UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO ____________
COMMISSION FILE NUMBER: 000-24235
GUARANTY BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-16516431
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 W. ARKANSAS
MT. PLEASANT, TEXAS 75455
(Address of principal executive offices, including zip code)
903-572-9881
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X]Yes [ ] No
As of May 15, 2000, there were 3,128,416 shares of the registrant's Common
Stock, par value $1.00 per share, outstanding.
<PAGE>
GUARANTY BANCSHARES, INC.
INDEX TO FORM 10-Q
- --------------------------------------------------------------------------------
PART I - FINANCIAL INFORMATION
PAGE
----
Item 1. Financial Statements
Consolidated Balance Sheets................................... 2
Consolidated Statements of Earnings........................... 3
Condensed Consolidated Statements of Changes in
Shareholders' Equity ....................................... 3
Condensed Consolidated Statements of Cash Flows............... 4
Consolidated Statements of Comprehensive Income............... 5
Notes to Interim Consolidated Financial Statements............ 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations .................................. 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk.... 18
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.............................................. 18
Item 2. Changes in Securities and Use of Proceeds...................... 18
Item 3. Defaults upon Senior Securities ............................... 18
Item 4. Submission of Matters to a Vote of Security Holders............ 18
Item 5. Other Information.............................................. 18
Item 6. Exhibits and Reports on Form 8-K............................... 18
Signatures.............................................................. 19
1
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GUARANTY BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------------- ---------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and due from banks ................................................................... $ 12,468 $ 13,102
Interest bearing deposits in other banks .................................................. 80 50
--------------- ---------------
Total cash and cash equivalents ..................................................... 12,548 13,152
Federal funds sold ........................................................................ 9,155 1,140
Securities available-for-sale ............................................................. 81,292 79,761
Loans, net of allowance for loan losses of $2,549 and $2,491 .............................. 256,559 252,718
Premises and equipment, net ............................................................... 13,041 11,662
Accrued interest receivable ............................................................... 2,840 2,735
Other assets .............................................................................. 9,976 9,270
--------------- ---------------
Total assets ........................................................................ $ 385,411 $ 370,438
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing ................................................................... $ 59,130 $ 56,404
Interest-bearing ...................................................................... 279,635 272,233
--------------- ---------------
Total deposits ...................................................................... 338,765 328,637
--------------- ---------------
FHLB advances ............................................................................. 8,627 10,699
Long-term debt ............................................................................ 7,000 --
Other liabilities ......................................................................... 2,292 2,606
--------------- ---------------
Total liabilities ................................................................... 356,684 341,942
--------------- ---------------
Shareholders' equity:
Preferred stock, $5.00 par value, 15,000,000 shares authorized,
none issued ...................................................................... -- --
Common stock, $1.00 par value, 50,000,000 shares authorized,
3,250,016 issued ................................................................. 3,250 3,250
Additional capital ..................................................................... 12,659 12,659
Retained earnings ...................................................................... 14,080 13,535
Treasury stock, 17,600 shares at cost .................................................. (174) (174)
Accumulated other comprehensive income ................................................. (1,088) (774)
--------------- ---------------
Total shareholders' equity ............................................................. 28,727 28,496
--------------- ---------------
Total liabilities and shareholders' equity ............................................. $ 385,411 $ 370,438
=============== ===============
</TABLE>
See accompanying Notes to Interim Consolidated Financial Statements.
2
<PAGE>
GUARANTY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------------------
2000 1999
--------------- ---------------
<S> <C> <C>
Interest income:
Loans .................................................................................... $ 5,317 $ 3,881
Securities ............................................................................... 1,314 772
Federal funds sold and other temporary investments ....................................... 44 110
--------------- ---------------
Total interest income ................................................................. 6,675 4,763
Interest expense:
Deposits ................................................................................ 3,434 2,221
Other borrowed funds .................................................................... 139
--------------- ---------------
Total interest expense ................................................................ 3,573 2,273
--------------- ---------------
Net interest income ................................................................... 3,102 2,490
Provision for loan losses ................................................................... 130 105
--------------- ---------------
Net interest income after provision for loan losses ................................... 2,972 2,385
Noninterest income:
Service charges .......................................................................... 542 405
Other operating income ................................................................... 369 252
Realized (loss) gain on available-for-sale securities .................................... (34) 5
--------------- ---------------
Total noninterest income .............................................................. 877 662
--------------- ---------------
Noninterest expense:
Employee compensation and benefits ....................................................... 1,770 1,268
Net bank premises expense ................................................................ 417 309
Other operating expenses ................................................................. 932 650
--------------- ---------------
Total noninterest expenses ............................................................ 3,119 2,227
--------------- ---------------
Earnings before income taxes .......................................................... 730 820
Provision for income taxes .................................................................. 185 165
--------------- ---------------
Net earnings .......................................................................... $ 545 $ 655
=============== ===============
Basic earnings per common share ....................................................... $ 0.17 $ 0.23
=============== ===============
Diluted earnings per common share ..................................................... $ 0.17 $ 0.23
=============== ===============
</TABLE>
See accompanying Notes to Interim Consolidated Financial Statements.
GUARANTY BANCSHARES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------------------
2000 1999
--------------- ---------------
<S> <C> <C>
Balance at beginning of period ............................................................... $ 28,496 $ 23,796
Net income ................................................................................... 545 655
Change in unrealized gain/loss on
securities available for sale, net of tax ................................................ (314) (166)
--------------- ---------------
Balance at end of period ..................................................................... $ 28,727 $ 24,285
=============== ===============
</TABLE>
See accompanying Notes to Interim Consolidated Financial Statements.
3
<PAGE>
GUARANTY BANCSHARES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
----------------------------------
2000 1999
--------------- ---------------
<S> <C> <C>
Net cash provided by operating activities .................................................... 171 745
Cash flows from investing activities:
Securities available for sale:
Purchases .......................................................................... (9,727) (2,627)
Sales .............................................................................. 5,314 1,006
Maturities, calls, and principal repayments ........................................ 2,387 3,439
Securities held to maturity:
Purchases .......................................................................... -- (708)
Maturities, calls, and principal repayments ........................................ -- 593
Net increase in loans .............................................................. (4,283) (11,219)
Purchases of premises and equipment ................................................ (1,563) (588)
Proceeds from sale of premises, equipment and other real estate .................... 56 31
Net increase in federal funds sold ................................................. (8,015) (3,615)
--------------- ---------------
Net cash used by investing activities ......................................... (15,831) (13,688)
--------------- ---------------
Cash flows from financing activities:
Change in deposits ..................................................................... 10,128 11,385
Net change in short-term FHLB advances ................................................. (2,000) --
Repayment of long-term FHLB advances ................................................... (72) (69)
Proceeds from issuance of long-term debt ............................................... 7,000 --
--------------- ---------------
Net cash provided from financing activities ...................................... 15,056 11,316
--------------- ---------------
Net increase in cash and cash equivalents ........................................ (604) (1,627)
Cash and cash equivalents at beginning of period ............................................. 13,152 11,721
--------------- ---------------
Cash and cash equivalents at end of period ................................................... $ 12,548 $ 10,094
=============== ===============
Supplemental disclosures:
Cash paid for income taxes .............................................................. $ 170 $ 115
Cash paid for interest .................................................................. 3,504 2,255
Significant non-cash transactions:
Transfers from loans to real estate owned ............................................... 132 67
</TABLE>
See accompanying Notes to Interim Consolidated Financial Statements.
4
<PAGE>
GUARANTY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
----------------------------------
2000 1999
--------------- ---------------
<S> <C> <C>
Net income ................................................................................ 545 655
Other comprehensive income:
Unrealized gain/(loss) on available for sale securities
arising during the period ......................................................... (509) (247)
Reclassification adjustment for amounts realized on
securities sales included in net income ........................................... 34 (5)
--------------- ---------------
Net unrealized gain/(loss) .................................................... (475) (252)
Tax effect .................................................................... 161 86
--------------- ---------------
Total other comprehensive income ......................................... (314) (166)
--------------- ---------------
Comprehensive income....................................................................... $ 231 $ 489
=============== ===============
</TABLE>
5
<PAGE>
GUARANTY BANCSHARES, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Guaranty
Bancshares, Inc. (the "Company") and its wholly-owned subsidiaries Guaranty (TX)
Capital Trust I and Guaranty Financial Corp., Inc., which wholly owns Guaranty
Bank, and one non-bank subsidiary, Guaranty Company. Guaranty Bank has three
wholly-owned non-bank subsidiaries, Guaranty Leasing Company, Guaranty Mortgage
Company and GB Com, Inc. All significant intercompany balances and transactions
have been eliminated in consolidation.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the statements reflect all
adjustments necessary for a fair presentation of the financial position, results
of operations and cash flows of the Company on a consolidated basis, and all
such adjustments are of a normal recurring nature. These financial statements
and the notes thereto should be read in conjunction with the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission on March
10, 2000. The Company has consistently followed the accounting policies
described in the Annual Report in preparing this Form 10-Q. Operating results
for the first quarter ended March 31, 2000, are not necessarily indicative of
the results that may be expected for the year ending December 31, 2000.
To prepare financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions based on
available information. These estimates and assumptions affect amounts reported
in the financial statements and disclosures provided; future results could
differ. The collectibility of loans, fair value of financial instruments and
status of contingencies are particularly subject to change.
NOTE 2. EARNINGS PER SHARE
The following table illustrates the computation of earnings per share
("EPS") (dollars in thousands, except share data):
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
---------------------------------
2000 1999
--------------- ---------------
(UNAUDITED)
<S> <C> <C>
Net earnings available to common shareholders ............................................. $ 545 $ 655
Weighted average common shares used in basic EPS .......................................... 3,232,416 2,898,280
Potential dilutive common shares .......................................................... -- --
--------------- ---------------
Weighted average common and potential dilutive
common shares used in dilutive EPS .................................................. 3,232,416 2,898,280
=============== ===============
Basic earnings per common share ........................................................... $ 0.17 $ 0.23
=============== ===============
Diluted earnings per common share ......................................................... $ 0.17 $ 0.23
=============== ===============
</TABLE>
6
<PAGE>
NOTE 3. GUARANTEED PREFERRED BENEFICIAL INTERESTS IN JUNIOR SUBORDINATED
DEBENTURES
On March 23, 2000, the Company, in a private placement, issued $7,000,000
(7,000 shares with a liquidation amount of $1,000 per security) of 10.875% Fixed
Rate Capital Trust Pass-through Securities ("TruPS") through a newly formed,
wholly-owned subsidiary, Guaranty (TX) Capital Trust I (the "Trust"). The Trust
invested the total proceeds from the sale of the TruPS in 10.875% Junior
Subordinated Deferrable Interest Debentures (the "Debentures") issued by the
Company. The net proceeds from the sale of the Debentures will be used to buy
back shares of the Company's stock, provide a $1.5 million additional capital
contribution to Guaranty Bank and provide for additional working capital to
support growth.
With certain exceptions, the amount of the principal and any accrued and
unpaid interest on the Debentures are subordinated in right of payment to the
prior payment in full of all senior indebtedness of the Company. The terms of
the Debentures are such that they qualify as Tier I capital under the Federal
Reserve Board's regulatory capital guidelines applicable to bank holding
companies. Interest on the Debentures is payable semi-annually on March 8 and
September 8 of each year, commencing September 8, 2000. The interest is
deferrable on a cumulative basis for up to five consecutive years following a
suspension of dividend payments on all other capital stock. No principal
payments are due until maturity on March 8, 2030.
On any March 8 or September 8 on or after March 8, 2010 and prior to
maturity, the Debentures are redeemable for cash at the option of the Company,
on at least 30 but not more than 60 days notice, in whole or in part, at the
redemption prices set forth in the table below, plus accrued interest to the
date of redemption.
IF REDEEMED
IF REDEEMED DURING PERCENTAGE OF DURING PERCENTAGE OF
12 MONTHS BEGINNING PRINCIPAL 12 MONTHS BEGINNING PRINCIPAL
MARCH 8, AMOUNT MARCH 31, AMOUNT
- -------------------- ------------------ ------------------ ----------------
2010 105.438% 2016 102.175%
2011 104.894% 2017 101.631%
2012 104.350% 2018 101.088%
2013 103.806% 2019 100.544%
2014 103.263% 2020 and after 100.000%
2015 102.719%
Upon the occurrence of certain special events, the Company will have the
right to call the securities at par at any time with the permission of the
Federal Reserve.
These special events include, among other things:
1. A change in the laws or regulations in the United States or any
taxing authority to the effect that the Trust becomes subject to
federal income tax and the interest paid by the Company is no
longer tax deductible.
2. A change in the law by any government agency that would make the
Trust an investment company under the Investment Company Act of
1940.
3. A change in the law by any government agency that would cause the
Company to not be able to treat the liquidation amount of the debt
security as Tier I Capital.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Management's Discussion and Analysis includes forward-looking
statements. When used in this document, the words or phrases such as, "will
likely result," "are expected to," "will continue," "is anticipated,"
"estimated," "projected," or similar expressions are intended to identify
"forward looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are subject to certain risks and
uncertainties including changes in economic conditions in the Company's market
area, changes in policies by regulatory agencies, fluctuations in interest
rates, demand for loans in the Company's market area and competition, that could
cause actual results to differ materially from historical earnings and those
presently anticipated or projected. Factors listed above could affect the
Company's financial performance and could cause the Company's results for future
periods to differ materially from any statements expressed with respect to
future periods.
The Company does not undertake, and specifically disclaims any obligation,
to publicly revise any forward-looking statements to reflect events or
circumstances after the date of such statements or to reflect the occurrence of
anticipated or unanticipated events.
GENERAL OVERVIEW
Guaranty Bancshares, Inc. (the "Company") is a registered bank holding
company that derives substantially all of its revenues and income from the
operation of its subsidiary, Guaranty Bank (the "Bank"). The Bank is a full
service bank that provides a broad line of financial products and services to
small and medium-sized businesses and consumers through ten banking locations in
the Texas communities of Mount Pleasant (two offices), Bogata, Commerce, Deport,
Paris, Pittsburg, Sulphur Springs, Talco and Texarkana.
FINANCIAL OVERVIEW
Net earnings available to common shareholders for the three months ended
March 31, 2000 were $545,000 or $0.17 per share compared with $655,000 or $0.23
per share for the three months ended March 31, 1999, a decrease of $110,000 or
16.8%. The decrease in net earnings was due primarily to an increase in
noninterest expense of $892,000 or 40.1%, and an increase in the provision for
loan losses of $25,000 or 23.8%, offset by an increase in net interest income of
$612,000 or 24.6% and an increase in noninterest income of $215,000 or 32.5%.
The three-month period ended March 31, 2000 showed steady growth. Gross
loans increased to $259.1 million at March 31, 2000, from $255.2 million at
December 31, 1999, an increase of $3.9 million or 1.5%. Total assets were $385.4
million at March 31, 2000, compared with $370.4 million at December 31, 1999.
The increase of $15.0 million in total assets resulted primarily from the
investment of funds provided from an increase in deposits of $10.1 million and
the issuance of the Debentures of $7.0 million - See Note 3 to the Interim
Consolidated Financial Statements. Total deposits were $338.8 million at March
31, 2000 compared to $328.7 million at December 31, 1999, an increase of $10.1
million or 3.1%. There were no Debentures outstanding at December 31, 1999.
Total shareholders' equity was $28.7 million at March 31, 2000, compared
with $28.5 million at December 31, 1999, an increase of $231,000 or 0.81%. This
increase was due to earnings for the period of $545,000 less a decrease in
accumulated comprehensive income of $314,000.
8
<PAGE>
RESULTS OF OPERATIONS
INTEREST INCOME
Interest income for the three months ended March 31, 2000 was $6.7
million, an increase of $1.9 million or 40.1% compared with the three months
ended March 31, 1999. The increase in interest income was due primarily to
higher interest income on loans. Average loans were $257.9 million for the three
months ended March 31, 2000, compared with $190.7 million for the three months
ended March 31, 1999, an increase of $67.2 million or 35.2%. Average securities
were $79.1 million for the three months ended March 31, 2000, compared with
$51.2 million for the three months ended March 31, 1999, an increase of $27.9
million or 54.3%.
INTEREST EXPENSE
Interest expense on deposits and other interest-bearing liabilities was
$3.6 million for the three months ended March 31, 2000, compared with $2.3
million for the three months ended March 31, 1999, an increase of $1.3 million
or 57.2%. The increase in interest expense was due primarily to a 42.0% increase
in average interest-bearing liabilities to $292.1 million for the three months
ended March 31, 2000, from $205.6 million for the three months ended March 31,
1999. The increase is also due to a rise in average interest rates from 4.48%
for the three months ended March 31, 1999 to 4.92% for the first three months
ended March 31, 2000.
NET INTEREST INCOME
Net interest income was $3.1 million for the three months ended March 31,
2000 compared with $2.5 million for the three months ended March 31, 1999, an
increase of $612,000 or 24.6%. The increase in net interest income resulted
primarily from growth in average interest-earning assets to $340.2 million for
the three months ended March 31, 2000, from $250.9 million for the three months
ended March 31, 1999, an increase of $89.3 million or 35.6%.
The Company's net interest income is affected by changes in the amount and
mix of interest-earning assets and interest-bearing liabilities, referred to as
a "volume change." It is also affected by changes in yields earned on
interest-earning assets and rates paid on interest-bearing deposits and other
borrowed funds, referred to as a "rate change." The following tables set forth,
for each category of interest-earning assets and interest-bearing liabilities,
the average amounts outstanding, the interest earned or paid on such amounts,
and the average rate earned or paid for the three months ended March 31, 2000
and 1999, respectively. The tables also set forth the average rate earned on
total interest-earning assets, the average rate paid on total interest-bearing
liabilities, and the net interest margin on average total interest-earning
assets for the same periods.
9
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-------------------------------------------------------------------------
2000 1999
------------------------------------ ---------------------------------
AVERAGE INTEREST AVERAGE AVERAGE INTEREST AVERAGE
OUTSTANDING EARNED/ YIELD/ OUTSTANDING EARNED/ YIELD/
BALANCE PAID RATE BALANCE PAID RATE
--------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-earning assets:
Loans:
Commercial and industrial ..................... $ 67,823 $ 1,393 8.26% $ 58,230 $ 1,163 8.10%
Agriculture ................................... 8,723 208 9.59 -- -- --
Real estate-mortgage and
construction ................................ 153,937 3,084 8.06 111,495 2,206 8.02
Installment and other ......................... 27,447 629 9.22 20,989 501 9.68
Fees on loans ................................. 3 11
Securities .................................... 79,066 1,314 6.69 51,227 772 6.11
Federal funds sold ............................ 3,177 44 5.61 6,936 83 4.85
Interest-bearing deposits in
other financial institutions ................ -- -- -- 1,980 27 5.53
--------- --------- --------- ---------
Total interest-earning assets ................. 340,173 6,675 7.89% 250,857 4,763 7.70%
Less allowance for loan losses ..................... (2,479) (1,525)
--------- ---------
Total interest-earning
assets, net of allowance ................. 337,694 249,332
Non-earning assets:
Cash and due from banks ........................ 12,967 8,682
Premises and equipment ......................... 12,298 7,226
Interest receivable and
other assets ............................. 13,714 9,321
Other real estate owned ........................ 150 135
--------- ---------
Total assets ............................ $ 376,823 $ 274,696
========= =========
LIABILITIES AND SHAREHOLDERS'
Interest-bearing liabilities:
NOW, savings, and money
market accounts ........................... $ 93,399 $ 929 4.00% $ 65,569 $ 512 3.17%
Time deposits ................................. 188,150 2,505 5.36 136,085 1,709 5.09
--------- --------- --------- ---------
Total interest-bearing
deposits ............................... 281,549 3,434 4.91 201,654 2,221 4.47
FHLB advances ................................. 9,877 120 4.89 3,995 52 5.28
Long-term debt ................................ 692 19 10.87 -- -- --
--------- --------- --------- ---------
Total interest-bearing
liabilities ............................ 292,118 $ 3,573 4.92% 205,649 $ 2,273 4.48%
--------- ---------
Noninterest-bearing liabilities:
Demand deposits ............................... 54,162 42,249
Accrued interest, taxes and
other liabilities ......................... 2,190 2,556
--------- ---------
Total liabilities ......................... 348,470 250,454
Shareholders' equity ................................ 28,353 24,242
--------- ---------
Total liabilities and
shareholders' equity .................. $ 376,823 $ 274,696
========= =========
Net interest income ................................. $ 3,102 $ 2,490
========= =========
Net interest spread ................................. 2.97% 3.22%
========= =========
Net interest margin ................................. 3.67% 4.03%
========= =========
</TABLE>
10
<PAGE>
The following table presents the dollar amount of changes in interest
income and interest expense for the major components of interest-earning assets
and interest-bearing liabilities and distinguishes between the increase
(decrease) related to outstanding balances and the volatility of interest rates.
For purposes of this table, changes attributable to both rate and volume that
can be segregated have been allocated.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-----------------------------------------------------
2000 VS. THREE MONTHS ENDED MARCH 31, 1999
-----------------------------------------------------
INCREASE (DECREASE)
DUE TO
VOLUME RATE TOTAL
--------------- --------------- ---------------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C>
Interest-earning assets:
Loans ........................................................ $ 1,399 $ 37 $ 1,436
Securities ................................................... 428 114 542
Federal funds sold ........................................... (45) 6 (39)
Interest-bearing deposits in other
financial institutions .................................... (27) -- (27)
--------------- --------------- ---------------
Total increase (decrease) in interest
income ....................................................... 1,755 157 1,912
--------------- --------------- ---------------
Interest-bearing liabilities:
NOW, savings, and money market
accounts .................................................. 221 196 417
Time deposits ................................................ 660 136 796
FHLB advances ................................................ 78 (10) 68
Long-term debt ............................................... 19 -- 19
--------------- --------------- ---------------
Total increase (decrease) in interest
expense ............................................ 978 322 1,300
--------------- --------------- ---------------
Increase (decrease) in net interest income ................... $ 777 $ (165) $ 612
=============== =============== ===============
</TABLE>
11
<PAGE>
PROVISION FOR LOAN LOSSES
Provisions for loan losses are charged to income to bring the total
allowance for loan losses to a level deemed appropriate by management of the
Company based on such factors as the industry diversification of the Company's
commercial loan portfolio, the effect of changes in the local real estate market
on collateral values, the results of recent regulatory examinations, the effects
on the loan portfolio of current economic indicators and their probable impact
on borrowers, the amount of charge-offs for the period, the amount of
nonperforming loans and related collateral security, the evaluation of the
Company's loan portfolio by Independent Bank Services, L.C. and the annual
examination of the Company's financial statements by its independent auditors.
The provision for loan losses for the three months ended March 31, 2000, was
$130,000 compared with $105,000 for the three months ended March 31, 1999, an
increase of $25,000 or 23.8%. Management believes increasing the allowance for
loan losses is prudent as total loans, particularly commercial, construction,
and consumer loans, increase.
NONINTEREST INCOME
The Company's primary sources of recurring noninterest income are service
charges on deposit accounts and fee income. Noninterest income for the three
months ended March 31, 2000 increased to $877,000 from $662,000 for the three
months ended March 31, 1999, an increase of $215,000 or 32.5%. The increase in
noninterest income for the three months ended March 31, 2000, resulted primarily
from an increase in service charges on deposit accounts due to an increase in
the number of deposit accounts. Additionally, fee income increased from $117,000
for the three months ended March 31, 1999 to $192,000 for the three months ended
March 31, 2000. The increase was primarily due to fee income from the Cash Flow
Manager program initiated in September 1999 and additional legal fee income
generated from the Company's internal legal counsel. Other noninterest income
increased $34,000 during the same period due primarily to additional earnings
generated from the key man life insurance policies that have been in place since
July 1998.
The following table presents, for the periods indicated, the major
categories of noninterest income (dollars in thousands):
THREE MONTHS ENDED
MARCH 31,
------------------------
2000 1999
---------- ----------
(UNAUDITED)
Service charges on deposit accounts ......... $ 542 $ 405
Fee income .................................. 192 117
Fiduciary income ............................ 25 17
Other noninterest income .................... 152 118
Realized gain on securities ................. (34) 5
---------- ----------
Total noninterest income .............. $ 877 $ 662
========== ==========
12
<PAGE>
NONINTEREST EXPENSES
Noninterest expenses totaled $3.1 million for the three months ended March
31, 2000 compared with $2.2 million for the three months ended March 31, 1999,
an increase of $892,000 or 40.1%. The following table presents, for the periods
indicated, the major categories of noninterest expenses (dollars in thousands):
THREE MONTHS ENDED
MARCH 31,
-----------------------
2000 1999
---------- ----------
(UNAUDITED)
Employee compensation and
benefits ................................ $ 1,770 $ 1,268
---------- ----------
Non-staff expenses:
Net bank premises expense .............. 417 309
Office and computer supplies ........... 102 51
Legal and professional fees ............ 71 101
Advertising ............................ 69 42
Postage ................................ 39 34
FDIC insurance ......................... 16
Other .................................. 635 415
---------- ----------
Total non-staff expenses ............ 1,349 959
---------- ----------
Total noninterest
expenses .......................... $ 3,119 $ 2,227
========== ==========
Employee compensation and benefits expense for the three months ended
March 31, 2000 was $1.8 million, an increase of $502,000 or 39.6% compared with
$1.3 million for the same period in 1999. The increase for the three-month
period ended March 31, 2000 was due primarily to normal salary increases and
additional staff placement in the Texarkana, Mt. Pleasant, and Paris locations
to handle customer growth and the recently opened Pittsburg, Sulphur Springs,
and Commerce locations. The number of full-time equivalent employees was 189.0
at March 31, 2000, compared with 135.5 at March 31, 1999, an increase of 39.5%.
Non-staff expenses were $1.3 million for the three months ended March 31,
2000, compared with $959,000 for the same period in 1999, an increase of
$390,000 or 40.7%. Net bank premises expense increased $108,000 or 35.0% during
the same period to $417,000 due to construction and remodeling projects and the
addition of the new Operations Center in Mt. Pleasant, Texas.
Other non-staff expenses increased $220,000 or 53.0% to $635,000 as of
March 31, 2000. The primary reason for this increase is the addition of new
locations which, among other expenses, resulted in an increase of $18,000 in
director fees, an increase of $36,000 in supplies expense, an increase of
$23,000 in ATM and debit card expenses, and an increase of $37,000 in
amortization of goodwill.
13
<PAGE>
INCOME TAXES
Income tax expense increased $20,000 to $185,000 for the three months
ended March 31, 2000 from $165,000 for the same period in 1999. The increase is
primarily a result of fewer tax deductions available from the Company's
leveraged leasing activities. The income stated on the consolidated statement of
earnings differs from the taxable income due to tax-exempt income, the amount of
non-deductible interest expense and the amount of other non-deductible expense.
FINANCIAL CONDITION
LOAN PORTFOLIO
Gross loans were $259.1 million at March 31, 2000, an increase of $3.9
million or 1.5% from $255.2 million at December 31, 1999. Loan growth occurred
primarily in 1-4 family residential loans, non-residential and non-farmland
loans, and construction and land development loans. Loans comprised 74.1% of
total interest-earning assets at March 31, 2000 compared with 75.9% at December
31, 1999.
The following table summarizes the loan portfolio of the Company by
type of loan as of March 31, 2000 and December 31, 1999:
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
----------------------------------------------------------------------
MARCH 31, 2000 DECEMBER 31, 1999
--------------------------------- ---------------------------------
AMOUNT PERCENT AMOUNT PERCENT
--------------- --------------- --------------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Commercial and industrial ................... $ 57,890 22.34% $ 61,153 23.96%
Agriculture ................................. 8,528 3.29 9,102 3.57
Real estate:
Construction and land ............. 9,188 3.55 7,926 3.11
1-4 family residential ............ 87,755 33.87 83,777 32.83
Farmland .......................... 7,831 3.02 7,976 3.13
Non-residential and non-farmland. . 56,387 21.76 52,303 20.49
Multi-family residential .......... 4,525 1.75 6,239 2.44
Consumer .................................... 27,004 10.42 26,733 10.47
--------------- --------------- --------------- ---------------
Total loans ............. $ 259,108 100.00% $ 255,209 100.00%
=============== =============== =============== ===============
</TABLE>
ALLOWANCE FOR LOAN LOSSES
In originating loans, the Company recognizes that it will experience
credit losses and the risk of loss will vary with, among other things, general
economic conditions, the type of loan being made, the creditworthiness of the
borrower over the term of the loan and, in the case of a collateralized loan,
the quality of the collateral for such loan. The Company maintains an allowance
for loan losses in an amount that it believes is adequate for estimated losses
in its loan portfolio. Management determines the adequacy of the allowance
through its evaluation of the loan portfolio. In addition to unallocated
allowances, specific allowances are provided for individual loans when ultimate
collection is considered questionable by management after reviewing the current
status of loans which are contractually past due and considering the net
realizable value of the collateral for the loan. Loans are charged-off against
the allowance for loan losses when appropriate. Although management believes it
uses the best information available to make determinations with respect to the
allowance for loan losses, future adjustments may be necessary
14
<PAGE>
if economic conditions differ from the assumptions used in making the initial
determinations. At March 31, 2000, and December 31, 1999, the allowance for loan
losses totaled $2.5 million or 0.98% of gross loans. The allowance for loan
losses as a percentage of nonperforming loans was 140.29% at March 31, 2000.
Set forth below is an analysis of the allowance for loan losses for the
periods indicated (dollars in thousands):
<TABLE>
<CAPTION>
THREE MONTHS YEAR
ENDED ENDED
MARCH 31, DECEMBER 31,
2000 1999
--------------- ---------------
(UNAUDITED)
<S> <C> <C>
Average loans outstanding ................................................................. $ 257,930 $ 213,737
=============== ===============
Gross loans outstanding at end of period .................................................. $ 259,108 $ 255,209
=============== ===============
Allowance for loan losses at beginning of period .......................................... 2,491 1,512
Provision for loan losses ................................................................. 130 310
Balance acquired with First American Acquisition .......................................... 846
Charge-offs:
Commercial and industrial ....................................................... (82) (64)
Real estate ..................................................................... (21) (2)
Consumer ........................................................................ (25) (267)
Recoveries:
Commercial and industrial ....................................................... 22 65
Real estate ..................................................................... 8 42
Consumer ........................................................................ 26 49
--------------- ---------------
Net loan (charge-offs) recoveries ......................................................... (72) (177)
--------------- ---------------
Allowance for loan losses at end of period ................................................ $ 2,549 $ 2,491
=============== ===============
Ratio of allowance to end of period loans ................................................. 0.98% 0.98%
Ratio of net charge-offs to average loans ................................................. 0.03% 0.08%
Ratio of allowance to end of period nonperforming loans ................................... 140.29% 244.94%
</TABLE>
15
<PAGE>
NONPERFORMING ASSETS
Nonperforming assets were $2.0 million at March 31, 2000 compared with
$1.1 million at December 31, 1999. Four lines of credit totaling $1.3 million
were added to nonaccrual loans during the quarter ended March 31, 2000, while
three lines of credit were removed totaling $560,000. Management anticipates
minimal losses on the total of these new nonperforming assets.
The ratio of nonperforming assets to total loans and other real estate was
0.76% and 0.43% at March 31, 2000, and December 31, 1999, respectively.
The following table presents information regarding nonperforming assets
as of the dates indicated (dollars in thousands):
MARCH 31, DECEMBER 31,
2000 1999
--------------- ---------------
(UNAUDITED)
Nonaccrual loans .......................... $ 1,185 $ 443
Accruing loans 90 or more days past due ... 632 574
--------------- ---------------
Total nonperforming loans ....... 1,817 1,017
Other real estate ......................... 157 79
--------------- ---------------
Total nonperforming assets ...... $ 1,974 $ 1,096
=============== ===============
SECURITIES
Securities totaled $81.3 million at March 31, 2000, an increase of $1.5
million from $79.8 million at December 31, 1999. At March 31, 2000, securities
represented 21.1% of total assets compared with 21.5% of total assets at
December 31, 1999. The yield on average securities for the three months ended
March 31, 2000, was 6.69% compared with 6.11% for the same period in 1999. At
March 31, 2000, securities included $27.9 million in U.S. Government securities,
$29.9 million in mortgage-backed securities, $16.6 million in collateralized
mortgage obligations, $1.6 million in equity securities, and $5.3 million in
municipal securities. The average life of the securities portfolio at March 31,
2000, was approximately five years.
PREMISES AND EQUIPMENT
Premises and equipment totaled $13.0 million at March 31, 2000 and $11.7
million at December 31, 1999. The net change reflects an increase of $1.3
million or 11.8%, in fixed assets. The increase is primarily due to the
capitalized construction cost incurred for the Mt. Pleasant Operations Center,
the new full-service bank location in Pittsburg, Texas, and major remodeling
projects in the Sulphur Springs, Commerce, and Mt. Pleasant, Texas locations.
OTHER ASSETS
On July 1, 1998, the Company invested $3.1 million in single insurance
premium policies, which insure the lives of certain senior officers of the
Company. As of March 31, 2000, and December 31, 1999, the net surrender values
of these policies totaled $3.9 million. Goodwill recorded in connection with the
First American Acquisition in September 1999, the Deport Acquisition in 1992 and
the Bogata Acquisition in 1993 totaled $3.1 million at March 31, 2000, and at
December 31, 1999.
16
<PAGE>
DEPOSITS
At March 31, 2000, demand, money market and savings deposits accounted for
approximately 45.0% of total deposits, while certificates of deposit made up
55.0% of total deposits. Noninterest-bearing demand deposits totaled $59.1
million or 17.5% of total deposits at March 31, 2000, compared with $56.4
million or 17.2% of total deposits at December 31, 1999. The average cost of
deposits, including noninterest-bearing demand deposits, was 4.11% for the three
months ended March 31, 2000 compared with 3.69% for the same period in 1999.
LIQUIDITY
The Company's Asset/Liability Management Policy is intended to maintain
adequate liquidity for the Company. Liquidity involves the Company's ability to
raise funds to support asset growth or reduce assets to meet deposit withdrawals
and other payment obligations, to maintain reserve requirements and otherwise to
operate the Company on an ongoing basis. The Company's liquidity needs are
primarily met by growth in core deposits. Although access to purchased funds
from correspondent banks is available and has been utilized on occasion to take
advantage of investment opportunities, the Company does not rely on these
external-funding sources. The cash and federal funds sold position, supplemented
by amortizing investments along with payments and maturities within the loan
portfolio, has historically created an adequate liquidity position.
The Company's cash flows are composed of three classifications: cash flows
from operating activities, cash flows from investing activities, and cash flows
from financing activities. As summarized in the Condensed Consolidated
Statements of Cash Flow, the most significant transactions which affected the
Company's level of cash and cash equivalents, cash flows, and liquidity during
the first quarter of 2000 were the net increase in federal funds sold of $8.0
million, the net increase in loans of $4.3 million, securities purchases of $9.7
million, securities sales of $5.3 million, the net increase in deposits of $10.1
million, and proceeds from the issuance of long-term debt of $7.0 million.
CAPITAL RESOURCES
Total shareholders' equity as of March 31, 2000, was $28.7 million, an
increase of $231,000 or 0.81% compared with shareholders' equity of $28.5
million at December 31, 1999. This increase was due to earnings for the period
of $545,000 less a decrease in accumulated comprehensive income of $314,000.
Both the Board of Governors of the Federal Reserve System ("Federal
Reserve"), with respect to the Company, and the Federal Deposit Insurance
Corporation ("FDIC"), with respect to the Bank, have established certain minimum
risk-based capital standards that apply to bank holding companies and federally
insured banks, respectively. As of March 31, 2000, the Company's Tier 1
risk-based capital, total risk-based capital and leverage capital ratios were
12.38%, 13.34%, and 8.65%, respectively. As of March 31, 2000, the Bank's
risk-based capital ratios remain above the levels required for the Bank to be
designated as "well capitalized" by the FDIC with Tier 1 risk-based capital,
total risk-based capital and leverage capital ratios of 9.27%, 10.23%, and
6.52%, respectively.
YEAR 2000 PREPAREDNESS
The Company successfully completed the Year 2000 changeover without any
problems in its core business processes. The Company has confirmed normal
business operations across all products and markets on a sustained basis.
While management believes it is unlikely, problems associated with
non-compliant third parties could still occur. Management will continue to
monitor all business processes and relationships with third parties during 2000
to ensure that all processes continue to function properly.
17
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
There have been no material changes in the market risk information
disclosed in the Company's Form 10-K for the year ended December 31, 1999. See
Form 10-K, Item 7, "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Interest Rate Sensitivity and Liquidity."
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) None
(b) None
(c) None
(d) None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit - 11, Statement regarding computation of earnings per
share. Exhibit - 27, Financial Data schedule.
(b) Reports on Form 8-K
Form 8-K was filed on January 25, 2000. Under Item 4, changes in
Registrant's Certifying Accountant, the Company announced the
dismissal of Arnold, Walker, Arnold & Co., P.C. as its independent
auditors effective upon the completion of the audit of the
Company's 1999 financial statements. Additionally, the Company
announced the engagement of Fisk & Robinson, P.C. to serve as the
Company's independent auditors for the 2000 financial statements.
Form 8-K/A was filed on February 25, 2000. The Company amended the
prior Form 8-K filed on January 25, 2000 to report February 23,
2000 as the effective date of dismissal of Arnold, Walker, Arnold &
Co., P.C. as the Company's independent auditors.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GUARANTY BANCSHARES, INC.
(Registrant)
Date: May 15, 2000 By: /s/ ARTHUR B. SCHARLACH
-------------------------------
Arthur B. Scharlach, Jr.
President
(Principal Executive Officer)
Date: May 15, 2000 By: /s/ CLIFTON A. PAYNE
-------------------------------
Clifton A. Payne
Senior Vice President and Chief
Financial Officer
(Principal Financial Officer)
19
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION PAGE NUMBER
- ------- ----------- -----------
10 Amended and Restated Declaration of Trust -
Guaranty (TX) Trust I - Dated as of March
23, 2000 23
11 Statement regarding computation Reference is hereby made
of earnings per share to Note 2 of Notes to
Interim Consolidated
Financial Statements on
page 6 hereof.
27 Financial Data Schedule 21
20
==============================================
AMENDED AND RESTATED DECLARATION
OF TRUST
GUARANTY (TX) CAPITAL TRUST I
Dated as of March 23, 2000
==============================================
23
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions................................................27
ARTICLE II
ORGANIZATION
SECTION 2.1 Name.......................................................34
SECTION 2.2 Office.....................................................34
SECTION 2.3 Purpose....................................................34
SECTION 2.4 Authority..................................................34
SECTION 2.5 Title to Property of the Trust.............................34
SECTION 2.6 Powers and Duties of the Trustees and the Administrators...34
SECTION 2.7 Prohibition of Actions by the Trust and the Trustees.......38
SECTION 2.8 Powers and Duties of the Institutional Trustee.............38
SECTION 2.9 Certain Duties and Responsibilities of the Trustees and
Administrators.............................................40
SECTION 2.10 Certain Rights of Institutional Trustee....................41
SECTION 2.11 Delaware Trustee...........................................43
SECTION 2.12 Execution of Documents.....................................43
SECTION 2.13 Not Responsible for Recitals or Issuance of Securities.....44
SECTION 2.14 Duration of Trust..........................................44
SECTION 2.15 Mergers....................................................44
ARTICLE III
SPONSOR
SECTION 3.1 Sponsor's Purchase of Common Securities....................45
SECTION 3.2 Responsibilities of the Sponsor............................45
ARTICLE IV
TRUSTEES AND ADMINISTRATORS
SECTION 4.1 Number of Trustees.........................................46
SECTION 4.2 Delaware Trustee...........................................46
SECTION 4.3 Institutional Trustee; Eligibility.........................46
SECTION 4.4 Certain Qualifications of the Delaware Trustee Generally...47
SECTION 4.5 Administrators.............................................47
SECTION 4.6 Delaware Trustee...........................................47
SECTION 4.7 Appointment, Removal and Resignation of Trustees and
Administrators.............................................47
SECTION 4.8 Vacancies Among Trustees...................................49
SECTION 4.9 Effect of Vacancies........................................49
SECTION 4.10 Meetings of the Trustees and the Administrators............49
SECTION 4.11 Delegation of Power........................................49
SECTION 4.12 Conversion, Consolidation or Succession to Business........50
ARTICLE V
DISTRIBUTIONS
SECTION 5.1 Distributions..............................................50
24
<PAGE>
ARTICLE VI
ISSUANCE OF SECURITIES
SECTION 6.1 General Provisions Regarding Securities....................50
SECTION 6.2 Paying Agent, Transfer Agent and Registrar.................51
SECTION 6.3 Form and Dating............................................51
SECTION 6.4 Mutilated, Destroyed, Lost or Stolen Certificates..........52
SECTION 6.5 Temporary Securities.......................................52
SECTION 6.6 Cancellation...............................................52
SECTION 6.7 Rights of Holders; Waivers of Past Defaults................52
ARTICLE VII
DISSOLUTION AND TERMINATION OF TRUST
SECTION 7.1 Dissolution and Termination of Trust.......................54
ARTICLE VIII
TRANSFER OF INTERESTS
SECTION 8.1 General....................................................55
SECTION 8.2 Transfer Procedures and Restrictions.......................56
SECTION 8.3 Deemed Security Holders....................................57
ARTICLE IX
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 9.1 Liability..................................................58
SECTION 9.2 Exculpation................................................58
SECTION 9.3 Fiduciary Duty.............................................58
SECTION 9.4 Indemnification............................................59
SECTION 9.5 Outside Businesses.........................................61
SECTION 9.6 Compensation; Fee..........................................62
ARTICLE X
ACCOUNTING
SECTION 10.1 Fiscal Year................................................62
SECTION 10.2 Certain Accounting Matters.................................62
SECTION 10.3 Banking....................................................63
SECTION 10.4 Withholding................................................63
ARTICLE XI
AMENDMENTS AND MEETINGS
SECTION 11.1 Amendments.................................................63
SECTION 11.2 Meetings of the Holders of Securities; Action by Written
Consent....................................................65
25
<PAGE>
ARTICLE XII
REPRESENTATIONS OF INSTITUTIONAL
TRUSTEE AND DELAWARE TRUSTEE
SECTION 12.1 Representations and Warranties of Institutional Trustee....66
SECTION 12.2 Representations and Warranties of Delaware Trustee.........67
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Notices....................................................67
SECTION 13.2 Governing Law..............................................68
SECTION 13.3 Intention of the Parties...................................69
SECTION 13.4 Headings...................................................69
SECTION 13.5 Successors and Assigns.....................................69
SECTION 13.6 Partial Enforceability.....................................69
SECTION 13.7 Counterparts...............................................69
26
<PAGE>
AMENDED AND RESTATED DECLARATION OF TRUST
OF
GUARANTY (TX) CAPITAL TRUST I
March 23, 2000
AMENDED AND RESTATED DECLARATION OF TRUST (this "Declaration") dated
and effective as of March 23, 2000, by the Trustees (as defined herein), the
Administrators (as defined herein), the Sponsor (as defined herein) and the
holders, from time to time, of undivided beneficial interests in the Trust (as
defined herein) to be issued pursuant to this Declaration;
WHEREAS, certain of the Trustees, the Administrators and the Sponsor
established Guaranty (TX) Capital Trust I (the "Trust"), a statutory business
trust under the Delaware Business Trust Act pursuant to a Declaration of Trust
dated as of March 7, 2000 (the "Original Declaration"), and a Certificate of
Trust filed with the Secretary of State of the State of Delaware on March 10,
2000, for the sole purpose of issuing and selling certain securities
representing undivided beneficial interests in the assets of the Trust and
investing the proceeds thereof in certain debentures of the Debenture Issuer (as
defined herein);
WHEREAS, as of the date hereof, no interests in the Trust have
been issued;
WHEREAS, all of the Trustees, the Administrators and the Sponsor, by
this Declaration, amend and restate each and every term and provision of the
Original Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a statutory business trust under the Business Trust Act
(as defined herein) and that this Declaration constitutes the governing
instrument of such statutory business trust, the Trustees declare that all
assets contributed to the Trust will be held in trust for the benefit of the
holders, from time to time, of the securities representing undivided beneficial
interests in the assets of the Trust issued hereunder, subject to the provisions
of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 DEFINITIONS
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
27
<PAGE>
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits to
this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act (as defined herein)
has the same meaning when used in this Declaration unless otherwise defined in
this Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"ADDITIONAL INTEREST" has the meaning set forth in Section 3.06 of
the Indenture.
"ADMINISTRATIVE ACTION" has the meaning set forth in paragraph 4(a)
of Annex I.
"ADMINISTRATORS" means each of Arthur Scharlach and Clifton A.
Payne, solely in such Person's capacity as Administrator of the Trust created
and continued hereunder and not in such Person's individual capacity, or such
Administrator's successor in interest in such capacity, or any successor
appointed as herein provided.
"AFFILIATE" has the same meaning as given to that term in Rule 405
of the Securities Act or any successor rule thereunder.
"AUTHORIZED OFFICER" of a Person means any Person that is authorized
to bind such Person.
"BANKRUPTCY EVENT" means, with respect to any Person:
(a) a court having jurisdiction in the premises enters a decree or
order for relief in respect of such Person in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or appoints a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of such Person or for any substantial part of
its property, or orders the winding-up or liquidation of its affairs, and such
decree, appointment or order remains unstayed and in effect for a period of 90
consecutive days; or
(b) such Person commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, consents
to the entry of an order for relief in an involuntary case under any such law,
or consents to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of such Person of any substantial part of its property, or makes any general
assignment for the benefit of creditors, or fails generally to pay its debts as
they become due.
"BUSINESS DAY" means any day other than Saturday, Sunday or any
other day on which banking institutions in New York are permitted or required by
any applicable any applicable law to close.
"BUSINESS TRUST ACT" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Codess.3801 et seq., as it may be amended from time to time, or
any successor legislation.
"CAPITAL SECURITIES" has the meaning set forth in 6.1(a).
"CAPITAL SECURITY CERTIFICATE" means a Certificate representing a
Capital Security substantially in the form of Exhibit A-1.
28
<PAGE>
"CAPITAL TREATMENT EVENT" has the meaning set forth in paragraph
4(a) of Annex I.
"CERTIFICATE" means any certificate evidencing Securities.
"CLOSING DATE" has the meaning set forth in the Placement Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON SECURITIES" has the meaning set forth in Section 6.1(a).
"COMMON SECURITY CERTIFICATE" means a definitive Certificate in
fully registered form representing a Common Security substantially in the form
of Exhibit A-2.
"COMPANY INDEMNIFIED PERSON" means (a) any Administrator; (b) any
Affiliate of any Administrator; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Administrator; or
(d) any officer, employee or agent of the Trust or its Affiliates.
"COMPARABLE TREASURY ISSUE" has the meaning set forth in paragraph
4(a) of Annex I.
"COMPARABLE TREASURY PRICE" has the meaning set forth in paragraph
4(a) of Annex I.
"CORPORATE TRUST OFFICE" means the office of the Institutional
Trustee at which the corporate trust business of the Institutional Trustee
shall, at any particular time, be principally administered, which office at the
date of execution of this Declaration is located at 101 Barclay Street, Floor 21
West, New York, NY 10286.
"COVERED PERSON" means: (a) any Administrator, officer, director,
shareholder, partner, member, representative, employee or agent of (i) the Trust
or (ii) the Trust's Affiliates; and (b) any Holder of Securities.
"DEBENTURE ISSUER" means Guaranty Bancshares, Inc., a bank
holding company incorporated in Texas, in its capacity as issuer of the
Debentures under the Indenture.
"DEBENTURE TRUSTEE" means The Bank of New York, as trustee under the
Indenture until a successor is appointed thereunder, and thereafter means such
successor trustee.
"DEBENTURES" means the 107/8% Junior Subordinated Deferrable
Interest Debentures due 2030 to be issued by the Debenture Issuer under the
Indenture.
"DEFERRED INTEREST" means any interest on the Debentures that would
have been overdue and unpaid for more than one Distribution Payment Date but for
the imposition of an Extension Period, and the interest that shall accrue (to
the extent that the payment of such interest is legally enforceable) on such
interest at the rate per annum equal to 107/8%, compounded semi-annually from
the date on which such Deferred Interest would otherwise have been due and
payable until paid or made available for payment.
29
<PAGE>
"DEFINITIVE CAPITAL SECURITIES" means any Capital Securities in
definitive form issued by the Trust.
"DELAWARE TRUSTEE" has the meaning set forth in Section 4.2.
"DIRECT ACTION" has the meaning set forth in Section 2.8(e).
"DISTRIBUTION" means a distribution payable to Holders of Securities
in accordance with Section 5.1.
"DISTRIBUTION PAYMENT DATE" has the meaning set forth in paragraph
2(b) of Annex I.
"EVENT OF DEFAULT" means any one of the following events (whatever
the reason for such event 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 an Indenture Event of Default;
(b) default by the Trust in the payment of any Redemption Price
of any Security when it becomes due and payable;
(c) default in the performance, or breach, in any material
respect, of any covenant or warranty of the Trustees in this Declaration (other
than those specified in clause (b) above) and continuation of such default or
breach for a period of 30 days after there has been given, by registered or
certified mail to the Trustees and to the Sponsor by the Holders of at least 25%
in aggregate liquidation amount of the outstanding Capital Securities a written
notice specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
(d) the occurrence of a Bankruptcy Event with respect to the
Institutional Trustee if a successor Institutional Trustee has not been
appointed within 90 days thereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"EXTENSION PERIOD" has the meaning set forth in paragraph 2(b) of
Annex I.
"FEDERAL RESERVE" has the meaning set forth in paragraph 3 of Annex
I.
"FIDUCIARY INDEMNIFIED PERSON" shall mean the Institutional Trustee,
the Delaware Trustee, any Affiliate of the Institutional Trustee or the Delaware
Trustee, and any officers, directors, shareholders, members, partners,
employees, representatives, custodians, nominees or agents of the Institutional
Trustee and the Delaware Trustee.
"FISCAL YEAR" has the meaning set forth in Section 10.1
"GUARANTEE" means the guarantee agreement to be dated as of March
23, 2000, of the Sponsor in respect of the Capital Securities.
"HOLDER" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act.
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"INDEMNIFIED PERSON" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"INDENTURE" means the Indenture dated as of March 23, 2000, among
the Debenture Issuer and the Debenture Trustee, and any indenture supplemental
thereto pursuant to which the Debentures are to be issued.
"INDENTURE EVENT OF DEFAULT" means an "Event of Default" as defined
in the Indenture.
"INSTITUTIONAL TRUSTEE" means the Trustee meeting the eligibility
requirements set forth in Section 4.3.
"INTEREST" means any interest due on the Debentures, including any
Deferred Interest and Defaulted Interest (as each such term is defined in the
Indenture).
"INVESTMENT COMPANY" means an investment company as defined in the
Investment Company Act.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940,
as amended from time to time, or any successor legislation.
"INVESTMENT COMPANY EVENT" has the meaning set forth in paragraph
4(a) of Annex I.
"LEGAL ACTION" has the meaning set forth in Section 2.8(e).
"LIQUIDATION" has the meaning set forth in paragraph 3 of Annex I.
"LIQUIDATION DISTRIBUTION" has the meaning set forth in paragraph 3
of Annex I.
"MAJORITY IN LIQUIDATION AMOUNT OF THE SECURITIES" means Holder(s)
of outstanding Securities voting together as a single class or, as the context
may require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of
more than 50% of the aggregate liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus accrued and
unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
"OFFICERS' CERTIFICATES" 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 it in this Declaration shall include:
(a) a statement that each officer signing the Certificate has read
the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
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(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"PAYING AGENT" has the meaning specified in Section 6.2.
"PAYMENT AMOUNT" has the meaning set forth in Section 5.1.
"PERSON" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"PLACEMENT AGREEMENT" means the Placement Agreement relating to the
offering and sale of Capital Securities in the form of Exhibit E.
"PORTAL" has the meaning set forth in Section 2.6(a)(i).
"PRIMARY TREASURY DEALER" has the meaning set forth in paragraph
4(a) of Annex I.
"PROPERTY ACCOUNT" has the meaning set forth in Section 2.8(c).
"PRO RATA" has the meaning set forth in paragraph 8 of Annex I.
"QIB" means a "qualified institutional buyer" as defined under Rule
144A of the Securities Act.
"QUORUM" means a majority of the Administrators or, if there are
only two Administrators, both of them.
"QUOTATION AGENT" has the meaning set forth in paragraph 4(a) of
Annex I.
"REDEMPTION/DISTRIBUTION NOTICE" has the meaning set forth in
paragraph 4(e) of Annex I.
"REDEMPTION PRICE" has the meaning set forth in paragraph 4(a) of
Annex I.
"REGISTRAR" has the meaning set forth in Section 6.2.
"REFERENCE TREASURY DEALER" has the meaning set forth in paragraph
4(a) of Annex I.
"REFERENCE TREASURY DEALER QUOTATIONS" has the meaning set forth in
paragraph 4(a) of Annex I.
"RELEVANT TRUSTEE" has the meaning set forth in Section 4.7(a).
"REMAINING LIFE" has the meaning set forth in paragraph 4(a) of
Annex I.
"RESPONSIBLE OFFICER" means, with respect to the Institutional
Trustee, any officer within the Corporate Trust Office of the Institutional
Trustee, including any vice-president, any assistant vice-president, any
assistant secretary, the treasurer, any assistant treasurer, any trust officer
or other officer of the Corporate Trust Office of the Institutional Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also
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means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"RESTRICTED SECURITIES LEGEND" has the meaning set forth in Section
8.2(c).
"RULE 144A" means Rule 144A under the Securities Act.
"RULE 3A-5" means Rule 3a-5 under the Investment Company Act.
"RULE 3A-7" means Rule 3a-7 under the Investment Company Act.
"SECURITIES" means the Common Securities and the Capital
Securities.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time or any successor legislation.
"SPONSOR" means Guaranty Bancshares, Inc., a bank holding company
incorporated in Texas, or any successor entity in a merger, consolidation or
amalgamation, in its capacity as sponsor of the Trust.
"SUCCESSOR DELAWARE TRUSTEE" has the meaning set forth in Section
4.7(a).
"SUCCESSOR ENTITY" has the meaning set forth in Section 2.15(b).
"SUCCESSOR INSTITUTIONAL TRUSTEE" has the meaning set forth in
Section 4.7(a).
"SUCCESSOR SECURITIES" has the meaning set forth in Section 2.15(b).
"SUPER MAJORITY" has the meaning set forth in paragraph 5(b) of
Annex I.
"TAX EVENT" has the meaning set forth in paragraph 4(a) of Annex I.
"10% IN LIQUIDATION AMOUNT OF THE SECURITIES" means Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of 10%
or more of the aggregate liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined) of
all outstanding Securities of the relevant class.
"TRANSFER AGENT" has the meaning set forth in Section 6.2.
"TREASURY RATE" has the meaning set forth in paragraph 4(a) of Annex
I.
"TREASURY REGULATIONS" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as
amended.
"TRUSTEE" or "TRUSTEES" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees
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in accordance with the provisions hereof, and references herein to a Trustee or
the Trustees shall refer to such Person or Persons solely in their capacity as
trustees hereunder.
"TRUST PROPERTY" means (a) the Debentures, (b) any cash on deposit
in, or owing to, the Property Account and (c) all proceeds and rights in respect
of the foregoing and any other property and assets for the time being held or
deemed to be held by the Institutional Trustee pursuant to the trusts of this
Declaration.
"U.S. PERSON" means a United States Person as defined a Section
7701(a)(30) of the Code.
ARTICLE II
ORGANIZATION
SECTION 2.1 NAME. The Trust is named "Guaranty (TX) Capital Trust
I," as such name may be modified from time to time by the Administrators
following written notice to the Holders of the Securities. The Trust's
activities may be conducted under the name of the Trust or any other name deemed
advisable by the Administrators.
SECTION 2.2 OFFICE. The address of the principal office of the Trust
is P.O. Box 1158, Mt. Pleasant, TX 75456. On ten Business Days written notice to
the Holders of the Securities, the Administrators may designate another
principal office which, shall be in a State of the United States or the District
of Columbia.
SECTION 2.3 PURPOSE. The exclusive purposes and functions of the
Trust are (a) to issue and sell the Securities representing undivided beneficial
interests in the assets of the Trust, (b) to invest the gross proceeds from such
sale to acquire the Debentures and (c) except as otherwise limited herein, to
engage in only those other activities necessary or incidental thereto. The Trust
shall not borrow money, issue debt or reinvest proceeds derived from
investments, pledge any of its assets, or otherwise undertake (or permit to be
undertaken) any activity that would cause the Trust not to be classified for
United States federal income tax purposes as a grantor trust.
SECTION 2.4 AUTHORITY. Except as specifically provided in this
Declaration, the Institutional Trustee shall have exclusive and complete
authority to carry out the purposes of the Trust. An action taken by a Trustee
in accordance with its powers shall constitute the act of and serve to bind the
Trust. In dealing with the Trustees acting on behalf of the Trust, no Person
shall be required to inquire into the authority of the Trustees to bind the
Trust. Persons dealing with the Trust are entitled to rely conclusively on the
power and authority of the Trustees as set forth in this Declaration. The
Administrators shall have only those ministerial duties set forth herein with
respect to accomplishing the purposes of the Trust and are not intended to be
trustees or fiduciaries with respect to the Trust or the Holders.
SECTION 2.5 TITLE TO PROPERTY OF THE TRUST. Except as provided in
Section 2.8 with respect to the Debentures and the Property Account or as
otherwise provided in this Declaration, legal title to all assets of the Trust
shall be vested in the Trust. The Holders shall not have legal title to any part
of the assets of the Trust, but shall have an undivided beneficial interest in
the assets of the Trust.
SECTION 2.6 POWERS AND DUTIES OF THE TRUSTEES AND THE
ADMINISTRATORS.
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(a) The Trustees and the Administrators shall conduct the affairs of
the Trust in accordance with the terms of this Declaration. Subject to the
limitations set forth in paragraph (b) of this Section, and in accordance with
the following provisions (i) and (ii), the Trustees and the Administrators shall
have the authority to enter into all transactions and agreements determined by
the Trustees to be appropriate in exercising the authority, express or implied,
otherwise granted to the Trustees or the Administrators, as the case may be,
under this Declaration, and to perform all acts in furtherance thereof,
including without limitation, the following:
(i) Each Administrator 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 Securities;
(B) to cause the Trust to enter into, and to execute and
deliver on behalf of the Trust, such agreements as may be necessary
or desirable in connection with the purposes and function of the
Trust, including agreements with the Paying Agent;
(C) ensuring compliance with the Securities Act,
applicable state securities or blue sky laws;
(D) if and at such time determined by the Sponsor at the
request of the Holders, assisting in the designation of the Capital
Securities for trading in the Private Offering, Resales and Trading
through the Automatic Linkages ("PORTAL") system;
(E) the sending of notices (other than notices of default) and
other information regarding the Securities and the Debentures to the
Holders in accordance with this Declaration;
(F) the consent to the appointment of a Paying Agent, Transfer
Agent and Registrar in accordance with this Declaration, which
consent shall not be unreasonably withheld;
(G) execution and delivery of the Securities in accordance
with this Declaration;
(H) execution and delivery of closing certificates, pursuant
to the Placement Agreement and the application for a taxpayer
identification number;
(I) unless otherwise determined by the Institutional Trustee
or the Holders of a Majority in liquidation amount of the Securities
or as otherwise required by the Business Trust Act, to execute on
behalf of the Trust (either acting alone or together with any or all
of the Administrators) any documents that the Administrators have
the power to execute pursuant to this Declaration;
(J) the taking of any action incidental to the foregoing as
the Institutional Trustee may from time to time determine is
necessary to give effect to the terms of this Declaration for the
benefit of the Holders (without consideration of the effect of any
such action on any particular Holder);
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(K) to establish a record date with respect to all actions to
be taken hereunder that require a record date be established,
including Distributions, voting rights, redemptions and exchanges,
and to issue relevant notices to the Holders of Capital Securities
and Holders of Common Securities as to such actions and applicable
record dates; and
(L) to duly prepare and file all applicable tax returns and
tax information reports that are required to be filed with respect
to the Trust on behalf of the Trust.
(ii) As among the Trustees and the Administrators, the Institutional
Trustee shall have the power, duty and authority to act on behalf of the
Trust with respect to the following matters:
(A) the establishment of the Property Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal and any other
payments made in respect of the Debentures in the Property
Account;
(D) the distribution through the Paying Agent of amounts
owed to the Holders in respect of the Securities;
(E) the exercise of all of the rights, powers and
privileges of a holder of the Debentures;
(F) the sending of notices of default and other information
regarding the Securities and the Debentures to the Holders in
accordance with this Declaration;
(G) the distribution of the Trust Property in accordance
with the terms of this Declaration;
(H) to the extent provided in this Declaration, 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;
(I) after any Event of Default (PROVIDED that such Event of
Default is not by or with respect to the Institutional Trustee) the
taking of any action incidental to the foregoing as the
Institutional Trustee may from time to time determine is necessary
or advisable to give effect to the terms of this Declaration and
protect and conserve the Trust Property for the benefit of the
Holders (without consideration of the effect of any such action on
any particular Holder); and
(J) to take all action that may be necessary 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 Capital Securities or to
enable the Trust to effect the purposes for which the Trust was
created.
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(b) So long as this Declaration remains in effect, the Trust (or the
Trustees or Administrators acting on behalf of the Trust) shall not undertake
any business, activities or transaction except as expressly provided herein or
contemplated hereby. In particular, neither the Trustees nor the Administrators
may cause the Trust to (i) acquire any investments or engage in any activities
not authorized by this Declaration, (ii) sell, assign, transfer, exchange,
mortgage, pledge, set-off or otherwise dispose of any of the Trust Property or
interests therein, including to Holders, except as expressly provided herein,
(iii) take any action that would 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 Institutional Trustee shall, at the sole cost and expense of the
Trust, 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
Holders in their capacity as Holders.
(c) In connection with the issuance and sale of the Capital
Securities, the Sponsor 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 Sponsor in furtherance of the following prior to the date
of this Declaration are hereby ratified and confirmed in all respects):
(i) the taking of any action necessary to obtain an exemption from
the Securities Act;
(ii) the determination of the States in which to take appropriate
action to qualify or register for sale all or part of the Capital
Securities and the determination of any and all such acts, other than
actions which must be taken by or on behalf of the Trust, and the advice
to the Trustees of actions they must take on behalf of the Trust, and the
preparation for execution and filing of any documents to be executed and
filed by the Trust or on behalf of the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any
such States in connection with the sale of the Capital Securities;
(iii) the negotiation of the terms of, and the execution and
delivery of, the Placement Agreement providing for the sale of the
Capital Securities; and
(iv) the taking of any other actions necessary or desirable to
carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the
Administrators and the Holders of a Majority in liquidation amount of the Common
Securities are authorized and directed to conduct the affairs of the Trust and
to operate the Trust so that (i) the Trust will not be deemed to be an
"investment company" required to be registered under the Investment Company Act
and (ii) the Trust will not fail to be classified as a grantor trust for United
States federal income tax purposes. The Administrator and the Holders of a
Majority in liquidation amount of the Common Securities shall not take any
action inconsistent with the treatment of the Debentures as indebtedness of the
Debenture Issuer for United States federal income tax purposes. In this
connection, the Holders of a Majority in liquidation amount of the Common
Securities are authorized to take any action, not inconsistent with applicable
laws, the Original Declaration or this Declaration, as amended from time to
time, that such Holders determine in their discretion to be necessary or
desirable for such purposes, even if such action adversely affects the interests
of the Holders of the Capital Securities.
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(e) All expenses incurred by the Administrators or the Trustees
pursuant to this Section 2.6 shall be reimbursed by the Sponsor, and the
Trustees shall have no obligations with respect to such expenses.
(f) The assets of the Trust shall consist of the Trust Property.
(g) Legal title to all Trust Property shall be vested at all times
in the Institutional Trustee (in its capacity as such) and shall be held and
administered by the Institutional Trustee for the benefit of the Trust and
neither the Administrators nor the Holders in accordance with this Declaration.
SECTION 2.7 PROHIBITION OF ACTIONS BY THE TRUST AND THE TRUSTEES.
(a) The Trust shall not, and the Institutional Trustee shall cause
the Trust not to, engage in any activity other than as required or authorized by
this Declaration. In particular, the Trust shall not and the Institutional
Trustee shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders of the
Securities pursuant to the terms of this Declaration and of the
Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust Property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(v) possess any power or otherwise act in such a way as to vary the
Trust assets or the terms of the Securities;
(vi) issue any securities or other evidences of beneficial ownership
of, or beneficial interest in, the Trust other than the Securities; or
(vii) other than as provided in this Declaration (including Annex
I), (A) direct the time, method and place of exercising any trust or power
conferred upon the Debenture Trustee with respect to the Debentures, (B)
waive any past default that is waivable under the Indenture, (C) exercise
any right to rescind or annul any declaration that the principal of all
the Debentures shall be due and payable, or (D) consent to any amendment,
modification or termination of the Indenture or the Debentures where such
consent shall be required unless the Trust shall have received an opinion
of counsel to the effect that such modification will not cause the Trust
to cease to be classified as a grantor trust for United States federal
income tax purposes.
SECTION 2.8 POWERS AND DUTIES OF THE INSTITUTIONAL TRUSTEE.
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Institutional Trustee in trust for the benefit of the
Trust. The right, title and interest of the Institutional Trustee to the
Debentures shall vest automatically in each Person who may hereafter be
appointed as Institutional Trustee in accordance with Section 4.7. Such vesting
and cessation of title shall be effective whether or not conveyancing documents
with regard to the Debentures have been executed and delivered.
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(b) The Institutional Trustee shall not transfer its right, title
and interest in the Debentures to the Administrators or to the Delaware Trustee.
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "PROPERTY ACCOUNT") in the United States (as defined in
Treasury Regulations section 301.7701-7), in the name of and under the
exclusive control of the Institutional Trustee, and maintained in the
Institutional Trustee's trust department, on behalf of the Holders of the
Securities and, upon the receipt of payments of funds made in respect of
the Debentures held by the Institutional Trustee, deposit such funds into
the Property Account and make payments to the Holders of the Capital
Securities and Holders of the Common Securities from the Property Account
in accordance with Section 5.1. Funds in the Property Account shall be
held uninvested until disbursed in accordance with this Declaration;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Capital Securities and the
Common Securities to the extent the Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by the
Administrators in accordance with the terms of the Securities, engage in
such ministerial activities as shall be necessary or appropriate to effect
the distribution of the Debentures to Holders of Securities upon the
occurrence of certain circumstances pursuant to the terms of the
Securities.
(d) The Institutional Trustee shall take all actions and perform
such duties as may be specifically required of the Institutional Trustee
pursuant to the terms of the Securities.
(e) The Institutional Trustee may bring or defend, pay, collect,
compromise, arbitrate, resort to legal action with respect to, or otherwise
adjust claims or demands of or against, the Trust (a "LEGAL Action") which
arises out of or in connection with an Event of Default of which a Responsible
Officer of the Institutional Trustee has actual knowledge or the Institutional
Trustee's duties and obligations under this Declaration or the Trust Indenture
Act; PROVIDED, HOWEVER, that if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay interest or principal on the Debentures on the date such interest or
principal is otherwise payable (or in the case of redemption, on the redemption
date), then a Holder of the Capital Securities may directly institute a
proceeding for enforcement of payment to such Holder of the principal of or
interest on the Debentures having a principal amount equal to the aggregate
liquidation amount of the Capital Securities of such Holder (a "DIRECT ACTION")
on or after the respective due date specified in the Debentures. In connection
with such Direct Action, the rights of the Holders of the Common Securities will
be subrogated to the rights of such Holder of the Capital Securities to the
extent of any payment made by the Debenture Issuer to such Holder of the Capital
Securities in such Direct Action; PROVIDED, HOWEVER, that a Holder of the Common
Securities may exercise such right of subrogation only so long as an Event of
Default with respect to the Capital Securities has occurred and is continuing.
(f) The Institutional Trustee shall continue to serve as a Trustee
until either:
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(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders of the Securities pursuant to the
terms of the Securities; or
(ii) a Successor Institutional Trustee has been appointed and has
accepted that appointment in accordance with Section 4.7.
(g) The Institutional Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a Holder of the Debentures under the
Indenture and, if an Event of Default occurs and is continuing, the
Institutional Trustee may, for the benefit of Holders of the Securities, enforce
its rights as holder of the Debentures subject to the rights of the Holders
pursuant to this Declaration (including Annex I) and the terms of the
Securities.
The Institutional Trustee must exercise the powers set forth in this
Section 2.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 2.3, and the Institutional Trustee shall not take
any action that is inconsistent with the purposes and functions of the Trust set
out in Section 2.3.
SECTION 2.9 CERTAIN DUTIES AND RESPONSIBILITIES OF THE TRUSTEES AND
ADMINISTRATORS.
(a) The Institutional 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 Declaration and no implied covenants shall be read into this Declaration
against the Institutional Trustee. In case an Event of Default has occurred
(that has not been cured or waived pursuant to Section 6.7), the Institutional
Trustee shall exercise such of the rights and powers vested in it by this
Declaration, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(b) The duties and responsibilities of the Trustees and the
Administrators shall be as provided by this Declaration and, in the case of the
Institutional Trustee, by the Trust Indenture Act. Notwithstanding the
foregoing, no provision of this Declaration shall require the Trustees or
Administrators to expend or risk their own funds or otherwise incur any
financial liability in the performance of any of their duties hereunder, or in
the exercise of any of their rights or powers. Whether or not therein expressly
so provided, every provision of this Declaration relating to the conduct or
affecting the liability of or affording protection to the Trustees or
Administrators shall be subject to the provisions of this Article. Nothing in
this Declaration shall be construed to release an Administrator or Trustee from
liability for its own negligent action, its own negligent failure to act, or its
own willful misconduct. To the extent that, at law or in equity, a Trustee or an
Administrator has duties and liabilities relating to the Trust or to the
Holders, such Trustee or Administrator shall not be liable to the Trust or to
any Holder for such Trustee's or Administrator's good faith reliance on the
provisions of this Declaration. The provisions of this Declaration, to the
extent that they restrict the duties and liabilities of the Administrators or
the Trustees otherwise existing at law or in equity, are agreed by the Sponsor
and the Holders to replace such other duties and liabilities of the
Administrators or the Trustees.
(c) All payments made by the Institutional Trustee or a Paying Agent
in respect of the 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 Institutional Trustee
or a Paying Agent to make payments in accordance
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with the terms hereof. Each Holder, by its acceptance of a Security, agrees that
it will look solely to the revenue and proceeds from the Trust Property to the
extent legally available for distribution to it as herein provided and that the
Trustees and the Administrators are not personally liable to it for any amount
distributable in respect of any Security or for any other liability in respect
of any Security. This Section 2.9(c) does not limit the liability of the
Trustees expressly set forth elsewhere in this Declaration or, in the case of
the Institutional Trustee, in the Trust Indenture Act.
(d) No provision of this Declaration shall be construed to relieve
the Institutional Trustee from liability with respect to matters that are within
the authority of the Institutional Trustee under this Declaration for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) the Institutional Trustee shall not be liable for any error or
judgment made in good faith by an Authorized Officer of the Institutional
Trustee, unless it shall be proved that the Institutional Trustee was
negligent in ascertaining the pertinent facts;
(ii) the Institutional 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 Capital Securities or the Common Securities, as
applicable, relating to the time, method and place of conducting any
proceeding for any remedy available to the Institutional Trustee, or
exercising any trust or power conferred upon the Institutional Trustee
under this Declaration;
(iii) the Institutional Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and the
Property Account shall be to deal with such property in a similar manner
as the Institutional Trustee deals with similar property for its own
account, subject to the protections and limitations on liability afforded
to the Institutional Trustee under this Declaration and the Trust
Indenture Act;
(iv) the Institutional Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree in writing
with the Sponsor; and money held by the Institutional Trustee need not be
segregated from other funds held by it except in relation to the Property
Account maintained by the Institutional Trustee pursuant to Section
2.8(c)(i) and except to the extent otherwise required by law; and
(v) the Institutional Trustee shall not be responsible for
monitoring the compliance by the Administrators or the Sponsor with their
respective duties under this Declaration, nor shall the Institutional
Trustee be liable for any default or misconduct of the Administrators or
the Sponsor.
SECTION 2.10 CERTAIN RIGHTS OF INSTITUTIONAL TRUSTEE. Subject
to the provisions of Section 2.9:
(a) the Institutional Trustee may conclusively rely and shall fully
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, direction, 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, sent or
presented by the proper party or parties;
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(b) if (i) in performing its duties under this Declaration, the
Institutional Trustee is required to decide between alternative courses of
action, (ii) in construing any of the provisions of this Declaration, the
Institutional Trustee finds the same ambiguous or inconsistent with any other
provisions contained herein, or (iii) the Institutional Trustee is unsure of the
application of any provision of this Declaration, then, except as to any matter
as to which the Holders of Capital Securities are entitled to vote under the
terms of this Declaration, the Institutional Trustee may deliver a notice to the
Sponsor requesting the Sponsor's opinion as to the course of action to be taken
and the Institutional Trustee shall take such action, or refrain from taking
such action, as the Institutional Trustee shall be directed, in which event the
Institutional Trustee shall have no liability except for its own negligence or
willful misconduct;
(c) any direction or act of the Sponsor or the Administrators
contemplated by this Declaration shall be sufficiently evidenced by an Officers'
Certificate;
(d) whenever in the administration of this Declaration, the
Institutional Trustee shall deem it desirable that a matter be proved or
established before undertaking, suffering or omitting any action hereunder, the
Institutional Trustee (unless other evidence is herein specifically prescribed)
may request and conclusively rely upon an Officers' Certificate as to factual
matters which, upon receipt of such request, shall be promptly delivered by the
Sponsor or the Administrators;
(e) the Institutional 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 Institutional Trustee may consult with counsel of its
selection (which counsel may be counsel to the Sponsor or any of its Affiliates)
and the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon and in accordance with such advice; the
Institutional Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of competent
jurisdiction;
(g) the Institutional Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration at the
request or direction of any of the Holders pursuant to this Declaration, unless
such Holders shall have offered to the Institutional Trustee security or
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction; PROVIDED, that nothing contained in this Section 2.10(g) shall be
taken to relieve the Institutional Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the rights and powers vested in it by
this Declaration;
(h) the Institutional Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond, debenture, note or other evidence of indebtedness or other paper
or document, unless requested in writing to do so by one or more Holders, but
the Institutional Trustee may make such further inquiry or investigation into
such facts or matters as it may see fit;
(i) the Institutional Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through its agents or attorneys and the Institutional Trustee shall not be
responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent or attorney appointed with due care by it
hereunder;
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(j) whenever in the administration of this Declaration the
Institutional Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action hereunder,
the Institutional Trustee (i) may request instructions from the Holders of the
Capital Securities, which instructions may be given only by the Holders of the
same proportion in liquidation amount of the Capital Securities as would be
entitled to direct the Institutional Trustee under the terms of the Capital
Securities in respect of such remedy, right or action, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be fully protected in acting in
accordance with such instructions;
(k) except as otherwise expressly provided in this Declaration,
the Institutional Trustee shall not be under any obligation to take any action
that is discretionary under the provisions of this Declaration;
(l) when the Institutional Trustee incurs expenses or renders
services in connection with a Bankruptcy Event, such expenses (including the
fees and expenses of its counsel) and the compensation for such services are
intended to constitute expenses of administration under any bankruptcy law or
law relating to creditors rights generally;
(m) the Institutional Trustee shall not be charged with knowledge
of an Event of Default unless a Responsible Officer of the Institutional Trustee
obtains actual knowledge of such event or the Institutional Trustee receives
written notice of such event from any Holder;
(n) any action taken by the Institutional Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and the
signature of the Institutional Trustee or its agents alone shall be sufficient
and effective to perform any such action and no third party shall be required to
inquire as to the authority of the Institutional Trustee to so act or as to its
compliance with any of the terms and provisions of this Declaration, both of
which shall be conclusively evidenced by the Institutional Trustee's or its
agent's taking such action; and
(o) no provision of this Declaration shall be deemed to impose any
duty or obligation on the Institutional 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 Institutional 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 Institutional
Trustee shall be construed to be a duty.
SECTION 2.11 DELAWARE TRUSTEE. Notwithstanding any other provision
of this Declaration other than Section 4.2, the Delaware Trustee shall not be
entitled to exercise any powers, nor shall the Delaware Trustee have any of the
duties and responsibilities of any of the Trustees or the Administrators
described in this Declaration. Except as set forth in Section 4.2, the Delaware
Trustee shall be a Trustee for the sole and limited purpose of fulfilling the
requirements of ss. 3807 of the Business Trust Act.
SECTION 2.12 EXECUTION OF DOCUMENTS. Subject to the provisions of
Section 2.11, unless otherwise determined in writing by the Institutional
Trustee, and except as otherwise required by the Business Trust Act, the
Institutional Trustee, or any one or more of the Administrators, as the case may
be, is authorized to execute on behalf of the Trust any documents that the
Trustees or the Administrators, as the case may be, have the power and authority
to execute pursuant to Section 2.6.
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SECTION 2.13 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained in this Declaration and the Securities shall be taken as
the statements of the Sponsor, and the Trustees do not assume any responsibility
for their correctness. The Trustees make no representations as to the value or
condition of the property of the Trust or any part thereof. The Trustees make no
representations as to the validity or sufficiency of this Declaration, the
Debentures or the Securities.
SECTION 2.14 DURATION OF TRUST. The Trust, unless dissolved pursuant
to the provisions of Article VII hereof, shall have existence for fifty-five
(55) years from the Closing Date.
SECTION 2.15 MERGERS. (a) The Trust may not 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 corporation or other
body, except as described in this Section 2.15(b) and (c).
(b) The Trust may, with the consent of the Institutional Trustee
and without the consent of the Delaware Trustee or the Holders of the Capital
Securities, consolidate, amalgamate, merge with or into, or be replaced by a
trust organized as such under the laws of any State; PROVIDED, that:
(i) if the Trust is not the Survivor, such successor entity
(the "SUCCESSOR ENTITY") either:
(A) expressly assumes all of the obligations of the Trust
under the Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Securities (the "SUCCESSOR
SECURITIES") so that the Successor Securities rank the same as the
Securities rank with respect to Distributions and payments upon
Liquidation, redemption and otherwise;
(ii) the Institutional Trustee expressly appoints a trustee of the
Successor Entity that possesses the same powers and duties as the
Institutional Trustee as the Holder of the Debentures;
(iii) the Capital Securities or any Successor Securities are listed,
or any Successor Securities will be listed upon notification of issuance,
on any national securities exchange or with another organization on which
the Capital Securities are then listed or quoted, if any;
(iv) such merger, consolidation, amalgamation or replacement does
not cause the Capital Securities (including any Successor Securities) to
be downgraded by any nationally recognized statistical rating
organization;
(v) such merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the Holders of
the Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of such Holders'
interests in the Successor Entity as a result of such merger,
consolidation, amalgamation or replacement);
(vi) such Successor Entity has a purpose substantially identical
to that of the Trust;
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(vii) prior to such merger, consolidation, amalgamation or
replacement, the Trust has received an opinion of a nationally recognized
independent counsel to the Trust experienced in such matters to the effect
that:
(A) such merger, consolidation, amalgamation or replacement
does not adversely affect the rights, preferences and privileges of
the Holders of the Securities (including any Successor Securities)
in any material respect (other than with respect to any dilution of
the Holders' interest in the Successor Entity);
(B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor the Successor Entity will be
required to register as an Investment Company;
(C) following such merger, consolidation, amalgamation or
replacement, the Trust (or the Successor Entity) will continue to be
classified as a grantor trust for United States federal income tax
purposes; and
(viii) the Sponsor guarantees the obligations of such Successor
Entity under the Successor Securities at least to the extent provided by
the Guarantee; and
(ix) prior to such merger, consolidation, amalgamation or
replacement, the Institutional Trustee shall have received an Officers'
Certificate of the Administrators and an opinion of counsel, each to the
effect that all conditions precedent of this paragraph (b) to such
transaction have been satisfied.
(c) Notwithstanding Section 2.15(b), the Trust shall not, except
with the consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, or to be replaced by any other
entity or permit any other entity to consolidate, amalgamate, merge with or
into, or replace it if such consolidation, amalgamation, merger or replacement
would cause the Trust or Successor Entity to be classified as other than a
grantor trust for United States federal income tax purposes.
ARTICLE III
SPONSOR
SECTION 3.1 SPONSOR'S PURCHASE OF COMMON SECURITIES. On the Closing
Date, the Sponsor will purchase all of the Common Securities issued by the
Trust, in an amount at least equal to 3% of the capital of the Trust, at the
same time as the Capital Securities are sold.
SECTION 3.2 RESPONSIBILITIES OF THE SPONSOR. In connection with the
issue and sale of the Capital Securities, the Sponsor shall have the exclusive
right and responsibility to engage in the following activities:
(a) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Capital Securities and to do any
and all such acts, other than actions which must be taken by the Trust, and
advise the Trust of actions it must take, and prepare for execution and filing
any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any such
States;
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(b) to prepare for filing and request the Administrators to cause
the filing by the Trust, as may be appropriate, of an application to the PORTAL
system, for listing or quotation upon notice of issuance of any Capital
Securities, if required ; and
(c) to negotiate the terms of and/or execute on behalf of the
Trust, the Placement Agreement and other related agreements providing for the
sale of the Capital Securities.
ARTICLE IV
TRUSTEES AND ADMINISTRATORS
SECTION 4.1 NUMBER OF TRUSTEES. The number of Trustees initially
shall be two, and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees
may be increased or decreased by vote of the Holders of a Majority in
liquidation amount of the Capital Securities voting as a class at a meeting of
the Holders of the Capital Securities; PROVIDED, HOWEVER, that there shall be a
Delaware Trustee if required by Section 4.2; and there shall always be one
Trustee who shall be the Institutional Trustee, and such Trustee may also serve
as Delaware Trustee if it meets the applicable requirements, in which case
Section 2.11 shall have no application to such entity in its capacity as
Institutional Trustee.
SECTION 4.2 DELAWARE TRUSTEE. If required by the Business Trust Act,
one Trustee (the "DELAWARE TRUSTEE") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which is organized under the
laws of the United States or any State thereof or the District of Columbia, has
its principal place of business in the State of Delaware, and otherwise meets
the requirements of applicable law, including ss.3807 of the Business Trust Act.
SECTION 4.3 INSTITUTIONAL TRUSTEE; ELIGIBILITY.(a) There shall at
all times be one Trustee which shall act as Institutional Trustee which shall:
(i) not be an Affiliate of the Sponsor;
(ii) not offer or provide credit or credit enhancement to the Trust;
and
(iii) be a banking corporation organized and doing business under
the laws of the United States of America or any State thereof or of the
District of Columbia authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least 50 million
U.S. dollars ($50,000,000), and subject to supervision or examination by
Federal, State 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 4.3(a)(ii), the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.
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(b) If at any time the Institutional Trustee shall cease to be
eligible to so act under Section 4.3(a), the Institutional Trustee shall
immediately resign in the manner and with the effect set forth in Section
4.7(a).
(c) If the Institutional Trustee has or shall acquire any
"conflicting interest" within the meaning of ss. 310(b) of the Trust Indenture
Act, the Institutional Trustee shall either eliminate such interest or resign,
to the extent and in the manner provided by, and subject to this Declaration.
(d) The initial Institutional Trustee shall be The Bank of New York.
SECTION 4.4 CERTAIN QUALIFICATIONS OF THE DELAWARE TRUSTEE
GENERALLY. The Delaware Trustee shall be a U.S. Person and either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more Authorized Officers.
SECTION 4.5 ADMINISTRATORS. Each Administrator shall be a U.S.
Person. The initial Administrators shall be Arthur Scharlach and Clifton A.
Payne. There shall at all times be at least one Administrator.
Except where a requirement for action by a specific number of
Administrators is expressly set forth in this Declaration and except with
respect to any action the taking of which is the subject of a meeting of the
Administrators any action required or permitted to be taken by the
Administrators may be taken by, and any power of the Administrators may be
exercised by, or with the consent of, any one such Administrator.
SECTION 4.6 INITIAL DELAWARE TRUSTEE. The initial Delaware Trustee
shall be The Bank of New York (Delaware).
SECTION 4.7 APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES AND
ADMINISTRATORS.
(a) 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 this Section 4.7.
Subject to the immediately preceding paragraph, a Relevant Trustee
may resign at any time by giving written notice thereof to the Holders of the
Securities and by appointing a successor Relevant Trustee. Upon the resignation
of the Institutional Trustee, the Institutional Trustee shall appoint a
successor by requesting from each of Bank One Trust Company, NA, Bankers Trust
Company and State Street Bank & Trust Company, its expenses and charges to serve
as the successor Institutional Trustee on a form provided by the Administrators,
and selecting the Person who agrees to the lowest expense and charges (the
"SUCCESSOR INSTITUTIONAL TRUSTEE"). If the instrument of acceptance by the
successor Relevant Trustee required by Section 4.7 shall not have been delivered
to the Relevant Trustee within 60 days after the giving of such notice of
resignation or delivery of the instrument of removal, the Relevant Trustee may
petition, at the expense of the Trust, any Federal, State or District of
Columbia court of competent jurisdiction for the appointment of a successor
Relevant Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper, appoint a Relevant Trustee. The Institutional
Trustee shall have no liability for the selection of such successor pursuant to
this Section 4.7.
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The Institutional Trustee or the Delaware Trustee, or both of them,
may be removed by the act of the Holders of a Majority in liquidation amount of
the Capital Securities, delivered to the Relevant Trustee (in its individual
capacity and on behalf of the Trust) if an Event of Default shall have occurred
and be continuing. If any Trustee shall be so removed, the Holders of Capital
Securities, by act of the Holders of a Majority in liquidation amount of the
Capital Securities then outstanding delivered to the Relevant Trustee, shall
promptly appoint a successor Relevant Trustee or Trustees, and such successor
Trustee shall comply with the applicable requirements of this Section 4.7. If no
successor Relevant Trustee shall have been so appointed by the Holders of a
Majority in liquidation amount of the Capital Securities and accepted
appointment in the manner required by this Section 4.7, within 30 days after
delivery of an instrument of removal, the Relevant Trustee or any Holder who has
been a Holder of the Securities for at least six months may, on behalf of
himself and all others similarly situated, petition any Federal, State or
District of Columbia court of competent jurisdiction for the appointment of a
successor Relevant Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper, appoint a successor Relevant Trust or
Trustees.
The Institutional Trustee shall give notice of each resignation and
each removal of a Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 4.7(b) and shall give notice to the
Sponsor. Each notice shall include the name of the successor Relevant Trustee
and the address of its Corporate Trust Office if it is the Institutional
Trustee.
Notwithstanding the foregoing or any other provision of this
Declaration, in the event a Delaware Trustee who is a natural person dies or
becomes incompetent or incapacitated, the vacancy created by such death,
incompetence or incapacity may be filled by the Institutional Trustee following
the procedures in this Section 4.7 (with the successor being a Person who
satisfies the eligibility requirement for a Delaware Trustee set forth in this
Declaration) (the "SUCCESSOR DELAWARE TRUSTEE").
(b) In case of the appointment hereunder of a successor Relevant
Trustee, the retiring Relevant Trustee and each successor Relevant Trustee with
respect to the Trust Securities shall execute and deliver an amendment hereto
wherein each successor Relevant Trustee shall accept such appointment and which
(a) shall contain such provisions as shall be necessary or desirable to transfer
and confirm to, and to vest in, each successor Relevant Trustee all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Securities and the Trust and (b) shall add to or change any of the provisions of
this Declaration as shall be necessary to provide for or facilitate the
administration of the Trust by more than one Relevant Trustee, it being
understood that nothing herein or in such amendment shall constitute such
Relevant Trustees co-trustees and upon the execution and delivery of such
amendment the resignation or removal of the retiring Relevant Trustee shall
become effective to the extent provided therein and each such successor Relevant
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Relevant Trustee; but,
on request of the Trust of any successor Relevant Trustee such retiring Relevant
Trustee shall duly assign, transfer and deliver to such successor Relevant
Trustee all Trust Property, all proceeds thereof and money held by such retiring
Relevant Trustee hereunder with respect to the Securities and the Trust.
(c) No Institutional Trustee or Delaware Trustee shall be liable
for the acts or omissions to act of any Successor Institutional Trustee or
Successor Delaware Trustee, as the case may be.
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(d) The Holders of the Capital Securities will have no right to
vote to appoint, remove or replace the Administrators, which voting rights are
vested exclusively in the Holder of the Common Securities.
SECTION 4.8 VACANCIES AMONG TRUSTEES. If a Trustee ceases to hold
office for any reason and the number of Trustees is not reduced pursuant to
Section 4.1, or if the number of Trustees is increased pursuant to Section 4.1,
a vacancy shall occur. A resolution certifying the existence of such vacancy by
the Trustees or, if there are more than two, a majority of the Trustees shall be
conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with an a Trustee appointed in accordance with Section 4.7.
SECTION 4.9 EFFECT OF VACANCIES. The death, resignation, retirement,
removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to
perform the duties of a Trustee shall not operate to dissolve, terminate or
annul the Trust. Whenever a vacancy in the number of Trustees shall occur, until
such vacancy is filled by the appointment of a Trustee in accordance with
Section 4.7, the Institutional Trustee shall have all the powers granted to the
Trustees and shall discharge all the duties imposed upon the Trustees by this
Declaration.
SECTION 4.10 MEETINGS OF THE TRUSTEES AND THE ADMINISTRATORS.
Meetings of the Trustees or the Administrators shall be held from time to time
upon the call of any Trustee or Administrator, as applicable. Regular meetings
of the Trustees and the Administrators, respectively, may be in person in the
United States or by telephone, at a place (if applicable) and time fixed by
resolution of the Trustees or the Administrators, as applicable. Notice of any
in-person meetings of the Trustees or the Administrators shall be hand delivered
or otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 48 hours before such meeting. Notice of any
telephonic meetings of the Trustees or the Administrators or any committee
thereof shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours before
a meeting. Notices shall contain a brief statement of the time, place and
anticipated purposes of the meeting. The presence (whether in person or by
telephone) of a Trustee or an Administrator, as the case may be, at a meeting
shall constitute a waiver of notice of such meeting except where a Trustee or an
Administrator, as the case may be, attends a meeting for the express purpose of
objecting to the transaction of any activity on the ground that the meeting has
not been lawfully called or convened. Unless provided otherwise in this
Declaration, any action of the Trustees or the Administrators, as the case may
be, may be taken at a meeting by vote of a majority of the Trustees or the
Administrators present (whether in person or by telephone) and eligible to vote
with respect to such matter; PROVIDED, that a Quorum is present, or without a
meeting by the unanimous written consent of the Trustees or the Administrators.
Meetings of the Trustees and the Administrators together shall be held from the
time to time upon the call of any Trustee or Administrator.
SECTION 4.11 DELEGATION OF POWER. (a) Any Trustee or any
Administrator, as the case may be, may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 that is
a U.S. Person his or her power for the purpose of executing any documents
contemplated in Section 2.6; and
(b) the Trustees shall have power to delegate from time to time to
such of their number or to any officer of the Trust that is a U.S. Person, the
doing of such things and the execution of such instruments either in the name of
the Trust or the names of the Trustees or otherwise as the 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.
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SECTION 4.12 CONVERSION, CONSOLIDATION OR SUCCESSION TO Business.
Any Person into which the Institutional Trustee or the Delaware Trustee, as the
case may be, may be merged or converted or with which either may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Institutional Trustee or the Delaware Trustee, as the
case may be, shall be a party, or any Person succeeding to all or substantially
all the corporate trust business of the Institutional Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the Institutional Trustee
or the Delaware Trustee, as the case may be, hereunder, provided such Person
shall be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto.
ARTICLE V
DISTRIBUTIONS
SECTION 5.1 DISTRIBUTIONS. Holders shall receive Distributions in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Capital Securities and the Common Securities
in accordance with the preferences set forth in their respective terms. If and
to the extent that the Debenture Issuer makes a payment of interest (including
any Additional Interest or Deferred Interest) and/or principal on the Debentures
held by the Institutional Trustee (the amount of any such payment being a
"PAYMENT AMOUNT"), the Institutional Trustee shall and is directed, to the
extent funds are available for that purpose, to make a distribution (a
"DISTRIBUTION") of the Payment Amount to Holders.
ARTICLE VI
ISSUANCE OF SECURITIES
SECTION 6.1 GENERAL PROVISIONS REGARDING SECURITIES.
(a) The Administrators shall on behalf of the Trust issue one series
of capital securities substantially in the form of Exhibit A-1 representing
undivided beneficial interests in the assets of the Trust having such terms as
are set forth in Annex I (the "CAPITAL SECURITIES") and one series of common
securities representing undivided beneficial interests in the assets of the
Trust having such terms as are set forth in Annex I (the "COMMON SECURITIES").
The Trust shall issue no securities or other interests in the assets of the
Trust other than the Capital Securities and the Common Securities. The Capital
Securities rank pari passu and payment thereon shall be made Pro Rata with the
Common Securities except that, where an Event of Default has occurred and is
continuing, the rights of Holders of the Common Securities to payment in respect
of Distributions and payments upon liquidation, redemption and otherwise are
subordinated to the rights to payment of the Holders of the Capital Securities.
(b) The Certificates shall be signed on behalf of the Trust by one
or more Administrators. Such signature shall be the facsimile or manual
signature of any Administrator. In case any Administrator of the Trust who shall
have signed any of the Securities shall cease to be such Administrator before
the Certificates so signed shall be delivered by the Trust, such Certificates
nevertheless may be delivered as though the person who signed such Certificates
had not ceased to be such Administrator; and any Certificate may be signed on
behalf of the Trust by such person who, at the actual date of execution of such
Security, shall be an Administrator of the Trust, although at the date of the
execution and delivery of the Declaration any such person was not such an
Administrator. A Capital Security shall not be valid until authenticated by the
manual signature of an Authorized Officer of the Institutional Trustee. Such
signature shall be
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conclusive evidence that the Capital Security has been authenticated under this
Declaration. Upon written order of the Trust signed by one Administrator, the
Institutional Trustee shall authenticate the Capital Securities for original
issue. The Institutional Trustee may appoint an authenticating agent that is a
U.S. Person acceptable to the Trust to authenticate the Capital Securities. A
Common Security need not be so authenticated.
(c) The consideration received by the Trust for the issuance of
the Securities shall constitute a contribution to the capital of the Trust and
shall not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and non-assessable.
(e) Every Person, by virtue of having become a Holder or a Capital
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration and the Guarantee.
SECTION 6.2 PAYING AGENT, TRANSFER AGENT AND REGISTRAR. The Trust
shall maintain in New York, New York, an office or agency where the Capital
Securities may be presented for payment (the "PAYING AGENT"), and an office or
agency where Securities may be presented for registration of transfer (the
"TRANSFER AGENT"). The Trust shall keep or cause to be kept at such office or
agency a register for the purpose of registering Securities and transfers and
exchanges of Securities, such register to be held by a registrar (the
"REGISTRAR"). The Administrators may appoint the Paying Agent, the Registrar and
the Transfer Agent, and may appoint one or more additional Paying Agents or one
or more co-Registrars, or one or more co-Transfer Agents in such other locations
as it shall determine. The term "PAYING AGENT" includes any additional paying
agent, the term "REGISTRAR" includes any additional registrar or co-Registrar
and the term "TRANSFER Agent" includes any additional transfer agent. The
Administrators may change any Paying Agent without prior notice to any Holder.
The Administrators shall notify the Institutional Trustee of the name and
address of any Paying Agent, Transfer Agent and Registrar not a party to this
Declaration. The Administrators hereby appoint the Institutional Trustee to act
as Paying Agent, Transfer Agent and Registrar for the Capital Securities and the
Common Securities. The Institutional Trustee or any of its Affiliates in the
United States may act as Paying Agent, Transfer Agent or Registrar.
SECTION 6.3 FORM AND DATING. The Capital Securities and the
Institutional Trustee's certificate of authentication thereon shall be
substantially in the form of Exhibit A-1, and the Common Securities shall be
substantially in the form of Exhibit A-2, each of which is hereby incorporated
in and expressly made a part of this Declaration. Certificates may be typed,
printed, lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Administrators, as conclusively evidenced by their
execution thereof. The Securities may have letters, numbers, notations or other
marks of identification or designation and such legends or endorsements required
by law, stock exchange rule, agreements to which the Trust is subject, if any,
or usage (PROVIDED, that any such notation, legend or endorsement is in a form
acceptable to the Sponsor). The Trust at the direction of the Sponsor shall
furnish any such legend not contained in Exhibit A-1 to the Institutional
Trustee in writing. Each Capital Security shall be dated the date of its
authentication. The terms and provisions of the Securities set forth in Annex I
and the forms of Securities set forth in Exhibits A-1 and A-2 are part of the
terms of this Declaration and to the extent applicable, the Institutional
Trustee, the Delaware Trustee, the Administrators and the Sponsor, by their
execution and delivery of this Declaration, expressly
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agree to such terms and provisions and to be bound thereby. Capital Securities
will be issued only in blocks having a stated liquidation amount of not less
than $1,000.
The Capital Securities are being offered and sold by the Trust
pursuant to the Placement Agreement in definitive, registered form without
coupons with the Restricted Securities Legend.
SECTION 6.4 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If:
(a) any mutilated Certificates should be surrendered to the
Registrar, or if the Registrar shall receive evidence to their satisfaction of
the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Registrar, the Administrators
and the Institutional Trustee such security or indemnity as may be required by
them to keep each of them harmless; then, in the absence of notice that such
Certificate shall have been acquired by a bona fide purchaser, an Administrator
on behalf of the Trust shall execute (and in the case of a Capital Security
Certificate, the Institutional Trustee shall authenticate) and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like denomination. In connection with the
issuance of any new Certificate under this Section 6.4, the Registrar or the
Administrators 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 Certificate issued pursuant to this Section shall constitute
conclusive evidence of an ownership interest in the relevant Securities, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
SECTION 6.5 TEMPORARY SECURITIES. Until definitive Securities are
ready for delivery, the Administrators may prepare and, in the case of the
Capital Securities, the Institutional Trustee shall authenticate, temporary
Securities. Temporary Securities shall be substantially in form of definitive
Securities but may have variations that the Administrators consider appropriate
for temporary Securities. Without unreasonable delay, the Administrators shall
prepare and, in the case of the Capital Securities, the Institutional Trustee
shall authenticate definitive Securities in exchange for temporary Securities.
SECTION 6.6 CANCELLATION. The Administrators at any time may deliver
Securities to the Institutional Trustee for cancellation. The Registrar shall
forward to the Institutional Trustee any Securities surrendered to it for
registration of transfer, redemption or payment. The Institutional Trustee shall
promptly cancel all Securities surrendered for registration of transfer,
payment, replacement or cancellation and shall dispose of such canceled
Securities as the Administrators direct. The Administrators may not issue new
Securities to replace Securities that have been paid or that have been delivered
to the Institutional Trustee for cancellation.
SECTION 6.7 RIGHTS OF HOLDERS; WAIVERS OF PAST DEFAULTS.
(a) The legal title to the Trust Property is vested exclusively in
the Institutional Trustee (in its capacity as such) in accordance with Section
2.5, and the Holders shall not have any right or title therein other than the
undivided beneficial interest in the assets of the Trust conferred by their
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
Securities shall be personal property giving only the rights specifically set
forth therein and in this Declaration. The Securities shall have no preemptive
or similar rights and when issued and delivered to
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Holders against payment of the purchase price therefor will be fully paid and
nonassessable by the Trust.
(b) For so long as any Capital Securities remain outstanding, if,
upon an Indenture Event of Default, the Debenture Trustee fails or the holders
of not less than 25% in principal amount of the outstanding Debentures fail to
declare the principal of all of the Debentures to be immediately due and
payable, the Holders of at least a majority in liquidation amount of the Capital
Securities then outstanding shall have the right to make such declaration by a
notice in writing to the Institutional Trustee, the Sponsor and the Debenture
Trustee.
At any time after a declaration of acceleration with respect to the
Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Debenture Trustee as provided in the
Indenture, if the Institutional Trustee fails to annul any such declaration and
waive such default, the Holders of at least a majority in liquidation amount of
the Capital Securities, by written notice to the Institutional Trustee, the
Sponsor and the Debenture Trustee, may rescind and annul such declaration and
its consequences if:
(i) the Sponsor has paid or deposited with the Debenture
Trustee a sum sufficient to pay
(A) all overdue installments of interest on all of the
Debentures,
(B) any accrued Deferred Interest on all of the Debentures,
(C) the principal of (and premium, if any, on) any Debentures
that have become due otherwise than by such declaration of
acceleration and interest and Deferred Interest thereon at the rate
borne by the Debentures, and
(D) all sums paid or advanced by the Debenture Trustee under
the Indenture and the reasonable compensation, expenses,
disbursements and advances of the Debenture Trustee and the
Institutional Trustee, their agents and counsel; and
(ii) all Events of Default with respect to the Debentures, other
than the non-payment of the principal of the Debentures that has become
due solely by such acceleration, have been cured or waived as provided in
Section 5.07 of the Indenture.
The Holders of at least a majority in liquidation amount of the
Capital Securities may, on behalf of the Holders of all the Capital Securities,
waive any past default or Event of Default under the Indenture, except a default
or Event of Default in the payment of principal or interest (unless such default
or Event of Default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee) or a default or Event of Default in
respect of a covenant or provision that under the Indenture cannot be modified
or amended without the consent of the holder of each outstanding Debenture. No
such rescission shall affect any subsequent default or impair any right
consequent thereon.
Upon receipt by the Institutional Trustee of written notice
declaring such an acceleration, or rescission and annulment thereof, by Holders
of any part of the Capital Securities a record date shall be established for
determining Holders of outstanding Capital Securities entitled to join in such
notice, which record date shall be at the close of business on the day the
Institutional Trustee receives such notice. The Holders on such record date, or
their duly
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designated proxies, and only such Persons, shall be entitled to join in such
notice, whether or not such Holders remain Holders after such record date;
PROVIDED, that, unless such declaration of acceleration, or rescission and
annulment, as the case may be, shall have become effective by virtue of the
requisite percentage having joined in such notice prior to the day that is 90
days after such record date, such notice of declaration of acceleration, or
rescission and annulment, as the case may be, shall automatically and without
further action by any Holder be canceled and of no further effect. Nothing in
this paragraph shall prevent a Holder, or a proxy of a Holder, from giving,
after expiration of such 90-day period, a new written notice of declaration of
acceleration, or rescission and annulment thereof, as the case may be, that is
identical to a written notice that has been canceled pursuant to the proviso to
the preceding sentence, in which event a new record date shall be established
pursuant to the provisions of this Section 6.7.
(d) Except as otherwise provided in paragraphs (a) and (b) of this
Section 6.7, the Holders of at least a majority in liquidation amount of the
Capital Securities may, on behalf of the Holders of all the Capital Securities,
waive any past default or Event of Default and its consequences. Upon such
waiver, any such default or Event of Default shall cease to exist, and any
default or Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Trust Agreement, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.
ARTICLE VII
DISSOLUTION AND TERMINATION OF TRUST
SECTION 7.1 DISSOLUTION AND TERMINATION OF TRUST. (a) The Trust
shall dissolve on the first to occur of :
(i) unless earlier dissolved, on March 8, 2055, the expiration of
the term of the Trust;
(ii) upon a Bankruptcy Event with respect to the Sponsor, the
Trust or the Debenture Issuer;
(iii) (other than in connection with a merger, consolidation or
similar transaction not prohibited by the Indenture, this Declaration or
the Guarantee, as the case may be) upon the filing of a certificate of
dissolution or its equivalent with respect to the Sponsor; upon the
consent of Holders of a Majority in liquidation amount of the Securities
voting together as a single class to file a certificate of cancellation
with respect to the Trust or upon the revocation of the charter of the
Sponsor and the expiration of 90 days after the date of revocation without
a reinstatement thereof;
(iv) upon the distribution of the Debentures to the Holders of the
Securities, upon exercise of the right of the Holder of all of the
outstanding Common Securities to dissolve the Trust as provided in Annex I
hereto;
(v) upon the entry of a decree of judicial dissolution of the Holder
of the Common Securities, the Sponsor, the Trust or the Debenture Issuer;
(vi) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the Securities;
or
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(vii) before the issuance of any Securities, with the consent of
all of the Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 7.1(a), and after satisfaction of liabilities to
creditors of the Trust as required by applicable law, including Section 3808 of
the Business Trust Act, and subject to the terms set forth in Annex I, the
Institutional Trustee shall terminate the Trust by filing a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 2.9 and Article IX shall survive the
termination of the Trust.
ARTICLE VIII
TRANSFER OF INTERESTS
SECTION 8.1 GENERAL. (a) Where Capital Securities are presented to
the Registrar or a co-registrar with a request to register a transfer or to
exchange them for an equal number of Capital Securities represented by different
certificates, the Registrar shall register the transfer or make the exchange if
its requirements for such transactions are met. To permit registrations of
transfer and exchanges, the Trust shall issue and the Institutional Trustee
shall authenticate Capital Securities at the Registrar's request.
(b) Upon issuance of the Common Securities, the Sponsor shall
acquire and retain beneficial and record ownership of the Common Securities and
for so long as the Securities remain outstanding, the Sponsor shall maintain
100% ownership of the Common Securities; PROVIDED, HOWEVER, that any permitted
successor of the Sponsor under the Indenture that is a U.S. Person may succeed
to the Sponsor's ownership of the Common Securities.
(c) Capital Securities may only be transferred, in whole or in
part, in accordance with the terms and conditions set forth in this Declaration
and in the terms of the Securities. To the fullest extent permitted by
applicable law, any transfer or purported transfer of any Security not made in
accordance with this Declaration shall be null and void and will be deemed to be
of no legal effect whatsoever and any such transferee shall be deemed not to be
the holder of such Capital Securities for any purpose, including but not limited
to the receipt of Distributions on such Capital Securities, and such transferee
shall be deemed to have no interest whatsoever in such Capital Securities.
(d) The Registrar shall provide for the registration of Securities
and of transfers of Securities, which will be effected without charge but only
upon payment (with such indemnity as the Registrar may require) in respect of
any tax or other governmental charges that may be imposed in relation to it.
Upon surrender for registration of transfer of any Securities, the Registrar
shall cause one or more new Securities to be issued in the name of the
designated transferee or transferees. Every Security surrendered for
registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by the Holder or
such Holder's attorney duly authorized in writing. Each Security surrendered for
registration of transfer shall be canceled by the Institutional Trustee pursuant
to Section 6.6. A transferee of a Security shall be entitled to the rights and
subject to the obligations of a Holder hereunder upon the receipt by such
transferee of a Security. By acceptance of a Security, each transferee shall be
deemed to have agreed to be bound by this Declaration.
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(e) The Trust shall not be required (i) to issue, register the
transfer of, or exchange any Securities during a period beginning at the opening
of business 15 days before the day of any selection of Securities for redemption
and ending at the close of business on the earliest date on which the relevant
notice of redemption is deemed to have been given to all Holders of the
Securities to be redeemed, or (ii) to register the transfer or exchange of any
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.
SECTION 8.2 TRANSFER PROCEDURES AND RESTRICTIONS.
(a) GENERAL. (i) The Capital Securities shall bear the Restricted
Securities Legend, which shall not be removed unless there is delivered to the
Trust such satisfactory evidence, which may include an opinion of counsel
licensed to practice law in the State of New York, as may be reasonably required
by the Trust, that neither the legend nor the restrictions on transfer set forth
therein are required to ensure that transfers thereof comply with the provisions
of the Securities Act or that such Securities are not "restricted" within the
meaning of Rule 144 under the Securities Act. Upon provision of such
satisfactory evidence, the Institutional Trustee, at the written direction of
the Trust, shall authenticate and deliver Capital Securities that do not bear
the legend.
(b) TRANSFER AND EXCHANGE OF CAPITAL SECURITIES. When Capital
Securities are presented to the Registrar (x) to register the transfer of such
Capital Securities, or (y) to exchange such Capital Securities for an equal
number of Capital Securities of another number, the Registrar shall register the
transfer or make the exchange as requested if its reasonable requirements for
such transaction are met; PROVIDED, HOWEVER, that the Capital Securities
surrendered for registration of transfer or exchange shall be duly endorsed or
accompanied by a written instrument of transfer in form reasonably satisfactory
to the Trust and the Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing and (i) if such Capital Securities are being
transferred to a QIB, accompanied by a certificate of the transferee
substantially in the form set forth as Exhibit C hereto or (ii) if such Capital
Securities are being transferred otherwise than to a QIB, accompanied by a
certificate of the transferee substantially in the form set forth as Exhibit B
hereto.
(c) LEGEND. Except as permitted by Section 8.2(a), each Capital
Security shall bear a legend (the "RESTRICTED SECURITIES LEGEND") in
substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF
THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE
TRANSFER SUCH SECURITY ONLY (A) TO THE DEBENTURE ISSUER OR THE TRUST, (B)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (C) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT
IS ACQUIRING THE
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SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF AN "ACCREDITED INVESTOR,"
FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN
CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (D)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT TO THE DEBENTURE ISSUER'S AND THE TRUST'S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (C) OR (D) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE DECLARATION OF
TRUST, A COPY OF WHICH MAY BE OBTAINED FROM THE DEBENTURE ISSUER OR THE TRUST.
THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE FOREGOING
RESTRICTIONS.
(d) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF CAPITAL
SECURITIES.
(i) To permit registrations of transfers and exchanges, the Trust
shall execute and the Institutional Trustee shall authenticate Capital
Securities at the Registrar's request.
(ii) Registrations of transfers or exchanges will be effected
without charge, but only upon payment (with such indemnity as the
Registrar or the Sponsor may require) in respect of any tax or other
governmental charge that may be imposed in relation to it.
(iii) The Registrar shall not be required to register the transfer
of or exchange of any Capital Security during a period beginning at the
opening of business 15 days before the day of any selection of any Capital
Security for redemption set forth in the terms and ending at the close of
business on the earliest date on which the relevant notice of redemption
is deemed to have been given to all Holders of Capital Securities to be
redeemed.
(iv) All Capital Securities issued upon any registration of transfer
or exchange pursuant to the terms of this Declaration shall evidence the
same security and shall be entitled to the same benefits under this
Declaration as the Capital Securities surrendered upon such registration
of transfer or exchange.
SECTION 8.3 DEEMED SECURITY HOLDERS. The Trust, the Administrators,
the Trustees, the Paying Agent, the Transfer Agent or the Registrar may treat
the Person in whose name any Certificate shall be registered on the books and
records of the Trust as the sole holder of such Certificate and of the
Securities represented by such Certificate for purposes of receiving
Distributions and for all other purposes whatsoever and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in such
Certificate or in the Securities represented by such Certificate on the part of
any Person, whether or not the Trust, the Administrators, the Trustees, the
Paying Agent, the Transfer Agent or the Registrar shall have actual or other
notice thereof.
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ARTICLE IX
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 9.1 LIABILITY. (a) Except as expressly set forth in
this Declaration, the Guarantee and the terms of the Securities, the Sponsor
shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Securities
which shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder of the Securities
any deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of
the debts and obligations of the Trust (other than with respect to the
Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to ss. 3803(a) of the Business Trust Act, the Holders
of the Capital Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
SECTION 9.2 EXCULPATION. (a)No Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the Trust or any Covered
Person for any loss, damage or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith on behalf of the
Trust and in a manner such Indemnified Person reasonably believed to be within
the scope of the authority conferred on such Indemnified Person by this
Declaration or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's
negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and, if selected by such Indemnified Person,
has been selected by such Indemnified Person with reasonable care by or on
behalf of the Trust, including information, opinions, reports or statements as
to the value and amount of the assets, liabilities, profits, losses or any other
facts pertinent to the existence and amount of assets from which Distributions
to Holders of Securities might properly be paid.
SECTION 9.3 FIDUCIARY DUTY. (a) To the extent that, at law or in
equity, an Indemnified Person has duties (including fiduciary duties) and
liabilities relating thereto to the Trust or to any other Covered Person, an
Indemnified Person acting under this Declaration shall not be liable to the
Trust or to any other Covered Person for its good faith reliance on the
provisions of this Declaration. The provisions of this Declaration, to the
extent that they restrict the duties and liabilities of an Indemnified Person
otherwise existing at law or in equity (other than the duties imposed on the
Institutional Trustee under the Trust Indenture Act), are agreed by the parties
hereto to replace such other duties and liabilities of the Indemnified Person.
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(b) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have no duty
or obligation to give any consideration to any interest of or factors
affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or
by applicable law.
SECTION 9.4 INDEMNIFICATION. (a) (i) The Sponsor shall indemnify, to
the full extent permitted by law, any Indemnified Person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust) by reason
of the fact that he is or was an Indemnified Person against expenses (including
attorneys' fees and expenses), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the Indemnified
Person did not act in good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
(ii) The Sponsor shall indemnify, to the full extent permitted by
law, any Indemnified Person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or
in the right of the Trust to procure a judgment in its favor by reason of
the fact that he is or was an Indemnified Person against expenses
(including attorneys' fees and expenses) actually and reasonably incurred
by him in connection with the defense or settlement of such action or suit
if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Trust and except that no such
indemnification shall be made in respect of any claim, issue or matter as
to which such Indemnified Person shall have been adjudged to be liable to
the Trust unless and only to the extent that the Court of Chancery of
Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which such Court of
Chancery or such other court shall deem proper.
(iii) To the extent that an Indemnified Person shall be successful
on the merits or otherwise (including dismissal of an action without
prejudice or the settlement of an action without admission of liability)
in defense of any action, suit or proceeding referred to in paragraphs (i)
and (ii) of this Section 9.4(a), or in defense of any claim, issue or
matter therein, he shall be indemnified, to the full extent permitted by
law, against expenses (including attorneys' fees and expenses) actually
and reasonably incurred by him in connection therewith.
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(iv) Any indemnification of an Administrator under paragraphs (i)
and (ii) of this Section 9.4(a) (unless ordered by a court) shall be made
by the Sponsor only as authorized in the specific case upon a
determination that indemnification of the Indemnified Person is proper in
the circumstances because he has met the applicable standard of conduct
set forth in paragraphs (i) and (ii). Such determination shall be made (A)
by the Administrators by a majority vote of a Quorum consisting of such
Administrators who were not parties to such action, suit or proceeding,
(B) if such a Quorum is not obtainable, or, even if obtainable, if a
Quorum of disinterested Administrators so directs, by independent legal
counsel in a written opinion, or (C) by the Common Security Holder of the
Trust.
(v) To the fullest extent permitted by law, expenses (including
attorneys' fees and expenses) incurred by an Indemnified Person in
defending a civil, criminal, administrative or investigative action, suit
or proceeding referred to in paragraphs (i) and (ii) of this Section
9.4(a) shall be paid by the Sponsor in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Sponsor as authorized in this Section 9.4(a). Notwithstanding the
foregoing, no advance shall be made by the Sponsor if a determination is
reasonably and promptly made (A) by the Administrators by a majority vote
of a Quorum of disinterested Administrators, (B) if such a Quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested
Administrators so directs, by independent legal counsel in a written
opinion or (C) by the Common Security Holder of the Trust, that, based
upon the facts known to the Administrators, counsel or the Common Security
Holder at the time such determination is made, such Indemnified Person
acted in bad faith or in a manner that such Person did not believe to be
in or not opposed to the best interests of the Trust, or, with respect to
any criminal proceeding, that such Indemnified Person believed or had
reasonable cause to believe his conduct was unlawful. In no event shall
any advance be made in instances where the Administrators, independent
legal counsel or the Common Security Holder reasonably determine that such
Person deliberately breached his duty to the Trust or its Common or
Capital Security Holders.
(vi) Each Trustee, at the sole cost and expense of the Sponsor,
retains the right to representation by counsel of its own choosing in any
action, suit or any other proceeding hereunder or against it by relation
to the foregoing, without affecting its right to indemnification hereunder
or waiving any rights afforded to it under this Declaration or applicable
law.
(b) The Sponsor shall indemnify, to the fullest extent permitted
by applicable law, each Indemnified Person from and against any and all 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 or by reason of the creation, operation or termination of the Trust, or any
act or omission performed or omitted by such Indemnified Person in good faith on
behalf of the Trust and in a manner such Indemnified Person reasonably believed
to be within the scope of authority conferred on such Indemnified Person by this
Declaration, 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 or willful misconduct with respect to such
acts or omissions.
(c) The indemnification and advancement of expenses provided by,
or granted pursuant to, the other paragraphs of this Section 9.4 shall not be
deemed exclusive of any other
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rights to which those seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of stockholders or disinterested directors of
the Sponsor or Capital Security Holders of the Trust or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office. All rights to indemnification under this Section 9.4 shall
be deemed to be provided by a contract between the Sponsor and each Indemnified
Person who serves in such capacity at any time while this Section 9.4 is in
effect. Any repeal or modification of this Section 9.4 shall not affect any
rights or obligations then existing.
(d) The Sponsor or the Trust may purchase and maintain insurance
on behalf of any Person who is or was an Indemnified Person against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Sponsor would have the
power to indemnify him against such liability under the provisions of this
Section 9.4.
(e) For purposes of this Section 9.4, references to "the Trust"
shall include, in addition to the resulting or surviving entity, any constituent
entity (including any constituent of a constituent) absorbed in a consolidation
or merger, so that any Person who is or was a director, trustee, officer or
employee of such constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent of another
entity, shall stand in the same position under the provisions of this Section
9.4 with respect to the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence had continued.
(f) The indemnification and advancement of expenses provided by,
or granted pursuant to, this Section 9.4 shall, unless otherwise provided when
authorized or ratified, continue as to a Person who has ceased to be an
Indemnified Person and shall inure to the benefit of the heirs, executors and
administrators of such a Person.
The provisions of this Section shall survive the termination of this
agreement or the earlier resignation or removal of the Institutional Trustee.
The obligations of the Sponsor under this Section 9.4 to compensate and
indemnify the Trustees and to pay or reimburse the Trustees for expenses,
disbursements and advances shall constitute additional indebtedness hereunder.
Such additional indebtedness shall be secured by a lien prior to that of the
Securities upon all property and funds held or collected by the Trustees as
such, except funds held in trust for the benefit of the holders of particular
Securities.
SECTION 9.5 OUTSIDE BUSINESSES. Any Covered Person, the Sponsor, the
Delaware Trustee and the Institutional Trustee (subject to Section 4.3(c)) may
engage in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the business
of the Trust, and the Trust and the Holders of Securities shall have no rights
by virtue of this Declaration in and to such independent ventures or the income
or profits derived therefrom, and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or
improper. None of any Covered Person, the Sponsor, the Delaware Trustee or the
Institutional Trustee shall be obligated to present any particular investment or
other opportunity to the Trust even if such opportunity is of a character that,
if presented to the Trust, could be taken by the Trust, and any Covered Person,
the Sponsor, the Delaware Trustee and the Institutional Trustee shall have the
right to take for its own account (individually or as a partner or fiduciary) or
to recommend to others any such particular investment or other opportunity. Any
Covered Person, the Delaware Trustee and the Institutional Trustee may engage or
be interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depositary for, trustee
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or agent for, or act on any committee or body of holders of, securities or other
obligations of the Sponsor or its Affiliates.
SECTION 9.6 COMPENSATION; FEE. The Sponsor agrees:
(a) to pay to the Trustees from time to time such compensation for
all services rendered by them hereunder as the parties shall agree from time to
time (which compensation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust); and
(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 Declaration (including the reasonable compensation and the expenses and
disbursements of their respective agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or willful
misconduct.
The provisions of this Section 9.6 shall survive the dissolution of
the Trust and the termination of this Declaration and the removal or resignation
of any Trustee.
No Trustee may claim any lien or charge on any property of the Trust
as a result of any amount due pursuant to this Section 9.6.
ARTICLE X
ACCOUNTING
SECTION 10.1 FISCAL YEAR. The fiscal year (the "FISCAL YEAR") of the
Trust shall be the calendar year, or such other year as is required by the Code.
SECTION 10.2 CERTAIN ACCOUNTING MATTERS.
(a) At all times during the existence of the Trust, the
Administrators shall keep, or cause to be kept at the principal office of the
Trust in the United States, as defined for purposes of Treasury regulations
section 301.7701-7, full books of account, records and supporting documents,
which shall reflect in reasonable detail each transaction of the Trust. The
books of account shall be maintained on the accrual method of accounting, in
accordance with generally accepted accounting principles, consistently applied.
The books of account and the records of the Trust shall be examined by and
reported upon as of the end of each Fiscal Year of the Trust by a firm of
independent certified public accountants selected by the Administrators.
(b) The Administrators shall cause to be prepared at the principal
office of the Trust in the United States, as defined for purposes of Treasury
regulations section 301.7701-7, and delivered to each of the Holders of
Securities, within 90 days after the end of each Fiscal Year of the Trust,
annual financial statements of the Trust, including a balance sheet of the Trust
as of the end of such Fiscal Year, and the related statements of income or loss
which shall be examined by and reported upon by a firm of independent certified
public accountants selected by the Administrators.
(c) The Administrators shall cause to be duly prepared and
delivered to each of the Holders of Securities Form 1099 or such other annual
United States federal income tax information statement required by the Code,
containing such information with regard to the Securities held by each Holder as
is required by the Code and the Treasury Regulations.
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Notwithstanding any right under the Code to deliver any such statement at a
later date, the Administrators shall endeavor to deliver all such statements
within 30 days after the end of each Fiscal Year of the Trust.
(d) The Administrators shall cause to be duly prepared in the
United States, as defined for purposes of Treasury regulations section
301.7701-7, and filed an annual United States federal income tax return on a
Form 1041 or such other form required by United States federal income tax law,
and any other annual income tax returns required to be filed by the
Administrators on behalf of the Trust with any state or local taxing authority.
SECTION 10.3 BANKING. The Trust shall maintain one or more bank
accounts in the United States, as defined for purposes of Treasury regulations
section 301.7701-7, in the name and for the sole benefit of the Trust; PROVIDED,
HOWEVER, that all payments of funds in respect of the Debentures held by the
Institutional Trustee shall be made directly to the Property Account and no
other funds of the Trust shall be deposited in the Property Account. The sole
signatories for such accounts (including the Property Account) shall be
designated by the Institutional Trustee.
SECTION 10.4 WITHHOLDING. The Institutional Trustee or any Paying
Agent and the Administrators shall comply with all withholding requirements
under United States federal, state and local law. The Institutional Trustee or
any Paying Agent shall request, and each Holder shall provide to the
Institutional Trustee or any Paying Agent, such forms or certificates as are
necessary to establish an exemption from withholding with respect to the Holder,
and any representations and forms as shall reasonably be requested by the
Institutional Trustee or any Paying Agent to assist it in determining the extent
of, and in fulfilling, its withholding obligations. The Administrators shall
file required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Institutional Trustee or any Paying Agent is required to withhold and pay over
any amounts to any authority with respect to distributions or allocations to any
Holder, the amount withheld shall be deemed to be a Distribution to the Holder
in the amount of the withholding. In the event of any claimed overwithholding,
Holders shall be limited to an action against the applicable jurisdiction. If
the amount required to be withheld was not withheld from actual Distributions
made, the Institutional Trustee or any Paying Agent may reduce subsequent
Distributions by the amount of such withholding.
ARTICLE XI
AMENDMENTS AND MEETINGS
SECTION 11.1 AMENDMENTS. (a) Except as otherwise provided in this
Declaration or by any applicable terms of the Securities, this Declaration may
only be amended by a written instrument approved and executed by
(i) the Institutional Trustee, and
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee.
(b) Notwithstanding any other provision of this Article XI, no
amendment shall be made, and any such purported amendment shall be void and
ineffective:
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(i) unless the Institutional Trustee shall have first received
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities);
and
(B) an opinion of counsel (who may be counsel to the Sponsor
or the Trust) that such amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the
Securities); and
(ii) if the result of such amendment would be to
(A) cause the Trust to cease to be classified for purposes of
United States federal income taxation as a grantor trust;
(B) reduce or otherwise adversely affect the powers of the
Institutional Trustee in contravention of the Trust Indenture Act;
or
(C) cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act.
(c) Except as provided in Section 11.1(d), (e) or (h), no
amendment shall be made, and any such purported amendment shall be void and
ineffective unless the Holders of a Majority in liquidation amount of the
Capital Securities shall have consented to such amendment.
(d) In addition to and notwithstanding any other provision in this
Declaration, without the consent of each affected Holder, this Declaration may
not be amended to (i) change the amount or timing of any Distribution on the
Securities or otherwise adversely affect the amount of any Distribution required
to be made in respect of the Securities as of a specified date or (ii) restrict
the right of a Holder to institute suit for the enforcement of any such payment
on or after such date.
(e) Section 8.1(b) and 8.1(c) and this Section 11.1 shall not be
amended without the consent of all of the Holders of the Securities.
(f) Article III shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities.
(g) the rights of the Holders of the Capital Securities under
Article IV to increase or decrease the number of, and appoint and remove,
Trustees shall not be amended without the consent of the Holders of a Majority
in liquidation amount of the Capital Securities.
(h) This Declaration may be amended by the Institutional Trustee
and the Holders of a Majority in the liquidation amount of the Common Securities
without the consent of the Holders of the Capital Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration that
may be defective or inconsistent with any other provision of this
Declaration;
(iii) add to the covenants, restrictions or obligations of the
Sponsor; and
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(iv) modify, eliminate or add to any provision of this Declaration
to such extent as may be necessary to ensure that the Trust will be
classified for United States federal income tax purposes at all times as a
grantor trust and will not be required to register as an "investment
company" under the Investment Company Act (including without limitation to
conform to any change in Rule 3a-5, Rule 3a-7 or any other applicable rule
under the Investment Company Act or written change in interpretation or
application thereof by any legislative body, court, government agency or
regulatory authority) which amendment does not have a material adverse
effect on the right, preferences or privileges of the Holders of
Securities;
PROVIDED, HOWEVER, that no such modification, elimination or addition
referred to in clauses (i), (ii) or (iii) shall adversely affect the powers,
preferences or special rights of Holders of Capital Securities.
SECTION 11.2 MEETINGS OF THE HOLDERS OF SECURITIES; ACTION BY
WRITTEN CONSENT.
(a) Meetings of the Holders of any class of Securities may be called
at any time by the Administrators (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading, if any. The Administrators shall
call a meeting of the Holders of such class if directed to do so by the Holders
of at least 10% in liquidation amount of such class of Securities. Such
direction shall be given by delivering to the Administrators one or more calls
in a writing stating that the signing Holders of the Securities wish to call a
meeting and indicating the general or specific purpose for which the meeting is
to be called. Any Holders of the Securities calling a meeting shall specify in
writing the Certificates held by the Holders of the Securities exercising the
right to call a meeting and only those Securities represented by such
Certificates shall be counted for purposes of determining whether the required
percentage set forth in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of the
Securities:
(i) notice of any such meeting shall be given to all the Holders of
the Securities having a right to vote thereat at least 7 days and not more
than 60 days before the date of such meeting. Whenever a vote, consent or
approval of the Holders of the Securities is permitted or required under
this Declaration or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading, if any, such vote, consent
or approval may be given at a meeting of the Holders of the Securities.
Any action that may be taken at a meeting of the Holders of the Securities
may be taken without a meeting if a consent in writing setting forth the
action so taken is signed by the Holders of the Securities owning not less
than the minimum amount of Securities in liquidation amount that would be
necessary to authorize or take such action at a meeting at which all
Holders of the Securities having a right to vote thereon were present and
voting. Prompt notice of the taking of action without a meeting shall be
given to the Holders of the Securities entitled to vote who have not
consented in writing. The Administrators may specify that any written
ballot submitted to the Holders of the Securities for the purpose of
taking any action without a meeting shall be returned to the Trust within
the time specified by the Administrators;
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(ii) each Holder of a Security may authorize any Person to act for
it by proxy on all matters in which a Holder of Securities is entitled to
participate, including waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid after the expiration
of 11 months from the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the Holder of the
Securities executing it. Except as otherwise provided herein, all matters
relating to the giving, voting or validity of proxies shall be governed by
the General Corporation Law of the State of Delaware relating to proxies,
and judicial interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders of the Securities were stockholders of a
Delaware corporation; each meeting of the Holders of the Securities shall
be conducted by the Administrators or by such other Person that the
Administrators may designate; and
(iii) unless the Business Trust Act, this Declaration, the terms of
the Securities, the Trust Indenture Act or the listing rules of any stock
exchange on which the Capital Securities are then listed for trading, if
any, otherwise provides, the Administrators, in their sole discretion,
shall establish all other provisions relating to meetings of Holders of
Securities, including notice of the time, place or purpose of any meeting
at which any matter is to be voted on by any Holders of the Securities,
waiver of any such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements, voting in person or
by proxy or any other matter with respect to the exercise of any such
right to vote; provided, however, that each meeting shall be conducted in
the United States (as that term is defined in Treasury regulations section
301.7701-7).
ARTICLE XII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 12.1 REPRESENTATIONS AND WARRANTIES OF INSTITUTIONAL
TRUSTEE. The Trustee that acts as initial Institutional Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Institutional Trustee represents and warrants to the Trust and
the Sponsor at the time of the Successor Institutional Trustee's acceptance of
its appointment as Institutional Trustee, that:
(a) the Institutional Trustee is a banking corporation with trust
powers, duly organized, validly existing and in good standing under the laws of
the United States with trust power and authority to execute and deliver, and to
carry out and perform its obligations under the terms of, this Declaration;
(b) the execution, delivery and performance by the Institutional
Trustee of this Declaration has been duly authorized by all necessary corporate
action on the part of the Institutional Trustee. This Declaration has been duly
executed and delivered by the Institutional Trustee, and it constitutes a legal,
valid and binding obligation of the Institutional Trustee, enforceable against
it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency and other similar laws affecting
creditors' rights generally and to general principles of equity (regardless of
whether considered in a proceeding in equity or at law);
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(c) the execution, delivery and performance of this Declaration by
the Institutional Trustee does not conflict with or constitute a breach of the
charter or by-laws of the Institutional Trustee; and
(d) no consent, approval or authorization of, or registration with
or notice to, any state or federal banking authority is required for the
execution, delivery or performance by the Institutional Trustee of this
Declaration.
SECTION 12.2 REPRESENTATIONS AND WARRANTIES OF DELAWARE Trustee. The
Trustee that acts as initial Delaware Trustee represents and warrants to the
Trust and to the Sponsor at the date of this Declaration, and each Successor
Delaware Trustee represents and warrants to the Trust and the Sponsor at the
time of the Successor Delaware Trustee's acceptance of its appointment as
Delaware Trustee, that:
(a) The Delaware Trustee is duly organized, validly existing and
in good standing under the laws of the State of Delaware, with trust power and
authority to execute and deliver, and to carry out and perform its obligations
under the terms of, this Declaration.
(b) The Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and this Declaration. This
Declaration under Delaware law constitutes a legal, valid and binding obligation
of the Delaware Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium, insolvency and
other similar laws affecting creditors' rights generally, and to general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).
(c) No consent, approval or authorization of, or registration with
or notice to, any state or federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee of this Declaration.
(d) The Delaware Trustee is a natural person who is a resident of
the State of Delaware or, if not a natural person, an entity which has its
principal place of business in the State of Delaware and, in either case, a
Person that satisfies for the Trust the requirements of Section 3807 of the
Business Trust Act.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 NOTICES. All notices provided for in this Declaration
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied (which telecopy shall be followed by notice delivered or
mailed by first class mail) or mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Administrators at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Holders of the Securities:
Guaranty (TX) Capital Trust I
c/o Guaranty Bancshares, Inc.
P.O. Box 1158
Mt. Pleasant, Texas 75456
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Attention: Administrators of Guaranty (TX) Capital
Trust I
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as Delaware Trustee may give notice of to the
Holders of the Securities):
The Bank of New York (Delaware)
White Clay Center, Route 273
Newark, Delaware
Attention: Corporate Trust Administration
Telecopy:
(c) if given to the Institutional Trustee, at the Institutional
Trustee's mailing address set forth below (or such other address as the
Institutional Trustee may give notice of to the Holders of the Securities):
The Bank of New York
101 Barclay Street, Floor 21W
New York, NY 10286
Attention: Corporate Trust Administration
Telecopy: 212-819-5915
(d) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice of to the Trust):
Guaranty Bancshares, Inc.
P.O. Box 1158
Mt. Pleasant, Texas 75456
Attention: Clifton A. Payne, Chief Financial Officer
(e) if given to any other Holder, at the address set forth on
the books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 13.2 GOVERNING LAW. This Declaration and the rights of the
parties hereunder shall be governed by and interpreted in accordance with the
law of the State of Delaware and all rights and remedies shall be governed by
such laws without regard to the principles of conflict of laws of the State of
Delaware or any other jurisdiction that would call for the application of the
law of any jurisdiction other than the State of Delaware; PROVIDED, HOWEVER,
that there shall not be applicable to the Trust, the Trustees or this
Declaration any provision of the laws (statutory or common) of the State of
Delaware pertaining to trusts that relate to or regulate, in a manner
inconsistent with the terms hereof (a) the filing with any court or governmental
body or agency of trustee accounts or schedules of trustee fees and charges, (b)
affirmative requirements to post bonds for trustees, officers, agents or
employees of a trust, (c) the necessity for obtaining court or other
governmental approval concerning the acquisition,
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holding or disposition of real or personal property, (d) fees or other sums
payable to trustees, officers, agents or employees of a trust, (e) the
allocation of receipts and expenditures to income or principal, (f) restrictions
or limitations on the permissible nature, amount or concentration of trust
investments or requirements relating to the titling, storage or other manner of
holding or investing trust assets or (g) the establishment of fiduciary or other
standards of responsibility or limitations on the acts or powers of trustees
that are inconsistent with the limitations or liabilities or authorities and
powers of the Trustees as set forth or referenced in this Declaration. Section
3540 of Title 12 of the Delaware Code shall not apply to the Trust.
SECTION 13.3 INTENTION OF THE PARTIES. It is the intention of the
parties hereto that the Trust be classified for United States federal income tax
purposes as a grantor trust. The provisions of this Declaration shall be
interpreted to further this intention of the parties.
SECTION 13.4 HEADINGS. Headings contained in this Declaration are
inserted for convenience of reference only and do not affect the interpretation
of this Declaration or any provision hereof.
SECTION 13.5 SUCCESSORS AND ASSIGNS. Whenever in this Declaration
any of the parties hereto is named or referred to, the successors and assigns of
such party shall be deemed to be included, and all covenants and agreements in
this Declaration by the Sponsor and the Trustees shall bind and inure to the
benefit of their respective successors and assigns, whether or not so expressed.
SECTION 13.6 PARTIAL ENFORCEABILITY. If any provision of this
Declaration, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Declaration, or the application of
such provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
SECTION 13.7 COUNTERPARTS. This Declaration may contain more than
one counterpart of the signature page and this Declaration may be executed by
the affixing of the signature of each of the Trustees and Administrators to any
of such counterpart signature pages. All of such counterpart signature pages
shall be read as though one, and they shall have the same force and effect as
though all of the signers had signed a single signature page.
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IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
THE BANK OF NEW YORK (DELAWARE)
as Delaware Trustee
By: /S/ WILLIAM T. LEWIS, SVP
Name: William T. Lewis
Title: Senior Vice President
THE BANK OF NEW YORK
as Institutional Trustee
By: /S/ ANNETTE L. KOS
Name: Annette L. Kos
Title: Assistant Vice President
GUARANTY BANCSHARES, INC.
as Sponsor
By: /S/ ARTHUR B. SCHARLACH
Name: Arthur B. Scharlach
Title: President
GUARANTY (TX) CAPITAL TRUST I
By: /S/ ARTHUR B. SCHARLACH
Administrator
By: /S/ CLIFTON A. PAYNE
Administrator
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ANNEX I
TERMS OF
FIXED RATE CAPITAL TRUST PASS-THROUGH SECURITIES(R)(TRUPS(R))
Pursuant to Section 6.1 of the Amended and Restated Declaration of
Trust, dated as of March 23, 2000 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Capital Securities and the Common
Securities are set out below (each capitalized term used but not defined herein
has the meaning set forth in the Declaration):
1. DESIGNATION AND NUMBER. (a) Capital Securities. 7,000 Capital
Securities of Guaranty (TX) Capital Trust I (the "Trust"), with an aggregate
stated liquidation amount with respect to the assets of the Trust of Seven
Million ($7,000,000) and a stated liquidation amount with respect to the assets
of the Trust of $1,000 per Capital Security, are hereby designated for the
purposes of identification only as the "Fixed Rate Capital Trust Pass-through
Securities"(R) (the "Capital Securities"). The Capital Security Certificates
evidencing the Capital Securities shall be substantially in the form of Exhibit
A-1 to the Declaration, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice or to conform
to the rules of any stock exchange on which the Capital Securities are listed,
if any.
(b) Common Securities. 217 Common Securities of the Trust (the
"Common Securities") will be evidenced by Common Security Certificates
substantially in the form of Exhibit A-2 to the Declaration, with such changes
and additions thereto or deletions therefrom as may be required by ordinary
usage, custom or practice.
2. DISTRIBUTIONS. (a) Distributions payable on each Security will be
payable at an annual rate equal to 107/8% (the "Coupon Rate") of the stated
liquidation amount of $1,000 per Security, such rate being the rate of interest
payable on the Debentures to be held by the Institutional Trustee. Except as set
forth below in respect of an Extension Period, Distributions in arrears for more
than one semi-annual period will bear interest thereon compounded semi-annually
at the Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes cash distributions and any such
compounded distributions payable unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Institutional Trustee and to the extent the Institutional Trustee
has funds available therefore. The amount of Distributions payable for any
period will be computed for any full semi-annual period on the basis of a
360-day year of twelve 30-day months.
(b) Distributions on the Securities will be cumulative, will
accrue from the date of original issuance, and will be payable, subject to
extension of distribution payment periods as described herein, semi-annually in
arrears on March 8 and September 8 of each year, commencing on September 8, 2000
(each, a "Distribution Payment Date") when, as and if available for payment. The
Debenture Issuer has the right under the Indenture to defer payments of interest
on the Debentures by extending the interest payment period for up to 10
consecutive semi-annual periods (each, an "Extension Period") at any time and
from time to time on the Debentures, subject to the conditions described below,
although such interest would continue to accrue on the Debentures, and interest
will accrue on such Deferred Interest at an annual rate equal to 107/8%,
compounded semi-annually to the extent permitted by law during any Extension
Period. No Extension Period may end on a date other than a Distribution Payment
Date. At the
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end of any such Extension Period the Debenture Issuer shall pay all Deferred
Interest; PROVIDED, however, that no Extension Period may extend beyond the
Maturity Date and PROVIDED FURTHER, that, during any such Extension Period, the
Debenture Issuer may not (i) declare or pay any dividends or distributions on,
or redeem, purchase, acquire, or make a liquidation payment with respect to, any
of the Debenture Issuer's capital stock or (ii) make any payment of principal of
or interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Debenture Issuer that rank PARI PASSU in all respects with or
junior in interest to the Debentures (other than (a) repurchases, redemptions or
other acquisitions of shares of capital stock of the Debenture Issuer in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Debenture Issuer (or securities convertible into or exercisable for
such capital stock) as consideration in an acquisition transaction entered into
prior to the applicable Extension Period, (b) as a result of any exchange or
conversion of any class or series of the Debenture Issuer's capital stock (or
any capital stock of a subsidiary of the Debenture Issuer) for any class or
series of the Debenture Issuer's capital stock or of any class or series of the
Debenture Issuer's indebtedness for any class or series of the Debenture
Issuer's capital stock, (c) the purchase of fractional interests in shares of
the Debenture Issuer's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
(d) any declaration of a dividend in connection with any stockholder's rights
plan, or the issuance of rights, stock or other property under any stockholder's
rights plan, or the redemption or repurchase of rights pursuant thereto, or (e)
any dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks PARI PASSU with or junior to such stock). Prior to the termination of any
Extension Period, the Debenture Issuer may further extend such period, provided
that such period together with all such previous and further consecutive
extensions thereof shall not exceed 10 consecutive semi-annual periods, or
extend beyond the Maturity Date. Upon the termination of any Extension Period
and upon the payment of all Deferred Interest, the Debenture Issuer may commence
a new Extension Period, subject to the foregoing requirements. No interest or
Deferred Interest shall be due and payable during an Extension Period, except at
the end thereof, but each installment of interest that would otherwise have been
due and payable during such Extension Period shall bear Deferred Interest. If
Distributions are deferred, the Distributions due shall be paid on the date that
the related Extension Period terminates, or, if such date is not a Distribution
Payment Date, on the immediately following Distribution Payment Date, to Holders
of the Securities as they appear on the books and records of the Trust on the
record date immediately preceding such date. Distributions on the Securities
must be paid on the dates payable (after giving effect to any Extension Period)
to the extent that the Trust has funds available for the payment of such
distributions in the Property Account of the Trust. The Trust's funds available
for Distribution to the Holders of the Securities will be limited to payments
received from the Debenture Issuer. The payment of Distributions out of moneys
held by the Trust is guaranteed by the Guarantor pursuant to the Guarantee.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the relevant
record dates. The relevant record dates shall be selected by the Administrators,
which dates shall be 15 days before the relevant payment dates. Distributions
payable on any Securities that are not punctually paid on any Distribution
Payment Date, as a result of the Debenture Issuer having failed to make a
payment under the Debentures, as the case may be, when due (taking into account
any Extension Period), will cease to be payable to the Person in
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whose name such Securities are registered on the relevant record date, and such
defaulted Distribution will instead be payable to the Person in whose name such
Securities are registered on the special record date or other specified date
determined in accordance with the Indenture. If any date on which Distributions
are payable on the Securities is not a Business Day, then payment of the
Distribution payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in respect of any
such delay) except that, if such 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 payment date.
(d) In the event that there is any money or other property held by
or for the Trust that is not accounted for hereunder, such property shall be
distributed pro rata (as defined herein) among the Holders of the Securities.
3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION. In the event of the
voluntary or involuntary liquidation, dissolution, winding-up or termination of
the Trust (each, a "Liquidation") other than in connection with a redemption of
the Debentures, the Holders of the Securities will be entitled to receive out of
the assets of the Trust available for distribution to Holders of the Securities,
after satisfaction of liabilities to creditors of the Trust (to the extent not
satisfied by the Debenture Issuer), distributions equal to the aggregate of the
stated liquidation amount of $1,000 per Security plus accrued and unpaid
Distributions thereon to the date of payment (such amount being the "Liquidation
Distribution"), unless in connection with such Liquidation, the Debentures in an
aggregate stated principal amount equal to the aggregate stated liquidation
amount of such Securities, with an interest rate equal to the Coupon Rate of,
and bearing accrued and unpaid interest in an amount equal to the accrued and
unpaid Distributions on, and having the same record date as, such Securities,
after paying or making reasonable provision to pay all claims and obligations of
the Trust in accordance with Section 3808(e) of the Business Trust Act, shall be
distributed on a Pro Rata basis to the Holders of the Securities in exchange for
such Securities.
The Sponsor, as the Holder of all of the Common Securities, has the
right at any time to dissolve the Trust (including without limitation upon the
occurrence of a Tax Event, an Investment Company Event or a Capital Treatment
Event), subject to the receipt by the Debenture Issuer of prior approval from
the Board of Governors of the Federal Reserve System (the "Federal Reserve"), if
then required under applicable capital guidelines or policies of the Federal
Reserve and, after satisfaction of liabilities to creditors of the Trust, cause
the Debentures to be distributed to the Holders of the Securities on a Pro Rata
basis in accordance with the aggregate stated liquidation amount thereof.
The Trust shall dissolve on the first to occur of (i) March 8, 2055,
the expiration of the term of the Trust, (ii) a Bankruptcy Event with respect to
the Sponsor, Trust or the Debenture Issuer, (iii) (other than in connection with
a merger, consolidation or similar transaction not prohibited by the Indenture,
this Declaration or the Guarantee, as the case may be) upon the consent of the
Holders of a Majority in liquidation amount of the Securities voting together as
a single class to dissolve the Trust, or upon the revocation of the charter of
the Sponsor and the expiration of 90 days after the date of revocation without a
reinstatement thereof, (iv) the distribution to the Holders of the Securities of
the Debentures, upon exercise of the right of the Holder of all of the
outstanding Common Securities to dissolve the Trust as described above, (v) the
entry of a decree of a judicial dissolution of the Sponsor or the Trust, or (vi)
when all of the Securities shall have been called for redemption and the amounts
necessary for redemption thereof shall have been paid to the Holders in
accordance with the terms of the Securities. As soon as practicable after the
dissolution of the Trust and upon completion of the winding up of the Trust, the
Trust shall terminate upon the filing of a certificate of cancellation with the
Secretary of State of the State of Delaware.
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If a Liquidation of the Trust occurs as described in clause (i),
(ii), (iii) or (v) in the immediately preceding paragraph, the Trust shall be
liquidated by the Trustees of the Trust as expeditiously as such Trustees
determine to be possible by distributing, after satisfaction of liabilities to
creditors of the Trust, to the Holders of the Securities, the Debentures on a
Pro Rata basis to the extent not satisfied by the Debenture Issuer, unless such
distribution is determined by the Institutional Trustee not to be practical, in
which event such Holders will be entitled to receive out of the assets of the
Trust available for distribution to the Holders, after satisfaction of
liabilities of creditors of the Trust to the extent not satisfied by the
Debenture Issuer, an amount equal to the Liquidation Distribution. An early
Liquidation of the Trust pursuant to clause (iv) above shall occur if the
Institutional Trustee determines that such Liquidation is possible by
distributing, after satisfaction of liabilities to creditors of Trust, to the
Holders of the Securities on a Pro Rata basis, the Debentures, and such
distribution occurs.
If, upon any such Liquidation 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 the amounts payable directly
by the Trust on such Capital Securities shall be paid to the Holders of the
Trust Securities on a pro rata basis, except that if an Event of Default has
occurred and is continuing, the Capital Securities shall have a preference over
the Common Securities with regard to such distributions.
Upon any such Liquidation of the Trust involving a distribution of
the Debentures, if at the time of such Liquidation, the Capital Securities were
rated by at least one nationally-recognized statistical rating organization, the
Debenture Issuer will use its reasonable best efforts to obtain from at least
one such or other rating organization a rating for the Debentures.
After the date for any distribution of the Debentures upon
dissolution of the Trust, (i) the Securities of the Trust will be deemed to be
no longer outstanding, and (ii) any certificates representing the Capital
Securities will be deemed to represent undivided beneficial interests in such of
the Debentures as have an aggregate principal amount equal to the aggregate
stated liquidation amount of, with an interest rate identical to the
distribution rate of, and bearing accrued and unpaid interest equal to accrued
and unpaid distributions on, the Securities until such certificates are
presented to the Debenture Issuer or its agent for transfer or reissuance.
4. REDEMPTION AND DISTRIBUTION.
(a) The Debentures will mature on March 8, 2030. The Debentures
may be redeemed by the Debenture Issuer, in whole or in part, on any March 8 or
September 8 on or after March 8, 2010, at the Redemption Price. In addition,
upon the occurrence and continuation of a Tax Event, an Investment Company Event
or a Capital Treatment Event, the Debentures may be redeemed by the Debenture
Issuer in whole or in part, at any time within 90 days following the occurrence
of such Tax Event, Investment Company Event or Capital Treatment Event, as the
case may be (the "Special Redemption Date"), at the Special Redemption Price ,
upon not less than 30 nor more than 60 days' notice to Holders of such
Debentures so long as such Tax Event, Investment Company Event or Capital
Treatment Event, as the case may be, is continuing. In each case, the right of
the Debenture Issuer to redeem the Debentures is subject to the Debenture Issuer
having received prior approval from the Federal Reserve, if then required under
applicable capital guidelines or policies of the Federal Reserve.
"Tax Event" means the receipt by the Debenture Issuer and the Trust
of an opinion of counsel experienced in such matters to the effect that, as a
result of any amendment to or change (including any announced prospective
change) in the laws or any regulations
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thereunder of the United States or any political subdivision or taxing authority
thereof or therein, or as a result of any official administrative pronouncement
(including any private letter ruling, technical advice memorandum, field service
advice, regulatory procedure, notice or announcement, including any notice or
announcement of intent to adopt such procedures or regulations (an
"Administrative Action")) or judicial decision interpreting or applying such
laws or regulations, regardless of whether such Administrative Action or
judicial decision is issued to or in connection with a proceeding involving the
Debenture Issuer or the Trust and whether or not subject to review or appeal,
which amendment, clarification, change, Administrative Action or decision is
enacted, promulgated or announced, in each case on or after the date of issuance
of the Debentures, there is more than an insubstantial risk that: (i) the Trust
is, or will be within 90 days of the date of such opinion, subject to United
States federal income tax with respect to income received or accrued on the
Debentures; (ii) interest payable by the Debenture Issuer on the Debentures is
not, or within 90 days of the date of such opinion, will not be, deductible by
the Debenture Issuer, in whole or in part, for United States federal income tax
purposes; or (iii) the Trust is, or will be within 90 days of the date of such
opinion, subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
"Investment Company Event" means the receipt by 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 written change (including
any announced prospective change) in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority, there is more than an insubstantial risk that the Trust is or will be
considered an "investment company" that is required to be registered under the
Investment Company Act of 1940, as amended which change or prospective change
becomes effective or would become effective, as the case may be, on or after the
date of the issuance of the Debentures.
"Capital Treatment Event" means the reasonable determination by the
Debenture Issuer that, as a result of the occurrence of any amendment to, or
change (including any announced prospective change) in, the laws of the United
States or any political subdivision thereof or therein, or as the result of any
official or administrative pronouncement or action or decision interpreting or
applying such laws, rules or regulations, which amendment or change is effective
or which pronouncement, action or decision is announced on or after the date of
issuance of the Debentures, there is more than an insubstantial risk that the
Debenture Issuer will not be entitled to treat an amount equal to the aggregate
Liquidation Amount of the Debentures as "Tier I Capital" (or the then equivalent
thereof) for purposes of the capital adequacy guidelines of the Federal Reserve,
as then in effect and applicable to the Debenture Issuer; PROVIDED, HOWEVER,
that the distribution of the Debentures in connection with the Liquidation of
the Trust by the Debenture Issuer shall not in and of itself constitute a
Capital Treatment Event unless such Liquidation shall have occurred in
connection with a Tax Event or an Investment Company Event.
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"Redemption Price" means the price set forth in the following table
for any Redemption Date or Special Redemption Date that occurs within the
twelve-month period beginning in the relevant year indicated below, expressed in
percentage of the principal amount of the Debt Securities being redeemed:
YEAR PERCENTAGE
---- ----------
March 8, 2010 105.438
March 8, 2011 104.894
March 8, 2012 104.350
March 8, 2013 103.806
March 8, 2014 103.263
March 8, 2015 102.719
March 8, 2016 102.175
March 8, 2017 101.631
March 8, 2018 101.088
March 8, 2019 100.544
March 8, 2020 and after 100.000
plus accrued and unpaid interest on such Debentures to the
Redemption Date or Special Redemption Date, as the case may be.
"Special Redemption Price" means (1) if the Special Redemption Date
is before March 8, 2010, the greater of (a) 100% of the principal amount of the
Debentures being redeemed and (b) as determined by a Quotation Agent, the sum of
the present values of scheduled payments of principal and interest from the
Special Redemption Date to March 8, 2010 (the "Remaining Life") discounted to
the Special Redemption Date on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Treasury Rate plus 0.45%, plus, in
the case of either (a) or (b), accrued and unpaid interest on such Debentures to
the next Redemption Date and (2) if the Special Redemption Date is on or after
March 8, 2010, the Redemption Price for such Special Redemption Date.
"Comparable Treasury Issue" means with respect to any Special
Redemption Date the United States Treasury security selected by the Quotation
Agent as having a maturity comparable to the Remaining Life that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the Remaining Life. If no United States Treasury security has a
maturity which is within a period from three months before to three months after
March 8, 2010, the two most closely corresponding United States Treasury
securities shall be used as the Comparable Treasury Issue, and the Treasury Rate
shall be interpolated or extrapolated on a straight-line basis, rounding to the
nearest month using such securities.
"Comparable Treasury Price" means (a) the average of five Reference
Treasury Dealer Quotations for such Special Redemption Date, after excluding the
highest and lowest such Reference Treasury Dealer Quotations, or (b) if the
Quotation Agent obtains fewer than five such Reference Treasury Dealer
Quotations, the average of all such Quotations.
"Primary Treasury Dealer" shall mean a primary United States
Government securities dealer in New York City.
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"Quotation Agent" means Salomon Smith Barney, Inc. and its
successors; provided, however, that if the foregoing shall cease to be a primary
United States Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Debenture Issuer shall substitute therefor another Primary
Treasury Dealer.
"Redemption Date" shall mean the date fixed for the redemption of
Capital Securities, which shall be any March 8 or September 8 commencing on
March 8, 2010.
"Reference Treasury Dealer" means (i) the Quotation Agent and (ii)
any other Primary Treasury Dealer selected by the Debenture Trustee after
consultation with the Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Quotation Agent, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted in
writing to the Debenture Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such Redemption Date.
"Treasury Rate" means (i) the yield, under the heading which
represents the average for the week immediately prior to the date of
calculation, appearing in the most recently published statistical release
designated H.15 (519) or any successor publication which is published weekly by
the Federal Reserve and which establishes yields on actively traded United
States Treasury securities adjusted to constant maturity under the caption
"Treasury Constant Maturities", for the maturity corresponding to the Remaining
Life (if no maturity is within three months before or after the Remaining Life,
yields for the two published maturities most closely corresponding to the
Remaining Life shall be determined and the Treasury Rate shall be interpolated
or extrapolated from such yields on a straight-line basis, rounding to the
nearest month) or (ii) if such release (or any successor release) is not
published during the week preceding the calculation date or does not contain
such yields, the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, calculated using a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such Special Redemption Date. The
Treasury Rate shall be calculated on the third Business Day preceding the
Special Redemption Date.
(b) Upon the repayment in full at maturity or redemption in whole
or in part of the Debenture (other than following the distribution of the
Debenture to the Holders of the Securities), the proceeds from such repayment or
payment shall concurrently be applied to redeem Pro Rata at the applicable
Redemption Price, Securities having an aggregate liquidation amount equal to the
aggregate principal amount of the Debenture so repaid or redeemed; PROVIDED,
HOWEVER, that holders of such Securities shall be given not less than 30 nor
more than 60 days' notice of such redemption (other than at the scheduled
maturity of the Debenture).
(c) If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Capital Securities will be redeemed Pro
Rata and the Capital Securities to be redeemed will be as described in Section
4(e)(ii) below.
(d) The Trust may not redeem fewer than all the outstanding
Capital Securities unless all accrued and unpaid Distributions have been paid on
all Capital Securities for all semi-annual Distribution periods terminating on
or before the date of redemption.
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(e) Redemption or Distribution Procedures.
(i) Notice of any redemption of, or notice of distribution of
the Debentures in exchange for, the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder of Securities
to be redeemed or exchanged not fewer than 30 nor more than 60 days before
the date fixed for redemption or exchange thereof which, in the case of a
redemption, will be the date fixed for redemption of the Debentures. For
purposes of the calculation of the date of redemption or exchange and the
dates on which notices are given pursuant to this Section 4(e)(i), a
Redemption/Distribution Notice shall be deemed to be given on the day such
notice is first mailed by first-class mail, postage prepaid, to Holders of
such Securities. Each Redemption/Distribution Notice shall be addressed to
the Holders of such Securities at the address of each such Holder
appearing on the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing thereof with respect to
any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding
Securities are to be redeemed, the Securities to be redeemed shall be
redeemed Pro Rata from each Holder of Capital Securities.
(iii) If the Securities are to be redeemed and the Trust gives
a Redemption/Distribution Notice, which notice may only be issued if the
Debentures are redeemed as set out in this Section 4 (which notice will be
irrevocable), then, provided that the Institutional Trustee has a
sufficient amount of cash in connection with the related redemption or
maturity of the Debentures, the Institutional Trustee will pay the
relevant Redemption Price to the Holders of such Securities by check
mailed to the address of each such Holder appearing on the books and
records of the Trust on the redemption date. If a Redemption/Distribution
Notice shall have been given and funds deposited as required then
immediately prior to the close of business on the date of such deposit
Distributions will cease to accrue on the Securities so called for
redemption and all rights of Holders of such Securities so called for
redemption will cease, except the right of the Holders of such Securities
to receive the applicable Redemption Price specified in Section 4(a), but
without interest on such Redemption Price. If any date fixed for
redemption of Securities is not a Business Day, then payment of any such
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 effect as if made on
such date fixed for redemption. If payment of the Redemption Price in
respect of any Securities is improperly withheld or refused and not paid
either by the Trust or by the Debenture Issuer as guarantor pursuant to
the Guarantee, Distributions on such Securities will continue to accrue at
the then applicable rate from the original redemption date to the actual
date of payment, in which case the actual payment date will be considered
the date fixed for redemption for purposes of calculating the Redemption
Price. In the event of any redemption of the Capital Securities issued by
the Trust in part, the Trust shall not be required to (i) issue, register
the transfer of or exchange any Security during a period beginning at the
opening of business 15 days before any selection for redemption of the
Capital Securities and ending at the close of business on the earliest
date on which the relevant notice of redemption is deemed to have been
given to all Holders of the Capital Securities to be so redeemed or (ii)
register the transfer of or
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exchange any Capital Securities so selected for redemption, in whole or in
part, except for the unredeemed portion of any Capital Securities being
redeemed in part.
(iv) Redemption/Distribution Notices shall be sent by the
Administrators on behalf of the Trust (A) in respect of the Capital
Securities, to the Holders thereof, and (B) in respect of the Common
Securities, to the Holder thereof.
(v) Subject to the foregoing and applicable law (including,
without limitation, United States federal securities laws), and provided
that the acquiror is not the Holder of the Common Securities or the
obligor under the Indenture, the Sponsor or any of its subsidiaries may at
any time and from time to time purchase outstanding Capital Securities by
tender, in the open market or by private agreement.
5. VOTING RIGHTS - CAPITAL SECURITIES. (a) Except as provided under
Sections 5(b) and 7 and as otherwise required by law and the Declaration, the
Holders of the Capital Securities will have no voting rights. The Administrators
are required to call a meeting of the Holders of the Capital Securities if
directed to do so by Holders of at least 10% in liquidation amount of the
Capital Securities.
(b) Subject to the requirements of obtaining a tax opinion by the
Institutional Trustee in certain circumstances set forth in the last sentence of
this paragraph, the Holders of a Majority in liquidation amount of the Capital
Securities, voting separately as a class, have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon the
Institutional Trustee under the Declaration, including the right to direct the
Institutional Trustee, as holder of the Debentures, to (i) exercise the remedies
available under the Indenture as the holder of the Debentures, (ii) waive any
past default that is waivable under the Indenture, or (iii) exercise any right
to rescind or annul a declaration that the principal of all the Debentures shall
be due and payable or (iv) consent on behalf of all the Holders of the Capital
Securities to any amendment, modification or termination of the Indenture or the
Debentures where such consent shall be required; PROVIDED, HOWEVER, that, where
a consent or action under the Indenture would require the consent or act of the
holders of greater than a simple majority in principal amount of Debentures (a
"Super Majority") affected thereby, the Institutional Trustee may only give such
consent or take such action at the written direction of the Holders of at least
the proportion in liquidation amount of the Capital Securities outstanding which
the relevant Super Majority represents of the aggregate principal amount of the
Debentures outstanding. If the Institutional Trustee fails to enforce its rights
under the Debentures after the Holders of a Majority in liquidation amount of
such Capital Securities have so directed the Institutional Trustee, to the
fullest extent permitted by law, a Holder of the Capital Securities may
institute a legal proceeding directly against the Debenture Issuer to enforce
the Institutional Trustee's rights under the Debentures without first
instituting any legal proceeding against the Institutional 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
Debenture Issuer to pay interest or principal on the Debentures on the date the
interest or principal is payable (or in the case of redemption, the redemption
date), then a Holder of record of the Capital Securities may directly institute
a proceeding for enforcement of payment, on or after the respective due dates
specified in the Debentures, to such Holder directly of the principal of or
interest on the Debentures having an aggregate principal amount equal to the
aggregate liquidation amount of the Capital Securities of such Holder. The
Institutional Trustee shall notify all Holders of the Capital Securities of any
default actually known to the Institutional Trustee with respect to the
Debentures unless (x) such default has been cured prior to the giving of such
notice or (y) the Institutional Trustee determines in good faith that the
withholding of such notice is in the interest
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of the Holders of such Capital Securities, except where the default relates to
the payment of principal of or interest on any of the Debentures. Such notice
shall state that such Indenture Event of Default also constitutes an Event of
Default hereunder. Except with respect to directing the time, method and place
of conducting a proceeding for a remedy, the Institutional Trustee shall not
take any of the actions described in clauses (i), (ii) or (iii) above unless the
Institutional Trustee has obtained an opinion of tax counsel to the effect that,
as a result of such action, the Trust will not be classified as other than a
grantor trust for United States federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder
of the Debentures is required under the Indenture with respect to any amendment,
modification or termination of the Indenture, the Institutional Trustee shall
request the direction of the Holders of the Securities with respect to such
amendment, modification or termination and shall vote with respect to such
amendment, modification or termination as directed by a Majority in liquidation
amount of the Securities voting together as a single class; PROVIDED, HOWEVER,
that where a consent under the Indenture would require the consent of a Super
Majority, the Institutional Trustee may only give such consent at the direction
of the Holders of at least the proportion in liquidation amount of such Trust
Securities outstanding which the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding. The Institutional
Trustee shall not take any such action in accordance with the directions of the
Holders of the Securities unless the Institutional Trustee has obtained an
opinion of tax counsel to the effect that, as a result of such action, the Trust
will not be classified as other than a grantor trust for United States federal
income tax purposes.
A waiver of an Indenture Event of Default will constitute a waiver
of the corresponding Event of Default hereunder. Any required approval or
direction of Holders of the Capital Securities may be given at a separate
meeting of Holders of the Capital Securities convened for such purpose, at a
meeting of all of the Holders of the Securities in the Trust or pursuant to
written consent. The Institutional Trustee will cause a notice of any meeting at
which Holders of the Capital Securities are entitled to vote, or of any matter
upon which action by written consent of such Holders is to be taken, to be
mailed to each Holder of record of the Capital Securities. Each such notice will
include a statement setting forth the following information (i) the date of such
meeting or the date by which such action is to be taken, (ii) a description of
any resolution proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents. No vote or consent
of the Holders of the Capital Securities will be required for the Trust to
redeem and cancel Capital Securities or to distribute the Debentures in
accordance with the Declaration and the terms of the Securities.
Notwithstanding that Holders of the Capital Securities are entitled
to vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned by the Sponsor or any Affiliate of the Sponsor
shall not entitle the Holder thereof to vote or consent and shall, for purposes
of such vote or consent, be treated as if such Capital Securities were not
outstanding.
In no event will Holders of the Capital Securities have the right to
vote to appoint, remove or replace the Administrators, which voting rights are
vested exclusively in the Sponsor as the Holder of all of the Common Securities
of the Trust. Under certain circumstances as more fully described in the
Declaration, Holders of Capital Securities have the right to vote to appoint,
remove or replace the Institutional Trustee and the Delaware Trustee.
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6. VOTING RIGHTS - COMMON SECURITIES. (a) Except as provided under
Sections 6(b), 6(c) and 7 and as otherwise required by law and the Declaration,
the Common Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in
accordance with Article V of the Declaration, to vote to appoint, remove or
replace any Administrators.
(c) Subject to Section 6.7 of the Declaration and only after each
Event of Default (if any) with respect to the Capital Securities has been cured,
waived or otherwise eliminated and subject to the requirements of the second to
last sentence of this paragraph, the Holders of a Majority in liquidation amount
of the Common Securities, voting separately as a class, may direct the time,
method, and place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon the
Institutional Trustee under the Declaration, including (i) directing the time,
method, place of conducting any proceeding for any remedy available to the
Debenture Trustee, or exercising any trust or power conferred on the Debenture
Trustee with respect to the Debentures, (ii) waive any past default and its
consequences that is waivable under the Indenture, or (iii) exercise any right
to rescind or annul a declaration that the principal of all the Debentures shall
be due and payable, PROVIDED, HOWEVER, that, where a consent or action under the
Indenture would require a Super Majority, the Institutional Trustee may only
give such consent or take such action at the written direction of the Holders of
at least the proportion in liquidation amount of the Common Securities which the
relevant Super Majority represents of the aggregate principal amount of the
Debentures outstanding. Notwithstanding this Section 6(c), the Institutional
Trustee shall not revoke any action previously authorized or approved by a vote
or consent of the Holders of the Capital Securities. Other than with respect to
directing the time, method and place of conducting any proceeding for any remedy
available to the Institutional Trustee or the Debenture Trustee as set forth
above, the Institutional Trustee shall not take any action described in (i),
(ii) or (iii) above, unless the Institutional Trustee has obtained an opinion of
tax counsel to the effect that for the purposes of United States federal income
tax the Trust will not be classified as other than a grantor trust on account of
such action. If the Institutional Trustee fails to enforce its rights under the
Declaration to the fullest extent permitted by law, any Holder of the Common
Securities may institute a legal proceeding directly against any Person to
enforce the Institutional Trustee's rights under the Declaration, without first
instituting a legal proceeding against the Institutional Trustee or any other
Person.
Any approval or direction of Holders of the Common Securities may be
given at a separate meeting of Holders of the Common Securities convened for
such purpose, at a meeting of all of the Holders of the Securities in the Trust
or pursuant to written consent. The Administrators will cause a notice of any
meeting at which Holders of the Common Securities are entitled to vote, or of
any matter upon which action by written consent of such Holders is to be taken,
to be mailed to each Holder of the Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
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7. AMENDMENTS TO DECLARATION AND INDENTURE. (a) In addition to any
requirements under Section 11.1 of the Declaration, if any proposed amendment to
the Declaration provides for, or the Trustees otherwise propose to effect, (i)
any action that would adversely affect the powers, preferences or special rights
of the Securities, whether by way of amendment to the Declaration or otherwise,
or (ii) the Liquidation of the Trust, other than as described in Section 7.1 of
the Declaration, then the Holders of outstanding Securities, voting together as
a single 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 Securities, affected
thereby; PROVIDED, HOWEVER, if any amendment or proposal referred to in clause
(i) above would adversely affect only the Capital Securities or only the Common
Securities, then only the affected 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 a Majority in liquidation amount of such class of
Securities.
(b) In the event the consent of the Institutional Trustee as the
holder of the Debentures is required under the Indenture with respect to any
amendment, modification or termination of the Indenture or the Debentures, the
Institutional Trustee shall request the written direction of the Holders of the
Securities with respect to such amendment, modification or termination and shall
vote with respect to such amendment, modification, or termination as directed by
a Majority in liquidation amount of the Securities voting together as a single
class; PROVIDED, HOWEVER, that where a consent under the Indenture would require
a Super Majority, the Institutional Trustee may only give such consent at the
direction of the Holders of at least the proportion in liquidation amount of the
Securities which the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding.
(c) Notwithstanding the foregoing, no amendment or modification
may be made to a Declaration if such amendment or modification would (i) cause
the Trust to be classified for purposes of United States federal income taxation
as other than a grantor trust, (ii) reduce or otherwise adversely affect the
powers of the Institutional Trustee or (iii) cause the Trust to be deemed an
"investment company" which is required to be registered under the Investment
Company Act.
(d) Notwithstanding any provision of the Declaration, the right of
any Holder of the Capital Securities to receive payment of distributions and
other payments upon redemption or otherwise, on or after their respective due
dates, or to institute a suit for the enforcement of any such payment on or
after such respective dates, shall not be impaired or affected without the
consent of such Holder. For the protection and enforcement of the foregoing
provision, each and every Holder of the Capital Securities shall be entitled to
such relief as can be given either at law or equity.
8. PRO RATA. A reference in these terms of the Securities to any
payment, distribution or treatment as being "Pro Rata" shall mean pro rata to
each Holder of the Securities according to the aggregate liquidation amount of
the Securities held by the relevant Holder in relation to the aggregate
liquidation amount of all Securities outstanding unless, in relation to a
payment, an Event of Default has occurred and is continuing, in which case any
funds available to make such payment shall be paid first to each Holder of the
Capital Securities Pro Rata according to the aggregate liquidation amount of the
Capital Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Capital Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Capital Securities, to
each Holder of the Common Securities Pro Rata according to the aggregate
liquidation amount of the Common Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Common Securities outstanding.
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9. RANKING. The Capital Securities rank pari passu with and payment
thereon shall be made Pro Rata with the Common Securities except that, where an
Event of Default has occurred and is continuing, the rights of Holders of the
Common Securities to receive payment of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights of the
Holders of the Capital Securities with the result that no payment of any
Distribution on, or Redemption Price of, any Common Security, and no other
payment on account of redemption, liquidation or other acquisition of Common
Securities, shall be made unless payment in full in cash of all accumulated and
unpaid Distributions on all outstanding Capital 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
Capital Securities then called for redemption, shall have been made or provided
for, and all funds immediately available to the Institutional Trustee shall
first be applied to the payment in full in cash of all Distributions on, or the
Redemption Price of, the Capital Securities then due and payable.
10. ACCEPTANCE OF GUARANTEE AND INDENTURE. Each Holder of the
Capital Securities and the Common Securities, by the acceptance of such
Securities, agrees to the provisions of the Guarantee, including the
subordination provisions therein and to the provisions of the Indenture.
11. NO PREEMPTIVE RIGHTS. The Holders of the Securities shall have
no preemptive or similar rights to subscribe for any additional securities.
12. MISCELLANEOUS. These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Guarantee, and the
Indenture to a Holder without charge on written request to the Sponsor at its
principal place of business.
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EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF
THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE
TRANSFER SUCH SECURITY ONLY (A) TO THE DEBENTURE ISSUER OR THE TRUST, (B)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (C) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT
IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF AN
"ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE DEBENTURE
ISSUER'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSES (C) OR (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN
ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY OF WHICH MAY BE OBTAINED FROM
THE DEBENTURE ISSUER OR THE TRUST. THE HOLDER OF THIS SECURITY AGREES THAT IT
WILL COMPLY WITH THE FOREGOING RESTRICTIONS.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATE AND OTHER INFORMATION MAY BE
REQUIRED BY THE DECLARATION TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS.
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Certificate Number Number of Capital Securities
CUSIP NO ___________
Certificate Evidencing Capital Securities
of
Guaranty (TX) Capital Trust I
Fixed Rate Capital Pass-through Securities(R)(TRUPS(R))
(liquidation amount $1,000 per Capital Security)
Guaranty (TX) Capital Trust I, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of securities of the Trust
representing undivided beneficial interests in the assets of the Trust,
designated the Fixed Rate Capital Trust Pass-through Securities(R) (liquidation
amount $1,000 per Capital Security) (the "Capital Securities"). Subject to the
Declaration (as defined below), the Capital Securities are transferable on the
books and records of the Trust, in person or by a duly authorized attorney, upon
surrender of this Certificate duly endorsed and in proper form for transfer. The
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Capital Securities represented hereby are issued pursuant to,
and shall in all respects be subject to, the provisions of the Amended and
Restated Declaration of Trust of the Trust dated as of March 23, 2000, among
[__________] and [__________], as Administrators, The Bank of New York
(Delaware), as Delaware Trustee, The Bank of New York, as Institutional Trustee,
Guaranty Bancshares, Inc., as Sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Trust, including the
designation of the terms of the Capital Securities as set forth in Annex I to
the Declaration, as the same may be amended from time to time (the
"Declaration"). Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits of
the Guarantee to the extent provided therein. The Sponsor will provide a copy of
the Declaration, the Guarantee, and the Indenture to the Holder without charge
upon written request to the Trust at its principal place of business.
Upon receipt of this Security, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance of this Security, the Holder agrees to treat, for
United States federal income tax purposes, the Debentures as indebtedness and
the Capital Securities as evidence of beneficial ownership in the Debentures.
This Capital Security is governed by, and construed in accordance
with, the laws of the State of Delaware, without regard to principles of
conflict of laws. IN WITNESS WHEREOF, the Trust has duly executed this
certificate.
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GUARANTY (TX) CAPITAL TRUST I
By:________________________________
Name:
Title: Administrator
Dated: ___________________________
CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
THE BANK OF NEW YORK, as the
Institutional Trustee
By:
Authorized Officer
Dated: ___________________________
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be payable at an
annual rate of 107/8% (the "Coupon Rate") of the stated liquidation amount of
$1,000 per Capital Security, such rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Except as set forth below in
respect of an Extension Period, Distributions in arrears for more than a
semi-annual period will bear interest thereon compounded semi-annual at the
Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes cash distributions, any such compounded
interest and any Additional Interest payable on the Debentures unless otherwise
stated. A Distribution is payable only to the extent that payments are made in
respect of the Debentures held by the Institutional Trustee and to the extent
the Institutional Trustee has funds available therefor. The amount of
Distributions payable for any period will be computed for any full semi-annual
Distribution period on the basis of a 360-day year of twelve 30-day months.
Except as otherwise described below, Distributions on the Capital
Securities will be cumulative, will accrue from the date of original issuance
and will be payable semi-annually in arrears on March 8 and September 8 of each
year, commencing on September 8, 2000. The Debenture Issuer has the right under
the Indenture to defer payments of interest on the Debentures by extending the
interest payment period for up to 10 consecutive semi-annual periods (each, an
"Extension Period") at any time and from time to time on the Debentures, subject
to the conditions described below, although such interest would continue to
accrue on the Debentures, and Interest will accrue on such Deferred Interest, at
an annual rate equal to 10 7/8%, compounded semi-annually to the extent
permitted by law during any Extension Period. No
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Extension Period may end on a date other than a Distribution Payment Date. At
the end of any such Extension Period the Debenture Issuer shall pay all Deferred
Interest then accrued and unpaid on the Debentures; PROVIDED however, that no
Extension Period may extend beyond the Maturity Date. Prior to the termination
of any Extension Period, the Debenture Issuer may further extend such period,
provided that such period together with all such previous and further
consecutive extensions thereof shall not exceed 10 consecutive semi-annual
periods, or extend beyond the Maturity Date. Upon the termination of any
Extension Period and upon the payment of all Deferred Interest, the Debenture
Issuer may commence a new Extension Period, subject to the foregoing
requirements. No interest or Deferred Interest shall be due and payable during
an Extension Period, except at the end thereof, but each installment of interest
that would otherwise have been due and payable during such Extension Period
shall bear Deferred Interest. If Distributions are deferred, the Distributions
due shall be paid on the date that the related Extension Period terminates, or,
if such date is not a Distribution Payment Date, on the immediately following
Distribution Payment Date, to Holders of the Securities as they appear on the
books and records of the Trust on the record date immediately preceding such
date. Distributions on the Securities must be paid on the dates payable (after
giving effect to any Extension Period) to the extent that the Trust has funds
available for the payment of such distributions in the Property Account of the
Trust. The Trust's funds available for Distribution to the Holders of the
Securities will be limited to payments received from the Debenture Issuer. The
payment of Distributions out of moneys held by the Trust is guaranteed by the
Guarantor pursuant to the Guarantee.
The Capital Securities shall be redeemable as provided in the
Declaration.
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ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Capital Security Certificate to:
__________________________
__________________________
__________________________
(Insert assignee's social security or tax identification number)
__________________________
__________________________
__________________________
(Insert address and zip code of assignee), and irrevocably appoints as agent to
transfer this Capital Security Certificate on the books of the Trust. The agent
may substitute another to act for him or her.
Date:_______________________________
Signature:__________________________
(Sign exactly as your name appears on the other side of this
Capital Security Certificate)
Signature Guarantee:(1)__________________________
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION.
THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED.
___________________
1 Signature must be guaranteed by an "eligible guarantor institution" that is a
bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Security registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Security
registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
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Certificate Number Number of Common Securities 217
Certificate Evidencing Common Securities
of
Guaranty (TX) Capital Trust I
Guaranty (TX) Capital Trust I, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
[__________] (the "Holder") is the registered owner of common securities of the
Trust representing undivided beneficial interests in the assets of the Trust
(the "Common Securities"). The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities represented
hereby are issued pursuant to, and shall in all respects be subject to, the
provisions of the Amended and Restated Declaration of Trust of the Trust dated
as of March 23, 2000, among [__________] and [__________], as Administrators,
The Bank of New York (Delaware), as Delaware Trustee, The Bank of New York, as
Institutional Trustee, Guaranty Bancshares, Inc. as Sponsor and the holders from
time to time of undivided beneficial interest in the assets of the Trust
including the designation of the terms of the Common Securities as set forth in
Annex I to the Declaration, as the same may be amended from time to time (the
"Declaration"). Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits of
the Guarantee to the extent provided therein. The Sponsor will provide a copy of
the Declaration, the Guarantee and the Indenture to the Holder without charge
upon written request to the Sponsor at its principal place of business.
As set forth in the Declaration, where an Event of Default has
occurred and continuing, the rights of Holders of Common securities to payment
in respect of Distributions and payments upon Liquidation, redemption or
otherwise are subordinated to the rights of payment of Holders of the Capital
Securities.
Upon receipt of this Certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance of this Certificate, the Holder agrees to treat, for
United States federal income tax purposes, the Debentures as indebtedness and
the Common Securities as evidence of undivided beneficial ownership in the
Debentures.
This Common Security is governed by, and construed in accordance
with, the laws of the State of Delaware, without regard to principles of
conflict of laws.
IN WITNESS WHEREOF, the Trust has executed this certificate this
23rd day of March, 2000.
GUARANTY (TX) CAPITAL TRUST I
By:______________________________
Name:
Title: Administrator
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[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be identical in
amount to the Distributions payable on each Capital Security, which is at an
annual rate of 107/8% (the "Coupon Rate") of the stated liquidation amount of
$1,000 per Capital Security, such rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Except as set forth below in
respect of an Extension Period, Distributions in arrears for more than one
period will bear interest thereon compounded at the Coupon Rate (to the extent
permitted by applicable law). The term "Distributions" as used herein includes
cash distributions, any such compounded distribution and any Additional Interest
payable on the Debentures unless otherwise stated. A Distribution is payable
only to the extent that payments are made in respect of the Debentures held by
the Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. The amount of Distributions payable for any period will be
computed for any full semi-annual Distribution period on 360-day year of twelve
30-day months.
Except as otherwise described below, Distributions on the Common
Securities will be cumulative, will accrue from the date of original issuance
and will be payable semi-annually in arrears on March 8 and September 8 of each
year, commencing on September 8, 2000. The Debenture Issuer has the right under
the Indenture to defer payments of interest on the Debentures by extending the
interest payment period for up to 10 consecutive semi-annual periods (each, an
"Extension Period") at any time and from time to time on the Debentures, subject
to the conditions described below, during which Extension Period no interest
shall be due and payable. No Extension Period may end on a date other than a
Distribution Payment Date. During an Extension Period, interest would continue
to accrue on the Debentures, and interest on such accrued interest (such accrued
interest and interest theron referred to herein as "Deferred Interest") will
accrue at an annual rate equal to 107/8%, compounded semi-annually from the date
such Deferred Interest would have been payable were it not for the Extension
Period to the extent permitted by law during any Extension Period. At the end of
any such Extension Period the Debenture Issuer shall pay all Deferred Interest
then accrued and unpaid on the Debentures; PROVIDED, HOWEVER, that no Extension
Period may extend beyond the Maturity Date. Prior to the termination of any
Extension Period, the Debenture Issuer may further extend such period, provided
that such period together with all such previous and further consecutive
extensions thereof shall not exceed 10 consecutive semi-annual periods, or
extend beyond the Maturity Date. Upon the termination of any Extension Period
and upon the payment of all Deferred Interest, the Debenture Issuer may commence
a new Extension Period, subject to the foregoing requirements. No interest or
Deferred Interest shall be due and payable during an Extension Period, except at
the end thereof, but each installment of interest that would otherwise have been
due and payable during such Extension Period shall bear Deferred Interest. If
Distributions are deferred, the Distributions due shall be paid on the date that
the related Extension Period terminates, or, if such date is not a Distribution
Payment Date, on the immediately following Distribution Payment Date, to Holders
of the Securities as they appear on the books and records of the Trust on the
record date immediately preceding such date. Distributions on the Securities
must be paid on the dates payable (after giving effect to any Extension Period)
to the extent that the Trust has funds available for the payment of such
distributions in the Property Account of the Trust. The Trust's funds available
for Distribution to the Holders of the Securities will be limited to payments
received from the Debenture Issuer. The payment of Distributions out of moneys
held by the Trust is guaranteed by the Guarantor pursuant to the Guarantee.
The Common Securities shall be redeemable as provided in the
Declaration.
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ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Common Security Certificate to:
_______________________________
_______________________________
_______________________________
(Insert assignee's social security or tax identification number)
_______________________________
_______________________________
_______________________________
(Insert address and zip code of assignee), and irrevocably appoints
as agent to transfer this Common Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date:___________________________
Signature:_______________________
(Sign exactly as your name appears on the other side of this
Common Security Certificate)
Signature Guarantee:(2):________________________________
__________________________
2 Signature must be guaranteed by an "eligible guarantor institution" that is a
bank, stockbroker, savings and loan association or credit union, meeting the
requirements of the Security registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Security
registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
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EXHIBIT B
FORM OF TRANSFEREE CERTIFICATE
TO BE EXECUTED BY TRANSFEREES OTHER THAN QIBS
----------, [ ]
[Sponsor].
[Trust]
[Address]
Re: Purchase of $1,000 stated liquidation amount of Fixed Rate Capital Trust
Pass-through Securities(R)(TruPS)(R)(the "Capital Securities")
OF GUARANTY (TX) CAPITAL TRUST I
Ladies and Gentlemen:
In connection with our purchase of the Capital Securities we confirm
that:
1. We understand that the Fixed Rate Capital Trust Pass-through
SecuritiesSM (the "Capital Securities") (including the guarantee (the
"Guarantee") of [__________] ("[___________]") executed in connection therewith)
and the Fixed Rate Junior Subordinated Deferrable Interest Debentures due 2030
(the "Subordinated Debt Securities") of [________] (the "Company") (the Capital
Securities, the Guarantee and the Subordinated Debt Securities together being
referred to herein as "Offered Securities"), have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and may not be
offered or sold except as permitted in the following sentence. We agree on our
own behalf and on behalf of any investor account for which we are purchasing the
Offered Securities that, if, we decide to offer, sell or otherwise transfer any
such Offered Securities, such offer, sale or transfer will be made only (a) to
[_________] or [________], (b) pursuant to Rule 144A under the Securities Act,
to a person we reasonably believe is a qualified institutional buyer under Rule
144A (a "QIB") that purchases for its own account or for the account of a QIB
and to whom notice is given that the transfer is being made in reliance on Rule
144A, (c) to an "accredited investor" with the meaning of subparagraph (a) (1),
(2), (3) or (7) of Rule 501 under the Securities Act that is acquiring Offered
Securities for its own account or for the account of such an accredited investor
for investment purposes and not with a view to, or for offer or sale in
connection with, any distribution thereof in violation of the Securities Act, or
(d) pursuant to another available exemption from the registration requirements
of the Securities Act, subject in each of the foregoing cases to any
requirements of law that the disposition of our property or compliance with any
applicable state securities laws. The foregoing restrictions on resale will not
apply subsequent to the Resale Restriction Termination Date. If any resale or
other transfer of the Offered Securities is proposed to be made pursuant to
clause (c) or (d) above the transferor shall deliver a letter from the
transferee substantially in the form of this letter to [________________] as
Transfer Agent, which shall provide as applicable, among other things, that the
transferee is an "accredited investor" within the meaning of subparagraph (a)
(1), (2), (3) or (7) of Rule 501 under the Securities Act that is acquiring such
Securities for investment purposes and not for distribution in violation of the
Securities Act. We acknowledge on our behalf and on behalf of any investor
account for which we are purchasing Securities that the [______] and
[__________] reserve the right prior to any offer,
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sale or other transfer pursuant to clauses (d) or (e) to require the delivery of
any opinion of counsel, certifications and/or other information satisfactory to
the Trust and the Company. We understand that the certificates for any Offered
Security that we receive will bear a legend substantially to the effect of the
foregoing.
2. We are an "accredited investor" with the meaning of subparagraph
(a) (1), (2), (3) or (7) of Rule 501 under the Securities Act purchasing for our
own account or for the account of such an "accredited investor," and we are
acquiring the Offered Securities for the investment purposes and not with view
to, or for offer or sale in connection with, any distribution in violation of
the Securities Act and we have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of our
investment in the Offered Securities, and we and any account for which we are
acting are each able to bear the economic risks of our or its investment.
3. We are acquiring the Offered Securities purchased by us for our
own account (or for one or more accounts as to each of which we exercise sole
investment discretion and have authority to make, and do make, the statements
contained in this letter) and not with a view to any distribution of the Offered
Securities, subject, nevertheless, to the understanding that the disposition of
our property will at all times be and remain within our control.
4. In the event that we purchase any Capital Securities or any
Subordinated Debt Securities, we will acquire such Capital Securities having an
aggregate stated liquidation amount of not less than $1,000 or such Subordinated
Debt Securities having an aggregate principal amount not less than $1,000, for
our own account and for each separate account for which we are acting.
5. We acknowledge that we either (A) are not a fiduciary of a
pension, profit-sharing or other employee benefit plan subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") (a "Plan"), or an
entity whose assets include "plan assets" by reason of any Plan's investment in
the entity and are not purchasing the Offered Securities on behalf of or with
"plan assets" by reason of any Plan's investment in the entity and is not
purchasing the Offered Securities on behalf of or with "plan assets" of any Plan
or (B) are eligible for the exemptive relief available under one ore more of the
following prohibited transaction class exemptions ("PTCEs") issued by the U.S.
Department of Labor: PTCE 96-23, 95-60, 91-38, 90-1 or 84-14.
6. We acknowledge that [_________] and [_______] and others will
rely upon the truth and accuracy of the foregoing acknowledges, representations,
warranties and agreements and agree that if any of the acknowledgments,
representations, warranties and agreements deemed to have been made by our
purchase of the Offered Securities are no longer accurate, we shall promptly
notify the Initial Purchasers. If we are acquiring any Offered Securities as a
fiduciary or agent for one or more investor accounts, we represent that we have
sole discretion with respect to each such investor account and that we have full
power to make the foregoing acknowledgments, representations and agreement on
behalf of each such investor account.
Very truly yours,
____________________________________
(Name of Purchaser)
By:__________________________________
Date:________________________________
93
<PAGE>
Upon transfer of the Offered Securities would be registered in the
name of the new beneficial owner as follows.
Name:______________________________
Address:____________________________
94
<PAGE>
Taxpayer ID Number:
EXHIBIT C
FORM OF TRANSFEREE CERTIFICATE
TO BE EXECUTED FOR QIBs
__________, [ ]
[Sponsor]
[Trust]
[Address]
Re: Purchase of $1,000 stated liquidation amount of Fixed Rate Capital Trust
PASS-THROUGH SECURITIES(R)(TRUPS)(R)(THE "CAPITAL SECURITIES") OF [TRUST]
Reference is hereby made to the Amended and Restated Declaration
dated as of March 23, 2000 (the "Declaration") among [____________] and
[__________], as Administrators, The Bank of New York (Delaware), as Delaware
Trustee, The Bank of New York, as Institutional Trustee, [___________], as
Sponsor, and the holders from time to time of undivided beneficial interest in
the assets of [Trust]. Capitalized terms used but not defined herein shall have
the meanings given them in the Declaration.
This letter relates to $[_______________] aggregate liquidation
amount of Capital Securities which are held in the name of [name of transferor]
(the "Transferor").
In connection with such request, and in respect to such Capital
Securities, the transferor does hereby certify that such Capital Securities are
being transferred in accordance with (i) the transfer restrictions set forth in
the Capital Securities and (ii) Rule 144A under the United States Securities Act
of 1933, as amended ("Rule 144A"), to a transferee that the Transferor
reasonably believes is purchasing the Capital Securities for its own account or
an account with respect to which the transferee exercises sole investment
discretion and the transferee and any such account is a "qualified institutional
buyer" within the meaning of Rule 144A, in a transaction meeting the
requirements of Rule 144A and in accordance with applicable securities laws of
any state of the United States or any other jurisdiction.
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
_______________________________________
(Name of Transferor)
By:_____________________________________
Name:________________________________
Title:_______________________________
Date:___________________________________
95
<PAGE>
EXHIBIT D
SPECIMEN OF INITIAL DEBENTURE
EXHIBIT E
PLACEMENT AGREEMENT
96
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME FILED AS
PART OF THE QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 12,468
<INT-BEARING-DEPOSITS> 80
<FED-FUNDS-SOLD> 9,155
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 81,292
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 259,108
<ALLOWANCE> 2,549
<TOTAL-ASSETS> 358,411
<DEPOSITS> 338,765
<SHORT-TERM> 5,000
<LIABILITIES-OTHER> 2,292
<LONG-TERM> 10,627
0
0
<COMMON> 3,250
<OTHER-SE> 25,477
<TOTAL-LIABILITIES-AND-EQUITY> 385,411
<INTEREST-LOAN> 5,317
<INTEREST-INVEST> 1,314
<INTEREST-OTHER> 44
<INTEREST-TOTAL> 6,675
<INTEREST-DEPOSIT> 3,434
<INTEREST-EXPENSE> 3,573
<INTEREST-INCOME-NET> 3,102
<LOAN-LOSSES> 130
<SECURITIES-GAINS> (34)
<EXPENSE-OTHER> 3,119
<INCOME-PRETAX> 730
<INCOME-PRE-EXTRAORDINARY> 545
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 545
<EPS-BASIC> 0.17
<EPS-DILUTED> 0.17
<YIELD-ACTUAL> 3.67
<LOANS-NON> 1,185
<LOANS-PAST> 632
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,491
<CHARGE-OFFS> 128
<RECOVERIES> 56
<ALLOWANCE-CLOSE> 2,549
<ALLOWANCE-DOMESTIC> 2,549
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 565
</TABLE>
