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As filed with the Securities and Exchange Commission on March 26, 1999
Registration No. 333-
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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FLAGSTAR BANCORP, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
MICHIGAN 38-3150651
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
</TABLE>
FLAGSTAR TRUST
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE APPLIED FOR
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
</TABLE>
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2600 TELEGRAPH ROAD
BLOOMFIELD HILLS, MICHIGAN 48302-0953
(248) 338-7700
(Address, including zip code, and telephone number, including area code, of
Registrants' principal executive offices)
------------------------------
THOMAS J. HAMMOND
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
FLAGSTAR BANCORP, INC.
2600 TELEGRAPH ROAD
BLOOMFIELD HILLS, MICHIGAN 48302-0953
(248) 338-7700
(Name, address, including zip code, and telephone number, including area code,
of agent for service of process)
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Copies To:
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<S> <C>
MATTHEW G. ASH, ESQ. DONALD J. KUNZ, ESQ.
PAUL D. BORJA, ESQ. DAVID E. BARNES, ESQ.
ROGER D. BAILEY, ESQ. HONIGMAN MILLER SCHWARTZ AND COHN
KUTAK ROCK 2290 FIRST NATIONAL BUILDING
1101 CONNECTICUT AVENUE, N.W., SUITE 1000 660 WOODWARD AVENUE
WASHINGTON, DC 20036-4374 DETROIT, MICHIGAN 48226-3583
(202) 828-2400 (PHONE) (313) 465-7000 (PHONE)
(202) 828-2488 (FAX) (313) 465-7455 (FAX)
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
------------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
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 the delivery of the Prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
=================================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) PRICE(1) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Preferred Securities of Flagstar Trust....... 2,990,000(2) $25.00 $74,750,000 $21,000
- ---------------------------------------------------------------------------------------------------------------------------------
% Junior Subordinated Debentures of
Flagstar Bancorp, Inc.(3)..................
- ---------------------------------------------------------------------------------------------------------------------------------
Guarantee of Flagstar Bancorp, Inc. with
respect to Preferred Securities(4).........
=================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee based on
Section 6(b), in accordance with Rule 457(a) of the General Rules and
Regulations under the Securities Act of 1933, as amended.
(2) Includes 390,000 Preferred Securities that are being registered in
connection with a 15% over-allotment option granted to the Underwriters.
(3) The % Junior Subordinated Debentures (the "Junior Subordinated
Debentures") will be purchased by Flagstar Trust with the proceeds of the
sale of the Preferred Securities. The Junior Subordinated Debentures may
later be distributed for no additional consideration to holders of the
Preferred Securities upon Flagstar Trust's dissolution and distribution of
its assets.
(4) No fee is required pursuant to Rule 457(n).
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION. DATED APRIL , 1999
PROSPECTUS
2,600,000 PREFERRED SECURITIES
[FLAGSTAR TRUST LOGO]
% CUMULATIVE PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
GUARANTEED BY
[FLAGSTAR BANCORP LOGO]
------------------------------------
The Offering:
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<CAPTION>
PER
PREFERRED
SECURITY TOTAL
--------- -----
<S> <C> <C>
Public Price........... $25.00 $65,000,000
Underwriting Discounts
and Commissions......
------ -----------
Proceeds to Trust...... $ $
====== ===========
</TABLE>
This offering is for 2,600,000 Preferred Securities of Flagstar Trust; however,
the Underwriters have a 30-day option to purchase up to an additional 15% of the
shares of Preferred Securities (390,000 additional Preferred Securities) from
Flagstar Trust.
Flagstar Trust is a Delaware business trust. The trust will:
- - sell Preferred Securities (representing undivided beneficial interests in the
trust) to the public,
- - sell Common Securities (representing undivided beneficial interests in the
trust) to Flagstar Bancorp,
- - use the proceeds from these sales to buy an equal principal amount of Junior
Subordinated Debentures due 2029 of Flagstar Bancorp,
- - distribute the cash payments it receives on the Junior Subordinated Debentures
it owns to the holders of the Preferred and Common Securities.
For each Preferred Security that you own, you will be entitled to receive
cumulative cash distributions at an annual rate of % payable after each
calendar quarter on the last business day of March, June, September and
December, beginning on June 30, 1999. We may defer payment of distributions at
any time for periods of up to 20 consecutive quarters. The Preferred Securities
are subordinated to all of our Senior and Subordinated Debt. The Preferred
Securities mature on , 2029. Flagstar Trust may redeem the Preferred
Securities, at a redemption price of $25 per Preferred Security plus accrued and
unpaid distributions, at any time on or after , 2004, or earlier under
certain circumstances.
Flagstar Bancorp will fully and unconditionally guarantee the Preferred
Securities based on its obligations under a guarantee, a trust declaration and
an indenture.
We have applied to The Nasdaq Stock Market to list the Preferred Securities
under the trading symbol " ______ ".
------------------------------------
INVESTING IN THE PREFERRED SECURITIES INVOLVES RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 7.
NONE OF THE SECURITIES OFFERED BY THIS PROSPECTUS ARE DEPOSITS OR ACCOUNTS. THEY
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSIONS HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------------------
RONEY CAPITAL MARKETS LOGO
MCDONALD INVESTMENTS INC.
STIFEL, NICOLAUS & COMPANY
INCORPORATED
JWGENESIS CAPITAL MARKETS, LLC
DATE OF THIS PROSPECTUS IS , 1999.
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[MAP OF PROPOSED MARKET AREA]
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ABOUT THIS PROSPECTUS
This Prospectus is part of a registration statement on Form S-3 that we and
Flagstar Trust have filed with the Securities and Exchange Commission (the
"SEC") relating to Flagstar Trust's Preferred Securities being offered by this
Prospectus. As permitted by SEC rules, this Prospectus does not contain all of
the information contained in the registration statement and accompanying
exhibits and schedules we file with the SEC. You may refer to the registration
statement, the exhibits and schedules for more information about us and Flagstar
Trust's Preferred Securities. The registration statement, exhibits and schedules
are also available at the SEC's public reference rooms or through its EDGAR
database on the internet.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy, upon payment of a fee set by
the SEC, any document that we file with the SEC at its public reference rooms in
Washington, D.C. (450 Fifth Street, N.W., 20549), New York, New York (Seven
World Trade Center, 13th Floor, Suite 1300, 10048) and Chicago, Illinois
(Citicorp Center, 500 West Madison Street, 14th Floor, Suite 1400, 60661). You
may also call the SEC at 1-800-432-0330 for more information on the public
reference rooms. Our filings are also available to the public on the internet,
through the SEC's EDGAR database. You may access the EDGAR database at the SEC's
web site at http://www.sec.gov.
You may also obtain a copy of these filings from us at no cost upon your
written or oral request to us. Please direct your requests to our Corporate
Secretary, Mary Kay McGuire, at Flagstar Bancorp, Inc., 2600 Telegraph Road,
Bloomfield Hills, Michigan, 48302-0953, or by telephoning us at (248) 338-7700.
To obtain timely delivery, you must request the information no later than five
business days prior to the date you decide to invest in Flagstar Trust's
Preferred Securities.
The SEC allows us to "incorporate by reference" into this Prospectus the
information we file with them. This means that we can disclose important
business, financial and other information in our SEC filings by referring you to
the documents containing this information. Any information referred to in this
way is considered part of this Prospectus, and any information filed with the
SEC by us after the date of this Prospectus will automatically be deemed to
update and supersede this information. We incorporate by reference the documents
listed below and any future filings made with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act")
until we file a post-effective amendment to the Form S-3 indicating the
termination of this offering:
- Annual Report on Form 10-K for the year ended December 31, 1998.
There are not separate financial statements of Flagstar Trust in this
Prospectus. We do not believe such financial statements would be helpful
because:
- Flagstar Trust is a subsidiary of Flagstar Bancorp, Inc., which files
consolidated financial information under the Exchange Act.
- Flagstar Trust does not have any independent operations other than
issuing the preferred and common securities and purchasing the Junior
Subordinated Debentures of Flagstar Bancorp, Inc.
- Flagstar Trust's only material assets will be the Junior Subordinated
Debentures of Flagstar Bancorp, Inc. when issued.
- The combined obligations of Flagstar Bancorp, Inc. under the Junior
Subordinated Debentures, the Guarantee, the Trust Agreement and the
Indenture (each as we define later) have the effect of providing a full
and unconditional guarantee of Flagstar Trust's
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obligations under its Preferred Securities. See "Description of Junior
Subordinated Securities," "Description of Preferred Securities,"
"Description of Guarantee" and "Relationship Among Preferred Securities,
the Junior Subordinated Debentures and the Guarantee."
SPECIAL NOTE OF CAUTION REGARDING
FORWARD-LOOKING STATEMENTS
Certain statements contained in (i) this Prospectus, (ii) any applicable
amendment to this Prospectus and (iii) the documents incorporated by reference
into this Prospectus, may constitute "forward-looking statements" within the
meaning of the federal securities laws. Forward-looking statements are based on
our management's beliefs, assumptions and expectations of our future economic
performance, taking into account the information currently available to them.
These statements are not statements of historical fact. Forward-looking
statements involve risks and uncertainties that may cause our actual results,
performance or financial condition to be materially different from the
expectations of future results, performance or financial condition we express or
imply in any forward-looking statements. Some of the important factors that
could cause our actual results, performance or financial condition to differ
materially from our expectations are:
- The effect that changes in interest rates have on our earnings and
assets.
- Our cost of funds.
- Our ability to resell mortgages.
- Our level of loan defaults and delinquencies.
- Concentrations of our loans in one geographic area or with a few mortgage
companies.
- The seasonal variations in the mortgage banking business.
- Our ability to manage our retail banking expansion.
- Our ability to retain key personnel.
- The degree and nature of our competition.
- Changes in government regulation of our business.
- The threat of litigation in the mortgage banking business.
- Environmental liability associated with foreclosures.
- The effect of the Year 2000 problem on us and on those entities with
which we deal.
When used in our documents or oral presentations, the words "believe,"
"may," "will," "should," "anticipate," "estimate," "expect," "objective,"
"projection," "forecast," "goal," or similar words or the negatives of these
words are intended to identify forward-looking statements. We qualify any such
forward-looking statements entirely by these cautionary factors.
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this Prospectus.
The summary is not complete and does not contain all of the information that you
should consider before investing in the Preferred Securities. You should read
the entire Prospectus carefully.
We use the term "we" or "the Company" to refer to Flagstar Bancorp, Inc., a
business corporation organized under Michigan law. We use the term "Flagstar
Trust" to refer to Flagstar Trust, a Delaware business trust organized to
purchase our Junior Subordinated Debentures and issue the Preferred Securities.
We use the term "the Bank" to refer to Flagstar Bank, FSB, a federal savings
bank organized under federal laws of the United States. In some cases, a
reference to "we" or "the Company" will include the Bank and Flagstar Trust
since they are both our wholly-owned subsidiaries.
FLAGSTAR BANCORP, INC.
We are one of the largest home mortgage lenders in the United States. Our
business is the origination of single-family mortgage loans. Through the Bank,
we attract deposits from the general public and originate or acquire residential
mortgage loans. The Bank is the largest independent savings institution in
Michigan based on asset size. For the year ended December 31, 1998, we ranked
13th in the United States in residential mortgage loan originations.
We have experienced significant asset growth and achieved continuing
profitability:
- Total assets increased to $3.0 billion for the year ended December 31,
1998 from $1.9 billion for the same period in 1997 and $1.3 billion for
the same period in 1996.
- Net income increased to $41.1 million ($2.90 per share -- diluted) for
the year ended December 31, 1998 from $21.8 million ($1.68 per
share -- diluted) for the same period in 1997 and $17.0 million ($1.51
per share -- diluted) for the same period in 1996.
- For the year ended December 31, 1998 return on average assets equaled
1.45% and return on average equity equaled 28.77% compared to return on
average assets of 1.29% and return on average equity of 20.69% for the
same period in 1997.
Our primary lines of business are mortgage banking and retail banking.
- Our mortgage banking operations originate residential mortgages through
31 retail loan origination offices located in Michigan (27), Florida (3)
and Ohio (1), as well as a nationwide network of independent mortgage
brokers.
- We currently operate a network of 30 retail bank branches located in
Michigan, including two opened in 1999.
For the year ended December 31, 1998, we produced $18.8 billion in mortgage
loans as compared to $7.9 billion in 1997. In addition, our loan servicing
portfolio totaled $11.5 billion at December 31, 1998 as compared to $6.4 billion
at December 31, 1997. Substantially all of our servicing portfolio (net of loans
subserviced for others) is comprised of conventional loans.
OUR BUSINESS STRATEGY
Our strategy consists of the following key elements:
- continue to expand our bank branch network into demographically desirable
communities in Michigan in order to gain access to additional deposits;
- as market conditions permit, retain a portion of our mortgage loan
production volume or mortgage servicing rights or both (thereby
benefiting from economies of scale);
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- continue to utilize advanced technology and automated processes
throughout our business to improve customer service, reduce costs of loan
production and servicing and increase efficiencies; and
- cross-sell retail banking services to our large Michigan base of existing
mortgage customers.
FLAGSTAR TRUST
Flagstar Trust is a Delaware business trust. Flagstar Trust will exist
solely to:
- issue and sell its Common Securities to us;
- issue and sell its Preferred Securities to the public;
- use the proceeds from the sale of its Common Securities and Preferred
Securities to purchase the Junior Subordinated Debentures from us;
- distribute the cash payments it receives on the Junior Subordinated
Debentures it owns to the holders of the Preferred and Common Securities;
and
- engage in other activities that are necessary or incidental to these
purposes.
Flagstar Bancorp's and Flagstar Trust's principal executive offices are
located at 2600 Telegraph Road, Bloomfield Hills, Michigan, 48302-0968. The main
telephone number for both Flagstar Bancorp and Flagstar Trust is (248) 338-7700.
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RISK FACTORS
In addition to the other information in this Prospectus, you should
carefully consider the following factors before investing in the Preferred
Securities.
PREFERRED SECURITIES RISK FACTORS
THE HOLDERS OF OUR SENIOR AND SUBORDINATED DEBT WILL GET PAID BEFORE YOU
WILL GET PAID UNDER THE GUARANTEE.
Our obligations under the Junior Subordinated Debentures are unsecured and
rank junior in right of payment to all of our Senior and Subordinated Debt and
equal to any junior debt securities we may later have.
The Preferred Securities, the Junior Subordinated Debentures and the
Guarantee do not limit our ability to incur additional indebtedness, including
indebtedness that ranks senior to the Junior Subordinated Debentures and the
Guarantee. See "Description of Guarantee -- Status of Guarantee" and
"Description of the Junior Subordinated Debentures -- Subordination."
IF WE DO NOT MAKE PAYMENTS UNDER THE JUNIOR SUBORDINATED DEBENTURES,
FLAGSTAR TRUST WILL BE UNABLE TO PAY DISTRIBUTIONS AND LIQUIDATION AMOUNTS AND
THE PREFERRED SECURITIES GUARANTEE WILL NOT APPLY.
The ability of Flagstar Trust to pay Distributions and, upon redemption,
the Liquidation Amount of $25 per Preferred Security is solely dependent upon
our ability to make the related payments on the Junior Subordinated Debentures
when due. If we default on our obligation to pay principal of or interest on the
Junior Subordinated Debentures, Flagstar Trust will not have sufficient funds to
pay Distributions or the Liquidation Amount.
In that case, you will not be able to rely upon the Preferred Securities
Guarantee for payment of these amounts because the Preferred Securities
Guarantee only applies if we make a payment of principal or interest on the
Junior Subordinated Debentures. For more information on our obligations under
the Preferred Securities Guarantee and the Junior Subordinated Debentures, see
"Description of Guarantee -- Status of Guarantee" and "Description of the Junior
Subordinated Debentures -- Subordination."
OUR INTEREST PAYMENTS ON THE JUNIOR SUBORDINATED DEBENTURES ARE DEPENDENT
ON OUR RECEIPT OF DIVIDENDS FROM THE BANK.
A substantial majority of our assets consists of our investment in the
Bank. Thus, our ability to pay interest and principal on the Junior Subordinated
Debentures to Flagstar Trust depends primarily upon our receipt of cash
dividends from the Bank. Dividend payments from the Bank to us are subject to,
among other things:
- regulatory limitations, generally based on current and retained earnings
and capital maintenance requirements, imposed by various bank regulatory
agencies;
- profitability, financial condition and capital expenditures and other
cash flow requirements of the Bank; and
- prior claims of creditors of the Bank.
This means that the Junior Subordinated Debentures will be effectively
subordinated to all obligations of our subsidiaries. For example, our Bank
currently has a subsidiary that acts as a real estate investment trust ("REIT")
and sold preferred shares to the public. If the Bank is required to terminate
the REIT, the REIT's preferred shares will be exchanged for the Bank's preferred
shares. If this happens, the Bank's funds would be used first to satisfy its
obligations on its own preferred shares before paying any dividends to the
Company.
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If the Bank is unable to pay sufficient dividends to us, then we will
likely be unable to make payments on the Junior Subordinated Debentures, thereby
leaving insufficient funds for Flagstar Trust to make payments to you on the
Preferred Securities.
DISTRIBUTIONS ON THE PREFERRED SECURITIES MAY BE DEFERRED; YOU MAY HAVE TO
INCLUDE INTEREST IN YOUR TAXABLE INCOME BEFORE YOU RECEIVE CASH.
It is possible that you will not receive cash distributions on the
Preferred Securities for up to 20 consecutive quarters (in each case, an
"Extension Period"). We have the right, at one or more times, to defer interest
payments on the Junior Subordinated Debentures for up to 20 consecutive
quarters, but not beyond the maturity date of the Junior Subordinated Debentures
and must make payments of all deferred interest upon the earlier of the end of
the Extension Period or the maturity date. This right exists only if no Event of
Default under the Junior Subordinated Debentures has occurred and is continuing.
If we exercise this right, Flagstar Trust could defer Distributions on the
Preferred Securities during any Extension Period. However, you would still
accumulate Distributions at the annual rate of % of the Liquidation Amount
of $25 per Preferred Security, plus you will earn interest at the annual rate of
%, compounded quarterly, on any unpaid Distributions. When we pay all the
accumulated amounts due to you during an Extension Period, the Extension Period
will terminate. However, we have the right to begin another Extension Period
under the same terms outlined above. There is no limit on the number of times we
can elect to begin an Extension Period. During an Extension Period, the
Preferred Securities may trade at a price that does not fully reflect the value
of accrued but unpaid Distributions. See "Description of the Preferred
Securities."
You will also not receive the cash distributions related to any accrued and
unpaid interest from Flagstar Trust if you sell the Preferred Securities before
the end of an Extension Period. However, you will be required to include accrued
interest income as original issue discount for United States federal income tax
purposes in respect of your pro rata share of the Junior Subordinated Debentures
held by Flagstar Trust. While we will take the position that original issue
discount will not arise before the first Extension Period, it is possible that
all interest on the Junior Subordinated Debentures would be required to be
accounted for as original issue discount. In these circumstances, the receipt of
interest would not separately be reported as taxable income. See "United States
Federal Income Tax Consequences" for more information regarding the tax
consequences of the Preferred Securities.
We have no current intention of exercising our right to defer interest
payments on the Junior Subordinated Debentures. However, if we exercise our
right in the future, the market price of the Preferred Securities is likely to
be adversely affected.
IF WE REDEEM THE JUNIOR SUBORDINATED DEBENTURES IT WILL CAUSE A REDEMPTION
OF THE PREFERRED SECURITIES AND YOU MAY NOT BE ABLE TO REINVEST THE PROCEEDS AT
THE SAME OR HIGHER RATE OF RETURN.
You are subject to prepayment risk of your Preferred Securities. If your
Preferred Securities are redeemed, you may not be able to reinvest the money you
receive in the redemption at a rate that is equal to or higher than the rate of
return you receive on the Preferred Securities. Although the Junior Subordinated
Debentures have a stated maturity date of , 2029, they may be
redeemed by us prior to maturity which, in turn, would cause an early redemption
of the Preferred Securities, in the following circumstances:
- In whole or in part, beginning on 2004 at our option.
- In whole upon a change in the federal tax laws or a change in the
interpretation of the tax laws by the courts or the Internal Revenue
Service, which would result in a risk that (1) Flagstar Trust may be
subject to federal income tax, (2) the interest we pay on the Junior
Subordinated Debentures will not be deductible by us for federal income
tax pur-
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poses, or (3) Flagstar Trust is or will be subject to more than a minimal amount
of other taxes or governmental charges.
- In whole upon a change in the laws or regulations to the effect that
Flagstar Trust is or will be considered to be an investment company that
is required to be registered under the Investment Company Act of 1940.
- In whole upon a change in the laws or regulations if there is a risk that
we will not be able to treat all or a substantial portion of the
Preferred Securities as core capital for purposes of federal banking
guidelines.
Our exercise of these redemption rights is subject to our receipt of prior
approval of federal banking regulators, if required. For further information
concerning tax or regulatory events that may trigger redemption of the Junior
Subordinated Debentures and prepayment of the Preferred Securities, see
"Description of the Preferred Securities -- Redemption."
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES TO HOLDERS OF PREFERRED
SECURITIES MAY HAVE AN ADVERSE EFFECT ON THE MARKET PRICE OF YOUR INVESTMENT.
Your investment in the Preferred Securities may decrease in value if the
Junior Subordinated Debentures are distributed to you in exchange for your
Preferred Securities. We cannot predict the liquidity or market prices for the
Junior Subordinated Debentures that may be distributed. Accordingly, the Junior
Subordinated Debentures that you receive upon a distribution, or the Preferred
Securities you hold pending such a distribution, may trade at a discount to the
price that you paid to purchase the Preferred Securities.
Because you may receive Junior Subordinated Debentures, you must also make
an investment decision with regard to these securities. You should carefully
review all the information regarding the Junior Subordinated Debentures
contained in this Prospectus.
Under "United States Federal Income Tax Consequences" we discuss applicable
United States federal income tax consequences of a distribution of the Junior
Subordinated Debentures.
IN THE EVENT OF A DEFAULT UNDER THE PREFERRED SECURITIES, YOU MAY BE
REQUIRED TO RELY ON THE PROPERTY TRUSTEE OF FLAGSTAR TRUST TO ENFORCE YOUR
RIGHTS.
You may not be able to directly enforce rights against us if an event of
default occurs with respect to the Junior Subordinated Debentures. For a listing
of events that are events of default, see "Description of the Preferred
Securities -- Events of Default, Notice" and "Description of the Junior
Subordinated Debentures -- Debenture Events of Default."
If an event of default under the Junior Subordinated Debentures occurs and
is continuing, this event will also be an event of default under the Preferred
Securities. In that case, you generally would first have to rely on the Property
Trustee's enforcement of its rights as holder of the Junior Subordinated
Debentures against us. If the Property Trustee fails to exercise its rights
under the Junior Subordinated Debentures, you will then be able to exercise any
other remedies available under the Junior Subordinated Debentures.
However, if the default arises because we fail to pay interest or principal
(except during an Extension Period) on the Junior Subordinated Debentures, you
may proceed directly against us without first relying on the Property Trustee.
LIMITED COVENANTS RELATING TO THE PREFERRED SECURITIES AND THE JUNIOR
SUBORDINATED DEBENTURES WILL NOT NECESSARILY PROTECT YOU.
Our obligations as set forth in the governing documents (i.e., relating to
the Preferred Securities and the Junior Subordinated Debentures) are limited. As
a result, the governing documents will not necessarily protect you in the event
of an adverse change in our financial
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condition or results of operations. The governing documents do not limit our
ability or any of our subsidiaries to incur additional debt. You should not
consider the terms of the governing documents to be a significant factor in
evaluating whether we will be able to comply with our obligations under the
Junior Subordinated Debentures or the Guarantee.
WE WILL CONTROL FLAGSTAR TRUST BECAUSE YOU WILL HAVE LIMITED VOTING RIGHTS.
As a holder of Preferred Securities, you have limited voting rights. These
rights relate only to the modification of the Preferred Securities and removal
of the Property and Indenture Trustees of Flagstar Trust upon a limited number
of events. You will not have any voting rights regarding Flagstar Bancorp's
business or any matters regarding the Administrative Trustees. See "Description
of the Preferred Securities -- Voting Rights; Amendment of the Trust Agreement"
for more information on your limited voting rights.
TRADING CHARACTERISTICS OF THE PREFERRED SECURITIES MAY CREATE ADVERSE TAX
CONSEQUENCES FOR YOU.
The Preferred Securities may trade at a price that does not reflect the
value of accrued but unpaid interest on the underlying Junior Subordinated
Debentures. If you dispose of your Preferred Securities between record dates for
payments on the Preferred Securities, you may have adverse tax consequences.
Under these circumstances, you will be required to include accrued but unpaid
interest on the Junior Subordinated Debentures allocable to the Preferred
Securities through the date of disposition in your income as ordinary income.
If interest on the Junior Subordinated Debentures is included in income
under the original issue discount provisions, you would add this amount to your
adjusted tax basis in your share of the underlying Junior Subordinated
Debentures deemed disposed. If your selling price is less than your adjusted tax
basis, which will include all accrued but unpaid original issue discount
interest included in your income, you could recognize a capital loss which,
subject to exceptions, cannot be applied to offset ordinary income for federal
income tax purposes. See "United States Federal Income Tax
Consequences -- Potential Extension of Interest Payment Period and Original
Issue Discount" and "-- Sale of Preferred Securities" for more information on
possible adverse tax consequences to you.
THERE HAS NOT BEEN A PRIOR PUBLIC MARKET FOR THE PREFERRED SECURITIES, AND
AN ACTIVE TRADING MARKET FOR THE PREFERRED SECURITIES MAY NOT DEVELOP.
The Preferred Securities constitute a new issue of securities with no
established trading market. Although an application for listing of the Preferred
Securities on The Nasdaq Stock Market(R) has been filed, there can be no
assurance that our listing will be approved. Further, even if approved, a
listing does not guarantee that a trading market for the Preferred Securities
will develop. If a trading market does develop, there is no assurance of the
depth of that market or that holders of Preferred Securities will be able to
sell their Preferred Securities easily.
FLAGSTAR BANCORP RISK FACTORS
ANY CHANGES IN INTEREST RATES MAY ADVERSELY AFFECT OUR EARNINGS AND
FINANCIAL CONDITION.
Changes in interest rates affect our operating performance and financial
condition in diverse ways. Our profitability depends in substantial part on our
"net interest spread," which is the difference between the rates we receive on
loans and investments and the rates we pay for deposits and other sources of
funds. Our net interest spread will depend on many factors that are partly or
entirely outside our control, including competition, federal economic, monetary
and fiscal policies, and economic conditions generally. Historically, net
interest spreads for other financial institutions have widened and narrowed in
response to these and other factors, which are often collectively referred to as
"interest rate risk." We intend to try to minimize our exposure to interest rate
risk, but we will be unable to eliminate it.
10
<PAGE> 12
In our retail banking operations, we are subject to interest rate risk on
loans held in our portfolio arising from mismatches (i.e., the interest rate
sensitivity gap) between the dollar amount of repricing or maturing assets and
liabilities, which is measured in terms of the ratio of the interest rate
sensitivity gap to total assets. A higher level of assets repricing or maturing
than liabilities over a given time frame is considered asset-sensitive and is
reflected as a positive gap. In contrast, a higher level of liabilities
repricing or maturing than assets over a given time frame is considered
liability-sensitive and is reflected as a 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. 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. Although we have
attempted to structure our asset and liability management strategies to mitigate
the impact on net interest income of changes in market interest rates, we can
not give any assurance that a sudden or significant change in prevailing
interest rates will not have a material adverse effect on our operating results.
In our mortgage banking operations, we are exposed to interest rate risk
from the time the interest rate on a mortgage loan application is committed to
by us through the time we sell or commit to sell the mortgage loan. On a daily
basis, we analyze various economic and market factors and, based upon these
analyses, project the amount of mortgage loans we expect to sell for delivery at
a future date. The actual amount of loans we sell will be a percentage computed
as (i) the number of mortgage loans on which we have issued binding commitments
(and thereby locked in the interest rate) but have not yet closed ("pipeline
loans") divided by (ii) actual closings. If interest rates change in an
unanticipated fashion, the actual percentage of pipeline loans that close may
differ from the projected percentage. The resulting mismatch of commitments to
fund mortgage loans and commitments to sell mortgage loans may have an adverse
effect on the results of operations in any such period. For instance, a sudden
increase in interest rates can cause a higher percentage of pipeline loans to
close than projected. To the degree that this is not anticipated, we may not
have made commitments to sell these additional pipeline loans and may incur
significant losses upon their sale as the market rate of interest will be higher
than the mortgage interest rate we committed to on such additional pipeline
loans. Our profitability may be adversely affected to the extent our hedging
strategy is not successful.
The market value of, and earnings from, our mortgage loan servicing
portfolio may be adversely affected by declines in interest rates. When mortgage
interest rates decline, mortgage loan prepayments usually increase as customers
refinance their loans. When this happens, the income stream from our current
mortgage loan servicing portfolio may decline. In that case, we may be required
to amortize the portfolio over a shorter period of time or reduce the carrying
value of our mortgage loan servicing portfolio. This would adversely affect our
operating results and financial condition.
THE LOSS OF OR INCREASED COST OF OUR OPERATING FUNDS MAY REDUCE OUR
EARNINGS.
The principal sources of funding for our operations have been bank deposits
and, to a lesser extent, borrowings from the Federal Home Loan Bank (the "FHLB")
and funds held in escrow for mortgage loan servicing purposes. Historically, our
cost of funds associated with deposits has generally been lower than our cost to
borrow from the FHLB. If we are unable to fund our asset growth through the
maintenance and growth of our deposit base, we may have to rely to a greater
extent on borrowings from the FHLB or other sources. If this causes our net cost
of funds to increase, our net interest margin would be adversely affected. At
December 31, 1998, we had a $1.3 billion line of credit with the FHLB, of which
$456.0 million had been drawn and was outstanding.
We cannot assume that we will be successful in retaining our access to
funds at the level or cost necessary to continue originations of single-family
mortgage loans at their current volume
11
<PAGE> 13
and level of profitability. We may have to curtail our origination of
single-family mortgage loans if we cannot maintain our low cost of funds. If we
have to reduce our single family mortgage loan originations, we may suffer a
material adverse effect on our operating results and financial condition.
OUR PROFITABILITY WILL BE SIGNIFICANTLY REDUCED IF WE ARE NOT ABLE TO
RESELL MORTGAGES.
Currently, we sell substantially all the mortgage loans we originate. Our
profitability depends in large part upon our ability to originate or purchase a
high volume of loans and to quickly sell them in the secondary market.
Our ability to sell mortgage loans readily is dependent upon the
availability of an active secondary market for single-family mortgage loans,
which in turn depends in part upon the continuation of programs currently
offered by Fannie Mae, Freddie Mac, Ginnie Mae and other institutional and
non-institutional investors. These entities account for a substantial portion of
the secondary market in residential mortgage loans. Some of the largest
participants in the secondary market, including Fannie Mae, Freddie Mac and
Ginnie Mae, are government-sponsored enterprises whose activities are governed
by federal law. Any future changes in laws that limit the activity of such
government sponsored enterprises could, in turn, adversely affect our
operations.
In addition, our ability to sell mortgage loans readily is dependent upon
our ability to remain eligible for the programs offered by Fannie Mae, Freddie
Mac, Ginnie Mae and other institutional and non-institutional investors. We
expect to remain eligible to participate in such programs but any significant
impairment of such eligibility could materially and adversely affect our
operations. Further, the criteria for loans to be accepted under such programs
may be changed from time to time by the sponsoring entity. The profitability of
participating in specific programs may vary depending on a number of factors,
including our administrative costs of originating and purchasing qualifying
loans.
WE ARE AT RISK FOR LOSSES ON OUR LOANS THAT HAVE DEFAULTS OR DELINQUENCIES.
We are generally at risk for any loan defaults from the time we fund a loan
until the time we sell the loan. This time period is generally 10 to 40 days.
Once we sell the mortgage loans, the risk of loss from loan defaults and
foreclosure generally passes to the purchaser or insurer of the loans. In
connection with the sale, we typically make certain representations and
warranties to the purchasers and insurers of such loans. Such representations
and warranties generally relate to the origination and servicing of loans in
substantial conformance with the laws of the state of origination and applicable
investor guidelines and program eligibility standards. We rely upon our
underwriting department to ascertain compliance with individual investor
standards prior to sale of the loans in the secondary market, and we rely upon
our quality control department to test sold loans on a sample basis for
compliance. The purchasers of such loans will typically conduct a more detailed
review of such loans following acquisition to determine whether such loans were
originated in compliance with the purchaser's underwriting guidelines and
program eligibility standards. We become liable for the unpaid principal and
interest on any defaulted mortgage loan if there has been a breach of our
representations and warranties. In such instances, we may be required to
repurchase the loan.
We are also affected by loan delinquencies and defaults on mortgage loans
that we service. At December 31, 1998, approximately 1.83% of the loans we
serviced for others were 30 days or more delinquent (including foreclosures).
Under certain types of servicing contracts, the servicer must advance all or
part of the scheduled payments to the owner of the loan, even when loan payments
are delinquent. Also, to protect their liens on mortgaged properties, owners of
loans usually require the servicer to advance the cost of mortgage and hazard
insurance and tax payments on schedule even if sufficient escrow funds are not
available. The servicer will be reimbursed by the mortgage owner or from
liquidation proceeds for payments advanced that the
12
<PAGE> 14
servicer is unable to recover from the mortgagor, although the timing of such
reimbursement is typically uncertain. In the interim, the servicer must absorb
the cost of funds advanced. Further, the servicer must bear the costs of
attempting to collect on delinquent and defaulted loans. We do not collect
servicing income from the time a loan becomes delinquent until foreclosure, at
which time such amounts, if any, may be recovered.
IF THERE ARE ADVERSE CONDITIONS IN ONE GEOGRAPHIC AREA OR WITH A FEW
CUSTOMERS, THESE MAY HAVE A DISPROPORTIONATELY LARGE EFFECT ON OUR FINANCIAL
RESULTS.
Historically, our single-family mortgage loan portfolio has been
concentrated in certain geographic regions, particularly Michigan, based upon
the location of the property collateralizing the mortgage loan. Because
borrowers of single-family mortgage loans usually reside on the collateral
property, changes in economic and business conditions in the area in which the
property is located can affect the borrower and thus have an effect on the
performance of the loan. For instance, the mortgage loans we serviced (as
measured by unpaid principal balance), including loans held for investment, that
were collateralized by property located in Michigan comprised 22.4% of total
mortgage loans at December 31, 1998. As a result, unfavorable or worsened
economic conditions in Michigan could have a material adverse effect on our
financial condition and results of operations.
In addition to risks associated with a geographic concentration of our loan
portfolio, our results of operations can be affected by concentration of credit
to just a few borrowers. We currently provide warehouse lines of credit ranging
up to $21.5 million to certain mortgage companies. We have also originated
commercial real estate loans in amounts up to $6.5 million. Repayment of such
loans is primarily dependent upon the successful operation of the business
involved and therefore could be subject to a greater extent to adverse
conditions in the economy. If any single large loan customer defaults on their
loan from us, it could adversely affect our operating results.
A SIGNIFICANT PORTION OF OUR INCOME ARISES FROM THE MORTGAGE BANKING
BUSINESS, WHICH IS SEASONAL.
We earn a significant amount of income in the mortgage banking industry,
which is generally subject to seasonal variations. These variations reflect the
general national pattern of sales and resales of homes, although refinancings
tend to be less seasonal and more closely related to changes in interest rates.
Sales and resales of homes typically peak during the spring and summer seasons
and decline to lower levels from mid-November through February. In addition,
delinquency rates typically rise in the winter months, which results in higher
servicing costs. The magnitude of these variations, which is beyond our control,
could adversely affect our operating results.
THE EXPANSION OF OUR RETAIL BANKING BUSINESS WILL BE EXPENSIVE.
We intend to expand our retail banking operations through the acquisition
or establishment of additional bank branches. This expansion is expected to
occur in communities across southern and western Michigan. If we are unable to
generate a customer base within these communities because of consumer loyalty to
other financial institutions or for other reasons, we will have incurred
construction or building acquisition costs and liabilities under lease
agreements as well as related branch overhead expenses without an appropriate
return on our investment.
WE ARE DEPENDENT ON OUR KEY PERSONNEL.
Our growth and development to date have been largely dependent on certain
key employees, the loss of whom could have a material adverse effect. Our key
employees are Thomas J. Hammond, Chief Executive Officer; Mark T. Hammond,
President; Michael W. Carrie, Executive Vice President and Chief Financial
Officer; and Joan H. Anderson, Executive Vice President. Each of these persons
are officers of the Company and the Bank. Our key employees also include
13
<PAGE> 15
Kirstin A. Hammond, Executive Vice President; and Robert O. Rondeau, Jr.,
Executive Vice President, who are officers of the Bank. We do not carry "key
person" life insurance on the lives of any officers.
WE ARE IMPACTED BY COMPETITION FROM MANY OTHERS.
Both our retail banking business and mortgage banking business are
extremely competitive. In the retail banking segment, we will have to overcome
historical relationships to attract customers away from our competition. In the
mortgage banking segment, many of our competitors are, or are affiliates of,
enterprises that have greater resources than we do.
Through our various businesses, we compete with different institutions,
including:
- mortgage companies;
- other banks and thrift institutions;
- credit unions;
- full service and discount broker dealers;
- investment companies, mutual funds and money market funds; and
- insurance companies.
Some of our competitors are not regulated as extensively as we are and,
therefore, may have greater flexibility in competing for business. Some of these
competitors are subject to similar regulation but have the advantages of
established customer bases, higher lending limits, extensive branch networks,
numerous automated teller machines or other factors. We compete by offering
market rates on our products and prompt service to our customers.
WE OPERATE A BUSINESS THAT IS SUBJECT TO SIGNIFICANT GOVERNMENT REGULATION.
We are subject to extensive regulation by state and federal banking
authorities. These regulations govern our existence, our general operations and
our other functions such as mortgage origination, processing, underwriting,
selling and servicing. Many of these regulations are intended to protect
depositors, the public or the FDIC and not our shareholders. Regulatory
requirements will affect our lending practices, capital structure, investment
practices, dividend policy and growth. Any change in these regulatory
requirements could adversely affect us. In some instances, regulatory changes
are applied retroactively. Our mortgage banking operations are also affected by
the rules and regulations of quasi-governmental agencies that purchase,
guarantee or insure mortgage loans. Further, federal economic and monetary
policies, which are entirely out of our control, will affect various aspects of
our operations.
In addition, certain states require that interest be paid to mortgagors on
funds deposited by them in escrow to cover mortgage-related payments such as
property taxes and insurance premiums. Federal legislation has been introduced
in the past that would, if enacted, revise current escrow regulations and
establish a uniform escrow calculation methodology in all states. If such
federal legislation were enacted or if other states enact legislation relating
to payment of, or increases in the rate of, interest on escrow balances, or if
such legislation were retroactively applied to loans in our servicing portfolio,
our earnings would be adversely affected.
WE OPERATE A BUSINESS IN AN INDUSTRY THAT HAS BEEN SUBJECT TO SIGNIFICANT
LITIGATION.
In recent years, mortgage originators have been subject to class action
lawsuits that allege violations of federal and state laws and regulations,
including the propriety of collecting and paying various fees and charges and
the calculation of escrow amounts. Class action lawsuits may continue to be
filed in the future against mortgage originators generally. The results of our
operations could be adversely affected if we suffer an unfavorable court
judgment in any such lawsuit.
14
<PAGE> 16
WE MAY INCUR SIGNIFICANT COSTS IF WE FORECLOSE ON ENVIRONMENTALLY
CONTAMINATED REAL ESTATE.
If we foreclose on a defaulted mortgage loan to recover our investment in
such mortgage loan, we may be subject to environmental liabilities in connection
with the underlying real property. These liabilities could exceed the fair value
of the real property. It is also possible that hazardous substances or wastes,
contaminants, pollutants or their sources (as defined by state and federal laws
and regulations) may be discovered on properties during our ownership or after
they are sold to a third party. If they are discovered on a property that we
have acquired through foreclosure or otherwise, we may be required to remove
those substances and clean up the property. We may have to pay for the entire
cost of any removal and clean-up without the contribution of any other third
parties. These costs may also exceed the fair value of the property. We may also
be liable to tenants and other users of neighboring properties. In addition, we
may find it difficult or impossible to sell the property prior to or following
any such clean-up.
THE YEAR 2000 PROBLEM MAY HAVE AN ADVERSE IMPACT ON US OR ON OTHERS UPON
WHOM WE DEPEND.
Much of today's information technology (i.e., computer systems) and
embedded technology (e.g., microcontrollers) identifies a particular year on the
basis of the last two digits of that year. For example, the year "1998" is
recognized by the digits "98." The inability of information technology and
embedded technology to properly recognize a year that begins with "20" instead
of "19," if not corrected, may result in the production of erroneous results or
the failure of systems which rely on information technology and embedded
technology. This failure of systems, production of erroneous results and the
resulting damages is commonly known as the "Year 2000 Problem" or the "Y2K
Problem."
We are dependent, to a substantial degree, upon the proper functioning of
our computer systems as well as those of our vendors, suppliers and customers.
Most of our products and services rely on information and data provided by
others. Most of this information and data is provided electronically and is
dependent on information systems and telecommunications. The inability of our
vendors and suppliers to provide accurate information in a timely manner, our
inability to accurately and timely process such information, the inability of
our customers to receive and use our products and services, and a general
disruption of telecommunications and utilities as a result of the Year 2000
Problem would most likely result in business interruption or shutdown, financial
loss, potential regulatory action, harm to our reputation and potential legal
liability.
Although we have conducted internal development and testing of our computer
systems to insure millennium compliance, we can give no assurance that our
internal systems will be completely free of errors. Furthermore, we can give no
assurance that all of our vendors will deliver Year 2000 compliant certificates
or that the vendors will in fact be Year 2000 compliant despite their
certification of compliance. If either our computer systems or those of our
vendors fail to function properly because of the Year 2000 problem, the results
of our operations may materially suffer.
15
<PAGE> 17
THE OFFERING
Preferred Securities
Issuer..................... Flagstar Trust
Securities Offered......... Flagstar Trust is offering 2,600,000 of its
Preferred Securities, which represent an indirect
interest in our Junior Subordinated Debentures that
it will purchase with the proceeds of this
offering.
Flagstar Trust will sell its Preferred Securities
to the public and its Common Securities to us.
Together, the Preferred Securities and the Common
Securities are referred to as Trust Securities.
Flagstar Trust will use the proceeds from the sale
of Trust Securities to buy our % Junior
Subordinated Debentures which will have the same
payment terms as the Preferred Securities.
Use of Proceeds of Sale of
the Preferred Securities... The proceeds of the sale of the Preferred
Securities will be invested by Flagstar Trust in
our Junior Subordinated Debentures. We will receive
the proceeds from the issuance of the Junior
Subordinated Debentures. We intend to:
- invest a significant portion of the net proceeds
in the Bank; and
- retain the remainder for our general corporate
purposes.
Quarterly Distributions Are
Payable to You on the
Preferred Securities....... The Distributions payable on each Preferred
Security will:
- be fixed and accumulate at a rate per year of
%;
- accrue from the date of issuance of the Preferred
Securities; and
- be payable after each calendar quarter on the
last business day of March, June, September and
December of each year that the Preferred
Securities are outstanding, beginning on June 30,
1999.
Flagstar Bancorp and
Flagstar Trust May Defer
Distributions to You on the
Preferred Securities....... Flagstar Trust may defer Distributions on the
Preferred Securities if we defer paying interest to
Flagstar Trust on the Junior Subordinated
Debentures. We generally have the right to defer
interest payments on the Junior Subordinated
Debentures for up to 20 consecutive quarters.
During any deferral period, you will accumulate
Distributions at the annual rate of %, plus
you will earn additional interest at the annual
rate of %, compounded quarterly, on any unpaid
Distributions.
You Will Still be Taxed
Even If Distributions on
the Preferred Securities
are Deferred............... If Distributions on the Preferred Securities are
deferred, you must still include the related income
in your taxable gross income for United States
federal income tax purposes for as long
16
<PAGE> 18
as the Junior Subordinated Debentures remain
outstanding. As a result, you may incur a tax
liability on the income before you have received
cash to pay the tax. For further information on
deferrals and their tax consequences, see "Risk
Factors -- Distributions on the Preferred
Securities may be deferred; you may have to include
interest in your taxable income before you receive
cash," "Description of the Junior Subordinated
Debentures -- Option to Extend Interest Payment
Period" and "United States Federal Income Tax
Consequences -- Potential Extension of Interest
Payment Period and Original Issue Discount."
You Will Be Required to
Sell Your Preferred
Securities To Flagstar
Trust When the Junior
Subordinated Debentures
Mature or if They Are
Prepaid.................... The Junior Subordinated Debentures will mature on
, 2029. You will be required to sell
your Preferred Securities to Flagstar Trust upon
the stated maturity date of the Junior Subordinated
Debentures or earlier if they are prepaid. If we
prepay the Junior Subordinated Debentures, Flagstar
Trust will simultaneously redeem your Preferred
Securities on the date of payment of the Junior
Subordinated Debentures.
If the Junior Subordinated
Debentures Are Prepaid,
Your Preferred Securities
Will Be Redeemed........... If we receive prior approval of federal banking
regulators, if required, we may prepay the Junior
Subordinated Debentures prior to maturity:
- on or after , 2004; or
- at any time if certain specified events occur
that may have a significant adverse effect on our
benefits of having the Preferred Securities
outstanding.
Upon any prepayment of the Junior Subordinated
Debentures, your Preferred Securities will be
redeemed at the liquidation amount of $25 per
Preferred Security plus any accrued and unpaid
Distributions to the date of redemption. For
further information on redemptions, see
"Description of the Preferred
Securities -- Redemption" and "Description of the
Junior Subordinated Debentures Redemption."
At our Option, We May
Require You to Exchange
Your Preferred Securities
For Our Junior Subordinated
Debentures................. We have the right at any time to dissolve or
liquidate Flagstar Trust and distribute the Junior
Subordinated Debentures to you in exchange for your
Preferred Securities. If that happens, you will
receive Junior Subordinated Debentures in exchange
for the same principal amount of your holdings of
Preferred Securities. However, we must pay the
creditors of Flagstar Trust and, if required,
receive prior approval of federal banking
regulators
17
<PAGE> 19
before we dissolve or liquidate Flagstar Trust. If
the Junior Subordinated Debentures are distributed,
we will use our best efforts to list them on The
Nasdaq Stock Market(R) in place of the Preferred
Securities. For further information concerning
distribution of the Junior Subordinated Debentures,
see "Description of the Preferred
Securities -- Distribution of Junior Subordinated
Debentures."
We Fully and
Unconditionally Guarantee
Your Preferred Securities
On a Subordinated Basis.... We fully and unconditionally guarantee the payment
of all distributions Flagstar Trust is obliged to
make, but only to the extent Flagstar Trust has
sufficient funds to satisfy those payments.
If we do not make a payment on the Junior
Subordinated Debentures, Flagstar Trust will not
have sufficient funds to make payments on the
Preferred Securities. The Guarantee does not
require us to make any payments on our Junior
Subordinated Debentures nor does it require us to
make up any shortfall in Flagstar Trust's funds
needed to make a payment on the Preferred
Securities to you. The Guarantee only requires us
to make payments to the extent Flagstar Trust holds
any funds.
For further information concerning our Guarantee of
the Preferred Securities, see "Description of
Guarantee."
Your Preferred Securities
Rank Lower in Payment
Compared to Our Other
Obligations................ Our obligations under the Preferred Securities
Guarantee, the Junior Subordinated Debentures and
other governing documents are unsecured and have a
payment priority below all of our current and
future Senior and Subordinated Debt. In addition,
because we are a holding company that relies on our
subsidiaries for virtually all of our income, all
existing and future liabilities of our subsidiaries
will effectively rank higher than all of our
obligations relating to the Preferred Securities
and the Junior Subordinated Debentures. For
example, our Bank currently has a subsidiary that
acts as a real estate investment trust and sold
preferred shares to the public. If the Bank is
required to terminate the REIT, the REIT's
preferred shares will be exchanged for the Bank's
preferred shares. If this happens, the Bank's funds
would be used to first satisfy its obligations on
its own preferred shares before paying any
dividends to the Company.
There is no limit on the amount of other preferred
securities or other junior subordinated debentures
that we may issue in the future or on the amount of
future liabilities of the Bank. Future issuances of
securities similar to the Preferred Securities and
the Junior Subordinated Debentures will rank
equally with our obligations under the Junior
Subordinated Debentures and our Preferred
Securities Guarantee described in this Prospectus.
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<PAGE> 20
You Will Have Limited
Voting Rights.............. As a holder of Preferred Securities, you will have
limited voting rights. These rights relate only to
the dissolution or termination of Flagstar Trust
and removal of the Property Trustee and the
Indenture Trustee of Flagstar Trust under certain
conditions. See "Description of the Preferred
Securities -- Voting Rights; Amendment of the Trust
Agreement."
The Preferred Securities
Will Be In Book Entry Form
Only....................... You will not receive a certificate for your
Preferred Securities. Instead, the Preferred
Securities will be represented by a global security
that will be deposited with and registered in the
name of The Depository Trust Company or its
nominee.
The Nasdaq Stock
Market(R).................. Flagstar Trust has applied to have the Preferred
Securities listed for trading on The Nasdaq Stock
Market(R) under the trading symbol
" ." Prior to this offering, there
has been no public market of the Preferred
Securities. The Underwriters have advised Flagstar
Trust that they presently intend to make a market
in the Preferred Securities prior to the
commencement of trading on The Nasdaq Stock
Market(R). The Underwriters are not obligated to
make a market in the Preferred Securities, however,
and may cease market making activities at any time.
We can not give any assurance as to the liquidity
of any trading market for the Preferred Securities.
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<PAGE> 21
USE OF PROCEEDS
All of the proceeds from the sale of Preferred Securities by Flagstar Trust
will be invested in the Junior Subordinated Debentures. The net proceeds to
Flagstar Bancorp from the sale of the Junior Subordinated Debentures, after
deducting underwriting commissions and estimated offering expenses, will be
approximately $64,500,000 or $74,250,000 if the underwriters' over-allotment
option is exercised in full. We intend to invest a significant portion of the
net proceeds in the Bank, with the remainder to be retained by us and used for
general corporate purposes.
CAPITALIZATION
The following table sets forth (a) our historical capitalization at
December 31, 1998 and (b) our adjusted capitalization at December 31, 1998 after
giving effect to the offering and the use of net proceeds as described in "Use
of Proceeds" above.
<TABLE>
<CAPTION>
AT DECEMBER 31, 1998
----------------------------
HISTORICAL AS ADJUSTED
---------- -----------
(DOLLARS IN THOUSANDS
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
Long-term debt(1)........................................... $300,000 $300,000
Company obligated mandatorily redeemable securities of
subsidiary trust holding solely Junior Subordinated
Debentures................................................ -- 65,000
Stockholders' Equity:
Preferred Stock (10,000,000 shares authorized; no shares
issued or outstanding)................................. -- --
Common Stock (40,000,000 shares authorized; 13,670,000
shares issued and outstanding);........................ 137 137
Additional paid in capital................................ 29,988 29,988
Retained earnings......................................... 133,727 133,727
-------- --------
Total Stockholders' equity............................. 163,852 163,852
-------- --------
Total capitalization................................. $463,852 $528,852
======== ========
Ratio of equity to assets................................... 5.38% 5.27%
Regulatory capital ratios of the Bank:
Tangible Capital.......................................... 6.44% 8.21%
Core Capital.............................................. 6.54% 8.37%
Total Risk Based Capital.................................. 12.93% 15.94%
</TABLE>
- -------------------------
(1) Reflects FHLB advances maturing more than one year from December 31, 1998.
20
<PAGE> 22
SELECTED CONSOLIDATED FINANCIAL DATA
The following table presents our selected consolidated financial data as of
and for each of the years in the period ended December 31, 1998, 1997, 1996,
1995 and 1994. The information has been derived from our consolidated financial
statements, including our audited consolidated financial statements incorporated
in this Prospectus by reference to our 1998 Form 10-K, and should be read in
conjunction with the notes to those financial statements. See "WHERE YOU CAN
FIND MORE INFORMATION."
Historical results are not necessarily indicative of results to be expected
for any future period.
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1998 1997 1996(1) 1995 1994
---- ---- ------- ---- ----
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
SUMMARY OF CONSOLIDATED STATEMENTS OF EARNINGS:
Interest income................................ $ 191,261 $ 122,752 $ 76,179 $ 71,304 $ 35,112
Interest expense............................... 137,187 80,033 45,967 41,443 14,486
----------- ---------- ---------- ---------- ----------
Net interest income............................ 54,074 42,719 30,212 29,861 20,626
Provisions for losses.......................... 18,631 5,015 2,604 238 290
----------- ---------- ---------- ---------- ----------
Net interest income after provisions for
losses....................................... 35,443 37,704 27,608 29,623 20,336
Other income................................... 118,413 59,836 58,534 36,988 42,732
Operating and administrative expenses.......... 86,843 62,503 58,820 41,716 37,619
----------- ---------- ---------- ---------- ----------
Earnings before federal income tax provision... 67,013 35,037 27,322 24,895 25,449
Provision for federal income taxes............. 25,950 13,265 10,299 9,419 9,318
----------- ---------- ---------- ---------- ----------
Net earnings................................... $ 41,063 $ 21,772 $ 17,023 $ 15,476 $ 16,131
=========== ========== ========== ========== ==========
Basic earnings per share....................... $ 3.00 $ 1.70 $ 1.51 $ 1.37 $ 1.42
Diluted earnings per share..................... $ 2.90 $ 1.68 $ 1.51 $ 1.37 $ 1.42
Dividends per common share..................... $ 0.28 $ 0.06 $ 0.09 $ 0.18 $ 0.04
Dividend payout ratio.......................... 9.32% 3.77% 5.87% 12.92% 2.48%
SUMMARY OF CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION:
Total assets................................... $ 3,046,445 $1,901,084 $1,297,226 $1,045,094 $ 723,150
Loans receivable............................... 2,558,716 1,655,259 1,110,836 923,933 633,409
Mortgage servicing rights...................... 150,258 83,845 30,064 27,957 18,179
Deposits....................................... 1,923,370 1,109,933 624,485 526,974 307,624
FHLB advances.................................. 456,019 482,378 389,801 191,156 200,750
Stockholders' equity........................... 163,852 126,617 78,468 62,445 49,419
OTHER FINANCIAL AND STATISTICAL DATA:
Ratio of earnings to fixed charges............. 1.49x 1.44x 1.59x 1.60x 2.76x
Tangible capital ratio......................... 6.44% 5.40% 5.58% 5.19% 5.54%
Core capital ratio............................. 6.54% 5.62% 6.01% 5.84% 6.63%
Total risk-based capital ratio................. 12.93% 11.74% 10.91% 10.12% 12.08%
Equity-to-assets ratio (at the end of the
period)...................................... 5.38% 6.66% 6.05% 5.98% 6.83%
Equity-to-assets ratio (average for the
period)...................................... 5.03% 6.22% 6.19% 5.54% 8.91%
Book value per share........................... $ 11.98 $ 9.26 $ 6.97 $ 5.55 $ 4.37
Shares outstanding............................. 13,670 13,670 11,250 11,250 11,309
Average shares outstanding..................... 13,670 12,837 11,250 11,274 11,389
Mortgage loans originated or purchased......... $18,852,885 $7,873,099 $6,791,665 $5,195,605 $3,720,173
Mortgage loans sold............................ $17,803,958 $7,222,394 $6,581,897 $4,760,806 $3,551,319
Mortgage loans serviced for others............. $11,472,211 $6,412,797 $4,801,581 $6,788,530 $5,691,421
Capitalized value of mortgage servicing
rights....................................... 1.31% 1.31% 0.63% 0.41% 0.32%
Interest rate spread........................... 1.85% 2.10% 2.13% 2.36% 3.37%
Net interest margin............................ 2.14% 2.74% 3.07% 3.46% 4.63%
Return on average assets....................... 1.45% 1.29% 1.53% 1.63% 3.19%
Return on average equity....................... 28.77% 20.69% 24.68% 29.42% 35.78%
Efficiency ratio............................... 49.6% 59.7% 64.8% 60.4% 58.3%
Net charge offs to average loans............... 0.17% 0.20% 0.13% 0.00% 0.08%
Ratio of allowances to total loans............. 0.78% 0.33% 0.31% 0.23% 0.29%
Ratio of non performing assets to total
assets....................................... 1.97% 3.29% 3.16% 1.25% 0.42%
Ratio of allowance to non performing loans..... 53.78% 12.41% 11.43% 19.67% 107.59%
Number of Bank branches........................ 28(2) 19 15 13 9
Number of retail loan origination centers...... 31 35 41 31 29
Number of correspondent offices................ 15 16 10 9 6
</TABLE>
- -------------------------
(1) Included in the 1996 operation and administrative expenses is a one-time
assessment to recapitalize the SAIF, which totaled $3.4 million pre-tax
($2.2 million or $.20 per share on an after-tax basis). Without this
assessment, return on average assets would have been 1.73%, return on
average equity would have been 27.87%, and the efficiency ratio would have
been 61.0%.
(2) In 1999, we opened two branches.
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<PAGE> 23
BUSINESS
GENERAL. We are one of the largest home mortgage lenders in the United
States. Our business is the origination of single-family mortgage loans. Through
our Bank, we attract deposits from the general public and originate or acquire
residential mortgage loans. The Bank is the largest independent savings
institution in Michigan based on asset size. We also acquire funds on a
wholesale basis from a variety of sources, service a significant volume of
mortgage loans for others, and to a lesser extent, make consumer loans,
commercial real estate loans and non-real estate commercial loans. For the year
ended December 31, 1998, we ranked 13th in the United States in residential
mortgage loan originations.
We have experienced significant asset growth and achieved continuing
profitability: our total assets increased to $3.0 billion for the year ended
December 31, 1998 from $1.9 billion for the same period in 1997 and $1.3 billion
for the same period in 1996; our net income increased to $41.1 million ($2.90
per share -- diluted), for the year ended December 31, 1998 from $21.8 million
($1.68 per share -- diluted) for the same period in 1997 and $17.0 million
($1.51 per share -- diluted) for the same period in 1996; and for the year ended
December 31, 1998 return on average assets equaled 1.45% and return on average
equity was 28.77% compared to return on average assets of 1.29% and return on
average equity of 20.69% for the same period in 1997.
MORTGAGE AND RETAIL BANKING. Our primary lines of business are mortgage
banking and retail banking. A majority of our revenue (net interest income and
non-interest income) and earnings before income taxes is attributable to the
mortgage banking segment. We believe that our retail banking business provides
us with access to attractive and relatively stable funding sources for our
mortgage origination business. We believe we have a strategic advantage compared
to other mortgage originators with no retail banking operations due to our
stable, lower cost of funds.
Mortgage Banking. Our mortgage banking operations originate residential
mortgages through 31 retail loan origination offices located in Michigan (27),
Florida (3) and Ohio (1). In addition, we originate mortgage loans on a
wholesale basis through a nationwide network of independent mortgage brokers. We
also purchase mortgage loans on a regular basis from independent mortgage
lenders, commercial banks, savings and loan associations and other financial
institutions with whom we are familiar. These independent mortgage brokers and
mortgage lenders originate such loans using our underwriting standards. We
service this network through over 60 account executives, who are organized among
10 regional wholesale/correspondent lending offices and five
wholesale/correspondent satellite offices.
Retail Banking. We provide a full range of retail banking services to
consumers and small businesses in southern and western Michigan. We currently
operate a network of 30 bank branches (including nine opened in 1998 and two in
1999) located in southern and western Michigan counties. Since 1994, we have
focused on expanding our branch network in these markets in order to increase
our access to retail deposit funding sources. We believe that this also provides
a greater opportunity for cross-marketing of consumer banking services to our
large base of mortgage customers in Michigan. We believe we can benefit from the
customer displacement in our markets caused by the substantial consolidation of
the banking industry in Michigan.
LOAN PRODUCTION. For the year ended December 31, 1998, we produced $18.8
billion in mortgage loans. These included $17.4 billion in mortgage loans
produced through the wholesale and correspondent network and $1.4 billion
originated through the retail network. We produced mortgage loans of $7.9
billion during 1997 which included $7.1 billion produced through the wholesale
and correspondent network and $745.2 million originated through the retail
network. For the year ended December 31, 1996, the wholesale and correspondent
network produced $6.1 billion and the retail network originated $685.3 million
for a total production of $6.8 billion.
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<PAGE> 24
LOAN SALES AND SERVICING. We sell a substantial portion of our loan
production into the secondary market. These sales are principally completed by
securitizing pools of loans through programs offered by government-sponsored
enterprises such as Fannie Mae, Freddie Mac, and Ginnie Mae and through sales to
private investors. We generally retain the servicing rights to many of the loans
that we sell. We also realize additional income by selling servicing rights on
an individual and a bulk basis to other mortgage servicers. Our loan servicing
portfolio totaled $11.5 billion at December 31, 1998, $6.4 billion at December
31, 1997 and $4.8 billion at December 31, 1996 (net of loans subserviced for
others).
TECHNOLOGY. We make extensive use of advanced technology and automated
processes which we believe enhance our competitiveness and reduce the cost of
our mortgage origination operations. We were one of the first major mortgage
lenders to utilize video conferencing for loan production. In 1996, we began
full-scale operational use of automated underwriting system technologies,
including Fannie Mae's Desktop Underwriter ((TM)) and Freddie Mac's Loan
Prospector (TM). In fact, we are currently one of the largest users of the Loan
Prospector (TM) system. We underwrite substantially all of our mortgage loans
using these automated systems. We believe that our use of these systems reduces
overhead, enhances customer service and better ensures that our mortgage loans
conform to secondary market guidelines.
BUSINESS STRATEGY. Our strategy consists of the following key elements:
- continue to expand our bank branch network into demographically desirable
communities in Michigan in order to gain access to additional retail
funding sources;
- as market conditions permit, retain a portion of our mortgage loan
production volume or mortgage servicing rights or both (thereby
benefiting from economies of scale);
- continue to utilize advanced technology and automated processes
throughout our business to improve customer service, reduce costs of loan
production and servicing and increase efficiencies; and
- cross-sell retail banking services to our large Michigan base of existing
mortgage customers.
ACCOUNTING TREATMENT
For financial reporting purposes, we will treat Flagstar Trust as our
subsidiary. Accordingly, we will include the accounts of Flagstar Trust in our
consolidated financial statements. We will include the Preferred Securities in
debt in our consolidated statements of financial condition, and will include
appropriate disclosures about the Preferred Securities, the Guarantee and the
Junior Subordinated Debentures in the notes to our consolidated financial
statements. For financial reporting purposes, we will record Distributions on
the Preferred Securities as interest expense in our consolidated statements of
earnings.
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<PAGE> 25
DESCRIPTION OF THE PREFERRED SECURITIES
DEFINITIONS OF MATERIAL AGREEMENTS
For purposes of this Prospectus:
- the "Indenture" means the Subordinated Indenture dated as of April ,
1999, as amended and supplemented from time to time, between Flagstar
Bancorp and FMB Bank, as trustee (the "Indenture Trustee"), under which
the Junior Subordinated Debentures will be issued,
- the "Trust Agreement" means the Amended and Restated Trust Agreement,
under which the Preferred Securities and the Common Securities will be
issued, dated as of April , 1999, as amended and supplemented from time
to time, among Flagstar Bancorp, as Depositor, First Omni Bank, National
Association, as Delaware trustee (the "Delaware Trustee"), FMB Bank, as
property trustee (the "Property Trustee"), and the Administrative
Trustees named therein,
- the "Guarantee" means the Guarantee Agreement relating to the Guarantee
of Flagstar Bancorp, between Flagstar Bancorp and FMB Bank, as trustee
(the "Guarantee Trustee") on behalf of the holders, and
- the "Expense Agreement" means the Expense Agreement between Flagstar
Bancorp and Flagstar Trust.
The Preferred Securities and the Common Securities will be issued pursuant
to the terms of the Trust Agreement, which is qualified as an indenture under
the Trust Indenture Act of 1939 (the "Trust Indenture Act"). This summary is not
complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the Trust Agreement, including the definitions portion of
the Trust Agreement, and the Trust Indenture Act. However, we believe that all
material terms of the Preferred Securities in the Trust Agreement are set forth
in this section of the Prospectus. The form of the Trust Agreement has been
filed as an exhibit to the Registration Statement. This Prospectus is a part of
the Registration Statement.
GENERAL
The Administrative Trustees on behalf of Flagstar Trust will issue the
Preferred Securities and the Common Securities (collectively, the "Trust
Securities"). We will own 100% of the Common Securities and you may purchase the
Preferred Securities. The Preferred Securities will represent undivided
preferred beneficial interests in the assets of Flagstar Trust and each holder
will be entitled to a preference in respect of certain distributions by Flagstar
Trust and amounts payable on redemption or liquidation of Flagstar Trust.
Otherwise, the Preferred Securities will generally rank the same as the Common
Securities.
The Preferred Securities, as well as the Junior Subordinated Debentures,
are scheduled to mature on , 2029.
The Property Trustee will hold the Junior Subordinated Debentures which we
have issued in trust for the benefit of the holders of Trust Securities. Our
Guarantee (the "Guarantee") will be subordinated to most of our other
obligations and liabilities. Our Guarantee will not provide for the payment of
Distributions (as defined below) or amounts payable on redemption of the
Preferred Securities if Flagstar Trust does not have funds available to make
such payments. See "Description of Guarantee."
If we do not make required payments on the Junior Subordinated Debentures
held by Flagstar Trust, taking into account our right to defer such payments for
up to 20 quarters, Flagstar Trust will be unable to pay any Distributions to
you. In such event, you may make a claim directly against us to enforce payment
of the amounts due to you. See "Description of the
24
<PAGE> 26
Junior Subordinated Debentures -- Enforcement of Certain Rights by Holders of
Preferred Securities."
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at an annual rate
of % of the Liquidation Amount of $25 per Preferred Security. Unpaid
Distributions that are past due will accumulate additional interest at an annual
rate of % of the unpaid Distributions, compounded quarterly. The term
"Distribution" includes any additional amounts payable in respect of
Distributions unless otherwise stated.
Distributions on the Preferred Securities:
- will be cumulative,
- will accumulate from , 1999, the date of initial issuance of
the Preferred Securities, and
- will be payable quarterly in arrears on the last Business Day of March,
June, September and December, commencing June 30, 1999.
The amount of Distributions payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. In the event that any date on
which a Distribution is payable is not a Business Day, the payment of that
Distribution will generally be made on the next Business Day (and without any
additional interest). "Business Day" means any day other than a Saturday or a
Sunday, or a day on which banking institutions in the State of Michigan are
authorized or required by law or executive order to remain closed or a day on
which the Corporate Trust Office of the Property Trustee or the Indenture
Trustee is closed for business.
We may defer the payment to Flagstar Trust of interest on the Junior
Subordinated Debentures at any time for one or more Extension Periods. However,
we may not defer any payments if we are in default under the Indenture. No
Extension Period may extend beyond the maturity date of the Junior Subordinated
Debentures. If we elect to defer the payment of interest, then quarterly
Distributions on the Preferred Securities will be deferred by Flagstar Trust
during the Extension Period. The Distributions will continue to accumulate, with
additional interest, generally at an annual rate of %, compounded
quarterly, during the Extension Period.
During any Extension Period:
- we may not declare or pay any dividends on, make any distribution, or
redeem, purchase, acquire or make a liquidation payment on any of
Flagstar Bancorp's capital stock; and
- we may not make any payment of interest, principal or premium on or
repay, repurchase or redeem any debt securities issued by us that rank
equal or junior to the Junior Subordinated Debentures (of which there are
none at the time of this printing), or make any guarantee payments on the
foregoing.
The Extension Period restrictions do not apply to:
- repurchases, redemptions or other acquisitions of shares of our capital
stock 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, or a dividend reinvestment or
shareholder stock purchase plan;
- any declaration of a dividend in connection with any shareholders' rights
plan, or the issuance of rights, stock or other property under any
shareholders' rights plan, or the redemption or repurchase of rights
pursuant to the plan;
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<PAGE> 27
- any dividend in the form of stock, warrants, options or other rights
where the dividend or the stock issuable upon exercise of the warrants,
options or other rights is the same stock as that on which the dividend
is being paid or ranks equal or junior to that stock; or
- payments by us under the Guarantee.
When we pay all the accumulated amounts due to you during an Extension
Period, the Extension Period will terminate. However, we have the right to begin
another Extension Period under the same terms outlined above. There is no limit
on the number of times we can elect to begin an Extension Period. In no way may
any single Extension Period extend beyond 20 consecutive calendar quarters.
We have no current intention of exercising our right to defer payments of
interest by extending the interest payment period on the Junior Subordinated
Debentures.
REDEMPTION
When we repay or redeem some or all of the Junior Subordinated Debentures,
whether at maturity or upon earlier redemption, the Property Trustee will apply
the proceeds from the repayment or redemption to redeem the same proportionate
amount of Preferred Securities and Common Securities. The Redemption Price per
Security will equal the $25 Liquidation Amount, plus accumulated and unpaid
Distributions to the date of redemption. We will make this redemption not less
than 30 nor more than 60 days after the notice of a date of redemption (the
"Redemption Date"), at the Redemption Price (as defined below). See "Description
of the Junior Subordinated Debentures -- Redemption."
If less than all the Junior Subordinated Debentures are to be repaid or
redeemed, then the aggregate liquidation amount of Preferred and Common
Securities to be redeemed will be allocated approximately 3% to the Common
Securities and 97% to the Preferred Securities, except in the case of an event
of default under the Indenture. See "-- Subordination of Common Securities."
We will have the right, after receipt of prior approval by federal banking
regulators, if approval is then required, to redeem the Junior Subordinated
Debentures:
- on or after , 2004, in whole at any time or in part from time
to time; or
- prior to , 2004 in whole, but not in part, at any time within
90 days following the occurrence and continuation of a Tax Event, an
Investment Company Event or a Capital Treatment Event, each as we defined
below. See "Description of the Junior Subordinated Debentures -- Optional
Redemption."
SELECTED DEFINITIONS
"Additional Sums" means the additional payments we are required by the
Indenture to make under the Junior Subordinated Debentures to cover certain
charges imposed upon Flagstar Trust so that the funds available to Flagstar
Trust for payment of Distributions will not be reduced. An example of the
Additional Sums could be any additional taxes, duties and other governmental
charges that Flagstar Trust has incurred.
"Capital Treatment Event" means that we have received an opinion of
nationally recognized independent counsel experienced in such matters that, as a
result of
(1) any amendment to, clarification of or change, including any announced
prospective change, in applicable laws or regulations or official
interpretations thereof or policies with respect thereto; or
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<PAGE> 28
(2) any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment,
clarification, change, pronouncement or decision is announced or is
effective after the date of this Prospectus,
there is more than an insubstantial risk that the Preferred Securities will not
then constitute capital of Flagstar Bancorp for purposes of the capital adequacy
guidelines or policies of federal banking regulators. There are currently no
capital adequacy guidelines applicable to savings and loan holding companies
such as Flagstar Bancorp.
"Investment Company Event" means that the Administrative Trustees have
received an opinion of nationally recognized independent counsel experienced in
such matters that, as a result of the occurrence of a change, including any
announced prospective 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 on or after the date of this Prospectus, there is more than
an insubstantial risk that Flagstar 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").
"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 Indenture, allocated to the
Common Securities and to the Preferred Securities based upon the relative
Liquidation Amounts of such classes and the proceeds of which will be used to
pay the Redemption Price of such Trust Securities, and (ii) with respect to a
distribution of Junior Subordinated Debentures to holders of Trust Securities in
connection with a dissolution or liquidation of Flagstar Trust, Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of Trust Securities of each holder to whom such Junior Subordinated
Debentures are distributed.
"Liquidation Amount" means the stated amount of $25 per Trust Security. The
Liquidation Amount is the amount that you are entitled to receive if Flagstar
Trust is terminated at or prior to the maturity date and its assets are
distributed to the holders of its securities. You are entitled to receive this
amount from the assets of Flagstar Trust for distribution, after it has paid
liabilities owed to its creditors, if Flagstar Trust has sufficient funds to pay
this amount.
"Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, allocated on a pro rata basis (based on
Liquidation Amounts) among the holders of Trust Securities.
"Tax Event" means that the regular trustees, or, if Flagstar Trust has been
terminated at the time, an appropriate representative of the holders of the
Junior Subordinated Debentures, have received an opinion of nationally
recognized independent tax counsel experienced in such matters to the effect
that, as a result of:
- any amendment to, clarification of, or change, including any announced
prospective change, in the laws, or any regulations under the laws, of
the United States or any political subdivision or taxing authority
affecting taxation;
- any judicial decision, official administrative pronouncement, ruling,
regulatory procedure, notice or announcement, including any notice or
announcement of intent to adopt such procedures or regulations (an
"Administrative Action"); or -- any amendment to, clarification of, or
change in the official position or the interpretation of such
Administrative Action or judicial decision that differs from the prior
generally accepted position,
in each case, by any legislative body, court, governmental authority or
regulatory body, irrespective of the manner in which the amendment,
clarification, change or Administrative Action is made known, which amendment,
clarification, change or Administrative Action is effective or
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<PAGE> 29
which pronouncement or decision is announced, in each case, on or after the date
of this Prospectus, there is more than an insubstantial risk that:
(1) Flagstar Trust is, or will be within 90 days of the date of the opinion
of counsel, subject to United States federal income tax with respect to
income accrued or received on the Junior Subordinated Debentures,
(2) Flagstar Trust is, or will be within 90 days of the date of the opinion
of counsel, subject to more than a de minimis amount of taxes, duties
or other governmental charges, except for withholding taxes, or
(3) interest paid in cash by us to Flagstar Trust on the Junior
Subordinated Debentures is not, or within 90 days of the date of the
opinion of counsel will not be, deductible, in whole or in part, by us
for United States federal income tax purposes.
Notwithstanding the foregoing, a Tax Event does not include any change in
tax law that requires us to defer taking a deduction for any original issue
discount that accrues with respect to the Junior Subordinated Debentures until
the interest payment related to the OID is paid by us in cash if the change in
tax law does not create more than an insubstantial risk that we will be
prevented from taking a deduction for OID accruing on the Junior Subordinated
Debentures at a date that is no later than the date the interest payment related
to the OID is actually paid by us in cash.
If any event described in clause (1) or (2) of the definition of "Tax
Event" above has occurred and is continuing and Flagstar Trust is the holder of
all of the Junior Subordinated Debentures, Flagstar Bancorp will pay Additional
Sums, if any, on the Junior Subordinated Debentures.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
We may at any time elect to dissolve Flagstar Trust and, after we have paid
all of the liabilities of creditors of Flagstar Trust as provided by applicable
law, cause the Junior Subordinated Debentures to be distributed to you. However,
we may only dissolve Flagstar Trust if we have received prior federal banking
regulators' approval, if then required. If we dissolve Flagstar Trust and
distribute the Junior Subordinated Debentures to you:
- the Preferred Securities will no longer be outstanding;
- the Depositary or its nominee, as the record holder of the Preferred
Securities, will, upon the distribution of the Junior Subordinated
Debentures, receive a registered global certificate or certificates
representing the Junior Subordinated Debentures; and
- any certificates representing Preferred Securities not held by the
Depositary or its nominee will be deemed to represent the Junior
Subordinated Debentures having a principal amount equal to the
Liquidation Amount of the Preferred Securities.
The Preferred Securities certificates will continue to bear interest until
the certificates are presented to the Administrative Trustees or their agent for
replacement by certificates representing an equal amount of Junior Subordinated
Debentures, at which time only unpaid interest will be paid, if Flagstar Trust
has sufficient funds available.
REDEMPTION PROCEDURES
Flagstar Trust may not redeem fewer than all of the outstanding Preferred
Securities unless it has paid all accumulated and unpaid Distributions on all
Preferred Securities for all quarterly distribution periods terminating on or
prior to the date of redemption. Flagstar Trust will only redeem the Preferred
Securities if we have redeemed the Junior Subordinated Debentures. Flagstar
Trust may redeem Preferred Securities only in an amount equal to the funds it
has on
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<PAGE> 30
hand and legally available to pay the Redemption Price. See "-- Subordination of
Common Securities" and "Description of Guarantee."
Unless there is a payment default, additional interest will stop accruing
on those Preferred Securities called for redemption on the date they are called
for redemption.
The Property Trustee will give you notice of the redemption at least 30 but
not more than 60 days before the date fixed for redemption. If Flagstar Trust
gives a notice of redemption, then, by 12:00 noon, New York City time, on the
date of redemption, if the funds are available for payment, the Property Trustee
will, for Preferred Securities held in book-entry form:
- deposit irrevocably with The Depository Trust Company ("DTC") funds
sufficient to pay the Redemption Price; and
- give DTC irrevocable instructions and authority to pay the Redemption
Price to the holders of the Preferred Securities.
With respect to Preferred Securities not held in book-entry form, if funds
are available for payment, the Property Trustee will:
- irrevocably deposit with the paying agent for the Preferred Securities
funds sufficient to pay the Redemption Price; and
- give such paying agent irrevocable instructions and authority to pay the
Redemption Price to the holders of Preferred Securities upon surrender of
their certificates evidencing the Preferred Securities.
Notwithstanding the foregoing, distributions payable on or prior to the
date of redemption for any Preferred Securities called for redemption will be
payable to the holders on the relevant record dates.
Once notice of redemption is given and funds are deposited as required,
then all rights of the holders of Preferred Securities called for redemption
will cease, except the right to receive the Redemption Price, but without
interest after the date of redemption. At that time, those Preferred Securities
will cease to be outstanding.
Payment of the Redemption Price on the Preferred Securities and any
distribution of Junior Subordinated Debentures to holders of Preferred
Securities will be made to the applicable record holders on the relevant record
date, which date will be one Business Day prior to the relevant redemption date
or liquidation date, as applicable; provided, however, that in the event that
any Preferred Securities are not in book-entry form, the relevant record date
for such Preferred Securities will be a date at least 15 days prior to the
redemption date or liquidation date, as applicable. In the case of a
liquidation, the record date will be no more than 45 days before the liquidation
date.
If any date fixed for redemption is not a Business Day, then payment of the
Redemption Price will be made on the next day that is a Business Day, without
any interest or other payment for the delay. If the next Business Day falls in
the next calendar year, the payment will instead be made on the immediately
preceding Business Day.
If payment of the Redemption Price for the Preferred Securities called for
redemption is improperly withheld or refused and not paid, either by Flagstar
Trust or by Flagstar Bancorp under the Guarantee, then Distributions on those
Preferred Securities will continue to accumulate at the then applicable rate,
from the date of redemption to the date of actual payment. In this case, the
actual payment date will be the date fixed for redemption for purposes of
calculating the Redemption Price.
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Flagstar Bancorp 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 Preferred Securities.
If Flagstar Trust is going to redeem less than all the Preferred Securities
and Common Securities, then the aggregate liquidation amount of Preferred and
Common Securities to be redeemed will be allocated approximately 3% to the
Common Securities and 97% to the Preferred Securities, except if an Event of
Default has occurred. In such case, holders of Preferred Securities will be paid
first. See "-- Subordination of the Common Securities" immediately below for a
more complete discussion. The Property Trustee will select the particular
Preferred Securities to be redeemed on this pro rata basis not more than 60 days
before the date of redemption by any method the Property Trustee deems fair and
appropriate, or if the Preferred Securities are then held in book-entry form, in
accordance with DTC's customary procedures.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the Preferred
Securities and Common Securities will be made on a proportionate basis, based on
the aggregate Liquidation Amounts of the Preferred Securities and Common
Securities. However, if a Debenture Event of Default has occurred and is
continuing, then no payment of any Distribution will be made on any of the
Common Securities, unless all unpaid amounts due on the Preferred Securities
shall have been paid in full or provided for, as appropriate.
In the case of any Event of Default under the Trust Agreement resulting
from a Debenture Event of Default, we as the holder of the Common Securities
will be deemed to have waived any right to act upon the Event of Default under
the Trust Agreement until the effects of all Events of Default under the Trust
Agreement regarding the Preferred Securities have been cured, waived or
otherwise eliminated. Until that time, the Property Trustee shall act solely on
behalf of the holders of the Preferred Securities.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
We will have the right at any time to dissolve Flagstar Trust, and after
paying all the expenses and liabilities of Flagstar Trust, distribute the Junior
Subordinated Debentures to you. However, we may only dissolve Flagstar Trust if
we have received prior approval of federal banking regulators, if then required.
See "-- Distribution of Junior Subordinated Debentures" above.
In addition, the Trust Agreement states that Flagstar Trust will dissolve:
- on the expiration of the term of Flagstar Trust, which currently expires
on , 2029;
- upon the bankruptcy of Flagstar Bancorp;
- upon the filing of a certificate of dissolution or its equivalent of
Flagstar Bancorp;
- upon our delivery of a written direction to the Property Trustee to
dissolve Flagstar Trust, which we may do in our discretion; or
- upon entry of a court order for the dissolution of Flagstar Bancorp or
Flagstar Trust.
In the event of a dissolution, after Flagstar Trust pays all amounts owed
to its creditors, the holders of the Preferred Securities and Common Securities
issued by Flagstar Trust will be entitled to receive:
- cash, if the dissolution arises from redemption of the Junior
Subordinated Debentures, equal to the aggregate Liquidation Amount of
each Preferred Security and Common
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Security specified in this Prospectus, plus accumulated and unpaid
Distributions to the date of payment; or
- Junior Subordinated Debentures, if the dissolution does not arise from
redemption of the Junior Subordinated Debentures, in an aggregate
principal amount equal to the aggregate Liquidation Amount of the
Preferred Securities and Common Securities are distributed to the holders
of the Preferred Securities and Common Securities.
If Flagstar Trust cannot pay the full amount due on its Preferred
Securities and Common Securities because insufficient assets are available for
payment, then the amounts payable by Flagstar Trust on its Preferred Securities
and Common Securities shall be paid pro rata. However, if a Debenture Event of
Default has occurred, the total amounts due on such Preferred Securities will be
paid before any distribution on such Common Securities.
Under current United States federal income tax law and interpretations and
assuming, as expected, Flagstar Trust is treated as a grantor trust, a
distribution of the Junior Subordinated Debentures should not be a taxable event
to you. Should there be a change in law, a change in legal interpretation, a Tax
Event or other circumstances, however, the distribution could be a taxable event
to you. See "United States Federal Income Tax Consequences."
If we elect to liquidate Flagstar Trust and cause the Junior Subordinated
Debentures to be distributed to you in liquidation of Flagstar Trust, we will
continue to have the right to shorten the maturity of the Junior Subordinated
Debentures, subject to certain conditions. See "Description of the Junior
Subordinated Debentures -- Option to Accelerate Maturity."
EVENTS OF DEFAULT; NOTICE
The following events constitute an Event of Default (an "Event of Default")
with respect to the Preferred Securities and Common Securities:
(i) the occurrence of a Debenture Event of Default under the Indenture
(see "Description of Junior Subordinated Debentures -- Debenture Events of
Default"); or
(ii) default by Flagstar Trust in the payment of any Distribution when
it becomes due and payable (other than during an Extension Period), and
continuation of such default for a period of 30 days; or
(iii) default by Flagstar Trust in the payment of any Redemption Price
of any Trust Security when it becomes due and payable; or
(iv) material default in the performance, or breach, of any covenant
or warranty of the Property Trustee in the Trust Agreement (other than a
default or breach in the performance of a covenant or warranty which is
addressed in clause (ii) or (iii) above), and continuation of such default
or breach, for a period of 60 days after there has been given, to the
Property Trustee 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) if the Property Trustee becomes bankrupt or insolvent and we do
not appoint a successor to the Property Trustee within 60 days of the event
of bankruptcy or insolvency.
The Property Trustee must give notice of any uncured or unwaived Event of
Default to you, to us and to the Administrative Trustees. This notice must be
given within five Business Days after the Property Trustee actually knows of the
Event of Default. Flagstar Bancorp and the Administrative Trustees are required
to file annual certificates with the Property Trustee declaring whether we and
they are in compliance with all the conditions and covenants applicable to us
and them under the Trust Agreement.
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If a Debenture Event of Default has occurred and is continuing, the
Preferred Securities will have a preference over the Common Securities upon
dissolution of Flagstar Trust as described above. See "-- Liquidation
Distribution upon Dissolution." Upon a Debenture Event of Default, unless the
principal of all the Junior Subordinated Debentures has already become due and
payable, either the Property Trustee or the holders of not less than 25% in
aggregate principal amount of the Junior Subordinated Debentures then
outstanding may declare all of the Junior Subordinated Debentures to be due and
payable immediately by giving us written notice of that fact (and to the
Property Trustee, if notice is given by holders of the Junior Subordinated
Debentures). If the Property Trustee or the holders of the Junior Subordinated
Debentures fail to declare the principal of all of the Junior Subordinated
Debentures due and payable upon a Debenture Event of Default, the holders of at
least 25% in Liquidation Amount of the Preferred Securities then outstanding
will have the right to declare the Junior Subordinated Debentures immediately
due and payable. In either event, payment of principal and interest on the
Junior Subordinated Debentures will remain subordinated to the extent provided
in the Indenture. In addition, holders of the Preferred Securities have the
right in certain circumstances to bring a Direct Action (as defined below). See
"Description of the Junior Subordinated Debentures -- Enforcement of Certain
Rights by Holders of Preferred Securities."
REMOVAL OF TRUSTEES
As the holder of the Common Securities, we may at any time remove any
trustee, unless a Debenture Event of Default has occurred and is continuing. If
a Debenture Event of Default has occurred and is continuing, the Property
Trustee and the Delaware Trustee may be removed at such time by the holders of a
majority in Liquidation Amount of the outstanding Preferred Securities. In no
event will the holders of the Preferred Securities have the right to vote to
appoint, remove or replace the Administrative Trustees. Flagstar Bancorp as the
holder of the Common Securities has the sole power to remove the Administrative
Trustee. The resignation or removal of any Trustee and the appointment of a
successor Trustee is effective only on the acceptance of appointment by the
successor trustee in accordance with the provisions of the Trust Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default has occurred and is continuing, we have the
right to appoint co-trustees or a separate Property Trustee. We may appoint
these additional trustees in order to meet the requirements of the Trust
Indenture Act or the state laws of any jurisdiction where property of Flagstar
Trust may be located. Our appointment of any additional trustees will be subject
to provisions of the Trust Agreement. In case a Debenture Event of Default has
occurred and is continuing, the Property Trustee alone will have power to make
such appointment.
MERGER OR CONSOLIDATION OF TRUSTEES
Any Person (as defined in the Trust Agreement) into which the Property
Trustee, the Delaware Trustee or any Administrative Trustee that is not a
natural person may be merged or converted or with which it may be consolidated,
or any Person resulting from any merger, conversion or consolidation to which
such Trustee will be a party, or any person succeeding to all or substantially
all the corporate trust business of such Trustee, shall be the successor of such
Trustee under the Trust Agreement, provided such corporation shall be otherwise
qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF FLAGSTAR TRUST
Flagstar Trust may, at our request, with the consent of the Administrative
Trustees and without your consent, consolidate, amalgamate, merge with or into
or be replaced by or convey,
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transfer or lease its properties and assets substantially as an entirety to
another trust organized under the laws of any state provided that:
- such successor entity either (a) expressly assumes all of the obligations
of Flagstar Trust with respect to the Preferred Securities or (b)
substitutes for the Preferred Securities other securities having
substantially the same terms as the Preferred Securities (the "Successor
Securities") so long as the Successor Securities rank the same as the
Preferred Securities for distributions and payments upon liquidation,
redemption and otherwise;
- Flagstar Bancorp expressly appoints a trustee of such successor entity
possessing the same powers and duties as the Property Trustee as the
holder of the Junior Subordinated Debentures;
- any such transaction does not adversely affect the rights, preferences
and privileges of the holders of the Preferred Securities (including any
Successor Securities) in any material respect;
- such successor entity has a purpose substantially identical to that of
Flagstar Trust;
- the Successor Securities will be listed or traded on any national
securities exchange or other organization on which the Preferred
Securities may then be listed;
- prior to such a transaction, Flagstar Bancorp has received an opinion
from independent counsel to Flagstar Trust experienced in such matters to
the effect that (a) such transaction does not adversely affect the
rights, preferences and privileges of the holders of the Preferred
Securities (including any Successor Securities) in any material respect,
and (b) following any such transaction, neither Flagstar Trust nor such
successor entity will be required to register as an investment company
under the Investment Company Act; and
- Flagstar Bancorp or any permitted successor or designee owns all of the
common securities of such successor entity and guarantees the obligations
of such successor entity under the Successor Securities at least to the
extent provided by the Guarantee and enters into an agreement
substantially similar to the Expense Agreement.
In addition, unless all of the holders of the Preferred Securities and
Common Securities agree, Flagstar Trust may not consolidate, amalgamate, merge
with or into, or be replaced by any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it, if that transaction
would cause Flagstar Trust or the successor entity to be classified as other
than a grantor trust for United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
Except as provided below and under "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 Flagstar Bancorp,
the Property Trustee and the Administrative Trustees, without the consent of the
holders of Trust 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 which shall not be inconsistent with the other
provisions of the Trust Agreement, or (ii) to modify, eliminate or add to any
provisions of the Trust Agreement to such extent as will be necessary to ensure
that Flagstar Trust will be classified for United States federal income tax
purposes as a grantor trust at all times that any Trust Securities are
outstanding or to ensure that Flagstar Trust will not be required to register as
an "investment company" under the Investment Company Act.
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We and the Trustees may amend the Trust Agreement (i) with the consent of
holders representing not less than a majority of the aggregate Liquidation
Amount of the outstanding Trust Securities, and (ii) upon receipt by both the
Property and Administrative Trustees of an opinion of counsel to the effect that
the amendment or the exercise of any power granted to trustees in accordance
with the amendment will not affect Flagstar Trust's status as a grantor trust
for United States federal income tax purposes or Flagstar Trust's exemption from
status as an "investment company" under the Investment Company Act.
However, the Trust Agreement may not be amended without the consent of each
holder of Trust Securities to (i) change the amount or timing of any
Distribution on Trust Securities or otherwise adversely affect the amount of any
Distribution required to be made in respect of 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 Property
Trustee, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture Trustee, or
executing 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 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
a majority in aggregate Liquidation Amount of all outstanding Preferred
Securities or in some cases, the prior consent of each holder of the Preferred
Securities.
The Trustees 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 the Preferred Securities of
any notice of default with respect to the Junior Subordinated Debentures.
In addition to obtaining these approvals, the Trustees must also obtain an
opinion of counsel experienced in such matters to the effect that Flagstar Trust
will not be classified as an association taxable as a corporation for United
States federal income tax purposes on account of such action.
Any required approval of holders of the 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 the Preferred Securities are entitled to vote, or of
any matter upon which action by written consent of such holders is to be taken,
to be given to each holder of record of the Preferred Securities in the manner
set forth in the Trust Agreement.
If we or any of our affiliates, or the Trustees or any of their affiliates
own any Preferred Securities, those Preferred Securities will not be treated as
outstanding for purposes of the votes or consents described above.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
DTC will act as securities depositary for the Preferred Securities.
Flagstar Trust will issue one or more fully registered global Preferred
Securities certificates in the name of Cede & Co. (DTC's nominee). These
certificates will represent the total aggregate number of Preferred Securities.
Flagstar Trust will deposit these certificates with DTC or a custodian appointed
by DTC. Flagstar Trust will not issue certificates to you for the Preferred
Securities that you purchase, unless DTC's services are discontinued.
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DTC has provided Flagstar Trust and Flagstar Bancorp with the following
information: DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered under the provisions of Section 17A of the Securities Exchange Act of
1934. DTC holds securities that its participants deposit with DTC. DTC also
facilitates the settlement among participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and other organizations ("Direct Participants").
DTC is owned by a number of its Direct Participants and by the New York
Stock Exchange, Inc., the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others, such as securities brokers and dealers, banks and trust
companies, that clear transactions through or maintain a direct or indirect
custodial relationship with a Direct Participant ("Indirect Participants"). The
rules applicable to DTC and its participants are on file with the SEC.
When you purchase Preferred Securities within the DTC system, the purchase
must be made by or through a Direct Participant. The Direct Participant will
receive a credit for the Preferred Securities on DTC's records. You, as the
actual owner of the Preferred Securities, are the "beneficial owner." Your
beneficial ownership interest will be recorded on the Direct and Indirect
Participants' records, but DTC will have no knowledge of your individual
ownership. DTC's records reflect only the identity of the Direct Participants to
whose accounts Preferred Securities are credited.
You will not receive written confirmation from DTC of your purchases. The
Direct or Indirect Participant through whom you purchased the Preferred
Securities should send you written confirmations providing details of your
transactions, as well as periodic statements of your holdings. The participants
are responsible for keeping accurate account of the holdings of their customers
like you.
Transfers of ownership interests in the Preferred Securities will be
accomplished by entries made on the books of participants acting on behalf of
beneficial owners.
The laws of some states may require that specified purchasers of securities
take physical delivery of the securities in definitive form. These laws may
impair the ability to transfer beneficial interests in the global certificate
representing the Preferred Securities.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by Direct
Participants and Indirect Participants to beneficial owners will be governed by
arrangements among them, and any statutory or regulatory requirements that may
be in effect from time to time.
Redemption notices will be sent to Cede & Co. If less than all of the
Preferred Securities are being redeemed, DTC will reduce each Direct
Participant's holdings of Preferred Securities in accordance with its
procedures.
In those cases where a vote by the holders of the Preferred Securities is
required, neither DTC nor Cede & Co. will itself consent or vote. Under its
usual procedures, DTC would mail an omnibus proxy to Flagstar Trust as soon as
possible after the record date. The omnibus proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts the
Preferred Securities are credited on the record date, which are identified in a
listing attached to the omnibus proxy.
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Flagstar Trust will make distribution payments on the Preferred Securities
directly to DTC. DTC's practice is to credit Direct Participants' accounts on
the relevant payment date in accordance with their respective holdings shown on
DTC's records, unless DTC has reason to believe that it will not receive payment
on such payment date.
Payments by participants (whether Direct Participants or Indirect
Participants) to beneficial owners will be governed by standing instructions and
customary practices, as is the case with securities held for the account of
customers in bearer form or registered in "street name." These payments will be
the responsibility of the participant and not of DTC, Flagstar Trust or Flagstar
Bancorp.
Except as provided below in "Description of the Junior Subordinated
Debentures -- Discontinuance of the Depositary's Services," a beneficial owner
in a global Preferred Securities certificate will not be entitled to receive
physical delivery of Preferred Securities. Accordingly, each beneficial owner
must rely on the procedures of DTC to exercise any rights under the Preferred
Securities.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to
Flagstar Trust. In the event that a successor securities depositary is not
obtained, Flagstar Trust will print and deliver Preferred Securities
certificates. Additionally, the Administrative Trustees, with our consent, may
decide to discontinue the book-entry only system of transfers with respect to
the Preferred Securities. In that event, Flagstar Trust will print and deliver
certificates for the Preferred Securities to its holders.
We have obtained the information in this section concerning DTC and DTC's
book-entry system from sources that we and Flagstar Trust believe to be
reliable, but neither we nor they take responsibility for the accuracy of the
information.
CERTIFICATED SECURITIES
If the Preferred Securities do not remain in book-entry only form as
described above, the following provisions would apply:
- The Property Trustee will act as paying agent and may designate an
additional or substitute paying agent at any time.
- Registration of transfers of Preferred Securities will be effected
without charge by or on behalf of Flagstar Trust, but the registration
will require payment, with the giving of such indemnity as Flagstar Trust
or Flagstar Bancorp may require, for any tax or other governmental
charges that may be imposed.
- Flagstar Trust will not be required to register or cause to be registered
the transfer of Preferred Securities after they have been called for
redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than upon the occurrence and during the
continuance of an Event of Default, undertakes to perform only those 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 the Property Trustee is offered
reasonable indemnity against the costs, expenses and liabilities that it might
incur. If no Event of Default has occurred and is continuing and the Property
Trustee is required to decide between alternative causes of action, construe
ambiguous provisions in the Trust Agreement or is unsure of the application of
any provision of the Trust
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Agreement, and the matter is not one on which holders of the Preferred
Securities are entitled under the Trust Agreement to vote, then the Property
Trustee shall take such action as is directed by us. If we do not direct any
action, then the Property Trustee shall take such action as it deems advisable
and in the best interests of the holders of Trust Securities and will have no
liability except for its own bad faith, negligence or willful misconduct.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to operate Flagstar
Trust in such a way so that Flagstar Trust will not be:
- required to register as an "investment company" under the Investment
Company Act; or
- characterized as other than a grantor trust for United States federal
income tax purposes.
We are authorized and directed to conduct our affairs so that the Junior
Subordinated Debentures will be treated as indebtedness for United States
federal income tax purposes on our books and accounts.
We and the Administrative Trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust of Flagstar Trust or
our articles of incorporation, that either we or the Administrative Trustees
determine in either of our discretion to be necessary or desirable to achieve
that end, as long as the action does not adversely affect the interests of the
holders of the Preferred Securities.
Flagstar Trust may not borrow money, issue debt or mortgage or pledge any
of its assets.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures will be issued under the Subordinated
Indenture, dated as of April , 1999 (the "Indenture"), between us and FMB
Bank, as the Indenture Trustee. The following summary of the terms and
provisions of the Junior Subordinated Debentures and the Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Indenture. You should also read the Indenture for the complete
terms of the Junior Subordinated Debentures. The Indenture has been filed as an
exhibit to the Registration Statement. This Prospectus forms a part of the
Registration Statement. The Indenture is also qualified in its entirety by
reference to the Trust Indenture Act. The Indenture is qualified under the Trust
Indenture Act. We believe that this section of the Prospectus describes the
material terms of the Junior Subordinated Debentures and the Related Indenture.
Flagstar Trust will invest the proceeds of the issuance of the Preferred
Securities and Common Securities in the Junior Subordinated Debentures that are
issued by us. Our Junior Subordinated Debentures are subordinated, unsecured
debt under the Indenture.
GENERAL
We will issue the Junior Subordinated Debentures as unsecured debt under
the Indenture. The Junior Subordinated Debentures will be limited in aggregate
principal amount to the sum of the Liquidation Amount of the Preferred
Securities and the amount of capital that we contributed to Flagstar Trust in
exchange for the Common Securities.
The Junior Subordinated Debentures contain no sinking fund provisions. The
entire principal amount of the Junior Subordinated Debentures will become due
and payable, together with any accrued and unpaid interest, including compound
interest and additional sums, if any, on , 2029.
If Junior Subordinated Debentures are distributed to holders of Preferred
Securities in liquidation of those holders' interests in Flagstar Trust, the
Junior Subordinated Debentures will
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initially be issued as a global security. As described in "Description of the
Junior Subordinated Debentures -- Discontinuance of the Depositary's Services",
under limited circumstances, Junior Subordinated Debentures may be issued in
certificated form in exchange for a global security. See "-- Book-Entry and
Settlement; Depositary" below.
If Junior Subordinated Debentures are issued in certificated form, we will
issue them in denominations of $25, and integral multiples of $25, and they may
be transferred or exchanged at the offices described below.
We will make payments on Junior Subordinated Debentures issued as a global
security to DTC, a successor depositary or, if no depositary is used, to a
paying agent for the Junior Subordinated Debentures. If we issue Junior
Subordinated Debentures 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 denominations of a like aggregate principal amount, at the
Corporate Trust Office of the Indenture Trustee in Baltimore, Maryland. At our
option, however, we may pay interest by check mailed to the address of the
persons entitled to the interest.
INTEREST
The Junior Subordinated Debentures will bear interest at an annual rate of
% from the original date of issuance until the principal becomes due and
payable. Interest is payable quarterly in arrears on the last Business Day of
March, June, September and December of each year, beginning June 30, 1999.
Interest payments not paid when due will accrue interest, compounded quarterly,
at the annual rate of %.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months, and, for any period shorter than a
quarter, on the basis of the actual number of days elapsed per 30-day month.
The interest payment provisions for the Junior Subordinated Debentures
correspond to the distribution provisions for the Preferred Securities. See
"Description of the Preferred Securities -- Distributions".
OPTION TO EXTEND INTEREST PAYMENT PERIOD
As long as we are not in default on the payment of interest on the Junior
Subordinated Debentures, we have the right, at any time and from time to time,
to defer payments of interest by extending the interest payment period for a
period not exceeding 20 consecutive quarters (an "Extension Period"), but not
beyond the maturity date of the Junior Subordinated Debentures. At the end of
any Extension Period, we will pay all interest then accrued and unpaid, together
with interest on that amount, compounded quarterly, at the annual rate of
%. After termination of any Extension Period and the payment of all amounts
then due, we may begin a new Extension Period.
During an Extension Period, interest will continue to accrue and holders of
Junior Subordinated Debentures will be required to accrue interest income for
United States federal income tax purposes. See "United States Federal Income Tax
Consequences."
During any Extension Period:
- we may not declare or pay any dividends on, make any distribution, or
redeem, purchase, acquire or make a liquidation payment on any of our
capital stock; and
- we may not make any payment of interest, principal or premium on or
repay, repurchase or redeem any debt securities issued by us that rank
equal or junior to the Junior Subordinated Debentures, or make any
guarantee payments on the foregoing.
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The Extension Period restrictions do not apply to:
- repurchases, redemptions or other acquisitions of shares of our capital
stock 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, or a dividend reinvestment or
shareholder stock purchase plan;
- any declaration of a dividend in connection with any shareholders' rights
plan, or the issuance of rights, stock or other property under any
shareholders' rights plan, or the redemption or repurchase of rights
pursuant to the plan;
- any dividend in the form of stock, warrants, options or other rights
where the dividend or the stock issuable upon exercise of the warrants,
options or other rights is the same stock as that on which the dividend
is being paid or ranks equal or junior to that stock; or
- payments by us under the Guarantee.
The restrictions described above will also apply if we default on our
obligations under the Junior Subordinated Debentures or the Guarantee.
Before termination of any Extension Period, we may further extend the
interest payment period. However, the Extension Period, including all previous
and further extensions, may not exceed 20 consecutive quarters or extend beyond
the maturity date of the Junior Subordinated Debentures. After termination of
any Extension Period and the payment of all amounts then due, we may begin a new
Extension Period, for up to an additional 20 consecutive calendar quarters, as
described above.
If the Property Trustee is the sole holder of the Junior Subordinated
Debentures, we will give the Administrative Trustees, the Indenture Trustee and
the Property Trustee notice of our selection of an Extension Period one business
day before the earlier of:
- the next date Distributions on the Preferred Securities are payable; or
- the date the Administrative Trustees are required to give notice to the
holders of record of the Preferred Securities.
The Indenture Trustee will give notice of our selection of an Extension
Period to the holders of the Preferred Securities. We may elect to begin an
Extension Period an unlimited number of times.
If the Property Trustee is not the sole holder of the Junior Subordinated
Debentures, we will give the holders of the Junior Subordinated Debentures
notice of our selection of an Extension Period ten business days before the
earlier of:
- the next interest payment date; or
- the date upon which we are required to give notice to the New York Stock
Exchange, or other applicable self-regulatory organization, or to holders
of the Junior Subordinated Debentures of the record or payment date of
the related interest payment.
We have no present intention of exercising our right to defer payments of
interest by extending the interest payment period on the Junior Subordinated
Debentures.
ADDITIONAL SUMS
If Flagstar Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, we will pay as additional
amounts on the Junior Subordinated Debentures the amounts (i.e., the "Additional
Sums") required to be paid so that the Distributions paid by Flagstar Trust
shall not be reduced as a result of such charges.
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REDEMPTION
We have the right, after receipt of prior approval of the federal banking
regulators, if approval is then required, to redeem the Junior Subordinated
Debentures:
(i) on or after , 2004, in whole at any time or in part
from time to time; or
(ii) at any time in whole (but not in part), upon the occurrence of a
Tax Event, an Investment Company Event or a Capital Treatment Event.
In either case, the Redemption Price will equal 100% of the principal
amount to be redeemed, plus any accrued and unpaid interest, to the date of
redemption.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Junior Subordinated
Debentures to be redeemed at such holder's registered address. Interest will
cease to accrue on any Junior Subordinated Debentures that we call for
redemption, unless we default in payment of the Redemption Price.
The Junior Subordinated Debentures will not be subject to any sinking fund.
OPTION TO ACCELERATE MATURITY DATE
The Junior Subordinated Debentures will mature on , 2029. We
may, at our option, shorten the maturity to any date not earlier than
, 2004. We may only shorten the maturity date if we receive prior
approval from the federal banking regulators, if then required. We may only
elect to shorten the maturity once.
If we elect to shorten the maturity, we will give notice to each registered
holder of the Junior Subordinated Debentures, the Property Trustee and the
Indenture Trustee within 90 days of the effective date of the shortened
maturity. The Property Trustee must give notice to the holders of Trust
Securities of the new maturity date of the Junior Subordinated Debentures. You
may be subject to adverse United States federal income tax consequences if we
shorten the maturity. See "United States Federal Income Tax Consequences --
Exercise of Right to Shorten Maturity."
DISTRIBUTION UPON LIQUIDATION
As described under "Description of the Preferred Securities -- Liquidation
Distribution upon Dissolution," under certain circumstances involving the
dissolution of Flagstar Trust, the Junior Subordinated Debentures may be
distributed to the holders of the Preferred Securities and Common Securities in
liquidation of Flagstar Trust after the expenses of Flagstar Trust have been
paid in full. If distributed to holders of the Preferred Securities in
liquidation, the Junior Subordinated Debentures will initially be issued in the
form of one or more global securities and the Depositary, or any successor
depositary for the Preferred Securities, will act as depositary for the Junior
Subordinated Debentures. We anticipate that the depositary arrangements for the
Junior Subordinated Debentures will be substantially identical to those in
effect for the Preferred Securities. See "Book-Entry Issuance".
If the Junior Subordinated Debentures are distributed to the holders of
Preferred Securities upon the liquidation of Flagstar Trust, there can be no
assurance as to the market price of the Junior Subordinated Debentures.
SUBORDINATION
The Indenture provides that the Junior Subordinated Debentures rank junior
in right of payment to all of our "Senior and Subordinated Debt," defined below.
We may not make payment
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of principal, including redemption payments, or interest on the Junior
Subordinated Debentures if
- any of our Senior and Subordinated Debt is not paid when due and any
applicable grace period after the default has ended and the default has
not been cured or waived; or
- the maturity of any of our Senior and Subordinated Debt has been
accelerated because of a default, and the acceleration has not been
rescinded.
Upon any distribution of our assets to creditors upon our dissolution,
winding-up, liquidation or reorganization, whether voluntary or involuntary, or
in bankruptcy, insolvency, receivership or other proceedings, all principal,
premium, if any, and interest due or to become due on all of our Senior and
Subordinated Debt must be paid in full before the holders of Junior Subordinated
Debentures are entitled to receive or retain any payment. In that event, any
payment or distribution on the Junior Subordinated Debentures that would
otherwise be payable in respect of the Junior Subordinated Debentures, but for
the subordination provision, will be paid or delivered directly to the holders
of our Senior and Subordinated Debt in accordance with the priorities then
existing among the holders of our Senior and Subordinated Debt until all of our
Senior and Subordinated Debt has been paid in full.
If the Indenture Trustee or any holder of Junior Subordinated Debentures
receives any payment or distribution on account of the Junior Subordinated
Debentures before all of our Senior and Subordinated Debt is paid in full, then
that payment or distribution will be paid to the holders of our Senior and
Subordinated Debt at the time outstanding.
The rights of the holders of the Junior Subordinated Debentures will be
subrogated to the rights of the holders of our Senior and Subordinated Debt to
the extent of any payment we made to the holders of our Senior and Subordinated
Debt that otherwise would have been made to the holders of the Junior
Subordinated Debentures but for the subordination provisions.
SELECTED DEFINITIONS
"Debt" means with respect to any person, whether recourse is to all or a
portion of the assets of such person and whether or not contingent:
- every obligation of such person for money borrowed or money owed;
- every reimbursement obligation of such person with respect to letters of
credit, bankers' acceptances or similar facilities;
- every obligation of such person issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts
payable or accrued liabilities arising in the ordinary course of
business);
- every capital lease obligation of such person; and
- every obligation of the type referred to in the foregoing clauses of
another person and all dividends of another person the payment of which,
in either case, such person has guaranteed or is responsible or liable,
directly or indirectly, as obligor or otherwise.
"Senior and Subordinated Debt" means the principal of (and premium, if any)
and interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to Flagstar Bancorp
whether or not such claim for post-petition interest is allowed in such
proceeding), on Debt, whether incurred on, prior to or after the date of the
Indenture, unless, in the instrument creating or evidencing the Debt, it is
provided that such obligations are not superior in right of payment to the
Junior Subordinated Debentures or to
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other Debt which ranks equal with, or subordinated to, the Junior Subordinated
Debentures. However, that Senior and Subordinated Debt will not include:
- any Debt of the Company which when incurred (and without respect to any
election under section 1111(b) of the United States Bankruptcy Code of
1978, as amended), was without recourse to the Company;
- any Debt of the Company to any of its subsidiaries;
- any Debt to any employee of the Company;
- any Debt which by its terms is subordinated to trade accounts payable or
accrued liabilities arising in the ordinary course of business but only
to the extent that payments made to the holders of such Debt by the
holders of the Junior Subordinated Debentures as a result of the
subordination provisions of the Indenture would be greater than they
otherwise would have been as a result of any obligation of such holders
to pay amounts over to the obligees on such trade accounts payable or
accrued liabilities arising in the ordinary course of business as a
result of subordination provisions to which such Debt is subject;
- the Guarantee; and
- any other debt securities issued pursuant to the Indenture.
The Indenture does not limit the amount of additional Senior and
Subordinated Debt that we may incur. We expect that from time to time we may
incur additional indebtedness constituting Senior and Subordinated Debt.
BOOK-ENTRY AND SETTLEMENT; DEPOSITARY
If we distribute the Junior Subordinated Debentures to holders of Preferred
Securities in connection with the involuntary or voluntary dissolution,
winding-up or liquidation of Flagstar Trust, they will be issued in the form of
one or more global certificates registered in the name of a depositary or its
nominee. Except under the limited circumstances described immediately below
under "-- Discontinuance of the Depositary's Services," Junior Subordinated
Debentures represented by a global security will not be exchangeable for, and
will not otherwise be issuable as, certificated securities.
If Junior Subordinated Debentures are distributed to holders of Preferred
Securities upon termination of Flagstar Trust, DTC will act as securities
depositary for the Junior Subordinated Debentures. For a description of DTC and
the specific terms of the depositary arrangements, see "Description of the
Preferred Securities -- Book-Entry Only Issuance -- The Depository Trust
Company."
As of the date of this Prospectus, that description of DTC's book-entry
system and DTC's practices as they relate to purchases of, transfers of, notices
concerning and payments on the Preferred Securities apply in all material
respects to any debt obligations represented by one or more global securities
held by DTC.
We may appoint a successor to DTC or any successor depositary if the
current depositary is unable or unwilling to continue as a depositary for the
global securities.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
A global security will be exchangeable for Junior Subordinated Debentures
registered in the names of persons other than the depositary or its nominee only
if:
- the depositary notifies us that it is unwilling or unable to continue as
a depositary for the global security and no successor depositary has been
appointed;
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- the depositary ceases to be a clearing agency registered under the
Exchange Act at a time the depositary is required to be so registered to
act as depositary, and no successor depositary has been appointed;
- we, in our sole discretion, determine that the global security shall be
exchangeable for definitive certificates; or
- there shall have occurred a Debenture Event of Default.
Any global security that is exchangeable as described above will be
exchangeable for Junior Subordinated Debentures registered in the names the
depositary directs. We expect that the instructions will be based upon
directions received by the depositary from its participants with respect to
ownership of beneficial interests in the global security.
PAYMENT AND PAYING AGENTS
Payment of principal and interest on the Junior Subordinated Debentures
will be made at the office of the Indenture Trustee. In addition, at our option,
we may pay interest by check mailed to the address of the holder of the
Preferred Security as it appears in the securities register or by transfer to an
account of the holder of the Preferred Security pursuant to proper transfer
instructions that we have received prior to the regular record date. However, we
may not exercise these options if the Junior Subordinated Debentures are
represented by a Global Subordinated Debenture. Payment of any interest on
Junior Subordinated Debentures will be made to the person in whose name such
Junior Subordinated Debenture is registered at the close of business on the
regular record date for such interest. We may at any time designate additional
Paying Agents or rescind the designation of any Paying Agent; however, we will
at all times be required to maintain a Paying Agent in each place of payment for
the Junior Subordinated Debentures.
Any moneys deposited with the Indenture Trustee or any Paying Agent, or
held by us in trust, for the payment of the principal of or interest on the
Junior Subordinated Debentures and remaining unclaimed for two years after such
principal or interest has become due and payable shall, at our request, be
repaid to us. Thereafter the holder of our Junior Subordinated Debenture shall
look only to us for payment as one of our general unsecured creditors.
MODIFICATION OF INDENTURE
The Indenture provides that we and the Indenture Trustee may enter into
supplemental indentures without the consent of the holders of Preferred
Securities to: (i) secure any securities, (ii) evidence the assumption by a
successor corporation of our obligations, (iii) add covenants for the protection
of the holders of Junior Subordinated Debentures, (iv) cure any ambiguity or
correct any inconsistency in the Indenture, (v) qualify or maintain the
qualification of the Indenture under Trust Indenture Act and (vi) evidence and
provide for the acceptance of appointment by a successor trustee.
The Indenture also provides that we and the Indenture Trustee may, with the
consent of at least a majority of the holders in aggregate principal amount of
the Junior Subordinated Debentures then outstanding and affected, add any
provisions to or change the provisions of the Indenture or the rights of the
holders of the Junior Subordinated Debentures. We and the Indenture Trustee may
not, however, without the consent of each holder of the Junior Subordinated
Debentures:
- extend the final maturity of the Junior Subordinated Debentures;
- reduce the principal amount or premium, if any;
- reduce the rate or extend the time of payment of interest;
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- reduce any amount payable on redemption; or
- reduce the percentage of holders of the Junior Subordinated Debentures
whose consent is required for any modification of the Indenture.
DEBENTURE EVENTS OF DEFAULT
The 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 a "Debenture Event of Default" with respect to the
Junior Subordinated Debentures:
- failure for 30 days to pay any interest on the Junior Subordinated
Debentures, when due (not including the deferral of any due date in the
case of an Extension Period); or
- failure to pay any principal on the Junior Subordinated Debentures when
due whether at maturity, upon redemption by declaration or otherwise; or
- our failure to observe or perform in any material respect certain other
covenants contained in the Indenture for 90 days after written notice to
us from the Indenture Trustee or to us and the Indenture Trustee by the
holders of at least 25% in aggregate outstanding principal amount of the
Junior Subordinated Debentures; or
- certain events in bankruptcy, insolvency or reorganization of Flagstar
Bancorp, including the voluntary commencement of bankruptcy proceedings,
entry of an order for relief against us in a bankruptcy proceeding,
appointment of a custodian over substantially all of our property, a
general assignment for the benefit of creditors, or a court order for our
liquidation; or
- if Flagstar Trust shall have voluntarily or involuntarily dissolved,
wound up its business or otherwise terminated its existence (except in
connection with (i) the distribution of Junior Subordinated Debentures to
the holders in liquidation of their interests in Flagstar Trust; (ii) the
redemption of all of the outstanding Trust Securities; or (iii) certain
mergers, consolidations or amalgamations, each as permitted by the Trust
Agreement).
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures have the right to direct any proceeding for any
remedy available to the Indenture Trustee. The Indenture Trustee or the holders
of not less than 25% in aggregate outstanding principal amount of the Junior
Subordinated Debentures may declare the principal due and payable immediately
upon a Debenture Event of Default.
However, the holders of a majority in aggregate outstanding principal
amount of the Junior Subordinated Debentures may annul such declaration and
waive the default if the default (other than the non-payment of the principal of
the Junior Subordinated Debentures which has become due solely by such
acceleration) has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Indenture Trustee. If the holders of the Junior
Subordinated Debentures fail to annul such declaration and waive such default,
the holders of a majority in aggregate Liquidation Amount of the Preferred
Securities would have such right.
In case a Debenture Event of Default occurs, the Property Trustee may
declare the principal of and the interest on the Junior Subordinated Debentures,
and any other amounts payable under the Indenture, to be due and payable and to
enforce its other rights as a creditor with respect to the Junior Subordinated
Debentures.
We will be required to file annually with the Indenture Trustee a
certificate, signed by one of our officers, stating whether or not such officer
knows of any default by us in the performance, observance or fulfillment of any
condition or covenant of the Indenture.
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ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Debenture Event of Default for failure to pay interest or principal on
the Junior Subordinate Debentures has occurred and is continuing, you may
institute a legal proceeding directly against us for enforcement of payment to
you of the principal of or interest on the Junior Subordinated Debentures in an
amount equal to the aggregate Liquidation Amount of the Preferred Securities you
hold ("Direct Action"). Our failure to pay principal or interest during an
Extension Period is not a Debenture Event of Default. If the right to bring a
Direct Action is removed, Flagstar Trust may become subject to the reporting
obligations under the Exchange Act. We have the right under the Indenture to
set-off any payment made to a holder of Preferred Securities by us in connection
with a Direct Action.
Unless an Event of Default under the Trust Agreement has occurred, you will
not be able to exercise directly any remedies except for those listed above. See
"Description of the Preferred Securities -- Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Company shall not consolidate with, convert
into 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, convert into or merge into the Company or convey, transfer or
lease its properties and assets substantially as an entirety to the Company.
However, this does not apply if (i) in case the Company consolidates with,
converts into 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 Person expressly assumes the Company's
obligations on the Junior Subordinated Debentures issued under the Indenture;
(ii) immediately after giving effect thereto, no Debenture Event of Default, and
no event which, after notice or lapse of time or both, would become a Debenture
Event of Default, shall have occurred and be continuing; and (iii) certain other
conditions as prescribed in the Indenture are met.
If these conditions are met, the holders of the Preferred Securities have
no grounds to object to a highly leveraged or other transaction involving the
Company even if it may adversely affect holders of the Junior Subordinated
Debentures.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Junior
Subordinated Debentures not previously delivered to the Indenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and payable
at their maturity date within one year, and we deposit with the Indenture
Trustee, in trust, funds for the purpose and in an amount sufficient to pay and
discharge the entire indebtedness on the outstanding Junior Subordinated
Debentures, for the principal and interest to the date of the deposit or to the
stated maturity, as the case may be, then the Indenture will cease to be of
further effect. However, we will continue to be obliged to pay all other sums
due pursuant to the Indenture and to provide the officers' certificates and
opinions of counsel required by the Indenture. Under these conditions, we will
be deemed to have satisfied and discharged the Indenture.
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by
and construed in accordance with the laws of the State of Delaware.
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INFORMATION CONCERNING THE INDENTURE TRUSTEE
The Indenture Trustee will be unaffiliated with us. For matters relating to
compliance with Trust Indenture Act, the Indenture Trustee will have all of the
duties and responsibilities of an Indenture Trustee under the Trust Indenture
Act. The Indenture Trustee, other than during the occurrence and continuance of
a Debenture Event of Default, undertakes to perform only such duties as are
specifically set forth in the Indenture and, upon a Debenture Event of Default,
must use the same degree of care and skill as a prudent person would use in the
conduct of his or her own affairs. Subject to this provision, the Indenture
Trustee is under no obligation to exercise any of the powers given it by the
Indenture at the request of any holder of Preferred Securities unless it is
offered reasonable security or indemnity against the costs, expenses and
liabilities that it might incur. However, the holders of the Preferred
Securities will not be required to offer such an indemnity where the holders, by
exercising their voting rights, direct the Indenture Trustee to take any action
following a Debenture Event of Default.
COVENANTS OF THE COMPANY
We have made certain covenants in the Indenture. One specific covenant we
have agreed to is that we will pay to Flagstar Trust the Additional Sums so long
as Flagstar Trust holds the Junior Subordinated Debentures.
In addition, we have also agreed to the following terms:
- we will maintain directly or indirectly 100% ownership of the Common
Securities. However, the Indenture does allow us to transfer ownership of
the Common Securities to certain successors;
- we will not voluntarily dissolve Flagstar Trust unless we have received
prior approval from federal banking regulators, if required. However, we
may voluntarily dissolve Flagstar Trust if we distribute the Junior
Subordinated Debentures to holders of the Preferred Securities or if
Flagstar Trust is a party to certain mergers, consolidations or
amalgamations permitted by the Trust Agreement; and
- we will use our reasonable best efforts to cause Flagstar Trust to be
classified as a grantor trust and thus not be taxed as a corporation for
United States federal income tax purposes.
BOOK-ENTRY ISSUANCE
The Depositary will act as securities depositary for all of the Preferred
Securities and, if there is a dissolution of Flagstar Trust, the Junior
Subordinated Debentures. The Preferred Securities and the Junior Subordinated
Debentures will be issued only as fully-registered securities registered in the
name of Cede & Co. (the Depositary's nominee). One or more fully-registered
global certificates will be issued for the Preferred Securities and the Junior
Subordinated Debentures and will be deposited with the Depositary.
The Depositary may discontinue providing its services as securities
depositary with respect to any of the Preferred Securities or the Junior
Subordinated Debentures at any time by giving reasonable notice to the relevant
Trustee and the Company. In the event that a successor securities depositary is
not obtained, definitive Preferred Securities or Subordinated Debenture
certificates representing such Preferred Securities or Junior Subordinated
Debentures are required to be printed and delivered. At our option, we may
decide to discontinue use of the system of book-entry transfers through the
Depositary (or a successor depositary). After a Debenture Event of Default, the
holders of a majority in Liquidation Amount of Preferred Securities or aggregate
principal amount of Junior Subordinated Debentures may determine to discontinue
the system of book-entry transfers through the Depositary. In any such event,
definitive
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certificates for such Preferred Securities or Junior Subordinated Debentures
will be printed and delivered.
The Depositary's management is aware that some computer applications,
systems, and the like for processing data ("Systems") that are dependent upon
calendar dates, including dates before, on, and after January 1, 2000, may
encounter "Year 2000 problems." The Depositary has informed its participants and
other members of the financial community (the "Industry") that it has developed
and is implementing a program so that its Systems, as the same relate to the
timely payment of distributions (including principal and income payments) to
security holders, book-entry deliveries and settlement of trades with the
Depositary, continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, the Depositary's plan includes a testing phase, which is expected
to be completed within appropriate time frames.
However, the Depositary's ability to perform properly its services is also
dependent upon other parties, including but not limited to issuers and their
agents, as well as third-party vendors from whom the Depositary licenses
software and hardware, and third-party vendors on whom the Depositary relies for
information or the provision of services, including telecommunication and
electrical utility service providers, among others. The Depositary has informed
the Industry that it is contacting (and will continue to contact) third-party
vendors from whom the Depositary acquires services to: (i) impress upon them the
importance of such services being Year 2000 compliant and (ii) determine the
extent of their efforts for Year 2000 remediation (and, as appropriate, testing)
of their services. In addition, the Depositary is in the process of developing
such contingency plans as it deems appropriate.
According to the Depositary, the foregoing information with respect to the
Depositary has been provided to the Industry for informational purposes only and
is not intended to serve as a representation, warranty or contract modification
of any kind.
DESCRIPTION OF GUARANTEE
We will execute and deliver the Preferred Securities Guarantee Agreement
(the "Guarantee") concurrently with the issuance of the Preferred Securities for
the benefit of the holders of the Preferred Securities. FMB Bank will act as
trustee under the Guarantee (the "Guarantee Trustee") for the purposes of
compliance with the Trust Indenture Act, and the Guarantee will be qualified
under the Trust Indenture Act. The following 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 of the provisions of the Guarantee,
including the definitions of certain terms, and Trust Indenture Act. The form of
the Guarantee has been filed as an exhibit to the Registration Statement of
which this Prospectus forms a part. You should also read the Guarantee. The
Guarantee Trustee will hold the Guarantee for the benefit of the holders of the
Preferred Securities.
GENERAL
Pursuant to the Guarantee, we will agree to pay in full on a subordinated
basis, to the extent set forth in the Guarantee, 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 Flagstar Trust
may have or assert other than the defense of payment.
The following payments on the Preferred Securities, if not fully paid by
Flagstar Trust (the "Guarantee Payments"), are covered by the Guarantee, without
duplication:
- any accumulated and unpaid Distributions required to be paid on the
Preferred Securities, if Flagstar Trust has funds available to make the
payment;
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- the Redemption Price, if Flagstar Trust has funds available to make the
payment, with respect to any Preferred Securities called for redemption;
and
- upon a voluntary or involuntary dissolution, winding up or liquidation of
Flagstar Trust other than in connection with the distribution of the
Junior Subordinated Debentures to holders of the Preferred Securities,
the lesser of
(1) the aggregate of the $25 Liquidation Amount and all accumulated and
unpaid Distributions on the Preferred Securities to the date of
payment if Flagstar Trust has funds available to make the payment;
or
(2) the amount of assets Flagstar Trust has remaining available for
distribution to holders of Preferred Securities.
Our obligations to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by us to the holders of the Preferred Securities
or by causing Flagstar Trust to pay the amounts to the holders.
The Guarantee will be full and unconditional from the time of issuance.
However, the Guarantee will not apply to any payment of Distributions due if
Flagstar Trust lacks funds legally available for payment as a result of a
failure by us to make payments of interest or principal on the Junior
Subordinated Debentures.
We are a holding company and we have the right to participate in any
distribution of assets of any of our subsidiaries if any of our subsidiaries are
liquidated or reorganized. However, our right to participate is subject to the
prior claim of the subsidiary's creditors. Accordingly, our obligations under
the Guarantee will be effectively subordinated to all existing and future
liabilities of our subsidiaries, and holders of Preferred Securities should look
only to our assets for payments.
The Guarantee does not limit our incurrence or issuance of other secured or
unsecured debt. We may issue or incur Senior and Subordinated Debt in the
future. We expect that we will issue or incur Senior and Subordinated Debt in
the future.
We have, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures, the Indenture and the Expense Agreement, taken
together, guaranteed on a subordinated basis all of Flagstar Trust's obligations
under the Preferred Securities. No single document standing alone or operating
in conjunction with fewer than all of the other documents constitutes the
guarantee. It is only the combined operation of these documents that has the
effect of providing our guarantee on a subordinated basis of all of Flagstar
Trust's obligations under the Preferred Securities. See "Relationship Among the
Preferred Securities, the Junior Subordinated Debentures and the Guarantee."
THE EXPENSE AGREEMENT
We will enter into an agreement with Flagstar Trust as to the expenses and
liabilities of Flagstar Trust (the "Expense Agreement"). We will fully and
unconditionally guarantee to each person or entity to whom Flagstar Trust
becomes indebted or liable, the full payment of any costs, expenses or
liabilities of Flagstar Trust, other than obligations of Flagstar Trust to the
holders of the Preferred Securities or other similar interests in Flagstar
Trust.
STATUS OF THE GUARANTEE
The Guarantee is unsecured and ranks subordinate and junior in right of
payment to all Senior and Subordinated Debt in the same manner as the Junior
Subordinated Debentures. As such, it is (1) subordinate and junior in right of
payment to all of our other liabilities, (2) equal to the most senior preferred
stock now or hereafter issued by us, and with any guarantee now or
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hereafter issued by us in respect of any preferred stock of our affiliates, and
(3) senior to our Common Stock.
The Guarantee will constitute a guarantee of payment and not of collection.
The guaranteed party may institute a legal proceeding directly against us to
enforce its rights under the Guarantee without first instituting a legal
proceeding against any other person or entity. The Guarantee will be held 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 Flagstar Trust or upon distribution of the Junior Subordinated
Debentures to the holders of the Preferred Securities.
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 vote will be
required), the Guarantee may not be amended without the prior approval of the
holders of not less than a majority of the aggregate Liquidation Amount of the
outstanding Preferred Securities. A description of the way to obtain any
approval is described under "Description of the Preferred Securities -- Voting
Rights; Amendment of the Trust Agreement." All Guarantees and agreements
contained in the Guarantee will bind our successors, assigns, receivers,
trustees and representatives and are for the benefit of the holders of the
Preferred Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur when we fail to perform
any of our payment or other obligations under the Guarantee. The holders of at
least a majority in aggregate Liquidation Amount of the Preferred Securities
have the right to direct any proceeding for any remedy available to the
Guarantee Trustee relating to the Guarantee or to direct the exercise of any
trust or power conferred upon the Guarantee Trustee under the Guarantee.
If the Guarantee Trustee fails to enforce the Guarantee, you may, after
your written request to the Guarantee Trustee to enforce the Guarantee, sue us
directly to enforce the Guarantee Trustee's rights under the Guarantee without
first instituting a legal proceeding against Flagstar Trust, the Guarantee
Trustee, or any other person or entity.
Notwithstanding the foregoing, if we have failed to make a Guarantee
Payment, you may directly institute a proceeding against us to enforce the
Guarantee.
We are required to file annually with the Guarantee Trustee a certificate
as to our compliance with all the conditions and covenants under the Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
a default by us in performance of the Guarantee, undertakes to perform only such
duties as are specifically set forth in the Guarantee and, after default with
respect to the Guarantee, must exercise the same degree of care and skill as a
prudent person would exercise or use in the conduct of his or her own affairs.
Subject to 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 it might incur.
TERMINATION OF THE GUARANTEE
The Guarantee will remain in effect as long as the Preferred Securities are
outstanding.
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GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of Delaware.
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE JUNIOR
SUBORDINATED DEBENTURES AND THE GUARANTEE
GUARANTEE
Payments of Distributions and other amounts due on the Preferred Securities
are guaranteed by us to the extent described under "Description of Guarantee."
Taken together, our obligations under the Junior Subordinated Debentures, the
Indenture, the Trust Agreement, the Expense Agreement and the Guarantee provide,
in the aggregate, a guarantee on a subordinated basis for payments of
Distributions and other amounts due on the Preferred Securities (but only to the
extent Flagstar Trust has funds available for the payment of such
Distributions). No single document standing alone or operating in conjunction
with fewer than all of the other documents constitutes such guarantee. It is
only the combined operation of our obligations under those documents that has
the effect of providing a guarantee on a subordinated basis of Flagstar Trust's
obligations under the Preferred Securities.
To the extent that we do not make required payments on the Junior
Subordinated Debentures, Flagstar Trust will not pay Distributions or other
amounts due on the Preferred Securities. Neither the guarantee described above
nor the Guarantee covers payment of Distributions when Flagstar Trust does not
have sufficient funds to pay such Distributions. In those circumstances, your
remedy is to institute a legal proceeding directly against us to enforce the
payment of the Distributions to you. Our obligations under the guarantee and the
Guarantee are subordinate and junior in right of payment to all Senior and
Subordinated Debt.
SUFFICIENCY OF PAYMENTS
As long as we make payments required by the Junior Subordinated Debentures
held by Flagstar Trust, there will be sufficient funds to cover Distributions
and other payments due on the Preferred Securities, primarily because:
- the aggregate principal amount of the Junior Subordinated Debentures will
exceed the aggregate Liquidation Amount of the Preferred Securities by
the amount of the Common Securities;
- the interest rate and interest and other payment dates on the Junior
Subordinated Debentures will match the distribution rate and distribution
and other payment dates for the Preferred Securities;
- we will directly pay for all costs, expenses and liabilities of Flagstar
Trust except Flagstar Trust's obligations to holders of Preferred
Securities; and
- the Trust Agreement further provides that Flagstar Trust will not engage
in any activity that is not consistent with the limited purposes of
Flagstar Trust.
Notwithstanding anything to the contrary in the Indenture, we have the
right to set-off any payment we are required to make with and to the extent we
have made, or are concurrently making a payment under the Guarantee.
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ENFORCEMENT RIGHTS OF HOLDERS OF THE PREFERRED SECURITIES UNDER THE GUARANTEE
A holder of the Preferred Securities may institute a legal proceeding
directly against us to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, Flagstar Trust or
any other person or entity.
A default or event of default under any Senior and Subordinated Debt would
not constitute a Debenture Event of Default. However, in the event of payment
defaults under, or acceleration of, Senior and Subordinated Debt, the
subordination provisions of the Indenture provide that no payments may be made
in respect of the Junior Subordinated Debentures until the Senior and
Subordinated Debt have been paid in full or any payment default has been cured
or waived. Our failure to make the required payments on Junior Subordinated
Debentures will constitute a Debenture Event of Default.
LIMITED PURPOSE OF FLAGSTAR TRUST
The Preferred Securities evidence a beneficial interest in Flagstar Trust,
and it exists for the sole purpose of issuing Trust Securities and investing
those proceeds in the Junior Subordinated Debentures. A principal difference
between the rights of a holder of the Preferred Securities and a holder of a
Junior Subordinated Debenture is that a holder of a Junior Subordinated
Debenture is entitled to receive the principal amount of and interest accrued on
Junior Subordinated Debentures from us, while a holder of the Preferred
Securities is entitled to receive Distributions from Flagstar Trust (or from us
under the Guarantee) if and to the extent Flagstar Trust has funds available for
the payment of such Distributions.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution, winding-up or liquidation of
Flagstar Trust involving the liquidation of the Junior Subordinated Debentures,
the holders of Preferred Securities will be entitled to receive, out of assets
held by Flagstar Trust, the liquidation distribution in cash. See "Description
of the Preferred Securities -- Liquidation Distribution upon Dissolution." Upon
our voluntary or involuntary liquidation or bankruptcy, the Property Trustee, as
holder of the Junior Subordinated Debentures, would be one of our subordinated
creditors, subordinated in right of payment to all Senior and Subordinated Debt
as set forth in the Indenture. However, the Property Trustee, and indirectly the
holders of the Preferred Securities are entitled to receive payment in full of
principal and interest, before any of our stockholders receive payments or
distributions. Since we are the guarantor under the Guarantee and have agreed to
pay for all costs, expenses and liabilities of Flagstar Trust (other than
Flagstar Trust's obligations to the holders of its Preferred Securities), the
positions of a holder of the Preferred Securities and a holder of Junior
Subordinated Debentures relative to other creditors and to our stockholders in
the event of our liquidation or bankruptcy are expected to be substantially the
same.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
GENERAL
This discussion summarizes the opinion of Kutak Rock, special tax counsel
to Flagstar Bancorp and Flagstar Trust ("Tax Counsel"), of the United States
federal income tax consequences of the purchase, ownership, and disposition of
the Preferred Securities that Tax Counsel anticipates to be material to
investors. Unless otherwise stated, this summary only deals with Preferred
Securities held as capital assets (generally, assets held for investment) by
holders who purchase the Preferred Securities upon original issuance. Your tax
treatment may vary depending on your particular situation.
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This summary does not address:
- all of the tax consequences that may be relevant to holders who may be
subject to special tax treatment such as, for example, financial
institutions, insurance companies, broker-dealers, tax-exempt
organizations or investors who have acquired Preferred Securities as part
of a straddle, hedge or similar transaction or, except as described
below, non-U.S. Holders, as we define that term below;
- the tax consequences to holders that have a functional currency other
than the United States dollar;
- the tax consequences to shareholders, partners or beneficiaries of a
holder of Preferred Securities;
- any aspects of state, local or foreign tax laws; or
- the United States federal alternative minimum tax consequences of the
purchase, ownership and sale of Preferred Securities.
Tax Counsel's opinion is based on the United States federal income tax law
in effect as of the date of this Prospectus. These laws may change, and any
change could have a retroactive effect. These laws are also subject to various
interpretations, and the IRS or the courts could later disagree with the
explanation of conclusions contained in this summary. The IRS has not formally
ruled (and we do not intend to seek a ruling) on the tax consequences of
purchasing, holding, and selling the Preferred Securities. Accordingly, the IRS
could challenge the opinions expressed in this Prospectus concerning such
consequences, and a court could agree with the IRS. We urge you to consult your
tax advisor as to the particular tax consequences to you of purchasing, owning,
and disposing of the Preferred Securities, including the application and effect
of United States federal, state, local, foreign and other tax laws.
For purposes of this discussion, a "U.S. Holder" means:
- a citizen or resident of the United States (or someone treated as a
citizen or resident of the United States for federal income tax
purposes);
- a corporation, partnership, or other entity created or organized (or
treated as created or organized for United States federal income tax
purposes) in the United States or under the laws of the United States or
of any political subdivision of the United States;
- an estate, the income of which is includible in gross income for United
States federal income tax purposes regardless of its source; or
- a trust, the administration of which is subject to the primary
supervision of a United States court and that has one or more United
States persons who have the authority to control all substantial
decisions of the trust.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
Based on the opinion of Tax Counsel, we will treat the Junior Subordinated
Debentures for United States federal income tax purposes as indebtedness of
Flagstar Bancorp. By accepting the Preferred Securities, you agree to treat the
Junior Subordinated Debentures as indebtedness for United States federal income
tax purposes and to treat the Preferred Securities as evidence of an indirect
beneficial ownership interest in the Junior Subordinated Debentures. No
assurance can be given, however, that such treatment will not be challenged by
the IRS or, if challenged, that such a challenge will not be successful.
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CLASSIFICATION OF FLAGSTAR TRUST
Tax Counsel is of the opinion that Flagstar Trust will be classified for
United States federal income tax purposes as a grantor trust and not as an
association taxable as a corporation.
Accordingly, for United States federal income tax purposes, you will
generally be treated as the owner of an undivided interest in the Junior
Subordinated Debentures. As further discussed below, you may be required to
include in ordinary income your allocable share of interest paid or accrued on
the Junior Subordinated Debentures.
POTENTIAL EXTENSION OF INTEREST PAYMENT PERIOD AND ORIGINAL ISSUE DISCOUNT
We have the right to defer payments of interest on the Junior Subordinated
Debentures, which could cause the Junior Subordinated Debentures treated as
having been issued with OID. In general, a debt instrument will be deemed to
have been issued with OID for United States federal income tax purposes if there
is more than a remote contingency that periodic stated interest payments due on
the instrument will not be timely paid. Because the exercise by us of our option
to defer the payment of stated interest on the Junior Subordinated Debentures
would also prevent us from declaring dividends on any class of equity, we
believe that the likelihood that we would exercise the option is remote.
As a result, we intend to take the position, based on the advice of Tax
Counsel, that the Junior Subordinated Debentures will not be deemed to be issued
with OID. Accordingly, based on this position, stated interest payments on the
Junior Subordinated Debentures will be includible in your ordinary income at the
time that those payments are paid or accrued in accordance with your regular
method of accounting and in the amount of each payment. Because these Treasury
Regulations have not yet been addressed in any revenue rulings or other
published interpretations issued by the IRS, it is possible that the IRS could
take a position contrary to the position taken by us.
EXERCISE OF DEFERRAL OPTION
If we exercise our option to defer the payment of stated interest on the
Junior Subordinated Debentures, they would be treated, solely for purpose of the
OID rules, as being "re-issued" at that time with OID. Under these rules, you
would be required to include OID in ordinary income, on a current basis, over
the period that the instrument is held, even though we would not be making any
actual cash payments during the extended interest payment period.
The amount of interest income treated as OID and therefore includible in
the taxable income of a holder of the Junior Subordinated Debentures would be
determined on the basis of a constant yield method over the remaining term of
the instrument, not on the basis of the stated interest amount. The actual
receipt of future payments of stated interest on the Junior Subordinated
Debentures would no longer be separately reported as taxable income because it
would have been replaced, solely for tax purposes, by the amount of OID. The
amount of OID that would accrue, in total, during the extended interest payment
period would be approximately equal to the amount of the cash payment due at the
end of the period. Any OID included in income would increase your adjusted tax
basis in the Preferred Securities or the Junior Subordinated Debentures,
depending on which you held at that time, and interest payments actually
received would reduce your adjusted tax basis.
If the likelihood of the Company deciding to defer any payments of interest
were not treated as remote, the Junior Subordinated Debentures would be
considered as issued initially with OID in an amount equal to the sum of all the
interest payable over the term of the Junior Subordinated Debentures. Again,
this would mean that you would have to include interest income in gross income
for United States federal income tax purposes as it accrued daily on an economic
accrual basis instead of on the dates you actually received the cash payments.
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The IRS has not issued any rulings or interpretations which define the
meaning of the term "remote" as used in the applicable income tax regulations.
The IRS could take a position that differs from what we state in this
Prospectus.
CORPORATE U.S. HOLDERS
Because the income from the Preferred Securities will not be considered to
be dividends for federal income tax purposes, corporate U.S. Holders of the
Preferred Securities will not be entitled to a dividends-received deduction for
any income received from the Preferred Securities.
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON TERMINATION OF FLAGSTAR
TRUST
If we exercise our right to terminate Flagstar Trust and cause the Junior
Subordinated Debentures to be distributed to you on a basis proportionate to
your ownership in the Preferred Securities, the distribution would be treated as
a nontaxable event to you. In that event, you would have an adjusted tax basis
in the Junior Subordinated Debentures that you receive equal to the adjusted tax
basis in the Preferred Securities that you surrender, and the holding period of
the Junior Subordinated Debentures would include the period during which you
held the Preferred Securities. If, however, Flagstar Trust is characterized for
United States federal income tax purposes as an association taxable as a
corporation at the time of the termination, the distribution of the Junior
Subordinated Debentures would be a taxable event to the holders of Preferred
Securities.
If we redeem the Junior Subordinated Debentures for cash and Flagstar Trust
distributes the proceeds of the redemption to holders in redemption of their
Preferred Securities, the redemption would be treated as a sale of the Preferred
Securities in which you would recognize gain or loss as described immediately
below.
EXERCISE OF RIGHT TO SHORTEN MATURITY
We have the right to shorten the maturity of the Junior Subordinated
Debentures. If we exercise our right to shorten the maturity of the Junior
Subordinated Debentures, this could result in a taxable event to you. Federal
income tax regulations provide that a significant modification of a debt
instrument is a taxable event. A significant modification includes shortening
the maturity of a debt instrument, provided that the instrument's rate of return
changes by more than the greater of 25 basis points or five percent of the
annual rate of return. At the present time, the extent to which the Junior
Subordinated Debenture's rate of return would change (if we exercised our right
to shorten the maturity) is unclear.
SALE OF PREFERRED SECURITIES
Upon the sale of Preferred Securities (including a redemption for cash),
you will recognize gain or loss in an amount equal to the difference between the
amount realized (which for this purpose, will exclude amounts attributable to
accrued interest or OID not previously included in income, which amount will be
subject to tax as ordinary interest income) and your adjusted tax basis in the
Preferred Securities.
If we do not defer interest payments on the Junior Subordinated Debentures,
your adjusted tax basis in the Preferred Securities generally will equal the
initial purchase price that you paid for the Preferred Securities. If, however,
we elect to defer interest payments on the Junior Subordinated Debentures, your
adjusted tax basis in the Preferred Securities will equal: (1) the initial
purchase price that you paid for the Preferred Securities; (2) increased by the
amount of any accrual and unpaid distributions you were required to treat as
OID; and (3) reduced by the amount of cash or other property received by you
with respect to such OID.
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The gain or loss will be capital gain or loss and will be long-term capital
gain or loss if you have held the Preferred Securities for more than one year.
Capital losses generally cannot be applied to offset ordinary income for United
States federal income tax purposes.
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest, or OID, if the Junior
Subordinated Debentures are treated as having been issued, or reissued, with
OID, relating to the underlying Junior Subordinated Debentures. If you dispose
of your Preferred Securities you will be required to include in your ordinary
income:
- any portion of the amount realized that is attributable to accrued but
unpaid interest to the extent not previously included in income; or
- any amount of OID that has accrued on your proportionate share of the
underlying Junior Subordinated Debentures during the taxable year of sale
through the date of disposition.
However, you can also increase your adjusted tax basis in the Preferred
Securities to the extent that you include these amounts in ordinary income.
WITHHOLDING OF U.S. TAXES ON NON-U.S. HOLDERS
This summary assumes that the non-U.S. Holder
- is an individual;
- is not and will not become engaged in a United States trade or business;
and
- will not be present in the United States for 183 days or more during any
particular taxable year.
Payments made to a holder of Preferred Securities who is a non-U.S. Holder
generally will not be subject to withholding of United States federal income
tax, if:
- the beneficial owner of the Preferred Securities does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock entitled to vote; and
- either:
(1) the beneficial owner of the Preferred Securities certifies to
Flagstar Trust or its agent, under penalties of perjury, that it
is not a United States person and provides his name and address;
or
(2) a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary
course of its trade or business (a "Financial Institution"), and
holds the capital securities in that capacity, certifies to
Flagstar Trust or its agent, under penalties of perjury, that such
statement has been received from the beneficial owner by it or by
a Financial Institution between it and the beneficial owner and
furnishes Flagstar Trust or its agent with a copy of the
statement.
In addition, a non-U.S. Holder of Preferred Securities will not be subject
to withholding of United States federal income tax on any gain realized upon the
sale or other disposition of a capital security.
BACKUP WITHHOLDING
You may be subject to a "backup withholding" tax of 31% on distributions
made on the Preferred Securities and on the entire price received on the sale of
the Preferred Securities if you:
- fail to provide your Social Security or taxpayer identification number to
your broker;
- provide your broker with an incorrect Social Security or tax
identification number;
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- fail to provide your broker with a certified statement that your Social
Security or tax identification number is correct and that you are not
subject to backup withholding; or
- improperly report interest and dividends on your tax return.
Backup withholding, however, does not apply to payments made to certain exempt
recipients such as corporations or tax-exempt organizations. Any withheld
amounts will be allowed as a credit against your United States federal income
tax, provided the required information is provided to the IRS.
ERISA CONSIDERATIONS
Retirement plans are generally subject to the rules of the Employee
Retirement Income Security Act of 1974 ("ERISA"), and they are also subject to
requirements in the Code. Retirement plans may purchase Preferred Securities in
accordance with their governing documents. When they do, the fiduciaries for
these retirement plans (usually trustees and custodians) are required to comply
with fiduciary duties under ERISA and other requirements under the Code.
Retirement plans can be employer-sponsored plans like pension plans and profit
sharing plans, individual retirement accounts (IRAs), and other types of plans
which defer the receipt of income.
If a retirement plan is sponsored and/or contributed to by a party that is
affiliated in certain ways with us, we and/or our affiliate could be a "party in
interest" or a "disqualified person" for purposes of ERISA and the Code. The
rules regarding these relationships are very complex. They can arise if we are a
fiduciary to a retirement plan, such as a trustee or custodian. They can arise
if we or one of our affiliates provides any services to or for the retirement
plan. Our affiliates are Flagstar Bank, Douglas Insurance Agency, Inc., FSSB
Real Estate Development Corporation, First Security Investment Group, Inc., FSSB
Mortgage Corporation, Flagstar Capital Corporation, Flagstar Credit Corporation,
Mid-Michigan Service Corporation and SSB Funding Corporation.
There are many other circumstances which can cause the relationship to
exist. When one of these relationships exists, the purchase of Preferred
Securities by the retirement plan is likely to result in a transaction that is
not permitted by ERISA and/or the Internal Revenue Code. These transactions are
referred to as "prohibited transactions" or "disqualifying transactions." These
could lead to excise tax penalties and even tax disqualification of a retirement
plan. However, there may be ways to exempt prohibited transactions from the
excise tax penalties and tax disqualification. This may require application to a
governmental agency.
If we or one of our affiliates is a party in interest or disqualified
person as to a retirement plan, that retirement plan should not acquire
Preferred Securities without first establishing an exemption. Entities like
partnerships and limited liability companies which have a relationship with us
and/or one of our affiliates and that may be holding assets of retirement plans
also have to address these prohibited transaction issues. All of these rules are
very complicated. If you have a relationship of any kind with us and/or one of
our affiliates, you should consult with your benefits counsel before acquiring
Preferred Securities.
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UNDERWRITING
Upon the terms and subject to the conditions stated in the Underwriting
Agreement dated the date hereof, each of the underwriters (the "Underwriters")
named below has severally agreed to purchase, and Flagstar Trust has agreed to
sell to such Underwriter, the number of Preferred Securities set forth opposite
the name of such Underwriter.
<TABLE>
<CAPTION>
NUMBER OF
PREFERRED
NAME OF UNDERWRITER SECURITIES
- ------------------- ----------
<S> <C>
Roney Capital Markets, a division of First Chicago Capital
Markets, Inc. ............................................
McDonald Investments Inc. ..................................
Stifel, Nicolaus & Company, Incorporated....................
JWGenesis Capital Markets, LLC..............................
---------
2,600,000
=========
</TABLE>
The Underwriters are offering the Preferred Securities subject to their
acceptance of the securities from Flagstar Trust and subject to prior sale. The
Underwriting Agreement provides that the obligations of the Underwriters to pay
for and accept delivery of the Preferred Securities are conditioned on the
delivery of legal opinions by their counsel. The Underwriters are obligated to
purchase all the Preferred Securities if any are purchased.
The Underwriters propose to offer part of the Preferred Securities directly
to the public at the public offering price set forth on the cover page of this
Prospectus and part of the Preferred Securities to certain dealers at a price
which represents a concession not in excess of $ per Preferred Security
under the public offering price. The Underwriters may allow, and such dealers
may reallow, a concession not in excess of $ per Preferred Security to
certain other dealers. After the initial offering of Preferred Securities to the
public, the public offering price and such concessions may be changed by the
Underwriters.
Flagstar Trust has granted to the Underwriters an option, exercisable at
any time during the 30-day period from the date of this Prospectus, to purchase
up to an aggregate of 390,000 additional Preferred Securities at the public
offering price set forth on the cover page less underwriting discounts and
commissions. The Underwriters may exercise such option to purchase additional
Preferred Securities solely for the purpose of covering over-allotments, if any,
incurred in connection with the sale of the Preferred Securities offered by this
Prospectus. To the extent such option is exercised, each Underwriter will become
obligated, subject to certain conditions, to purchase a number of additional
Preferred Securities proportionate to such Underwriter's initial amount
reflected in the preceding table.
Flagstar Bancorp, Flagstar Trust and the Underwriters have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act.
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The following table sets forth the estimated expenses in connection with
the sale and distribution of the securities being registered hereby, other than
underwriting discounts and commissions. All such expenses are to be paid by
Flagstar Bancorp, Inc.:
<TABLE>
<S> <C>
SEC registration fee........................................ $ 21,000
NASD filing fee............................................. 7,975
Blue Sky filing fees and expenses........................... 5,000
Accounting fees and expenses................................ 50,000
Legal fees and expenses..................................... 250,000
Printing, postage and mailing............................... 100,000
Stock transfer agent fees and certificates.................. 5,000
Other....................................................... 61,025
--------
Total.................................................. $500,000
========
</TABLE>
The Underwriters may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation M
under the Exchange Act. Over-allotment involves syndicate sales in excess of the
offering size, which creates a syndicate short position. Stabilizing
transactions permit bids for and purchase of the Common Stock so long as the
stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the Preferred Securities in the open market in
order to cover syndicate short positions. Penalty bids permit the Underwriters
to reclaim a selling concession from a syndicate member when the Preferred
Securities originally sold by such syndicate member is purchased in a
stabilizing transaction or syndicate covering transaction to cover syndicate
short positions. Such stabilizing transactions, syndicate covering transactions
and penalty bids may cause the price of the Preferred Securities to be higher
than it would otherwise be in the absence of such transactions. These
transactions may be effected on The Nasdaq Stock Market(R) or otherwise and, if
commenced, may be discontinued at any time.
TRANSFER AGENT
Registrar and Transfer Company, Cranford, New Jersey, will act as registrar
and transfer agent for the Preferred Securities.
LEGAL MATTERS
The validity of the Preferred Securities we are offering, and certain
matters relating to United States federal income tax consequences of this
offering, will be passed upon for us and for Flagstar Trust by Kutak Rock,
Washington, D.C. Albert J. Gladner, Esq., Senior Vice President and General
Counsel of the Bank, will pass upon certain legal matters relating to Michigan
law for us and Flagstar Trust. Morris, James, Hitchens & Williams, Wilmington,
Delaware will pass upon certain matters relating to Delaware law for Flagstar
Trust. Certain legal matters will be passed upon for the Underwriters by
Honigman Miller Schwartz and Cohn, Detroit, Michigan.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to our Annual Report on Form 10-K for the year ended December 31, 1998
have been so incorporated in reliance on the report of Grant Thornton LLP,
independent certified public accountants, given on the authority of said firm as
experts in auditing and accounting.
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- ------------------------------------------------------
- ------------------------------------------------------
- - WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION THAT DIFFERS FROM
THE INFORMATION IN THIS PROSPECTUS. IF YOU RECEIVE ANY DIFFERENT INFORMATION,
YOU SHOULD NOT RELY ON IT.
- - THE DELIVERY OF THIS PROSPECTUS SHALL NOT, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT FLAGSTAR BANCORP, INC. IS OPERATING UNDER THE SAME CONDITIONS
THAT IT WAS OPERATING UNDER WHEN THIS PROSPECTUS WAS WRITTEN. DO NOT ASSUME
THAT THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AT ANY TIME PAST
THE DATE INDICATED.
- - THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF
AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES.
- - THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF
AN OFFER TO BUY, THE SECURITIES TO WHICH IT RELATES IN ANY CIRCUMSTANCES IN
WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
About this Prospectus..................... 3
Where You Can Find More Information....... 3
Special Note of Caution Regarding
Forward-Looking Statements.............. 4
Prospectus Summary........................ 5
Risk Factors.............................. 7
The Offering.............................. 16
Use of Proceeds........................... 20
Capitalization Table...................... 20
Selected Consolidated Financial Data...... 21
Business.................................. 22
Accounting Treatment...................... 23
Description of the Preferred Securities... 24
Description of the Junior Subordinated
Debentures.............................. 37
Book-Entry Issuance....................... 46
Description of Guarantee.................. 47
Relationship Among the Preferred
Securities, the Junior Subordinated
Debentures and the Guarantee............ 50
United States Federal Income Tax
Consequences............................ 51
ERISA Considerations...................... 56
Underwriting.............................. 57
Transfer Agent............................ 58
Legal Matters............................. 58
Experts................................... 58
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
2,600,000 PREFERRED SECURITIES
[FLAGSTAR TRUST LOGO]
% CUMULATIVE PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25
PER PREFERRED SECURITY)
GUARANTEED BY
[FLAGSTAR BANCORP LOGO]
---------------------------
PROSPECTUS
---------------------------
Roney Capital Markets Logo
MCDONALD
INVESTMENTS INC.
STIFEL, NICOLAUS & COMPANY
INCORPORATED
JWGENESIS CAPITAL
MARKETS, LLC
, 1999
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 61
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection with
the sale and distribution of the securities being registered hereby, other than
underwriting discounts and commissions. All such expenses are to be paid by
Flagstar Bancorp, Inc.:
<TABLE>
<S> <C>
SEC registration fee........................................ $ 21,000
NASD filing fee............................................. 7,975
Blue Sky filing fees and expenses........................... 5,000
Accounting fees and expenses................................ 50,000
Legal fees and expenses..................................... 250,000
Printing, postage and mailing............................... 100,000
Stock transfer agent fees and certificates.................. 5,000
Other....................................................... 61,025
--------
Total..................................................... $500,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Flagstar's Restated Articles of Incorporation contain a provision,
authorized by the Michigan Business Corporation Act ("MBCA"), designed to
eliminate in certain circumstances the personal liability of directors for
monetary damages to Flagstar or its stockholders for breach of their fiduciary
duty as directors. This provision, however, does not limit the liability of any
director who breached his or her duty of loyalty to the Company or its
stockholders, failed to act in good faith, obtained an improper personal benefit
or paid a dividend or approved a stock repurchase or redemption that was
prohibited under Michigan law. This provision will not limit or eliminate the
rights of the Company or any stockholder to seek an injunction or any other
nonmonetary relief in the event of a breach of a director's duty of care. In
addition, this provision applies only to claims against a director arising out
of his or her role as a director and does not relieve a director from liability
unrelated to his fiduciary duty of care or from a violation of statutory law
such as certain liabilities imposed on a director under the federal securities
laws.
The Company's Restated Articles of Incorporation and Restated Bylaws also
provide that the Company shall indemnify all directors and officers of the
Company to the full extent permitted by the MBCA. Under the provisions of the
MBCA, any director or officer who, in his or her capacity as such, is made or
threatened to be made a party to any suit or proceeding, may be indemnified if
the Board determines such director or officer acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the Company or its stockholders.
Officers and directors are covered within specified monetary limits by
insurance against certain losses arising from claims made by reason of their
being directors or officers of the Company or of the Company's subsidiaries and
the Company's officers and directors are indemnified against such losses by
reason of their being or having been directors or officers of another
corporation, partnership, joint venture, trust or other enterprise at the
Company's or its subsidiaries' request.
II-1
<PAGE> 62
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following is a list of exhibits filed as part of this Registration
Statement and also serves as the Exhibit Schedules:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
1.1* Engagement Letter
1.2* Form of Underwriting Agreement
4.1* Certificate of Trust of Flagstar Trust
4.2* Trust Agreement of Flagstar Trust
4.3* Form of Flagstar Trust Amended and Restated Trust Agreement
4.4* Form of Preferred Securities Certificate (included as an
exhibit to Exhibit 4.3)
4.5* Form of Subordinated Indenture
4.6* Form of Junior Subordinated Debenture (included as an
exhibit to Exhibit 4.5)
4.7* Form of Preferred Securities Guarantee Agreement
5.1* Opinion of Kutak Rock regarding legality of securities being
registered
5.2* Form of Opinion of Morris, James, Hitchens & Williams
8.1* Opinion of Kutak Rock regarding tax matters
12.1* Computation of ratio of earnings to fixed charges
23.1* Consent of Grant Thornton LLP
23.2* Consent of Kutak Rock (contained in Exhibit 5.1 and Exhibit
8.1)
23.3* Consent of Albert J. Gladner, Esq.
23.4* Consent of Morris, James, Hitchens & Williams (contained in
Exhibit 5.2)
24.1* Powers of Attorney (see the signature page of this
Registration Statement)
25.1* Form of Eligibility on Form T-1 under Trust Indenture Act of
1939, as amended, of FMB Bank, as Trustee under the
Subordinated Indenture
25.2* Form of Eligibility on Form T-1 under Trust Indenture Act of
1939, as amended, of FMB Bank, as Trustee under the Flagstar
Trust Amended & Restated Trust Agreement
25.3* Form of Eligibility on Form T-1 under Trust Indenture Act of
1939, as amended, of FMB Bank, as Trustee under the
Preferred Securities Guarantee Agreement
</TABLE>
- -------------------------
* Filed herewith
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes as follows:
(a) For purposes of determining any liability under the Securities Act
of 1933, the information omitted form the form of Prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(b) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
Prospectus shall be deemed to be a new Registration Statement related 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.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, when 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 hereof.
II-2
<PAGE> 63
Insofar as indemnification for liabilities arising under the Securities Act
for 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE> 64
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 the City of Bloomfield Hills, State of Michigan, on the 26th day
of March, 1999.
FLAGSTAR BANCORP, INC.
By: /s/ THOMAS J. HAMMOND
------------------------------------
Thomas J. Hammond
Chairman and Chief Executive Officer
(Duly Authorized Representative)
Each person whose signature appears below hereby appoints Thomas J. Hammond
his or her true and lawful attorney-in-fact, with power to act and with full
power of substitution, in any and all capacities, to sign any or all amendments
(including post-effective amendments) to the Registration Statement and file the
same with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney-in-fact
and agent full power and authority to do and perform each and every act
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agents, or their substitutes,
may lawfully cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1933, this
Registration Statement has been signed by the following persons (including a
majority of the Board of Directors of the Registrant) in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ THOMAS J. HAMMOND Chairman of the Board and March 26, 1999
- --------------------------------------------- Chief Executive Officer
Thomas J. Hammond (Principal Executive Officer)
/s/ MARK T. HAMMOND Vice Chairman of the Board and March 26, 1999
- --------------------------------------------- President
Mark T. Hammond
/s/ MICHAEL W. CARRIE Executive Vice President, March 26, 1999
- --------------------------------------------- Chief Financial Officer and
Michael W. Carrie Treasurer (Principal Financial
and Accounting Officer)
/s/ JOAN H. ANDERSON Director and Executive Vice March 26, 1999
- --------------------------------------------- President
Joan H. Anderson
/s/ JAMES D. COLEMAN Director March 26, 1999
- ---------------------------------------------
James D. Coleman
/s/ JAMES D. ISBISTER Director March 26, 1999
- ---------------------------------------------
James D. Isbister
</TABLE>
II-4
<PAGE> 65
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ RICHARD S. ELSEA Director March 26, 1999
- ---------------------------------------------
Richard S. Elsea
/s/ JOHN R. KERSTEN Director March 26, 1999
- ---------------------------------------------
John R. Kersten
/s/ C. MICHAEL KOJAIAN Director March 26, 1999
- ---------------------------------------------
C. Michael Kojaian
</TABLE>
II-5
<PAGE> 66
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Bloomfield Hills, State
of Michigan, on the 26th day of March, 1999.
FLAGSTAR TRUST
By: Flagstar Bancorp, Inc., as Sponsor
By: /s/ THOMAS J. HAMMOND
-----------------------------------
Thomas J. Hammond
Chairman and Chief Executive
Officer
II-6
<PAGE> 67
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
1.1* Engagement Letter
1.2* Form of Underwriting Agreement
4.1* Certificate of Trust of Flagstar Trust
4.2* Trust Agreement of Flagstar Trust
4.3* Form of Flagstar Trust Amended and Restated Trust Agreement
4.4* Form of Preferred Securities Certificate (included as an
exhibit to Exhibit 4.3)
4.5* Form of Subordinated Indenture
4.6* Form of Junior Subordinated Debenture (included as an
exhibit to Exhibit 4.5)
4.7* Form of Preferred Securities Guarantee Agreement
5.1* Opinion of Kutak Rock regarding legality of securities being
registered
5.2* Form of Opinion of Morris, James, Hitchens & Williams
8.1* Opinion of Kutak Rock regarding tax matters
12.1* Computation of ratio of earnings to fixed charges
23.1* Consent of Grant Thornton LLP
23.2* Consent of Kutak Rock (contained in Exhibit 5.1 and Exhibit
8.1)
23.3* Consent of Albert J. Gladner, Esq.
23.4* Consent of Morris, James, Hitchens & Williams (contained in
Exhibit 5.2)
24.1* Powers of Attorney (see the signature page of this
Registration Statement)
25.1* Form of Eligibility on Form T-1 under Trust Indenture Act of
1939, as amended, of FMB Bank, as Trustee under the
Subordinated Indenture
25.2* Form of Eligibility on Form T-1 under Trust Indenture Act of
1939, as amended, of FMB Bank, as Trustee under the Flagstar
Trust Amended & Restated Trust Agreement
25.3* Form of Eligibility on Form T-1 under Trust Indenture Act of
1939, as amended, of FMB Bank, as Trustee under the
Preferred Securities Guarantee Agreement
</TABLE>
- -------------------------
* Filed herewith
<PAGE> 1
FLAGSTAR TRUST EXHIBIT 1.1
LETTER OF INTENT
FEBRUARY 15, 1999
PAGE 1 OF 6
LETTER OF INTENT
February 15, 1999
The Board of Directors
Flagstar Bancorp, Inc.
2600 Telegraph Road
Bloomfield Hills, MI 48302
ATTN.: MR. MICHAEL W. CARRIE
PRIVATE & CONFIDENTIAL
Ladies and Gentlemen:
This letter of intent ("Letter of Intent") will confirm our recent
conversation and is intended to be an expression of our present mutual intent
concerning the potential initial public offering (the "Offering") of Cumulative
Preferred Securities (the "Preferred Securities") of Flagstar Trust ("Flagstar
Trust") a business trust to be formed as a wholly owned subsidiary of Flagstar
Bancorp, Inc. ("Bancorp") which is also the parent of Flagstar Bank, FSB
("Flagstar" or the "Bank"). Flagstar Trust would upon consummation of the
Offering, purchase a series of junior subordinated debentures from Bancorp for
the same denomination and with the same payment terms as the Preferred
Securities. We are pleased to advise you that, based on the information made
available to us, representations which you have made to us concerning the Bank
and Bancorp, their principals, their business and their prospects, and current
market conditions, Roney Capital Markets, a division of First Chicago Capital
Markets, Inc. ("Roney Capital Markets"), McDonald Investments Inc., Stifel,
Nicolaus & Company, Incorporated and JWGenesis Capital Markets, LLC
(collectively referred to as the "Managing Underwriters") hereby confirm in
principle their interest in underwriting on a firm commitment basis (subject to
the terms and conditions of the Underwriting Agreement) the Offering, the
general terms of which would be in accordance with the terms outlined below.
1. PUBLIC OFFERING OF PREFERRED SECURITIES
The Managing Underwriters propose an offering as follows:
Issuer: Flagstar Trust
Managing Underwriters: Roney Capital Markets (books)
McDonald Investments Inc.
Stifel, Nicolaus & Company,
Incorporated
JWGenesis Capital Markets, LLC
Security: A minimum of 2,600,000
shares of Preferred Securities
Liquidation Preference: $25.00 per share
Proposed Listing: NASDAQ National Market System
- --------------------------------------------------------------------------------
Roney Capital Markets Letter of Intent Investment Banking
- --------------------------------------------------------------------------------
<PAGE> 2
FLAGSTAR TRUST
LETTER OF INTENT
FEBRUARY 15, 1999
PAGE 2 of 6
2. CAPITALIZATION
Flagstar Trust would have a minimum of 2,600,000 shares of Preferred
Securities outstanding immediately after the Offering, excluding the
over-allotment option. Flagstar Trust would also have outstanding Common Stock
owned by Bancorp which would represent an aggregate liquidation amount equal to
at least 3.00% of the total capital of Flagstar Trust, assuming no exercise of
the over-allotment option.
3. OVER-ALLOTMENT OPTION
Flagstar Trust would grant the underwriters, for the purpose of
covering over-allotments, the right for a 30-day period after commencement of
the Offering to purchase from Flagstar Trust up to an additional 15% of the
shares of Preferred Securities offered at the public offering price less the
underwriting discount.
4. ESTIMATED OFFERING PRICE AND DIVIDEND
The public offering price per share is currently estimated at $25.00
per share. It is currently anticipated that the dividend yield, which is subject
to market and other conditions at the time of the Offering and is based, in
part, upon our preliminary review of the Bank's and Bancorp's financial plans
and prospects, will approximate 9.00% to 9.25% based on the current dividend
yield scenario.
5. LISTING
Flagstar Trust's Preferred Securities would be quoted on the National
Association of Securities Dealers, Inc. National Market System and Flagstar
Trust and the Bank would comply with the National Association of Securities
Dealers, Inc.'s (the "NASD") requirements for such quotation.
6. UNDERWRITING COMPENSATION
Assuming the gross proceeds from the sale of Flagstar Trust's Preferred
Securities in the Offering is $65,000,000 the underwriting discount will be
3.15%. If any or all of the over-allotment is exercised, the underwriting
discount will be 3.15% on the over-allotment shares.
7. REGISTRATION STATEMENT
The Offering would be subject to compliance with the Securities Act of
1933, as amended (the "Act"), the Office of Thrift Supervision (the "OTS") and
other applicable federal and state laws and regulations, including, without
limitation, "Blue Sky" laws. The Bank and Flagstar Trust, working with its
counsel, would prepare and file the appropriate registration
- --------------------------------------------------------------------------------
Roney Capital Markets Letter of Intent Investment Banking
- --------------------------------------------------------------------------------
<PAGE> 3
FLAGSTAR TRUST
LETTER OF INTENT
FEBRUARY 15, 1999
PAGE 3 0F 6
statement (the "Registration Statement"). The Registration Statement
(anticipated to be on Form S-3) would conform to the requirements of applicable
laws, the Act and the rules and regulations of the SEC and OTS. Flagstar Trust
would use its best efforts to file such amendments with the SEC and OTS as may
be necessary to have the Registration Statement declared effective by the SEC
as promptly as practicable.
8. OFFERING EXPENSES
Flagstar Trust, Bancorp and the Bank will be jointly and severally
liable for all expenses and fees incurred in connection with the proposed
financing, including but not limited to, fees and expenses related to preparing,
printing and filing of the Registration Statement, all amendments and
supplements thereto, the preliminary and final prospectus, other related
underwriting and selling documents, and certificates for the Preferred
Securities and for accounting, legal, SEC, NASD, appraisal and listing fees. In
addition to the underwriting discount, Bancorp, the Bank and Flagstar Trust also
agree to pay the out-of-pocket expenses, including road show expenses and
underwriters' legal fees (such out-of-pocket expenses payable by Flagstar Trust,
Bancorp and the Bank shall not exceed $75,000 for legal fees and $25,000 for all
other out-of-pocket expenses). In addition, legal fees and disbursements
relating to the "Blue Sky" survey, any required state filing registrations and
the filing fees relating thereto shall be the responsibility of Flagstar Trust.
The underwriters' out-of-pocket expense reimbursement and the Blue Sky legal
fees and disbursements shall be paid regardless of whether the Offering is
completed or not completed for any reason, including market conditions, unless
the Offering is not completed because of the underwriters' refusal (except for
bona fide reasons related to Bancorp, Flagstar Trust, the Bank, or their
officers, directors, employees or agents or market conditions) or inability to
perform. Upon completion of the Offering the Managing Underwriters will agree to
credit the out-of-pocket expense reimbursement (up to a maximum of $100,000)
against the underwriting fee but not the Blue Sky legal fees and disbursements.
Flagstar Trust, Bancorp and the Bank will be responsible for all of
their own out-of-pocket expenses, including, without limitation, transportation,
meals, and lodging with respect to any road shows and other selling efforts.
If the Offering does not close for any reason other than the Managing
Underwriters' refusal (except for bona fide reasons related to Flagstar Trust,
Bancorp, the Bank, or their officers, directors, employees or agents or market
conditions) or inability to perform, the underwriters will account for their
reimbursable expenses and will be entitled to reimbursement from Flagstar Trust,
Bancorp and the Bank of such expenses, as described above, including: (i)
documented out-of-pocket expenses relating to the Registration Statement,
including, without limitation, expenses relating to road shows, syndicate
expenses, sales literature expenses and advertising expenses, (ii) documented
underwriters' legal fees (described above) actually incurred. Documented
expenses for "Blue Sky" survey, any required state filing registrations and
filing fees disbursements and expenses, shall be paid directly by Flagstar Trust
and shall not be part of the $100,000 legal fee and out-of-pocket reimbursement
and will be subject to negotiation in advance, between Flagstar Trust and
Honigman Miller Schwartz and Cohn ("Blue Sky Counsel").
- --------------------------------------------------------------------------------
Roney Capital Markets Letter of Intent Investment Banking
- --------------------------------------------------------------------------------
<PAGE> 4
FLAGSTAR TRUST
LETTER OF INTENT
FEBRUARY 15, 1999
PAGE 4 OF 6
Flagstar Trust shall have the right to cancel the Offering or terminate
this Letter of Intent at any time without further recourse; provided, however,
that any such cancellation or termination by Flagstar Trust shall not affect the
Bank's, Bancorp's or Flagstar Trust's obligation to pay the out-of-pocket
expense reimbursements (as capped above, i.e., not to exceed $100,000) and the
legal fees and disbursements of Blue Sky Counsel.
9. SALE OF ADDITIONAL SHARES IN THE PUBLIC MARKET
For a period of 180 days after the effective date of the Registration
Statement, Bancorp, the Bank and their executive officers and directors would
agree not to make any sales of the Flagstar Trust's Preferred Securities without
the consent of Roney Capital Markets.
10. TIMING OF THE OFFERING
We and our counsel are prepared to begin work with Flagstar Trust and
its counsel toward preparation and filing of the Registration Statement with the
SEC as soon as possible. Following the filing of the Registration Statement, we
would move forward promptly with the formation of an underwriting syndicate or
selling group, to include a select group of firms capable of providing
complementary distribution. We would consult with you as to firms to be included
in the syndicate and selling group.
The marketing program would be designed cooperatively by the Managing
Underwriters and Flagstar Trust, and will reflect the need to balance
management's work schedule with the necessary exposure required for the
underwriting.
After the initial filing, we would expect that a period of up to four
to six weeks would be required for review by the SEC of the Registration
Statement and any necessary amendments thereto, and that a marketing program
would run simultaneously with SEC review. The marketing program would be
completed prior to the time the Registration Statement is declared effective.
11. AUDITORS AND FINANCIAL STATEMENTS
The Registration Statement would contain financial information of
Bancorp, the Bank, and Flagstar Trust. For two years from the effective date of
the Registration Statement, Bancorp would furnish the Managing Underwriters and
investors with quarterly unaudited financial statements and copies of all
reports filed with the SEC covering both Bancorp and Flagstar Trust. The
Managing Underwriters will also require a comfort letter from Grant Thornton,
LLP in relation to the Registration Statement.
12. ACCESS TO INFORMATION
In connection with the preparation of the Registration Statement and
other matters pertaining to the Offering, Bancorp, the Bank and Flagstar Trust,
their officers, accountants and counsel shall furnish to us and our counsel on a
timely basis for our use in connection with the Offering such information and
documents as we or they may reasonably request. In addition,
- --------------------------------------------------------------------------------
Roney Capital Markets Letter of Intent Investment Banking
- --------------------------------------------------------------------------------
<PAGE> 5
FLAGSTAR TRUST
LETTER OF INTENT
FEBRUARY 15, 1999
PAGE 5 0F 6
management would be available for consultation and meetings until the closing of
the Offering.
13. UNDERTAKING TO GIVE NOTICE OF EVENTS
In providing this letter, we have assumed no material changes from the
information provided us to date and that no information of a material adverse
nature may come up in the completion of due diligence. Until the signing of the
Underwriting Agreement, Flagstar Trust and the Bank will notify us of any
business or operating events which might materially adversely affect the
Offering or the status of Bancorp, the Bank, or Flagstar Trust and will give
serious consideration to the Managing Underwriters' recommendation as to the
required disclosures relating thereto.
14. UNDERWRITING AGREEMENT
The terms of the Offering would be negotiated between the Managing
Underwriters and Flagstar Trust immediately prior to the effective date of the
Registration Statement. Matters regarding the Offering and other matters between
Flagstar Trust and Bancorp and the Managing Underwriters, would be subject to
the terms and conditions of an Underwriting Agreement to be signed concurrently
with the effective date of the Registration Statement. The Underwriting
Agreement would contain terms and conditions usual and customary for a
transaction of this nature, as negotiated between Flagstar Trust and Bancorp and
the Managing Underwriters, including indemnification and contribution clauses
acceptable to Flagstar Trust, Bancorp and the Managing Underwriters.
15. NON-BINDING LETTER
This Letter of Intent is only a brief outline of the proposed financing
and, with the exception of paragraph 8, is merely an expression of our present
intention concerning the proposed Offering along the lines indicated. While it
is the present mutual intention of the parties that a public offering of
Flagstar Trust's Preferred Securities be made, this Letter of Intent shall not
in any way be construed as a commitment by the Managing Underwriters to proceed
with a public offering or purchase or sell the Preferred Securities and the
Managing Underwriters may, in their sole judgment and discretion, determine at
any time not to proceed with the Offering, in which event no party shall have
any liability under this Letter of Intent, except as otherwise provided in
paragraph 8. With the exception of paragraph 8 which shall be enforceable in
accordance with its terms, this Letter of Intent does not constitute a binding
contract or represent or create any legally binding obligations of the Managing
Underwriters, Bancorp, the Bank, Flagstar Trust or any of their partners,
officers, directors, agents or affiliates, which obligations would arise only
upon the signing of a definitive Underwriting Agreement.
With the exception of paragraph 8 the Offering is conditioned in its
entirety upon, and a binding contract will come into existence only upon,
execution and delivery of the Underwriting
- --------------------------------------------------------------------------------
Roney Capital Markets Letter of Intent Investment Banking
- --------------------------------------------------------------------------------
<PAGE> 6
FLAGSTAR TRUST
LETTER OF INTENT
FEBRUARY 15, 1999
PAGE 6 OF 6
Agreement between the Managing Underwriters, Flagstar Trust and Bancorp in form
and substance satisfactory to Flagstar Trust, Bancorp and the Managing
Underwriters. This Letter of Intent shall not be construed as the Underwriting
Agreement nor as an agreement to enter into an underwriting agreement. The
Offering is also conditioned upon compliance by Flagstar Trust and Bancorp with
the terms contained in such Underwriting Agreement which will include standard
indemnification and a tax opinion from Grant Thornton, LLP or counsel acceptable
to the Managing Underwriters relating to, among other things, the tax status of
Flagstar Trust.
We are pleased to have the opportunity to work with you on this
important financing.
If this Letter of Intent accurately reflects your present understanding
of our mutual intentions, please have an authorized officer sign the enclosed
copy of this letter and return it to us. We will then move forward with our
counsel to begin work with you regarding this important financing.
Very truly yours,
Roney Capital Markets McDonald Investments Inc.
By:/s/ John C. Donnelly By: /s/ Kristin Whiting
Its: Managing Director Its: Vice President
STIfel, Nicolaus & Company, Incorporated
JWGenesis Capital Markets, LLC
By: /s/ Mark Ross By: /s/ Harvey Morgan
Its: Vice President Its: Executive Managing
Director
ACCEPTED AND APPROVED:
Flagstar Bancorp, Inc.
By: /s/ Michael Carrie
Its: Executive Vice President/ Chief Financial Officer
- --------------------------------------------------------------------------------
Roney Capital Markets Letter of Intent Investment Banking
- --------------------------------------------------------------------------------
<PAGE> 7
FLAGSTAR TRUST
LETTER OF INTENT
FEBRUARY 15, 1999
PAGE 7 OF 6
- --------------------------------------------------------------------------------
Roney Capital Markets Letter of Intent Investment Banking
- --------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT 1.2
2,600,000 Cumulative Preferred Securities
Flagstar Trust
__% Cumulative Preferred Securities
(Liquidation Amount of $25.00 per Cumulative Preferred Security)
UNDERWRITING AGREEMENT
Roney Capital Markets,
a division of First Chicago
Capital Markets, Inc.
McDonald Investments Inc.
Stifel, Nicolaus & Company, Incorporated
JW Genesis Capital Markets, L.L.C.
As representatives of the several
Underwriters named in Schedule A
c/o Roney Capital Markets
One Griswold Street
Detroit, Michigan 48226
Dear Sirs:
Flagstar Bancorp, Inc., a Michigan corporation (the "Company") and its
financing subsidiary, Flagstar Trust, a Delaware business trust (the "Trust,"
and hereinafter together with the Company, the "Offerors"), propose that the
Trust issue and sell to the several Underwriters named in Schedule A (the
"Underwriters"), (who are acting severally and not jointly) pursuant to the
terms of this Agreement, 2,600,000 shares of the Trust's __% Cumulative
Preferred Securities, with a liquidation amount of $25.00 per preferred security
(the "Preferred Securities"), to be issued under the Trust Agreement (as
hereinafter defined), the terms of which are more fully described in the
Prospectus (as hereinafter defined). The aforementioned 2,600,000 Preferred
Securities to be sold to the Underwriters are herein called the "Firm Preferred
Securities." Solely for the purpose of covering over-allotments in the sale of
the Firm Preferred Securities, the Offerors further propose that the Trust issue
and sell to the Underwriters, at their option, up to an additional 390,000
Preferred Securities (the "Option Preferred Securities") upon exercise of the
over-allotment option granted in Section 1 hereof. The Firm Preferred Securities
and any Option Preferred Securities are herein collectively referred to as the
"Designated Preferred Securities."
The Offerors hereby confirm as follows their agreement with the several
Underwriters in connection with the proposed purchase of the Designated
Preferred Securities.
1. SALE, PURCHASE AND DELIVERY OF PREFERRED SECURITIES; DESCRIPTION OF
PREFERRED SECURITIES.
(a) On the basis of the representations, warranties and agreements herein
contained, and subject to the terms and conditions herein set forth,
the Offerors hereby
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agree that the Trust shall issue and sell to the several Underwriters,
and the Underwriters agree, severally and not jointly, to purchase from
the Trust, at a purchase price of $25.00 per Preferred Security (the
"Purchase Price"), the Firm Preferred Securities each in the amount set
forth in Schedule A. Because the proceeds from the sale of the
Preferred Securities will be used to purchase from the Company its
Debentures (as hereinafter defined and as described in the Prospectus),
the Company shall pay to the Underwriters a commission as described in
Section 3 (the "Preferred Securities Commission").
In addition, on the basis of the representations, warranties
and agreements herein contained and subject to the terms and conditions
herein set forth, the Trust hereby grants to the Underwriters an option
to purchase all or any portion of the 390,000 Option Preferred
Securities, and upon the exercise of such option in accordance with
this Section 1, the Offerors hereby agree that the Trust shall issue
and sell to the Underwriters, and the Underwriters agree to purchase
from the Trust, all or any portion of the Option Preferred Securities
at the same Purchase Price per Preferred Security paid for the Firm
Preferred Securities. Because the proceeds from the sale of the Firm
Preferred Securities will be used to purchase from the Company its
Debentures, the Company shall pay to the Underwriters the Preferred
Securities Commission described in Section 3 for each Option Preferred
Security purchased. The option hereby granted (the "Option") shall
expire 30 days after the date upon which the Registration Statement (as
hereinafter defined) becomes effective and may be exercised only for
the purpose of covering over-allotments which may be made in connection
with the offering and distribution of the Firm Preferred Securities,
and may only be exercised with the express written consent of Roney
Capital Markets, a division of First Chicago Capital Markets, Inc. (the
"Representative"). The Option may be exercised in whole or in part at
any time (but not more than once) by the Underwriters by the
Representative giving notice (confirmed in writing) to the Trust
setting forth the number of Option Preferred Securities as to which the
Underwriters are exercising the Option and the time, date and place for
payment and delivery of certificates for such Option Preferred
Securities. Such time and date of payment and delivery for the Option
Preferred Securities (the "Option Closing Date") shall be determined by
the Underwriters, but shall not be earlier than two nor later than five
full business days after the exercise of such Option, nor in any event
prior to the Closing Date (as hereinafter defined). The Option Closing
Date may be the same as the Closing Date.
Payment of the Purchase Price and the Preferred Securities
Commission and delivery of certificates for the Firm Preferred
Securities shall be made at the offices of Honigman Miller Schwartz and
Cohn, counsel for the Underwriters, 2290 First National Building,
Detroit, Michigan 48226, or such other place as shall be agreed to by
the Underwriters and the Offerors, at 10:00 a.m., Eastern time, on
___________, 1999, or at such other time not more than five full
business days thereafter as the Offerors and the Underwriters shall
determine (the "Closing Date"). If the Underwriters exercise the Option
to purchase any or all of the Option Preferred Securities, payment of
the Purchase Price and the Preferred Securities Commission and delivery
of certificates for such Option Preferred Securities shall be made on
the Option Closing Date at the Underwriter's offices, or at such other
place as the Offerors and the Underwriter shall determine. Such
payments shall be made to an account designated or on behalf of by the
Trust by wire transfer or certified or bank cashier's check, in
clearing house or similar
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next day available funds in the amount of the Purchase Price therefor,
against delivery by or on behalf of the Trust to the Underwriters of
certificates for the Designated Preferred Securities to be purchased by
the Underwriters.
The Agreement contained herein with respect to the timing of
the Closing Date and the Option Closing Date is intended to, and does,
constitute an express agreement, as described in Rule 15c6-1(c) and (d)
promulgated under the 1934 Act (as defined herein), for a settlement
date other than four business days after the date of the contract.
Certificates for Designated Preferred Securities to be
purchased hereunder shall be in book-entry form and registered in the
name of Cede & Co. not later than 12:00 noon, Eastern time, two
business days prior to the Closing Date and, if applicable, the Option
Closing Date. Delivery of the Preferred Securities may be made by
credit through full fast transfer to the accounts at The Depository
Trust Company ("DTC") designated by you and if not made by such credit
delivery with will be made to DTC. Certificates for Designated
Preferred Securities to be purchased by or on behalf of the
Underwriters and registered in the name of Cede & Co. shall be made
available by the Offerors to the Underwriters for inspection, checking
and packaging at such office as the Underwriters may designate in
writing not later than 1:00 p.m., Eastern time, on the last business
day prior to the Closing Date, and, if applicable, on the last business
day prior to the Option Closing Date.
Time shall be of the essence, and delivery of the certificates
for the Designated Preferred Securities at the time and place specified
pursuant to this Agreement is a further condition of the obligations of
the Underwriters hereunder.
(b) The Offerors propose that the Trust issue the
Designated Preferred Securities pursuant to a Trust Agreement among,
______________ Trust Company, as Delaware Trustee,
_____________________________, as the Property Trustee, the
Administrative Trustees named therein, (collectively, the "Trustees"),
and the Company, in substantially the form heretofore delivered to the
Underwriters, said Agreement being hereinafter referred to as the
"Trust Agreement." In connection with the issuance of the Designated
Preferred Securities, the Company proposes (i) to issue its Junior
Subordinated Debentures (the "Debentures") pursuant to an Indenture, to
be dated as of __________________, 1999, between the Company and
_____________________, as Trustee (the "Indenture") and (ii) to
guarantee certain payments on the Preferred Securities pursuant to a
Preferred Securities Guarantee Agreement between the Company and
______________________, as Guarantee Trustee (the "Guarantee"), to the
extent described therein.
(c) The Representative hereby represents and warrants to
the Offerors that it has the authority to enter into this Agreement on
behalf of the several Underwriters and that the Underwriters have
indicated their intention to the Representative their willingness to
purchase severally and not jointly Designated Preferred Securities as
provided herein.
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2. REPRESENTATIONS AND WARRANTIES.
(a) The Offerors jointly and severally represent and warrant to,
and agree with, the several Underwriters that:
(i) The reports filed with the Securities and
Exchange Commission (the "Commission") by the Company under
the Securities Exchange Act of 1934, as amended (the "1934
Act") and the rules and regulations thereunder (the "1934 Act
Regulations") and incorporated into the Prospectus by
reference, at the time they were filed with the Commission,
complied as to form in all material respects with the
requirements of the 1934 Act and the 1934 Act Regulations and
did not contain an untrue statement of fact or omit to state
any fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which
they were made, not misleading.
(ii) The Offerors have prepared and filed with the
Commission a registration statement on Form S-3 (File Number
333-______) for the registration of $65,000,000 aggregate
amount of the Designated Preferred Securities, the Guarantee
and Debentures under the Securities Act of 1933, as amended
(the "1933 Act"), including the related preliminary prospectus
subject to completion included therein, and one or more
amendments or supplements to such registration statement may
have been so filed, in each case in conformity with the
requirements of the 1933 Act, the rules and regulations
promulgated thereunder (the "1933 Act Regulations") and the
Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act") and the rules and regulations thereunder. Copies of such
registration statement, including any amendments thereto, each
Preliminary Prospectus (as defined herein) contained therein
and the exhibits, financial statements and schedules to such
registration statement, as finally amended and revised, have
heretofore been delivered by the Offerors to the Underwriters.
After the execution of this Agreement, the Offerors will file
with the Commission (A) if such registration statement, as it
may have been amended, has been declared by the Commission to
be effective under the 1933 Act, a prospectus in the form most
recently included in an amendment to such registration
statement (or, if no such amendment shall have been filed, in
such registration statement), with such changes or insertions
as are required by Rule 430A of the 1933 Act Regulations
("Rule 430A") or permitted by Rule 424(b) of the 1933 Act
Regulations ("Rule 424(b)") and as have been provided to and
not objected to by the Underwriters prior to (or as are agreed
to by the Underwriters subsequent to) the execution of this
Agreement, or (B) if such registration statement, as it may
have been amended, has not been declared by the Commission to
be effective under the 1933 Act, an amendment to such
registration statement, including a form of final prospectus,
necessary to permit such registration statement to become
effective, a copy of which amendment has been furnished to and
not objected to by the Underwriters prior to (or is agreed to
by the Underwriters subsequent to) the execution of this
Agreement. Except as required by applicable law as evidenced
by a written opinion of counsel relating thereto, the Offerors
will not file any amendment to the registration statement or
any amended Preliminary Prospectus
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or any amendment thereto, of which the Underwriters have not
been previously furnished a copy or to which the Underwriters
or counsel thereto shall have reasonably objected in writing.
As used in this Agreement, the term "Registration Statement"
means such registration statement, as amended at the time when
it was or is declared effective under the 1933 Act, including
(1) all financial schedules and exhibits thereto, (2) all
documents (or portions thereof) incorporated by reference
therein filed under the 1934 Act, and (3) any information
omitted therefrom pursuant to Rule 430A and included in the
Prospectus (as hereinafter defined); the term "Preliminary
Prospectus" means each preliminary prospectus subject to
completion filed with such registration statement or any
amendment thereto including all documents (or portions
thereof) incorporated by reference therein to documents filed
under the 1934 Act (including the preliminary prospectus
subject to completion, if any, included in the Registration
Statement and each prospectus filed pursuant to Rule 424(a)
under the 1933 Act); and the term "Prospectus" means the
prospectus first filed with the Commission pursuant to Rule
424(b)(1) or (4) if no prospectus is required to be filed
pursuant to Rule 424(b)(1) or (4), the prospectus included in
the Registration Statement, in each case including the
financial schedules and all documents (or portions thereof)
incorporated by reference therein to documents filed under the
1934 Act. The date on which the Registration Statement becomes
effective under the 1933 Act is hereinafter referred to as the
"Effective Date."
(iii) The documents incorporated by reference in the
Preliminary Prospectus or Prospectus when they became
effective or were filed with the Commission, as the case may
be, complied in all material respects with the requirements of
the 1934 Act and the 1934 Act Regulations, and when read
together and with the other information in the Preliminary
Prospectus or Prospectus, as the case may be, at the time the
Registration Statement became or becomes effective and at the
Closing Date and any Option Closing Date, did not or will not,
as the case may be, contain an 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, in light
of the circumstances under which they were made, not
misleading.
(iv) No order preventing or suspending the use of
any Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) has been issued by the
Commission, nor has the Commission, to the knowledge of the
Offerors, threatened to issue such an order or instituted
proceedings for that purpose. Each Preliminary Prospectus, at
the time of filing thereof, (A) complied in all material
respects with the requirements of the 1933 Act and the 1933
Act Regulations and (B) did not contain an untrue statement of
fact or omit to state any fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
provided, however, that this representation and warranty does
not apply to statements or omissions made in reliance upon and
in conformity with information furnished in writing to the
Offerors by the Underwriters expressly for inclusion in the
Prospectus beneath the heading "Underwriting" and on the cover
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page of the Prospectus with respect to price, underwriting
discount and terms of the offering (such information referred
to herein as the "Underwriter Information").
(v) At the Effective Date and at all times
subsequent thereto, up to and including the Closing Date and,
if applicable, the Option Closing Date, the Registration
Statement and any post-effective amendment thereto (A)
complied and will comply in all material respects with the
requirements of the 1933 Act, the 1933 Act Regulations and the
Trust Indenture Act (and the rules and regulations thereunder)
and (B) did not and will not contain an untrue statement of
fact or omit to state any fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. At
the Effective Date and at all times when the Prospectus is
required to be delivered in connection with offers and sales
of Designated Preferred Securities, including, without
limitation, the Closing Date and, if applicable, the Option
Closing Date, the Prospectus, as amended or supplemented, (1)
complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and
the Trust Indenture Act (and the rules and regulations
thereunder) and (2) did not contain and will not contain an
untrue statement of fact or omit to state any fact required to
be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading; provided, however, that this representation and
warranty does not apply to Underwriter Information. (vi) The
Company is duly incorporated, validly existing and in good
standing under the laws of the State of Michigan, with full
corporate power and authority to own, lease and operate its
properties and conduct its business as described in and
contemplated by the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) and as currently being conducted.
(vii) The Trust has been duly created and is validly
existing as a statutory business trust in good standing under
the Delaware Business Trust Act with the power and authority
(trust and other) to own its property and conduct its business
as described in the Registration Statement and Prospectus, to
issue and sell its common securities (the "Common Securities")
to the Company pursuant to the Trust Agreement, to issue and
sell the Designated Preferred Securities, to enter into and
perform its obligations under this Agreement and to consummate
the transactions herein contemplated; the Trust has no
subsidiaries and is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of
its business or the ownership of its property requires such
qualification, except to the extent that the failure to be so
qualified or to be in good standing would not have a material
adverse effect on the Trust; the Trust has conducted and will
conduct no business other than the transactions contemplated
by this Agreement and described in the Prospectus; the Trust
is not a party to or bound by any agreement or instrument
other than this Agreement, the Trust Agreement and the
agreements and instruments contemplated by the Trust
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Agreement and described in the Prospectus; the Trust has no
liabilities or obligations other than those arising out of the
transactions contemplated by this Agreement and the Trust
Agreement and described in the Prospectus; the Trust is not a
party to or subject to any action, suit or proceeding of any
nature; the Trust is not, and at the Closing Date or any
Option Closing Date will not be, to the knowledge of the
Offerors, classified as an association taxable as a
corporation for United States federal income tax purposes; and
the Trust is, and as of the Closing Date or any Option Closing
Date will be, treated as a consolidated subsidiary of the
Company pursuant to generally accepted accounting principles.
(viii) The Company has six subsidiaries, Flagstar
Bank, FSB (the "Bank"), the Trust, Douglas Insurance Agency,
Inc. ("DIA"), FSSB Real Estate Development Corporation
("REDC"), Mortgage Video Network, Inc. ("Video"), and First
Security Investment Group, Inc. ("Investment"). The Bank, the
Trust, DIA, REDC, Video and Investment are hereinafter
collectively referred to as the "Subsidiaries". The Company
does not own or control, directly or indirectly, more than 5%
of any class of equity security of any corporation,
association or other entity other than the Subsidiaries. The
Bank is a federally chartered stock savings bank, validly
existing and in good standing under the federal Home Owners'
Loan Act. The Bank has full corporate power and authority to
own, lease and operate its properties and to conduct its
business as described in and contemplated by the Registration
Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) and as
currently being conducted. The Bank is a member of the Federal
Reserve System, and no proceedings for the termination or
revocation of such membership are pending, or, to the
knowledge of the Company, threatened. The deposit accounts of
the Bank are insured by the Savings Association Insurance Fund
("SAIF") administered by the Federal Deposit Insurance
Corporation (the "FDIC") up to the maximum amount provided by
law; and no proceedings for the modification, termination or
revocation of any such insurance are pending or, to the
knowledge of the Offerors, threatened.
(ix) The Company, the Bank, DIA, REDC, Video and
Investment are each duly qualified to transact business as a
foreign corporation and are each in good standing in each
other jurisdiction in which it owns or leases property or
conducts its business so as to require such qualification and
in which the failure to so qualify would, individually or in
the aggregate, have a material adverse effect on the financial
condition, earnings, business, prospects or results of
operations of the Company and the Subsidiaries on a
consolidated basis. All of the issued and outstanding shares
of capital stock of the Subsidiaries (A) have been duly
authorized and are validly issued, (B) are fully paid and
nonassessable and (C) except as disclosed in the Prospectus
(or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), are directly owned by the Company
free and clear of any security interest, mortgage, pledge,
lien, encumbrance, restriction upon voting or transfer,
preemptive rights, claim or equity. Except as disclosed in the
Prospectus, there are no outstanding rights, warrants or
options to acquire or
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instruments convertible into or exchangeable for any capital
stock or equity securities of the Subsidiaries.
(x) The capital stock of the Company and the
equity securities of the Trust conform to the description
thereof contained in the Prospectus or the financial
information included therein (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus). The
outstanding shares of capital stock and equity securities of
each Offeror have been duly authorized and validly issued and
are fully paid and nonassessable, and no such shares were
issued in violation of the preemptive or similar rights of any
security holder of an Offeror; no person has any preemptive or
similar right to purchase any shares of capital stock or
equity securities of the Offerors. Except as disclosed in the
Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), there are no outstanding
rights, options or warrants to acquire from the Offerors any
securities of the Offerors other than options and warrants
issued under the Company's 1997 Employees and Directors Stock
Option Plan, and there are no outstanding securities
convertible into or exchangeable for any such securities and
no restrictions upon the voting or transfer of any capital
stock of the Company or equity securities of the Trust
pursuant to the Company's corporate charter or bylaws, the
Trust Agreement or any agreement or other instrument to which
an Offeror is a party or by which an Offeror is bound.
(xi) (A) The Trust has all requisite power
and authority to issue, sell and deliver the
Designated Preferred Securities in accordance with and
upon the terms and conditions set forth in this
Agreement, the Trust Agreement, the Registration
Statement and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary
Prospectus). All corporate and trust action required
to be taken by the Offerors for the authorization,
issuance, sale and delivery of the Designated
Preferred Securities in accordance with such terms and
conditions has been validly and sufficiently taken.
The Designated Preferred Securities, when delivered in
accordance with this Agreement, will be duly and
validly issued and outstanding, will be fully paid and
nonassessable undivided beneficial interests in the
assets of the Trust, will be entitled to the benefits
of the Trust Agreement, will not be issued in
violation of or subject to any preemptive or similar
rights, and will conform in all material respects to
the description thereof in the Registration Statement
and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) and
the Trust Agreement. None of the Designated Preferred
Securities, immediately prior to delivery, will be
subject to any security interest, lien, mortgage,
pledge, encumbrance, restriction upon voting or
transfer, preemptive rights, claim, equity or other
defect.
(B) The Debentures have been duly and
validly authorized, and, when duly and validly
executed, authenticated and issued as provided in the
Indenture and delivered to the Trust pursuant to the
Trust Agreement, will constitute valid and legally
binding obligations of the
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Company entitled to the benefits of the Indenture and
will conform in all material respects to the
description thereof contained in the Prospectus.
(C) The Guarantee has been duly and
validly authorized, and, when duly and validly
executed and delivered to the Guarantee Trustee for
the benefit of the Trust, will constitute a valid and
legally binding obligation of the Company and will
conform in all material respects to the description
thereof contained in the Prospectus.
(D) The Agreement as to Expenses and
Liabilities (the "Expense Agreement") has been duly
and validly authorized, and, when duly and validly
executed and delivered by the Company, will constitute
a valid and legally binding obligation of the Company
and will conform in all material respects to the
description thereof contained in the Prospectus.
(xii) The Offerors and the Subsidiaries have
complied with all federal, state and local statutes,
regulations, ordinances and rules applicable to the ownership
and operation of their properties or the conduct of their
businesses as described in and contemplated by the
Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus) and as currently being conducted except for such
matters as would not be expected to have a materially adverse
effect thereon.
(xiii) The Offerors and the Subsidiaries have all
governmental and regulatory permits, easements, consents,
licenses, franchises and other authorizations from all
appropriate federal, state, local or other public authorities
("Permits") as are necessary to own and lease their properties
and conduct their businesses in the manner described in and
contemplated by the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) and as currently being conducted,
except as such matters that would not have a material adverse
effect on the Offerors and the Subsidiaries or their financial
condition, earnings, business, prospects or results of
operations. All such Permits are in full force and effect and
each of the Offerors and the Subsidiaries are complying
therewith in all material respects, and no event has occurred
that allows, or after notice or lapse of time would allow,
revocation or termination thereof or will result in any other
impairment of the rights of the holder of any such Permit,
subject in each case to such qualification as may be
adequately disclosed in the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus)
except as such matters that would not have a material adverse
effect on the Offerors and the Subsidiaries or their financial
condition, earnings, business, prospects or results of
operations. Such Permits contain no restrictions that would
materially impair the ability of the Company or the
Subsidiaries to conduct their businesses in the manner
consistent with their past practices. Neither of the Offerors
nor any of the Subsidiaries has received notice or otherwise
has knowledge of any proceeding or action relating to the
revocation or modification of any such Permit.
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(xiv) Neither of the Offerors nor any of the
Subsidiaries is in breach or violation of their corporate
charter, bylaws or other governing documents (including
without limitation, the Trust Agreement). Neither of the
Offerors nor any of the Subsidiaries is, and to the knowledge
of the Offerors no other party is, in violation, breach or
default (with or without notice or lapse of time or both) in
the performance or observance of any term, covenant,
agreement, obligation, representation, warranty or condition
contained in (A) any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease, franchise,
license, Permit or any other agreement or instrument to which
it is a party or by which it or any of its properties may be
bound, which such breach, violation or default would
reasonably be expected to have a material adverse effect on
the Offerors and the Subsidiaries on a consolidated basis, and
to the knowledge of the Offerors, no other party has asserted
that the Offerors or any of the Subsidiaries is in such
violation, breach or default (provided that the foregoing
representations in clause (A) shall not apply to defaults by
borrowers from the Bank), or (B) except as disclosed in the
Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), any order, decree,
judgment, rule or regulation of any court, arbitrator,
government, or governmental agency or instrumentality,
domestic or foreign, having jurisdiction over the Offerors or
the Subsidiaries or any of their respective properties the
breach, violation or default of which would have a material
adverse effect on the financial condition, earnings, business,
prospects or results of operations of the Offerors and the
Subsidiaries on a consolidated basis.
(xv) The execution, delivery and performance of
this Agreement and the consummation of the transactions
contemplated by this Agreement, the Trust Agreement, the
Guarantee, the Expense Agreement, the Registration Statement
and the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus) do not and will not
conflict with, result in the creation or imposition of any
lien, claim, charge, encumbrance or restriction upon any
property or assets of the Offerors or the Subsidiaries or the
Designated Preferred Securities pursuant to, constitute a
breach or violation of, or constitute a default under, with or
without notice or lapse of time or both, any of the terms,
provisions or conditions of the charter or bylaws of the
Company or the Subsidiaries, the Trust Agreement, the
Guarantee, the Expense Agreement, the Indenture, any contract,
indenture, mortgage, deed of trust, loan or credit agreement,
note, lease, franchise, license, Permit or any other agreement
or instrument to which the Offerors or the Subsidiaries is a
party or by which any of them or any of their respective
properties may be bound or any order, decree, judgment, rule
or regulation of any court, arbitrator, government, or
governmental agency or instrumentality, domestic or foreign,
having jurisdiction over the Offerors or the Subsidiaries or
any of their respective properties which conflict, creation,
imposition, breach, violation or default would have either
singly or in the aggregate a material adverse effect on the
financial condition, earnings, business, prospects or results
of operations of the Offerors and the Subsidiaries on a
consolidated basis. No authorization, approval, consent or
order of, or filing, registration or qualification with, any
person (including, without limitation, any
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court, governmental body or authority) is required in
connection with the transactions contemplated by this
Agreement, the Trust Agreement, the Indenture, the Guarantee,
the Expense Agreement, the Registration Statement and the
Prospectus, except such as may be required by, and have been
obtained under, the 1933 Act, the Trust Indenture Act, state
securities laws, Interpretations or Rules of the National
Association of Securities Dealers, Inc. ("NASD") in connection
with the purchase and distribution of the Designated Preferred
Securities by the Underwriters, and from the Nasdaq Stock
Market's National Market relating to the listing of the
Designated Preferred Securities.
(xvi) The Offerors have all requisite corporate
power and authority to enter into this Agreement and this
Agreement has been duly and validly authorized, executed and
delivered by the Offerors and constitutes the legal, valid and
binding agreement of the Offerors, enforceable against the
Offerors in accordance with its terms, except as the
enforcement thereof may be limited by general principles of
equity and by bankruptcy, moratorium, reorganization,
fraudulent conveyance or other laws relating to or affecting
creditors' rights generally and except as any indemnification
or contribution provisions thereof may be limited under
applicable securities laws or public policy. Each of the
Indenture, the Trust Agreement, the Guarantee and the Expense
Agreement has been duly authorized by the Company, and, when
executed and delivered by the Company on the Closing Date,
each of said agreements will constitute a valid and legally
binding obligation of the Company and will be enforceable
against the Company in accordance with its terms, except as
the enforcement thereof may be limited by general principles
of equity and by bankruptcy, moratorium, reorganization,
fraudulent transfer or other laws relating to or affecting
creditors, rights generally and except as any indemnification
or contribution provisions thereof may be limited under
applicable securities laws or public policy. Each of the
Indenture, the Trust Agreement and the Guarantee has been duly
qualified under the Trust Indenture Act and will conform in
all material respects to the description thereof contained in
the Prospectus.
(xvii) The Company and the Subsidiaries have good and
marketable title in fee simple to all real property and good
title to all personal property owned by them, in each case
free and clear of all security interests, liens, mortgages,
pledges, encumbrances, restrictions, claims, equities and
other defects except such as are referred to in or are
incorporated by reference into the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus) or such as do not materially affect the value of
such property in the aggregate and do not materially interfere
with the use made or proposed to be made of such property; and
all of the leases under which the Company or the Subsidiaries
hold real or personal property are valid, existing and
enforceable leases and in full force and effect and do not
interfere with the use made or proposed to be made of such
real or personal property, and neither the Company nor any of
the Subsidiaries is in default of any of the terms or
provisions of any leases, except as such matters that would
not have a material adverse effect on the Offerors and the
Subsidiaries or their financial condition, earnings, business,
prospects or results of operations.
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<PAGE> 12
(xviii) Grant Thornton LLP, who have certified certain
of the consolidated financial statements of the Company and
the Subsidiaries including the notes thereto, included in the
Registration Statement and Prospectus, are independent public
accountants with respect to the Company and the Subsidiaries,
as required by the 1933 Act and the 1933 Act Regulations.
(xix) The consolidated financial statements
including the notes thereto, included in or incorporated by
reference or otherwise in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) with respect to the
Company and the Subsidiaries comply with the 1933 Act and the
1933 Act Regulations and present fairly the consolidated
financial position of the Company and the Subsidiaries as of
the dates indicated and the consolidated results of
operations, cash flows and shareholders' equity of the Company
and the Subsidiaries for the periods specified and have been
prepared in conformity with generally accepted accounting
principles applied on a consistent basis. The selected and
summary consolidated financial data concerning the Offerors
and the Subsidiaries included in the Registration Statement
and the Prospectus (or such Preliminary Prospectus) comply
with the 1933 Act and the 1933 Act Regulations, present fairly
the information set forth therein, and have been compiled on a
basis consistent with that of the consolidated financial
statements of the Offerors and the Subsidiaries in the
Registration Statement and the Prospectus (or such Preliminary
Prospectus). The other financial, statistical and numerical
information with respect to the Company and the Subsidiaries
included in the Registration Statement and the Prospectus (or
such Preliminary Prospectus) comply with the 1933 Act and the
1933 Act Regulations, present fairly the information shown
therein, and to the extent applicable have been compiled on a
basis consistent with the consolidated financial statements of
the Company and the Subsidiaries included in the Registration
Statement and the Prospectus (or such Preliminary Prospectus).
(xx) Since the respective dates as of which
information is given in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), except as otherwise
stated therein:
(A) neither of the Offerors nor any of the
Subsidiaries has sustained any loss or interference
with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action,
order or decree which would have a material adverse
effect on the financial condition, earnings, business,
prospects or results of operations of the Offerors and
the Subsidiaries on a consolidated basis;
(B) there has not been any change in, or
any development which is likely to have a material
adverse effect on, the financial condition, earnings,
business, prospects or results of operations of the
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<PAGE> 13
Offerors and the Subsidiaries on a consolidated basis,
whether or not arising in the ordinary course of
business;
(C) neither of the Offerors nor any of the
Subsidiaries has incurred any liabilities or
obligations, direct or contingent, or entered into any
transactions, other than in the ordinary course of
business which would have a material adverse effect on
the financial condition, earnings, business, prospects
or results of operations of the Offerors and the
Subsidiaries on a consolidated basis;
(D) neither of the Offerors has declared
or paid any dividend and neither of the Offerors nor
any of the Subsidiaries has become delinquent in the
payment of principal or interest on any outstanding
borrowings; and
(E) there has not been any change in the
capital stock (except for the exercise of employee
stock options issued under the Company's 1997
Employees and Directors Stock Option Plan, and
disclosed as outstanding), equity securities,
long-term debt, obligations under capital leases or,
other than in the ordinary course of business,
short-term borrowings of the Offerors or the
Subsidiaries.
(xxi) Except as set forth in the Registration
Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), no
investigation, action, suit or proceeding is pending or, to
the knowledge of the Offerors, threatened, against or
affecting the Offerors or the Subsidiaries or any of their
respective properties before or by any court or any
regulatory, administrative or governmental official,
commission, board, agency or other authority or body, or any
arbitrator, wherein an unfavorable decision, ruling or finding
would have a material adverse effect on the consummation of
this Agreement or the transactions contemplated herein or the
financial condition, earnings, business, prospects or results
of operations of the Offerors and the Subsidiaries on a
consolidated basis or which is required to be disclosed in the
Registration Statement or the Prospectus (or such Preliminary
Prospectus) and is not so disclosed.
(xxii) There are no contracts or other documents
required to be filed as exhibits to the Registration Statement
under the 1933 Act or the 1933 Act Regulations or the Trust
Indenture Act (or any rules or regulations thereunder) which
have not been filed as exhibits or incorporated by reference
to the Registration Statement, or that are required to be
summarized in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) that are
not so summarized.
(xxiii) Neither of the Offerors has taken, directly
or indirectly, any action designed to result in or which has
constituted or which might cause or result in stabilization or
manipulation of the price of any security of the Offerors to
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<PAGE> 14
facilitate the sale or resale of the Designated Preferred
Securities, and neither of the Offerors is aware of any such
action taken or to be taken by any affiliate of the Offerors.
(xxiv) The Offerors and the Subsidiaries own, or
possess adequate rights to use, all patents, copyrights,
trademarks, service marks, trade names and other rights
necessary to conduct the businesses now conducted by them or
as described in the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus) and
neither of the Offerors nor any of the Subsidiaries has
received any notice of infringement or conflict with asserted
rights of others with respect to any patents, copyrights,
trademarks, service marks, trade names or other rights which,
individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material
adverse effect on the financial condition, earnings, business,
prospects or results of operations of the Offerors and the
Subsidiaries on a consolidated basis, and the Offerors do not
know of any basis for any such infringement or conflict.
(xxv) Except as adequately disclosed in the
Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), no labor dispute
involving the Company or the Subsidiaries exists or, to the
knowledge of the Offerors, is imminent which would reasonably
be expected to have a material adverse effect on the financial
condition, earnings, business, prospects or results of
operations of the Offerors and the Subsidiaries on a
consolidated basis or which is required to be disclosed in the
Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus). Neither the Company nor
any of the Subsidiaries has received notice of any existing or
threatened labor dispute by the employees of any of its
principal suppliers, customers or contractors which might be
expected to have an adverse effect on the condition (financial
or otherwise), earnings, affairs, business, prospects or
results of operations of the Company and the Subsidiaries on a
consolidated basis.
(xxvi) Each of the Offerors and the Subsidiaries has
timely and properly prepared and filed all necessary federal,
state, local and foreign tax returns which are required to be
filed and has paid all taxes shown as due thereon and has paid
all other taxes and assessments to the extent that the same
shall have become due, except such as are being contested in
good faith or where the failure to so timely and properly
prepare and file would not have a material adverse effect on
the financial condition, earnings, business, prospects or
results of operations of the Offerors and the Subsidiaries on
a consolidated basis. The Offerors have no knowledge of any
tax deficiency which has been or might be assessed against the
Offerors or the Subsidiaries which, if the subject of an
unfavorable decision, ruling or finding, would have a material
adverse effect on the financial condition, earnings, business,
prospects or results of operations of the Offerors and the
Subsidiaries on a consolidated basis.
(xxvii) Each of the contracts, agreements and
instruments described or referred to in the Registration
Statement or the Prospectus (or, if the Prospectus is
14
<PAGE> 15
not in existence, the most recent Preliminary Prospectus) and
each contract, agreement and instrument filed as an exhibit to
the Registration Statement is in full force and effect and is
the legal, valid and binding agreement of the Offerors or the
Subsidiaries, enforceable in accordance with its terms, except
as the enforcement thereof may be limited by general
principles of equity and by bankruptcy, moratorium,
reorganization, fraudulent transfer or other laws relating to
or affecting creditors rights generally, except as such
matters that would not have a material adverse effect on the
Offerors or their financial condition, earnings, business,
prospects or results of operations. Except as disclosed in the
Prospectus (or such Preliminary Prospectus), to the knowledge
of the Offerors, no other party to any such agreement is (with
or without notice or lapse of time or both) in breach or
default thereunder, except as to such matters that would not
have a material adverse effect on the Offerors or their
financial condition, earnings, business, prospects or results
of operations; provided however, that the foregoing shall not
apply to defaults by borrowers from the Bank.
(xxviii) No relationship, direct or indirect, exists
between or among the Offerors or the Subsidiaries, on the one
hand, and the directors, officers, trustees, shareholders,
customers or suppliers of the Offerors or the Subsidiaries, on
the other hand, which is required to be described in the
Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus) which is not adequately described therein.
(xxix) Except as adequately disclosed in the
Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus), persons with the right to request or require the
Offerors or the Subsidiaries to register any securities for
offering and sale under the 1933 Act by reason of the filing
of the Registration Statement with the Commission or the
issuance and sale of the Designated Preferred Securities have
executed waivers of such rights.
(xxx) The Designated Preferred Securities have been
approved for quotation on the Nasdaq National Market subject
to official notice of issuance.
(xxxi) Except as described in the Prospectus (or, if
the Prospectus is not in existence, the most recent
Preliminary Prospectus), there are no contractual encumbrances
or restrictions or legal restrictions on the ability of the
Subsidiaries (A) to pay dividends or make any other
distributions on its capital stock or to pay any indebtedness
owed to the Offerors, (B) to make any loans or advances to, or
investments in, the Offerors or (C) to transfer any of its
property or assets to the Offerors.
(xxxii) Neither of the Offerors is an "investment
company" or a company "controlled" by an investment company as
such terms are defined in the Investment Company Act of 1940,
as amended (the "Investment Company Act").
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<PAGE> 16
(xxxiii) Other than due diligence material
distributed to the Underwriters, the Offerors have not
distributed and will not distribute prior to the Closing Date
any prospectus in connection with the offering of the
Designated Preferred Securities, other than a Preliminary
Prospectus, the Prospectus, the Registration Statement and the
other materials permitted by the 1933 Act and the 1933 Act
Regulations and reviewed by the Underwriters.
3. OFFERING BY THE UNDERWRITERS. After the Registration Statement
becomes effective or, if the Registration Statement is already effective, after
this Agreement becomes effective, the Underwriters propose severally and not
jointly to offer the Designated Preferred Securities for sale to the public upon
the terms and conditions set forth in the Prospectus. Each Underwriter may from
time to time thereafter reduce the public offering price and change the other
selling terms, provided that the proceeds to the Trust shall not be reduced as a
result of such reduction or change.
Each Underwriter shall be entitled to a commission from the Company of
$0.7875 per Firm Preferred Security sold by such Underwriter. Each Underwriter
shall be entitled to a commission of $0.7875 per Option Preferred Security sold
by such Underwriter.
Each Underwriter may reserve and sell such of the Designated Preferred
Securities purchased by such Underwriter as such Underwriter may elect to
dealers chosen by it (the "Selected Dealers") at the public offering price set
forth in the Prospectus less the applicable Selected Dealers' concessions set
forth therein, for re-offering by Selected Dealers to the public at the public
offering price. The Underwriters may allow, and Selected Dealers may re-allow, a
concession set forth in the Prospectus to certain other brokers and dealers.
4. CERTAIN COVENANTS OF THE OFFERORS. The Offerors jointly and
severally covenant with the several Underwriters as follows:
(a) The Offerors shall use their best efforts to cause the
Registration Statement and any amendments thereto, if not effective at
the time of execution of this Agreement, to become effective as
promptly after execution as possible. If the Registration Statement has
become or becomes effective pursuant to Rule 430A and information has
been omitted therefrom in reliance on Rule 430A, then the Offerors will
prepare and file in accordance with Rule 430A and Rule 424(b) copies of
the Prospectus or, if required by Rule 430A, a post-effective amendment
to the Registration Statement (including the Prospectus) containing all
information so omitted and will provide evidence satisfactory to the
Underwriters of such timely filing.
(b) The Offerors shall notify the Underwriters immediately,
and confirm such notice in writing:
(i) when the Registration Statement, or any
post-effective amendment to the Registration Statement, has
become effective, or when the Prospectus or any supplement to
the Prospectus or any amended Prospectus has been filed with
the Commission;
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<PAGE> 17
(ii) of the receipt of any comments or requests
from the Commission relating to the Registration Statement and
any 1934 Act documents incorporated by reference therein;
(iii) of any request of the Commission to amend or
supplement the Registration Statement, any Preliminary
Prospectus, the Prospectus or the 1934 Act documents
incorporated therein by reference or for additional
information relating thereto; and
(iv) of the issuance by the Commission or any state
or other regulatory body of any stop order or other order
suspending the effectiveness of the Registration Statement,
preventing or suspending the use of any Preliminary Prospectus
or the Prospectus, or suspending the qualification of any of
the Designated Preferred Securities for offering or sale in
any jurisdiction or the institution or threat of institution
of any proceedings for any of such purposes. The Offerors
shall use their best efforts to prevent the issuance of any
such stop order or of any other such order and if any such
order is issued, to cause such order to be withdrawn or lifted
as soon as possible.
(c) The Offerors shall furnish to the Underwriters, from
time to time without charge, as soon as available, as many copies as
the Underwriters may reasonably request of (i) the registration
statement as originally filed and of all amendments thereto, in
executed form, including exhibits, whether filed before or after the
Registration Statement becomes effective, (ii) all exhibits and
documents incorporated therein or filed therewith, (iii) all consents
and certificates of experts in executed form, (iv) each Preliminary
Prospectus and all amendments and supplements thereto, and (v) the
Prospectus, and all amendments and supplements thereto.
(d) During the time when a prospectus is required to be
delivered under the 1933 Act, the Offerors shall comply with the 1933
Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act
Regulations so as to permit the completion of the distribution of the
Preferred Securities as contemplated herein and in the Trust Agreement
and the Prospectus. Except as required by applicable law as evidenced
by a written opinion of counsel relating thereto, the Offerors shall
not file any amendment to the registration statement as originally
filed or to the Registration Statement and shall not file any amendment
thereto or make any amendment or supplement to any Preliminary
Prospectus or to the Prospectus of which the Underwriters shall not
previously have been advised in writing and provided a copy a
reasonable time prior to the proposed filings thereof or to which the
Underwriters or counsel to the Underwriters shall reasonably object. If
it is necessary, in the Underwriters' reasonable opinion or in the
reasonable written opinion of counsel to the Underwriters to amend or
supplement the Registration Statement or the Prospectus in connection
with the distribution of the Designated Preferred Securities, the
Offerors shall forthwith amend or supplement the Registration Statement
or the Prospectus, as the case may be, by preparing and filing with the
Commission and furnishing to the Underwriters, such number of copies as
the Underwriters may reasonably request of an amendment or amendments
of, or a supplement or supplements to, the Registration Statement or
the Prospectus, as the case
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<PAGE> 18
may be (in form and substance reasonably satisfactory to the
Underwriters and counsel to the Underwriters). If any event shall occur
as a result of which it is necessary to amend or supplement the
Prospectus to correct an untrue statement of fact or to include any
fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if for any
reason it is necessary at any time to amend or supplement the
Prospectus to comply with the 1933 Act and the 1933 Act Regulations,
the Offerors shall, subject to the second sentence of this subsection
(d), forthwith amend or supplement the Prospectus by preparing and
filing with the Commission, and furnishing to the Underwriters, such
number of copies as the Underwriters may reasonably request of an
amendment or amendments of, or a supplement or supplements to, the
Prospectus (in form and substance satisfactory to the Underwriters and
counsel to the Underwriters) so that, as so amended or supplemented,
the Prospectus shall not contain an untrue statement of fact or omit to
state any fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(e) The Offerors shall cooperate with the Underwriters and
counsel to the Underwriters in order to qualify the Designated
Preferred Securities for offering and sale under the securities or blue
sky laws of such jurisdictions as the Underwriters may reasonably
request and shall continue such qualifications in effect so long as may
be advisable for distribution of the Designated Preferred Securities;
provided, however, that the Offerors shall not be required to qualify
to do business as a foreign corporation or file a general consent to
service of process in any jurisdiction in connection with the
foregoing. The Offerors shall file such statements and reports as may
be required by the laws of each jurisdiction in which the Designated
Preferred Securities have been qualified as above. The Offerors will
notify the Underwriters immediately of, and confirm in writing, the
suspension of qualification of the Preferred Securities or threat
thereof in any jurisdiction.
(f) The Offerors shall make generally available to their
security holders in the manner contemplated by Rule 158 of the 1933 Act
Regulations and furnish to the Underwriters as soon as practicable, but
in any event not later than 16 months after the Effective Date, a
consolidated earnings statement of the Offerors conforming with the
requirements of Section 11(a) of the 1933 Act and Rule 158.
(g) The Offerors shall use the proceeds from the sale of
the Designated Preferred Securities to be sold by the Trust hereunder
in the manner specified in the Prospectus under the caption "Use of
Proceeds."
(h) For five years from the Effective Date, the Offerors
shall furnish to the Underwriters copies of all reports and
communications (financial or otherwise) furnished by the Offerors to
the holders of the Designated Preferred Securities as a class, copies
of all reports and financial statements filed with or furnished to the
Commission (other than portions for which confidential treatment has
been obtained from the commission) or with any national securities
exchange or the Nasdaq National Market.
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<PAGE> 19
(i) For a period of 180 days from the Effective Date, the
Offerors, the Bank and their executive officers and directors shall
not, directly or indirectly, offer for sale, sell or agree to sell or
otherwise dispose of any Designated Preferred Securities other than
pursuant to this Agreement, any other beneficial interests in the
assets of the Trust or any securities of the Trust or the Company that
are substantially similar to the Preferred Securities, including any
guarantee of such beneficial interests or substantially similar
securities, or securities convertible into or exchangeable for or that
represent the right to receive any such beneficial interest or
substantially similar securities, without the Representative's prior
written consent.
(j) The Offerors shall use their best efforts to cause the
Designated Preferred Securities to become quoted on the Nasdaq National
Market, or in lieu thereof a national securities exchange, and to
remain so quoted for at least five years from the Effective Date or for
such shorter period as may be specified in a written consent of the
Underwriters, provided this shall not prevent the Company from
redeeming the Designated Preferred Securities pursuant to the terms of
the Trust Agreement. If the Designated Preferred Securities are
exchanged for Debentures, the Company will use its best efforts to have
the Debentures promptly listed on the Nasdaq National Market or other
organization on which the Designated Preferred Securities are then
listed, and to have the Debentures promptly registered under Section 12
of the Exchange Act.
(k) The Offerors shall not, for a period of 180 days after
the date hereof, without the Representative's prior written consent,
purchase, redeem or call for redemption, or prepay or give notice of
prepayment (or announce any redemption or call for redemption, or any
repayment or notice of prepayment) of the Offerors' securities;
provided, however, that the foregoing shall not prevent an employee
from delivering the Company's securities in payment of the exercise
price of options issued under the Company's 1997 Employees and
Directors Stock Option Plan.
(l) The Offerors shall not take, directly or indirectly,
any action designed to result in or which has constituted or which
might cause or result in stabilization or manipulation of the price of
any security of the Offerors to facilitate the sale or resale of the
Designated Preferred Securities and the Offerors are not aware of any
such action taken or to be taken by any affiliate of the Offerors.
(m) Prior to the Closing Date, the Offerors will not issue
any press release or other communication directly or indirectly or hold
any press conference with respect to the Offerors, the Subsidiaries or
the offering of the Designated Preferred Securities (the "Offering")
without the Representative's prior written consent, which will not be
unreasonably withheld.
5. PAYMENT OF EXPENSES. Whether or not this Agreement is
terminated or the sale of the Designated Preferred Securities to the
Underwriters is consummated, each of the Company, the Bank and the Trust,
jointly and severally, covenants and agrees that it will pay or cause to be paid
(directly or by reimbursement) all costs and expenses incident to the
performance of the obligations of the Offerors under this Agreement, including:
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<PAGE> 20
(a) the preparation, printing, filing, delivery and
shipping of the initial registration statement, the Preliminary
Prospectus or Prospectuses, the Registration Statement and the
Prospectus and any amendments or supplements thereto, and the printing,
delivery and shipping of this Agreement and any other underwriting
documents (including, without limitation, selected dealers agreements),
the certificates for the Designated Preferred Securities and the
Preliminary and Final Blue Sky Memoranda and any legal investment
surveys and any supplements thereto;
(b) all fees, expenses and disbursements of the Offerors'
counsel and accountants;
(c) with respect to the Trust only, all fees and expenses
incurred in connection with the qualification of the Designated
Preferred Securities, Debentures and the Guarantee under the securities
or blue sky laws of such jurisdictions as the Underwriters may request,
including all filing fees and reasonable fees and disbursements of
counsel to the Underwriters in connection therewith, including, without
limitation, in connection with the preparation of the Preliminary and
Final Blue Sky Memoranda and any legal investment surveys and any
supplements thereto;
(d) payment to the Representative of its documented
expenses up to $75,000 for legal counsel and up to $25,000 for all
other expenses;
(e) all fees and expenses incurred in connection with
filings made with the NASD;
(f) any applicable fees and other expenses incurred in
connection with the listing of the Designated Preferred Securities and,
if applicable, the Guarantee and the Debentures on the Nasdaq National
Market;
(g) the cost of furnishing to the Underwriters copies of
the initial registration statements, any Preliminary Prospectus, the
Registration Statement and the Prospectus and all amendments or
supplements thereto;
(h) the costs and charges of any transfer agent or
registrar and the fees and disbursements of counsel to any transfer
agent or registrar;
(i) all costs and expenses (including stock transfer taxes)
incurred in connection with the printing, issuance and delivery of the
Designated Preferred Securities to the Underwriters;
(j) all expenses incident to the preparation, execution and
delivery of the Trust Agreement, the Indenture, the Guarantee and the
Expense Agreement; and
(k) all other costs and expenses incident to the
performance of the obligations of the Company hereunder and under the
Trust Agreement that are not otherwise specifically provided for in
this Section 5.
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<PAGE> 21
If the sale of Designated Preferred Securities contemplated by this
Agreement is not completed due to a default of this Agreement by the Company
(including a termination pursuant to Section 8(a), (b) or (c)), the Company will
pay the Underwriters their accountable out-of-pocket expenses in connection
herewith or in contemplation of the performance of the Underwriters' obligations
hereunder, including without limitation travel expenses, reasonable fees,
expenses and disbursements of counsel or other out-of-pocket expenses incurred
by the Underwriters in connection with any discussion of the Offering or the
contents of the Registration Statement, any investigation of the Offerors and
the Subsidiaries, or any preparation for the marketing, purchase, sale or
delivery of the Designated Preferred Securities, in each case following
presentation of reasonably detailed invoices therefor.
6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations
of each of the several Underwriters to purchase and pay for the Firm Preferred
Securities and, following exercise of the Option granted by the Offerors in
Section 1 of this Agreement, the Option Preferred Securities, as set forth in
Schedule A, are subject to the accuracy of and compliance with the
representations and warranties and agreements of the Offerors herein as of the
date hereof and as of the Closing Date (or in the case of the Option Preferred
Securities, if any, as of the Option Closing Date), to the accuracy of the
written statements of the Offerors made pursuant to the provisions hereof, to
the performance by the Offerors of their covenants and obligations hereunder and
to the following additional conditions:
(a) If the Registration Statement or any amendment
thereto filed prior to the Closing Date has not been declared effective
prior to the time of execution hereof, the Registration Statement shall
become effective not later than 10:00 a.m., Eastern time, on the first
business day following the time of execution of this Agreement, or at
such later time and date as the Underwriters may agree to in writing.
If required, the Prospectus and any amendment or supplement thereto
shall have been timely filed in accordance with Rule 424(b) and Rule
430A under the 1933 Act and Section 4(a) hereof. No stop order
suspending the effectiveness of the Registration Statement or any
amendment or supplement thereto shall have been issued under the 1933
Act or any applicable state securities laws and no proceedings for that
purpose shall have been instituted or shall be pending, or, to the
knowledge of the Offerors or the Underwriters, shall be contemplated by
the Commission or any state authority. Any request on the part of the
Commission or any state authority for additional information (to be
included in the Registration Statement or Prospectus or otherwise)
shall have been disclosed to the Underwriters and complied with to the
Underwriters' reasonable satisfaction and to the reasonable
satisfaction of counsel to the Underwriters.
(b) The Underwriters shall not have advised the Company at
or before the Closing Date (and, if applicable, the Option Closing
Date) that the Registration Statement or any post-effective amendment
thereto, or the Prospectus (including any 1934 Act document
incorporated by reference therein) or any amendment or supplement
thereto, contains an untrue statement of fact which, in the
Underwriters' opinion, is material or omits to state any fact which, in
the Underwriters' opinion, is material and is required to be stated
therein or is necessary to make statements therein (in the case of the
Prospectus or any amendment or supplement thereto, in light of the
circumstances under which they
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<PAGE> 22
were made) not misleading or, if so advised, the Company shall have
cured such disclosure to the satisfaction of the Underwriters.
(c) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this Agreement, the
Trust Agreement, and the Designated Preferred Securities, and the
authorization and form of the Registration Statement and Prospectus,
other than financial statements and other financial data, and all other
legal matters relating to this Agreement and the transactions
contemplated hereby or by the Trust Agreement shall be reasonably
satisfactory in all respects to counsel to the Underwriters, and the
Offerors and the Subsidiaries shall have furnished to such counsel all
documents and information relating thereto that they may reasonably
request to enable them to pass upon such matters.
(d) Kutak Rock, counsel to the Offerors, shall have
furnished to the Underwriters their opinion, dated the Closing Date, or
the Option Closing Date, as the case may be, in form and substance
reasonably satisfactory to counsel to the Underwriters, to the effect
that:
(i) The Company has been duly incorporated and is
validly existing and in good standing under the laws of the
State of Michigan, and is duly registered as a bank holding
company under the BHC Act. Each of the Subsidiaries is duly
incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization.
Each of the Company and the Subsidiaries has full corporate
and trust power and authority to own or lease its properties
and to conduct its business as such business is described in
the Prospectus and is currently conducted. All outstanding
shares of capital stock of the Subsidiaries have been duly
authorized and validly issued and are fully paid and
nonassessable and, except as disclosed in the Prospectus,
there are no outstanding rights, options or warrants to
purchase any such shares or securities convertible into or
exchangeable for any such shares. The Bank is a member of the
Federal Reserve System, and no proceedings for termination or
revocation of such membership are pending or, to the best
knowledge of such counsel, threatened. The deposit accounts of
the Bank are insured by the SAIF up to the maximum amount
provided by law, and no proceedings for the termination or
revocation of such insurance are pending or, to the best
knowledge of such counsel, threatened.
(ii) The capital stock, Debentures and Guarantee of
the Company and the equity securities of the Trust conform in
all material respects to the description thereof contained in
the Prospectus. The capital stock of the Company authorized
and issued as of __________________ is as set forth under the
caption "Capitalization" in the Prospectus, has been duly
authorized and validly issued, and is fully paid and
nonassessable. The form of certificates to evidence the
Designated Preferred Securities has been approved by or on
behalf of the Trust and is in due and proper form and complies
with all applicable requirements. There are no outstanding
rights, options or warrants to purchase from the Company, no
other outstanding securities convertible into or
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exchangeable for, and no commitments, plans or arrangements to
issue, any shares of capital stock of the Company or equity
securities of the Trust, except as described in the
Prospectus.
(iii) The Offerors have all requisite corporate
power and authority to issue, sell and deliver the Designated
Preferred Securities and Debentures in accordance with and
upon the terms and conditions set forth in this Agreement, the
Indenture, the Trust Agreement, the Registration Statement and
the Prospectus. All corporate or trust action required to be
taken by the Offerors for the authorization, issuance, sale
and delivery of the Designated Preferred Securities and
Debentures in accordance with such terms and conditions has
been validly and sufficiently taken. All of the Designated
Preferred Securities have been duly and validly authorized
and, when delivered in accordance with this Agreement will be
duly and validly issued, fully paid and nonassessable, and
will conform in all material respects to the description
thereof in the Registration Statement, the Prospectus and the
Trust Agreement. The Designated Preferred Securities have been
approved for quotation on the Nasdaq National Market subject
to official notice of issuance. There are no preemptive or
other rights to subscribe for or to purchase, and other than
as disclosed in the Prospectus no restrictions upon the voting
or transfer of, any shares of capital stock or equity
securities of the Offerors or the Subsidiaries pursuant to the
corporate charter, bylaws or other governing documents
(including without limitation, the Trust Agreement) of the
Offerors or the Subsidiaries, or, to such counsel's knowledge,
any agreement or other instrument to which either Offeror or
any of the Subsidiaries is a party or by which either Offeror
or any of the Subsidiaries may be bound.
(iv) The Offerors have all requisite corporate and
trust power to enter into and perform their obligations under
this Agreement, and this Agreement has been duly and validly
authorized, executed and delivered by the Offerors and
constitutes the legal, valid and binding obligations of the
Offerors enforceable in accordance with its terms, except as
the enforcement hereof or thereof may be limited by general
principles of equity and by bankruptcy, insolvency,
reorganization, receivership, fraudulent transfer, moratorium
or other laws relating to or affecting creditors rights
generally, and except as the indemnification and contribution
provisions hereof may be limited under applicable laws and
public policy and certain remedies may not be available in the
case of a non-material breach.
(v) Each of the Indenture, the Trust Agreement
and the Guarantee has been duly qualified under the Trust
Indenture Act, has been duly authorized, executed and
delivered by the Company, and is a valid and legally binding
obligation of the Company enforceable in accordance with its
terms, subject to the effect of bankruptcy, insolvency,
reorganization, receivership, fraudulent transfer, moratorium
or other laws affecting the rights and remedies of creditors
generally and of general principles of equity and public
policy.
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<PAGE> 24
(vi) The Debentures have been duly authorized,
executed, authenticated and delivered by the Company, are
entitled to the benefits of the Indenture and are legal, valid
and binding obligations of the Company enforceable against the
Company in accordance with their terms, subject to the effect
of bankruptcy, insolvency, reorganization, receivership,
fraudulent transfer, moratorium and other laws affecting the
rights and remedies of creditors generally and of general
principles of equity and public policy.
(vii) The Expense Agreement has been duly
authorized, executed and delivered by the Company, and is a
valid and legally binding obligation of the Company
enforceable in accordance with its terms, subject to the
effect of bankruptcy, insolvency, reorganization,
receivership, fraudulent transfer, moratorium and other laws
affecting the rights and remedies of creditors generally and
of general principles of equity and public policy.
(viii) To such counsel's knowledge, neither of the
Offerors nor any of the Subsidiaries is in breach or violation
of, or default under, with or without notice or lapse of time
or both, its corporate charter, bylaws or governing document
(including without limitation, the Trust Agreement). The
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated by this
Agreement, the Indenture, the Guarantee, the Expense Agreement
and the Trust Agreement do not and will not conflict with,
result in the creation or imposition of any lien, claim,
charge, encumbrance or restriction upon any property or assets
of the Offerors or any of the Subsidiaries or the Designated
Preferred Securities pursuant to, or constitute a breach or
violation of, or constitute a default under, with or without
notice or lapse of time or both, any of the terms, provisions
or conditions of the charter, bylaws or governing document
(including, without limitation, the Trust Agreement) of the
Offerors or the Subsidiaries, or to such counsel's knowledge,
any material contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease, franchise, license or
any other agreement or instrument to which either Offeror or
the Subsidiaries is a party or by which any of them or any of
their respective properties may be bound or any order, decree,
judgment, franchise, license, Permit, rule or regulation of
any court, arbitrator, government, or governmental agency or
instrumentality, domestic or foreign, known to such counsel
having jurisdiction over the Offerors or the Subsidiaries or
any of their respective properties. No authorization,
approval, consent or order of, or filing, registration or
qualification with, any person (including, without limitation,
any court, governmental body or authority) is required under
Michigan or Delaware law in connection with the transactions
contemplated by this Agreement in connection with the purchase
and distribution of the Designated Preferred Securities by the
Underwriters.
(ix) To such counsel's knowledge, holders of
securities of the Offerors either do not have any right that,
if exercised, would require the Offerors to cause such
securities to be included in the Registration Statement or
have waived such right. To such counsel's knowledge, neither
the Offerors nor any of the
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<PAGE> 25
Subsidiaries is a party to any agreement or other instrument
which grants rights for or relating to the registration of any
securities of the Offerors.
(x) Except as set forth in the Registration
Statement and the Prospectus, (A) no action, suit or
proceeding at law or in equity is pending or threatened in
writing to which any of the Offerors or the Subsidiaries is or
may be a party, and (B) no action, suit or proceeding is
pending or threatened in writing against or affecting any of
the Offerors or the Subsidiaries or any of their properties,
before or by any court or governmental official, commission,
board or other administrative agency, authority or body, or
any arbitrator, wherein an unfavorable decision, ruling or
finding would have a material adverse effect on the
consummation of the transactions contemplated by this
Agreement or the issuance and sale of the Designated Preferred
Securities as contemplated herein or the financial condition,
earnings, business, or results of operations of the Offerors
and the Subsidiaries on a consolidated basis or which is
required to be disclosed in the Registration Statement or the
Prospectus and is not so disclosed.
(xi) No authorization, approval, consent or order
of or filing, registration or qualification with, any person
(including, without limitation, any court, governmental body
or authority) is required in connection with the transactions
contemplated by this Agreement, the Trust Agreement, the
Registration Statement and the Prospectus, except such as may
be required by, and have been obtained under, the 1933 Act,
the Trust Indenture Act, state securities laws, or
Interpretations or Rules of the NASD in connection with the
purchase and distribution of the Designated Preferred
Securities by the Underwriters, and from the Nasdaq Stock
Market's National Market relating to the listing of the
Designated Preferred Securities.
(xii) The Registration Statement and the Prospectus
and any amendments or supplements thereto and any documents
incorporated therein by reference (other than the financial
statements or other financial and/or statistical data included
therein or omitted therefrom and Underwriter Information, as
to which such counsel need express no opinion) comply as to
form with the requirements of the 1933 Act and the 1933 Act
Regulations as of their respective dates of effectiveness.
(xiii) There are no contracts, agreements, leases or
other documents of a character required to be disclosed in the
Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement that are not so
disclosed or filed.
(xiv) The statements under the captions
"Capitalization," "Description of the Preferred Securities,"
"Description of the Junior Subordinated Debentures,"
"Description of Guarantee," "Relationship Among the Preferred
Securities, the Junior Subordinated Debentures and the
Guarantee," "Certain Federal Income Tax Consequences," "ERISA
Considerations," "Supervision and Regulation," "Bank Holding
Company Regulation" and "Regulatory Capital Requirements" in
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<PAGE> 26
the Prospectus or incorporated therein by reference in the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, insofar as such statements constitute a
summary of legal and regulatory matters, documents,
instruments or proceedings referred to therein are accurate
descriptions of the matters summarized therein and fairly
present in all material respects the information called for
with respect to such legal and regulatory matters, documents,
instruments and proceedings, other than financial and
statistical data as to which said counsel expresses no opinion
or belief.
(xv) Such counsel has been advised by the staff of
the Commission that the Registration Statement has become
effective under the 1933 Act; any required filing of the
Prospectus pursuant to Rule 424(b) has been made within the
time period required by Rule 424(b); to such counsel's
knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
a stop order are pending or threatened by the Commission.
(xvi) Except as set forth in the Prospectus, to such
counsel's knowledge, there are no contractual encumbrances or
restrictions, or legal restrictions (excluding any
encumbrances or restrictions of general application to state
banks contained in laws, rules and regulations of applicable
regulatory authorities) on the ability of the Subsidiaries (A)
to pay dividends or make any other distributions on its
capital stock or to pay indebtedness owed to the Offerors, (B)
to make any loans or advances to, or investments in, the
Offerors or (C) to transfer any of its property or assets to
the Offerors.
(xvii) The Trust will be classified for United States
federal income tax purposes as a grantor trust and not as an
association taxable as a corporation for United States federal
income tax purposes, and as a result, each beneficial owner of
Preferred Securities (a "Securityholder") will be treated as
owning an undivided beneficial interest in the Junior
Subordinated Debentures.
(xviii) Unless the Company exercises its option to
extend the interest payment period, stated interest on the
Junior Subordinated Debentures generally will be included in
income by a Securityholder at the time such interest income is
paid or accrued in accordance with the Securityholder's
regular method of tax accounting.
(xix) Gain or loss will be recognized by a
Securityholder on a sale of Preferred Securities (including a
redemption for cash) in an amount equal to the difference
between the amount realized (which for this purpose, will
exclude amounts attributable to accrued interest or original
issue discount not previously included in income) and the
Securityholder's adjusted tax basis in the Preferred
Securities sold or so redeemed. Gain or loss recognized by the
Securityholder on Preferred Securities held for more than one
year will generally be taxable as long-term capital gain or
loss.
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<PAGE> 27
In giving the above opinion, such counsel may state that,
insofar as such opinion involves factual matters, they have relied upon
certificates of officers of the Offerors including, without limitation,
certificates as to the identity of any and all contracts, indentures,
mortgages, deeds of trust, loans or credit agreements, notes, leases,
franchises, licenses or other agreements or instruments, and all
permits, easements, consents, licenses, franchises and government
regulatory authorizations, for purposes of paragraphs (viii), (xiii)
and (xvii) hereof and certificates of public officials. In giving such
opinion, such counsel may rely as to matters of Delaware law upon the
opinion of _______________ described herein.
Such counsel shall also confirm that, in connection with the
preparation of the Registration Statement and Prospectus, such counsel
has participated in conferences with officers and representatives of
the Offerors and with their independent public accountants and with the
Underwriters and counsel to the Underwriters, at which conferences such
counsel made inquiries of such officers, representatives and
accountants and discussed in detail the contents of the Registration
Statement and Prospectus and the documents incorporated therein by
reference and such counsel has no reason to believe (A) that the
Registration Statement or any amendment thereto (except for the
financial statements and related schedules and financial and
statistical data included therein or omitted therefrom or Underwriter
Information, as to which such counsel need express no opinion), at the
time the Registration Statement or any such amendment became effective,
contained any untrue statement of a material fact or omitted to state a
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 (B) that the Prospectus or any amendment
or supplement thereto or the documents contained therein by reference
(except for the financial statements and related schedules and
financial and statistical data included therein or omitted therefrom or
Underwriter Information, as to which such counsel need express no
opinion), at the time the Registration Statement became effective (or,
if the term "Prospectus" refers to the prospectus first filed pursuant
to Rule 424(b) of the 1933 Act Regulations, at the time the Prospectus
was issued), at the time any such amended or supplemented Prospectus
was issued, at the Closing Date and, if applicable, the Option Closing
Date, contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of
the circumstances under which they were made, or (C) that there is any
amendment to the Registration Statement required to be filed that has
not already been filed.
(e) ____________________, special Delaware counsel to the
Offerors, shall have furnished to the Underwriters their signed
opinion, dated as of Closing Date or the Option Closing Date, as the
case may be, in form and substance satisfactory to such counsel, to the
effect that:
(i) The Trust has been duly created and is validly
existing in good standing as a business trust under the
Delaware Business Trust Act and, under the Trust Agreement and
the Delaware Business Trust Act, has the trust power and
authority to conduct its business as described in the
Prospectus.
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<PAGE> 28
(ii) The Trust Agreement is a legal, valid and
binding agreement of the Trust and the Trustees, and is
enforceable against the Company, as sponsor, and the Trustees,
in accordance with its terms.
(iii) Under the Trust Agreement and the Delaware
Business Trust Act, the execution and delivery of the
Underwriting Agreement by the Trust, and the performance by
the Trust of its obligations thereunder, have been authorized
by all requisite trust action on the part of the Trust.
(iv) The Designated Preferred Securities have been
duly authorized by the Trust Agreement, and when issued and
sold in accordance with the Trust Agreement, the Designated
Preferred Securities will be, subject to the qualifications
set forth in paragraph (v) below, fully paid and nonassessable
beneficial interest in the assets of the Trust and entitled to
the benefits of the Trust Agreement. The form of certificates
to evidence the Designated Preferred Securities has been
approved by the Trust and is in due and proper form and
complies with all applicable requirements of the Delaware
Business Trust Act.
(v) Holders of Designated Preferred Securities, as
beneficial owners of the Trust, will be entitled to the same
limitation of personal liability extended to shareholders of
private, for-profit corporations organized under the General
Corporation Law of the State of Delaware. Such opinion may
note that the holders of Designated Preferred Securities may
be obligated to make payments as set forth in the Trust
Agreement.
(vi) Under the Delaware Business Trust Act and the
Trust Agreement, the issuance of the Designated Preferred
Securities is not subject to preemptive rights.
(vii) The issuance and sale by the Trust of the
Designated Preferred Securities and the Common Securities, the
execution, delivery and performance by the Trust of this
Agreement, and the consummation of the transactions
contemplated by this Agreement, do not violate (A) the Trust
Agreement, or (B) any applicable Delaware law, rule or
regulation.
Such opinion may state that it is limited to the laws of the
State of Delaware and that the opinion expressed in paragraph (ii)
above is subject to the effect upon the Trust Agreement of (i)
bankruptcy, insolvency, moratorium, receivership, reorganization,
liquidation, fraudulent conveyance and other similar laws relating to
or affecting the rights and remedies of creditors generally, (ii)
principles of equity, including applicable law relating to fiduciary
duties (regardless of whether considered and applied in a proceeding in
equity or at law), and (iii) the effect of applicable public policy on
the enforceability of provisions relating to indemnification or
contribution.
(f) Honigman Miller Schwartz and Cohn, counsel to the
Underwriters, shall have furnished to the Underwriters their opinion,
dated the Closing Date or the Option Closing Date, as the case may be,
with respect to the sufficiency of all corporate
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<PAGE> 29
proceedings and other legal matters relating to this Agreement, the
validity of the Designated Preferred Securities, the Registration
Statement, the Prospectus and such other related matters as the
Underwriters may reasonably request and there shall have been furnished
to such counsel such documents and other information as they may
request to enable them to pass on such matters. In giving such opinion,
Honigman Miller Schwartz and Cohn may rely as to matters of fact upon
statements and certifications of officers of the Offerors and of other
appropriate persons and may rely as to matters of law, other than law
of the United States and the State of Michigan, upon the opinion of
_________________ described herein.
(g) On the date of this Agreement and on the Closing Date,
the Underwriters shall have received from Grant Thornton LLP a letter,
dated the date of this Agreement and the Closing Date (and, if
applicable, any Option Closing Date), respectively, in form and
substance satisfactory to the Underwriters, confirming that they are
independent public accountants with respect to the Company and the
Bank, within the meaning of the 1933 Act and the 1933 Act Regulations,
and stating in effect that:
(i) In their opinion, the consolidated financial
statements of the Company and the Bank audited by them and
included in the Registration Statement comply as to form with
the applicable accounting requirements of the 1933 Act and the
1933 Act Regulations.
(ii) On the basis of the procedures specified by
the American Institute of Certified Public Accountants as
described in SAS No. 71, "Interim Financial Information,"
inquiries of officials of the Company and the Bank responsible
for financial and accounting matters, and such other inquiries
and procedures as may be specified in such letter, which
procedures do not constitute an audit in accordance with U.S.
generally accepted auditing standards, nothing came to their
attention that caused them to believe that, if applicable, the
unaudited interim consolidated financial statements of the
Company and its subsidiary included in the Registration
Statement do not comply as to form with the applicable
accounting requirements of the 1933 Act and 1933 Act
Regulations or are not in conformity with U.S. generally
accepted accounting principles applied on a basis
substantially consistent, except as noted in the Registration
Statement, with the basis for the audited consolidated
financial statements of the Company and its subsidiary
included in the Registration Statement.
(iii) On the basis of limited procedures, not
constituting an audit in accordance with U.S. generally
accepted auditing standards, consisting of a reading of the
unaudited interim financial statements and other information
referred to below, a reading of the latest available unaudited
condensed consolidated financial statements of the Company and
its subsidiary, inspection of the minute books of the Company
and the Bank since the date of the latest audited financial
statements of the Company and its subsidiary included in the
Registration Statement, inquiries of officials of the Company
and the Bank responsible for financial and accounting matters
and such other inquiries and
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<PAGE> 30
procedures as may be specified in such letter, nothing came to
their attention that caused them to believe that:
(A) as of a specified date not more than
five days prior to the date of such letter, there have
been any changes in the consolidated capital stock,
allowance for loan losses, or net loans receivable of
the Company and its subsidiary, any increase in the
consolidated long-term debt, short term borrowings,
obligations under capital leases or real estate owned
of the Company and its subsidiary, any decreases in
consolidated total assets or shareholders equity of the
Company and its subsidiary, or any changes, decreases
or increases in other items specified by the
Underwriters, in each case as compared with amounts
shown in the latest unaudited interim consolidated
statement of financial condition of the Company and its
subsidiary included in the Registration Statement
except in each case for changes, increases or decreases
which the Registration Statement specifically
discloses, have occurred or may occur or which are
described in such letter; and
(B) for the period from the date of the
latest unaudited interim consolidated financial
statements included in the Registration Statement to
the specified date referred to in clause (iii)(A),
there were any decreases in the consolidated interest
income, net interest income, other operating income or
net income of the Company and its subsidiary or in the
per share amount of net income of the Company and its
subsidiary, any increase in consolidated other
operating expense of the Company and its subsidiary, or
any changes, decreases or increases in any other items
specified by the Underwriters, in each case as compared
with the comparable period of the preceding year and
with any other period of corresponding length specified
by the Underwriters, except in each case for increases
or decreases which the Registration Statement discloses
have occurred or may occur, or which are described in
such letter.
(iv) In addition to the audit referred to in their
report included in the Registration Statement and the limited
procedures, inspection of minute books, inquiries and other
procedures referred to in paragraphs (ii) and (iii) above,
they have carried out certain specified procedures, not
constituting an audit in accordance with U.S. generally
accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by the
Underwriters which are derived from the general accounting
records and consolidated financial statements of the Company
and its subsidiary which appear in the Registration Statement
specified by the Underwriters in the Registration Statement,
and have compared such amounts, percentages and financial
information with the accounting records and the material
derived from such records and consolidated financial
statements of the Company and its subsidiary have found them
to be in agreement.
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<PAGE> 31
In the event that the letters to be delivered referred to
above set forth any such changes, decreases or increases as specified
in Clauses (iii)(A) or (iii)(B) above, or any exceptions from such
agreement specified in Clause (iv) above, it shall be a further
condition to the obligations of the Underwriters that the Underwriters
shall have determined, after discussions with officers of the Company
and the Bank responsible for financial and accounting matters, that
such changes, decreases, increases or exceptions as are set forth in
such letters do not (x) reflect an adverse change in the items
specified in Clause (iii)(A) above as compared with the amounts shown
in the latest unaudited consolidated statement of financial condition
of the Company and its subsidiary included in the Registration
Statement, (y) reflect an adverse change in the items specified in
Clause (iii)(B) above as compared with the corresponding periods of the
prior year or other period specified by the Underwriters, or (z)
reflect a material change in items specified in Clause (iv) above from
the amounts shown in the Preliminary Prospectus distributed by the
Underwriters in connection with the offering contemplated hereby or
from the amounts shown in the Prospectus.
(h) At the Closing Date (and, if applicable, the Option
Closing Date), the Underwriters shall have received certificates of the
chief executive officer and the chief financial and accounting officer
of the Company, which certificates shall be deemed to be made on behalf
of the Company dated as of the Closing Date (and, if applicable, the
Option Closing Date), evidencing satisfaction of the conditions of
Section 6(a) and stating that (i) the representations and warranties of
the Company set forth in Section 2(a) hereof are accurate as of the
Closing Date (and, if applicable, the Option Closing Date), and that
the Offerors have complied in all material respects with all agreements
and satisfied all conditions on their part to be performed or satisfied
at or prior to such Closing Date; (ii) since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, there has not been any material adverse change in the
financial condition, earnings, business, prospects or results of
operations of the Offerors and the Subsidiaries on a consolidated
basis; (iii) since such dates there has not been any transaction
entered into by the Offerors or the Subsidiaries other than
transactions in the ordinary course of business; and (iv) they have
carefully examined the Registration Statement and the Prospectus as
amended or supplemented and nothing has come to their attention that
would lead them to believe that either the Registration Statement or
the Prospectus, or any amendment or supplement thereto as of their
respective effective or issue dates, contained, and the Prospectus as
amended or supplemented at such Closing Date (and, if applicable, the
Option Closing Date), contains any untrue statement of a material fact,
or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The officers
certificate of the Company shall further state that no stop order
affecting the Registration Statement is in effect or, to their
knowledge, threatened.
(i) At the Closing Date (and, if applicable, the Option
Closing Date), the Underwriters shall have received a certificate of an
authorized representative of the Trust to the effect that to the best
of his or her knowledge after due investigation, the representations
and warranties of the Trust in this Agreement are true and correct as
though made on and as of the Closing Date (and, if applicable, the
Option Closing Date);
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<PAGE> 32
the Trust has complied with all the agreements and satisfied all the
conditions required by this Agreement to be performed or satisfied by
the Trust on or prior to the Closing Date and since the most recent
date as of which information is given in the Prospectus, except as
contemplated by the Prospectus, the Trust has not incurred any
liabilities or obligations, direct or contingent, or entered into any
transactions not in the ordinary course of business and there has not
been any adverse change in the condition (financial or otherwise) of
the Trust.
(j) On the Closing Date, the Underwriters shall have received
duly executed counterparts of the Trust Agreement, the Guarantee, the
Indenture and the Expense Agreement.
(k) The NASD, upon review of the terms of the public offering
of the Preferred Securities, shall not have objected to the
Underwriters' participation in such offering.
(l) Prior to the Closing Date, the Offerors shall have
furnished to the Underwriters and counsel to the Underwriters all such
other documents, certificates and opinions as they have reasonably
requested.
All opinions, certificates, letters and other documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Underwriters. Any certificate signed by an officer
of an Offeror and delivered to the Underwriters pursuant hereto shall also be
deemed to be a representation and warranty of such Offeror to the Underwriters
as to the statements made therein. The Offerors shall furnish to the
Underwriters conformed copies of such opinions, certificates, letters and other
documents as the Underwriters may reasonably request.
If any of the conditions referred to in this Section 6 shall not have
been fulfilled when and as required by this Agreement, this Agreement and all of
the several Underwriters' obligations hereunder may be terminated by the
Underwriters on notice to the Company at, or at any time before, the Closing
Date or the Option Closing Date. Any such termination shall be without liability
of the Underwriters to the Offerors.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Offerors agree to jointly and severally indemnify
and hold harmless each of the Underwriters, each of their directors,
officers and agents, and each person, if any, who controls any
Underwriter within the meaning of the 1933 Act and the 1934 Act,
against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation and reasonable attorney
fees and expenses), joint or several, arising out of or based (i) upon
any untrue statement or alleged untrue statement of fact made by the
Company or the Trust contained in the Registration Statement, any
Preliminary Prospectus or the Prospectus, or in any amendment or
supplement thereto, (ii) upon any untrue statement or alleged untrue
statement of fact made by the Company or the Trust upon any blue sky
application or other document executed by the Company or the Trust
specifically for that purpose or based upon written information
furnished by the Company
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or the Trust filed in any state or other jurisdiction in order to
qualify any of the Designated Preferred Securities under the securities
laws thereof (any such application, document or information being
hereinafter referred to as a "Blue Sky Application"), (iii) any
omission or alleged omission to state a material fact in the
Registration Statement, any Preliminary Prospectus or the Prospectus,
or in any amendment or supplement thereto, or in any Blue Sky
Application required to be stated therein or necessary to make the
statements therein not misleading, and against any and all losses,
claims, damages, liabilities and expenses (including reasonable costs
of investigation and attorney fees), arising out of or based upon any
untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus or the Prospectus, or in any
amendment or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a 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 (iv) the enforcement of this indemnification provision or
the contribution provisions of Section 7(d); and shall reimburse each
such indemnified party for any reasonable legal or other expenses as
incurred, but in no event less frequently than 30 days after each
invoice is submitted, incurred by them in connection with investigating
or defending against any such loss, claim, damage, liability or action,
notwithstanding the possibility that payments for such expenses might
later be held to be improper, in which case such payments shall be
promptly refunded; provided, however, that the Offerors shall not be
liable in any such case to the extent, but only to the extent, that any
such losses, claims, damages, liabilities and expenses arise out of or
are based upon any untrue statement or omission or allegation thereof
that has been made therein or omitted therefrom in reliance upon and in
conformity with the Underwriter Information; provided further that the
indemnification contained in this paragraph with respect to any
Preliminary Prospectus shall not inure to the benefit of any
Underwriter (or of any person controlling such Underwriter) to the
extent any such losses, claims, damages, liabilities or expenses result
from the fact that such Underwriter sold Designated Preferred
Securities to a person to whom there was not sent or given, at or prior
to the written confirmation of such sale, a copy of the Prospectus (as
amended or supplemented if any amendments or supplements thereto shall
have been furnished to such Underwriter in sufficient time to
distribute same with or prior to the written confirmation of the sale
involved), if required by law, and if such loss, claim, damage,
liability or expense would not have arisen but for the failure to give
or send such person such document. The foregoing indemnity agreement is
in addition to any liability the Company or the Trust may otherwise
have to any such indemnified party.
(b) Each Underwriter severally agrees to indemnify and hold
harmless each Offeror, each of its directors, each of its officers who
signed the Registration Statement and each person, if any, who controls
an Offeror within the meaning of the 1933 Act, to the same extent as
required by the foregoing indemnity from the Company to the
Underwriters, but only with respect to the Underwriter Information or
information furnished by an Underwriter in a Blue Sky Application and
only for failure to deliver a final prospectus to investors in
accordance with the 1933 Act. The foregoing indemnity agreement is in
addition to any liability which any such Underwriter may otherwise have
to any such indemnified party.
33
<PAGE> 34
(c) If any action or claim shall be brought or asserted
against any indemnified party or any person controlling an indemnified
party in respect of which indemnity may be sought from the indemnifying
party, such indemnified party or controlling person shall promptly
notify the indemnifying party in writing, and the indemnifying party
shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to the indemnified party and the payment of all
expenses; provided, however, that the failure so to notify the
indemnifying party shall not relieve it from any liability which it may
have to an indemnified party otherwise than under such paragraph, and
further, shall only relieve it from liability under such paragraph to
the extent prejudiced thereby. Any indemnified party or any such
controlling person shall have the right to employ separate counsel in
any such action and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such
indemnified party or such controlling person unless (i) the employment
thereof as separate counsel and the payment of such counsel's fees has
been specifically authorized by the indemnifying party in writing, (ii)
the indemnifying party has failed to assume the defense or to employ
counsel reasonably satisfactory to the indemnified party or (iii) the
named parties to any such action (including any impleaded parties)
include both such indemnified party or such controlling person and the
indemnifying party and such indemnified party or such controlling
person shall have been advised in writing by such counsel that the
representation of both parties by the same counsel would be
inappropriate due to the actual or potential differing interests
between them (in which case, if such indemnified party or controlling
person notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not be required to assume the defense of such
action on behalf of such indemnified party or such controlling person)
it being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys at any
time and for all such indemnified party and controlling persons, which
firm shall be designated in writing by the indemnified party and shall
be reasonably acceptable to the indemnifying party. Each indemnified
party and each controlling person, as a condition of such indemnity,
shall use reasonable best efforts to cooperate with the indemnifying
party in the defense of any such action or claim. The indemnifying
party shall not be liable for any settlement of any such action
effected without its prior written consent, but if there be a final
judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party and any
such controlling person from and against any loss, claim, damage,
liability or expense by reason of such settlement or judgment.
An indemnifying party shall not, without the prior written
consent of each indemnified party, settle, compromise or consent to the
entry of any judgment in any pending or threatened claim, action, suit
or proceeding in respect of which indemnity may be sought hereunder
(whether or not such indemnified party or any person who controls such
indemnified party within the meaning of the 1933 Act is a party to such
claim, action, suit or proceeding), unless such settlement, compromise
or consent includes a release of each such indemnified party reasonably
satisfactory to each such indemnified party and each such controlling
person from all liability arising out of such
34
<PAGE> 35
claim, action, suit or proceeding or unless the indemnifying party
shall confirm in a written agreement with each indemnified party, that
notwithstanding any federal, state or common law, such settlement,
compromise or consent shall not alter the right of any indemnified
party or controlling person to indemnification or contribution as
provided in this Agreement.
(d) If the indemnification provided for in this Section 7
is legally unavailable or insufficient to hold harmless an indemnified
party under paragraphs (a), (b) or (c) hereof in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages, liabilities or
expenses (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 from the offering of the Designated Preferred
Securities or (ii) if the allocation provided by clause (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 (i)
above but also the relative fault of the Offerors on the one hand and
the Underwriters on the other in connection with the statements or
omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
relative benefits received by the Offerors on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering of the Designated Preferred
Securities (before deducting expenses) received by the Offerors bear to
the total underwriting discounts, commissions and compensation received
by the Underwriters, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault of the Offerors on the
one hand and of the Underwriters on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of fact or the omission or alleged omission to state a fact
relates to information supplied by the Offerors or by the Underwriters
and the parties, relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.
The Offerors and each of the Underwriters agree that it would not be
just and equitable if contribution pursuant to this paragraph (d) were
determined by pro rata allocation or by any other method of allocation
that does not take into account the equitable considerations referred
to herein. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities and expenses
referred to in the first sentence of this paragraph (d) shall be deemed
to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this paragraph (d), an Underwriter
shall not be required to contribute any amount in excess of the amount
by which the total price at which the Designated Preferred Securities
underwritten by such Underwriter and distributed to the public were
offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
35
<PAGE> 36
For purposes of this paragraph (d), each person who controls
an Underwriter within the meaning of the 1933 Act shall have the same
rights to contribution as the Underwriters, and each person who
controls an Offeror within the meaning of the 1933 Act and the 1934
Act, each officer and trustee of an Offeror who shall have signed the
Registration Statement and each director of an Offeror shall have the
same rights to contribution as the Offerors subject in each case to the
preceding sentence. The obligations of the Offerors under this
paragraph (d) shall be in addition to any liability which the Offerors
may otherwise have and the obligations of the Underwriters under this
paragraph (d) shall be in addition to any liability that the
Underwriters may otherwise have.
(e) The indemnity and contribution agreements contained in
this Section 7 and the representations and warranties of the Offerors
set forth in this Agreement shall remain operative and in full force
and effect, regardless of (i) any investigation made by or on behalf of
the Underwriters or any person controlling an Underwriter or by or on
behalf of the Offerors, or such directors, trustees or officers (or any
person controlling an Offeror), (ii) acceptance of any Designated
Preferred Securities and payment therefor hereunder and (iii) any
termination of this Agreement. A successor of an Underwriter or of an
Offeror, such directors, trustees or officers (or of any person
controlling an Underwriter or an Offeror) shall be entitled to the
benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 7.
(f) The Company agrees to indemnify the Trust against any
and all losses, claims, damages or liabilities that may become due from
the Trust under this Section 7.
8. TERMINATION. The Underwriters shall have the right to
terminate this Agreement at any time at or prior to the Closing Date or, with
respect to the Underwriters' option to purchase the Option Preferred Securities,
at any time at or prior to the Option Closing Date, without liability on the
part of the Underwriters to the Offerors, if:
(a) either Offeror shall have failed, refused, or been
unable to perform any agreement on its part to be performed under this
Agreement, or any of the conditions referred to in Section 6 shall not
have been fulfilled, when and as required by this Agreement;
(b) the Offerors or any of the Subsidiaries shall have
sustained any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree which in the judgment of the Underwriters impairs in
any material respect the investment quality of the Designated Preferred
Securities;
(c) there has been since the respective dates as of which
information is given in the Registration Statement or the Prospectus,
any material adverse change in, or any development which is likely to
have a material adverse effect on, the financial condition, earnings,
business, prospects or results of operations of the Offerors and the
Subsidiaries on a consolidated basis, whether or not arising in the
ordinary course of business;
36
<PAGE> 37
(d) there has occurred any outbreak of hostilities or other
calamity or crisis or change in general economic, political or
financial conditions, or internal conditions, the effect of which on
the financial markets of the United States is such as to make it, in
the Underwriters' reasonable judgment, impracticable to market the
Designated Preferred Securities or enforce contracts for the sale of
the Designated Preferred Securities;
(e) trading generally on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market shall have been
suspended, or minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities shall have been
required, by any of said exchanges or market system or by the
Commission or any other governmental authority;
(f) a banking moratorium shall have been declared by either
federal or Michigan authorities; or
(g) any action shall have been taken by any government in
respect of its monetary affairs which, in the Underwriters' reasonable
judgment, has an adverse effect on the United States securities
markets.
If this Agreement shall be terminated pursuant to this Section 8, the
Offerors shall not then be under any liability to the Underwriters except as
provided in Sections 5 and 7 hereof.
9. DEFAULT BY UNDERWRITERS. If on the Closing Date or the Option
Closing Date, as the case may be, any Underwriter shall fail to purchase and pay
for the portion of the Firm Preferred Securities, as the case may be, which such
Underwriter has agreed to purchase and pay for on such date otherwise than by
reason of the nonfulfillment of any condition to its obligation to do so
hereunder, you, as Representative of the Underwriters, shall use your best
efforts to procure within 36 hours thereafter one or more of the other
Underwriters, or any others, to purchase such amounts as may be agreed upon, and
upon the terms set forth herein, of the Firm Preferred Securities or Option
Preferred Securities, as the case may be, which the defaulting Underwriter or
Underwriters failed to purchase. If during such 36 hours you, as Representative,
shall not have procured such other Underwriters, or any others, to purchase the
Firm Preferred Securities or Option Preferred Securities, as the case may be,
agreed to be purchased by the defaulting Underwriter or Underwriters, then (a)
if the aggregate number of Preferred Securities with respect to which such
default shall occur does not exceed 10% of the Firm Preferred Securities or
Option Preferred Securities, as the case may be, which they are obligated to
purchase hereunder, you and the other non-defaulting Underwriters each agree to
purchase your pro rata share (based on the number of Preferred Securities which
each non-defaulting Underwriter agreed to purchase hereunder) of the Firm
Preferred Securities or Option Preferred Securities, as the case may be, which
such defaulting Underwriter or Underwriters failed to purchase, or (b) if the
aggregate number of Preferred Securities with respect to which such default
shall occur exceeds 10% of the Firm Preferred Securities or Option Preferred
Securities, as the case may be, covered hereby, you as the Representative of the
Underwriters will have the right, by written notice given within the next
36-hour period to the parties to this Agreement, to terminate this Agreement
without liability on the part of the nondefaulting Underwriters or of the
Offerors except for expenses to be borne by the Offerors and the Underwriters as
provided in Section 5 hereof and the indemnity and contribution agreements in
Section 7 hereof. In the event
37
<PAGE> 38
of a default by any Underwriter or Underwriters, as set forth in this Section 9,
the Closing Date or Option Closing Date, as the case may be, may be postponed
for such period, not exceeding seven days, as you, as Representative, may
determine in order that the required changes in the Registration Statement or in
the Prospectus or in any other documents or arrangements may be effected. The
term "Underwriter" includes any person substituted for a defaulting Underwriter.
Any action taken under this Section 9 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
10. EFFECTIVE DATE OF AGREEMENT. If the Registration Statement is
not effective at the time of execution of this Agreement, this Agreement shall
become effective on the Effective Date at the time the Commission declares the
Registration Statement effective. The Company shall immediately notify the
Underwriters when the Registration Statement becomes effective.
If the Registration Statement is effective at the time of execution of
this Agreement, this Agreement shall become effective at the earlier of 11:00
a.m. Eastern time, on the first full business day following the day on which
this Agreement is executed, or at such earlier time as the Underwriters shall
release the Designated Preferred Securities for initial public offering. The
Underwriters shall notify the Offerors immediately after it has taken any action
which causes this Agreement to become effective.
Until such time as this Agreement shall have become effective, it may
be terminated by the Offerors, by notifying the Representative, or by the
Underwriters, by notifying either Offeror, except that the provisions of
Sections 5 and 7 shall at all times be effective.
11. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. The representations, warranties, indemnities, agreements and other
statements of the Offerors and their officers and trustees set forth in or made
pursuant to this Agreement and the agreements of the Underwriters contained in
Section 7 hereof shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of the Offerors or controlling persons
of either Offeror, or by or on behalf of the Underwriters or controlling persons
of the Underwriters or any termination or cancellation of this Agreement and
shall survive delivery of and payment for the Designated Preferred Securities.
12. NOTICES. Except as otherwise provided in this Agreement, all
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if delivered by hand, mailed by registered or
certified mail, return receipt requested, or transmitted by any standard form of
telecommunication and confirmed. Notices to either Offeror shall be sent to 2600
Telegraph Road, Bloomfield Hills, Michigan 48302, Attention: Thomas J. Hammond
(with a copy to Kutak Rock, 1101 Connecticut Avenue, N.W., Washington, D.C.
20036-4374, Attention: Matthew Ash, Esq.); and notices to the Underwriters shall
be sent c/o Roney Capital Markets, a division of First Chicago Capital Markets,
Inc., One Griswold, Roney Building, Detroit, Michigan 48226, Attention: John
Donnelly (with a copy to Honigman Miller Schwartz and Cohn, 2290 First National
Building, Detroit, Michigan 48226, Attention: Donald J. Kunz, Esq.).
13. PARTIES. The Agreement herein set forth is made solely for the
benefit of the Underwriters and the Offerors and, to the extent expressed,
directors, trustees and officers of the Offerors, any person controlling the
Offerors or the Underwriters, and their respective successors
38
<PAGE> 39
and assigns. No other person shall acquire or have any right under or by virtue
of this Agreement. The term "successors and assigns" shall not include any
purchaser, in his status as such purchaser, from the Underwriters of the
Designated Preferred Securities.
14. GOVERNING LAW. This Agreement shall be governed by the laws of
the State of Michigan, without giving effect to the choice of law or conflicts
of law principles thereof.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and when a counterpart has been executed by each party hereto all
such counterparts taken together shall constitute one and the same Agreement.
[Remainder of page intentionally left blank.]
39
<PAGE> 40
If the foregoing is in accordance with the Underwriters' understanding
of our agreement, please sign and return to us a counterpart hereof, whereupon
this shall become a binding agreement between the Company, the Trust and the
Underwriters in accordance with its terms.
Very truly yours,
FLAGSTAR BANCORP, INC.
By________________________
Name______________________
Title_____________________
FLAGSTAR TRUST
By________________________
Name______________________
Title_____________________
CONFIRMED AND ACCEPTED,
as of ________________________, 1999.
RONEY CAPITAL MARKETS, a division of
First Chicago Capital Markets, Inc.
Acting on behalf of itself and the several
Underwriters named in Schedule A
By________________________________________
Name______________________________________
Title_____________________________________
<PAGE> 41
<TABLE>
<CAPTION>
SCHEDULE A
NUMBER OF PREFERRED
UNDERWRITER SECURITIES TO BE PURCHASED
<S> <C>
Roney Capital Markets
McDonald Investments Inc.
Stifel & Nicolaus & Company, Incorporated
JWGenesis Capital Markets, L.L.C.
</TABLE>
A-1
<PAGE> 1
EXHIBIT 4.1
CERTIFICATE OF TRUST
OF
FLAGSTAR TRUST
THIS Certificate of Trust of Flagstar Trust (the "Trust") has been duly
executed and is being filed by the undersigned, as trustees, to form a business
trust under the Delaware Business Trust Act (12 Del. C. Section 3801 et seq.).
1. Name. The name of the business trust being formed hereby is Flagstar
Trust.
2. Delaware Trustee. The name and business address of the trustee of
the Trust with a principal place of business in the State of Delaware is First
Omni Bank, National Association, 499 Mitchell Street, Millsboro, Delaware,
19966, Attn: Robert D. Brown, Vice President, Mail Code 101-591.
IN WITNESS WHEREOF, the undersigned have executed this
Certificate of Trust in accord with 12 Del. C. Section 3810.
FIRST OMNI BANK NA, not in its
individual capacity but solely
as trustee of the Trust
By: /s/ Robert Brown
-------------------------------------
Name: Robert Brown
Title: Vice President
MICHAEL W. CARRIE, not in his
individual capacity but solely as
trustee of the Trust
/s/ Michael W. Carrie
--------------------------------------
<PAGE> 1
EXHIBIT 4.2
TRUST AGREEMENT
OF
FLAGSTAR TRUST
THIS TRUST AGREEMENT is made as of March 25, 1999 (this "Trust
Agreement"), by and among Flagstar Bancorp, Inc., a Michigan corporation, as
depositor (the "Depositor"), and First Omni Bank National Association, a
national banking association with its principal place of business located in
Delaware, as trustee, and Michael W. Carrie, as trustee (jointly, the
"Trustees"). The Depositor and the Trustees hereby agree as follows:
1. The trust created hereby shall be known as "Flagstar Trust" (the
"Trust"), in which name the Trustees or the Depositor, to the extent provided
herein, may conduct the business of the Trust, make and execute contracts, and
sue and be sued.
2. The Depositor hereby assigns, transfers, conveys and sets over to
the Trust the sum of $10. Such amount shall constitute the initial trust estate.
It is the intention of the parties hereto that the Trust created hereby
constitute a business trust under Chapter 38 of Title 12 of the Delaware Code,
12 Del. C. Section 3801, et seq. (the "Business Trust Act"), and that this
document constitute the governing instrument of the Trust. The Trustees are
hereby authorized and directed to execute and file a certificate of trust with
the Delaware Secretary of State in such form as the Trustees may approve.
3. The Depositor and the Trustees will enter into an Amended and
Restated Trust Agreement satisfactory to each such party to provide for the
contemplated operation of the Trust created hereby and the issuance of the
Preferred or Capital Securities and Common Securities referred to therein. Prior
to the execution and delivery of such Amended and Restated Trust Agreement, (a)
the Trustees shall not have any duty or obligation hereunder or with respect of
the trust estate, except as otherwise required by applicable law and (b) the
Depositor shall take or cause to be taken any action as may be necessary to
obtain prior to such execution and delivery any licenses, consents or approvals
required by applicable law or otherwise. Notwithstanding the foregoing, the
Trustees may take all actions requested by the Depositor that the Depositor
deems necessary, convenient or incidental to effect the transactions
contemplated herein.
4. The Depositor, as sponsor of the Trust, is hereby authorized, in its
discretion, (i) to prepare and file with the Securities and Exchange Commission
(the "Commission") and to execute, in the case of the 1933 Act Registration
Statement and 1934 Act Registration Statement (as herein defined), on behalf of
the Trust, (a) a Registration Statement (the "1933 Act Registration Statement"),
including all pre-effective and post-effective amendments thereto, relating to
the registration under the Securities Act of 1933, as amended (the "1933 Act"),
of the Preferred or Capital Securities of the Trust, (b) any preliminary
prospectus or prospectus or supplement thereto relating to the Preferred or
Capital Securities of the Trust required to be filed pursuant to the 1933 Act,
and (c) a Registration Statement on Form 8-A or other appropriate form (the
"1934 Act Registration Statement"), including all pre-effective and
post-effective amendments thereto, relating to the registration of the Preferred
or Capital Securities of the Trust under the Securities Exchange Act of 1934, as
amended; (ii) if and at such time as determined by
<PAGE> 2
the Depositor, to file with the New York Stock Exchange or other exchange, or
the National Association of Securities Dealers ("NASD"), and execute on behalf
of the Trust a listing application and all other applications, statements,
certificates, agreements and other instruments as shall be necessary or
desirable to cause the Preferred or Capital Securities of the Trust to be listed
on the New York Stock Exchange or such other exchange, or the NASD's Nasdaq
Stock Market; (iii) to file and execute on behalf of the Trust, such
applications, reports, surety bonds, irrevocable consents, appointments of
attorney for service of process and other papers and documents that shall be
necessary or desirable to register the Preferred or Capital Securities of the
Trust under the securities or "Blue Sky" laws of such jurisdictions as the
Depositor, on behalf of the Trust, may deem necessary or desirable; (iv) to
execute and deliver letters or documents to, or instruments for filing with, a
depository relating to the Preferred or Capital Securities of the Trust; and (v)
to execute, deliver and perform on behalf of the Trust an underwriting agreement
or purchase agreement with one or more underwriters or purchasers relating to
the offering of the Preferred or Capital Securities of the Trust.
In the event that any filing referred to in this Section 4 is required
by the rules and regulations of the Commission, the New York Stock Exchange or
other exchange, NASD, or state securities or "Blue Sky" laws to be executed on
behalf of the Trust by the Trustees, the Trustees, in their capacity as trustees
of the Trust, are hereby authorized to join in any such filing and to execute on
behalf of the Trust any and all of the foregoing, it being understood that the
Trustees, in their capacity as trustees of the Trust, shall not be required to
join in any such filing or execute on behalf of the Trust any such document
unless required by the rules and regulations of the Commission, the New York
Stock Exchange or other exchange, NASD, or state securities or "Blue Sky" laws.
5. This Trust Agreement may be executed in one or more counterparts.
6. The number of trustees of the Trust initially shall be two and
thereafter the number of trustees of the Trust shall be such number as shall be
fixed from time to time by a written instrument signed by the Depositor which
may increase or decrease the number of trustees of the Trust; provided, however,
that to the extent required by the Business Trust Act, one trustee of the Trust
shall either be a natural person who is a resident of the State of Delaware or,
if not a natural person, an entity which has its principal place of business in
the State of Delaware. Subject to the foregoing, the Depositor is entitled to
appoint or remove without cause any trustee of the Trust at any time. Any
trustee of the Trust may resign upon thirty days prior notice to the Depositor.
7. The Depositor hereby agrees to (i) reimburse the Trustees for all
reasonable expenses (including reasonable fees and expenses of counsel and other
experts) and (ii) indemnify, defend and hold harmless the Trustees and any of
the officers, directors, employees and agents of the Trustees (the "Indemnified
Persons") from and against all losses, damages, liabilities, claims, actions,
suits, costs, expenses, disbursements (including the reasonable fees and
expenses of counsel), taxes and penalties of any kind and nature whatsoever
(collectively, "Expenses"), to the extent that such Expenses arise out of or are
imposed upon or asserted at any time against such Indemnified Persons with
respect to the performance of this Trust Agreement, the creation, operation or
termination of the Trust or the transactions contemplated hereby; provided,
however, that the Depositor shall not be required to indemnify any Indemnified
Person for any Expenses
2
<PAGE> 3
which are a result of the willful misconduct, bad faith or gross negligence of
such Indemnified Person.
8. 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).
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed as of the day and year first above written.
FLAGSTAR BANCORP, INC., as
Depositor
By:
/s/ Mark T. Hammond
-----------------------------------
Name: Mark T. Hammond
Title: Vice Chairman and President
FIRST OMNI BANK NA, not in
its individual capacity but
solely as trustee of the
Trust By:
/s/ Robert Brown
-----------------------------------
Name: Robert Brown
Title: Vice President
MICHAEL W. CARRIE, not in his individual
capacity but solely as trustee of the Trust
/s/ Michael W. Carrie
-----------------------------------
3
<PAGE> 1
EXHIBIT 4.3
FLAGSTAR TRUST I
AMENDED AND RESTATED TRUST AGREEMENT
AMONG
FLAGSTAR BANCORP, INC., AS DEPOSITOR
FMB TRUST COMPANY NATIONAL ASSOCIATION, AS PROPERTY TRUSTEE
FIRST OMNI BANK, NA, AS DELAWARE TRUSTEE
AND
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
DATED AS OF __________, 1999
<PAGE> 2
TABLE OF CONTENTS
PAGE
Exhibits
- --------
Exhibit A - Certificate of Trust
Exhibit B - Form of Certificate Depository Agreement
Exhibit C - Form of Common Securities Certificate
Exhibit D - Form of Expense Agreement
Exhibit E - Form of Preferred Securities Certificate
<PAGE> 3
AMENDED AND RESTATED TRUST AGREEMENT, dated as of ________________,
1999, among (i) Flagstar Bancorp, Inc., a Michigan corporation (including any
successors or assigns, the "Depositor"), (ii) FMB Trust Company National
Association, a trust company duly organized and existing under the laws of the
United States, as property trustee (the "Property Trustee" and, in its separate
corporate capacity and not in its capacity as Property Trustee, the "Trust
Company"), (iii) First OMNI Bank, N.A. a national banking association with its
home office located in the State of Delaware, as Delaware trustee (the "Delaware
Trustee," and, to the extent expressly provided herein, in its separate
corporate capacity and not in its capacity as Delaware Trustee, the "Delaware
Bank"), (iv) Thomas J. Hammond, an individual, Mark T. Hammond, an individual,
and Mike Carrie, an individual, each of whose address is c/o Flagstar Bancorp,
Inc. (each an "Administrative Trustee" and collectively the "Administrative
Trustees") (the Property Trustee, the Delaware Trustee and the Administrative
Trustees referred to collectively as the "Trustees") and (v) the several
Holders, as hereinafter defined.
WITNESSETH:
WHEREAS, the Depositor, the Delaware Trustee and Michael W. Carrie have
heretofore duly declared and created Flagstar Trust I, a business trust (the
"Trust"), pursuant to the Delaware Business Trust Act by the entering into of
that certain Trust Agreement, dated as of March __, 1999 (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 March __, 1999, the form of which is attached as EXHIBIT A; and
WHEREAS, the Depositor, the Delaware Trustee and Thomas J. Hammond
desire to amend and restate the Original Trust Agreement in its entirety as set
forth herein to provide for, among other things, (i) the issuance of the Common
Securities (as defined below) by the Trust to the Depositor, (ii) the issuance
and sale of the Preferred Securities (as defined below) by the Trust pursuant to
the Underwriting Agreement, (iii) the acquisition by the Trust from the
Depositor of all of the right, title and interest in the Junior Subordinated
Debentures (as defined below), (iv) the appointment of the Property Trustee, and
(v) the appointment of the Administrative Trustees;
NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the sufficiency of
which is hereby acknowledged, each party, for the benefit of the other parties
and for the benefit of the Securityholders, hereby amends and restates the
Original Trust Agreement in its entirety and agrees as follows:
ARTICLE I
DEFINED TERMS
.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;
<PAGE> 4
(b) all other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(c) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case
may be, of this Trust Agreement; and
(d) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Trust Agreement as a whole and not to
any particular Article, Section or other subdivision.
"Accelerated Maturity Date" has the meaning set forth in Section 1.01
of the Indenture.
"Act" has the meaning specified in Section 6.08.
"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and a given period, the amount of additional interest accrued
on interest in arrears and paid by the Depositor on a Like Amount of Junior
Subordinated Debentures for such period.
"Additional Sums" has the meaning specified in Section 2.05 of the
Indenture.
"Administrative Trustee" means each of Thomas J. Hammond, Mark T.
Hammond and Mike Carrie, solely in each such person's capacity as Administrative
Trustee of the Trust continued hereunder and not in such person's individual
capacity, or such Administrative Trustee's successor in interest in such
capacity, or any successor Administrative Trustee appointed as herein provided.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction
in the premises adjudging such Person a bankrupt or insolvent, or
approving as properly filed a petition seeking liquidation or
reorganization of or in respect of such Person under the United States
Bankruptcy Code or any other similar applicable federal or state law,
and the continuance of any such decree or order unvacated and unstayed
for a period of 90 days; or the commencement of an involuntary case
under the United States Bankruptcy Code in respect of such Person,
which shall continue undismissed for a period of 90 days or entry of an
order for relief in such case; or the entry of a decree or order of a
court having jurisdiction in the premises for the appointment on the
ground of insolvency or bankruptcy of a receiver, custodian,
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liquidator, trustee or assignee in bankruptcy or insolvency of such
Person or of its property, or for the winding up or liquidation of its
affairs, and such decree or order shall have remained in force
unvacated and unstayed for a period of 90 days; or
(b) the institution by such Person of proceedings to be
adjudicated a voluntary bankrupt, or the consent by such Person to the
filing of a bankruptcy proceeding against it, or the filing by such
Person of a petition or answer or consent seeking liquidation or
reorganization under the United States Bankruptcy Code or other similar
applicable federal or state law, or the consent by such Person to the
filing of any such petition or to the appointment on the ground of
insolvency or bankruptcy of a receiver or custodian or liquidator or
trustee or assignee in bankruptcy or insolvency of such Person or of
its property, or such Person shall make a general assignment for the
benefit of creditors.
"Bankruptcy Laws" has the meaning specified in Section 10.09.
"Book-Entry Preferred Securities Certificates" means certificates
representing Preferred Securities issued in global, fully registered form to the
Clearing Agency as described in Section 5.11.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a
day on which banking institutions in the State of Michigan 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 Corporate Trust Office of the
Debenture Trustee is closed for business.
"Certificate Depository Agreement" means the agreement among the Trust,
the Depositor and The Depository Trust Company, as the initial Clearing Agency,
dated as of the Closing Date, relating to the Trust Securities Certificates,
substantially in the form attached as EXHIBIT B, as the same may be amended and
supplemented from time to time.
"Certificate of Trust" means, as stated in the recitals to this Trust
Agreement, the certificate of trust filed with the Secretary of State of the
State of Delaware with respect to the Trust, in the form attached as EXHIBIT A,
as the same may be amended or restated from time to time.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act. The Depository Trust
Company will be the initial Clearing Agency.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means the date of execution and delivery of this Trust
Agreement.
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"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 Trust Agreement such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Security" means a common undivided beneficial interest in the
assets of the Trust, having a Liquidation Amount of $25.00 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Common Securities Certificate" means a certificate evidencing
ownership of Common Securities, substantially in the form attached as EXHIBIT C.
"Corporate Trust Office" means the principal corporate trust office of
the Property Trustee located at 25 South Charles Street, Baltimore, MD 21203,
Attention: Corporate Trust Administration.
"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 under the Indenture.
"Debenture Trustee" means FMB Trust Company, National Association, a
trust company organized under the laws of the United States and any successor
thereto, as trustee under the Indenture.
"Definitive Preferred Securities Certificates" means either or both (as
the context requires) of (a) Preferred Securities Certificates issued as
Book-Entry Preferred Securities Certificates as provided in Section 5.11(a), and
(b) Preferred Securities Certificates issued in certificated, fully registered
form as provided in Section 5.13.
"Delaware Bank" has the meaning specified in the preamble to this Trust
Agreement.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. Section 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 Trust continued hereunder and not in its individual
capacity, or its successor in interest in such capacity, or any successor
Delaware Trustee appointed as herein provided.
"Depositor" has the meaning specified in the preamble to this Trust
Agreement.
"Distribution Date" has the meaning specified in Section 4.01(a).
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"Distributions" means amounts payable in respect of the Trust
Securities as provided in Section 4.01.
"Event of Default" means any one of the following events that shall
have occurred and be continuing (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Trust in the payment of any Distribution when
it becomes due and payable, and continuation of such default for a
period of 30 days; or
(c) default by the Trust in the payment of any Redemption Price of
any Trust Security when it becomes due and payable; or
(d) default in the performance, or breach, in any material
respect, of any covenant or warranty of the Property Trustee in this
Trust Agreement (other than a covenant or warranty, a default in the
performance of which or the breach of which is dealt with in clause (b)
or (c), above) and continuation of such default or breach for a period
of 60 days after there has been given, by registered or certified mail,
to the defaulting Property Trustee 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 a Bankruptcy Event with respect to the
Property Trustee and the failure by the Depositor to appoint a
successor Property Trustee within 60 days thereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expense Agreement" means the Agreement as to Expenses and Liabilities
between the Depositor and the Trust, substantially in the form attached as
EXHIBIT D, as amended from time to time.
"Expiration Date" has the meaning specified in Section 9.01.
"Extension Period" means the "Extended Interest Payment Period" as
defined in the Indenture.
"Global Subordinated Debenture" has the meaning specified in the
Indenture.
"Guarantee" means the Preferred Securities Guarantee Agreement executed
and delivered by the Depositor and Property Trustee, as trustee,
contemporaneously with the execution and delivery of this Trust Agreement, for
the benefit of the Holders of the Preferred Securities, as amended from time to
time.
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<PAGE> 8
"Holder" means a Securityholder.
"Indenture" means the Subordinated Indenture, dated as of
_________________, 1999, between the Depositor and the Debenture Trustee, as
trustee, as amended or supplemented from time to time.
"Investment Company Act" means the Investment Company Act of 1940, as
amended.
"Junior Subordinated Debentures" means the $________ aggregate
principal amount of the Depositor's ____% Junior Subordinated Debentures due
2029, 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 the principal
amount of Junior Subordinated Debentures to be contemporaneously redeemed in
accordance with the Indenture and the proceeds of which will be used to pay the
Redemption Price of such Trust Securities 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 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 $25.00 per Trust
Security.
"Liquidation Date" means the date on which Junior Subordinated
Debentures are to be distributed to Holders of Trust Securities in connection
with a dissolution and liquidation of the Trust pursuant to Section 9.04(a).
"Liquidation Distribution" has the meaning specified in Section
9.04(d).
"Maturity Date" has the meaning set forth in Section 2.02 of the
Indenture.
"Officers' Certificate" means a certificate signed by the Chief
Executive Officer, the President or a Vice President and by the Chief Accounting
Officer or the Controller or an Assistant Controller or the Secretary or an
Assistant Secretary, of the Depositor, and delivered to the appropriate Trustee.
One of the officers signing an Officers' Certificate given pursuant to Section
8.16 shall be the principal executive, financial or accounting officer of the
Depositor. Any Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Trust Agreement shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
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(b) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(c) 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 the Trust, the Property Trustee, the Delaware Trustee or the
Depositor, but not an employee of any thereof, and who shall be reasonably
acceptable to the Property Trustee.
"Original Trust Agreement" has the meaning specified in the recitals to
this Trust Agreement.
"Outstanding," when used with respect to Preferred Securities, means,
as of the date of determination, all Preferred Securities theretofore executed
and delivered under this Trust Agreement, except:
(a) Preferred Securities theretofore canceled by the Property
Trustee or delivered to the Property Trustee for cancellation;
(b) Preferred Securities for whose payment or redemption money in
the necessary amount has been theretofore deposited with the Property
Trustee or any Paying Agent for the Holders of such Preferred
Securities; provided that, if such Preferred Securities are to be
redeemed, notice of such redemption has been duly given pursuant to
this Trust Agreement; and
(c) Preferred Securities which have been paid or in exchange for
or in lieu of which other Preferred Securities have been executed and
delivered pursuant to Sections 5.04, 5.05, 5.11 and 5.13; provided,
however, that in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Preferred Securities have given
any request, demand, authorization, direction, notice, consent or
waiver hereunder, Preferred Securities owned by the Depositor, any
Trustee, or any Affiliate of the Depositor or any Trustee, shall be
disregarded and deemed not to be Outstanding, except that (i) in
determining whether any Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or
waiver, only Preferred Securities that such Trustee knows to be so
owned shall be so disregarded and (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 Trustees 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 Administrative Trustees the pledgee's right as to
such Preferred Securities so owned.
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"Owner" means each Person who is the beneficial owner of a Book-Entry
Preferred Securities Certificate 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 5.09 and shall initially be the Trust Company.
"Payment Account" means a segregated non-interest-bearing corporate
trust account maintained by the Property Trustee for the benefit of the
Securityholders in which all amounts paid in respect of the Junior Subordinated
Debentures will be held and from which the Property Trustee shall make payments
to the Securityholders in accordance with Sections 4.01 and 4.02.
"Person" means any individual, corporation, partnership, joint venture,
trust, limited liability company or corporation, unincorporated organization or
government or any agency or political subdivision thereof.
"Preferred Security" means a preferred undivided beneficial interest in
the assets of the Trust, designated "____% Cumulative Trust Preferred
Securities," having a Liquidation Amount of $25.00 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Preferred Securities Certificate" means a certificate evidencing
ownership of Preferred Securities, substantially in the form attached as EXHIBIT
E.
"Property Trustee" means the commercial bank or trust company
identified as the "Property Trustee" in the preamble to this Trust Agreement
solely in its capacity as Property Trustee of the Trust heretofore formed and
continued hereunder and not in its individual capacity, or its successor in
interest in such capacity, or any successor Property Trustee appointed as herein
provided.
"Redemption Date" means, with respect to any Trust Security to be
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Debenture Redemption Date and the Maturity Date of
the Junior Subordinated Debentures shall be a Redemption Date for a Like Amount
of Trust Securities.
"Redemption Price" means, with respect to any Trust Security to be
redeemed, the Liquidation Amount of such Trust Security, plus accumulated and
unpaid Distributions to the Redemption Date allocated on a pro rata basis (based
on Liquidation Amounts) among the Trust Securities to be redeemed.
"Relevant Trustee" shall have the meaning specified in Section 8.10.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 5.04.
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"Securityholder" means a Person in whose name a Trust Security or Trust
Securities is registered in the Securities Register; any such Person is a
beneficial owner within the meaning of the Delaware Business Trust Act.
"Trust" means Flagstar Bancorp Trust I, the Delaware business trust
continued hereby and which was created as stated in the recitals to this Trust
Agreement.
"Trust Agreement" means this Amended and Restated Trust Agreement, as
the same may be modified, amended or supplemented in accordance with the
applicable provisions hereof, including all exhibits hereto, including, for all
purposes of this Trust Agreement and any such modification, amendment or
supplement, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this Trust Agreement and any such modification, amendment or
supplement, respectively.
"Trust Company" has the meaning specified in the preamble to this Trust
Agreement.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this Trust Agreement was executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Trust Property" means (a) the Junior Subordinated Debentures, (b) the
rights of the Property Trustee under the Guarantee, (c) any cash on deposit in,
or owing to, the Payment Account and (d) all proceeds and rights in respect of
the foregoing and any other property and assets for the time being held or
deemed to be held by the Property Trustee pursuant to the trusts of this Trust
Agreement.
"Trust Security" means any one of the Common Securities or the
Preferred Securities.
"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.
"Trustee" or "Trustees" means, individually or collectively, any of the
Property Trustee, the Delaware Trustee and the Administrative Trustees.
"Underwriting Agreement" means the Underwriting Agreement dated as of
_______________, 1999, among the Trust, the Depositor and the underwriters named
therein.
ARTICLE II
ESTABLISHMENT OF THE TRUST
.1. NAME. The Trust heretofore created and continued hereby shall
continue to be known as "FLAGSTAR TRUST I," as such name may be modified from
time to time by the Administrative Trustees following written notice to the
Holders of Trust Securities and the other
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Trustees, in which name the Trustees may engage in the transactions contemplated
hereby, make and execute contracts and other instruments on behalf of the Trust
and sue and be sued.
.2. OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE OF BUSINESS. The
address of the Delaware Trustee in the State of Delaware is 499 Mitchell Street,
Millsboro, Delaware 19966 Wilmington, Delaware 19890, Attention: Corporate Trust
Administration, or such other address in the State of Delaware as the Delaware
Trustee may designate by written notice to the Securityholders and the
Depositor. The principal executive office of the Trust is c/o Flagstar Bancorp,
Inc., 2600 Telegraph Road, Bloomfield Hills, Michigan 48303.
.3. INITIAL CONTRIBUTION OF TRUST PROPERTY; ORGANIZATIONAL EXPENSES.
The Trustees acknowledge receipt in trust from the Depositor in connection with
the Original Trust Agreement of the sum of $10, which constituted the initial
Trust Property. The Depositor shall pay organizational expenses of the Trust as
they arise or shall, upon request of any Trustee, promptly reimburse such
Trustee for any such expenses paid by such Trustee. The Depositor shall make no
claim upon the Trust Property for the payment of such expenses.
.4. ISSUANCE OF THE PREFERRED SECURITIES. On ______________, 1999, the
Depositor and an Administrative Trustee, on behalf of the Trust and pursuant to
the Original Trust Agreement, executed and delivered the Underwriting Agreement.
Contemporaneously with the execution and delivery of this Trust Agreement, an
Administrative Trustee, on behalf of the Trust, shall execute in accordance with
Section 5.02 and deliver, in accordance with the Underwriting Agreement, a
Preferred Securities Certificate, registered in the name of the nominee of the
initial Clearing Agency, in an aggregate amount of Preferred Securities having
an aggregate Liquidation Amount of $______ against receipt of the aggregate
purchase price of such Preferred Securities of $______, which amount such
Administrative Trustee shall promptly deliver to the Property Trustee.
.5. ISSUANCE OF THE COMMON SECURITIES; SUBSCRIPTION AND PURCHASE OF
JUNIOR SUBORDINATED DEBENTURES. Contemporaneously with the execution and
delivery of this Trust Agreement, an Administrative Trustee, on behalf of the
Trust, shall execute in accordance with Section 5.02 and deliver to the
Depositor a Common Securities Certificate, registered in the name of the
Depositor, in an aggregate amount of Common Securities having an aggregate
Liquidation Amount of $______ against payment by the Depositor of such amount.
Contemporaneously therewith, an Administrative Trustee, on behalf of the Trust,
shall subscribe to and purchase from the Depositor Junior Subordinated
Debentures, registered in the name of the Property Trustee on behalf of the
Trust and having an aggregate principal amount equal to $______, and, in
satisfaction of the purchase price for such Junior Subordinated Debentures, the
Property Trustee, on behalf of the Trust, shall deliver to the Depositor the sum
of $______.
.6. DECLARATION OF TRUST. The exclusive purposes and functions of the
Trust are (a) to issue and sell Trust Securities and use the proceeds from such
sale to acquire the Junior Subordinated Debentures, and (b) to engage in those
activities necessary, convenient or incidental thereto. The Depositor hereby
appoints the Trustees as trustees of the Trust, to have all the rights, powers
and duties to the extent set forth herein, and the Trustees hereby accept such
appointment. The Property Trustee hereby declares that it will hold the Trust
Property in trust
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upon and subject to the conditions set forth herein for the benefit of the
Securityholders. The Administrative Trustees shall have all rights, powers and
duties set forth herein and in accordance with applicable law with respect to
accomplishing the purposes of the Trust. The Delaware Trustee shall not be
entitled to exercise any powers, nor shall the Delaware Trustee have any of the
duties and responsibilities, of the Property Trustee or the Administrative
Trustees set forth herein. The Delaware Trustee shall be one of the Trustees of
the Trust for the sole and limited purpose of fulfilling the requirements of
Section 3807 of the Delaware Business Trust Act.
.7. AUTHORIZATION TO ENTER INTO CERTAIN TRANSACTIONS.
(a) The Trustees shall conduct the affairs of the Trust in
accordance with the terms of this Trust Agreement. Subject to the
limitations set forth in paragraph (b) of this Section and Article
VIII, and in accordance with the following provisions (i) and (ii), the
Administrative Trustees shall have the authority to enter into all
transactions and agreements determined by the Administrative Trustees
to be appropriate in exercising the authority, express or implied,
otherwise granted to the Administrative Trustees under this Trust
Agreement, and to perform all acts in furtherance thereof, including
without limitation, the following:
(i) As among the Trustees, each Administrative Trustee,
acting singly or jointly, shall have the power and authority to
act on behalf of the Trust with respect to the following matters:
(A) the issuance and sale of the Trust Securities, including,
without limitation, the execution of the Trust Securities on behalf of the Trust
in accordance with this Trust Agreement, and complying with the terms of the
Underwriting Agreement regarding the issuance and sale of the Trust Securities;
(B) to cause the Trust to enter into, and to execute, deliver and
perform on behalf of the Trust, the Expense Agreement and the Certificate
Depository Agreement and such other agreements or documents as may be necessary
or desirable in connection with the purposes and function of the Trust;
(C) to assist in the registration of the Preferred Securities
under the Securities Act of 1933, as amended, and under state securities or blue
sky laws, and the qualification of this Trust Agreement as a trust indenture
under the Trust Indenture Act;
(D) assisting in the listing of the Preferred Securities upon
the NASDAQ National Market or such securities exchange or exchanges as shall be
determined by the Depositor and, if required, the registration of the Preferred
Securities under the Exchange Act, and the preparation and filing of all
periodic and other reports and other documents pursuant to the foregoing;
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(E) the sending of notices (other than notices of default) and
other information regarding the Trust Securities and the Junior Subordinated
Debentures to the Securityholders in accordance with this Trust Agreement;
(F) the appointment of a Paying Agent, authenticating agent and
Securities Registrar in accordance with this Trust Agreement;
(G) to the extent provided in this Trust Agreement, the winding
up of the affairs of and liquidation of the Trust and the preparation, execution
and filing of the certificate of cancellation with the Secretary of State of the
State of Delaware;
(H) to take all action that may be necessary or appropriate for
the preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Preferred
Securities or to enable the Trust to effect the purposes for which the Trust was
created;
(I) the execution and delivery of an application for a taxpayer
identification number for the Trust; and
(J) the taking of any action incidental to the foregoing as the
Administrative Trustees may from time to time determine is necessary or
advisable to give effect to the terms of this Trust Agreement for the benefit of
the Securityholders (without consideration of the effect of any such action on
any particular Securityholder).
(ii) As among the Trustees, the Property Trustee shall have
the power, duty and authority to act on behalf of the Trust with
respect to the following matters:
(K) the establishment of the Payment Account;
(L) the receipt of the Junior Subordinated Debentures;
(M) the receipt and collection of interest, principal and any
other payments made in respect of the Junior Subordinated Debentures in the
Payment Account;
(N) the distribution of amounts owed to the Securityholders in
respect of the Trust Securities in accordance with the terms of this Trust
Agreement;
(O) the exercise of all of the rights, powers and privileges of a
holder of the Junior Subordinated Debentures;
(P) the sending of notices of default and other information
regarding the Trust Securities and the Junior Subordinated Debentures to the
Securityholders in accordance with this Trust Agreement;
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(Q) the distribution of the Trust Property in accordance with the
terms of this Trust Agreement;
(R) to the extent provided in this Trust Agreement, the winding
up of the affairs of and liquidation of the Trust;
(S) after an Event of Default (other than under paragraph (b),
(c), (d) or (e) of the definition of such term if the Event of Default is by or
with respect to the Property Trustee) the taking of any action incidental to the
foregoing as the Property Trustee may from time to time determine is necessary
or advisable to give effect to the terms of this Trust Agreement and protect and
conserve the Trust Property for the benefit of the Securityholders (without
consideration of the effect of any such action on any particular
Securityholder);
(T) so long as the Property Trustee is the Securities Registrar,
registering transfers of the Trust Securities in accordance with this Trust
Agreement; and
(U) except as otherwise provided in this Section 2.07(a)(ii), the
Property Trustee shall have none of the duties, liabilities, powers or the
authority of the Administrative Trustees set forth in Section 2.07(a)(i).
(b) So long as this Trust Agreement remains in effect, the Trust
(or the Trustees acting on behalf of the Trust) shall not undertake any
business, activities or transaction except as expressly provided herein
or contemplated hereby. In particular, the Trustees shall not (i)
acquire any investments or engage in any activities not authorized by
this Trust Agreement, (ii) sell, assign, transfer, exchange, mortgage,
pledge, set-off or otherwise dispose of any of the Trust Property or
interests therein, including to Securityholders, except as expressly
provided herein, (iii) take any action that would cause the Trust to
fail or cease to qualify as a "grantor trust" for United States federal
income tax purposes, (iv) incur any indebtedness for borrowed money or
issue any other debt or (v) take or consent to any action that would
result in the placement of a Lien on any of the Trust Property. The
Administrative Trustees shall defend all claims and demands of all
Persons at any time claiming any Lien on any of the Trust Property
adverse to the interest of the Trust or the Securityholders in their
capacity as Securityholders.
(c) In connection with the issue and sale of the Preferred
Securities, the Depositor shall have the right and responsibility to
assist the Trust with respect to, or effect on behalf of the Trust, the
following (and any actions taken by the Depositor in furtherance of the
following prior to the date of this Trust Agreement are hereby ratified
and confirmed in all respects):
(i) the preparation and filing by the Trust with the
Commission and the execution on behalf of the Trust of a
registration statement on the appropriate form in relation to the
Preferred Securities and the Junior Subordinated Debentures,
including any amendments thereto;
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(ii) the determination of the states in which to take
appropriate action to qualify or register for sale all or part of
the Preferred Securities and to do any and all such acts, other
than actions which must be taken by or on behalf of the Trust, and
advise the Trustees of actions they must take on behalf of the
Trust, and prepare for execution and filing any documents to be
executed and filed by the Trust or on behalf of the Trust, as the
Depositor deems necessary or advisable in order to comply with the
applicable laws of any such states;
(iii) the preparation for filing by the Trust and execution
on behalf of the Trust of an application to the NASDAQ National
Market or a national stock exchange or other organizations for
listing upon notice of issuance of any Preferred Securities and to
file or cause an Administrative Trustee to file thereafter with
such exchange or organization such notifications and documents as
may be necessary from time to time;
(iv) if required, the preparation for filing by the Trust
with the Commission and the execution on behalf of the Trust of a
registration statement on Form 8-A relating to the registration of
the Preferred Securities under Section 12(b) or 12(g) of the
Exchange Act, including any amendments thereto;
(v) the negotiation of the terms of, and the execution and
delivery of, the Underwriting Agreement providing for the sale of
the Preferred Securities;
(vi) the negotiation of the terms of, and execution of, the
Original Trust Agreement, and the preparation of this Trust
Agreement and the selection of the Trustee; and
(vii) the taking of any other actions necessary or desirable
to carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the
Administrative Trustees are authorized and directed to conduct the
affairs of the Trust and to operate the Trust so that the Trust will
not be deemed to be an "investment company" required to be registered
under the Investment Company Act, will be classified as a "grantor
trust" and not as an association taxable as a corporation for United
States federal income tax purposes and so that the Junior Subordinated
Debentures will be treated as indebtedness of the Depositor for United
States federal income tax purposes. In this connection, subject to
Section 10.02, the Depositor and the Administrative Trustees are
authorized to take any action, not inconsistent with applicable law or
this Trust Agreement, that each of the Depositor and the Administrative
Trustees determines in their discretion to be necessary or desirable
for such purposes. In no event shall the Trustees be liable
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to the Trust or the Securityholders for any failure to comply with this
Section that results from a change in law or regulations or in the
interpretation thereof.
.8. ASSETS OF TRUST. The assets of the Trust shall consist of the Trust
Property.
.9. TITLE TO TRUST PROPERTY. Legal title to all Trust Property shall be
vested at all times in the Property Trustee (in its capacity as such) and shall
be held and administered by the Property Trustee for the benefit of the
Securityholders in accordance with this Trust Agreement.
ARTICLE III
PAYMENT ACCOUNT
.1. PAYMENT ACCOUNT. (a) On or prior to the Closing Date, the Property
Trustee shall establish the Payment Account. The Property Trustee and any agent
of the Property Trustee shall have exclusive control and sole right of
withdrawal with respect to the Payment Account for the purpose of making
deposits and withdrawals from the Payment Account in accordance with this Trust
Agreement. All monies and other property deposited or held from time to time in
the Payment Account shall be held by the Property Trustee in the Payment Account
for the exclusive benefit of the Securityholders and for distribution as herein
provided, including (and subject to) any priority of payments provided for
herein.
(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments or proceeds with respect to, the Junior Subordinated Debentures.
Amounts held in the Payment Account shall not be invested by the Property
Trustee pending distribution thereof.
ARTICLE IV
DISTRIBUTIONS; REDEMPTION
.1. DISTRIBUTIONS.
(a) Distributions on the Trust Securities shall be cumulative, and will
accumulate whether or not there are funds of the Trust available for the payment
of Distributions. Distributions shall accumulate from _________________, 1999,
and, except during any Extension Period with respect to the Junior Subordinated
Debentures, shall be payable quarterly in arrears on the 15th day of March,
June, September and December in each year, commencing June 15, 1999. The amount
of each Distribution due with respect to the Trust Securities will include
amounts accrued through the date the Distribution payment is due. If any date on
which a Distribution is otherwise payable on the Trust Securities is not a
Business Day, then the payment of such Distribution shall be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, payment of such Distribution shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date (each
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date on which Distributions are payable in accordance with this Section 4.01(a)
a "Distribution Date").
(b) The Trust Securities represent undivided beneficial interests in
the Trust Property, and, as a practical matter, the Distributions on the Trust
Securities shall be payable at a rate of ____% per annum of the Liquidation
Amount of the Trust Securities. The amount of Distributions payable for any full
period shall be computed on the basis of a 360-day year of twelve 30-day months.
The amount of Distributions for any partial period shall be computed on the
basis of the number of days elapsed in a 360-day year of twelve 30-day months.
During any Extension Period with respect to the Junior Subordinated Debentures,
Distributions on the Preferred Securities will be deferred for a period equal to
the Extension Period. The amount of Distributions payable for any period shall
include the Additional Amounts, if any.
(c) Distributions on the Trust Securities shall be made by the Property
Trustee solely from the Payment Account and shall be payable on each
Distribution Date only to the extent that the Trust has funds then on hand and
immediately available in the Payment Account for the payment of such
Distributions.
(d) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they appear on the
Securities Register for the Trust Securities on the relevant record date, which
shall be one Business Day prior to such Distribution Date; provided, however,
that in the event that the Preferred Securities do not remain in book-entry-only
form, the relevant record date shall be the 1st day of the month in which the
relevant Distribution Date occurs.
.2. REDEMPTION.
(a) On each Debenture Redemption Date and on the Maturity Date of the
Junior Subordinated Debentures, the 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 Securities Register. The Property
Trustee shall have no responsibility for the accuracy of any CUSIP number
contained in such notice. All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price, 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
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as practicable thereafter, that notice of such actual Redemption
Price is received pursuant to the Indenture);
(iii) the CUSIP number;
(iv) if less than all the Outstanding Trust Securities are to
be redeemed, the identification and the aggregate Liquidation
Amount of the particular Trust Securities to be redeemed;
(v) that on the Redemption Date the Redemption Price 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 4.02(d)
below; and
(vi) the place or places where Trust Securities are to be
surrendered for the payment of the Redemption Price.
(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the 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 Trust has immediately available
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 10:00 a.m., Michigan time, on the Redemption
Date, subject to Section 4.02(c), the Property Trustee will, so long as the
Preferred Securities are in book-entry-only form, deposit with the Clearing
Agency for the Preferred Securities funds sufficient to pay the applicable
Redemption Price and will give such Clearing Agency irrevocable instructions and
authority to pay the Redemption Price to the Holders thereof. If the Preferred
Securities are no longer in book-entry-only form, the Property Trustee, subject
to Section 4.02(c), will deposit with the Paying Agent 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 thereof
upon surrender of their Preferred Securities Certificates. Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date for any
Trust Securities called for redemption shall be payable to the Holders of such
Trust Securities as they appear on the 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 Securityholders holding Trust
Securities so called for redemption will cease, except the right of such
Securityholders to receive the Redemption Price, but without interest on such
Redemption Price, and such Securities will cease to be Outstanding. In the event
that any date on which any Redemption Price is payable is not a Business Day,
then payment of the Redemption Price payable on such date 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 falls
in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case, with the same force and
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effect as if made on such date. In the event that payment of the Redemption
Price in respect of any Trust Securities called for redemption is improperly
withheld or refused and not paid either by the Trust or by the Depositor
pursuant to the Guarantee, Distributions on such Trust Securities will continue
to accumulate, at the then applicable rate, from the Redemption Date originally
established by the Trust for such Trust Securities to the date such Redemption
Price is actually paid, in which case the actual payment date will be the date
fixed for redemption for purposes of calculating the Redemption Price.
(e) Payment of the Redemption Price on the Trust Securities shall be
made to the record Holders thereof as they appear on the Securities Register for
the Trust Securities on the relevant record date, which shall be one Business
Day prior to the relevant Redemption Date; provided, however, that in the event
that the Preferred Securities do not remain in book-entry-only form, the
relevant record date shall be the date fifteen days prior to the relevant
Redemption Date.
(f) Subject to Section 4.03(a), if less than all the Outstanding Trust
Securities are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of Trust Securities to be redeemed shall be allocated on a
pro rata basis (based on Liquidation Amounts) among the Common Securities and
the Preferred Securities. The particular Preferred Securities to be redeemed
shall be selected not more than 60 days prior to the Redemption Date by the
Property Trustee from the outstanding Preferred Securities not previously called
for redemption, by such method (including, without limitation, by lot) as the
Property Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to $25 or an integral multiple of
$25 in excess thereof) of the Liquidation Amount of Preferred Securities of a
denomination larger than $25. The Property Trustee shall promptly notify the
Securities Registrar in writing of the Preferred Securities selected for
redemption and, in the case of any Preferred Securities selected for partial
redemption, the Liquidation Amount thereof to be redeemed. For all purposes of
this Trust Agreement, unless the context otherwise requires, all provisions
relating to the redemption of Preferred Securities shall relate, in the case of
any Preferred Securities redeemed or to be redeemed only in part, to the portion
of the Liquidation Amount of Preferred Securities which has been or is to be
redeemed.
.3. SUBORDINATION OF COMMON SECURITIES.
(a) Payment of Distributions (including Additional Amounts, if
applicable) on, and the Redemption Price of, the Trust Securities, as
applicable, shall be made, subject to Section 4.02(f), pro rata among the Common
Securities and the Preferred Securities based on the Liquidation Amount of the
Trust Securities; provided, however, that if on any Distribution Date or
Redemption Date any Event of Default resulting from a Debenture Event of Default
shall have occurred and be continuing, no payment of any Distribution (including
Additional Amounts, if applicable) on, or Redemption Price of, any Common
Security, and no other payment on account of the redemption, liquidation or
other acquisition of Common Securities, shall be made unless payment in full in
cash of all accumulated and unpaid Distributions (including Additional Amounts,
if applicable) on all Outstanding Preferred Securities for all Distribution
periods terminating on or prior thereto, or in the case of payment of the
Redemption Price the full amount of such Redemption Price on all Outstanding
Preferred Securities then called for redemption, shall
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have been made or provided for, and all funds immediately available to the
Property Trustee shall first be applied to the payment in full in cash of all
Distributions (including Additional Amounts, if applicable) on, or the
Redemption Price of, Preferred Securities then due and payable. The existence of
an Event of Default does not entitle the Holders of Preferred Securities to
accelerate the maturity thereof.
(b) In the case of the occurrence of any Event of Default resulting
from a Debenture Event of Default, the Holder of Common Securities will be
deemed to have waived any right to act with respect to any such Event of Default
under this Trust Agreement until the effect of all such Events of Default with
respect to the Preferred Securities shall have been cured, waived or otherwise
eliminated. Until any such Event of Default under this Trust Agreement with
respect to the Preferred Securities shall have been so cured, waived or
otherwise eliminated, the Property Trustee shall act solely on behalf of the
Holders of the Preferred Securities and not 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.
.4. PAYMENT PROCEDURES. Payments of Distributions (including Additional
Amounts, if applicable) in respect of the Preferred Securities shall be made by
check mailed to the address of the Person entitled thereto as such address shall
appear on the Securities Register or, if the Preferred Securities are held by a
Clearing Agency, such Distributions shall be made to the Clearing Agency in
immediately available funds, which shall credit the relevant Persons' accounts
at such Clearing Agency on the applicable Distribution Dates. Payments in
respect of the Common Securities shall be made in such manner as shall be
mutually agreed between the Property Trustee and the Holder of the Common
Securities.
.5. TAX RETURNS AND REPORTS. The Administrative Trustees shall prepare
(or cause to be prepared), at the Depositor's expense, and file all United
States federal, state and local tax and information returns and reports required
to be filed by or in respect of the Trust. In this regard, the Administrative
Trustees shall (a) prepare and file (or cause to be prepared and filed) the
appropriate Internal Revenue Service Form required to be filed in respect of the
Trust in each taxable year of the Trust and (b) prepare and furnish (or cause to
be prepared and furnished) to each Securityholder the appropriate Internal
Revenue Service form required to be furnished to such Securityholder or the
information required to be provided on such form. The Administrative Trustees
shall provide the Depositor with a copy of all such returns and reports promptly
after such filing or furnishing. The Property Trustee shall comply with United
States federal withholding and backup withholding tax laws and information
reporting requirements with respect to any payments to Securityholders under the
Trust Securities.
.6. PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST. Upon receipt under the
Junior Subordinated Debentures of Additional Sums, the Property Trustee, at the
direction of an Administrative Trustee or the Depositor, shall promptly pay any
taxes, duties or governmental charges of whatsoever nature (other than
withholding taxes) imposed on the Trust by the United States or any other taxing
authority.
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.7. PAYMENTS UNDER INDENTURE. Any amount payable hereunder to any
Holder of Preferred Securities shall be reduced by the amount of any
corresponding payment such Holder has directly received under the Indenture
pursuant to Section 5.14(b) or (c) hereof.
ARTICLE V
TRUST SECURITIES CERTIFICATES
.1. INITIAL OWNERSHIP. Upon the creation of the Trust and the
contribution by the Depositor pursuant to Section 2.03 and until the issuance of
the Trust Securities, and at any time during which no Trust Securities are
outstanding, the Depositor shall be the sole beneficial owner of the Trust.
.2. THE TRUST SECURITIES CERTIFICATES. The Preferred Securities
Certificates shall be issued in minimum denominations of $25.00 Liquidation
Amount and integral multiples of $25.00 in excess thereof, and the Common
Securities Certificates shall be issued in denominations of $25.00 Liquidation
Amount and integral multiples of $25.00 in excess thereof. The Trust Securities
Certificates shall be executed on behalf of the Trust by manual signature of at
least one Administrative Trustee. Trust Securities Certificates bearing the
manual signatures of individuals who were, at the time when such signatures
shall have been affixed, authorized to sign on behalf of the Trust, shall be
validly issued and entitled to the benefits of this Trust Agreement,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the delivery of such Trust Securities Certificates or did
not hold such offices at the date of delivery of such Trust Securities
Certificates. A transferee of a Trust Securities Certificate shall become a
Securityholder, and shall be entitled to the rights and subject to the
obligations of a Securityholder hereunder, upon due registration of such Trust
Securities Certificate in such transferee's name pursuant to Sections 5.04, 5.11
and 5.13.
.3. EXECUTION AND DELIVERY OF TRUST SECURITIES CERTIFICATES. On the
Closing Date, the Administrative Trustees shall cause Trust Securities
Certificates, in an aggregate Liquidation Amount as provided in Sections 2.04
and 2.05, to be executed on behalf of the Trust by at least one of the
Administrative Trustees and delivered, without further corporate action by the
Depositor, in authorized denominations.
.4. REGISTRATION OF TRANSFER AND EXCHANGE OF PREFERRED SECURITIES
CERTIFICATES. The Property Trustee shall keep or cause to be kept, at the office
or agency maintained pursuant to Section 5.08, a register or registers for the
purpose of registering Trust Securities Certificates and transfers and exchanges
of Preferred Securities Certificates (herein referred to as the "Securities
Register") in which the registrar designated by the Property Trustee (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 5.10 in the
case of the Common Securities Certificates) and registration of transfers and
exchanges of Preferred Securities Certificates as herein provided. The Property
Trustee shall be the initial Securities Registrar.
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Upon surrender for registration of transfer of any Preferred Securities
Certificate at the office or agency maintained pursuant to Section 5.08, the
Administrative Trustees or any one of them shall execute and deliver, in the
name of the designated transferee or transferees, one or more new Preferred
Securities Certificates in authorized denominations of a like aggregate
Liquidation Amount dated the date of execution by such Administrative Trustee or
Trustees. The Securities Registrar shall not be required to register the
transfer of any Preferred Securities that have been called for redemption. At
the option of a Holder, Preferred Securities Certificates may be exchanged for
other Preferred Securities Certificates in authorized denominations of the same
class and of a like aggregate Liquidation Amount upon surrender of the Preferred
Securities Certificates to be exchanged at the office or agency maintained
pursuant to Section 5.08.
Every Preferred Securities Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Property Trustee and the
Securities Registrar duly executed by the Holder or such Holder's attorney duly
authorized in writing. Each Preferred Securities Certificate surrendered for
registration of transfer or exchange shall be canceled and subsequently disposed
of by the Property Trustee in accordance with its customary practice. The Trust
shall not be required to (i) issue, register the transfer of, or exchange any
Preferred Securities during a period beginning at the opening of business 15
calendar days before the date of mailing of a notice of redemption of any
Preferred Securities called for redemption and ending at the close of business
on the day of such mailing or (ii) register the transfer of or exchange any
Preferred Securities so selected for redemption, in whole or in part, except the
unredeemed portion of any such Preferred Securities being redeemed in part.
No service charge shall be made for any registration of transfer or
exchange of Preferred Securities Certificates, but the Securities Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Preferred
Securities Certificates.
.5. MUTILATED, DESTROYED, LOST OR STOLEN TRUST SECURITIES CERTIFICATES.
If (a) any mutilated Trust Securities Certificate shall be surrendered to the
Securities Registrar, or if the Securities Registrar shall receive evidence to
its satisfaction of the destruction, loss or theft of any Trust Securities
Certificate and (b) there shall be delivered to the Securities Registrar and the
Administrative Trustees such security or indemnity as may be required by them to
save each of them harmless, then in the absence of notice that such Trust
Securities Certificate shall have been acquired by a bona fide purchaser, the
Administrative Trustees, or any one of them, on behalf of the Trust shall
execute and make available for delivery, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Trust Securities Certificate, a new Trust
Securities Certificate of like class, tenor and denomination. In connection with
the issuance of any new Trust Securities Certificate under this Section, the
Administrative Trustees or the Securities Registrar may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection therewith. Any duplicate Trust Securities Certificate issued
pursuant to this Section shall constitute conclusive evidence of an undivided
beneficial interest in the assets of the Trust, as if originally issued, whether
or not the lost, stolen or destroyed Trust Securities Certificate shall be found
at any time.
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.6. PERSONS DEEMED SECURITYHOLDERS. The Trustees, the Paying Agent and
the Securities Registrar shall treat the Person in whose name any Trust
Securities Certificate shall be registered in the Securities Register as the
owner of such Trust Securities Certificate for the purpose of receiving
Distributions and for all other purposes whatsoever, and neither the Trustees
nor the Securities Registrar shall be bound by any notice to the contrary.
.7. ACCESS TO LIST OF SECURITYHOLDERS' NAMES AND ADDRESSES. At any time
when the Property Trustee is not also acting as the Securities Registrar, the
Administrative Trustees or the Depositor shall furnish or cause to be furnished
to the Property Trustee (a) semi-annually on or before January 15 and July 15 in
each year, a list, in such form as the Property Trustee may reasonably require,
of the names and addresses of the Securityholders as of the most recent regular
record date (as provided in Section 4.01(d)) and (b) promptly after receipt by
any Administrative Trustee or the Depositor of a request therefor from the
Property Trustee, such other information as the Property Trustee may reasonably
require in order to enable the Property Trustee to discharge its obligations
under this Trust Agreement, in each case to the extent such information is in
the possession or control of the Administrative Trustees or the Depositor and is
not identical to a previously supplied list or has not otherwise been received
by the Property Trustee in its capacity as Securities Registrar. The rights of
Securityholders to communicate with other Securityholders with respect to their
rights under this Trust Agreement or under the Trust Securities, and the
corresponding rights of the Trustee shall be as provided in the Trust Indenture
Act. Each Holder, by receiving and holding a Trust Securities Certificate, and
each Owner shall be deemed to have agreed not to hold the Depositor, the
Property Trustee or the Administrative Trustees accountable by reason of the
disclosure of its name and address, regardless of the source from which such
information was derived.
.8. MAINTENANCE OF OFFICE OR AGENCY. The Administrative Trustees shall
maintain an office or offices or agency or agencies where Preferred Securities
Certificates may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Trustees in respect of the Trust
Securities Certificates may be served. The Administrative Trustees initially
designate the principal corporate trust office of the Property Trustee, 25 South
Charles Street, Baltimore, Maryland 21203, Attention: Corporate Trust
Administration, as the principal corporate trust office for such purposes. The
Administrative Trustees shall give prompt written notice to the Depositor and to
the Securityholders of any change in the location of the Securities Register or
any such office or agency.
.9. APPOINTMENT OF PAYING AGENT. The Paying Agent shall make
Distributions to Securityholders from the Payment Account and shall report the
amounts of such Distributions to the Property Trustee and the Administrative
Trustees. Any Paying Agent shall have the revocable power to withdraw funds from
the Payment Account for the purpose of making the Distributions referred to
above. The Administrative Trustees may revoke such power and remove the Paying
Agent if such Trustees determine in their sole discretion that the Paying Agent
shall have failed to perform its obligations under this Trust Agreement in any
material respect. The Paying Agent shall initially be the Property Trustee, and
any co-paying agent chosen by the Property Trustee, and acceptable to the
Administrative Trustees and the Depositor. Any Person acting as Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' written notice to the
Administrative Trustees, the Property Trustee and the Depositor. In the event
that the Property
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Trustee shall no longer be the Paying Agent or a successor Paying Agent shall
resign or its authority to act be revoked, the Administrative Trustees shall
appoint a successor that is acceptable to the Property Trustee and the Depositor
to act as Paying Agent (which shall be a bank or trust company). The
Administrative Trustees shall cause such successor Paying Agent or any
additional Paying Agent appointed by the Administrative Trustees to execute and
deliver to the Trustees an instrument in which such successor Paying Agent or
additional Paying Agent shall agree with the Trustees that as Paying Agent, such
successor Paying Agent or additional Paying Agent will hold all sums, if any,
held by it for payment to the Securityholders in trust for the benefit of the
Securityholders entitled thereto until such sums shall be paid to such
Securityholders. The Paying Agent shall return all unclaimed funds to the
Property Trustee and upon removal of a Paying Agent such Paying Agent shall also
return all funds in its possession to the Property Trustee. The provisions of
Sections 8.01, 8.03 and 8.06 shall apply to the Property Trustee also in its
role as Paying Agent, for so long as the Property Trustee shall act as Paying
Agent and, to the extent applicable, to any other Paying Agent appointed
hereunder. Any reference in this Agreement to the Paying Agent shall include any
co-paying agent unless the context requires otherwise.
.10. OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR. On the Closing Date,
the Depositor shall acquire and retain beneficial and record ownership of the
Common Securities. To the fullest extent permitted by law, any attempted
transfer of the Common Securities (other than a transfer in connection with a
merger or consolidation of the Depositor into another corporation pursuant to
Section 12.01 of the Indenture) shall be void. The Administrative Trustees shall
cause each Common Securities Certificate issued to the Depositor to contain a
legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE".
.11. BOOK-ENTRY PREFERRED SECURITIES CERTIFICATES; COMMON SECURITIES
CERTIFICATE.
(a) The Preferred Securities Certificates, upon original issuance, will
be issued in the form of a typewritten Preferred Securities Certificate or
Certificates representing Book-Entry Preferred Securities Certificates, to be
delivered to or held on behalf of The Depository Trust Company, the initial
Clearing Agency, by, or on behalf of, the Trust. Such Book-Entry Preferred
Securities Certificate or Certificates shall initially be registered on the
Securities Register in the name of Cede & Co., the nominee of the initial
Clearing Agency, and no beneficial owner will receive a Definitive Preferred
Securities Certificate representing such beneficial owner's interest in such
Preferred Securities, except as provided in Section 5.13. Unless and until
Definitive Preferred Securities Certificates have been issued to beneficial
owners pursuant to Section 5.13:
(i) the provisions of this Section 5.11(a) shall be in full
force and effect;
(ii) the Securities Registrar, the Paying Agent and the
Trustees shall be entitled to deal with the Clearing Agency for
all purposes of this Trust Agreement relating to the Book-Entry
Preferred Securities Certificates (including the payment of the
Liquidation Amount of and Distributions on the Book-Entry
Preferred Securities) as the sole Holder of Book-Entry Preferred
Securities and shall have no obligations to the Owners thereof;
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(iii) to the extent that the provisions of this Section 5.11
conflict with any other provisions of this Trust Agreement, the
provisions of this Section 5.11 shall control; and
(iv) the rights of the Owners of the Book-Entry Preferred
Securities Certificates 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 and/or
the Clearing Agency Participants. Pursuant to the Certificate
Depository Agreement, unless and until Definitive Preferred
Securities Certificates are issued pursuant to Section 5.13, the
initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and will receive and transmit
payments on the Preferred Securities to such Clearing Agency
Participants. Any Clearing Agency designated pursuant hereto will
not be deemed an agent of the Trustees for any purpose.
(b) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive Common
Securities Certificate.
.12. NOTICES TO CLEARING AGENCY. To the extent that a notice or other
communication to the Owners is required under this Trust Agreement, unless and
until Definitive Preferred Securities Certificates shall have been issued to
Owners pursuant to Section 5.13, the Trustees shall give all such notices and
communications specified herein to be given to Owners to the Clearing Agency,
and shall have no obligations to the Owners.
.13. DEFINITIVE PREFERRED SECURITIES CERTIFICATES. If (a) the Depositor
advises the Trustees in writing that the Clearing Agency is no longer willing or
able to discharge properly its responsibilities with respect to the Preferred
Securities Certificates, and the Depositor is unable to locate a qualified
successor, (b) the Depositor at its option advises the Trustees in writing that
it elects to terminate the book-entry system through the Clearing Agency, or (c)
after the occurrence of a Debenture Event of Default, Owners of Preferred
Securities Certificates representing beneficial interests aggregating at least a
majority of the Liquidation Amount advise the Property Trustee in writing that
the continuation of a book-entry system through the Clearing Agency is no longer
in the best interests of the Owners of Preferred Securities Certificates, then
the Property Trustee shall notify the Clearing Agency, and the Clearing Agency
shall notify all Owners of Preferred Securities Certificates, of the occurrence
of any such event and of the availability of the Definitive Preferred Securities
Certificates to Owners of such class or classes, as applicable, requesting the
same. Upon surrender to the Property Trustee of the typewritten Preferred
Securities Certificate or Certificates representing the Book-Entry Preferred
Securities Certificates by the Clearing Agency, accompanied by registration
instructions, the Administrative Trustees, or any one of them, shall execute the
Definitive Preferred Securities Certificates in accordance with the instructions
of the Clearing Agency. Neither the Securities Registrar nor the Trustees shall
be liable for any delay in delivery of such instructions and may conclusively
rely on, and shall be protected in relying on, such instructions. Upon the
issuance of Definitive Preferred Securities Certificates, the Trustees shall
recognize the Holders of the Definitive Preferred Securities Certificates as
Securityholders. The Definitive Preferred Securities Certificates shall be
printed, lithographed or engraved or may be produced in any other manner as is
reasonably
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acceptable to the Administrative Trustees, as evidenced by the execution thereof
by the Administrative Trustees or any one of them.
.14. RIGHTS OF SECURITYHOLDERS.
(a) The legal title to the Trust Property is vested exclusively in the
Property Trustee (in its capacity as such) in accordance with Section 2.09, and
the Securityholders shall not have any right or title therein other than the
undivided beneficial interest in the assets of the Trust conferred by their
Trust Securities and they shall have no right to call for any partition or
division of property, profits or rights of the Trust except as described below.
The Trust Securities shall be personal property giving only the rights
specifically set forth therein and in this Trust Agreement. The Trust Securities
shall have no preemptive or similar rights. When issued and delivered to Holders
of the Preferred Securities against payment of the purchase price therefor, the
Preferred Securities will be fully paid and nonassessable interests in the
Trust. The Holders of the Preferred Securities, in their capacities as such,
shall be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware.
(b) For so long as any Preferred Securities remain Outstanding, if,
upon a Debenture Event of Default, the Debenture Trustee fails or the holders of
not less than 25% in principal amount of the outstanding 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 the
right to make such declaration by a notice in writing to the Depositor and the
Debenture Trustee; and upon any such declaration such principal amount of and
the accrued interest on all of the Junior Subordinated Debentures shall become
immediately due and payable, provided that the payment of principal and interest
on such Junior Subordinated Debentures shall remain subordinated to the extent
provided in the Indenture. If, as a result of a Debenture Event of Default, the
Debenture Trustee or the holders of not less than 25% in aggregate outstanding
principal amount of the Junior Subordinated Debentures have declared the Junior
Subordinated Debentures due and payable and if such default has been cured and a
sum sufficient to pay all matured installments due (otherwise than by
acceleration) under the Junior Subordinated Debentures has been deposited with
the Debenture Trustee, then (if the holders of not less than a majority in
aggregate outstanding principal amount of Junior Subordinated Debentures have
not annulled such declaration and waived such default) the Holders of a majority
in aggregate Liquidation Amount of the Preferred Securities may annul such
declaration and waive such default.
(c) For so long as any Preferred Securities remain outstanding, upon a
Debenture Event of Default arising from the failure to pay interest or principal
on the Junior Subordinated Debentures, the Holders of any Preferred Securities
then Outstanding shall, to the fullest extent permitted by law, have the right
to institute directly proceedings for enforcement of payment to such Holders of
principal of or interest on the Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Preferred Securities of
such Holders.
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ARTICLE VI
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING
.1. LIMITATIONS ON VOTING RIGHTS.
(a) Except as provided in this Section, in Sections 5.14, 8.10 and
10.02 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 Trust or the
obligations of the parties hereto, nor shall anything herein set forth, or
contained in the terms of the Trust Securities Certificates, be construed so as
to constitute the Securityholders from time to time as partners or members of an
association.
(b) So long as any Junior Subordinated Debentures are held by the
Property Trustee, the Trustees shall not (i) direct the time, method and place
of conducting any proceeding for any remedy available to the Debenture Trustee,
or executing any trust or power conferred on the Debenture Trustee with respect
to such Junior Subordinated Debentures, (ii) waive any past default which is
waivable under Article Seven 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 all Outstanding Preferred Securities; provided, however,
that where a consent under the Indenture would require the consent of each
holder of outstanding 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 Trustees shall not revoke any action
previously authorized or approved by a vote of the Holders of the Outstanding
Preferred Securities, except by a subsequent vote of the Holders of the
Outstanding Preferred Securities. The Property Trustee shall notify each Holder
of the Outstanding Preferred Securities of any notice of default received from
the Debenture Trustee with respect to the 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 Trustees shall, at
the expense of the Depositor, obtain an Opinion of Counsel experienced in such
matters to the effect that the Trust will continue to be classified as a grantor
trust and not as an association taxable as a corporation for United States
federal income tax purposes on account of such action.
(c) If any proposed amendment to the Trust Agreement provides for, or
the Trustees otherwise propose to effect, (i) any action that would adversely
affect in any material respect the powers, preferences or special rights of the
Preferred Securities, whether by way of amendment to the Trust Agreement or
otherwise, or (ii) the dissolution, winding-up or termination of the Trust,
other than pursuant to the terms of this Trust Agreement, then the Holders of
Outstanding Preferred Securities as a class 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 Outstanding Preferred Securities. No amendment to this Trust
Agreement may be made if, as a result of such amendment, the Trust would cease
to be
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classified as a grantor trust or would be classified as an association taxable
as a corporation for United States federal income tax purposes.
.2. NOTICE OF MEETINGS. Notice of all meetings of the Holders of
Preferred Securities, stating the time, place and purpose of the meeting, shall
be given by the Property Trustee pursuant to Section 10.08 to each Holder of
Preferred Securities of record, at such Securityholder's 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.
.3. MEETINGS OF HOLDERS OF PREFERRED SECURITIES. No annual meeting of
Securityholders is required to be held. The Administrative Trustees, however,
shall call a meeting of Securityholders to vote on any matter upon the written
request of the Holders of 25% of the Outstanding Preferred Securities (based
upon their aggregate Liquidation Amount) and the Administrative Trustees or the
Property Trustee may, at any time in their discretion, call a meeting of Holders
of the Preferred Securities to vote on any matters as to which the Holders of
the Preferred Securities are entitled to vote. Holders of record of 50% of the
Outstanding Preferred Securities (based upon their aggregate Liquidation
Amount), present in person or by proxy, shall constitute a quorum at any meeting
of such Securityholders. If a quorum is present at a meeting, an affirmative
vote by the Holders of record present, in person or by proxy, holding more than
a majority of the Preferred Securities (based upon their aggregate Liquidation
Amount) held by the Holders of Preferred Securities of record present, either in
person or by proxy, at such meeting shall constitute the action of the Holders
of the Preferred Securities, unless this Trust Agreement requires a greater
number of affirmative votes.
.4. VOTING RIGHTS. Securityholders shall be entitled to one vote for
each $25 of Liquidation Amount represented by their Trust Securities in respect
of any matter as to which such Securityholders are entitled to vote.
.5. PROXIES, ETC. At any meeting of Securityholders, any Securityholder
entitled to vote thereat may vote by proxy, provided that no proxy shall be
voted at any meeting unless it shall have been placed on file with the
Administrative Trustees, or with such other officer or agent of the Trust as the
Administrative Trustees may direct, for verification prior to the time at which
such vote shall be taken. When Trust Securities are held jointly by several
persons, any one of them may vote at any meeting in person or by proxy in
respect of such Trust Securities, but if more than one of them shall be present
at such meeting in person or by proxy, and such joint owners or their proxies so
present disagree as to any vote to be cast, such vote shall not be received in
respect of such Trust Securities. A proxy purporting to be executed by or on
behalf of a Securityholder shall be deemed valid unless challenged at or prior
to its exercise, and, the burden of proving invalidity shall rest on the
challenger. No proxy shall be valid more than three years after its date of
execution.
.6. SECURITYHOLDER ACTION BY WRITTEN CONSENT. Any action which may be
taken by Securityholders at a meeting may be taken without a meeting if
Securityholders holding more than a majority of all Outstanding Trust Securities
(based upon their aggregate Liquidation Amount)
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entitled to vote in respect of such action (or such larger proportion thereof as
shall be required by any express provision of this Trust Agreement) shall
consent to the action in writing (based upon their aggregate Liquidation
Amount).
.7. RECORD DATE FOR VOTING AND OTHER PURPOSES. For the purposes of
determining the Securityholders who are entitled to notice of and to vote at any
meeting or by written consent, or to participate in any distribution on the
Trust Securities in respect of which a record date is not otherwise provided for
in this Trust Agreement, or for the purpose of any other action, the
Administrative Trustees may from time to time fix a date, not more than 90 days
prior to the date of any meeting of Securityholders or the payment of any
distribution or other action, as the case may be, as a record date for the
determination of the identity of the Securityholders of record for such
purposes.
.8. ACTS OF SECURITYHOLDERS. Any request, demand, authorization,
direction, notice, consent, waiver or other action provided or permitted by this
Trust Agreement to be given, made or taken by Securityholders or Owners may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Securityholders or Owners in person or by an agent duly
appointed in writing; and, except as otherwise expressly provided herein, such
action shall become effective when such instrument or instruments are delivered
to an Administrative Trustee. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Securityholders or Owners 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 8.01) conclusive in favor of the Trustees, if made in the manner
provided in this Section.
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 or her the execution thereof. Where such
execution is by a signer acting in a capacity other than such signer's
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of such signer's authority. The fact and date of the execution
of any such instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which any Trustee receiving the
same deems sufficient. The ownership of Preferred Securities shall be proved by
the Securities Register. Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Securityholder of any Trust Security shall
bind every future Securityholder of the same Trust Security and the
Securityholder of every Trust Security issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustees or the Trust in reliance thereon,
whether or not notation of such action is made upon such Trust Security. Without
limiting the foregoing, a Securityholder entitled hereunder to take any action
hereunder with regard to any particular Trust Security may do so with regard to
all or any part of the Liquidation Amount of such Trust Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such Liquidation Amount. A Holder of Preferred
Securities may institute a legal proceeding directly against the Depositor under
the Guarantee to enforce its rights under the
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Guarantee without first instituting a legal proceeding against the Guarantee
Trustee (as defined in the Guarantee), the Trust or any Person.
.9. INSPECTION OF RECORDS. Upon reasonable notice to the Administrative
Trustees and the Property Trustee, the records of the Trust shall be open to
inspection by Securityholders during normal business hours for any purpose
reasonably related to such Securityholder's interest as a Securityholder.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
.1. REPRESENTATIONS AND WARRANTIES OF THE TRUST COMPANY AND THE
PROPERTY TRUSTEE. The Trust Company, in its separate corporate capacity and as
Property Trustee, as of the date hereof, and each successor Property Trustee at
the time of the successor Property Trustee's acceptance of its appointment as
Property Trustee hereunder (the term "Trust Company" being used hereafter in
this Article VII to refer to such successor Property Trustee in its separate
corporate capacity and as Property Trustee), hereby represents and warrants (as
applicable) for the benefit of the Depositor and the Securityholders that:
(a) the Trust Company is a trust company duly organized, validly
existing and in good standing under the laws of the United States of
America;
(b) the Trust Company has full corporate power, authority and
legal right to execute, deliver and perform its obligations under this
Trust Agreement and has taken all necessary action to authorize the
execution, delivery and performance by it of this Trust Agreement;
(c) this Trust Agreement has been duly authorized, executed and
delivered by the Trust Company and constitutes the valid and legally
binding agreement of the Trust Company enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to
general equity principles;
(d) the execution, delivery and performance by the Trust Company
of this Trust Agreement has been duly authorized by all necessary
corporate or other action on the part of the Trust Company and does not
require any approval of the stockholders of the Trust Company and such
execution, delivery and performance will not (i) violate the Trust
Company's charter or by-laws, (ii) violate any provision of, or
constitute, with or without notice or lapse of time, a default under,
or result in the creation or imposition of, any Lien on any properties
included in the Trust Property pursuant to the provisions of, any
indenture, mortgage, credit agreement, license or other agreement or
instrument to which the Trust Company is a party or by which it is
bound, or (iii) violate any law, governmental rule or regulation of the
United States or the State of Delaware, as the case may be,
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governing the banking or trust powers of the Trust Company, or any
order, judgment or decree applicable to the Trust Company;
(e) neither the authorization, execution or delivery by the Trust
Company of this Trust Agreement nor the consummation of any of the
transactions by the Trust Company contemplated herein or therein
requires the consent or approval of, the giving of notice to, the
registration with or the taking of any other action with respect to,
any governmental authority or agency under any existing law of the
United States or State of Delaware governing the banking or trust
powers of the Trust Company; and
(f) there are no proceedings pending or, to the best of the Trust
Company's knowledge, threatened against or affecting the Trust Company
in any court or before any governmental authority, agency or
arbitration board or tribunal which, individually or in the aggregate,
would materially and adversely affect the Trust or would question the
right, power and authority of the Trust Company to enter into or
perform its obligations as one of the Trustees under this Trust
Agreement.
.2. REPRESENTATIONS AND WARRANTIES OF THE DELAWARE BANK AND THE
DELAWARE TRUSTEE. The Delaware Bank in its corporate capacity and as Delaware
Trustee, as of the date hereof, and each successor Delaware Trustee at the time
of the successor Delaware Trustee's acceptance of its appointment as Delaware
Trustee hereunder (the term "Delaware Bank" being used hereafter in this Article
VIII to refer to such successor Delaware Trustee in its separate corporate
capacity and as Delaware Trustee), hereby represents and warrants (as
applicable) for the benefit of the Depositor and the Securityholders that:
(a) the Delaware Bank is a Delaware banking corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware;
(b) the Delaware Bank has full corporate power, authority and
legal right to execute, deliver and perform its obligations under this
Trust Agreement and has taken all necessary action to authorize the
execution, delivery and performance by it of this Trust Agreement;
(c) this Trust Agreement has been duly authorized, executed and
delivered by the Delaware Bank and constitutes the valid and legally
binding agreement of the Delaware Bank enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to
general equity principles;
(d) the execution, delivery and performance by the Delaware Bank
of this Trust Agreement has been duly authorized by all necessary
corporate or other action on the part of the Delaware Bank and does not
require any approval of the
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stockholders of the Delaware Bank and such execution, delivery and
performance will not (i) violate the Delaware Bank's charter or
by-laws, (ii) violate any provision of, or constitute, with or without
notice or lapse of time, a default under, or result in the creation or
imposition of, any Lien on any properties included in the Trust
Property pursuant to the provisions of, any indenture, mortgage, credit
agreement, license or other agreement or instrument to which the
Delaware Bank is a party or by which it is bound, or (iii) violate any
law, governmental rule or regulation of the United States or the State
of Delaware, as the case may be, governing the banking or trust powers
of the Delaware Bank, or any order, judgment or decree applicable to
the Delaware Bank;
(e) neither the authorization, execution or delivery by the
Delaware Bank of this Trust Agreement nor the consummation of any of
the transactions by the Delaware Bank contemplated herein or therein
requires the consent or approval of, the giving of notice to, the
registration with or the taking of any other action with respect to,
any governmental authority or agency under any existing law of the
State of Delaware governing the banking or trust powers of the Delaware
Bank; and
(f) there are no proceedings pending or, to the best of the
Delaware Bank's knowledge, threatened against or affecting the Delaware
Bank in any court or before any governmental authority, agency or
arbitration board or tribunal which, individually or in the aggregate,
would materially and adversely affect the Trust or would question the
right, power and authority of the Delaware Bank to enter into or
perform its obligations as one of the Trustees under this Trust
Agreement.
.3. REPRESENTATION AND WARRANTIES OF DEPOSITOR. The Depositor hereby
represents and warrants for the benefit of the Securityholders that:
(a) the Trust Securities Certificates issued on the Closing Date
on behalf of the Trust have been duly authorized and will have been
duly and validly executed, issued and delivered by the Administrative
Trustees pursuant to the terms and provisions of, and in accordance
with the requirements of, this Trust Agreement and the Securityholders
will be, as of such date, entitled to the benefits of this Trust
Agreement; and
(b) there are no taxes, fees or other governmental charges payable
by the Trust (or the Trustees on behalf of the Trust) under the laws of
the State of Delaware or any political subdivision thereof in
connection with the execution, delivery and performance by the Trust
Company, the Property Trustee, the Delaware Bank or the Delaware
Trustee, as the case may be, of this Trust Agreement.
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ARTICLE VIII
THE TRUSTEES
.1. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) The duties and responsibilities of the Trustees shall be as
provided by this Trust Agreement and, in the case of the Property Trustee, by
the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Trust Agreement shall require the Trustees to expend or risk their own funds or
otherwise incur any financial liability in the performance of any of their
duties hereunder, or in the exercise of any of their rights or powers, if they
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it. No Administrative Trustee nor the Delaware Trustee shall be liable for such
Trustee's acts or omissions hereunder except as a result of such Trustee's own
gross negligence or willful misconduct. The Property Trustee's liability shall
be determined under the Trust Indenture Act. Whether or not therein expressly so
provided, every provision of this Trust Agreement relating to the conduct or
affecting the liability of or affording protection to the Trustees shall be
subject to the provisions of this Section. To the extent that, at law or in
equity, the Delaware Trustee or an Administrative Trustee has duties (including
fiduciary duties) and liabilities relating thereto to the Trust or to the
Securityholders, the Delaware Trustee or such Administrative Trustee shall not
be liable to the Trust or to any Securityholder for such Trustee's good faith
reliance on the provisions of this Trust Agreement. The provisions of this Trust
Agreement, to the extent that they restrict the duties and liabilities of the
Delaware Trustee or the Administrative Trustees otherwise existing at law or in
equity, are agreed by the Depositor and the Securityholders to replace such
other duties and liabilities of the Delaware Trustee and the Administrative
Trustees.
(b) All payments made by the Property Trustee or a Paying Agent in
respect of the Trust Securities shall be made only from the revenue and proceeds
from the Trust Property and only to the extent that there shall be sufficient
revenue or proceeds from the Trust Property to enable the Property Trustee or a
Paying Agent to make payments in accordance with the terms hereof. Each
Securityholder, by such Securityholder's acceptance of a Trust Security, agrees
that such Securityholder will look solely to the revenue and proceeds from the
Trust Property to the extent legally available for distribution to such
Securityholder as herein provided and that the Trustees are not personally
liable to such Securityholder for any amount distributable in respect of any
Trust Security or for any other liability in respect of any Trust Security. This
Section 8.01(b) does not limit the liability of the Trustees expressly set forth
elsewhere in this Trust Agreement or, in the case of the Property Trustee, in
the Trust Indenture Act.
(c) No provision of this Trust Agreement shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) the Property Trustee shall not be liable for any error of
judgment made in good faith by an authorized officer of the Property
Trustee, unless it shall
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be proved that the Property Trustee was negligent in ascertaining the
pertinent facts;
(ii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a majority in
Liquidation Amount of the Trust Securities relating to the time, method
and place of conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power conferred upon the
Property Trustee under this Trust Agreement;
(iii) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the 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;
(iv) the Property Trustee shall not be liable for any interest on
any money received by it except as it may otherwise agree with the
Depositor and money held by the Property Trustee need not be segregated
from other funds held by it except in relation to the Payment Account
maintained by the Property Trustee pursuant to Section 3.01 and except
to the extent otherwise required by law; and
(v) the Property Trustee shall not be responsible for monitoring
the compliance by the Administrative Trustees or the Depositor with
their respective duties under this Trust Agreement, nor shall the
Property Trustee be liable for the negligence, default or misconduct of
the Administrative Trustees or the Depositor.
.2. CERTAIN NOTICES.
(a) Within five Business Days after the Property Trustee learns of
occurrence of any Event of Default, the Property Trustee shall transmit, in the
manner and to the extent provided in Section 10.08, notice of such Event of
Default to the Securityholders, the Administrative Trustees and the Depositor,
unless such Event of Default shall have been cured or waived prior to the
sending of such notice. For purposes of this Section the term "Event of Default"
means any event that is, or after notice or lapse of time or both would become,
an Event of Default.
(b) The Administrative Trustees shall transmit, to the Securityholders
in the manner and to the extent provided in Section 10.08, notice of the
Depositor's election to begin or further extend an Extension Period on the
Junior Subordinated Debentures (unless such election shall have been revoked)
within the time specified for transmitting such notice to the holders of the
Junior Subordinated Debentures pursuant to the Indenture as originally executed.
(c) In the event the Depositor elects to accelerate the Maturity Date
in accordance with Section 2.02 of the Indenture, the Property Trustee shall
give notice to each Holder of Trust Securities of the acceleration of the
Maturity Date and the Accelerated Maturity Date not later
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than five Business Days after the Property Trustee receives the notice provided
in Section 2.02(c) of the Indenture.
.3. CERTAIN RIGHTS OF PROPERTY TRUSTEE. Subject to the provisions of
Section 8.01:
(a) the Property Trustee may rely and shall be protected in acting or
refraining from acting in good faith upon any resolution, Opinion of Counsel,
certificate, written representation of a Holder or transferee, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) if (i) in performing its duties under this Trust Agreement the
Property Trustee is required to decide between alternative courses of action or
(ii) in construing any of the provisions of this Trust Agreement the Property
Trustee finds the same ambiguous or inconsistent with other provisions contained
herein or (iii) the Property Trustee is unsure of the application of any
provision of this Trust Agreement, then, except as to any matter as to which the
Holders of the Preferred Securities are entitled to vote under the terms of this
Trust Agreement, the Property Trustee shall deliver a notice to the Depositor
requesting written instructions of the Depositor as to the course of action to
be taken and the Property Trustee shall take such action, or refrain from taking
such action, as the Property Trustee shall be instructed in writing to take, or
to refrain from taking, by the Depositor; provided, however, that if the
Property Trustee does not receive such instructions of the Depositor within 10
Business Days after it has delivered such notice, or such reasonably shorter
period of time set forth in such notice (which to the extent practicable shall
not be less than two Business Days), it may, but shall be under no duty to, take
or refrain from taking such action not inconsistent with this Trust Agreement as
it shall deem advisable and in the best interests of the Securityholders, in
which event the Property Trustee shall have no liability except for its own bad
faith, negligence or willful misconduct;
(c) any direction or act of the Depositor or the Administrative
Trustees contemplated by this Trust Agreement shall be sufficiently evidenced by
an Officers' Certificate;
(d) whenever in the administration of this Trust Agreement, the
Property Trustee shall deem it desirable that a matter be established before
undertaking, suffering or omitting any action hereunder, the Property Trustee
(unless other evidence is herein specifically prescribed) may, in the absence of
bad faith on its part, request and conclusively rely upon an Officer's
Certificate which, upon receipt of such request, shall be promptly delivered by
the Depositor or the Administrative Trustees;
(e) the Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or reregistration thereof;
(f) the Property Trustee may consult with counsel of its choice 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
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with such advice (such counsel may be counsel to the Depositor or any of its
Affiliates, and may include any of its employees); the Property Trustee shall
have the right at any time to seek instructions concerning the administration of
this Trust Agreement from any court of competent jurisdiction;
(g) the Property Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Securityholders pursuant to this Trust Agreement, unless
such Securityholders shall have offered to the Property Trustee such reasonable
security or indemnity as the Property Trustee may request against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(h) the Property Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other evidence of indebtedness or other paper or document,
unless requested in writing to do so by one or more Securityholders, but the
Property Trustee may make such further inquiry or investigation into such facts
or matters as it may see fit;
(i) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through its
agents or attorneys, provided that the Property Trustee shall be responsible for
its own negligence or recklessness with respect to selection of any agent or
attorney appointed by it hereunder;
(j) whenever in the administration of this Trust Agreement the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the Property
Trustee (i) may request instructions from the Holders of the Trust Securities
which instructions may only be given by the Holders of the same proportion in
Liquidation Amount of the Trust Securities as would be entitled to direct the
Property Trustee under the terms of the Trust Securities in respect of such
remedy, right or action, (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received, and (iii) shall
be protected in acting in accordance with such instructions; and
(k) except as otherwise expressly provided by this Trust Agreement, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Trust Agreement. No provision of this
Trust Agreement shall be deemed to impose any duty or obligation on the Property
Trustee to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it, in any jurisdiction in which it shall be
illegal, or in which the Property Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts, or to exercise
any such right, power, duty or obligation. No permissive power or authority
available to the Property Trustee shall be construed to be a duty.
.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 Trust, and the
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Trustees do not assume any responsibility for their correctness. The Trustees
(as such) shall not be accountable for the use or application by the Depositor
of the proceeds of the Junior Subordinated Debentures.
.5. MAY HOLD SECURITIES. Any Trustee or any other agent of any Trustee
or the Trust, in its individual or any other capacity, may become the owner or
pledgee of Trust Securities and, subject to Sections 8.08 and 8.13 and except as
provided in the definition of the term "Outstanding" in Article I, may otherwise
deal with the Trust with the same rights it would have if it were not a Trustee
or such other agent.
.6. COMPENSATION; INDEMNITY; FEES. The Depositor agrees:
(a) to pay to the Trustees from time to time reasonable compensation
for all services rendered by them hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustees upon request for all reasonable expenses, disbursements and advances
incurred or made by the Trustees in accordance with any provision of this Trust
Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to such Trustee's negligence, bad faith or
willful misconduct (or, in the case of the Administrative Trustees or the
Delaware Trustee, any such expense, disbursement or advance as may be
attributable to its, his or her gross negligence, bad faith or willful
misconduct); and
(c) to the fullest extent permitted by applicable law, to indemnify and
hold harmless (i) each Trustees and any predecessor Trustee, (ii) any Affiliate
of any Trustee, (iii) any officer, director, shareholder, employee,
representative or agent of any Trustee, and (iv) any employee or agent of the
Trust, (referred to as an "Indemnified Person") from and against, any loss,
damage, liability, tax, 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 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 gross negligence, bad faith or willful misconduct with respect to such
acts or omissions (or, in the case of the Property Trustee, by reason of
negligence, bad faith or willful misconduct with respect to such acts or
omissions).
The provisions of this Section 8.06 shall survive the termination of
this Trust Agreement.
The Depositor and any Trustee may engage in or possess an interest in
other business ventures of any nature or description, independently or with
others, similar or dissimilar to the business of the Trust, and the Trust and
the Holders of Trust Securities shall have no rights by virtue of the 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
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the Trust, shall not be deemed wrongful or improper. Neither the Depositor nor
any Trustee shall be obligated to present any particular investment or other
opportunity to the Trust even if such opportunity is of a character that, if
presented to the Trust, could be taken by the Trust, and the Depositor or any
Trustee shall have the right to take for its own account (individually or as a
partner of fiduciary) or to recommend to others any such particular investment
or other opportunity. Any 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.
No Trustee may claim any Lien on any Trust Property as a result of any
amount due pursuant to this Section 8.06.
.7. CORPORATE PROPERTY TRUSTEE REQUIRED; ELIGIBILITY OF TRUSTEES.
(a) There shall at all times be a Property Trustee hereunder with
respect to the Trust Securities. The Property Trustee shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such and has a combined
capital and surplus of at least $500,000 (and its principal parent holding
company having a combined capital and surplus of at least $50 million). 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.
(b) There shall at all times be one or more Administrative Trustees
hereunder with respect to the Trust Securities. Each Administrative Trustee
shall be either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more persons authorized to bind that
entity.
(c) There shall at all times be a Delaware Trustee with respect to the
Trust Securities. The Delaware Trustee shall either be (i) a natural person who
is at least 21 years of age and a resident of the State of Delaware or (ii) a
legal entity with its principal place of business in the State of Delaware and
that otherwise meets the requirements of applicable Delaware law that shall act
through one or more persons authorized to bind such entity.
.8. CONFLICTING INTERESTS. If the Property Trustee has or shall acquire
a conflicting interest within the meaning of the Trust Indenture Act, the
Property Trustee shall either eliminate such interest or resign, to the extent
and in the manner provided by, and subject to the provisions of, the Trust
Indenture Act and this Trust Agreement.
.9. CO-TRUSTEES AND SEPARATE TRUSTEE. Unless an Event of Default shall
have occurred and be continuing, at any time or times, for the purpose of
meeting the legal requirements of the Trust Indenture Act or of any jurisdiction
in which any part of the Trust
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Property may at the time be located, the Depositor and the Administrative
Trustees shall have power to appoint, and upon the written request of the
Property Trustee, the Depositor and the Administrative Trustees 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. If the Depositor and the
Administrative Trustees do not join in such appointment within 15 days after the
receipt by them of a request so to do, or in case a Debenture Event of Default
has occurred and is continuing, the Property Trustee alone shall have power to
make such appointment. Any co-trustee or separate trustee appointed pursuant to
this Section 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.
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.
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:
(a) The Trust Securities shall be executed and delivered and all
rights, powers, duties and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustees specified hereunder, shall be exercised,
solely by such Trustees and not by such co-trustee or separate trustee.
(b) The rights, powers, duties and obligations hereby conferred or
imposed upon the Property Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed by the
Property Trustee or by the Property Trustee and such co-trustee or separate
trustee jointly, as shall be provided in the instrument appointing such
co-trustee or separate trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the Property
Trustee shall be incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations shall be exercised and performed by
such co-trustee or separate trustee.
(c) 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
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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 8.09.
(d) 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.
(e) The Property Trustee shall not be liable by reason of any act of a
co-trustee or separate trustee.
(f) Any Act of Holders delivered to the Property Trustee shall be
deemed to have been delivered to each such co-trustee and separate trustee.
.10. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. No resignation
or removal of any Trustee (the "Relevant Trustee") and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 8.11.
Subject to the immediately preceding paragraph, the Relevant Trustee
may resign at any time by giving written notice thereof to the Securityholders.
If the instrument of acceptance by the successor Trustee required by Section
8.11 shall not have been delivered to the Relevant Trustee within 30 days after
the giving of such notice of resignation, the Relevant Trustee may petition, at
the expense of the Depositor, any court of competent jurisdiction for the
appointment of a successor Relevant Trustee.
Unless a Debenture Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by Act of the Holder of the
Common Securities. If a Debenture Event of Default shall have occurred and be
continuing, the Property Trustee or the Delaware Trustee, or both of them, may
be removed at such time by Act of the Holders of a majority in Liquidation
Amount of the Preferred Securities, delivered to such Relevant Trustee (in its
individual capacity and on behalf of the Trust). An Administrative Trustee may
be removed by the Holder of the Common Securities at any time. In no event will
the Holders of the Preferred Securities have the right to vote to appoint,
remove or replace the Administrative Trustees.
If the Relevant Trustee shall resign, be removed or become incapable of
acting as Trustee, or if a vacancy shall occur in the office of such Relevant
Trustee for any cause, at a time when no Debenture Event of Default shall have
occurred and be continuing, the Holder of the Common Securities, by Act of the
Holder of the Common Securities delivered to the retiring Relevant Trustee,
shall promptly appoint a successor Trustee or Trustees with respect to the Trust
Securities and the Trust, and the successor Trustee shall comply with the
applicable requirements of Section 8.11. If the Property Trustee or the Delaware
Trustee shall resign, be removed or become incapable of continuing to act as the
Property Trustee or the Delaware Trustee, as the case may be, at a time when a
Debenture Event of Default shall have occurred and is continuing, the Holders of
the Preferred Securities by Act of the Holders of a majority in Liquidation
Amount of the Preferred Securities then Outstanding delivered to the retiring
Relevant Trustee, shall promptly appoint a successor Trustee or Trustees, and
such successor Trustee shall comply with the applicable requirements of Section
8.11. If an Administrative Trustee shall resign, be removed
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or become incapable of acting as Administrative Trustee, at a time when a
Debenture Event of Default shall have occurred and be continuing, the Holder of
the Common Securities, by Act of the Holder of the Common Securities delivered
to an Administrative Trustee, shall promptly appoint a successor Administrative
Trustee or Administrative Trustees, and such successor Administrative Trustee or
Administrative Trustees shall comply with the applicable requirements of Section
8.11. If no successor Trustee with respect to the Trust Securities shall have
been so appointed by the Holder of the Common Securities or the Holders of the
Preferred Securities, as the case may be, and accepted appointment in the manner
required by Section 8.11, any Securityholder who has been a Securityholder for
at least six months may, on behalf of such Securityholder and all others
similarly situated, petition a court of competent jurisdiction for the
appointment of a successor Trustee.
The Property Trustee shall give notice of each resignation and each
removal of a Relevant Trustee and each appointment of a successor Trustee to all
Securityholders in the manner provided in Section 10.08 and shall give notice to
the Depositor. Each notice shall include the name of the successor Trustee and
the address of its Corporate Trust office if it is the Property Trustee.
Subject to the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or a Delaware Trustee who is
a natural person dies or becomes, in the opinion of the Depositor, incompetent
or incapacitated, the vacancy created by such death, incompetence or incapacity
may be filled by (a) the unanimous act of the remaining Administrative Trustees
if there are at least two of them or (b) otherwise by the Depositor (with the
successor in each case being a Person who satisfies the eligibility requirement
for Administrative Trustees or the Delaware Trustee, as the case may be, set
forth in Section 8.07).
.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. In case of the appointment
hereunder of a successor Trustee, the retiring Relevant Trustee and each
successor Trustee shall execute and deliver an instrument wherein each successor
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 Trustee all the rights, powers, trusts and duties of the retiring
Relevant Trustee with respect to the Trust Securities and the Trust, and upon
the execution and delivery of such instrument, the resignation or removal of the
retiring Relevant Trustee shall become effective to the extent provided therein
and each such successor Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and duties of the
retiring Relevant Trustee with respect to the Trust Securities and the Trust;
but, on request of the Trust or any successor Trustee such retiring Relevant
Trustee shall duly assign, transfer and deliver to such successor Trustee all
Trust Property, all proceeds thereof and money held by such retiring Relevant
Trustee hereunder with respect to the Trust Securities and the Trust. Upon
request of any such successor Trustee, the Trust shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts referred to in the
immediately preceding paragraph, as the case may be. 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.
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.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any
Person into which a Trustee that is not a natural person may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which such Relevant Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of such Relevant Trustee, shall be the successor of such Relevant
Trustee hereunder, provided such Person shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR OR TRUST. If
and when the Property Trustee shall be or become a creditor of the Depositor or
the Trust (or any other obligor upon the Junior Subordinated Debentures or the
Trust Securities), the Property Trustee shall be subject to and shall take all
actions necessary in order to comply with the provisions of the Trust Indenture
Act regarding the collection of claims against the Depositor or Trust (or any
such other obligor).
.14. REPORTS BY PROPERTY TRUSTEE.
(a) Not later than January 31 of each year commencing with January 31,
2000, the Property Trustee shall transmit to all Securityholders in accordance
with Section 10.08, and to the Depositor, a brief report dated as of the
preceding December 31 with respect to:
(i) its eligibility under Section 8.07 or, in lieu thereof, if to
the best of its knowledge it has continued to be eligible under said
Section, a written statement to such effect; and
(ii) any change in the property and funds in its possession as
Property Trustee since the date of its last report and any action taken
by the Property Trustee in the performance of its duties hereunder
which it has not previously reported and which in its opinion
materially affects the Trust Securities.
(b) In addition the Property Trustee shall transmit to Securityholders
such reports concerning the Property Trustee and its actions under this Trust
Agreement as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto.
(c) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Property Trustee with each national securities
exchange or other organization upon which the Trust Securities may be listed,
with the Commission and with the Depositor.
.15. REPORTS TO THE PROPERTY TRUSTEE. The Depositor and the
Administrative Trustees on behalf of the Trust shall provide to the Property
Trustee such documents, reports and information as required by Section 314 of
the Trust Indenture Act (if any) and the compliance certificate required by
Section 314(a) of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act.
.16. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. Each of the
Depositor and the Administrative Trustees on behalf of the Trust shall provide
to the Property Trustee such
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evidence of compliance with the conditions precedent, if any, provided for in
this Trust Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) of the Trust Indenture Act
shall be given in the form of an Officers' Certificate.
.17. NUMBER OF TRUSTEES.
(a) The number of Trustees shall be five, provided that the Holder
of the Common Securities by written instrument may increase or decrease the
number of Administrative Trustees. The Property Trustee and the Delaware Trustee
may be the same Person.
(b) If a Trustee ceases to hold office for any reason and the
number of Administrative Trustees is not reduced pursuant to Section 8.17(a), or
if the number of Trustees is increased pursuant to Section 8.17(a), a vacancy
shall occur. The vacancy shall be filled with a Trustee appointed in accordance
with Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of a Trustee shall not operate
to annul the Trust. Whenever a vacancy in the number of Administrative Trustees
shall occur, until such vacancy is filled by the appointment of an
Administrative Trustee in accordance with Section 8.10, the Administrative
Trustees in office, regardless of their number (and notwithstanding any other
provision of this Agreement), shall have all the powers granted to the
Administrative Trustees and shall discharge all the duties imposed upon the
Administrative Trustees by this Trust Agreement.
.18. DELEGATION OF POWER.
(a) Any Administrative Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21 his
or her power for the purpose of executing any documents contemplated in Section
2.07(a)(i); and
(b) The Administrative Trustees shall have power to delegate from time
to time to such of their number or to the Depositor the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Administrative Trustees or otherwise as the Administrative Trustees may
deem expedient, to the extent such delegation is not prohibited by applicable
law or contrary to the provisions of the Trust, as set forth herein.
.19. VOTING. Except as otherwise provided in this Trust Agreement, the
consent or approval of the Administrative Trustees shall require consent or
approval by not less than a majority of the Administrative Trustees, unless
there are only two, in which case both must consent.
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ARTICLE IX
DISSOLUTION, LIQUIDATION AND MERGER
.1. DISSOLUTION UPON EXPIRATION DATE. Unless earlier dissolved, the
Trust shall automatically dissolve on ____________________, 2029 (the
"Expiration Date"), and thereafter the Trust Property shall be distributed in
accordance with Section 9.04.
.2. EARLY DISSOLUTION. The first to occur of any of the following
events is an "Early Termination Event," upon the occurrence of which the Trust
shall dissolve:
(a) the occurrence of a Bankruptcy Event in respect of, or the
dissolution or liquidation of, the Depositor;
(b) delivery of written direction to the Property Trustee by the
Depositor at any time (which direction is wholly optional and within
the discretion of the Depositor) to dissolve the Trust and distribute
the Junior Subordinated Debentures to Securityholders in exchange for
the Preferred Securities in accordance with Section 9.04;
(c) the redemption of all of the Preferred Securities in
connection with the redemption of all of the Junior Subordinated
Debentures; and
(d) an order for dissolution of the Trust shall have been entered
by a court of competent jurisdiction.
.3. TERMINATION. The respective obligations and responsibilities of the
Trustees and the Trust created and continued hereby shall terminate upon the
latest to occur of the following:
(a) the distribution by the Property Trustee to Securityholders
upon the liquidation of the Trust pursuant to Section 9.04, or upon the
redemption of all of the Trust Securities pursuant to Section 4.02, of
all amounts required to be distributed hereunder upon the final payment
of the Trust Securities;
(b) the payment of any expenses owed by the Trust;
(c) the discharge of all administrative duties of the
Administrative Trustees, including the performance of any tax reporting
obligations with respect to the Trust or the Securityholders, and
(d) the filing of a certificate of cancellation by the
Administrative Trustee under the Delaware Business Trust Act.
.4. LIQUIDATION.
(a) If an Early Termination Event specified in clause (a), (b), or (d)
of Section 9.02 occurs or upon the Expiration Date, the Trust shall be
liquidated by the Trustees as expeditiously
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as the Trustees determine to be possible by distributing, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, to each
Securityholder a Like Amount of Junior Subordinated Debentures, subject to
Section 9.04(d). Notice of liquidation shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not later than 30 nor more than 60
days prior to the Liquidation Date to each Holder of Trust Securities at such
Holder's address appearing in the Securities Register. All notices of
liquidation shall:
(i) state the Liquidation Date;
(ii) state that from and after the Liquidation Date, the Trust
Securities 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 9.04(d) applies receive a
Liquidation Distribution, as the Administrative Trustees or the
Property Trustee shall deem appropriate.
(b) Except where Section 9.02(c) or 9.04(d) applies, in order to effect
the liquidation of the Trust and distribution of the Junior Subordinated
Debentures to Securityholders, the Property Trustee shall establish a record
date for such distribution (which shall be not more than 45 days prior to the
Liquidation Date) and, either itself acting as exchange agent or through the
appointment of a separate exchange agent, shall establish such procedures as it
shall deem appropriate to effect the distribution of Junior Subordinated
Debentures in exchange for the Outstanding Trust Securities Certificates.
(c) Except where Section 9.02(c) or 9.04(d) applies, after the
Liquidation Date, (i) the Trust Securities will no longer be deemed to be
Outstanding, (ii) certificates (or, at the election of the Depositor a Global
Subordinated Debenture, subject to the provisions of the Indenture) representing
a Like Amount of Junior Subordinated Debentures will be issued to Holders of
Trust Securities Certificates upon surrender of such certificates to the
Administrative Trustees or their agent for exchange, (iii) the Depositor shall
use its reasonable efforts to have the Junior Subordinated Debentures listed on
the NASDAQ National Market or on such other securities exchange or other
organization as the Preferred Securities may then be listed or traded, (iv) any
Trust Securities Certificates not so surrendered for exchange will be deemed to
represent a Like Amount of Junior Subordinated Debentures, accruing interest at
the rate provided for in the Junior Subordinated Debentures from the last
Distribution Date on which a Distribution was made on such Trust Securities
Certificates until such certificates are so surrendered (and until such
certificates are so surrendered, no payments of interest or principal will be
made to Holders of Trust Securities Certificates with respect to such Junior
Subordinated Debentures) and (v) all rights of Securityholders holding Trust
Securities will cease, except the right of such Securityholders to receive
Junior Subordinated Debentures upon surrender of Trust Securities Certificates.
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(d) In the event that, notwithstanding the other provisions of this
Section 9.04, whether because of an order for dissolution entered by a court of
competent jurisdiction or otherwise, distribution of the Junior Subordinated
Debentures in the manner provided herein is determined by the Property Trustee
not to be practical, the Trust shall be dissolved and the Trust Property 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 Trust,
Securityholders will be entitled to receive out of the assets of the Trust
available for distribution to Securityholders, after satisfaction of liabilities
to creditors of the Trust as provided by applicable law, an amount equal to the
Liquidation Amount per Trust Security plus accumulated and unpaid Distributions
thereon to the date of payment (such amount being the "Liquidation
Distribution"). If, upon any such dissolution, the Liquidation Distribution can
be paid only in part because the Trust has insufficient assets available to pay
in full the aggregate Liquidation Distribution, then, subject to the next
succeeding sentence, the amounts payable by the Trust on the Trust Securities
shall be paid on a pro rata basis (based upon Liquidation Amounts). The Holder
of the Common Securities will be entitled to receive Liquidation Distributions
upon any such dissolution, 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 with respect to any distributions.
.5. MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE
TRUST. The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except pursuant
to this Section 9.05. At the request of the Depositor, with the consent of the
Administrative Trustees and without the consent of the Holders of the Preferred
Securities, the Property Trustee or the Delaware Trustee, the Trust may merge
with or into, consolidate, amalgamate, be replaced by or convey, transfer or
lease its properties and assets substantially as an entirety to a trust
organized as such under the laws of any state; provided, that (i) such successor
entity either (a) expressly assumes all of the obligations of the Trust with
respect to the Preferred Securities or (b) substitutes for the Preferred
Securities other securities having substantially the same terms as the Preferred
Securities (the "Successor Securities") so long as the Successor Securities rank
the same as the Preferred Securities rank in priority with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii) the
Depositor expressly appoints a trustee of such successor entity possessing
substantially the same powers and duties as the Property Trustee as the holder
of the Junior Subordinated Debentures, (iii) 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, (iv)
such successor entity has a purpose identical to that of the Trust, (v) the
Successor Securities will be listed or traded on any national securities
exchange or other organization on which the Preferred Securities may then be
listed, (vi) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Depositor has received an Opinion of 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
45
<PAGE> 48
Trust nor such successor entity will be required to register as an "investment
company" under the Investment Company Act and (vii) the Depositor owns all of
the Common Securities of such successor entity and guarantees the obligations of
such successor entity under the Successor Securities at least to the extent
provided by the Guarantee. Notwithstanding the foregoing, the Trust shall not,
except with the consent of Holders of 100% in Liquidation Amount of the
Preferred Securities, consolidate, amalgamate, merge with or into, or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to any other Person or permit any other Person to consolidate,
amalgamate, merge with or into, or replace it, if such consolidation,
amalgamation, merger or replacement would cause the Trust or the successor
entity to be classified as other than a grantor trust for United States federal
income tax purposes.
ARTICLE X
MISCELLANEOUS PROVISIONS
.1. LIMITATION OF RIGHTS OF SECURITYHOLDERS. The death or incapacity of
any Person having an interest, beneficial or otherwise, in Trust Securities
shall not operate to terminate this Trust Agreement, nor entitle the legal
representatives or heirs of such Person, 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.
.2. AMENDMENT.
(a) This Trust Agreement may be amended from time to time by the
Trustees and the Depositor, without the consent of any Securityholders, (i) as
provided in Section 8.11 with respect to acceptance of appointment by a
successor Trustee, (ii) to cure any ambiguity, correct or supplement any
provision herein or therein which may be inconsistent with any other provision
herein or therein, or to make any other provisions with respect to matters or
questions arising under this Trust Agreement, that shall not be inconsistent
with the other provisions of this Trust Agreement, or (iii) to modify, eliminate
or add to any provisions of this Trust Agreement to such extent as shall be
necessary to ensure that the Trust will be classified for United States federal
income tax purposes as a grantor trust at all times that any Trust Securities
are Outstanding or to ensure that the Trust will not be required to register as
an "investment company" under the Investment Company Act; provided, however,
that in the case of clause (ii), such action shall not adversely affect in any
material respect the interests of any Securityholder, and any amendments of this
Trust Agreement shall become effective when notice thereof is given to the
Securityholders.
(b) Except as provided in Section 6.01(c) or Section 10.02(c) hereof,
any provision of this Trust Agreement may be amended by the Trustees and the
Depositor (i) with the consent of Securityholders representing not less than a
majority (based upon Liquidation Amounts) of the Trust Securities then
Outstanding and (ii) upon receipt by the Trustees of an Opinion of Counsel to
the effect that such amendment or the exercise of any power granted to the
Trustees in accordance with such amendment will not affect the Trust's status as
a grantor trust for United
46
<PAGE> 49
States federal income tax purposes or the Trust's exemption from status of an
"investment company" under the Investment Company Act.
(c) In addition to and notwithstanding any other provision in this
Trust Agreement, without the consent of each affected Securityholder (such
consent being obtained in accordance with Section 6.03 or 6.06 hereof), this
Trust Agreement may not be amended to (i) change the amount or timing of any
distribution on the Trust Securities or otherwise adversely affect the amount of
any distribution required to be made in respect of the Trust Securities as of a
specified date or (ii) restrict the right of a Securityholder to institute suit
for the enforcement of any such payment on or after such date; notwithstanding
any other provision herein, without the unanimous consent of the Securityholders
(such consent being obtained in accordance with Section 6.03 or 6.06 hereof),
this paragraph (c) of this Section 10.02 may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement, no
Trustee shall enter into or consent to any amendment to this Trust Agreement
which would cause the Trust to fail or cease to qualify for the exemption from
status of an "investment company" under the Investment Company Act or to fail or
cease to be classified as a grantor trust for United States federal income tax
purposes.
(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Depositor, this Trust Agreement may not be amended in
a manner which imposes any additional obligation on the Depositor.
(f) In the event that any amendment to this Trust Agreement is made,
the Administrative Trustees shall promptly provide to the Depositor a copy of
such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be
required to enter into any amendment to this Trust Agreement which affects its
own rights, duties or immunities under this Trust Agreement. The Property
Trustee shall be entitled to receive an Opinion of Counsel and an Officers'
Certificate stating that any amendment to this Trust Agreement is in compliance
with this Trust Agreement.
.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.
.4. GOVERNING LAW. THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF EACH OF THE SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH RESPECT TO THIS
TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES).
.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
which is a Business Day (except as
47
<PAGE> 50
otherwise provided in Sections 4.01(a) and 4.02(d)), with the same force and
effect as though made on the date fixed for such payment, and no Distribution
shall accumulate thereon for the period after such date.
.6. SUCCESSORS. This Trust Agreement shall be binding upon and shall
inure to the benefit of any successor to the Depositor, the Trust or the
Relevant Trustee(s), including any successor by operation of law. Except in
connection with a consolidation, merger or sale involving the Depositor that is
permitted under Article Twelve 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.
.7. HEADINGS. The Article and Section headings are for convenience only
and shall not affect the construction of this Trust Agreement.
.8. REPORTS, NOTICES AND DEMANDS. Any report, notice, demand or other
communication which by any provision of this Trust Agreement is required or
permitted to be given or served to or upon any Securityholder or the Depositor
may be given or served in writing by deposit thereof, first-class postage
prepaid, in the United States mail, hand delivery or facsimile transmission, in
each case, addressed, (a) in the case of a Holder of Preferred Securities, to
such Securityholder as such Securityholder's name and address may appear on the
Securities Register; and (b) in the case of the Holder of the Common Securities
or the Depositor, to Flagstar Bancorp, Inc., 2600 Telegraph Road, Bloomfield
Hills, Michigan 48302, Attention: Chief Executive Officer; Facsimile No.: (248)
338-6493. Any notice to the Holders of the Preferred Securities shall also be
given to such Owners as have, within two years preceding the giving of such
notice, filed their names and addresses with the Property Trustee for that
purpose. Such notice, demand or other communication to or upon a Securityholder
shall be deemed to have been sufficiently given or made, for all purposes, upon
hand delivery, mailing or transmission.
Any notice, demand or other communication which by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
the Trust, the Property Trustee or the Administrative Trustees shall be given in
writing addressed (until another address is published by the Trust) as follows:
(a) with respect to the Property Trustee to FMB Trust Company National
Association, 25 South Charles Street, Baltimore, Maryland 21203, Attention:
Corporate Trust Administration; (b) with respect to the Delaware Trustee, to
First Omni Bank N.A., 499 Mitchell Street, Millsboro, Delaware 19966, Attention:
Corporate Trust Administration; and (c) with respect to the Administrative
Trustees, to them at the address above for notices to the Depositor, marked
"Attention: Administrative Trustees of Flagstar Bancorp Capital Trust I." Such
notice, demand or other communication to or upon the Trust or the Property
Trustee shall be deemed to have been sufficiently given or made only upon actual
receipt of the writing by the Trust or the Property Trustee.
.9. AGREEMENT NOT TO PETITION. Each of the Trustees and the Depositor
agree for the benefit of the Securityholders that, until at least one year and
one day after the Trust has been terminated in accordance with Article IX, they
shall not file, or join in the filing of, a petition against the Trust under any
bankruptcy, insolvency, reorganization or other similar law (including, without
limitation, the United States Bankruptcy Code) (collectively, "Bankruptcy Laws")
or
48
<PAGE> 51
otherwise join in the commencement of any proceeding against the Trust under any
Bankruptcy Law. In the event the Depositor takes action in violation of this
Section 10.09, the Property Trustee agrees, for the benefit of Securityholders,
that at the expense of the Depositor (which expense shall be paid prior to the
filing), it shall file an answer with the bankruptcy court or otherwise properly
contest the filing of such petition by the Depositor against the 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 stopped and precluded
therefrom. The provisions of this Section 10.09 shall survive the termination of
this Trust Agreement.
.10. TRUST INDENTURE ACT; CONFLICT WITH TRUST INDENTURE ACT.
(a) This Trust Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Trust Agreement and shall, to
the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a trustee
for the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Trust Agreement by any
of the provisions of the Trust Indenture Act, such required provision shall
control. If any provision of this Trust Agreement modifies or excludes any
provision of the Trust Indenture Act which may be so modified or excluded, the
latter provision shall be deemed to apply to this Trust Agreement as so modified
or to be excluded, as the case may be.
(d) The application of the Trust Indenture Act to this Trust Agreement
shall not affect the nature of the Trust Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
.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 SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY
SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL
ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN
SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND
AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND
THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH
SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS TRUST
AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND
SUCH SECURITYHOLDER AND SUCH OTHERS.
49
<PAGE> 52
.12. COUNTERPARTS. This Trust Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be an
original, and all of which counterparts together shall constitute one and the
same agreement.
FLAGSTAR BANCORP, INC.,
as Depositor
By: __________________________________
Thomas J. Hammond, Chairman and
Chief Executive Officer
FMB TRUST COMPANY, NATIONAL ASSOCIATION,
as Property Trustee
By: __________________________________
Name: ________________________________
Title: ________________________________
By: _________________________________
Name: _______________________________
Title: ______________________________
FIRST OMNI BANK, N.A.,
as Delaware Trustee, and not in its
individual capacity
By: _________________________________
Name: _______________________________
Title: ______________________________
____________________________________________
Thomas J. Hammond, as Administrative Trustee
____________________________________________
Mark T. Hammond, as Administrative Trustee
____________________________________________
Michael W. Carrie, as Administrative Trustee
50
<PAGE> 53
EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE
CERTIFICATE NUMBER NUMBER OF SECURITIES
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
FLAGSTAR TRUST I
____% COMMON SECURITIES
(LIQUIDATION AMOUNT $25.00 PER COMMON SECURITY)
FLAGSTAR TRUST I, a statutory business trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that Flagstar Bancorp,
Inc. (the "Holder") is the registered owner of
_______________________________________________ (________________) securities of
the Trust representing undivided beneficial interests in the assets of the Trust
and designated the ____% Common Securities (liquidation amount $25.00 per Common
Security) (the "Common Securities"). In accordance with Section 5.10 of the
Trust Agreement (as defined below), the Common Securities are not transferable
and any attempted transfer hereof shall be void. The designations, rights,
privileges, restrictions, preferences, and other terms and provisions of the
Common Securities are set forth in, and this certificate and the Common
Securities represented hereby are issued and shall in all respects be subject to
the terms and provisions of, the Amended and Restated Trust Agreement of the
Trust dated as of _________________, 1999, as the same may be amended from time
to time (the "Trust Agreement"), including the designation of the terms of
Common Securities as set forth therein. The Trust will furnish a copy of the
Trust Agreement to the Holder without charge upon written request to the Trust
at its principal place of business or registered office. Upon receipt of this
certificate, the Holder is bound by the Trust Agreement and is entitled to the
benefits thereunder.
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this ____ day of ______________, 1999.
FLAGSTAR TRUST I
By: __________________________________
Michael W. Carrie
Administrative Trustee
<PAGE> 54
EXHIBIT D
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT dated as of _______________, 1999, between FLAGSTAR BANCORP,
INC., a Michigan corporation (the "Company"), and FLAGSTAR TRUST I, a Delaware
business trust (the "Trust").
WHEREAS, the Trust intends to issue its Common Securities (the "Common
Securities") to, and receive ____% Junior Subordinated Debentures due 2029 (the
"Junior Subordinated Debentures") from, the Company and to issue and sell ____%
Cumulative Preferred Securities (the "Preferred Securities") with such powers,
preferences and special rights and restrictions as are set forth in the Amended
and Restated Trust Agreement of the Trust dated as of _______________, 1999, as
the same may be amended from time to time (the "Trust Agreement"); and
WHEREAS, the Company will directly or indirectly own all of the Common
Securities of the Trust and will issue the Junior Subordinated Debentures.
NOW, THEREFORE, in consideration of the purchase by each holder of the
Preferred Securities, which purchase the Company hereby agrees shall benefit the
Company and which purchase the Company acknowledges will be made in reliance
upon the execution and delivery of this Agreement, the Company, including in its
capacity as holder of the Common Securities, and the Trust hereby agree as
follows:
ARTICLE I
SECTION 1.01. GUARANTEE BY THE COMPANY. Subject to the terms and
conditions hereof, the Company, including in its capacity as holder of the
Common Securities, hereby irrevocably and unconditionally guarantees to each
person or entity to whom the Trust is now or hereafter becomes indebted or
liable (the "Beneficiaries") the full payment, when and as due, of any and all
Obligations (as hereinafter defined) to such Beneficiaries. As used herein,
"Obligations" means any costs, expenses or liabilities of the Trust other than
obligations of the Trust to pay to holders of any Preferred Securities or other
similar interests in the Trust the amounts due such holders pursuant to the
terms of the Preferred Securities or such other similar interests, as the case
may be. This Agreement is intended to be for the benefit of, and to be
enforceable by, all such Beneficiaries, whether or not such Beneficiaries have
received notice hereof.
SECTION 1.02. TERM OF AGREEMENT. This Agreement shall terminate and be
of no further force and effect upon the later of (a) the date on which full
payment has been made of all amounts payable to all holders of all the Preferred
Securities (whether upon redemption, liquidation, exchange or otherwise) and (b)
the date on which there are no Beneficiaries remaining; provided, however, that
this Agreement shall continue to be effective or shall be reinstated, as the
case may be, if at any time any holder of Preferred Securities or any
Beneficiary must restore payment of any sums paid under the Preferred
Securities, under any Obligation,
<PAGE> 55
under the Preferred Securities Guarantee Agreement dated the date hereof by the
Company and Property Trustee as Guarantee Trustee or under this Agreement, for
any reason whatsoever. This Agreement is continuing, irrevocable, unconditional
and absolute.
SECTION 1.03. WAIVER OF NOTICE. The Company hereby waives notice of
acceptance of this Agreement and of any Obligation to which it applies or may
apply, and the Company hereby waives presentment, demand for payment, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 1.04. NO IMPAIRMENT. The obligations, covenants, agreements and
duties of the Company under this Agreement shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the extension of time for the payment by the Trust of all or
any portion of the Obligations or for the performance of any other
obligation under, arising out of, or in connection with, the
Obligations;
(b) any failure, omission, delay or lack of diligence on the part
of the Beneficiaries to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Beneficiaries with respect
to the Obligations or any action on the part of the Trust granting
indulgence or extension of any kind; or
(c) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the
Trust or any of the assets of the Trust. The Beneficiaries shall not be
obligated to give notice to, or obtain the consent of, the Company with
respect to the happening of any of the foregoing.
SECTION 1.05. ENFORCEMENT. A Beneficiary may enforce this Agreement
directly against the Company, and the Company waives any right or remedy to
require that any action be brought against the Trust or any other person or
entity before proceeding against the Company.
ARTICLE II
SECTION 2.01. BINDING EFFECT. All guarantees and agreements contained
in this Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Company and shall inure to the benefit of the
Beneficiaries.
SECTION 2.02. AMENDMENT. So long as there remains any Beneficiary or
any Preferred Securities are outstanding, this Agreement shall not be modified
or amended in any manner adverse to such Beneficiary or to the holders of the
Preferred Securities.
SECTION 2.03. NOTICES. Any notice, request or other communication
required or permitted to be given hereunder shall be given in writing by
delivering the same by facsimile transmission (confirmed by mail), telex, or by
registered or certified mail, addressed as follows
2
<PAGE> 56
(and if so given, shall be deemed given when mailed or upon receipt of an answer
back, if sent by telex):
Flagstar Trust I
2600 Telegraph Road
Bloomfield Hills, Michigan 48302
Facsimile No.: (248) 338-6493
Attention: Corporate Trust Administration
Flagstar Bancorp, Inc.
2600 Telegraph Road
Bloomfield Hills, Michigan 48302
Facsimile No.: (248) 338-6493
Attention: Chief Executive Officer
SECTION 2.04. GOVERNING LAW. This Agreement shall be governed by and
construed and interpreted in accordance with the laws of the State of Michigan
(without regard to conflict of laws principles).
THIS AGREEMENT is executed as of the day and year first above written.
FLAGSTAR BANCORP, INC.
By: _________________________________________
Thomas J. Hammond, Chairman and Chief
Executive Officer
FLAGSTAR TRUST I
By: _________________________________________
Michael W. Carrie, Administrative Trustee
3
<PAGE> 57
EXHIBIT E
This Preferred Security is a Book-Entry Preferred Securities
Certificate within the meaning of the Trust Agreement hereinafter referred to
and is registered in the name of The Depository Trust Company, a New York
corporation (the "Depositary") or a nominee of the Depositary. This Preferred
Security is exchangeable for Preferred Securities registered in the name of a
person other than the Depositary or its nominee only in the limited
circumstances described in the Trust Agreement (as defined below) and no
transfer of this Preferred Security (other than a transfer of this Preferred
Security as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary) may be registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of the Depositary to FLAGSTAR TRUST I or its agent for
registration of transfer, exchange or payment, and any Preferred Security issued
is registered in the name of Cede & Co., or such other name as requested by an
authorized representative of the Depositary (and any payment hereon is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of the Depositary), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co. has an interest herein.
<PAGE> 58
Certificate Number Number of Preferred Securities
**1** ___________
CUSIP NO. ____
___________________
Certificate Evidencing Preferred Securities
of
Flagstar Trust I
____% Cumulative Preferred Securities
(liquidation amount $25.00 per Preferred Security)
FLAGSTAR TRUST I, a statutory business trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the
"Holder") is the registered owner of _______________________ (____) preferred
securities of the Trust representing undivided beneficial interests in the
assets of the Trust and designated the ____% Cumulative Preferred Securities
(liquidation amount $25.00 per Preferred Security) (the "Preferred Securities").
The Preferred Securities are transferable on the books and records of the Trust,
in person or by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer as provided in Section 5.04 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 Trust dated
as of _________________, 1999, as the same may be amended from time to time (the
"Trust Agreement"), including the designation of the terms of Preferred
Securities as set forth therein. The Holder is entitled to the benefits of the
Preferred Securities Guarantee Agreement entered into by Flagstar Bancorp, Inc.,
a Michigan corporation, and ________________ Trust Company, as guarantee
trustee, dated as of _________________, 1999 (the "Guarantee"), to the extent
provided therein. The Trust will furnish a copy of the Trust Agreement and the
Guarantee to the Holder without charge upon written request to the Trust at its
principal place of business or registered office. Upon receipt of this
certificate, the Holder is bound by the Trust Agreement and is entitled to the
benefits thereunder.
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this ____ day of __________________, 1999.
FLAGSTAR TRUST I
By: _______________________________
Michael W. Carrie
Administrative Trustee
<PAGE> 1
EXHIBIT 4.5
================================================================================
SUBORDINATED INDENTURE
FLAGSTAR BANCORP, INC.,
as Issuer
to
FMB TRUST COMPANY NATIONAL ASSOCIATION,
as Trustee
__% Junior Subordinated Debentures
Dated as of March__, 1999
================================================================================
<PAGE> 2
FLAGSTAR BANCORP, INC.
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939,
AS AMENDED, AND SUBORDINATED INDENTURE,
DATED AS OF MARCH__, 1999
<TABLE>
<CAPTION>
TRUST INDENTURE ACT SECTION SUBORDINATED INDENTURE SECTION
<S> <C>
Section 310 15.09
Section 310(b) 9.08
Section 311 15.09
Section 311(a) 9.13
(b) 9.13
Section 312 15.09
Section 312(b) 6.02
Section 313 15.09
Section 313(a) 6.04
(b) 6.04
(c) 6.04
Section 314 15.09
Section 315 15.09
Section 316 15.09
Section 317 15.09
</TABLE>
- ------------------------------------------
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Subordinated Indenture.
<PAGE> 3
SUBORDINATED INDENTURE (the "Indenture"), dated as of March__, 1999,
between FLAGSTAR BANCORP, INC., a Michigan corporation (the "Company") and FMB
TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association, as trustee
(the "Trustee");
WHEREAS, for its lawful corporate purposes, the Company has duly authorized
the execution and delivery of this Indenture to provide for the issuance of its
securities to be known as its __% Junior Subordinated Debentures due March __,
2029 (hereinafter referred to as the "Junior Subordinated Debentures"), the form
and substance of such Junior Subordinated Debentures and the terms, provisions
and conditions thereof to be set forth as provided in this Indenture; and
WHEREAS, Flagstar Capital Trust I, a Delaware statutory business trust (the
"Trust"), has offered to the public $_____[A]___ aggregate liquidation amount of
its __% Cumulative Trust Preferred Securities (the "Preferred Securities"),
representing undivided beneficial interests in the assets of the Trust and
proposes to invest the proceeds from such offering, together with the proceeds
of the issuance and sale by the Trust to the Company of $__[B]___ aggregate
liquidation amount of its __% Common Securities, in $_[A]+[B]__ aggregate
principal amount of the Junior Subordinated Debentures; and
WHEREAS, the Company has requested that the Trustee execute and deliver
this Indenture and all requirements necessary to make this Indenture a valid
instrument in accordance with its terms, and to make the Junior Subordinated
Debentures, when executed by the Company and authenticated and delivered by the
Trustee, the valid obligations of the Company; and
WHEREAS, to provide the terms and conditions upon which the Junior
Subordinated Debentures are to be authenticated, issued and delivered, the
Company has duly authorized the execution and delivery of this Indenture; and
WHEREAS, all things necessary to make this Indenture a valid agreement of
the Company, in accordance with its terms, have been done.
NOW, THEREFORE, in consideration of the premises and the purchase of the
Junior Subordinated Debentures by the holders thereof, it is mutually covenanted
and agreed as follows for the equal and ratable benefit of the holders of Junior
Subordinated Debentures:
ARTICLE I
DEFINITIONS
The terms defined in this Section (except as in this Indenture otherwise
expressly provided or unless the context otherwise requires) for all purposes of
this Indenture and of any indenture supplemental hereto shall have the
respective meanings specified in this Section and shall include the plural as
well as the singular. All other terms used in this Indenture that are defined in
the Trust Indenture Act of 1939, as amended, or that are by reference in said
Trust Indenture Act defined in the Securities Act of 1933, as amended (except as
herein otherwise expressly provided
<PAGE> 4
or unless the context otherwise requires), shall have the meanings assigned to
such terms in said Trust Indenture Act and in said Securities Act as in force at
the date of the execution of this Indenture.
"Accelerated Maturity Date" means, if the Company elects to accelerate the
Maturity Date in accordance with Section 2.02, the date selected by the Company
which is prior to the Scheduled Maturity Date, but is after March __, 2004.
"Additional Sums" shall have the meaning set forth in Section 2.05(c).
"Administrative Trustees" has the meaning set forth in the Trust Agreement.
"Affiliate" means, with respect to a specified Person, (a) any Person
directly or indirectly owning, controlling or holding with power to vote 10% or
more of the outstanding voting securities or other ownership interests of the
specified Person, (b) any Person 10% or more of whose outstanding voting
securities or other ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified Person, (c) any Person
directly or indirectly controlling, controlled by, or under common control with
the specified Person, (d) a partnership in which the specified Person is a
general partner, (e) any officer or director of the specified Person, and (f) if
the specified Person is an individual, any entity of which the specified Person
is an officer, director or general partner.
"Authenticating Agent" means an authenticating agent with respect to the
Junior Subordinated Debentures appointed by the Trustee pursuant to Section
9.14.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or state
law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company or any
duly authorized committee of such Board.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification.
"Business Day" means any day other than a day on which federal or state
banking institutions in the State of Michigan are authorized or obligated by
law, executive order or regulation to close or a day on which the Trustee is
closed.
"Capital Treatment Event" means the reasonable determination by the Company
that, as a result of any amendment to, or change (including any proposed change)
in, the laws (or any regulations thereunder) of the United States or any
political subdivision thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such proposed change, pronouncement or decision is announced on or after the
date of issuance of the Preferred Securities under the Trust Agreement, there is
more than an insubstantial risk of impairment of the Company's ability to treat
the Preferred Securities (or any substantial portion thereof) as tier I
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Capital for purposes of any then applicable capital adequacy guidelines of the
OTS, as then in effect.
"Certificate" means a certificate signed by the principal executive
officer, the principal financial officer or the principal accounting officer of
the Company. The Certificate need not comply with the provisions of Section
15.07.
"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 Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Securities" means undivided beneficial interests in the assets of
the Trust which rank pari passu with Preferred Securities issued by the Trust;
provided, however, that upon the occurrence of an Event of Default, the rights
of holders of Common Securities to payment in respect of Distributions and
payments upon liquidation, redemption and otherwise are subordinated to the
rights of holders of Preferred Securities.
"Company" means Flagstar Bancorp, Inc., a corporation duly organized and
existing under the laws of the State of Michigan, and, subject to the provisions
of Article XII, shall also include its successors and assigns.
"Compounded Interest" shall have the meaning set forth in Section 4.01.
"Corporate Trust Office" means the office of the Trustee at which, at any
particular time, its corporate trust business shall be principally administered,
which office at the date hereof is located at ____________, Attention: Corporate
Trust Administration.
"Coupon Rate" shall have the meaning set forth in Section 2.05(a).
"Custodian" means any receiver, trustee, assignee, liquidator, or similar
official under any Bankruptcy Law.
"Debt" means with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (a) every
obligation of such Person for money borrowed; (b) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (c) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (d) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (e) every capital lease obligation of such Person; and (f) every
obligation of the type referred to in clauses (a) through (e) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has guaranteed or for which such Person is responsible or liable,
directly or indirectly, as obligor or otherwise.
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"Default" means any event, act or condition that with notice or lapse of
time, or both, would constitute an Event of Default.
"Deferred Interest" shall have the meaning set forth in Section 4.01.
"Depositary" means, with respect to Junior Subordinated Debentures issued
as a Global Subordinated Debenture, The Depository Trust Company, New York, New
York, another clearing agency, or any successor registered as a clearing agency
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
other applicable statute or regulation, which, in each case, shall be designated
by the Company pursuant to either Section 2.01 or 2.04.
"Dissolution Event" means that as a result of the occurrence and
continuation of a Special Event, the Trust is to be dissolved in accordance with
the Trust Agreement and the Junior Subordinated Debentures held by the Property
Trustee are to be distributed to the holders of the Trust Securities issued by
the Trust pro rata in accordance with the Trust Agreement.
"Distributions" shall have the meaning set forth in the Trust Agreement.
"Event of Default" means any event specified in Section 7.01, continued for
the period of time, if any, therein designated.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Extended Interest Payment Period" shall have the meaning set forth in
Section 4.01.
"Global Subordinated Debenture" means a Junior Subordinated Debenture
executed by the Company and delivered by the Trustee to the Depositary or
pursuant to the Depositary's instruction, all in accordance with this Indenture,
which shall be registered in the name of the Depositary or its nominee.
"Governmental Obligations" means securities that are (a) direct obligations
of the United States of America for the payment of which its full faith and
credit is pledged or (b) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of America, the
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America that, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act of 1933, as amended) as custodian with respect to any such
Governmental Obligation or a specific payment of principal of or interest on any
such Governmental Obligation held by such custodian for the account of the
holder of such depositary receipt; provided, however, that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depositary receipt from any amount received by the
custodian in respect of the Governmental Obligation or the specific payment of
principal of or interest on the Governmental Obligation evidenced by such
depositary receipt.
"Herein," "hereof" and "hereunder," and other words of similar import,
refer to this Indenture as a whole and not to any particular Article, Section or
other subdivision.
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"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into in accordance with the terms hereof.
"Interest Payment Date," when used with respect to any installment of
interest on the Junior Subordinated Debentures, means the date specified in the
Junior Subordinated Debenture as the fixed date on which an installment of
interest with respect to the Junior Subordinated Debentures is due and payable.
"Investment Company Act" means the Investment Company Act of 1940, as
amended.
"Investment Company Event" means the receipt by the Company and the Trust
of an Opinion of Counsel experienced in such matters to the effect that, as a
result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in Investment
Company Act Law"), the Trust is or will be considered an "investment company"
that is required to be registered under the Investment Company Act, which Change
in Investment Company Act Law becomes effective on or after the date of original
issuance of the Preferred Securities under the Trust Agreement.
"Junior Subordinated Debentures" means the __% Junior Subordinated
Debentures due 2029 authenticated and delivered under this Indenture.
"Liquidation Amount" means the stated amount of $25.00 per Trust Security.
"Maturity Date" shall have the meaning set forth in Section 2.02.
"Non Book-Entry Preferred Securities" shall have the meaning set forth in
Section 2.04(a).
"Officers' Certificate" means a certificate signed by the Chief Executive
Officer, the President or a Vice President and by the Chief Accounting Officer
or the Controller or an Assistant Controller or the Secretary or an Assistant
Secretary of the Company that is delivered to the Trustee in accordance with the
terms hereof. Each such certificate shall include the statements provided for in
Section 15.07, if and to the extent required by the provisions thereof.
"Opinion of Counsel" means an opinion in writing of legal counsel, who may
be an employee of or counsel for the Company, that is delivered to the Trustee
in accordance with the terms hereof. Each such opinion shall include the
statements provided for in Section 15.07, if and to the extent required by the
provisions thereof.
"OTS" means the Office of Thrift Supervision of the United States
Department of the Treasury, or any successor agency.
"Outstanding," when used with reference to Junior Subordinated Debentures
means, subject to the provisions of Section 10.04, as of any particular time,
all Junior Subordinated Debentures theretofore authenticated and delivered by
the Trustee under this Indenture, except
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(a) Junior Subordinated Debentures theretofore canceled by the Trustee or any
paying agent, or delivered to the Trustee or any paying agent for cancellation
or that have previously been canceled; (b) Junior Subordinated Debentures or
portions thereof for the payment or redemption of which moneys or Governmental
Obligations in the necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Company) or shall have been set
aside and segregated in trust by the Company (if the Company shall act as its
own paying agent); provided, however, that if such Junior Subordinated
Debentures or portions of such Junior Subordinated Debentures are to be redeemed
prior to the maturity thereof, notice of such redemption shall have been given
as provided in Article III, or provision satisfactory to the Trustee shall have
been made for giving such notice; and (c) Junior Subordinated Debentures in lieu
of or in substitution for which other Junior Subordinated Debentures shall have
been authenticated and delivered pursuant to the terms of Section 2.08.
"Person" means any individual, corporation, partnership, joint venture,
joint-stock company, unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Junior Subordinated Debenture" means every previous Junior
Subordinated Debenture evidencing all or a portion of the same debt as that
evidenced by such particular Junior Subordinated Debenture; and, for the
purposes of this definition, any Junior Subordinated Debenture authenticated and
delivered under Section 2.08 in lieu of a lost, destroyed or stolen Junior
Subordinated Debenture shall be deemed to evidence the same debt as the lost,
destroyed or stolen Junior Subordinated Debenture.
"Preferred Securities" means undivided beneficial interests in the assets
of the Trust which rank pari passu with Common Securities issued by the Trust;
provided, however, that upon the occurrence of an Event of Default, the rights
of holders of Common Securities to payment in respect of Distributions and
payments upon liquidation, redemption and otherwise are subordinated to the
rights of holders of Preferred Securities.
"Preferred Securities Certificate" has the meaning set forth in the Trust
Agreement.
"Preferred Securities Guarantee" means any guarantee that the Company may
enter into with the Property Trustee or other Persons that operates directly or
indirectly for the benefit of holders of Preferred Securities of the Trust.
"Property Trustee" has the meaning set forth in the Trust Agreement.
"Redemption Price" means the amount equal to 100% of the principal amount
of Junior Subordinated Debentures to be redeemed plus any accrued and unpaid
interest thereon to the date of the redemption of such Junior Subordinated
Debentures.
"Responsible Officer" when used with respect to the Trustee means the
Chairman of the Board of Directors, the President, any Vice President, the
Secretary, the Treasurer, any trust officer, any corporate trust officer or any
other officer or assistant officer of the Trustee customarily performing
functions similar to those performed by the Persons who at the time shall
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be such officers, respectively, or to whom any corporate trust matter is
referred because of his or her knowledge of and familiarity with the particular
subject.
"Scheduled Maturity Date" means March __, 2009.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 2.07.
"Securityholder," "Holder," "Registered Holder," or other similar term,
means the Person or Persons in whose name or names particular Junior
Subordinated Debentures shall be registered in the Securities Register.
"Senior and Subordinated Debt" means the principal of (and premium, if any)
and interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not such claim for post-petition interest is allowed in such proceeding), on
Debt of the Company, whether incurred on or prior to the date of this Indenture
or thereafter incurred, unless, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is provided that such
obligations are not superior in right of payment to the Junior Subordinated
Debentures or to other Debt which is pari passu with, or subordinated to, the
Junior Subordinated Debentures; provided, however, that Senior and Subordinated
Debt shall not be deemed to include (a) any Debt of the Company which when
incurred and without respect to any election under section 1111(b) of the United
States Bankruptcy Code of 1978, as amended, was without recourse to the Company,
(b) any Debt of the Company to any of its Subsidiaries, (c) any Debt to any
employee of the Company, (d) any Debt which by its terms is subordinated to any
trade accounts payable or accrued liabilities arising in the ordinary course of
business but only to the extent that payments made to the holders of such Debt
by the Holders of the Junior Subordinated Debentures as a result of the
subordination provisions of this Indenture would be greater than they otherwise
would have been as a result of any obligation of such Holders to pay amounts
over to the obligees on such trade accounts payable or accrued liabilities
arising in the ordinary course of business as a result of subordination
provisions to which such Debt is subject, (e) the Preferred Securities
Guarantee, and (f) any other debt securities issued pursuant to this Indenture.
"Special Event" means a Tax Event, an Investment Company Event or a Capital
Treatment Event.
"Subsidiary" means, with respect to any Person, (a) any corporation at
least a majority of whose outstanding Voting Stock shall at the time be owned,
directly or indirectly, by such Person, or by one or more of its Subsidiaries,
or by such Person and one or more of its Subsidiaries, (b) any general
partnership, joint venture or similar entity, at least a majority of whose
outstanding partnership or similar interests shall at the time be owned by such
Person, or by one or more of its Subsidiaries, or by such Person and one or more
of its Subsidiaries, and (c) any limited partnership of which such Person or any
of its Subsidiaries is a general partner.
"Tax Event" means the receipt by the Company and the Trust of an Opinion of
Counsel experienced in such matters to the effect that, as a result of any
amendment to, or change
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(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or which pronouncement or
decision is announced on or after the date of issuance of the Junior
Subordinated Debentures there is more than an insubstantial risk that (a)
interest payable by the Company on the Junior Subordinated Debentures is not, or
within 90 days after the date of such Opinion of Counsel will not be, deductible
by the Company, in whole or in part, for United States federal income tax
purposes, (b) the Trust is, or will be within 90 days after the date of such
Opinion of Counsel, subject to United States federal income tax with respect to
income received or accrued on the Junior Subordinated Debentures, or (c) the
Trust is, or will be within 90 days after the date of such Opinion of Counsel,
subject to more than a de minimis amount of other taxes, duties, assessments or
other governmental charges.
"Trust" means Flagstar Capital Trust I, a Delaware statutory business trust
created for the purpose of issuing Trust Securities in connection with the
issuance of Junior Subordinated Debentures under this Indenture.
"Trust Agreement" means the Amended and Restated Trust Agreement, dated as
of March__, 1999, of the Trust.
"Trustee" means TRUSTEE and, subject to the provisions of Article IX, shall
also include its successors and assigns, and, if at any time there is more than
one Person acting in such capacity hereunder, "Trustee" shall mean each such
Person.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date of execution of this Indenture; provided, however, that in the event
the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture
Act" means, to the extent required by any such amendment, the Trust Indenture
Act of 1939 as so amended.
"Trust Securities" means Common Securities and Preferred Securities of the
Trust.
"Voting Stock" as applied to stock of any Person, means shares, interests,
participations or other equivalents in the equity interest (however designated)
in such Person having ordinary voting power for the election of a majority of
the directors (or the equivalent) of such Person, other than shares, interests,
participations or other equivalents having such power only by reason of the
occurrence of a contingency.
ARTICLE II
DESCRIPTION, TERMS, CONDITIONS, REGISTRATION
AND EXCHANGE OF THE JUNIOR SUBORDINATED DEBENTURES
.1. DESIGNATION AND PRINCIPAL AMOUNT. There is hereby authorized a
series of Securities designated the "__% Junior Subordinated Debentures due
2029," limited in aggregate principal amount to $__________, which amount shall
be as set forth in any written order of the
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Company for the authentication and delivery of Junior Subordinated Debentures
pursuant to Section 8.02 of this Indenture.
.2. MATURITY.
(a) The Maturity Date will be either:
(i) the Scheduled Maturity Date; or
(ii) if the Company elects to accelerate the Maturity Date
to be a date prior to the Scheduled Maturity Date in accordance
with Section 2.02(b), the Accelerated Maturity Date.
(b) The Company may, at any time before the day which is 90
days before the Scheduled Maturity Date, elect to shorten the Maturity Date
only once to the Accelerated Maturity Date, provided that the Company has
received the prior approval of the OTS if then required under applicable
capital guidelines or policies of the OTS, but in no case shall such
Accelerated Maturity Date be a date before March __, 2004.
(c) If the Company elects to accelerate the Maturity Date in
accordance with Section 2.02(b), the Company shall give notice to the
Registered Holders of the Junior Subordinated Debentures, the Property
Trustee and the Trustee of the acceleration of the Maturity Date and the
Accelerated Maturity Date at least 90 days before the Accelerated Maturity
Date.
.3. FORM AND PAYMENT. Except as provided in Section 2.04, the Junior
Subordinated Debentures shall be issued in fully registered certificated form
without interest coupons. Principal and interest on the Junior Subordinated
Debentures issued in certificated form will be payable, the transfer of such
Junior Subordinated Debentures will be registrable and such Junior Subordinated
Debentures will be exchangeable for Junior Subordinated Debentures bearing
identical terms and provisions at the office or agency of the Trustee; provided,
however, that payment of interest may be made at the option of the Company by
check mailed to the Holder at such address as shall appear in the Securities
Register. Notwithstanding the foregoing, so long as the Holder of any Junior
Subordinated Debentures is the Property Trustee, the payment of the principal of
and interest (including Compounded Interest and Additional Sums, if any) on such
Junior Subordinated Debentures held by the Property Trustee will be made at such
place and to such account as may be designated by the Property Trustee.
.4. GLOBAL SUBORDINATED DEBENTURE.
(a) In connection with a Dissolution Event:
(i) the Junior Subordinated Debentures in certificated
form may be presented to the Trustee by the Property Trustee in
exchange for a Global Subordinated Debenture in an aggregate
principal amount equal to the aggregate principal amount of all
outstanding Junior Subordinated Debentures (a "Global
Subordinated Debenture"), to be registered in the name of the
Depositary, or its
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nominee, and delivered by the Trustee to the Depositary for
crediting to the accounts of its participants pursuant to the
instructions of the Administrative Trustees. The Company upon any
such presentation shall execute a Global Subordinated Debenture
in such aggregate principal amount and deliver the same to the
Trustee for authentication and delivery in accordance with this
Indenture. Payments on the Junior Subordinated Debentures issued
as a Global Subordinated Debenture will be made to the
Depositary; and
(ii) if any Preferred Securities are held in non book-entry
certificated form, the Junior Subordinated Debentures in
certificated form may be presented to the Trustee by the Property
Trustee and any Preferred Securities Certificate which represents
Preferred Securities other than Preferred Securities held by the
Depositary or its nominee ("Non Book-Entry Preferred Securities")
will be deemed to represent beneficial interests in Junior
Subordinated Debentures presented to the Trustee by the Property
Trustee having an aggregate principal amount equal to the
aggregate Liquidation Amount of the Non Book-Entry Preferred
Securities until such Preferred Securities Certificates are
presented to the Securities Registrar for transfer or reissuance
at which time such Preferred Securities Certificates will be
canceled and a Junior Subordinated Debenture, registered in the
name of the holder of the Preferred Securities Certificate or the
transferee of the holder of such Preferred Securities
Certificate, as the case may be, with an aggregate principal
amount equal to the aggregate Liquidation Amount of the Preferred
Securities Certificate canceled, will be executed by the Company
and delivered to the Trustee for authentication and delivery in
accordance with this Indenture. On issue of such Junior
Subordinated Debentures, Junior Subordinated Debentures with an
equivalent aggregate principal amount that were presented by the
Property Trustee to the Trustee will be deemed to have been
canceled.
(b) A Global Subordinated Debenture may be transferred, in whole
but not in part, only to another nominee of the Depositary, or to a
successor Depositary selected or approved by the Company or to a nominee of
such successor Depositary.
(c) If at any time the Depositary notifies the Company that it
is unwilling or unable to continue as Depositary or if at any time the
Depositary for such series shall no longer be registered or in good
standing under the Exchange Act or other applicable statute or regulation,
and a successor Depositary for such series is not appointed by the Company
within 90 days after the Company receives such notice or becomes aware of
such condition, as the case may be, the Company will execute, and the
Trustee, upon written notice from the Company, will authenticate and
deliver the Junior Subordinated Debentures in definitive registered form
without coupons, in authorized denominations, and in an aggregate principal
amount equal to the principal amount of the Global Subordinated Debenture
in exchange for such Global Subordinated Debenture. In addition, the
Company may at any time determine that the Junior Subordinated Debentures
shall no longer be represented by a Global Subordinated Debenture. In such
event the Company will execute, and the Trustee, upon receipt of an
Officers' Certificate evidencing such determination by the Company, will
authenticate and deliver the Junior
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Subordinated Debentures in definitive registered form without coupons, in
authorized denominations, and in an aggregate principal amount equal to the
principal amount of the Global Subordinated Debenture in exchange for such
Global Subordinated Debenture. Upon the exchange of the Global Subordinated
Debenture for such Junior Subordinated Debentures in definitive registered
form without coupons, in authorized denominations, the Global Subordinated
Debenture shall be canceled by the Trustee. Such Junior Subordinated
Debentures in definitive registered form issued in exchange for the Global
Subordinated Debenture shall be registered in such names and in such
authorized denominations as the Depositary, pursuant to instructions from
its direct or indirect participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver such Junior Subordinated Debentures to
the Depositary for delivery to the Persons in whose names such Junior
Subordinated Debentures are so registered.
.5. INTEREST.
(a) Each Junior Subordinated Debenture will bear interest at
the rate of __% per annum (the "Coupon Rate") from the original date of
issuance until the principal thereof becomes due and payable, and on any
overdue principal and (to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest
at the Coupon Rate, compounded quarterly, payable (subject to the
provisions of Article IV) quarterly in arrears on the fifteenth day of
March, June, September and December in each year (each, an "Interest
Payment Date"), commencing on June 15, 1999, to the Person in whose name
such Junior Subordinated Debenture or any Predecessor Junior Subordinated
Debenture is registered at the close of business on the regular record
date for such interest installment, which, in respect of (i) Junior
Subordinated Debentures of which the Property Trustee is the Holder and
the Preferred Securities are in book-entry-only form or (ii) a Global
Subordinated Debenture, shall be the close of business on the Business Day
next preceding that Interest Payment Date. Notwithstanding the foregoing
sentence, if (A) the Junior Subordinated Debentures are held by the
Property Trustee and the Preferred Securities are no longer in book-entry
only form or (B) the Junior Subordinated Debentures are not represented by
a Global Subordinated Debenture, the record date for such interest
installment shall be the first day of the month in which such payment is
to be made. The amount of each interest payment due with respect to the
Junior Subordinated Debentures will include amounts accrued through the
date the interest payment is due.
(b) The amount of interest payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months. Except as
provided in the following sentence, the amount of interest payable for any
period shorter than a full quarterly period for which interest is computed
will be computed on the basis of the actual number of days elapsed in such
a quarterly period. In the event that any date on which interest is payable
on the Junior Subordinated Debentures is not a Business Day, then payment
of interest payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such 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.
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(c) If, at any time while the Property Trustee is the Holder of
any Junior Subordinated Debentures, the Trust or the Property Trustee is
required to pay any taxes, duties, assessments or governmental charges of
whatever nature (other than withholding taxes) imposed by the United
States, or any other taxing authority, then, in any case, the Company will
pay as additional interest ("Additional Sums") on the Junior Subordinated
Debentures held by the Property Trustee such additional amounts as shall be
required so that the net amounts received and retained by the Trust and the
Property Trustee after paying such taxes, duties, assessments or other
governmental charges will be equal to the amounts the Trust and the
Property Trustee would have received had no such taxes, duties, assessments
or other government charges been imposed.
.6. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The Junior
Subordinated Debentures shall be executed on behalf of the Company by its Chief
Executive Officer, its President or any Vice President and attested by its
Secretary or Assistant Secretary. The signature of any of these officers on the
Junior Subordinated Debentures may be manual or facsimile.
Junior Subordinated Debentures 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
Junior Subordinated Debentures or did not hold such offices at the date of such
Junior Subordinated Debentures.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Junior Subordinated Debentures executed by
the Company to the Trustee for authentication, together with a Company order for
the authentication and delivery of such Junior Subordinated Debentures. The
Trustee in accordance with such Company order shall authenticate and deliver
such Junior Subordinated Debentures as provided in this Indenture and not
otherwise.
Upon the initial issuance, each Junior Subordinated Debenture shall be
dated March__, 1999, and thereafter Junior Subordinated Debentures issued
hereunder shall be dated the date of their authentication.
No Junior Subordinated Debenture shall be entitled to any benefit under
this Indenture or be valid or obligatory for any purpose unless there appears on
such Junior Subordinated Debenture a certificate of authentication substantially
in the form provided for herein executed by the Trustee by manual signature, and
such certificate upon any Junior Subordinated Debenture shall be conclusive
evidence, and the only evidence, that such Junior Subordinated Debenture has
been duly authenticated and delivered hereunder and is entitled to the benefits
of this Indenture.
.7. REGISTRATION AND TRANSFER. The Company shall cause to be kept at the
Corporate Trust Office of the Trustee a register (the register maintained in
such office or any other office or agency pursuant to Section 5.02 being herein
sometimes referred to as the "Securities Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of the Junior Subordinated Debentures and transfers of the Junior
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Subordinated Debentures. The Trustee is hereby appointed "Securities Registrar"
for the purpose of registering the Junior Subordinated Debentures and transfers
of the Junior Subordinated Debentures as herein provided.
Upon surrender for registration of transfer of any Junior Subordinated
Debenture at an office or agency of the Company designated pursuant to Section
5.02 for such purpose, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, a new Junior Subordinated Debenture of the authorized denomination.
All Junior Subordinated Debentures issued upon any registration of transfer
of Junior Subordinated Debentures shall be valid obligations of the Company,
evidencing the same debt and entitled to the same benefits under this Indenture
as the Junior Subordinated Debentures surrendered upon such registration of
transfer.
Every Junior Subordinated Debenture presented or surrendered for
registration of transfer shall be duly endorsed for transfer (if so required by
the Company or the Trustee), or shall 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 for any registration of transfer of Junior
Subordinated Debentures, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer of Junior Subordinated Debentures.
The Company shall not be required to issue or register the transfer of any
Junior Subordinated Debenture during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Junior Subordinated Debentures selected for redemption pursuant to Article III
and ending at the close of business on the day of such mailing.
.8. MUTILATED, DESTROYED, LOST AND STOLEN JUNIOR SUBORDINATED
DEBENTURES. If any mutilated Junior Subordinated Debenture is surrendered to the
Trustee, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a new Junior Subordinated Debenture of like tenor
and principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (a) evidence to
their satisfaction of the destruction, loss or theft of any Junior Subordinated
Debenture and (b) 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 Junior Subordinated Debenture has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Junior
Subordinated Debenture, a new Junior Subordinated Debenture of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
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In case any such mutilated, destroyed, lost or stolen Junior Subordinated
Debenture has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Junior Subordinated Debenture, pay such
Junior Subordinated Debenture.
Upon the issuance of any new Junior Subordinated Debenture under this
Section, 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.
Every new Junior Subordinated Debenture issued pursuant to this Section in
lieu of any destroyed, lost or stolen Junior Subordinated Debenture shall
constitute an original additional contractual obligation of the Company, whether
or not the destroyed, lost or stolen Junior Subordinated Debenture shall be at
any time enforceable by anyone, and shall be entitled to all of the benefits of
this Indenture.
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 Junior Subordinated Debentures.
ARTICLE III
REDEMPTION OF JUNIOR SUBORDINATED DEBENTURES
.1. REDEMPTION. Subject to the Company having received prior approval of
the OTS, if then required under the applicable capital guidelines or policies of
the OTS, the Company may redeem the Junior Subordinated Debentures in accordance
with this Article III.
.2. SPECIAL EVENT REDEMPTION. Subject to the Company having received the
prior approval of the OTS, if then required under the applicable capital
guidelines or policies of the OTS, if a Special Event has occurred and is
continuing, then, notwithstanding Section 3.03, the Company shall have the right
upon not less than 30 days' nor more than 60 days' notice to the Holders of the
Junior Subordinated Debentures to redeem the Junior Subordinated Debentures, in
whole but not in part, for cash within 90 days following the occurrence of such
Special Event (the "90-Day Period") at the Redemption Price, provided that if at
the time there is available to the Company the opportunity to eliminate, within
the 90-Day Period, the Tax Event by taking some ministerial action ("Ministerial
Action"), such as filing a form or making an election, or pursuing some other
similar reasonable measure which has no adverse effect on the Company, the Trust
or the Holders of the Trust Securities issued by the Trust, the Company shall
pursue such Ministerial Action in lieu of redemption, and, provided, further,
that the Company shall have no right to redeem the Junior Subordinated
Debentures while the Trust is pursuing any Ministerial Action to eliminate the
Tax Event. The Redemption Price shall be paid prior to 2:00 p.m., Bloomfield
Hills, Michigan, time, on the date of such redemption or such earlier time as
the Company determines, provided that the Company shall deposit with the Trustee
an amount sufficient to pay the Redemption Price by 12:00 noon, Bloomfield
Hills, Michigan, time, on the date such Redemption Price is to be paid.
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.3. OPTIONAL REDEMPTION BY COMPANY.
(a) Except as otherwise may be specified in this Indenture, the
Company shall have the right to redeem the Junior Subordinated Debentures,
in whole or in part, from time to time, on or after March __, 2004, at the
Redemption Price. Any redemption pursuant to this Section 3.03 will be made
upon not less than 30 days' nor more than 60 days' notice to the Holders of
the Junior Subordinated Debentures, at the Redemption Price. If the Junior
Subordinated Debentures are only partially redeemed pursuant to this
Section 3.03, the Junior Subordinated Debentures will be redeemed pro rata
or by lot or by any other method utilized by the Trustee; provided, that if
at the time of redemption the Junior Subordinated Debentures are registered
as a Global Subordinated Debenture, the Depositary shall determine, in
accordance with its procedures, the principal amount of such Junior
Subordinated Debentures held by each Holder of Junior Subordinated
Debentures to be redeemed. The Redemption Price shall be paid prior to 2:00
p.m., Bloomfield Hills, Michigan time, on the date of such redemption or at
such earlier time as the Company determines provided that the Company shall
deposit with the Trustee an amount sufficient to pay the Redemption Price
by 12:00 noon, Bloomfield Hills, Michigan time, on the date such Redemption
Price is to be paid.
(b) If a partial redemption of the Junior Subordinated
Debentures would result in the delisting of the Preferred Securities issued
by the Trust from the NASDAQ National Market or any national securities
exchange or other organization on which the Preferred Securities may then
be listed, if any, the Company shall not be permitted to effect such
partial redemption and may only redeem the Junior Subordinated Debentures
in whole or in part to such extent as would not cause such delisting.
.4. NOTICE OF REDEMPTION.
(a) In case the Company shall desire to exercise such right to
redeem all or, as the case may be, a portion of the Junior Subordinated
Debentures in accordance with the right reserved so to do, the Company
shall, or shall cause the Trustee to, give notice of such redemption to
Holders of the Junior Subordinated Debentures to be redeemed by mailing,
first class postage prepaid, a notice of such redemption not less than 30
days and not more than 60 days before the date fixed for redemption to such
Holders at their last addresses as they shall appear upon the Securities
Register. Any notice that is mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the
Registered Holder receives the notice. In any case, failure duly to give
such notice to the Holder of any Junior Subordinated Debenture designated
for redemption in whole or in part, or any defect in the notice, shall not
affect the validity of the proceedings for the redemption of any other
Junior Subordinated Debentures. In the case of any redemption of Junior
Subordinated Debentures prior to the expiration of any restriction on such
redemption provided elsewhere in this Indenture, the Company shall furnish
the Trustee with an Officers' Certificate evidencing compliance with any
such restriction.
Each such notice of redemption shall specify the date fixed for
redemption and the Redemption Price, and shall state that payment of the
Redemption Price of such Junior
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Subordinated Debentures to be redeemed will be made at the office or agency
of the Company in Bloomfield Hills, Michigan, upon presentation and
surrender of such Junior Subordinated Debentures, that interest accrued to
the date fixed for redemption will be paid as specified in said notice,
that from and after said date interest will cease to accrue. If less than
all the Junior Subordinated Debentures are to be redeemed, the notice to
the Holders of Junior Subordinated Debentures to be redeemed in whole or in
part shall specify the particular Junior Subordinated Debentures to be so
redeemed. In case any Junior Subordinated Debenture is to be redeemed in
part only, the notice that relates to such Junior Subordinated Debenture
shall state the portion of the principal amount thereof to be redeemed, and
shall state that on and after the redemption date, upon surrender of such
Junior Subordinated Debenture, a new Junior Subordinated Debenture or
Junior Subordinated Debentures in principal amount equal to the unredeemed
portion thereof shall be issued to the Holder.
(b) If less than all the Junior Subordinated Debentures are to
be redeemed, the Company shall give the Trustee at least 45 days' notice in
advance of the date fixed for redemption as to the aggregate principal
amount of Junior Subordinated Debentures to be redeemed, and thereupon the
Trustee shall select, by lot or in such other manner as it shall deem
appropriate and fair in its discretion and that may provide for the
selection of a portion or portions (equal to ______dollars U.S. ($_____) or
any integral multiple thereof), the Junior Subordinated Debentures to be
redeemed and shall thereafter promptly notify the Company in writing of the
numbers of the Junior Subordinated Debentures to be redeemed, in whole or
in part.
The Company may, if and whenever it shall so elect, by delivery of
instructions signed on its behalf by its Chief Executive Officer, its President
or any Vice President, instruct the Trustee or any paying agent to call all or
any part of the Junior Subordinated Debentures for redemption and to give notice
of redemption in the manner set forth in this Section, such notice to be in the
name of the Company or in the name of the Trustee or the paying agent, as the
Trustee or such paying agent may deem advisable. In any case in which notice of
redemption is to be given by the Trustee or any such paying agent, the Company
shall deliver or cause to be delivered to, or permit to remain with, the Trustee
or such paying agent, as the case may be, such Securities Register, transfer
books or other records, or suitable copies or extracts therefrom, sufficient to
enable the Trustee or such paying agent to give any notice by mail that may be
required under the provisions of this Section.
.5. PAYMENT UPON REDEMPTION.
(a) If the giving of notice of redemption shall have been
completed as above provided, the Junior Subordinated Debentures or portions
of Junior Subordinated Debentures to be redeemed specified in such notice
shall become due and payable on the date and at the place stated in such
notice at the Redemption Price (which includes interest accrued to the date
fixed for redemption) and interest on such Junior Subordinated Debentures
or
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portions of Junior Subordinated Debentures shall cease to accrue on and
after the date fixed for redemption, unless the Company shall default in
the payment of such Redemption Price with respect to any such Junior
Subordinated Debentures or portions thereof. On presentation and surrender
of such Junior Subordinated Debentures on or after the date fixed for
redemption at the place of payment specified in the notice, such Junior
Subordinated Debentures shall be paid and redeemed at the Redemption Price
(which includes the interest accrued thereon to the date fixed for
redemption) (but if the date fixed for redemption is an Interest Payment
Date, the interest installment payable on such date shall be payable to the
Registered Holder at the close of business on the applicable record date
pursuant to Section 2.05(a)).
(b) Upon presentation of any Junior Subordinated Debenture that
is to be redeemed in part only, the Company shall execute and the Trustee
shall authenticate and the office or agency where the Junior Subordinated
Debenture is presented shall deliver to the Holder thereof, at the expense
of the Company, a new Junior Subordinated Debenture or Junior Subordinated
Debentures of authorized denominations in principal amount equal to the
unredeemed portion of the Junior Subordinated Debenture so presented.
.6. NO SINKING FUND. The Junior Subordinated Debentures are not
entitled to the benefit of any sinking fund.
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
.1. EXTENSION OF INTEREST PAYMENT PERIOD. So long as no Event of Default
has occurred and is continuing, the Company shall have the right, at any time
and from time to time during the term of the Junior Subordinated Debentures, to
defer payments of interest by extending the interest payment period of such
Junior Subordinated Debentures for a period not exceeding 20 consecutive
quarters (the "Extended Interest Payment Period"), during which Extended
Interest Payment Period no interest shall be due and payable; provided that no
Extended Interest Payment Period may extend beyond the Maturity Date. To the
extent permitted by applicable law, interest, the payment of which has been
deferred because of the extension of the interest payment period pursuant to
this Section 4.01, will bear interest thereon at the Coupon Rate compounded
quarterly for each quarter of the Extended Interest Payment Period ("Compounded
Interest"). At the end of the Extended Interest Payment Period, the Company
shall pay all interest accrued and unpaid on the Junior Subordinated Debentures,
including any Additional Sums and Compounded Interest (together, "Deferred
Interest") that shall be payable to the Holders of the Junior Subordinated
Debentures in whose names the Junior Subordinated Debentures are registered in
the Securities Register on the record date for the Interest Payment Date
coinciding with the end of the Extended Interest Payment Period. Before the
termination of any Extended Interest Payment Period, the Company may further
extend such period, provided that such period together with all such further
extensions thereof shall not exceed 20 consecutive quarters, or extend beyond
the Maturity Date. Upon the termination of any Extended Interest Payment Period
and upon the payment of all Deferred Interest then due, the Company may commence
a new Extended Interest Payment Period, subject to the foregoing requirements.
No interest shall be due and payable during an Extended Interest Payment Period,
except at the end thereof, but the Company may prepay at any time all or any
portion of the interest accrued during an Extended Interest Payment Period.
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.2. NOTICE OF EXTENSION.
(a) If the Property Trustee is the only Registered Holder of the
Junior Subordinated Debentures at the time the Company selects an Extended
Interest Payment Period, the Company shall give written notice to the
Administrative Trustees, the Property Trustee and the Trustee of its
selection of such Extended Interest Payment Period one Business Day before
the earlier of (i) the next succeeding date on which Distributions are
payable, or (ii) the date the Trust is required to give notice of the
record date, or the date such Distributions are payable, to the Preferred
Securities holders or to the NASDAQ National Market or other applicable
self-regulatory organization, if any, but in any event at least one
Business Day before such record date.
(b) If the Property Trustee is not the only Holder of the Junior
Subordinated Debentures at the time the Company selects an Extended
Interest Payment Period, the Company shall give the Holders of the Junior
Subordinated Debentures and the Trustee written notice of its selection of
such Extended Interest Payment Period at least one Business Day before the
earlier of (i) the next succeeding Interest Payment Date, or (ii) the date
the Company is required to give notice of the record or payment date of
such interest payment to the Holders of the Junior Subordinated Debentures
or to the NASDAQ National Market or other applicable self-regulatory
organization, if any.
(c) The quarter in which any notice is given pursuant to
paragraph (a) or paragraph (b) of this Section 4.02 shall be counted as one
of the 20 quarters permitted in the maximum Extended Interest Payment
Period permitted under Section 4.01.
.3. LIMITATION OF TRANSACTIONS DURING EXTENSION. If (a) the Company
shall exercise its right to defer payment of interest as provided in Section
4.01; or (b) there shall have occurred any Event of Default, then the Company
shall be subject to the restrictions on payments set forth under Section 5.06.
ARTICLE V
PARTICULAR COVENANTS OF THE COMPANY
.1. PAYMENT OF PRINCIPAL AND INTEREST. The Company will duly and
punctually pay or cause to be paid the principal of and interest on the Junior
Subordinated Debentures at the time and place and in the manner provided herein
and established with respect to such Junior Subordinated Debentures.
.2. MAINTENANCE OF AGENCY. So long as any Junior Subordinated Debentures
remain Outstanding, the Company agrees to maintain an office or agency in
Bloomfield Hills, Michigan, or at such other location or locations as may be
designated as provided in this Section 5.02, where (a) Junior Subordinated
Debentures may be presented for payment, (b) Junior Subordinated Debentures may
be presented as hereinabove authorized for registration of transfer and
exchange, and (c) notices and demands to or upon the Company in respect of the
Junior Subordinated Debentures and this Indenture may be given or served, such
designation to continue with respect
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to such office or agency until the Company shall, by written notice signed by
its Chief Executive Officer, its President or a Vice President and delivered to
the Trustee, designate some other office or agency for such purposes or any of
them. If at any time the Company shall fail to maintain any such required office
or agency or shall fail to furnish the Trustee with the address thereof, such
presentations, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, notices and demands.
.3. PAYING AGENTS.
(a) If the Company shall appoint one or more paying agents for
the Junior Subordinated Debentures, other than the Trustee, the Company
will cause each such paying agent to execute and deliver to the Trustee an
instrument in which such agent shall agree with the Trustee, subject to the
provisions of this Section:
(i) that it will hold all sums held by it as such agent for
the payment of the principal of or interest on the Junior
Subordinated Debentures (whether such sums have been paid to it
by the Company or by any other obligor) in trust for the benefit
of the Persons entitled thereto;
(ii) that it will give the Trustee notice of any failure by
the Company (or by any other obligor) to make any payment of the
principal of or interest on the Junior Subordinated Debentures
when the same shall be due and payable;
(iii) that it will, at any time during the continuance of
any failure referred to in the preceding paragraph (a)(ii) above,
upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such paying agent; and
(iv) that it will perform all other duties of paying agent
as set forth in this Indenture.
(b) If the Company shall act as its own paying agent with
respect to the Junior Subordinated Debentures, it will on or before each
due date of the principal of or interest on Junior Subordinated Debentures,
set aside, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay such principal or interest so
becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of such
action, or any failure (by it or any other obligor) to take such action.
Whenever the Company shall have one or more paying agents for the Junior
Subordinated Debentures, it will, prior to each due date of the principal
of or interest on the Junior Subordinated Debentures, deposit with the
paying agent a sum sufficient to pay the principal or interest so becoming
due, such sum to be held in trust for the benefit of the Persons entitled
to such principal or interest, and (unless such paying agent is the
Trustee) the Company will promptly notify the Trustee of this action or
failure so to act.
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(c) Notwithstanding anything in this Section to the contrary,
(i) the agreement to hold sums in trust as provided in this Section is
subject to the provisions of Section 13.05, and (ii) the Company may at any
time, for the purpose of obtaining the satisfaction and discharge of this
Indenture or for any other purpose, pay, or direct any paying agent to pay,
to the Trustee all sums held in trust by the Company or such paying agent,
such sums to be held by the Trustee upon the same terms and conditions as
those upon which such sums were held by the Company or such paying agent;
and, upon such payment by any paying agent to the Trustee, such paying
agent shall be released from all further liability with respect to such
money.
.4. APPOINTMENT TO FILL VACANCY IN OFFICE OF TRUSTEE. The Company,
whenever necessary to avoid or fill a vacancy in the office of Trustee, will
appoint, in the manner provided in Section 9.10, a Trustee, so that there shall
at all times be a Trustee hereunder.
.5. COMPLIANCE WITH CONSOLIDATION PROVISIONS. The Company will not,
while any of the Junior Subordinated Debentures remain Outstanding, consolidate
with, or merge into, or merge into itself, or sell or convey all or
substantially all of its property to any other company unless the provisions of
Article XII hereof are complied with.
.6. RESTRICTIONS ON CERTAIN PAYMENTS. If at any time (a) there shall
have occurred any event of which the Company has actual knowledge that (i) with
the giving of notice or the lapse of time, or both, would constitute an Event of
Default and (ii) in respect to which the Company shall not have taken reasonable
steps to cure, or (b) the Company shall have given notice of its election of an
Extended Interest Payment Period as provided herein with respect to the Junior
Subordinated Debentures and shall not have rescinded such notice, or such
Extended Interest Payment Period, or any extension thereof, shall be continuing;
or (c) while the Junior Subordinated Debentures are held by the Trust, the
Company shall be in default with respect to its payment of any obligation under
the Preferred Securities Guarantee, then the Company will not (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock or (ii)
make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company (including the Junior
Subordinated Debentures) that rank pari passu with or junior in interest to the
Junior Subordinated Debentures or make any guarantee payments with respect to
any guarantee by the Company of the debt securities of any Subsidiary of the
Company if such guarantee ranks pari passu or junior in interest to the Junior
Subordinated Debentures (other than (A) dividends or distributions in common
stock, (B) any declaration of a dividend in connection with the implementation
of a shareholders' rights plan, or the issuance of stock under any such plan in
the future or the redemption or repurchase of any such rights pursuant thereto,
(C) payments under the Preferred Securities Guarantee and (D) purchases of
common stock related to the issuance of common stock or rights under any of the
Company's benefit plans for its directors, officers or employees).
.7. COVENANTS AS TO THE TRUST. For so long as the Trust Securities of
the Trust remain outstanding, the Company will (a) maintain 100% direct or
indirect ownership of the Common Securities of the Trust; provided, however,
that any permitted successor of the Company under this Indenture may succeed to
the Company's ownership of the Common Securities, (b) use its
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<PAGE> 23
reasonable efforts to cause the Trust (i) to remain a business trust, except in
connection with a distribution of Junior Subordinated Debentures, the redemption
of all of the Trust Securities of the Trust or certain mergers, consolidations
or amalgamations, each as permitted by the Trust Agreement, and (ii) to
otherwise continue not to be treated as an association taxable as a corporation
or partnership for United States federal income tax purposes and (c) to use its
reasonable efforts to cause each Holder of Trust Securities to be treated as
owning an individual undivided beneficial interest in the Junior Subordinated
Debentures.
If the Junior Subordinated Debentures are to be issued as a Global
Subordinated Debenture in connection with the distribution of the Junior
Subordinated Debentures to the holders of the Preferred Securities issued by the
Trust upon a Dissolution Event, the Company will use its best efforts to list
such Junior Subordinated Debentures on the NASDAQ National Market or on such
other exchange as the Preferred Securities may then be listed.
ARTICLE VI
SECURITYHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
.1. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF SECURITYHOLDERS.
The Company will furnish or cause to be furnished to the Trustee (a) on each
regular record date (as defined in Section 2.05(a)) a list, in such form as the
Trustee may reasonably require, of the names and addresses of the Holders as of
such regular record date, provided that the Company shall not be obligated to
furnish or cause to furnish such list at any time that the list shall not differ
in any respect from the most recent list furnished to the Trustee by the Company
and (b) at such other times as the Trustee may request in writing within 30 days
after the receipt by the Company of any such request, a list of similar form and
content as of a date not more than 15 days prior to the time such list is
furnished; provided, however, that, in either case, no such list need be
furnished if the Trustee shall be the Securities Registrar.
.2. PRESERVATION OF INFORMATION; COMMUNICATIONS WITH SECURITYHOLDERS.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of
the Holders contained in the most recent list furnished to it as provided
in Section 6.01 and as to the names and addresses of Holders received by
the Trustee in its capacity as Securities Registrar (if acting in such
capacity).
(b) The Trustee may destroy any list furnished to it as provided
in Section 6.01 upon receipt of a new list so furnished.
(c) Securityholders may communicate as provided in Section
312(b) of the Trust Indenture Act with other Securityholders with respect
to their rights under this Indenture or under the Junior Subordinated
Debentures.
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.3. REPORTS BY THE COMPANY.
(a) The Company covenants and agrees to file with the Trustee,
within 15 days after the Company is required to file the same with the
Commission, copies of the annual reports and of the information, documents
and other reports (or copies of such portions of any of the foregoing as
the Commission may from time to time by rules and regulations prescribe)
that the Company may be required to file with the Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not
required to file information, documents or reports pursuant to either of
such sections, then to file with the Trustee and the Commission, in
accordance with the rules and regulations prescribed from time to time by
the Commission, such of the supplementary and periodic information,
documents and reports that may be required pursuant to any applicable rules
and regulations of the Commission.
(b) The Company covenants and agrees to file with the Trustee
and the Commission, in accordance with the rules and regulations prescribed
from time to time by the Commission, such additional information, documents
and reports with respect to compliance by the Company with the conditions
and covenants provided for in this Indenture as may be required from time
to time by such rules and regulations.
(c) The Company covenants and agrees to transmit by mail, first
class postage prepaid, or reputable overnight delivery service that
provides for evidence of receipt, to the Securityholders, as their names
and addresses appear upon the Securities Register, within 30 days after the
filing thereof with the Trustee, such summaries of any information,
documents and reports required to be filed by the Company pursuant to
subsections (a) and (b) of this Section as may be required by rules and
regulations prescribed from time to time by the Commission.
.4. REPORTS BY THE TRUSTEE.
(a) Beginning January 31, 2000, on or before January 31 in each
year in which any of the Junior Subordinated Debentures are Outstanding,
the Trustee shall transmit by mail, first class postage prepaid, to the
Securityholders, as their names and addresses appear upon the Securities
Register, a brief report dated as of the preceding December 31, if and to
the extent required under Section 313(a) of the Trust Indenture Act.
(b) The Trustee shall comply with Section 313(b) and 313(c) of
the Trust Indenture Act.
(c) A copy of each such report shall, at the time of such
transmission to Securityholders, be filed by the Trustee with the Company,
and also with the Commission.
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ARTICLE VII
REMEDIES OF THE TRUSTEE AND
SECURITYHOLDERS ON EVENT OF DEFAULT
.1. EVENTS OF DEFAULT.
(a) Whenever used herein, "Event of Default" means any one or
more of the following events that has occurred and is continuing:
(i) the Company defaults in the payment of any installment
of interest upon any of the Junior Subordinated Debentures, as
and when the same shall become due and payable, and continuance
of such default for a period of 30 days; provided, however, that
a valid extension of an interest payment period by the Company in
accordance with the terms of this Indenture shall not constitute
a default in the payment of interest for this purpose;
(ii) the Company defaults in the payment of the principal of
any of the Junior Subordinated Debentures as and when the same
shall become due and payable whether at maturity, upon
redemption, by declaration or otherwise;
(iii) the Company fails to observe or perform any other of
its covenants or agreements hereunder with respect to the Junior
Subordinated Debentures for a period of 90 days after the date on
which written notice of such failure, requiring the same to be
remedied and stating that such notice is a "Notice of Default"
hereunder, shall have been given to the Company by the Trustee,
by registered or certified mail, or to the Company and the
Trustee by the Holders of at least 25% in principal amount of the
Junior Subordinated Debentures at the time Outstanding;
(iv) the Company pursuant to or within the meaning of any
Bankruptcy Law (A) commences a voluntary case, (B) consents to
the entry of an order for relief against it in an involuntary
case, (C) consents to the appointment of a custodian of it or for
all or substantially all of its property or (D) makes a general
assignment for the benefit of its creditors;
(v) a court of competent jurisdiction enters an order under
any Bankruptcy Law that (A) is for relief against the Company in
an involuntary case, (B) appoints a custodian of the Company for
all or substantially all of its property, or (C) orders the
liquidation of the Company, and the order or decree remains
unstayed and in effect for 90 days; or
(vi) in the event Junior Subordinated Debentures are issued
to the Trust or a trustee of the Trust in connection with the
issuance of Trust Securities by the Trust, the Trust shall have
voluntarily or involuntarily dissolved, wound up its business or
otherwise terminated its existence, except in connection with (A)
the distribution of Junior Subordinated Debentures to holders of
Trust Securities in
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liquidation of their interests in the Trust, (B) the redemption
of all of the outstanding Trust Securities of the Trust or (C)
certain mergers, consolidations or amalgamations, each as
permitted by the Trust Agreement.
(b) In each and every such case, unless the principal of all the
Junior Subordinated Debentures shall have already become due and payable,
either the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Junior Subordinated Debentures then Outstanding
hereunder, by notice in writing to the Company (and to the Trustee if given
by such Securityholders) may declare the principal of all the Junior
Subordinated Debentures to be due and payable immediately, and upon any
such declaration the same shall become and shall be immediately due and
payable, notwithstanding anything contained in this Indenture or in the
Junior Subordinated Debentures to the contrary.
(c) At any time after the principal of the Junior Subordinated
Debentures shall have been so declared due and payable, and before any
judgment or decree for the payment of the moneys due shall have been
obtained or entered as hereinafter provided, the Holders of a majority in
aggregate principal amount of the Junior Subordinated Debentures then
Outstanding, by written notice to the Company and the Trustee, may rescind
and annul such declaration and its consequences if: (i) the Company has
paid or deposited with the Trustee a sum sufficient to pay all matured
installments of interest upon all the Junior Subordinated Debentures and
the principal of any and all Junior Subordinated Debentures that shall have
become due otherwise than by acceleration (with interest upon such
principal and, to the extent that such payment is enforceable under
applicable law, upon overdue installments of interest, at the rate per
annum expressed in the Junior Subordinated Debentures to the date of such
payment or deposit) and the amount payable to the Trustee under Section
9.06, and (ii) any and all Events of Default under this Indenture, other
than the nonpayment of principal on Junior Subordinated Debentures that
shall not have become due by their terms, shall have been remedied or
waived as provided in Section 7.06. Should the Holders fail to annul such
declaration and waive such default, then the holders of a majority in
aggregate Liquidation Amount of the Preferred Securities shall have such
right.
No such rescission and annulment shall extend to or shall affect
any subsequent default or impair any right consequent thereon.
(d) In case the Trustee shall have proceeded to enforce any right
with respect to Junior Subordinated Debentures under this Indenture and
such proceedings shall have been discontinued or abandoned because of such
rescission or annulment or for any other reason or shall have been
determined adversely to the Trustee, then and in every such case the
Company and the Trustee shall be restored respectively to their former
positions and rights hereunder, and all rights, remedies and powers of the
Company and the Trustee shall continue as though no such proceedings had
been taken.
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.2. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
(a) The Company covenants that (i) in case it shall default in
the payment of any installment of interest on any of the Junior
Subordinated Debentures as and when the same shall have become due and
payable, and such default shall have continued for a period of 90 Business
Days, or (ii) in case it shall default in the payment of the principal of
any of the Junior Subordinated Debentures when the same shall have become
due and payable, whether upon maturity of the Junior Subordinated
Debentures or upon redemption or upon declaration or otherwise, then, upon
demand of the Trustee, the Company will pay to the Trustee, for the benefit
of the Holders of the Junior Subordinated Debentures, the whole amount that
then shall have become due and payable on all such Junior Subordinated
Debentures for principal or interest, or both, as the case may be, with
interest upon the overdue principal and (to the extent that payment of such
interest is enforceable under applicable law and, if the Junior
Subordinated Debentures are held by the Trust or a trustee of the Trust,
without duplication of any other amounts paid by the Trust or trustee in
respect thereof) upon overdue installments of interest at the rate per
annum expressed in the Junior Subordinated Debentures; and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, and the amount payable to the Trustee under Section
9.06.
(b) If the Company shall fail to pay such amounts forthwith upon
such demand, the Trustee, in its own name and as trustee of an express
trust, shall be entitled and empowered to institute any action or
proceedings at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceeding to judgment or
final decree, and may enforce any such judgment or final decree against the
Company or other obligor upon the Junior Subordinated Debentures and
collect the moneys adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or other obligor upon the Junior
Subordinated Debentures, wherever situated.
(c) In case of any receivership, insolvency, liquidation,
bankruptcy, reorganization, readjustment, arrangement, composition or
judicial proceedings affecting the Company or the creditors or property of
either, the Trustee shall have power to intervene in such proceedings and
take any action therein that may be permitted by the court and shall
(except as may be otherwise provided by law) be entitled to file such
proofs of claim and other papers and documents as may be necessary or
advisable in order to have the claims of the Trustee and of the Holders of
Junior Subordinated Debentures allowed for the entire amount due and
payable by the Company under this Indenture at the date of institution of
such proceedings and for any additional amount that may become due and
payable by the Company after such date, and to collect and receive any
moneys or other property payable or deliverable on any such claim, and to
distribute the same after the deduction of the amount payable to the
Trustee under Section 9.06; and any receiver, assignee or trustee in
bankruptcy or reorganization is hereby authorized by each of the Holders to
make such payments to the Trustee, and, in the event that the Trustee shall
consent to the making of such payments directly to such Securityholders, to
pay to the Trustee any amount due it under Section 9.06.
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(d) All rights of action and of asserting claims under this
Indenture may be enforced by the Trustee without the possession of any of
the Junior Subordinated Debentures, or the production thereof at any trial
or other proceeding relative thereto, and any such suit or proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall, after provision for
payment to the Trustee of any amounts due under Section 9.06, be for the
ratable benefit of the Holders of the Junior Subordinated Debentures.
In case of an Event of Default hereunder, the Trustee may in its discretion
proceed to protect and enforce the rights vested in it by this Indenture by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any of such rights, either at law or in equity or in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.
Nothing contained herein shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Securityholder any
plan of reorganization, arrangement, adjustment or composition affecting the
Junior Subordinated Debentures or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Securityholder in
any such proceeding.
.3. APPLICATION OF MONEYS COLLECTED. Any moneys collected by the Trustee
pursuant to this Article with respect to the Junior Subordinated Debentures
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such moneys on account of principal
or interest, upon presentation of the Junior Subordinated Debentures, and
notation thereon the payment, if only partially paid, and upon surrender thereof
if fully paid:
FIRST, to the payment of costs and expenses of collection and of
all amounts payable to the Trustee under Section 9.06;
SECOND, to the payment of all Senior and Subordinated Debt of the
Company if and to the extent required by Article XVI; and
THIRD, to the payment of the amounts then due and unpaid upon
Junior Subordinated Debentures for principal and interest, in respect of
which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due
and payable on such Junior Subordinated Debentures for principal and
interest, respectively.
.4. LIMITATION ON SUITS. No Holder shall have any right by virtue of or
by availing any provision of this Indenture to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Indenture
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless (a) such Holder previously shall have given to the Trustee
written notice of an Event of Default and of the continuance thereof; (b) the
Holders of not less than 25% in aggregate principal amount of the Junior
Subordinated Debentures then Outstanding shall have
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made written request upon the Trustee to institute such action, suit or
proceeding in its own name as trustee hereunder; (c) such Holder or Holders
shall have offered to the Trustee such reasonable indemnity as it may require
against the costs, expenses and liabilities to be incurred therein or thereby;
and (d) the Trustee for 60 days after its receipt of such notice, request and
offer of indemnity shall have failed to institute any such action, suit or
proceeding; and (e) during such 60-day period, the Holders of a majority in
principal amount of the Junior Subordinated Debentures do not give the Trustee a
direction inconsistent with the request.
Notwithstanding any other provisions of this Indenture to the contrary, the
right of any Holder to receive payment of the principal of and interest on the
Junior Subordinated Debentures on or after the respective due dates (or in the
case of redemption, on the redemption date), or to institute suit for the
enforcement of any such payment on or after such respective dates or redemption
date, shall not be impaired or affected without the consent of such Holder; and
by accepting a Junior Subordinated Debenture hereunder it is expressly
understood, intended and covenanted by the Holder thereof with every other such
Holder and the Trustee, that no one or more Holders shall have any right in any
manner whatsoever by virtue of or by availing any provision of this Indenture to
affect, disturb or prejudice the rights of any other Holders, or to obtain or
seek to obtain priority over or preference to any such other Holders, or to
enforce any right under this Indenture, except in the manner herein provided and
for the equal, ratable and common benefit of all Holders of Junior Subordinated
Debentures. For the protection and enforcement of the provisions of this
Section, each and every Securityholder and the Trustee shall be entitled to such
relief as can be given either at law or in equity.
.5. RIGHTS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT WAIVER.
(a) Except as otherwise provided in Section 7.02, all powers and
remedies given by this Article to the Trustee or to the Securityholders
shall, to the extent permitted by law, be deemed cumulative and not
exclusive of any other powers and remedies available to the Trustee or the
Holders of the Junior Subordinated Debentures, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture or otherwise established with
respect to such Junior Subordinated Debentures.
(b) No delay or omission of the Trustee or of any Holder of any
of the Junior Subordinated Debentures to exercise any right or power
accruing upon any Event of Default occurring and continuing as aforesaid
shall impair any such right or power, or shall be construed to be a waiver
of any such default or on acquiescence therein; and, subject to the
provisions of Section 7.04, every power and remedy given by this Article or
by law to the Trustee or the Securityholders may be exercised from time to
time, and as often as shall be deemed expedient, by the Trustee or by the
Securityholders.
.6. CONTROL BY SECURITYHOLDERS. The Holders of a majority in aggregate
principal amount of the Junior Subordinated Debentures at the time Outstanding,
determined in accordance with Section 10.04, shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee;
provided, however, that such direction shall not be in conflict with any rule of
law or
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with this Indenture. Subject to the provisions of Section 9.01, the
Trustee shall have the right to decline to follow any such direction if the
Trustee in good faith shall, by a Responsible Officer or Officers of the
Trustee, determine that the proceeding so directed would involve the Trustee in
personal liability. The Holders of a majority in aggregate principal amount of
the Junior Subordinated Debentures at the time Outstanding affected thereby,
determined in accordance with Section 10.04, may on behalf of the Holders of all
of the Junior Subordinated Debentures waive any past default in the performance
of any of the covenants contained herein and its consequences, except (a) a
default in the payment of the principal of or interest on any of the Junior
Subordinated Debentures as and when the same shall become due by its terms
otherwise than by acceleration (unless such default has been cured and a sum
sufficient to pay all matured installments of interest and principal has been
deposited with the Trustee in accordance with Section 7.01(c)), (b) a default in
the covenants contained in Section 5.06 or (c) in respect of a covenant or
provision hereof which under Article XI cannot be modified or amended without
the consent of the Holder of each Outstanding Junior Subordinated Debenture
affected; provided, however, that if the Junior Subordinated Debentures are held
by the Trust or a Trustee of the Trust, such waiver or modification to such
waiver shall not be effective until the Holders of a majority in Liquidation
Amount of Trust Securities of the Trust shall have consented to such waiver or
modification to such waiver; provided further, that if the consent of the Holder
of each Outstanding Junior Subordinated Debenture is required, such waiver shall
not be effective until each Holder of the Trust Securities of the Trust shall
have consented to such waiver. Upon any such waiver, the default covered thereby
shall be deemed to be cured for all purposes of this Indenture and the Company,
the Trustee and the Holders of the Junior Subordinated Debentures shall be
restored to their former positions and rights hereunder, respectively; but no
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon.
.7. UNDERTAKING TO PAY COSTS. All parties to this Indenture agree, and
each Holder of any Junior Subordinated Debentures by such Holder's acceptance
thereof shall be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken or omitted by
it as Trustee, the filing by any party litigant in such suit of an undertaking
to pay the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Securityholder, or group of Securityholders, holding more than
10% in aggregate principal amount of the Outstanding Junior Subordinated
Debentures, or to any suit instituted by any Securityholder for the enforcement
of the payment of the principal of or interest on the Junior Subordinated
Debentures on or after the due dates thereof.
ARTICLE VIII
FORM OF JUNIOR SUBORDINATED DEBENTURE AND ORIGINAL ISSUE
.1. FORM OF JUNIOR SUBORDINATED DEBENTURE. The Junior Subordinated
Debenture and the Trustee's Certificate of Authentication to be endorsed thereon
are to be substantially in
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the forms contained as Exhibit A to this Indenture, attached hereto and
incorporated herein by reference.
.2. ORIGINAL ISSUE OF JUNIOR SUBORDINATED DEBENTURES. Junior
Subordinated Debentures in the aggregate principal amount of $__________ may,
upon execution of this Indenture, be executed by the Company and delivered to
the Trustee for authentication, and the Trustee shall thereupon authenticate and
deliver the Junior Subordinated Debentures to or upon the written order of the
Company, signed by its Chairman, its Vice Chairman, its Chief Executive Officer,
its President or any Vice President, without any further action by the Company.
ARTICLE IX
CONCERNING THE TRUSTEE
.1. CERTAIN DUTIES AND RESPONSIBILITIES OF THE TRUSTEE.
(a) The Trustee, prior to the occurrence of an Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform with respect to the Junior Subordinated Debentures
such duties and only such duties as are specifically set forth in this
Indenture, and no implied covenants shall be read into this Indenture
against the Trustee. In case an Event of Default has occurred (that has not
been cured or waived), the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of care and
skill in their exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b) No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and
after the curing or waiving of all such Events of Default that
may have occurred:
(A) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this
Indenture, and the Trustee shall not be liable except for
the performance of such duties and obligations as are
specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture
against the Trustee; and
(B) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions
furnished to the Trustee and conforming to the requirements
of this Indenture; but in the case of any such certificates
or opinions that by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to
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determine whether or not they conform to the requirement of
this Indenture;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent
facts;
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
majority in principal amount of the Junior Subordinated
Debentures at the time Outstanding relating to the time, method
and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred upon
the Trustee under this Indenture; and
(iv) none of the provisions contained in this Indenture
shall require the Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance
of any of its duties or in the exercise of any of its rights or
powers, if there is reasonable ground for believing that the
repayment of such funds or liability is not reasonably assured to
it under the terms of this Indenture or adequate indemnity
against such risk is not reasonably assured to it.
.2. CERTAIN RIGHTS OF TRUSTEE. Except as otherwise provided in Section
9.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond, security or other paper or document believed by it to be genuine and
to have been signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by a Board Resolution or
an instrument signed in the name of the Company by the Chief Executive
Officer, the President or any Vice President and by the Secretary or an
Assistant Secretary or the Chief Accounting Officer thereof (unless other
evidence in respect thereof is specifically prescribed herein);
(c) the Trustee may consult with counsel and the written advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted hereunder in good faith and in reliance thereon;
(d) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request, order
or direction of any of the Securityholders, pursuant to the provisions of
this Indenture, unless such Securityholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby; nothing contained
herein shall, however, relieve the Trustee of the obligation, upon the
occurrence of an Event of Default (that has not been cured or waived) to
exercise such of the rights and powers vested in it by this Indenture, and
to use the same degree of care and skill in their exercise
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<PAGE> 33
as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs;
(e) the Trustee shall not be liable for any action taken or
omitted to be taken by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Indenture;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond, security or other papers or documents, unless requested in writing so
to do by the Holders of not less than a majority in principal amount of the
Outstanding Junior Subordinated Debentures (determined as provided in
Section 10.04); provided, however, that if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of
the Trustee, not reasonably assured to the Trustee by the security afforded
to it by the terms of this Indenture, the Trustee may require reasonable
indemnity against such costs, expenses or liabilities as a condition to so
proceeding. The reasonable expense of every such examination shall be paid
by the Company or, if paid by the Trustee, shall be repaid by the Company
upon demand; and
(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.
.3. TRUSTEE NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF THE JUNIOR
SUBORDINATED DEBENTURES.
(a) The recitals contained herein and in the Junior
Subordinated Debentures shall be taken as the statements of the Company and
the Trustee assumes no responsibility for the correctness of the same.
(b) The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Junior Subordinated Debentures.
(c) The Trustee shall not be accountable for the use or
application by the Company of any of the Junior Subordinated Debentures or
of the proceeds of such Junior Subordinated Debentures, or for the use or
application of any moneys paid over by the Trustee in accordance with any
provision of this Indenture, or for the use or application of any moneys
received by any paying agent other than the Trustee.
.4. MAY HOLD JUNIOR SUBORDINATED DEBENTURES. The Trustee or any paying
agent or Securities Registrar, in its individual or any other capacity, may
become the owner or pledgee of Junior Subordinated Debentures with the same
rights it would have if it were not Trustee, paying agent or Securities
Registrar.
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.5. MONEYS HELD IN TRUST. Subject to the provisions of Section 13.05,
all moneys received by the Trustee shall, until used or applied as herein
provided, be held in trust for the purposes for which they were received, but
need not be segregated from other funds except to the extent required by law.
The Trustee shall be under no liability for interest on any moneys received by
it hereunder except such as it may agree with the Company to pay thereon.
.6. COMPENSATION AND REIMBURSEMENT.
(a) The Company covenants and agrees to pay to the Trustee, and
the Trustee shall be entitled to, such reasonable compensation (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust), as the Company and the Trustee may from time
to time agree in writing, for all services rendered by it in the execution
of the trusts hereby created and in the exercise and performance of any of
the powers and duties hereunder of the Trustee, and, except as otherwise
expressly provided herein, the Company will pay or reimburse the Trustee
upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the provisions of
this Indenture (including the reasonable compensation and the expenses and
disbursements of its counsel and of all Persons not regularly in its
employ) except any such expense, disbursement or advance as may arise from
its negligence or bad faith. The Company also covenants to indemnify the
Trustee (and its officers, agents, directors and employees) for, and to
hold it harmless against, any loss, liability or expense incurred without
negligence or bad faith on the part of the Trustee and arising out of or in
connection with the acceptance or administration of this trust, including
the costs and expenses of defending itself against any claim of liability
in the premises.
(b) The obligations of the Company under this Section to
compensate and indemnify the Trustee and to pay or reimburse the Trustee
for expenses, disbursements and advances shall constitute additional
indebtedness hereunder. Such additional indebtedness shall be secured by a
lien prior to that of the Junior Subordinated Debentures upon all property
and funds held or collected by the Trustee as such, except funds held in
trust for the benefit of the Holders of the Junior Subordinated Debentures.
.7. RELIANCE ON OFFICERS' CERTIFICATE. Except as otherwise provided in
Section 9.01, whenever in the administration of the provisions of this Indenture
the Trustee shall deem it necessary or desirable that a matter be proved or
established prior to taking or suffering or omitting to take any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence or bad faith on the
part of the Trustee, be deemed to be conclusively proved and established by an
Officers' Certificate delivered to the Trustee and such certificate, in the
absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken, suffered or omitted to be taken by
it under the provisions of this Indenture upon the faith thereof.
.8. DISQUALIFICATION; CONFLICTING INTERESTS. If the Trustee has or shall
acquire any "conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Trustee
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and the Company shall in all respects comply with the provisions of
Section 310(b) of the Trust Indenture Act.
.9. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at all times be
a Trustee with respect to the Junior Subordinated Debentures issued hereunder
which shall at all times be a corporation organized and doing business under the
laws of the United States of America or any state or territory thereof or of the
District of Columbia, or a corporation or other Person permitted to act as
trustee by the Commission, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $500,000 (and
its parent holding company having a combined capital and surplus of at least
$50,000,000) and subject to supervision or examination by federal, state,
territorial, or District of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section, 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. No Affiliate of the Company may serve as
Trustee. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, the Trustee shall resign
immediately in the manner and with the effect specified in Section 9.10.
.10. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) The Trustee, or any successor hereafter appointed, may at
any time resign by giving written notice thereof to the Company and by
transmitting notice of resignation by mail, first class postage prepaid, to
the Securityholders, as their names and addresses appear upon the
Securities Register. Upon receiving such notice of resignation, the Company
shall promptly appoint a successor trustee by written instrument, in
duplicate, executed by order of the Board of Directors, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and
have accepted appointment within 30 days after the mailing of such notice
of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee, or any
Securityholder who has been a bona fide Holder of Junior Subordinated
Debentures for at least six months may, subject to the provisions of
Section 7.07, on behalf of such Securityholder and all other Holders,
petition any such court for the appointment of a successor trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.
(b) In case at any time any one of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of
Section 9.08 after written request therefor by the Company or by
any Securityholder who has been a bona fide Holder of Junior
Subordinated Debentures for at least six months; or
(ii) the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.09 and shall fail to resign
after written request therefor by the Company or by any such
Securityholder; or
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(iii) the Trustee shall become incapable of acting, or shall
be adjudged a bankrupt or insolvent, or commence a voluntary
bankruptcy proceeding, or a receiver of the Trustee or of its
property shall be appointed or consented to, or any public
officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, the Company may remove the Trustee and
appoint a successor trustee by written instrument, in duplicate, executed
by order of the Board of Directors, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee,
or, subject to the provisions of Section 7.07, unless the Trustee's duty to
resign is stayed as provided herein, any Securityholder who has been a bona
fide Holder of Junior Subordinated Debentures for at least six months may,
on behalf of that Holder and all other Holders, petition any court of
competent jurisdiction for the removal of the Trustee and the appointment
of a successor trustee. Such court may thereupon after such notice, if any,
as it may deem proper and prescribe, remove the Trustee and appoint a
successor trustee.
(c) The Holders of a majority in aggregate principal amount of
the Junior Subordinated Debentures at the time Outstanding may at any time
remove the Trustee by so notifying the Trustee and the Company and may
appoint a successor Trustee with the consent of the Company.
(d) Any resignation or removal of the Trustee and appointment of
a successor trustee pursuant to any of the provisions of this Section shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 9.11.
.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor trustee,
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 such rights, powers and
trusts referred to in paragraph (a) of this Section.
(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.
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(d) Upon acceptance of appointment by a successor trustee as
provided in this Section, the Company shall transmit notice of the
succession of such trustee hereunder by mail, first class postage prepaid,
to the Securityholders, as their names and addresses appear upon the
Securities Register. If the Company fails to transmit such notice within
ten days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be transmitted at the expense
of the Company.
.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any
corporation into which the Trustee may be merged or converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided that such corporation shall be
qualified and eligible under the provisions of this Article IX, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding. In case any
Junior Subordinated Debentures shall have been authenticated, but not delivered,
by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication and
deliver the Junior Subordinated Debentures so authenticated with the same effect
as if such successor Trustee had itself authenticated such Junior Subordinated
Debentures.
.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY. The Trustee
shall comply with Section 311(a) of the Trust Indenture Act, excluding any
creditor relationship described in Section 311(b) of the Trust Indenture Act. A
Trustee who has resigned or been removed shall be subject to Section 311(a) of
the Trust Indenture Act to the extent included therein.
.14. APPOINTMENT OF AUTHENTICATING AGENT. At any time when any of the
Junior Subordinated Debentures remain Outstanding, the Trustee may appoint an
Authenticating Agent or Agents which shall be authorized to act on behalf of the
Trustee to authenticate Junior Subordinated Debentures issued upon original
issuance, exchange, registration of transfer or partial redemption thereof or
pursuant to Section 2.08, and Junior Subordinated Debentures so authenticated
shall be entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee hereunder.
Wherever reference is made in this Indenture to the authentication and delivery
of Junior Subordinated Debentures 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 and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the United
States of America, any state thereof or the District of Columbia, authorized
under such laws to act as Authenticating Agent, having a combined capital and
surplus of not less than $500,000 (and its parent holding company having a
combined capital and surplus of at least $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 such supervision or examining authority, 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
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so published. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section, such Authenticating Agent
shall resign immediately in the manner and with the effect specified in this
Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation 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.
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 notice of
resignation or upon such 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 mail written notice of such appointment by
first class mail, postage prepaid, to all Securityholders as their names and
addresses appear in the Securities Register. Any successor Authenticating Agent
upon acceptance of its appointment hereunder shall become vested with all the
rights, powers and duties of its predecessor hereunder, with the like effect as
if originally named as an Authenticating Agent herein. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section.
The Trustee 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 payments, subject to the provisions
of Section 9.06.
If an appointment is made pursuant to this Section, the Junior Subordinated
Debentures may have endorsed thereon, in lieu of the form of certificate of
authentication set forth in Section 8.01, a certificate of authentication in the
following form:
"This is one of the Junior Subordinated Debentures described in the within
mentioned Indenture."
------------------------------------------,
as Trustee
By
---------------------------------------,
as Authenticating Agent
By
---------------------------------------,
Authorized Signature
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ARTICLE X
CONCERNING THE SECURITYHOLDERS
.1. EVIDENCE OF ACTION BY SECURITYHOLDERS. Whenever in this Indenture it
is provided that the Holders of a majority or specified percentage in aggregate
principal amount of the Junior Subordinated Debentures may take any action
(including the making of any demand or request, the giving of any notice,
consent or waiver or the taking of any other action), the fact that at the time
of taking any such action the Holders of such majority or specified percentage
have joined therein may be evidenced by any instrument or any number of
instruments of similar tenor executed by such Holders in Person or by agent or
proxy appointed in writing.
If the Company shall solicit from the Securityholders any request, demand,
authorization, direction, notice, consent, waiver or other action, the Company
may, at its option, as evidenced by an Officers' Certificate, fix in advance a
record date for the determination of Securityholders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other
action, but the Company shall have no obligation to do so. If such a record date
is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other action may be given before or after the record date, but only
the Securityholders of record at the close of business on the record date shall
be deemed to be Securityholders for the purposes of determining whether
Securityholders of the requisite proportion of Outstanding Junior Subordinated
Debentures have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other action, and for that
purpose the Outstanding Junior Subordinated Debentures shall be computed as of
the record date; provided, however, that no such authorization, agreement or
consent by such Securityholders on the record date shall be deemed effective
unless it shall become effective pursuant to the provisions of this Indenture
not later than six months after the record date.
.2. PROOF OF EXECUTION BY SECURITYHOLDERS. Subject to the provisions of
Section 6.01, proof of the execution of any instrument by a Securityholder (such
proof will not require notarization) or his agent or proxy and proof of the
holding by any Person of any of the Junior Subordinated Debentures shall be
sufficient if made in the following manner:
(a) The fact and date of the execution by any such Person of
any instrument may be proved in any reasonable manner acceptable to the
Trustee.
(b) The ownership of Junior Subordinated Debentures shall be
proved by the Securities Register or by a certificate of the Securities
Registrar thereof.
(c) The Trustee may require such additional proof of any matter
referred to in this Section as it shall deem necessary.
.3. WHO MAY BE DEEMED OWNERS. Prior to the due presentment for
registration of transfer of any Junior Subordinated Debenture, the Company, the
Trustee, any paying agent and
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any Securities Registrar may deem and treat the Person in whose name such Junior
Subordinated Debenture shall be registered upon the books of the Company as the
absolute owner of such Junior Subordinated Debenture (whether or not such Junior
Subordinated Debenture shall be overdue and notwithstanding any notice of
ownership or writing thereon made by anyone other than the Securities Registrar)
for the purpose of receiving payment of or on account of the principal of and
(subject to Section 2.03) interest on such Junior Subordinated Debenture and for
all other purposes; and neither the Company nor the Trustee nor any paying agent
nor any Securities Registrar shall be affected by any notice to the contrary.
.4. CERTAIN JUNIOR SUBORDINATED DEBENTURES OWNED BY COMPANY DISREGARDED.
In determining whether the Holders of the requisite aggregate principal amount
of Junior Subordinated Debentures have concurred in any direction, consent or
waiver under this Indenture, the Junior Subordinated Debentures that are owned
by the Company or any other obligor on the Junior Subordinated Debentures or by
any Person directly or indirectly controlling or controlled by or under common
control with the Company or any other obligor on the Junior Subordinated
Debentures shall be disregarded and deemed not to be Outstanding for the purpose
of any such determination, except that for the purpose of determining whether
the Trustee shall be protected in relying on any such direction, consent or
waiver, only Junior Subordinated Debentures that the Trustee actually knows are
so owned shall be so disregarded. The Junior Subordinated Debentures so owned
that have been pledged in good faith may be regarded as Outstanding for the
purposes of this Section, if the pledgee shall establish to the satisfaction of
the Trustee the pledgee's right with respect to such Junior Subordinated
Debentures and that the pledgee is not a Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any such other obligor. In case of a dispute as to such right, any
decision by the Trustee taken upon the advice of counsel shall be full
protection to the Trustee.
.5. ACTIONS BINDING ON FUTURE SECURITYHOLDERS. At any time prior to
(but not after) the evidencing to the Trustee, as provided in Section 10.01, of
the taking of any action by the Holders of the majority or percentage in
aggregate principal amount of the Junior Subordinated Debentures specified in
this Indenture in connection with such action, any Holder who is shown by the
evidence to have consented to such action may, by filing written notice with the
Trustee, and upon proof of holding as provided in Section 10.02, revoke such
action so far as concerns such Holder's Junior Subordinated Debentures. Except
as aforesaid any such action taken by the Holder shall be conclusive and binding
upon such Holder and upon all future Holders and owners of such Holder's Junior
Subordinated Debentures, and of any Junior Subordinated Debentures issued in
exchange therefor, on registration of transfer thereof or in place thereof,
irrespective of whether or not any notation in regard thereto is made upon such
Junior Subordinated Debentures. Any action taken by the Holders of the majority
or percentage in aggregate principal amount of the Junior Subordinated
Debentures specified in this Indenture in connection with such action shall be
conclusively binding upon the Company, the Trustee and the Holders of all the
Junior Subordinated Debentures.
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ARTICLE XI
SUPPLEMENTAL INDENTURES
.1. SUPPLEMENTAL INDENTURES WITHOUT THE CONSENT OF SECURITYHOLDERS. In
addition to any supplemental indenture otherwise authorized by this Indenture,
the Company and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as then in effect), without the consent of
the Securityholders, for one or more of the following purposes:
(a) to cure any ambiguity, defect, or inconsistency herein, or
in the Junior Subordinated Debentures, provided that any such action does
not materially adversely affect the interests of the Holders or the holders
of the Preferred Securities so long as they remain outstanding;
(b) to comply with Article XII;
(c) to provide for uncertificated Junior Subordinated Debentures
in addition to or in place of certificated Junior Subordinated Debentures;
(d) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon the
Company;
(e) to add to, delete from, or revise the conditions,
limitations, and restrictions on the authorized amount, terms, or purposes
of issue, authentication, and delivery of Junior Subordinated Debentures,
as herein set forth;
(f) to make any change that does not adversely affect the rights
of any Securityholder in any material respect; or
(g) to establish the form of any certifications required to be
furnished pursuant to the terms of this Indenture or to add to the rights
of the Holders.
The Trustee is hereby authorized to join with the Company in the execution
of any such supplemental indenture, and to make any further appropriate
agreements and stipulations that may be therein contained, but the Trustee shall
not be obligated to enter into any such supplemental indenture that affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section may
be executed by the Company and the Trustee without the consent of the Holders of
any of the Junior Subordinated Debentures at the time Outstanding,
notwithstanding any of the provisions of Section 11.02.
.2. SUPPLEMENTAL INDENTURES WITH CONSENT OF SECURITYHOLDERS. With the
consent (evidenced as provided in Section 10.01) of the Holders of not less than
a majority in aggregate principal amount of the Junior Subordinated Debentures
at the time Outstanding, the Company,
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when authorized by Board Resolutions, and the Trustee may from time to time and
at any time enter into an indenture or indentures supplemental hereto (which
shall conform to the provisions of the Trust Indenture Act as then in effect)
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of any supplemental
indenture or of modifying in any manner not covered by Section 11.01 the rights
of the Holders of the Junior Subordinated Debentures under this Indenture;
provided, however, that no such supplemental indenture shall without the consent
of the Holders of each Junior Subordinated Debenture then Outstanding, (a)
change (except as expressly provided herein pursuant to Section 2.02) the stated
maturity of the Junior Subordinated Debentures or reduce the principal amount
thereof; or reduce the rate or extend (except as expressly provided herein
pursuant to Section 4.01) the time of payment of interest thereon; or (b) reduce
the percentage of principal amount of Junior Subordinated Debentures, the
Holders of which are required to consent to any such supplemental indenture;
provided, further, that if the Junior Subordinated Debentures are held by the
Trust or a trustee of the Trust, such supplemental indenture shall not be
effective until the holders of a majority in aggregate Liquidation Amount of
Preferred Securities shall have consented to such supplemental indenture;
provided further, that if the consent of the Holder of each Outstanding Junior
Subordinated Debenture is required, such supplemental indenture shall not be
effective until each Holder of the Trust Securities shall have consented to such
supplemental indenture.
It shall not be necessary for the consent of the Securityholders to approve
the particular form of any proposed supplemental indenture, but it shall be
sufficient if such consent shall approve the substance thereof.
.3. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any
supplemental indenture pursuant to the provisions of this Article or of Section
12.01, this Indenture shall be and be deemed to be modified and amended in
accordance therewith.
.4. JUNIOR SUBORDINATED DEBENTURES AFFECTED BY SUPPLEMENTAL INDENTURES.
Junior Subordinated Debentures, affected by a supplemental indenture,
authenticated and delivered after the execution of such supplemental indenture
pursuant to the provisions of this Article or of Section 12.01, may 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 Junior
Subordinated Debentures so modified as to conform, in the opinion of the Board
of Directors, to any modification of this Indenture contained in any such
supplemental indenture may be prepared by the Company, authenticated by the
Trustee and delivered in exchange for the Junior Subordinated Debentures then
Outstanding.
.5. EXECUTION OF SUPPLEMENTAL INDENTURES. Upon the request of the
Company, accompanied by Board Resolutions authorizing the execution of any such
supplemental indenture, and upon the filing with the Trustee of evidence of the
consent of Securityholders required to consent thereto as aforesaid, the Trustee
shall join with the Company in the execution of such supplemental indenture
unless such supplemental indenture affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion but shall not be obligated to enter into such supplemental
indenture. The Trustee, subject to the provisions of Section 9.01, may receive
an Opinion of Counsel as conclusive
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<PAGE> 43
evidence that any supplemental indenture executed pursuant to this Article is
authorized or permitted by, and conforms to, the terms of this Article and that
it is proper for the Trustee under the provisions of this Article to join in the
execution thereof.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Trustee
shall transmit by mail, first class postage prepaid, a notice, setting forth in
general terms the substance of such supplemental indenture, to the
Securityholders as their names and addresses appear upon the Securities
Register. Any failure of the Trustee to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
supplemental indenture.
ARTICLE XII
SUCCESSOR CORPORATION
.1. COMPANY MAY CONSOLIDATE, ETC. 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) in
case 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 on the Junior Subordinated Debentures issued under
this Indenture; (b) immediately after giving effect thereto, no Event of
Default, and no event which, after notice or lapse of time or both, would become
an Event of Default, shall have occurred and be continuing; and (c) such
successor Person expressly assumes the due and punctual performance and
observance of all the covenants and conditions of this Indenture to be kept and
performed by the Company by executing and delivering a supplemental indenture in
form and substance satisfactory to the Trustee.
.2. SUCCESSOR SUBSTITUTED.
(a) In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition and upon the assumption by the successor
Person by supplemental indenture, executed and delivered to the Trustee
and satisfactory in form to the Trustee, of the due and punctual
payment of the principal of and interest on all of the Junior
Subordinated Debentures Outstanding and the due and punctual
performance of all of the covenants and conditions of this Indenture to
be performed by the Company, such successor Person shall succeed to and
be substituted for the Company, with the same effect as if it had been
named as the Company herein, and thereupon the predecessor corporation
shall be relieved of all obligations and covenants under this Indenture
and the Junior Subordinated Debentures.
(b) In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition such changes in phraseology and form (but
not in substance) may be made in the Junior Subordinated Debentures
thereafter to be issued as may be appropriate.
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.3. EVIDENCE OF CONSOLIDATION, ETC., TO TRUSTEE. The Trustee, subject
to the provisions of Section 9.01, may receive an Opinion of Counsel as
conclusive evidence that any such consolidation, merger, sale, conveyance,
transfer or other disposition, and any such assumption, comply with the
provisions of this Article.
ARTICLE XIII
SATISFACTION AND DISCHARGE
.1. SATISFACTION AND DISCHARGE OF INDENTURE. If at any time: (a) the
Company shall have delivered to the Trustee for cancellation all Junior
Subordinated Debentures theretofore authenticated (other than any Junior
Subordinated Debentures that shall have been destroyed, lost or stolen and that
shall have been replaced or paid as provided in Section 2.08) and Junior
Subordinated Debentures for whose payment money or Governmental Obligations have
theretofore been deposited in trust or segregated and held in trust by the
Company (and thereupon repaid to the Company or discharged from such trust, as
provided in Section 13.05); or (b) all such Junior Subordinated Debentures not
theretofore delivered to the Trustee for cancellation shall have become due and
payable, or are by their terms to become due and payable within one year or are
to be called for redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption, and the Company shall
deposit or cause to be deposited with the Trustee as trust funds the entire
amount in moneys or Governmental Obligations sufficient or a combination thereof
sufficient, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay at maturity or upon redemption all Junior Subordinated
Debentures not theretofore delivered to the Trustee for cancellation, including
principal and interest due or to become due to such date of maturity or date
fixed for redemption, as the case may be, and if the Company shall also pay or
cause to be paid all other sums payable hereunder by the Company; then this
Indenture shall thereupon cease to be of further effect except for the
provisions of Sections 2.02, 2.03, 2.04, 2.05, 4.01, 4.02, 4.03 and 9.10, that
shall survive until the date of maturity or redemption date, as the case may be,
and Sections 9.06 and 13.05, that shall survive to such date and thereafter, and
the Trustee, on demand of the Company and at the cost and expense of the
Company, shall execute proper instruments acknowledging satisfaction of and
discharging this Indenture.
.2. DISCHARGE OF OBLIGATIONS. If at any time all such Junior
Subordinated Debentures not theretofore delivered to the Trustee for
cancellation or that have not become due and payable as described in Section
13.01 shall have been paid by the Company by depositing irrevocably with the
Trustee, as trust funds, moneys or an amount of Governmental Obligations
sufficient to pay at maturity or upon redemption all such Junior Subordinated
Debentures not theretofore delivered to the Trustee for cancellation, including
principal and interest due or to become due to such date of maturity or date
fixed for redemption, as the case may be, and if the Company shall also pay or
cause to be paid all other sums payable hereunder by the Company, then after the
date such moneys or Governmental Obligations, as the case may be, are deposited
with the Trustee the obligations of the Company under this Indenture shall cease
to be of further effect except for the provisions of Sections 2.02, 2.03, 2.04,
2.05, 4.01, 4.02, 4.03, 9.06, 9.10 and 13.05 hereof that
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shall survive until such Junior Subordinated Debentures shall mature and be
paid. Thereafter, Sections 9.06 and 13.05 shall survive.
.3. DEPOSITED MONEYS TO BE HELD IN TRUST. All moneys or Governmental
Obligations deposited with the Trustee pursuant to Sections 13.01 or 13.02 shall
be held in trust and shall be available for payment as due, either directly or
through any paying agent (including the Company acting as its own paying agent),
to the Holders of the Junior Subordinated Debentures for the payment or
redemption of which such moneys or Governmental Obligations have been deposited
with the Trustee.
.4. PAYMENT OF MONEYS HELD BY PAYING AGENTS. In connection with the
satisfaction and discharge of this Indenture all moneys or Governmental
Obligations then held by any paying agent under the provisions of this Indenture
shall, upon demand of the Company, be paid to the Trustee and thereupon such
paying agent shall be released from all further liability with respect to such
moneys or Governmental Obligations.
.5. REPAYMENT TO COMPANY. Any moneys or Governmental Obligations
deposited with any paying agent or the Trustee, or then held by the Company in
trust for payment of principal of or interest on the Junior Subordinated
Debentures that are not applied but remain unclaimed by the Holders of such
Junior Subordinated Debentures for at least two years after the date upon which
the principal of or interest on such Junior Subordinated Debentures shall have
respectively become due and payable, shall be repaid to the Company on the
second annual anniversary of when such payment was originally due or (if then
held by the Company) shall be discharged from such trust; and thereupon the
paying agent and the Trustee shall be released from all further liability with
respect to such moneys or Governmental Obligations, and the Holder of any of the
Junior Subordinated Debentures entitled to receive such payment shall
thereafter, as an unsecured general creditor, look only to the Company for the
payment thereof.
ARTICLE XIV
IMMUNITY OF INCORPORATORS,
STOCKHOLDERS, OFFICERS AND DIRECTORS
.1. NO RECOURSE. No recourse under or upon any obligation, covenant or
agreement of this Indenture, or of any Junior Subordinated Debenture, or for any
claim based thereon or otherwise in respect thereof, shall be had against any
incorporator, stockholder, officer or director as such, past, present or future,
of the Company or of any predecessor or successor corporation, either directly
or through the Company or any such predecessor or successor corporation, whether
by virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise; it being expressly understood that this
Indenture and the obligations issued hereunder are solely corporate obligations,
and that no such personal liability whatever shall attach to, or is or shall be
incurred by, the incorporators, stockholders, officers or directors as such, of
the Company or of any predecessor or successor corporation, or any of them,
because of the creation of the indebtedness hereby authorized, or under or by
reason of the obligations, covenants or agreements contained in this Indenture
or in any of the Junior Subordinated Debentures or implied therefrom; and that
any and all such personal liability of
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every name and nature, either at common law or in equity or by constitution or
statute, of, and any and all such rights and claims against, every such
incorporator, stockholder, officer or director as such, because of the creation
of the indebtedness hereby authorized, or under or by reason of the obligations,
covenants or agreements contained in this Indenture or in any of the Junior
Subordinated Debentures or implied therefrom, are hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this
Indenture and the issuance of such Junior Subordinated Debentures.
ARTICLE XV
MISCELLANEOUS PROVISIONS
.1. EFFECT ON SUCCESSORS AND ASSIGNS. All the covenants, stipulations,
promises and agreements in this Indenture contained by or on behalf of the
Company or the Trustee shall bind their respective successors and assigns,
whether so expressed or not.
.2. ACTIONS BY SUCCESSOR. Any act or proceeding by any provision of
this Indenture authorized or required to be done or performed by any board,
committee or officer of the Company shall and may be done and performed with
like force and effect by the corresponding board, committee or officer of any
corporation that shall at the time be the lawful sole successor of the Company.
.3. SURRENDER OF COMPANY POWERS. The Company by instrument in writing
executed by authority of two-thirds of its Board of Directors and delivered to
the Trustee may surrender any of the powers reserved to the Company, and
thereupon such power so surrendered shall terminate both as to the Company and
as to any successor corporation.
.4. NOTICES. Except as otherwise expressly provided herein any notice
or demand that by any provision of this Indenture is required or permitted to be
given or served by the Trustee or by the Holders of Junior Subordinated
Debentures to or on the Company may be given or served by being deposited first
class postage prepaid in a post-office letterbox addressed (until another
address is filed in writing by the Company with the Trustee), as follows: c/o
Flagstar Bancorp, Inc., 2600 Telegraph Road, Bloomfield Hills, Michigan 48302,
Attention: Chief Executive Officer. Any notice, election, request or demand by
the Company or any Securityholder to or upon the Trustee shall be deemed to have
been sufficiently given or made, for all purposes, if given or made in writing
at the Corporate Trust Office of the Trustee.
.5. GOVERNING LAW. This Indenture and each Junior Subordinated
Debenture shall be deemed to be a contract made under the internal laws of the
State of Michigan and for all purposes shall be construed in accordance with the
laws of said state, provided that the immunities and the standard of care of the
Trustee shall be governed by Michigan law.
.6. TREATMENT OF JUNIOR SUBORDINATED DEBENTURES AS DEBT. It is intended
that the Junior Subordinated Debentures will be treated as indebtedness and not
as equity for federal income tax purposes. The provisions of this Indenture
shall be interpreted to further this intention.
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<PAGE> 47
.7. COMPLIANCE CERTIFICATES AND OPINIONS.
(a) Upon any application or demand by the Company to the Trustee
to take any action under any of the provisions of this Indenture, the
Company shall furnish to the Trustee an Officers' Certificate stating
that all conditions precedent provided for in this Indenture relating
to the proposed action have been complied with and an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent have been complied with, except that in the case of any such
application or demand as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to
such particular application or demand, no additional certificate or
opinion need be furnished.
(b) Every certificate or opinion delivered to the Trustee with
respect to compliance with a condition or covenant in this Indenture
shall include (i) a statement that the Person making such certificate
or opinion has read such covenant or condition; (ii) a brief statement
as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or
opinion are based; (iii) a statement that, in the opinion of such
Person, such Person has made such examination or investigation as is
necessary to enable such Person to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been complied with.
.8. PAYMENTS ON BUSINESS DAYS. In any case where the date of maturity
of interest or principal of the Junior Subordinated Debentures or the date of
redemption of the Junior Subordinated Debentures shall not be a Business Day,
then payment of interest or principal will be made on the next succeeding
Business Day (without any additional 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 the date such
payment was originally payable.
.9. CONFLICT WITH TRUST INDENTURE ACT. If and to the extent that any
provision of this Indenture limits, qualifies or conflicts with the duties
imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such
imposed duties shall control.
.10. COUNTERPARTS. This Indenture may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
.11. SEPARABILITY. In case any one or more of the provisions contained
in this Indenture or in the Junior Subordinated Debentures shall for any reason
be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
Indenture or of the Junior Subordinated Debentures, but this Indenture and the
Junior Subordinated Debentures shall be construed as if such invalid or illegal
or unenforceable provision had never been contained herein or therein.
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<PAGE> 48
.12. ASSIGNMENT. The Company will have the right at all times to assign
any of its respective rights or obligations under this Indenture to a direct or
indirect wholly owned Subsidiary of the Company, provided that, in the event of
any such assignment, the Company will remain liable for all such obligations.
Subject to the foregoing, this Indenture is binding upon and inures to the
benefit of the parties thereto and their respective successors and assigns. This
Indenture may not otherwise be assigned by the parties hereto.
.13. ACKNOWLEDGMENT OF RIGHTS. The Company acknowledges that, with
respect to any Junior Subordinated Debentures held by the Trust or a trustee of
the Trust, if the Property Trustee of the Trust fails to enforce its rights
under this Indenture as the Holder of the Junior Subordinated Debentures held as
the assets of the Trust, any holder of Preferred Securities may institute legal
proceedings directly against the Company to enforce such Property Trustee's
rights under this Indenture without first instituting any legal proceedings
against such Property Trustee or any other Person or entity. Notwithstanding the
foregoing, if an Event of Default has occurred and is continuing and such event
is attributable to the failure of the Company to pay interest or principal on
the Junior Subordinated Debentures on the date such interest or principal is
otherwise payable (or in the case of redemption, on the redemption date), the
Company acknowledges that a holder of Preferred Securities may directly
institute a proceeding for enforcement of payment to such holder of the
principal of or interest on the Junior Subordinated Debentures having a
principal amount equal to the aggregate Liquidation Amount of the Preferred
Securities of such holder on or after the respective due date specified in the
Junior Subordinated Debentures. This Section 15.13 may not be amended without
the prior written consent of the holders of all of the Preferred Securities.
ARTICLE XVI
SUBORDINATION OF JUNIOR SUBORDINATED DEBENTURES
.1. AGREEMENT TO SUBORDINATE. The Company covenants and agrees, and
each Holder of Junior Subordinated Debentures issued hereunder by such Holder's
acceptance thereof likewise covenants and agrees, that all Junior Subordinated
Debentures shall be issued subject to the provisions of this Article XVI; and
each Holder, whether upon original issue or upon transfer or assignment thereof,
accepts and agrees to be bound by such provisions.
The payment by the Company of the principal of and interest on all
Junior Subordinated Debentures issued hereunder shall, to the extent and in the
manner hereinafter set forth, be subordinated and junior in right of payment to
the prior payment in full of all Senior and Subordinated Debt, whether
outstanding at the date of this Indenture or thereafter incurred.
No provision of this Article XVI shall prevent the occurrence of any
default or Event of Default hereunder.
.2. DEFAULT ON SENIOR AND SUBORDINATED DEBT. In the event and during
the continuation of any default by the Company in the payment of principal,
premium, interest or any other payment due on any Senior and Subordinated Debt
of the Company or in the event that the maturity of any Senior and Subordinated
Debt of the Company has been accelerated because of a
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<PAGE> 49
default, then, in either case, no payment shall be made by the Company with
respect to the principal of or interest on the Junior Subordinated Debentures.
In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee when such payment is prohibited by the preceding
paragraph of this Section 16.02, such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of Senior and
Subordinated Debt or their respective representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior and
Subordinated Debt may have been issued, as their respective interests may
appear, but only to the extent that the holders of the Senior and Subordinated
Debt (or their representative or representatives or a trustee) notify the
Trustee in writing within 90 days of such payment of the amounts then due and
owing on the Senior and Subordinated Debt and only the amounts specified in such
notice to the Trustee shall be paid to the holders of Senior and Subordinated
Debt.
.3. LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any payment by the
Company or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to creditors upon any dissolution or
winding-up or liquidation or reorganization of the Company, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings, all
amounts due upon all Senior and Subordinated Debt of the Company shall first be
paid in full, or payment thereof provided for in money in accordance with its
terms, before any payment is made by the Company on account of the principal or
interest on the Junior Subordinated Debentures; and upon any such dissolution or
winding-up or liquidation or reorganization, any payment by the Company, or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the Holders or the Trustee would be entitled to
receive from the Company, except for the provisions of this Article XVI, shall
be paid by the Company or by any receiver, trustee in bankruptcy, liquidating
trustee, agent or other Person making such payment or distribution, or by the
Holders or by the Trustee under the Indenture if received by them or it,
directly to the holders of Senior and Subordinated Debt of the Company (pro rata
to such holders on the basis of the respective amounts of Senior and
Subordinated Debt held by such holders, as calculated by the Company) or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior and
Subordinated Debt may have been issued, as their respective interests may
appear, to the extent necessary to pay such Senior and Subordinated Debt in
full, in money or money's worth, after giving effect to any concurrent payment
or distribution to or for the holders of such Senior and Subordinated Debt,
before any payment or distribution is made to the Holders or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee before all Senior and Subordinated Debt of the Company is paid in full,
or provision is made for such payment in money in accordance with its terms,
such payment or distribution shall be held in trust for the benefit of and shall
be paid over or delivered to the holders of such Senior and Subordinated Debt or
their representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior and
Subordinated Debt may have been issued, and their respective interests may
appear, as calculated by the Company, for application to the payment of
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<PAGE> 50
all Senior and Subordinated Debt of the Company, as the case may be, remaining
unpaid to the extent necessary to pay such Senior and Subordinated Debt in full
in money in accordance with its terms, after giving effect to any concurrent
payment or distribution to or for the benefit of the holders of such Senior and
Subordinated Debt.
For purposes of this Article XVI, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article XVI with respect
to the Junior Subordinated Debentures to the payment of all Senior and
Subordinated Debt of the Company, as the case may be, that may at the time be
outstanding, provided that (a) such Senior and Subordinated Debt is assumed by
the new corporation, if any, resulting from any such reorganization or
readjustment, and (b) the rights of the holders of such Senior and Subordinated
Debt are not, without the consent of such holders, altered by such
reorganization or readjustment. The consolidation of the Company with, or the
merger of the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance or transfer of its property
as an entirety, or substantially as an entirety, to another corporation upon the
terms and conditions provided for in Article XII of this Indenture shall not be
deemed a dissolution, winding-up, liquidation or reorganization for the purposes
of this Section 16.03 if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions stated
in Article XII of this Indenture. Nothing in Section 16.02 or in this Section
16.03 shall apply to claims of, or payments to, the Trustee under or pursuant to
Section 9.06 of this Indenture.
.4. SUBROGATION. Subject to the payment in full of all Senior and
Subordinated Debt of the Company, the rights of the Holders of the Junior
Subordinated Debentures shall be subrogated to the rights of the holders of such
Senior and Subordinated Debt to receive payments or distributions of cash,
property or securities of the Company, as the case may be, applicable to such
Senior and Subordinated Debt until the principal of and interest on the Junior
Subordinated Debentures shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the holders of such Senior and
Subordinated Debt of any cash, property or securities to which the Holders of
the Junior Subordinated Debentures or the Trustee would be entitled except for
the provisions of this Article XVI, and no payment over pursuant to the
provisions of this Article XVI to or for the benefit of the holders of such
Senior and Subordinated Debt by Holders of the Junior Subordinated Debentures or
the Trustee, shall, as between the Company, its creditors other than holders of
Senior and Subordinated Debt of the Company, and the Holders of the Junior
Subordinated Debentures, be deemed to be a payment by the Company to or on
account of such Senior and Subordinated Debt. It is understood that the
provisions of this Article XVI are and are intended solely for the purposes of
defining the relative rights of the Holders of the Junior Subordinated
Debentures, on the one hand, and the holders of such Senior and Subordinated
Debt on the other hand.
Nothing contained in this Article XVI or elsewhere in this Indenture or
in the Junior Subordinated Debentures is intended to or shall impair, as between
the Company, its creditors other than the holders of Senior and Subordinated
Debt of the Company, and the Holders of the Junior Subordinated Debentures, the
obligation of the Company, which is absolute and
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<PAGE> 51
unconditional, to pay to the Holders of the Junior Subordinated Debentures the
principal of and interest on the Junior Subordinated Debentures as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of the Holders of the Junior Subordinated
Debentures and creditors of the Company, other than the holders of Senior and
Subordinated Debt of the Company, nor shall anything herein or therein prevent
the Trustee or the Holder of any Junior Subordinated Debenture from exercising
all remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article XVI of the holders
of such Senior and Subordinated Debt in respect of cash, property or securities
of the Company, as the case may be, received upon the exercise of any such
remedy.
Upon any payment or distribution of assets of the Company referred to
in this Article XVI, the Trustee, subject to the provisions of Section 9.01, and
the Holders of the Junior Subordinated Debentures shall be entitled to
conclusively rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person making such
payment or distribution, delivered to the Trustee or to the Holders of the
Junior Subordinated Debentures, for the purposes of ascertaining the Persons
entitled to participate in such distribution, the holders of Senior and
Subordinated Debt and other indebtedness of the Company, as the case may be, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article XVI.
.5. TRUSTEE TO EFFECTUATE SUBORDINATION. Each Holder of Junior
Subordinated Debentures by such Holder's acceptance thereof authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article XVI and appoints the Trustee such Holder's attorney-in-fact for any and
all such purposes.
.6. NOTICE BY THE COMPANY. The Company shall give prompt written notice
to a Responsible Officer of the Trustee of any fact known to the Company that
would prohibit the making of any payment of moneys to or by the Trustee in
respect of the Junior Subordinated Debentures pursuant to the provisions of this
Article XVI. Notwithstanding the provisions of this Article XVI or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment of
moneys to or by the Trustee in respect of the Junior Subordinated Debentures
pursuant to the provisions of this Article XVI, unless and until a Responsible
Officer of the Trustee shall have received written notice thereof from the
Company or a holder or holders of Senior and Subordinated Debt or from any
trustee therefor; and before the receipt of any such written notice, the
Trustee, subject to the provisions of Section 9.01, shall be entitled in all
respects to assume that no such facts exist; provided, however, that if the
Trustee shall not have received the notice provided for in this Section 16.06 at
least two Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose (including, without limitation, the
payment of the principal of or interest on any Junior Subordinated Debenture),
then, anything herein contained to the contrary notwithstanding, the Trustee
shall have full power and authority to receive such money and to apply the same
to the purposes for which it was received, and shall not be affected
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<PAGE> 52
by any notice to the contrary that may be received by it within two Business
Days prior to such date.
The Trustee, subject to the provisions of Section 9.01, shall be
entitled to conclusively rely on the delivery to it of a written notice by a
Person representing himself to be a holder of Senior and Subordinated Debt of
the Company (or a trustee on behalf of such holder), to establish that such
notice has been given by a holder of such Senior and Subordinated Debt or a
trustee on behalf of any such holder or holders. In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any Person as a holder of such Senior and Subordinated Debt to
participate in any payment or distribution pursuant to this Article XVI, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of such Senior and Subordinated
Debt held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article XVI, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
.7. RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR AND SUBORDINATED DEBT. The
Trustee in its individual capacity shall be entitled to all the rights set forth
in this Article XVI in respect of any Senior and Subordinated Debt at any time
held by it, to the same extent as any other holder of Senior and Subordinated
Debt, and nothing in this Indenture shall deprive the Trustee of any of its
rights as such holder.
With respect to the holders of Senior and Subordinated Debt of the
Company, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article XVI, and
no implied covenants or obligations with respect to the holders of such Senior
and Subordinated Debt shall be read into this Indenture against the Trustee. The
Trustee shall not be deemed to owe any fiduciary duty to the holders of such
Senior and Subordinated Debt and, subject to the provisions of Section 9.01, the
Trustee shall not be liable to any holder of such Senior and Subordinated Debt
if it shall pay over or deliver to Holders of Junior Subordinated Debentures,
the Company or any other Person money or assets to which any holder of such
Senior and Subordinated Debt shall be entitled by virtue of this Article XVI or
otherwise.
.8. SUBORDINATION MAY NOT BE IMPAIRED. No right of any present or
future holder of any Senior and Subordinated Debt of the Company to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
the Company with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof that any such holder may have or otherwise
be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior and Subordinated Debt of the Company may, at any time and
from time to time, without the consent of or notice to the Trustee or the
Holders of the Junior Subordinated Debentures, without incurring responsibility
to the Holders of the Junior Subordinated Debentures and without impairing or
releasing the subordination provided in this Article XVI or the obligations
hereunder
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<PAGE> 53
of the Holders of the Junior Subordinated Debentures to the holders of such
Senior and Subordinated Debt, do any one or more of the following: (a) change
the manner, place or terms of payment or extend the time of payment of, or renew
or alter, such Senior and Subordinated Debt, or otherwise amend or supplement in
any manner such Senior and Subordinated Debt or any instrument evidencing the
same or any agreement under which such Senior and Subordinated Debt is
outstanding; (b) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing such Senior and Subordinated Debt; (c)
release any Person liable in any manner for the collection of such Senior and
Subordinated Debt; and (d) exercise or refrain from exercising any rights
against the Company and any other Person.
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<PAGE> 54
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.
FLAGSTAR BANCORP, INC.
By _____________________________________
Thomas J. Hammond, Chairman and Chief
Executive Officer
FMB TRUST COMPANY, NATIONAL
ASSOCIATION, as Trustee
By______________________________________
Name____________________________________
Title___________________________________
By______________________________________
Name____________________________________
Title___________________________________
STATE OF MICHIGAN )
) ss.
COUNTY OF OAKLAND )
On the _______ day of ____________, 1999, before me personally came
THOMAS J. HAMMOND, to me known, who, being by me duly sworn, did depose and say
that he is the Chairman and Chief Executive Officer of FLAGSTAR BANCORP, INC.,
one of the corporations described in and which executed the above instrument;
and that he signed his name thereto on behalf of said corporation by authority
of the Board of Directors of said corporation.
Witness my hand and official seal:
_______________________________________________
Notary Public
My Commission Expires:
___________________________
52
<PAGE> 55
STATE OF MICHIGAN )
) ss.
COUNTY OF OAKLAND )
On the _______ day of ___________, 1999, before me personally came
______________________, to me known, who, being by me duly sworn, did depose and
say that he/she is the _______________________ of FMB TRUST COMPANY, NATIONAL
ASSOCIATION, one of the corporations described in and which executed the above
instrument; and that he/she signed his/her name thereto on behalf of said
corporation by authority of the Board of Directors of said corporation.
Witness my hand and official seal:
______________________________________________
Notary Public
My Commission Expires:
_________________________
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<PAGE> 56
EXHIBIT A
(FORM OF FACE OF JUNIOR SUBORDINATED DEBENTURE)
This Junior Subordinated Debenture is a [Global] Subordinated Debenture
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
Junior Subordinated Debenture is exchangeable for Junior Subordinated Debentures
registered in the name of a person other than [____________] [the Depositary or
its nominee] only in the limited circumstances described in the Indenture, and
no transfer of this Junior Subordinated Debenture [(other than a transfer of
this Junior Subordinated Debenture as a whole by the Depositary to a nominee of
the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary)] may be registered except in such limited
circumstances.
[Unless this Junior Subordinated Debenture is presented by an
authorized representative of TRUSTEE ( ____[address]_______________) to the
issuer or its agent for registration of transfer, exchange or payment, and any
Junior Subordinated Debenture issued is registered in the name of Cede & Co. or
such other name as requested by an authorized representative of TRUSTEE (and any
payment hereon is made to Cede & Co. or to such other entity as is requested by
an authorized representative of TRUSTEE), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch the
registered owner hereof, Cede & Co., has an interest herein.]
Registered Principal Amount
Registered No. _______________ $__________
[CUSIP No. _______________]
FLAGSTAR BANCORP, INC.
____% JUNIOR SUBORDINATED DEBENTURE
DUE ________________, 2029
Flagstar Bancorp, Inc., a Delaware corporation (the "Company," which
term includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to TRUSTEE or registered
assigns, the principal sum of
____________________________________________________________________ Dollars
($__________) on ________________, 2029 (which date may be shortened as provided
in the Indenture, the "Stated Maturity"), and to pay interest on said principal
sum from ________________, 1999, or from the most recent interest payment date
(each such date, an "Interest Payment Date") to which interest has been paid or
duly provided for, quarterly (subject to deferral as set forth herein) in
arrears on the 15th day of March, June, September and December in each year
commencing June 15, 1999, at the rate of ____% per annum until the principal
hereof shall have become due and payable, and on any overdue principal and
(without duplication and to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest at the
same rate per annum compounded quarterly. The
<PAGE> 57
amount of each interest payment due with respect to the Junior Subordinated
Debentures will include amounts accrued through the date the interest payment is
due. The amount of interest payable on any Interest Payment Date shall be
computed on the basis of a 360-day year of twelve 30-day months. In the event
that any date on which interest is payable on this Junior Subordinated Debenture
is not a Business Day (as defined in the Indenture), then payment of interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, 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. The interest installment
so payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in the Indenture, be paid to the person in whose name
this Junior Subordinated Debenture (or one or more Predecessor Junior
Subordinated Debentures, as defined in the Indenture) is registered at the close
of business on the regular record date for such interest installment, which
shall be the close of business on the business day next preceding such Interest
Payment Date unless otherwise provided in the Indenture. The principal of and
the interest on this Junior Subordinated Debenture shall be payable at the
office or agency of the Trustee (as defined in the Indenture) maintained for
that purpose in any coin or currency of the United States of America that at the
time of payment is legal tender for payment of public and private debts;
provided, however, that payment of interest may be made at the option of the
Company by check mailed to the Registered Holder (as defined in the Indenture)
at such address as shall appear in the Securities Register (as defined in the
Indenture). Notwithstanding the foregoing, so long as the Holder of this Junior
Subordinated Debenture is the Property Trustee (as defined in the Indenture),
the payment of the principal of and interest on this Junior Subordinated
Debenture will be made at such place and to such account as may be designated by
the Property Trustee.
The Stated Maturity may be shortened at any time by the Company to any
date not earlier than ________________, 2004, subject to the Company having
received prior approval of the OTS (as defined in the Indenture) if then
required under applicable capital guidelines or policies of the OTS.
The indebtedness evidenced by this Junior Subordinated Debenture is, to
the extent provided in the Indenture, subordinate and junior in right of payment
to the prior payment in full of all Senior and Subordinated Debt (as defined in
the Indenture), and this Junior Subordinated Debenture is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Junior
Subordinated Debenture, by accepting the same, (a) agrees to and shall be bound
by such provisions, (b) authorizes and directs the Trustee on his or her behalf
to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination so provided and (c) appoints the Trustee his or her
attorney-in-fact for any and all such purposes. Each Holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior and Subordinated Debt, whether now outstanding or hereafter incurred, and
waives reliance by each such holder upon said provisions.
This Junior Subordinated Debenture shall not be entitled to any benefit
under the Indenture, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
A-2
<PAGE> 58
The provisions of this Junior Subordinated Debenture are continued on
the reverse side hereof and such continued provisions shall for all purposes
have the same effect as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
Dated: _______________ FLAGSTAR BANCORP, INC.
By ______________________________________
Thomas J. Hammond, Chairman and Chief
Executive Officer
Attest:
By __________________________
Mary K. McGuire
Secretary
A-3
<PAGE> 59
[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This is one of the Junior Subordinated Debentures described in the
within-mentioned Indenture.
Dated:__________________ TRUSTEE, as Trustee
By_______________________________________
Authorized Signature
A-4
<PAGE> 60
[FORM OF REVERSE OF JUNIOR SUBORDINATED DEBENTURE]
____% JUNIOR SUBORDINATED DEBENTURE
(CONTINUED)
This Junior Subordinated Debenture is one of the junior subordinated
debentures of the Company (herein sometimes referred to as the "Junior
Subordinated Debentures"), specified in the Indenture, all issued under and
pursuant to a Subordinated Indenture dated as of ________________, 1999 (the
"Indenture") duly executed and delivered between the Company and TRUSTEE, as
Trustee (the "Trustee"), to which Indenture reference is hereby made for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the Holders of the Junior
Subordinated Debentures. The Junior Subordinated Debentures are limited in
aggregate principal amount as specified in the Indenture.
Because of the occurrence and continuation of a Special Event (as
defined in the Indenture), in certain circumstances, this Junior Subordinated
Debenture may become due and payable at the option of the Company at the
principal amount together with any interest accrued thereon (the "Redemption
Price"). The Redemption Price shall be paid prior to 2:00 p.m. Bloomfield Hills,
Michigan time, on the date of such redemption or at such earlier time as the
Company determines.
The Company shall have the right to redeem this Junior Subordinated
Debenture at the option of the Company, in whole or in part, from time to time,
on or after ________________, 2004, at a redemption price equal to 100% of the
principal amount to be redeemed plus any accrued but unpaid interest thereon to
the date of such redemption. Any redemption pursuant to this paragraph will be
made upon not less than 30 days' nor more than 60 days' notice. If the Junior
Subordinated Debentures are only partially redeemed by the Company pursuant to
this paragraph, the Junior Subordinated Debentures will be redeemed pro rata or
by lot or by any other method utilized by the Trustee; provided that if, at the
time of redemption, the Junior Subordinated Debentures are registered as a
Global Subordinated Debenture (as defined in the Indenture), the Depositary (as
defined in the Indenture) shall determine the principal amount of such Junior
Subordinated Debentures held by each Junior Subordinated Debenture Holder to be
redeemed in accordance with its procedures.
In the event of redemption of this Junior Subordinated Debenture in
part only, a new Junior Subordinated Debenture for the unredeemed portion hereof
will be issued in the name of the Holder hereof upon the cancellation hereof.
In case an Event of Default (as defined in the Indenture), shall have
occurred and be continuing, the principal of all of the Junior Subordinated
Debentures may be declared, and upon such declaration shall become, due and
payable, in the manner, with the effect and subject to the conditions provided
in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Junior Subordinated Debentures at the time
Outstanding, as defined in the Indenture, to execute
A-5
<PAGE> 61
supplemental indentures for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or of modifying in any manner the rights of the Holders
of the Junior Subordinated Debentures; provided, however, that no such
supplemental indenture shall (i) change the stated maturity of the Junior
Subordinated Debentures except as provided in the Indenture, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon, without the consent of the Holder of each Junior Subordinated
Debenture so affected, or (ii) reduce the aforesaid percentage of Junior
Subordinated Debentures, the Holders of which are required to consent to any
such supplemental indenture, without the consent of the Holders of each Junior
Subordinated Debenture then Outstanding and affected thereby. The Indenture also
contains provisions permitting the Holders of a majority in aggregate principal
amount of the Junior Subordinated Debentures at the time Outstanding, on behalf
of all of the Holders of the Junior Subordinated Debentures, to waive any past
default in the performance of any of the covenants contained in the Indenture,
or established pursuant to the Indenture, and its consequences, except a default
in the payment of the principal of or interest on any of the Junior Subordinated
Debentures. Any such consent or waiver by the registered Holder of this Junior
Subordinated Debenture (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such Holder and upon all future Holders and owners
of this Junior Subordinated Debenture and of any Junior Subordinated Debenture
issued in exchange herefor or in place hereof (whether by registration of
transfer or otherwise), irrespective of whether or not any notation of such
consent or waiver is made upon this Junior Subordinated Debenture.
No reference herein to the Indenture and no provision of this Junior
Subordinated Debenture or of the Indenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of and
interest on this Junior Subordinated Debenture at the time and place and at the
rate and in the money herein prescribed.
The Company shall have the right at any time during the term of the
Junior Subordinated Debentures and from time to time to extend the interest
payment period of such Junior Subordinated Debentures for up to 20 consecutive
quarters (an "Extended Interest Payment Period"), at the end of which period the
Company shall pay all interest then accrued and unpaid (together with interest
thereon at the rate specified for the Junior Subordinated Debentures to the
extent that payment of such interest is enforceable under applicable law).
Before the termination of any such Extended Interest Payment Period, the Company
may further extend such Extended Interest Payment Period, provided that such
Extended Interest Payment Period together with all such further extensions
thereof shall not exceed 20 consecutive quarters or extend beyond the Stated
Maturity. At the termination of any such Extended Interest Payment Period and
upon the payment of all accrued and unpaid interest and any additional amounts
then due, the Company may commence a new Extended Interest Payment Period.
The Company has agreed that if at any time (a) there shall have
occurred any event of which the Company has actual knowledge that (i) with the
giving of notice or the lapse of time, or both, would constitute an Event of
Default and (ii) in respect to which the Company shall not have taken reasonable
steps to cure, or (b) the Company shall have given notice of its election of an
Extended Interest Payment Period as provided herein and shall not have rescinded
such notice, or such Extended Interest Payment Period, or any extension thereof,
shall be continuing; or (c)
A-6
<PAGE> 62
while the Junior Subordinated Debentures are held by the Trust, the Company
shall be in default with respect to its payment of any obligation under the
Preferred Securities Guarantee, then the Company will not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock or (ii)
make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company (including the Junior
Subordinated Debentures) that rank pari passu with or junior in interest to the
Junior Subordinated Debentures or make any guarantee payments with respect to
any guarantee by the Company of the debt securities of any subsidiary of the
Company if such guarantee ranks pari passu or junior in interest to the Junior
Subordinated Debentures (other than (A) dividends or distributions in common
stock, (B) any declaration of a dividend in connection with the implementation
of a shareholders' rights plan, or the issuance of stock under any such plan in
the future or the redemption or repurchase of any such rights pursuant thereto,
(C) payments under the Preferred Securities Guarantee and (D) purchases of
common stock related to the issuance of common stock or rights under any of the
Company's benefit plans for its directors, officers or employees).
As provided in the Indenture and subject to certain limitations therein
set forth, this Junior Subordinated Debenture is transferable by the registered
Holder hereof on the Securities Register of the Company, upon surrender of this
Junior Subordinated Debenture for registration of transfer at the office or
agency of the Trustee accompanied by a written instrument or instruments of
transfer in form satisfactory to the Company or the Trustee duly executed by the
registered Holder hereof or such Holder's attorney duly authorized in writing,
and thereupon one or more new Junior Subordinated Debentures of authorized
denominations and for the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be made for any
such transfer, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this Junior
Subordinated Debenture, the Company, the Trustee, any paying agent and the
Securities Registrar (as defined in the Indenture) may deem and treat the
Registered Holder hereof as the absolute owner hereof (whether or not this
Junior Subordinated Debenture shall be overdue and notwithstanding any notice of
ownership or writing hereon made by anyone other than the Securities Registrar)
for the purpose of receiving payment of or on account of the principal hereof
and interest due hereon and for all other purposes, and neither the Company nor
the Trustee nor any paying agent nor any Securities Registrar shall be affected
by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Junior Subordinated Debenture, or for any claim based hereon,
or otherwise in respect hereof, or based on or in respect of the Indenture,
against any incorporator, stockholder, officer or director, past, present or
future, as such, of the Company or of any predecessor or successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issuance
hereof, expressly waived and released.
The Junior Subordinated Debentures are issuable only in registered form
without coupons in denominations of $_____ and any integral multiple thereof.
[This Global Subordinated
A-7
<PAGE> 63
Debenture is exchangeable for Junior Subordinated Debentures in definitive form
only under certain limited circumstances set forth in the Indenture. Junior
Subordinated Debentures so issued are issuable only in registered form without
coupons in denominations of $_____ and any integral multiple thereof.]
All terms used in this Junior Subordinated Debenture that are defined
in the Indenture shall have the meanings assigned to them in the Indenture.
A-8
<PAGE> 64
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
<S> <C>
DEFINITIONS......................................................................................................1
ARTICLE II
DESCRIPTION, TERMS, CONDITIONS, REGISTRATION AND EXCHANGE
OF THE JUNIOR SUBORDINATED DEBENTURES
Section 2.01. Designation and Principal Amount...............................................................8
Section 2.02. Maturity.......................................................................................8
Section 2.03. Form and Payment...............................................................................9
Section 2.04. Global Subordinated Debenture..................................................................9
Section 2.05. Interest......................................................................................11
Section 2.06. Execution, Authentication, Delivery and Dating................................................12
Section 2.07. Registration and Transfer.....................................................................12
Section 2.08. Mutilated, Destroyed, Lost and Stolen Junior Subordinated Debentures..........................13
ARTICLE III
REDEMPTION OF JUNIOR SUBORDINATED DEBENTURES
Section 3.01. Redemption....................................................................................14
Section 3.02. Special Event Redemption......................................................................14
Section 3.03. Optional Redemption by Company................................................................14
Section 3.04. Notice of Redemption..........................................................................15
Section 3.05. Payment Upon Redemption.......................................................................16
Section 3.06. No Sinking Fund...............................................................................17
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
Section 4.01. Extension of Interest Payment Period..........................................................17
Section 4.02. Notice of Extension...........................................................................17
Section 4.03. Limitation of Transactions During Extension...................................................18
ARTICLE V
PARTICULAR COVENANTS OF THE COMPANY
Section 5.01. Payment of Principal and Interest.............................................................18
</TABLE>
<PAGE> 65
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 5.02. Maintenance of Agency.........................................................................18
Section 5.03. Paying Agents.................................................................................19
Section 5.04. Appointment to Fill Vacancy in Office of Trustee..............................................20
Section 5.05. Compliance with Consolidation Provisions......................................................20
Section 5.06. Restrictions on Certain Payments..............................................................20
Section 5.07. Covenants as to the Trust.....................................................................20
ARTICLE VI
SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND
THE TRUSTEE
Section 6.01. Company to Furnish Trustee Names and Addresses of Securityholders.............................21
Section 6.02. Preservation of Information; Communications with Securityholders..............................21
Section 6.03. Reports by the Company........................................................................21
Section 6.04. Reports by the Trustee........................................................................22
ARTICLE VII
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF
DEFAULT
Section 7.01. Events of Default.............................................................................22
Section 7.02. Collection of Indebtedness and Suits for Enforcement by Trustee...............................24
Section 7.03. Application of Moneys Collected...............................................................26
Section 7.04. Limitation on Suits...........................................................................26
Section 7.05. Rights and Remedies Cumulative; Delay or Omission Not Waiver..................................27
Section 7.06. Control by Securityholders....................................................................27
Section 7.07. Undertaking to Pay Costs......................................................................28
ARTICLE VIII
FORM OF JUNIOR SUBORDINATED DEBENTURE AND ORIGINAL ISSUE
Section 8.01. Form of Junior Subordinated Debenture.........................................................28
Section 8.02. Original Issue of Junior Subordinated Debentures..............................................28
</TABLE>
ii
<PAGE> 66
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
ARTICLE IX
CONCERNING THE TRUSTEE
<S> <C> <C>
Section 9.01. Certain Duties and Responsibilities of the Trustee............................................28
Section 9.02. Certain Rights of Trustee.....................................................................30
Section 9.03. Trustee not Responsible for Recitals or Issuance of the Junior Subordinated Debentures........31
Section 9.04. May Hold Junior Subordinated Debentures.......................................................31
Section 9.05. Moneys Held in Trust..........................................................................31
Section 9.06. Compensation and Reimbursement................................................................31
Section 9.07. Reliance on Officers' Certificate.............................................................32
Section 9.08. Disqualification; Conflicting Interests.......................................................32
Section 9.09. Corporate Trustee Required; Eligibility.......................................................32
Section 9.10. Resignation and Removal; Appointment of Successor.............................................33
Section 9.11. Acceptance of Appointment by Successor........................................................34
Section 9.12. Merger, Conversion, Consolidation or Succession to Business...................................34
Section 9.13. Preferential Collection of Claims Against the Company.........................................35
Section 9.14. Appointment of Authenticating Agent...........................................................35
ARTICLE X
CONCERNING THE SECURITYHOLDERS
Section 10.01. Evidence of Action by Securityholders.........................................................36
Section 10.02. Proof of Execution by Securityholders.........................................................37
Section 10.03. Who May be Deemed Owners......................................................................37
Section 10.04. Certain Junior Subordinated Debentures Owned by Company Disregarded...........................37
Section 10.05. Actions Binding on Future Securityholders.....................................................38
ARTICLE XI
SUPPLEMENTAL INDENTURES
Section 11.01. Supplemental Indentures Without the Consent of Securityholders................................38
Section 11.02. Supplemental Indentures With Consent of Securityholders.......................................39
Section 11.03. Effect of Supplemental Indentures.............................................................40
Section 11.04. Junior Subordinated Debentures Affected by Supplemental Indentures............................40
Section 11.05. Execution of Supplemental Indentures..........................................................40
</TABLE>
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TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
ARTICLE XII
SUCCESSOR CORPORATION
<S> <C> <C>
Section 12.01. Company May Consolidate, Etc..................................................................40
Section 12.02. Successor Substituted.........................................................................41
Section 12.03. Evidence of Consolidation, etc., to Trustee...................................................41
ARTICLE XIII
SATISFACTION AND DISCHARGE
Section 13.01. Satisfaction and Discharge of Indenture.......................................................41
Section 13.02. Discharge of Obligations......................................................................42
Section 13.03. Deposited Moneys to be Held in Trust..........................................................42
Section 13.04. Payment of Moneys held by Paying Agents.......................................................42
Section 13.05. Repayment to Company..........................................................................42
ARTICLE XIV
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND
DIRECTORS
Section 14.01. No Recourse...................................................................................43
ARTICLE XV
MISCELLANEOUS PROVISIONS
Section 15.01. Effect on Successors and Assigns..............................................................43
Section 15.02. Actions by Successor..........................................................................43
Section 15.03. Surrender of Company Powers...................................................................43
Section 15.04. Notices.......................................................................................44
Section 15.05. Governing Law.................................................................................44
Section 15.06. Treatment of Junior Subordinated Debentures as Debt...........................................44
Section 15.07. Compliance Certificates and Opinions..........................................................44
Section 15.08. Payments on Business Days.....................................................................44
Section 15.09. Conflict with Trust Indenture Act.............................................................45
Section 15.10. Counterparts..................................................................................45
Section 15.11. Separability..................................................................................45
Section 15.12. Assignment....................................................................................45
</TABLE>
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TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 15.13. Acknowledgment of Rights......................................................................45
ARTICLE XVI
SUBORDINATION OF JUNIOR SUBORDINATED DEBENTURES
Section 16.01. Agreement to Subordinate......................................................................46
Section 16.02. Default on Senior and Subordinated Debt.......................................................46
Section 16.03. Liquidation; Dissolution; Bankruptcy..........................................................46
Section 16.04. Subrogation...................................................................................47
Section 16.05. Trustee to Effectuate Subordination...........................................................48
Section 16.06. Notice by the Company.........................................................................49
Section 16.07. Rights of the Trustee; Holders of Senior and Subordinated Debt................................49
Section 16.08. Subordination May Not be Impaired.............................................................50
</TABLE>
EXHIBIT A FORM OF JUNIOR SUBORDINATED DEBENTURE
v
<PAGE> 1
EXHIBIT 4.7
================================================================================
PREFERRED SECURITIES GUARANTEE AGREEMENT
FLAGSTAR BANCORP, INC.
and
FMB TRUST COMPANY, NATIONAL ASSOCIATION
Dated: March __, 1999
================================================================================
<PAGE> 2
CROSS REFERENCE TABLE
Section of Trust Indenture Act of 1939, Section of Guarantee Agreement
as Amended
310(a) 4.01(a)
310(b) 4.01(c), 2.08
310(c) Inapplicable
311(a) 2.02(b)
311(b) 2.02(b)
311(c) Inapplicable
312(a) 2.02(a)
312(b) 2.02(b)
313 2.03
314(a) 2.04
314(b) Inapplicable
314(c) 2.05
314(d) Inapplicable
314(e) 1.01, 2.05, 3.02
314(f) 2.01, 3.02
315(a) 3.01(d)
315(b) 2.07
315(c) 3.01
315(d) 3.01(d)
316(a) 1.01, 3.06, 5.04
316(b) 5.03
316(c) 8.02
317(a) Inapplicable
317(b) Inapplicable
318(a) 2.01(b)
318(b) 2.01
318(c) 2.01(a)
<PAGE> 3
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"), dated
as of March __, 1999, is executed and delivered by FLAGSTAR BANCORP, INC.., a
Michigan corporation (the "Guarantor"), and FMB TRUST COMPANY, NATIONAL
ASSOCIATION, as trustee (the "Preferred Guarantee Trustee"), for the benefit of
the Holders (as defined herein) from time to time of the Preferred Securities
(as defined herein) of FLAGSTAR TRUST I, a Delaware statutory business trust
("Flagstar Trust").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the
"Trust Agreement") dated as of March __, 1999 among the trustees of Flagstar
Trust named therein, the Guarantor, as sponsor, and the holders from time to
time of undivided beneficial interests in the assets of Flagstar Trust, Flagstar
Trust is issuing on the date hereof__________ preferred securities, having an
aggregate liquidation amount of $_______________________ designated the
__% Cumulative Trust Preferred Securities (the "Preferred Securities"); 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 in this Preferred Securities Guarantee, to pay to the
Holders of the Preferred Securities the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
.1. DEFINITIONS AND INTERPRETATIONS. In this Preferred Securities
Guarantee, unless the context otherwise requires:
(a) capitalized terms used in this Preferred Securities Guarantee
but not defined in the preamble above have the respective meanings
assigned to them in this Section 1.01;
(b) a term defined anywhere in this Preferred Securities Guarantee
has the same meaning throughout;
(c) all references to "the Preferred Securities Guarantee" or
"this Preferred Securities Guarantee" are to this Preferred Securities
Guarantee as modified, supplemented or amended from time to time;
(d) all references in this Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this Preferred
Securities Guarantee, unless otherwise specified;
<PAGE> 4
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Preferred Securities Guarantee, unless otherwise
defined in this Preferred Securities Guarantee or unless the context
otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than (a) a Saturday or Sunday, (b) a day
on which banking institutions in the State of Michigan are authorized or
required by law or executive order to remain closed, or (c) a day on which the
Preferred Guarantee Trustee's Corporate Trust Office is closed for business.
"Corporate Trust Office" means the office of the Preferred Guarantee Trustee
at which the corporate trust business of the Preferred Guarantee Trustee shall,
at any particular time, be principally administered, which office at the date of
execution of this Agreement is located at 25 South Charles Street, Baltimore,
Maryland 21203, Attn: Corporate Trust Administration.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Debt" means with respect to any person, whether recourse is to all or a
portion of the assets of such person and whether or not contingent: (a) every
obligation of such person for money borrowed; (b) every obligation of such
person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (c) every reimbursement obligation of such person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such person; (d) every obligation of such person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (e) every capital lease obligation of such person; and (f) every
obligation of the type referred to in clauses (a) through (e) of another person
and all dividends of another person the payment of which, in either case, such
person has guaranteed or for which such person is responsible or liable,
directly or indirectly, as obligor or otherwise.
"Event of Default" means a default by the Guarantor on any of its payment or
other obligations under this Preferred Securities Guarantee.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by Flagstar Trust: (a) any accrued and unpaid Distributions (as defined in
the Trust Agreement) that are required to be paid on such Preferred Securities
to the extent Flagstar Trust shall have funds available therefor, (b) the
redemption price, including all accrued and unpaid Distributions to the date of
redemption (the "Redemption Price") to the extent Flagstar Trust has funds
available therefor, with respect to any Preferred Securities called for
redemption by Flagstar Trust, and (c) upon a voluntary or involuntary
dissolution, winding-up or termination of Flagstar Trust (other than in
connection with the distribution of Junior Subordinated Debentures to the
Holders
2
<PAGE> 5
in exchange for Preferred Securities as provided in the Trust Agreement), the
lesser of (i) the aggregate of the liquidation amount and all accrued and unpaid
Distributions on the Preferred Securities to the date of payment, to the extent
Flagstar Trust shall have funds available therefor, and (ii) the amount of
assets of Flagstar Trust remaining available for distribution to Holders in
liquidation of Flagstar Trust (in either case, the "Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books and records of
Flagstar 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 or any Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee, any Affiliate of
the Preferred Guarantee Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives, nominees, custodians or agents of
the Preferred Guarantee Trustee.
"Indenture" means the Subordinated Indenture dated as of March __, 1999,
among the Guarantor (the "Debenture Issuer") and American Securities Transfer &
Trust, Inc., as trustee, and any indenture supplemental thereto pursuant to
which the Junior Subordinated Debentures are to be issued to the Property
Trustee (as defined in the Trust Agreement) of Flagstar Trust.
"Junior Subordinated Debentures" means the series of junior subordinated
deferrable interest debt securities of the Guarantor designated the __% Junior
Subordinated Debentures due 2029 held by the Property Trustee of Flagstar Trust.
"Majority in liquidation amount of the Preferred Securities" means, except
as provided by the Trust Indenture Act, a vote by Holders of Preferred
Securities, voting separately as a class, of more than 50% of the liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by two Authorized officers of such Person. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Preferred Securities Guarantee shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definition
relating thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
3
<PAGE> 6
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Guarantee Trustee" means American Securities Transfer &
Trust, Inc., until a Successor Preferred Guarantee Trustee has been appointed
and has accepted such appointment pursuant to the terms of this Preferred
Securities Guarantee and thereafter means each such Successor Preferred
Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, any officer within the Corporate Trust Office of the Preferred
Guarantee Trustee, including any vice-president, any assistant vice-president,
any assistant secretary, the treasurer, any assistant treasurer or other officer
of the Corporate Trust Office of the Preferred Guarantee Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.01.
"Senior and Subordinated Debt" means the principal of (and premium, if
any) and interest, if any (including interest accruing on or after the filing of
any petition in bankruptcy or for reorganization relating to the Guarantor
whether or not such claim for post-petition interest is allowed in such
proceeding), on Debt of the Guarantor, whether incurred on or prior to the date
of the Indenture or thereafter incurred, unless, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such obligations are not superior in right of payment to the Preferred
Securities Guarantee or to other Debt which is pari passu with, or subordinated
to, the Preferred Securities Guarantee; provided, however, that Senior and
Subordinated Debt shall not be deemed to include (a) any Debt of the Guarantor
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 Guarantor, (b) any Debt of the Guarantor to any of its subsidiaries, (c) any
Debt to any employee of the Guarantor, (d) any Debt which by its terms is
subordinated to trade accounts payable or accrued liabilities arising in the
ordinary course of business to the extent that payments made to the holders of
such Debt by the holders of the Junior Subordinated Debentures as a result of
the subordination provisions of the Indenture would be greater than they
otherwise would have been as a result of any obligation of such holders to pay
amounts over to the obligees on such trade accounts payable or accrued
liabilities arising in the ordinary course of business as a result of the
subordination provisions to which such Debt is subject, (e) the Junior
Subordinated Debentures, and (f) any other debt securities issued pursuant to
the Indenture.
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"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II
TRUST INDENTURE ACT
.1. TRUST INDENTURE ACT; APPLICATION.
(a) This Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of
this Preferred Securities Guarantee and shall, to the extent
applicable, be governed by such provisions; and
(b) If and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties
imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act,
such imposed duties shall control.
.2. LISTS OF HOLDERS OF SECURITIES.
(a) The Guarantor shall provide the Preferred Guarantee Trustee
with a list, in such form as the Preferred Guarantee Trustee may
reasonably require, of the names and addresses of the Holders of the
Preferred Securities ("List of Holders") (i) on or before January 15
and July 15 of each year, and (ii) at any other time within 30 days of
receipt by the Guarantor of a written request for a List of Holders, as
of a date no more than 14 days before such List of Holders is given to
the Preferred Guarantee Trustee provided, that the Guarantor shall not
be obligated to provide such List of Holders at any time the List of
Holders does not differ from the most recent List of Holders given to
the Preferred Guarantee Trustee by the Guarantor. The Preferred
Guarantee Trustee may destroy any List of Holders previously given to
it on receipt of a new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b) of the
Trust Indenture Act.
.3. REPORTS BY THE PREFERRED GUARANTEE TRUSTEE. On or before July 15 of
each year, the Preferred Guarantee Trustee shall provide to the Holders of the
Preferred Securities such reports as are required by Section 313 of the Trust
Indenture Act, if any, in the form and in the manner provided by Section 313 of
the Trust Indenture Act. The Preferred Guarantee Trustee shall also comply with
the requirements of Section 313(d) of the Trust Indenture Act.
.4. PERIODIC REPORTS TO PREFERRED GUARANTEE TRUSTEE. The Guarantor
shall provide to the Preferred Guarantee Trustee such documents, reports and
information as required by Section 314 of the Trust Indenture Act, if any, and
the compliance certificate required by Section 314 of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. The Guarantor
shall provide to the Preferred Guarantee Trustee such evidence of compliance
with the conditions precedent, if any, provided for in this Preferred Securities
Guarantee that relate to any of the matters set forth
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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.
.6. EVENTS OF DEFAULT; WAIVER. The Holders of a Majority in liquidation
amount of Preferred Securities may, by vote, on behalf of the Holders of all of
the Preferred Securities, waive any past Event of Default and its consequences.
Upon such waiver, any such Event of Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Preferred Securities Guarantee, but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent thereon.
.7. EVENT OF DEFAULT; NOTICE.
(a) The Preferred Guarantee Trustee shall, within 90 days after
the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Preferred Securities, notices of
all Events of Default actually known to a Responsible Officer of the
Preferred Guarantee Trustee, unless such defaults have been cured
before the giving of such notice, provided, that, the Preferred
Guarantee Trustee shall be protected in withholding such notice if and
so long as a Responsible Officer of the Preferred Guarantee Trustee in
good faith determines that the withholding of such notice is in the
interests of the Holders of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Preferred Guarantee
Trustee shall have received a properly addressed written notice, or of
which a Responsible Officer of the Preferred Guarantee Trustee charged
with the administration of the Trust Agreement shall have obtained
actual knowledge.
.8. CONFLICTING INTERESTS. The Trust Agreement shall be deemed to be
specifically described in this Preferred Securities Guarantee for the purposes
of clause (i) of the first proviso contained in Section 310(b) of the Trust
Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
.1. POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE.
(a) This Preferred Securities Guarantee shall be held by the
Preferred Guarantee Trustee for the benefit of the Holders of the
Preferred Securities, and the Preferred Guarantee Trustee shall not
transfer this Preferred Securities Guarantee to any Person except a
Holder of Preferred Securities exercising such Holder's rights pursuant
to Section 5.04(b) or to a Successor Preferred Guarantee Trustee on
acceptance by such Successor Preferred Guarantee Trustee of its
appointment to act as Successor Preferred Guarantee Trustee. The right,
title and interest of the Preferred Guarantee Trustee shall
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automatically vest in any Successor Preferred Guarantee Trustee, and
such vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Preferred Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer
of the Preferred Guarantee Trustee has occurred and is continuing, the
Preferred Guarantee Trustee shall enforce this Preferred Securities
Guarantee for the benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may
have occurred, shall undertake to perform only such duties as are
specifically set forth in this Preferred Securities Guarantee, and no
implied covenants shall be read into this Preferred Securities
Guarantee against the Preferred Guarantee Trustee. In case an Event of
Default has occurred (that has not been cured or waived pursuant to
Section 2.06) and is actually known to a Responsible Officer of the
Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Preferred
Securities Guarantee, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(d) No provision of this Preferred Securities Guarantee shall be
construed to relieve the Preferred Guarantee Trustee from liability for
its own negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Preferred
Guarantee Trustee shall be determined solely by the express
provisions of this Preferred Securities Guarantee, and the
Preferred Guarantee Trustee shall not be liable except for
the performance of such duties and obligations as are
specifically set forth in this Preferred Securities
Guarantee, and no implied covenants or obligations shall be
read into this Preferred Securities Guarantee against the
Preferred Guarantee Trustee; and
(B) in the absence of bad faith on the part of the
Preferred Guarantee Trustee, the Preferred Guarantee Trustee
may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Preferred Guarantee
Trustee and conforming to the requirements of this Preferred
Securities Guarantee; but in the case of any such
certificates or opinions that by any provision hereof are
specifically required to be furnished to the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee shall be
under a duty to examine the same to determine whether or
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not they conform to the requirements of this Preferred
Securities Guarantee;
(ii) the Preferred Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer
of the Preferred Guarantee Trustee, unless it shall be proved that
the Preferred Guarantee Trustee was negligent in ascertaining the
pertinent facts upon which such judgment was made;
(iii) the Preferred Guarantee Trustee shall not be liable
with respect to any action taken or omitted to be taken by it in
good faith in accordance with the direction of the Holders of not
less than a Majority in liquidation amount of the Preferred
Securities relating to the time, method and place of conducting
any proceeding for any remedy available to the Preferred Guarantee
Trustee, or exercising any trust or power conferred upon the
Preferred Guarantee Trustee under this Preferred Securities
Guarantee; and
(iv) no provision of this Preferred Securities Guarantee
shall require the Preferred Guarantee Trustee to expend or risk
its own funds or otherwise incur personal financial liability in
the performance of any of its duties or in the exercise of any of
its rights or powers if the Preferred Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds
or liability is not reasonably assured to it under the terms of
this Preferred Securities Guarantee or indemnity, reasonably
satisfactory to the Preferred Guarantee Trustee, against such risk
or liability is not reasonably assured to it.
.2. CERTAIN RIGHTS OF PREFERRED GUARANTEE TRUSTEE.
(a) Subject to the provisions of Section 3.01:
(i) The Preferred Guarantee Trustee may conclusively rely
upon, and shall be fully protected in acting or refraining from
acting upon, any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed,
sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Preferred Securities Guarantee shall be sufficiently
evidenced by an Officers' Certificate.
(iii) Whenever, in the administration of this Preferred
Securities Guarantee, the Preferred Guarantee Trustee shall deem
it desirable that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Preferred
Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request
and conclusively rely upon an Officers' Certificate which, upon
receipt of such request, shall be promptly delivered by the
Guarantor.
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(iv) The Preferred Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any instrument (or
any re-recording, re-filing or registration thereof).
(v) The Preferred Guarantee Trustee may consult with counsel,
and the written advice or opinion of such counsel with respect to
legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with such advice or
opinion. Such counsel may be counsel to the Guarantor or any of
its Affiliates and may include any of its employees. The Preferred
Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Preferred
Securities Guarantee from any court of competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by
this Preferred Securities Guarantee at the request or direction of
any Holder, unless such Holder shall have provided to the
Preferred Guarantee Trustee such security and indemnity,
reasonably satisfactory to the Preferred Guarantee Trustee,
against the costs, expenses (including attorneys' fees and
expenses and the expenses of the Preferred Guarantee Trustee's
agents, nominees or custodians) and liabilities that might be
incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the
Preferred Guarantee Trustee; provided that, nothing contained in
this Section 3.02(a)(vi) shall be taken to relieve the Preferred
Guarantee Trustee, upon the occurrence of an Event of Default, of
its obligation to exercise the rights and powers vested in it by
this Preferred Securities Guarantee.
(vii) The Preferred Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document, but the
Preferred Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it
may see fit.
(viii) The Preferred Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, nominees, custodians or
attorneys, and the Preferred Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder.
(ix) Any action taken by the Preferred Guarantee Trustee or
its agents hereunder shall bind the Holders of the Preferred
Securities, and the signature of the Preferred Guarantee Trustee
or its agents alone shall be sufficient and effective to perform
any such action. No third party shall be required to inquire as to
the authority of the Preferred Guarantee Trustee to so act or as
to its compliance with any of the terms and provisions of this
Preferred Securities Guarantee, both of
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which shall be conclusively evidenced by the Preferred Guarantee
Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Preferred
Securities Guarantee the Preferred Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any
remedy or right or taking any other action hereunder, the
Preferred Guarantee Trustee (A) may request instructions from the
Holders of a Majority in liquidation amount of the Preferred
Securities, (B) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received, and
(C) shall be protected in conclusively relying on or acting in
accordance with such instructions.
(b) No provision of this Preferred Securities Guarantee shall be
deemed to impose any duty or obligation on the Preferred Guarantee
Trustee to perform any act or acts or exercise any right, power, duty
or obligation conferred or imposed on it in any jurisdiction in which
it shall be illegal, or in which the Preferred Guarantee Trustee shall
be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty
or obligation. No permissive power or authority available to the
Preferred Guarantee Trustee shall be construed to be a duty.
.3. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE. The recitals
contained in this Preferred Securities Guarantee shall be taken as the
statements of the Guarantor, and the Preferred Guarantee Trustee does not assume
any responsibility for their correctness. The Preferred Guarantee Trustee makes
no representation as to the validity or sufficiency of this Preferred Securities
Guarantee.
.4. COMPENSATION AND REIMBURSEMENT. The Guarantor covenants and agrees
to pay to the Preferred Guarantor Trustee, and the Preferred Guarantor Trustee
shall be entitled to, such reasonable compensation (which shall not be limited
by any provision of law in regard to the compensation of a trustee of an express
trust), as the Guarantor and the Preferred Guarantor Trustee may from time to
time agree in writing, for all services rendered by it in the execution of the
trusts hereby created and in the exercise and performance of any of the powers
and duties hereunder of the Preferred Guarantee Trustee, and, except as
otherwise expressly provided herein, the Guarantor will pay or reimburse the
Preferred Guarantor Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Preferred Guarantor Trustee
in accordance with any of the provisions of this Preferred Securities Guarantee
(including the reasonable compensation and the expenses and disbursements of its
counsel and of all Persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or bad faith. The
Guarantor also covenants to indemnify the Preferred Guarantor Trustee (and its
officers, agents, directors and employees) for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or bad faith on the
part of the Preferred Guarantor Trustee and arising out of or in connection with
the acceptance or administration of this trust, including the costs and expenses
of defending itself against any claims of liability in the premises.
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ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
.1. PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY.
(a) There shall at all times be a Preferred Guarantee Trustee
which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any state or territory
thereof or of the District of Columbia, or a corporation or Person
permitted by the Securities and Exchange Commission to act as an
institutional trustee under the Trust Indenture Act, authorized
under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least with respect to the
initial Trustee $500,000 (and its principal parent holding company
having a combined capital and surplus of at least $50,000,000) and
with respect to any successor Trustee $50,000,000, and subject to
supervision or examination by federal, state, territorial or
District of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred to
above, then, for the purposes of this Section 4.01(a)(ii), the
combined capital and surplus of such corporation shall be deemed
to be its combined capital and surplus as set forth in its most
recent report of condition so published.
(b) If at any time the Preferred Guarantee Trustee shall cease to
be eligible to so act under Section 4.01(a), the Preferred Guarantee
Trustee shall immediately resign in the manner and with the effect set
out in Section 4.02(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Preferred Guarantee Trustee and Guarantor
shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act.
.2. APPOINTMENT, REMOVAL AND RESIGNATION OF PREFERRED GUARANTEE
TRUSTEES.
(a) Subject to Section 4.02(b), the Preferred Guarantee Trustee
may be appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.02(a) until a Successor Preferred Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been
appointed or until its removal or resignation. The Preferred Guarantee
Trustee may resign from office (without need for
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prior or subsequent accounting) by an instrument in writing executed by
the Preferred Guarantee Trustee and delivered to the Guarantor, which
resignation shall not take effect until a Successor Preferred Guarantee
Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guarantee
Trustee and delivered to the Guarantor and the resigning Preferred
Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.02
within 60 days after delivery to the Guarantor of an instrument of
resignation, the resigning Preferred Guarantee Trustee may petition any
court of competent jurisdiction for appointment of a Successor
Preferred Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a
Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities Guarantee or
removal or resignation of the Preferred Guarantee Trustee pursuant to
this Section 4.02, the Guarantor shall pay to the Preferred Guarantee
Trustee all amounts accrued to the date of such termination, removal or
resignation.
ARTICLE V
GUARANTEE
.1. GUARANTEE. The Guarantor irrevocably and unconditionally agrees to
pay in full to the Holders the Guarantee Payments (without duplication of
amounts theretofore paid by Flagstar Trust), as and when due, regardless of any
defense, right of set-off or counterclaim that Flagstar Trust may have or
assert. The Guarantor's obligation to make a Guarantee Payment may be satisfied
by direct payment of the required amounts by the Guarantor to the Holders or by
causing Flagstar Trust to pay such amounts to the Holders.
.2. WAIVER OF NOTICE AND DEMAND. The Guarantor hereby waives notice of
acceptance of this Preferred Securities Guarantee and of any liability to which
it applies or may apply, presentment, demand for payment, any right to require a
proceeding first against Flagstar 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.
.3. OBLIGATIONS NOT AFFECTED. The obligations, covenants, agreements
and duties of the Guarantor under this Preferred Securities Guarantee shall in
no way be affected or impaired by reason of the happening from time to time of
any of the following:
(a) the release or waiver, by operation of law or otherwise, of
the Performance or observance by Flagstar Trust of any express or
implied agreement, covenant, term or condition relating to the
Preferred Securities to be performed or observed by Flagstar Trust;
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(b) the extension of time for the payment by Flagstar Trust of all
or any portion of the Distributions, 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 (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum
payable that results from the extension of any interest payment period
on the Junior Subordinated Debentures or any extension of the maturity
date of the Junior Subordinated Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part
of the Holders to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Holders pursuant to the terms of the
Preferred Securities, or any action on the part of Flagstar 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,
Flagstar Trust or any of the assets of Flagstar 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, it
being the intent of this Section 5.03 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and
all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
.4. RIGHTS OF HOLDERS.
(a) The Holders of a Majority in liquidation amount of the
Preferred Securities have the right to direct the time, method and
place of conducting of any proceeding for any remedy available to the
Preferred Guarantee Trustee in respect of this Preferred Securities
Guarantee or exercising any trust or power conferred upon the Preferred
Guarantee Trustee under this Preferred Securities Guarantee.
(b) Any Holder of Preferred Securities may institute a legal
proceeding directly against the Guarantor to enforce its rights under
this Preferred Securities Guarantee, without first instituting a legal
proceeding against Flagstar Trust, the Preferred Guarantee Trustee or
any other Person.
.5. GUARANTEE OF PAYMENT. This Preferred Securities Guarantee creates a
Guarantee of payment and not of collection.
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.6. SUBROGATION. The Guarantor shall be subrogated to all (if any)
rights of the Holders of Preferred Securities against Flagstar Trust in respect
of any amounts paid to such Holders by the Guarantor under this Preferred
Securities Guarantee; provided, however, that the Guarantor shall not (except to
the extent required by mandatory provisions of law) be entitled to enforce or
exercise any right that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under this
Preferred Securities Guarantee, if, at the time of any such payment, any amounts
are due and unpaid under this Preferred Securities Guarantee. If any amount
shall be paid to the Guarantor in violation of the preceding sentence, the
Guarantor agrees to hold such amount in trust for the Holders and to pay over
such amount to the Holders.
.7. INDEPENDENT OBLIGATIONS. The Guarantor acknowledges that its
obligations hereunder are independent of the obligations of Flagstar Trust with
respect to the Preferred Securities, and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Preferred Securities Guarantee notwithstanding the occurrence of
any event referred to in subsections (a) through (g), inclusive, of Section
5.03.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
.1. LIMITATION OF TRANSACTIONS. So long as any Preferred Securities
remain outstanding, if there shall have occurred and be continuing an Event of
Default or an event of default under the Trust Agreement, then (a) the Guarantor
shall not declare or pay any dividend or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of its capital
stock, (b) the Guarantor shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities issued by
the Guarantor (including other Junior Subordinated Debentures) which rank pari
passu with or junior in interest to the Junior Subordinated Debentures or (c)
the Guarantor shall not make any guarantee payments with respect to any
guarantee by the guarantor of the debt securities of any subsidiary of the
Guarantor if such guarantee ranks pari passu or junior in interest to the Junior
Subordinated Debentures (other than (i) dividends or distributions in common
stock, (ii) any declaration of a dividend in connection with the implementation
of a shareholders' rights plan, or the issuance of stock under any such plan in
the future or the redemption or repurchase of any such rights pursuant thereto,
(iii) payments under this Preferred Securities Guarantee and (iv) purchases of
common stock related to the issuances of common stock or rights under any of the
Guarantor's benefit plans for its directors, officers or employees).
.2. RANKING. This Preferred Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank subordinate and junior in
right of payment to all Senior and Subordinated Debt of the Guarantor.
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ARTICLE VII
TERMINATION
.1. TERMINATION. This Preferred Securities Guarantee shall terminate
upon (a) full payment of the Redemption Price of all Preferred Securities, (b)
upon full payment of the amounts payable in accordance with the Trust Agreement
upon liquidation of Flagstar Trust or (c) upon distribution of the Junior
Subordinated Debentures to the Holders of the Preferred Securities.
Notwithstanding the foregoing, this Preferred Securities Guarantee will continue
to be effective or will be reinstated, as the case may be, if at any time any
Holder of Preferred Securities must restore payment of any sums paid under the
Preferred Securities or under this Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
.1. EXCULPATION.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered
Person for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith
in accordance with this Preferred Securities Guarantee and in a manner
that such Indemnified Person reasonably believed to be within the scope
of the authority conferred on such Indemnified Person by this Preferred
Securities Guarantee or by law, except that an Indemnified Person shall
be liable for any such loss, damage or claim incurred by reason of such
Indemnified Person's negligence or willful misconduct with respect to
such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any
Person as to matters the Indemnified Person reasonably believes are
within such other Person's professional or expert competence and who
has been selected with reasonable care by or on behalf of the
Guarantor, including information, opinions, reports or statements as to
the value and amount of the assets, liabilities, profits, losses, or
any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Preferred Securities might properly
be paid.
.2. INDEMNIFICATION. The Guarantor agrees to indemnify each Indemnified
Person for, and to hold each Indemnified Person harmless against, any loss,
liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.02 shall survive the termination of
this Preferred Securities Guarantee.
15
<PAGE> 18
ARTICLE IX
MISCELLANEOUS
.1. SUCCESSORS AND ASSIGNS. All guaranties and agreements contained in
this Preferred Securities Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders of the Preferred Securities then outstanding.
.2. AMENDMENTS. Except with respect to any changes that do not
materially adversely affect the rights of Holders (in which case no consent of
Holders will be required), this Preferred Securities Guarantee may only be
amended with the prior approval of the Holders of at least a Majority in
liquidation amount of the Preferred Securities. The provisions of Article VI of
the Trust Agreement with respect to meetings of Holders of the Securities apply
to the giving of such approval.
.3. NOTICES. All notices provided for in this Preferred Securities
Guarantee shall be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by registered or certified mail, as
follows:
(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other
address as the Preferred Guarantee Trustee may give notice of to the
Holders of the Preferred Securities):
FMB TRUST COMPANY NATIONAL ASSOCIATION
25 South Charles Street
Baltimore, Maryland 21203
Attention: Corporate Trust Administration
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice
of to the Holders of the Preferred Securities):
FLAGSTAR BANCORP, INC..
2600 Telegraph Road
Bloomfield Hills, Michigan 48302
Attention: Chief Executive Officer
(c) If given to any Holder of Preferred Securities, at the address
set forth on the books and records of Flagstar Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
16
<PAGE> 19
.4. BENEFIT. This Preferred Securities Guarantee is solely for the
benefit of the Holders of the Preferred Securities and, subject to Section
3.01(a), is not separately transferable from the Preferred Securities.
.5. GOVERNING LAW. THIS PREFERRED SECURITIES GUARANTEE, INCLUDING THE
IMMUNITIES AND THE STANDARD OF CARE OF THE TRUSTEE, SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE.
17
<PAGE> 20
THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and year
first above written.
FLAGSTAR BANCORP, INC.., as Guarantor
By ______________________________________
Thomas J. Hammond, Chairman and Chief
Executive Officer
FMB TRUST COMPANY, NATIONAL
ASSOCIATION, as Preferred Guarantee
Trustee
By ______________________________________
Name ____________________________________
Title ___________________________________
By ______________________________________
Name ____________________________________
Title ___________________________________
18
<PAGE> 21
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
Article I
DEFINITIONS AND INTERPRETATION
<S> <C> <C>
Section 1.01. Definitions and Interpretations..............................................1
Article II
TRUST INDENTURE ACT
Section 2.01. Trust Indenture Act; Application.............................................5
Section 2.02. Lists of Holders of Securities...............................................5
Section 2.03. Reports by the Preferred Guarantee Trustee...................................5
Section 2.04. Periodic Reports to Preferred Guarantee Trustee..............................5
Section 2.05. Evidence of Compliance with Conditions Precedent.............................6
Section 2.06. Events of Default; Waiver....................................................6
Section 2.07. Event of Default; Notice.....................................................6
Section 2.08. Conflicting Interests........................................................6
Article III
POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE
Section 3.01. Powers and Duties of the Preferred Guarantee Trustee.........................7
Section 3.02. Certain Rights of Preferred Guarantee Trustee................................8
Section 3.03. Not Responsible for Recitals or Issuance of Guarantee.......................10
Section 3.04. Compensation and Reimbursement..............................................10
Article IV
PREFERRED GUARANTEE TRUSTEE
Section 4.01. Preferred Guarantee Trustee; Eligibility....................................11
Section 4.02. Appointment, Removal and Resignation of Preferred Guarantee Trustees........12
Article V
GUARANTEE
Section 5.01. Guarantee...................................................................12
Section 5.02. Waiver of Notice and Demand.................................................13
Section 5.03. Obligations Not Affected....................................................13
</TABLE>
<PAGE> 22
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 5.04. Rights of Holders...........................................................14
Section 5.05. Guarantee of Payment........................................................14
Section 5.06. Subrogation.................................................................14
Section 5.07. Independent Obligations.....................................................14
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
Section 6.01. Limitation of Transactions..................................................14
Section 6.02. Ranking.....................................................................15
ARTICLE VII
TERMINATION
Section 7.01. Termination.................................................................15
ARTICLE VIII
INDEMNIFICATION
Section 8.01. Exculpation.................................................................15
Section 8.02. Indemnification.............................................................16
ARTICLE IX
MISCELLANEOUS
Section 9.01. Successors and Assigns......................................................16
Section 9.02. Amendments..................................................................16
Section 9.03. Notices.....................................................................16
Section 9.04. Benefit.....................................................................17
Section 9.05. Governing Law...............................................................17
</TABLE>
ii
<PAGE> 1
EXHIBIT 5.1
March 26, 1999
Board of Directors
Flagstar Bancorp, Inc.
2600 Telegraph Road
Bloomfield Hills, Michigan 48302-0953
The Administrative Trustee
The Flagstar Trust
2600 Telegraph Road
Bloomfield Hills, Michigan 48302-0953
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
You have requested our opinion as special counsel to Flagstar Bancorp,
Inc. (the "Company") and Flagstar Trust (the "Trust") in connection with
securities to be offered pursuant to the Registration Statement on Form S-3 to
be filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "Registration Statement"). The Registration Statement
relates to the registration of 2,990,000 preferred securities of the Trust (the
"Preferred Securities") in connection with the proposed offer and sale of such
Preferred Securities by the Trust.
In rendering this opinion, we understand that the Preferred Securities
will be offered and sold in the manner described in the Prospectus, which is a
part of the Registration Statement. We have examined such records and documents
and made such examination as we have deemed relevant in connection with this
opinion.
Based upon the foregoing, it is our opinion that:
1. The Preferred Securities have been, and when issued and sold as
contemplated by the Registration Statement, will be, legally issued, fully paid
and nonassessable.
2. The Guarantee, when executed and delivered as contemplated by the
Registration Statement, and the Junior Subordinated Debentures, when issued and
paid for as contemplated by the Registration Statement, will be validly issued
obligations of the Company enforceable in accordance with their terms except as
such enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the rights of creditors generally and subject to general
principles of equity.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm in the Prospectus under
the heading "Legal Matters."
Very truly yours,
/s/ Kutak Rock
<PAGE> 1
EXHIBIT 5.2
[Letterhead of Morris, James, Hitchens & Williams]
March , 1999
Flagstar Trust
c/o Flagstar Bancorp, Inc.
2600 Telegraph Road
Bloomfield Hills, MI 48302-0953
Re: Flagstar Trust
Ladies and Gentlemen:
We have acted as special Delaware counsel for Flagstar Trust, a Delaware
business trust (the "Trust"), in connection with the matters set forth herein.
This opinion is being furnished to you at your request.
For purposes of giving the opinions hereinafter set forth, our examination
of documents has been limited to the examination of originals or copies
furnished to us of the following:
(a) The Trust Agreement of the Trust, dated as of March , 1999,
between Flagstar Bancorp, Inc., a Michigan Corporation (the "Company"), and the
trustees of the Trust named therein;
(b) The Certificate of Trust of the Trust, as filed in the office of
the Secretary of State of the State of Delaware (the "Secretary of State") on
March 25, 1999 (the "Certificate");
(c) The Registration Statement (the "Registration Statement") on Form
S-3, including a prospectus (the "Prospectus") relating to, among other things,
% Cumulative Trust Preferred Securities (Liquidation Amount $25.00 per
Preferred Security) of the Trust representing preferred undivided beneficial
interests in the assets
<PAGE> 2
Flagstar Trust
March , 1999
Page 2
of the Trust (each, a "Preferred Security", and collectively, the "Preferred
Securities"), as proposed to be filed by the Company, the Trust and others as
set forth therein with the Securities and Exchange Commission on or about March
, 1999;
(d) A form of Amended and Restated Trust Agreement, to be entered into
among the Company, as Depositor, the trustees of the Trust named therein, and
the holders, from time to time, of undivided beneficial interests in the assets
of the Trust (the "Agreement"), attached as an exhibit to the Registration
Statement; and
(e) A Certificate of Good Standing for the Trust, dated March , 1999,
obtained from the Secretary of State.
Unless otherwise defined herein, all capitalized terms used in this
opinion letter shall have the respective meanings provided in the Agreement,
except that reference herein to any document shall mean such document as in
effect on the date hereof.
For the purposes of this opinion letter, we have not reviewed any
documents other than the documents listed in paragraphs (a) through (e) above.
In particular, we have not reviewed any document (other than the documents
listed in paragraphs (a) through (e) above) that is referred to in or
incorporated by reference into the documents reviewed by us. We have assumed
that there exists no provision in any document that we have not reviewed that is
inconsistent with the opinions stated herein. We have conducted no independent
factual investigation of our own but rather have relied solely upon the
foregoing documents, the statements and information set forth therein and the
additional matters recited or assumed herein, all of which we have assumed to be
true, complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, (iii) the genuineness of all signatures, and (iv) such documents
submitted to us in final or execution form have not been and will not be altered
or amended in any respect material to our opinions as expressed in this letter
and conform in all material respects to the final, executed originals of such
documents.
For purposes of this opinion letter, we have assumed (i) that the
Agreement constitutes the entire agreement among the parties thereto with
respect to the creation, operation, and termination of the Trust, and that the
Agreement and the Certificate are in full force and effect and have not been
amended, (ii) that there are no proceedings, pending or contemplated, for the
merger, consolidation, liquidation, dissolution or termination of the Trust,
(iii) except to the extent provided in paragraph 1 below, the due creation, due
formation or due organization, as the case may be, and valid existence in
<PAGE> 3
Flagstar Trust
March , 1999
Page 3
good standing of each party to the documents examined by us under the laws of
the jurisdiction governing its creation, formation or organization, (iv) the
legal capacity of each natural person who is a party to the documents examined
by us, (v) 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, (vi) that each of the parties to the documents examined
by us has duly authorized, executed and delivered such documents, (vii) the
receipt by each Person to whom a Preferred Security is to be issued by the Trust
(collectively, the "Preferred Securities Holders") of an appropriate certificate
for such Preferred Security, and the payment for the Preferred Security acquired
by it, in accordance with the Agreement and the Registration Statement, and
(viii) that the Preferred Securities are issued to the Preferred Securities
Holders in accordance with the Agreement and the Registration Statement. We have
not participated in the preparation of the Registration Statement and assume no
responsibility for its contents.
The opinions in this letter are 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 the federal laws of the United States of America and rules and
regulations relating thereto.
Based upon the foregoing, and subject to the assumptions,
qualifications, limitations and exceptions set forth herein, we are of the
opinion that:
1. The Trust has been duly formed and is validly existing in good
standing as a business trust under the Delaware Business Trust Act (12 Del. C.
Section 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 Securities 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 Securities
Holders may be obligated to make payments as provided in the Agreement.
We consent to the filing of this opinion letter 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 "Legal Matters" 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
<PAGE> 4
Flagstar Trust
March , 1999
Page 4
amended, or the rules and regulations of the Securities and Exchange Commission
thereunder. Except as stated above, without our prior written consent, this
opinion letter may not be furnished or quoted to, or relied upon by, any other
Person for any purpose.
Very truly yours,
RLS:fg
<PAGE> 1
EXHIBIT 8.1
March 26, 1999
Flagstar Bancorp, Inc.
2600 Telegraph Road
Bloomfield Hills, MI 48302-0953
Flagstar Trust
c/o Flagstar Bancorp, Inc.
2600 Telegraph Road
Bloomfield Hills, MI 48302-0953
Re: Preferred Securities of Flagstar Trust
Ladies and Gentlemen:
We have acted as special tax counsel for Flagstar Bancorp, Inc. (the
"Company"), a Michigan corporation, and Flagstar Trust (the "Trust"), a
statutory business trust organized under the Business Trust Act of the State of
Delaware (12 Del. Code Ann., tit. 12, Section 3801, et seq.), in connection with
the sale, pursuant to an underwriting agreement (the "Underwriting Agreement")
to be entered into among the Company, the Trust, and the underwriters (the
"Underwriters") named therein, of trust preferred securities (the "Preferred
Securities") (liquidation amount $25 per Preferred Security), which will
represent undivided beneficial interests in the assets of the Trust.
The Preferred Securities will be guaranteed by the Company with respect
to distributions and payments upon liquidation, redemption, and otherwise
pursuant to the guarantee agreement (the "Guarantee Agreement"), to be entered
into, between the Company and FMB Bank, as trustee (the "Guarantee Trustee"),
for the benefit of the holders of the Preferred Securities.
In connection with the issuance of the Preferred Securities, the Trust
will also issue common securities (the "Common Securities") (liquidation amount
$25 per Common Security), which will represent undivided beneficial interests in
the assets of the Trust.
<PAGE> 2
Flagstar Bancorp, Inc.
Flagstar Trust
March 26, 1999
Page 2 of 5
The proceeds from the sale of the Preferred Securities and the Common
Securities are to be used by the Trust to purchase junior subordinated
debentures (the "Junior Subordinated Debentures"), to be issued by the Company.
The Preferred Securities and the Common Securities are to be issued pursuant to
the Amended and Restated Trust Agreement (the "Trust Agreement"), to be entered
into among the Company, as depositor, First Omni Bank, National Association
(Delaware), as Delaware trustee (the "Delaware Trustee"), FMB Bank, as property
trustee (the "Property Trustee"), and the administrative trustees (the
"Administrative Trustees") named therein. The Junior Subordinated Debentures are
to be issued pursuant to an indenture (the "Indenture"), to be entered into,
between the Company and FMB Bank, as indenture trustee.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the preliminary
Prospectus dated March 26, 1999; (ii) the Certificate of Trust filed with the
Secretary of State of the State of Delaware as of March 25, 1999, by the
Administrative Trustees, and the Delaware Trustee; (iii) the form of the Trust
Agreement including the designation of the terms of the Preferred Securities;
(iv) the form of the Preferred Securities and a specimen certificate thereof;
(v) the form of the Guarantee Agreement; (vi) the form of the Indenture; (vii)
the form of Junior Subordinated Debentures and a specimen certificate thereof;
(viii) the form of Common Securities and a specimen certificate thereof; and
(ix) the form of the Underwriting Agreement. We have also examined originals or
copies, certified or otherwise identified to our satisfaction, of such records
of the Company and the Trust and such agreements, certificates of public
officials, certificates of officers, trustees or other representatives of the
Company, the Trust and others, as applicable, and such other documents,
certificates and records as we have deemed necessary or appropriate as a basis
for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all natural
persons, 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 certified, conformed or photostatic copies, and the
authenticity of the originals of such latter documents. In making our
examination of documents executed, or to be executed by parties other than the
Company or the Trust, we have assumed that such parties had, or will have, the
power, corporate or other, to enter into and perform all obligations thereunder,
and we have also assumed the due authorization by all requisite action,
corporate or other, and execution and delivery by such parties of such documents
and that such documents constitute, or will constitute, valid and binding
obligations of such parties. As to any facts material to the opinions expressed
herein which were not independently established or verified, we have relied upon
oral or written statements and representations of officers, trustees and other
representatives of the Company, the Trust, and others.
2
<PAGE> 3
Flagstar Bancorp, Inc.
Flagstar Trust
March 26, 1999
Page 3 of 5
In rendering our opinion, we have participated in the preparation of
the preliminary Prospectus. Our opinion is conditioned on, among other things,
the initial and continuing accuracy of the facts, information, covenants,
representations, and assumptions set forth in the documents referred to above
and the statements and representations made by the Company and the Trust. In
rendering our opinion, we have considered the provisions of the Internal Revenue
Code of 1986, as amended, Treasury regulations (proposed, temporary, and final)
promulgated thereunder, judicial decisions, and Internal Revenue Service rulings
all as of the date hereof, and all of which are subject to change, which changes
may be retroactively applied. A change in the authorities upon which our opinion
is based could affect our conclusions. There can be no assurance, moreover, that
any of the opinions expressed herein will be accepted by the Internal Revenue
Service or, if challenged, by a court.
Based solely upon the foregoing, we are of the opinion that under
current United States federal income tax law:
(1) The Trust should be classified as a grantor trust and not
as an association taxable as a corporation. Accordingly, each holder of
Preferred Securities will generally be treated as the owner of an
undivided interest in the Junior Subordinated Debentures.
(2) The Junior Subordinated Debentures should be classified as
indebtedness of the Company.
(3) Assuming that the likelihood of the exercise by the
Company of the election to defer the payment of interest on the Junior
Subordinated Debentures is remote, the Junior Subordinated Debentures
will not be deemed to be issued with original issue discount.
Accordingly, stated interest payments on the Junior Subordinated
Debentures will be includible in a holder's income at the time those
payments are paid or accrued in accordance with a holder's regular
method of accounting. A determination as to the remoteness of a
contingency under United States federal income tax law is inherently a
factual determination, and thus, no opinion is expressed herein
regarding the remoteness of the likelihood of the exercise of the
Company's election to defer the payment of interest on the Junior
Subordinated Debentures.
(4) If the Company exercises its option to defer the payment
of stated interest, (i) solely for purposes of the original issue
discount rules, the Junior Subordinated Debentures would be treated as
being "reissued," (ii) the amount of interest income includible in the
taxable income of a holder of the Junior Subordinated Debentures would
be determined on the basis of a constant yield method over the
remaining term of the Junior Subordinated Debentures, (iii) the actual
receipt of future payments of stated interest on the Junior
Subordinated Debentures would no longer be separately reported as
3
<PAGE> 4
Flagstar Bancorp, Inc.
Flagstar Trust
March 26, 1999
Page 4 of 5
taxable income, (iv) any original issue discount included in income
would increase the holder's adjusted tax basis in the Preferred
Securities or the Junior Subordinated Debentures, as the may be, and
(v) the holder's actual receipt of interest payments would reduce the
holder's adjusted tax basis.
(5) Because payments on the Preferred Securities will be
treated as interest income for United States federal income tax
purposes, corporate holders of Preferred Securities will not be
entitled to claim a dividends received deduction.
(6) If the Company exercises its right to liquidate the Trust
and cause the Junior Subordinated Debentures to be distributed to
holders on a basis proportionate to a holder's ownership in the
Preferred Securities, such a distribution will be treated as a
nontaxable event to a holder, provided that the Trust is classified,
for United States federal income tax purposes, as a grantor trust and
not an association taxable as a corporation at the time of the
liquidation. In such event, a holder will have an adjusted tax basis in
the Junior Subordinated Debentures received in the liquidation of the
Trust equal to such holder's adjusted tax basis in the Preferred
Securities surrendered and the holding period of the Junior
Subordinated Debentures will include the period during which the holder
held the Preferred Securities.
(7) If the Trust is characterized, for United States federal
income tax purposes, as an association taxable as a corporation at the
time of the liquidation of the Trust, the distribution of Junior
Subordinated Debentures would be taxable to holders.
(8) Upon the sale or redemption for cash of Preferred
Securities, a holder will recognize gain or loss in an amount equal to
the difference between (i) the holder's adjusted tax basis in the
Preferred Securities and (ii) the amount realized in the sale, except
for any amount received for accrued but unpaid interest not previously
included in income.
(9) The gain or loss on the sale or redemption for cash of
Preferred Securities will be long term capital gain or loss if a holder
held the Securities as capital assets for United States federal income
tax purposes for more than one year, provided that the holder will be
required to include in ordinary income any portion of the amount
realized in the sale that is attributable to (i) accrued but unpaid
interest to the extent not previously included in income and (ii) any
amount of original issue discount that has accrued on a holder's
proportionate share of the underlying Junior Subordinated Debentures
during the taxable year through the date of disposition.
(10) Capital losses generally cannot be applied to offset
ordinary income.
4
<PAGE> 5
Flagstar Bancorp, Inc.
Flagstar Trust
March 26, 1999
Page 5 of 5
(11) Payments made to non-U.S. Holders (as defined in the
preliminary Prospectus) will generally not be subject to withholding of
United States federal income tax if (A) the beneficial owner of the
Preferred Securities does not actually or constructively own 10% or
more of the total combined voting power of all classes of the stock of
the Company entitled to vote and (B) either (i) the beneficial owner of
the Preferred Securities certifies to the Trust or its agent, under
penalties of perjury, that it is not a United States person and
provides his 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 ("Financial
Institution"), and holds the Preferred Securities in that capacity,
certifies to the Trust or its agent, under penalties of perjury, that
such statement has been received from the beneficial owner by it or by
a Financial Institution between it and the beneficial owner and
furnishes the Trust or its agent with a copy of the statement.
Except as set forth above, we express no opinion to any party as to the
tax consequences, whether United States federal, state, local or foreign, of the
issuance of the Junior Subordinated Debentures, the Preferred Securities, the
Common Securities, or any transactions related to or contemplated by such
issuance. In connection with the sale of the Preferred Securities pursuant to
the Registration Statement of the Company dated March 26, 1999, as filed with
the Securities and Exchange Commission on March 26, 1999 (the "Registration
Statement"), we are furnishing this opinion to you solely for your benefit. This
opinion is not to be used, circulated, quoted, or otherwise referred to for any
other purpose without our written permission.
The opinions expressed herein are subject to, and conditioned upon,
reconfirmation and delivery of these opinions at the time of the closing of the
offering of Preferred Securities. This opinion is expressed as of the date
hereof, and we disclaim any undertaking to advise you of changes of the facts
stated or assumed herein or any subsequent changes in applicable law.
We consent to the filing of this opinion as Exhibit 8.1 to the
Registration Statement and to the reference to Kutak Rock therein under the
caption "Legal Matters." In giving this consent, we do not thereby admit that we
are within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules or regulations of the
Securities and Exchange Commission promulgated thereunder.
Very truly yours,
/s/ Kutak Rock
5
<PAGE> 1
EXHIBIT 12.1
FLAGSTAR BANCORP, INC.
COMPARISON OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Earnings:
Pre-tax earnings from operations $ 67,013 $ 35,037 $27,322 $24,895 $25,449
Fixed charges 137,187 80,033 45,967 41,443 14,486
-------- -------- ------- ------- -------
Earnings as adjusted (A) $204,200 $115,070 $73,289 $66,338 $39,935
======== ======== ======= ======= =======
Fixed charges:
Interest expense (B) $137,187 $ 80,033 $45,967 $41,443 $14,486
======== ======== ======= ======= =======
Ratio of earnings to fixed charges
(A) divided by (B) 1.49 1.44 1.59 1.60 2.76
======== ======== ======= ======= =======
</TABLE>
<PAGE> 1
EXHIBIT 23.1
ACCOUNTANT'S CONSENT
We have issued our report dated February 12, 1999 accompanying the
consolidated financial statements of Flagstar Bancorp, Inc. appearing in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998,
which are incorporated by reference in this Registration Statement. We consent
to the incorporation by reference in the Registration Statement of the
aforementioned report and to the use of our name as it appears under the
caption "Experts."
Detroit, Michigan
March 25, 1999
<PAGE> 1
EXHIBIT 23.3
CONSENT OF ALBERT J. GLADNER, ESQ.
I hereby consent to the reference to the undersigned under the heading
"Legal Matters" as set forth in the Prospectus that is contained in the
Registration Statement on Form S-3 filed by Flagstar Bancorp, Inc. and Flagstar
Trust with the Securities and Exchange Commission.
/s/ Albert Gladner
- --------------------
Albert J. Gladner, Esq.
March 25, 1999
<PAGE> 1
EXHIBIT 25.1
Registration No. 333-_________
Form T-1 Statement of Eligibility
of FMB Bank to act as trustee
under the Subordinated Indenture
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
--------------------
FMB BANK
(Exact name of trustee as specified in its charter)
MARYLAND 52-0312840
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or formation)
25 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201
(Address of principal (Zip code)
executive offices
GREGORY K. THORESON, GENERAL COUNSEL
FMB BANK
25 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201
(410) 244-3800
(Name, address and telephone number of agent
for service of process)
FLAGSTAR BANCORP, INC.
(Exact name of obligor as specified in its charter)
MICHIGAN 38-3150651
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or formation)
2600 TELEGRAPH ROAD
BLOOMFIELD HILLS, MI 48302
(Address of principal (Zip code)
executive offices)
___% Junior Subordinated Debentures
(Title of the indenture securities)
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of Richmond, Richmond, Virginia 23261.
Maryland Bank Commission, Baltimore, Maryland 21202
Federal Deposit Insurance Corporation, Washington, D.C. 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
(Because responses from the obligor and the underwriters have not yet
been received, Item 2 is at the date hereof based upon incomplete
information but is believed to be correct and may be considered to be
complete unless modified by an amendment to this Form T-1).
ITEM 16. LIST OF EXHIBITS.
List below all exhibits filed as a part of this statement of eligibility.
Exhibit
- -------
1 A copy of the articles of incorporation of the trustee as now in
effect is incorporated herein by reference to Exhibit 1 to Form
T-1 (Exhibit 25 to the Registration Statement on Form S-3,
Registration No. 333-27305)
2 A copy of the certificate of authority of the trustee to commence
business is incorporated herein by reference to Exhibit T1-2 to
Form T-1 (Exhibit 26 to the Registration Statement on Form S-2,
Registration No. 2-98697)
3 A copy of the authorization of the trustee to exercise corporate
trust powers is incorporated herein by reference to Exhibit T1-3 of
Amendment No. 1 to Form T-1 (Exhibit 26 to the Registration
Statement on Form S-3, Registration No. 33-18373)
<PAGE> 3
4 A copy of the existing bylaws of the trustee is incorporated herein
by refererence to Exhibit 4 to Form T-1 (Exhibit 25 to the
Registration Statement on Form S-3, Registration No. 333-27305)
5 Not applicable
6 The consent of the trustee required by Section 321(b) of the Act
7 A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority
8 Not applicable
9 Not applicable
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, FMB Bank, a corporation organized and existing under the laws of the
State of Maryland, has duly caused this statement of eligibility to be signed on
its behalf by the undersigned, thereunto duly authorized, all in the City of
Baltimore and State of Maryland, on March 16, 1999
FMB BANK
By: /s/ Robert D. Brown
---------------------------------
Robert D. Brown
Vice President
<PAGE> 5
EXHIBIT 6
Consent of Trustee
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, in connection with the issuance by Flagstar Bancorp, Inc., we
hereby consent that reports of examination by Federal, state, territorial or
district authorities may be furnished by such authorities to the Securities and
Exchange Commission upon request therefor.
FMB BANK
By: /s/ Robert D. Brown
---------------------------------
Robert D. Brown
Vice President
<PAGE> 6
EXHIBIT 7
Report of Condition Consolidating Domestic and Foreign Subsidiaries of FMB Bank,
Baltimore, Maryland at the close of business on December 31, 1998 published in
response to call made by Comptroller of the Currency, under Title 12, United
States Code, Section 161, Charter No. 04822, Comptroller of the Currency,
Richmond District.
CONSOLIDATED REPORT OF CONDITION
(Dollars in Thousands)
<TABLE>
<S> <C>
ASSETS
Cash and balances due from
depository institutions:
Noninterest-bearing balances
and currency and coin...................... $ 1,199,940
Interest-bearing balances..................... 6,943
Securities:
Held-to-maturity securities....................... -0-
Available-for-sale securities..................... 4,602,042
Federal funds sold and securities purchased
under agreements to resell........................ 123,418
Loans and lease financing receivables:
Loans and leases, net of unearned income.......... 10,501,474
LESS: Allowance for loan and lease losses......... 154,697
LESS: Allocated transfer risk reserve............. 1,400
Loans and leases, net of unearned income,
allowance, and reserve..................... 10,345,377
Trading assets...................................... 118,269
Premises and fixed assets (including
capitalized leases)............................... 188,979
Other real estate owned............................. 12,416
Investments in unconsolidated subsidiaries
and associated companies.......................... 58,643
Customers' liability to this bank
on acceptances outstanding........................ 12,253
Intangible assets................................... 91,109
Other assets........................................ 355,315
TOTAL ASSETS.................................. 17,114,704
==========
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
LIABILITIES
Deposits:
In domestic offices............................ $11,898,282
Noninterest-bearing......................... 3,228,185
Interest-bearing............................ 8,610,097
In foreign offices, Edge and Agreement
subsidiaries, and IBFs....................... 517,687
Noninterest-bearing......................... 0
Interest-bearing............................ 517,687
Federal funds purchased and securities
sold under agreements to repurchase............. 2,223,081
Demand notes issued to the U.S. Treasury......... 56,020
Trading liabilities.............................. 71,866
Other borrowed money:
With a remaining maturity of one year or less -0-
With a remaining maturity of more than one year
through three years.......................... 200,000
With a remaining maturity of more than three
years........................................ 239
Bank's liability on acceptances
executed and outstanding....................... 12,253
Subordinated notes and debentures................ 219,000
Other liabilities................................ 565,161
TOTAL LIABILITIES.......................... $15,763,589
EQUITY CAPITAL
Perpetual preferred stock and related surplus.... -0-
Common Stock..................................... 18,448
Surplus.......................................... 765,562
Undivided profits and capital reserves........... 543,808
Net unrealized holding gains (losses)
on available-for-sale securities............... 23,297
Cumulative foreign currency transalation
adjustments.................................... -0-
TOTAL EQUITY CAPITAL....................... $ 1,351,115
TOTAL LIABILITIES AND EQUITY CAPITAL....... $17,114,704
==========
</TABLE>
<PAGE> 1
EXHIBIT 25.2
Registration No. 333-_________
Form T-1 Statement of Eligibility
of FMB Bank to act as trustee
under the Flagstar Trust Amended
and Restated Trust Agreement
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
--------------------
FMB BANK
(Exact name of trustee as specified in its charter)
MARYLAND 52-0312840
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or formation)
25 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201
(Address of principal (Zip code)
executive offices
GREGORY K. THORESON, GENERAL COUNSEL
FMB BANK
25 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201
(410) 244-3800
(Name, address and telephone number of agent
for service of process)
FLAGSTAR BANCORP, INC.
(Exact name of obligor as specified in its charter)
MICHIGAN 38-3150651
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or formation)
2600 TELEGRAPH ROAD
BLOOMFIELD HILLS, MI 48302
(Address of principal (Zip code)
executive offices)
___% Junior Subordinated Debentures
(Title of the indenture securities)
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of Richmond, Richmond, Virginia 23261.
Maryland Bank Commission, Baltimore, Maryland 21202
Federal Deposit Insurance Corporation, Washington, D.C. 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
(Because responses from the obligor and the underwriters have not yet
been received, Item 2 is at the date hereof based upon incomplete
information but is believed to be correct and may be considered to be
complete unless modified by an amendment to this Form T-1).
ITEM 16. LIST OF EXHIBITS.
List below all exhibits filed as a part of this statement of eligibility.
Exhibit
- -------
1 A copy of the articles of incorporation of the trustee as now in
effect is incorporated herein by reference to Exhibit 1 to Form
T-1 (Exhibit 25 to the Registration Statement on Form S-3,
Registration No. 333-27305)
2 A copy of the certificate of authority of the trustee to commence
business is incorporated herein by reference to Exhibit T1-2 to
Form T-1 (Exhibit 26 to the Registration Statement on Form S-2,
Registration No. 2-98697)
3 A copy of the authorization of the trustee to exercise corporate
trust powers is incorporated herein by reference to Exhibit T1-3 of
Amendment No. 1 to Form T-1 (Exhibit 26 to the Registration
Statement on Form S-3, Registration No. 33-18373)
<PAGE> 3
4 A copy of the existing bylaws of the trustee is incorporated herein
by refererence to Exhibit 4 to Form T-1 (Exhibit 25 to the
Registration Statement on Form S-3, Registration No. 333-27305)
5 Not applicable
6 The consent of the trustee required by Section 321(b) of the Act
7 A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority
8 Not applicable
9 Not applicable
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, FMB Bank, a corporation organized and existing under the laws of the
State of Maryland, has duly caused this statement of eligibility to be signed on
its behalf by the undersigned, thereunto duly authorized, all in the City of
Baltimore and State of Maryland, on March 16, 1999
FMB BANK
By: /s/ Robert D. Brown
---------------------------------
Robert D. Brown
Vice President
<PAGE> 5
EXHIBIT 6
Consent of Trustee
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, in connection with the issuance by Flagstar Bancorp, Inc., we
hereby consent that reports of examination by Federal, state, territorial or
district authorities may be furnished by such authorities to the Securities and
Exchange Commission upon request therefor.
FMB BANK
By: /s/ Robert D. Brown
---------------------------------
Robert D. Brown
Vice President
<PAGE> 6
EXHIBIT 7
Report of Condition Consolidating Domestic and Foreign Subsidiaries of FMB Bank,
Baltimore, Maryland at the close of business on December 31, 1998 published in
response to call made by Comptroller of the Currency, under Title 12, United
States Code, Section 161, Charter No. 04822, Comptroller of the Currency,
Richmond District.
CONSOLIDATED REPORT OF CONDITION
(Dollars in Thousands)
<TABLE>
<S> <C>
ASSETS
Cash and balances due from
depository institutions:
Noninterest-bearing balances
and currency and coin...................... $ 1,199,940
Interest-bearing balances..................... 6,943
Securities:
Held-to-maturity securities....................... -0-
Available-for-sale securities..................... 4,602,042
Federal funds sold and securities purchased
under agreements to resell........................ 123,418
Loans and lease financing receivables:
Loans and leases, net of unearned income.......... 10,501,474
LESS: Allowance for loan and lease losses......... 154,697
LESS: Allocated transfer risk reserve............. 1,400
Loans and leases, net of unearned income,
allowance, and reserve..................... 10,345,377
Trading assets...................................... 118,269
Premises and fixed assets (including
capitalized leases)............................... 188,979
Other real estate owned............................. 12,416
Investments in unconsolidated subsidiaries
and associated companies.......................... 58,643
Customers' liability to this bank
on acceptances outstanding........................ 12,253
Intangible assets................................... 91,109
Other assets........................................ 355,315
TOTAL ASSETS.................................. 17,114,704
==========
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
LIABILITIES
Deposits:
In domestic offices............................ $11,898,282
Noninterest-bearing......................... 3,228,185
Interest-bearing............................ 8,610,097
In foreign offices, Edge and Agreement
subsidiaries, and IBFs....................... 517,687
Noninterest-bearing......................... 0
Interest-bearing............................ 517,687
Federal funds purchased and securities
sold under agreements to repurchase............. 2,223,081
Demand notes issued to the U.S. Treasury......... 56,020
Trading liabilities.............................. 71,866
Other borrowed money:
With a remaining maturity of one year or less -0-
With a remaining maturity of more than one year
through three years.......................... 200,000
With a remaining maturity of more than three
years........................................ 239
Bank's liability on acceptances
executed and outstanding....................... 12,253
Subordinated notes and debentures................ 219,000
Other liabilities................................ 565,161
TOTAL LIABILITIES.......................... $15,763,589
EQUITY CAPITAL
Perpetual preferred stock and related surplus.... -0-
Common Stock..................................... 18,448
Surplus.......................................... 765,562
Undivided profits and capital reserves........... 543,808
Net unrealized holding gains (losses)
on available-for-sale securities............... 23,297
Cumulative foreign currency transalation
adjustments.................................... -0-
TOTAL EQUITY CAPITAL....................... $ 1,351,115
TOTAL LIABILITIES AND EQUITY CAPITAL....... $17,114,704
==========
</TABLE>
<PAGE> 1
Form T-1 Statement of Eligibility
of FMB Bank to act as trustee
under the Preferred Securities
Guarantee Agreement
EXHIBIT 25.3
Registration No. 333-_________
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
--------------------
FMB BANK
(Exact name of trustee as specified in its charter)
MARYLAND 52-0312840
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or formation)
25 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201
(Address of principal (Zip code)
executive offices
GREGORY K. THORESON, GENERAL COUNSEL
FMB BANK
25 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201
(410) 244-3800
(Name, address and telephone number of agent
for service of process)
FLAGSTAR BANCORP, INC.
(Exact name of obligor as specified in its charter)
MICHIGAN 38-3150651
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or formation)
2600 TELEGRAPH ROAD
BLOOMFIELD HILLS, MI 48302
(Address of principal (Zip code)
executive offices)
___% Junior Subordinated Debentures
(Title of the indenture securities)
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of Richmond, Richmond, Virginia 23261.
Maryland Bank Commission, Baltimore, Maryland 21202
Federal Deposit Insurance Corporation, Washington, D.C. 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
(Because responses from the obligor and the underwriters have not yet
been received, Item 2 is at the date hereof based upon incomplete
information but is believed to be correct and may be considered to be
complete unless modified by an amendment to this Form T-1).
ITEM 16. LIST OF EXHIBITS.
List below all exhibits filed as a part of this statement of eligibility.
Exhibit
- -------
1 A copy of the articles of incorporation of the trustee as now in
effect is incorporated herein by reference to Exhibit 1 to Form
T-1 (Exhibit 25 to the Registration Statement on Form S-3,
Registration No. 333-27305)
2 A copy of the certificate of authority of the trustee to commence
business is incorporated herein by reference to Exhibit T1-2 to
Form T-1 (Exhibit 26 to the Registration Statement on Form S-2,
Registration No. 2-98697)
3 A copy of the authorization of the trustee to exercise corporate
trust powers is incorporated herein by reference to Exhibit T1-3 of
Amendment No. 1 to Form T-1 (Exhibit 26 to the Registration
Statement on Form S-3, Registration No. 33-18373)
<PAGE> 3
4 A copy of the existing bylaws of the trustee is incorporated herein
by refererence to Exhibit 4 to Form T-1 (Exhibit 25 to the
Registration Statement on Form S-3, Registration No. 333-27305)
5 Not applicable
6 The consent of the trustee required by Section 321(b) of the Act
7 A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority
8 Not applicable
9 Not applicable
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, FMB Bank, a corporation organized and existing under the laws of the
State of Maryland, has duly caused this statement of eligibility to be signed on
its behalf by the undersigned, thereunto duly authorized, all in the City of
Baltimore and State of Maryland, on March 16, 1999
FMB BANK
By: /s/ Robert D. Brown
---------------------------------
Robert D. Brown
Vice President
<PAGE> 5
EXHIBIT 6
Consent of Trustee
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, in connection with the issuance by Flagstar Bancorp, Inc., we
hereby consent that reports of examination by Federal, state, territorial or
district authorities may be furnished by such authorities to the Securities and
Exchange Commission upon request therefor.
FMB BANK
By: /s/ Robert D. Brown
---------------------------------
Robert D. Brown
Vice President
<PAGE> 6
EXHIBIT 7
Report of Condition Consolidating Domestic and Foreign Subsidiaries of FMB Bank,
Baltimore, Maryland at the close of business on December 31, 1998 published in
response to call made by Comptroller of the Currency, under Title 12, United
States Code, Section 161, Charter No. 04822, Comptroller of the Currency,
Richmond District.
CONSOLIDATED REPORT OF CONDITION
(Dollars in Thousands)
<TABLE>
<S> <C>
ASSETS
Cash and balances due from
depository institutions:
Noninterest-bearing balances
and currency and coin...................... $ 1,199,940
Interest-bearing balances..................... 6,943
Securities:
Held-to-maturity securities....................... -0-
Available-for-sale securities..................... 4,602,042
Federal funds sold and securities purchased
under agreements to resell........................ 123,418
Loans and lease financing receivables:
Loans and leases, net of unearned income.......... 10,501,474
LESS: Allowance for loan and lease losses......... 154,697
LESS: Allocated transfer risk reserve............. 1,400
Loans and leases, net of unearned income,
allowance, and reserve..................... 10,345,377
Trading assets...................................... 118,269
Premises and fixed assets (including
capitalized leases)............................... 188,979
Other real estate owned............................. 12,416
Investments in unconsolidated subsidiaries
and associated companies.......................... 58,643
Customers' liability to this bank
on acceptances outstanding........................ 12,253
Intangible assets................................... 91,109
Other assets........................................ 355,315
TOTAL ASSETS.................................. 17,114,704
==========
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
LIABILITIES
Deposits:
In domestic offices............................ $11,898,282
Noninterest-bearing......................... 3,228,185
Interest-bearing............................ 8,610,097
In foreign offices, Edge and Agreement
subsidiaries, and IBFs....................... 517,687
Noninterest-bearing......................... 0
Interest-bearing............................ 517,687
Federal funds purchased and securities
sold under agreements to repurchase............. 2,223,081
Demand notes issued to the U.S. Treasury......... 56,020
Trading liabilities.............................. 71,866
Other borrowed money:
With a remaining maturity of one year or less -0-
With a remaining maturity of more than one year
through three years.......................... 200,000
With a remaining maturity of more than three
years........................................ 239
Bank's liability on acceptances
executed and outstanding....................... 12,253
Subordinated notes and debentures................ 219,000
Other liabilities................................ 565,161
TOTAL LIABILITIES.......................... $15,763,589
EQUITY CAPITAL
Perpetual preferred stock and related surplus.... -0-
Common Stock..................................... 18,448
Surplus.......................................... 765,562
Undivided profits and capital reserves........... 543,808
Net unrealized holding gains (losses)
on available-for-sale securities............... 23,297
Cumulative foreign currency transalation
adjustments.................................... -0-
TOTAL EQUITY CAPITAL....................... $ 1,351,115
TOTAL LIABILITIES AND EQUITY CAPITAL....... $17,114,704
==========
</TABLE>
