpaid
interest on the Junior Subordinated Debentures so redeemed to the date fixed for
redemption. The ability of the Company to exercise its rights to redeem the
Junior Subordinated Debentures or to cause the redemption of the Preferred
Securities prior to the Stated Maturity may be subject to prior regulatory
approval by the FRB, if then required under applicable FRB capital guidelines or
policies. See "Description of Junior Subordinated Debentures -- Redemption" and
"Description of Preferred Securities -- Liquidation Distribution Upon
Dissolution."
The Company, as the holder of all of the outstanding Common Securities,
will have the right at any time to dissolve the Issuer Trust and, after
satisfaction of liabilities of creditors of the Issuer Trust as provided by
applicable law, to cause the Junior Subordinated Debentures to be distributed to
the holders of the Preferred Securities and Common Securities in liquidation of
the Issuer Trust. The ability of the Company, as holder of the Common
Securities, to dissolve the Issuer Trust may be subject to prior regulatory
approval of the FRB, if then required under applicable FRB capital guidelines or
policies. See "Description of Preferred Securities -- Liquidation Distribution
Upon Dissolution."
In the event of the dissolution of the Issuer Trust, after satisfaction
of liabilities to creditors of the Issuer Trust as provided by applicable law,
the holders of the Preferred Securities will be entitled to receive a
Liquidation Amount of $10 per Preferred Security plus accumulated and unpaid
Distributions thereon to the date of payment, subject to certain exceptions,
which may be in the form of a distribution of such amount in Junior Subordinated
Debentures. See "Description of Preferred Securities -- Liquidation Distribution
Upon Dissolution."
The Junior Subordinated Debentures are unsecured and subordinated to
all Senior Indebtedness (as defined herein) and will rank pari passu with the
Company's obligations associated with the Outstanding Preferred Securities of
the Company. See "Description of Junior Subordinated Debentures --
Subordination."
Prospective purchasers must carefully consider the information set
forth in "Certain ERISA Considerations."
THE JUNIOR SUBORDINATED DEBENTURES ARE DIRECT AND UNSECURED OBLIGATIONS
OF THE COMPANY, DO NOT EVIDENCE DEPOSITS AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER INSURER OR GOVERNMENTAL AGENCY.
3
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MAP
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE
PREFERRED SECURITIES OFFERED HEREBY, INCLUDING OVER-ALLOTTING SHARES OF THE
PREFERRED SECURITIES AND BIDDING FOR AND PURCHASING SUCH SHARES AT A LEVEL ABOVE
THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. FOR A DESCRIPTION OF
THESE ACTIVITIES, SEE "UNDERWRITING." SUCH STABILIZING TRANSACTIONS, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME. IN CONNECTION WITH THIS OFFERING,
CERTAIN UNDERWRITERS (AND SELLING GROUP MEMBERS) MAY ENGAGE IN PASSIVE MARKET
MAKING TRANSACTIONS IN THE COMMON SHARES ON NASDAQ IN ACCORDANCE WITH RULE 103
OF REGULATION M. SEE "UNDERWRITING."
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PROSPECTUS SUMMARY
The following is a summary of certain information contained elsewhere
in this Prospectus and in the documents incorporated by reference. This summary
is not intended to be a summary of all information relating to the Offering and
the Common Shares Offering and should be read in conjunction with, and is
qualified in its entirety by reference to, the more detailed information
contained elsewhere in this Prospectus, including the documents incorporated by
reference in this Prospectus. Unless otherwise indicated, all information in
this Prospectus is based on the assumption that the Underwriters (as defined
herein) will not exercise their over-allotment options with respect to the
Offering or the Common Shares Offering.
The Company
The Company, a New Jersey corporation, is a bank holding company
headquartered in Vineland, New Jersey. The Company's principal subsidiary is Sun
National Bank (the "Bank"). At June 30, 1998, the Company had total assets of
$1,154 million, total deposits of $754 million and total shareholders' equity of
$59 million. Substantially all of the Company's deposits are federally insured
by the Bank Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC"). The Company's remaining deposits are federally
insured by the Savings Association Insurance Fund ("SAIF"), administered by the
FDIC. The Company's principal business is to serve as a holding company for the
Bank. As a registered bank holding company, the Company is subject to the
supervision and regulation of the FRB.
The ongoing consolidation of the banking industry, as well as a
regionalization of decision-making authority by larger banking institutions, has
left many businesses and individuals in the Company's market area underserved.
Beginning in 1993, the Company embarked upon a strategy to expand its operations
and retail market in central and southern New Jersey through mergers,
acquisitions and internal growth. More recently, this strategy has broadened to
include contiguous portions of Delaware. The Board of Directors and management
saw opportunities to expand the Company as a result of the lack of competitive
commercial banking services being provided to local businesses and recognized
the need for a locally based and managed community bank. In executing its
expansion strategy, the Company has successfully completed the acquisition of
two commercial banks with a total of $119 million in assets, as well as six
branch purchase transactions in which the Company acquired a total of 27
branches with $404 million in deposits, and has opened five de novo branches
since 1993. An additional acquisition of two branches from Summit Bank
("Summit") with $14.8 million in deposit liabilities is pending.
In July 1998, the Company entered into an agreement that will expand
its banking operations into Delaware through the assumption, by a new national
bank subsidiary to be named "Sun National Bank, Delaware" ("Sun Delaware"), of
approximately $179 million in deposits (including eight branch locations) and
the purchase of $139 million in loans, from Household Bank, fsb., the successor
to Beneficial National Bank, Wilmington, Delaware (the "Beneficial
Acquisition"). The Beneficial Acquisition is expected to be consummated in the
fourth quarter of 1998. In July 1998, the Company also acquired its first
non-bank operating subsidiary, Allegiance Mortgage Company ("Allegiance"), a
retail mortgage banking operation, in exchange for 28,302 shares of common
stock. Allegiance has one office located in Cherry Hill, New Jersey. The Company
intends to offer residential mortgage products and services to its existing
customers through Allegiance.
Through its acquisition and expansion program, the Company has
significantly increased its asset size as well as the Company's retail network.
At December 31, 1993, the Company's total consolidated assets were $112.0
million as compared to $1,154 million at June 30, 1998.
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The Company provides community banking services through 42 branches
located in southern and central New Jersey. Sun Delaware will conduct a similar
business through eight branches in contiguous markets in Delaware. The Company
offers a wide variety of consumer and commercial lending, as well as deposit
services. The loans offered by the Company include commercial and industrial
loans, commercial real estate loans, home equity loans, mortgage loans and
installment loans. The Company's deposit and personal banking services include
checking, regular savings, money market deposits, certificates of deposit and
individual retirement accounts. Through a third party arrangement, the Company
also offers mutual funds, securities brokerage and investment advisory services.
The Company considers its primary market area to be southern and central New
Jersey and intends to expand its primary market area to contiguous markets in
Delaware upon completion of the Beneficial Acquisition. The Company's market
area contains a diverse base of customers, including agricultural,
manufacturing, transportation, hospitality and retail consumer businesses.
In recent years, the Company has experienced a significant level of
loan growth. The Company's loan portfolio increased from $83.4 million at
December 31, 1993, to $486.1 million at June 30, 1998. Much of this loan growth
is attributable to the Company's hiring of a number of experienced loan officers
previously employed by larger banking organizations. In most cases, these loan
officers brought with them established contacts and relationships with
individuals or entities throughout the Company's primary market area and thus
have been able to increase the Company's customer base and the number of loan
originations. The Company also has established a number of regional advisory
boards, comprised of prominent local business and community representatives, who
refer significant business opportunities to the Company. In addition, the
Company has made significant efforts to increase its lending to businesses along
the central and southern New Jersey seashore that are primarily operational
during certain times of each year (i.e. seasonal lending), which has contributed
to the Company's loan growth.
To support and manage the expanded operations of the Company and to
provide adequate management resources to support further expansion and growth,
the Company has recruited and hired, in addition to experienced commercial loan
officers, credit, compliance, loan review, internal audit, operations personnel
and senior level executives. Additionally, the Company has enhanced and expanded
its operational and management information systems and taken steps to enhance
its oversight of third-party vendors. While the Company continues to monitor its
rapid growth, as well as the adequacy of management and resources available to
support such growth, there can be no assurance that the Company will be
successful in managing all elements relating to this rapid growth.
The growth and expansion of operations through mergers and acquisitions
and internal growth has resulted in a significant increase in assets, loans and
deposits since December 31, 1993, and a corresponding increase in net interest
income, non-interest income and non-interest expenses.
The executive office of the Company is located at 226 Landis Avenue,
Vineland, New Jersey 08360 and its telephone number is (609) 691-7700.
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Sun Capital Trust II
The Issuer Trust is a statutory business trust created under Delaware
law on August 12, 1998. The Issuer Trust will be governed by a trust agreement,
as amended and supplemented from time to time (the "Trust Agreement"), among the
Company, as Depositor, Bankers Trust (Delaware), as Delaware trustee (the
"Delaware Trustee"), and Bankers Trust Company, as property trustee (the
"Property Trustee") (the Delaware Trustee and Property Trustee together, the
"Trustees"). The Issuer Trust exists for the exclusive purpose of (i) issuing
and selling the Trust Securities, (ii) using the proceeds from the sale of the
Trust Securities to acquire the Junior Subordinated Debentures issued by the
Company, and (iii) engaging in only those other activities necessary,
convenient, or incidental thereto (such as registering the transfer of the Trust
Securities). Accordingly, the Junior Subordinated Debentures will be the sole
assets of the Issuer Trust, and payments under the Junior Subordinated
Debentures will be sole source of revenue of the Issuer Trust. The Issuer Trust
has a term of 31 years, unless terminated earlier as provided in the Trust
Agreement. The principal executive office of the Issuer Trust is 226 Landis
Avenue, Vineland, New Jersey 08360, and its telephone number is (609) 691-7700.
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THE OFFERING
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Securities Offered............................ $18,000,000 aggregate Liquidation Amount of ______%
Preferred Securities (Liquidation Amount $10 per Preferred
Security) representing preferred undivided beneficial interests in
the Issuer Trust's assets, which will consist solely of the Junior
Subordinated Debentures. The Company has granted the
Underwriters an option, exercisable within 30 days after the date
of this Prospectus, to purchase up to an additional $2,700,000
aggregate Liquidation Amount of Preferred Securities at the
offering price, solely to cover over-allotments, if any.
Offering Price................................ $10 per Preferred Security (Liquidation Amount $10 per
Preferred Security), plus accumulated Distributions, if any, from
________ ____, 1998.
Distributions................................. The Distributions payable on each Preferred Security will be
fixed at a rate per annum of __________% of the stated
Liquidation Amount per Preferred Security. Such distributions
will be cumulative, will accrue from __________ ____, 1998
(the date of issuance of the Preferred Securities), and will be
payable quarterly in arrears on March 31, June 30, September
30 and December 31 of each year, commencing __________
____, 1998. See "Description of Preferred Securities --
Distributions."
Preferred Securities Rank..................... The Preferred Securities will rank pari passu, and payments
thereon, will be made pro rata, with the Common Securities
except as described under "Description of Preferred Securities --
Subordination of Common Securities."
Junior Subordinated Debentures................ The Issuer Trust will invest the proceeds from the issuance of
the Preferred Securities and Common Securities in an equivalent
amount of __________% Junior Subordinated Debentures of the
Company. The Junior Subordinated Debentures will mature on
__________ ____, 2028, subject to the Maturity Adjustment.
The Junior Subordinated Debentures will rank subordinate and
junior in right of payment to all Senior Indebtedness of the
Company and will be pari passu with the Company's obligations
associated with the Outstanding Preferred Securities. See
"Description of Junior Subordinated Debentures." In addition,
the Company's obligations under the Junior Subordinated
Debentures will be structurally subordinated to all existing and
future liabilities and obligations of the Company's subsidiaries.
Guarantee..................................... Under the terms of the Guarantee, the Company will guarantee
the payment of Distributions and payments on liquidation or
redemption of the Preferred Securities, but only in each case to
the extent of funds held by the Issuer Trust, as described herein.
The Company and the Issuer Trust believe that the obligations of
the Company under the Guarantee, the Trust Agreement, the
Junior Subordinated Debentures, and the Junior Subordinated
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Indenture, when taken together, fully, irrevocably, and
unconditionally guarantee all of the Issuer Trust's
obligations relating to the Preferred Securities. The
obligations of the Company under the Guarantee and the
Preferred Securities are subordinate and junior in right
of payment to all Senior Indebtedness and will be pari
passu with the Company's obligations associated with the
Outstanding Preferred Securities. See "Description of
Guarantee."
Right to Defer Interest....................... The Company has the right, at any time, so long as no
Debenture Event of Default has occurred and is continuing, to
defer payments of interest on Junior Subordinated Debentures
for a period not exceeding 20 consecutive quarters; provided,
that no Extension Period may extend beyond the Stated Maturity
of the Junior Subordinated Debentures. As a consequence of the
Company's extension of the interest payment period, quarterly
Distributions on the Preferred Securities will be deferred
(though such Distributions would continue to accrue with
interest thereon compounded quarterly, since interest will
continue to accrue and compound on the Junior Subordinated
Debentures during any such Extension Period). During an
Extension Period, the Company will be prohibited, subject to
certain exceptions described herein, from declaring or paying
any cash distributions with respect to its capital stock or debt
securities that rank pari passu with or junior to the Junior
Subordinated Debentures, including the Company's obligations
associated with the Outstanding Preferred Securities. Upon the
termination of any Extension Period and the payment of all
amounts then due, the Company may commence a new
Extension Period, subject to the foregoing requirements. See
"Description of Junior Subordinated Debentures -- Option to
Extend Interest Payment Period."
In the event that an Extension Period should occur, Preferred
Security holders will continue to include interest income (and
de minimis original issue discount, if any) for United
States federal income tax purposes in advance of receipt
of the cash distributions with respect to such deferred
interest payments. See "Certain Federal Income Tax Consequences
-- Interest Income and Original Issue Discount." The Company
has no current intention of exercising its right to defer
payments of interest by extending the interest payment
period of the Junior Subordinated Debentures.
Redemption.................................... The Preferred Securities will be subject to mandatory
redemption (i) in whole, but not in part, at the Stated Maturity
upon repayment of the Junior Subordinated Debentures, (ii) in
whole, but not in part, contemporaneously with the optional
redemption at any time by the Company of the Junior
Subordinated Debentures upon the occurrence and continuation
of a Tax Event, Investment Company Event or Capital
Treatment Event and (iii) in whole or in part at any time on or
after __________ ____, 2003, contemporaneously with the
</TABLE>
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9
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
optional redemption by the Company of the Junior Subordinated
Debentures in whole or in part, in each case at the applicable
Redemption Price. See "Description of Preferred Securities --
Redemption."
Liquidation of the Issuer Trust............... The Company, as holder of the Common Securities, will have
the right at any time to dissolve the Issuer Trust and cause the
Junior Subordinated Debentures to be distributed to holders of
Preferred Securities in liquidation of the Issuer Trust, subject to
the Company having received prior approval of the FRB to do
so if then required under applicable capital guidelines or policies
of the FRB. See "Description of Preferred Securities --
Liquidation Distribution Upon Dissolution."
Voting Rights................................. Generally, except in limited circumstances, the holders of the
Preferred Securities will not have any voting rights. See
"Description of Preferred Securities -- Voting Rights;
Amendment of Trust Agreement" and "Risk Factors -- Risk
Factors Relating to the Offering -- Limited Voting Rights."
Use of Proceeds............................... All of the net proceeds to the Issuer Trust from the sale of the
Preferred Securities offered hereby will be used by the Issuer
Trust to purchase the Junior Subordinated Debentures issued by
the Company. The net proceeds received by the Company from
the sale of the Junior Subordinated Debentures and from the
Common Shares Offering will be used to contribute capital to
Sun Delaware in connection with the Beneficial Acquisition.
Sun Delaware intends to use the capital for general corporate
purposes, primarily to support the Beneficial Acquisition. The
proceeds from the Offering will qualify under the capital
adequacy guidelines of the FRB as Tier 2 capital of the
Company. See "Use of Proceeds."
ERISA Considerations.......................... Prospective purchasers must carefully consider the information
set forth under "Certain ERISA Considerations."
Nasdaq National Market Symbol................. The Preferred Securities have been approved for quotation on
the Nasdaq National Market under the symbol "SNBCO."
Concurrent Common Shares Offering............. Concurrent with this Offering, the Company is offering by
separate prospectus __________ Common Shares (subject to
increase up to __________ Common Shares if the over-allotment
option is exercised in full). This Offering is not contingent
upon the closing of the Common Shares Offering.
</TABLE>
RISK FACTORS
Prospective investors should carefully consider the matters set forth
under "Risk Factors," beginning on page ___.
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10
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following summary information regarding the Company should be
read in conjunction with the consolidated financial statements of the Company
and notes thereto included in the Company's 1997 Annual Report to Stockholders
which is incorporated herein by reference as part of the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1997, and included in the
Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, and
June 30, 1998. See "Incorporation of Certain Documents by Reference" and
"Management's Discussion and Analysis of Financial Condition of the Company and
Recent Results of Operations." Consolidated historical financial and other data
regarding the Company at or for the six months ended June 30, 1998 and 1997,
have been prepared by the Company, are unaudited, and may not be indicative of
results on an annualized basis or for any other period. In the opinion of
management, all adjustments (consisting only of normal recurring accruals) that
are necessary for a fair presentation for such periods or dates have been made.
<TABLE>
<CAPTION>
At or For the Six
Months Ended
June 30, At or For the Years Ended December 31,
--------------------- ---------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Results of Operations
Interest income................................ $ 39,222 $ 18,145 $ 47,185 $ 29,270 $ 20,850 $ 12,194 $ 8,164
Net interest income............................ 18,247 9,454 22,778 16,736 13,163 8,256 5,327
Provision for loan losses...................... 1,010 825 1,665 900 808 383 2
Net interest income after
provision for loan losses................... 17,237 8,629 21,113 15,836 12,355 7,873 5,325
Other income................................... 2,705 776 2,236 1,746 1,651 732 472
Other expenses................................. 14,550 7,332 17,445 13,207 10,047 5,991 4,198
Net income..................................... 3,807 1,482 4,171 3,013 2,819 1,840 1,128
Net income excluding goodwill amortization..... 5,712 1,951 5,676 3,840 3,162 1,974 1,226
Per Share Data
Net income
Basic....................................... 0.60 0.32 0.86 0.68 0.66 0.57 0.41
Diluted..................................... 0.53 0.30 0.78 0.63 0.61 0.57 0.41
Book value..................................... 9.32 6.33 8.64 5.98 5.74 5.07 4.64
Selected Balance Sheet Data
Assets......................................... 1,153,562 585,219 1,099,973 436,795 369,895 217,351 112,015
Cash and investments........................... 604,613 188,418 610,339 117,388 164,251 70,809 24,134
Loans receivable (net) ........................ 486,059 363,705 427,761 295,501 183,634 134,861 83,387
Deposits....................................... 753,508 467,394 695,388 385,987 335,248 196,019 99,099
Borrowings and securities sold
under agreements to repurchase............... 307,500 57,426 316,314 21,253 8,000 -- --
Shareholders' equity........................... 59,124 29,071 54,632 27,415 24,671 20,571 12,306
Performance Ratios(1)
Return on average assets....................... 0.70% 0.62% 0.66% 0.74% 1.03% 1.09% 1.04%
Return on average equity....................... 13.49% 10.69% 12.89% 11.99% 12.42% 11.74% 9.61%
Net yield on interest-earning assets........... 3.68% 4.33% 3.89% 4.57% 5.30% 5.39% 5.29%
Asset Quality Ratios
Nonperforming loans to total loans............. 0.50% 0.72% 0.51% 0.81% 1.72% 1.82% 1.84%
Nonperforming assets to total loans
and other real estate owned.................. 0.50% 0.90% 0.57% 1.06% 2.19% 2.56% 2.26%
Net charge-offs to average total loans......... 0.02% 0.02% 0.02% 0.16% 0.23% 0.29% 0.02%
Total allowance for loan losses to
total nonperforming loans.................... 209.73% 127.32% 189.77% 107.26% 64.47% 64.74% 69.10%
Capital Ratios
Equity to assets............................... 5.13% 4.97% 4.97% 6.28% 6.67% 9.46% 10.99%
Tier 1 risk-based capital ratio................ 8.60% 7.52% 8.17% 7.44% 8.67% 14.01% 15.59%
Total risk-based capital ratio................. 10.91% 12.99% 10.75% 8.28% 9.64% 15.22% 16.84%
Leverage ratio................................. 4.96% 5.68% 6.42% 5.43% 5.74% 8.44% 10.74%
</TABLE>
- -------------------
(1) Ratios are annualized for the six months ended June 30, 1998 and 1997.
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<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors which address those risks material to the Offering and the Company
should be considered carefully in evaluating an investment in the Preferred
Securities offered by this Prospectus. Certain statements in this Prospectus are
forward-looking and are identified by the use of forward-looking words or
phrases such as "intended," "will be positioned," "expects," is or are
"expected," "anticipates," and "anticipated." These forward-looking statements
are based on the Company's current expectations. To the extent any of the
information contained in this Prospectus constitutes a "forward-looking
statement" as defined in Section 27A(i)(1) of the Securities Act of 1933, as
amended (the "Securities Act"), the risk factors set forth below are cautionary
statements identifying important factors that could cause actual results to
differ materially from those in the forward-looking statement.
RISK FACTORS RELATING TO THE OFFERING
Ranking of Subordinated Obligations Under the Guarantee and the Junior
Subordinated Debentures
The obligations of the Company under the Guarantee issued by the
Company for the benefit of the holders of Preferred Securities and under the
Junior Subordinated Debentures are subordinate and junior in right of payment to
all Senior Indebtedness and rank pari passu with the Company's obligations
associated with the Outstanding Preferred Securities. Senior Indebtedness as of
June 30, 1998, totalled $307.5 million. None of the Junior Subordinated
Indenture, the Guarantee or the Trust Agreement places any limitation on the
amount of secured or unsecured debt, including Senior Indebtedness, that may be
incurred by the Company. See "Description of Guarantee -- Status of the
Guarantee" and "Description of Junior Subordinated Debentures -- Subordination."
The ability of the Issuer Trust to pay amounts due on the Preferred
Securities is solely dependent upon the Company's making payments on the Junior
Subordinated Debentures as and when required.
Option to Extend Interest Payment Period; Tax Consequences
So long as no Event of Default (as defined in the Junior Subordinated
Indenture) has occurred and is continuing with respect to the Junior
Subordinated Debentures (a "Debenture Event of Default"), the Company has the
right under the Junior Subordinated Indenture to defer the payment of interest
on the Junior Subordinated Debentures at any time or from time to time for a
period not exceeding 20 consecutive quarterly periods with respect to each
Extension Period, provided that no Extension Period may extend beyond the Stated
Maturity of the Junior Subordinated Debentures. See "Description of Junior
Subordinated Debentures -- Debenture Events of Default." As a consequence of any
such deferral, quarterly Distributions on the Preferred Securities by the Issuer
Trust will be deferred during any such Extension Period. Distributions to which
holders of the Preferred Securities are entitled will accumulate additional
Distributions thereon during any Extension Period at the rate of __________% per
annum, compounded quarterly from the relevant payment date for such
Distributions, computed on the basis of a 360-day year of twelve 30-day months
and the actual days elapsed in a partial month in such period. Additional
Distributions payable for each full Distribution period will be computed by
dividing the rate per annum by four. The term "Distribution" as used herein
shall include any such additional Distributions. During any such Extension
Period, the Company may not (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire or make a liquidation payment with respect to,
any of the Company's capital stock or (ii) make any payment of principal or
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank pari passu in all respects with or junior in
interest to the Junior Subordinated Debentures including the Outstanding
Preferred Securities (other than (a) repurchases, redemptions or other
acquisitions of shares of capital stock of the Company in connection with any
employment contract, benefit plan or other similar arrangements with or for the
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<PAGE>
benefit of any one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock purchase plan or in
connection with the issuance of capital stock of the Company (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the applicable Extension Period,
(b) as a result of a reclassification or an exchange or conversion of any class
or series of the Company's capital stock (or any capital stock of a subsidiary
of the Company) for any class or series of the Company's capital stock or any
class or series of the Company's indebtedness for any class or series of the
Company's capital stock, (c) the purchase of fractional interests in shares of
the Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any stockholder's rights plan, or
the issuance of rights, stock, or other property under any stockholder's rights
plan, or the redemption or repurchase of rights pursuant thereto, or (e) any
dividend in the form of stock, warrants, options, or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options, or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock). Prior to the termination of any
such Extension Period, the Company may further defer the payment of interest,
provided that no Extension Period may exceed 20 consecutive quarterly periods or
extend beyond the Stated Maturity of the Junior Subordinated Debentures. Upon
the termination of any Extension Period and the payment of all interest then
accrued and unpaid (together with interest thereon at the annual rate of
__________%, compounded quarterly, to the extent permitted by applicable law),
the Company may elect to begin a new Extension Period subject to the above
conditions. No interest shall be due and payable during an Extension Period,
except at the end thereof. The Company must give the Issuer Trustees notice of
its election to begin an Extension Period at least one Business Day prior to the
earlier of (i) the date the Distributions on the Preferred Securities would have
been payable but for the election to begin such Extension Period and (ii) the
date the Property Trustee is required to give notice to holders of the Preferred
Securities of the record date or the date such Distributions are payable, but in
any event not less than one Business Day prior to such record date. The Property
Trustee will give notice of the Company's election to begin a new Extension
Period to the holders of the Preferred Securities. Subject to the foregoing,
there is no limitation on the number of times that the Company may elect to
begin an Extension Period. See "Description of Preferred Securities --
Distributions" and "Description of Junior Subordinated Debentures -- Option to
Extend Interest Payment Period."
In the event an Extension Period should occur, a holder of Preferred
Securities will continue to accrue and recognize income (in the form of original
issue discount ("OID")) for United States federal income tax purposes in respect
of its pro rata share of the Junior Subordinated Debentures held by the Issuer
Trust, which will include a holder's pro rata share of both the stated interest
and de minimis OID, if any, on the Junior Subordinated Debentures. As a result,
a holder of Preferred Securities will include such OID in gross income for
United States federal income tax purposes in advance of the receipt of cash, and
will not receive the cash related to such income from the Issuer Trust if the
holder disposes of the Preferred Securities prior to the record date for the
payment of Distributions. See "Certain Federal Income Tax Consequences --
Interest Income and Original Issue Discount" and "-- Sales of Preferred
Securities."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures. However, if the Company should elect to exercise such
right in the future, the market price of the Preferred Securities is likely to
be adversely affected. A holder that disposes of his, her or its Preferred
Securities during an Extension Period, therefore, might not receive the same
return on his, her or its investment as a holder that continues to hold its
Preferred Securities. In addition, as a result of the existence of the Company's
right to defer interest payments, the market price of the Preferred Securities
(which represent preferred undivided beneficial interest in the assets of the
Issuer Trust) may be more volatile than the market price
13
<PAGE>
of other securities on which original issue discount or interest accrues that
are not subject to such deferrals.
Redemption Due to Tax Event, Investment Company Event or Capital Treatment Event
Upon the occurrence and during the continuation of a Tax Event,
Investment Company Event, or Capital Treatment Event, the Company has the right
to redeem the Junior Subordinated Debentures in whole, but not in part, at any
time within 90 days following the occurrence of such Tax Event, Investment
Company Event, or Capital Treatment Event and thereby cause a mandatory
redemption of the Preferred Securities. Any such redemption shall be at a price
equal to the Liquidation Amount of the Preferred Securities, together with
accumulated Distributions to but excluding the date fixed for redemption. The
ability of the Company to exercise its right to redeem the Junior Subordinated
Debentures prior to the Stated Maturity may be subject to prior regulatory
approval by the FRB, if then required, as it currently is, under applicable FRB
capital guidelines or policies. See "Description of Junior Subordinated
Debentures -- Redemption" and "Description of Preferred Securities --
Liquidation Distribution Upon Dissolution."
A "Tax Event" means the receipt by the Issuer Trust of an opinion of
counsel to the Company experienced in such matters to the effect that, as a
result of any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, or as a result of
any official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement or decision is announced on or after the date
of issuance of the Preferred Securities, there is more than an insubstantial
risk that (i) the Issuer Trust is, or will be within 90 days of the delivery of
such opinion, subject to United States federal income tax with respect to income
received or accrued on the Junior Subordinated Debentures, (ii) interest payable
by the Company on the Junior Subordinated Debentures is not, or within 90 days
of the delivery of such opinion will not be, deductible by the Company, in whole
or in part, for United States federal income tax purposes or (iii) the Issuer
Trust is, or will be within 90 days of the delivery of the opinion, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges.
See "Certain Federal Income Tax Consequences -- Pending Tax Litigation
Affecting the Preferred Securities" for a discussion of pending United States
Tax Court litigation that, if decided adversely to the taxpayer, could give rise
to a Tax Event, which may permit the Company to redeem the Junior Subordinated
Securities prior to __________ ____, 2003.
"Investment Company Event" means the receipt by the Issuer Trust of an
opinion of counsel to the Company experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or a
written change (including any announced prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more than an insubstantial risk that
the Issuer Trust is or will be considered an "investment company" that is
required to be registered under the Investment Company Act of 1940, as amended
(the "Investment Company Act"), which change or prospective change becomes
effective or would become effective, as the case may be, on or after the date of
the issuance of the Preferred Securities.
A "Capital Treatment Event" means the reasonable determination by the
Company that, as a result of the occurrence of any amendment to, or change
(including any announced prospective change) in, the laws (or any rules or
regulations thereunder) of the United States or any political subdivision
thereof or therein, or as a result of any official or administrative
pronouncement or action or judicial decision
14
<PAGE>
interpreting or applying such laws or regulations, which amendment or change is
effective or such pronouncement, action or decision is announced on or after the
date of issuance of the Preferred Securities, there is more than an
insubstantial risk that the Company will not be entitled to treat an amount
equal to the Liquidation Amount of the Preferred Securities as "Tier 1 Capital"
(or the then equivalent thereof) except as otherwise restricted under the 25%
Capital Limitation (as defined herein), for purposes of the risk-based capital
adequacy guidelines of the FRB, as then in effect and applicable to the Company.
Exchange of Preferred Securities for Junior Subordinated Debentures
The Company, as holder of all the outstanding Common Securities, has
the right at any time to dissolve the Issuer Trust and, after satisfaction of
liabilities to creditors of the Issuer Trust as provided by applicable law,
cause the Junior Subordinated Debentures to be distributed to the holders of
Preferred Securities and Common Securities in liquidation of the Issuer Trust.
The ability of the Company, as holder of the Common Securities, to dissolve the
Issuer Trust may be subject to prior regulatory approval of the FRB, if then
required under applicable FRB capital guidelines or policies. See "Description
of Preferred Securities -- Liquidation Distribution Upon Dissolution."
Under current United States federal income tax law and interpretation
and assuming, as expected, that the Issuer Trust will not be taxable as a
corporation, a distribution of the Junior Subordinated Debentures upon a
liquidation of the Issuer Trust will not be a taxable event to holders of
Preferred Securities. However, if a Tax Event were to occur that would cause the
Issuer Trust to be subject to United States federal income tax with respect to
income received or accrued on the Junior Subordinated Debentures, a distribution
of the Junior Subordinated Debentures by the Issuer Trust would be a taxable
event to the Issuer Trust and the holders of the Preferred Securities. See
"Certain Federal Income Tax Consequences -- US Holders -- Receipt of Junior
Subordinated Debentures or Cash Upon Liquidation of the Issuer Trust."
Rights Under the Guarantee
Bankers Trust Company will act as the trustee under the Guarantee (the
"Guarantee Trustee") and will hold the Guarantee for the benefit of the holders
of the Preferred Securities. Bankers Trust Company also will act as Debenture
Trustee for the Junior Subordinated Debentures and as Property Trustee under the
Trust Agreement. Bankers Trust (Delaware) will act as Delaware Trustee under the
Trust Agreement. The Guarantee guarantees to the holders of the Preferred
Securities the following payments, to the extent not paid by or on behalf of the
Issuer Trust: (i) any accumulated and unpaid Distributions required to be paid
on the Preferred Securities, to the extent that the Issuer Trust has funds on
hand available therefor at the payment date, (ii) the Redemption Price with
respect to any Preferred Securities called for redemption, to the extent that
the Issuer Trust has funds on hand available therefor at such time, and (iii)
upon a voluntary or involuntary dissolution, winding up or liquidation of the
Issuer Trust (unless the Junior Subordinated Debentures are distributed to
holders of the Preferred Securities), the lesser of (a) the aggregate of the
Liquidation Amount and all accumulated and unpaid Distributions to the date of
payment, to the extent that the Issuer Trust has funds on hand available
therefor at such time, and (b) the amount of assets of the Issuer Trust
remaining available for distribution to holders of the Preferred Securities on
liquidation of the Issuer Trust. The Guarantee is subordinated as described
under "-- Ranking of Subordinated Obligations Under the Guarantee and the Junior
Subordinated Debentures" and "Description of Guarantee -- Status of the
Guarantee" and pari passu with the Company's obligations associated with the
Outstanding Preferred Securities. The holders of not less than a majority in
aggregate Liquidation Amount of the outstanding Preferred Securities have the
right to direct the time, method, and place of conducting any proceeding for any
remedy available to the Guarantee Trustee in respect of the
15
<PAGE>
Guarantee or to direct the exercise of any trust power conferred upon the
Guarantee Trustee under the Guarantee. Any holder of the Preferred Securities
may institute a legal proceeding directly against the Company to enforce its
rights under the Guarantee without first instituting a legal proceeding against
the Issuer Trust, the Guarantee Trustee, or any other person or entity.
If the Company were to default on its obligation to pay amounts payable
under the Junior Subordinated Debentures, the Issuer Trust may lack funds for
the payment of Distributions or amounts payable on redemption of the Preferred
Securities or otherwise, and, in such event, holders of the Preferred Securities
would not be able to rely upon the Guarantee for payment of such amounts.
Instead, if a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay any amounts payable
in respect of the Junior Subordinated Debentures on the payment date on which
such payment is due and payable, then a holder of Preferred Securities may
institute a legal proceeding directly against the Company for enforcement of
payment to such holder of any amounts payable in respect of such Junior
Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Preferred Securities of such holder (a "Direct
Action"). The exercise by the Company of its right, as described herein, to
defer the payment of interest on the Junior Subordinate Debentures does not
constitute a Debenture Event of Default. In connection with such Direct Action,
the Company will have a right of set-off under the Junior Subordinated Indenture
to the extent of any payment made by the Company to such holder of Preferred
Securities in the Direct Action. Except as described herein, holders of
Preferred Securities will not be able to exercise directly any other remedy
available to the holders of the Junior Subordinated Debentures or assert
directly any other rights in respect of the Junior Subordinated Debentures. See
"Description of Junior Subordinated Debentures -- Enforcement of Certain Rights
by Holders of Preferred Securities," "-- Debenture Events of Default" and
"Description of Guarantee." The Trust Agreement provides that each holder of
Preferred Securities by acceptance thereof agrees to the provisions of the
Guarantee and the Junior Subordinated Indenture.
Limited Voting Rights
Holders of Preferred Securities will have limited voting rights
relating generally to the modification of the Preferred Securities and the
Guarantee and the exercise of the Issuer Trust's rights as holder of Junior
Subordinated Debentures. Holders of Preferred Securities will not be entitled to
appoint, remove, or replace the Property Trustee or the Delaware Trustee except
upon the occurrence of certain events specified in the Trust Agreement. The
Property Trustee and the holders of all the Common Securities may, subject to
certain conditions, amend the Trust Agreement without the consent of holders of
Preferred Securities to cure any ambiguity or make other provisions not
inconsistent with the Trust Agreement or to ensure that the Issuer Trust (i)
will not be taxable as a corporation for United States federal income tax
purposes, or (ii) will not be required to register as an "investment company"
under the Investment Company Act. See "Description of Preferred Securities --
Voting Rights; Amendment of Trust Agreement" and "-- Removal of Issuer Trustees;
Appointment of Successors."
Absence of Market
The Preferred Securities are a new issue of securities with no
established trading market. The Preferred Securities have been approved for
quotation on the Nasdaq National Market, but the Nasdaq National Market
standards require the existence of three market makers for initial listing, and
two for continued listing. Although the Company has been advised that certain
firms intend to make a market in the Preferred Securities, such firms are not
obligated to do so and such market making may be interrupted or discontinued at
any time without any notice at their sole discretion. Moreover, there can be no
assurance that an established and liquid trading market will develop or, if
developed, will be sustained following the issuance of the Preferred Securities.
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<PAGE>
Market Prices
There can be no assurance as to the market prices for Preferred
Securities, or the market prices for Junior Subordinated Debentures that may be
distributed in exchange for Preferred Securities if a liquidation of the Issuer
Trust occurs. Accordingly, the Preferred Securities or the Junior Subordinated
Debentures that a holder of Preferred Securities may receive on liquidation of
the Issuer Trust may trade at a discount to the price that the investor paid to
purchase the Preferred Securities offered hereby. Because holders of Preferred
Securities may receive Junior Subordinated Debentures on termination of the
Issuer Trust, prospective purchasers of Preferred Securities are also making an
investment decision with regard to the Junior Subordinated Debentures and should
carefully review all the information regarding the Junior Subordinated
Debentures contained herein. See "Description of Junior Subordinated
Debentures."
Securities are not Insured
Neither the Preferred Securities nor the Junior Subordinated Debentures
are insured by the FDIC or by any other governmental agency or any private
insurer.
RISK FACTORS RELATING TO THE COMPANY
Restrictions on the Company as a Bank Holding Company
The Company is a legal entity separate and distinct from the Bank,
although the principal source of the Company's cash revenues is dividends from
the Bank. The ability of the Company to pay the interest on, and principal of,
the Junior Subordinated Debentures will be significantly dependent on the
ability of the Bank to pay dividends to the Company in amounts sufficient to
service the Company's debt obligations. Payment of dividends by the Bank is, and
by Sun Delaware will be, restricted by various legal and regulatory limitations.
At June 30, 1998, approximately $11.0 million was available for payment of
dividends to the Company from the Bank without prior regulatory approval.
The right of the Company to participate in the assets of any subsidiary
upon the latter's liquidation, reorganization or otherwise (and thus the ability
of the holders of Preferred Securities to benefit indirectly from any such
distribution) will be subject to the claims of the subsidiaries' creditors,
which will take priority except to the extent that the Company may itself be a
creditor with a recognized claim. As of June 30, 1998 the Company had Senior
Indebtedness of approximately $307.5 million.
The Bank is, and Sun Delaware will be, subject also to restrictions
under federal law which limit the transfer of funds by the Bank or Sun Delaware
to the Company, whether in the form of loans, extensions of credit, investments,
asset purchases or otherwise. Such transfers by the Bank, or Sun Delaware, to
the Company and any nonbank subsidiary are limited in amount to 10% of such
bank's capital and surplus and, with respect to the Company and all its nonbank
subsidiaries, to an aggregate of 20% of such bank's capital and surplus.
Furthermore, such loans and extensions of credit are required to be secured in
specified amounts.
Upon consummation of the Trust Preferred Offering, Sun Capital Trust
(the "Original Trust") and the Issuer Trust, each a subsidiary trust of the
Company, will have outstanding an aggregate Liquidation Amount of $49.5 million
(assuming the over-allotment option of the underwriters of the Trust Preferred
Offering is exercised in full) of Preferred Securities. The proceeds from the
sale of such Preferred Securities were utilized by the Original Trust, and will
be utilized by the Issuer Trust, to invest in a like amount of junior
subordinated deferrable interest debentures (collectively, the "Debentures") of
17
<PAGE>
the Company. The Company has the right to defer payment of interest on the
Debentures at any time or from time to time for a period not exceeding 20
consecutive quarterly periods with respect to each deferred period (each, an
"Extension Period"), provided that no Extension Period may extend beyond the
maturity of the applicable Debentures. If interest payments on the Debentures
are so deferred, the Company will be prohibited, subject to certain exceptions,
from declaring or paying cash dividends with respect to its capital stock, or
debt securities that rank pari passu with or junior to the Debentures, until
such time as the payment of all amounts due on the Debentures are paid and the
Extension Period is terminated.
Ability of the Company to Maintain and Manage Growth
During the last five years, the Company has experienced rapid and
significant growth. The total assets of the Company have increased from $112.0
million at December 31, 1993, to $1,154 million at June 30, 1998. Although the
Company believes that it has adequately managed its growth in the past, there
can be no assurance that the Company will continue to experience such rapid
growth, or any growth, in the future and, to the extent that it does experience
continued growth, it will be able to adequately and profitably manage such
growth.
The continued growth has led the Company to undertake the present
Offering and the Common Shares Offering. The capital to be raised from the sale
of the Preferred Securities offered hereby and from the Common Shares Offering,
is necessary to provide sufficient capital to support the Beneficial
Acquisition. No assurance can be given that this rapid growth will continue,
and, if it does, there is no assurance that the earnings of the Company, the
Bank and Sun Delaware can adequately provide the necessary capital for the Bank,
Sun Delaware and the Company to maintain required regulatory capital levels
commensurate with continued rapid growth. After giving effect to the sale of the
Preferred Securities, the Common Shares Offering and the Beneficial Acquisition,
Sun Delaware will be "well capitalized" and the Company will be "adequately
capitalized" for federal bank regulatory purposes. The Bank will also continue
to be "well capitalized" for federal bank regulatory purposes. The level of
future earnings of the Company also will depend on the ability of the Company
and its subsidiaries to profitably deploy and manage the increased assets.
The rapid growth of the Company in asset size and the rapid increase in
its volume of total loans during the past five years have increased the possible
risks inherent in an investment in the Company. In addition, the Beneficial
Acquisition will result in the acquisition of a significant amount of deposits.
The deposits to be assumed pursuant to the Beneficial Acquisition are
predominantly core deposits with lower costs. If the Company is unable to
maintain a low cost of funds on such deposits or if the Company is unable to
retain a substantial portion of the deposits to be assumed, the Beneficial
Acquisition may have an adverse impact on the Company's financial condition,
results of operations and cash flows. The Beneficial Acquisition will also
result in the acquisition by the Company of approximately $139 million of loans,
approximately $87 million of which are commercial and industrial loans. The
nature of commercial and industrial loans is such that they may present more
credit risk to the Company than other types of loans such as home equity loans
or residential real estate loans. See "Beneficial Acquisition."
Growth in Loan Portfolio; Concentration of Credit
During the past five years, the Company has experienced significant
growth in its loan portfolio. Net loans increased to $486.1 million at June 30,
1998, from $83.4 million at December 31, 1993. While many components of the loan
portfolio have contributed to this increase over the past five years, much of
this loan growth has occurred in the portfolio of commercial and industrial
loans. Commercial
18
<PAGE>
and industrial loans increased by 55.3% or $123.4 million during 1997 as
compared to 1996 and comprised 80.2% of total loans as of December 31, 1997. As
of June 30, 1998, commercial and industrial loans comprised 81.6% of total
loans. As a result of this recent growth, a significant portion of the Company's
total loan portfolio may be considered unseasoned. Accordingly, specific payment
and loss experience for this portion of the portfolio has not yet been fully
established and the potential for additional loan losses does exist.
Furthermore, the nature of commercial and industrial loans is such that they may
present more credit risk to the Company than other types of loans such as home
equity or residential real estate loans. In addition, a significant portion of
the Company's commercial and industrial loans are concentrated in the
hospitality, entertainment and leisure industries. Many of these industries are
dependent upon seasonal business and other factors beyond the control of such
industries, such as weather and beach conditions along the New Jersey seashore.
Any significant or prolonged adverse weather or beach conditions along the New
Jersey seashore could have an adverse impact on the borrowers' ability to repay
such loans. Additionally, because these loans are concentrated in southern and
central New Jersey and so a decline in the general economic conditions of
southern or central New Jersey could have a material adverse effect on the
Company's financial condition, results of operations and cash flows.
Adequacy of Allowance for Loan Losses
The risk of loan losses varies with, among other things, general
economic conditions, the type of loan being made, the creditworthiness of the
borrower over the term of the loan and, in the case of a collateralized loan,
the value of the collateral for the loan. Management maintains an allowance for
loan losses based upon, among other things, historical experience, an evaluation
of economic conditions and regular review of delinquencies and loan portfolio
quality. Based upon such factors, management makes various assumptions and
judgments about the ultimate collectibility of the loan portfolio and provides
an allowance for loan losses based upon a percentage of the outstanding balances
and for specific loans when their ultimate collectibility is considered
questionable. If management's assumptions and judgments prove to be incorrect
and the allowance for loan losses is inadequate to absorb future credit losses,
or if the bank regulatory authorities require the Bank and/or Sun Delaware to
increase the allowance for loan losses, the Company's earnings could be
significantly and adversely affected.
As of June 30, 1998, the allowance for loan losses was $5.1 million,
which represented 1.05% of total loans. The allowance for loan losses as a
percentage of nonperforming loans was 209.73% as of June 30, 1998. The Company
actively manages its nonperforming loans in an effort to minimize credit losses
and monitors its asset quality to maintain an adequate allowance for loan
losses. As its loan growth has increased, the Company has increased its
allowance for loan losses. However, future additions to the allowance in the
form of provisions for loan losses may be necessary due to changes in economic
conditions and growth of the Company's loan portfolio.
High Degree of Competition
The banking business is highly competitive. In its primary market
areas, the Company competes, and in Delaware will compete, with other commercial
banks, savings and loan associations, credit unions, finance companies, mutual
funds, insurance companies, and brokerage and investment banking firms operating
locally and elsewhere. Many of the Company's primary competitors have
substantially greater resources and lending limits than the Bank or than Sun
Delaware will have. The profitability of the Company depends upon the ability of
its subsidiaries to compete in the Company's primary market areas.
19
<PAGE>
Potential Impact of Changes in Interest Rates
The Company's profitability is dependent to a large extent on its net
interest income, which is the difference between its interest income on
interest-earning assets and its interest expense on interest-bearing
liabilities. The Company, like most financial institutions, is affected by
changes in general interest rate levels and by other economic factors beyond its
control. Interest rate risk arises from mismatches (i.e., the interest
sensitivity gap) between the dollar amount of repricing or maturing assets and
liabilities, and is measured in terms of the ratio of the interest rate
sensitivity gap to total assets. More assets repricing or maturing than
liabilities over a given time period is considered asset-sensitive and is
reflected as a positive gap, and more liabilities repricing or maturing than
assets over a given time period is considered liability-sensitive and is
reflected as negative gap. An asset-sensitive position (i.e., a positive gap)
will generally enhance earnings in a rising interest rate environment and will
negatively impact earnings in a falling interest rate environment, while a
liability-sensitive position (i.e., a negative gap) will generally enhance
earnings in a falling interest rate environment and negatively impact earnings
in a rising interest rate environment. Fluctuations in interest rates are not
predictable or controllable. The Company has attempted to structure its asset
and liability management strategies to mitigate the impact on net interest
income of changes in market interest rates. However, there can be no assurance
that the Company will be able to manage interest rate risk so as to avoid
significant adverse effects in net interest income. At June 30, 1998, the
Company had a one year cumulative positive gap of 0.56%.
Limitations Imposed by Industry Regulation
Bank holding companies and banks operate in a highly regulated
environment and are subject to the supervision and examination by several
federal regulatory agencies. The Company is subject to the Bank Holding Company
Act of 1956, as amended ("BHCA"), and to regulation and supervision by the FRB,
and the Bank is, and Sun Delaware will be, subject to regulation and supervision
by the Office of the Comptroller of the Currency (the "OCC") and the FDIC. The
Bank is, and Sun Delaware will also be, a member of the Federal Home Loan Bank
of New York (the "FHLB") and subject to regulation thereby. Federal and state
banking laws and regulations govern matters ranging from the regulation of
certain debt obligations, changes in the control of bank holding companies, and
the maintenance of adequate capital to the general business operations and
financial condition of the Bank and, in the future, Sun Delaware, including
permissible types, amounts and terms of loans and investments, the amount of
reserves maintained against deposits, restrictions on dividends, establishment
of branch offices, and the maximum rate of interest that may be charged by law.
The FRB, the FDIC, and the OCC also possess cease and desist powers over bank
holding companies and banks, to prevent or remedy unsafe or unsound practices or
violations of law. These and other restrictions limit the manner in which the
Company and its bank subsidiaries may conduct their business and obtain
financing. Furthermore, the commercial banking business is affected not only by
general economic conditions, but also by the monetary policies of the FRB. These
monetary policies have had, and are expected to continue to have, significant
effects on the operating results of commercial banks. Changes in monetary or
legislative policies may affect the ability of the Bank and Sun Delaware to
attract deposits and make loans.
Cross Guarantee Liability of the Bank and Sun Delaware
Federal law contains a "cross-guarantee" provision which could result
in an insured depository institution which is owned by the Company, such as the
Bank and Sun Delaware, being liable for losses incurred by the FDIC in
connection with assistance provided to, or the failure of, another depository
institution "commonly controlled" by the Company. Because the Bank and Sun
Delaware will be "commonly controlled" by the Company, losses incurred by the
FDIC in connection with assistance provided to, or failure of, one such bank
could result in an assessment against the other bank and such
20
<PAGE>
assessment could have a material adverse effect on the financial condition of
such bank and the Company.
Impact of Changes in Economic Conditions and Monetary Policies
Conditions beyond the Company's control may have a significant impact
on changes in net interest income from one period to another. Examples of such
conditions could include: (i) the strength of credit demands by customers; (ii)
fiscal and debt management policies of the federal government, including changes
in tax laws; (iii) the FRB's monetary policy; (iv) the introduction and growth
of new investment instruments and transaction accounts by non-bank financial
competitors; and (v) changes in rules and regulations governing the payment of
interest on deposit accounts.
Year 2000
The Year 2000 issue is created by the potential inability of computer
systems to use more than two digits in the data field for the year, thus making
them unable to identify years after 1999 with accuracy. If a bank does not
resolve problems related to the Year 2000 issue, computer systems may
incorrectly compute payment, interest or delinquency information. In addition,
because payment and other important data systems are linked by computer, if the
banks with which the Company or its subsidiaries conducts ongoing operations do
not resolve this potential problem in time, the Company or its subsidiaries may
experience significant data processing delays, mistakes or failures. These
delays, mistakes or failures may have a significant adverse impact on the
financial condition, results of operations and cash flows of the Company.
The Company processes much of its data processing using licensed
software from a third party including all of its deposit and loan accounting and
general ledger functions. The third party has advised the Company that it has
made all the necessary programming changes to its systems for the Year 2000. The
Company plans to test its systems for Year 2000 compliance in late 1998. The
Company does not expect to incur significant incremental direct expenses related
to the Year 2000. Failure of third party computer systems relative to the Year
2000 would have a material adverse impact on the Company's ability to conduct
its business. Costs associated with the Year 2000 problem are expected to be
expensed as incurred in compliance with generally accepted accounting
principles. In addition, the Company cannot guarantee that the inability of loan
customers to adequately correct the Year 2000 issue will not have an adverse
effect on the Company.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RECENT RESULTS OF OPERATIONS OF THE COMPANY
General
The primary activity of the Company is the oversight of the Bank.
Through the Bank, the Company engages in community banking activities by
accepting deposit accounts from the general public and investing such funds in a
variety of loans. These community banking activities primarily include providing
home equity loans, mortgage loans, a variety of commercial business and
commercial real estate loans and, to a much lesser extent, installment loans.
The Company also maintains an investment securities portfolio. The Company's
lending and investing activities are funded by retail deposits. The largest
component of the Company's net income is net interest income. Consequently, the
Company's earnings are primarily dependent on its net interest income, which is
determined by (i) the difference between rates of interest earned on
interest-earning assets and rates paid on interest-bearing liabilities (interest
rate spread), and (ii) the relative amounts of interest-earning assets and
interest-bearing liabilities. The Company's net income is also affected by its
provision for loan losses, as well as the amount of non-
21
<PAGE>
interest income and non-interest expenses, such as salaries and employee
benefits, professional fees and services, deposit insurance premiums, occupancy
and equipment costs and income taxes. Set forth below is an analysis of the
financial condition and recent operating results of the Company. In July 1998,
the Company entered into an agreement regarding the Beneficial Acquisition. See
"-- Financial Condition," "Beneficial Acquisition" and "Pro Forma Consolidated
Statement of Financial Condition."
Financial Condition
Total assets at June 30, 1998 increased by $53.6 million to $1,154
million as compared to $1,100 million at December 31, 1997. The growth was
primarily due to an increase in net loans of $58.3 million, an increase in
federal funds sold of $9.5 million and offset by a decrease in the investment
securities portfolio of $18.9 million.
Investment securities available for sale decreased $18.9 million, from
$576.3 million at December 31, 1997 to $557.4 million at June 30, 1998. The
decrease was primarily a result of net sales of investment securities, the
proceeds of which funded loan growth and repayment of short-term borrowings.
Net loans at June 30, 1998 amounted to $486.1 million, an increase of
$58.3 million from $427.8 million at December 31, 1997. Of the increase, only
$34,000 was the result of loans purchased. The increase was primarily from
increased originations of commercial and industrial loans. The ratio of
non-performing assets to total loans and real estate owned at June 30, 1998 was
0.50% compared to 0.51% at December 31, 1997. The ratio of allowance for loan
losses to total non-performing loans was 209.73% at June 30, 1998 compared to
189.77% at December 31, 1997. The increase in this ratio was the result of a
higher allowance for loan losses at June 30, 1998. The ratio of allowance for
loan losses to total loans was 1.05% at June 30, 1998 compared to 0.97% at
December 31, 1997.
Excess of cost over fair value of assets acquired (goodwill) decreased
$1.1 million, from $26.2 million at December 31, 1997 to $25.1 million at June
30, 1998. The decrease was a result of related amortization and a $289,000
refund of the purchase premium from the purchase of The Bank of New York
branches, substantially offset by the addition of a $1.1 million premium paid
for the acquisition of the Eatontown office of First Savings.
Total liabilities at June 30, 1998 amounted to $1,066 million compared
to $1,017 million at December 31, 1997, an increase of $49.1 million.
Total deposits grew to $753.5 million at June 30, 1998, a $58.1 million
increase over December 31, 1997 deposits of $695.4 million. The increase was the
result of approximately $25.1 million in deposits acquired from First Savings
Bank, as well as from internal deposit growth of 4.74%.
There were $35.7 million in advances from the Federal Home Loan Bank
and $15 million in federal funds purchased at June 30, 1998 compared to $75.0
million and $5.5 million, respectively, at December 31, 1997. The combined net
decrease in these liabilities was due to the availability of funds from
increased deposit levels combined with the proceeds from sales of investment
securities.
Total shareholders' equity grew by $4.5 million, from $54.6 million at
December 31, 1997, to $59.1 million at June 30, 1998. The increase was a result
of net earnings of $3.8 million for the six months ended June 30, 1998 augmented
by proceeds received from the issuance of common stock amounting to
approximately $409,000 and an improvement in the net unrealized gains on
securities available for sale, net of income taxes of $283,000.
22
<PAGE>
Beginning in 1997, to more fully leverage its capital, the Company
entered into certain structured transactions in which the Bank borrows funds
from the FHLB at a rate similar to the London Inter-Bank Offered Rate ("LIBOR").
It invests the borrowed funds in mortgage-backed securities that are priced to
yield a spread over LIBOR. The securities are pledged as collateral for FHLB
borrowings. For the six months ended June 30, 1998, net interest income related
to structured transactions amounted to $2.3 million, or a 1.03% weighted average
net spread. Partly as a result of the implementation of this strategy, the net
interest margin of the Company has narrowed to 3.68% for the six months ended
June 30, 1998. Excluding the effect of the structured transactions, the
Company's net interest margin would have been 5.29% for that period.
Additionally, for the six months ended June 30, 1998, the Company
reported a return on average assets, a return on average equity and an
efficiency ratio of 0.70%, 13.49% and 69.44%, respectively. On a cash earnings
basis (computed excluding the amortization of goodwill) the return on average
assets, the return on average equity and the efficiency ratio for the same
period would have been 1.06%, 20.24% and 60.35%, respectively. Amortization of
goodwill resulting from the Beneficial Acquisition is expected to further reduce
the Company's profitability ratios, while the transaction is expected to be
accretive to earnings.
Comparison of Operating Results for the Six Months Ended June 30, 1998 and 1997
General. Net income increased by $2.3 million for the six months ended
June 30, 1998 to $3.8 million from $1.5 million for the six months ended June
30, 1997. Net interest income increased $8.8 million and the provision for loan
losses increased $185,000 for the six months ended June 30, 1998 compared to the
same period in 1997. Other income increased by $1.9 million to $2.7 million for
the six months ended June 30, 1998 as compared to $776,000 for the six months
ended June 30, 1997. Other expenses increased by $7.2 million to $14.5 million
for the six months ended June 30, 1998 as compared to $7.3 million for the six
months ended June 30, 1997. The return on average assets for the six months
ended June 30, 1998 and 1997 were 0.70% and 0.62%, respectively. The return on
average equity for the six months ended June 30, 1998 and 1997 were 13.49% and
10.69%, respectively.
Net Interest Income. The increase in net interest income was due to a
$21.1 million increase in interest income partially offset by a $12.3 million
increase in interest expense.
Interest Income. Interest income for the six months ended June 30, 1998
increased approximately $21.1 million, or 116.2%, from $18.1 million for the
same period in 1997 to $39.2 million in 1998. The increase was primarily the
result of an increase of $6.7 million in interest and fees on loans resulting
from acquisitions and internal growth and $14.3 million in interest on
investment securities resulting from the deployment of cash received from
financing transactions, branch acquisitions and deposit growth into the
Company's investment portfolio. The Beneficial Acquisition, the Offering and the
Common Shares Offering are expected to generate additional net cash that can be
deployed into loan growth and investments that will create interest income.
Interest Expense. Interest expense for the six months ended June 30,
1998 increased approximately $12.3 million, from $8.7 million for the same
period in 1997 to $21.0 million in 1998. This increase was primarily due to a
$5.3 million increase in interest on deposit accounts resulting from
significantly higher deposit balances due to acquisitions and internal growth, a
$6.3 million increase in interest on short-term borrowed funds resulting from
higher levels of borrowings from correspondent banks and securities sold under
agreements to repurchase and a $615,000 increase in interest on guaranteed
preferred beneficial interest in subordinated debt. The Beneficial Acquisition
23
<PAGE>
and the Offering will result in increased interest expense in future periods.
Provision for Loan Losses. For the six months ended June 30, 1998, the
provision for loan losses amounted to $1.0 million, an increase of $185,000,
compared to $825,000 for the same period in 1997. The increase in the provision
for loan losses was due to higher levels of loans outstanding. Management
continually reviews the adequacy of the loan loss reserve based upon internal
review of loans and using guidelines promulgated by the Bank's primary
regulator.
Other Income. Other income increased $1.9 million for the six-month
period ended June 30, 1998 compared to the six-month period ended June 30, 1997.
The increase was a result of approximately $978,000 in fees generated by a
larger base due to deposit acquisitions and internal growth, augmented by
$110,000 in gains from the sale of loans and an increase of $573,000 in gains on
the sale of investment securities and $250,000 in other income.
Other Expenses. Other expenses increased approximately $7.2 million, to
$14.5 million for the six months ended June 30, 1998 as compared to $7.3 million
for the same period in 1997. Of the increase, $3.1 million was in salaries and
employee benefits, $824,000 was in occupancy expense, $525,000 was in equipment
expense, $116,000 was in professional fees and services, $389,000 was in data
processing expense, $174,000 was in postage and supplies, $1.4 million was in
amortization of excess of cost over fair value of assets acquired (amortization
of goodwill) and $644,000 was in Other Expenses. The increase in other expenses
reflects the Company's strategy to support planned expansion. Salaries and
benefits increased due to additional staff positions in financial service
centers, lending, loan review, compliance and audit departments. The increase in
occupancy, equipment, professional fees and services and data processing
expenses were the result of internal growth and the effect of the Company's
acquisitions. The Company has entered into two purchase and assumption
agreements which, when completed, will result in the acquisition of a total of
ten branch locations, including the eight branch locations in connection with
the Beneficial Acquisition. As a result, the Company expects the level of
amortization of excess of cost over fair value of assets acquired to increase in
periods subsequent to the completion of the transactions.
Income Taxes. Applicable income taxes increased $995,000 for the six
months ended June 30, 1998 as compared to the same period in 1997. The increase
resulted from higher pre-tax earnings.
USE OF PROCEEDS
All the proceeds to the Issuer Trust from the sale of the Preferred
Securities will be invested by the Issuer Trust in the Junior Subordinated
Debentures. The proceeds from the sale of the Preferred Securities are expected
to qualify initially as Tier 2 capital with respect to the Company under the
capital adequacy guidelines established by the FRB and ultimately as Tier 1
capital when permitted under the 25% Capital Limitation. (The proceeds from the
sale of the Common Shares will qualify as Tier 1 capital for the Company.) The
net proceeds to be received by the Company from the sale of the Junior
Subordinated Debentures, as well as from the sale of the Common Shares, will be
used by the Company to provide equity capital to Sun Delaware for the purpose of
providing sufficient capital to Sun Delaware to consummate the Beneficial
Acquisition.
BENEFICIAL ACQUISITION
The Company has entered into an agreement to acquire certain loans, and
assume certain deposits, of Beneficial National Bank ("Beneficial"). As part of
the Beneficial Acquisition, the Company will acquire eight leased branch
offices, all located in New Castle County, Delaware. It is anticipated that
24
<PAGE>
the current senior management of Beneficial, comprised of the president, senior
credit officer and senior business development/operations officer, will continue
in similar positions at Sun Delaware. The State of Delaware is a contiguous
extension of the Company's existing marketplace, with the Company's closest New
Jersey branch being located only a few miles from the closest Beneficial branch.
The agreement with Beneficial includes the purchase by the Company of
performing loans and loans that are not thirty days or more past due in the
payment of principal or interest or not adversely classified. While the Company
did not originate or underwrite such loans, the Company has performed a loan
review on a significant portion of the loans it is acquiring from the Beneficial
Acquisition and will not acquire any loans that are more than 30 days delinquent
in the payment of interest or principal or that are adversely classified at the
time of consummation of the Beneficial Acquisition.
At June 30, 1998, loans covered by the agreement with Beneficial were
as follows:
Weighted
Average
Amount Yield
------ -----
(In thousands)
Commercial and industrial.............. $ 87,158 10.32%
Home equity............................ 21,700 9.96%
Residential real estate................ 11,519 7.91%
Installment............................ 18,674 11.14%
-------
Gross Loans.......................... 139,051 10.18%
Reserve for loan losses................ (1,000)
-------
Net loans............................ $138,051
=======
At June 30, 1998, deposits to be assumed under the agreement with
Beneficial were as follows:
Weighted
Average
Amount Interest Cost
------ -------------
(In thousands)
Demand deposits........................ $ 58,110 1.50%
Savings deposits....................... 43,441 3.01%
Time deposits.......................... 77,062 4.99%
------- -----
Total deposits....................... $178,613 3.38%
=======
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PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
June 30, 1998
The following table sets forth the unaudited pro forma consolidated
statement of financial condition of the Company assuming the branch purchases
are consummated as of June 30, 1998. The pro forma consolidated statement of
financial condition should be read in conjunction with the consolidated
financial statements of the Company and notes thereto included in the Company's
1997 Annual Report to Stockholders which is incorporated herein by reference as
part of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, and included in the Company's Quarterly Reports on Form 10-Q
for the quarters ended March 31, and June 30, 1998. See "Incorporation of
Certain Documents by Reference." The pro forma consolidated statement of
financial condition has been prepared by the Company, is unaudited, and may not
be indicative of results on an annualized basis or for any other period.
<TABLE>
<CAPTION>
Pro Forma
Consolidated Pro Forma
Beneficial Summit Company Consolidated
Branch Branch Before Securities Company After
Purchase Purchase Securities Offerings Securities
Company Dr. (Cr.) Dr. (Cr.) Offerings Dr. (Cr.) Offerings
------- --------- --------- --------- --------- ---------
(In thousands)
Assets
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cash and amounts due from banks......... $ 37,721 $ 1,400 (1) $ $ 39,121 $ $ 39,121
Federal funds sold...................... 9,500 38,700 (1) 14,596 (1) 36,000 (5)
(4,100) (2) (660)(4) (2,080) (5)
(19,900) (3) 38,136 72,056
Investment securities available-for-
sale.................................. 557,392 557,392 557,392
Loans receivable (net).................. 486,059 138,000 (1)
4,100 (2) 628,159 628,159
Bank properties and equipment, net...... 25,342 500 (1) 178 (1) 26,020 26,020
Real estate owned....................... 396 396 396
Accrued interest receivable............. 8,234 8,234 8,234
Excess of cost over fair value
of net assets acquired................ 25,065 19,900 (3) 660 (4) 45,625 45,625
Deferred taxes.......................... 1,511 1,511 1,511
Other assets............................ 2,342 -- -- 2,342 830 (5) 3,172
---------- ------- -------- ---------- ------ ---------
Total................................ $1,153,562 $178,600 $14,774 $1,346,936 $34,750 $1,381,686
========= ======= ====== ========= ====== =========
Liabilities and Shareholders' Equity
Liabilities:
Deposits................................ $753,507 $178,600 (1) $14,774 (1) $946,981 $ $946,881
Advances from the Federal Home Loan
Bank.................................. 35,700 35,700 35,700
Federal funds purchased................. 15,000 15,000 15,000
Securities sold under agreements
to repurchase......................... 256,800 256,800 256,800
Other liabilities....................... 4,681 -- -- 4,681 -- 4,681
--------- -------- ------ ---------- ------ ---------
Total liabilities..................... 1,065,688 178,600 14,774 1,259,062 -- 1,259,062
--------- -------- ------ --------- ------ ---------
Guaranteed preferred beneficial interest
in subordinated debt.................. 28,750 28,750 18,000 (5) 46,750
Shareholders' equity:
Preferred stock.........................
Common stock............................ 6,341 6,341 666 (5) 7,007
Surplus................................. 38,935 38,935 16,084 (5) 55,019
Retained earnings....................... 13,412 13,412 13,412
Net unrealized gain on securities
available-for-sale, net
of income taxes....................... 436 -- -- 436 -- 436
------ ------- ------ ---------- ------ ---------
Total shareholders' equity............ 59,124 -- -- 59,124 16,750 75,874
--------- ------- ------ --------- ------ ---------
Total................................. $1,153,562 $178,600 $14,774 $1,346,936 $34,750 $1,381,686
========= ======= ====== ========= ====== =========
</TABLE>
- -----------------
(1) To record branch purchase.
(2) To record premium paid on the purchase of loans ($4.1 million). The premium
will be amortized over a five year period.
(3) To record premium paid on the assumption of the deposit liabilities ($19.9
million). The excess of cost over fair value of assets acquired will be
amortized over a seven year period.
(4) To record premium paid on the assumption of deposit liabilities ($660,000).
The excess of cost over fair value of assets acquired will be amortized
over a seven year period.
(5) To record net proceeds from this Offering and the Common Shares Offering.
26
<PAGE>
CAPITALIZATION
The following table sets forth (i) the consolidated capitalization of
the Company at June 30, 1998, (ii) the consolidated capitalization of the
Company giving effect to the issuance of the Preferred Securities and the Common
Shares in the Common Shares Offering assuming the Underwriters' over-allotment
option was not exercised in either offering, (iii) the pro forma effect of
branch purchases, and (iv) the actual and pro forma capital ratios of the
Company.
<TABLE>
<CAPTION>
As Adjusted
------------------------------------------------------
Sale of Securities
Sale of and
Actual Securities(2) Branch Purchases(2)
------ ------------- -------------------
(Dollars in thousands)
<S> <C> <C> <C>
Guaranteed preferred beneficial interest in
subordinated debt................................ $ 28,750 $ 46,750 $ 46,750
SHAREHOLDERS' EQUITY:
Preferred stock $1 par value, 1,000,000
shares authorized, none issued................. -- -- --
Common stock $1 par value - 25,000,000(1)
shares authorized; 7,007,748 outstanding........ 6,341 7,007 7,007
Surplus.......................................... 38,935 55,019 55,019
Retained earnings................................ 13,412 13,412 13,412
Net unrealized gain on securities
available-for-sale, net of income taxes........ 436 436 436
------- ------ -------
Total shareholders' equity................... 59,124 75,874 75,874
------- ------- -------
Total capitalization........................... $ 87,874 $122,624 $122,624
======= ======= =======
COMPANY CAPITAL RATIOS(3):
Tier 1 risk-based capital ratio.................. 8.60% 12.06% 7.14%
Total risk-based capital ratio................... 10.91% 14.35% 9.13%
Leverage ratio................................... 4.96% 6.82% 4.11%
</TABLE>
- ------------------
(1) As adjusted for the increase in authorized Common Shares approved by
shareholders of the Company on August 25, 1998.
(2) Assumes the sale of $18 million of Common Shares in the Common Shares
Offering and $18 million of Preferred Securities in this Offering.
(3) The capital ratios, as adjusted, are computed including the total estimated
net proceeds from the sale of the Common Shares, in a manner consistent
with FRB guidelines.
At June 30, 1998, the Bank's Tier 1 risk-based capital, total
risk-based capital and leverage capital ratios were 9.77%, 10.60% and 5.63%,
respectively. At June 30, 1998, the pro forma Tier 1 risk-based capital, total
risk-based capital and leverage capital ratios for Sun Delaware were 10.01%,
10.68% and 7.68%, respectively. The Bank is "well capitalized" and Sun Delaware
will be "well capitalized" on a pro forma basis for federal bank regulatory
purposes. The Company will be "adequately capitalized" on a pro forma basis for
federal bank regulatory purposes.
27
<PAGE>
SUN CAPITAL TRUST II
The Issuer Trust is a statutory business trust created under Delaware
law pursuant to the filing of a Certificate of Trust with the Delaware Secretary
of State on August 12, 1998. The Issuer Trust will be governed by the Trust
Agreement among the Company, as Depositor, Bankers Trust (Delaware), as Delaware
Trustee, and Bankers Trust Company, as Property Trustee (together with the
Delaware Trustee, the "Issuer Trustees"). Two individuals will be selected by
the holder of the Common Securities to act as administrators with respect to the
Issuer Trust (the "Administrators"). The Company, while holder of the Common
Securities, intends to select two individuals who are employees or officers of
or affiliated with the Company to serve as the Administrators. See "Description
of Preferred Securities -- Miscellaneous." The Issuer Trust exists for the
exclusive purposes of (i) issuing and selling the Trust Securities, (ii) using
the proceeds from the sale of the Trust Securities to acquire the Junior
Subordinated Debentures and (iii) engaging in only those other activities
necessary, convenient or incidental thereto (such as registering the transfer of
the Trust Securities). Accordingly, the Junior Subordinated Debentures will be
the sole assets of the Issuer Trust, and payments under the Junior Subordinated
Debentures will be the sole source of revenue of the Issuer Trust.
All the Common Securities will initially be owned by the Company. The
Common Securities will rank pari passu, and payments will be made thereon pro
rata, with the Preferred Securities, except that upon the occurrence and during
the continuation of a Debenture Event of Default arising as a result of any
failure by the Company to pay any amounts in respect of the Junior Subordinated
Debentures when due, the rights of the holder of the Common Securities to
payment in respect of Distributions and Payments upon liquidation, redemption or
otherwise will be subordinated to the rights of the holders of the Preferred
Securities. See "Description of Preferred Securities -- Subordination of Common
Securities." The Company will acquire Common Securities in an aggregate
liquidation amount equal to 3% of the total capital of the Issuer Trust. The
Issuer Trust has a term of 31 years, but may terminate earlier as provided in
the Trust Agreement. The address of the Delaware Trustee is Bankers Trust
(Delaware), 1101 Centre Road, Suite 200, Trust Department, Wilmington, Delaware
19805, telephone number (302) 636-3301. The address of the Property Trustee, the
Guarantee Trustee and the Debenture Trustee is Bankers Trust Company, Four
Albany Street, 4th Floor, New York, New York 10006, telephone number (212)
250-2500.
ACCOUNTING TREATMENT
For financial reporting purposes, the Issuer Trust will be treated as a
subsidiary of the Company and, accordingly, the accounts of the Issuer Trust
will be included in the consolidated financial statements of the Company. The
Preferred Securities will be included in the consolidated balance sheets of the
Company and appropriate disclosures about the Preferred Securities, the
Guarantee and the Junior Subordinated Debentures will be included in the notes
to the consolidated financial statements of the Company. For financial reporting
purposes, Distributions on the Preferred Securities will be recorded in the
consolidated statements of income of the Company.
DESCRIPTION OF PREFERRED SECURITIES
Pursuant to the terms of the Trust Agreement for the Issuer Trust, the
Issuer Trust will issue the Preferred Securities and the Common Securities. The
Preferred Securities will represent preferred undivided beneficial interests in
the assets of the Issuer Trust and the holders thereof will be entitled to a
preference in certain circumstances with respect to Distributions and amounts
payable on redemption or liquidation over the Common Securities, as well as
other benefits as described in the Trust Agreement. This summary of certain
provisions of the Preferred Securities and the Trust Agreement does not purport
28
<PAGE>
to be complete and is subject to, and qualified in its entirety by reference to,
all the provisions of the Trust Agreement, including the definitions therein of
certain terms. Wherever particular defined terms of the Trust Agreement are
referred to herein, such defined terms are incorporated herein by reference. A
copy of the form of the Trust Agreement is available upon request from the
Issuer Trustees.
General
The Preferred Securities will be limited to $18,000,000 aggregate
Liquidation Amount outstanding (which amount may be increased by up to
$2,700,000 aggregate Liquidation Amount of Preferred Securities for exercise of
the Underwriters' over-allotment option). See "Underwriting." The Preferred
Securities will rank pari passu, and payments will be made thereon pro rata,
with the Common Securities except as described under "-- Subordination of Common
Securities." The Junior Subordinated Debentures will be registered in the name
of the Issuer Trust and held by the Property Trustee in trust for the benefit of
the holders of the Preferred Securities and Common Securities. The Guarantee
will be a guarantee on a subordinated basis with respect to the Preferred
Securities but will not guarantee payment of Distributions or amounts payable on
redemption or liquidation of such Preferred Securities when the Issuer Trust
does not have funds on hand available to make such payments. See "Description of
Guarantee."
Distributions
The Preferred Securities represent preferred undivided beneficial
interests in the assets of the Issuer Trust, and Distributions on each Preferred
Security will be payable at the annual rate of __________% of the stated
Liquidation Amount of $10, payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year (each a "Distribution Date"), to the
holders of the Preferred Securities at the close of business on 15th day of
March, June, September and December (whether or not a Business Day (as defined
below)) next preceding the relevant Distribution Date. Distributions on the
Preferred Securities will be cumulative. Distributions will accumulate from
_________ ____, 1998. The first Distribution Date for the Preferred Securities
will be ____________ ____, 1998. The amount of Distributions payable for any
period less than a full Distribution period will be computed on the basis of a
360-day year of twelve 30-day months and the actual days elapsed in a partial
month in such period. Distributions payable for each full Distribution period
will be computed by dividing the rate per annum by four. If any date on which
Distributions are payable on the Preferred Securities is not a Business Day,
then payment of the Distributions payable on such date will be made on the next
succeeding day that is a Business Day (without any additional Distributions or
other payment in respect of any such delay), with the same force and effect as
if made on the date such payment was originally payable, except that, if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day (without any additional Distributions or
other payment in respect of any such delay), with the same force and effect as
if made on the date such payment was originally payable.
So long as no Debenture Event of Default has occurred and is
continuing, the Company has the right under the Junior Subordinated Indenture to
defer the payment of interest on the Junior Subordinated Debentures at any time
or from time to time for a period not exceeding 20 consecutive quarterly periods
with respect to each Extension Period, provided that no Extension Period may
extend beyond the Stated Maturity of the Junior Subordinated Debentures. As a
consequence of any such deferral, quarterly Distributions on the Preferred
Securities by the Issuer Trust will be deferred during any such Extension
Period. Distributions to which holders of the Preferred Securities are entitled
will accumulate additional Distributions thereon at the rate of __________% per
annum, compounded quarterly from the relevant payment date for such
Distributions, computed on the basis of a 360-day year of twelve 30-day months
29
<PAGE>
and the actual days elapsed in a partial month in such period. Additional
Distributions payable for each full Distribution period will be computed by
dividing the rate per annum by four. The term "Distributions" as used herein
shall include any such additional Distributions. During any such Extension
Period, the Company may not (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire or make a liquidation payment with respect to,
any of the Company's capital stock or (ii) make any payment of principal of or
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank pari passu in all respects with or junior in
interest to the Junior Subordinated Debentures, including the Company's
obligations associated with the Outstanding Preferred Securities (other than (a)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Company in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of any one or more employees,
officers, directors or consultants, in connection with a dividend reinvestment
or stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable Extension Period, (b) as a result of a reclassification or an
exchange or conversion of any class or series of the Company's capital stock (or
any capital stock of a subsidiary of the Company) for any class or series of the
Company's capital stock or of any class or series of the Company's indebtedness
for any class or series of the Company's capital stock, (c) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, (d) any declaration of a dividend in connection with any
stockholder's rights plan, or the issuance of rights, stock or other property
under any stockholder's rights plan, or the redemption or repurchase of rights
pursuant thereto, or (e) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock). Prior
to the termination of any such Extension Period, the Company may further defer
the payment of interest, provided that no Extension Period may exceed 20
consecutive quarterly periods or extend beyond the Stated Maturity of the Junior
Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all amounts then due, the Company may elect to begin a new
Extension Period. No interest shall be due and payable during an Extension
Period, except at the end thereof. The Company must give the Trustees notice of
its election of such Extension Period at least one Business Day prior to the
earlier of (i) the date the Distributions on the Preferred Securities would have
been payable but for the election to begin such Extension Period and (ii) the
date the Property Trustee is required to give notice to holders of the Preferred
Securities of the record date or the date such Distributions are payable, but in
any event not less than one Business Day prior to such record date. The Property
Trustee will give notice of the Company's election to begin a new Extension
Period to the holders of the Preferred Securities. Subject to the foregoing,
there is no limitation on the number of times that the Company may elect to
begin an Extension Period. See "Description of Junior Subordinated Debentures --
Option To Extend Interest Payment Period" and "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue Discount."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures.
The revenue of the Issuer Trust available for distribution to holders
of the Preferred Securities will be limited to payments under the Junior
Subordinated Debentures in which the Issuer Trust will invest the proceeds from
the issuance and sale of the Preferred Securities. See "Description of Junior
Subordinated Debentures." If the Company does not make payments on the Junior
Subordinated Debentures, the Issuer Trust may not have funds available to pay
Distributions or other amounts payable on the Preferred Securities. The payment
of Distributions and other amounts payable on the Preferred Securities (if and
to the extent the Issuer Trust has funds legally available for and cash
sufficient to make
30
<PAGE>
such payments) is guaranteed by the Company on a limited basis as set forth
herein under "Description of Guarantee."
Redemption
Upon the repayment or redemption, in whole or in part, of the Junior
Subordinated Debentures, whether at maturity or upon earlier redemption as
provided in the Junior Subordinated Indenture, the proceeds from such repayment
or redemption shall be applied by the Property Trustee to redeem a Like Amount
(as defined below) of the Preferred Securities, upon not less than 30 nor more
than 60 days' notice, at a redemption price (the "Redemption Price") equal to
the aggregate Liquidation Amount of such Preferred Securities plus accumulated
but unpaid Distributions thereon to the date of redemption (the "Redemption
Date") and the related amount of the premium, if any, paid by the Company upon
the concurrent redemption of such Junior Subordinated Debentures. See
"Description of Junior Subordinated Debentures -- Redemption." If less than all
the Junior Subordinated Debentures are to be repaid or redeemed on a Redemption
Date, then the proceeds from such repayment or redemption shall be allocated to
the redemption pro rata of the Preferred Securities and the Common Securities.
The amount of premium, if any, paid by the Company upon the redemption of all or
any part of the Junior Subordinated Debentures to be repaid or redeemed on a
Redemption Date shall be allocated to the redemption pro rata of the Preferred
Securities and the Common Securities.
The Company has the right to redeem the Junior Subordinated Debentures
(i) on or after __________ ____, 2003, in whole at any time or in part from time
to time, or (ii) in whole, but not in part, at any time within 90 days following
the occurrence and during the continuation of a Tax Event, Investment Company
Event or Capital Treatment Event (each as defined below), in each case subject
to possible regulatory approval. See "-- Liquidation Distribution Upon
Dissolution." A redemption of the Junior Subordinated Debentures would cause a
mandatory redemption of a Like Amount of the Preferred Securities and Common
Securities at the Redemption Price.
"25% Capital Limitation" means the limitation imposed by the FRB that
the proceeds of certain qualifying securities like the Trust Securities will
qualify as Tier 1 capital of the Company up to an amount not to exceed, when
taken together with all cumulative preferred stock of the Company, if any, 25%
of the Company's Tier 1 capital, or any subsequent limitation adopted by the
FRB.
"Business Day" means a day other than (i) a Saturday or Sunday, (ii) a
day on which banking institutions in the State of New Jersey or the City of New
York are authorized or required by law or executive order to remain closed, or
(iii) a day on which the Property Trustee's Corporate Trust Office or the
Corporate Trust Office of the Debenture Trustee is closed for business.
"Like Amount" means (i) with respect to a redemption of Trust
Securities, Trust Securities having a Liquidation Amount (as defined below)
equal to that portion of the principal amount of Junior Subordinated Debentures
to be contemporaneously redeemed in accordance with the Junior Subordinated
Indenture, allocated to the Common Securities and to the Preferred Securities
based upon the relative Liquidation Amounts of such classes and (ii) with
respect to a distribution of Junior Subordinated Debentures to holders of Trust
Securities in connection with a dissolution or liquidation of the Issuer Trust,
Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of the Trust Securities of the holder to whom such Junior
Subordinated Debentures are distributed.
"Liquidation Amount" means the stated amount of $10 per Trust Security.
"Tax Event" means the receipt by the Issuer Trust of an opinion of counsel
to the Company
31
<PAGE>
experienced in such matters to the effect that, as a result of any amendment to,
or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance of
the Preferred Securities, there is more than an insubstantial risk that (i) the
Issuer Trust is, or will be within 90 days of the delivery of such opinion,
subject to United States federal income tax with respect to income received or
accrued on the Junior Subordinated Debentures, (ii) interest payable by the
Company on the Junior Subordinated Debentures is not, or within 90 days of the
delivery of such opinion, will not be, deductible by the Company, in whole or in
part, for United States federal income tax purposes or (iii) the Issuer Trust
is, or will be within 90 days of the delivery of such opinion, subject to more
than a de minimis amount of other taxes, duties or other governmental charges.
See "Certain Federal Income Tax Consequences-Pending Tax Litigation Affecting
the Preferred Securities" for a discussion of pending United States Tax Court
litigation that, if decided adversely to the taxpayer, could give rise to a Tax
Event, which may permit the Company to redeem the Junior Subordinated Debentures
prior to __________ ____, 2003.
"Investment Company Event" means the receipt by the Issuer Trust of an
opinion of counsel to the Company experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or a
written change (including any announced prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more than an insubstantial risk that
the Issuer Trust is or will be considered an "investment company" that is
required to be registered under the Investment Company Act, which change or
prospective change becomes effective or would become effective, as the case may
be, on or after the date of the issuance of the Preferred Securities.
"Capital Treatment Event" means the reasonable determination by the
Company that, as a result of the occurrence of any amendment to, or change
(including any announced prospective change) in, the laws (or any rules or
regulations thereunder) of the United States or any political subdivision
thereof or therein, or as a result of any official or administrative
pronouncement or action or judicial decision interpreting or applying such laws
or regulations, which amendment or change is effective or such pronouncement,
action or decision is announced on or after the date of issuance of the
Preferred Securities, there is more than an insubstantial risk that the Company
will not be entitled to treat an amount equal to the Liquidation Amount of the
Preferred Securities as "Tier 1 Capital" (or the then equivalent thereof),
except as otherwise restricted under the 25% Capital Limitation, for purposes of
the risk-based capital adequacy guidelines of the FRB, as then in effect and
applicable to the Company.
If a Tax Event described in clause (i) or (iii) of the definition of
Tax Event above has occurred and is continuing and the Issuer Trust is the
holder of all the Junior Subordinated Debentures, the Company will pay
Additional Sums (as defined below), if any, on the Junior Subordinated
Debentures.
"Additional Sums" means the additional amounts as may be necessary in
order that the amount of Distributions then due and payable by the Issuer Trust
on the outstanding Preferred Securities and Common Securities of the Issuer
Trust will not be reduced as a result of any additional taxes, duties and other
governmental charges to which the Issuer Trust has become subject as a result of
a Tax Event.
Redemption Procedures
Preferred Securities redeemed on each Redemption Date shall be redeemed
at the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Junior Subordinated
32
<PAGE>
Debentures. Redemptions of the Preferred Securities shall be made and the
Redemption Price shall be payable on each Redemption Date only to the extent
that the Issuer Trust has funds on hand available for the payment of such
Redemption Price. See also "-- Subordination of Common Securities."
If the Issuer Trust gives a notice of redemption in respect of the
Preferred Securities, then, by 12:00 noon, New York City time, on the Redemption
Date, to the extent funds are available, in the case of Preferred Securities
held in book-entry form, the Property Trustee will deposit irrevocably with DTC
funds sufficient to pay the applicable Redemption Price and will give DTC
irrevocable instructions and authority to pay the Redemption Price to the
beneficial owners of the Preferred Securities. With respect to Preferred
Securities not held in book-entry form, the Property Trustee, to the extent
funds are available, will irrevocably deposit with the paying agent for the
Preferred Securities funds sufficient to pay the applicable Redemption Price and
will give such paying agent irrevocable instructions and authority to pay the
Redemption Price to the holders thereof upon surrender of their certificates
evidencing the Preferred Securities. Notwithstanding the foregoing,
Distributions payable on or prior to the Redemption Date for any Preferred
Securities called for redemption shall be payable to the holders of the
Preferred Securities on the relevant record dates for the related Distribution
Dates. If notice of redemption shall have been given and funds deposited as
required, then upon the date of such deposit all rights of the holders of such
Preferred Securities so called for redemption will cease, except the right of
the holders of such Preferred Securities to receive the Redemption Price, but
without interest on such Redemption Price, and such Preferred Securities will
cease to be outstanding. If any date fixed for redemption of Preferred
Securities is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day which is a Business Day
(without any interest or other payment in respect of any such delay), except
that, if such Business Day falls in the next calendar year, such payment will be
made on the immediately preceding Business Day. In the event that payment of the
Redemption Price in respect of Preferred Securities called for redemption is
improperly withheld or refused and not paid either by the Issuer Trust or by the
Company pursuant to the Guarantee as described under "Description of Guarantee,"
Distributions on such Preferred Securities will continue to accumulate at the
then applicable rate, from the Redemption Date originally established by the
Issuer Trust for such Preferred Securities to the date such Redemption Price is
actually paid, in which case the actual payment date will be the date fixed for
redemption for purposes of calculating the Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities laws), the Company or its affiliates may at any time and from
time to time purchase outstanding Preferred Securities by tender, in the open
market or by private agreement, and may resell such securities.
If less than all the Preferred Securities and Common Securities are to
be redeemed on a Redemption Date, then the aggregate Liquidation Amount of such
Preferred Securities and Common Securities to be redeemed shall be allocated pro
rata to the Preferred Securities and the Common Securities based upon the
relative Liquidation Amounts of such classes. The particular Preferred
Securities to be redeemed shall be selected on a pro rata basis not more than 60
days prior to the Redemption Date by the Property Trustee from the outstanding
Preferred Securities not previously called for redemption, or if the Preferred
Securities are then held in the form of a Global Preferred Security (as defined
below), in accordance with DTC's customary procedures. The Property Trustee
shall promptly notify the securities registrar for the Trust Securities in
writing of the Preferred Securities selected for redemption and, in the case of
any Preferred Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed. For all purposes of the Trust Agreement, unless the
context otherwise requires, all provisions relating to the redemption of
Preferred Securities shall relate, in the case of any Preferred Securities
redeemed or to be redeemed only in part, to the portion of the aggregate
Liquidation Amount of Preferred Securities which has been or is to be redeemed.
33
<PAGE>
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the Redemption Date to each registered holder of Preferred
Securities to be redeemed at its address appearing on the securities register
for the Trust Securities. Unless the Company defaults in payment of the
Redemption Price on the Junior Subordinated Debentures, on and after the
Redemption Date interest will cease to accrue on the Junior Subordinated
Debentures or portions thereof (and, unless payment of the Redemption Price in
respect of the Preferred Securities is withheld or refused and not paid either
by the Issuer Trust or the Company pursuant to the Guarantee, Distributions will
cease to accumulate on the Preferred Securities or portions thereof) called for
redemption.
Subordination of Common Securities
Payment of Distributions on, and the Redemption Price of, and the
Liquidation Distribution in respect of, the Preferred Securities and Common
Securities, as applicable, shall be made pro rata based on the Liquidation
Amount of such Preferred Securities and Common Securities. However, if on any
Distribution Date or Redemption Date a Debenture Event of Default has occurred
and is continuing as a result of any failure by the Company to pay any amounts
in respect of the Junior Subordinated Debentures when due, no payment of any
Distribution on, or Redemption Price of, or Liquidation Distribution in respect
of, any of the Common Securities, and no other payment on account of the
redemption, liquidation or other acquisition of such Common Securities, shall be
made unless payment in full in cash of all accumulated and unpaid Distributions
on all the outstanding Preferred Securities for all Distribution periods
terminating on or prior thereto, or in the case of payment of the Redemption
Price the full amount of such Redemption Price on all the outstanding Preferred
Securities then called for redemption, shall have been made or provided for, and
all funds available to the Property Trustee shall first be applied to the
payment in full in cash of all Distributions on, or Redemption Price of, the
Preferred Securities then due and payable.
In the case of any Event of Default (as defined below) resulting from a
Debenture Event of Default, the holders of the Common Securities will be deemed
to have waived any right to act with respect to any such Event of Default under
the Trust Agreement until the effects of all such Events of Default with respect
to such Preferred Securities have been cured, waived or otherwise eliminated.
See "-- Events of Default; Notice" and "Description of Junior Subordinated
Debentures -- Debenture Events of Default." Until all such Events of Default
under the Trust Agreement with respect to the Preferred Securities have been so
cured, waived or otherwise eliminated, the Property Trustee will act solely on
behalf of the holders of the Preferred Securities and not on behalf of the
holders of the Common Securities, and only the holders of the Preferred
Securities will have the right to direct the Property Trustee to act on their
behalf.
Liquidation Distribution Upon Dissolution
The amount payable on the Preferred Securities in the event of any
liquidation of the Issuer Trust is $10 per Preferred Security plus accumulated
and unpaid Distributions, subject to certain exceptions, which may be in the
form of a distribution of such amount in Junior Subordinated Debentures.
The holders of all the outstanding Common Securities have the right at
any time to dissolve the Issuer Trust and, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, cause the Junior
Subordinated Debentures to be distributed to the holders of the Preferred
Securities and Common Securities in liquidation of the Issuer Trust.
34
<PAGE>
The FRB's risk-based capital guidelines currently provide that
redemptions of permanent equity or other capital instruments before stated
maturity could have a significant impact on a bank holding company's overall
capital structure and that any organization considering such a redemption should
consult with the FRB before redeeming any equity or capital instrument prior to
maturity if such redemption could have a material effect on the level or
composition of the organization's capital base (unless the equity or capital
instrument were redeemed with the proceeds of, or replaced by, a like amount of
a similar or higher quality capital instrument and the FRB considers the
organization's capital position to be fully adequate after the redemption).
In the event the Company, while a holder of Common Securities,
dissolves the Issuer Trust prior to the Stated Maturity of the Preferred
Securities and the dissolution of the Issuer Trust is deemed to constitute the
redemption of capital instruments by the FRB under its risk-based capital
guidelines or policies, the dissolution of the Issuer Trust by the Company may
be subject to the prior approval of the FRB. Moreover, any changes in applicable
law or changes in the FRB's risk-based capital guidelines or policies could
impose a requirement on the Company that it obtain the prior approval of the FRB
to dissolve the Issuer Trust.
Pursuant to the Trust Agreement, the Issuer Trust will automatically
dissolve upon expiration of its term or, if earlier, will dissolve on the first
to occur of: (i) certain events of bankruptcy, dissolution or liquidation of the
Company or the holder of the Common Securities, (ii) the distribution of a Like
Amount of the Junior Subordinated Debentures to the holders of the Trust
Securities, if the holders of Common Securities have given written direction to
the Property Trustee to dissolve the Issuer Trust (which direction, subject to
the foregoing restrictions, is optional and wholly within the discretion of the
holders of Common Securities), (iii) the repayment of all the Preferred
Securities in connection with the redemption of all the Trust Securities as
described under "-- Redemption" and (iv) the entry of an order for the
dissolution of the Issuer Trust by a court of competent jurisdiction.
If dissolution of the Issuer Trust occurs as described in clause (i),
(ii) or (iv) above, the Issuer Trust will be liquidated by the Property Trustee
as expeditiously as the Property Trustee determines to be possible by
distributing, after satisfaction of liabilities to creditors of the Issuer Trust
as provided by applicable law, to the holders of such Trust Securities a Like
Amount of the Junior Subordinated Debentures, unless such distribution is not
practical, in which event such holders will be entitled to receive out of the
assets of the Issuer Trust available for distribution to holders, after
satisfaction of liabilities to creditors of the Issuer Trust as provided by
applicable law, an amount equal to, in the case of holders of Preferred
Securities, the aggregate of the Liquidation Amount plus accumulated and unpaid
Distributions thereon to the date of payment (such amount being the "Liquidation
Distribution"). If such Liquidation Distribution can be paid only in part
because the Issuer Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Issuer Trust on its Preferred Securities shall be paid on a pro rata basis. The
holders of the Common Securities will be entitled to receive distributions upon
any such liquidation pro rata with the holders of the Preferred Securities,
except that if a Debenture Event of Default has occurred and is continuing as a
result of any failure by the Company to pay any amounts in respect of the Junior
Subordinated Debentures when due, the Preferred Securities shall have a priority
over the Common Securities. See "-- Subordination of Common Securities."
After the liquidation date fixed for any distribution of Junior
Subordinated Debentures (i) the Preferred Securities will no longer be deemed to
be outstanding, (ii) DTC or its nominee, as the registered holder of Preferred
Securities, will receive a registered global certificate or certificates
representing the Junior Subordinated Debentures to be delivered upon such
distribution with respect to Preferred Securities held by DTC or its nominee and
(iii) any certificates representing the Preferred
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Securities not held by DTC or its nominee will be deemed to represent the Junior
Subordinated Debentures having a principal amount equal to the stated
Liquidation Amount of the Preferred Securities and bearing accrued and unpaid
interest in an amount equal to the accumulated and unpaid Distributions on the
Preferred Securities until such certificates are presented to the security
registrar for the Trust Securities for transfer or reissuance.
If the Company does not redeem the Junior Subordinated Debentures prior
to maturity and the Issuer Trust is not liquidated and the Junior Subordinated
Debentures are not distributed to holders of the Preferred Securities, the
Preferred Securities will remain outstanding until the repayment of the Junior
Subordinated Debentures and the distribution of the Liquidation Distribution to
the holders of the Preferred Securities.
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Preferred Securities if a dissolution and liquidation of the Issuer
Trust were to occur. Accordingly, the Preferred Securities that an investor may
purchase, or the Junior Subordinated Debentures that the investor may receive on
dissolution and liquidation of the Issuer Trust, may trade at a discount to the
price that the investor paid to purchase the Preferred Securities offered
hereby.
Events of Default; Notice
Any one of the following events constitutes an "Event of Default" under
the Trust Agreement (an "Event of Default") with respect to the Preferred
Securities (whatever the reason for such Event of Default and whether it is
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the occurrence of a Debenture Event of Default (see "Description of
Junior Subordinated Debentures -- Debenture Events of Default"); or
(ii) default by the Issuer Trust in the payment of any Distribution
when it becomes due and payable, and continuation of such default for a period
of 30 days; or
(iii) default by the Issuer Trust in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Issuer Trustees in the Trust Agreement (other
than a covenant or warranty a default in the performance of which or the breach
of which is dealt with in clause (ii) or (iii) above), and continuation of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the Issuer Trustees and the Company by the
holders of at least 25% in aggregate Liquidation Amount of the outstanding
Preferred Securities, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee if a successor Property Trustee has not been
appointed within 90 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee will transmit
notice of such Event of Default to the holders of
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Trust Securities and the Administrators, unless such Event of Default has been
cured or waived. The Company, as Depositor, and the Administrators are required
to file annually with the Property Trustee a certificate as to whether or not
they are in compliance with all the conditions and covenants applicable to them
under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing as a
result of any failure by the Company to pay any amounts in respect of the Junior
Subordinated Debentures when due, the Preferred Securities will have a
preference over the Common Securities with respect to payments of any amounts in
respect of the Preferred Securities as described above. See "-- Subordination of
Common Securities," "-- Liquidation Distribution Upon Dissolution" and
"Description of Junior Subordinated Debentures -- Debenture Events of Default."
Removal of Issuer Trustees; Appointment of Successors
The holders of at least a majority in aggregate Liquidation Amount of
the outstanding Preferred Securities may remove an Issuer Trustee for cause or,
if a Debenture Event of Default has occurred and is continuing, with or without
cause. If an Issuer Trustee is removed by the holders of the outstanding
Preferred Securities, the successor may be appointed by the holders of at least
25% in aggregate Liquidation Amount of Preferred Securities. If an Issuer
Trustee resigns, such Issuer Trustee will appoint its successor. If an Issuer
Trustee fails to appoint a successor, the holders of at least 25% in aggregate
Liquidation Amount of the outstanding Preferred Securities may appoint a
successor. If a successor has not been appointed by the holders, any holder of
Preferred Securities or Common Securities or the other Issuer Trustee may
petition a court in the State of Delaware to appoint a successor. Any Delaware
Trustee must meet the applicable requirements of Delaware law. Any Property
Trustee must be a national or state-chartered bank, and at the time of
appointment have securities rated in one of the three highest rating categories
by a nationally recognized statistical rating organization and have capital and
surplus of at least $50,000,000. No resignation or removal of an Issuer Trustee
and no appointment of a successor trustee shall be effective until the
acceptance of appointment by the successor trustee in accordance with the
provisions of the Trust Agreement.
Merger or Consolidation of Issuer Trustees
Any entity into which the Property Trustee or the Delaware Trustee may
be merged or converted or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which such Issuer
Trustee is a party, or any entity succeeding to all or substantially all the
corporate trust business of such Issuer Trustee, will be the successor of such
Issuer Trustee under the Trust Agreement, provided such entity is otherwise
qualified and eligible.
Mergers, Consolidations, Amalgamations or Replacements of the Issuer Trust
The Issuer Trust may not merge with or into, consolidate, amalgamate,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any entity, except as described below or as
otherwise set forth in the Trust Agreement. The Issuer Trust may, at the request
of the holders of the Common Securities and with the consent of the holders of
at least a majority in aggregate Liquidation Amount of the outstanding Preferred
Securities, merge with or into, consolidate, amalgamate, or be replaced by or
convey, transfer or lease its properties and assets substantially as an entirety
to a trust organized as such under the laws of any State, so long as (i) such
successor entity either (a) expressly assumes all the obligations of the Issuer
Trust with respect to the Preferred Securities or (b) substitutes for the
Preferred Securities other securities having substantially the same terms as the
Preferred Securities (the "Successor Securities") so long as the Successor
Securities have the same priority
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as the Preferred Securities with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) a trustee of such successor entity,
possessing the same powers and duties as the Property Trustee, is appointed to
hold the Junior Subordinated Debentures, (iii) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Preferred Securities (including any Successor Securities) to be downgraded by
any nationally recognized statistical rating organization, if then rated, (iv)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not adversely affect the rights, preferences and privileges of the
holders of the Preferred Securities (including any Successor Securities) in any
material respect, (v) such successor entity has a purpose substantially
identical to that of the Issuer Trust, (vi) prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Issuer Trust has
received an opinion from independent counsel experienced in such matters to the
effect that (a) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Preferred Securities (including any
Successor Securities) in any material respect and (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, neither
the Issuer Trust nor such successor entity will be required to register as an
investment company under the Investment Company Act, and (vii) the Company or
any permitted successor or assignee owns all the common securities of such
successor entity and guarantees the obligations of such successor entity under
the Successor Securities at least to the extent provided by the Guarantee.
Notwithstanding the foregoing, the Issuer Trust may not, except with the consent
of holders of 100% in aggregate Liquidation Amount of the Preferred Securities,
consolidate, amalgamate, merge with or into, or be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to, any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Issuer Trust or the successor
entity to be taxable as a corporation for United States federal income tax
purposes.
Voting Rights; Amendment of Trust Agreement
Except as provided above and under "-- Removal of Issuer Trustees;
Appointment of Successors" and "Description of Guarantee -- Amendments and
Assignment" and as otherwise required by law and the Trust Agreement, the
holders of the Preferred Securities will have no voting rights.
The Trust Agreement may be amended from time to time by the holders of
a majority of the Common Securities and the Property Trustee, without the
consent of the holders of the Preferred Securities, (i) to cure any ambiguity,
correct or supplement any provisions in the Trust Agreement that may be
inconsistent with any other provision, or to make any other provisions with
respect to matters or questions arising under the Trust Agreement, provided that
any such amendment does not adversely affect in any material respect the
interests of any holder of Trust Securities, or (ii) to modify, eliminate or add
to any provisions of the Trust Agreement to such extent as may be necessary to
ensure that the Issuer Trust will not be taxable as a corporation for United
States federal income tax purposes at any time that any Trust Securities are
outstanding or to ensure that the Issuer Trust will not be required to register
as an "investment company" under the Investment Company Act, and any such
amendments of the Trust Agreement will become effective when notice of such
amendment is given to the holders of Trust Securities. The Trust Agreement may
be amended by the holders of a majority of the Common Securities and the
Property Trustee with (i) the consent of holders representing not less than a
majority in aggregate Liquidation Amount of the outstanding Preferred Securities
and (ii) receipt by the Issuer Trustees of an opinion of counsel to the effect
that such amendment or the exercise of any power granted to the Issuer Trustees
in accordance with such amendment will not affect the Issuer Trust's not being
taxable as a corporation for United States federal income tax purposes or the
Issuer Trust's exemption from status as an "investment company" under the
Investment Company Act, except that, without the consent of each
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holder of Trust Securities affected thereby, the Trust Agreement may not be
amended to (i) change the amount or timing of any Distribution on the Trust
Securities or otherwise adversely affect the amount of any Distribution required
to be made in respect of the Trust Securities as of a specified date or (ii)
restrict the right of a holder of Trust Securities to institute suit for the
enforcement of any such payment on or after such date.
So long as any Junior Subordinated Debentures are held by the Issuer
Trust, the Property Trustee will not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
execute any trust or power conferred on the Property Trustee with respect to the
Junior Subordinated Debentures, (ii) waive any past default that is waivable
under Section 5.13 of the Junior Subordinated Indenture, (iii) exercise any
right to rescind or annul a declaration that the Junior Subordinated Debentures
shall be due and payable or (iv) consent to any amendment, modification or
termination of the Junior Subordinated Indenture or the Junior Subordinated
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the holders of at least a majority in aggregate
Liquidation Amount of the outstanding Preferred Securities, except that, if a
consent under the Junior Subordinated Indenture would require the consent of
each holder of Junior Subordinated Debentures affected thereby, no such consent
will be given by the Property Trustee without the prior consent of each holder
of the Preferred Securities. The Property Trustee may not revoke any action
previously authorized or approved by a vote of the holders of the Preferred
Securities except by subsequent vote of the holders of the Preferred Securities.
The Property Trustee will notify each holder of Preferred Securities of any
notice of default with respect to the Junior Subordinated Debentures. In
addition to obtaining the foregoing approvals of the holders of the Preferred
Securities, before taking any of the foregoing actions, the Property Trustee
will obtain an opinion of counsel experienced in such matters to the effect that
the Issuer Trust will not be taxable as a corporation for United States federal
income tax purposes on account of such action.
Any required approval of holders of Preferred Securities may be given
at a meeting of holders of Preferred Securities convened for such purpose or
pursuant to written consent. The Property Trustee will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such holders is to be taken, to
be given to each registered holder of Preferred Securities in the manner set
forth in the Trust Agreement.
No vote or consent of the holders of Preferred Securities will be
required to redeem and cancel Preferred Securities in accordance with the Trust
Agreement.
Notwithstanding that holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Company, the Issuer Trustees or any
affiliate of the Company or any Issuer Trustees, will, for purposes of such vote
or consent, be treated as if they were not outstanding.
Expenses and Taxes
In the Junior Subordinated Indenture, the Company, as borrower, has
agreed to pay all debts and other obligations (other than with respect to the
Preferred Securities) and all costs and expenses of the Issuer Trust (including
costs and expenses relating to the organization of the Issuer Trust, the fees
and expenses of the Issuer Trustees and the costs and expenses relating to the
operation of the Issuer Trust) and to pay any and all taxes and all costs and
expenses with respect thereto (other than United States withholding taxes) to
which the Issuer Trust might become subject. The foregoing obligations of the
Company under the Junior Subordinated Indenture are for the benefit of, and
shall be enforceable by, any person to whom any such debts, obligations, costs,
expenses and taxes are owed (a "Creditor") whether
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or not such Creditor has received notice thereof. Any such Creditor may enforce
such obligations of the Company directly against the Company, and the Company
has irrevocably waived any right or remedy to require that any such Creditor
take any action against the Issuer Trust or any other person before proceeding
against the Company. The Company has also agreed in the Junior Subordinated
Indenture to execute such additional agreements as may be necessary or desirable
to give full effect to the foregoing.
Book Entry, Delivery and Form
The Preferred Securities will be issued in the form of one or more
fully registered global securities which will be deposited with, or on behalf
of, DTC and registered in the name of DTC's nominee. Unless and until it is
exchangeable in whole or in part for the Preferred Securities in definitive
form, a global security may not be transferred except as a whole by DTC to a
nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC or by DTC
or any such nominee to a successor of such Depository or a nominee of such
successor.
Ownership of beneficial interests in a global security will be limited
to persons that have accounts with DTC or its nominee ("Participants") or
persons that may hold interests through Participants. The Company expects that,
upon the issuance of a global security, DTC will credit, on its book-entry
registration and transfer system, the Participants' accounts with their
respective principal amounts of the Preferred Securities represented by such
global security. Ownership of beneficial interests in such global security will
be shown on, and the transfer of such ownership interests will be effected only
through, records maintained by DTC (with respect to interests of Participants)
and on the records of Participants (with respect to interests of Persons held
through Participants). Beneficial owners will not receive written confirmation
from DTC of their purchase, but are expected to receive written confirmations
from the Participants through which the beneficial owner entered into the
transaction. Transfers of ownership interests will be accomplished by entries on
the books of Participants acting on behalf of the beneficial owners.
So long as DTC, or its nominee, is the registered owner of a global
security, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Preferred Securities represented by such global security
for all purposes under the Trust Agreement. Except as provided below, owners of
beneficial interests in a global security will not be entitled to receive
physical delivery of the Preferred Securities in definitive form and will not be
considered the owners or holders thereof under the Trust Agreement. Accordingly,
each person owning a beneficial interest in such a global security must rely on
the procedures of DTC and, if such person is not a Participant, on the
procedures of the Participant through which such person owns its interest, to
exercise any rights of a holder of Preferred Securities under the Trust
Agreement. The Company understands that, under DTC's existing practices, in the
event that the Company requests any action of holders, or an owner of a
beneficial interest in such a global security desires to take any action which a
holder is entitled to take under the Trust Agreement, DTC would authorize the
Participants holding the relevant beneficial interests to take such action, and
such Participants would authorize beneficial owners owning through such
Participants to take such action or would otherwise act upon the instructions of
beneficial owners owning through them. Redemption notices will also be sent to
DTC. If less than all of the Preferred Securities are being redeemed, the
Company understands that it is DTC's existing practice to determine by lot the
amount of the interest of each Participant to be redeemed.
Distributions on the Preferred Securities registered in the name of DTC
or its nominee will be made to DTC or its nominee, as the case may be, as the
registered owner of the global security representing such Preferred Securities.
None of the Company, the Issuer Trustees, the Administrators,
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any Paying Agent or any other agent of the Company or the Issuer Trustees will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests in the global
security for such Preferred Securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Disbursements of Distributions to Participants shall be the responsibility of
DTC. DTC's practice is to credit Participants' accounts on a payable date in
accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payment on the payable date. Payments
by Participants to beneficial owners will be governed by standing instructions
and customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC, the Company, the Issuer
Trustees, the Paying Agent or any other agent of the Company, subject to any
statutory or regulatory requirements as may be in effect from time to time.
DTC may discontinue providing its services as securities depository
with respect to the Preferred Securities at any time by giving reasonable notice
to the Company or the Issuer Trustees. If DTC notifies the Company that it is
unwilling to continue as such, or if it is unable to continue or ceases to be a
clearing agency registered under the Exchange Act and a successor depository is
not appointed by the Company within ninety days after receiving such notice or
becoming aware that DTC is no longer so registered, the Company will issue the
Preferred Securities in definitive form upon registration of transfer of, or in
exchange for, such global security. In addition, the Company may at any time and
in its sole discretion determine not to have the Preferred Securities
represented by one or more global securities and, in such event, will issue
Preferred Securities in definitive form in exchange for all of the global
securities representing such Preferred Securities.
DTC has advised the Company and the Issuer Trust as follows: DTC is a
limited purpose trust company organized under the laws of the State of New York,
a member of the FRB, a "clearing corporation" within the meaning of the Uniform
Commercial Code and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Exchange Act. DTC was created to hold securities for its
Participants and to facilitate the clearance and settlement of securities
transactions between Participants through electronic book entry changes to
accounts of its Participants, thereby eliminating the need for physical movement
of certificates. Participants include securities brokers and dealers (such as
the Underwriters), banks, trust companies and clearing corporations and may
include certain other organizations. Certain of such Participants (or their
representatives), together with other entities, own DTC. Indirect access to the
DTC system is available to others such as banks, brokers, dealers and trust
companies that clear through, or maintain a custodial relationship with a
Participant, either directly or indirectly.
Same-Day Settlement and Payment
Settlement for the Preferred Securities will be made by the
Underwriters in immediately available funds.
Secondary trading in preferred securities of corporate issuers is
generally settled in clearinghouse or next-day funds. In contrast, the Preferred
Securities will trade in DTC's Same-Day Funds Settlement System, and secondary
market trading activity in the Preferred Securities will therefore be required
by DTC to settle in immediately available funds. No assurance can be given as to
the effect, if any, of settlement in immediately available funds on trading
activity in the Preferred Securities.
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Payment and Paying Agency
Payments in respect of the Preferred Securities will be made to DTC,
which will credit the relevant accounts at DTC on the applicable Distribution
Dates or, if the Preferred Securities are not held by DTC, such payments will be
made by check mailed to the address of the holder entitled thereto as such
address appears on the securities register for the Trust Securities. The paying
agent (the "Paying Agent") will initially be the Property Trustee and any
co-paying agent chosen by the Property Trustee and acceptable to the
Administrators. The Paying Agent will be permitted to resign as Paying Agent
upon 30 days' written notice to the Property Trustee and the Administrators. If
the Property Trustee is no longer the Paying Agent, the Property Trustee will
appoint a successor (which must be a bank or trust company reasonably acceptable
to the Administrators) to act as Paying Agent.
Registrar and Transfer Agent
The Property Trustee will act as registrar and transfer agent for the
Preferred Securities.
Registration of transfers of Preferred Securities will be effected
without charge by or on behalf of the Issuer Trust, but upon payment of any tax
or other governmental charges that may be imposed in connection with any
transfer or exchange. The Issuer Trust will not be required to register or cause
to be registered the transfer of the Preferred Securities after the Preferred
Securities have been called for redemption.
Information Concerning the Property Trustee
The Property Trustee, other than during the occurrence and continuance
of an Event of Default, undertakes to perform only such duties as are
specifically set forth in the Trust Agreement and, after such Event of Default,
must exercise the same degree of care and skill as a prudent person would
exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is under no obligation to exercise any of the
powers vested in it by the Trust Agreement at the request of any holder of
Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby.
For information concerning the relationships between Bankers Trust
Company, the Property Trustee, and the Company, see "Description of Junior
Subordinated Debentures -- Information Concerning the Debenture Trustee."
Miscellaneous
The Administrators and the Property Trustee are authorized and directed
to conduct the affairs of and to operate the Issuer Trust in such a way that the
Issuer Trust will not be deemed to be an "investment company" required to be
registered under the Investment Company Act or taxable as a corporation for
United States federal income tax purposes and so that the Junior Subordinated
Debentures will be treated as indebtedness of the Company for United States
federal income tax purposes. In this connection, the Property Trustee and the
holders of Common Securities are authorized to take any action, not inconsistent
with applicable law, the certificate of trust of the Issuer Trust or the Trust
Agreement, that the Property Trustee and the holders of Common Securities
determine in their discretion to be necessary or desirable for such purposes, as
long as such action does not materially adversely affect the interests of the
holders of the Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar
rights.
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The Issuer Trust may not borrow money, issue debt or mortgage or pledge
any of its assets.
Governing Law
The Trust Agreement will be governed by and construed in accordance
with the laws of the State of Delaware.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued under the Junior
Subordinated Indenture between the Company and the Debenture Trustee (the
"Junior Subordinated Indenture"), pursuant to which Bankers Trust Company is
acting as Debenture Trustee. This summary of certain terms and provisions of the
Junior Subordinated Debentures and the Junior Subordinated Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the Junior Subordinated Indenture, including
the definitions therein of certain terms. Whenever particular defined terms of
the Junior Subordinated Indenture (as amended or supplemented from time to time)
are referred to herein, such defined terms are incorporated herein by reference.
A copy of the form of Junior Subordinated Indenture is available from the
Debenture Trustee upon request.
General
Concurrently with the issuance of the Preferred Securities, the Issuer
Trust will invest the proceeds thereof, together with the consideration paid by
the Company for the Common Securities, in the Junior Subordinated Debentures
issued by the Company. The Junior Subordinated Debentures will bear interest,
accruing from __________ ____, 1998, at the annual rate of __________% of the
principal amount thereof, payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year (each, an "Interest Payment Date"),
commencing __________ ____, 1998, to the person in whose name each Junior
Subordinated Debenture is registered at the close of business on the 15th day of
March, June, September or December (whether or not a Business Day) next
preceding such Interest Payment Date. It is anticipated that, until the
liquidation, if any, of the Issuer Trust, each Junior Subordinated Debenture
will be registered in the name of the Issuer Trust and held by the Property
Trustee in trust for the benefit of the holders of the Trust Securities. The
amount of interest payable for any period less than a full interest period will
be computed on the basis of a 360-day year of twelve 30-day months and the
actual days elapsed in a partial month in such period. The amount of interest
payable for any full interest period will be computed by dividing the rate per
annum by four. If any date on which interest is payable on the Junior
Subordinated Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (without any interest or other payment in respect of any such delay), with
the same force and effect as if made on the date such payment was originally
payable, except that, if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding Business Day. Accrued interest
that is not paid on the applicable Interest Payment Date will bear additional
interest on the amount thereof (to the extent permitted by law) at the rate per
annum of ____%, compounded quarterly and computed on the basis of a 360-day year
of twelve 30-day months and the actual days elapsed in a partial month in such
period. The amount of additional interest payable for any full interest period
will be computed by dividing the rate per annum by four. The term "interest" as
used herein includes quarterly interest payments, interest on quarterly interest
payments not paid on the applicable Interest Payment Date and Additional Sums
(as defined below), as applicable.
The Junior Subordinated Debentures will mature on __________ ____,
2028, subject to the
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Maturity Adjustment (such date, as it may be shortened by the Maturity
Adjustment is referred to herein as the Stated Maturity). The Maturity
Adjustment represents the right of the Company to shorten the maturity date once
at any time to any date not earlier than __________ ____, 2003, subject to the
Company having received prior approval of the FRB if then required under
applicable capital guidelines or policies of the FRB. In the event the Company
elects to shorten the Stated Maturity of the Junior Subordinated Debentures, it
will give notice to the registered holders of the Junior Subordinated
Debentures, the Debenture Trustee and the Issuer Trust of such shortening no
less than 90 days prior to the effectiveness thereof. The Property Trustee must
give notice to the holders of the Trust Securities of the shortening of the
Stated Maturity at least 30 but not more than 60 days before such date.
The Junior Subordinated Debentures will be unsecured and will rank
junior and be subordinate in right of payment to all Senior Indebtedness of the
Company and pari passu with the Company's obligations associated with the
Outstanding Capital Securities. The Junior Subordinated Debentures will not be
subject to a sinking fund. The Junior Subordinated Indenture does not limit the
incurrence or issuance of other secured or unsecured debt by the Company,
including Senior Indebtedness, whether under the Junior Subordinated Indenture
or any existing or other indenture that the Company may enter into in the future
or otherwise. See "-- Subordination."
Option to Extend Interest Payment Period
So long as no Debenture Event of Default has occurred and is
continuing, the Company has the right at any time during the term of the Junior
Subordinated Debentures to defer the payment of interest at any time or from
time to time for a period not exceeding 20 consecutive quarterly periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the Junior Subordinated Debentures. During any
such Extension Period the Company shall have the right to make partial payments
of interest on any interest payment date. At the end of such Extension Period,
the Company must pay all interest then accrued and unpaid (together with
interest thereon at the annual rate of __________%, compounded quarterly and
computed on the basis of a 360-day year of twelve 30-day months and the actual
days elapsed in a partial month in such period, to the extent permitted by
applicable law). The amount of additional interest payable for any full interest
period will be computed by dividing the rate per annum by four. During an
Extension Period, interest will continue to accrue and holders of Junior
Subordinated Debentures (or holders of Preferred Securities while outstanding)
will be required to accrue interest income for United States federal income tax
purposes. See "Certain Federal Income Tax Consequences -- Interest Income and
Original Issue Discount."
During any such Extension Period, the Company may not (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock or (ii)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu in
all respects with or junior in interest to the Junior Subordinated Debentures,
including the Company's obligations associated with the Outstanding Preferred
Securities (other than (a) repurchases, redemptions or other acquisitions of
shares of capital stock of the Company in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
any one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment or stockholder stock purchase plan or in connection
with the issuance of capital stock of the Company (or securities convertible
into or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of a reclassification or an exchange or conversion of any class or series
of the Company's capital stock (or any capital stock of a subsidiary of the
Company) for any class or series of the Company's capital stock or of any class
or series of the Company's indebtedness for any class or series of the Company's
capital stock, (c) the purchase of fractional interests in shares
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of the Company's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any stockholder's rights plan, or
the issuance of rights, stock or other property under any stockholders rights
plan, or the redemption or repurchase of rights pursuant thereto, or (e) any
dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock). Prior to the termination of any
such Extension Period, the Company may further defer the payment of interest,
provided that no Extension Period may exceed 20 consecutive quarterly periods or
extend beyond the Stated Maturity of the Junior Subordinated Debentures. Upon
the termination of any such Extension Period and the payment of all amounts then
due, the Company may elect to begin a new Extension Period subject to the above
conditions. No interest shall be due and payable during an Extension Period,
except at the end thereof. The Company must give the Trustees notice of its
election of such Extension Period at least one Business Day prior to the earlier
of (i) the date the Distributions on the Preferred Securities would have been
payable but for the election to begin such Extension Period and (ii) the date
the Property Trustee is required to give notice to holders of the Preferred
Securities of the record date or the date such Distributions are payable, but in
any event not less than one Business Day prior to such record date. The Property
Trustee will give notice of the Company's election to begin a new Extension
Period to the holders of the Preferred Securities. There is no limitation on the
number of times that the Company may elect to begin an Extension Period.
Redemption
The Junior Subordinated Debentures are redeemable prior to maturity at
the option of the Company (i) on or after __________ ____, 2003, in whole at any
time or in part from time to time, or (ii) in whole, but not in part, at any
time within 90 days following the occurrence and during the continuation of a
Tax Event, Investment Company Event or Capital Treatment Event (each as defined
under "Description of Preferred Securities -- Redemption"), in each case at the
redemption price described below. The proceeds of any such redemption will be
used by the Issuer Trust to redeem the Preferred Securities.
The FRB's risk-based capital guidelines, which are subject to change,
currently provide that redemptions of permanent equity or other capital
instruments before stated maturity could have a significant impact on a bank
holding company's overall capital structure and that any organization
considering such a redemption should consult with the FRB before redeeming any
equity or capital instrument prior to maturity if such redemption could have a
material effect on the level or composition of the organization's capital base
(unless the equity or capital instrument were redeemed with the proceeds of, or
replaced by, a like amount of a similar or higher quality capital instrument and
the FRB considers the organization's capital position to be fully adequate after
the redemption).
The redemption of the Junior Subordinated Debentures by the Company
prior to their Stated Maturity would constitute the redemption of capital
instruments under the FRB's current risk-based capital guidelines and may be
subject to the prior approval of the FRB. The redemption of the Junior
Subordinated Debentures also could be subject to the additional prior approval
of the FRB under its current risk-based capital guidelines.
The redemption price for Junior Subordinated Debentures is the
outstanding principal amount of the Junior Subordinated Debentures plus accrued
interest (including any Additional Interest or any Additional Sums) thereon to
but excluding the date fixed for redemption.
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Additional Sums
The Company has covenanted in the Junior Subordinated Indenture that,
if and for so long as (i) the Issuer Trust is the holder of all Junior
Subordinated Debentures and (ii) the Issuer Trust is required to pay any
additional taxes, duties or other governmental charges as a result of a Tax
Event, the Company will pay as additional sums on the Junior Subordinated
Debentures such amounts as may be required so that the Distributions payable by
the Issuer Trust will not be reduced as a result of any such additional taxes,
duties or other governmental charges. See "Description of Preferred Securities
- -- Redemption."
Registration, Denomination and Transfer
The Junior Subordinated Debentures will initially be registered in the
name of the Issuer Trust. If the Junior Subordinated Debentures are distributed
to holders of Preferred Securities, it is anticipated that the depositary
arrangements for the Junior Subordinated Debentures will be substantially
identical to those in effect for the Preferred Securities. See "Description of
Preferred Securities -- Book Entry, Delivery and Form."
Although DTC has agreed to the procedures described above, it is under
no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
the Company within 90 days of receipt of notice from DTC to such effect, the
Company will cause the Junior Subordinated Debentures to be issued in definitive
form.
Payments on Junior Subordinated Debentures represented by a global
security will be made to Cede & Co., the nominee for DTC, as the registered
holder of the Junior Subordinated Debentures, as described under "Description of
Preferred Securities -- Book Entry, Delivery and Form." If Junior Subordinated
Debentures are issued in certificated form, principal and interest will be
payable, the transfer of the Junior Subordinated Debentures will be registrable,
and Junior Subordinated Debentures will be exchangeable for Junior Subordinated
Debentures of other authorized denominations of a like aggregate principal
amount, at the corporate trust office of the Debenture Trustee in New York, New
York or at the offices of any Paying Agent or transfer agent appointed by the
Company, provided that payment of interest may be made at the option of the
Company by check mailed to the address of the persons entitled thereto. However,
a holder of $1 million or more in aggregate principal amount of Junior
Subordinated Debentures may receive payments of interest (other than interest
payable at the Stated Maturity) by wire transfer of immediately available funds
upon written request to the Debenture Trustee not later than 15 calendar days
prior to the date on which the interest is payable.
Junior Subordinated Debentures are issuable only in registered form
without coupons in integral multiples of $10. Junior Subordinated Debentures
will be exchangeable for other Junior Subordinated Debentures of like tenor, of
any authorized denominations, and of a like aggregate principal amount.
Junior Subordinated Debentures may be presented for exchange as
provided above, and may be presented for registration of transfer (with the form
of transfer endorsed thereon, or a satisfactory written instrument of transfer,
duly executed), at the office of the securities registrar appointed under the
Junior Subordinated Debenture or at the office of any transfer agent designated
by the Company for such purpose without service charge and upon payment of any
taxes and other governmental charges as described in the Junior Subordinated
Indenture. The Company will appoint the Debenture Trustee as securities
registrar under the Junior Subordinated Indenture. The Company may at any time
designate additional transfer agents with respect to the Junior Subordinated
Debentures.
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In the event of any redemption, neither the Company nor the Debenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures during a period beginning at the opening of
business 15 days before the day of selection for redemption of the Junior
Subordinated Debentures to be redeemed and ending at the close of business on
the day of mailing of the relevant notice of redemption or (ii) transfer or
exchange any Junior Subordinated Debentures so selected for redemption, except,
in the case of any Junior Subordinated Debentures being redeemed in part, any
portion thereof not to be redeemed.
Any monies deposited with the Debenture Trustee or any paying agent, or
then held by the Company in trust, for the payment of the principal of (and
premium, if any) or interest on any Junior Subordinated Debenture and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall, at the request of the Company, be repaid to
the Company and the holder of such Junior Subordinated Debenture shall
thereafter look, as a general unsecured creditor, only to the Company for
payment thereof.
Restrictions on Certain Payments; Certain Covenants of the Company
The Company has covenanted that it will not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock or (ii)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu in
all respects with, or junior in interest to, the Junior Subordinated Debentures,
including the Company's obligations associated with the Outstanding Preferred
Securities (other than (a) repurchases, redemptions or other acquisitions of
shares of capital stock of the Company in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
any one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment or stockholder stock purchase plan or in connection
with the issuance of capital stock of the Company (or securities convertible
into or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period or other event
referred to below, (b) as a result of an exchange or conversion of any class or
series of the Company's capital stock (or any capital stock of a subsidiary of
the Company) for any class or series of the Company's capital stock or of any
class or series of the Company's indebtedness for any class or series of the
Company's capital stock, (c) the purchase of fractional interests in shares of
the Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any stockholder's rights plan, or
the issuance of rights, stock or other property under any stockholder's rights
plan, or the redemption or repurchase of rights pursuant thereto, or (e) any
dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock), if at such time (i) there has
occurred any event (a) of which the Company has actual knowledge that with the
giving of notice or the lapse of time, or both, would constitute a Debenture
Event of Default and (b) that the Company has not taken reasonable steps to
cure, (ii) if the Junior Subordinated Debentures are held by the Issuer Trust,
the Company is in default with respect to its payment of any obligations under
the Guarantee or (iii) the Company has given notice of its election of an
Extension Period as provided in the Junior Subordinated Indenture and has not
rescinded such notice, or such Extension Period, or any extension thereof, is
continuing.
The Company has covenanted in the Junior Subordinated Indenture (i) to
continue to hold, directly or indirectly, 100% of the Common Securities,
provided that certain successors that are permitted pursuant to the Junior
Subordinated Indenture may succeed to the Company's ownership of the Common
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Securities, (ii) as holder of the Common Securities, not to voluntarily
terminate, windup or liquidate the Issuer Trust, other than (a) in connection
with a distribution of Junior Subordinated Debentures to the holders of the
Preferred Securities in liquidation of the Issuer Trust or (b) in connection
with certain mergers, consolidations or amalgamations permitted by the Trust
Agreement and (iii) to use its reasonable efforts, consistent with the terms and
provisions of the Trust Agreement, to cause the Issuer Trust to continue not to
be taxable as a corporation for United States federal income tax purposes.
Modification of Junior Subordinated Indenture
From time to time, the Company and the Debenture Trustee may, without
the consent of any of the holders of the outstanding Junior Subordinated
Debentures, amend, waive or supplement the provisions of the Junior Subordinated
Indenture to: (1) evidence succession of another corporation or association to
the Company and the assumption by such person of the obligations of the Company
under the Junior Subordinated Debentures, (2) add further covenants,
restrictions or conditions for the protection of holders of the Junior
Subordinated Debentures, (3) cure ambiguities or correct the Junior Subordinated
Debentures in the case of defects or inconsistencies in the provisions thereof,
so long as any such cure or correction does not adversely affect the interest of
the holders of the Junior Subordinated Debentures in any material respect, (4)
change the terms of the Junior Subordinated Debentures to facilitate the
issuance of the Junior Subordinated Debentures in certificated or other
definitive form, (5) evidence or provide for the appointment of a successor
Debenture Trustee, or (6) qualify, or maintain the qualification of, the Junior
Subordinated Indentures under the Trust Indenture Act. The Junior Subordinated
Indenture contains provisions permitting the Company and the Debenture Trustee,
with the consent of the holders of not less than a majority in principal amount
of the Junior Subordinated Debentures, to modify the Junior Subordinated
Indenture in a manner affecting the rights of the holders of the Junior
Subordinated Debentures, except that no such modification may, without the
consent of the holder of each outstanding Junior Subordinated Debenture so
affected, (i) change the Stated Maturity of the Junior Subordinated Debentures,
or reduce the principal amount thereof, the rate of interest thereon or any
premium payable upon the redemption thereof, or change the place of payment
where, or the currency in which, any such amount is payable or impair the right
to institute suit for the enforcement of any Junior Subordinated Debenture or
(ii) reduce the percentage of principal amount of Junior Subordinated
Debentures, the holders of which are required to consent to any such
modification of the Junior Subordinated Indenture. Furthermore, so long as any
of the Preferred Securities remain outstanding, no such modification may be made
that adversely affects the holders of such Preferred Securities in any material
respect, and no termination of the Junior Subordinated Indenture may occur, and
no waiver of any Debenture Event of Default or compliance with any covenant
under the Junior Subordinated Indenture may be effective, without the prior
consent of the holders of at least a majority of the aggregate Liquidation
Amount of the outstanding Preferred Securities unless and until the principal of
(and premium, if any, on) the Junior Subordinated Debentures and all accrued and
unpaid interest thereon have been paid in full and certain other conditions are
satisfied.
Debenture Events of Default
The Junior Subordinated Indenture provides that any one or more of the
following described events with respect to the Junior Subordinated Debentures
that has occurred and is continuing constitutes an "Event of Default" with
respect to the Junior Subordinated Debentures:
(i) failure to pay any interest on the Junior Subordinated
Debentures when due and continuance of such default for a
period of 30 days (subject to the deferral of any due date in
the case of an Extension Period); or
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(ii) failure to pay any principal of or premium, if any, on the
Junior Subordinated Debentures when due whether at the Stated
Maturity; or
(iii) failure to observe or perform certain other covenants
contained in the Junior Subordinated Indenture for 90 days
after written notice to the Company from the Debenture Trustee
or the holders of at least 25% in aggregate outstanding
principal amount of the outstanding Junior Subordinated
Debentures; or
(iv) the occurrence of the appointment of a receiver or other
similar official in any liquidation, insolvency or similar
proceeding with respect to the Company or all or substantially
all of its property; or a court or other governmental agency
shall enter a decree or order appointing a receiver or similar
official and such decree or order shall remain unstayed and
undischarged for a period of 60 days.
For purposes of the Trust Agreement and this Prospectus, each such
Event of Default under the Junior Subordinated Debenture is referred to as a
"Debenture Event of Default." As described in "Description of Preferred
Securities -- Events of Default; Notice," the occurrence of a Debenture Event of
Default will also constitute an Event of Default in respect of the Trust
Securities.
The holders of at least a majority in aggregate principal amount of
outstanding Junior Subordinated Debentures have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee. The Debenture Trustee or the holders of not less than 25% in
aggregate principal amount of outstanding Junior Subordinated Debentures may
declare the principal due and payable immediately upon a Debenture Event of
Default, and, should the Debenture Trustee or such holders of Junior
Subordinated Debentures fail to make such declaration, the holders of at least
25% in aggregate Liquidation Amount of the outstanding Preferred Securities
shall have such right. The holders of a majority in aggregate principal amount
of outstanding Junior Subordinated Debentures may annul such declaration and
waive the default if all defaults (other than the non-payment of the principal
of Junior Subordinated Debentures which has become due solely by such
acceleration) have been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee. Should the holders of Junior
Subordinated Debentures fail to annul such declaration and waive such default,
the holders of a majority in aggregate Liquidation Amount of the outstanding
Preferred Securities shall have such right.
The holders of at least a majority in aggregate principal amount of the
outstanding Junior Subordinated Debentures affected thereby may, on behalf of
the holders of all the Junior Subordinated Debentures, waive any past default,
except a default in the payment of principal (or premium, if any) or interest
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee) or a default in respect of a covenant
or provision which under the Junior Subordinated Indenture cannot be modified or
amended without the consent of the holder of each outstanding Junior
Subordinated Debenture affected thereby. See "-- Modification of Junior
Subordinated Indenture." The Company is required to file annually with the
Debenture Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it under the
Junior Subordinated Indenture.
If a Debenture Event of Default occurs and is continuing, the Property
Trustee will have the right to declare the principal of and the interest on the
Junior Subordinated Debentures, and any other amounts payable under the Junior
Subordinated Indenture, to be forthwith due and payable and to enforce its other
rights as a creditor with respect to the Junior Subordinated Debentures.
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Enforcement of Certain Rights by Holders of Preferred Securities
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay any amounts payable
in respect of the Junior Subordinated Debentures on the date such amounts are
otherwise payable, a registered holder of Preferred Securities may institute a
Direct Action against the Company for enforcement of payment to such holder of
an amount equal to the amount payable in respect of Junior Subordinated
Debentures having a principal amount equal to the aggregate Liquidation Amount
of the Preferred Securities held by such holder. The Company may not amend the
Junior Subordinated Indenture to remove the foregoing right to bring a Direct
Action without the prior written consent of the holders of all the Preferred
Securities. The Company will have the right under the Junior Subordinated
Indenture to set-off any payment made to such holder of Preferred Securities by
the Company in connection with a Direct Action.
The holders of the Preferred Securities are not able to exercise
directly any remedies available to the holders of the Junior Subordinated
Debentures except under the circumstances described in the preceding paragraph.
See "Description of Preferred Securities -- Events of Default; Notice."
Consolidation, Merger, Sale of Assets and Other Transactions
The Junior Subordinated Indenture provides that the Company may not
consolidate with or merge into any other Person or convey, transfer or lease its
properties and assets substantially as an entirety to any Person, and no Person
may consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, unless (i) if
the Company consolidates with or merges into another Person or conveys or
transfers its properties and assets substantially as an entirety to any Person,
the successor Person is organized under the laws of the United States or any
state or the District of Columbia, and such successor Person expressly assumes
the Company's obligations in respect of the Junior Subordinated Debentures
provided, however, that nothing in the Junior Subordinated Indenture shall be
deemed to restrict or prohibit, and no supplemental indenture shall be required
in the case of the merger of a Principal Subsidiary Bank with and into a
Principal Subsidiary Bank or the Company, the consolidation of Principal
Subsidiary Banks into a Principal Subsidiary Bank or the Company, or the sale or
other disposition of all or substantially all of the assets of any Principal
Subsidiary Bank to another Principal Subsidiary Bank or the Company, if, in any
such case in which the surviving, resulting or acquiring entity is not the
Company, the Company would own, directly or indirectly, at least 80% of the
voting securities of the Principal Subsidiary Bank (and of any other Principal
Subsidiary Bank any voting securities of which are owned, directly or
indirectly, by such Principal Subsidiary Bank) surviving such merger, resulting
from such consolidation or acquiring such assets; (ii) immediately after giving
effect thereto, no Debenture Event of Default, and no event which, after notice
or lapse of time or both, would constitute a Debenture Event of Default, has
occurred and is continuing; and (iii) certain other conditions as prescribed in
the Junior Subordinated Indenture are satisfied.
For purposes of clause (i) above, the term "Principal Subsidiary Bank"
means each of (a) Sun National Bank, (b) any other banking subsidiary of the
Company the consolidated assets of which constitute 20% or more of the
consolidated assets of the Company and its consolidated subsidiaries, (c) any
other banking subsidiary designated as a Principal Subsidiary Bank pursuant to a
Board Resolution and set forth in an Officers' Certificate delivered to the
Trustee, and (d) any subsidiary of the Company that owns, directly or
indirectly, any voting securities, or options, warrants or rights to subscribe
for or purchase voting securities, of any Principal Subsidiary Bank under clause
(a), (b) or (c), and in the case of clause (a), (b), (c) or (d) their respective
successors (whether by consolidation, merger, conversion, transfer of
substantially all their assets and business or otherwise) so long as any such
successor is a
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banking subsidiary (in the case of clause (a), (b) or (c)) or a subsidiary (in
the case of clause (d)) of the Company.
The provisions of the Junior Subordinated Indenture do not afford
holders of the Junior Subordinated Debentures protection in the event of a
highly leveraged or other transaction involving the Company that may adversely
affect holders of the Junior Subordinated Debentures.
Satisfaction and Discharge
The Junior Subordinated Indenture provides that when, among other
things, all Junior Subordinated Debentures not previously delivered to the
Debenture Trustee for cancellation (i) have become due and payable, (ii) will
become due and payable at the Stated Maturity within one year, and the Company
deposits or causes to be deposited with the Debenture Trustee funds, in trust,
for the purpose and in an amount sufficient to pay and discharge the entire
indebtedness on the Junior Subordinated Debentures not previously delivered to
the Debenture Trustee for cancellation, for the principal (and premium, if any)
and interest to the date of the deposit or to the Stated Maturity, as the case
may be, then the Junior Subordinated Indenture will cease to be of further
effect (except as to the Company's obligations to pay all other sums due
pursuant to the Junior Subordinated Indenture and to provide the officers'
certificates and opinions of counsel described therein), and the Company will be
deemed to have satisfied and discharged the Junior Subordinated Indenture.
Subordination
The Junior Subordinated Debentures will be subordinate and junior in
right of payment, to the extent set forth in the Junior Subordinated Indenture,
to all Senior Indebtedness (as defined below) of the Company and pari passu with
the Company's obligations associated with the Outstanding Preferred Securities.
If the Company defaults in the payment of any principal, premium, if any, or
interest, if any, or any other amount payable on any Senior Indebtedness when
the same becomes due and payable, whether at maturity or at a date fixed for
redemption or by declaration of acceleration or otherwise, then, unless and
until such default has been cured or waived or has ceased to exist or all Senior
Indebtedness has been paid, no direct or indirect payment (in cash, property,
securities, by set- off or otherwise) may be made or agreed to be made on the
Junior Subordinated Debentures, or in respect of any redemption, repayment,
retirement, purchase or other acquisition of any of the Junior Subordinated
Debentures.
As used herein, "Senior Indebtedness" means, whether recourse is to all
or a portion of the assets of the Company and whether or not contingent, (i)
every obligation of the Company for money borrowed; (ii) every obligation of the
Company evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of the Company with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of the Company; (iv) every obligation of the Company issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of the Company; (vi) every
obligation of the Company for claims (as defined in Section 101(4) of the United
States Bankruptcy Code of 1978, as amended) in respect of derivative products
such as interest and foreign exchange rate contracts, commodity contracts and
similar arrangements; and (vii) every obligation of the type referred to in
clauses (i) through (vi) of another person and all dividends of another person
the payment of which, in either case, the Company has guaranteed or is
responsible or liable, directly or indirectly, as obligor or otherwise; provided
that Senior Indebtedness shall not include (i) any obligations which, by their
terms, are expressly stated to rank pari passu in right of payment with, or to
not be superior in right of payment to, the Junior Subordinated Debentures, (ii)
any Senior
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Indebtedness of the Company which when incurred and without respect to any
election under Section 1111(b) of the United States Bankruptcy Code of 1978, as
amended, was without recourse to the Company, (iii) any indebtedness of the
Company to any of its subsidiaries, (iv) indebtedness to any executive officer
or director of the Company, or (v) any indebtedness in respect of debt
securities issued to any trust, or a trustee of such trust, partnership or other
entity affiliated with the Company that is a financing entity of the Company in
connection with the issuance by such financing entity of securities that are
similar to the Preferred Securities, including the Outstanding Preferred
Securities.
In the event of (i) certain events of bankruptcy, dissolution or
liquidation of the Company or the holder of the Common Securities, (ii) any
proceeding for the liquidation, dissolution or other winding up of the Company,
voluntary or involuntary, whether or not involving insolvency or bankruptcy
proceedings, (iii) any assignment by the Company for the benefit of creditors or
(iv) any other marshaling of the assets of the Company, all Senior Indebtedness
(including any interest thereon accruing after the commencement of any such
proceedings) shall first be paid in full before any payment or distribution,
whether in cash, securities or other property, shall be made on account of the
Junior Subordinated Debentures. In such event, any payment or distribution on
account of the Junior Subordinated Debentures, whether in cash, securities or
other property, that would otherwise (but for the subordination provisions) be
payable or deliverable in respect of the Junior Subordinated Debentures will be
paid or delivered directly to the holders of Senior Indebtedness in accordance
with the priorities then existing among such holders until all Senior
Indebtedness (including any interest thereon accruing after the commencement of
any such proceedings) has been paid in full.
In the event of any such proceeding, after payment in full of all sums
owing with respect to Senior Indebtedness, the holders of Junior Subordinated
Debentures, together with the holders of any obligations of the Company ranking
on a parity with the Junior Subordinated Debentures, will be entitled to be paid
from the remaining assets of the Company the amounts at the time due and owing
on the Junior Subordinated Debentures and such other obligations before any
payment or other distribution, whether in cash, property or otherwise, will be
made on account of any capital stock or obligations of the Company ranking
junior to the Junior Subordinated Debentures and such other obligations. If any
payment or distribution on account of the Junior Subordinated Debentures of any
character or any security, whether in cash, securities or other property is
received by any holder of any Junior Subordinated Debentures in contravention of
any of the terms hereof and before all the Senior Indebtedness has been paid in
full, such payment or distribution or security will be received in trust for the
benefit of, and must be paid over or delivered and transferred to, the holders
of the Senior Indebtedness at the time outstanding in accordance with the
priorities then existing among such holders for application to the payment of
all Senior Indebtedness remaining unpaid to the extent necessary to pay all such
Senior Indebtedness in full. By reason of such subordination, in the event of
the insolvency of the Company, holders of Senior Indebtedness may receive more,
ratably, and holders of the Junior Subordinated Debentures may receive less,
ratably, than the other creditors of the Company. Such subordination will not
prevent the occurrence of any Event of Default in respect of the Junior
Subordinated Debentures.
The Junior Subordinated Indenture places no limitation on the amount of
additional Senior Indebtedness that may be incurred by the Company. The Company
expects from time to time to incur additional indebtedness constituting Senior
Indebtedness.
Information Concerning the Debenture Trustee
The Debenture Trustee, other than during the occurrence and continuance
of a default by the Company in performance of its obligations under the Junior
Subordinated Debenture, is under no
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obligation to exercise any of the powers vested in it by the Junior Subordinated
Indenture at the request of any holder of Junior Subordinated Debentures, unless
offered reasonable indemnity by such holder against the costs, expenses and
liabilities that might be incurred thereby. The Debenture Trustee is not
required to expend or risk its own funds or otherwise incur personal financial
liability in the performance of its duties if the Debenture Trustee reasonably
believes that repayment or adequate indemnity is not reasonably assured to it.
Bankers Trust Company, the Debenture Trustee, may serve from time to
time as trustee under other indentures or trust agreements with the Company or
its subsidiaries relating to other issues of their securities. In addition, the
Company and certain of its affiliates may have other banking relationships with
Bankers Trust Company and its affiliates.
Governing Law
The Junior Subordinated Indenture and the Junior Subordinated Debentures
will be governed by and construed in accordance with the laws of the State of
New York.
DESCRIPTION OF GUARANTEE
The Guarantee will be executed and delivered by the Company
concurrently with the issuance of Preferred Securities by the Issuer Trust for
the benefit of the holders from time to time of the Preferred Securities.
Bankers Trust Company will act as Guarantee Trustee under the Guarantee. This
summary of certain provisions of the Guarantee does not purport to be complete
and is subject to, and qualified in its entirety by reference to, all the
provisions of the Guarantee, including the definitions therein of certain terms.
A copy of the form of Guarantee is available upon request from the Guarantee
Trustee. The Guarantee Trustee will hold the Guarantee for the benefit of the
holders of the Preferred Securities.
General
The Company will irrevocably agree to pay in full on a subordinated
basis, to the extent set forth in the Guarantee and described herein, the
Guarantee Payments (as defined below) to the holders of the Preferred
Securities, as and when due, regardless of any defense, right of set-off or
counterclaim that the Issuer Trust may have or assert other than the defense of
payment. The following payments with respect to the Preferred Securities, to the
extent not paid by or on behalf of the Issuer Trust (the "Guarantee Payments"),
will be subject to the Guarantee: (i) any accrued and unpaid Distributions
required to be paid on such Preferred Securities, to the extent that the Issuer
Trust has funds on hand available therefor at such time, (ii) the Redemption
Price with respect to any Preferred Securities called for redemption, to the
extent that the Issuer Trust has funds on hand available therefor at such time,
and (iii) upon a voluntary or involuntary dissolution, termination, winding up
or liquidation of the Issuer Trust (unless the Junior Subordinated Debentures
are distributed to holders of the Preferred Securities), the lesser of (a) the
aggregate of the Liquidation Amount and all accumulated and unpaid Distributions
to the date of payment, to the extent that the Issuer Trust has funds on hand
available therefor at such time, and (b) the amount of assets of the Issuer
Trust remaining available for distribution to holders of the Preferred
Securities on liquidation of the Issuer Trust. The Company's obligation to make
a Guarantee Payment may be satisfied by direct payment of the required amounts
by the Company to the holders of the Preferred Securities or by causing the
Issuer Trust to pay such amounts to such holders.
The Guarantee will be an irrevocable guarantee of payment on a
subordinated basis of the Issuer Trust's obligations under the Preferred
Securities, but will apply only to the extent that the Issuer Trust
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has funds sufficient to make such payments, and is not a guarantee of
collection.
If the Company does not make payments on the Junior Subordinated
Debentures held by the Issuer Trust, the Issuer Trust will not be able to pay
any amounts payable in respect of the Preferred Securities and will not have
funds legally available therefor. The Guarantee will rank subordinate and junior
in right of payment to all Senior Indebtedness of the Company. See "-- Status of
the Guarantee." The Guarantee does not limit the incurrence or issuance of other
secured or unsecured debt of the Company, including Senior Indebtedness, whether
under the Junior Subordinated Indenture, any other indenture that the Company
may enter into in the future or otherwise.
The Company has, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures and the Junior Subordinated Indenture, taken together,
fully, irrevocably and unconditionally guaranteed all the Issuer Trust's
obligations under the Preferred Securities on a subordinated basis. No single
document standing alone or operating in conjunction with fewer than all the
other documents constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Issuer Trust's obligations in respect of the
Preferred Securities. See "Relationship Among the Preferred Securities, the
Junior Subordinated Debentures and the Guarantee."
Status of the Guarantee
The Guarantee will constitute an unsecured obligation of the Company
and will rank subordinate and junior in right of payment to all Senior
Indebtedness of the Company and pari passu with the Company's obligations
associated with the Outstanding Preferred Securities in the same manner as the
Junior Subordinated Debentures.
The Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding directly
against the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). The
Guarantee will be held by the Guarantee Trustee for the benefit of the holders
of the Preferred Securities. The Guarantee will not be discharged except by
payment of the Guarantee Payments in full to the extent not paid by the Issuer
Trust or distribution to the holders of the Preferred Securities of the Junior
Subordinated Debentures.
Amendments and Assignment
Except with respect to any changes which do not materially adversely
affect the rights of holders of the Preferred Securities (in which case no
consent will be required), the Guarantee may not be amended without the prior
approval of the holders of not less than a majority of the aggregate Liquidation
Amount of the outstanding Preferred Securities. The manner of obtaining any such
approval will be as set forth under "Description of Preferred Securities --
Voting Rights; Amendment of Trust Agreement." All guarantees and agreements
contained in the Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Company and shall inure to the benefit of
the holders of the Preferred Securities then outstanding.
Events of Default
An event of default under the Guarantee will occur upon the failure of
the Company to perform any of its payment or other obligations thereunder, or to
perform any non-payment obligation if such non-payment default remains
unremedied for 30 days. The holders of not less than a majority in
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aggregate Liquidation Amount of the outstanding Preferred Securities have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Guarantee Trustee in respect of the Guarantee or to
direct the exercise of any trust or power conferred upon the Guarantee Trustee
under the Guarantee.
Any registered holder of Preferred Securities may institute a legal
proceeding directly against the Company to enforce its rights under the
Guarantee without first instituting a legal proceeding against the Issuer Trust,
the Guarantee Trustee or any other person or entity.
The Company, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the occurrence and continuance
of a default by the Company in performance of the Guarantee, undertakes to
perform only such duties as are specifically set forth in the Guarantee and,
after the occurrence of an event of default with respect to the Guarantee, must
exercise the same degree of care and skill as a prudent person would exercise or
use in the conduct of his or her own affairs. Subject to this provision, the
Guarantee Trustee is under no obligation to exercise any of the powers vested in
it by the Guarantee at the request of any holder of the Preferred Securities
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred thereby.
For information concerning the relationship between Bankers Trust
Company, as Guarantee Trustee, and the Company, see "Description of Junior
Subordinated Debentures -- Information Concerning the Debenture Trustee."
Termination of the Guarantee
The Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of the Preferred Securities, upon full
payment of the amounts payable with respect to the Preferred Securities upon
liquidation of the Issuer Trust or upon distribution of Junior Subordinated
Debentures to the holders of the Preferred Securities in exchange for all of the
Preferred Securities. The Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of the Preferred
Securities must restore payment of any sums paid under the Preferred Securities
or the Guarantee.
Governing Law
The Guarantee will be governed by and construed in accordance with the
laws of the State of New York.
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RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE JUNIOR
SUBORDINATED DEBENTURES, AND THE GUARANTEE
Full and Unconditional Guarantee
Payments of Distributions and other amounts due on the Preferred
Securities (to the extent the Issuer Trust has funds available for such payment)
are irrevocably guaranteed, on a subordinated basis, by the Company as and to
the extent set forth under "Description of Guarantee." Taken together, the
Company's obligations under the Junior Subordinated Debentures, the Junior
Subordinated Indenture, the Trust Agreement and the Guarantee provide, in the
aggregate, a full, irrevocable and unconditional guarantee of payments of
Distributions and other amounts due on the Preferred Securities. No single
document standing alone or operating in conjunction with fewer than all the
other documents constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Issuer Trust's obligations in respect of the
Preferred Securities. If and to the extent that the Company does not make
payments on the Junior Subordinated Debentures, the Issuer Trust will not have
sufficient funds to pay Distributions or other amounts due on the Preferred
Securities. The Guarantee does not cover payment of amounts payable with respect
to the Preferred Securities when the Issuer Trust does not have sufficient funds
to pay such amounts. In such event, the remedy of a holder of the Preferred
Securities is to institute a legal proceeding directly against the Company for
enforcement of payment of the Company's obligations under Junior Subordinated
Debentures having a principal amount equal to the Liquidation Amount of the
Preferred Securities held by such holder.
The obligations of the Company under the Junior Subordinated Debentures
and the Guarantee are subordinate and junior in right of payment to all Senior
Indebtedness and rank pari passu with the Company's obligations associated with
the Outstanding Preferred Securities.
Sufficiency of Payments
As long as payments are made when due on the Junior Subordinated
Debentures, such payments will be sufficient to cover Distributions and other
payments distributable on the Preferred Securities, primarily because (i) the
aggregate principal amount of the Junior Subordinated Debentures will be equal
to the sum of the aggregate stated Liquidation Amount of the Preferred
Securities and Common Securities; (ii) the interest rate and interest and other
payment dates on the Junior Subordinated Debentures will match the Distribution
rate, Distribution Dates and other payment dates for the Preferred Securities;
(iii) the Company will pay for any and all costs, expenses and liabilities of
the Issuer Trust except the Issuer Trust's obligations to holders of the Trust
Securities; and (iv) the Trust Agreement further provides that the Issuer Trust
will not engage in any activity that is not consistent with the limited purposes
of the Issuer Trust.
Notwithstanding anything to the contrary in the Junior Subordinated
Indenture, the Company has the right to set-off any payment it is otherwise
required to make thereunder against and to the extent the Company has
theretofore made, or is concurrently on the date of such payment making, a
payment under the Guarantee.
Enforcement Rights of Holders of Preferred Securities
A holder of any Preferred Security may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Guarantee Trustee, the Issuer
Trust or any other person or entity. See "Description of Guarantee."
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A default or event of default under any Senior Indebtedness of the
Company would not constitute a default or Event of Default in respect of the
Preferred Securities. However, in the event of payment defaults under, or
acceleration of, Senior Indebtedness of the Company, the subordination
provisions of the Junior Subordinated Indenture provide that no payments may be
made in respect of the Junior Subordinated Debentures until such Senior
Indebtedness has been paid in full or any payment default thereunder has been
cured or waived. See "Description of Junior Subordinated Debentures --
Subordination."
Limited Purpose of Issuer Trust
The Preferred Securities represent preferred undivided beneficial
interests in the assets of the Issuer Trust, and the Issuer Trust exists for the
sole purpose of issuing its Preferred Securities and Common Securities and
investing the proceeds thereof in Junior Subordinated Debentures. A principal
difference between the rights of a holder of a Preferred Security and a holder
of a Junior Subordinated Debenture is that a holder of a Junior Subordinated
Debenture is entitled to receive from the Company payments on Junior
Subordinated Debentures held, while a holder of Preferred Securities is entitled
to receive Distributions or other amounts distributable with respect to the
Preferred Securities from the Issuer Trust (or from the Company under the
Guarantee) only if and to the extent the Issuer Trust has funds available for
the payment of such Distributions.
Rights Upon Dissolution
Upon any voluntary or involuntary dissolution of the Issuer Trust,
other than any such dissolution involving the distribution of the Junior
Subordinated Debentures, after satisfaction of liabilities to creditors of the
Issuer Trust as required by applicable law, the holders of the Preferred
Securities will be entitled to receive, out of assets held by the Issuer Trust,
the Liquidation Distribution in cash. See "Description of Preferred Securities
- -- Liquidation Distribution Upon Dissolution." Upon any voluntary or involuntary
liquidation or bankruptcy of the Company, the Issuer Trust, as registered holder
of the Junior Subordinated Debentures, would be a subordinated creditor of the
Company, subordinated and junior in right of payment to all Senior Indebtedness
as set forth in the Junior Subordinated Indenture, but entitled to receive
payment in full of all amounts payable with respect to the Junior Subordinated
Debentures before any stockholders of the Company receive payments or
distributions. Since the Company is the guarantor under the Guarantee and has
agreed under the Junior Subordinated Indenture to pay for all costs, expenses
and liabilities of the Issuer Trust (other than the Issuer Trust's obligations
to the holders of the Trust Securities), the positions of a holder of the
Preferred Securities and a holder of such Junior Subordinated Debentures
relative to other creditors and to stockholders of the Company in the event of
liquidation or bankruptcy of the Company are expected to be substantially the
same.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General
In the opinion of Malizia, Spidi, Sloane & Fisch, P.C., Washington,
D.C., in its capacity as special tax counsel to the Company ("Tax Counsel"), the
following discussion summarizes the material United States federal income tax
consequences of the purchase, ownership and disposition of the Preferred
Securities.
This summary is based on the Internal Revenue Code of 1986, as amended
(the "Code"), Treasury regulations thereunder, and administrative and judicial
interpretations thereof, each as of the
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date hereof, all of which are subject to change, possibly on a retroactive
basis. The authorities on which this summary is based are subject to various
interpretations, and the opinions of Tax Counsel are not binding on the Internal
Revenue Service (the "IRS") or the courts, either of which could take a contrary
position. Moreover, no rulings have been or will be sought from the IRS with
respect to the transactions described herein. Accordingly, there can be no
assurance that the IRS will not challenge the opinions expressed herein or that
a court would not sustain such a challenge.
Except as otherwise stated, this summary deals only with the Preferred
Securities held as a capital asset by a holder who or which (i) purchased the
Preferred Securities upon original issuance at their original offering price and
(ii) is a US Holder (as defined below). This summary does not address all the
tax consequences that may be relevant to a US Holder, nor does it address the
tax consequences, except as stated below, to holders that are not US Holders
("Non-US Holders") or to holders that may be subject to special tax treatment
(such as banks, thrift institutions, real estate investment trusts, regulated
investment companies, insurance companies, brokers and dealers in securities or
currencies, certain securities traders, other financial institutions, tax-exempt
organizations, persons holding the Preferred Securities as a position in a
"straddle," or as part of a "synthetic security," "hedging," as part of a
"conversion" or other integrated investment, persons having a functional
currency other than the U.S. Dollar and certain United States expatriates).
Further, this summary does not address (a) the income tax consequences to
shareholders in, or partners or beneficiaries of, a holder of the Preferred
Securities, (b) the United States federal alternative minimum tax consequences
of the purchase, ownership or disposition of the Preferred Securities, or (c)
any state, local or foreign tax consequences of the purchase, ownership and
disposition of Preferred Securities.
A "US Holder" is a holder of the Preferred Securities who or which is
(i) a citizen or individual resident (or is treated as a citizen or individual
resident) of the United States for income tax purposes, (ii) a corporation or
partnership created or organized (or treated as created or organized for income
tax purposes) in or under the laws of the United States or any political
subdivision thereof, (iii) an estate the income of which is includible in its
gross income for United States federal income tax purposes without regard to its
source, or (iv) a trust if (a) a court within the United States is able to
exercise primary supervision over the administration of the trust and (b) one or
more United States persons have the authority to control all substantial
decisions of the trust.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE PREFERRED
SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER
TAX LAWS.
US Holders
Characterization of the Issuer Trust. In connection with the issuance
of the Preferred Securities, Tax Counsel will render its opinion generally to
effect that, under then current law and based on the representations, facts and
assumptions set forth in this Prospectus, and assuming full compliance with the
terms of the Trust Agreement (and other relevant documents), and based on
certain assumptions and qualifications referenced in the opinion, the Issuer
Trust will be characterized for United States federal income tax purposes as a
grantor trust and will not be characterized as an association taxable as a
corporation. Accordingly, for United States federal income tax purposes, each
holder of the Preferred Securities generally will be considered the owner of an
undivided interest in the Junior Subordinated Debentures owned by the Issuer
Trust, and each US Holder will be required to include all income or gain
recognized for United States federal income tax purposes with respect to its
allocable share of the Junior
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Subordinated Debentures on its own income tax return.
Characterization of the Junior Subordinated Debentures. The Company
intends to take the position that, under current law, the Junior Subordinated
Debentures constitute indebtedness for United States federal income tax
purposes. The Company, the Issuer Trust and the holders of the Preferred
Securities (by acceptance of a beneficial interest in a Preferred Security)
agree to treat the Junior Subordinated Debentures as indebtedness of the Company
and the Preferred Securities as evidence of a beneficial ownership interest in
the Issuer Trust. No assurance can be given, however, that such position will
not be challenged by the IRS or, if challenged, that such a challenge will not
be successful. The remainder of this discussion assumes that the Junior
Subordinated Debentures will be classified as indebtedness of the Company for
United States federal income tax purposes.
Interest Income and Original Issue Discount. Under the terms of the
Junior Subordinated Debentures, the Company has the ability to defer payments of
interest from time to time by extending the interest payment period for a period
not exceeding 20 consecutive quarterly periods, but not beyond the maturity of
the Junior Subordinated Debentures. Treasury regulations under Section 1273 of
the Code provide that debt instruments like the Junior Subordinated Debentures
will not be considered issued with original issue discount ("OID") by reason of
the Company's ability to defer payments of interest if the likelihood of such
deferral is "remote."
The Company has concluded, and this discussion assumes, that, as of the
date of this Prospectus, the likelihood of deferring payments of interest under
the terms of the Junior Subordinated Debentures is "remote" within the meaning
of the applicable Treasury regulations, in part because exercising that option
would prevent the Company from declaring dividends on its stock and would
prevent the Company from making any payments with respect to debt securities
that rank pari passu with or junior to the Junior Subordinated Debentures.
Therefore, the Junior Subordinated Debentures should not be treated as issued
with OID by reason of the Company's deferral option. Rather, stated interest on
the Junior Subordinated Debentures will generally be taxable to a US Holder as
ordinary income when paid or accrued in accordance with that holder's method of
accounting for income tax purposes. It should be noted, however, that the
Treasury regulations under Section 1273 of the Code have not yet been
interpreted in any rulings or any other published authorities of the IRS.
Accordingly, it is possible that the IRS could take a position contrary to the
interpretation described herein.
In the event the Company exercises its option to defer payments of
interest, the Junior Subordinated Debentures would be treated as redeemed and
reissued for OID purposes and the sum of the remaining interest payments (and
any de minimis OID) on the Junior Subordinated Debentures would thereafter be
treated as OID, which would accrue, and be includible in a US Holder's taxable
income, on an economic accrual basis (regardless of the US Holder's method of
accounting for income tax purposes) over the remaining term of the Junior
Subordinated Debentures (including any period of interest deferral), without
regard to the timing of payments under the Junior Subordinated Debentures.
(Subsequent distributions of interest on the Junior Subordinated Debentures
generally would not be taxable.) The amount of OID that would accrue in any
period would generally equal the amount of interest that accrued on the Junior
Subordinated Debentures in that period at the stated interest rate.
Consequently, during any period of interest deferral, US Holders will include
OID in gross income in advance of the receipt of cash, and a US Holder which
disposes of a Preferred Security prior to the record date for payment of
distributions on the Junior Subordinated Debentures following that period will
be subject to income tax on OID accrued through the date of disposition (and not
previously included in income), but will not receive cash from the Issuer Trust
with respect to the OID.
If the possibility of the Company's exercise of its option to defer
payments of interest is not
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remote, the Junior Subordinated Debentures would be treated as initially issued
with OID in an amount equal to the aggregate stated interest (plus any de
minimis OID) over the term of the Junior Subordinated Debentures. That OID would
generally be includible in a US Holder's taxable income, over the term of the
Junior Subordinated Debentures, on an economic accrual basis.
Characterization of Income. Because the income underlying the Preferred
Securities will not be characterized as dividends for income tax purposes,
corporate holders of the Preferred Securities will not be entitled to a
dividends-received deduction for any income recognized with respect to the
Preferred Securities.
Market Discount and Bond Premium. Under certain circumstances, Holders
of the Preferred Securities may be considered to have acquired their undivided
interests in the Junior Subordinated Debentures with market discount or
acquisition premium (as each phrase is defined for United States federal income
tax purposes).
Receipt of Junior Subordinated Debentures or Cash Upon Liquidation of
the Issuer Trust. Under certain circumstances described herein (See "Description
of the Preferred Securities -- Liquidation Distribution Upon Dissolution"), the
Issuer Trust may distribute the Junior Subordinated Debentures to holders in
exchange for the Preferred Securities and in liquidation of the Issuer Trust.
Except as discussed below, such a distribution would not be a taxable event for
United States federal income tax purposes, and each US Holder would have an
aggregate adjusted basis in its Junior Subordinated Debentures for United States
federal income tax purposes equal to such holder's aggregate adjusted basis in
its Preferred Securities. For United States federal income tax purposes, a US
Holder's holding period in the Junior Subordinated Debentures received in such a
liquidation of the Issuer Trust would include the period during which the
Preferred Securities were held by the holder. If, however, the relevant event is
a Tax Event which results in the Issuer Trust being treated as an association
taxable as a corporation, the distribution would likely constitute a taxable
event to US Holders of the Preferred Securities for United States federal income
tax purposes.
Under certain circumstances described herein (see "Description of the
Preferred Securities"), the Junior Subordinated Debentures may be redeemed for
cash and the proceeds of such redemption distributed to holders in redemption of
their Preferred Securities. Such a redemption would be taxable for United States
federal income tax purposes, and a US Holder would recognize gain or loss as if
it had sold the Preferred Securities for cash. See "-- Sales of Preferred
Securities" below.
Sales of Preferred Securities. A US Holder that sells Preferred
Securities will recognize gain or loss equal to the difference between its
adjusted basis in the Preferred Securities and the amount realized on the sale
of such Preferred Securities. A US Holder's adjusted basis in the Preferred
Securities generally will be its initial purchase price, increased by OID
previously included (or currently includible) in such holder's gross income to
the date of disposition, and decreased by payments received on the Preferred
Securities (other than any interest received with respect to the period prior to
the effective date of the Company's first exercise of its option to defer
payments of interest). Any such gain or loss generally will be capital gain or
loss, and generally will be a long-term capital gain or loss if the Preferred
Securities have been held for more than one year prior to the date of
disposition.
A holder who disposes of his Preferred Securities between record dates
for payments of distributions thereon will be required to include accrued but
unpaid interest (or OID) on the Junior Subordinated Debentures through the date
of disposition in its taxable income for United States federal income tax
purposes (notwithstanding that the holder may receive a separate payment from
the purchaser with respect to accrued interest), and to deduct that amount from
the sales proceeds received (including the separate payment, if any, with
respect to accrued interest) for the Preferred Securities (or as to OID only, to
add such amount to such holder's adjusted tax basis in its Preferred
Securities). To the extent the selling price is less than the holder's adjusted
tax basis (which will include accrued but unpaid OID,
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if any), 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.
Pending Tax Litigation Affecting the Preferred Securities
Recently, a taxpayer filed a petition in the United States Tax Court
contesting the IRS' disallowance of interest deductions that taxpayer claimed in
respect of securities issued in 1993 and 1994 that are, in some respects,
similar to the Preferred Securities. (Enron Corp. v. Commissioner, Docket No.
6149-98, filed April 1, 1998). It is possible that an adverse decision by the
Tax Court concerning the deductibility of such interest could give rise to a Tax
Event. Such a Tax Event would give the Company the right to redeem the Junior
Subordinated Debentures. See "Description of Junior Subordinated Debentures --
Redemption" and "Description of Preferred Securities -- Liquidation Distribution
Upon Dissolution."
Non-US Holders
The following discussion applies to a Non-US Holder.
Payments to a holder of a Preferred Security which is a Non-US Holder
will generally not be subject to withholding of income tax, provided that (a)
the beneficial owner of the Preferred Security does not (directly or indirectly,
actually or constructively) own 10% or more of the total combined voting power
of all classes of stock of the Company entitled to vote, (b) the beneficial
owner of the Preferred Security is not a controlled foreign corporation that is
related to the Company through stock ownership, and (c) either (i) the
beneficial owner of the Preferred Securities certifies to the Issuer Trust or
its agent, under penalties of perjury, that it is a Non-US Holder and provides
its name and address, or (ii) a securities clearing organization, bank or other
financial institution that holds customers' securities in the ordinary course of
its trade or business (a "Financial Institution"), and holds the Preferred
Security in such capacity, certifies to the Issuer Trust or its agent, under
penalties of perjury, that such a statement has been received from the
beneficial owner by it or by another Financial Institution between it and the
beneficial owner in the chain of ownership, and furnishes the Issuer Trust or
its agent with a copy thereof.
As discussed above, changes in the law affecting the income tax
consequences of the Junior Subordinated Debentures are possible, and could
adversely affect the ability of the Company to deduct interest payable on the
Junior Subordinated Debentures. Such changes could also cause the Junior
Subordinated Debentures to be classified as equity (rather than indebtedness) of
the Company for United Stated federal income tax purposes and, thus, might cause
the income derived from the Junior Subordinated Debentures to be characterized
as dividends, generally subject to a 30% income tax (on a withholding basis)
when paid to a Non-US Holder, rather than as interest which, as discussed above,
is generally exempt from income tax in the hands of a Non-US Holder.
A Non-US Holder of a Preferred Security will generally not be subject
to withholding of income tax on any gain realized upon the sale or other
disposition of a Preferred Security.
A Non-US Holder which holds the Preferred Securities in connection with
the active conduct of a United States trade or business will be subject to
income tax on all income and gains recognized with respect to its proportionate
share of the Junior Subordinated Debentures.
Information Reporting
In general, information reporting requirements will apply to payments
made on, and proceeds from the sale of, the Preferred Securities held by a
noncorporate US Holder within the United States.
61
<PAGE>
In addition, payments made on, and payments of the proceeds from the sale of,
the Preferred Securities to or through the United States office of a broker are
subject to information reporting unless the holder thereof certifies as to its
Non-United States status or otherwise establishes an exemption from information
reporting and backup withholding. See "--Backup Withholding." Taxable income on
the Preferred Securities for a calendar year should be reported to US Holders on
the appropriate forms by the following January 31st.
Backup Withholding
Payments made on, and proceeds from the sale of, the Preferred
Securities may be subject to a "backup" withholding tax of 31% unless the holder
complies with certain identification or exemption requirements. Any amounts so
withheld will be allowed as a credit against the holder's income tax liability,
or refunded, provided the required information is provided to the IRS.
The preceding discussion is only a summary and does not address the
consequences to a particular holder of the purchase, ownership and disposition
of the Preferred Securities. Potential holders of the Preferred Securities are
urged to contact their own tax advisors to determine their particular tax
consequences.
CERTAIN ERISA CONSIDERATIONS
The Company and certain affiliates of the Company may each be
considered a "party in interest" within the meaning of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") or a "disqualified person"
within the meaning of Section 4975 of the Code with respect to many employee
benefit plans ("Plans") that are subject to ERISA. The purchase of the Preferred
Securities by a Plan that is subject to the fiduciary responsibility provisions
of ERISA or the prohibited transaction provisions of Section 4975(e)(1) of the
Code and with respect to which the Company, or any affiliate of the Company is a
service provider (or otherwise is a party in interest or a disqualified person)
may constitute or result in a prohibited transaction under ERISA or Section 4975
of the Code, unless the Preferred Securities are acquired pursuant to and in
accordance with an applicable exemption. Any pension or other employee benefit
plan proposing to acquire any Preferred Securities should consult with its
counsel.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement (the
"Underwriting Agreement") dated __________ ____, 1998, among the Company, the
Issuer Trust and Advest, Inc. and Janney Montgomery Scott Inc., as
representatives (the "Representatives") of the Underwriters, the Issuer Trust
has agreed to sell to the Underwriters, and the Underwriters have severally
agreed to purchase from the Issuer Trust, the following respective aggregate
Liquidation Amount of Preferred Securities at the public offering price less the
underwriting discounts and commissions set forth on the cover page of this
Prospectus:
Liquidation Amount of
Underwriter: Preferred Securities:
Advest, Inc.................................... $
Janney Montgomery Scott Inc....................
----------
Total.......................................... $18,000,000
==========
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 Preferred Securities offered
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<PAGE>
hereby if any of such Preferred Securities are purchased.
The Company has been advised by the Underwriters that the Underwriters
propose to offer the Preferred Securities 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 $__________ per Preferred
Security. The Underwriters may allow, and such dealers may reallow, a concession
not in excess of $__________ per Preferred Security to certain other dealers.
After the public offering, the offering price and other selling terms may be
changed by the Underwriters. In addition, the Company has agreed to pay a
financial advisory fee to Advest, Inc. of $25,000 in connection with the
Offering and $75,000 in connection with the Common Shares Offering.
The Company has granted to the Underwriters an option, exercisable not
later than 30 days after the date of the Underwriting Agreement, to purchase up
to an additional $2,700,000 aggregate Liquidation Amount of the Preferred
Securities at the public offering price. To the extent that the Underwriters
exercise such option, the Company will be obligated, pursuant to the option, to
sell such Preferred Securities to the Underwriters. The Underwriters may
exercise such option only to cover over-allotments made in connection with the
sale of the Preferred Securities offered hereby. If purchased, the Underwriters
will offer such additional Preferred Securities on the same terms as those on
which the $18,000,000 aggregate Liquidation Amount of the Preferred Securities
are being offered.
In connection with this Offering, the Underwriters and any selling
group members and their respective affiliates may engage in transactions
effected in accordance with Rule 104 of the Securities and Exchange Commission's
Regulation M that are intended to stabilize, maintain or otherwise affect the
market price of the Preferred Securities. Such transactions may include
over-allotment transactions in which the Underwriters create a short position
for their own account by selling more Preferred Securities than they are
committed to purchase from the Issuer Trust. In such a case, to cover all or
part of the short position, the Underwriters may exercise the over-allotment
option described above or may purchase Preferred Securities in the open market
following completion of the initial offering of the Preferred Securities. The
Underwriters also may engage in stabilizing transactions in which they bid for,
and purchase, shares of the Preferred Securities at a level above that which
might otherwise prevail in the open market for the purpose of preventing or
retarding a decline in the market price of the Preferred Securities. The
Underwriters also may reclaim any selling concessions allowed to an Underwriter
or dealer if the Underwriters repurchase shares distributed by that Underwriter
or dealer. Any of the foregoing transactions may result in the maintenance of a
price for the Preferred Securities at a level above that which might otherwise
prevail in the open market. Neither the Company nor any of the Underwriters
makes any representation or prediction as to the direction or magnitude of any
effect that the transactions described above may have on the price of the
Preferred Securities. The Underwriters are not required to engage in any of the
foregoing transactions and, if commenced, such transactions may be discontinued
at any time without notice.
In view of the fact that the proceeds from the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures issued by
the Company, the Underwriting Agreement provides that the Company will pay as
compensation for the Underwriters' arranging the investment therein of such
proceeds an amount of $__________ per Preferred Security (or $__________
($__________ if the over-allotment option is exercised in full) in the
aggregate).
Because the National Association of Securities Dealers, Inc. ("NASD")
is expected to view the Preferred Securities as interests in a direct
participation program, this Offering is being made in compliance with the
applicable provisions of Rule 2810 of the NASD's Conduct Rules.
The Preferred Securities are a new issue of securities with no
established trading market. The Company and the Issuer Trust have been advised
by the Representatives that they intend to make a market
63
<PAGE>
in the Preferred Securities. However, the Underwriters are not obligated to do
so and such market making may be interrupted or discontinued at any time without
notice at the sole discretion of each of the Underwriters. Application has been
made by the Company to list the Preferred Securities on the Nasdaq National
Market, but a requirement for initial listing, and for continued listing, is the
presence of three, and two, market makers, respectively, for the Preferred
Securities, and the presence of a second market maker cannot be assured.
Accordingly, no assurance can be given as to the development or liquidity of any
market for the Preferred Securities.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act.
The Representatives and certain of the other Underwriters have in the
past, and may in the future, perform various services for the Company, including
investment banking services, for which they have or may receive customary fees.
Advest, Inc. also served as managing underwriter in the Company's public
offerings of Common Shares and trust preferred securities in 1997, and advised
the Company in certain of its branch purchases. The Representatives are also
serving as underwriters of the Common Shares Offering.
VALIDITY OF SECURITIES
The validity of the Guarantee and the Junior Subordinated Debentures
and certain tax matters will be passed upon for the Company by Malizia, Spidi,
Sloane & Fisch, P.C., Washington, D.C., special counsel to the Company, and
certain legal matters will be passed upon for the Underwriters by Arnold &
Porter, Washington, D.C. and New York, New York. Certain matters of Delaware law
relating to the validity of the Preferred Securities, the enforceability of the
Trust Agreement and the creation of the Issuer Trust will be passed upon by
Richards, Layton & Finger, special Delaware counsel to the Company and the
Issuer Trust. Malizia, Spidi, Sloane & Fisch, P.C. and Arnold & Porter will rely
as to certain matters of Delaware law on the opinion of Richards, Layton &
Finger.
EXPERTS
The consolidated financial statements incorporated in this Prospectus
by reference from the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities of the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Commission located at 7 World Trade Center, 13th Floor, Suite
1300, New York, New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material can also
be obtained at prescribed rates by writing to the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Such material
also may be accessed electronically by means of the Commission's home page on
the Internet at http://www.sec.gov.
The Company has filed a Registration Statement on Form S-3 (together
with all amendments and exhibits thereto, the "Registration Statement") with the
Commission under the Securities Act in
64
<PAGE>
connection with the Offering. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. The
Registration Statement, including any amendments, schedules and exhibits
thereto, is available for inspection and copying as set forth above. Statements
contained in this Prospectus as to the contents of any contract or other
document referred to herein include all material terms of such contracts or
other documents but are not necessarily complete, and in each instance reference
is made to the copy of any such contract or other document which may have been
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference.
The Common Shares are traded on the Nasdaq National Market under the
symbol "SNBC." Documents filed by the Company with the Commission also can be
inspected at the offices of the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20006.
No separate financial statements of the Issuer Trust have been included
or incorporated by reference herein. The Company and the Issuer Trust do not
consider that such financial statements would be material to holders of the
Preferred Securities because the Issuer Trust is a newly formed special purpose
entity, has no operating history or independent operations and is not engaged in
and does not propose to engage in any activity other than holding as trust
assets the Junior Subordinated Debentures and issuing the Trust Securities. See
"Sun Capital Trust II," "Description of Preferred Securities," "Description of
Junior Subordinated Debentures" and "Description of Guarantee." In addition, the
Company does not expect that the Issuer Trust will be filing reports under the
Exchange Act with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the
Commission are hereby incorporated into this Prospectus by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997;
(b) The Company's Quarterly Reports on Form 10-Q for the quarter
ended March 31, 1998 and the quarter ended June 30, 1998; and
(c) The Company's Current Reports on Form 8-K filed with the
Commission on July 27, 1998, March 6, 1998, and February 26,
1998.
In addition, all subsequent documents filed with the Commission by the
Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of this Prospectus shall be deemed to be incorporated by reference into
this Prospectus and to be a part hereof from the date of filing such documents.
Any statement contained in this Prospectus or in a document incorporated or
deemed to be incorporated by reference herein or therein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or therein or in any subsequently filed document
which also is or is deemed to be incorporated by reference herein modified or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
This Prospectus incorporates documents by reference which are not
presented herein or delivered herewith. These documents (excluding exhibits
unless specifically incorporated therein) are available without charge upon
written or oral request from the Secretary, Sun Bancorp, Inc., 226 Landis
Avenue, Vineland, New Jersey 08360, telephone (609) 691-7700.
65
<PAGE>
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This Prospectus (including information included or incorporated by
reference herein) contains or may contain forward-looking statements with
respect to the financial condition, results of operations, plans, objectives,
future performance and business of the Company, including statements preceded
by, followed by or that include the words, "believes," "expects," "anticipates"
or similar expressions. These forward-looking statements involve certain risks
and uncertainties and may relate to future operating results of the Company.
Factors that may cause actual results to differ materially from those
contemplated by such forward-looking statements include, among others, the
following possibilities: (1) expected cost savings from the acquisitions not
being fully realized or realized within the expected time frame; (2) earnings
following the acquisitions being lower than expected; (3) a significant increase
in competitive pressures among depository and other financial institutions; (4)
costs or difficulties related to the integration of the acquired business being
greater than expected; (5) changes in the interest rate environment resulting in
reduced margins; (6) general economic or business conditions, either nationally
or in the states in which the Company will be doing business, being less
favorable than expected, resulting in, among other things, a deterioration in
credit quality or a reduced demand for credit; (7) legislative or regulatory
changes adversely affecting the businesses in which the Company will be engaged;
(8) changes in the securities markets; and (9) changes in the banking industry
including the effects of consolidation resulting from possible mergers of
financial institutions.
66
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
=================================================== ===================================================
No person has been authorized in connection
with the offering made hereby to give any
information or to make any representation
not contained in this prospectus and, if given
or made, such information or representation
must not be relied upon as having been
authorized by the company or any
underwriter. This prospectus does not
constitute an offer to sell or a solicitation of
any offer to buy any of the securities offered
hereby to any person or by anyone in any $18,000,000
jurisdiction in which it is unlawful to make
such offer or solicitation. Neither the [LOGO]
delivery of this prospectus nor any sale made
hereunder shall, under any circumstances, SUN CAPITAL TRUST II
create any implication that the information
contained herein is correct as of any date
subsequent to the date hereof. __________% Preferred Securities
(Liquidation Amount $10 per
TABLE OF CONTENTS Preferred Security)
guaranteed, as described herein, by
PAGE
----
Prospectus Summary..............................
Selected Consolidated Financial Data............ SUN BANCORP, INC.
Risk Factors....................................
Management's Discussion and Analysis of
Financial Condition of the Company and
Results of Operations.........................
Use of Proceeds................................. ___________________
Beneficial Acquisition..........................
Pro Forma Statement of Financial Condition.. PROSPECTUS
Capitalization.................................. ___________________
Sun Capital Trust II........................
Accounting Treatment............................
Description of Preferred Securities.............
Description of Junior Subordinated
Debentures.................................... Advest, Inc.
Description of Guarantee........................
Relationship Among the Preferred Janney Montgomery Scott Inc.
Securities, the Junior Subordinated
Debentures and the Guarantee..................
Certain Federal Income Tax __________ ____, 1998
Consequences..................................
Certain ERISA Considerations....................
Underwriting....................................
Validity of Securities..........................
Experts.........................................
Available Information...........................
Incorporation of Certain Documents by
Reference.....................................
Cautionary Statement Concerning
Forward-Looking Information...................
=================================================== ===================================================
</TABLE>
<PAGE>
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
* Registration Fees................................... $ 4,140
* Legal Services...................................... 25,000
* Printing Costs...................................... 25,000
* Nasdaq Listing Fees................................. 46,500
* Accounting Fees..................................... 15,000
* Trustee Fees and Expenses........................... 20,000
* Blue Sky Fees and Expenses.......................... 5,000
* Miscellaneous....................................... 15,000
-------
* TOTAL............................................... $155,640
========
Item 15. Indemnification of Directors and Officers.
Section 14A:3-5 of the New Jersey Business Corporation Law ("BCL")
provides that an officer, director, employee or agent may be indemnified by the
Company against expenses and liabilities actually and reasonably incurred in
connection with any threatened, pending or completed "proceeding" (including
civil, criminal, administrative or investigative proceedings or arbitrative
action) in which such person is involved by reason of such person's position
with the Company, provided that a determination has been made (by the Board of
Directors or a committee thereof, acting by a majority vote of a quorum
consisting of directors who were not parties to such proceeding, or by
independent legal counsel in a written opinion, or by the shareholders) that
such person acted in good faith and in a manner that such person reasonably
believes to be in, or not opposed to, the best interests of the Company. Such
person may not be indemnified if the person has been adjudged to be in breach of
his duty of loyalty to the corporation or its shareholders, or if his/her
conduct were determined not to be in good faith or to have involved a knowing
violation of law, or to have resulted in receipt by the officer, director,
employee or agent of an improper personal benefit.
Provisions regarding indemnification of directors, officers, employees
or agents of the Company are contained in Article VI of the Company's Amended
and Restated Bylaws.
Under a directors' and officers' liability insurance policy, directors
and officers of the Company are insured against certain liabilities, including
certain liabilities under the Securities Act, as amended.
Under the Trust Agreement, the Company will agree to indemnify and hold
harmless (i) each Issuer Trustee, (ii) each Administrator, (iii) any affiliate
of the Trustee, (iv) any officer, director, shareholder, employee,
representative or agent of the Trustee, and (v) any employee or agent of the
Trust, (referred to herein as an "Indemnified Person") from and against any
loss, damage, liability, tax (excluding income taxes, other than taxes referred
to in Sections 4.5 and 4.6 thereunder), penalty, expense or claim of any kind or
nature whatsoever incurred by such Indemnified Person arising out of or in
connection with the creation, operation or dissolution of the Trust or any act
or omission performed or omitted by such Indemnified Person in good faith on
behalf of the Trust and in a manner such Indemnified Person reasonably believed
to be within the scope of authority conferred on such Indemnified Person by the
Trust Agreement, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such Indemnified
Person by reason of bad faith, negligence or willful misconduct with respect to
such acts or omissions.
II-1
<PAGE>
Item 16. Exhibits and Financial Statement Schedules:
The financial statements and exhibits filed as part of this
Registration Statement are as follows:
<TABLE>
<CAPTION>
<S> <C>
(a) List of Exhibits:
1 Form of Underwriting Agreement
3.1 Amended and Restated Certificate of Incorporation of Sun Bancorp, Inc.*
3.2 Amended and Restated Bylaws of Sun Bancorp, Inc. **
4.1 Form of Junior Subordinated Indenture
4.2 Form of Junior Subordinated Deferrable Interest Debenture Certificate (included
in Exhibit 4.1)
4.3 Trust Agreement
4.4 Form of Amended and Restated Trust Agreement
4.5 Form of Preferred Security (included in Exhibit 4.4)
4.6 Form of Guarantee
5.1 Opinion of Richards, Layton & Finger
5.2 Opinion of Malizia, Spidi, Sloane, & Fisch, P.C.
8 Tax opinion of Malizia, Spidi, Sloane, & Fisch, P.C.
23.1 Consent of Deloitte & Touche LLP***
23.2 Consent of Richards, Layton & Finger (included in Exhibit 5.1)
23.3 Consent of Malizia, Spidi, Sloane & Fisch, P.C. (included in Exhibits 5.2 and 8)
25 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
Bankers Trust Company, as trustee under the Junior Subordinated Indenture, the
Amended and Restated Trust Agreement and the Guarantee Agreement relating
to Sun Capital Trust II
27.1 Restated Financial Data Schedule for the quarters ended June 30 and September 30, 1996,
March 31 and June 30, 1997 and the fiscal year ended December 31, 1996.*****
27.2 Restated Financial Data Schedule for the quarter ended September 30, 1997.*****
(b) Financial Statements Schedules****
</TABLE>
- -------------------
* Incorporated by reference to the registrant's Registration Statement on
Form S-3 filed with the Commission on August 25, 1998.
** Incorporated by reference to the registrant's Current Report on Form 8-K
dated March 3, 1998.
*** To be filed by amendment.
**** All schedules are omitted because they are not required or applicable or
the required information is shown in the financial statements or the notes
thereto incorporated in this Registration Statement by reference to the
registrant's Annual Report on Form 10-K for the fiscal year ended December
31, 1997.
*****Filed electronically only.
II-2
<PAGE>
Item 17. Undertakings
The undersigned registrants hereby undertake:
(1) 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 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;
(2) that, for purposes of determining any liability under the
Securities Act, as amended, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrants pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this registration statement as of the time it was declared effective;
(3) that, for the purpose of determining any liability under the
Securities Act, as amended, 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;
(4) insofar as indemnification for liabilities arising under the
Securities Act 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, 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, trustee or
controlling person of the registrants in the successful defense of any action,
suit or proceeding) is asserted by such director, officer, trustee 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 and will be governed by the final adjudication
of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Sun Capital
Trust II 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 Vineland, New Jersey, on August 28, 1998.
SUN CAPITAL TRUST II
By:/s/Philip W. Koebig, III
--------------------------------
Philip W. Koebig, III
(Duly Authorized Representative)
By:/s/Robert F. Mack
--------------------------------
Robert F. Mack
(Duly Authorized Representative)
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Vineland, New Jersey, on August 28, 1998.
SUN BANCORP, INC.
By: /s/Philip W. Koebig, III
--------------------------------
Philip W. Koebig, III
Executive Vice President
(Duly Authorized Representative)
We, the undersigned directors and officers of Sun Bancorp, Inc., do
hereby severally constitute and appoint Philip W. Koebig, III and Robert F. Mack
our true and lawful attorneys and agents, to do any and all things and acts in
our names in the capacities indicated below and to execute all instruments for
us and in our names in the capacities indicated below which said Philip W.
Koebig, III and Robert F. Mack may deem necessary or advisable to enable Sun
Bancorp, Inc. to comply with the Securities Act of 1933, as amended, and any
rules, regulations and requirements of the Securities and Exchange Commission,
in connection with this Registration Statement on Form S-3, including
specifically, but not limited to, power and authority to sign for us or any of
us, in our names in the capacities indicated below, the Registration Statement
and any and all amendments (including post-effective amendments) thereto; and we
hereby ratify and confirm all that Philip W. Koebig, III and Robert F. Mack do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities indicated on August 28, 1998.
<TABLE>
<CAPTION>
<S> <C>
/s/Adolph F. Calovi /s/Bernard A. Brown
- -------------------------------------------------------- ----------------------------------------------------
Adolph F. Calovi Bernard A. Brown
President, Chief Executive Officer and Director Chairman of the Board
(Principal Executive Officer)
/s/Sidney R. Brown /s/Philip W. Koebig, III
- -------------------------------------------------------- ----------------------------------------------------
Sidney R. Brown Philip W. Koebig, III
Vice Chairman, Treasurer and Secretary Executive Vice President and Director
/s/Peter Galetto, Jr. /s/Anne E. Koons
- -------------------------------------------------------- ----------------------------------------------------
Peter Galetto, Jr. Anne E. Koons
Director Director
/s/Robert F. Mack /s/Ike Brown
- -------------------------------------------------------- ----------------------------------------------------
Robert F. Mack Ike Brown
Executive Vice President and Chief Financial Officer Director
(Principal Financial and Accounting Officer)
</TABLE>
II-5
EXHIBIT NO. 1
<PAGE>
$18,000,000*
SUN CAPITAL TRUST II
SUN BANCORP, INC.
___% Preferred Securities
(Liquidation Amount $10 per Preferred Security)
UNDERWRITING AGREEMENT
----------------------
________ ___, 1998
ADVEST, INC.
JANNEY MONTGOMERY SCOTT INC.
As Representatives (the "Representatives") of the Several
Underwriters Named in Schedule I Hereto
c/o Advest, Inc.
One Rockefeller Plaza, 20th Floor
New York, New York 10020
Ladies and Gentlemen:
Sun Capital Trust II (the "Trust"), a statutory business trust
organized under the Business Trust Act (the "Delaware Act") of the State of
Delaware (Chapter 38, Title 12, of the Delaware Business Code, 12 Del. C.
Section 3801 et seq.), and Sun Bancorp, Inc., a New Jersey corporation (the
"Company"), as depositor of the Trust and as guarantor, hereby confirms its
agreement with you and the several underwriters, on whose behalf you have been
duly authorized to act as their representative (the "Representative"), as
follows:
1. Introduction. Upon the terms and conditions set forth in this
Underwriting Agreement (this "Agreement"), the Trust agrees to, and the Company
agrees to cause the Trust to, issue and sell to the several underwriters
identified in Scheduled A annexed hereto (the "Underwriters"), who are acting
severally and not jointly, an aggregate liquidation amount of $18,000,000 (the
"Firm Securities") of the Trust's _____% preferred securities (the "Preferred
Securities"). The Trust also proposes to, and the Company also proposes to cause
the Trust to, issue and sell to the Underwriters, at the Underwriters' option,
up to an additional $2,700,000 aggregate Liquidation Amount of Preferred
Securities (the "Option Securities") as set forth herein. The term "Preferred
Securities" as used herein, unless
* Plus an option to acquire up to an additional $2,700,000 aggregate liquidation
amount of Preferred Securities from the Trust to cover over-allotments.
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indicated otherwise, shall mean the Firm Securities and the Option Securities.
The Preferred Securities and the Common Securities (as defined herein)
are to be issued pursuant to the terms of an Amended and Restated Trust
Agreement dated as of _____ ___, 1998 (the "Trust Agreement"), among the
Company, as depositor, and, together with the Trust, the "Offerors," and Bankers
Trust Company ("Trust Company"), a New York banking corporation, as property
trustee ("Property Trustee") and Bankers Trust (Delaware) ("Trust Delaware"), a
Delaware banking corporation, as Delaware trustee ("Delaware Trustee") and the
holders from time to time of undivided interests in the assets of the Trust. The
Preferred Securities will be guaranteed by the Company on a subordinated basis
and subject to certain limitations with respect to distributions and payments
upon liquidation, redemption or otherwise (the "Guarantee") pursuant to the
Preferred Securities Guarantee Agreement dated as of _____ ___, 1998 (the
"Guarantee Agreement"), between the Company and the Trust Company, as Trustee
(the "Guarantee Trustee"). The assets of the Trust will consist of _____% junior
subordinated deferrable interest debentures, due ______ ___, 2028 (the
"Subordinated Debentures") of the Company which will be issued under an
indenture dated as of _______ ____, 1998 (the "Indenture"), between the Company
and the Trust Company, as Trustee (the "Indenture Trustee"). Under certain
circumstances, the Subordinated Debentures will be distributable to the holders
of undivided beneficial interests in the assets of the Trust. The entire
proceeds from the sale of the Preferred Securities will be combined with the
entire proceeds from the sale by the Trust to the Company of the Trust's common
securities (the "Common Securities"), and will be used by the Trust to purchase
an equivalent amount of the Subordinated Debentures.
2. Representations and Warranties. Each of the Offerors represents and
warrants to, and agrees with, each of the Underwriters as follows:
(a) The Offerors meet the requirements for the use of Form S-3
under the Securities Act. The Offerors have filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-3
(Nos. 333-______ and 333-_______-01) and a related preliminary prospectus for
the registration of the Preferred Securities, the Guarantee and the Subordinated
Debentures under the Securities Act of 1933, as amended (the "Securities Act"),
and the rules and regulations thereunder (the "Securities Act Regulations"). The
Offerors have prepared and filed such amendments thereto, if any, and such
amended preliminary prospectuses, if any, as may have been required to the date
hereof, and will file such additional amendments thereto and such amended
prospectuses as may hereafter be required. The registration statement has been
declared effective under the Securities Act by the Commission. The registration
statement as amended at the time it became effective (including the Prospectus
and all information deemed to be a part of the registration statement at the
time it became effective pursuant to Rule 430A(b) of the Securities Act
Regulations) is hereinafter called the "Registration Statement," except that, if
the Company files a post-effective amendment to such registration statement
which becomes effective prior to the Closing Date (as defined below),
"Registration Statement" shall refer to such registration statement as so
amended. Each prospectus included in the registration statement, or amendments
thereof, before it became effective under the Securities Act and any prospectus
filed with the Commission by the Company with the consent of the Underwriters
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pursuant to Rule 424(a) of the Securities Act Regulations (including the
documents incorporated by reference therein) is hereinafter called the
"Preliminary Prospectus." The term "Prospectus" means the final prospectus
(including the documents incorporated by reference therein, if any), as first
filed with the Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the
Securities Act Regulations. The Commission has not issued any order preventing
or suspending the use of any Preliminary Prospectus.
(b) The Company is duly incorporated and validly existing as a
corporation in good standing under the laws of the State of New Jersey with full
power and authority (corporate and other) to own, lease, and operate its
properties and conduct its business as described in the Prospectus (as defined
in Section 2(e) of this Agreement); the Company is duly registered under the
Bank Holding Company Act of 1956, as amended (the "BHCA"); the Company has no
subsidiaries except those described in the Registration Statement (each a
"Subsidiary"); the Company owns, directly or indirectly, beneficially and of
record all of the outstanding capital stock of each Subsidiary free and clear of
any claim, lien, encumbrance or security interest, except as described in the
Prospectus. The Company and each of its Subsidiaries is duly qualified to do
business and is in good standing as a foreign corporation in each jurisdiction
in which any of them own or lease properties, has an office, or in which the
business conducted by any of them make such qualification necessary, except
where the failure to so qualify would not have a material adverse effect on the
condition (financial or otherwise), business, prospects, assets, properties,
results of operations, or net worth of the Company and its Subsidiaries taken as
a whole ("Material Adverse Effect"); and no proceeding has been instituted in
any jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit
or curtail, such power and authority or qualification.
(c) The Preferred Securities have been duly and validly
authorized for issuance and sale to the Underwriters pursuant to this Agreement
and, when executed and authenticated in accordance with the terms of the Trust
Agreement and delivered to the Underwriters against payment of the consideration
set forth herein, will constitute valid and legally binding obligations of the
Trust enforceable in accordance with their terms and entitled to the benefits
provided by the Trust Agreement (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership, readjustment of
debt, moratorium, fraudulent conveyance or similar laws relating to or affecting
creditors' rights generally or general equity principles (whether considered in
a proceeding in equity or at law)). The Trust Agreement has been duly authorized
and, when executed by the proper officers of the Trust and delivered by the
Trust, will have been duly executed and delivered by the Trust and will
constitute the valid and legally binding instrument of the Trust, enforceable in
accordance with its terms, (except as such enforceability may be limited by
applicable
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bankruptcy, insolvency, reorganization, receivership, readjustment of debt,
moratorium, fraudulent conveyance or similar laws relating to or affecting
creditors' rights generally or general equity principles (whether considered in
a proceeding in equity or at law)). The Subordinated Debentures have been duly
and validly authorized for delivery by the Company and, when duly authenticated
in accordance with the terms of the Indenture and delivered to the Trust against
payment of the consideration set forth herein, will constitute valid and legally
binding obligations of the Company enforceable against the Company in accordance
with their terms (except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, readjustment of debt,
moratorium, fraudulent conveyance or similar laws relating to or affecting
creditors' rights generally or general equity principles (whether considered in
a proceeding in equity or at law)) and entitled to the benefits provided by the
Indenture. The Indenture has been duly authorized and, when executed by the
proper officers of the Company and delivered by the Company, will have been duly
executed and delivered by the Company and will constitute the valid and legally
binding instrument of the Company, enforceable in accordance with its terms,
(except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, readjustment of debt, moratorium,
fraudulent conveyance or similar laws relating to or affecting creditors' rights
generally or general equity principles (whether considered in a proceeding in
equity or at law)). The Guarantee Agreement has been duly authorized and, when
executed by the proper officers of the Company and delivered by the Company,
will have been duly executed and delivered by the Company and will constitute
the valid and legally binding instrument of the Company, enforceable in
accordance with its terms, (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership, readjustment of
debt, moratorium, fraudulent conveyance or similar laws relating to or affecting
creditors' rights generally or general equity principles (whether considered in
a proceeding in equity or at law)). The Trust Agreement, the Guarantee
Agreement, and the Indenture have been duly qualified under the Trust Indenture
Act; and the Preferred Securities, the Common Securities, the Trust Agreement,
the Guarantee Agreement, the Subordinated Debentures and the Indenture conform
in all material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus.
(d) Neither the Trust nor the Company or any Subsidiary, is,
or with the giving of notice or lapse of time or both will be, in violation or
breach of, or in default under, nor will the execution or delivery of, or the
performance and consummation of the transactions contemplated by this Agreement
(including the offer, sale, or delivery of the Preferred Securities), conflict
with, or result in a violation or breach of, or constitute a default under, any
provision of the organization documents of the Trust or the Articles of
Incorporation, Bylaws (as amended or restated) of the Company, or other
governing documents of the Trust, the Company or any Subsidiary, or of any
provision of any agreement, contract, mortgage, deed of trust, lease, loan
agreement, indenture, note, bond, or other evidence of indebtedness, or other
material agreement or instrument to which the Trust, the Company or any
Subsidiary is a party or by which any of them is bound or to which any of their
properties is subject, nor will the performance by the Offerors of their
obligations hereunder violate any rule, regulation, order, or decree, applicable
to the Trust, the Company or any Subsidiary of any court or any regulatory body,
administrative agency, or other governmental body having jurisdiction over the
Trust, the Company or any Subsidiary or any of their respective properties, or
any order of any court or governmental agency or authority entered in any
proceeding to which the Trust, the Company or any Subsidiary was or is now a
party or by which it is bound, except those, if any, described in the Prospectus
or which are not material to the Company and the Trust taken as a whole. No
consent, approval, filing, authorization, registration, qualification, or order,
including with or by any bank regulatory agency, is required for the execution,
delivery, and performance of this Agreement or the consummation of the
transactions contemplated by this Agreement, other than such that have
4
<PAGE>
been obtained or made, except for compliance with the Securities Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Blue
Sky Laws applicable to the public offering of the Preferred Securities by the
Underwriters, the clearance of such offering and the underwriting arrangements
evidenced hereby with the National Association of Securities Dealers, Inc.
("NASD"), and the listing of the Preferred Securities on the Nasdaq Stock
Market. This Agreement has been duly authorized, executed and delivered by the
Company and the Trust and constitutes a valid and binding obligation of the
Company and the Trust and is enforceable against the Company and the Trust in
accordance with its terms.
(e) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus complies in all material respects with the requirements of the
Securities Act and the Securities Act Regulations. As of the effective date of
the Registration Statement, and at all times subsequent thereto up to the
Closing Date or any Option Closing Date (as defined below), the Registration
Statement and the Prospectus, and any amendments or supplements thereto,
contained or will contain all material statements that are required to be stated
therein in accordance with the Securities Act and the Securities Act Regulations
and conformed or will conform in all material respects to the requirements of
the Securities Act and the Securities Act Regulations, and neither the
Registration Statement nor the Prospectus, nor any amendment or supplement
thereto included or will include any untrue statement of a material fact or
omitted or will omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
no representation or warranty is made as to information contained in or omitted
from the Registration Statement, the Prospectus or any amendment or supplement
in reliance upon and in conformity with written information furnished to the
Company and the Trust by or on behalf of the Underwriters.
(f) Deloitte & Touche LLP which has audited, reviewed, and
expressed its opinion with respect to certain of the financial statements and
schedules filed with the Commission as a part of the Registration Statement and
included or to be included, as the case may be, in the Prospectus and in the
Registration Statement, and whose report is included in the Prospectus and the
Registration Statement are independent accountants as required by the Securities
Act and the Securities Act Regulations.
(g) The financial statements and schedules and the related
notes thereto included or to be included, as the case may be, in the
Registration Statement, the Preliminary Prospectus, and the Prospectus present
fairly the financial position of the entities purported to be shown thereby as
of the respective dates of such financial statements and schedules, and the
results of operations and changes in equity and in cash flows of the entities
purported to be shown thereby for the respective periods covered thereby, all in
conformity with generally accepted accounting principles consistently applied
throughout the periods involved, except as may be disclosed in the Prospectus.
All adjustments necessary for a fair presentation of the results of such periods
have been made. The Company had an outstanding capitalization as set forth under
"Capitalization" in the Prospectus as of the date indicated therein and there
has been no material change therein since such date except as disclosed in the
Prospectus. The financial, operating, and statistical information set forth in
the Prospectus under captions
5
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"Summary," "Selected Consolidated Financial Data," "Use of Proceeds,"
"Capitalization," "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Business of the Company" and "Management" are
fairly presented and prepared on a basis consistent with the audited financial
statements of the Company.
(h) There is no litigation or governmental proceeding, action,
or investigation pending or, to the knowledge of the Trust or the Company,
threatened, to which the Trust, the Company or any Subsidiary is or may be a
party or to which property owned or leased by the Company or any Subsidiary is
or may be subject, or related to environmental or discrimination matters, which
is required to be disclosed in the Registration Statement or the Prospectus by
the Securities Act or the Securities Act Regulations and is not so disclosed, or
which questions the validity of this Agreement or any action taken or to be
taken pursuant hereto.
(i) Either the Company or a Subsidiary, as the case may be,
has good and marketable title in fee simple to all items of real property and
good and marketable title to all the personal properties and assets reflected as
owned by the Company or a Subsidiary in the Prospectus (or elsewhere in the
Registration Statement), in each case clear of all liens, mortgages, pledges,
charges, or encumbrances of any kind or nature except those, if any, reflected
in the financial statements described above (or elsewhere in the Registration
Statement) or which are not material to the Company and its Subsidiaries taken
as a whole; all properties held or used by the Company or a Subsidiary under
leases, licenses, franchises or other agreements are held by them under valid,
existing, binding, and enforceable leases, franchises, licenses, or other
agreements with respect to which it is not in default.
(j) Neither the Trust nor the Company or any Subsidiary has
taken or will take, directly or indirectly, any action designed to cause or
result in, or which has constituted or which might reasonably be expected to
constitute, stabilization or manipulation, under the Exchange Act or otherwise,
of the price of the Preferred Securities.
(k) Except as reflected in or contemplated by the Registration
Statement, since the respective dates as of which information is given in the
Registration Statement and prior to the Closing Date and Option Closing Date (as
such terms are hereinafter defined):
(i) neither the Company nor any Subsidiary has or will have
incurred any material liabilities or obligations, direct or contingent, or
entered into any material transaction not in the ordinary course of business
without the prior consent of the Representatives;
(ii) neither the Company nor any Subsidiary has or will have
paid or declared any dividend or other distribution with respect to its capital
stock and neither the Company nor any Subsidiary has or will be delinquent in
the payment of principal or interest on any outstanding debt obligations; and
(iii)there has not been and will not be any change in the
capital stock or any material change in the indebtedness of the Company or any
Subsidiary (except as may result from the closing of the transactions
contemplated by this Agreement), or any adverse change in the condition
(financial or otherwise), or any development involving a prospective adverse
change in their respective businesses (resulting from litigation or
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<PAGE>
otherwise), prospects, properties, condition (financial or otherwise), net
worth, or results of operations which is material to the Company and its
Subsidiaries taken as a whole.
(l) There is no contract or other document, transaction, or
relationship required to be described in the Registration Statement, or to be
filed as an exhibit to the Registration Statement, by the Securities Act or by
the Securities Act Regulations that has not been described or filed as required.
(m) All documents delivered or to be delivered by the Offerors
or any of their representatives in connection with the issuance and sale of the
Preferred Securities were on the dates on which they were delivered, or will be
on the dates on which they are to be delivered, true, complete, and correct in
all material respects.
(n) The Company and each Subsidiary have filed all necessary
federal and all state and foreign income and franchise tax returns and paid all
taxes shown as due thereon; and no tax deficiency has been asserted or
threatened against the Company or any Subsidiary that would have a Material
Adverse Effect, except as described in the Prospectus.
(o) Neither the Trust nor the Company or any Subsidiary has,
directly or indirectly, at any time:
(i) made any unlawful contribution to any candidate for
political office, or failed to disclose any contribution in violation of law; or
(ii) made any payment to any federal, state, local, or foreign
government officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or permitted by the laws of
the United States or any jurisdiction thereof or applicable foreign
jurisdictions.
(p) The Company or a Subsidiary owns or possesses adequate
rights to use all patents, patent applications, trademarks, service marks, trade
names, trademark registrations, servicemark registrations, copyrights, and
licenses necessary for the conduct of the business of the Company and the
Subsidiaries or ownership of their respective properties, and neither the
Company nor any Subsidiary has received notice of conflict with the asserted
rights of others in respect thereof which has not been resolved.
(q) The Company and each Subsidiary have in place and
effective such policies of insurance, with limits of liability in such amounts,
as are normal and prudent in the ordinary scope of business similar to that of
the Company and such Subsidiary in the respective jurisdiction in which they
conduct business.
(r) The Company and each Subsidiary have and hold, and at the
Closing Date or Option Closing Date will have and hold, and are operating in
compliance with, and have fulfilled and performed all of their material
obligations with respect to, all permits, certificates, franchises, grants,
easements, consents, licenses, approvals, charters, registrations,
authorizations, and orders (collectively, "Permits") required under all laws,
rules, and regulations in connection with their respective businesses, and all
of such Permits are in full force and effect; and there is no pending
proceeding, and neither the Company nor any Subsidiary has received notice of
any threatened proceeding, relating to the revocation or modification of any
such Permits. Neither the Company nor any Subsidiary is (by virtue
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<PAGE>
of any action, omission to act, contract to which it is a party or by which it
is bound, or any occurrence or state of facts whatsoever) in violation of any
applicable federal, state, municipal, or local statutes, laws, ordinances,
rules, regulations and/or orders issued pursuant to foreign, federal, state,
municipal, or local statutes, laws, ordinances, rules, or regulations (including
those relating to any aspect of banking, bank holding companies, environmental
protection, occupational safety and health, and equal employment practices)
heretofore or currently in effect, except such violation that has been fully
cured or satisfied without recourse or that is not reasonably likely to have a
Material Adverse Effect.
(s) The provisions of any employee pension benefit plan
("Pension Plan") as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), in which the Company or any
Subsidiary is a participating employer are in substantial compliance with ERISA,
and neither the Company nor any Subsidiary is in violation of ERISA. The
Company, each Subsidiary, or the plan sponsor thereof, as the case may be, has
duly and timely filed the reports required to be filed by ERISA in connection
with the maintenance of any Pension Plans in which the Company or any Subsidiary
is a participating employer, and no facts, including any "reportable event" as
defined by ERISA and the regulations thereunder, exist in connection with any
Pension Plan in which the Company or any Subsidiary is a participating employer
which might constitute grounds for the termination of such plan by the Pension
Benefit Guaranty Corporation or for the appointment by the appropriate U.S.
District Court of a trustee to administer any such plan. The provisions of any
employee benefit welfare plan, as defined in Section 3(1) of ERISA, in which the
Company or any Subsidiary is a participating employer, are in substantial
compliance with ERISA, and the Company, any Subsidiary, or the plan sponsor
thereof, as the case may be, has duly and timely filed the reports required to
be filed by ERISA in connection with the maintenance of any such plans.
(t) Neither the Company nor the Trust is an open-end
investment company, unit investment trust or face-amount certificate company
that is, or is required to be, registered under Section 8 of the Investment
Company Act of 1940, as amended, or subject to regulation under such Act.
(u) Sun National Bank is a member in good standing of the
Federal Reserve System and its deposits are insured by the Federal Deposit
Insurance Corporation ("FDIC") up to the legal limits.
(v) Neither this Agreement nor any certificate, statement or
other document delivered or to be delivered by the Offerors or any Subsidiary
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
Any certificate signed by any director or officer of the Company or the
Trust, as the case may be, and delivered to the Representatives or to counsel
for the Underwriters shall be deemed a representation and warranty of the
Company or the Trust, as the case may be, to the Underwriters as to the matters
covered thereby.
Any certificate delivered by the Company or the Trust, as the case may
be, to their respective counsel for purposes of enabling such counsel to render
an opinion pursuant to
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Section 8 will also be furnished to the Representatives and counsel for the
Underwriters and shall be deemed to be additional representations and warranties
to the Underwriters by the Company and the Trust as to the matters covered
thereby.
3. Purchase Sale and Delivery to Underwriters, Closing. On the
basis of the representations and warranties herein contained and subject to the
terms and conditions herein set forth, the Trust and the Company, as the case
may be, agree that the Trust will issue and sell to the Underwriters, and each
of the Underwriters agrees, severally and not jointly to purchase from the
Trust, the number of Firm Securities set forth opposite the name of such
Underwriter in Schedule A at a purchase price of $25 per Firm Security.
Payment of the purchase price for, and delivery of, the Firm Securities
shall be made at the offices of Arnold & Porter, 555 Twelfth Street, N.W.,
Washington, D.C., or at such other place as shall be agreed upon by the
Representatives, the Trust and the Company, at 9:00 A.M. Eastern Standard Time,
on the fourth business day (unless postponed in accordance with the provisions
of Section 14) following the date of this Agreement, or such other time not
later than ten (10) business days after such date as shall be agreed upon by the
Representatives, the Trust and the Company (such time and date of payment and
delivery being herein called the "Closing Date").
As compensation (the "Underwriting Commission") for the commitments of
the Underwriters contained in this Section 3, the Company hereby agrees to pay
to the Underwriters an amount equal to ___% of the public offering price of the
Preferred Securities. Such payment will be made on the Closing Date with respect
to the Firm Securities and on the Option Closing Date (as defined below) with
respect to the Option Securities.
Payment for the Firm Securities shall be made to the Trust by wire
transfer of immediately available funds, against delivery to the Underwriter of
the Firm Securities to be purchased by it. The Firm Securities shall be issued
in the form of one or more fully registered global securities (the "Global
Securities") in book-entry form in such denominations and registered in the name
of the nominee of The Depository Trust Company (the "DTC") or in such names as
the Representatives may request in writing at least two business days before the
Closing Date. The Global Securities representing the Firm Securities shall be
made available for examination by the Representatives and counsel to the
Underwriters not later than 9:30 A.M. Eastern Standard Time on the last business
day prior to the Closing Date.
In addition, on the basis of the representations, warranties, and
agreements contained herein, but subject to the terms and conditions set forth
herein, the Trust hereby grants to the Underwriters an option to purchase,
severally and not jointly, from the Trust the Option Securities in the same
proportion as the number of Preferred Securities set forth opposite their names
on Schedule A bears to the total number of Firm Securities, at the same purchase
price per Preferred Security to be paid for the Firm Securities, for use solely
in covering any over-allotments made by the Underwriters in the sale and
distribution of the Firm Securities. The option granted hereunder may be
exercised at any time (but not more than once) within thirty (30) days after the
date of this Agreement, upon notice by the Representatives to the Trust which
sets forth the aggregate liquidation amount of Option Securities as to which the
Underwriters are exercising the option, and the time and place at which the
certificate
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representing the Option Securities will be delivered. Such time of delivery may
not be earlier than the Closing Date and herein is called the "Option Closing
Date." The Option Closing Date shall be determined by the Representatives, but
if at any time other than the Closing Date, shall not be earlier than three nor
later than five full business days after delivery of such notice to exercise.
Certificates for the Option Securities will be made available for inspection at
least 24 hours prior to the Option Closing Date at the offices of the DTC, or
its designated custodian, or at such other location as specified by the
Representatives. The manner of payment for a delivery of the Option Securities
shall be the same as for the Firm Securities as specified in this Section 3.
4. Representations and Warranties of the Underwriters. The
Representatives, on behalf of the Underwriters, represent and warrant to the
Company that the information set forth (a) in the last paragraph of the cover
page of the Prospectus, (b) on the inside front cover page of the Prospectus
relating to stabilization, and (c) in the third and sixth paragraphs of the
section in the Prospectus entitled "Underwriting" was the only written
information furnished to the Company by and on behalf of any Underwriter
expressly for use in connection with the preparation of the Registration
Statement, and is correct and complete in all material respects and does not
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading.
5. Offering by the Underwriters. The Trust and the Company are advised
by the Representatives that the Underwriters propose to make a public offering
of the Preferred Securities, on the terms and conditions set forth in the
Registration Statement from time to time as and when the Underwriters deem
advisable after the Registration Statement becomes effective. Because the NASD
is expected to view the Preferred Securities as interests in a direct
participation program, the offering of the Preferred Securities is being made in
compliance with the applicable provisions of Rule 2810 of the NASD's Conduct
Rules.
6. Agreements of the Offerors. Each of the Offerors covenants and
agrees with the Underwriter that:
(a) If any information shall have been omitted from the
Registration Statement in reliance upon Rule 430A, the Company, at the earliest
possible time, will furnish the Representatives with copies of the Prospectus to
be filed by the Offerors with the Commission to comply with Rule 424(b) and Rule
430A under the Securities Act, and, will file such Prospectus with the
Commission in compliance with such Rules. Upon compliance with such Rules, the
Company will so advise the Representatives promptly. The Company will advise the
Representatives and counsel to the Underwriters promptly of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of the institution of any proceedings for that purpose, or of any
notification received by the Company of the suspension of qualification of the
Preferred Securities for sale in any jurisdiction or the initiation or
threatening of any proceedings for that purpose, or of any notification received
by the Company of the suspension of qualification of the Preferred Securities
for sale in any jurisdiction or the initiation or threatening of any proceedings
for that purpose. The Company also will advise the Representatives and counsel
to the Underwriters promptly of any request of the Commission for amendment or
supplement of
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the Registration Statement, of any Preliminary Prospectus, or of the Prospectus,
or for additional information, and the Offerors will not file any amendment or
supplement to the Registration Statement (either before or after it becomes
effective), to any Preliminary Prospectus, or to the Prospectus (including a
prospectus filed pursuant to Rule 424(b)) if the Representatives have not been
furnished with copies prior to such filing or if the Representatives reasonably
object to such filing.
(b) For the period during which a Prospectus relating to the
Preferred Securities is required to be delivered under the Securities Act, the
Offerors shall comply with all requirements imposed on them by the Securities
Act, as now and hereafter amended, and by the Securities Act Regulations, as
from time to time in force, so far as is necessary to permit the continuance of
sales or dealings in the Preferred Securities as contemplated by the provisions
hereof and the Prospectus. If any event occurs as a result of which the
Prospectus, including any subsequent amendment or supplement, would include an
untrue statement of a material fact, or would omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or if
it becomes necessary at any time to amend the Prospectus, including any
amendment or supplement thereto, to comply with the Securities Act, the Company
promptly will advise the Representatives and counsel to the Underwriters thereof
and the Offerors will promptly prepare and file with the Commission an amendment
or supplement that will correct such statement or omission or an amendment that
will effect such compliance; and, if any Underwriter is required to deliver a
prospectus nine (9) months or more after the effective date of the Registration
Statement, the Company, upon request of the Representatives but at the expense
of such Underwriter, will prepare promptly such prospectus or prospectuses as
may be necessary to permit compliance with the requirements of Section 10(a)(3)
of the Securities Act.
(c) The Offerors will not, prior to the Option Closing Date or
thirty (30) days after the date of this Agreement, whichever occurs first,
without the prior consent of the Representatives, incur any material liability
or obligation, direct or contingent, or enter into any material transaction,
other than in the ordinary course of business, or any transaction with a related
party which is required to be disclosed in the Prospectus pursuant to Item 404
of Regulation S-K under the Securities Act, except as contemplated by the
Prospectus.
(d) The Company will make generally available to its security
holders and the Representatives an earnings statement of the Company as soon as
practicable, but in no event later than fifteen (15) months after the end of the
Company's current fiscal quarter, covering a period of twelve (12) consecutive
calendar months beginning after the effective date of the Registration
Statement, but beginning not later than four (4) months after such effective
date, which will satisfy the provisions of the last subsection of Section 11(a)
of the Securities Act and Rule 158 promulgated thereunder.
(e) During such period as a prospectus is required by law to
be delivered in connection with sales by an underwriter or dealer, the Company
will furnish to the Representatives, at the expense of the Company, copies of
the Registration Statement, the Prospectus, any Preliminary Prospectus, and all
amendments and supplements to any such documents in each case as soon as
available and in such quantities as the Representatives may
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reasonably request, for the purposes contemplated by the Securities Act.
(f) The Offerors will use their best efforts to take or cause
to be taken in cooperation with the Representatives and counsel to the
Underwriters all actions required in qualifying or registering the Preferred
Securities for sale under the Blue Sky Laws of such jurisdictions as the
Representatives may reasonably designate, provided the Offerors shall not be
required to qualify generally as foreign corporations or as a dealer in
securities or to consent generally to the service of process under the law of
any such state (except with respect to the offering and sale of the Preferred
Securities), and will continue such qualifications or registrations in effect so
long as reasonably requested by the Representatives to effect the distribution
of the Preferred Securities (including, without limitation, compliance with all
undertakings given pursuant to such qualifications or registrations). In each
jurisdiction where any of the Preferred Securities shall have been qualified as
provided above, the Offerors will file such reports and statements as may be
required to continue such qualification for a period of not less than one (1)
year from the date of this Agreement.
(g) The Company will furnish to its security holders annual
reports containing financial statements audited by independent public
accountants. During the period ending three (3) years after the date of this
Agreement, (i) as soon as practicable after the end of the fiscal year, the
Company will furnish to each of the Representatives two copies of the annual
report of the Company containing the audited consolidated balance sheet of the
Company as of the close of such fiscal year and corresponding audited
consolidated statements of earnings, stockholders' equity and cash flows for the
year then ended, and (ii) the Company will file promptly and will furnish to
each of the Representatives at or before the filing thereof copies of all
reports and any definitive proxy or information statements required to be filed
by the Company with the Commission pursuant to Section 13, 14, or 15 of the
Exchange Act. During such three-year period the Company also will furnish to the
Representative one copy of the following:
(i) as soon as practicable after the filing thereof,
each other report, statement, or other document filed by the Company with the
Commission;
(ii) as soon as practicable after the filing thereof, all
reports, statements, other documents and financial statements furnished by the
Company to Nasdaq pursuant to requirements of or agreements with Nasdaq; and
(iii) as soon as available, each report, statement, or other
document of the Company mailed to its stockholders.
(h) The Offerors will use their best efforts to satisfy or
cause to be satisfied the conditions to the obligations of the Underwriters in
Section 8 hereof.
(i) The Offerors shall deliver the requisite notice of
issuance to the NASD and shall take all necessary or appropriate action within
its power to maintain the authorization for trading of the Preferred Securities
on the Nasdaq Stock Market for a period of at least thirty-six (36) months after
the date of this Agreement.
(j) The Trust shall comply in all respects with the
undertakings given by the Trust in connection with the qualification or
registration of the Preferred Securities for
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<PAGE>
offering and sale under the Blue Sky Laws.
(k) The Trust shall apply the proceeds from its sale of the
Preferred Securities, combined with the entire proceeds from the sale by the
Trust to the Company of the Trust's Common Securities, to purchase an equivalent
amount of Subordinated Debentures. All the proceeds to be received by the
Company from the sale of the Subordinated Debentures will be used in the manner
and for the purposes specified under the heading "Use of Proceeds" in the
Prospectus. The Offerors shall file, and will furnish or cause to be furnished
to the Underwriter and counsel to the Underwriters copies of all reports as may
be required in accordance with Rule 463 under the Securities Act.
(l) Except for the sale of Preferred Securities pursuant to
this Agreement, neither the Company nor any Subsidiary shall, directly or
indirectly, offer, sell, contract to sell, issue, distribute, grant any option,
right, or warrant to purchase or otherwise dispose of any shares of the
Preferred Securities or substantially similar securities, in the open market or
otherwise, for a period of one hundred eighty (180) days after the later of the
effective date of the Registration Statement or the date of this Agreement,
without the express prior written consent of the Representatives.
7. Payment of Expenses and Fees
(a) Whether or not the transactions contemplated hereunder are
consummated, or if this Agreement is terminated for any reason, the Company will
pay or cause to be paid the costs, fees, and expenses incurred in connection
with the offering of the Preferred Securities as follows:
(i) All costs, fees, and expenses incurred in connection with
the performance of the obligations of the Company and the Trust hereunder,
including all fees and expenses of the Company and the Trust's accountants and
counsel, all costs and expenses incurred in connection with the preparation,
printing, filing, and distribution (including delivery and shipping costs) of
the Registration Statement, each Preliminary Prospectus, and the Prospectus
(including all amendments and exhibits thereto and the financial statements
therein), and agreements and supplements provided for herein, this Agreement and
other underwriting documents, including various Underwriters' letters, and the
Preliminary and Supplemental Blue Sky Memoranda.
(ii) All filing and registration fees and expenses, including
the legal fees and disbursements of counsel, incurred in connection with
qualifying or registering all or any part of the Preferred Securities, the
Guarantee and the Subordinated Debentures for offer and sale under the Blue Sky
Laws.
(iii) All fees and expenses of the Offerors' registrar and
transfer agent; all transfer taxes, if any, and all other fees and expenses
incurred in connection with the sale and delivery of the Preferred Securities to
the Underwriters.
(iv) The filing fees of the NASD and applicable fees charged
by Nasdaq for inclusion of the Preferred Securities for quotation on the
National Market System, and
(v) All other costs and expenses incident to the performance
of the Company's and the Trust's obligations hereunder which are not otherwise
provided for in this
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Section 7(a).
(b) On the consummation of the offering of the Firm
Securities, the Company shall pay Advest, Inc. ____________ Dollars and 00/100
($______) as a financial advisory fee.
8. Conditions to the Obligations of the Underwriters. The obligations
of the Underwriters under this Agreement shall be subject to the accuracy of the
representations and warranties on the part of the Company and the Trust set
forth herein as of the Closing Date, and if applicable, as of the Option Closing
Date, as the case may be, to the accuracy of the statements of the Offerors'
directors and officers, to the performance by the Company and the Trust of their
obligations hereunder, and to the following additional conditions, except to the
extent expressly waived in writing by the Representatives:
(a) The Registration Statement and all post-effective
amendments thereto shall have been declared effective by the Commission no later
than 5:30 p.m. eastern time, on the date of this Agreement, or such later time
as shall have been consented to by the Representatives, but in any event not
later than 5:30 p.m., eastern time, on the third full business day following the
date hereof; if the Offerors omitted information from the Registration Statement
at the time it became effective in reliance on Rule 430A under the Securities
Act, the Prospectus shall have been filed with the Commission in compliance with
Rule 424(b) and Rule 430A under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement or any amendment or supplement
thereto shall have been issued; no proceeding for the issuance of such an order
shall have been initiated or shall be pending or, to the knowledge of the
Offerors or the Representatives, threatened or contemplated by the Commission;
and any request of the Commission for additional information (to be included in
the Registration Statement or the Prospectus or otherwise) shall have been
disclosed to the Representative and complied with to the Representatives'
satisfaction.
(b) The Preferred Securities, the Guarantee and the
Subordinated Debentures shall have been qualified or registered for sale, or
subject to an available exemption from such qualification or registration, under
the Blue Sky Laws of such jurisdictions as shall have been reasonably specified
by the Representative and the offering contemplated by this Agreement shall have
been cleared by the NASD.
(c) Since the dates as of which information is given in the
Registration Statement:
(i) There shall not have been any material adverse change, or
any development involving a prospective material adverse change, in the ability
of the Company or any Subsidiary to conduct their respective business (whether
by reason of any court, legislative, other governmental action, order, decree,
or otherwise), or in the general affairs, condition (financial and otherwise)
business, prospects, properties, management, financial position or earnings,
results of operations, or net worth of the Company or any Subsidiary, whether or
not arising from transactions in the ordinary course of business; and
(ii) Neither the Company nor any Subsidiary shall have
sustained any loss or interference from any labor dispute, strike, fire, flood,
windstorm, accident, or
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<PAGE>
other calamity (whether or not insured) or from any court or governmental
action, order, or decree.
The effect of which on the Company or any Subsidiary, in any such case described
in clause (c)(i) or (ii) above, is in the reasonable opinion of the
Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the Preferred
Securities on the terms and in the manner contemplated in the Registration
Statement and the Prospectus.
(d) There shall have been furnished to the Representatives on
the Closing Date and the Option Closing Date, except as otherwise expressly
provided below:
(i) An opinion of Malizia, Spidi, Sloane & Fisch, P.C.,
counsel to the Company, dated as of the Closing Date and any Option Closing
Date, in form and substance substantially in the form attached hereto as Exhibit
A.
(ii) The favorable opinion, dated the Closing Date and the
Option Closing Date, of White & Case, counsel to the Trust Company and Trust
Delaware, substantially in the form attached hereto as Exhibit B.
(iii) The favorable opinion, dated the Closing Date and the
Option Closing Date, of Richards, Layton & Finger, special Delaware counsel to
the Company and the Trust, substantially to the effect and in the form attached
hereto as Exhibit C.
(iv) The favorable opinion, dated the Closing Date and the
Option Closing Date, of Richards, Layton & Finger, special Delaware counsel to
Trust Delaware, substantially to the effect and in the form attached hereto as
Exhibit D.
(v) The favorable opinion, dated the Closing Date, of Arnold &
Porter, counsel to the Underwriters as to such matters as the Representatives
shall reasonably request.
In rendering such opinions specified in clause (d)(ii), (iii) or (iv)
above, counsel may rely upon an opinion or opinions, each dated the Closing
Date, of other counsel retained by them or the Company as to laws of any
jurisdiction other than the United States or the State of New York, provided
that (A) such reliance is expressly authorized by each opinion so relied upon
and a copy of each such opinion is delivered to the Representatives, and (B)
counsel shall state in their opinion that they believe that they and the
Underwriters are justified in relying thereon. Insofar as such opinions involve
factual matters, such counsel may rely, to the extent such counsel deems proper,
upon certificates of officers of the Company, its Subsidiaries and the Trust and
certificates of public officials.
(e) `At the time this Agreement is executed and also on the
Closing Date and the Option Closing Date, as the case may be, there shall be
delivered to each of the Representatives a letter from Deloitte & Touche LLP,
the Company's independent accountants, the first letter to be dated the date of
this Agreement, the second letter to be dated the Closing Date, and the third
letter to be dated the Option Closing Date, if any, which shall be in form and
substance reasonably satisfactory to the Representatives and shall contain
information as of a date within five days of the date of such letter. There
shall not have been any change set forth in any letter referred to in this
subsection (e) that makes it impracticable
15
<PAGE>
or inadvisable in the judgment of the Representatives to proceed with the public
offering or purchase of the Preferred Securities as contemplated hereby.
(f) On the Closing Date and on the Option Closing Date, a
certificate signed by the Chairman of the Board, the President, a Vice Chairman
of the Board or any Executive or Senior Vice President and the principal
financial or accounting officer of the Company, dated the Closing Date or the
Option Closing Date, as the case may be, to the effect that the signers of such
certificate have carefully examined the Registration Statement and this
Agreement and that:
(i) The representations and warranties of the Offerors in this
Agreement are true and correct in all material respects on and as of the Closing
Date or the Option Closing Date, as the case may be, with the same effect as if
made on the Closing Date or the Option Closing Date, as the case may be and the
Offerors have complied in all material respects with all the agreements and
satisfied in all material respects all the conditions on its part to be
performed or satisfied at or prior to the Closing Date or the Option Closing
Date, as the case may be; and
(ii) The Commission has not issued an order preventing or
suspending the use of the Prospectus or any Preliminary Prospectus or any
amendment thereto; no stop order suspending the effectiveness of the
Registration Statement has been issued; and, to the knowledge of the respective
signatories, no proceeding for that purpose has been instituted or is pending or
contemplated under the Securities Act;
(iii) Each of the respective signatories of the certificate
has carefully examined the Registration Statement, the Prospectus, and any
amendments or supplements thereto, and such documents contain all material
statements and information required to be made therein, and neither the
Registration Statement nor any amendment or supplement thereto includes any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
and, since the date on which the Registration Statement was initially filed, no
event has occurred that was required to be set forth in an amended or
supplemented prospectus or in an amendment to the Registration Statement that
has not been so set forth; provided, however, that no representation need be
made as to information contained in or omitted from the Registration Statement
or any amendment or supplement in reliance upon and in conformity with written
information furnished to the Company and the Trust by or on behalf of any
Underwriter through the Representatives; and
(iv) Since the date on which the Registration Statement was
initially filed with the Commission, there has not been any material adverse
change or a development involving a prospective material adverse change in the
business, properties, financial condition, or earnings of the Company and its
Subsidiaries taken as a whole, whether or not arising from transactions in the
ordinary course of business, except as disclosed in the Registration Statement
as heretofore amended or (but only if the Representatives expressly consent
thereto in writing) as disclosed in an amendment or supplement thereto filed
with the Commission and delivered to the Representatives after the execution of
this Agreement; since such date and except as so disclosed or in the ordinary
course of business, neither the Company nor any Subsidiary has incurred any
liability or obligation, direct or indirect, or
16
<PAGE>
entered into any transaction that is material to the Company or such Subsidiary,
as the case may be, not contemplated in the Prospectus; since such date and
except as so disclosed there has not been any change in the outstanding capital
stock of the Company, or any change that is material to the Company and its
Subsidiaries taken as a whole in the short-term debt or long-term debt of the
Company or any Subsidiary; since such date and except as so disclosed, neither
the Company nor any of its Subsidiaries have incurred any material contingent
obligations, and no material litigation is pending or, to their knowledge
threatened against the Company or any Subsidiary; and, since such date and
except as so disclosed, neither the Company nor any of its Subsidiaries have
sustained any material loss or interference from any strike, fire, flood,
windstorm, accident or other calamity (whether or not insured) or from any court
or governmental action, order, or decree.
(g) Prior to the Closing Date and any Option Closing Date, the
Company shall have furnished to the Representatives such further information,
certificates and documents as the Representatives may reasonably request in
connection with the offering of the Preferred Securities.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Underwriters by notice from the Representatives to the Company at any
time without liability on the part of any Underwriters, including the
Representatives, or the Company, except for expenses to be paid by the Company
pursuant to Section 7 hereof or reimbursed by the Company pursuant to Section 9
and except to the extent provided in Section 11.
9. Reimbursement of Underwriters' Expenses. If the sale of the
Preferred Securities to the Underwriters on the Closing Date is not consummated
because the offering is terminated or indefinitely suspended by the Company or
by the Representatives for any reason permitted by this Agreement, other than
the Underwriters' inability to legally act as Underwriters, the Company will
reimburse the Underwriters for the Underwriters' reasonable out-of-pocket
expenses, including fees and disbursements of its counsel, that shall have been
incurred by the Underwriters in connection with the proposed purchase and sale
of the Preferred Securities in an aggregate amount not to exceed $90,000. Any
such termination or suspension shall be without liability of any party to the
other except that the provisions of this Section 9, and Sections 7 and 11 shall
remain effective and shall apply.
10. Maintain Effectiveness of Registration Statement. The
Representatives and the Company will use their respective best efforts to
prevent the issuance of any stop order or other such order suspending the
effectiveness of the Registration Statement and, if such stop order is issued,
to obtain the lifting thereof as soon as possible.
11. Indemnification and Contribution.
(a) The Offerors agree to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages, expenses, liabilities, or actions in respect thereof ("Claims"), joint
or several to which such Underwriter or each such controlling person may become
subject under the Securities Act, the Exchange Act, the Securities Act
Regulations, Blue Sky Laws or other federal or state statutory laws or
17
<PAGE>
regulations, at common law or otherwise (including payments made in settlement
of any litigation, if such settlement is effected with the written consent of
the Company, which consent shall not be unreasonably withheld), insofar as such
Claims arise out of or are based upon the inaccuracy or breach of any
representation, warranty, or covenant of the Company or the Trust contained in
this Agreement, any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or in any application filed
under any Blue Sky Law or other document executed by the Offerors for that
purpose or based upon written information furnished by the Offerors and filed in
any state or other jurisdiction to qualify or register any or all of the
Preferred Securities under the securities laws thereof (any such document,
application, or information being hereinafter called a "Blue Sky Application"),
or arise out of or are based upon the omission or alleged omission to state in
any of the foregoing a material fact required to be stated therein or necessary
to make the statements therein not misleading. The Company agrees to reimburse
each Underwriter and each such controlling person promptly for any legal fees or
other expenses incurred by such Underwriter or any such controlling person in
connection with investigating or defending any such Claim or appearing as a
third-party witness in connection with any such Claim; provided, however, that
the Company will not be liable in any such case to the extent that:
(i) Any such Claim arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto or in any Blue Sky Application in reliance upon
and in conformity with the written information furnished by or on behalf of the
Underwriters to the Offerors expressly for use therein pursuant to Section 4 of
this Agreement; or
(ii) Such statement or omission was contained or made in any
Preliminary Prospectus and corrected in the Prospectus and (1) any such Claim
suffered or incurred by any Underwriter (or any person who controls such
Underwriter) resulted from an action, claim, or suit by any person who purchased
Preferred Securities that are the subject thereof from such Underwriter in the
offering of the Preferred Securities, and (2) such Underwriter failed to deliver
a copy of the Prospectus (as then amended if the Offerors shall have amended the
Prospectus) to such person at or prior to the confirmation of the sale of such
Preferred Securities in any case where such delivery is required by the
Securities Act, unless such failure was due to failure by the Company to provide
copies of the Prospectus (as so amended) to the Underwriter as required by this
Agreement.
(b) Each Underwriter severally, but not jointly, agrees to
indemnify and hold harmless the Offerors, each of their directors, each of their
officers who sign the Registration Statement, and each person who controls the
Company or the Trust within the meaning of the Securities Act, against any Claim
to which the Offerors, or any such director, officer, or controlling person may
become subject under the Securities Act, the Exchange Act, the Securities Act
Regulations, Blue Sky Laws, or other federal or state statutory laws or
regulations, at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriter and the Representatives, which consent shall not be unreasonably
withheld), insofar as such Claim arises out of or is
18
<PAGE>
based upon any untrue or alleged untrue statement of any material fact contained
in the Registration Statement, any Preliminary Prospectus, the Prospectus, or
any amendment or supplement thereto, or in any Blue Sky Application, or arises
out of or is based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or in any Blue Sky
Application, in reliance upon and in conformity with the written information
furnished by or on behalf of such Underwriter to the Offerors pursuant to
Section 4 of this Agreement. Each Underwriter will severally reimburse any legal
fees or other expenses reasonably incurred by the Offerors, or any such
director, officer, or controlling person in connection with investigating or
defending any such Claim, and from any and all Claims resulting from failure of
such Underwriter to deliver a copy of the Prospectus, if the person asserting
such Claim purchased Preferred Securities from such Underwriter and a copy of
the Prospectus (as then amended if the Offerors shall have amended the
Prospectus) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Preferred Securities to such person, and if the
Prospectus (as so amended) would have cured the defect giving rise to such Claim
(unless such failure was due to a failure by the Company and the Trust to
provide sufficient copies of the Prospectuses (as so amended) to each
Underwriter).
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) of this Section 11 of notice of the commencement of any
action in respect of a Claim, such indemnified party will, if a Claim in respect
thereof is to be made against an indemnifying party under such subsection,
notify the indemnifying party in writing of the commencement thereof. In case
any such action is brought against any indemnified party, and such indemnified
party notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in and, to the extent that it
may wish, jointly with all other indemnifying parties, similarly notified,
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to the indemnified party and/or other indemnified parties
that are different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties.
(d) Upon receipt of notice from the indemnifying party to such
indemnified party of the indemnifying party's election to assume the defense of
such action and upon approval by the indemnified party of counsel selected by
the indemnifying party, the indemnifying party will not be liable to such
indemnified party under subsection (a) or (b) of this Section 11 for any legal
fees or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof, unless:
(i) the indemnified party shall have employed separate counsel
in
19
<PAGE>
connection with the assumption of legal defenses in accordance with the proviso
to the last sentence of subsection (c) of this Section 11 (it being understood,
however, that the indemnified party shall not be liable for the legal fees and
expenses of more than one separate counsel (plus local counsel), approved by the
Representatives if one or more of the Underwriters or their controlling persons
are the indemnified parties); or
(ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after the indemnified party's notice to the
indemnifying party of commencement of the action;
(e) If the indemnification provided for in this Section 11 is
unavailable to an indemnified party or insufficient to hold harmless an
indemnified party under subsection (a) or (b) of this Section 11 in respect of
any Claim referred to therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall, subject, to the limitations
hereinafter set forth, contribute to the amount paid or payable by such
indemnified party as a result of such Claim:
(i) in such proportion as is appropriate to reflect the
relative benefits received by the Offerors on the one hand and the Underwriters
on the other hand from the offering of the Preferred Securities; or
(ii) if the allocation provided by clause (e)(i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (e)(i) above, but also the
relative fault of the Offerors on the one hand and the Underwriters on the other
hand in connection with the statements or omissions that resulted in such Claim,
as well as any other relevant equitable considerations.
The respective relative benefits received by the Offerors on the one hand and
the Underwriters on the other hand shall be deemed to be in such proportion that
the Underwriters are responsible for that portion of a Claim represented by the
percentage that the amount of the Underwriting Commission bears to the public
offering price of the Preferred Securities, and the Company (including the
Company's directors, officers, and controlling persons) is responsible for the
remaining portion of such Claim.
The relative fault of the Offerors on the one hand and the Underwriters on the
other hand shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Offerors on the one hand or the Underwriters on the other hand and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such untrue statement or omission. The amount paid or payable by a party
as a result of the Claims referred to above shall be deemed to include, subject
to the limitations set forth in subsections (c) and (d) of this Section 11, any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim.
(f) The Offerors and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 11 were
determined by pro rata or per capita allocation or by any other method or
allocation that does not take into account the equitable
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<PAGE>
considerations referred to in subsection (e) of this Section 11. Notwithstanding
the other provisions of this Section 11, no underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Preferred Securities underwritten by it and distributed to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Underwriters' obligation to
contribute pursuant to this Section 11 are several in proportion to their
respective underwriting commitments and not joint.
(g) The obligations of the Company, the Trust and the
Underwriters under this Section 11 shall be in addition to any liability that
the Company, the Trust or the Underwriters may otherwise have.
12. Default of Underwriters. It shall be a condition to this Agreement
and to the obligations of the Trust to sell and deliver the Preferred Securities
hereunder, and to the obligations of each Underwriter to purchase the Preferred
Securities in the manner described herein, that, except as hereinafter provided
in this Section 12, each of the Underwriters (except a defaulting Underwriter)
shall purchase and pay for all the Preferred Securities agreed to be purchased
by such Underwriter hereunder upon tender to the Representatives of all such
Preferred Securities in accordance with the terms hereof. If any Underwriter or
Underwriters default in its or their obligations to purchase Preferred
Securities hereunder on either the Closing Date or the Option Closing Date and
the aggregate number of Preferred Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase does not exceed ten percent (10%) of
the liquidation amount of Preferred Securities the Underwriters are obligated to
purchase on such Closing Date, the Representatives may make arrangements for the
purchase of such Preferred Securities by other persons, including any of the
Underwriters, but if no such arrangements are made by such Closing Date or
Option Closing Date the nondefaulting Underwriters shall be obligated severally,
in proportion to their respective commitments hereunder, to purchase the
Preferred Securities such defaulting Underwriters agreed but failed to purchase
on such Closing Date or Option Closing Date. If any Underwriter or Underwriters
so default and the liquidation amount of Preferred Securities with respect to
which such default or defaults occur is greater than the above percentage and
arrangements satisfactory to the Representatives for the purchase of such
Preferred Securities by other person are not made within thirty-six (36) hours
after such default, this Agreement will terminate without liability on the part
of any nondefaulting Underwriter or the Company, except to the extent provided
in Section 11.
If Preferred Securities to which a default relates are to be purchased
by the nondefaulting Underwriters or by another party or parties, the
Representatives or the Company shall have the right to postpone the Closing Date
or Option Closing Date, as the case may be, for not more than seven (7) business
days in order that the necessary changes, if any, in the Registration Statement,
Prospectus, and any other documents, as well as any other arrangements, may be
effected. As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 12. Nothing herein will
21
<PAGE>
relieve a defaulting Underwriter from liability for its default.
13. Effective Date. This Agreement shall become effective immediately
on the date hereof.
14. Termination. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof, this Agreement may be
terminated by the Representatives prior to the Closing Date and the option from
the Company and the Trust referred to in Section 3, if exercised, may be
canceled by the Representatives at any time prior to the Option Closing Date,
if:
(a) The Offerors shall have failed, refused, or been unable,
at or prior to the Closing Date or Option Closing Date, as the case may be to
perform any agreement on its part to be performed hereunder.
(b) Any other condition to the obligations of the Underwriters
hereunder is not fulfilled; or
(c) In the Representatives' reasonable judgment, payment for
and delivery of the Preferred Securities is rendered impracticable or
inadvisable because:
(i) Additional governmental restrictions, not in force and
effect on the date hereof, shall have been imposed upon trading in securities
generally or minimum or maximum prices shall have been generally established on
any national securities exchange or over-the-counter market, or trading in
securities generally shall have suspended on any national securities exchange or
on the Nasdaq Stock Market, or a general banking moratorium shall have been
established by federal or state authorities;
(ii) Any event shall have occurred or shall exist that makes
untrue or incorrect in any material respect any statement or information
contained in the Registration Statement or that is not reflected in the
Registration Statement but should be reflected therein to make the statements or
information contained therein not misleading in any material respect; or
(iii) Any outbreak or escalation of major hostilities or other
national or international calamity or any substantial change in political,
financial or economic conditions shall have occurred or shall have accelerated
to such extent, in the Representatives' reasonable judgment, as to have a
material adverse effect on the general securities market or make it
impracticable or inadvisable to proceed with completion of the sale and payment
for the Preferred Securities as provided in this Agreement.
Any termination pursuant to this Section 14 shall be without liability
on the part of any Underwriter to the Company or on the part of the Company to
any Underwriter (except for expenses to be paid by the Company pursuant to
Section 7 or reimbursed by the Company pursuant to Section 9 and except as to
indemnification and contribution to the extent provided in Section 11).
15. Representations and Indemnities to Survive Delivery. The respective
indemnity and contribution agreements of the Company and the Underwriters, and
the representations, warranties, covenants, other statements of the Offerors and
of their directors
22
<PAGE>
and officers set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter, the Offerors, or any of its or their partners, officers, directors,
or any controlling person, as the case may be, and will survive delivery of and
payment for the Preferred Securities sold hereunder. The respective indemnity
and contribution of the Company and the Underwriters, the provisions of Section
7(a) and Section 9 of this Agreement, and the representations and warranties of
the Offerors will survive the termination or cancellation of this Agreement.
16. Notices. All communications hereunder shall be in writing and, if
sent to the Representatives, will be mailed, delivered, or telecopied (with
receipt confirmed) to the Representatives, c/o Advest, Inc., at One Rockefeller
Plaza, 20th Floor, New York, New York 10020, Attention: Michael T. Mayes,
Managing Director (Fax No. (212) 584-4292) with a copy to Steven Kaplan, Arnold
& Porter, 555 Twelfth Street, N.W., Washington, D.C. 20004, (Fax No. (202)
942-5999; and if sent to the Company or the Trust will be mailed, delivered, or
telecopied (with receipt confirmed) to Sun Bancorp, Inc., 226 Landis Avenue,
Vineland, New Jersey 08360, Attention: Robert F. Mack, Senior Vice President,
(Fax No. (609) 696-8844) with a copy to John J. Spidi, Malizia, Spidi, Sloane &
Fisch, P.C., One Franklin Square, 1301 K Street, N.W., Suite 700 East,
Washington, D.C. 20005 (Fax No. (202) 434-4661).
17. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors or assigns, and
to the benefit of the directors and officers (and their personal
representatives) and controlling persons referred to in Section 11, and no other
person shall acquire or have any right or obligation hereunder. The terms
"successors or assigns," as used in this Agreement, shall not include any
purchaser of the Preferred Securities from any Underwriter merely by reason of
such purchase.
18. Partial Unenforceability. If any section, subsection, clause,
or provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, subsection, clause, or provision hereof.
19. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
20. Entire Agreement. This Agreement embodies the entire agreement
among the parties hereto with respect to the transactions contemplated herein,
and there have been and are no agreements among the parties with respect to such
transactions other than as set forth or provided for herein.
21. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
23
<PAGE>
SUN CAPITAL TRUST II
SUN BANCORP, INC.
SCHEDULE I
Liquidation Amount of
Firm Securities to be
Name of Underwriter Purchased
Advest, Inc...............................................$_______________
Janney Montgomery Scott Inc. .............................$_______________
Aggregate Liquidation Amount..............................$
<PAGE>
EXHIBIT A
---------
The opinion of special counsel to the Company to be delivered pursuant to
Section 8(d)(i) of the Underwriting Agreement shall be substantially to the
effect that:
1. The Company is a corporation existing and in good standing under the
laws of the State of New Jersey, with requisite corporate power and authority to
own its properties and conduct its business as described in the Registration
Statement, except for such power and authority the absence of which would not
have a material adverse effect on the Company, and is registered as bank holding
company under the Bank Holding Company Act of 1956, as amended.
2. The Company and each Subsidiary have been duly incorporated or
organized and are validly existing as corporations or banking associations in
good standing under the laws of the jurisdiction of organization, with full
corporate power and authority to own, lease, and operate their respective
properties and conduct their respective businesses as described in the
Registration Statement; the Company and each Subsidiary are qualified to do
business as foreign corporations under the corporation laws of each jurisdiction
in which the Company or such Subsidiary, as the case may be, owns or leases
properties, has an office, or in which business is conducted and such
qualification is required, except where the failure to so qualify would not have
a material adverse effect.
3. The Company and the Trust each has full corporate power and
authority to execute, deliver, and perform the Underwriting Agreement and to
issue, sell, and deliver the Preferred Securities to be sold by it to the
Underwriters as provided herein; the Underwriting Agreement has been duly
authorized, executed and delivered by the Company and the Trust, and constitutes
a legal, valid, and binding obligation of each of the Company and the Trust and
is enforceable against each of the Company and the Trust in accordance with its
terms, except as enforceability of this Agreement may be limited by bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting creditors'
rights generally, and by equitable principles limiting the right to specific
performance or other equitable relief and except as the obligations of the
Company under the indemnification and contribution provisions of Section 11 of
the Agreement may be limited by laws or unenforceable as against public policy,
as to which no opinion is expressed, and an implied covenant of good faith and
fair dealing.
4. The Trust Agreement has been duly authorized, executed and delivered
by the Company, and is a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, readjustment of debt, moratorium, fraudulent
conveyance or similar laws relating to or affecting creditors' rights generally,
general equity principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing.
5. The Guarantee Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by
<PAGE>
applicable bankruptcy, insolvency, reorganization, receivership, readjustment of
debt, moratorium, fraudulent conveyance or similar laws relating to or affecting
creditors' rights generally, general equity principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
6. The Indenture has been duly authorized, executed and delivered by
the Company, has been duly qualified under the Trust Indenture Act, and is a
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership, readjustment of
debt, moratorium, fraudulent conveyance or similar laws relating to or affecting
creditors' rights generally, general equity principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
7. The Subordinated Debentures have been duly authorized, executed and
delivered by the Company and when duly authenticated in accordance with the
Indenture and delivered and paid for in accordance with the Underwriting
Agreement, will be valid and binding obligations of the Company, entitled to the
benefits of the Indenture and enforceable against the Company in accordance with
their terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, readjustment of debt,
moratorium, fraudulent conveyance or similar laws relating to or affecting
creditors' rights generally, general equity principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
8. The Trust is not an "investment company" or an entity "controlled"
by an "investment company," as such terms are defined in Investment Company Act
of 1940, as amended.
9. The statements set forth in the Registration Statement under the
captions "Supervision and Regulation," "Description of Preferred Securities,"
"Description of Junior Subordinated Debentures," "Description of Guarantee" and
"Relationship Among the Preferred Securities, the Junior Subordinated Debentures
and the Guarantee," insofar as they purport to describe the provisions of the
laws referred to therein, fairly summarize the legal matters described therein.
10. The statements of law or legal conclusions and opinions set forth
in the Registration Statement under the caption "Certain Federal Income Tax
Consequences," subject to the assumptions and conditions described therein,
constitute such counsel's opinion.
11. The Registration Statement was declared effective under the
Securities Act as of the date and time specified in such opinion and, to such
counsel's knowledge and information, no stop order suspending the effectiveness
of the Registration Statement has been issued under the Securities Act and no
proceedings therefor have been initiated or threatened by the Commission.
12. The Registration Statement and the Prospectus and any amendment or
2
<PAGE>
supplement thereto made by the Company prior to the Closing Date or any Option
Closing Date (other than the financial statements and financial and statistical
data included therein, as to which no opinion need be rendered), when it or they
became effective or were filed with the Commission, as the case may be, and in
each case at the Closing Date or any Option Closing Date, complied as to form in
all material respects with the requirements of the Securities Act, the Trust
Indenture Act and the applicable rules and regulations under said acts, and such
counsel has no reason to believe that the Registration Statement, at the time it
became effective, contained any untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements contained
therein, not misleading, or that the Prospectus, at the time it was filed with
the Commission or at the Closing Date or any Option Closing Date, contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading.
13. Such counsel knows of no material legal or governmental proceedings
pending to which the Company or any Subsidiary is a party or of which any
property of the Company or any Subsidiary is the subject which are required to
be disclosed in the Registration Statement or which would affect the
consummation of the transactions contemplated in this Agreement, the Indenture
or the Preferred Securities; and such counsel knows of no such proceedings which
are threatened or contemplated by governmental authorities or threatened by
others.
14. Such counsel knows of no contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments required to be described in the
Registration Statement or to be filed as exhibits thereto other than those
described therein or filed or incorporated by reference as exhibits thereto, and
such instruments as are summarized in the Registration Statement are fairly
summarized in all material respects.
15. No approval, authorization, consent, registration, qualification or
other order of any public board or body is required in connection with the
execution and delivery of this Agreement, the Trust Agreement, the Guarantee
Agreement, and the Indenture or the issuance and sale of the Preferred
Securities or the consummation by the Company of the other transactions
contemplated by this Agreement, the Trust Agreement, the Guarantee Agreement, or
the Indenture, except such as have been obtained under the Securities Act, the
Exchange Act and the Trust Indenture Act or such as may be required under the
blue sky or securities laws of various states in connection with the offering
and sale of the Preferred Securities (as to which such counsel need express no
opinion).
16. The execution and delivery of this Agreement, the Trust Agreement,
the Guarantee Agreement, and the Indenture, the issue and sale of the Preferred
Securities and the Subordinated Debentures, the compliance by the Company with
the provisions of the Preferred Securities, the Subordinated Debentures, the
Indenture and this Agreement and the consummation of the transactions herein and
therein contemplated will not conflict with or constitute a breach of, or
default under, the articles of incorporation or by-laws of the
3
<PAGE>
Company or a breach or default under any contract, indenture, mortgage, loan
agreement, note, lease or other instrument known to such counsel to which either
the Company or any Subsidiary is a party or by which either of them or any of
their respective properties may be bound except for such breaches as would not
have a material adverse effect on the Company and its Subsidiaries considered as
one enterprise, nor will such action result in a violation on the part of the
Company or any Subsidiary of any applicable law or regulation or of any
administrative, regulatory or court decree known to such counsel.
4
<PAGE>
EXHIBIT B
---------
The opinion of counsel to the Trust Company and Trust Delaware to be delivered
pursuant to Section 8(d)(ii) of the Underwriting Agreement shall be
substantially to the effect that:
1. The Trust Company is duly incorporated and is validly existing
in good standing as a banking corporation with trust powers under the laws of
the State of New York.
2. The Indenture Trustee has the requisite power and authority to
execute, deliver and perform its obligations under the Indenture, and has taken
all necessary corporate action to authorize the execution, delivery and
performance by it of the Indenture.
3. The Guarantee Trustee has the requisite power and authority to
execute, deliver and perform its obligations under the Guarantee Agreement, and
has taken all necessary corporate action to authorize the execution, delivery
and performance by it of the Guarantee Agreement.
4. The Property Trustee has the requisite power and authority to
execute and deliver the Trust Agreement, and has taken all necessary corporate
action to authorize the execution and delivery of the Trust Agreement.
5. Each of the Indenture and the Guarantee Agreement has been duly
executed and delivered by the Indenture Trustee and the Guarantee Trustee,
respectively, and constitutes a legal, valid and binding obligation of the
Indenture Trustee and the Guarantee Trustee, respectively, enforceable against
the Indenture Trustee and the Guarantee Trustee, respectively in accordance with
its respective terms, except that certain payment obligations may be enforceable
solely against the assets of the Trust and except that such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium, liquidation,
fraudulent conveyance and transfer or other similar laws affecting the
enforcement of creditors' rights generally, and by general principles of equity,
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing (regardless of whether such enforceability is considered
in a proceeding in equity or at law), and by the effect of applicable public
policy on the enforceability of provisions relating to indemnification or
contribution.
6. The Subordinated Debentures delivered on the date hereof have
been duly authenticated by the Indenture Trustee in accordance with the terms of
the Indenture.
<PAGE>
EXHIBIT C
---------
The opinion of counsel, as special Delaware counsel to the Company and the Trust
to be delivered pursuant to Section 8(d)(iii) of the Underwriting Agreement
shall be substantially to the effect that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act, 12 Del. C.
Section 3801 et seq. (the "Delaware Act"), and all filings required under the
laws of the State of Delaware with respect to the creation and valid existence
of the Trust as a business trust have been made.
2. Under the Delaware Act and the Trust Agreement the Trust has the
trust power and authority to own its property and to its conduct its business,
all as described in the Prospectus.
3. The Trust Agreement constitutes a valid and binding obligation
of the Company and the Property Trustee and the Delaware Trustee, and is
enforceable against the Company and the Trustees, in accordance with its terms.
4. Under the Delaware Act and the Trust Agreement, the Trust has
the trust power and authority to execute and deliver, and to perform its
obligations under, the Underwriting Agreement and to issue and perform its
obligations under the Preferred Securities and the Common Securities.
5. Under the Delaware Act and the Trust Agreement, the execution
and delivery by the Trust of the Underwriting Agreement, and the performance by
the Trust of its obligations thereunder, have been duly authorized by all
necessary trust action on the part of the Trust.
6. The Preferred Securities have been duly authorized by the Trust
Agreement and are duly and validly issued and, subject to the qualifications set
forth herein, fully paid and nonassessable undivided beneficial interests in the
assets of the Trust and are entitled to the benefits of the Trust Agreement. The
Holders, as beneficial owners of the Trust, will be entitled to the same
limitations of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware. We note that the Holders may be obligated pursuant to the Trust
Agreement, (i) to provide indemnity and/or security in connection with and pay
taxes or governmental charges arising from transfers or exchanges of Preferred
Securities Certificates and the issuance of replacement Preferred Securities
Certificates, and (ii) to provide security or indemnity in connection with
requests of or directions to the Property Trustee to exercise its rights and
powers under the Trust Agreement.
7. Under the Delaware Act and the Trust Agreement, the issuance of the
Preferred Securities and Common Securities is not subject to preemptive rights.
8. The Common Securities have been duly authorized by the Trust
Agreement and are duly and validly issued undivided beneficial interests in the
assets of the Trust and are entitled to the benefits of the Trust Agreement.
<PAGE>
9. The issuance and sale by the Trust of the Preferred Securities and
Common Securities, the purchase by the Trust of the Subordinated Debentures, the
execution, delivery and performance by the Trust of the Underwriting Agreement,
the consummation by the Trust of the transactions contemplated by the
Underwriting Agreement and the compliance by the Trust with its obligations
thereunder will not violate (i) any of the provisions of the Certificate of
Trust or the Trust Agreement or (ii) any applicable Delaware law or
administrative regulation.
2
<PAGE>
EXHIBIT D
---------
The opinion of counsel, as Special Delaware counsel to Trust Delaware to be
delivered pursuant to Section 8(d) (iv) of the Underwriting Agreement shall be
substantially to the effect that:
1. Trust Delaware is duly incorporated and is validly existing in
good standing as a banking corporation with trust powers under the laws of the
State of Delaware. The Delaware Trustee has the requisite power and authority to
execute and deliver the Trust Agreement, and has taken all necessary corporate
action to authorize the execution and delivery of the Trust Agreement.
2. Trust Delaware has the requisite power and authority to execute
and deliver the Trust Agreement, and has taken all necessary corporate action to
authorize the execution and delivery of the Trust Agreement.
EXHIBIT NO. 4.1
<PAGE>
================================================================================
JUNIOR SUBORDINATED INDENTURE
Between
SUN BANCORP, INC.
and
BANKERS TRUST COMPANY
(as Trustee)
dated as of
__________, 1998
================================================================================
<PAGE>
SUN CAPITAL TRUST II
Certain Sections of this Junior Subordinated Indenture relating
to Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Junior Subordinated
Act Section Indenture Section
- --------------- -------------------
<S> <C> <C> <C>
Section 310.............................(a)(1)
6.9
(a)(2).................... 6.9
(a)(3).................... Not Applicable
(a)(4).................... Not Applicable
(a)(5).................... 6.9
(b)....................... 6.8, 6.10
Section 311................................(a) 6.13
(b)....................... 6.13
(b)(2).................... 7.3(a)
Section 312................................(a) 7.1, 7.2(a)
(b)....................... 7.2(b)
(c)....................... 7.2(c)
Section 313................................(a) 7.3(a)
(a)(4).................... 7.3(a)
(b)....................... 7.3(b)
(c)....................... 7.3(a)
(d)....................... 7.3(c)
Section 314................................(a) 7.4
(b)....................... 7.4
(c)(1).................... 1.2
(c)(2).................... 1.2
(c)(3).................... Not Applicable
(e)....................... 1.2
Section 315................................(a) 6.1(a)
(b)....................... 6.2, 7.3
(c)....................... 6.1(b)
(d)....................... 6.1(c)
(e)....................... 5.14
Section 316................................(a) 5.12
(a)(1)(A)................. 5.12
(a)(1)(B)................. 5.13
(a)(2).................... Not Applicable
(b)....................... 5.8
(c)....................... 1.4(f)
Section 317.............................(a)(1)...... 5.3
(a)(2).................... 5.4
(b)....................... 10.3
Section 318................................(a) 1.7
</TABLE>
Note: This reconciliation and tie shall not, for any purpose, be
deemed to be a part of the Indenture.
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Page
----
ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
SECTION 1.1. Definitions............................................................. 1
SECTION 1.2. Compliance Certificate and Opinions..................................... 10
SECTION 1.3. Forms of Documents Delivered to Trustee................................. 10
SECTION 1.4. Acts of Holders......................................................... 11
SECTION 1.5. Notices, Etc. to Trustee and Company.................................... 12
SECTION 1.6. Notice to Holders; Waiver............................................... 13
SECTION 1.7. Conflict with Trust Indenture Act....................................... 13
SECTION 1.8. Effect of Headings and Table of Contents................................ 13
SECTION 1.9. Successors and Assigns.................................................. 13
SECTION 1.10. Separability Clause..................................................... 13
SECTION 1.11. Benefits of Indenture................................................... 14
SECTION 1.12. Governing Law........................................................... 14
SECTION 1.13. Non-Business Days....................................................... 14
ARTICLE II. SECURITY FORMS
SECTION 2.1. Forms Generally......................................................... 14
SECTION 2.2. Form of Face of Security................................................ 15
SECTION 2.3. Form of Reverse of Security............................................. 18
SECTION 2.4. Additional Provisions Required in Global
Security................................................................ 21
SECTION 2.5. Form of Trustee's Certificate of Authentication ........................ 21
ARTICLE III. THE SECURITIES
SECTION 3.1. Title and Terms......................................................... 22
SECTION 3.2. Denominations........................................................... 22
SECTION 3.3. Execution, Authentication, Delivery
and Dating.............................................................. 22
SECTION 3.4. Temporary Securities.................................................... 24
SECTION 3.5. Global Securities....................................................... 24
SECTION 3.6. Registration, Transfer and Exchange
Generally; Certain Transfers and
Exchanges; Securities Act Legends....................................... 25
SECTION 3.7. Mutilated, Lost and Stolen Securities................................... 26
SECTION 3.8. Payment of Interest and Additional
Interest; Interest Rights Preserved..................................... 27
SECTION 3.9. Persons Deemed Owners................................................... 28
SECTION 3.10. Cancellation............................................................ 28
SECTION 3.11. Computation of Interest................................................. 29
SECTION 3.12. Deferrals of Interest Payment Dates..................................... 29
SECTION 3.13. Right of Set-Off........................................................ 30
SECTION 3.14. Agreed Tax Treatment.................................................... 30
SECTION 3.15. CUSIP Numbers........................................................... 30
SECTION 3.16. Shortening of Stated Maturity........................................... 31
ARTICLE IV. SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture................................. 30
SECTION 4.2. Application of Trust Money.............................................. 31
ARTICLE V. REMEDIES
SECTION 5.1. Events of Default....................................................... 32
SECTION 5.2. Acceleration of Maturity; Rescission
and Annulment........................................................... 32
SECTION 5.3. Collection of Indebtedness and Suits
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
for Enforcement by Trustee.............................................. 33
SECTION 5.4. Trustee May File Proofs of Claim........................................ 34
SECTION 5.5. Trustee May Enforce Claim Without
Possession of Securities................................................ 35
SECTION 5.6. Application of Money Collected.......................................... 35
SECTION 5.7. Limitation on Suits..................................................... 35
SECTION 5.8. Unconditional Right of Holders to
Receive Principal, Premium and
Interest; Direct Action by Holders
of Preferred Securities................................................. 36
SECTION 5.9. Restoration of Rights and Remedies...................................... 36
SECTION 5.10. Rights and Remedies Cumulative.......................................... 36
SECTION 5.11. Delay or Omission Not Waiver............................................ 36
SECTION 5.12. Control by Holders...................................................... 37
SECTION 5.13. Waiver of Past Defaults................................................. 37
SECTION 5.14. Undertaking for Costs................................................... 37
SECTION 5.15. Waiver of Usury, Stay or Extension Laws................................. 38
ARTICLE VI. THE TRUSTEE
SECTION 6.1. Certain Duties and Responsibilities..................................... 38
SECTION 6.2. Notice of Defaults...................................................... 39
SECTION 6.3. Certain Rights of Trustee............................................... 39
SECTION 6.4. Not Responsible for Recitals or
Issuance of Securities.................................................. 40
SECTION 6.5. May Hold Securities..................................................... 40
SECTION 6.6. Money Held in Trust..................................................... 40
SECTION 6.7. Compensation and Reimbursements......................................... 41
SECTION 6.8. Disqualification; Conflicting Interests................................. 41
SECTION 6.9. Corporate Trustee Required; Eligibility................................. 42
SECTION 6.10. Resignation and Removal; Appointment of Successor....................... 42
SECTION 6.11. Acceptance of Appointment by Successor.................................. 43
SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business............. 44
SECTION 6.13. Preferential Collection of Claims Against Company....................... 44
SECTION 6.14. Appointment of Authenticating Agent..................................... 44
ARTICLE VII. HOLDERS LISTS AND REPORTS BY TRUSTEE,
PAYING AGENT AND COMPANY
SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders............... 46
SECTION 7.2. Preservation of Information, Communications to Holders ................. 46
SECTION 7.3. Reports by Trustee and Paying Agent..................................... 46
SECTION 7.4. Reports by Company...................................................... 47
ARTICLE VIII. CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
SECTION 8.1. Company May Consolidate, Etc., Only on Certain Terms.................... 47
SECTION 8.2. Successor Company Substituted........................................... 48
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ARTICLE IX. SUPPLEMENTAL INDENTURES................................................. 48
SECTION 9.1. Supplemental Indentures Without Consent Of Holders...................... 48
SECTION 9.2. Supplemental Indentures With Consent of
Holders................................................................. 49
SECTION 9.3. Execution of Supplemental Indentures.................................... 50
SECTION 9.4. Effect of Supplemental Indentures....................................... 50
SECTION 9.5. Conformity with Trust Indenture Act..................................... 50
SECTION 9.6. Reference in Securities to Supplemental
Indentures.............................................................. 50
ARTICLE X. COVENANTS
SECTION 10.1. Payment of Principal, Premium and Interest 51
SECTION 10.2. Maintenance of Office or Agency......................................... 51
SECTION 10.3. Money for Security Payments to be Held in Trust......................... 51
SECTION 10.4. Statement as to Compliance.............................................. 52
SECTION 10.5. Waiver of Certain Covenants............................................. 53
SECTION 10.6. Additional Sums......................................................... 53
SECTION 10.7. Additional Covenants.................................................... 53
SECTION 10.8. Federal Tax Reports..................................................... 54
ARTICLE XI. REDEMPTION OF SECURITIES
SECTION 11.1. Applicability of This Article........................................... 54
SECTION 11.2. Election to Redeem; Notice to Trustee................................... 55
SECTION 11.3. Selection of Securities to be Redeemed.................................. 55
SECTION 11.4. Notice of Redemption.................................................... 55
SECTION 11.5. Deposit of Redemption Price............................................. 56
SECTION 11.6. Payment of Securities Called for Redemption............................. 56
SECTION 11.7. Right of Redemption of Securities
Initially Issued to the Issuer Trust.................................. 57
ARTICLE XII. SINKING FUNDS
Sinking Funds........................................................... 57
ARTICLE XIII. SUBORDINATION OF SECURITIES............................................. 57
SECTION 13.1. Securities Subordinate to Senior Indebtedness........................... 57
SECTION 13.2. No Payment When Senior Indebtedness in Default;
Payment Over of Proceeds Upon Dissolution, Etc.......................... 57
SECTION 13.3 Payment Permitted If No Default......................................... 59
SECTION 13.4. Subrogation to Rights of Holders of Senior Indebtedness................. 59
SECTION 13.5. Provisions Solely to Define Relative Rights............................. 59
SECTION 13.6. Trustee to Effectuate Subordination..................................... 60
SECTION 13.7. No Waiver of Subordination Provisions................................... 60
SECTION 13.8. Notice to Trustee....................................................... 60
SECTION 13.9. Reliance on Judicial Order or Certificate of Liquidating Agent.......... 61
</TABLE>
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<TABLE>
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SECTION 13.10. Trustee Not Fiduciary for Holders of Senior Indebtedness................ 61
SECTION 13.11. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights...................................... 61
SECTION 13.12. Article Applicable to Paying Agents..................................... 61
SECTION 13.13. Certain Conversions or Exchanges Deemed Payment......................... 61
ANNEX A Form of Restricted Securities Certificate............................... 80
</TABLE>
- v -
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JUNIOR SUBORDINATED INDENTURE
-----------------------------
THIS JUNIOR SUBORDINATED INDENTURE, dated as of _______________, 1998,
between SUN BANCORP, INC., a New Jersey Corporation (the "Company"), having its
principal office at 226 Landis Avenue, Vineland, New Jersey 08360 and BANKERS
TRUST COMPANY, as Trustee, having its principal office at Four Albany Street,
4th Floor, New York, New York 10006 (the "Trustee").
RECITALS OF THE COMPANY
WHEREAS, the Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance of its unsecured junior subordinated
deferrable interest debentures due __________, 2028 (hereinafter called the
"Securities") of substantially the tenor hereinafter provided, including
Securities issued to evidence loans made to the Company from the proceeds from
the issuance from time to time by Sun Capital Trust II, a Delaware business
trust (the "Issuer Trust") of undivided preferred beneficial interests in the
assets of such Issuer Trust (the "Preferred Securities") and common undivided
interests in the assets of such Issuer Trust (the "Common Securities" and,
collectively with the Preferred Securities, the "Trust Securities"), and to
provide the terms and conditions upon which the Securities are to be
authenticated, issued and delivered; and
WHEREAS, all things necessary to make this Indenture a valid agreement
of the Company, in accordance with its terms, have been done.
NOW THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders (as such term is defined in Section 1.1 hereof)
thereof, it is mutually covenanted and agreed, for the equal and proportionate
benefit of all Holders of the Securities or of any series thereof, and intending
to be legally bound hereby, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article I have the meanings assigned to
them in this Article, and include the plural as well as the singular;
<PAGE>
(b) all other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(c) the words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation";
(d) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect at the time of computation;
(e) whenever the context may require, any gender shall be deemed to
include the other;
(f) unless the context otherwise requires, any reference to an "Article"
or a "Section" refers to an Article or a Section, as the case may be, of this
Indenture; and
(g) the words "hereby", "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
"25% Capital Limitation" means the limitation imposed by the Federal
Reserve that the proceeds of certain qualifying securities similar to the Trust
Securities will qualify as Tier 1 capital of the Company up to an amount not to
exceed, when taken together with all cumulative preferred stock of the Company,
if any, 25% of the Company's Tier 1 capital, or any subsequent limitation
adopted by the Federal Reserve.
"Act"when used with respect to any Holder has the meaning specified in
Section 1.4.
"Additional Interest" means the interest, if any, that shall accrue on
any interest on the Securities of any series the payment of which has not been
made on the applicable Interest Payment Date and which shall accrue at the rate
per annum specified or determined as specified in such Security.
"Additional Sums" has the meaning specified in Section 10.6.
"Additional Taxes" means any additional taxes, duties and other
governmental charges to which the Issuer Trust has become subject from time to
time as a result of a Tax Event.
"Administrator" means, in respect of the Issuer Trust, each Person
appointed in accordance with the Trust Agreement, solely in such Person's
capacity as Administrator of the Issuer Trust and not in such Person's
individual capacity, or any successor Administrator appointed as therein
provided.
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"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent Member" means any member of, or participant in, the Depositary.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Global Security, in each case to
the extent applicable to such transaction and as in effect from time to time.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.14 to act on behalf of the Trustee to authenticate
Securities.
"Board of Directors" means the board of directors of the Company or the
executive committee of the board of directors of the Company (or any other
committee of the board of directors of the Company performing similar functions)
or, for purposes of this Indenture, a committee designated by the board of
directors of the Company (or such committee), comprised of two or more members
of the board of directors of the Company or officers of the Company, or both.
"Board Resolution" means a copy of a resolution certified by the
Secretary or any Assistant Secretary of the Company to have been duly adopted by
the Board of Directors, or such committee of the Board of Directors or officers
of the Company to which authority to act on behalf of the Board of Directors has
been delegated, and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day other than (a) a Saturday or Sunday, (b) a
day on which banking institutions in the State of New Jersey or the City of New
York are authorized or required by law or executive order to remain closed, or
(c) a day on which the Corporate Trust Office of the Trustee, or, with respect
to the Securities initially issued to the Issuer Trust, the "Corporate Trust
Office" (as defined in the Trust Agreement) of the Property Trustee or the
Delaware Trustee under the Trust Agreement, is closed for business.
"Capital Treatment Event" means, in respect of the Issuer Trust, the
reasonable determination by the Company that, as a result of the occurrence of
any amendment to, or change (including any announced prospective change) in, the
laws (or any rules or regulations thereunder) of the United States or any
political subdivision thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
3
<PAGE>
such pronouncement, action or decision is announced on or after the date of the
issuance of the Preferred Securities of the Issuer Trust, there is more than an
insubstantial risk that the Company will not be entitled to treat an amount
equal to the Liquidation Amount (as such term is defined in the Trust Agreement)
of such Preferred Securities as "Tier 1 Capital" (or the then equivalent
thereof), except as otherwise restricted under the 25% Capital Limitation, for
purposes of the risk-based capital adequacy guidelines of the Federal Reserve,
as then in effect and applicable to the Company.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act, or, if at any time after
the execution of this instrument such Commission is not existing and performing
the duties now assigned to it under the Trust Indenture Act, then the body
performing such duties on such date.
"Common Securities" has the meaning specified in the first recital of
this Indenture.
"Common Stock" means the common stock, $1.00 par value per share, of the
Company.
"Company" means the Person named as the "Company" in the preamble of
this instrument until a successor entity shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor entity.
"Company Request" and "Company Order" mean, respectively, the written
request or order signed in the name of the Company by any Chairman of the Board
of Directors, any Vice Chairman of the Board of Directors, its President or a
Vice President, and by its Chief Financial Officer, its Treasurer, its Secretary
or an Assistant Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered,
which office at the date hereof is located at Four Albany Street, 4th Floor, New
York, New York 10006.
"Creditor" has the meaning specified in Section 6.7.
"Defaulted Interest" has the meaning specified in Section 3.8.
"Delaware Trustee" means, with respect to the Issuer Trust, the Person
identified as the "Delaware Trustee" in the Trust Agreement, solely in its
capacity as Delaware Trustee of the Issuer Trust under the Trust Agreement and
not in its individual capacity, or its successor in interest in such capacity,
or any successor Delaware trustee appointed as therein provided.
"Depositary" means, with respect to the Securities issuable or issued in
whole or in part in the form of one or more Global Securities, the Person
designated as Depositary by the Company pursuant to Section 3.1 (or any
successor thereto).
4
<PAGE>
"Discount Security" means any security that provides for an amount less
than the principal amount thereof to be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 5.2.
"Dollar" or "$" means the currency of the United States of America that,
as at the time of payment, is legal tender for the payment of public and private
debts.
The term "entity" includes a bank, corporation, association, company,
limited liability company, joint-stock company or business trust.
"Event of Default," has the meaning specified in Article V.
"Exchange Act" means the Securities Exchange Act of 1934 and any
successor statute thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 1.4.
"Federal Reserve" means the Board of Governors of the Federal Reserve
System.
"Extension Period" has the meaning specified in Section 3.12.
"Global Security" means a Security in the form prescribed in Section 2.4
evidencing all or part of the Securities, issued to the Depositary or its
nominee, and registered in the name of such Depositary or its nominee.
"Guarantee" means, with respect to the Issuer Trust, the Guarantee
Agreement, dated _________, 1998, executed by the Company for the benefit of the
Holders of the Preferred Securities issued by the Issuer Trust as modified,
amended or supplemented from time to time.
"Holder" means a Person in whose name a Security is registered in the
Securities Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Institutional Accredited Investor" means an institutional accredited
investor within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on Securities.
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<PAGE>
"Investment Company Act" means the Investment Company Act of 1940 and
any successor statute thereto, in each case as amended from time to time.
"Investment Company Event" means the receipt by the Issuer Trust of an
Opinion of Counsel rendered by counsel experienced in such matters, to the
effect that, as a result of the occurrence of a change in law or regulation or a
written change (including any announced prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more than an insubstantial risk that
the Issuer Trust is or will be considered an "investment company" that is
required to be registered under the Investment Company Act, which change or
prospective change becomes effective or would become effective, as the case may
be, on or after the date of the issuance of the Preferred Securities of the
Issuer Trust.
"Issuer Trust" has the meaning specified in the first recital of this
Indenture.
"Liquidation Amount" has the meaning assigned in the Trust Agreement.
"Maturity" when used with respect to any Security means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in
Section 5.1(3).
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chairman of the Board, Chief Executive Officer, President or a
Vice President, and by the Chief Financial Officer, Treasurer, an Associate
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
such Person, and delivered to the Trustee. Any Officers' Certificate delivered
with respect to compliance with a condition or covenant provided for in this
Indenture shall include;
(a) a statement by each officer signing the Officers' Certificate
that such officer has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by such officer in rendering the Officers'
Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of such officer,
such condition or covenant has been complied with;
6
<PAGE>
provided, however, that the Officers' Certificate delivered pursuant to the
provisions of Section 10.4 hereof shall comply with the provisions of Section
314 of the Trust Indenture Act.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for or an employee of the Company or any Affiliate of the Company.
"Original Issue Date" means the date of issuance specified as such in
each Security.
"Outstanding" means, when used in reference to any Securities, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(a) Securities theretofore canceled by the Trustee or delivered
to the Trustee for cancellation;
(b) Securities for whose payment money in the necessary amount
has been theretofore deposited with the Trustee or any Paying Agent in trust for
the Holders of such Securities; and
(c) Securities in substitution for or in lieu of other Securities
which have been authenticated and delivered or that have been paid pursuant to
Section 3.6, unless proof satisfactory to the Trustee is presented that any such
Securities are held by Holders in whose hands such Securities are valid, binding
and legal obligations of the Company;
provided, however, that in determining whether the Holders of the
requisite principal amount of Outstanding Securities have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder, Securities owned by the Company or any other obligor upon the
Securities or any Affiliate of the Company or such other obligor (other
than, for the avoidance of doubt, the Issuer Trust to which Securities
of the applicable series were initially issued) shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities
that the Trustee knows to be so owned shall be so disregarded.
Securities so owned that have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities
and that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or such other obligor (other
than, for the avoidance of doubt, the Issuer Trust). Upon the written
request of the Trustee, the Company shall furnish to the Trustee
promptly an Officers' Certificate listing and identifying all
Securities, if any, known by the Company to be owned or held by or for
the account of the Company, or any other obligor on the Securities or
any Affiliate of the Company or such obligor (other than, for the
7
<PAGE>
avoidance of doubt, the Issuer Trust), and, subject to the provisions of
Section 6.1, the Trustee shall be entitled to accept such Officers'
Certificate as conclusive evidence of the facts therein set forth and of
the fact that all Securities not listed therein are Outstanding for the
purpose of any such determination.
"Outstanding Preferred Securities" means the $25,000,000 aggregate
liquidation amount of 9.86% Preferred Securities issued by Sun Capital Trust.
"Paying Agent" means the Trustee or any Person authorized by the Company
to pay the principal of (or premium, if any) or interest on, or other amounts in
respect of any Securities on behalf of the Company.
"Person" means any individual, partnership, trust, unincorporated
organization or entity (as defined herein) or government or any agency or
political subdivision thereof.
"Place of Payment" means, with respect to the Securities, the place or
places where the principal of (and premium, if any) and interest on the
Securities are payable pursuant to Section 3.1.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security. For the purposes of this definition, any security
authenticated and delivered under Section 3.7 in lieu of a mutilated, destroyed,
lost or stolen Security shall be deemed to evidence the same debt as the
mutilated, destroyed, lost or stolen Security.
"Preferred Securities" has the meaning specified in the first recital of
this Indenture.
"Principal Subsidiary Bank" means each of (a) Sun National Bank, (b) any
other banking subsidiary of the Company the consolidated assets of which
constitute 20% or more of the consolidated assets of the Company and its
consolidated subsidiaries, (c) any other banking subsidiary designated as a
Principal Subsidiary Bank pursuant to a Board Resolution and set forth in an
Officers' Certificate delivered to the Trustee, and (d) any subsidiary of the
Company that owns, directly or indirectly, any voting securities, or options,
warrants or rights to subscribe for or purchase voting securities, of any
Principal Subsidiary Bank under clause (a), (b) or (c), and in the case of
clause (a), (b), (c) or (d) their respective successors (whether by
consolidation, merger, conversion, transfer of substantially all their assets
and business or otherwise) so long as any such successor is a banking subsidiary
(in the case of clause (a), (b) or (c)) or a subsidiary (in the case of clause
(d)) of the Company.
"Proceeding" has the meaning specified in Section 13.2.
"Property Trustee" means, with respect to the Issuer Trust, the Person
identified as the "Property Trustee" in the Trust Agreement, solely in its
capacity as Property Trustee of the
8
<PAGE>
Issuer Trust under the Trust Agreement and not in its individual capacity, or
its successor in interest in such capacity, or any successor property trustee
appointed as therein provided.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture or the terms of such Security.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date with respect to the Securities means, unless otherwise provided pursuant to
Section 3.1 with respect to the Securities, the close of business on March 15,
June 15, September 15 or December 15 next preceding such Interest Payment Date
(whether or not a Business Day).
"Responsible Officer", when used with respect to the Property Trustee
means any officer assigned to the Corporate Trust Office, including any managing
director, principal, vice president, assistant vice president, assistant
treasurer, assistant secretary or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and having direct responsibility for the administration of this
Indenture, and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Restricted Security" means each Security required pursuant to Section
3.6(c) to bear a Restricted Securities Legend.
"Restricted Securities Certificate" means a certificate substantially in
the form set forth in Annex A.
"Restricted Securities Legend" means a legend substantially in the form
of the legend required in the form of Security set forth in Section 2.2 to be
placed upon a Restricted Security.
"Rights Plan" means any plan of the Company providing for the issuance
by the Company to all holders of its Common Stock, $1.00 par value per share, of
rights entitling the holders thereof to subscribe for or purchase shares of any
class or series of capital stock of the Company which rights (a) are deemed to
be transferred with such shares of such Common Stock, (b) are not exercisable,
and (c) are also issued in respect of future issuances of such Common Stock, in
each case until the occurrence of a specified event or events.
"Securities" or "Security" means any debt securities or debt security,
as the case may be, authenticated and delivered under this Indenture.
9
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"Securities Act" means the Securities Act of 1933 and any successor
statute thereto, in each case as amended from time to time.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 3.6.
"Senior Indebtedness" means, whether recourse is to all or a portion of
the assets of the Company and whether or not contingent, (a) every obligation of
the Company for money borrowed; (b) every obligation of the Company evidenced by
bonds, debentures, notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets or businesses;
(c) every reimbursement obligation of the Company with respect to letters of
credit, bankers' acceptances or similar facilities issued for the account of the
Company; (d) every obligation of the Company issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts payable or
accrued liabilities arising in the ordinary course of business); (e) every
capital lease obligation of the Company; (f) every obligation of the Company for
claims (as defined in Section 101(4) of the United States Bankruptcy Code of
1978, as amended) in respect of derivative products such as interest and foreign
exchange rate contracts, commodity contracts and similar arrangements; and (g)
every obligation of the type referred to in clauses (a) through (f) of another
person and all dividends of another person the payment of which, in either case,
the Company has guaranteed or is responsible or liable, directly or indirectly,
as obligor or otherwise. Senior Indebtedness shall not include (a) any
obligations which, by their terms, are expressly stated to rank pari passu in
right of payment with, or to not be superior in right of payment to, the Junior
Subordinated Debentures, (b) any Senior Indebtedness of the Company which when
incurred and without respect to any election under Section 1111(b) of the United
States Bankruptcy Code of 1978, as amended, was without recourse to the Company,
(c) any indebtedness of the Company to any of its subsidiaries, (d) indebtedness
to any executive officer or director of the Company, or (e) any indebtedness in
respect of debt securities issued to any trust, or a trustee of such trust,
partnership or other entity affiliated with the Company that is a financing
entity of the Company in connection with the issuance of such financing entity
of securities that are similar to the Preferred Securities, including the
obligations associated with the Outstanding Preferred Securities.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.8.
"Stated Maturity," when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
pursuant to the terms of such Security as the fixed date on which the principal
of such Security or such installment of principal or interest is due and
payable, as such date may, in the case of such principal, be shortened or
extended as provided pursuant to the terms of such Security and this Indenture.
10
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"Subsidiary" means an entity more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For purposes of this definition, "voting stock" means stock that ordinarily has
voting power for the election of directors, whether at all times or only so long
as no senior class of stock has such voting power by reason of any contingency.
"Successor Security" of any particular Security means every Security
issued after, and evidencing all or a portion of the same debt as that evidenced
by, such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 3.7 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Tax Event" means the receipt by the Issuer Trust of an Opinion of
Counsel rendered by counsel experienced in such matters to the effect that, as a
result of any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, or as a result of
any official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement or decision is announced on or after the date
of issuance of the Preferred Securities of the Issuer Trust, there is more than
an insubstantial risk that (a) the Issuer Trust is, or will be within 90 days of
the delivery of such Opinion of Counsel, subject to United States federal income
tax with respect to income received or accrued on the corresponding series of
Securities issued by the Company to the Issuer Trust, (b) interest payable by
the Company on the Securities is not, or within 90 days of the delivery of such
Opinion of Counsel will not be, deductible by the Company, in whole or in part,
for United States federal income tax purposes, or (c) the Issuer Trust is, or
will be within 90 days of the delivery of such Opinion of Counsel, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges.
"Trust Agreement" means the Amended and Restated Trust Agreement, dated
as of ___________, 1998, as amended, modified or supplemented from time to time,
among the trustees of the Issuer Trust named therein, the Company, as depositor,
and the holders from time to time of undivided beneficial ownership interests in
the assets of the Issuer Trust.
"Trustee" means the Person named as the "Trustee" in the preamble of
this Indenture, solely in its capacity as such and not in its individual
capacity, until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder and, if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities
shall mean the Trustee with respect to Securities.
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"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
by the Trust Reform Act of 1990, or any successor statute, in each case as
amended from time to time, except as provided in Section 9.5.
"Trust Securities" has the meaning specified in the first recital of
this Indenture.
"Vice President," when used with respect to the Company, means any duly
appointed vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
SECTION 1.2. Compliance Certificate and Opinions.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent
(including covenants compliance with which constitutes a condition precedent),
if any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent (including covenants compliance with
which constitutes a condition precedent), if any, have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than the certificates provided
pursuant to Section 10.4) shall include:
(a) a statement by each individual signing such certificate or
opinion that such individual has read such covenant or condition and the
definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions of such
individual contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such individual, he or
she has made such examination or investigation as is necessary to enable him or
her to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of such individual,
such condition or covenant has been complied with.
SECTION 1.3. Forms of Documents Delivered to Trustee.
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(a) In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
(b) Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to matters upon which his or her certificate or opinion is based
are erroneous. Any such certificate or Opinion of Counsel may be based, insofar
as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
(c) Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions, or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.4. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given, made or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments is or are
delivered to the Trustee, and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.1) conclusive in favor of
the Trustee and the Company, if made in the manner provided in this Section 1.4.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him or her the execution thereof.
Where such execution is by a Person acting in other than his or her individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his or her authority.
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(c) The fact and date of the execution by any Person of any such
instrument or writing, or the authority of the Person executing the same, may
also be provided in any other manner that the Trustee deems sufficient and in
accordance with such reasonable rules as the Trustee may determine.
(d) The ownership of Securities shall be proved by the Securities
Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done or suffered to be done by the Trustee or the Company in reliance
thereon, whether or not notation of such action is made upon such Security.
(f) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given, made or taken by
Holders of Securities, provided that the Company may not set a record date for,
and the provisions of this Section 1.4(f) shall not apply with respect to, the
giving or making of any notice, declaration, request or direction referred to in
Section 1.4(g). If any record date is set pursuant to this Section 1.4(f), the
Holders of Outstanding Securities on such record date, and no other Holders,
shall be entitled to take the relevant action, whether or not such Holders
remain Holders after such record date, provided, however, that no such action
shall be effective hereunder unless taken on or prior to the applicable
Expiration Date (as defined below) by Holders of the requisite principal amount
of Outstanding Securities on such record date. Nothing in this Section 1.4(f)
shall be construed to prevent the Company from setting a new record date for any
action for which a record date has previously been set pursuant to this Section
1.4(f) (whereupon the record date previously set shall automatically and with no
action by any Person be canceled and of no effect), and nothing in this Section
1.4(f) shall be construed to render ineffective any action taken by Holders of
the requisite principal amount of Outstanding Securities on the date such action
is taken. Promptly after any record date is set pursuant to this Section 1.4(f),
the Company, at its own expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to the
Trustee in writing and to each Holder of Securities in the manner set forth in
Section 1.6.
(g) The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to join in the giving
or making of (i) any Notice of Default, (ii) any declaration of acceleration
referred to in Section 5.2, (iii) any request to institute proceedings referred
to in Section 5.7(b), or (iv) any direction referred to in Section 5.12, in each
case with respect to Securities. If any record date is set pursuant to this
Section 1.4(g), the Holders of Outstanding Securities on such record date, and
no other Holders, shall be entitled to join in such notice, declaration, request
or direction, whether or not such Holders remain Holders after such record date,
provided, however, that no such
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<PAGE>
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities on such record date. Nothing in this Section 1.4(g) shall be
construed to prevent the Trustee from setting a new record date for any action
for which a record date has previously been set pursuant to this Section 1.4(g)
(whereupon the record date previously set shall automatically and with no action
by any Person be canceled and of no effect) and nothing in this Section 1.4(g)
shall be construed to render ineffective any action taken by Holders of the
requisite principal amount of Outstanding Securities on the date such action is
taken. Promptly after any record date is set pursuant to this Section 1.4(g),
the Trustee, at the Company's expense, shall cause notice of such record date,
the proposed action by Holders and the applicable Expiration Date to be given to
the Company in writing and to each Holder of Securities in the manner set forth
in Section 1.6.
(h) With respect to any record date set pursuant to this Section 1.4,
the party hereto that sets such record date may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day, provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto in
writing, and to each Holder of Securities in the manner set forth in Section 1.6
on or prior to the existing Expiration Date. If an Expiration Date is not
designated with respect to any record date set pursuant to this Section, the
party hereto that set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this Section 1.4(h). Notwithstanding the foregoing, no Expiration Date shall
be later than the 180th day after the applicable record date.
(i) Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
SECTION 1.5. Notices, Etc. to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(a) the Trustee by any Holder, any holder of Preferred Securities or
the Company shall be sufficient for every purpose hereunder if made,
given, furnished or filed in writing to or with the Trustee at its
Corporate Trust Office, or
(b) the Company by the Trustee, any Holder or any holder of
Preferred Securities shall be sufficient for every purpose (except as
otherwise provided in Section 5.1) hereunder if in writing and mailed,
first class, postage prepaid, to the Company
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<PAGE>
addressed to it at the address of its principal office specified in the
first paragraph of this instrument or at any other address previously
furnished in writing to the Trustee by the Company.
SECTION 1.6. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first class postage prepaid, to each Holder affected
by such event, at the address of such Holder as it appears in the Securities
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. If, by reason of the suspension
of or irregularities in regular mail services or for any other reason, it shall
be impossible or impracticable to mail notice of any event to Holders when said
notice is required to be given pursuant to any provision of this Indenture or of
the Securities, then any manner of giving such notice as shall be satisfactory
to the Trustee shall be deemed to be a sufficient giving of such notice. In any
case where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
SECTION 1.7. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision
of the Trust Indenture Act that is required thereunder to be a part of and
govern this Indenture, the provision of the Trust Indenture Act shall control.
If any provision of this Indenture modifies or excludes any provision of the
Trust Indenture Act that may be so modified or excluded, the latter provision
shall be deemed to apply to this Indenture as so modified or to be excluded, as
the case may be.
SECTION 1.8. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 1.9. Successors and Assigns.
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All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 1.10. Separability Clause.
If any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.11. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors and
assigns, the holders of Senior Indebtedness, the Holders of the Securities and,
to the extent expressly provided in Sections 5.2, 5.8, 5.9, 5.11, 5.13, 9.1 and
9.2, the holders of Preferred Securities, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 1.12. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 1.13. Non-Business Days.
If any Interest Payment Date, Redemption Date or Stated Maturity of any
Security shall not be a Business Day, then (notwithstanding any other provision
of this Indenture or the Securities) payment of interest or principal (and
premium, if any) or other amounts in respect of such Security need not be made
on such date, but may be made on the next succeeding Business Day (and no
interest shall accrue in respect of the amounts whose payment is so delayed for
the period from and after such Interest Payment Date, Redemption Date or Stated
Maturity, as the case may be, until such next succeeding Business Day) except
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day (in each case with the
same force and effect as if made on the Interest Payment Date or Redemption Date
or at the Stated Maturity).
ARTICLE II
SECURITY FORMS
SECTION 2.1. Forms Generally.
(a) The Securities and the Trustee's certificate of authentication shall
be in substantially the forms set forth in this Article, or in such other form
or forms as shall be
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established by or pursuant to a Board Resolution or in one or more indentures
supplemental hereto, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with applicable tax laws or the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such securities,
as evidenced by their execution of the Securities. If the form of Securities is
established by action taken pursuant to a Board Resolution, a copy of an
appropriate record of such action shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Company Order contemplated by Section 3.3 with respect to
the authentication and delivery of such Securities.
(b) The definitive Securities shall be printed, lithographed or engraved
or produced by any combination of these methods, if required by any securities
exchange on which the Securities may be listed, on a steel engraved border or
steel engraved borders or may be produced in any other manner permitted by the
rules of any securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as evidenced by their
execution of such Securities.
(c) Securities distributed to holders of Global Preferred Securities (as
defined in the Trust Agreement) upon the dissolution of the Issuer Trust shall
be distributed in the form of one or more Global Securities registered in the
name of a Depositary or its nominee, and deposited with the Securities
Registrar, as custodian for such Depositary, or with such Depositary, for credit
by the Depositary to the respective accounts of the beneficial owners of the
Securities represented thereby (or such other accounts as they may direct).
Securities distributed to holders of Preferred Securities other than Global
Preferred Securities upon the dissolution of the Issuer Trust shall not be
issued in the form of a Global Security or any other form intended to facilitate
book-entry trading in beneficial interests in such Securities.
SECTION 2.2. Form of Face of Security.
SUN BANCORP, INC.
____% Junior Subordinated Deferrable Interest Debentures due _________, 2028
[If the Security is a Restricted Security, insert -- THE SECURITIES
EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (A) BY AN INITIAL INVESTOR THAT IS NOT A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT,
(I) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF
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RULE 144A, (II) IN AN OFFSHORE TRANSACTION COMPLYING WITH THE PROVISIONS OF RULE
903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (III) PURSUANT TO
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), OR (B) BY AN INITIAL INVESTOR THAT IS A QUALIFIED
INSTITUTIONAL BUYER OR BY ANY SUBSEQUENT INVESTOR, AS SET FORTH IN (A) ABOVE
AND, IN ADDITION, TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND, IN EACH
CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER
JURISDICTIONS OF THE UNITED STATES. THE HOLDER OF THIS SECURITY AGREES THAT IT
WILL COMPLY WITH THE FOREGOING RESTRICTIONS. SECURITIES OWNED BY AN INITIAL
INVESTOR THAT IS NOT A QUALIFIED INSTITUTIONAL BUYER MAY NOT BE HELD IN GLOBAL
FORM AND MAY NOT BE TRANSFERRED WITHOUT CERTIFICATION THAT THE TRANSFER COMPLIES
WITH THE FOREGOING RESTRICTIONS, AS PROVIDED IN THE INDENTURE REFERRED TO BELOW.
NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED
BY RULE 144 FOR RESALES OF THE SECURITIES.]
No. $
SUN BANCORP, INC., a New Jersey corporation (hereinafter called the
"Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to Sun
Capital Trust II, or registered assigns, the principal sum of _________ Dollars
on ___________, 2028, or such other principal amount represented hereby as may
be set forth in the records of the Securities Registrar hereinafter referred to
in accordance with the Indenture provided that the Company may shorten the
Stated Maturity of the principal of this Security to a date not earlier than
___________, 2003. The Company further promises to pay interest on said
principal from _______________, 1998, or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, quarterly (subject to
deferral as set forth herein) in arrears on March 31, June 30, September 30 and
December 31 of each year, commencing ____________________, 1998 at the rate of
_____% per annum, together with Additional Sums, if any, as provided in Section
10.6 of the Indenture, until the principal hereof is paid or duly provided for
or made available for payment; provided that any overdue principal, premium or
Additional Sums and any overdue installment of interest shall bear Additional
Interest at the rate of ______% per annum (to the extent that the payment of
such interest shall be legally enforceable), compounded quarterly from the dates
such amounts are due until they are paid or made available for payment, and such
interest shall be payable on demand. The amount of interest payable for any
period less than a full interest period shall be computed on the basis of a
360-day year of twelve 30-day months and the actual days elapsed in a partial
month in such period. The amount of interest payable for any full interest
period shall be computed by dividing the applicable rate per annum by four. The
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<PAGE>
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in the Indenture, be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest installment,
which shall be the 15th day of March, June, September and December (whether or
not a Business Day), as the case may be, next preceding such Interest Payment
Date. Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities of this series
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in said
Indenture.
So long as no Event of Default has occurred and is continuing, the
Company shall have the right, at any time during the term of this Security, from
time to time to defer the payment of interest on this Security for up to 20
consecutive quarterly interest payment periods with respect to each deferral
period (each an "Extension Period"), during which Extension Periods the Company
shall have the right to make partial payments of interest on any Interest
Payment Date, and at the end of which the Company shall pay all interest then
accrued and unpaid including Additional Interest, as provided below; provided
however, that no Extension Period shall extend beyond the Stated Maturity of the
principal of this Security, as then in effect, and no such Extension Period may
end on a date other than an Interest Payment Date; and provided further,
however, that during any such Extension Period, the Company shall not (a)
declare or pay any dividends or distributions on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of the Company's capital
stock, or (b) make any payment of principal of or interest or premium, if any,
on or repay, repurchase or redeem any debt securities of the Company that rank
pari passu in all respects with or junior in interest to this Security,
including the Company's obligations associated with the Outstanding Preferred
Securities (other than (i) repurchases, redemptions or other acquisitions of
shares of capital stock of the Company in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
any one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment or stockholder stock purchase plan or in connection
with the issuance of capital stock of the Company (or securities convertible
into or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (ii) as a
result of a reclassification, an exchange or conversion of any class or series
of the Company's capital stock (or any capital stock of a Subsidiary of the
Company) for any class or series of the Company's capital stock or of any class
or series of the Company's indebtedness for any class or series of the Company's
capital stock, (iii) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (iv) any
declaration of a dividend in connection with any Rights Plan, or the issuance of
rights,
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<PAGE>
stock or other property under any Rights Plan, or the redemption or repurchase
of rights pursuant thereto, or (v) any dividend in the form of stock, warrants,
options or other rights where the dividend stock or the stock issuable upon
exercise of such warrants, options or other rights is the same stock as that on
which the dividend is being paid or ranks pari passu with or junior to such
stock). Prior to the termination of any such Extension Period, the Company may
further defer the payment of interest, provided that no Extension Period shall
exceed 20 consecutive quarterly interest payment periods, extend beyond the
Stated Maturity of the principal of this Security or end on a date other than an
Interest Payment Date. Upon the termination of any such Extension Period and
upon the payment of all accrued and unpaid interest and any Additional Interest
then due on any Interest Payment Date, the Company may elect to begin a new
Extension Period, subject to the above conditions. No interest shall be due and
payable during an Extension Period, except at the end thereof, but each
installment of interest that would otherwise have been due and payable during
such Extension Period shall bear Additional Interest (to the extent that the
payment of such interest shall be legally enforceable) at the rate of _____% per
annum, compounded quarterly and calculated as set forth in the first paragraph
of this Security, from the date on which such amounts would otherwise have been
due and payable until paid or made available for payment. The Company shall give
the Holder of this Security and the Trustee notice of its election to begin any
Extension Period at least one Business Day prior to the next succeeding Interest
Payment Date on which interest on this Security would be payable but for such
deferral or so long as such securities are held by Sun Capital Trust II, or at
least one Business Day prior to the earlier of (a) the next succeeding date on
which Distributions on the Preferred Securities of the Issuer Trust would be
payable but for such deferral, and (b) the date on which the Property Trustee of
the Issuer Trust is required to give notice to holders of such Preferred
Securities of the record date or the date such Distributions are payable, but in
any event not less than one Business Day prior to such record date.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the United States, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided however, that at the option of the Company payment of
interest may be made (a) by check mailed to the address of the Person entitled
thereto as such address shall appear in the Securities Register, or (b) if to a
Holder of $1,000,000 or more in aggregate principal amount of this Security, by
wire transfer in immediately available funds upon written request to the Trustee
not later than 15 calendar days prior to the date on which the interest is
payable.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and subject in right of payments to the prior
payment in full of all Senior Indebtedness, and this Security is issued subject
to the provisions of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such actions as may be necessary or appropriate to effectuate the subordination
so provided, and (c) appoints the Trustee his or her attorney-in-fact for any
and all such
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<PAGE>
purposes. Each Holder hereof, by his or her acceptance hereof, waives all notice
of the acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Indebtedness, whether now outstanding or
hereafter incurred, and waives reliance by each such holder upon said
provisions.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual or facsimile signature, this
Security shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
SUN BANCORP, INC.
By:
--------------------------------
Name:
Title:
Attest:
- -----------------------------------
Secretary or Assistant Secretary
SECTION 2.3. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued under the
Junior Subordinated Indenture, dated as of _____________, 1998 (herein called
the "Indenture"), between the Company and Bankers Trust Company, as Trustee
(herein called the "Trustee", which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee, the
holders of Senior Indebtedness and the Holders of the Securities, and of the
terms upon which the Securities
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<PAGE>
are, and are to be, authenticated and delivered. This security is one of the
series designated on the face hereof, limited in aggregate principal amount to
$_______________.
All terms used in this Security that are defined in the Indenture or, if
not defined in the Indenture, in the Amended and Restated Trust Agreement dated
as of _____________, 1998 (as modified, amended or supplemented from time to
time the "Trust Agreement"), relating to Sun Capital Trust II (the "Issuer
Trust") among the Company, as Depositor, the Trustees named therein and the
Holders from time to time of the Trust Securities issued pursuant thereto shall
have the meanings assigned to them in the Indenture or the Trust Agreement, as
the case may be.
The Company has the right to redeem this Security (a) on or after
_________, 2003 in whole at any time or in part from time to time, or (b) in
whole (but not in part), at any time within 90 days following the occurrence and
during the continuation of a Tax Event, Investment Company Event, or Capital
Treatment Event, in each case at the Redemption Price described below, and
subject to possible regulatory approval. The Redemption Price shall equal 100%
of the principal amount hereof being redeemed, together with accrued interest to
but excluding the date fixed for redemption.
In the event of redemption of this Security in part only, a new Security
or Securities for the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.
[If applicable, insert--The Indenture contains provisions for defeasance
at any time [of the entire indebtedness of this Security] [or] [certain
restrictive covenants and Events of Default with respect to this Security] [, in
each case] upon compliance by the Company with certain conditions set forth in
the Indenture.]
The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee at any time to enter into a supplemental indenture or
indentures for the purpose of modifying in any manner the rights and obligations
of the Company and of the Holders of the Securities, with the consent of the
Holders of not less than a majority in principal amount of the Outstanding
Securities to be affected by such supplemental indenture. The Indenture also
contains provisions permitting Holders of specified percentages in principal
amount of the Securities at the time Outstanding, on behalf of the Holders of
all Securities, to waive compliance by the Company with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.
[If the Security is not a Discount Security, insert--As provided in and
subject to the provisions of the Indenture, if an Event of Default with respect
to the Securities at the time
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Outstanding occurs and is continuing, then and in every such case the Trustee or
the Holders of not less than 25% in aggregate principal amount of the
Outstanding Securities may declare the principal amount of all the Securities to
be due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by Holders), provided that, if upon an Event of Default,
the Trustee or such Holders fail to declare the principal of all the Outstanding
Securities to be immediately due and payable, the holders of at least 25% in
aggregate Liquidation Amount of the Preferred Securities then outstanding shall
have the right to make such declaration by a notice in writing to the Company
and the Trustee; and upon any such declaration the principal amount of and the
accrued interest (including any Additional Interest) on all the Securities shall
become immediately due and payable, provided that the payment of principal and
interest (including any Additional Interest) on such Securities shall remain
subordinated to the extent provided in Article XIII of the Indenture.]
[If the Security is a Discount Security, insert--As provided in and
subject to the provisions of the Indenture, if an Event of Default with respect
to the Securities at the time Outstanding occurs and is continuing, then and in
every such case the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Outstanding Securities may declare an amount of
principal of the Securities to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by Holders), provided that,
if upon an Event of Default, the Trustee or such Holders fail to declare such
principal amount of the Outstanding Securities to be immediately due and
payable, the Holders of at least 25% in aggregate Liquidation Amount of the
Preferred Securities then outstanding shall have the right to make such
declaration by a notice in writing to the Company and the Trustee. The principal
amount payable upon such acceleration shall be equal to [insert formula for
determining the amount]. Upon any such declaration, such amount of the principal
of and the accrued interest (including any Additional Interest) on all the
Securities shall become immediately due and payable, provided that the payment
of such principal and interest (including any Additional Interest) on all the
Securities shall remain subordinated to the extent provided in Article XIII of
the Indenture. Upon payment (a) of the amount of principal so declared due and
payable and (b) of interest on any overdue principal, premium and interest (in
each case to the extent that the payment of such interest shall be legally
enforceable), all of the Company's obligations in respect of the payment of the
principal of and premium and interest, if any, on this Security shall
terminate.]
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest (including Additional Interest) on this Security at the times, place
and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Securities
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained under Section 10.2 of the Indenture
for such purpose, duly endorsed by, or accompanied by a
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written instrument of transfer in form satisfactory to the Company and the
Securities Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Securities,
of like tenor, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
As provided in the Indenture and subject to certain limitations therein
set forth, Securities are exchangeable for a like aggregate principal amount of
Securities and of like tenor of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Company and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Security agrees that for United States federal, state and
local tax purposes it is intended that this Security constitute indebtedness.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
THIS SECURITY IS A DIRECT AND UNSECURED OBLIGATION OF THE COMPANY, DOES
NOT EVIDENCE DEPOSITS AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER INSURER OR GOVERNMENT AGENCY.
SECTION 2.4. Additional Provisions Required in Global Security.
Unless otherwise specified as contemplated by Section 3.1, any Global
Security issued hereunder shall, in addition to the provisions contained in
Sections 2.2 and 2.3, bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS SECURITY IS EXCHANGEABLE
FOR SECURITIES
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REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND
MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE
OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY, EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE.
SECTION 2.5. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially
the following form:
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated:
------------------------------
BANKERS TRUST COMPANY,
as Trustee
By:
----------------------------------
Authorized Signatory
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ARTICLE III
THE SECURITIES
SECTION 3.1. Title and Terms.
(a) The aggregate principal amount of Securities that may be
authenticated and delivered under this Indenture is $_______________.
(b) Subject to Section 3.16, the Securities' Stated Maturity shall be
____________, 2028.
(c) The Securities, established pursuant to a Board Resolution, shall
bear interest at a per annum rate equal to ____% from ____________, 1998 or from
the most recent Interest Payment Date to which interest has been paid or duly
provided for, as the case may be, payable quarterly (subject to deferral as set
forth in Section 3.12), in arrears, on March 31, June 30, September 30 and
December 31 of each year, commencing ______________, 1998, until the principal
thereof is paid or made available for payment. Interest will compound quarterly
and will accrue at a per annum rate equal to _____% to the extent permitted by
applicable law, on any interest installment in arrears for more than one
quarterly period or during an extension of an interest payment period as set
forth below in Section 3.12.
(d) The principal of (and premium, if any) and interest on the
Securities shall be payable at the office or agency of the Paying Agent in the
United States maintained for such purpose and at any other office or agency
maintained by the Company for such purpose in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts; provided, however, that at the option of the
Company payment of interest may be made (i) by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register or (ii) if to a Holder of $1,000,000 or more in aggregate principal
amount of this Security, by wire transfer in immediately available funds upon
written report from the trustee not later than 15 calendar days prior to the
date on which the interest is payable, the at such place and to such account as
may be designated by the Person entitled thereto as specified in the Security
Register.
(e) Securities may be issuable in whole or in part in the form of one or
more Global Securities and, in such case, the Depositary for such Global
Securities shall be The Depository Trust Company.
(f) The securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article XIII.
SECTION 3.2. Denominations.
The Securities shall be in registered form without coupons and shall be
issuable in denominations of $10 and any integral multiple thereof.
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SECTION 3.3. Execution, Authentication, Delivery and Dating.
(a) The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its President or one of
its Vice Presidents, and attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Securities may be
manual or facsimile.
(b) Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities. At any time and from time to
time after the execution and delivery of this Indenture, the Company may deliver
Securities executed by the Company to the Trustee for authentication, together
with a Company Order for the authentication and delivery of such Securities, and
the Trustee in accordance with the Company Order shall authenticate and deliver
such Securities. If the form or terms of the Securities have been established by
or pursuant to one or more Board Resolutions as permitted by Sections 2.1 and
3.1, in authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to Section 6.1) shall be
fully protected in relying upon, an Opinion of Counsel stating,
(i) if the form of such Securities has been established by or pursuant
to Board Resolution as permitted by Section 2.1, that such form has been
established in conformity with the provisions of this Indenture;
(ii) if the terms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 3.1, that such
terms have been established in conformity with the provisions of this
Indenture; and
(iii) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid
and legally binding obligations of the Company enforceable in accordance
with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
(c) If such form or terms have been so established, the Trustee shall
not be required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner that
is not reasonably acceptable to the Trustee.
(d) Notwithstanding the provisions of Section 3.1 and Section 3.3 (b),
if all Securities are not to be originally issued at one time, it shall not be
necessary to deliver the Officers'
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Certificate otherwise required pursuant to Section 3.1 or the Company Order and
Opinion of Counsel otherwise required pursuant to Section 3.3(b) at or prior to
the authentication of each Security if such documents are delivered at or prior
to the authentication upon original issuance of the first Security to be issued.
(e) Each Security shall be dated the date of its authentication.
(f) No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose, unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
officers, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such security has been duly authenticated and
delivered hereunder. Notwithstanding the foregoing, if any Security shall have
been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 3.10, for all purposes of this Indenture
such Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
SECTION 3.4. Temporary Securities.
(a) Pending the preparation of definitive Securities, the Company may
execute, and upon receipt of a Company Order the Trustee shall authenticate and
deliver, temporary Securities that are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
(b) If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for that purpose
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor one or more definitive securities,
of any authorized denominations having the same Original Issue Date and Stated
Maturity and having the same terms as such temporary Securities. Until so
exchanged, the temporary Securities shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities.
SECTION 3.5. Global Securities.
(a) Each Global Security issued under this Indenture shall be registered
in the name of the Depositary designated by the Company for such Global Security
or a nominee thereof and
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delivered to such Depositary or a nominee thereof or custodian therefor, and
each such Global Security shall constitute a single Security for all purposes of
this Indenture.
(b) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the name
of any Person other than the Depositary for such Global Security or a nominee
thereof unless (i) such Depositary advises the Trustee in writing that such
Depositary is no longer willing or able to properly discharge its
responsibilities as Depositary with respect to such Global Security, and the
Company is unable to locate a qualified successor within 90 days of receipt of
such notice from the Depositary, (ii) the Company executes and delivers to the
Trustee a Company Order stating that the Company elects to terminate the
book-entry system through the Depositary, or (iii) there shall have occurred and
be continuing an Event of Default.
(c) If any Global Security is to be exchanged for other Securities or
canceled in whole, it shall be surrendered by or on behalf of the Depositary or
its nominee to the Securities Registrar for exchange or cancellation as provided
in this Article III. If any Global Security is to be exchanged for other
Securities or canceled in part, or if another Security is to be exchanged in
whole or in part for a beneficial interest in any Global Security, then either
(i) such Global Security shall be so surrendered for exchange or cancellation as
provided in this Article III or (ii) the principal amount thereof shall be
reduced, or increased by an amount equal to the portion thereof to be so
exchanged or canceled, or equal to the principal amount of such other Security
to be so exchanged for a beneficial interest therein, as the case may be, by
means of an appropriate adjustment made on the records of the Securities
Registrar, whereupon the Trustee, in accordance with the Applicable Procedures,
shall instruct the Depositary or its authorized representative to make a
corresponding adjustment to its records. Upon any such surrender or adjustment
of a Global Security by the Depositary, accompanied by registration
instructions, the Trustee shall, subject to Section 3.6(b) and as otherwise
provided in this Article III, authenticate and deliver any Securities issuable
in exchange for such Global Security (or any portion thereof) in accordance with
the instructions of the Depositary. The Trustee shall not be liable for any
delay in delivery of such instructions and may conclusively rely on, and shall
be fully protected in relying on, such instructions.
(d) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Article III, Section 9.6 or 11.6 or otherwise,
shall be authenticated and delivered in the form of, and shall be, a Global
Security, unless such Security is registered in the name of a Person other than
the Depositary for such Global Security or a nominee thereof.
(e) The Depositary or its nominee, as the registered owner of a Global
Security, shall be the Holder of such Global Security for all purposes under
this Indenture and the Securities, and owners of beneficial interests in a
Global Security shall hold such interests pursuant to the Applicable Procedures.
Accordingly, any such owner's beneficial interest in
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a Global Security shall be shown only on, and the transfer of such interest
shall be effected only through, records maintained by the Depositary or its
nominee or agent. Neither the Trustee nor the Securities Registrar shall have
any liability in respect of any transfers effected by the Depositary.
(f) The rights of owners of beneficial interests in a Global Security
shall be exercised only through the Depositary and shall be limited to those
established by law and agreements between such owners and the Depositary and/or
its Agent Members.
SECTION 3.6. Registration, Transfer and Exchange Generally; Certain
Transfers and Exchanges; Securities Act Legends.
(a) The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register in which, subject to such reasonable regulations as it
may prescribe, the Company shall provide for the registration of Securities and
transfers of Securities. Such register is herein sometimes referred to as the
"Securities Register." The Trustee is hereby appointed "Securities Registrar"
for the purpose of registering Securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any Security at the
offices or agencies of the Company designated for that purpose, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Securities of any
authorized denominations of like tenor and aggregate principal amount and
bearing such restrictive legends as may be required by this Indenture.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations, of like tenor and aggregate
principal amount and bearing such restrictive legends as may be required by this
Indenture, upon surrender of the Securities to be exchanged at such office or
agency. Whenever any securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
that the Holder making the exchange is entitled to receive.
All Securities issued upon any transfer or exchange of Securities shall
be the valid obligations of the Company, evidencing the same debt, and entitled
to the same benefits under this Indenture, as the Securities surrendered upon
such transfer or exchange.
Every Security presented or surrendered for transfer or exchange shall
(if so required by the Company or the Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Securities Registrar, duly executed by the Holder thereof or
such Holder's attorney duly authorized in writing.
No service charge shall be made to a Holder for any transfer or exchange
of Securities, but the Company may require payment of a sum sufficient to cover
any tax or other
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governmental charge that may be imposed in connection with any transfer or
exchange of Securities.
Neither the Company nor the Trustee shall be required, pursuant to the
provisions of this Section, (i) to issue, exchange or register the transfer of
any Security during a period beginning at the opening of business 15 days before
the day of selection for redemption of Securities pursuant to Article XI and
ending at the close of business on the day of mailing of the notice of
redemption, or (ii) to register the transfer of or exchange any Security so
selected for redemption in whole or in part, except, in the case of any such
Security to be redeemed in part, any portion thereof not to be redeemed.
(b) Certain Transfers and Exchanges. Notwithstanding any other provision
of this Indenture, transfers and exchanges of Securities and beneficial
interests in a Global Security shall be made only in accordance with this
Section 3.6(b).
(i) Restricted Non-Global Security to Global Security. If the Holder of
a Restricted Security (other than a Global Security) wishes at any time
to transfer all or any portion of such Security to a Person who wishes
to take delivery thereof in the form of a beneficial interest in a
Global Security, such transfer may be effected only in accordance with
the provisions of this clause (b)(i) and subject to the Applicable
Procedures. Upon receipt by the Securities Registrar of (A) such
Security as provided in Section 3.6(a) and instructions satisfactory to
the Securities Registrar directing that a beneficial interest in the
Global Security in a specified principal amount not greater than the
principal amount of such Security be credited to a specified Agent
Member's account and (B) a Restricted Securities Certificate duly
executed by such Holder or such Holder's attorney duly authorized in
writing, then the Securities Registrar shall cancel such Security (and
issue a new Security in respect of any untransferred portion thereof) as
provided in Section 3.6(a) and increase the aggregate principal amount
of the Global Security by the specified principal amount as provided in
Section 3.5(c).
(ii) Non-Global Security to Non-Global Security. A Security that is not
a Global Security may be transferred, in whole or in part, to a Person
who takes delivery in the form of another Security that is not a Global
Security as provided in Section 3.6(a), provided that if the Security to
be transferred in whole or in part is a Restricted Security, the
Securities Registrar shall have received a Restricted Securities
Certificate duly executed by the transferor Holder or such Holder's
attorney duly authorized in writing.
(iii) Exchanges Between Global Security and Non-Global Security. A
beneficial interest in a Global Security may be exchanged for a Security
that is not a Global Security as provided in Section 3.5.
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(iv) Certain Initial Transfers of Non-Global Securities. In the case of
Securities initially issued other than in global form, an initial
transfer or exchange of such Securities that does not involve any change
in beneficial ownership may be made to an Institutional Accredited
Investor or Investors as if such transfer or exchange were not an
initial transfer or exchange; provided, however, that written
certification shall be provided by the transferee and transferor of such
Securities to the Securities Registrar that such transfer or exchange
does not involve a change in beneficial ownership.
(c) Restricted Securities Legend. Except as set forth below, all
Securities shall bear a Restricted Securities Legend:
(i) subject to the following clauses of this Section 3.6(c), a Security
or any portion thereof that is exchanged, upon transfer or otherwise,
for a Global Security or any portion thereof shall bear the Restricted
Securities Legend while represented thereby;
(ii) subject to the following clauses of this Section 3.6(c), a new
Security which is not a Global Security and is issued in exchange for
another Security (including a Global Security) or any portion thereof,
upon transfer or otherwise, shall, if such new Security is required
pursuant to Section 3.6(b)(ii) or (iii) to be issued in the form of a
Restricted Security, bear a Restricted Securities Legend;
(iii) a new Security (other than a Global Security) that does not bear a
Restricted Security Legend may be issued in exchange for or in lieu of a
Restricted Security or any portion thereof that bears such a legend if,
in the Company's judgement, placing such a legend upon such new Security
is not necessary to ensure compliance with the registration requirements
of the Securities Act, and the Trustee, at the written direction of the
Company in the form of an Officer's Certificate, shall authenticate and
deliver such a new Security as provided in this Article III:
(iv) notwithstanding the foregoing provisions of this Section 3.6(c), a
Successor Security of a Security that does not bear a Restricted
Securities Legend shall not bear such form of legend unless the Company
has reasonable cause to believe that such Successor Security is a
"restricted security" within the meaning of Rule 144, in which case the
Trustee, at the written direction of the Company in the form of an
Officer's Certificate, shall authenticate and deliver a new Security
bearing a Restricted Securities Legend in exchange for such successor
Security as provided in this Article III; and
(v) Securities distributed to a holder of Preferred Securities upon
dissolution of an Issuer Trust shall bear a Restricted Securities Legend
if the Preferred Securities so held bear a similar legend.
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SECTION 3.7. Mutilated, Lost and Stolen Securities.
(a) If any mutilated Security, including any temporary Securities, is
surrendered to the Trustee together with such security or indemnity as may be
required by the Company or the Trustee to save each of them harmless, the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security, of like tenor and aggregate principal amount, bearing
the same legends, and bearing a number not contemporaneously outstanding.
(b) If there shall be delivered to the Company and to the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security, and (ii) such security or indemnity as may be required by them to save
each of them harmless, then, in the absence of notice to the Company or the
Trustee that such Security has been acquired by a bona fide purchaser or a
protected purchaser, the Company shall execute and upon its request the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security, of like tenor and aggregate principal amount and
bearing the same legends as such destroyed, lost or stolen Security, and bearing
a number not contemporaneously outstanding.
(c) If any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
(d) Upon the issuance of any new Security under this Section 3.7, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
(e) Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
(f) The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.8. Payment of Interest and Additional Interest; Interest
Rights Preserved.
(a) Interest and Additional Interest on any Security that is payable,
and is punctually paid or duly provided for, on any Interest Payment Date, shall
be paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of
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business on the Regular Record Date for such interest in respect of Securities,
except that, unless otherwise provided in the Securities, interest payable on
the Stated Maturity of the principal of a Security shall be paid to the Person
to whom principal is paid. The initial payment of interest on any Security that
is issued between a Regular Record Date and the related Interest Payment Date
shall be payable as provided in such Security or in the Board Resolution
pursuant to Section 3.1 with respect to the Securities.
(b) Any interest on any Security that is due and payable, but is not
timely paid or duly provided for, on any Interest Payment Date for Securities
(herein called "Defaulted Interest"), shall forthwith cease to be payable to the
registered Holder on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in clause (i) or (ii) below:
(i) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities in respect of which interest
is in default (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security and
the date of the proposed payment, and which shall be fixed at the same
time the Company shall deposit with the Trustee an amount of money equal
to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this clause provided. Thereupon, the
Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest, which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less than
10 days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special
Record Date and, in the name and at the expense of the Company, shall
cause notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor to be mailed, first class, postage prepaid,
to each Holder of a Security at the address of such Holder as it appears
in the Securities Register not less than 10 days prior to such Special
Record Date. The Trustee may, in its discretion, in the name and at the
expense of the Company, cause a similar notice to be published at least
once in a newspaper, customarily published in the English language on
each Business Day and of general circulation in the Borough of
Manhattan, The City of New York, but such publication shall not be a
condition precedent to the establishment of such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered
on such Special Record Date and shall no longer be payable pursuant to
the following clause (ii).
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(ii) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities in respect of which interest is in
default may be listed and, upon such notice as may be required by such
exchange (or by the Trustee if the Securities are not listed), if, after
notice given by the Company to the Trustee of the proposed payment
pursuant to this clause (ii), such payment shall be deemed practicable
by the Trustee.
(c) Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Security shall carry the rights to interest accrued and unpaid, and to
accrue interest, that were carried by such other Security.
SECTION 3.9. Persons Deemed Owners.
(a) The Company, the Trustee and any agent of the Company or the Trustee
shall treat the Person in whose name any Security is registered as the owner of
such Security for the purpose of receiving payment of principal of and (subject
to Section 3.8) any interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and none of the Company,
the Trustee or any agent of the Company or the Trustee shall be affected by
notice to the contrary.
(b) No holder of any beneficial interest in any Global Security held on
its behalf by a Depositary shall have any rights under this Indenture with
respect to such Global Security, and such Depositary may be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the owner of
such Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy or
other authorization furnished by a Depositary or impair, as between a Depositary
and such holders of beneficial interests, the operation of customary practices
governing the exercise of the rights of the Depositary (or its nominee) as
Holder of any Security.
SECTION 3.10. Cancellation.
All Securities surrendered for payment, redemption, transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee, and any such Securities and Securities surrendered directly to the
Trustee for any such purpose shall be promptly canceled by it. The Company may
at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder that the Company may have acquired in any
manner whatsoever, and all Securities so delivered shall be promptly canceled by
the Trustee. No Securities shall be authenticated in lieu of or in exchange for
any Securities canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Securities shall be destroyed by the
Trustee and the Trustee shall deliver to the Company a certificate of such
destruction.
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SECTION 3.11. Computation of Interest.
Interest on the Securities for any period shall be computed on the basis
of a 360-day year of twelve 30-day months and the actual number of days elapsed
in any partial month in such period, and interest on the Securities for a full
period shall be computed by dividing the rate per annum by the number of
interest periods that together constitute a full twelve months.
SECTION 3.12. Deferrals of Interest Payment Dates.
(a) So long as no Event of Default has occurred and is continuing, the
Company shall have the right, at any time during the term of the Securities,
from time to time to defer the payment of interest on such Securities for such
period or periods (each an "Extension Period") not to exceed the number of
consecutive interest periods that equal 20 consecutive quarterly periods with
respect to each Extension Period, during which Extension Periods the Company
shall have the right to make partial payments of interest on any Interest
Payment Date. No Extension Period shall end on a date other than an Interest
Payment Date. At the end of any such Extension Period, the Company shall pay all
interest then accrued and unpaid on the Securities (together with Additional
Interest thereon, if any, at the rate specified for the Securities to the extent
permitted by applicable law); provided, however, that no Extension Period shall
extend beyond the Stated Maturity of the principal of the Securities; and
provided further, however, that, during any such Extension Period, the Company
shall not (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of the
Company's capital stock, or (ii) make any payment of principal of or interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Company that rank pari passu in all respects with or junior in interest to the
Securities, including the Company's obligations associated with the Outstanding
Preferred Securities (other than (A) repurchases, redemptions or other
acquisitions of shares of capital stock of the Company in connection with any
employment contract, benefit plan or other similar arrangement with or for the
benefit of any one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock purchase plan or in
connection with the issuance of capital stock of the Company (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the applicable Extension Period,
(B) as a result of a reclassification, an exchange or conversion of any class or
series of the Company's capital stock (or any capital stock of a Subsidiary of
the Company) for any class or series of the Company's capital stock or of any
class or series of the Company's indebtedness for any class or series of the
Company's capital stock, (C) the purchase of fractional interests in shares of
the Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (D) any
declaration of a dividend in connection with any Rights Plan, or the issuance of
rights, stock or other property under any Rights Plan, or the redemption or
repurchase of rights pursuant thereto, or (E) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock issuable
upon exercise of such warrants, options or
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other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock). Prior to the termination of any
such Extension Period, the Company may further defer the payment of interest,
provided that no Event of Default has occurred and is continuing and provided
further, that no Extension Period shall exceed the period or periods specified
in such Securities, extend beyond the Stated Maturity of the principal of such
Securities or end on a date other than an Interest Payment Date. Upon the
termination of any such Extension Period and upon the payment of all accrued and
unpaid interest and any Additional Interest then due on any Interest Payment
Date, the Company may elect to begin a new Extension Period, subject to the
above conditions. No interest or Additional Interest shall be due and payable
during an Extension Period, except at the end thereof, but each installment of
interest that would otherwise have been due and payable during such Extension
Period shall bear Additional Interest. The Company shall give the Holders of the
Securities and the Trustee notice of its election to begin any such Extension
Period at least one Business Day prior to the next succeeding Interest Payment
Date on which interest on Securities would be payable but for such deferral or,
with respect to any Securities issued to the Issuer Trust, so long as any such
Securities are held by the Issuer Trust, at least one Business Day prior to the
earlier of (x) the next succeeding date on which Distributions (as defined in
the Trust Agreement) on the Preferred Securities of the Issuer Trust would be
payable but for such deferral, and (y) the date on which the Property Trustee of
the Issuer Trust is required to give notice to holders of such Preferred
Securities of the record date or the date such Distributions are payable, but in
any event not less than one Business Day prior to such record date.
(b) The Trustee shall promptly give notice of the Company's election to
begin any such Extension Period to the Holders of the Outstanding Securities.
SECTION 3.13. Right of Set-Off.
With respect to the Securities initially issued to the Issuer Trust,
notwithstanding anything to the contrary herein, the Company shall have the
right to set off any payment it is otherwise required to make in respect of any
such Security to the extent the Company has theretofore made, or is concurrently
on the date of such payment making, a payment under the Guarantee or to a holder
of Preferred Securities pursuant to an action undertaken under Section 5.8 of
this Indenture.
SECTION 3.14. Agreed Tax Treatment.
Each Security issued hereunder shall provide that the Company and, by
its acceptance of a Security or a beneficial interest therein, the Holder of,
and any Person that acquires a beneficial interest in, such Security agree that
for United States federal, state and local tax purposes it is intended that such
Security constitutes indebtedness.
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SECTION 3.15. CUSIP Numbers.
The Company, in issuing the Securities, may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notice
of redemption and other similar or related materials as a convenience to
Holders; provided that any such notice or other materials may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of redemption or other materials
and that reliance may be placed only on the other identification numbers printed
on the Securities, and any such redemption shall not be affected by any defect
in or omission of such numbers.
SECTION 3.16. Shortening of Stated Maturity.
The Company shall have the right to shorten the Stated Maturity of the
principal of the Securities at any time to any date not earlier than
___________, 2003, provided that the Company shall give notice to the Holders,
the Trustee and, in the case of Securities issued to an Issuer Trust, the Issuer
Trust of such shortening no less than 90 days prior to the effectiveness,
thereof.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall, upon Company Request, cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for and as otherwise provided
in this Section 4.1) and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(a) either
(i) all Securities theretofore authenticated and delivered (other
than (A) Securities that have been destroyed, lost or stolen and that
have been replaced or paid as provided in Section 3.7 and (B) Securities
for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust, as provided in Section 10.3) have
been delivered to the Trustee for cancellation; or
(ii) all such Securities not theretofore delivered to the Trustee
for cancellation
(A) have become due and payable, or
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(B) will become due and payable at their Stated Maturity
within one year of the date of deposit, or
(C) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the
expense, of the Company,and the Company, in the case of subclause
(ii)(A), (B) or (C) above, has deposited or caused to be
deposited with the Trustee as trust funds in trust for such
purpose an amount in the currency or currencies in which the
Securities are payable sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the
Trustee for cancellation, for the principal (and premium, if any)
and interest (including any Additional Interest) to the date of
such deposit (in the case of Securities that have become due and
payable) or to the Stated Maturity or Redemption Date, as the
case may be;
(b) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
(d) notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 6.7, the obligations
of the Company to any Authenticating Agent under Section 6.14 and, if money
shall have been deposited with the Trustee pursuant to subclause (ii) of clause
(a) of this Section, the obligations of the Trustee under Section 4.2 and the
last paragraph of Section 10.3 shall survive.
SECTION 4.2. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3, all
money deposited with the Trustee pursuant to Section 4.1 shall be held in trust
and applied by the Trustee, in accordance with the provisions of the Securities
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest and Additional Interest for the payment of which such money or
obligations have been deposited with or received by the Trustee.
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ARTICLE V
REMEDIES
SECTION 5.1. Events of Default.
"Event of Default", wherever used herein with respect to the Securities,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) default in the payment of any interest upon any Security,
including any Additional Interest in respect thereof, when it becomes
due and payable and continuance of such default for a period of 30 days
(subject to the deferral of any due date in the case of an Extension
Period); or
(b) default in the payment of the principal of (or premium, if
any, on) any Security at its Stated Maturity;
(c) failure on the part of the Company duly to observe or perform
any other of the covenants or agreements on the part of the Company in
the Securities or in this Indenture for a period of 90 days after the
date on which written notice of such failure (a "Notice of Default"),
requiring the Company to remedy the same, shall have been given to the
Company by the Trustee by registered or certified mail or to the Company
and the Trustee by the Holders of at least 25% in aggregate principal
amount of the Outstanding Securities; or
(d) the occurrence of the appointment of a receiver or other
similar official in any liquidation, insolvency or similar proceeding
with respect to the Company or all or substantially all of its property;
or a court or other governmental agency shall enter a decree or order
appointing a receiver or similar official and such decree or order shall
remain unstayed and undischarged for a period of 60 days.
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.
(a) If an Event of Default (other than an Event of Default specified in
Section 5.1(d)) with respect to Securities at the time Outstanding occurs and is
continuing, then, and in every such case, the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Outstanding Securities may declare
the principal amount (or, if the Securities are Discount Securities, such
portion of the principal amount as may be specified in the terms) of all the
Securities to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), provided, however, that, if,
upon an Event of Default, the Trustee or the Holders of not less than 25% in
principal amount of the
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Outstanding Securities fail to declare the principal of all the Outstanding
Securities to be immediately due and payable, the holders of at least 25% in
aggregate Liquidation Amount (as defined in the Trust Agreement) of the
Preferred Securities issued by the Issuer Trust then outstanding shall have the
right to make such declaration by a notice in writing to the Company and the
Trustee; and upon any such declaration such principal amount (or specified
portion thereof) of and the accrued interest (including any Additional Interest)
on all the Securities shall become immediately due and payable. If an Event of
Default specified in Section 5.1(d) with respect to Securities at the time
Outstanding occurs, the principal amount of all the Securities (or, if the
Securities are Discount Securities, such portion of the principal amount of such
Securities as may be specified by the terms) shall automatically, and without
any declaration or other action on the part of the Trustee or any Holder, become
immediately due and payable. Payment of principal and interest (including any
Additional Interest) on such Securities shall remain subordinated to the extent
provided in Article XIII notwithstanding that such amount shall become
immediately due and payable as herein provided.
(b) At any time after such a declaration of acceleration with respect to
the Securities has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter in this Article V
provided, the Holders of a majority in aggregate principal amount of the
Outstanding Securities, by written notice to the Company and the Trustee, may
rescind and annul such declaration and its consequences if:
(i) the Company has paid or deposited with the Trustee a sum sufficient
to pay:
(A) all overdue installments of interest on all Securities;
(B) any accrued Additional Interest on all Securities;
(C) the principal of (and premium, if any, on) any Securities
that have become due otherwise than by such declaration of acceleration
and interest and Additional Interest thereon at the rate borne by the
Securities; and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(ii) all Events of Default with respect to Securities, other than the
non-payment of the principal of Securities that has become due solely by
such acceleration, have been cured or waived as provided in Section
5.13.
If the Holders of Securities fail to annul such declaration and waive
such default, the holders of a majority in aggregate Liquidation Amount (as
defined in the Trust Agreement) of Preferred Securities issued by the Issuer
Trust then outstanding shall also have the right to rescind and annul such
declaration and its consequences by written notice to the Company
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and the Trustee, subject to the satisfaction of the conditions set forth in
clauses (a) and (b) above of this Section 5.2.
(d) No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if:
(i) default is made in the payment of any installment of interest
(including any Additional Interest) on any Security when such interest
becomes due and payable and such default continues for a period of 30
days, or
(ii) default is made in the payment of the principal of (and
premium, if any, on) any Security at the Stated Maturity thereof, then
the Company will, upon demand of the Trustee, pay to the Trustee, for
the benefit of the Holders of the Securities, the whole amount then due
and payable on the Securities for principal (and premium, if any) and
interest (including any Additional Interest), and, in addition thereto,
all amounts owing the Trustee under Section 6.7.
(b) If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon such Securities and collect the
monies adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
(c) If an Event of Default with respect to Securities occurs and is
continuing, the Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders of Securities by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
SECTION 5.4. Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial or
administrative proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors,
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(a) the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal (and premium, if any) or
interest (including any Additional Interest)) shall be entitled and empowered,
by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal
(and premium, if any) and interest (including any Additional Interest)
owing and unpaid in respect to the Securities and to file such other
papers or documents as may be necessary or advisable and to take any and
all actions as are authorized under the Trust Indenture Act in order to
have the claims of the Holders and any predecessor to the Trustee under
Section 6.7 allowed in any such judicial or administrative proceedings;
and
(ii) in particular, the Trustee shall be authorized to collect
and receive any monies or other property payable or deliverable on any
such claims and to distribute the same in accordance with Section 5.6;
and
(b) any custodian, receiver, assignee, trustee, liquidator,
sequestrator, conservator (or other similar official) in any such judicial or
administrative proceeding is hereby authorized by each Holder to make such
payments to the Trustee for distribution in accordance with Section 5.6, and in
the event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Trustee any amount due to it and any predecessor
Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
SECTION 5.5. Trustee May Enforce Claim Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, subject to
Article XIII and after provision for the payment of all the amounts owing the
Trustee and any predecessor Trustee under Section 6.7, its agents and counsel,
be for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
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SECTION 5.6. Application of Money Collected.
Any money or property collected or to be applied by the Trustee with
respect to the Securities pursuant to this Article V shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money or property on account of principal (and premium, if
any) or interest (including any Additional Interest), upon presentation of the
Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any predecessor
Trustee under Section 6.7;
SECOND: Subject to Article XIII, to the payment of the amounts then due
and unpaid upon Securities for principal (and premium, if any) and interest
(including any Additional Interest) in respect of which or for the benefit of
which such money has been collected, ratably, without preference or priority of
any kind, according to the amounts due and payable on such Securities for
principal (and premium, if any) and interest (including any Additional
Interest), respectively; and
THIRD: The balance, if any, to the Person or Persons entitled thereto.
SECTION 5.7. Limitation on Suits.
Subject to Section 5.8, no Holder of any Securities shall have any right
to institute any proceeding, judicial or otherwise, with respect to this
Indenture or for the appointment of a receiver, assignee, trustee, liquidator,
sequestrator (or other similar official) or for any other remedy hereunder,
unless:
(a) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the Securities
as herein before provided;
(b) the Holders of not less than 25% in aggregate principal
amount of the Outstanding Securities shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
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(e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in aggregate principal amount of the Outstanding Securities; it
being understood and intended that no one or more of such Holders shall
have any right in any manner whatever by virtue of, or by availing
itself of, any provision of this Indenture to affect, disturb or
prejudice the rights of any other Holders of Securities, or to obtain or
to seek to obtain priority or preference over any other of such Holders
or to enforce any right under this Indenture, except in the manner
herein provided and for the equal and ratable benefit of all such
Holders.
SECTION 5.8. Unconditional Right of Holders to Receive Principal,
Premium and Interest; Direct Action by Holders of Preferred Securities.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of (and premium, if any) and (subject to Sections 3.8
and 3.12) interest (including any Additional Interest) on such Security on the
Stated Maturity (or in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such right shall not
be impaired without the consent of such Holder. Any registered holder of the
Preferred Securities issued by the Issuer Trust shall have the right, upon the
occurrence of an Event of Default described in Section 5.1(a) or 5.1(b), to
institute a suit directly against the Company for enforcement of payment to such
holder of principal of (and premium, if any) and (subject to Sections 3.8 and
3.12) interest (including any Additional Interest) on the Securities having a
principal amount equal to the aggregate Liquidation Amount (as defined in the
Trust Agreement) of such Preferred Securities held by such holder.
SECTION 5.9. Restoration of Rights and Remedies.
If the Trustee, any Holder or any holder of Preferred Securities issued
by the Issuer Trust has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to the Trustee, such Holder or such
holder of Preferred Securities, then, and in every such case, the Company, the
Trustee, such Holders and such holder of Preferred Securities shall, subject to
any determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee, such Holder and such holder of Preferred Securities shall continue as
though no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative.
Except as otherwise provided in the last paragraph of Section 3.7, no
right or remedy herein conferred upon or reserved to the Trustee or the Holders
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law,
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be cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver.
(a) No delay or omission of the Trustee, any Holder of any Security with
respect to the Securities or any holder of any Preferred Security to exercise
any right or remedy accruing upon any Event of Default with respect to the
Securities shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein.
(b) Every right and remedy given by this Article V or by law to the
Trustee or to the Holders and the right and remedy given to the holders of
Preferred Securities by Section 5.8 may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee, the Holders or the holders of
Preferred Securities, as the case may be.
SECTION 5.12. Control by Holders.
The Holders of not less than a majority in aggregate principal amount of
the Outstanding Securities shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee, with respect to the
Securities, provided that:
(a) such direction shall not be in conflict with any rule of law
or with this Indenture,
(b) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction, and
(c) subject to the provisions of Section 6.1, the Trustee shall
have the right to decline to follow such direction if a Responsible
Officer or Officers of the Trustee shall, in good faith, determine that
the proceeding so directed would be unjustly prejudicial to the Holders
not joining in any such direction or would involve the Trustee in
personal liability.
SECTION 5.13. Waiver of Past Defaults.
(a) The Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities affected thereby and, the holders of a
majority in aggregate Liquidation Amount (as defined in the Trust Agreement) of
the Preferred Securities issued by the Issuer Trust may waive any past default
hereunder and its consequences except a default:
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(i) in the payment of the principal of (or premium, if any) or
interest (including any Additional Interest) on any Security (unless
such default has been cured and the Company has paid to or deposited
with the Trustee a sum sufficient to pay all matured installments of
interest (including Additional Interest) and all principal of (and
premium, if any, on) all Securities due otherwise than by acceleration),
or
(ii) in respect of a covenant or provision hereof that under
Article IX cannot be modified or amended without the consent of each
Holder of any Outstanding Security affected thereby.
Any such waiver shall be deemed to be on behalf of the Holders of all
the Securities, or in the case of waiver by holders of Preferred Securities
issued by the Issuer Trust, by all holders of Preferred Securities issued by the
Issuer Trust.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture, but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may, in
its discretion, require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may, in its
discretion, assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant, but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in aggregate principal amount of the Outstanding
Securities, or to any suit instituted by any Holder for the enforcement of the
payment of the principal of (or premium, if any) or interest (including any
Additional Interest) on any Security on or after the Stated Maturity.
SECTION 5.15. Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the
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execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
ARTICLE VI
THE TRUSTEE
SECTION 6.1. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture, but in the case of any such certificates or opinions that by
any provisions hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct except that
(i) this subsection shall not be construed to limit the effect of
subsection (a) of this Section 6.1(a);
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of Holders pursuant to Section 5.12 relating to the time,
method and place of conducting any proceeding for
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any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Indenture with respect to the
Securities.
(d) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
SECTION 6.2. Notice of Defaults.
Within 90 days after actual knowledge by a Responsible Officer of the
Trustee of the occurrence of any default hereunder with respect to the
Securities, the Trustee shall transmit by mail to all Holders of Securities, as
their names and addresses appear in the Securities Register, notice of such
default, unless such default shall have been cured or waived; provided, however,
that, except in the case of a default in the payment of the principal of (or
premium, if any) or interest (including any Additional Interest) on any
Security, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determines
that the withholding of such notice is in the interests of the Holders of
Securities; and provided further, that, in the case of any default of the
character specified in Section 5.1(c), no such notice to Holders of Securities
shall be given until at least 30 days after the occurrence thereof. For the
purpose of this Section 6.2, the term "default" means any event that is, or
after notice or lapse of time or both would become, an Event of Default with
respect to the Securities.
SECTION 6.3. Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, Security or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
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(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its choice and the advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that might be incurred by it in compliance with such
request or direction; provided, however, that nothing herein shall relieve the
Trustee of its obligations upon the occurrence of an Event of Default that has
not been cured or waived to exercise with respect to the Securities such of the
rights and powers vested in the Trustee by this Indenture, and to use the same
degree of care and skill in exercising such rights and powers as a reasonably
prudent person would use under the circumstances in the conduct of his own
affairs.
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, indenture,
Security or other paper or document, but the Trustee in its discretion may make
such inquiry or investigation into such facts or matters as it may see fit, and,
if the Trustee shall determine to make such inquiry or investigation, it shall
be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities. Neither the
Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of the Securities or the proceeds thereof.
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SECTION 6.5. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Securities
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
6.8 and 6.13, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Securities
Registrar or such other agent.
SECTION 6.6. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.
SECTION 6.7. Compensation and Reimbursement.
(a) The Company agrees to pay to the Trustee from time to time
reasonable compensation for all services rendered by it hereunder in such
amounts as the Company and the Trustee shall agree from time to time (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust).
(b) The Company agrees to reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense disbursement or advance as may be attributable to its
negligence, bad faith or willful misconduct.
(c) Since the Issuer Trust is being formed solely to facilitate an
investment in the Preferred Securities, the Company, as Holder of the Common
Securities, hereby covenants to pay all debts and obligations (other than with
respect to the Preferred Securities and the Common Securities) and all
reasonable costs and expenses of the Issuer Trust (including without limitation
all costs and expenses relating to the organization of the Issuer Trust, the
fees and expenses of the trustees and all reasonable costs and expenses relating
to the operation of the Issuer Trust) and to pay any and all taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed on the Issuer Trust by the United States, or any taxing
authority, so that the net amounts received and retained by the Issuer Trust and
the Property Trustee after paying such expenses will be equal to the amounts the
Issuer Trust and the Property Trustee would have received had no such costs or
expenses been incurred by or imposed on the Issuer Trust. The foregoing
obligations of the Company are for the benefit of, and shall be enforceable by,
any person to whom any such debts, obligations, costs, expenses and taxes are
owed (each, a "Creditor") whether or not such Creditor has received notice
thereof. Any such Creditor may enforce such obligations directly against the
Company, and the Company irrevocably waives any right or remedy to require that
any such Creditor take any action against the Issuer Trust or
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any other person before proceeding against the Company. The Company shall
execute such additional agreements as may be necessary or desirable to give full
effect to the foregoing.
(d) The Company shall indemnify the Trustee, its directors, officers,
employees and agents for, and hold them harmless against, any loss, liability or
expense (including the reasonable compensation and the expenses and
disbursements of its agents and counsel) incurred without negligence, bad faith
or willful misconduct, arising out of or in connection with the acceptance or
administration of this trust or the performance of its duties hereunder,
including the reasonable costs and expenses of defending against any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder. This indemnification shall survive the termination of this
Indenture or the resignation or removal of the Trustee.
(e) When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 5.1(d) occurs, the expenses and the compensation
for the services are intended to constitute expenses of administration under the
Bankruptcy Reform Act of 1978 or any successor statute.
SECTION 6.8. Disqualification; Conflicting Interests.
The Trustee for the Securities issued hereunder shall be subject to, and
shall comply fully with, the provisions of Section 310(b) of the Trust Indenture
Act. Nothing herein shall prevent the Trustee from filing with the Commission
the application referred to in the second to last paragraph of said Section
310(b).
SECTION 6.9. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee with respect to the Securities
issued hereunder which shall be:
(a) a Person organized and doing business under the laws of the United
States of America or of any state or territory thereof or of the District of
Columbia, authorized under such laws to exercise corporate trust powers and
subject to supervision or examination by federal, state, territorial or District
of Columbia authority, or
(b) an entity organized and doing business under the laws of a foreign
government that is permitted to act as Trustee pursuant to a rule, regulation or
order of the Commission, authorized under such laws to exercise corporate trust
powers, and subject to supervision or examination by authority of such foreign
government or a political subdivision thereof substantially equivalent to
supervision or examination applicable to United States institutional trustees;
in either case having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by federal or state authority. If such
entity publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then, for
the purposes of this Section, the combined
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capital and surplus of such entity shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. If
at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article. Neither the Company nor any
Person directly or indirectly controlling, controlled by or under common control
with the Company shall serve as Trustee for the Securities issued hereunder.
SECTION 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time with respect to the Securities by
giving written notice thereof to the Company. If an instrument of acceptance by
a successor Trustee shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time with respect to the
Securities by Act of the Holders of a majority in aggregate principal amount of
the Outstanding Securities, delivered to the Trustee and to the Company.
(d) If at any time:
(i) the Trustee shall fail to comply with Section 6.8 after
written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Security for at least six months, or
(ii) the Trustee shall cease to be eligible under Section 6.9 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(iii) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any such case, (x) the Company, acting pursuant to the authority of a
Board Resolution, may remove the Trustee with respect to the Securities issued
hereunder, or (y) subject to Section 5.14, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of such Holder and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee with respect to the Securities issued hereunder and
the appointment of a successor Trustee or Trustees.
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(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause with
respect to the Securities, the Company, by a Board Resolution, shall promptly
appoint a successor Trustee with respect to the Securities. If, within one year
after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee with respect to the Securities shall be appointed
by Act of the Holders of a majority in aggregate principal amount of the
Outstanding Securities delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Trustee with respect to the Securities and
supersede the successor Trustee appointed by the Company. If no successor
Trustee with respect to the Securities shall have been so appointed by the
Company or the Holders and accepted appointment in the manner hereinafter
provided, any Holder who has been a bona fide Holder of a Security for at least
six months may, subject to Section 5.14, on behalf of such Holder and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities.
(f) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the Securities and each appointment of a
successor Trustee with respect to the Securities by mailing written notice of
such event by first-class mail, postage prepaid, to the Holders of Securities as
their names and addresses appear in the Securities Register. Each notice shall
include the name of the successor Trustee with respect to the Securities and the
address of its Corporate Trust Office.
SECTION 6.11. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
(b) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all rights, powers and trusts referred to
in Section 6.11(a).
(c) No successor Trustee shall accept its appointment unless, at the
time of such acceptance, such successor Trustee shall be qualified and eligible
under this Article VI.
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SECTION 6.12. Merger, Conversion, Consolidation or Succession to
Business.
Any entity into which the Trustee may be merged or converted or with
which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any entity
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such entity
shall be otherwise qualified and eligible under this Article VI, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto. In case any Securities shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication and
deliver the Securities so authenticated, and in case any Securities shall not
have been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor Trustee or in the name of such
successor Trustee, and in all cases the certificate of authentication shall have
the full force which it is provided anywhere in the Securities or in this
Indenture that the certificate of the Trustee shall have.
SECTION 6.13. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
SECTION 6.14. Appointment of Authenticating Agent.
(a) The Trustee may appoint an Authenticating Agent or Agents with
respect to the Securities, which shall be authorized to act on behalf of the
Trustee to authenticate Securities issued upon original issue and upon exchange,
registration of transfer or partial redemption thereof or pursuant to Section
3.6, and Securities so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if authenticated
by the Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be an entity organized and doing business under the laws of the United
States of America, or of any state or territory thereof or of the District of
Columbia, authorized under such laws to act as Authenticating Agent, having a
combined capital and surplus of not less than $50,000,000 and subject to
supervision or examination by federal or state authority. If such Authenticating
Agent publishes reports of condition at least annually, pursuant to law or to
the requirements of said supervising or examining authority, then for the
purposes of this Section the combined capital and surplus of such Authenticating
Agent shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. If at any time an Authenticating
Agent shall cease to be eligible in
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accordance with the provisions of this Section 6.14, such Authenticating Agent
shall resign immediately in the manner and with the effect specified in this
Section 6.14.
(b) Any entity into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any entity resulting from any
merger, conversion or consolidation to which such Authenticating Agent shall be
a party, or any entity succeeding to all or substantially all of the corporate
trust business of an Authenticating Agent shall be the successor Authenticating
Agent hereunder, provided such entity shall be otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the Trustee or the Authenticating Agent.
(c) An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent, which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 1.6 to all Holders of Securities.
Any successor Authenticating Agent upon acceptance hereunder shall become vested
with all the rights, powers and duties of its predecessor hereunder, with like
effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provision of
this Section.
(d) The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payment, subject to the
provisions of Section 6.7.
(e) If an appointment is made pursuant to this Section 6.14, the
Securities may have endorsed thereon, in addition to the Trustee's certificate
of authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities referred to in the within mentioned
Indenture.
Dated: BANKERS TRUST COMPANY,
--------------------- as Trustee
By:
-----------------------------------------
As Authenticating Agent
Name:
Title:
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By:
-----------------------------------------
As Authenticating Agent
Name:
Title:
ARTICLE VII
HOLDERS LISTS AND REPORTS BY TRUSTEE,
PAYING AGENT AND COMPANY
SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee:
(a) quarterly, not more than 15 days after March 15, June 15, September
15, and December 15 in each year, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders as of such dates,
excluding from any such list names and addresses received by the Trustee in its
capacity as Securities Registrar, and
(b) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished, excluding from any such list names and addresses received by the
Trustee in its capacity as Securities Registrar.
SECTION 7.2. Preservation of Information, Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as Securities
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with respect
to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided in the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of the
disclosure of information as to the names and addresses of the Holders made
pursuant to the Trust Indenture Act.
SECTION 7.3. Reports by Trustee and Paying Agent.
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(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act, at the times and in the manner provided pursuant thereto.
(b) Reports so required to be transmitted at stated intervals of not
more than 12 months shall be transmitted within 60 days of January 31 in each
calendar year, commencing with January 31, 1999.
(c) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each securities exchange upon which any
Securities are listed and also with the Commission. The Company will notify the
Trustee when any Securities are listed on any securities exchange.
(d) The Paying Agent shall comply with all withholding, backup
withholding, tax and information reporting requirements under the Internal
Revenue Code of 1986, as amended, and the Treasury Regulations issued thereunder
with respect to payments on, or with respect to, the Securities.
SECTION 7.4. Reports by Company.
The Company shall file or cause to be filed with the Trustee and with
the Commission, and transmit to Holders, such information, documents and other
reports, and such summaries thereof, as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided in the Trust Indenture
Act. In the case of information, documents or reports required to be filed with
the Commission pursuant to Section 13(a) or Section 15(d) of the Exchange Act,
the Company shall file or cause the filing of such information documents or
reports with the Trustee within 15 days after the same is required to be filed
with the Commission.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, and no Person shall consolidate with or merge into the Company or
convey, transfer or lease its properties and assets substantially as an entirety
to the Company, unless:
(a) if the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the entity formed by such
consolidation or into which the Company is merged or the Person that
acquires by conveyance or transfer, or that leases, the properties and
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assets of the Company substantially as an entirety shall be an entity
organized and existing under the laws of the United States of America or
any state thereof or the District of Columbia and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the due and punctual
payment of the principal of (and premium, if any), and interest
(including any Additional Interest) on all the Securities of every
series and the performance of every covenant of this Indenture on the
part of the Company to be performed or observed; provided, however, that
nothing herein shall be deemed to restrict or prohibit, and no
supplemental indenture shall be required in the case of, the merger of a
Principal Subsidiary Bank with and into a Principal Subsidiary Bank or
the Company, the consolidation of Principal Subsidiary Banks into a
Principal Subsidiary Bank or the Company, or the sale or other
disposition of all or substantially all of the assets of any Principal
Subsidiary Bank (and of any other Principal Subsidiary Bank any voting
securities of which are owned, directly or indirectly, by such Principal
Subsidiary Bank) surviving such merger, resulting from such
consolidation or acquiring such assets;
(b) immediately after giving effect to such transaction, no Event
of Default, and no event that, after notice or lapse of time, or both,
would constitute an Event of Default, shall have occurred and be
continuing; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and any such
supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transaction have been
complied with and, in the case of a transaction subject to this Section
8.1 but not requiring a supplemental indenture under paragraph (a) of
this Section 8.1, an Officer's Certificate or Opinion of Counsel to the
effect that the surviving, resulting or successor entity is legally
bound by the Indenture and the Securities; and the Trustee, subject to
Section 6.1, may rely upon such Officers' Certificates and Opinions of
Counsel as conclusive evidence that such transaction complies with this
Section 8.1.
SECTION 8.2. Successor Company Substituted.
(a) Upon any consolidation or merger by the Company with or into any
other Person, or any conveyance, transfer or lease by the Company of its
properties and assets substantially as an entirety to any Person in accordance
with Section 8.1, the successor entity formed by such consolidation or into
which the Company is merged or to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; and in the event of any
such conveyance, transfer or lease the Company shall be discharged from all
obligations and covenants under the Indenture and the Securities.
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(b) Such successor Person may cause to be executed, and may issue either
in its own name or in the name of the Company, any or all of the Securities
issuable hereunder that theretofore shall not have been signed by the Company
and delivered to the Trustee; and, upon the order of such successor Person
instead of the Company and subject to all the terms, conditions and limitations
in this Indenture prescribed, the Trustee shall authenticate and shall deliver
any Securities that previously shall have been signed and delivered by the
officers of the Company to the Trustee for authentication pursuant to such
provisions and any Securities that such successor Person thereafter shall cause
to be executed and delivered to the Trustee on its behalf for the purpose
pursuant to such provisions. All the Securities so issued shall in all respects
have the same legal rank and benefit under this Indenture as the Securities
theretofore or thereafter issued in accordance with the terms of this Indenture.
(c) In case of any such consolidation, merger, sale, conveyance or
lease, such changes in phraseology and form may be made in the Securities
thereafter to be issued as may be appropriate.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may amend
or waive any provision of this Indenture or enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, for any of the
following purposes:
(a) to evidence the succession of another Person to the Company, and the
assumption by any such successor of the covenants of the Company herein and in
the Securities contained;
(b) to convey, transfer, assign, mortgage or pledge any property to or
with the Trustee or to surrender any right or power herein conferred upon the
Company;
(c) to facilitate the issuance of Securities in certificated or other
definitive form;
(d) to add to the covenants of the Company for the benefit of the
Holders of the Securities or to surrender any right or power herein conferred
upon the Company;
(e) to add any additional Events of Default for the benefit of the
Holders of the Securities;
(f) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall not apply to any Outstanding
Securities;
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(g) to cure any ambiguity, to correct or supplement any provision herein
that may be defective or inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising under
this Indenture, provided that such action pursuant to this clause (g) shall not
adversely affect the interest of the Holders of Securities in any material
respect or, in the case of the Securities issued to the Issuer Trust and for so
long as any of the Preferred Securities issued by the Issuer Trust shall remain
outstanding, the holders of such Preferred Securities;
(h) to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee with respect to the Securities and to add to or change
any of the provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one Trustee,
pursuant to the requirements of Section 6.11(b); or
(i) to comply with the requirements of the Commission in order to effect
or maintain the qualification of this Indenture under the Trust Indenture Act.
SECTION 9.2. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities affected by such supplemental
indenture, by Act of said Holders delivered to the Company and the Trustee, the
Company, when authorized by a Board Resolution, and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders of
Securities under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Security
affected thereby,
(a) change the Stated Maturity of the principal of, or any
installment of interest (including any Additional Interest) on, any
Security, or reduce the principal amount thereof or the rate of interest
thereon or any premium payable upon the redemption thereof, or reduce
the amount of principal of a Discount Security that would be due and
payable upon a declaration of acceleration of the Stated Maturity
thereof pursuant to Section 5.2, or change the place of payment where,
or the coin or currency in which, any Security or interest thereon is
payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity thereof (or, in the
case of redemption, on or after the Redemption Date), or
(b) reduce the percentage in aggregate principal amount of the
Outstanding Securities, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required
for any waiver (of compliance with certain provisions of this Indenture
or certain defaults hereunder and their consequences) provided for in
this Indenture, or
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(c) modify any of the provisions of this Section 9.2, Section
5.13 or Section 10.5, except to increase any such percentage or to
provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each Security
affected thereby;
provided, further, that, in the case of the Securities issued to the
Issuer Trust, so long as any of the Preferred Securities issued by the
Issuer Trust remains outstanding, (i) no such amendment shall be made
that adversely affects the holders of such Preferred Securities in any
material respect, and no termination of this Indenture shall occur, and
no waiver of any Event of Default or compliance with any covenant under
this Indenture shall be effective, without the prior consent of the
holders of at least a majority of the aggregate Liquidation Amount (as
defined in the Trust Agreement) of such Preferred Securities then
outstanding unless and until the principal of (and premium, if any, on)
the Securities and all accrued and (subject to Section 3.8) unpaid
interest (including any Additional Interest) thereon have been paid in
full, and (ii) no amendment shall be made to Section 5.8 of this
Indenture that would impair the rights of the holders of Preferred
Securities issued by the Issuer Trust provided therein without the prior
consent of the holders of each such Preferred Security then outstanding
unless and until the principal of (and premium, if any, on) the
Securities of such series and all accrued and (subject to Section 3.8)
unpaid interest (including any Additional Interest) thereon have been
paid in full.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 9.3. Execution of Supplemental Indentures.
In executing or accepting the additional trusts created by any
supplemental indenture permitted by this Article IX or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 6.1) shall be fully protected in relying upon,
an Officers' Certificate and an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture, and
that all conditions precedent herein provided for relating to such action have
been complied with. The Trustee may, but shall not be obligated to, enter into
any such supplemental indenture that affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article IX,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
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SECTION 9.5. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article IX shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 9.6. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article IX may, and shall if required by
the Company, bear a notation in form approved by the Company as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Company, to any
such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities.
ARTICLE X
COVENANTS
SECTION 10.1. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of the Securities that
it will duly and punctually pay the principal of (and premium, if any) and
interest (including any Additional Interest) on the Securities in accordance
with the terms of such Securities and this Indenture.
SECTION 10.2. Maintenance of Office or Agency.
(a) The Company will maintain in each Place of Payment an office or
agency where Securities may be presented or surrendered for payment, where
Securities may be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Company initially appoints the Trustee, acting
through its Corporate Trust Office, as its agent for said purposes. The Company
will give prompt written notice to the Trustee of any change in the location of
any such office or agency. If at any time the Company shall fail to maintain
such office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
(b) The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all of such purposes, and may from time to time rescind such designations;
provided, however, that no
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such designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in each Place of Payment for
Securities for such purposes. The Company will give prompt written notice to the
Trustee of any such designation and any change in the location of any such
office or agency.
SECTION 10.3. Money for Security Payments to be Held in Trust.
(a) If the Company shall at any time act as its own Paying Agent with
respect to the Securities, it will, on or before each due date of the principal
of (and premium, if any) or interest (including Additional Interest) on any of
the Securities, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal (and premium, if any) or
interest (including Additional Interest) so becoming due until such sums shall
be paid to such Persons or otherwise disposed of as herein provided, and will
promptly notify the Trustee of its failure so to act.
(b) Whenever the Company shall have one or more Paying Agents, it will,
prior to 10:00 a.m., New York City time, on each due date of the principal of
(or premium, if any) or interest, including Additional Interest on any
Securities, deposit with a Paying Agent a sum sufficient to pay the principal
(and premium, if any) or interest, including Additional Interest so becoming
due, such sum to be held in trust for the benefit of the Persons entitled to
such principal (and premium, if any) or interest, including Additional Interest,
and (unless such Paying Agent is the Trustee) the Company will promptly notify
the Trustee of its failure so to act.
(c) The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(i) hold all sums held by it for the payment of the principal of (and
premium, if any, or interest (including Additional Interest) on the Securities
in trust for the benefit of the Persons entitled thereto until such sums shall
be paid to such Persons or otherwise disposed of as herein provided;
(ii) give the Trustee notice of any default by the Company (or any other
obligor upon such Securities) in the making of any payment of principal (and
premium, if any) or interest (including Additional Interest) in respect of any
Security;
(iii) at any time during the continuance of any default with respect to
the Securities, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent; and
(iv) comply with the provisions of the Trust Indenture Act applicable to
it as a Paying Agent.
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(d) The Company may, at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same terms as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
(e) Any money deposited with the Trustee or any Paying Agent, or then
held by the Company in trust for the payment of the principal of (and premium,
if any) or interest (including Additional Interest) on any Security and
remaining unclaimed for two years after such principal (and premium, if any) or
interest (including Additional Interest) has become due and payable shall
(unless otherwise required by mandatory provision of applicable escheat or
abandoned or unclaimed property law) be paid on Company Request to the Company,
or (if then held by the Company) shall (unless otherwise required by mandatory
provision of applicable escheat or abandoned or unclaimed property law) be
discharged from such trust; and the Holder of such Security shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the Borough of
Manhattan, the City of New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 10.4. Statement as to Compliance.
The Company shall deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate covering the preceding calendar year, stating whether or not to the
best knowledge of the signers thereof of the Company is in default in the
performance, observance or fulfillment of or compliance with any of the terms,
provisions, covenants and conditions of this Indenture, and if the Company shall
be in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge. For the purpose of this Section 10.4, compliance
shall be determined without regard to any grace period or requirement of notice
provided pursuant to the terms of this Indenture.
SECTION 10.5. Waiver of Certain Covenants.
Subject to the rights of holders of Preferred Securities specified in
Section 9.2, if any, the Company may omit in any particular instance to comply
with any covenant or condition provided pursuant to Section 3.1, 9.1(c) or
9.1(d) with respect to the Securities, if before or
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after the time for such compliance the Holders of at least a majority in
aggregate principal amount of the Outstanding Securities shall, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such covenant or condition, but no such waiver shall extend to
or affect such covenant or condition except to the extent so expressly waived,
and, until such waiver shall become effective, the obligations of the Company in
respect of any such covenant or condition shall remain in full force and effect.
SECTION 10.6. Additional Sums.
So long as no Event of Default has occurred and is continuing and except
as otherwise specified as contemplated by Section 2.1 or Section 3.1, if: (a)
the Issuer Trust is the Holder of all of the Outstanding Securities, and (b) a
Tax Event described in clause (a) or (c) of the definition of "Tax Event" in
Section 1.1 hereof has occurred and is continuing in respect of the Issuer
Trust, the Company shall pay the Issuer Trust (and its permitted successors or
assigns under the Trust Agreement) for so long as the Issuer Trust (or its
permitted successor or assignee) is the registered holder of the Outstanding
Securities, such additional sums as may be necessary in order that the amount of
Distributions (including any Additional Amount (as defined in the Trust
Agreement)) then due and payable by the Issuer Trust on the Preferred Securities
and Common Securities that at any time remain outstanding in accordance with the
terms thereof shall not be reduced as a result of such Additional Taxes (the
"Additional Sums"). Whenever in this Indenture or the Securities there is a
reference in any context to the payment of principal of or interest on the
Securities, such mention shall be deemed to include mention of the payments of
the Additional Sums provided for in this paragraph to the extent that, in such
context, Additional Sums are, were or would be payable in respect thereof
pursuant to the provisions of this paragraph and express mention of the payment
of Additional Sums (if applicable) in any provisions hereof shall not be
construed as excluding Additional Sums in those provisions hereof where such
express mention is not made; provided, however, that the deferral of the payment
of interest pursuant to Section 3.12 or the Securities shall not defer the
payment of any Additional Sums that may be due and payable.
SECTION 10.7. Additional Covenants.
The Company covenants and agrees with each Holder of Securities that it
shall not (a) declare or pay any dividends or distributions on, or redeem
purchase, acquire or make a liquidation payment with respect to, any shares of
the Company's capital stock, or (b) make any payment of principal of or interest
or premium, if any, on or repay, repurchase or redeem any debt securities of the
Company that rank pari passu in all respects with or junior in interest to the
Securities, including the Company's obligations associated with the Outstanding
Preferred Securities (other than (i) repurchases, redemptions or other
acquisitions of shares of capital stock of the Company in connection with any
employment contract, benefit plan or other similar arrangement with or for the
benefit of any one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock purchase plan or in
connection with the issuance of capital stock of the
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Company (or securities convertible into or exercisable for such capital stock)
as consideration in an acquisition transaction entered into prior to the
applicable Extension Period or other event referred to below, (ii) as a result
of a reclassification, exchange or conversion of any class or series of the
Company's capital stock (or any capital stock of a Subsidiary of the Company)
for any class or series of the Company's capital stock or of any class or series
of the Company's indebtedness for any class or series of the Company's capital
stock, (iii) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (iv) any declaration of a
dividend in connection with any Rights Plan, or the issuance of rights, stock or
other property under any Rights Plan, or the redemption or repurchase of rights
pursuant thereto, or (v) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock) if at
such time (A) there shall have occurred any event (x) of which the Company has
actual knowledge that with the giving of notice or the lapse of time, or both,
would constitute an Event of Default with respect to the Securities, and (y)
which the Company shall not have taken reasonable steps to cure, (B) if the
Securities are held by the Issuer Trust, the Company shall be in default with
respect to its payment of any obligations under the Guarantee relating to the
Preferred Securities issued by the Issuer Trust, or (C) the Company shall have
given notice of its election to begin an Extension Period with respect to the
Securities as provided herein and shall not have rescinded such notice, or such
Extension Period, or any extension thereof, shall be continuing.
The Company also covenants with each Holder of Securities issued to the
Issuer Trust (a) to hold, directly or indirectly, 100% of the Common Securities
of the Issuer Trust, provided that any permitted successor of the Company as
provided under Section 8.2 may succeed to the Company's ownership of such Common
Securities, (b) as holder of such Common Securities, not to voluntarily
terminate, windup or liquidate the Issuer Trust, other than (i) in connection
with a distribution of the Securities to the holders of the Preferred Securities
in liquidation of the Issuer Trust, or (ii) in connection with certain mergers,
consolidations or amalgamations permitted by the Trust Agreement, and (c) to use
its reasonable efforts, consistent with the terms and provisions of the Trust
Agreement, to cause the Issuer Trust to continue not to be taxable as a
corporation for United States federal income tax purposes.
SECTION 10.8. Federal Tax Reports.
On or before December 15 of each year during which any Securities are
outstanding, the Company shall furnish to each Paying Agent such information as
may be reasonably requested by each Paying Agent in order that each Paying Agent
may prepare the information which it is required to report for such year on
Internal Revenue Service Forms 1096 and 1099 pursuant to Section 6049 of the
Internal Revenue Code of 1986, as amended. Such information shall include the
amount of original issue discount includible in income for each
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authorized minimum denomination of principal amount at Stated Maturity of
outstanding Securities during such year.
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.1. Applicability of this Article.
Redemption of Securities as permitted or required by any form of
Security issued pursuant to this Indenture shall be made in accordance with such
form of Security and this Article; provided, however, that, if any provision of
any such form of Security shall conflict with any provision of this Article XI,
the provision of such form of Security shall govern.
SECTION 11.2. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced
by or pursuant to a Board Resolution. In case of any redemption at the election
of the Company, the Company shall, not less than 30 nor more than 60 days prior
to the Redemption Date (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee and, in the case of Securities held by the Issuer
Trust, the Property Trustee under the Trust Agreement, of such date and of the
principal amount of Securities to be redeemed and provide the additional
information required to be included in the notice or notices contemplated by
Section 11.4; provided that, for so long as such Securities are held by the
Issuer Trust, such notice shall be given not less than 45 nor more than 75 days
prior to such Redemption Date (unless a shorter notice shall be satisfactory to
the Property Trustee under the Trust Agreement). In the case of any redemption
of Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Securities, the Company shall furnish the Trustee
with an Officers' Certificate and an Opinion of Counsel evidencing compliance
with such restriction.
SECTION 11.3. Selection of Securities to be Redeemed.
(a) If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities not previously
called for redemption, by such method as the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of a portion
of the principal amount of any Security, provided that the unredeemed portion of
the principal amount of any Security shall be in an authorized denomination
(which shall not be less than the minimum authorized denomination) for such
Security.
(b) The Trustee shall promptly notify the Company in writing of the
Securities selected for partial redemption and the principal amount thereof to
be redeemed. For all purposes of
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this Indenture, unless the context otherwise requires, all provisions relating
to the redemption of Securities shall relate, in the case of any Security
redeemed or to be redeemed only in part, to the portion of the principal amount
of such Security that has been or is to be redeemed.
SECTION 11.4. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not later than the thirtieth day, and not earlier than the
sixtieth day, prior to the Redemption Date, to each Holder of Securities to be
redeemed, at the address of such Holder as it appears in the Securities
Register.
With respect to Securities to be redeemed, each notice of redemption
shall state:
(a) the Redemption Date;
(b) the Redemption Price or, if the Redemption Price cannot be
calculated prior to the time the notice is required to be sent, the estimate of
the Redemption Price provided pursuant to the Indenture together with a
statement that it is an estimate and that the actual Redemption Price will be
calculated on the third Business Day prior to the Redemption Date (if such an
estimate of the Redemption Price is given, a subsequent notice shall be given as
set forth above setting forth the Redemption Price promptly following the
calculation thereof);
(c) if less than all Outstanding Securities are to be redeemed, the
identification (and, in the case of partial redemption, the respective principal
amounts) of the particular Securities to be redeemed;
(d) that, on the Redemption Date, the Redemption Price will become due
and payable upon each such Security or portion thereof, and that interest
thereon, if any, shall cease to accrue on and after said date;
(e) the place or places where such Securities are to be surrendered for
payment of the Redemption Price;
(f) such other provisions as may be required in respect of the terms of
the Securities; and
(g) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.
The notice, if mailed in the manner provided above, shall be conclusively
presumed to have been duly given, whether or not the
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Holder receives such notice. In any case, a failure to give such notice by mail
or any defect in the notice to the Holder of any Security designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Security.
SECTION 11.5. Deposit of Redemption Price.
Prior to 10:00 a.m., New York City time, on the Redemption Date
specified in the notice of redemption given as provided in Section 11.4, the
Company will deposit with the Trustee or with one or more Paying Agents (or if
the Company is acting as its own Paying Agent, the Company will segregate and
hold in trust as provided in Section 10.3) an amount of money sufficient to pay
the Redemption Price of, and any accrued interest (including Additional
Interest) on, all the Securities (or portions thereof) that are to be redeemed
on that date.
SECTION 11.6. Payment of Securities Called for Redemption.
(a) If any notice of redemption has been given as provided in Section
11.4, the Securities or portion of Securities with respect to which such notice
has been given shall become due and payable on the date and at the place or
places stated in such notice at the applicable Redemption Price, together with
accrued interest (including any Additional Interest) to the Redemption Date. On
presentation and surrender of such Securities at a Place of Payment in said
notice specified, the said Securities or the specified portions thereof shall be
paid and redeemed by the Company at the applicable Redemption Price, together
with accrued interest (including any Additional Interest) to the Redemption
Date; provided, however, that, installments of interest (including Additional
Interest) whose Stated Maturity is on or prior to the Redemption Date will be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant record
dates according to their terms and the provisions of Section 3.8.
(b) Upon presentation of any Security redeemed in part only, the Company
shall execute and the Trustee shall authenticate and deliver to the Holder
thereof, at the expense of the Company, a new Security or Securities, of
authorized denominations, in aggregate principal amount equal to the unredeemed
portion of the Security so presented and having the same Original Issue Date,
Stated Maturity and terms.
(c) If any Security called for redemption shall not be so paid under
surrender thereof for redemption, the principal of and premium, if any, on such
Security shall, until paid, bear interest from the Redemption Date at the rate
prescribed therefor in the Security.
SECTION 11.7. Right of Redemption of Securities Initially Issued to the
Issuer Trust.
(a) The Company, at its option, may redeem such Securities (i) on or
after ______________, 2003, in whole at any time or in part from time to time,
or (ii) upon the
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occurrence and during the continuation of a Tax Event, an Investment Company
Event or a Capital Treatment Event, at any time within 90 days following the
occurrence and during the continuation of such Tax Event, Investment Company
Event or Capital Treatment Event, in whole (but not in part), in each case at a
Redemption Price specified in such Security, together with accrued interest
(including Additional Interest) to the Redemption Date.
(b) If less than all the Securities are to be redeemed, the aggregate
principal amount of such Securities remaining Outstanding after giving effect to
such redemption shall be sufficient to satisfy any provisions of the Trust
Agreement.
ARTICLE XII
SINKING FUNDS
Except as may be provided in any supplemental or amended indenture, no
sinking fund shall be established or maintained for the retirement of
Securities.
ARTICLE XIII
SUBORDINATION OF SECURITIES
SECTION 13.1. Securities Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a Security, by its
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article, the payment of the principal
of (and premium, if any) and interest (including any Additional Interest) on
each and all of the Securities are hereby expressly made subordinate and subject
in right of payment to the prior payment in full of all Senior Indebtedness.
SECTION 13.2. No Payment When Senior Indebtedness in Default;
Payment Over of Proceeds Upon Dissolution, Etc.
(a) If the Company shall default in the payment of any principal of (or
premium, if any) or interest on any Senior Indebtedness when the same becomes
due and payable, whether at maturity or at a date fixed for prepayment or by
declaration of acceleration or otherwise, then, upon written notice of such
default to the Company by the holders of Senior Indebtedness or any trustee
therefor, unless and until such default shall have been cured or waived or shall
have ceased to exist, no direct or indirect payment (in cash, property,
securities, by set-off or otherwise) shall be made or agreed to be made on
account of the principal of (or premium, if any) or interest (including
Additional Interest) on any of the Securities, or in respect of any redemption,
repayment, retirement, purchase or other acquisition of any of the Securities.
(b) In the event of (i) any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment, composition or other similar
proceeding relating to the
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<PAGE>
Company, its creditors or its property, (ii) any proceeding for the liquidation,
dissolution or other winding up of the Company, voluntary or involuntary,
whether or not involving insolvency or bankruptcy proceedings, (iii) any
assignment by the Company for the benefit of creditors or (iv) any other
marshalling of the assets of the Company (each such event, if any, herein
sometimes referred to as a "Proceeding"), all Senior Indebtedness (including any
interest thereon accruing after the commencement of any such proceedings) shall
first be paid in full before any payment or distribution, whether in cash,
securities or other property, shall be made to any Holder on account thereof.
Any payment or distribution, whether in cash, securities or other property
(other than securities of the Company or any other entity provided for by a plan
of reorganization or readjustment, the payment of which is subordinate, at least
to the extent provided in these subordination provisions with respect to the
indebtedness evidenced by the Securities, to the payment of all Senior
Indebtedness at the time outstanding and to any securities issued in respect
thereof under any such plan of reorganization or readjustment), which would
otherwise (but for these subordination provisions) be payable or deliverable in
respect of the Securities shall be paid or delivered directly to the holders of
Senior Indebtedness in accordance with the priorities then existing among such
holders until all Senior Indebtedness (including any interest thereon accruing
after the commencement of any Proceeding) shall have been paid in full.
(c) In the event of any Proceeding, after payment in full of all sums
owing with respect to Senior Indebtedness, the Holders of the Securities,
together with the holders of any obligations of the Company ranking on a parity
with the Securities, shall be entitled to be paid from the remaining assets of
the Company the amounts at the time due and owing on account of unpaid principal
of (and premium, if any) and interest on the Securities and such other
obligations before any payment or other distribution, whether in cash, property
or otherwise, shall be made on account of any capital stock or any obligations
of the Company ranking junior to the Securities, and such other obligations. If,
notwithstanding the foregoing, any payment or distribution of any character or
any security, whether in cash, securities or other property (other than
securities of the Company or any other entity provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at least to
the extent provided in these subordination provisions with respect to the
indebtedness evidenced by the Securities, to the payment of all Senior
Indebtedness at the time outstanding and to any securities issued in respect
thereof under any plan of reorganization or readjustment), shall be received by
the Trustee or any Holder in contravention of any of the terms hereof and before
all Senior Indebtedness shall have been paid in full, such payment or
distribution or security shall be received in trust for the benefit of, and
shall be paid over or delivered and transferred to, the holders of the Senior
Indebtedness at the time outstanding in accordance with the priorities then
existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all such Senior
Indebtedness in full. In the event of the failure of the Trustee or any Holder
to endorse or assign any such payment, distribution or security, each holder of
Senior Indebtedness is hereby irrevocably authorized to endorse or assign the
same.
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(d) The Trustee and the Holders shall take such action (including,
without limitation, the delivery of this Indenture to an agent for the holders
of Senior Indebtedness or consent to the filing of a financing statement with
respect hereto) as may, in the opinion of counsel designated by the holders of a
majority in principal amount of the Senior Indebtedness at the time outstanding,
be necessary or appropriate to assure the effectiveness of the subordination
effected by these provisions.
(e) The provisions of this Section 13.2 shall not impair any rights,
interests, remedies or powers of any secured creditor of the Company in respect
of any security interest the creation of which is not prohibited by the
provisions of this Indenture.
(f) The securing of any obligations of the Company, otherwise ranking on
a parity with the Securities or ranking junior to the Securities shall not be
deemed to prevent such obligations from constituting, respectively, obligations
ranking on a parity with the Securities or ranking junior to the Securities.
SECTION 13.3. Payment Permitted If No Default.
Nothing contained in this Article XIII or elsewhere in this Indenture or
in any of the Securities shall prevent (a) the Company, at any time, except
during the pendency of the conditions described in the first paragraph of
Section 13.2 or of any Proceeding referred to in Section 13.2, from making
payments at any time of principal of (and premium, if any) or interest
(including Additional Interest) on the Securities, or (b) the application by the
Trustee of any monies deposited with it hereunder to the payment of or on
account of the principal of (and premium, if any) or interest (including any
Additional Interest) on the Securities or the retention of such payment by the
Holders, if, at the time of such application by the Trustee, it did not have
knowledge that such payment would have been prohibited by the provisions of this
Article.
SECTION 13.4. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all amounts due or to become due on
all Senior Indebtedness, or the provision for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of Senior
Indebtedness, the Holders of the Securities shall be subrogated to the extent of
the payments or distributions made to the holders of such Senior Indebtedness
pursuant to the provisions of this Article (equally and ratably with the holders
of all indebtedness of the Company that by its express terms is subordinated to
Senior Indebtedness of the Company to substantially the same extent as the
Securities are subordinated to the Senior Indebtedness and is entitled to like
rights of subrogation by reason of any payments or distributions made to holders
of such Senior Indebtedness) to the rights of the holders of such Senior
Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness until the principal of (and
premium if any) and interest (including Additional Interest) on the Securities
shall be paid in full. For purposes of such subrogation, no payments or
distributions to the holders of the
74
<PAGE>
Senior Indebtedness of any cash, property or securities to which the Holders of
the Securities or the Trustee would be entitled except for the provisions of
this Article, and no payments over pursuant to the provisions of this Article to
the holders of Senior Indebtedness by Holders of the Securities or the Trustee,
shall, as among the Company, its creditors other than holders of Senior
Indebtedness, and the Holders of the Securities, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness.
SECTION 13.5. Provisions Solely to Define Relative Rights.
The provisions of this Article XIII are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article XIII or elsewhere in this Indenture or in the
Securities is intended to or shall (a) impair, as between the Company and the
Holders of the Securities, the obligations of the Company, which are absolute
and unconditional, to pay to the Holders of the Securities the principal of (and
premium, if any) and interest (including any Additional Interest) on the
Securities as and when the same shall become due and payable in accordance with
their terms; or (b) affect the relative rights against the Company of the
Holders of the Securities and creditors of the Company other than their rights
in relation to the holders of Senior Indebtedness; or (c) prevent the Trustee or
the Holder of any Security (or to the extent expressly provided herein, the
holder of any Preferred Security) from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, including filing
and voting claims in any Proceeding, subject to the rights, if any, under this
Article XIII of the holders of Senior Indebtedness to receive cash, property and
securities otherwise payable or deliverable to the Trustee or such Holder.
SECTION 13.6. Trustee to Effectuate Subordination.
Each Holder of a Security by his or her acceptance thereof authorizes
and directs the Trustee on his or her behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination provided
in this Article XIII and appoints the Trustee his or her attorney-in-fact for
any and all such purposes.
SECTION 13.7. No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any Senior Indebtedness
to enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof that any such holder may have or
be otherwise charged with.
(b) Without in any way limiting the generality of Section 13.7(a), the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the
75
<PAGE>
Trustee or the Holders of the Securities, without incurring responsibility to
such Holders of the Securities and without impairing or releasing the
subordination provided in this Article XIII or the obligations hereunder of such
Holders of the Securities to the holders of Senior Indebtedness, do any one or
more of the following: (i) change the manner, place or terms of payment or
extent the time of payment of, or renew or alter, Senior Indebtedness, or
otherwise amend or supplement in any manner Senior Indebtedness or any
instrument evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any
Person liable in any manner for the collection of Senior Indebtedness; and (iv)
exercise or refrain from exercising any rights against the Company and any other
Person.
SECTION 13.8. Notice to Trustee.
(a) The Company shall give prompt written notice to a Responsible
Officer of the Trustee of any fact known to the Company that would prohibit the
making of any payment to or by the Trustee in respect of the Securities.
Notwithstanding the provisions of this Article XIII or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts that would prohibit the making of any payment to or by the Trustee
in respect of the Securities, unless and until the Trustee shall have received
written notice thereof from the Company or a holder of Senior Indebtedness or
from any trustee, agent or representative therefor; provided, however, that if
the Trustee shall not have received the notice provided for in this Section at
least two Business Days prior to the date upon which by the terms hereof any
monies may become payable for any purpose (including, the payment of the
principal of (and premium, if any, on) or interest (including any Additional
Interest) on any Security), then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive such
monies and to apply the same to the purpose for which they were received and
shall not be affected by any notice to the contrary that may be received by it
within two Business Days prior to such date.
(b) Subject to the provisions of Section 6.1, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself or herself to be a holder of Senior Indebtedness (or a
trustee or attorney-in-fact therefor) to establish that such notice has been
given by a holder of Senior Indebtedness (or a trustee or attorney-in-fact
therefor). In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article, and if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
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<PAGE>
SECTION 13.9. Reliance on Judicial Order or Certificate of Liquidating
Agent.
Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Section 6.1, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such Proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, conservator,
liquidating trustee, custodian, assignee for the benefit of creditors, agent or
other Person making such payment or distribution, delivered to the Trustee or to
the Holders of Securities, for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article XIII.
SECTION 13.10. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee, in its capacity as trustee under this Indenture, shall not
be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and
shall not be liable to any such holders if it shall in good faith mistakenly pay
over or distribute to Holders of Securities or to the Company or to any other
Person cash, property or securities to which any holders of Senior Indebtedness
shall be entitled by virtue of this Article or otherwise.
SECTION 13.11. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness that
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
SECTION 13.12. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article XIII shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee.
SECTION 13.13. Certain Conversions or Exchanges Deemed Payment.
For purposes of this Article only, (a) the issuance and delivery of
junior securities upon conversion or exchange of Securities shall not be deemed
to constitute a payment or distribution on account of the principal of (or
premium, if any, on) or interest (including any Additional Interest) on such
Securities or on account of the purchase or other acquisition of such
Securities, and (b) the payment, issuance or delivery of cash, property or
securities
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<PAGE>
(other than junior securities) upon conversion or exchange of a Security shall
be deemed to constitute payment on account of the principal of such security.
For the purposes of this Section, the term "junior securities" means (a) shares
of any stock of any class of the Company, and (b) securities of the Company that
are subordinated in right of payment to all Senior Indebtedness that may be
outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in this Article.
* * * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
78
<PAGE>
ANNEX A
FORM OF RESTRICTED SECURITIES CERTIFICATE
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to Section 3.6(b) of
the Indenture referred to below)
[ ],
as Securities Registrar
[address]
RE: Junior Subordinated Debentures of Sun Bancorp, Inc. (the "Securities")
Reference is made to the Junior Subordinated Indenture, dated as of
______ __, 1998 (the "Indenture"), between Sun Bancorp, Inc., a New Jersey
corporation, and Bankers Trust Company, as Trustee. Terms used herein and
defined in the Indenture or in Regulation S, Rule 144A or Rule 144 under the
U.S. Securities Act of 1933, as amended (the "Securities Act") are used here as
so defined.
This certificate relates to $________ aggregate principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s).
CERTIFICATE No(s).
CURRENTLY IN GLOBAL FORM: Yes ___ No ___ (check one)
The person in whose name this certificate is executed below (the
"Undersigned") hereby certifies that either (a) it is the sole beneficial owner
of the Specified Securities or (b) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner."
If the Specified Securities are represented by a Global Security, they are held
through a Depositary or an Agent Member in the name of the Undersigned, as or on
behalf of the Owner. If the Specified Securities are not represented by a Global
Security, they are registered in the name of the Undersigned, as or on behalf of
the Owner.
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<PAGE>
The Owner has requested that the Specified Securities be transferred to
a person (the "Transferee") who will take delivery in the form of a Restricted
Security. In connection with such transfer, the Owner hereby certifies that,
unless such transfer is being effected pursuant to an effective registration
statement under the Securities Act, it is being effected in accordance with Rule
144A, Rule 904 of Regulation S or Rule 144 under the Securities Act and all
applicable securities laws of the states of the United States and other
jurisdictions. Accordingly, the Owner hereby further certifies that:
(a) Rule 144A Transfers. If the transfer is being effected in
accordance with Rule 144A:
(i) the Specified Securities are being transferred to a person
that the Owner and any person acting on its behalf reasonably believe
is a "qualified institutional buyer" within the meaning of Rule 144A,
acquiring for its own account or for the account of a qualified
institutional buyer; and
(ii) the owner and any person acting on its behalf have taken
reasonable steps to ensure that the Transferee is aware that the Owner
may be relying on Rule 144A in connection with the transfer; and
(b) Rule 904 Transfer. If the transfer is being effected in accordance
with Rule 904:
(i) the Owner is not a distributor of the Securities, an
affiliate of the Company or any such distributor or a person acting in
behalf of any of the foregoing;
(ii) the offer of the Specified Securities was not made to a
person in the United States;
(iii) either;
(A) at the time the buy order was originated, the
Transferee was outside the United States or the Owner and any
person acting on its behalf reasonably believed that the
Transferee was outside the United States, or
(B) the transaction is being executed in, on or
through the facilities of the Eurobond market, as regulated by
the Association of International Bond Dealers, or another
designated offshore securities market and neither the Owner
nor any person acting on its behalf know that the transaction
has been prearranged with a buyer in the United States;
(iv) no directed selling efforts within the meaning of Rule
902 of Regulation S have been made in the United States by or on behalf
of the Owner or any affiliate thereof; and
(v) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act.
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<PAGE>
(c) Rule 144 Transfers. If the transfer is being effected pursuant to
Rule 144;
(i) the transfer is occurring after a holding period of at
least one year (computed in accordance with paragraph (d) of Rule 144)
has elapsed since the date the Specified Securities were acquired from
the Company or from an affiliate (as such term is defined in Rule 144)
of the Company, whichever is later, and is being effected in accordance
with the applicable amount, manner of sale and notice requirements of
paragraphs (e), (f) and (h) of Rule 144;
(ii) the transfer is occurring after a holding period by the
Owner of at least three years has elapsed since the date the Specified
Securities were acquired from the Company or from an affiliate (as such
term is defined in Rule 144) of the Company, whichever is later, and
the Owner is not, and during the preceding three months has not been,
an affiliate of the Company; or
(iii) the Owner is a Qualified Institutional Buyer under Rule
144A or has acquired the Securities otherwise in accordance with
Sections (1), (2) or (3) hereof and is transferring the Securities to
an institutional accredited investor in a transaction exempt from the
requirements of the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and the Underwriters (as defined in the
Trust Agreement relating to the Issuer Trust to which the Securities were
initially issued).
(Print the name of the Undersigned, as such term is defined in
the second paragraph of this certificate)
Dated:_____________________ By:______________________________
Name:
Title:
(If the Undersigned is a corporation, partnership of fiduciary, the title of the
person signing on behalf of the Undersigned must be stated.)
81
EXHIBIT NO. 4.3
<PAGE>
TRUST AGREEMENT
This TRUST AGREEMENT, dated as of February 13, 1997 (this "Trust
Agreement"), among (i) SUN BANCORP, INC., a New Jersey corporation (the
"Depositor"), and (ii) BANKERS TRUST (DELAWARE), a Delaware banking corporation
(the "Trustee"). The Depositor and the Trustee hereby agree as follows:
1. The trust created hereby (the "Trust") shall be known as "Sun Capital Trust"
in which name the Trustee, 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 Trustee the sum of $1. The Trustee hereby acknowledges receipt of such
amount in trust from the Depositor, which amount shall constitute the initial
trust estate. The Trustee hereby declares that it 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 constitutes the governing instrument of the Trust. The
Trustee is 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 Trustee 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 Trustee 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, any licenses, consents or approvals required by applicable law or
otherwise.
4. The Depositor and the Trustee 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-1 (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 any national stock
exchange (each, an "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
<PAGE>
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
named therein, substantially in the form included as an exhibit to the 1933 Act
Registration Statement. In connection with the filings referred to above, the
Depositor hereby constitutes and appoints Philip W. Koebig, III and Robert F.
Mack, 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 in the
Depositor's 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 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 might or could do 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 one (1) 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 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 principles.)
EXHIBIT NO. 4.4
<PAGE>
AMENDED AND RESTATED
TRUST AGREEMENT
among
SUN BANCORP, INC.
BANKERS TRUST COMPANY
as Property Trustee,
and
BANKERS TRUST (DELAWARE),
as Delaware Trustee
Dated as of _________, 1998
SUN CAPITAL TRUST II
<PAGE>
SUN CAPITAL TRUST II
Certain Sections of this Trust Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Trust Agreement
Section Section
- --------------- ---------------
<S> <C> <C>
Section 310(a)(1)............................................. 8.7
(a)(2)............................................. 8.7
(a)(3)............................................. 8.9
(a)(4)............................................. 2.7(a)(ii)
(b)................................................ 8.8, 10.10(b)
Section 311(a)................................................ 8.13, 10.10(b)
(b)................................................ 8.13, 10.10(b)
Section 312(a)................................................ 10.10(b)
(b)................................................ 10.10(b), (f)
(c)................................................ 5.7
Section 313(a)................................................ 8.15(a)
(a)(4)............................................. 10.10(c)
(b)................................................ 8.15(c), 10.10(c)
(c)................................................ 10.8, 10.10(c)
(d)................................................ 10.10(c)
Section 314(a)................................................ 8.16, 10.10(d)
(b)................................................ Not Applicable
(c)(1)............................................. 8.17, 10.10(d), (e)
(c)(2)............................................. 8.17, 10.10(d), (e)
(c)(3)............................................. 8.17, 10.10(d), (e)
(e)................................................ 8.17, 10.10(e)
Section 315(a)................................................ 8.1(d)
(b)................................................ 8.2
(c)................................................ 8.1(c)
(d)................................................ 8.1(d)
(e)................................................ Not Applicable
Section 316(a)................................................ Not Applicable
(a)(1)(A).......................................... Not Applicable
(a)(1)(B).......................................... Not Applicable
(a)(2)............................................. Not Applicable
(b)................................................ 5.13
(c)................................................ 6.7
Section 317(a)(1)............................................. Not Applicable
(a)(2)............................................. 8.14
(b)................................................ 5.10
Section 318(a)................................................ 10.10(a)
</TABLE>
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Trust Agreement.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I. DEFINED TERMS
SECTION 1.1. Definitions.......................................................
ARTICLE II. CONTINUATION OF THE ISSUER TRUST
SECTION 2.1. Name..............................................................
SECTION 2.2. Office of the Delaware Trustee;
Principal Place of Business.....................................
SECTION 2.3. Initial Contribution of Trust Property,
Organizational Expenses.........................................
SECTION 2.4. Issuance of the Preferred Securities..............................
SECTION 2.5. Issuance of the Common Securities;
Subscription and Purchase of Junior
Subordinated Debentures.........................................
SECTION 2.6. Declaration of Trust..............................................
SECTION 2.7. Authorization to Enter into Certain
Transactions....................................................
SECTION 2.8. Assets of Trust...................................................
SECTION 2.9. Title to Trust Property...........................................
ARTICLE III. PAYMENT ACCOUNT
SECTION 3.1. Payment Account...................................................
ARTICLE IV. DISTRIBUTIONS; REDEMPTION
SECTION 4.1. Distributions.....................................................
SECTION 4.2. Redemption........................................................
SECTION 4.3. Subordination of Common Securities................................
SECTION 4.4. Payment Procedures................................................
SECTION 4.5. Tax Returns and Reports...........................................
SECTION 4.6. Payment of Taxes, Duties, Etc.
of the Issuer Trust.............................................
SECTION 4.7. Payments under Indenture or Pursuant
to Direct Actions...............................................
SECTION 4.8. Liability of the Holder of Common
Securities......................................................
ARTICLE V. TRUST SECURITIES CERTIFICATES
SECTION 5.1. Initial Ownership.................................................
SECTION 5.2. The Trust Securities Certificates.................................
SECTION 5.3. Execution and Delivery of Trust
Securities Certificates...........................................
SECTION 5.4. Global Preferred Security.........................................
SECTION 5.5. Registration of Transfer and Exchange
Generally; Certain Transfers and
Exchanges; Preferred Securities
Certificates....................................................
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SECTION 5.6. Mutilated, Destroyed, Lost or Stolen
Trust Securities Certificates...................................
SECTION 5.7. Persons Deemed Holders............................................
SECTION 5.8. Access to List of Holders'
Names and Addresses...............................................
SECTION 5.9. Maintenance of Office or Agency...................................
SECTION 5.10. Appointment of Paying Agent.......................................
SECTION 5.11. Ownership of Common Securities
by Depositor....................................................
SECTION 5.12. Notices to Clearing Agency........................................
SECTION 5.13. Rights of Holders.................................................
ARTICLE VI. ACTS OF HOLDERS; MEETINGS; VOTING
SECTION 6.1. Limitations on Holder's Voting
Rights.........................................................
SECTION 6.2. Notice of Meetings................................................
SECTION 6.3. Meetings of Holders...............................................
SECTION 6.4. Voting Rights.....................................................
SECTION 6.5. Proxies, etc......................................................
SECTION 6.6. Holder Action by Written Consent..................................
SECTION 6.7 Record Date for Voting and Other
Purposes........................................................
SECTION 6.8. Acts of Holders...................................................
SECTION 6.9. Inspection of Records.............................................
ARTICLE VII. REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties
of the Property Trustee and
the Delaware Trustee............................................
SECTION 7.2. Representations and Warranties of the
Depositor.......................................................
ARTICLE VIII. THE ISSUER TRUSTEES; THE ADMINISTRATORS
SECTION 8.1. Certain Duties and Responsibilities...............................
SECTION 8.2. Certain Notices...................................................
SECTION 8.3. Certain Rights of Property Trustee................................
SECTION 8.4. Not Responsible for Recitals
or Issuance of Securities.......................................
SECTION 8.5. May Hold Securities...............................................
SECTION 8.6. Compensation; Indemnity; Fees.....................................
SECTION 8.7. Corporate Property Trustee Required;
Eligibility of Trustees and
Administrators..................................................
SECTION 8.8. Conflicting Interests.............................................
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SECTION 8.9. Co-Trustees and Separate Trustee..................................
SECTION 8.10. Resignation and Removal; Appointment
of Successor....................................................
SECTION 8.11. Acceptance of Appointment by
Successor.........................................................
SECTION 8.12. Merger, Conversion, Consolidation or
Succession to Business..........................................
SECTION 8.13. Preferential Collection of Claims
Against Depositor or Issuer Trust...............................
SECTION 8.14. Trustee May File Proofs of Claim..................................
SECTION 8.15. Reports by Property Trustee.......................................
SECTION 8.16. Reports to the Property Trustee...................................
SECTION 8.17. Evidence of Compliance with Conditions
Precedent.......................................................
SECTION 8.18. Number of Issuer Trustees.........................................
SECTION 8.19. Delegation of Power...............................................
SECTION 8.20. Appointment of Administrators.....................................
ARTICLE IX. DISSOLUTION, LIQUIDATION AND MERGER
SECTION 9.1. Dissolution Upon Expiration Date..................................
SECTION 9.2. Early Dissolution.................................................
SECTION 9.3. Termination.......................................................
SECTION 9.4. Liquidation.......................................................
SECTION 9.5. Mergers, Consolidations, Amalgamations
or Replacements of the Issuer Trust.............................
ARTICLE X. MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Holders...................................
SECTION 10.2. Amendment.........................................................
SECTION 10.3. Separability......................................................
SECTION 10.4. Governing Law.....................................................
SECTION 10.5. Payments Due on Non-Business Day..................................
SECTION 10.6. Successors........................................................
SECTION 10.7. Headings..........................................................
SECTION 10.8. Reports, Notices and Demands......................................
SECTION 10.9. Agreement Not to Petition.........................................
SECTION 10.10. Trust Indenture Act; Conflict with
Trust Indenture Act.............................................
SECTION 10.11. Acceptance of Terms of Trust Agreement,
Guarantee and Indenture.........................................
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Exhibit A Certificate of Trust
Exhibit B Form of Certificate Depositary Agreement
Exhibit C Form of Common Securities Certificate
Exhibit D Form of Preferred Securities Certificate
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AMENDED AND RESTATED TRUST AGREEMENT
This Amended and Restated Trust Agreement, dated as of ______,
1998, (this "Trust Agreement"), is among (i) Sun Bancorp, Inc., a New Jersey
corporation (including any successors or assigns, the "Depositor"), (ii) Bankers
Trust Company, a New York banking corporation, as property trustee, (in such
capacity, the "Property Trustee" and, in its separate corporate capacity and not
in its capacity as Property Trustee, the "Bank"), (iii) Bankers Trust
(Delaware), a Delaware banking corporation, as Delaware trustee (the "Delaware
Trustee") (the Property Trustee and the Delaware Trustee are referred to
collectively herein as the "Issuer Trustees") and (iv) the several Holders, as
hereinafter defined.
WITNESSETH
WHEREAS, the Depositor and the Delaware Trustee have heretofore
duly declared and established a business trust pursuant to the Delaware Business
Trust Act by the entering into a certain Trust Agreement, dated as of August
____, 1998 (the "Original Trust Agreement"), and by the execution and filing by
the Delaware Trustee with the Secretary of State of the State of Delaware of the
Certificate of Trust, filed on August ___, 1998 (the "Certificate of Trust"), a
copy of which is attached hereto as Exhibit A; and
WHEREAS, the Depositor and the Delaware Trustee desire to amend and
restate the Original Trust Agreement in its entirety as set forth herein to
provide for, among other things, (i) the issuance of the Common Securities by
the Issuer Trust to the Depositor, (ii) the issuance and sale of the Preferred
Securities by the Issuer Trust pursuant to the Underwriting Agreement, (iii) the
acquisition by the Issuer Trust from the Depositor of all of the right, title
and interest in the Junior Subordinated Debentures, and (iv) the appointment of
the Property Trustee and the Administrators.
NOW THEREFORE, in consideration of the agreements and obligations
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each party, for the benefit of the
other parties and for the benefit of the Holders, hereby amends and restates the
Original Trust Agreement in its entirety and agrees, intending to be legally
bound, as follows:
ARTICLE I
DEFINED TERMS
SECTION 1.1. Definitions.
For all purposes of this Trust Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(a) The terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(b) All other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) The words "include," "includes" and "including" shall be deemed
to be followed by the phrase "without limitation";
(d) All accounting terms used but not defined herein have the
meanings assigned to them in accordance with United States generally accepted
accounting principles as in effect at the time of computation;
<PAGE>
(e) Unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may be,
of this Trust Agreement;
(f) The words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision; and
(g) all references to the date the Preferred Securities were
originally issued shall refer to the date the _____% Preferred Securities were
originally issued.
"25% Capital Limitation" means the limitation imposed by the
Federal Reserve that the proceeds of certain qualifying securities similar to
the Trust Securities will qualify as Tier 1 capital of the issuer up to an
amount not to exceed, when taken together with all cumulative preferred stock of
the Depositor, if any, 25% of the Depositor's Tier 1 capital, or any subsequent
limitation adopted by the Federal Reserve.
"Act" has the meaning specified in Section 6.8.
"Additional Amount" means, with respect to Trust Securities of a
given Liquidation Amount and/or for a given period, the amount of Additional
Interest (as defined in the Indenture) paid by the Depositor on a Like Amount of
Junior Subordinated Debentures for such period.
"Additional Sums" has the meaning specified in Section 10.6 of the
Indenture.
"Administrators" means each Person appointed in accordance with
Section 8.20 solely in such Person's capacity as Administrator of the Issuer
Trust heretofore formed and continued hereunder and not in such Person's
individual capacity, or any successor Administrator appointed as herein
provided; with the initial Administrators being Philip W. Koebig, III and Robert
F. Mack.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Preferred Security or beneficial interest
therein, the rules and procedures of the Depositary for such Preferred Security,
in each case to the extent applicable to such transaction and as in effect from
time to time.
"Bank" has the meaning specified in the preamble to this Trust
Agreement.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction
in the premises judging such Person a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjudication or
composition of or in respect of such Person under any applicable federal or
State bankruptcy, insolvency, reorganization or other similar law, or appointing
a receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of such Person or of any substantial part of its property or ordering
the winding up or liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive days; or
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(b) the institution by such Person of proceedings to be adjudicated
a bankrupt or insolvent, or the consent by it to the institution of bankruptcy
or insolvency proceedings against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under any applicable federal
or State bankruptcy, insolvency, reorganization or other similar law, or the
consent by it to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or similar official) of
such Person or of any substantial part of its property or the making by it of an
assignment for the benefit of creditors, or the admission by it in writing of
its inability to pay its debts generally as they become due and its willingness
to be adjudicated a bankrupt, or the taking of corporate action by such Person
in furtherance of any such action.
"Bankruptcy Laws" has the meaning specified in Section 10.9.
"Board of Directors" means the board of directors of the Depositor
or the Executive Committee of the board of directors of the Depositor (or any
other committee of the board of directors of the Depositor performing similar
functions) or for purposes of this Trust Agreement, a committee designated by
the board of directors of the Depositor (or any such committee), comprised of
two or more members of the board of directors of the Depositor or officers of
the Depositor, or both.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Depositor to have been duly adopted
by the Depositor's Board of Directors, or such committee of the Board of
Directors or officers of the Depositor to which authority to act on behalf of
the Board of Directors has been delegated, and to be in full force and effect on
the date of such certification, and delivered to the Issuer Trustees.
"Business Day" means a day other than (a) a Saturday or Sunday, (b)
a day on which banking institutions in the State of New Jersey or in the City of
New York, are authorized or required by law or executive order to remain closed
or (c) a day on which the Property Trustee's Corporate Trust Office or the
Delaware Trustee's Corporate Trust Office or the Corporate Trust Office of the
Debenture Trustee is closed for business.
"Capital Treatment Event" means, in respect of the Issuer Trust,
the reasonable determination by the Depositor that, as a result of the
occurrence of any amendment to, or change (including any announced prospective
change) in, the laws (or any rules or regulations thereunder) of the United
States or any political subdivision thereof or therein, or as a result of any
official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or such pronouncement, action or decision is announced on or after the
date of the issuance of the Preferred Securities of the Issuer Trust, there is
more than an insubstantial risk that the Depositor will not be entitled to treat
an amount equal to the Liquidation Amount of such Preferred Securities as "Tier
1 Capital" (or the then equivalent thereof) except as otherwise restricted under
the 25% Capital Limitation, for purposes of the risk-based capital adequacy
guidelines of the Federal Reserve, as then in effect and applicable to the
Depositor.
"Cede" means Cede & Co.
"Certificate Depositary Agreement" means the agreement among the
Issuer Trust, the Depositor and the Depositary, as the initial Clearing Agency,
dated as of the Closing Date, substantially in the form attached hereto as
Exhibit B, as the same may be amended and supplemented from time to time.
"Certificate of Trust" has the meaning specified in the preamble to
this Trust Agreement.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act. The Depositary shall be the
initial Clearing Agency.
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"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means the Time of Delivery for the Firm Securities,
which date is also the date of execution and delivery of this Trust Agreement.
"Code" means the Internal Revenue Code of 1986, as amended or any
successor statute, in each case as amended from time to time.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Securities Certificate" means a certificate evidencing
ownership of Common Securities, substantially in the form attached hereto as
Exhibit C.
"Common Security" means an undivided beneficial interest in the
assets of the Issuer Trust, having a Liquidation Amount of $10 and having the
rights provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Corporate Trust Office" means (a) with respect to the Property
Trustee or the Debenture Trustee, the principal office of the Property Trustee
located in the City of New York, New York, which at the time of the execution of
this Trust Agreement is located at Four Albany Street, New York, New York 10006;
Attention: Corporate Trust and Agency Group - Corporate Market Services, and (b)
with respect to the Delaware Trustee, the principal office of the Delaware
Trustee located at E.A. Delle Donne Corporate Center, Montgomery Building, 1011
Centre Road, Suite 200, Wilmington, Delaware 19805- 1266.
"Debenture Event of Default" means an "Event of Default" as defined
in the Indenture.
"Debenture Redemption Date" means, with respect to any Junior
Subordinated Debentures to be redeemed under the Indenture, the date fixed for
redemption of such Junior Subordinated Debentures under the Indenture.
"Debenture Trustee" means Bankers Trust Company, a New York banking
corporation and any successor, as trustee under the Indenture.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. 3801, et seq., as it may be amended from time to time.
"Delaware Trustee" means the corporation identified as the
"Delaware Trustee" in the preamble to this Trust Agreement solely in its
capacity as Delaware Trustee of the Issuer Trust continued hereunder and not in
its individual capacity, or its successor in interest in such capacity, or any
successor trustee appointed as herein provided.
"Depositary" means The Depository Trust Company or any successor
thereto.
"Depositor" has the meaning specified in the preamble to this Trust
Agreement.
"Direct Action" has the meaning specified in Section 5.13(c).
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"Distribution Date" has the meaning specified in Section 4.1(a).
"Distributions" means amounts payable in respect of the Trust
Securities as provided in Section 4.1.
"Early Termination Event" has the meaning specified in Section 9.2.
"Event of Default" means any one of the following events (whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the occurrence of a Debenture Event of Default;
(b) default by the Issuer Trust in the payment of any Distribution
when it becomes due and payable, and continuation of such default for a period
of 30 days;
(c) default by the Issuer Trust in the payment of any Redemption
Price of any Trust Security when it becomes due and payable;
(d) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Issuer Trust in this Trust Agreement (other
than a covenant or warranty a default in the performance of which or the breach
of which is dealt with in clause (b) or (c) above) and continuation of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the Issuer Trustees and the Depositor by the
Holders of at least 25% in aggregate Liquidation Amount of the Outstanding
Preferred Securities, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(e) the occurrence of any Bankruptcy Event with respect to the
Property Trustee or all or substantially all of its property if a successor
Property Trustee has not been appointed within a period of 90 days thereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor statute thereto, in each case as amended from time to
time.
"Expiration Date" has the meaning specified in Section 9.1.
"Extension Period" has the meaning specified in Section 4.1.
"Federal Reserve" means the Board of Governors of the Federal
Reserve System.
"Firm Securities" means an aggregate Liquidation Amount of
$__________ of the Issuer Trust's ____% preferred securities.
"Global Preferred Securities Certificate" means a Preferred
Securities Certificate evidencing ownership of Global Preferred Securities.
"Global Preferred Security" means a Preferred Security, the
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 5.4.
"Guarantee Agreement" means the Guarantee Agreement executed and
delivered by the Depositor and Bankers Trust Company, as guarantee trustee,
contemporaneously with the execution and
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delivery of this Trust Agreement, for the benefit of the Holders of the
Preferred Securities, as amended from time to time.
"Holder" means a Person in whose name a Trust Security or Trust
Securities is/are registered in the Securities Register; any such Person shall
be a beneficial owner within the meaning of the Delaware Business Trust Act.
"Indenture" means the Junior Subordinated Indenture, dated as of
____________, 1998, between the Depositor and the Debenture Trustee (as amended
or supplemented from time to time) relating to the issuance of the Junior
Subordinated Debentures.
"Investment Company Act" means the Investment Company Act of 1940,
as amended or any successor statute, in each case as amended from time to time.
"Investment Company Event" means the receipt by the Issuer Trust of
an Opinion of Counsel, rendered by counsel experienced in such matters to the
effect that, as a result of the occurrence of a change in law or regulation or a
written change (including any announced prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more than an insubstantial risk that
the Issuer Trust is or will be considered an "investment company" that is
required to be registered under the Investment Company Act, which change or
prospective change becomes effective or would become effective, as the case may
be, on or after the date of the issuance of the Preferred Securities.
"Issuer Trust" means Sun Capital Trust II.
"Issuer Trustees" means, collectively, the Property Trustee and the
Delaware Trustee.
"Junior Subordinated Debentures" means the aggregate principal
amount of the Depositor's _____% junior subordinated deferrable interest
debentures, due ____________, 2028, which date may be shortened once at any time
by the Depositor to any date not earlier than _________, 2003, issued pursuant
to the Indenture.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed
of trust, adverse ownership interest, hypothecation, assignment, security
interest or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of Trust
Securities, Trust Securities having a Liquidation Amount equal to that portion
of the principal amount of Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with the Indenture, allocated to the
Common Securities and to the Preferred Securities based upon the relative
Liquidation Amounts of such classes and (b) with respect to a distribution of
Junior Subordinated Debentures to Holders of Trust Securities in connection with
a dissolution or liquidation of the Issuer Trust, Junior Subordinated Debentures
having a principal amount equal to the Liquidation Amount of the Trust
Securities of the Holder to whom such Junior Subordinated Debentures are
distributed.
"Liquidation Amount" means the stated amount of $10 per Trust
Security.
"Liquidation Date" means the date on which Junior Subordinated
Debentures or the Liquidation Distributions are to be distributed to Holders of
Trust Securities in connection with a dissolution and liquidation of the Issuer
Trust pursuant to Section 9.4.
"Liquidation Distribution" has the meaning specified in Section
9.4(d).
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"Majority in Liquidation Amount of the Preferred Securities" or
"Majority in Liquidation Amount of the Common Securities" means, except as
provided by the Trust Indenture Act, Preferred Securities or Common Securities,
as the case may be, representing more than 50% of the aggregate Liquidation
Amount of all then Outstanding Preferred Securities or Common Securities, as the
case may be.
"Officers' Certificate" means a certificate signed by the Chairman
of the Board, Chief Executive Officer, President or a Vice President, and by the
Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or
an Assistant Secretary, of the Depositor, and delivered to the appropriate
Issuer Trustee. Any Officers' Certificate delivered with respect to compliance
with a condition or covenant provided for in this Trust Agreement shall include:
(a) a statement by each officer signing the Officers' Certificate
that such officer has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by such officer in rendering the Officers' Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for or an employee of the Depositor or any Affiliate of the Depositor.
"Option Closing Date" shall have the meaning provided in the
Underwriting Agreement.
"Option Securities" means an aggregate Liquidation Amount of
$__________ of the Issuer Trust's _____% Preferred Securities, issuable to the
Underwriters, at its option, exercisable within 30 days after the date of the
Prospectus, solely to cover over-allotments, if any.
"Option Preferred Securities Certificate" means the certificate
evidencing ownership of Preferred Securities issued if the Underwriter exercises
its option described in Section 2.4, which certificate shall be substantially in
the form attached hereto as Exhibit D.
"Original Trust Agreement" has the meaning specified in the
preamble to this Trust Agreement.
"Outstanding," with respect to Trust Securities, means, as of the
date of determination, all Trust Securities theretofore executed and delivered
under this Trust Agreement, except:
(a) Trust Securities theretofore canceled by the Property Trustee
or delivered to the Property Trustee for cancellation;
(b) Trust Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Property Trustee or any
Paying Agent for the Holders of such Preferred Securities, provided that if such
Trust Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Trust Agreement; and
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(c) Trust Securities which have been paid or in exchange for or in
lieu of which other Trust Securities have been executed and delivered pursuant
to Sections 5.4, 5.5 and 5.6; provided, however, that in determining whether the
Holders of the requisite Liquidation Amount of the Outstanding Preferred
Securities have given any request, demand, authorization, direction, notice,
consent or waiver hereunder, Preferred Securities owned by the Depositor, any
Issuer Trustee, any Administrator or any Affiliate of the Depositor or any
Issuer Trustee shall be disregarded and deemed not to be Outstanding, except
that (i) in determining whether any Issuer Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Preferred Securities that such Issuer Trustee or such
Administrator, as the case may be, knows to be so owned shall be so disregarded
and (ii) the foregoing shall not apply at any time when all of the outstanding
Preferred Securities are owned by the Depositor, one or more of the Issuer
Trustees, one or more of the Administrators and/or any such Affiliate. Preferred
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Administrators
the pledgee's right so to act with respect to such Preferred Securities and that
the pledgee is not the Depositor or any Affiliate of the Depositor.
"Owner" means each Person who is the beneficial owner of Global
Preferred Securities as reflected in the records of the Clearing Agency or, if a
Clearing Agency Participant is not the Owner, then as reflected in the records
of a Person maintaining an account with such Clearing Agency, directly or
indirectly, in accordance with the rules of such Clearing Agency.
"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 5.10 and shall initially be the Property Trustee.
"Payment Account" means a segregated non-interest-bearing corporate
trust account maintained by the Property Trustee in its trust department for the
benefit of the Holders in which all amounts paid in respect of the Junior
Subordinated Debentures will be held and from which the Property Trustee,
through the Paying Agent, shall make payments to the Holders in accordance with
Sections 4.1 and 4.2.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, company, limited liability company, trust, unincorporated organization
or government or any agency or political subdivision thereof, or any other
entity of whatever nature.
"Preferred Securities Certificate" means a certificate evidencing
ownership of Preferred Securities, substantially in the form attached hereto as
Exhibit D.
"Preferred Security" means a Firm Security or an Option Security,
each constituting a preferred undivided beneficial interest in the assets of the
Issuer Trust, having a Liquidation Amount of $10 and having the rights provided
therefor in this Trust Agreement, including the right to receive Distributions
and a Liquidation Distribution as provided herein.
"Property Trustee" means the Person identified as the "Property
Trustee" in the preamble to this Trust Agreement solely in its capacity as
Property Trustee of the Issuer Trust 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.
"Prospectus" means the final prospectus covering the Preferred
Securities, Junior Subordinated Debentures and the Guarantee Agreement.
"Redemption Date" means, with respect to any Trust Security to be
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Junior Subordinated Debenture Redemption Date and
the stated maturity of the Junior Subordinated Debentures shall be a
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Redemption Date for a Like Amount of Trust Securities, including but not limited
to any date of redemption pursuant to the occurrence of any Special Event.
"Redemption Price" means with respect to a redemption of any Trust
Security, the Liquidation Amount of such Trust Security, together with
accumulated but unpaid Distributions to but excluding the date fixed for
redemption, plus the related amount of the premium, if any, paid by the
Depositor upon the concurrent redemption of a Like Amount of Junior Subordinated
Debentures.
"Relevant Trustee" has the meaning specified in Section 8.10.
"Responsible Officer" when used with respect to the Property
Trustee means any officer assigned to the Corporate Trust Office, including any
managing director, vice president, assistant vice president, assistant
treasurer, assistant secretary or any other officer of the Property Trustee
customarily performing functions similar to those performed by any of the above
designated officers and having direct responsibility for the administration of
the Indenture, and also, with respect to a particular matter, any other officer
to whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Securities Act" means the Securities Act of 1933, as amended, and
any successor statute thereto, in each case as amended from time to time.
"Securities Register" and "Securities Registrar" have the
respective meanings specified in Section 5.5.
"Special Event" means any Tax Event, Capital Treatment Event or
Investment Company Event.
"Successor Preferred Securities Certificate" of any particular
Preferred Securities Certificate means every Preferred Securities Certificate
issued after, and evidencing all or a portion of the same beneficial interest in
the Issuer Trust as that evidenced by, such particular Preferred Securities
Certificate; and, for the purposes of this definition, any Preferred Securities
Certificate executed and delivered under Section 5.6 in exchange for or in lieu
of a mutilated, destroyed, lost or stolen Preferred Securities Certificate shall
be deemed to evidence the same beneficial interest in the Issuer Trust as the
mutilated, destroyed, lost or stolen Preferred Securities Certificate.
"Successor Preferred Security" has the meaning specified in Section
9.5.
"Tax Event" means the receipt by the Issuer Trust of an Opinion of
Counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement, action or decision is announced on or after
the date of issuance of the Preferred Securities, there is more than an
insubstantial risk that (a) the Issuer Trust is, or will be within 90 days of
the delivery of such Opinion of Counsel, subject to United States federal income
tax with respect to income received or accrued on the Junior Subordinated
Debentures, (b) interest payable by the Depositor on the Junior Subordinated
Debentures is not, or within 90 days of the delivery of such Opinion of Counsel
will not be, deductible by the Depositor, in whole or in part, for United States
federal income tax purposes, or (c) the Issuer Trust is, or will be within 90
days of the delivery of such Opinion of Counsel, subject to more than a de
minimis amount of other taxes, duties or other governmental charges.
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"Time of Delivery" means 9:00 a.m. Eastern Standard Time, either
(a) with respect to the Firm Securities or the Common Securities, on the fourth
Business Day (unless postponed in accordance with the provisions of Section 4 of
the Underwriting Agreement) following the date of execution of the Underwriting
Agreement, or such other time not later than ten Business Days after such date
as shall be agreed upon by the Underwriters, the Issuer Trust and the Company,
or (b) with respect to the Option Securities, the Option Closing Date.
"Trust Agreement" means this Amended and Restated Trust Agreement,
as the same may be modified, amended or supplemented in accordance with the
applicable provisions hereof, including (a) all Exhibits hereto, and (b) for all
purposes of this Amended and Restated Trust Agreement and any such modification,
amendment or supplement, the provisions of the Trust Indenture Act that are
deemed to be a part of and govern this Amended and Restated Trust Agreement and
any modification, amendment or supplement, respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended by the Trust Indenture Reform Act of 1990, or any successor statute, in
each case as amended from time to time.
"Trust Property" means (a) the Junior Subordinated Debentures, (b)
any cash on deposit in, or owing to, the Payment Account, and (c) all proceeds
and rights in respect of the foregoing and any other property and assets for the
time being held or deemed to be held by the Property Trustee pursuant to the
trusts of this Trust Agreement.
"Trust Securities Certificate" means any one of the Common
Securities Certificates or the Preferred Securities Certificates.
"Trust Security" means any one of the Common Securities or the
Preferred Securities.
"Underwriters" has the meaning specified in the Underwriting
Agreement.
"Underwriting Agreement" means the Underwriting Agreement, dated as
of __________, 1998, among the Issuer Trust, the Depositor and the Underwriters,
as the same may be amended from time to time.
ARTICLE II
CONTINUATION OF THE ISSUER TRUST
SECTION 2.1. Name.
The Issuer Trust continued hereby shall be known as "Sun Capital
Trust II", as such name may be modified from time to time by the Administrators
following written notice to the Holders of Trust Securities and the other Issuer
Trustees, in which name the Administrators and the Issuer Trustees may engage in
the transactions contemplated hereby, make and execute contracts and other
instruments on behalf of the Issuer Trust and sue and be sued.
SECTION 2.2. Office of the Delaware Trustee; Principal Place of
Business.
The address of the Delaware Trustee in the State of Delaware is
Bankers Trust (Delaware), E. A. Delle Donne Corporate Center, Montgomery
Building, 1011 Centre Road, Suite 200, Wilmington, DE 19805-1266, Attention:
Lisa Wilkins, or such other address in the State of Delaware as the Delaware
Trustee may designate by written notice to the Holders and the Depositor. The
principal executive office
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of the Issuer Trust is in care of Sun Bancorp, Inc., 226 Landis Avenue,
Vineland, New Jersey 08360, Attention: Office of the Secretary.
SECTION 2.3. Initial Contribution of Trust Property, Organizational
Expenses.
The Issuer Trustees acknowledge receipt in trust from the Depositor
in connection with this Trust Agreement of the sum of $10, which constitutes the
initial Trust Property. The Depositor shall pay all organizational expenses of
the Issuer Trust as they arise or shall, upon request of any Issuer Trustee,
promptly reimburse such Issuer Trustee for any such reasonable expenses paid by
such Issuer Trustee. The Depositor shall make no claim upon the Trust Property
for the payment of such expenses.
SECTION 2.4. Issuance of the Preferred Securities.
On ___________, 1998, the Depositor, both on its own behalf and on
behalf of the Issuer Trust pursuant to the Original Trust Agreement, executed
and delivered the Underwriting Agreement. Contemporaneously with the execution
and delivery of this Trust Agreement, an Administrator, on behalf of the Issuer
Trust, shall manually execute in accordance with Section 5.3 and the Property
Trustee shall authenticate in accordance with Section 5.3 and deliver to the
Underwriters, Firm Securities Certificates, registered in the names requested by
the Underwriters, in an aggregate amount of __________ Firm Securities having an
aggregate Liquidation Amount of $__________, against receipt of the aggregate
purchase price of such Preferred Securities of $__________, by the Property
Trustee.
At the option of the Underwriters, within 30 days of the date of
the Prospectus, and solely for the purpose of covering an over-allotment, if
any, an Administrator, on behalf of the Issuer Trust, shall manually execute in
accordance with Section 5.3 and the Property Trustee shall authenticate in
accordance with Section 5.3 and deliver to the Underwriters, Option Preferred
Securities Certificates, registered in the names requested by the Underwriters,
up to _______ Option Preferred Securities having an aggregate Liquidation Amount
of up to $__________, against receipt of the aggregate purchase price of such
Option Securities of up to $_________, by the Property Trustee.
SECTION 2.5. Issuance of the Common Securities; Subscription and
Purchase of Junior Subordinated Debentures.
Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrator, on behalf of the Issuer Trust, shall execute in
accordance with Section 5.3 and the Property Trustee shall authenticate in
accordance with Section 5.3 and deliver to the Depositor, Common Securities
Certificates, registered in the name of the Depositor, in an aggregate amount of
_______ Common Securities having an aggregate Liquidation Amount of $______
against receipt by the Property Trustee of the aggregate purchase price of such
Common Securities of $_______ by the Property Trustee. In the event of any
exercise of an over-allotment option requiring issuance of additional Option
Preferred Securities Certificates, as described in Section 2.4 above, a
proportionate number of additional Common Securities Certificates, with
corresponding aggregate Liquidation Amount, shall be delivered to the Depositor.
Contemporaneously with the executions, and deliveries of Common Securities
Certificates and any Preferred Securities Certificates, an Administrator, on
behalf of the Issuer Trust, shall subscribe for and purchase from the Depositor
corresponding amounts of Junior Subordinated Debentures, registered in the name
of the Issuer Trust and having an aggregate principal amount equal to
$__________, plus, in the event of any exercise of the over-allotment option (a)
a corresponding additional number of Junior Subordinated Debentures not
exceeding an aggregate principal amount of $___________ and (b) a corresponding
number of Junior Subordinated Debentures not exceeding an aggregate principal
amount equal to the aggregate Liquidation Amount of Common Securities issued
pursuant to such exercise of an over-allotment option; and, in satisfaction of
the purchase price for such Junior Subordinated Debentures, the Property
Trustee, on behalf of the Issuer Trust, shall deliver to the Depositor the sum
of $__________, plus any corresponding over-allotment option amount (being the
sum
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of the amounts delivered to the Property Trustee pursuant to (a) the second
sentence of Section 2.4, and (b) the first and second sentences of this Section
2.5) and receive the Junior Subordinated Debentures on behalf of the Issuer
Trust.
SECTION 2.6. Declaration of Trust.
The exclusive purposes and functions of the Issuer Trust are to (a)
issue and sell Trust Securities and use the proceeds from such sale to acquire
the Junior Subordinated Debentures, and (b) engage in only those other
activities necessary, convenient or incidental thereto. The Depositor hereby
appoints the Issuer Trustees as trustees of the Issuer Trust, to have all the
rights, powers and duties to the extent set forth herein, and the Issuer
Trustees hereby accept such appointment. The Property Trustee hereby declares
that it will hold the Trust Property in trust upon and subject to the conditions
set forth herein for the benefit of the Issuer Trust and the Holders. The
Depositor hereby appoints the Administrators (as agents of the Issuer Trust),
with such Administrators having all rights, powers and duties set forth herein
with respect to accomplishing the purposes of the Issuer Trust, and the
Administrators hereby accept such appointment, provided, however, that it is the
intent of the parties hereto that such Administrators shall not be trustees or
fiduciaries with respect to the Issuer Trust and this Trust Agreement shall be
construed in a manner consistent with such intent. The Property Trustee shall
have the right, power and authority to perform those duties assigned to the
Administrators. The Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and
responsibilities, of the Property Trustee or the Administrators set forth
herein. The Delaware Trustee shall be one of the trustees of the Issuer Trust
for the sole and limited purpose of fulfilling the requirements of Section 3807
of the Delaware Business Trust Act and for taking such actions as are required
to be taken by a Delaware trustee under the Delaware Business Trust Act.
SECTION 2.7. Authorization to Enter into Certain Transactions.
(a) The Issuer Trustees and the Administrators shall conduct the
affairs of the Issuer Trust in accordance with the terms of this Trust
Agreement. Subject to the limitations set forth in paragraph (b) of this Section
2.7 and in accordance with the following provisions (i) and (ii), the Issuer
Trustees and the Administrators shall act as follows:
(i) Each Administrator shall have the power and authority and is
hereby authorized and directed to act on behalf of the Issuer Trust with respect
to the following:
(A) the compliance with the Underwriting Agreement
regarding the issuance and sale of the Trust Securities;
(B) the compliance with the Securities Act, applicable
state securities or blue sky laws, and the Trust Indenture Act;
(C) execute the Trust Securities on behalf of the Issuer
Trust in accordance with this Trust Agreement;
(D) the listing of the Preferred Securities upon such
securities exchange or exchanges or upon the Nasdaq National Market
as shall be determined by the Depositor, with the registration of
the Preferred Securities under the Exchange Act, if required, and
the preparation and filing of all periodic and other reports and
other documents pursuant to the foregoing;
(E) the application for a taxpayer identification number
for the Issuer Trust;
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(F) the preparation of a registration statement and a
prospectus in relation to the Preferred Securities, including any
amendments thereto and the taking of any action necessary or
desirable to sell the Preferred Securities in a transaction or
series of transactions subject to the registration requirements of
the Securities Act;
(G) cause the Issuer Trust to enter into, and execute,
deliver and perform on behalf of the Issuer Trust all agreements,
instruments, certificates or other documents as such Administrator
deems necessary or incidental to the purposes and functions of the
Issuer Trust; and
(H) any action incidental to the foregoing as the
Administrators may from time to time determine is necessary or
advisable to give effect to the terms of this Trust Agreement.
(ii) The Property Trustee shall have the power and authority, and
is hereby authorized and directed, to act on behalf of the Issuer Trust with
respect to the following matters:
(A) establish and maintain the Payment Account;
(B) receive, take title to, and exercise all of the
rights, powers and privileges of the holder of the Junior
Subordinated Debentures;
(C) receive and collect interest, principal and any other
payments made in respect of the Junior Subordinated Debentures in
the Payment Account;
(D) distribute amounts owed to the Holders in respect of
the Trust Securities in accordance with the terms of this Trust
Agreement;
(E) act as Paying Agent and/or Securities Registrar to the
extent appointed as such hereunder;
(F) send notices of default and other information
regarding the Trust Securities and the Junior Subordinated
Debentures to the Holders in accordance with this Trust Agreement;
(G) distribute the Trust Property in accordance with the
terms of this Trust Agreement;
(H) to the extent provided in this Trust Agreement,
wind-up the affairs of and liquidate the Issuer Trust and prepare,
execute and file the certificate of cancellation with the Secretary
of State of the State of Delaware;
(I) after an Event of Default (other than under paragraph
(b), (c) or (d) of the definition of such term if such Event of
Default is by or with respect to the Property Trustee), comply with
the provisions of this Trust Agreement and take any action to give
effect to the terms of this Trust Agreement and protect and
conserve the Trust Property for the benefit of the Holders (without
consideration of the effect of any such action on any particular
Holder); provided, however, that nothing in this Section 2.7(a)(ii)
shall require the Property Trustee to take any action that is not
otherwise required in this Trust Agreement; and
(J) take any action incidental or convenient 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;
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provided, however, that nothing in this Section 2.7(a)(ii) shall require the
Property Trustee to take any action that is not otherwise required in this Trust
Agreement.
(b) So long as this Trust Agreement remains in effect, the Issuer
Trust (or the Issuer Trustees or Administrators acting on behalf of the Issuer
Trust) shall not undertake any business, activities or transaction except as
expressly provided herein or contemplated hereby. In particular, neither the
Issuer Trustees nor the Administrators (in each case acting on behalf of the
Issuer Trust) shall (i) acquire any investments or engage in any activities not
authorized by this Trust Agreement, (ii) sell, assign, transfer, exchange,
mortgage, pledge, set-off or otherwise dispose of any of the Trust Property or
interests therein, including to Holders, except as expressly provided herein,
(iii) take any action that would reasonably be expected to cause the Issuer
Trust to become taxable as a corporation for United States federal income tax
purposes, (iv) incur any indebtedness for borrowed money or issue any other
debt, or (v) take or consent to any action that would result in the placement of
a Lien on any of the Trust Property. The Property Trustee shall defend all
claims and demands of all Persons at any time claiming any Lien on any of the
Trust Property adverse to the interest of the Issuer Trust or the Holders in
their capacity as Holders.
(c) In connection with the issue and sale of the Preferred
Securities, the Depositor shall have the power and authority to assist the
Issuer Trust with respect to, or effect on behalf of the Issuer Trust, the
following (and any actions taken by the Depositor in furtherance of the
following prior to the date of this Trust Agreement are hereby ratified and
confirmed in all respects):
(i) the preparation and filing by the Issuer Trust with
the Commission, and the execution and delivery, on behalf of the
Issuer Trust, of a registration statement, and a prospectus in
relation to the Preferred Securities, including any amendments
thereto and the taking of any action necessary or desirable to sell
the Preferred Securities in a transaction or a series of
transactions subject to the registration requirements of the
Securities Act;
(ii) the determination of the states in which to take
appropriate action to qualify or register for sale all or part of
the Preferred Securities and the determination of any and all such
acts, other than actions that must be taken by or on behalf of the
Issuer Trust, and the advice to the Issuer Trustees of actions they
must take on behalf of the Issuer Trust, and the preparation for
execution and filing of any documents to be executed and filed by
the Issuer Trust or on behalf of the Issuer Trust, as the Depositor
deems necessary or advisable in order to comply with the applicable
laws of any such states in connection with the offer and sale of
the Preferred Securities;
(iii) the negotiation of the terms of, and the execution
and delivery of, the Underwriting Agreement providing for the sale
of the Preferred Securities;
(iv) the preparation and filing by the Issuer Trust with
the Commission and the execution on behalf of the Issuer Trust of a
registration statement on Form 8-A relating to the registration of
the Preferred Securities under Section 12(b) or 12(g) of the
Exchange Act, as amended, including any amendments thereto;
(v) compliance with the listing requirements of the
Preferred Securities upon such securities exchange or exchanges, or
upon the Nasdaq National Market, as shall be determined by the
Depositor, the registration of the Preferred Securities under the
Exchange Act, if required, and the preparation and filing of all
periodic and other reports and other documents pursuant to the
foregoing; and
(vi) the taking of any other actions necessary or
desirable to carry out any of the foregoing activities.
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(d) Notwithstanding anything herein to the contrary, the
Administrators and the Property Trustee are authorized and directed to conduct
the affairs of the Issuer Trust and to operate the Issuer Trust so that the
Issuer Trust will not be deemed to be an "investment company" required to be
registered under the Investment Company Act, and will not be taxable as a
corporation for the United States federal income tax purposes and so that the
Junior Subordinated Debentures will be treated as indebtedness of the Depositor
for United States federal income tax purposes. In this connection, the Property
Trustee, the Administrators and the Holders of Common Securities are authorized
to take any action, not inconsistent with applicable law, the Certificate of
Trust or this Trust Agreement, that the Property Trustee, the Administrators and
Holders of Common Securities determine in their discretion to be necessary or
desirable for such purposes, as long as such action does not adversely affect in
any material respect the interests of the Holders of the Outstanding Preferred
Securities. In no event shall the Administrators or the Issuer Trustees be
liable to the Issuer Trust or the Holders for any failure to comply with this
section that results from a change in law or regulations or in the
interpretation thereof.
SECTION 2.8. Assets of Trust.
The assets of the Issuer Trust shall consist solely of the Trust
Property.
SECTION 2.9. Title to Trust Property.
Legal title to all Trust Property shall be vested at all times in
the Issuer Trust and shall be held and administered by the Property Trustee (in
its capacity as such) for the benefit of the Issuer Trust and the Holders in
accordance with this Trust Agreement.
ARTICLE III
PAYMENT ACCOUNT
SECTION 3.1. Payment Account.
(a) On or prior to the Closing Date, the Property Trustee shall
establish the Payment Account. The Property Trustee and its agents shall have
exclusive control and sole right of withdrawal with respect to the Payment
Account for the purpose of making deposits in and withdrawals from the Payment
Account in accordance with this Trust Agreement. All monies and other property
deposited or held from time to time in the Payment Account shall be held by the
Property Trustee in the Payment Account for the exclusive benefit of the Holders
and for distribution as herein provided, including (and subject to) any priority
of payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account,
promptly upon receipt, all payments of principal of or interest on, and any
other payments or proceeds with respect to, the Junior Subordinated Debentures.
Amounts held in the Payment Account shall not be invested by the Property
Trustee pending distribution thereof.
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ARTICLE IV
DISTRIBUTIONS; REDEMPTION
SECTION 4.1. Distributions.
(a) The Trust Securities represent undivided beneficial interests
in the Trust Property, and Distributions (including Distributions of Additional
Amounts) will be made on the Trust Securities at the rate and on the dates that
payments of interest (including payments of Additional Interest, as defined in
the Indenture) are made on the Junior Subordinated Debentures. Accordingly:
(i) Distributions on the Trust Securities shall be
cumulative and will accumulate whether or not there are funds of
the Issuer Trust available for the payment of Distributions.
Distributions shall accumulate from ______________, 1998, and,
except in the event (and to the extent) that the Depositor
exercises its right to defer the payment of interest on the Junior
Subordinated Debentures pursuant to the Indenture, shall be payable
quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, commencing on __________________, 1998.
If any date on which a Distribution is otherwise payable on the
Trust Securities is not a Business Day, then the payment of such
Distribution shall be made on the next succeeding day that is a
Business Day (without any interest or other payment in respect of
any such delay), except that if such Business Day is in the next
succeeding calendar year, payment of such Distributions shall be
made on the immediately preceding Business Day, in either case with
the same force and effect as if made on the date on which such
payment was originally payable (each date on which distributions
are payable in accordance with this Section 4.1(a), a "Distribution
Date").
(ii) The Trust Securities shall be entitled to
Distributions payable at a rate of _____% per annum of the
Liquidation Amount of the Trust Securities. The amount of
Distributions payable for any period less than a full Distribution
period shall be computed on the basis of a 360-day year of twelve
30-day months and the actual number of days elapsed in a partial
month in a period. Distributions payable for each full Distribution
period will be computed by dividing the rate per annum by four. The
amount of Distributions payable for any period shall include any
Additional Amounts in respect of such period.
(iii) So long as no Debenture Event of Default has
occurred and is continuing, the Depositor has the right under the
Indenture to defer the payment of interest on the Junior
Subordinated Debentures at any time and from time to time for a
period not exceeding 20 consecutive quarterly periods (an
"Extension Period"), provided that no Extension Period may extend
beyond ____________, 2028. As a consequence of any such deferral,
quarterly Distributions on the Trust Securities by the Issuer Trust
will also be deferred (and the amount of Distributions to which
Holders of the Trust Securities are entitled will accumulate
additional Distributions thereon at the rate per annum of ______%
per annum, compounded quarterly) from the relevant payment date for
such Distributions, computed on the basis of a 360-day year of
twelve 30-day months and the actual days elapsed in a partial month
in such period. Additional Distributions payable for each full
Distribution period will be computed by dividing the rate per annum
by four. The term "Distributions" as used in Section 4.1 shall
include any such additional Distributions provided pursuant to this
Section 4.1(a)(iii).
(iv) Distributions on the Trust Securities shall be made
by the Property Trustee from the Payment Account and shall be
payable on each Distribution Date only to the extent that the
Issuer Trust has funds then on hand and available in the Payment
Account for the payment of such Distributions.
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(b) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they appear on the
Securities Register for the Trust Securities at the close of business on the
relevant record date, which shall be at the close of business on the 15th day of
March, June, September or December (whether or not a Business Day).
SECTION 4.2. Redemption.
(a) On each Debenture Redemption Date and on the stated maturity of
the Junior Subordinated Debentures, the Issuer Trust will be required to redeem
a Like Amount of Trust Securities at the Redemption Price.
(b) Notice of redemption shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days
prior to the Redemption Date to each Holder of Trust Securities to be redeemed,
at such Holder's address appearing in the Security Register. All notices of
redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price, or if the Redemption Price
cannot be calculated prior to the time the notice is required to be
sent, the estimate of the Redemption Price provided pursuant to the
Indenture together with a statement that it is an estimate and that
the actual Redemption Price will be calculated on the third
Business Day prior to the Redemption Date (and if an estimate is
provided, a further notice shall be sent of the actual Redemption
Price on the date, or as soon as practicable thereafter, that
notice of such actual Redemption Price is received pursuant to the
Indenture);
(iii) the CUSIP number or CUSIP numbers of the Preferred
Securities affected;
(iv) if less than all the Outstanding Trust Securities are
to be redeemed, the identification and the total Liquidation Amount
of the particular Trust Securities to be redeemed;
(v) that on the Redemption Date the Redemption Price will
become due and payable upon each such Trust Security to be redeemed
and that Distributions thereon will cease to accumulate on and
after said date, except as provided in Section 4.2(d) below; and
(vi) the place or places where Trust Securities are to be
surrendered for the payment of the Redemption Price.
The Issuer Trust in issuing the Trust Securities shall use "CUSIP"
numbers, and the Property Trustee shall indicate the "CUSIP" numbers of the
Trust Securities in notices of redemption and related materials as a convenience
to Holders; provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Trust
Securities or as contained in any notice of redemption and related material.
(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the applicable proceeds from the
contemporaneous redemption of Junior Subordinated Debentures. Redemptions of the
Trust Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Issuer Trust has funds then on hand
and available in the Payment Account for the payment of such Redemption Price.
(d) If the Property Trustee gives a notice of redemption in respect
of any Preferred Securities, then, by 12:00 noon, New York City time, on the
Redemption Date, subject to Section 4.2(c), the
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Property Trustee will, with respect to Preferred Securities held in global form,
irrevocably deposit with the Clearing Agency for such Preferred Securities, to
the extent available therefor, funds sufficient to pay the applicable Redemption
Price and will give such Clearing Agency irrevocable instructions and authority
to pay the Redemption Price to the Owners of the Preferred Securities. With
respect to Preferred Securities that are not held in global form, the Property
Trustee, subject to Section 4.2(c), will irrevocably deposit with the Paying
Agent, to the extent available therefor, funds sufficient to pay the applicable
Redemption Price and will give the Paying Agent irrevocable instructions and
authority to pay the Redemption Price to the Holders of the Preferred Securities
upon surrender of their Preferred Securities Certificates. Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date for any
Trust Securities called for redemption shall be payable to the Holders of such
Trust Securities as they appear on the Securities Register for the Trust
Securities on the relevant record dates for the related Distribution Dates. If
notice of redemption shall have been given and funds deposited as required,
then, upon the date of such deposit, all rights of Holders holding Trust
Securities so called for redemption will cease, except the right of such Holders
to receive the Redemption Price and any Distributions payable in respect of the
Trust Securities on or prior to the Redemption Date, but without interest, and
such Trust Securities will cease to be Outstanding. In the event that any date
on which any applicable Redemption Price is payable is not a Business Day, then
payment of the applicable Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case, with the same force and effect
as if made on such date. In the event that payment of the Redemption Price in
respect of any Trust Securities called for redemption is improperly withheld or
refused and not paid either by the Issuer Trust or by the Depositor pursuant to
the Guarantee Agreement, Distributions on such Trust Securities will continue to
accumulate, as set forth in Section 4.1, from the Redemption Date originally
established by the Issuer Trust for such Trust Securities to the date such
applicable Redemption Price is actually paid, in which case the actual payment
date will be the date fixed for redemption for purposes of calculating the
applicable Redemption Price.
(e) Subject to Section 4.3(a), if less than all the Outstanding
Trust Securities are to be redeemed on a Redemption Date, then the particular
Preferred Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Property Trustee from the Outstanding
Preferred Securities not previously called for redemption in such a manner as
the Property Trustee shall deem fair and appropriate.
SECTION 4.3. Subordination of Common Securities.
(a) Payment of Distributions (including Additional Amounts, if
applicable) on, the Redemption Price of, and the Liquidation Distribution in
respect of, the Trust Securities, as applicable, shall be made, subject to
Section 4.2(e), pro rata among the Common Securities and the Preferred
Securities based on the Liquidation Amount of such Trust Securities; provided,
however, that if on any Distribution Date or Redemption Date any Event of
Default resulting from a Debenture Event of Default in Section 5.1(a) or 5.1(b)
of the Indenture shall have occurred and be continuing, no payment of any
Distribution (including any Additional Amounts, if applicable) on, or Redemption
Price of, or Liquidation Distribution in respect of, any Common Security, and no
other payment on account of the redemption, liquidation or other acquisition of
Common Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions (including Additional Amounts, if
applicable) on all Outstanding Preferred Securities for all Distribution periods
terminating on or prior thereto, or, in the case of payment of the Redemption
Price, the full amount of such Redemption Price on all Outstanding Preferred
Securities then called for redemption, or in the case of payment of the
Liquidation Distribution the full amount of such Liquidation Distribution on all
Outstanding Preferred Securities, shall have been made or provided for, and all
funds immediately available to the Property Trustee shall first be applied to
the payment in full in cash of all Distributions (including any Additional
Amounts) on, or the Redemption Price of, or Liquidation Distribution in respect
of Preferred Securities then due and payable. The
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existence of an Event of Default does not entitle the Holders of Preferred
Securities to accelerate the maturity thereof.
(b) In the case of the occurrence of any Event of Default resulting
from any Debenture Event of Default, the Holder of the Common Securities shall
have no right to act with respect to any such Event of Default under this Trust
Agreement until the effects of all such Events of Default with respect to the
Preferred Securities have been cured, waived or otherwise eliminated. Until all
such Events of Default under this Trust Agreement with respect to the Preferred
Securities have been so cured, waived or otherwise eliminated, the Property
Trustee shall act solely on behalf of the Holders of the Preferred Securities
and not on behalf of the Holder of the Common Securities, and only the Holders
of the Preferred Securities will have the right to direct the Property Trustee
to act on their behalf.
SECTION 4.4. Payment Procedures.
Payments of Distributions (including any Additional Amounts, if
applicable) in respect of the Preferred Securities shall be made by check mailed
to the address of the Person entitled thereto as such address shall appear on
the Securities Register or, if the Preferred Securities are held by a Clearing
Agency, such Distributions shall be made to the Clearing Agency in immediately
available funds, which will credit the relevant accounts on the applicable
Distribution Dates. Payments of Distributions to Holders of $1,000,000 or more
in aggregate Liquidation Amount of Preferred Securities may be made by wire
transfer of immediately available funds upon written request of such Holder of
Preferred Securities to the Securities Registrar not later than 15 calendar days
prior to the date on which the Distribution is payable. Payments in respect of
the Common Securities shall be made in such manner as shall be mutually agreed
between the Property Trustee and the Holder of the Common Securities.
SECTION 4.5. Tax Returns and Reports.
The Administrators shall prepare and file (or cause to be prepared
and filed), 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 Issuer Trust. In this regard, the Administrators shall (i)
prepare and file (or cause to be prepared and filed) all Internal Revenue
Service forms required to be filed in respect of the Issuer Trust in each
taxable year of the Issuer Trust and (ii) prepare and furnish (or cause to be
prepared and furnished) to each Holder all Internal Revenue Service forms
required to be provided by the Issuer Trust. The Administrators shall provide
the Depositor and the Property Trustee with a copy of all such returns and
reports promptly after such filing or furnishing. The Issuer Trustees and the
Administrators shall comply with United States federal withholding and backup
withholding tax laws and information reporting requirements with respect to any
payments to Holders under the Trust Securities.
On or before December 15 of each year during which any Preferred
Securities are outstanding, the Administrators shall furnish to the Paying Agent
such information as may be reasonably requested by the Property Trustee in order
that the Property Trustee may prepare the information which it is required to
report for such year on Internal Revenue Service Forms 1096 and 1099 pursuant to
Section 6049 of the Code, as amended. Such information shall include the amount
of original issue discount includible in income for each outstanding Preferred
Security during such year.
SECTION 4.6. Payment of Taxes; Duties, Etc. of the Issuer Trust.
Upon receipt under the Junior Subordinated Debentures of Additional
Sums, the Property Trustee, at the direction of an Administrator or the
Depositor, shall promptly pay any taxes, duties or governmental charges of
whatsoever nature (other than withholding taxes) imposed on the Issuer Trust by
the United States or any other taxing authority.
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SECTION 4.7. Payments under Indenture or Pursuant to Direct
Actions.
Any amount payable hereunder to any Holder of Preferred Securities
shall be reduced by the amount of any corresponding payment such Holder (or any
Owner related thereto) has directly received pursuant to Section 5.8 of the
Indenture or Section 5.13 of this Trust Agreement.
SECTION 4.8. Liability of the Holder of Common Securities.
The Holder of Common Securities shall be liable for the debts and
obligations of the Issuer Trust as set forth in Section 6.7(c) of the Indenture
regarding allocation of expenses.
ARTICLE V
TRUST SECURITIES CERTIFICATES
SECTION 5.1. Initial Ownership.
Until the issuance of the Trust Securities, and at any time during
which no Trust Securities are outstanding, the Depositor shall be the sole
beneficial owner of the Issuer Trust.
SECTION 5.2. The Trust Securities Certificates.
(a) The Trust Securities Certificates shall be executed on behalf
of the Issuer Trust by manual or facsimile signature of at least one
Administrator except as provided in Section 5.3. Trust Securities Certificates
bearing the signatures of individuals who were, at the time when such signatures
shall have been affixed, authorized to sign on behalf of the Issuer Trust, shall
be validly issued and entitled to the benefits of this Trust Agreement,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the delivery of such Trust Securities Certificates or did
not hold such offices at the date of delivery of such Trust Securities
Certificates. A transferee of a Trust Securities Certificate shall become a
Holder, and shall be entitled to the rights and subject to the obligations of a
Holder hereunder, upon due registration of such Trust Securities Certificate in
such transferee's name pursuant to Section 5.5.
(b) Upon their original issuance, Preferred Securities Certificates
shall be issued in the form of one or more fully registered Global Preferred
Securities Certificates which will be deposited with or on behalf of Cede as the
Depositary's nominee and registered in the name of the Depositary's nominee.
Unless and until it is exchangeable in whole or in part for the Preferred
Securities in definitive form, a global security may not be transferred except
as a whole by the Depositary to a nominee of the Depositary or by a nominee of
the Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor of such Depositary or a nominee of
such successor.
(c) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive Common
Securities Certificate.
SECTION 5.3. Execution and Delivery of Trust Securities
Certificates.
On the Closing Date, and on the Option Closing Date if applicable,
an Administrator shall cause Trust Securities Certificates, in an aggregate
Liquidation Amount as provided in Sections 2.4 and 2.5, as the case may be, to
be executed on behalf of the Issuer Trust and delivered to the Property Trustee
and upon such delivery the Property Trustee shall authenticate such Trust
Securities Certificates and deliver such Trust Securities Certificates upon the
written order of the Issuer Trust, executed by an
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Administrator thereof, without further corporate action by the Issuer Trust, in
authorized denominations, and whereupon the Trust Securities evidenced by such
Trust Securities Certificates shall be duly and validly issued undivided
beneficial interests in the assets of the Issuer Trust and entitled to the
benefits of this Trust Agreement.
SECTION 5.4. Global Preferred Security.
(a) Any Global Preferred Security issued under this Trust Agreement
shall be registered in the name of the nominee of the Clearing Agency and
delivered to such custodian therefor, and such Global Preferred Security shall
constitute a single Preferred Security for all purposes of this Trust Agreement.
(b) Notwithstanding any other provision in this Trust Agreement, a
Global Preferred Security may not be exchanged in whole or in part for Preferred
Securities registered, and no transfer of the Global Preferred Security in whole
or in part may be registered, in the name of any Person other than the Clearing
Agency for such Global Preferred Security, Cede, or other nominee thereof unless
(i) such Clearing Agency advises the Depositor and the Issuer Trustees in
writing that such Clearing Agency is no longer willing or able to properly
discharge its responsibilities as Clearing Agency with respect to such Global
Preferred Security, and the Depositor is unable to locate a qualified successor,
within 90 days of receipt of such notice from the Depositary, (ii) the Depositor
at its option advises the Depositary in writing that it elects to terminate the
book-entry system through the Clearing Agency, or (iii) there shall have
occurred and be continuing an Event of Default.
(c) If a Preferred Security is to be exchanged in whole or in part
for a beneficial interest in a Global Preferred Security, then either (i) such
Global Preferred Security shall be so surrendered for exchange 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 canceled, or equal to the Liquidation Amount of such other
Preferred Security to be so exchanged for a beneficial interest therein, as the
case may be, by means of an appropriate adjustment made on the records of the
Security Registrar, whereupon the Property Trustee, in accordance with the
Applicable Procedures, shall instruct the Clearing Agency or its authorized
representative to make a corresponding adjustment to its records. Upon any such
surrender or adjustment of a Global Preferred Security by the Clearing Agency,
accompanied by registration instructions, the Property Trustee shall, subject to
Section 5.4(b) and as otherwise provided in this Article V, authenticate and
deliver and an Administrator shall execute any Preferred Securities issuable in
exchange for such Global Preferred Security (or any portion thereof) in
accordance with the instructions of the Clearing Agency. The Property Trustee
shall not be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be fully protected in relying on, such
instructions.
(d) Every Preferred Security registered, executed, authenticated
and delivered upon registration of transfer of, or in exchange for or in lieu
of, a Global Preferred Security or any portion thereof, whether pursuant to this
Article V or Article IV or otherwise, shall be executed, authenticated and
delivered in the form of, and shall be, a Global Preferred Security, unless such
Global Preferred Security is registered in the name of a Person other than the
Clearing Agency for such Global Preferred Security or a nominee thereof.
(e) The Clearing Agency or its nominee, as the registered owner of
a Global Preferred Security, shall be considered the Holder of the Preferred
Securities represented by such Global Preferred Security for all purposes under
this Trust Agreement and the Preferred Securities, and owners of beneficial
interests in such Global Preferred Security shall hold such interests pursuant
to the Applicable Procedures and, except as otherwise provided herein, shall not
be entitled to receive physical delivery of any such Preferred Securities in
definitive form and shall not be considered the Holders thereof under this Trust
Agreement. Accordingly, any such Owner's beneficial interest in the Global
Preferred Security
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shall be shown only on, and the transfer of such interest shall be effected only
through, records maintained by the Clearing Agency or its nominee. Neither the
Property Trustee, the Securities Registrar nor the Depositor shall have any
liability in respect of any transfers effected by the Clearing Agency.
(f) The rights of Owners of beneficial interests in a Global
Preferred Security shall be exercised only through the Clearing Agency and shall
be limited to those established by law and agreements between such Owners and
the Clearing Agency.
SECTION 5.5. Registration of Transfer and Exchange Generally;
Certain Transfers and Exchanges; Preferred Securities Certificates.
(a) The Property Trustee shall keep or cause to be kept at its
Corporate Trust Office a register or registers for the purpose of registering
Preferred Trust Securities Certificates and transfers and exchanges of Preferred
Securities Certificates in which the registrar and transfer agent with respect
to the Preferred Securities (the "Securities Registrar"), subject to such
reasonable regulations as it may prescribe, shall provide for the registration
of Preferred Securities Certificates and Common Securities Certificates (subject
to Section 5.11 in the case of Common Securities Certificates) and registration
of transfers and exchanges of Preferred Securities Certificates as herein
provided. Such register is herein sometimes referred to as the "Securities
Register." The Property Trustee is hereby appointed "Securities Registrar" for
the purpose of registering Preferred Securities and transfers of Preferred
Securities as herein provided.
Upon surrender for registration of transfer of any Preferred
Security at the offices or agencies of the Property Trustee designated for that
purpose, an Administrator shall execute and the Property Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Preferred Securities of the same series of any
authorized denominations of like tenor and aggregate Liquidation Amount and
bearing such legends as may be required by this Trust Agreement.
At the option of the Holder, Preferred Securities may be exchanged
for other Preferred Securities of any authorized denominations, of like tenor
and aggregate Liquidation Amount and bearing such legends as may be required by
this Trust Agreement, upon surrender of the Preferred Securities to be exchanged
at such office or agency. Whenever any Preferred Securities are so surrendered
for exchange, an Administrator shall execute and the Property Trustee shall
authenticate and deliver the Preferred Securities that the Holder making the
exchange is entitled to receive.
All Preferred Securities issued upon any transfer or exchange of
Preferred Securities shall be the valid obligations of the Issuer Trust,
evidencing the same interest, and entitled to the same benefits under this Trust
Agreement, as the Preferred Securities surrendered upon such transfer or
exchange.
Every Preferred Security presented or surrendered for transfer or
exchange shall (if so required by the Property Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Property Trustee and the Securities Registrar, duly executed by the Holder
thereof or such Holder's attorney duly authorized in writing.
No service charge shall be made to a Holder for any transfer or
exchange of Preferred Securities, but the Property Trustee may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Preferred Securities.
Neither the Issuer Trust nor the Property Trustee shall be
required, pursuant to the provisions of this Section, (i) to issue, register the
transfer of or exchange any Preferred Security during a period beginning at the
opening of business 15 days before the day of selection for redemption of
Preferred Securities pursuant to Article IV and ending at the close of business
on the day of mailing of the notice
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of redemption, or (ii) to register the transfer of or exchange any Preferred
Security so selected for redemption in whole or in part, except, in the case of
any such Preferred Security to be redeemed in part, any portion thereof not to
be redeemed.
(b) Certain Transfers and Exchanges. Trust Securities may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Trust Agreement. Any transfer or purported transfer of any
Trust Security not made in accordance with this Trust Agreement shall be null
and void.
(i) Non-Global Security to Non-Global Security. A Trust
Security that is not a Global Preferred Security may be
transferred, in whole or in part, to a Person who takes delivery in
the form of another Trust Security that is not a Global Preferred
Security as provided in Section 5.5(a).
(ii) Free Transferability. Subject to this Section 5.5,
Preferred Securities shall be freely transferable.
(iii) Exchanges Between Global Preferred Security and
Non-Global Preferred Security. A beneficial interest in a Global
Preferred Security may be exchanged for a Preferred Security that
is not a Global Preferred Security as provided in Section 5.4.
SECTION 5.6. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates.
If (a) any mutilated Trust Securities Certificate shall be
surrendered to the Securities Registrar, or if the Securities Registrar shall
receive evidence to its satisfaction of the destruction, loss or theft of any
Trust Securities Certificate and (b) there shall be delivered to the Securities
Registrar and the Administrators such security or indemnity as may be required
by them to save each of them harmless, then in the absence of notice that such
Trust Securities Certificate shall have been acquired by a bona fide purchaser
or a protected purchaser, the Administrators, or any one of them, on behalf of
the Issuer Trust shall execute and make available for delivery, and the Property
Trustee shall authenticate, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Trust Securities Certificate, a new Trust Securities
Certificate of like class, tenor and denomination. In connection with the
issuance of any new Trust Securities Certificate under this Section, the
Administrators or the Securities Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Trust Securities Certificate issued pursuant
to this Section shall constitute conclusive evidence of an undivided beneficial
interest in the assets of the Issuer Trust corresponding to that evidenced by
the lost, stolen or destroyed Trust Securities Certificate, as if originally
issued, whether or not the lost, stolen or destroyed Trust Securities
Certificate shall be found at any time.
SECTION 5.7. Persons Deemed Holders.
The Issuer Trustees, the Administrators, the Securities Registrar
or the Depositor shall treat the Person in whose name any Trust Securities are
registered in the Securities Register as the owner of such Trust Securities for
the purpose of receiving Distributions and for all other purposes whatsoever,
and none of the Issuer Trustees, the Administrators, the Securities Registrar
nor the Depositor shall be bound by any notice to the contrary.
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SECTION 5.8. Access to List of Holders' Names and Addresses.
Each Holder and each Owner shall be deemed to have agreed not to
hold the Depositor, the Property Trustee, or the Administrators accountable by
reason of the disclosure of its name and address, regardless of the source from
which such information was derived.
SECTION 5.9. Maintenance of Office or Agency.
The Property Trustee shall designate, with the consent of the
Administrators, which consent shall not be unreasonably withheld, an office or
offices or agency or agencies where Preferred Securities Certificates may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Issuer Trustees in respect of the Trust Securities
Certificates may be served. The Property Trustee initially designates its
Corporate Trust Office for such purposes. The Property Trustee shall give prompt
written notice to the Depositor, the Administrators and the Holders of any
change in the location of the Securities Register or any such office or agency.
SECTION 5.10. Appointment of Paying Agent.
The Paying Agent shall make Distributions to Holders from the
Payment Account and shall report the amounts of such Distributions to the
Property Trustee and the Administrators. Any Paying Agent shall have the
revocable power to withdraw funds from the Payment Account solely for the
purpose of making the Distributions referred to above. The Property Trustee may
revoke such power and remove any Paying Agent in its sole discretion. The Paying
Agent shall initially be the Property Trustee. Any Person acting as Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' written notice to the
Administrators, and the Property Trustee. In the event that the Property Trustee
shall no longer be the Paying Agent or a successor Paying Agent shall resign or
its authority to act be revoked, the Property Trustee shall appoint a successor
(which shall be a bank or trust company) that is reasonably acceptable to the
Administrators to act as Paying Agent. Such successor Paying Agent appointed by
the Property Trustee, or any additional Paying Agent appointed by the
Administrators, shall execute and deliver to the Issuer Trustees an instrument
in which such successor Paying Agent or additional Paying Agent shall agree with
the Issuer Trustees that as Paying Agent, such successor Paying Agent or
additional Paying Agent will hold all sums, if any, held by it for payment to
the Holders in trust for the benefit of the Holders entitled thereto until such
sums shall be paid to such Holders. The Paying Agent shall return all unclaimed
funds to the Property Trustee and upon removal of a Paying Agent such Paying
Agent shall also return all funds in its possession to the Property Trustee. The
provisions of Sections 8.1, 8.3 and 8.6 herein shall apply to the Bank also in
its role as Paying Agent, for so long as the Bank shall act as Paying Agent and,
to the extent applicable, to any other paying agent appointed hereunder. Any
reference in this Trust Agreement to the Paying Agent shall include any
co-paying agent chosen by the Property Trustee unless the context requires
otherwise.
SECTION 5.11. Ownership of Common Securities by Depositor.
On the Closing Date, and on the Option Closing Date if applicable,
the Depositor shall acquire and retain beneficial and record ownership of the
Common Securities. Neither the Depositor nor any successor Holder of the Common
Securities may transfer less than all of the Common Securities, and the
Depositor or any Successor Holder may transfer the Common Securities only (a) in
connection with a consolidation or merger of the Depositor into another
corporation or any conveyance, transfer or lease by the Depositor of its
properties and assets substantially as an entirety to any Person, pursuant to
Section 8.1 of the Indenture, or (b) a transfer to an Affiliate of the Depositor
in compliance with applicable law (including the Securities Act and applicable
state securities and blue sky laws). To the fullest extent permitted by law, any
other attempted transfer of the Common Securities shall be void. The
Administrators shall cause each Common Securities Certificate issued to the
Depositor to contain a legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE
EXCEPT TO A SUCCESSOR IN INTEREST
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TO THE DEPOSITOR OR AN AFFILIATE OF THE DEPOSITOR IN COMPLIANCE WITH APPLICABLE
LAW AND SECTION 5.11 OF THE TRUST AGREEMENT."
SECTION 5.12. Notices to Clearing Agency.
To the extent that a notice or other communication to the Holders
is required under this Trust Agreement, for so long as Preferred Securities are
represented by a Global Preferred Securities Certificate, the Administrators and
the Property Trustee shall give all such notices and communications specified
herein to be given to the Clearing Agency, and shall have no obligations to the
Owners.
SECTION 5.13. Rights of Holders.
(a) The legal title to all Trust Property shall be vested at all
times in the Issuer Trust and shall be held and administered by the Property
Trustee (in its capacity as such) in accordance with Section 2.9, and the
Holders shall not have any right or title therein other than the undivided
beneficial interest in the assets of the Issuer Trust conferred by their Trust
Securities and they shall have no right to call for any partition or division of
property, profits or rights of the Issuer Trust except as described below. The
Trust Securities shall be personal property giving only the rights specifically
set forth therein and in this Trust Agreement. The Trust Securities shall have
no preemptive or similar rights and when issued and delivered to Holders against
payment of the purchase price therefor will be validly issued, fully paid and
nonassessable undivided beneficial interests in the Trust Property. Subject to
Section 4.8 hereof the Holders of the Trust Securities, in their capacities as
such, shall be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware.
(b) For so long as any Preferred Securities remain Outstanding, if,
upon a Debenture Event of Default, the Debenture Trustee fails or the holders of
not less than 25% in principal amount of the outstanding Junior Subordinated
Debentures fail to declare the principal of all of the Junior Subordinated
Debentures to be immediately due and payable, the Holders of at least 25% in
Liquidation Amount of the Preferred Securities then Outstanding shall have such
right to make such declaration by a notice in writing to the Property Trustee,
the Depositor and the Debenture Trustee.
At any time after such a declaration of acceleration with respect
to the Junior Subordinated Debentures has been made and before a judgment or
decree for payment of the money due has been obtained by the Debenture Trustee
as provided in the Indenture, the Holders of a Majority in Liquidation Amount of
the Preferred Securities, by written notice to the Property Trustee, the
Depositor and the Debenture Trustee, may rescind and annul such declaration and
its consequences if:
(i) the Depositor has paid or deposited with the Debenture
Trustee a sum sufficient to pay
(A) all overdue installments of interest on all of
the Junior Subordinated Debentures,
(B) any accrued Additional Interest on all of the
Junior Subordinated Debentures,
(C) the principal of (and premium, if any, on) any
Junior Subordinated Debentures which have become due
otherwise than by such declaration of acceleration and
interest and Additional Interest thereon at the rate borne
by the Junior Subordinated Debentures, and
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(D) all sums paid or advanced by the Debenture
Trustee under the Indenture and the reasonable
compensation, expenses, disbursements and advances of the
Debenture Trustee and the Property Trustee, their agents
and counsel; and
(ii) all Events of Default with respect to the Junior
Subordinated Debentures, other than the non-payment of the
principal of the Junior Subordinated Debentures which has
become due solely by such acceleration, have been cured or
waived as provided in Section 5.13 of the Indenture.
The Holders of at least a Majority in Liquidation Amount of the
Preferred Securities may, on behalf of the Holders of all the Preferred
Securities, waive any past default under the Indenture, except a default in the
payment of principal or interest (unless such default has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee) or
a default in respect of a covenant or provision which under the Indenture cannot
be modified or amended without the consent of the holder of each outstanding
Junior Subordinated Debentures affected thereby. No such rescission shall affect
any subsequent default or impair any right consequent thereon.
Upon receipt by the Property Trustee of written notice declaring
such an acceleration, or rescission and annulment thereof, by Holders of the
Preferred Securities all or part of which is represented by Global Preferred
Securities, a record date shall be established for determining Holders of
Outstanding Preferred Securities entitled to join in such notice, which record
date shall be at the close of business on the day the Property Trustee receives
such notice. The Holders on such record date, or their duly designated proxies,
and only such Persons, shall be entitled to join in such notice, whether or not
such Holders remain Holders after such record date; provided, that, unless such
declaration of acceleration, or rescission and annulment, as the case may be,
shall have become effective by virtue of the requisite percentage having joined
in such notice prior to the day which is 90 days after such record date, such
notice of declaration of acceleration, or rescission and annulment, as the case
may be, shall automatically and without further action by any Holder be canceled
and of no further effect. Nothing in this paragraph shall prevent a Holder, or a
proxy of a Holder, from giving, after expiration of such 90-day period, a new
written notice of declaration of acceleration, or rescission and annulment
thereof, as the case may be, that is identical to a written notice which has
been canceled pursuant to the proviso to the preceding sentence, in which event
a new record date shall be established pursuant to the provisions of this
Section 5.13(b).
(c) For so long as any Preferred Securities remain Outstanding, to
the fullest extent permitted by law and subject to the terms of this Trust
Agreement and the Indenture, upon a Debenture Event of Default specified in
Section 5.1(a) or 5.1(b) of the Indenture, any Holder of Preferred Securities
shall have the right to institute a proceeding directly against the Depositor,
pursuant to Section 5.8 of the Indenture, for enforcement of payment to such
Holder of the principal amount of or interest on Junior Subordinated Debentures
having an aggregate principal amount equal to the aggregate Liquidation Amount
of the Preferred Securities of such Holder (a "Direct Action"). Except as set
forth in Sections 5.13(b) and 5.13 (c) of this Trust Agreement, the Holders of
Preferred Securities shall have no right to exercise directly any right or
remedy available to the holders of, or in respect of, the Junior Subordinated
Debentures.
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ARTICLE VI
ACTS OF HOLDERS; MEETINGS; VOTING
SECTION 6.1. Limitations on Holder's Voting Rights.
(a) Except as provided in this Trust Agreement and in the Indenture
and as otherwise required by law, no Holder of Preferred Securities shall have
any right to vote or in any manner otherwise control the administration,
operation and management of the Issuer Trust or the obligations of the parties
hereto, nor shall anything herein set forth or contained in the terms of the
Trust Securities Certificates be construed so as to constitute the Holders from
time to time as members of an association.
(b) So long as any Junior Subordinated Debentures are held by the
Property Trustee on behalf of the Issuer Trust, the Property Trustee shall not
(i) direct the time, method and place of conducting any proceeding for any
remedy available to the Property Trustee, or executing any trust or power
conferred on the Debenture Trustee with respect to such Junior Subordinated
Debentures, (ii) waive any past default that may be waived under Section 5.13 of
the Indenture, (iii) exercise any right to rescind or annul a declaration that
the principal of all the Junior Subordinated Debentures shall be due and payable
or (iv) consent to any amendment, modification or termination of the Indenture
or the Junior Subordinated Debentures, where such consent shall be required,
without, in each case, obtaining the prior approval of the Holders of at least a
Majority in Liquidation Amount of the Preferred Securities, provided, however,
that where a consent under the Indenture would require the consent of each
holder of Junior Subordinated Debentures affected thereby, no such consent shall
be given by the Property Trustee without the prior written consent of each
Holder of Preferred Securities. The Property Trustee shall not revoke any action
previously authorized or approved by a vote of the Holders of Preferred
Securities, except by a subsequent vote of the Holders of Preferred Securities.
The Property Trustee shall notify all Holders of the Preferred Securities of any
notice of default received with respect to the Junior Subordinated Debentures.
In addition to obtaining the foregoing approvals of the Holders of the Preferred
Securities, prior to taking any of the foregoing actions, the Property Trustee
shall, at the expense of the Depositor, obtain an Opinion of Counsel experienced
in such matters to the effect that such action will not cause the Issuer Trust
to be taxable as a corporation for United States federal income tax purposes.
(c) If any proposed amendment to the Trust Agreement provides for,
or the Issuer Trust otherwise proposes to effect, (i) any action that would
adversely affect in any material respect the interests, powers, preferences or
special rights of the Preferred Securities, whether by way of amendment to the
Trust Agreement or otherwise, or (ii) the dissolution of the Issuer Trust, other
than pursuant to the terms of this Trust Agreement, then the Holders of
Outstanding Trust Securities as a class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of the Holders of at least a Majority in Liquidation
Amount of the Preferred Securities. Notwithstanding any other provision of this
Trust Agreement, no amendment to this Trust Agreement may be made if, as a
result of such amendment, it would cause the Issuer Trust to be taxable as a
corporation for United States federal income tax purposes.
SECTION 6.2. Notice of Meetings.
Notice of all meetings of the Holders, stating the time, place and
purpose of the meeting, shall be given by the Property Trustee pursuant to
Section 10.8 to each Holder of record, at his registered address, at least 15
days and not more than 90 days before the meeting. At any such meeting, any
business properly before the meeting may be so considered whether or not stated
in the notice of the meeting. Any adjourned meeting may be held as adjourned
without further notice.
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SECTION 6.3. Meetings of Holders.
No annual meeting of Holders is required to be held. The Property
Trustee, however, shall call a meeting of Holders to vote on any matter upon the
written request of the Holders of record of 25% of the aggregate Liquidation
Amount of the Preferred Securities and the Administrators or the Property
Trustee may, at any time in their discretion, call a meeting of Holders of
Preferred Securities to vote on any matters as to which Holders are entitled to
vote.
Holders of at least a Majority in Liquidation Amount of the
Preferred Securities, present in person or represented by proxy, shall
constitute a quorum at any meeting of Holders of the Preferred Securities.
If a quorum is present at a meeting, an affirmative vote by the
Holders of record present, in person or by proxy, holding Preferred Securities
representing at least a Majority in Liquidation Amount of the Preferred
Securities held by the Holders present, either in person or by proxy, at such
meeting shall constitute the action of the Holders of Preferred Securities,
unless this Trust Agreement requires a greater number of affirmative votes.
SECTION 6.4. Voting Rights.
Holders shall be entitled to one vote for each $10 of Liquidation
Amount represented by their Outstanding Trust Securities in respect of any
matter as to which such Holders are entitled to vote.
SECTION 6.5. Proxies, etc.
At any meeting of Holders, any Holder entitled to vote thereat may
vote by proxy, provided that no proxy shall be voted at any meeting unless it
shall have been placed on file with the Property Trustee, or with such other
officer or agent of the Issuer Trust as the Property Trustee may direct, for
verification prior to the time at which such vote shall be taken. Pursuant to a
resolution of the Property Trustee, proxies may be solicited in the name of the
Property Trustee or one or more officers of the Property Trustee. Only Holders
of record shall be entitled to vote. When Trust Securities are held jointly by
several persons, any one of them may vote at any meeting in person or by proxy
in respect of such Trust Securities, but if more than one of them shall be
present at such meeting in person or by proxy, and such joint owners or their
proxies so present disagree as to any vote to be cast, such vote shall not be
received in respect of such Trust Securities. A proxy purporting to be executed
by or on behalf of a Holder shall be deemed valid unless challenged at or prior
to its exercise, and the burden of proving invalidity shall rest on the
challenger. No proxy shall be valid more than three years after its date of
execution.
SECTION 6.6. Holder Action by Written Consent.
Any action which may be taken by Holders at a meeting may be taken
without a meeting if Holders holding at least a Majority in Liquidation Amount
of all Trust Securities entitled to vote in respect of such action (or such
larger proportion thereof as shall be required by any other provision of this
Trust Agreement) shall consent to the action in writing.
SECTION 6.7. Record Date for Voting and Other Purposes.
For the purposes of determining the Holders who are entitled to
notice of and to vote at any meeting or by written consent, or to participate in
any Distribution on the Trust Securities in respect of which a record date is
not otherwise provided for in this Trust Agreement, or for the purpose of any
other action, the Administrators (or the Property Trustee if the Administrators
are unable or unwilling to act) may from time to time fix a date, not more than
90 days prior to the date of any meeting of
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Holders or the payment of a Distribution or other action, as the case may be, as
a record date for the determination of the identity of the Holders of record for
such purposes.
SECTION 6.8. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Trust Agreement to be
given, made or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by an agent duly appointed in writing; and, except as otherwise expressly
provided herein, such action shall become effective when such instrument or
instruments are delivered to the Property Trustee. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Trust
Agreement and (subject to Section 8.1) conclusive in favor of the Issuer
Trustees, if made in the manner provided in this Section 6.8.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which any Issuer Trustee or Administrator receiving the same
deems sufficient.
(c) The ownership of Trust Securities shall be proved by the
Securities Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Trust Security shall bind every future
Holder of the same Trust Security and the Holder of every Trust Security issued
upon the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the
Issuer Trustees, the Administrators or the Issuer Trust in reliance thereon,
whether or not notation of such action is made upon such Trust Security.
(e) Without limiting the foregoing, a Holder entitled hereunder to
take any action hereunder with regard to any particular Trust Security may do so
with regard to all or any part of the Liquidation Amount of such Trust Security
or by one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such Liquidation Amount.
(f) If any dispute shall arise among the Holders, the
Administrators or the Issuer Trustees with respect to the authenticity, validity
or binding nature of any request, demand, authorization, direction, consent,
waiver or other Act of such Holder or Issuer Trustee under this Article VI, then
the determination of such matter by the Property Trustee shall be conclusive
with respect to such matter.
SECTION 6.9. Inspection of Records.
Upon reasonable notice to the Administrators and the Property
Trustee, the records of the Issuer Trust shall be open to inspection by Holders
during normal business hours for any purpose reasonably related to such Holder's
interest as a Holder.
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties of the Property Trustee
and the Delaware Trustee.
The Property Trustee and the Delaware Trustee (and any successors
thereto at the time of their appointment), each severally on behalf of and as to
itself, hereby represents and warrants for the benefit of the Depositor and the
Holders that:
(a) The Property Trustee is a banking corporation, duly organized,
validly existing and in good standing under the laws of New York, with trust
power and authority to execute and deliver, and to carry out and perform its
obligations under the terms of this Trust Agreement.
(b) The execution, delivery and performance by the Property Trustee
of this Trust Agreement has been duly authorized by all necessary corporate
action on the part of the Property Trustee; and this Trust Agreement has been
duly executed and delivered by the Property Trustee, and constitutes a legal,
valid and binding obligation of the Property Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law).
(c) The execution, delivery and performance of this Trust Agreement
by the Property Trustee does not conflict with or constitute a breach of the
certificate of incorporation or by-laws of the Property Trustee.
(d) At the Time of Delivery, the Property Trustee has not knowingly
created any Liens or encumbrances on the Trust Securities.
(e) No consent, approval or authorization of, or registration with
or notice to, any New York State or federal banking authority is required for
the execution, delivery or performance by the Property Trustee, of this Trust
Agreement.
(f) The Delaware Trustee is duly organized, validly existing and in
good standing under the laws of the State of Delaware, with trust power and
authority to execute and deliver, and to carry out and perform its obligations
under the terms of, the Trust Agreement.
(g) The execution, delivery and performance by the Delaware Trustee
of this Trust Agreement has been duly authorized by all necessary corporate
action on the part of the Delaware Trustee; and this Trust Agreement has been
duly executed and delivered by the Delaware Trustee, and constitutes a legal,
valid and binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' right
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law).
(h) The execution, delivery and performance of this Trust Agreement
by the Delaware Trustee does not conflict with or constitute a breach of the
certificate of incorporation or by-laws of the Delaware Trustee.
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(i) No consent, approval or authorization of, or registration with
or notice to any state or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee, of this Trust
Agreement.
(j) The Delaware Trustee is an entity which has its principal place
of business in the State of Delaware.
SECTION 7.2. Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants for the benefit of the
Holders that:
(a) the Trust Securities Certificates issued at the Time of
Delivery on behalf of the Issuer Trust have been duly authorized and will have
been duly and validly executed, and, subject to payment therefor, issued and
delivered by the Issuer Trustees pursuant to the terms and provisions of, and in
accordance with the requirements of, this Trust Agreement, and the Holders will
be, as of each such date, entitled to the benefits of this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges payable
by the Issuer Trust (or the Issuer Trustees on behalf of the Issuer Trust) under
the laws of the State of Delaware or any political subdivision thereof in
connection with the execution, delivery and performance by either the Property
Trustee or the Delaware Trustee, as the case may be, of this Trust Agreement.
ARTICLE VIII
THE ISSUER TRUSTEES; THE ADMINISTRATORS
SECTION 8.1. Certain Duties and Responsibilities.
(a) The duties and responsibilities of the Issuer Trustees and the
Administrators shall be as provided by this Trust Agreement and, in the case of
the Property Trustee, by the Trust Indenture Act. Notwithstanding the foregoing,
no provision of this Trust Agreement shall require the Issuer Trustees or the
Administrators to expend or risk their own funds or otherwise incur any
financial liability in the performance of any of their duties hereunder, or in
the exercise of any of their rights or powers, if they shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it or them. Whether or not
therein expressly so provided, every provision of this Trust Agreement relating
to the conduct or affecting the liability of or affording protection to the
Issuer Trustees or the Administrators shall be subject to the provisions of this
Section. Nothing in this Trust Agreement shall be construed to release an
Administrator or the Issuer Trustees from liability for his or its own negligent
action, his or its own negligent failure to act, or his or its own willful
misconduct. To the extent that, at law or in equity, an Issuer Trustee or
Administrator has duties and liabilities relating to the Issuer Trust or to the
Holders, such Issuer Trustee or Administrator shall not be liable to the Issuer
Trust or to any Holder for such Issuer Trustee's or Administrator's good faith
reliance on the provisions of this Trust Agreement. The provisions of this Trust
Agreement, to the extent that they restrict the duties and liabilities of the
Issuer Trustees and Administrators otherwise existing at law or in equity, are
agreed by the Depositor and the Holders to replace such other duties and
liabilities of the Issuer Trustees and Administrators.
(b) All payments made by the Property Trustee or a Paying Agent in
respect of the Trust Securities shall be made only from the revenue and proceeds
from the Trust Property and only to the extent that there shall be sufficient
revenue or proceeds from the Trust Property to enable the Property Trustee or a
Paying Agent to make payments in accordance with the terms hereof. Each Holder,
by his or its acceptance of a Trust Security, agrees that he or it will look
solely to the revenue and proceeds from the Trust Property to the extent legally
available for distribution to it or him as herein provided and
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that neither the Issuer Trustees nor the Administrators are personally liable to
it or him for any amount distributable in respect of any Trust Security or for
any other liability in respect of any Trust Security. This Section 8.1(b) does
not limit the liability of the Issuer Trustees expressly set forth elsewhere in
this Trust Agreement or, in the case of the Property Trustee, in the Trust
Indenture Act.
(c) The Property Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Trust Agreement (including pursuant to Section 10.10), and no implied
covenants shall be read into this Trust Agreement against the Property Trustee.
If an Event of Default has occurred (that has not been cured or waived pursuant
to Section 5.13 of the Indenture), the Property Trustee shall enforce this Trust
Agreement for the benefit of the Holders and shall exercise such of the rights
and powers vested in it by this Trust Agreement, and use the same degree of care
and skill in its exercise thereof, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Trust Agreement shall be construed to
relieve the Property Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of Default that may
have occurred:
(A) the duties and obligations of the Property
Trustee shall be determined solely by the express
provisions of this Trust Agreement (including pursuant to
Section 10.10), and the Property Trustee shall not be
liable except for the performance of such duties and
obligations as are specifically set forth in this Trust
Agreement (including pursuant to Section 10.10); and
(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may conclusively
rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Property Trustee
and conforming to the requirements of this Trust
Agreement; but in the case of any such certificates or
opinions that by any provision hereof or of the Trust
Indenture Act are specifically required to be furnished to
the Property Trustee, the Property Trustee shall be under
a duty to examine the same to determine whether or not
they conform to the requirements of this Trust Agreement;
(ii) the Property Trustee shall not be liable for any
error of judgment made in good faith by an authorized officer of
the Property Trustee, unless it shall be proved that the Property
Trustee was negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good
faith in accordance with the direction of the Holders of at least a
Majority in Liquidation Amount of the Preferred Securities relating
to the time, method and place of conducting any proceeding for any
remedy available to the Property Trustee, or exercising any trust
or power conferred upon the Property Trustee under this Trust
Agreement;
(iv) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Junior
Subordinated Debentures and the Payment Account shall be to deal
with such Property in a similar manner as the Property Trustee
deals with similar property for its own account, subject to the
protections and limitations on liability afforded to the Property
Trustee under this Trust Agreement and the Trust Indenture Act;
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(v) the Property Trustee shall not be liable for any
interest on any money received by it except as it may otherwise
agree with the Depositor; and money held by the Property Trustee
need not be segregated from other funds held by it except in
relation to the Payment Account maintained by the Property Trustee
pursuant to Section 3.1 and except to the extent otherwise required
by law;
(vi) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrators or the Depositor
with their respective duties under this Trust Agreement, nor shall
the Property Trustee be liable for the default or misconduct of any
other Issuer Trustee, the Administrators or the Depositor; and
(vii) no provision of this Trust Agreement shall require
the Property Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if the
Property Trustee shall have reasonable grounds for believing that
the repayment of such funds or liability is not reasonably assured
to it under the terms of this Trust Agreement or adequate indemnity
against such risk or liability is not reasonably assured to it.
(e) The Administrators shall not be responsible for monitoring the
compliance by the Issuer Trustees or the Depositor with their respective duties
under this Trust Agreement, nor shall either Administrator be liable for the
default or misconduct of any other Administrator, the Issuer Trustees or the
Depositor.
SECTION 8.2. Certain Notices.
Within five Business Days after the occurrence of any Event of
Default actually known to a Responsible Officer of the Property Trustee, the
Property Trustee shall transmit, in the manner and to the extent provided in
Section 10.8, notice of such Event of Default to the Holders and the
Administrators, unless such Event of Default shall have been cured or waived.
Within five Business Days after the receipt of notice of the
Depositor's exercise of its right to defer the payment of interest on the Junior
Subordinated Debentures pursuant to the Indenture, the Property Trustee shall
transmit, in the manner and to the extent provided in Section 10.8, notice of
such exercise to the Holders and the Administrators, unless such exercise shall
have been revoked.
In the event the Property Trustee receives notice of the
Depositor's exercise of its right to shorten the stated maturity of the Junior
Subordinated Debentures as provided in Section 3.16 of the Indenture, the
Property Trustee shall give notice of such shortening of the stated maturity to
the Holders at least 30 but not more than 60 days before the effective date
thereof.
SECTION 8.3. Certain Rights of Property Trustee.
Subject to the provisions of Section 8.1:
(a) the Property Trustee may rely and shall be fully protected in
acting or refraining from acting in good faith upon any resolution, Opinion of
Counsel, certificate, written representation of a Holder or transferee,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any direction or act of the Depositor contemplated by this
Trust Agreement shall be sufficiently evidenced by an Officers' Certificate;
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(c) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
re-recording, refiling or registration thereof;
(d) the Property Trustee may consult with counsel of its own
choosing (which counsel may be counsel to the Depositor or any of its
Affiliates, and may include any of its employees) and the advice of such counsel
shall be full and complete authorization and protection in respect of any action
taken suffered or omitted by it hereunder in good faith and in reliance thereon
and in accordance with such advice; the Property Trustee shall have the right at
any time to seek instructions concerning the administration of this Trust
Agreement from any court of competent jurisdiction;
(e) the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Trust Agreement at the request
or direction of any of the Holders pursuant to this Trust Agreement, unless such
Holders shall have offered to the Property Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction; provided that,
nothing contained in this Section 8.3(e) shall be taken to relieve the Property
Trustee, upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Trust Agreement;
(f) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond, debenture, note or other evidence of indebtedness or other paper
or document, unless requested in writing to do so by one or more Holders, but
the Property Trustee may make such further inquiry or investigation into such
facts or matters as it may see fit;
(g) the Property Trustee may execute any of the trusts or powers
hereunder or perform any of its duties hereunder either directly or by or
through its agents or attorneys, provided that the Property Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder;
(h) whenever in the administration of this Trust Agreement the
Property Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the Property
Trustee (i) may request instructions from the Holders (which instructions may
only be given by the Holders of the same proportion in Liquidation Amount of the
Trust Securities as would be entitled to direct the Property Trustee under the
terms of the Trust Securities in respect of such remedy, right or action), (ii)
may refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be fully protected in
acting in accordance with such instructions; and
(i) except as otherwise expressly provided by this Trust Agreement,
the Property Trustee shall not be under any obligation to take any action that
is discretionary under the provisions of this Trust Agreement.
No provision of this Trust Agreement shall be deemed to impose any
duty or obligation on any Issuer Trustee or Administrator to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on
it, in any jurisdiction in which it shall be illegal, or in which the Property
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to any Issuer Trustee or
Administrator shall be construed to be a duty.
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SECTION 8.4. Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Trust Securities
Certificates shall be taken as the statements of the Issuer Trust, and the
Issuer Trustees and the Administrators do not assume any responsibility for
their correctness. The Issuer Trustees and the Administrators shall not be
accountable for the use or application by the Depositor of the proceeds of the
Junior Subordinated Debentures.
SECTION 8.5. May Hold Securities.
Except as provided in the definition of the term "Outstanding" in
Article I, the Administrators, any Issuer Trustee or any other agent of any
Issuer Trustee or the Issuer Trust, in its individual or any other capacity, may
become the owner or pledgee of Trust Securities and, subject to Sections 8.8 and
8.13, may otherwise deal with the Issuer Trust with the same rights it would
have if it were not an Administrator, Issuer Trustee or such other agent.
SECTION 8.6. Compensation; Indemnity; Fees.
The Depositor agrees:
(a) to pay to the Issuer Trustees from time to time reasonable
compensation for all services rendered by them hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(b) to reimburse the Issuer Trustees and the Administrators upon
request for all reasonable expenses, disbursements and advances incurred or made
by the Issuer Trustees in accordance with any provision of this Trust Agreement
(including the reasonable compensation, expenses and disbursements of its agents
and counsel), except any such expense, disbursement or advance as may be
attributable to their negligence or willful misconduct; and
(c) to the fullest extent permitted by applicable law, to indemnify
and hold harmless (i) each Issuer Trustee, (ii) each Administrator, (iii) any
Affiliate of any Issuer Trustee, (iv) any officer, director, shareholder,
employee, representative or agent of any Issuer Trustee, and (v) any employee or
agent of the Issuer Trust, (referred to herein as an "Indemnified Person") from
and against any loss, damage, liability, tax (excluding income taxes, other than
taxes referred to in Sections 4.5 and 4.6 hereunder), penalty, expense or claim
of any kind or nature whatsoever incurred by such Indemnified Person arising out
of or in connection with the creation, operation or dissolution of the Issuer
Trust or any act or omission performed or omitted by such Indemnified Person in
good faith on behalf of the Issuer Trust and in a manner such Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Indemnified Person by this Trust Agreement, except that no Indemnified Person
shall be entitled to be indemnified in respect of any loss, damage or claim
incurred by such Indemnified Person by reason of bad faith, negligence or
willful misconduct with respect to such acts or omissions. The indemnification
provided to an Indemnified Party in this Trust Agreement shall not be exclusive
and nothing in this Trust Agreement shall limit any indemnification for actions
taken in connection with this Trust Agreement or otherwise which may be
available or provided to such Indemnified Party under other sources.
The provisions of this Section 8.6 shall survive the termination of
this Trust Agreement.
No Issuer Trustee may claim any lien or charge on any Trust
Property as a result of any amount due pursuant to this Section 8.6.
The Depositor, any Administrator and any Issuer Trustee may engage
in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar
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to the business of the Issuer Trust, and the Issuer Trust and the Holders of
Trust Securities shall have no rights by virtue of this Trust Agreement in and
to such independent ventures or the income or profits derived therefrom, and the
pursuit of any such venture, even if competitive with the business of the Issuer
Trust, shall not be deemed wrongful or improper. Neither the Depositor, any
Administrator, nor any Issuer Trustee shall be obligated to present any
particular investment or other opportunity to the Issuer Trust even if such
opportunity is of a character that, if presented to the Issuer Trust, could be
taken by the Issuer Trust, and the Depositor, any Administrator or any Issuer
Trustee shall have the right to take for its own account (individually or as a
partner or fiduciary) or to recommend to others any such particular investment
or other opportunity. Any Issuer Trustee may engage or be interested in any
financial or other transaction with the Depositor or any Affiliate of the
Depositor, or may act as depository for, trustee or agent for, or act on any
committee or body of holders of, securities or other obligations of the
Depositor or its Affiliates.
SECTION 8.7. Corporate Property Trustee Required; Eligibility of
Trustees and Administrators.
(a) There shall at all times be a Property Trustee hereunder with
respect to the Trust Securities. The Property Trustee shall be a Person that is
a national or state chartered bank and eligible pursuant to the Trust Indenture
Act to act as such and has a combined capital and surplus of at least
$50,000,000. If any such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of its supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Property Trustee with respect to the Trust Securities shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article VIII. At the time of appointment, the Property Trustee must have
securities rated in one of the three highest rating categories by a nationally
recognized statistical rating organization.
(b) There shall at all times be one or more Administrators
hereunder. Each Administrator shall be either a natural person who is at least
21 years of age or a legal entity that shall act through one or more persons
authorized to bind that entity. An employee, officer or Affiliate of the
Depositor may serve as an Administrator.
(c) There shall at all times be a Delaware Trustee. The Delaware
Trustee shall either be (i) a natural person who is at least 21 years of age and
a resident of the State of Delaware or (ii) a legal entity with its principal
place of business in the State of Delaware and that otherwise meets the
requirements of applicable Delaware law that shall act through one or more
persons authorized to bind such entity.
SECTION 8.8. Conflicting Interests.
(a) If the Property Trustee has or shall acquire a conflicting
interest within the meaning of the Trust Indenture Act, the Property Trustee
shall either eliminate such interest or resign, to the extent and in the manner
provided by, and subject to the provisions of, the Trust Indenture Act and this
Trust Agreement.
(b) The Guarantee Agreement and the Indenture shall be deemed to be
specifically described in this Trust Agreement for the purposes of clause (i) of
the first proviso contained in Section 310(b) of the Trust Indenture Act.
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SECTION 8.9. Co-Trustees and Separate Trustee.
(a) Unless an Event of Default shall have occurred and be
continuing, at any time or times, for the purpose of meeting the legal
requirements of the Trust Indenture Act or of any jurisdiction in which any part
of the Trust Property may at the time be located, the Property Trustee shall
have power to appoint, and upon the written request of the Property Trustee, the
Depositor and the Administrators shall for such purpose join with the Property
Trustee in the execution, delivery, and performance of all instruments and
agreements necessary or proper to appoint, one or more Persons approved by the
Property Trustee either to act as co-trustee, jointly with the Property Trustee,
of all or any part of such Trust Property, or to the extent required by law to
act as separate trustee of any such property, in either case with such powers as
may be provided in the instrument of appointment, and to vest in such Person or
Persons in the capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section. Any
co-trustee or separate trustee appointed pursuant to this Section 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:
(i) The Trust Securities shall be executed by one or
more Administrators, and the Trust Securities shall be executed and delivered
and all rights, powers, duties, and obligations hereunder in respect of the
custody of securities, cash and other personal property held by, or required to
be deposited or pledged with, the Property Trustees specified hereunder, shall
be exercised, solely by the Property Trustee and not by such co-trustee or
separate trustee.
(ii) The rights, powers, duties, and obligations hereby
conferred or imposed upon the Property Trustee in respect of any property
covered by such appointment shall be conferred or imposed upon and exercised or
performed by the Property Trustee and such co-trustee or separate trustee
jointly, as shall be provided in the instrument appointing such co-trustee or
separate trustee, except to the extent that under any law of any jurisdiction in
which any particular act is to be performed, the Property Trustee shall be
incompetent or unqualified to perform such act, in which event such rights,
powers, duties and obligations shall be exercised and performed by such
co-trustee or separate trustee.
(iii) The Property Trustee at any time, by an instrument
in writing executed by it, with the written concurrence of the Depositor, may
accept the resignation of or remove any co-trustee or separate trustee appointed
under this Section, and, in case a Debenture Event of Default has occurred and
is continuing, the Property Trustee shall have power to accept the resignation
of, or remove, any such co-trustee or separate trustee without the concurrence
of the Depositor. Upon the written request of the Property Trustee, the
Depositor shall join with the Property Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to effectuate
such resignation or removal. A successor to any co-trustee or separate trustee
so resigned or removed may be appointed in the manner provided in this Section
8.9.
(iv) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Property Trustee or
any other trustee hereunder.
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(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.
SECTION 8.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of any Issuer Trustee (the "Relevant
Trustee") and no appointment of a successor Issuer Trustee pursuant to this
Article VIII shall become effective until the acceptance of appointment by the
successor Issuer Trustee in accordance with the applicable requirements of
Section 8.11.
(b) Subject to Section 8.10(a), a Relevant Trustee may resign at
any time by giving written notice thereof to the Holders. The Relevant Trustee
shall appoint a successor by requesting from at least three Persons meeting the
eligibility requirements its expenses and charges to serve as the successor
Issuer Trustee on a form provided by the Administrators, and selecting the
Person who agrees to the lowest expenses and charges subject to the prior
consent of the Depositor which consent shall not be unreasonably withheld. If
the instrument of acceptance by the successor Issuer Trustee required by Section
8.11 shall not have been delivered to the Relevant Trustee within 60 days after
the giving of such notice of resignation, the Relevant Trustee may petition, at
the expense of the Issuer Trust, any court of competent jurisdiction for the
appointment of a successor Issuer Trustee.
(c) The Property Trustee or the Delaware Trustee may be removed at
any time by Act of the Holders of at least a Majority in Liquidation Amount of
the Preferred Securities, delivered to the Relevant Trustee (in its individual
capacity and on behalf of the Issuer Trust) (i) for cause, or (ii) if a
Debenture Event of Default shall have occurred and be continuing at any time.
(d) If a resigning Relevant Trustee shall fail to appoint a
successor, or if a Relevant Trustee shall be removed or become incapable of
acting as Issuer Trustee, or if any vacancy shall occur in the office of any
Issuer Trustee for any cause, the Holders of the Preferred Securities, by Act of
the Holders of record of not less than 25% aggregate Liquidation Amount of the
Preferred Securities than Outstanding delivered to such Relevant Trustee, shall
promptly appoint a successor Issuer Trustee or Trustees, and such successor
Issuer Trustee shall comply with the applicable requirements of Section 8.11. If
no successor Issuer Trustee shall have been so appointed by the Holders of the
Preferred Securities and accepted appointment in the manner required by Section
8.11, any Holder, on behalf of himself and all others similarly situated, or any
other Issuer Trustee, may petition any court in the State of Delaware for the
appointment of a successor Issuer Trustee.
(e) The Property Trustee shall give notice of each resignation and
each removal of a Relevant Trustee and each appointment of a successor Issuer
Trustee to all Holders in the manner provided in Section 10.8 and shall give
notice to the Depositor and to the Administrators. Each notice shall include the
name of the Relevant Trustee and the address of its Corporate Trust Office if it
is the Property Trustee.
(f) Notwithstanding the foregoing or any other provision of this
Trust Agreement, in the event any Delaware Trustee who is a natural person dies
or becomes, in the opinion of the Holders of the Common Securities, incompetent
or incapacitated, the vacancy created by such death, incompetence or incapacity
may be filled by the Property Trustee following the procedures regarding
expenses and charges set forth above (with the successor in each case being a
Person who satisfies the eligibility requirement for Delaware Trustee, set forth
in Section 8.7).
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SECTION 8.11. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Issuer
Trustee, the retiring Relevant Trustee and each such successor Issuer Trustee
with respect to the Trust Securities shall execute, acknowledge and deliver an
instrument wherein each successor Issuer Trustee shall accept such appointment
and which shall contain such provisions as shall be necessary or desirable to
transfer and confirm to, and to vest in, each successor Issuer Trustee all the
rights, powers, trusts and duties of the retiring Relevant Trustee with respect
to the Trust Securities and the Issuer Trust, and upon the execution and
delivery of such instrument the resignation or removal of the retiring Relevant
Trustee shall become effective to the extent provided therein and each such
successor Issuer Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the Relevant
Trustee; but, on request of the Issuer Trust or any successor Issuer Trustee
such Relevant Trustee shall duly assign, transfer and deliver to such successor
Issuer Trustee all Trust Property, all proceeds thereof and money held by such
Relevant Trustee hereunder with respect to the Trust Securities and the Issuer
Trust.
(b) Upon request of any such successor Issuer Trustee, the Issuer
Trust shall execute any and all instruments for more fully and certainly vesting
in and confirming to such successor Issuer Trustee all such rights, powers and
trusts referred to in the first or second preceding paragraph, as the case may
be.
(c) No successor Issuer Trustee shall accept its appointment unless
at the time of such acceptance such successor Issuer Trustee shall be qualified
and eligible under this Article VIII.
SECTION 8.12. Merger, Conversion, Consolidation or Succession to
Business.
Any Person into which the Property Trustee or the Delaware Trustee
may be merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which such Relevant
Trustee shall be a party, or any Person succeeding to all or substantially all
the corporate trust business of such Relevant Trustee, shall be the successor of
such Relevant Trustee hereunder, provided that such Person shall be otherwise
qualified and eligible under this Article VIII, without the execution or filing
of any paper or any further act on the part of any of the parties hereto.
SECTION 8.13. Preferential Collection of Claims Against Depositor
or Issuer Trust.
If and when the Property Trustee shall be or become a creditor of
the Depositor (or any other obligor upon Junior Subordinated Debentures or the
Trust Securities), the Property Trustee shall be subject to the provisions of
the Trust Indenture Act regarding the collection of claims against the Depositor
or the Issuer Trust (or any such other obligor) as is required by the Trust
Indenture Act.
SECTION 8.14. Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other similar judicial
proceeding relative to the Issuer Trust or any other obligor upon the Trust
Securities or the property of the Issuer Trust or of such other obligor, the
Property Trustee (irrespective of whether any Distributions on the Trust
Securities shall then be due and payable and irrespective of whether the
Property Trustee shall have made any demand on the Issuer Trust for the payment
of any past due Distributions) shall be entitled and empowered, to the fullest
extent permitted by law, by intervention in such proceeding or otherwise:
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(a) to file and prove a claim for the whole amount of any
Distributions owing and unpaid in respect of the Trust Securities and to file
such other papers or documents as may be necessary or advisable in order to have
the claims of the Property Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel) and of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Property Trustee and, in the event the Property Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Property Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Property Trustee, its agents and counsel, and
any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or compensation affecting
the Trust Securities or the rights of any Holder thereof or to authorize the
Property Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 8.15. Reports by Property Trustee.
(a) Within 60 days of January 31 of each year commencing with
January 31, 1999, the Property Trustee shall transmit to all Holders in
accordance with Section 10.8, and to the Depositor, a brief report dated as of
the immediately preceding January 31 with respect to:
(i) its eligibility under Section 8.7 or, in lieu thereof,
if to the best of its knowledge it has continued to be eligible
under said Section, a written statement to such effect; and
(ii) any change in the property and funds in its
possession as Property Trustee since the date of its last report
and any action taken by the Property Trustee in the performance of
its duties hereunder which it has not previously reported and which
in its opinion materially affects the Trust Securities.
(b) In addition the Property Trustee shall transmit to Holders such
reports concerning the Property Trustee and its actions under this Trust
Agreement as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto as set forth in Section 10.10 of
this Trust Agreement.
(c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Property Trustee with the Depositor.
SECTION 8.16. Reports to the Property Trustee.
The Depositor and the Administrators on behalf of the Issuer Trust
shall provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust Indenture Act and the compliance
certificate required by Section 314(a) of the Trust Indenture Act in the form,
in the manner and at the times required by Section 314 of the Trust Indenture
Act, as set forth in Section 10.10 of this Trust Agreement. The Depositor and
the Administrators shall annually file with the Property Trustee a certificate
specifying whether such Person is in compliance with all the terms and covenants
applicable to such Person hereunder.
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SECTION 8.17. Evidence of Compliance with Conditions Precedent.
Each of the Depositor and the Administrators on behalf of the
Issuer Trust shall provide to the Property Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Trust Agreement that
relate to any of the matters set forth in Section 314(c) of the Trust Indenture
Act as set forth in Section 10.10 of this Trust Agreement. Any certificate or
opinion required to be given by an officer pursuant to Section 314(c)(1) of the
Trust Indenture Act shall be given in the form of an Officers' Certificate.
SECTION 8.18. Number of Issuer Trustees.
(a) The number of Issuer Trustees shall be two. The Property
Trustee and the Delaware Trustee may be the same Person, in which event the
number of Issuer Trustees shall be one.
(b) If an Issuer Trustee ceases to hold office for any reason, a
vacancy shall occur. The vacancy shall be filled with an Issuer Trustee
appointed in accordance with Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of an Issuer Trustee shall not
operate to dissolve, terminate or annul the Issuer Trust or terminate this Trust
Agreement.
SECTION 8.19. Delegation of Power.
(a) Any Administrator may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
2.7(a) or making any governmental filing.
(b) The Administrators shall have power to delegate from time to
time to such of their number the doing of such things and the execution of such
instruments either in the name of the Issuer Trust or the names of the
Administrators or otherwise as the Administrators may deem expedient, to the
extent such delegation is not prohibited by applicable law or contrary to the
provisions of this Trust Agreement.
SECTION 8.20. Appointment of Administrators.
(a) The Administrators (other than the initial Administrators)
shall be appointed by the Holders of a Majority in Liquidation Amount of the
Common Securities and all Administrators (including the initial Administrators)
may be removed by the Holders of a Majority in Liquidation Amount of the Common
Securities or may resign at any time. Each Administrator shall sign an agreement
agreeing to comply with the terms of this Trust Agreement. If at any time there
is no Administrator, the Property Trustee or any Holder who has been a Holder of
Trust Securities for at least six months may petition any court of competent
jurisdiction for the appointment of one or more Administrators.
(b) Whenever a vacancy in the number of Administrators shall occur,
until such vacancy is filled by the appointment of an Administrator in
accordance with this Section 8.20, the Administrators in office, regardless of
their number (and notwithstanding any other provision of this Trust Agreement),
shall have all the powers granted to the Administrators and shall discharge all
the duties imposed upon the Administrators by this Trust Agreement.
(c) Notwithstanding the foregoing, or any other provision of this
Trust Agreement, in the event any Administrator or a Delaware Trustee who is a
natural person dies or becomes, in the opinion of the Holders of a Majority in
Liquidation Amount of the Common Securities, incompetent, or incapacitated, the
vacancy created by such death, incompetence or incapacity may be filled by the
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remaining Administrators, if there were at least two of them prior to such
vacancy, and by the Depositor, if there were not two such Administrators
immediately prior to such vacancy (with the successor in each case being a
Person who satisfies the eligibility requirement for Administrators or Delaware
Trustee, as the case may be, set forth in Section 8.7).
(d) Except as otherwise provided in this Trust Agreement, or by
applicable law, any one Administrator may execute any document or otherwise take
any action which the Administrators are authorized to take under this Trust
Agreement.
ARTICLE IX
DISSOLUTION, LIQUIDATION AND MERGER
SECTION 9.1. Dissolution Upon Expiration Date.
Unless earlier dissolved, the Issuer Trust shall automatically
dissolve on ______________, 2029 (the "Expiration Date").
SECTION 9.2. Early Dissolution.
The first to occur of any of the following events is an "Early
Termination Event", upon the occurrence of which the Issuer Trust shall
dissolve:
(a) the occurrence of any Bankruptcy Event with respect to the
Depositor unless the Depositor shall transfer the Common Securities as provided
by Section 5.11, in which case this provision shall refer instead to any
Bankruptcy Event with respect to the successor Holder of the Common Securities;
(b) delivery of the written direction to the Property Trustee from
the Holder of the Common Securities at any time to dissolve the Issuer Trust
and, after satisfaction of liabilities to creditors of the Issuer Trust as
provided by applicable law, to distribute the Junior Subordinated Debentures to
Holders in exchange for the Preferred Securities (which direction, subject to
Section 9.4(a), is optional and wholly within the discretion of the Holder of
the Common Securities);
(c) the redemption of all of the Preferred Securities in connection
with the redemption of all the Junior Subordinated Debentures; and
(d) the entry of an order for dissolution of the Issuer Trust by a
court of competent jurisdiction.
SECTION 9.3. Termination.
The respective obligations and responsibilities of the Issuer
Trustees, the Administrators and the Issuer Trust created and continued hereby
shall terminate upon the latest to occur of the following: (a) the distribution
by the Property Trustee to Holders of all amounts required to be distributed
hereunder upon the liquidation of the Issuer Trust pursuant to Section 9.4, or
upon the redemption of all of the Trust Securities pursuant to Section 4.2, (b)
the payment of any expenses owed by the Issuer Trust, (c) the discharge of all
administrative duties of the Administrators, including the performance of any
tax reporting obligations with respect to the Issuer Trust or the Holders and
(d) the filing of a certificate of cancellation with the Delaware Secretary of
State pursuant to Section 3810 of the Delaware Business Trust Act.
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SECTION 9.4. Liquidation.
(a) If an Early Termination Event specified in clause (a), (b) or
(d) of Section 9.2 occurs or upon the Expiration Date, the Issuer Trust shall be
liquidated by the Property Trustee as expeditiously as the Property Trustee
determines to be possible by distributing, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, to each Holder a
Like Amount of Junior Subordinated Debentures, subject to Section 9.4(d). Notice
of liquidation shall be given by the Property Trustee by first-class mail,
postage prepaid, mailed not later than 15 nor more than 45 days prior to the
Liquidation Date to each Holder of Trust Securities at such Holder's address
appearing in the Securities Register. All notices of liquidation shall:
(i) state the Liquidation Date;
(ii) state that, from and after the Liquidation Date, the
Trust Securities will no longer be deemed to be Outstanding and any Trust
Securities Certificates not surrendered for exchange will be deemed to represent
a Like Amount of Junior Subordinated Debentures; and
(iii) provide such information with respect to the
mechanics by which Holders may exchange Trust Securities Certificates for Junior
Subordinated Debentures, or if Section 9.4(d) applies receive a Liquidation
Distribution, as the Administrators or the Property Trustee shall deem
appropriate.
(b) Except where Section 9.2(c) or 9.4(d) applies, in order to
effect the liquidation of the Issuer Trust and distribution of the Junior
Subordinated Debentures to Holders, the Property Trustee shall establish a
record date for such distribution (which shall be not more than 30 days prior to
the Liquidation Date) and, either itself acting as exchange agent or through the
appointment of a separate exchange agent, shall establish such procedures as it
shall deem appropriate to effect the distribution of Junior Subordinated
Debentures in exchange for the Outstanding Trust Securities Certificates.
(c) Except where Section 9.2(c) or 9.4(d) applies, after the
Liquidation Date, (i) the Trust Securities will no longer be deemed to be
Outstanding, (ii) the Clearing Agency for the Preferred Securities or its
nominee, as the registered Holder of the Global Preferred Securities
Certificate, shall receive a registered global certificate or certificates
representing the Junior Subordinated Debentures to be delivered upon such
distribution with respect to Preferred Securities held by the Clearing Agency or
its nominee, and, (iii) any Trust Securities Certificates not held by the
Clearing Agency for the Preferred Securities or its nominee as specified in
clause (ii) above will be deemed to represent Junior Subordinated Debentures
having a principal amount equal to the stated Liquidation Amount of the Trust
Securities represented thereby and bearing accrued and unpaid interest in an
amount equal to the accumulated and unpaid Distributions on such Trust
Securities until such certificates are presented to the Securities Registrar for
transfer or reissuance.
(d) If, notwithstanding the other provisions of this Section 9.4,
whether because of an order for dissolution entered by a court of competent
jurisdiction or otherwise, distribution of the Junior Subordinated Debentures is
not practical, or if any Early Termination Event specified in clause (c) of
Section 9.2 occurs, the Trust Property shall be liquidated, and the Issuer Trust
shall be liquidated by the Property Trustee in such manner as the Property
Trustee determines. In such event, on the date of the dissolution of the Issuer
Trust, Holders will be entitled to receive out of the assets of the Issuer Trust
available for distribution to Holders, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, an amount equal to
the aggregate of the Liquidation Amount per Trust Security plus accumulated and
unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If, upon any such dissolution, the Liquidation
Distribution can be paid only in part because the Issuer Trust has insufficient
assets available to pay in full the aggregate Liquidation Distribution, then,
subject to the next succeeding sentence, the amounts payable by the Issuer Trust
on the Trust Securities shall be paid on a pro rata basis (based upon
Liquidation Amounts). The
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Holders of the Common Securities will be entitled to receive Liquidation
Distributions upon any such liquidation pro rata (determined as aforesaid) with
Holders of Preferred Securities, except that, if a Debenture Event of Default
has occurred and is continuing, the Preferred Securities shall have a priority
over the Common Securities as provided in Section 4.3.
(e) Following the dissolution of the Issuer Trust and after the
completion of the winding up of the affairs of the Issuer Trust, one of the
Issuer Trustees shall file a certificate of cancellation with the Delaware
Secretary of State.
SECTION 9.5. Mergers, Consolidations, Amalgamations or Replacements
of the Issuer Trust.
The Issuer Trust may not merge with or into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to, any entity, except pursuant to this
Section 9.5 and Section 9.4. At the request of the Holders of the Common
Securities, and with the consent of the Holders of at least a Majority in
Liquidation Amount of the Preferred Securities, but without the consent of the
Delaware Trustee or the Property Trustee, the Issuer Trust may merge with or
into, consolidate, amalgamate, or be replaced by or convey, transfer or lease
its properties and assets substantially as an entirety to a trust organized as
such under the laws of any state; provided, however, that (a) such successor
entity either (i) expressly assumes all of the obligations of the Issuer Trust
with respect to the Preferred Securities or (ii) substitutes for the Preferred
Securities other securities having substantially the same terms as the Preferred
Securities (the "Successor Preferred Securities") so long as the Successor
Securities have the same priority as the Preferred Securities with respect to
distributions and payments upon liquidation, redemption and otherwise, (b) a
trustee of such successor entity possessing the same powers and duties as the
Property Trustee is appointed to hold the Junior Subordinated Debentures, (c)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization if the Preferred Securities were rated by any nationally recognized
statistical rating organization immediately prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, (d) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of the
Preferred Securities (including any Successor Securities) in any material
respect, (e) such successor entity has a purpose substantially identical to that
of the Issuer Trust, (f) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Issuer Trustee has received an
Opinion of Counsel from independent counsel experienced in such matters to the
effect that (i) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights preferences
and privileges of the holders of the Preferred Securities (including any
Successor Preferred Securities) in any material respect, and (ii) following such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease,
neither the Issuer Trust nor such successor entity will be required to register
as an "investment company" under the Investment Company Act and (g) the
Depositor or any permitted transferee to whom it has transferred the Common
Securities hereunder owns all of the common securities of such successor entity
and guarantees the obligations of such successor entity under the Successor
Preferred Securities at least to the extent provided by the Guarantee Agreement.
Notwithstanding the foregoing, the Issuer Trust shall not, except with the
consent of Holders of 100% in Liquidation Amount of the Preferred Securities,
consolidate, amalgamate, merge with or into, or be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Issuer Trust or the successor
entity to be taxable as a corporation for United States federal income tax
purposes. Any merger or similar agreement shall be executed by the
Administrators on behalf of the Issuer Trust.
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ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Holders.
Except as set forth in Section 9.2, the bankruptcy, dissolution,
termination, death or incapacity of any Person having an interest, beneficial or
otherwise, in Trust Securities shall not operate to terminate this Trust
Agreement or dissolve, terminate or annul the Issuer Trust, nor entitle the
legal representatives or heirs of such person or any Holder for such Person, to
claim an accounting, take any action or bring any proceeding in any court for a
partition or winding-up of the arrangements contemplated hereby, nor otherwise
affect the rights, obligations and liabilities of the parties hereto or any of
them.
SECTION 10.2. Amendment.
(a) This Trust Agreement may be amended from time to time by the
Property Trustee, the Administrators or the Holders of a Majority in Liquidation
Amount of the Common Securities, without the consent of any Holder of the
Preferred Securities, (i) to cure any ambiguity, correct or supplement any
provision herein which may be inconsistent with any other provision herein, or
to make any other provisions with respect to matters or questions arising under
this Trust Agreement; provided, however, that such amendment shall not adversely
affect in any material respect the interests of any Holder or (ii) to modify,
eliminate or add to any provisions of this Trust Agreement to such extent as
shall be necessary to ensure that the Issuer Trust will not be taxable as a
corporation for United States federal income tax purposes at any time that any
Trust Securities are Outstanding or to ensure that the Issuer Trust will not be
required to register as an investment company under the Investment Company Act.
(b) Except as provided in Section 6.1(c) or Section 10.2(c), any
provision of this Trust Agreement may be amended by the Property Trustee, the
Administrators, and the Holders of a Majority in Liquidation Amount of the
Common Securities with (i) the consent of Holders of at least a Majority in
Liquidation Amount of the Preferred Securities and (ii) receipt by the Issuer
Trustees of an Opinion of Counsel to the effect that such amendment or the
exercise of any power granted to the Issuer Trustees in accordance with such
amendment will not cause the Issuer Trust to be taxable as a corporation for
United States federal income tax purposes or affect the Issuer Trust's exemption
from status of an "investment company" under the Investment Company Act.
(c) In addition to and notwithstanding any other provision in this
Trust Agreement, without the consent of each affected Holder (such consent being
obtained in accordance with Section 6.3 or 6.6 hereof), this Trust Agreement may
not be amended to (i) change the amount or timing of any Distribution on the
Trust Securities or otherwise adversely affect the amount of any Distribution
required to be made in respect of the Trust Securities as of a specified date or
(ii) restrict the right of a Holder to institute suit for the enforcement of any
such payment on or after such date. Notwithstanding any other provision herein,
without the unanimous consent of the Holders (such consent being obtained in
accordance with Section 6.3 or 6.6) this Section 10.2(c) may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement,
no Issuer Trustee shall enter into or consent to any amendment to this Trust
Agreement which would cause the Issuer Trust to fail or cease to qualify for the
exemption from status as an "investment company" under the Investment Company
Act or be taxable as a corporation for United States federal income tax
purposes.
(e) Notwithstanding anything in this Trust Agreement to the
contrary, without the consent of the Depositor and the Administrators, this
Trust Agreement may not be amended in a manner which imposes any additional
obligation on the Depositor or the Administrators.
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(f) In the event that any amendment to this Trust Agreement is
made, the Administrators or the Property Trustee shall promptly provide to the
Depositor a copy of such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be
required to enter into any amendment to this Trust Agreement which affects its
own rights, duties or immunities under this Trust Agreement. The Property
Trustee shall be entitled to receive an Opinion of Counsel and an Officers'
Certificate stating that any amendment to this Trust Agreement is in compliance
with this Trust Agreement.
(h) Any amendments to this Trust Agreement pursuant to Section
10.2(a) shall become effective when notice of such amendment is given to the
Holders of the Trust Securities.
SECTION 10.3. Separability.
In case any provision in this Trust Agreement or in the Trust
Securities Certificates shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 10.4. Governing Law.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
HOLDERS, THE ISSUER TRUST, THE DEPOSITOR, THE ISSUER TRUSTEES AND THE
ADMINISTRATORS WITH RESPECT TO THIS TRUST AGREEMENT AND THE TRUST SECURITIES
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
DELAWARE, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
SECTION 10.5. Payments Due on Non-Business Day.
If the date fixed for any payment on any Trust Security shall be a
day that is not a Business Day, then such payment need not be made on such date
but may be made on the next succeeding day that is a Business Day (except as
otherwise provided in Sections 4.2(d)), except that,if such Business Day is in
the next succeeding calendar year, payment on any Trust Security shall be made
on the immediately preceding Business Day, in each case, with the same force and
effect as though made on the date fixed for such payment, and no Distributions
shall accumulate on such unpaid amount for the period after such date.
SECTION 10.6. Successors.
This Trust Agreement shall be binding upon and shall inure to the
benefit of any successor to the Depositor, the Issuer Trust, the Administrators
and any Issuer Trustee, including any successor by operation of law. Except in
connection with a consolidation, merger or sale involving the Depositor that is
permitted under Article VIII of the Indenture and pursuant to which the assignee
agrees in writing to perform the Depositor's obligations hereunder, the
Depositor shall not assign its obligations hereunder.
SECTION 10.7. Headings.
The Article and Section headings are for convenience only and shall
not affect the construction of this Trust Agreement.
46
<PAGE>
SECTION 10.8. Reports, Notices and Demands.
(a) Any report, notice, demand or other communication that by any
provision of this Trust Agreement is required or permitted to be given or served
to or upon any Holder or the Depositor may be given or served in writing by
deposit thereof, first class postage prepaid, in the United States mail, hand
delivery or facsimile transmission, in each case, addressed, (i) in the case of
a Holder of Preferred Securities, to such Holder as such Holder's name and
address may appear on the Securities Register; and (ii) in the case of the
Holder of Common Securities or the Depositor, to Sun Bancorp, Inc., 226 Landis
Avenue, Vineland, New Jersey 08360, Attention: Office of the Secretary,
facsimile no.: (609) 691- 7131 or to such other address as may be specified in a
written notice by the Depositor to the Property Trustee. Such notice, demand or
other communication to or upon a Holder shall be deemed to have been
sufficiently given or made, for all purposes, upon hand delivery, mailing or
transmission. Such notice, demand or other communication to or upon the
Depositor shall be deemed to have been sufficiently given or made only upon
actual receipt of the writing by the Depositor.
(b) Any notice, demand or other communication which by any
provision of this Trust Agreement is required or permitted to be given or served
to or upon the Issuer Trust, the Property Trustee, the Delaware Trustee, the
Administrators, or the Issuer Trust shall be given in writing addressed (until
another address is published by the Issuer Trust) as follows: (a) with respect
to the Property Trustee to Bankers Trust Company, Four Albany Street, 4th Floor,
New York, NY 10006, Attention: Corporate Trust and Agency Group Corporate Market
Services; (b) with respect to the Delaware Trustee to Bankers Trust (Delaware),
1001 Jefferson Street, Suite 550, Wilmington, Delaware 19801, Attention: Lisa
Wilkins; and (c) with respect to the Administrators, to them at the address
above for notices to the Depositor, marked "Attention: Office of the Secretary".
Such notice, demand or other communication to or upon the Issuer Trust or the
Property Trustee shall be deemed to have been sufficiently given or made only
upon actual receipt of the writing by the Issuer Trust, the Property Trustee, or
such Administrator.
SECTION 10.9. Agreement Not to Petition.
Each of the Issuer Trustees, the Administrators and the Depositor
agree for the benefit of the Holders that, until at least one year and one day
after the Issuer Trust has been terminated in accordance with Article IX, they
shall not file, or join in the filing of, a petition against the Issuer Trust
under any bankruptcy, insolvency, reorganization or other similar law
(including, without limitation, the United States Bankruptcy Code)
(collectively, "Bankruptcy Laws") or otherwise join in the commencement of any
proceeding against the Issuer Trust under any Bankruptcy Law. In the event the
Depositor takes action in violation of this Section 10.9, the Property Trustee
agrees, for the benefit of Holders, that at the expense of the Depositor, it
shall file an answer with the bankruptcy court or otherwise properly contest the
filing of such petition by the Depositor against the Issuer Trust or the
commencement of such action and raise the defense that the Depositor has agreed
in writing not to take such action and should be estopped and precluded
therefrom and such other defenses, if any, as counsel for the Issuer Trustee or
the Issuer Trust may assert. If any Issuer Trustee or Administrator takes action
in violation of this Section 10.9, the Depositor agrees, for the benefit of the
Holders, that at the expense of the Depositor, it shall file an answer with the
bankruptcy court or otherwise properly contest the filing of such petition by
such Person against the Depositor or the commencement of such action and raise
the defense that such Person has agreed in writing not to take such action and
should be estopped and precluded therefrom and such other defenses, if any, as
counsel for the Depositor or the Issuer Trust may assert. The provisions of this
Section 10.9 shall survive the termination of this Trust Agreement.
47
<PAGE>
SECTION 10.10. Trust Indenture Act; Conflict with Trust Indenture
Act.
(a) Trust Indenture Act; Application. (i) This Trust Agreement is
subject to the provisions of the Trust Indenture Act that are required to be a
part of this Trust Agreement and shall, to the extent applicable, be governed by
such provisions; (ii) if and to the extent that any provision of this Trust
Agreement limits, qualifies or conflicts with the duties imposed by Sections 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control; (iii) for purposes of this Trust Agreement, the Property Trustee, to
the extent permitted by applicable law and/or the rules and regulations of the
Commission, shall be the only Issuer Trustee which is a trustee for the purposes
of the Trust Indenture Act; and (iv) the application of the Trust Indenture Act
to this Trust Agreement shall not affect the nature of the Preferred Securities
and the Common Securities as equity securities representing undivided beneficial
interests in the assets of the Issuer Trust.
(b) Lists of Holders of Preferred Securities. (i) Each of the
Depositor and the Administrators on behalf of the Issuer Trust shall provide the
Property Trustee with such information as is required under Section 312(a) of
the Trust Indenture Act at the times and in the manner provided in Section
312(a) and (ii) the Property Trustee shall comply with its obligations under
Sections 310(b), 311 and 312(b) of the Trust Indenture Act.
(c) Reports by the Property Trustee. Within 60 days after January
31 of each year, the Property Trustee shall provide to the Holders of the Trust
Securities such reports as are required by Section 313 of the Trust Indenture
Act, if any, in the form, in the manner and at the times provided by Section 313
of the Trust Indenture Act. The Property Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
(d) Periodic Reports to Property Trustee. Each of the Depositor and
the Administrators on behalf of the Issuer Trust shall provide to the Property
Trustee, the Commission and the Holders of the Trust Securities, as applicable,
such documents, reports and information as required by Section 314(a)(1) -(3)
(if any) of the Trust Indenture Act and the compliance certificates required by
Section 314(a)(4) and (c) of the Trust Indenture Act (provided that any
certificate to be provided pursuant to Section 314(a)(4) of the Trust Indenture
Act shall be provided within 120 days of the end of each fiscal year of the
Issuer Trust).
(e) Evidence of Compliance with Conditions Precedent. Each of the
Depositor and the Administrators on behalf of the Issuer Trust shall provide to
the Property Trustee such evidence of compliance with any conditions precedent,
if any, provided for in this Trust Agreement which relate to any of the matters
set forth in Section 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given pursuant to Section 314(c) shall comply with
Section 314(e) of the Trust Indenture Act.
(f) Disclosure of Information. The disclosure of information as to
the names and addresses of the Holders of Trust Securities in accordance with
Section 312 of the Trust Indenture Act, regardless of the source from which such
information was derived, shall not be deemed to be a violation of any existing
law or any law hereafter enacted which does not specifically refer to Section
312 of the Trust Indenture Act, nor shall the Property Trustee be held
accountable by reason of mailing any material pursuant to a request made under
Section 312(b) of the Trust Indenture Act.
SECTION 10.11. Acceptance of Terms of Trust Agreement, Guarantee
and Indenture.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST
THEREIN BY OR ON BEHALF OF A HOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY
SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL
ACCEPTANCE BY THE HOLDER AND ALL OTHERS HAVING A
48
<PAGE>
BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF
THIS TRUST AGREEMENT, THE GUARANTEE AGREEMENT AND THE INDENTURE, AND THE
AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE
AGREEMENT AND THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF THE ISSUER
TRUST, SUCH HOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS TRUST
AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE ISSUER TRUST
AND SUCH HOLDER AND SUCH OTHERS.
SECTION 10.12. Counterparts.
This Trust Agreement may contain more than one counterpart of the
signature page and this Trust Agreement may be executed by the affixing of the
signature of each of the Issuer Trustees to one of such counterpart signature
pages. All of such counterpart signature pages shall be read as though one, and
they shall have the same force and effect as though all of the signers had
signed a single signature paper.
49
<PAGE>
EXHIBIT A
[INSERT CERTIFICATE OF TRUST FILED WITH DELAWARE SECRETARY OF STATE]
1
<PAGE>
EXHIBIT B
[INSERT FORM OF CERTIFICATE DEPOSITARY AGREEMENT]
2
<PAGE>
EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO A SUCCESSOR IN INTEREST TO
THE DEPOSITOR OR AN AFFILIATE OF THE DEPOSITOR IN COMPLIANCE WITH
APPLICABLE LAW AND SECTION 5.11 OF THE TRUST AGREEMENT
Certificate Number Number of Common Securities
C-__
Certificate Evidencing Common Securities
of
Sun Capital Trust II
______% Common Securities
(liquidation amount $10 per Common Security)
Sun Capital Trust II, a statutory business trust created under the
laws of the State of Delaware (the "Issuer Trust"), hereby certifies that Sun
Bancorp, Inc. (the "Holder") is the registered owner of _________ (_____) common
securities of the Issuer Trust representing undivided beneficial interests in
the assets of the Issuer Trust and has designated the ____% Common Securities
(liquidation amount $10 per Common Security) (the "Common Securities"). Except
in accordance with Section 5.11 of the Trust Agreement (as defined below) the
Common Securities are not transferable and any attempted transfer hereof other
than in accordance therewith shall be void. The designations, rights,
privileges, restrictions, preferences and other terms and provisions of the
Common Securities are set forth in, and this certificate and the Common
Securities represented hereby are issued and shall in all respects be subject to
the terms and provisions of, the Amended and Restated Trust Agreement of the
Issuer Trust, dated as of _______________, 1998, as the same may be amended from
time to time (the "Trust Agreement") among Sun Bancorp, Inc. as Depositor,
Bankers Trust Company, as Property Trustee, Bankers Trust (Delaware), as
Delaware Trustee, and the Holders of Trust Securities, including the designation
of the terms of the Common Securities as set forth therein. The Issuer Trust
will furnish a copy of the Trust Agreement to the Holder without charge upon
written request to the Issuer Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
Terms used but not defined herein have the meanings set forth in
the Trust Agreement.
3
<PAGE>
IN WITNESS WHEREOF, one of the Administrators of the Issuer Trust has
executed this certificate this ____day of ____________, _____.
SUN CAPITAL TRUST II
By: ________________________
Name:
Administrator
AUTHENTICATED AND REGISTERED:
BANKERS TRUST COMPANY,
as Property Trustee and Securities Registrar
By: __________________________
Name:
Signatory Officer
4
<PAGE>
EXHIBIT D
[IF THE PREFERRED SECURITIES CERTIFICATE IS TO BE A GLOBAL
PREFERRED SECURITIES CERTIFICATE, INSERT -- This Preferred Securities
Certificate is a Global Preferred Securities Certificate within the meaning of
the Trust Agreement hereinafter referred to and is registered in the name of a
Depositary or a nominee of a Depositary. This Preferred Securities Certificate
is exchangeable for Preferred Securities Certificates registered in the name of
a person other than the Depositary or its nominee only in the limited
circumstances described in the Trust Agreement and may not be transferred except
as a whole by the Depositary to a nominee of the Depositary or by a nominee of
the Depositary to the Depositary or another nominee of the Depositary, except in
the limited circumstances described in the Trust Agreement.
Unless this Preferred Securities Certificate is presented by an
authorized representative of The Depository Trust Company, a New York
Corporation ("DTC"), to Sun Capital Trust II or its agent for registration of
transfer, exchange or payment, and any Preferred Security Certificate issued is
registered in the name of such nominee as is requested by an authorized
representative of DTC (and any payment is made to such entity as is requested by
an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO A PERSON IS WRONGFUL inasmuch as the registered
owner hereof, has an interest herein.]
5
<PAGE>
CERTIFICATE NUMBER NUMBER OF PREFERRED SECURITIES
P-__
CUSIP NO. ________________________
CERTIFICATE EVIDENCING PREFERRED SECURITIES
OF
SUN CAPITAL TRUST II
_____% PREFERRED SECURITIES
(LIQUIDATION AMOUNT $10 PER PREFERRED SECURITY)
Sun Capital Trust II, a statutory business trust created under the
laws of the State of Delaware (the "Issuer Trust"), hereby certifies that
_______________ (the "Holder") is the registered owner of ( ) preferred
securities of the Issuer Trust representing a preferred undivided beneficial
interest in the assets of the Issuer Trust and designated the Sun Capital Trust
II _____% Preferred Securities (liquidation amount $10 per Preferred Security)
(the "Preferred Securities"). The Preferred Securities are transferable on the
books and records of the Issuer Trust, in person or by a duly authorized
attorney, upon surrender of this certificate duly endorsed and in proper form
for transfer as provided in Section 5.5 of the Trust Agreement (as defined
below). The designations, rights, privileges, restrictions, preferences and
other terms and provisions of the Preferred Securities are set forth in, and
this certificate and the Preferred Securities represented hereby are issued and
shall in all respects be subject to the terms and provisions of, the Amended and
Restated Trust Agreement of the Issuer Trust, dated as of ________, 1998, as the
same may be amended from time to time (the "Trust Agreement"), among Sun
Bancorp, Inc. as Depositor, Bankers Trust Company, as Property Trustee, Bankers
Trust (Delaware), as Delaware Trustee, and the Holders of Trust Securities,
including the designation of the terms of the Preferred Securities as set forth
therein. The Holder is entitled to the benefits of the Guarantee Agreement
entered into by Sun Bancorp, Inc., a New Jersey corporation, and Bankers Trust
Company, as guarantee trustee, dated as of ____________, 1998, as the same may
be amended from time to time, (the "Guarantee Agreement"), to the extent
provided therein. The Issuer Trust will furnish a copy of the Trust Agreement
and the Guarantee Agreement to the Holder without charge upon written request to
the Issuer Trust at its principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
6
<PAGE>
IN WITNESS WHEREOF, one of the Administrators of the Issuer Trust has
executed this certificate this ____day of ____________, 1998.
SUN CAPITAL TRUST II
By: ________________________
Name:
Administrator
AUTHENTICATED AND REGISTERED:
BANKERS TRUST COMPANY,
as Property Trustee and Securities Registrar
By: __________________________
Name:
Signatory Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Preferred Securities Certificate to:
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax
identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
-------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Preferred Securities Certificate on the books of the
Issuer Trust. The agent may substitute another to act for him or her.
Date:
---------------------------
Signature:
------------------------------------------------
(Sign exactly as your name appears on
the other side of this Preferred Securities
Certificate)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
8
EXHIBIT NO. 4.6
<PAGE>
- --------------------------------------------------------------------------------
GUARANTEE AGREEMENT
Between
SUN BANCORP, INC.
(as Guarantor)
and
BANKERS TRUST COMPANY
(as Trustee)
dated as of
__________, 1998
- --------------------------------------------------------------------------------
<PAGE>
SUN CAPITAL TRUST II
Certain Sections of this Guarantee Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Guarantee Agreement
Act Section Section
- --------------- -------------------
<S> <C> <C>
Section 310 (a) (1)........................ 4.1 (a)
(a) (2)........................ 4.1 (a)
(a) (3)........................ Not Applicable
(a) (4)........................ Not Applicable
(b)............................ 2.8, 4.1 (c)
Section 311 (a)............................ Not Applicable
(b)............................ Not Applicable
Section 312 (a)............................ 2.2 (a)
(b)............................ 2.2 (b)
(c)............................ Not Applicable
Section 313 (a)............................ 2.3
(a) (4)........................ 2.3
(b)............................ 2.3
(c)............................ 2.3
(d)............................ 2.3
Section 314 (a)............................ 2.4
(b)............................ 2.4
(c) (1)........................ 2.5
(c) (2)........................ 2.5
(c) (3)........................ 2.5
(e)............................ 1.1, 2.5, 3.2
Section 315 (a)............................ 3.1 (d)
(b)............................ 2.7
(c)............................ 3.1 (c)
(d)............................ 3.1 (d)
(e)............................ Not Applicable
Section 316 (a)............................ 1.1, 2.6, 5.4
(a) (1) (A).................... 5.4
(a) (1) (B).................... 5.4
(a) (2)........................ Not Applicable
(b)............................ 5.3
(c)............................ Not Applicable
Section 317 (a) (1)........................ Not Applicable
(a) (2)........................ Not Applicable
(b)............................ Not Applicable
Section 318 (a)............................ 2.1
</TABLE>
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Guarantee Agreement.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I. DEFINITIONS
Section 1.1. Definitions...................................................... 1
ARTICLE II. TRUST INDENTURE ACT
Section 2.1. Trust Indenture Act; Application................................. 5
Section 2.2. List of Holders.................................................. 5
Section 2.3. Reports by the Guarantee Trustee................................. 6
Section 2.4. Periodic Reports to the 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......................................... 7
Section 2.8. Conflicting Interests............................................ 7
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE
TRUSTEE
Section 3.1. Powers and Duties of the Guarantee
Trustee.......................................................... 7
Section 3.2. Certain Rights of Guarantee Trustee.............................. 9
Section 3.3. Indemnity........................................................ 10
Section 3.4. Expenses......................................................... 11
ARTICLE IV. GUARANTEE TRUSTEE
Section 4.1. Guarantee Trustee; Eligibility................................... 11
Section 4.2. Appointment, Removal and Resignation
of the Guarantee Trustee......................................... 11
ARTICLE V. GUARANTEE
Section 5.1. Guarantee........................................................ 12
Section 5.2. Waiver of Notice and Demand...................................... 13
Section 5.3. Obligations Not Affected......................................... 13
Section 5.4. Rights of Holders................................................ 14
Section 5.5. Guarantee of Payment............................................. 14
Section 5.6. Subrogation...................................................... 14
Section 5.7. Independent Obligations.......................................... 15
ARTICLE VI. COVENANTS AND SUBORDINATION
Section 6.1. Subordination.................................................... 15
Section 6.2. Pari Passu Guarantees............................................ 15
ARTICLE VII. TERMINATION
Section 7.1. Termination...................................................... 15
</TABLE>
- i -
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VIII. MISCELLANEOUS
Section 8.1. Successors and Assigns........................................... 16
Section 8.2. Amendments....................................................... 16
Section 8.3. Notices.......................................................... 16
Section 8.4. Benefit.......................................................... 17
Section 8.5. Interpretation................................................... 18
Section 8.6. Governing Law.................................................... 18
Section 8.7. Counterparts..................................................... 18
</TABLE>
- ii -
<PAGE>
GUARANTEE AGREEMENT
-------------------
This GUARANTEE AGREEMENT, dated as of __________, 1998 (this
"Guarantee Agreement") is executed and delivered by SUN BANCORP, INC., a New
Jersey corporation (the "Guarantor"), having its principal office at 226 Landis
Avenue, Vineland, New Jersey 08360, and BANKERS TRUST COMPANY, a New York
banking corporation, as trustee (the "Guarantee Trustee"), for the benefit of
the Holders (as defined herein) from time to time of the Preferred Securities
(as defined herein) of Sun Capital Trust II, a Delaware statutory business trust
(the "Issuer Trust").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the
"Trust Agreement"), dated as of __________, 1998, among Sun Bancorp, Inc., as
Depositor, Bankers Trust Company, as Property Trustee (the "Property Trustee"),
Bankers Trust (Delaware), as Delaware Trustee (the "Delaware Trustee")
(collectively, the "Issuer Trustees") and the Holders from time to time of
preferred undivided beneficial ownership interests in the assets of the Issuer
Trust, the Issuer Trust is issuing up to $__________ aggregate Liquidation
Amount (as defined herein) of its ________% Preferred Securities, Liquidation
Amount $10 per preferred security (the "Preferred Securities"), representing
preferred undivided beneficial ownership interests in the assets of the Issuer
Trust and having the terms set forth in the Trust Agreement;
WHEREAS, the Preferred Securities will be issued by the Issuer
Trust and the proceeds thereof, together with the proceeds from the issuance of
the Issuer Trust's Common Securities (as defined herein), will be used to
purchase the Junior Subordinated Debentures due ______________, 2028 (as defined
in the Trust Agreement) (the "Junior Subordinated Debentures") of the Guarantor
which will be deposited with Bankers Trust Company, as Property Trustee under
the Trust Agreement, as trust assets; and
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth herein, to pay to the Holders of the Preferred Securities
the Guarantee Payments (as defined herein) and to make certain other payments on
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase of the Preferred
Securities by each Holder, which purchase the Guarantor hereby acknowledges
shall benefit the Guarantor, and intending to be legally bound hereby, the
Guarantor executes and delivers this Guarantee Agreement for the benefit of the
Holders from time to time of the Preferred Securities.
ARTICLE I. DEFINITIONS
SECTION 1.1. Definitions.
As used in this Guarantee Agreement, the terms set forth below
shall, unless the context otherwise requires, have the following meanings.
Capitalized terms used but not
<PAGE>
otherwise defined herein shall have the meanings assigned to such terms in the
Trust Agreement as in effect on the date hereof.
"Additional Amount" has the meaning specified in the Trust Agreement.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Delaware Trustee" shall have the meaning specified in the first
recital of this Guarantee Agreement.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer Trust.
"Distributions" means preferential cumulative cash distributions
accumulating from __________, 1998 and payable quarterly in arrears on March 31,
June 30, September 30, and December 31 of each year, commencing ____________,
1998, at the annual rate of ____% of the Liquidation Amount.
"Event of Default" means (a) a default by the Guarantor in any of
its payment obligations under this Guarantee Agreement, or (b) a default by the
Guarantor in any other obligation hereunder that remains unremedied for 30 days.
"Guarantee Agreement" means this Guarantee Agreement, as modified,
amended or supplemented from time to time.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by or on behalf of the Issuer Trust: (a) any accrued and unpaid
Distributions (as defined in the Trust Agreement) required to be paid on the
Preferred Securities, to the extent the Issuer Trust shall have funds on hand
available therefor at such time, (b) the Redemption Price, with respect to the
Preferred Securities called for redemption by the Issuer Trust to the extent
that the Issuer Trust shall have funds on hand available therefor at such time,
and (c) upon a voluntary or involuntary termination, winding-up or liquidation
of the Issuer Trust, unless the Junior Subordinated Debentures are distributed
to the Holders, the lesser of (i) the aggregate of the Liquidation Amount and
all accumulated and unpaid Distributions to the date of payment to the extent
the Issuer Trust shall have funds on hand available to make such payment at such
time and (ii) the amount of assets of the Issuer Trust remaining available for
2
<PAGE>
distribution to Holders in liquidation of the Issuer Trust (in either case, the
"Liquidation Distribution").
"Guarantee Trustee" means Bankers Trust Company, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee Agreement and thereafter means each such
Successor Guarantee Trustee.
"Guarantor" shall have the meaning specified in the preamble of
this Guarantee Agreement.
"Holder" means any holder, as registered on the books and records
of the Issuer Trust, of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor, the Guarantee Trustee, or any Affiliate of the
Guarantor or the Guarantee Trustee.
"Indenture" means the Junior Subordinated Indenture dated as of
__________, 1998, between Sun Bancorp, Inc. and Bankers Trust Company, as
trustee, as may be modified, amended or supplemented from time to time.
"Issuer Trust" shall have the meaning specified in the preamble of
this Guarantee Agreement.
"Issuer Trustees" shall have the meaning specified in the first
recital of this Guarantee Agreement.
"Junior Subordinated Debentures" shall have the meaning specified
in the first recital of this Guarantee Agreement.
"Like Amount" means (a) with respect to a redemption of Preferred
Securities, Preferred Securities having a Liquidation Amount equal to the
principal amount of Junior Subordinated Debentures to be contemporaneously
redeemed in accordance with the Indenture, the proceeds of which will be used to
pay the Redemption Price of such Preferred Securities, (b) with respect to a
distribution of Junior Subordinated Debentures to Holders of Preferred
Securities in connection with a dissolution or liquidation of the Issuer Trust,
Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of the Preferred Securities of the Holder to whom such Junior
Subordinated Debentures are distributed, and (c) with respect to any
distribution of an Additional Amount to Holders of Preferred Securities, Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Preferred Securities in respect of which such distribution is
made.
"Liquidation Amount" means the stated amount of $10 per Preferred
Security.
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"Majority in Liquidation Amount of the Preferred Securities" means,
except as provided by the Trust Indenture Act, Preferred Securities representing
more than 50% of the aggregate Liquidation Amount of all then outstanding
Preferred Securities issued by the Issuer Trust.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board and Chief Executive Officer,
President or a Vice President, and by the Chief Financial Officer, the
Treasurer, an Associate Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary of such Person, and delivered to the Guarantee Trustee. Any
Officers' Certificate delivered with respect to compliance with a condition or
covenant provided for in this Guarantee Agreement shall include:
(a) a statement by each officer signing the Officers'
Certificate that such officer has read the covenant or condition and the
definitions relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by such officer in rendering the
Officers' Certificate;
(c) a statement that such officer has made such
examination or investigation as, in such officer's opinion, is necessary to
enable such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of such
officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Securities" shall have the meaning specified in the
first recital of this Guarantee Agreement.
"Property Trustee" shall have the meaning specified in the first
recital of this Guarantee Agreement.
"Redemption Date" means, with respect to any Preferred Security to
be redeemed, the date fixed for such redemption by or pursuant to the Trust
Agreement; provided that each Junior Subordinated Debenture Redemption Date (as
such term is defined in the Indenture) and the stated maturity of the Junior
Subordinated Debentures shall be a Redemption Date for a Like Amount of
Preferred Securities.
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"Redemption Price" shall have the meaning specified in the Trust
Agreement.
"Responsible Officer" means, when used with respect to the
Guarantee Trustee, any officer assigned to the Corporate Trust Office, including
any managing director, principal, vice president, assistant vice president,
assistant treasurer, assistant secretary or any other officer of the Guarantee
Trustee customarily performing functions similar to those performed by any of
the above designated officers and having direct responsibility for the
administration of this Guarantee Agreement, and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
"Senior Indebtedness" shall have the meaning specified in the
Indenture.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Agreement" shall have the meaning specified in the recitals
to this Guarantee Agreement.
"Trust Indenture Act" means the Trust Indenture Act of 1939,as
amended by the Trust Indenture Reform Act of 1990, or any successor statute, in
each case as amended from time to time.
ARTICLE II. TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required to be a part of and govern
this Guarantee Agreement, the provision of the Trust Indenture Act shall
control. If any provision of this Guarantee Agreement modifies or excludes any
provision of the Trust Indenture Act that may be so modified or excluded, the
latter provision shall be deemed to apply to this Guarantee Agreement as so
modified or excluded, as the case may be.
SECTION 2.2. List of Holders.
(a) The Guarantor will furnish or cause to be furnished
to the Guarantee Trustee:
(i) quarterly, not more than 15 days after March
15, June 15, September 15 and December 15 in each year, a list, in such form as
the Guarantee Trustee may reasonably require, of the names and addresses of the
Holders as of such date; and
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(ii) at such other times as the Guarantee Trustee
may request in writing, within 30 days after the receipt by the Guarantor of any
such request, a list of similar form and content as of a date not more than 15
days prior to the time such list is furnished.
(b) The Guarantee Trustee shall comply with the
requirements of Section 312(b) of the Trust Indenture Act.
SECTION 2.3. Reports by the Guarantee Trustee.
Within 60 days of January 31 of each year, commencing January 31,
1999, the Guarantee Trustee shall provide to the Holders such reports, if any,
as are required by Section 313 of the Trust Indenture Act in the form and in the
manner provided by Section 313 of the Trust Indenture Act. The Guarantee Trustee
shall also comply with the requirements of Section 313(d) of the Trust Indenture
Act.
SECTION 2.4. Periodic Reports to the Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee, and the
Holders such documents, reports and information, if any, as required by Section
314 of the Trust Indenture Act and the compliance certificate required by
Section 314 of the Trust Indenture Act, in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act.
SECTION 2.5. Evidence of Compliance with Conditions
Precedent.
The Guarantor shall provide to the Guarantee Trustee such evidence
of compliance with such conditions precedent, if any, provided for in this
Guarantee Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of an
Officers' Certificate.
SECTION 2.6. Events of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Preferred
Securities may, by vote, on behalf of the Holders, waive any past Event of
Default and its consequences. Upon such waiver, any such Event of Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Guarantee Agreement, but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent therefrom.
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SECTION 2.7. Event of Default; Notice.
(a) The Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders, notices of all Events of Default known to the Guarantee
Trustee, unless such Events of Default have been cured before the giving of such
notice; provided that, except in the case of a default in the payment of a
Guarantee Payment, the Guarantee Trustee shall be protected in withholding such
notice if and so long as the Board of Directors, the executive committee or a
trust committee of directors and/or Responsible Officers of the Guarantee
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless (i) a Responsible Officer charged with
the administration of this Guarantee Agreement shall have received written
notice of such Event of Default, or (ii) a Responsible Officer of the Guarantee
Trustee charged with administration of the Trust Agreement shall have obtained
actual knowledge thereof.
SECTION 2.8. Conflicting Interests.
The Trust Agreement shall be deemed to be specifically described in
this Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE
GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee
Trustee for the benefit of the Holders, and the Guarantee Trustee shall not
transfer this Guarantee Agreement to any Person except to a Holder exercising
his or her rights pursuant to Section 5.4(d) or to a Successor Guarantee Trustee
on acceptance by such Successor Guarantee Trustee of its appointment to act as
Successor Guarantee Trustee hereunder. The right, title and interest of the
Guarantee Trustee, as such, hereunder shall automatically vest in any Successor
Guarantee Trustee, upon acceptance by such Successor Guarantee Trustee of its
appointment hereunder, and such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and delivered
pursuant to the appointment of such Successor Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing,
the Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of
the Holders.
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(c) The Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall be obligated to perform only such duties as are specifically set
forth in this Guarantee Agreement (including pursuant to Section 2.1), and no
implied covenants shall be read into this Guarantee Agreement against the
Guarantee Trustee. If an Event of Default has occurred (that has not been cured
or waived pursuant to Section 2.6), the Guarantee Trustee shall exercise such of
the rights and powers vested in it by this Guarantee Agreement, and use the same
degree of care and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(d) No provision of this Guarantee Agreement shall be
construed to relieve the Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act or its own bad faith or willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default
and after the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the
Guarantee Trustee shall be determined solely by the express provisions of this
Guarantee Agreement (including pursuant to Section 2.1), and the Guarantee
Trustee shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Guarantee Agreement (including
pursuant to Section 2.1); and
(B) in the absence of bad faith on the
part of the Guarantee Trustee, the Guarantee Trustee may conclusively rely, as
to the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Guarantee Trustee
and conforming to the requirements of this Guarantee Agreement; but in the case
of any such certificates or opinions that by any provision hereof or of the
Trust Indenture Act are specifically required to be furnished to the Guarantee
Trustee, the Guarantee Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this Guarantee
Agreement;
(ii) the Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer of the
Guarantee Trustee, unless it shall be proved that the Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable
with respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a Majority in
Liquidation Amount of the Preferred Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee, or exercising any trust or power conferred upon the Guarantee Trustee
under this Guarantee Agreement; and
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(iv) no provision of this Guarantee Agreement
shall require the Guarantee Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers if the Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds or liability
is not assured to it under the terms of this Guarantee Agreement or adequate
indemnity against such risk or liability is not reasonably assured to it.
SECTION 3.2. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) the Guarantee Trustee may conclusively rely
and shall be fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document reasonably believed by it to be genuine
and to have been signed, sent or presented by the proper party or parties.
(ii) any direction or act of the Guarantor
contemplated by this Guarantee Agreement shall be sufficiently evidenced by an
Officers' Certificate unless otherwise prescribed herein.
(iii) whenever, in the administration of this
Guarantee Agreement, the Guarantee Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting to take any action
hereunder, the Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt of such
request from the Guarantee Trustee, shall be promptly delivered by the
Guarantor.
(iv) the Guarantee Trustee may consult with legal
counsel, and the written advice or opinion of such legal counsel with respect to
legal matters shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted to be taken by it hereunder in good
faith and in accordance with such advice or opinion. Such legal counsel may be
legal counsel to the Guarantor or any of its Affiliates and may be one of its
employees. The Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Guarantee Agreement from any
court of competent jurisdiction.
(v) the Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Guarantee Agreement at the request or direction of any Holder, unless such
Holder shall have provided to the Guarantee Trustee such security and indemnity
as would satisfy a reasonable person in the position of the Guarantee Trustee,
against the costs, expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Guarantee Trustee; provided, however,
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that nothing herein shall relieve the Guarantee Trustee of its obligations upon
the occurrence of an Event of Default that has not been cured or waived to
exercise the rights and powers vested in the Guarantee Trustee by this
Guarantee, and to use the same degree of care and skill in exercising such
rights and powers as a reasonably prudent person would use under the
circumstances in the conduct of his own affairs.
(vi) the Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or other
paper or document, but the Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit.
(vii) the Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either directly or by
or through its agents or attorneys, and the Guarantee Trustee shall not be
responsible for any negligence or willful misconduct on the part of any such
agent or attorney appointed with due care by it hereunder. Nothing herein shall
be construed as limiting or restricting the right of the Guarantor to bring any
action directly against any agent or attorney appointed by the Guarantee Trustee
for any negligence or willful misconduct on the part of such agent or attorney.
(viii) whenever in the administration of this
Guarantee Agreement the Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking any other
action hereunder, the Guarantee Trustee (A) may request instructions from the
Holders, (B) may refrain from enforcing such remedy or right or taking such
other action until such instructions are received and (C) shall be fully
protected in acting in accordance with such instructions.
(b) No provision of this Guarantee Agreement shall be
deemed to impose any duty or obligation on the Guarantee Trustee to perform any
act or acts or exercise any right, power, duty or obligation conferred or
imposed on it in any jurisdiction in which it shall be illegal, or in which the
Guarantee Trustee shall be unqualified or incompetent in accordance with
applicable law, to perform any such act or acts or to exercise any such right,
power, duty or obligation. No permissive power or authority available to the
Guarantee Trustee shall be construed to be a duty to act in accordance with such
power and authority.
SECTION 3.3. Indemnity.
The Guarantor agrees to indemnify the Guarantee Trustee (which, for
purposes of this Section 3.3 shall include its directors, officers, employees
and agents) for, and to hold the Guarantee Trustee harmless against, any loss,
liability or expense incurred without negligence, willful misconduct or bad
faith on the part of the Guarantee Trustee, arising out
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of or in connection with the acceptance or administration of this Guarantee
Agreement, including the reasonable costs and expenses of defending against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder. The Guarantee Trustee will not claim or exact any
lien or charge on any Guarantee Payments as a result of any amount due to it
under this Guarantee Agreement.
SECTION 3.4. Expenses.
The Guarantor shall from time to time reimburse the Guarantee
Trustee for its reasonable expenses and costs (including reasonable attorneys'
or agents' fees) incurred in connection with the performance of its duties
hereunder.
ARTICLE IV. GUARANTEE TRUSTEE
SECTION 4.1. Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the
Trust Indenture Act to act as such and has a combined capital and surplus of at
least $50,000,000, and shall be a corporation meeting the requirements of
Section 310(a) of the Trust Indenture Act. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements of the
supervising or examining authority, then, for the purposes of this Section and
to the extent permitted by the Trust Indenture Act, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
(b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Guarantee Trustee shall immediately
resign in the manner and with the effect set out in Section 4.2(b).
(c) If the Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Guarantee Trustee and Guarantor shall in all respects comply
with the provisions of Section 310(b) of the Trust Indenture Act.
SECTION 4.2. Appointment, Removal and Resignation of the
Guarantee Trustee.
(a) No resignation or removal of the Guarantee Trustee
and no appointment of a Successor Guarantee Trustee pursuant to this Article IV
shall become effective until the acceptance of appointment by the Successor
Guarantee Trustee by written instrument
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executed by the Successor Guarantee Trustee and delivered to the Holders and the
Guarantee Trustee.
(b) Subject to Section 4.2(a), a Guarantee Trustee may
resign at any time by giving written notice thereof to the Holders. The
Guarantee Trustee shall appoint a successor by requesting from at least three
Persons meeting the eligibility requirements such Person's expenses and charges
to serve as the Guarantee Trustee, and selecting the Person who agrees to the
lowest expenses and charges. If the instrument of acceptance by the Successor
Guarantee Trustee shall not have been delivered to the Guarantee Trustee within
60 days after the giving of such notice of resignation, the Guarantee Trustee
may petition, at the expense of the Guarantor, any court of competent
jurisdiction for the appointment of a Successor Guarantee Trustee.
(c) The Guarantee Trustee may be removed for cause at any
time by Act (within the meaning of Section 6.8 of the Trust Agreement) of the
Holders of at least a Majority in Liquidation Amount of the Preferred
Securities, delivered to the Guarantee Trustee.
(d) If a resigning Guarantee Trustee shall fail to appoint
a successor, or if a Guarantee Trustee shall be removed or become incapable of
acting as Guarantee Trustee, or if any vacancy shall occur in the office of any
Guarantee Trustee for any cause, the Holders of the Preferred Securities, by Act
of the Holders of record of not less than 25% in aggregate Liquidation Amount of
the Preferred Securities then outstanding delivered to such Guarantee Trustee,
shall promptly appoint a successor Guarantee Trustee. If no Successor Guarantee
Trustee shall have been so appointed by the Holders of the Preferred Securities
and such appointment accepted by the Successor Guarantee Trustee, any Holder, on
behalf of himself and all others similarly situated, may petition any court of
competent jurisdiction for the appointment of a Successor Guarantee Trustee.
ARTICLE V. GUARANTEE
SECTION 5.1. Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full
on a subordinated basis as set forth in Section 6.1 hereof to the Holders the
Guarantee Payments (without duplication of amounts theretofore paid by or on
behalf of the Issuer Trust), as and when due, regardless of any defense, right
of set-off or counterclaim which the Issuer Trust may have or assert, except the
defense of payment. The Guarantor's obligation to make a Guarantee Payment may
be satisfied by direct payment of the required amounts by the Guarantor to the
Holders or by causing the Issuer Trust to pay such amounts to the Holders. The
Guarantor shall give prompt written notice to the Guarantee Trustee in the event
it makes any direct payment hereunder.
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SECTION 5.2. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of the Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the
Guarantee Trustee, the Issuer Trust or any other Person before proceeding
against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice
of redemption and all other notices and demands.
SECTION 5.3. Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee Agreement shall in no way be affected or impaired by reason
of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer Trust of any express or implied
agreement, covenant, term or condition relating to the Preferred Securities to
be performed or observed by the Issuer Trust;
(b) the extension of time for the payment by the Issuer
Trust of all or any portion of the Distributions (other than an extension of
time for payment of Distributions that results from the extension of any
interest payment period on the Junior Subordinated Debentures as so provided in
the Indenture), Redemption Price, Liquidation Distribution or any other sums
payable under the terms of the Preferred Securities or the extension of time for
the performance of any other obligation under, arising out of, or in connection
with, the Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right, privilege, power
or remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer Trust granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Issuer Trust or any of
the assets of the Issuer Trust;
(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor (other than
payment of the underlying
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obligation), it being the intent of this Section 5.3 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain the consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4. Rights of Holders.
The Guarantor expressly acknowledges that: (a) this Guarantee
Agreement will be deposited with the Guarantee Trustee to be held for the
benefit of the Holders; (b) the Guarantee Trustee has the right to enforce this
Guarantee Agreement on behalf of the Holders; (c) the Holders of a Majority in
Liquidation Amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of this Guarantee Agreement or exercising any
trust or power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and (d) any Holder may institute a legal proceeding directly against
the Guarantor to enforce its rights under this Guarantee Agreement, without
first instituting a legal proceeding against the Guarantee Trustee, the Issuer
Trust or any other Person.
SECTION 5.5. Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment of
the Guarantee Payments in full (without duplication of amounts theretofore paid
by the Issuer Trust) or upon the distribution of Junior Subordinated Debentures
to Holders as provided in the Trust Agreement.
SECTION 5.6. Subrogation.
The Guarantor shall be subrogated to all rights (if any) of the
Holders against the Issuer Trust in respect of any amounts paid to the Holders
by the Guarantor under this Guarantee Agreement; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any rights which it may acquire by way
of subrogation or any indemnity, reimbursement or other agreement, in all cases
as a result of payment under this Guarantee Agreement, if at the time of any
such payment, any amounts are due and unpaid under this Guarantee Agreement. If
any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guarantor agrees to hold such amount in trust for the Holders and
to pay over such amount to the Holders.
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SECTION 5.7. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer Trust with respect to the Preferred
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
Agreement notwithstanding the occurrence of any event referred to in subsections
(a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI. COVENANTS AND SUBORDINATION
SECTION 6.1. Subordination.
This Guarantee Agreement will constitute an unsecured obligation of
the Guarantor and will rank subordinate and junior in right of payment to all
Senior Indebtedness of the Guarantor to the extent and in the manner set forth
in the Indenture with respect to the Junior Subordinated Debentures, and the
provisions of Article XIII of the Indenture will apply, mutatis mutandis, to the
obligations of the Guarantor hereunder. The obligations of the Guarantor
hereunder do not constitute Senior Indebtedness of the Guarantor.
SECTION 6.2. Pari Passu Guarantees.
The obligations of the Guarantor under this Guarantee Agreement
shall rank pari passu with any similar guarantee agreements issued by the
Guarantor on behalf of the holders of preferred or capital securities issued by
the Issuer Trust and with any other security, guarantee or other obligation that
is expressly stated to rank pari passu with the obligations of the Guarantor
under this Guarantee Agreement.
ARTICLE VII. TERMINATION
SECTION 7.1. Termination.
This Guarantee Agreement shall terminate and be of no further force
and effect upon (a) full payment of the Redemption Price of all Preferred
Securities, (b) the distribution of Junior Subordinated Debentures to the
Holders in exchange for all of the Preferred Securities or (c) full payment of
the amounts payable in accordance with Article IX of the Trust Agreement upon
liquidation of the Issuer Trust. Notwithstanding the foregoing, this Guarantee
Agreement will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder is required to repay any sums paid with respect to
the Preferred Securities or this Guarantee Agreement.
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ARTICLE VIII. MISCELLANEOUS
SECTION 8.1. Successors and Assigns.
All guarantees and agreements contained in this Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding. Except in connection with a consolidation, merger
or sale involving the Guarantor that is permitted under Article VIII of the
Indenture and pursuant to which the assignee agrees in writing to perform the
Guarantor's obligations hereunder, the Guarantor shall not assign its
obligations hereunder, and any purported assignment that is not in accordance
with these provisions shall be void.
SECTION 8.2. Amendments.
Except with respect to any changes that do not materially adversely
affect the rights of the Holders (in which case no consent of the Holders will
be required), this Guarantee Agreement may only be amended with the prior
approval of the Holders of not less than a Majority in Liquidation Amount of the
Preferred Securities. The provisions of Article VI of the Trust Agreement
concerning meetings of the Holders shall apply to the giving of such approval.
SECTION 8.3. Notices.
Any notice, request or other communication required or permitted to
be given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied (confirmed by delivery of the original) or
mailed by first class mail as follows:
(a) if given to the Guarantor, to the address or telecopy
number set forth below or such other address or telecopy number or to the
attention of such other Person as the Guarantor may give notice to the Holders:
Sun Bancorp, Inc.
226 Landis Avenue
Vineland, New Jersey 08360
Facsimile No.: (609) 691-7131
Attention: Office of the Secretary
16
<PAGE>
(b) if given to the Issuer Trust, in care of the Guarantee
Trustee, at the Issuer Trust's (and the Guarantee Trustee's) address set forth
below or such other address or telecopy number or to the attention of such other
Person as the Guarantee Trustee on behalf of the Issuer Trust may give notice to
the Holders:
c/o Sun Bancorp, Inc.
226 Landis Avenue
Vineland, New Jersey 08360
Facsimile No.: (609) 691-7131
Attention: Office of the Secretary
with a copy to:
Bankers Trust Company
Four Albany Street - 4th Floor
New York, New York 10006
Facsimile No.: (212) 250-6961
Attention: Corporate Trust and Agency Group;
Corporate Market Services
(c) if given to the Guarantee Trustee:
Bankers Trust Company
Four Albany Street - 4th Floor
New York, New York 10006
Facsimile No.: (212) 250-6961
Attention: Corporate Trust and Agency Group
Corporate Market Services
(d) if given to any Holder, at the address set forth on the
books and records of the Issuer Trust.
All notices hereunder shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid, except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 8.4. Benefit.
This Guarantee Agreement is solely for the benefit of the Holders
and is not separately transferable from the Preferred Securities.
17
<PAGE>
SECTION 8.5. Interpretation.
In this Guarantee Agreement, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but
not defined in the preamble hereto have the respective meanings assigned to them
in Section 1.1;
(b) a term defined anywhere in this Guarantee Agreement
has the same meaning throughout;
(c) all references to "the Guarantee Agreement" or "this
Guarantee Agreement" are to this Guarantee Agreement as modified, supplemented
or amended from time to time;
(d) all references in this Guarantee Agreement to Articles
and Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and
vice versa; and
(g) the masculine, feminine or neuter genders used herein
shall include the masculine, feminine and neuter genders.
SECTION 8.6. Governing Law.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
SECTION 8.7. Counterparts.
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
18
EXHIBIT NO. 5.1
<PAGE>
[RICHARDS, LAYTON & FINGER LETTERHEAD]
August 28, 1998
Sun Capital Trust II
c/o Sun Bancorp, Inc.
226 Landis Avenue
Vineland, New Jersey 08360
Re: Sun Capital Trust II
--------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for Sun Capital
Trust II, a Delaware business trust (the "Trust"), in connection with the
matters set forth herein. At your request, this opinion is being furnished to
you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust (the "Certificate"),
as filed in the office of the Secretary of State of the State of Delaware (the
"Secretary of State") on August 12, 1998;
(b) The Trust Agreement of the Trust, dated as of August 12,
1998, between Sun Bancorp, Inc., a New Jersey corporation (the "Company"), and
the trustee of the Trust named therein;
(c) The Registration Statement (the "Registration Statement")
on Form S-1, including a prospectus (the "Prospectus") relating to the Preferred
Securities of the Trust representing preferred undivided beneficial interests in
the Trust (each, a "Preferred Security" and collectively, the "Preferred
Securities"), as filed by the Company and the Trust as set forth therein with
the Securities and Exchange Commission;
<PAGE>
Sun Capital Trust II
August 28, 1998
Page 2
(d) A form of Amended and Restated Trust Agreement of the
Trust, to be entered into among the Company, the trustees of the Trust named
therein, and the holders, from time to time, of undivided beneficial interests
in the Trust (the "Trust Agreement"), attached as an exhibit to the Registration
Statement; and
(e) A Certificate of Good Standing for the Trust, dated August
26, 1998, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise
defined are used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any
documents other than the documents listed above, and we have assumed that there
exists no provision in any document that we have not reviewed that bears upon or
is inconsistent with the opinions stated herein. We have conducted no
independent factual investigation of our own but rather have relied solely upon
the foregoing documents, the statements and information set forth therein and
the additional matters recited or assumed herein, all of which we have assumed
to be true, complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed
(i) the authenticity of all documents submitted to us as authentic originals,
(ii) the conformity with the originals of all documents submitted to us as
copies or forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the
Trust Agreement constitutes the entire agreement among the parties thereto with
respect to the subject matter thereof, including with respect to the creation,
operation and termination of the Trust, and that the Trust Agreement and the
Certificate are in full force and effect and have not been amended, (ii) except
to the extent provided in paragraph 1 below, the due creation or due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation, organization or formation, (iii) the legal
capacity of natural persons who are parties to the documents examined by us,
(iv) that each of the parties to the documents examined by us has the power and
authority to execute and deliver, and to perform its obligations under, such
documents, (v) the due authorization, execution and delivery by all parties
thereto of all documents examined by us, (vi) the receipt by each Person to whom
a Preferred Security is to be issued by the Trust (collectively, the "Preferred
Security Holders") of a Preferred Security Certificate for such Preferred
Security and the payment for the Preferred Security acquired by it, in
accordance with the Trust Agreement and the Prospectus, and (vii) that the
Preferred Securities are issued and sold to the Preferred Security Holders in
accordance with the Trust Agreement and the Prospectus. We have not participated
in the preparation of the Registration Statement and assume no responsibility
for its contents.
<PAGE>
Sun Capital Trust II
August 28, 1998
Page 3
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such
questions of law and statutes of the State of Delaware as we have considered
necessary or appropriate, and subject to the assumptions, qualifications,
limitations and exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing
in good standing as a business trust under the Delaware Business Trust Act, 12
Del. C. ss. 3801, et seq.
2. The Preferred Securities will represent valid and, subject
to the qualifications set forth in paragraph 3 below, fully paid and
nonassessable undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the
Trust, will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Trust Agreement.
We consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement. In
addition, we hereby consent to the use of our name under the heading "Validity
of Securities" in the Prospectus. In giving the foregoing consents, we do not
thereby admit that we come within the category of Persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the rules
and regulations of the Securities and Exchange Commission thereunder. Except as
stated above, without our prior written consent, this opinion may not be
furnished or quoted to, or relied upon by, any other Person for any purpose.
Very truly yours,
/s/Richards, Layton & Finger PA
EXHIBIT NO. 5.2
<PAGE>
MALIZIA, SPIDI, SLOANE & FISCH, P.C.
ATTORNEYS AT LAW
1301 K STREET, N.W.
SUITE 700 EAST
WASHINGTON, D.C. 20005
(202) 434-4660
FACSIMILE: (202) 434-4661
WRITER'S DIRECT DIAL NUMBER
August 28, 1998
Board of Directors
Sun Bancorp, Inc.
226 Landis Avenue
Vineland, New Jersey 08360
Lady and Gentlemen:
We have acted as counsel to Sun Bancorp, Inc. (the "Company") in
connection with the preparation and filing by the Company and Sun Capital Trust
II (the "Trust") of a registration statement (the "Registration Statement") on
Form S-3 under the Securities Act of 1933, as amended (the "Act"), with respect
to the offer and sale of certain of the Trust's Preferred Securities
(liquidation amount $10 per Preferred Security) (the "Preferred Securities") and
certain of the Company's Junior Subordinated Debentures (the "Debentures") and
the related Guarantee Agreement by and between the Company and Bankers Trust
Company, as trustee (the "Guarantee"). In connection therewith, you have
requested our opinion as to certain matters referred to below.
In our capacity as such counsel, we have familiarized ourselves with
the actions taken by the Company in connection with the registration of the
Debentures and the Guarantee. We have examined the originals or certified copies
of such records, agreements, certificates of public officials and others, and
such other documents, including the Registration Statement and the amendment
thereto, as we have deemed relevant and necessary as a basis for the opinions
hereinafter expressed. In such examination, we have assumed the genuineness of
all signatures on original documents and the authenticity of all documents
submitted to us as originals, the conformity to original documents of all copies
submitted to us as conformed or photostatic copies, and the authenticity of the
originals of such latter documents. We are attorneys admitted to practice before
the courts of the United States and the courts of the State of New Jersey and,
accordingly, we express no opinion with respect to matters governed by the laws
of any jurisdiction other than the federal laws of the United States or the
internal laws of the State of New Jersey.
Based upon and subject to the foregoing, we are of the opinion that,
when issued (with respect to the Debentures), or executed and delivered (with
respect to the Guarantee), as set forth in the
<PAGE>
Board of Directors
August 28, 1998
Page Two
Registration Statement, the Debentures and the Guarantee will be the valid and
binding obligations of the Company, enforceable in accordance with their terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws relating to or affecting the
enforcement of creditors' rights generally or the rights of creditors of bank
holding companies the accounts of whose subsidiaries are insured by the Federal
Deposit Insurance Corporation or by general equity principles, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
We consent to the references to this opinion and to Malizia, Spidi,
Sloane & Fisch, P.C. in the Prospectus included as part of the Registration
Statement under the caption "Validity of Securities" and to the inclusion of
this opinion as an exhibit to the Registration Statement.
Very truly yours,
/s/MALIZIA, SPIDI, SLOANE & FISCH, P.C.
MALIZIA, SPIDI, SLOANE & FISCH, P.C.
EXHIBIT NO. 8
<PAGE>
[FORM OF FEDERAL TAX OPINION]
___________ ____, 1998
Board of Directors
Sun Bancorp, Inc.
226 Landis Avenue
Vineland, New Jersey 08360
Dear Board Members:
We have acted as special tax counsel to Sun Bancorp, Inc. (the
"Company") and to Sun Capital Trust II (the "Trust") in connection with the
registration statement of the Company and the Trust on Form S-3 (Registration
Nos. 333-___________ and 333-_________-01), for the Company and the Trust,
respectively), as amended ("Registration Statement"), of which a prospectus
("Prospectus") is a part, filed by the Company and the Trust with the United
States Securities and Exchange Commission under the Securities Act of 1933, as
amended. This opinion is furnished pursuant to the requirements of Item
601(b)(8) of Regulation S-K.
For the purposes of rendering this opinion, we have reviewed and relied
upon the Registration Statement and such other documents and instruments as we
deemed necessary for the rendering of this opinion. In our examination of
relevant documents, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as copies, the authenticity
of such copies and the accuracy and completeness of all corporate records made
available to us by the Company and the Trust.
Based solely upon our review of such documents, and upon such
information as the Company has provided to us (which we have not attempted to
verify in any respect), and reliance upon such documents and information, we
hereby adopt and incorporate by reference the opinion set forth in the
Prospectus under the caption "Certain Federal Income Tax Consequences."
Our opinion is limited to the federal income tax matters described
above and does not address any other federal income tax considerations or any
state, local, foreign, or other tax considerations. If any of the information on
which we have relied is incorrect, or if changes in the relevant facts occur
after the date hereof, our opinion could be affected thereby. Moreover, our
opinion is based on the Internal Revenue Code of 1986, as amended, applicable
Treasury regulations promulgated thereunder, and Internal Revenue Service
rulings, procedures, and other
<PAGE>
Board of Directors
Sun Bancorp, Inc.
___________ ____, 1998
Page 2
pronouncements published by the United States Internal Revenue Service. These
authorities are all subject to change, and such change may be made with
retroactive effect. We can give no assurance that, after such change, our
opinion would not be different. We undertake no responsibility to update or
supplement our opinion. This opinion is not binding on the Internal Revenue
Service, and there can be no assurance, and none is hereby given, that the
Internal Revenue Service will not take a position contrary to one or more of the
positions reflected in the foregoing opinion, or that our opinion will be upheld
by the courts if challenged by the Internal Revenue Service.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the use of our name in the Prospectus
under the caption "Certain Federal Income Tax Consequences."
Sincerely,
MALIZIA, SPIDI, SLOANE & FISCH, P.C.
EXHIBIT NO. 25
<PAGE>
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) ___________
------------------------------
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification no.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
Bankers Trust Company
Legal Department
130 Liberty Street, 31st Floor
New York, New York 10006
(212) 250-2201
(Name, address and telephone number of agent for service)
---------------------------------
SUN BANCORP, INC. SUN CAPITAL TRUST II
(Exact name of Registrant (Exact name of Co-Registrant as
as specified in its charter) specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NEW JERSEY 52-1382541 DELAWARE Applied for
(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.)
226 LANDIS AVENUE c/o SUN BANCORP, INC.
VINELAND, NJ. 08360 226 LANDIS AVENUE
(Address, including zip code VINELAND, NEW JERSEY 08360
of principal executive offices) (Address, including zip code of
principal executive offices)
</TABLE>
Preferred Securities of Sun Capital Trust II
Junior Subordinated Deferrable Interest Debentures of Sun Bancorp, Inc.
Guarantee of Sun Bancorp, Inc. of certain obligations under the
Preferred Securities
(Title of the indenture securities)
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising authority
to which it is subject.
Name Address
---- -------
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the Trustee, describe each
such affiliation.
None.
Item 3. -15. Not Applicable
Item 16. List of Exhibits.
Exhibit 1 - Restated Organization Certificate of Bankers
Trust Company dated August 7, 1990, Certificate of
Amendment of the Organization Certificate of Bankers
Trust Company dated June 21, 1995 Incorporated herein
by reference to Exhibit 1 filed with Form T-1
Statement, Registration No. 33-65171, Certificate of
Amendment of the Organization Certificate of Bankers
Trust Company dated March 20, 1996, incorporate by
referenced to Exhibit 1 filed with Form T-1 Statement,
Registration No. 333-25843 and Certificate of Amendment
of the Organization Certificate of Bankers Trust
Company dated June 19, 1997, copy attached.
Exhibit 2 - Certificate of Authority to commence business -
Incorporated herein by reference to Exhibit 2 filed
with Form T-1 Statement, Registration No. 33-21047.
Exhibit 3 - Authorization of the Trustee to exercise
corporate trust powers - Incorporated herein by
reference to Exhibit 2 filed with Form T-1 Statement,
Registration No. 33-21047.
Exhibit 4 - Existing By-Laws of Bankers Trust Company, as
amended on November 18, 1997. Copy attached.
-2-
<PAGE>
Exhibit 5 - Not applicable.
Exhibit 6 - Consent of Bankers Trust Company required by
Section 321(b) of the Act. - Incorporated herein by
reference to Exhibit 4 filed with Form T-1 Statement,
Registration No. 22-18864.
Exhibit 7 - The latest report of condition of Bankers Trust
Company dated as of March 31, 1998. Copy attached.
Exhibit 8 - Not Applicable.
Exhibit 9 - Not Applicable.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on this 27th day
of August, 1998.
BANKERS TRUST COMPANY
By: /s/ Endora G. Linares
______________________________
Ednora G. Linares
Assistant Vice President
-4-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on this 27th day
of August, 1998.
BANKERS TRUST COMPANY
By: /s/Ednora G. Linares
______________________________________
Ednora G. Linares
Assistant Vice President
-5-
<PAGE>
State of New York,
Banking Department
I, MANUEL KURSKY, Deputy Superintendent of Banks of the State of New
York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY Under Section
8005 of the Banking Law," dated June 19, 1997, providing for an increase in
authorized capital stock from $1,601,666,670 consisting of 100,166,667 shares
with a par value of $10 each designated as Common Stock and 600 shares with a
par value of $1,000,000 each designated as Series Preferred Stock to
$2,001,666,670 consisting of 100,166,667 shares with a par value of $10 each
designated as Common Stock and 1,000 shares with a par value of $1,000,000 each
designated as Series Preferred Stock.
Witness, my hand and official seal of the Banking Department at the City of New
York,
this 27th day of June in the Year of our Lord one
thousand nine hundred and ninety-seven.
Manuel Kursky
--------------------------------
Deputy Superintendent of Banks
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
-----------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing
Director and an Assistant Secretary of Bankers Trust Company, do hereby certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by the
Superintendent of Banks on the 5th of march, 1903.
3. The organization certificate as heretofore amended is hereby amended
to increase the aggregate number of shares which the corporation shall have
authority to issue and to increase the amount of its authorized capital stock in
conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of the shares and the capital stock outstanding,
which reads as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is One Billion, Six Hundred and One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($1,601,666,670), divided into
One Hundred Million, One Hundred Sixty-Six Thousand, Six Hundred
Sixty-Seven (100,166,667) shares with a par value of $10 each
designated as Common Stock and 600 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is Two Billion One Million, Six Hundred Sixty-Six Thousand, Six
Hundred Seventy Dollars ($2,001,666,670), divided into One Hundred
Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven
(100,166,667) shares with a par value of $10 each designated as Common
Stock and 1000 shares with a par value of One Million Dollars
($1,000,000) each designated as Series Preferred Stock."
<PAGE>
5. The foregoing amendment of the organization certificate was
authorized by unanimous written consent signed by the holder of all outstanding
shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
19th day of June, 1997.
James T. Byrne, Jr.
---------------------------------------------
James T. Byrne, Jr.
Managing Director
Lea Lahtinen
---------------------------------------------
Lea Lahtinen
Assistant Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is an
Assistant Secretary of Bankers Trust Company, the corporation described in the
foregoing certificate; that she has read the foregoing certificate and knows the
contents thereof, and that the statements herein contained are true.
Lea Lahtinen
----------------------
Lea Lahtinen
Sworn to before me this 19th day of June, 1997.
Sandra L. West
- -----------------------------
Notary Public
SANDRA L. WEST
Notary Public State of New York
No. 31-4942101
Qualified in New York County
Commission Expires September 19, 1998
<PAGE>
BY-LAWS
NOVEMBER 18, 1997
Bankers Trust Company
New York
<PAGE>
BY-LAWS
of
Bankers Trust Company
ARTICLE I
MEETINGS OF STOCKHOLDERS
SECTION 1. The annual meeting of the stockholders of this Company shall be held
at the office of the Company in the Borough of Manhattan, City of New York, on
the third Tuesday in January of each year, for the election of directors and
such other business as may properly come before said meeting.
SECTION 2. Special meetings of stockholders other than those regulated by
statute may be called at any time by a majority of the directors. It shall be
the duty of the Chairman of the Board, the Chief Executive Officer or the
President to call such meetings whenever requested in writing to do so by
stockholders owning a majority of the capital stock.
SECTION 3. At all meetings of stockholders, there shall be present, either in
person or by proxy, stockholders owning a majority of the capital stock of the
Company, in order to constitute a quorum, except at special elections of
directors, as provided by law, but less than a quorum shall have power to
adjourn any meeting.
SECTION 4. The Chairman of the Board or, in his absence, the Chief Executive
Officer or, in his absence, the President or, in their absence, the senior
officer present, shall preside at meetings of the stockholders and shall direct
the proceedings and the order of business. The Secretary shall act as secretary
of such meetings and record the proceedings.
ARTICLE II
DIRECTORS
SECTION 1. The affairs of the Company shall be managed and its corporate powers
exercised by a Board of Directors consisting of such number of directors, but
not less than ten nor more than twenty-five, as may from time to time be fixed
by resolution adopted by a majority of the directors then in office, or by the
stockholders. In the event of any increase in the number of directors,
additional directors may be elected within the limitations so fixed, either by
the stockholders or within the limitations imposed by law, by a majority of
directors then in office. One-third of the number of directors, as fixed from
time to time, shall constitute a quorum. Any one or more members of the Board of
Directors or any Committee thereof may participate in a meeting of the Board of
Directors or Committee thereof by means of a conference telephone or similar
communications equipment which allows all persons participating in the meeting
to hear each other at the same time. Participation by such means shall
constitute presence in person at such a meeting.
<PAGE>
All directors hereafter elected shall hold office until the next annual meeting
of the stockholders and until their successors are elected and have qualified.
No person who shall have attained age 72 shall be eligible to be elected or
re-elected a director. Such director may, however, remain a director of the
Company until the next annual meeting of the stockholders of Bankers Trust New
York Corporation (the Company's parent) so that such director's retirement will
coincide with the retirement date from Bankers Trust New York Corporation.
No Officer-Director who shall have attained age 65, or earlier relinquishes his
responsibilities and title, shall be eligible to serve as a director.
SECTION 2. Vacancies not exceeding one-third of the whole number of the Board of
Directors may be filled by the affirmative vote of a majority of the directors
then in office, and the directors so elected shall hold office for the balance
of the unexpired term.
SECTION 3. The Chairman of the Board shall preside at meetings of the Board of
Directors. In his absence, the Chief Executive Officer or, in his absence, such
other director as the Board of Directors from time to time may designate shall
preside at such meetings.
SECTION 4. The Board of Directors may adopt such Rules and Regulations for the
conduct of its meetings and the management of the affairs of the Company as it
may deem proper, not inconsistent with the laws of the State of New York, or
these By-Laws, and all officers and employees shall strictly adhere to, and be
bound by, such Rules and Regulations.
SECTION 5. Regular meetings of the Board of Directors shall be held from time to
time on the third Tuesday of the month. If the day appointed for holding such
regular meetings shall be a legal holiday, the regular meeting to be held on
such day shall be held on the next business day thereafter. Special meetings of
the Board of Directors may be called upon at least two day's notice whenever it
may be deemed proper by the Chairman of the Board or, the Chief Executive
Officer or, in their absence, by such other director as the Board of Directors
may have designated pursuant to Section 3 of this Article, and shall be called
upon like notice whenever any three of the directors so request in writing.
SECTION 6. The compensation of directors as such or as members of committees
shall be fixed from time to time by resolution of the Board of Directors.
<PAGE>
ARTICLE III
COMMITTEES
SECTION 1. There shall be an Executive Committee of the Board consisting of not
less than five directors who shall be appointed annually by the Board of
Directors. The Chairman of the Board shall preside at meetings of the Executive
Committee. In his absence, the Chief Executive Officer or, in his absence, such
other member of the Committee as the Committee from time to time may designate
shall preside at such meetings.
The Executive Committee shall possess and exercise to the extent permitted by
law all of the powers of the Board of Directors, except when the latter is in
session, and shall keep minutes of its proceedings, which shall be presented to
the Board of Directors at its next subsequent meeting. All acts done and powers
and authority conferred by the Executive Committee from time to time shall be
and be deemed to be, and may be certified as being, the act and under the
authority of the Board of Directors.
A majority of the Committee shall constitute a quorum, but the Committee may act
only by the concurrent vote of not less than one-third of its members, at least
one of whom must be a director other than an officer. Any one or more directors,
even though not members of the Executive Committee, may attend any meeting of
the Committee, and the member or members of the Committee present, even though
less than a quorum, may designate any one or more of such directors as a
substitute or substitutes for any absent member or members of the Committee, and
each such substitute or substitutes shall be counted for quorum, voting, and all
other purposes as a member or members of the Committee.
SECTION 2. There shall be an Audit Committee appointed annually by resolution
adopted by a majority of the entire Board of Directors which shall consist of
such number of directors, who are not also officers of the Company, as may from
time to time be fixed by resolution adopted by the Board of Directors. The
Chairman shall be designated by the Board of Directors, who shall also from time
to time fix a quorum for meetings of the Committee. Such Committee shall conduct
the annual directors' examinations of the Company as required by the New York
State Banking Law; shall review the reports of all examinations made of the
Company by public authorities and report thereon to the Board of Directors; and
shall report to the Board of Directors such other matters as it deems advisable
with respect to the Company, its various departments and the conduct of its
operations.
In the performance of its duties, the Audit Committee may employ or retain, from
time to time, expert assistants, independent of the officers or personnel of the
Company, to make studies of the Company's assets and liabilities as the
Committee may request and to make an examination of the accounting and auditing
methods of the Company and its system of internal protective controls to the
extent considered necessary or advisable in order to determine that the
operations of the Company, including its fiduciary departments, are being
audited by the General Auditor in such a manner as to provide prudent and
adequate protection. The Committee also may direct the General Auditor to make
such investigation as it deems necessary or advisable with respect to the
Company, its various departments and the conduct of its operations. The
<PAGE>
Committee shall hold regular quarterly meetings and during the intervals thereof
shall meet at other times on call of the Chairman.
SECTION 3. The Board of Directors shall have the power to appoint any other
Committees as may seem necessary, and from time to time to suspend or continue
the powers and duties of such Committees. Each Committee appointed pursuant to
this Article shall serve at the pleasure of the Board of Directors.
ARTICLE IV
OFFICERS
SECTION 1. The Board of Directors shall elect from among their number a Chairman
of the Board and a Chief Executive Officer; and shall also elect a President,
and may also elect a Senior Vice Chairman, one or more Vice Chairmen, one or
more Executive Vice Presidents, one or more Senior Managing Directors, one or
more Managing Directors, one or more Senior Vice Presidents, one or more
Principals, one or more Vice Presidents, one or more General Managers, a
Secretary, a Controller, a Treasurer, a General Counsel, one or more Associate
General Counsels, a General Auditor, a General Credit Auditor, and one or more
Deputy Auditors, who need not be directors. The officers of the corporation may
also include such other officers or assistant officers as shall from time to
time be elected or appointed by the Board. The Chairman of the Board or the
Chief Executive Officer or, in their absence, the President, the Senior Vice
Chairman or any Vice Chairman, may from time to time appoint assistant officers.
All officers elected or appointed by the Board of Directors shall hold their
respective offices during the pleasure of the Board of Directors, and all
assistant officers shall hold office at the pleasure of the Board or the
Chairman of the Board or the Chief Executive Officer or, in their absence, the
President, the Senior Vice Chairman or any Vice Chairman. The Board of Directors
may require any and all officers and employees to give security for the faithful
performance of their duties.
SECTION 2. The Board of Directors shall designate the Chief Executive Officer of
the Company who may also hold the additional title of Chairman of the Board,
President, Senior Vice Chairman or Vice Chairman and such person shall have,
subject to the supervision and direction of the Board of Directors or the
Executive Committee, all of the powers vested in such Chief Executive Officer by
law or by these By-Laws, or which usually attach or pertain to such office. The
other officers shall have, subject to the supervision and direction of the Board
of Directors or the Executive Committee or the Chairman of the Board or, the
Chief Executive Officer, the powers vested by law or by these By-Laws in them as
holders of their respective offices and, in addition, shall perform such other
duties as shall be assigned to them by the Board of Directors or the Executive
Committee or the Chairman of the Board or the Chief Executive Officer.
The General Auditor shall be responsible, through the Audit Committee, to the
Board of Directors for the determination of the program of the internal audit
function and the evaluation of the adequacy of the system of internal controls.
Subject to the Board of Directors, the General Auditor shall have and may
exercise all the powers and shall perform all the duties usual to such office
and shall have such other powers as may be prescribed or assigned to him from
time to time by the Board of Directors or vested in him by law or by these
By-Laws. He shall perform such other duties and shall make such investigations,
examinations and reports as may be prescribed or required by the Audit
Committee. The General Auditor shall have unrestricted access to all records
<PAGE>
and premises of the Company and shall delegate such authority to his
subordinates. He shall have the duty to report to the Audit Committee on all
matters concerning the internal audit program and the adequacy of the system of
internal controls of the Company which he deems advisable or which the Audit
Committee may request. Additionally, the General Auditor shall have the duty of
reporting independently of all officers of the Company to the Audit Committee at
least quarterly on any matters concerning the internal audit program and the
adequacy of the system of internal controls of the Company that should be
brought to the attention of the directors except those matters responsibility
for which has been vested in the General Credit Auditor. Should the General
Auditor deem any matter to be of special immediate importance, he shall report
thereon forthwith to the Audit Committee. The General Auditor shall report to
the Chief Financial Officer only for administrative purposes.
The General Credit Auditor shall be responsible to the Chief Executive Officer
and, through the Audit Committee, to the Board of Directors for the systems of
internal credit audit, shall perform such other duties as the Chief Executive
Officer may prescribe, and shall make such examinations and reports as may be
required by the Audit Committee. The General Credit Auditor shall have
unrestricted access to all records and may delegate such authority to
subordinates.
SECTION 3. The compensation of all officers shall be fixed under such plan or
plans of position evaluation and salary administration as shall be approved from
time to time by resolution of the Board of Directors.
SECTION 4. The Board of Directors, the Executive Committee, the Chairman of the
Board, the Chief Executive Officer or any person authorized for this purpose by
the Chief Executive Officer, shall appoint or engage all other employees and
agents and fix their compensation. The employment of all such employees and
agents shall continue during the pleasure of the Board of Directors or the
Executive Committee or the Chairman of the Board or the Chief Executive Officer
or any such authorized person; and the Board of Directors, the Executive
Committee, the Chairman of the Board, the Chief Executive Officer or any such
authorized person may discharge any such employees and agents at will.
<PAGE>
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
SECTION 1. The Company shall, to the fullest extent permitted by Section 7018 of
the New York Banking Law, indemnify any person who is or was made, or threatened
to be made, a party to an action or proceeding, whether civil or criminal,
whether involving any actual or alleged breach of duty, neglect or error, any
accountability, or any actual or alleged misstatement, misleading statement or
other act or omission and whether brought or threatened in any court or
administrative or legislative body or agency, including an action by or in the
right of the Company to procure a judgment in its favor and an action by or in
the right of any other corporation of any type or kind, domestic or foreign, or
any partnership, joint venture, trust, employee benefit plan or other
enterprise, which any director or officer of the Company is servicing or served
in any capacity at the request of the Company by reason of the fact that he, his
testator or intestate, is or was a director or officer of the Company, or is
serving or served such other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise in any capacity, against judgments,
fines, amounts paid in settlement, and costs, charges and expenses, including
attorneys' fees, or any appeal therein; provided, however, that no
indemnification shall be provided to any such person if a judgment or other
final adjudication adverse to the director or officer establishes that (i) his
acts were committed in bad faith or were the result of active and deliberate
dishonesty and, in either case, were material to the cause of action so
adjudicated, or (ii) he personally gained in fact a financial profit or other
advantage to which he was not legally entitled.
SECTION 2. The Company may indemnify any other person to whom the Company is
permitted to provide indemnification or the advancement of expenses by
applicable law, whether pursuant to rights granted pursuant to, or provided by,
the New York Banking Law or other rights created by (i) a resolution of
stockholders, (ii) a resolution of directors, or (iii) an agreement providing
for such indemnification, it being expressly intended that these By-Laws
authorize the creation of other rights in any such manner.
SECTION 3. The Company shall, from time to time, reimburse or advance to any
person referred to in Section 1 the funds necessary for payment of expenses,
including attorneys' fees, incurred in connection with any action or proceeding
referred to in Section 1, upon receipt of a written undertaking by or on behalf
of such person to repay such amount(s) if a judgment or other final adjudication
adverse to the director or officer establishes that (i) his acts were committed
in bad faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or (ii) he
personally gained in fact a financial profit or other advantage to which he was
not legally entitled.
SECTION 4. Any director or officer of the Company serving (i) another
corporation, of which a majority of the shares entitled to vote in the election
of its directors is held by the Company, or (ii) any employee benefit plan of
the Company or any corporation referred to in clause (i) in any capacity shall
be deemed to be doing so at the request of the Company. In all other cases, the
provisions of this Article V will apply (i) only if the person serving another
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise so served at the specific request of the Company,
<PAGE>
evidenced by a written communication signed by the Chairman of the Board, the
Chief Executive Officer or the President, and (ii) only if and to the extent
that, after making such efforts as the Chairman of the Board, the Chief
Executive Officer or the President shall deem adequate in the circumstances,
such person shall be unable to obtain indemnification from such other enterprise
or its insurer.
SECTION 5. Any person entitled to be indemnified or to the reimbursement or
advancement of expenses as a matter of right pursuant to this Article V may
elect to have the right to indemnification (or advancement of expenses)
interpreted on the basis of the applicable law in effect at the time of
occurrence of the event or events giving rise to the action or proceeding, to
the extent permitted by law, or on the basis of the applicable law in effect at
the time indemnification is sought.
SECTION 6. The right to be indemnified or to the reimbursement or advancement of
expense pursuant to this Article V (i) is a contract right pursuant to which the
person entitled thereto may bring suit as if the provisions hereof were set
forth in a separate written contract between the Company and the director or
officer, (ii) is intended to be retroactive and shall be available with respect
to events occurring prior to the adoption hereof, and (iii) shall continue to
exist after the rescission or restrictive modification hereof with respect to
events occurring prior thereto.
SECTION 7. If a request to be indemnified or for the reimbursement or
advancement of expenses pursuant hereto is not paid in full by the Company
within thirty days after a written claim has been received by the Company, the
claimant may at any time thereafter bring suit against the Company to recover
the unpaid amount of the claim and, if successful in whole or in part, the
claimant shall be entitled also to be paid the expenses of prosecuting such
claim. Neither the failure of the Company (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of or
reimbursement or advancement of expenses to the claimant is proper in the
circumstance, nor an actual determination by the Company (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant is
not entitled to indemnification or to the reimbursement or advancement of
expenses, shall be a defense to the action or create a presumption that the
claimant is not so entitled.
SECTION 8. A person who has been successful, on the merits or otherwise, in the
defense of a civil or criminal action or proceeding of the character described
in Section 1 shall be entitled to indemnification only as provided in Sections 1
and 3, notwithstanding any provision of the New York Banking Law to the
contrary.
<PAGE>
ARTICLE VI
SEAL
SECTION 1. The Board of Directors shall provide a seal for the Company, the
counterpart dies of which shall be in the charge of the Secretary of the Company
and such officers as the Chairman of the Board, the Chief Executive Officer or
the Secretary may from time to time direct in writing, to be affixed to
certificates of stock and other documents in accordance with the directions of
the Board of Directors or the Executive Committee.
SECTION 2. The Board of Directors may provide, in proper cases on a specified
occasion and for a specified transaction or transactions, for the use of a
printed or engraved facsimile seal of the Company.
ARTICLE VII
CAPITAL STOCK
SECTION 1. Registration of transfer of shares shall only be made upon the books
of the Company by the registered holder in person, or by power of attorney, duly
executed, witnessed and filed with the Secretary or other proper officer of the
Company, on the surrender of the certificate or certificates of such shares
properly assigned for transfer.
ARTICLE VIII
CONSTRUCTION
SECTION 1. The masculine gender, when appearing in these By-Laws, shall be
deemed to include the feminine gender.
ARTICLE IX
AMENDMENTS
SECTION 1. These By-Laws may be altered, amended or added to by the Board of
Directors at any meeting, or by the stockholders at any annual or special
meeting, provided notice thereof has been given.
<PAGE>
I, Ednora G. Linares, Assistant Vice President of Bankers Trust Company, New
York, New York, hereby certify that the foregoing is a complete, true and
correct copy of the By-Laws of Bankers Trust Company, and that the same are in
full force and effect at this date.
Ednora G. Linares
---------------------------------------
ASSISTANT VICE PRESIDENT
DATED: August 27,1998
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 03/31/98 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-1
City, State ZIP: New York, NY 10006 11
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
</TABLE>
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for March 31, 1998
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, reported the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
------------
| C400 |
---------------------------
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
- -------------------------------------------------------------------------------------------------------------------------------
ASSETS | ////////////////// |
1. Cash and balances due from depository institutions (from Schedule RC-A): | ////////////////// |
a. Noninterest-bearing balances and currency and coin (1) ............... | 0081 1,458,000 |1.a.
b. Interest-bearing balances (2) ........................................ | 0071 2,253,000 |1.b.
2. Securities: | ////////////////// |
a. Held-to-maturity securities (from Schedule RC-B, column A) ........... | 1754 0 |2.a.
b. Available-for-sale securities (from Schedule RC-B, column D).......... | 1773 6,444,000 |2.b.
3. Federal funds sold and securities purchased under agreements to resell....... | 1350 30,836,000 |3.
4. Loans and lease financing receivables: | ////////////////// |
a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 19,993,000 | ////////////////// |4.a.
b. LESS: Allowance for loan and lease losses...................RCFD 3123 647,000 | ////////////////// |4.b.
c. LESS: Allocated transfer risk reserve ......................RCFD 3128 0 | ////////////////// |4.c.
d. Loans and leases, net of unearned income, | ////////////////// |
allowance, and reserve (item 4.a minus 4.b and 4.c) ................... | 2125 19,346,000 |4.d.
5. Trading Assets (from schedule RC-D) ........................................ | 3545 45,690,000 |5.
6. Premises and fixed assets (including capitalized leases) .................... | 2145 791,000 |6.
7. Other real estate owned (from Schedule RC-M) ................................ | 2150 184,000 |7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) | 2130 104,000 |8.
9. Customers' liability to this bank on acceptances outstanding ................ | 2155 542,000 |9.
10. Intangible assets (from Schedule RC-M) ...................................... | 2143 81,000 |10.
11. Other assets (from Schedule RC-F) ........................................... | 2160 5,339,000 |11.
12. Total assets (sum of items 1 through 11) .................................... | 2170 113,068,000 |12.
-------------------------------
</TABLE>
- --------------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 03/31/98 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-2
City, State Zip: New York, NY 10006 12
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
</TABLE>
Schedule RC--Continued
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
___________________________
Dollar Amounts in Thousands |//////// Bil Mil Thou|
- -------------------------------------------------------------------------------------------------|-------------------------|
LIABILITIES |//////////////////////// |
13. Deposits: |/////////////////////// |
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part I) | RCON 2200 26,465,000 |13.a.
(1) Noninterest-bearing(1) ......................RCON 6631 3,005,000....... |/////////////////////// |13.a.(1)
(2) Interest-bearing .............................RCON 6636 23,460,000....... |/////////////////////// |13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E |/////////////////////// |
part II) | RCFN 2200 21,993,000 |13.b.
(1) Noninterest-bearing .........................RCFN 6631 1,712,000 |/////////////////////// |13.b.(1)
(2) Interest-bearing ............................RCFN 6636 20,281,000 |/////////////////////// |13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase | RCFD 2800 12,125,000 |14.
15. a. Demand notes issued to the U.S. Treasury ........................................ | RCON 2840 0 |15.a.
b. Trading liabilities (from Schedule RC-D)......................................... | RCFD 3548 25,701,000 |15.b.
16.Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases)|////////////////////// /|
a. With a remaining maturity of one year or less ................................... | RCFD 2332 6,773,000 |16.a.
b. With a remaining maturity of more than one year through three years............. | A547 3,754,000 |16.b.
c. With a remaining maturity of more than three years................................ | A548 2,212,000 |16.c
17. Not Applicable. |/////////////////////////|17.
18. Bank's liability on acceptances executed and outstanding ............................. | RCFD 2920 542,000 |18.
19. Subordinated notes and debentures (2)................................................. | RCFD 3200 1,308,000 |19.
20. Other liabilities (from Schedule RC-G) ............................................... | RCFD 2930 6,135,000 |20.
21. Total liabilities (sum of items 13 through 20) ....................................... | RCFD 2948 107,008,000 |21.
22. Not Applicable |/////////////////////// |
|/////////////////////////|22.
EQUITY CAPITAL |/////////////////////// |
23. Perpetual preferred stock and related surplus ........................................ | RCFD 3838 1,000,000 |23.
24. Common stock ......................................................................... | RCFD 3230 1,352,000 |24.
25. Surplus (exclude all surplus related to preferred stock) ............................. | RCFD 3839 544,000 |25.
26. a. Undivided profits and capital reserves .......................................... | RCFD 3632 3,583,000 |26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities .......... | RCFD 8434 ( 41,000) |26.b.
27. Cumulative foreign currency translation adjustments .................................. | RCFD 3284 ( 378,000) |27.
28. Total equity capital (sum of items 23 through 27) .................................... | RCFD 3210 6,060,000 |28.
29. Total liabilities and equity capital (sum of items 21 and 28)......................... | RCFD 3300 113,068,000 |29
---------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the
most comprehensive level of auditing work performed for the bank by independent external Number
---------------------------
auditors as of any date during 1997 ..................................... | RCFD 6724 1 | M.1
---------------------------
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed
with generally accepted auditing standards by a certified by other external auditors (may be required
public accounting firm which submits a report on the bank by state chartering authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by
conducted in accordance with generally accepted auditing external auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial
submits a report on the consolidated holding company statements by external auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax
3 = Directors' examination of the bank conducted in preparation work)
accordance with generally accepted auditing standards by a certified 8 = No external audit work
public accounting firm (may be required by state chartering authority)
</TABLE>
- ----------------------
(1) Including total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION DERIVED FROM THE
REGISTRATION STATEMENT ON FORM S-3 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL INFORMATION.
</LEGEND>
<CIK> 0001017793
<NAME> SUN BANCORP, INC.
<RESTATED>
<MULTIPLIER> 1000
<S> <C> <C> <C> <C> <C>
<PERIOD-TYPE> 6-MOS 9-MOS YEAR 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1997 DEC-31-1997
<PERIOD-END> JUN-30-1996 SEP-30-1996 DEC-31-1996 MAR-31-1997 JUN-30-1997
<CASH> 16,442 21,924 17,007 18,172 26,688
<INT-BEARING-DEPOSITS> 0 0 0 0 0
<FED-FUNDS-SOLD> 0 0 4,800 0 11,150
<TRADING-ASSETS> 0 0 0 0 0
<INVESTMENTS-HELD-FOR-SALE> 136,703 125,359 0 95,135 150,581
<INVESTMENTS-CARRYING> 136,703 125,359 97,063 95,135 150,581
<INVESTMENTS-MARKET> 136,703 125,359 95,581 95,135 150,581
<LOANS> 236,841 267,686 297,565 322,666 367,056
<ALLOWANCE> 2,173 2,375 2,595 2,967 3,351
<TOTAL-ASSETS> 412,575 436,270 436,795 459,051 585,219
<DEPOSITS> 371,015 380,160 385,987 371,266 467,394
<SHORT-TERM> 14,236 28,213 15,253 33,478 57,426
<LIABILITIES-OTHER> 2,446 2,166 2,141 1,938 2,579
<LONG-TERM> 0 0 6,000 25,000 0
0 0 0 0 28,750
0 0 0 0 0
<COMMON> 1,760 1,760 1,849 1,851 1,945
<OTHER-SE> 23,118 23,972 25,566 25,519 27,126
<TOTAL-LIABILITIES-AND-EQUITY> 412,575 436,270 436,795 459,051 585,219
<INTEREST-LOAN> 9,596 15,639 22,074 6,922 14,788
<INTEREST-INVEST> 3,709 5,584 7,127 1,330 3,293
<INTEREST-OTHER> 65 65 68 1 64
<INTEREST-TOTAL> 13,371 21,288 29,270 8,252 18,145
<INTEREST-DEPOSIT> 5,511 8,733 11,954 3,193 6,556
<INTEREST-EXPENSE> 5,598 9,028 12,534 3,723 8,692
<INTEREST-INCOME-NET> 7,773 12,261 16,736 4,529 9,454
<LOAN-LOSSES> 450 675 900 420 825
<SECURITIES-GAINS> 191 203 206 5 16
<EXPENSE-OTHER> 6,121 9,730 13,207 3,573 7,332
<INCOME-PRETAX> 2,060 3,168 4,375 944 2,072
<INCOME-PRE-EXTRAORDINARY> 1,392 3,168 3,013 944 2,072
<EXTRAORDINARY> 0 0 0 0 0
<CHANGES> 0 0 0 0 0
<NET-INCOME> 1,392 2,167 3,013 679 1,482
<EPS-PRIMARY> 0.84 1.25 1.68 0.37 0.76
<EPS-DILUTED> 0.80 1.22 1.58 0.35 0.71
<YIELD-ACTUAL> 4.19 4.18 4.28 4.53 4.55
<LOANS-NON> 1,977 1,947 1,277 1,360 1,097
<LOANS-PAST> 475 845 1,143 602 1,535
<LOANS-TROUBLED> 981 974 973 0 0
<LOANS-PROBLEM> 0 0 0 0 0
<ALLOWANCE-OPEN> 2,065 2,065 2,065 2,595 2,595
<CHARGE-OFFS> 350 377 400 54 82
<RECOVERIES> 8 13 31 6 13
<ALLOWANCE-CLOSE> 2,173 2,375 2,595 2,967 3,351
<ALLOWANCE-DOMESTIC> 2,173 2,375 2,595 2,227 3,351
<ALLOWANCE-FOREIGN> 0 0 0 0 0
<ALLOWANCE-UNALLOCATED> 2,173 2,375 2,595 740 458
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION DERIVED FROM THE
REGISTRATION STATEMENT ON FORM S-3 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL INFORMATION.
</LEGEND>
<CIK> 0001017793
<NAME> SUN BANCORP, INC.
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 20,434
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 290,808
<INVESTMENTS-CARRYING> 290,808
<INVESTMENTS-MARKET> 290,808
<LOANS> 392,380
<ALLOWANCE> 3,761
<TOTAL-ASSETS> 738,124
<DEPOSITS> 541,316
<SHORT-TERM> 134,113
<LIABILITIES-OTHER> 2,858
<LONG-TERM> 0
28,750
0
<COMMON> 2,935
<OTHER-SE> 28,152
<TOTAL-LIABILITIES-AND-EQUITY> 738,124
<INTEREST-LOAN> 23,659
<INTEREST-INVEST> 6,905
<INTEREST-OTHER> 333
<INTEREST-TOTAL> 30,897
<INTEREST-DEPOSIT> 11,138
<INTEREST-EXPENSE> 4,371
<INTEREST-INCOME-NET> 15,388
<LOAN-LOSSES> 1,245
<SECURITIES-GAINS> 91
<EXPENSE-OTHER> 11,759
<INCOME-PRETAX> 3,757
<INCOME-PRE-EXTRAORDINARY> 3,757
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,678
<EPS-PRIMARY> 0.92
<EPS-DILUTED> 0.84
<YIELD-ACTUAL> 4.38
<LOANS-NON> 937
<LOANS-PAST> 1,099
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,595
<CHARGE-OFFS> 97
<RECOVERIES> 18
<ALLOWANCE-CLOSE> 3,761
<ALLOWANCE-DOMESTIC> 3,761
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 652
</TABLE>
