AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 14, 1998
REGISTRATION NO. 333-49383-01
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT No. 1
TO THE
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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<TABLE>
<S> <C>
MAINSTREET BANKGROUP INCORPORATED MAINSTREET CAPITAL TRUST I
(Exact name of Registrant as specified in its charter) (Exact name of Registrant as specified in its charter)
</TABLE>
VIRGINIA DELAWARE
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
--------- ---------
6712 6712
(Primary Standard Industrial (Primary Standard Industrial
Classification Code Number) Classification Code Number)
54-1046817
(I.R.S. Employer Identification No.) 54-6423300
(I.R.S. Employer Identification No.)
---------------------------------------------
P.O. BOX 4831
MARTINSVILLE, VIRGINIA 24115-4831
(540) 666-3272
(Address, including zip code, and telephone number,
including area code, of Registrants'
principal executive offices)
---------------------------------------------
REBECCA J. JENKINS
EXECUTIVE VICE PRESIDENT, SECRETARY AND ASSISTANT TREASURER
(540) 666-3272
(Name, address, including zip code, and telephone number, including area code,
of agents for service)
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COPIES TO:
DOUGLAS W. DENSMORE, ESQ.
FLIPPIN, DENSMORE, MORSE, RUTHERFORD & JESSEE, P.C.
300 FIRST CAMPBELL SQUARE
ROANOKE, VIRGINIA 24011
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Approximate Date of Commencement of Proposed Sale to
the Public: As soon as practicable after this Registration
Statement becomes effective.
<PAGE>
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THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
===========================================================================
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, JUNE 15, 1998
<PAGE>
PROSPECTUS
MAINSTREET CAPITAL TRUST I
OFFER TO EXCHANGE ITS
8.90% SERIES B CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
8.90% SERIES A CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
MAINSTREET BANKGROUP INCORPORATED
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON JUNE 15, 1998, UNLESS EXTENDED
---------------
MainStreet Capital Trust I, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby offers, upon the terms
and subject to the conditions set forth in this Prospectus (as the same may be
amended or supplemented from time to time, the "Prospectus") and in the
accompanying Letter of Transmittal (which together constitute the "Exchange
Offer"), to exchange up to $50,000,000 aggregate Liquidation Amount of its 8.90%
Series B Capital Securities (the "New Capital Securities") which have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a Registration Statement (as defined herein) of which this
Prospectus constitutes a part, for a like Liquidation Amount of its outstanding
8.90% Series A Capital Securities (the "Old Capital Securities"), of which
$50,000,000 aggregate Liquidation Amount is outstanding. Pursuant to the
Exchange Offer, MainStreet BankGroup Incorporated, a Virginia corporation
("MainStreet BankGroup" or the "Corporation"), also is offering to exchange: (i)
its guarantee of payments of cash distributions and payments on liquidation of
the Trust or redemption of the Old Capital Securities (the "Old Guarantee") for
a like guarantee in respect of the New Capital Securities (the "New Guarantee");
and (ii) all of its outstanding 8.90% Series A Junior Subordinated Deferrable
Interest Debentures due December 1, 2027 (the "Old Junior Subordinated
Debentures") for a like aggregate principal amount of its 8.90% Series B Junior
Subordinated Deferrable Interest Debentures due December 1, 2027 (the "New
Junior Subordinated Debentures"), which New Guarantee and New Junior
Subordinated Debentures also have been registered under the Securities Act. The
Old Capital Securities, the Old Guarantee and the Old Junior Subordinated
Debentures are collectively referred to herein as the "Old Securities" and the
New Capital Securities, the New Guarantee and the New Junior Subordinated
Debentures are collectively referred to herein as the "New Securities."
The terms of the New Securities are identical in all material respects
to the respective terms of the Old Securities, except that: (i) the New
Securities have been registered under the Securities Act and therefore will not
be subject to certain restrictions on transfer under federal and state
securities laws applicable to the Old Securities; (ii) the New Capital
Securities will not provide for any increase in the Distribution rate thereon;
and (iii) the New Junior Subordinated Debentures will not provide for any
increase in the interest rate thereon. See "Description of New Securities" and
"Description of Old Securities." The New Capital Securities are being offered
for exchange in order to satisfy certain obligations of the Corporation and the
Trust under a Registration Rights Agreement, dated as of November 19, 1997 (the
"Registration Rights Agreement"), among the Corporation, the Trust and the
Initial Purchaser (as defined herein). In the event that the Exchange Offer is
consummated, any Old Capital Securities which remain outstanding after
consummation of the Exchange Offer and the New Capital Securities issued in the
Exchange Offer will vote together as a single class for purposes of determining
whether holders of the requisite percentage in outstanding Liquidation Amount
thereof have taken certain actions or exercised certain rights under the Trust
Agreement (as defined herein).
This Prospectus and the Letter of Transmittal are first being mailed to
all registered holders of Old Capital Securities as of May 15, 1998.
SEE "RISK FACTORS" COMMENCING ON PAGE 22 FOR CERTAIN INFORMATION THAT
SHOULD BE CONSIDERED BY HOLDERS IN DECIDING WHETHER TO TENDER OLD CAPITAL
SECURITIES IN THE EXCHANGE OFFER.
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is May 15, 1998.
The New Capital Securities and the Old Capital Securities
(collectively, the "Capital Securities") represent beneficial interests in the
assets of the Trust. The Corporation is the owner of all of the beneficial
interests represented by common securities of the Trust (the "Common
Securities," and together with the Capital Securities, the "Trust Securities").
The Trust exists for the sole purpose of issuing the Trust Securities and
investing the proceeds thereof in the Junior Subordinated Debentures (as defined
herein). The Junior Subordinated Debentures will mature on December 1, 2027 (the
"Stated Maturity Date"). The Capital Securities will have a preference over the
Common Securities under certain circumstances with respect to cash distributions
and amounts payable on liquidation, redemption or otherwise. See "Description of
New Securities--Description of Capital Securities--Subordination of Common
Securities."
As used herein: (i) the "Indenture" means the Indenture, dated as of
November 19, 1997, between the Corporation and The Bank of New York, as
Debenture Trustee (the "Debenture Trustee"), as amended and supplemented from
time to time; and (ii) the "Trust Agreement" means the Amended and Restated
Declaration of Trust relating to the Trust among the Corporation, as Sponsor,
The Bank of New York, as Property Trustee (the "Property Trustee"), The Bank of
New York (Delaware), as the Delaware Trustee (the "Delaware Trustee"), the
Administrative Trustees named therein (collectively, with the Property Trustee
and the Delaware Trustee, the "Issuer Trustees"), and the holders, from time to
time, of undivided beneficial interests in the assets of the Trust, as amended
and supplemented from time to time. In addition, as the context may require,
unless otherwise expressly stated: (i) the term "Capital Securities" means the
Old Capital Securities and the New Capital Securities; (ii) the term "Trust
Securities" means the Capital Securities and the Common Securities; (iii) the
term "Junior Subordinated Debentures" means the Old Junior Subordinated
Debentures and the New Junior Subordinated Debentures and (iv) the term
"Guarantee" means the Old Guarantee and the New Guarantee.
Except as provided below, the Capital Securities will be represented by
global Capital Securities in fully registered form, deposited with a custodian
for and registered in the name of a nominee of The Depository Trust Company
("DTC"). Beneficial interests in such Capital Securities will be shown on, and
transfers thereof will be effected through, records maintained by DTC and its
participants. Beneficial interests in such Capital Securities will trade in
DTC's Same-Day Funds Settlement system and secondary market trading activity in
such interests will therefore settle in immediately available funds. Any Capital
Securities sold other than in reliance on Rule 144A will be issued in
certificated form. The Capital Securities are expected to be eligible for
quotation on the Private Offerings, Resales and Trading through Automated
Linkages ("PORTAL") System of the National Association of Securities Dealers,
Inc. at the time of issuance thereof. The Capital Securities will be issued, and
may be transferred, only in blocks having a Liquidation Amount of not less than
$100,000 (100 Capital Securities). See "Description of New
Securities--Description of Capital Securities--Form, Denomination, Book-Entry
Procedures and Transfer."
Holders of the Trust Securities will be entitled to receive cumulative
cash distributions arising from the payment of interest on the Junior
Subordinated Debentures, accruing from November 19, 1997, and payable
semi-annually in arrears on June 1 and December 1 of each year, commencing June
1, 1998, at the annual rate of 8.90% of the Liquidation Amount of $1,000 per
Trust Security ("Distributions"). So long as no Debenture Event of Default (as
defined herein) has occurred and is continuing, the Corporation has the right to
defer payments of interest on the Junior Subordinated Debentures at any time and
from time to time for a period not exceeding 10 consecutive semi-annual periods
with respect to each deferral period (each, an "Extension Period"), provided
that no Extension Period may end on a date other than an Interest Payment Date
(as defined herein) or extend beyond the Stated Maturity Date. Upon the
termination of any such Extension Period and the payment of all amounts then
due, the Corporation may elect to begin a new Extension Period, subject to the
requirements set forth herein. If and for so long as interest payments on the
Junior Subordinated Debentures are so deferred, Distributions on the Trust
Securities also will be deferred and the Corporation will not be permitted,
subject to certain exceptions described herein, to declare or pay any cash
distributions with respect to the Corporation's capital stock (which includes
common and preferred stock) or to make any payment with respect to debt
securities of the Corporation that rank pari passu with or junior to the Junior
Subordinated Debentures or make any guarantee payments with respect to any
guarantees by the Corporation or debt securities of any subsidiary of the
Corporation that rank pari passu with or junior to the Junior Subordinated
Debentures. During an Extension Period, interest on the Junior Subordinated
Debentures will continue to accrue (and the amount of Distributions to which
holders of the Trust Securities are entitled will continue to accumulate) at the
rate of 8.90% per annum, compounded semi-annually, and holders of Trust
Securities will be required to accrue such deferred interest income for United
States federal income tax purposes prior to the receipt of the cash attributable
to such income. See "Description of New Securities--Description of Junior
Subordinated Debentures--Option to Extend Interest Payment Date" and "Certain
United States Federal Income Tax Considerations--Interest Income and Original
Issue Discount."
The Corporation has, through the Guarantee, the guarantee agreement of
the Corporation relating to the Common Securities (the "Common Guarantee"), the
Trust Agreement, the Junior Subordinated Debentures and the Indenture, taken
together, fully, irrevocably and unconditionally guaranteed all of the Trust's
obligations under the Trust Securities. See "Relationship Among the Capital
Securities, the Junior Subordinated Debentures and the Guarantee--Full and
Unconditional Guarantee." The Guarantee and the Common Guarantee guarantee
payments of Distributions and payments on liquidation or redemption of the Trust
Securities, but in each case only to the extent that the Trust holds funds on
hand legally available therefor and has failed to make such payments, as
described herein. See "Description of New Securities--Description of Guarantee."
If the Corporation fails to make a required payment on the Junior Subordinated
Debentures, the Trust does not have sufficient funds to make the related
payments, including Distributions, on the Trust Securities. The Guarantee and
the Common Guarantee do not cover any such payment when the Trust does not have
sufficient funds on hand legally available therefor. In such event, under the
Indenture, a holder of Capital Securities may institute a legal proceeding
directly against the Corporation to enforce its rights in respect of such
payment. See "Description of New Securities--Description of Junior Subordinated
Debentures--Enforcement of Certain Rights By Holders of New Capital Securities."
The obligations of the Corporation under the Guarantee, the Common Guarantee and
the Junior Subordinated Debentures are unsecured and rank subordinate and junior
in right of payment to all Senior Indebtedness of the Corporation to the extent
and in the manner set forth in the Indenture. See "Description of New
Securities--Description of Junior Subordinated Debentures--Subordination." See
also, "Description of New Securities--Risk Factors--Ranking of Subordinated
Obligations Under the Guarantee and the Junior Subordinated Debentures." In
addition, because the Corporation is a holding company, the Junior Subordinated
Debentures and the Guarantee effectively are subordinated to all existing and
future liabilities, including deposits, of the Corporation's subsidiaries.
The Trust Securities are subject to mandatory redemption in a Like
Amount (as defined herein): (i) in whole but not in part, on the Stated Maturity
Date upon repayment of the Junior Subordinated Debentures at a redemption price
equal to the principal amount of, plus accrued and unpaid interest on, the
Junior Subordinated Debentures (the "Maturity Redemption Price"); (ii) in whole
but not in part, at any time before December 1, 2007 (the "Initial Optional
Prepayment Date"), contemporaneously with the optional prepayment of the Junior
Subordinated Debentures, upon the occurrence and continuation of a Special Event
(as defined herein) at a redemption price equal to, for each Capital Security to
be redeemed, the Special Event Prepayment Price (as defined herein) for a
corresponding $1,000 principal amount of Junior Subordinated Debentures (the
"Special Event Redemption Price"); and (iii) in whole or in part, on or after
the Initial Optional Prepayment Date, contemporaneously with the optional
prepayment by the Corporation of all or part of the Junior Subordinated
Debentures, at a redemption price equal to, for each Capital Security to be
redeemed, the Optional Prepayment Price (as defined herein) for a corresponding
$1,000 principal amount of Junior Subordinated Debentures (the "Optional
Redemption Price"). Any of the Maturity Redemption Price, the Special Event
Redemption Price and the Optional Redemption Price may be referred to herein as
the "Redemption Price." See "Description of New Securities--Description of
Capital Securities--Redemption."
Subject to the Corporation having received any required regulatory
approval, the Junior Subordinated Debentures will be prepayable prior to the
Stated Maturity Date at the option of the Corporation: (i) on or after the
Initial Optional Prepayment Date, in whole or in part, at a price (the "Optional
Prepayment Price") equal to 104.450% of the principal amount thereof on the
Initial Optional Prepayment Date, declining ratably on each December 1
thereafter to 100% on or after December 1, 2017, plus, in each case, accrued and
unpaid interest thereon to the date of prepayment; or (ii) at any time prior to
the Initial Optional Prepayment Date, in whole but not in part, upon the
occurrence and continuation of a Special Event, at a prepayment price (the
"Special Event Prepayment Price") equal to the Make-Whole Amount (as defined
below). The "Make-Whole Amount" shall be equal to the greater of: (a) 100% of
the principal amount of the Junior Subordinated Debentures; or (b) the sum, as
determined by a Quotation Agent (as defined herein), of the present values of
the remaining scheduled payments of principal and interest on the Junior
Subordinated Debentures, discounted to the prepayment date on a semi-annual
basis (assuming a 360-day year consisting of twelve 30-day months) at the
Adjusted Treasury Rate (as defined herein) plus, in the case of each of clauses
(a) and (b), accrued and unpaid interest thereon and liquidated Damages (as
defined herein), if any, to the date of prepayment. Either of the Optional
Prepayment Price or the Special Event Prepayment Price may be referred to herein
as the "Prepayment Price." See "Description of New Securities--Description of
Junior Subordinated Debentures--Optional Prepayment" and "--Special Event
Prepayment."
The Corporation has the right at any time (including without limitation
upon the occurrence of a Tax Event (as defined herein)) to terminate the Trust
and, after satisfaction of liabilities of creditors of the Trust as required by
applicable law, to cause a Like Amount of the Junior Subordinated Debentures to
be distributed to the holders of the Trust Securities in liquidation of the
Trust, subject to: (i) the Corporation having received an opinion of counsel to
the effect that such distribution will not be a taxable event to holders of
Capital Securities; and (ii) the receipt of any required regulatory approval.
Unless the Junior Subordinated Debentures are distributed to the holders of the
Trust Securities, in the event of a liquidation of the Trust as described
herein, after satisfaction of liabilities to creditors of the Trust as required
by applicable law, the holders of the Trust Securities generally will be
entitled to receive a Liquidation Amount of $1,000 per Trust Security plus
accumulated and unpaid Distributions thereon to the date of payment. See
"Description of New Securities--Description of Capital Securities--Liquidation
of the Trust and Distribution of Junior Subordinated Debentures."
The Corporation and the Trust are making the Exchange Offer of the New
Capital Securities in reliance on existing interpretations of the Securities Act
of the staff of the Division of Corporation Finance of the Securities and
Exchange Commission (the "Commission") as set forth in certain no-action letters
addressed to third parties in other transactions. However, neither the
Corporation nor the Trust has sought its own no-action letter and there can be
no assurance that the staff of the Division of Corporation Finance of the
Commission would make a similar determination with respect to the Exchange Offer
as it has in such no-action letters to third parties. Based on these
interpretations by the staff of the Division of Corporation Finance of the
Commission, and subject to the two immediately following sentences, the
Corporation and the Trust believe that New Capital Securities issued pursuant to
this Exchange Offer in exchange for Old Capital Securities may be offered for
resale, resold and otherwise transferred by a holder thereof (other than a
holder who is a broker-dealer) without further compliance with the registration
and prospectus delivery requirements of the Securities Act, provided that such
New Capital Securities are acquired in the ordinary course of such holder's
business and that such holder is not participating, and has no arrangement or
understanding with any person to participate, in a distribution (within the
meaning of the Securities Act) of such New Capital Securities. However, any
holder of Old Capital Securities who is an "affiliate" of the Corporation or the
Trust within the meaning of Rule 405 under the Securities Act (an "Affiliate")
or who intends to participate in the Exchange Offer for the purpose of
distributing New Capital Securities, or any broker-dealer who purchased Old
Capital Securities from the Trust to resell pursuant to Rule 144A under the
Securities Act ("Rule 144A") or any other available exemption under the
Securities Act: (i) will not be able to rely on the interpretations of the staff
of the Division of Corporation Finance of the Commission set forth in the
above-mentioned no-action letters; (ii) will not be entitled to tender such Old
Capital Securities in the Exchange Offer; and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or transfer of such Old Capital Securities (other than
pursuant to the Exchange Offer) unless such sale is made pursuant to an
exemption from such requirements. In addition, as described below, if any
broker-dealer (a "Participating Broker-Dealer") holds Old Capital Securities
acquired for its own account as a result of market-making or other trading
activities and exchanges such Old Capital Securities for New Capital Securities,
then such Participating Broker-Dealer must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of such New
Capital Securities.
Each holder of Old Capital Securities (other than certain specified
holders) who wishes to exchange Old Capital Securities for New Capital
Securities in the Exchange Offer will be required to represent that: (i) it is
not an Affiliate of the Corporation or the Trust; (ii) any New Capital
Securities to be received by it are being acquired in the ordinary course of its
business; and (iii) at the time of the Exchange Offer, it has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such New Capital Securities. The Letter of
Transmittal contains the foregoing representations. In addition, the Corporation
and the Trust may require such holder, as a condition to such holder's
eligibility to participate in the Exchange Offer, to furnish to the Corporation
and the Trust (or an agent thereof) in writing, information as to the number of
"beneficial owners" (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) on behalf of whom such
holder holds Old Capital Securities to be exchanged in the Exchange Offer. Each
Participating Broker-Dealer that receives New Capital Securities for its own
account pursuant to the Exchange Offer will be deemed to have acknowledged by
execution of the Letter of Transmittal or delivery of an Agent's Message (as
defined herein) that it acquired the Old Capital Securities for its own account
as the result of market-making activities or other trading activities and must
agree that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Capital Securities. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a Participating Broker-Dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. Based on the position
taken by the staff of the Division of Corporation Finance of the Commission in
the no-action letters referred to above, the Corporation and the Trust believe
that Participating Broker-Dealers may fulfill their prospectus delivery
requirements with respect to the New Capital Securities received upon exchange
of such Old Capital Securities (other than Old Capital Securities which
represent an unsold allotment from the original sale of the Old Capital
Securities) with a prospectus meeting the requirements of the Securities Act,
which may be the prospectus prepared for an exchange offer so long as it
contains a description of the plan of distribution with respect to the resale of
such New Capital Securities. Accordingly, this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
during the period referred to below in connection with resales of New Capital
Securities received in exchange for Old Capital Securities where such Old
Capital Securities were acquired by such Participating Broker-Dealer for its own
account as a result of market-making or other trading activities. Subject to
certain provisions set forth in the Registration Rights Agreement, the
Corporation and the Trust have agreed that this Prospectus, as it may be amended
or supplemented from time to time, may be used by a Participating Broker-Dealer
in connection with resales of such New Capital Securities for a period ending 90
days after the Expiration Date (as defined herein) (subject to extension under
certain limited circumstances described below) or, if earlier, when all such New
Capital Securities have been disposed of by such Participating Broker-Dealer.
See "Plan of Distribution." However, a Participating Broker-Dealer who intends
to use this Prospectus in connection with the resale of New Capital Securities
received in exchange for Old Capital Securities pursuant to the Exchange Offer
must notify the Corporation or the Trust, or cause the Corporation or the Trust
to be notified, on or prior to the Expiration Date, that it is a Participating
Broker-Dealer. Such notice may be given in the space provided for that purpose
in the Letter of Transmittal or may be delivered to the Exchange Agent at one of
the addresses set forth herein under "The Exchange Offer--Exchange Agent." Any
person, including any Participating Broker-Dealer, who is an Affiliate of the
Corporation or the Trust may not rely on such no-action letters and must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale transaction. See "The Exchange Offer--Resales of
New Capital Securities."
In that regard, each Participating Broker-Dealer who surrenders Old
Capital Securities pursuant to the Exchange Offer will be deemed to have agreed,
by execution of the Letter of Transmittal or delivery of an Agent's Message,
that, upon receipt of notice from the Corporation or the Trust of the occurrence
of any event or the discovery of any fact which makes any statement contained or
incorporated by reference in this Prospectus untrue in any material respect or
which causes this Prospectus to omit to state a material fact necessary in order
to make the statements contained or incorporated by reference herein, in light
of the circumstances under which they were made, not misleading or of the
occurrence of certain other events specified in the Registration Rights
Agreement, such Participating Broker-Dealer will suspend the sale of New Capital
Securities (or the New Guarantee or the New Junior Subordinated Debentures, as
applicable) pursuant to this Prospectus until the Corporation or the Trust has
amended or supplemented this Prospectus to correct such misstatement or omission
and has furnished copies of the amended or supplemented Prospectus to such
Participating Broker-Dealer or the Corporation or the Trust has given notice
that the sale of the New Capital Securities (or the New Guarantee or the New
Junior Subordinated Debentures, as applicable) may be resumed, as the case may
be. If the Corporation or the Trust gives such notice to suspend the sale of the
New Capital Securities (or the New Guarantee or the New Junior Subordinated
Debentures, as applicable), it shall extend the 90-day period referred to above
during which Participating Broker-Dealers are entitled to use this Prospectus in
connection with the resale of New Capital Securities by the number of days
during the period from and including the date of the giving of such notice to
and including the date when Participating Broker-Dealers shall have received
copies of the amended or supplemented Prospectus necessary to permit resales of
the New Capital Securities or to and including the date on which the Corporation
or the Trust has given notice that the sale of New Capital Securities (or the
New Guarantee or the New Junior Subordinated Debentures, as applicable) may be
resumed, as the case may be.
Prior to the Exchange Offer, there has been no market for the Old
Capital Securities. The New Capital Securities will be a new issue of securities
for which there currently is no market. There can be no assurance as to the
liquidity of any markets that may develop for the New Capital Securities or the
ability of a holder of the New Capital Securities to be able to sell such New
Capital Securities. Future trading prices of the New Capital Securities will
depend on many factors including, among other things, prevailing interest rates,
the Corporation's operating results and the market for similar securities. The
Initial Purchaser has informed the Trust and the Corporation that it intends to
make a market in the New Capital Securities, however, the Initial Purchaser is
not obligated to do so and any such market making activity may be terminated at
any time without notice to the holders of New Capital Securities. In addition,
such market making activity will be subject to the limits of the Securities Act.
The Corporation and the Trust currently do not intend to apply for listing of
the New Capital Securities on any securities exchange or for quotation through
the National Association of Securities Dealers Automated Quotation System.
Any Old Capital Securities not tendered and accepted in the Exchange
Offer will remain outstanding and will be entitled to all the same rights and
will be subject to the same limitations applicable thereto under the Trust
Agreement (except for those rights which terminate upon consummation of the
Exchange Offer). Following consummation of the Exchange Offer, the holders of
Old Capital Securities will continue to be subject to all of the existing
restrictions upon transfer thereof and neither the Corporation nor the Trust
will have any further obligation to such holders to provide for registration
under the Securities Act of the Old Capital Securities held by them. To the
extent that Old Capital Securities are tendered and accepted in the Exchange
Offer, a holder's ability to sell untendered Old Capital Securities could be
adversely affected. See "Risk Factors--Consequences of a Failure to Exchange Old
Capital Securities."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS PROSPECTUS
AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO
TENDER THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on June 15, 1998 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is extended
by the Corporation or the Trust (in which case the term "Expiration Date" shall
mean the latest date and time to which the Exchange Offer is extended). Tenders
of Old Capital Securities may be withdrawn at any time on or prior to the
Expiration Date. The Exchange Offer is not conditioned upon any minimum
Liquidation Amount of Old Capital Securities being tendered for exchange.
However, the Exchange Offer is subject to certain events and conditions which
may be waived by the Corporation or the Trust and to the provisions of the
Registration Rights Agreement. Old Capital Securities may be tendered in whole
or in part having an aggregate Liquidation Amount of not less than $100,000 (100
Capital Securities) and/or any integral multiple of $1,000 Liquidation Amount
(one Capital Security) in excess thereof. The Corporation has agreed to pay all
registration expenses of the Exchange Offer. See "The Exchange Offer--Fees and
Expenses." Holders of New Capital Securities as of the record date for the
payment of Distributions on June 1, 1998 will be entitled to receive
Distributions accumulated from and including November 19, 1997. Holders of the
Old Capital Securities whose Old Capital Securities are accepted for exchange
will not receive Distributions on such Old Capital Securities and will be deemed
to have waived the right to receive any Distributions on such Old Capital
Securities accumulated from and after November 19, 1997. See "The Exchange
Offer--Distributions on New Capital Securities."
Neither the Corporation nor the Trust will receive any cash proceeds from
the issuance of the New Capital Securities offered hereby. No dealer-manager is
being used in connection with this Exchange Offer. See "Use of Proceeds" and
"Plan of Distribution."
THE NEW CAPITAL SECURITIES WILL BE ISSUED, AND CAPITAL SECURITIES MAY
BE TRANSFERRED, ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN
$100,000. ANY TRANSFER, SALE OR OTHER DISPOSITION OF CAPITAL SECURITIES IN A
BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE
VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT
TO BE 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.
NO EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH, A "PLAN"), NO
ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S
INVESTMENT IN THE ENTITY (A "PLAN ASSET ENTITY"), AND NO PERSON INVESTING "PLAN
ASSETS" OF ANY PLAN, MAY ACQUIRE OR HOLD THE CAPITAL SECURITIES OR ANY INTEREST
THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF
AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION
("PTCE") 96-23, 95-60, 91-38, 90-1 OR 84-14 WITH RESPECT TO SUCH PURCHASE OR
HOLDING. ANY PURCHASER OR HOLDER OF THE CAPITAL SECURITIES OR ANY INTEREST
THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF
THAT EITHER: (A) IT IS NOT A PLAN SUBJECT TO ERISA; OR (B) THE ACQUISITION AND
HOLDING OF CAPITAL SECURITIES BY IT IS NOT PROHIBITED BY EITHER SECTION 406 OF
ERISA OR SECTION 4975 OF THE CODE OR IS EXEMPT FROM ANY SUCH PROHIBITION.
-------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THIS EXCHANGE
OFFER AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION OR THE TRUST. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE CORPORATION OR THE TRUST SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OR A SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR ANYONE TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION.
- -------------------
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TABLE OF CONTENTS
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Available Information............................................................................................12
Incorporation of Certain Documents by Reference..................................................................12
Summary..........................................................................................................13
Risk Factors.....................................................................................................22
The Trust........................................................................................................30
The Corporation..................................................................................................30
Selected Consolidated Financial Data of the Corporation..........................................................33
Recent Developments..............................................................................................34
Use of Proceeds..................................................................................................34
Ratio of Earnings to Fixed Charges...............................................................................35
Accounting Treatment.............................................................................................35
Capitalization...................................................................................................35
The Exchange Offer...............................................................................................36
Description of New Securities....................................................................................47
Description of Guarantee.........................................................................................71
Description of Old Securities....................................................................................73
Relationship Among the Capital Securities, the
Junior Subordinated Debentures and the Guarantee................................................................74
Certain Federal Income Tax Considerations........................................................................75
ERISA Considerations.............................................................................................80
Plan of Distribution.............................................................................................81
Legal Matters....................................................................................................82
Experts..........................................................................................................82
</TABLE>
<PAGE>
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities of the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Commission located at 7 World Trade Center, 13th Floor, Suite
1300, New York, New York 10048 and Citicorp Center, 14th Floor, Suite 1400, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material also can
be obtained at prescribed rates by writing to the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Such
information also may be accessed through the Commission's electronic data
gathering, analysis and retrieval system ("EDGAR") via electronic means,
including the Commission's web site on the Internet (http://www.sec.gov). Such
reports, proxy statements and other information concerning the Corporation also
can be inspected at the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
No separate financial statements of the Trust have been included
herein. The Corporation and the Trust do not consider that such financial
statements would be material to holders of the Capital Securities because the
Trust is a newly-formed special purpose entity, has no operating history or
independent operations and is not engaged in and does not propose to engage in
any activity other than holding as trust assets the Junior Subordinated
Debentures and issuing the Trust Securities. See "The Trust" and "Description of
New Securities." In addition, the Corporation does not expect that the Trust
will file reports, proxy statements and other information under the Exchange Act
with the Commission.
This Prospectus constitutes a part of a registration statement on Form
S-4 (the "Registration Statement") filed by the Corporation and the Trust with
the Commission under the Securities Act. This Prospectus does not contain all
the information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission, and
reference is hereby made to the Registration Statement and to the exhibits
relating thereto for further information with respect to the Corporation, the
Trust and the New Securities. Any statements contained herein concerning the
provisions of any document are not necessarily complete, and, in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Commission
are incorporated by reference in this Prospectus:
1. Annual Report on Form 10-K for the year ended December 31, 1997.
2. Current Reports on Form 8-K dated March 5, 1998 and March 13, 1998.
All documents subsequently filed by the Corporation pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to
the termination of the offering of the New Securities offered hereby shall be
deemed to be incorporated by reference in this Prospectus and to be a part of
this Prospectus from the date of filing of such documents. Any statement
contained herein or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein (or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein) modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this
Prospectus, including the documents incorporated or deemed to be incorporated
herein by reference, as the same may be amended, supplemented or otherwise
modified from time to time. Statements contained in this Prospectus as to the
contents of any contract or other document referred to herein do not purport to
be complete, and where reference is made to the particular provisions of such
contract or other document, such provisions are qualified in all respects by
reference to all of the provisions of such contract or other document.
The Corporation will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference herein (other
than exhibits to such documents unless such exhibits are specifically
incorporated by reference in such documents). Requests for such documents should
be directed to: MainStreet BankGroup Incorporated, 200 East Church Street, P. O.
Box 4831, Martinsville, Virginia 24115-4831, Attention: Ms. Francia Brown,
Shareholder Relations (telephone (540) 666-3234).
SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Offering Memorandum. As used herein: (i)
the "Indenture" means the Indenture, dated as of November 19, 1997, as amended
and supplemented from time to time, between the Corporation and The Bank of New
York, as trustee (the "Debenture Trustee"), relating to the Junior Subordinated
Debentures; (ii) the "Trust Agreement" means the Amended and Restated
Declaration of Trust relating to the Trust among the Corporation, as Sponsor,
The Bank of New York, as Property Trustee (the "Property Trustee"), The Bank of
New York (Delaware), as Delaware Trustee (the "Delaware Trustee"), and the
Administrative Trustees named therein (collectively, with the Property Trustee
and Delaware Trustee, the "Issuer Trustees"); (iii) the "Guarantee" means the
Guarantee Agreement relating to the Capital Securities between the Corporation
and The Bank of New York, as Guarantee Trustee (the "Guarantee Trustee"); and
(iv) the "Common Guarantee" means the Guarantee Agreement relating to the Common
Securities. In addition, as the context may require: (i) "Capital Securities"
and "Trust Securities" include the New Capital Securities (as defined herein);
(ii) "Junior Subordinated Debentures" includes the New Junior Subordinated
Debentures (as defined herein); and (iii) "Guarantee" includes the New Guarantee
(as defined herein).
MAINSTREET BANKGROUP INCORPORATED
MainStreet BankGroup Incorporated ("the Corporation") is a multi-bank
holding company headquartered in Martinsville, Virginia. Organized in 1977, the
Corporation, through its eleven (11) affiliate banks (the "Banks"), and
MainStreet Trust Company, National Association, a nationally chartered trust
company (the "Trust Company"), engages in a general banking business and
provides a broad spectrum of banking and trust services to consumers,
businesses, institutions and governments. These services include accepting
demand, savings and time deposits; making commercial, personal, installment,
mortgage and construction loans; issuing letters of credit; and providing
discount brokerage, trust services, bank-card services, mortgage banking and
investment services. At December 31, 1997, the Corporation had total assets,
deposits and shareholders' equity of $1.7 billion, $998.9 million and $128.7
million, respectively, not including recent acquisitions. See "Selected
Financial Data" and "Recent Developments."
The Banks seek customers whose total financial requirements they can
serve. As a result, most of the Banks' business customers are small and
medium-sized entities. While the Corporation considers this middle market to be
its primary business market, the Corporation's lead bank, Piedmont Trust Bank,
has banking relationships with many of the larger textile and furniture
manufacturing companies located in its market area.
The principal markets served by the Corporation and its Banks are: the
City of Martinsville and Henry County; the Town of Hillsville and City of Galax,
and Carroll and Grayson Counties; the Towns of Ferrum and Rocky Mount and
Franklin County; the Town of Forest, City of Lynchburg, and Bedford, Campbell
and Amherst Counties; the Town of Stuart and Patrick County; the Towns of
Saltville and Chilhowie and Smyth County; the towns of Mechanicsville and
Ashland, and Hanover, Chesterfield, and Henrico Counties; the towns of McLean
and Reston and Fairfax County; and the City of Clifton Forge, City of Richmond,
and Alleghany, Bath and northern Botetourt Counties, Virginia and contiguous
areas; and the City of Prince George County, Maryland, College Park, Maryland,
and contiguous areas. The Corporation's affiliate Banks operate a total of 45
offices in these markets.
The Corporation maintains a growth plan that continually identifies and
evaluates acquisition opportunities. On March 13, 1998, the Corporation
announced an agreement to acquire Ballston Bancorp, Inc., the holding company
for the Bank of Northern Virginia, an $80 million bank with three offices in the
Arlington, Virginia area.
During 1994, the Corporation moved to a centralized management
approach, providing direction to the Banks and performing selected services in
the compliance, data processing, financial management, human resources,
investment, accounting, marketing, mortgage, trust and audit areas. The Banks
have individual credit limits to approve loans, and loans above that limit
require the approval of the Corporation's central credit administration. The
Banks also still must approve investments and other activities consistent with
past practices and the needs of their communities. To coordinate the activities
of the Banks and to maintain internal controls, the Corporation utilizes a
planning and budgeting process which involves Company officers, presidents of
the Banks, and principal department heads. Performance targets and budget goals
are developed for each Bank on an annual basis, with financial and operating
results reported and reviewed periodically during the year.
During 1997, the Corporation organized the Trust Company to offer
fiduciary services in all the markets served by its affiliate banks and
elsewhere. This centralized approach to fiduciary services allows the
Corporation's affiliates to offer to the customer a broader array of more
sophisticated products more efficiently and effectively than could otherwise be
accomplished.
<PAGE>
MAINSTREET CAPITAL TRUST I
The Trust is a statutory business trust created under Delaware law
pursuant to the filing of a certificate of trust with the Secretary of State of
the State of Delaware. The Trust's business and affairs are conducted by the
Issuer Trustees: The Bank of New York as Property Trustee, The Bank of New York
(Delaware) as Delaware Trustee and three individual Administrative Trustees who
are officers of the Corporation. The Trust exists for the exclusive purposes of:
(i) issuing and selling the Trust Securities; (ii) using the proceeds from the
sale of the Trust Securities to acquire the Junior Subordinated Debentures
issued by the Corporation; and (iii) engaging in only those other activities
necessary, advisable or incidental thereto. Accordingly, the Junior Subordinated
Debentures will be the sole assets of the Trust, and payments under the Junior
Subordinated Debentures will be the sole revenue of the Trust. All of the Common
Securities are owned by the Corporation.
<PAGE>
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THE EXCHANGE OFFER
<S> <C>
The Exchange Offer............. Up to $50,000,000 aggregate Liquidation Amount of New Capital
Securities are being offered in exchange for a like aggregate
Liquidation Amount of Old Capital Securities. Old Capital Securities
may be tendered for exchange in whole or in part in a Liquidation
Amount of $100,000 (100 Capital Securities) or any integral multiple
of $1,000 (one Capital Security) in excess thereof. The Corporation
and the Trust are making the Exchange Offer in order to satisfy their
obligations under the Registration Rights Agreement relating to the
Old Capital Securities. For a description of the procedures for
tendering Old Capital Securities, see "The Exchange Offer--Procedures
for Tendering Old Capital Securities."
Expiration Date................ 5:00 p.m., New York City time, on June 15, 1998, unless the Exchange
Offer is extended by the Corporation or the Trust (in which case the
Expiration Date will be the latest date and time to which the
Exchange Offer is extended). See "The Exchange Offer--Terms of the
Exchange Offer."
Conditions to the
Exchange Offer................. The Exchange Offer is subject to certain conditions, which may be
waived by the Corporation and the Trust in their sole discretion.
The Exchange Offer is not conditioned upon any minimum Liquidation
Amount of Old Capital Securities being tendered. See "The Exchange
Offer--Conditions to the Exchange Offer."
Offer.......................... The Corporation and the Trust reserve the right in their sole and
absolute discretion, subject to its agreements and applicable law, at
any time and from time to time: (i) to delay the acceptance of the
Old Capital Securities for exchange; (ii) to terminate the Exchange
Offer if certain specified conditions have not been satisfied; (iii)
to extend the Expiration Date of the Exchange Offer and retain all
Old Capital Securities tendered pursuant to the Exchange Offer,
subject, however, to the right of holders of Old Capital Securities
to withdraw their tendered Old Capital Securities; or (iv) to waive
any condition or otherwise amend the terms of the Exchange Offer in
any respect. See "The Exchange Offer--Terms of the Exchange Offer."
Withdrawal Rights.............. Tenders of Old Capital Securities may be withdrawn at any time on or
prior to the Expiration Date by delivering a written notice of such
withdrawal to the Exchange Agent in conformity with certain
procedures set forth below under "The Exchange Offer--Withdrawal
Rights."
Procedures for Tendering
Old Capital Securities......... Tendering holders of Old Capital Securities must complete and sign a
Letter of Transmittal in accordance with the instructions contained
therein and forward the same by mail, facsimile or hand delivery,
together with any other required documents, to the Exchange Agent,
either with the Old Capital Securities to be tendered or in
compliance with the specified procedures for guaranteed delivery of
Old Capital Securities. Certain brokers, dealers, commercial banks,
trust companies and other nominees also may effect tenders by
book-entry transfer, including an Agent's Message in lieu of a Letter
of Transmittal. Holders of Old Capital Securities registered in the
name of a broker, dealer, commercial bank, trust company or other
nominee are urged to contact such person promptly if they wish to
tender Old Capital Securities pursuant to the Exchange Offer. See
"The Exchange Offer--Procedures for Tendering Old Capital
Securities." Letters of Transmittal and certificates representing
Old Capital Securities should not be sent to the Corporation or the
Trust. Such documents should only be sent to the Exchange Agent.
See "The Exchange Offer Exchange Agent."
Resales of New
Capital Securities............. The Corporation and the Trust are making the Exchange Offer in
reliance on the position of the staff of the Division of Corporation
Finance of the Commission as set forth in certain no-action letters
addressed to third parties in other transactions. However, neither
the Corporation nor the Trust has sought its own no-action letter and
there can be no assurance that the staff of the Division of
Corporation Finance of the Commission would make a similar
determination with respect to the Exchange Offer as it has in such
no-action letters to third parties. Based on these interpretations
by the staff of the Division of Corporation Finance of the
Commission, and subject to the two immediately following sentences,
the Corporation and the Trust believe that New Capital Securities
issued pursuant to this Exchange Offer in exchange for Old Capital
Securities may be offered for resale, resold and otherwise
transferred by a holder thereof (other than a holder who is a
broker-dealer) without further compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that
such New Capital Securities are acquired in the ordinary course of
such holder's business and that such holder is not participating, and
has no arrangement or understanding with any person to participate,
in a distribution (within the meaning of the Securities Act) of such
New Capital Securities. However, any holder of Old Capital
Securities who is an Affiliate of the Corporation or the Trust or who
intends to participate in the Exchange Offer for the purpose of
distributing the New Capital Securities, or any broker-dealer who
purchased the Old Capital Securities from the Trust to resell
pursuant to Rule 144A or any other available exemption under the
Securities Act: (i) will not be able to rely on the interpretations
of the staff of the Division of Corporation Finance of the Commission
set forth in the above-mentioned no-action letters; (ii) will not be
permitted or entitled to tender such Old Capital Securities in the
Exchange Offer; and (iii) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection
with any sale or other transfer of such Old Capital Securities unless
such sale is made pursuant to an exemption from such requirements.
In addition, as described below, if any broker-dealer holds Old
Capital Securities acquired for its own account as a result of
market-making or other trading activities and exchanges such Old
Capital Securities for New Capital Securities, then such
broker-dealer must deliver a prospectus meeting the requirements of
the Securities Act in connection with any resales of such New Capital
Securities. Each holder of Old Capital Securities who wishes to
exchange Old Capital Securities for New Capital Securities in the
Exchange Offer will be required to represent in the Letter of
Transmittal or by transmission of an Agent's Message that: (i) it is
not an Affiliate of the Corporation or the Trust; (ii) any New
Capital Securities to be received by it are being acquired in the
ordinary course of its business; and (iii) at the time of the
Exchange Offer, it has no arrangement or understanding with any
person to participate in a distribution (within the meaning of the
Securities Act) of such New Capital Securities. The Letter of
Transmittal contains the foregoing representations. Each
Participating Broker-Dealer that receives New Capital Securities for
its own account pursuant to the Exchange Offer will be deemed to have
acknowledged by execution of the Letter of Transmittal or delivery of
an Agent's Message (as defined herein) that it acquired the Old
Capital Securities for its own account as the result of market-making
activities or other trading activities and must agree that it will
deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of such New Capital Securities. The
Letter of Transmittal states that, by so acknowledging and by
delivering a prospectus, a Participating Broker-Dealer will not be
deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. Based on the position taken by the staff of the
Division of Corporation Finance of the Commission in the no-action
letters referred to above, the Corporation and the Trust believe
that Participating Broker-Dealers who acquired Old Capital Securities
for their own account as a result of market-making activities or
other trading activities may fulfill their prospectus delivery
requirements with respect to the New Capital Securities received upon
exchange of such Old Capital Securities (other than Old Capital
Securities which represent an unsold allotment from the original sale
of the Old Capital Securities) with a prospectus meeting the
requirements of the Securities Act, which may be the prospectus
prepared for an exchange offer so long as it contains a description
of the plan of distribution with respect to the resale of such New
Capital Securities. Accordingly, this Prospectus, as it may be
amended or supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with resales of New Capital
Securities received in exchange for Old Capital Securities where such
Old Capital Securities were acquired by such Participating
Broker-Dealer for its own account as a result of market-making or
other trading activities. Subject to certain provisions set forth in
the Registration Rights Agreement and to the limitations described
below under "The Exchange Offer--Resales of New Capital Securities,"
the Corporation and the Trust have agreed that this Prospectus, as it
may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with resales of such New
Capital Securities for a period ending 90 days after the Expiration
Date (subject to extension under certain limited circumstances) or,
if earlier, when all such New Capital Securities have been disposed
of by such Participating Broker-Dealer. See "Plan of Distribution."
Any person, including any Participating Broker-Dealer, who is an
Affiliate of the Corporation or the Trust may not rely on such
no-action letters and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection
with any resale transaction. See "The Exchange Offer--Resales of New
Capital Securities."
Exchange Agent................. The exchange agent with respect to the Exchange Offer is The Bank of
New York (the "Exchange Agent"). The addresses, and telephone and
facsimile numbers, of the Exchange Agent are set forth in "The
Exchange Offer--Exchange Agent" and in the Letter of Transmittal.
Use of Proceeds................ Neither the Corporation nor the Trust will receive any cash proceeds
from the issuance of the New Capital Securities offered hereby. See
"Use of Proceeds."
Certain Federal Income
Tax Considerations;
ERISA Considerations........... Holders of Old Capital Securities should review the information set
forth under "Certain Federal Income Tax Considerations" and "ERISA
Considerations" prior to tendering Old Capital Securities in the
Exchange Offer.
<PAGE>
THE NEW CAPITAL SECURITIES
Securities Offered............. Up to $50,000,000 aggregate Liquidation Amount of the Trust's New
Capital Securities which have been registered under the Securities
Act (Liquidation Amount $1,000 per New Capital Security). The New
Capital Securities will be issued and the Old Capital Securities were
issued under the Trust Agreement. The New Capital Securities and any
Old Capital Securities which remain outstanding after consummation of
the Exchange Offer will vote together as a single class for purposes
of determining whether holders of the requisite percentage in
outstanding Liquidation Amount thereof have taken certain actions or
exercised certain rights under the Trust Agreement. See "Description
of New Securities--Description of Capital Securities--Voting Rights;
Amendment of the Trust Agreement." The terms of the New Capital
Securities are identical in all material respects to the terms of the
Old Capital Securities, except that the New Capital Securities have
been registered under the Securities Act and therefore will not be
subject to certain restrictions on transfer under federal and state
securities laws and will not provide for any increase in the
Distribution rate thereon. See "The Exchange Offer--Purpose of the
Exchange Offer," "Description of New Securities" and "Description of
Old Securities."
Distribution Dates............. June 1 and December 1 of each year, commencing June 1, 1998.
Extension Periods.............. Distributions on the Capital Securities will be deferred for the
duration of any Extension Period elected by the Corporation with
respect to the payment of interest on the Junior Subordinated
Debentures. No Extension Period will exceed 10 consecutive
semi-annual periods, end on a date other than an Interest Payment
Date or extend beyond the Stated Maturity Date. See "Description of
New Securities--Description of Junior Subordinated Debentures--Option
to Extend Interest Payment Date" and "Certain United States Federal
Income Tax Considerations--Interest Income and Original Issue
Discount."
Ranking........................ The New Capital Securities rank pari passu, and payments thereon will
be made pro rata, with the Old Capital Securities and the Common
Securities except as described under "Description of New
Securities--Description of Capital Securities--Subordination of Common
Securities." The New Junior Subordinated Debentures rank pari passu
with the Old Junior Subordinated Debentures, and all other junior
subordinated debentures issued by the Corporation (the "Other
Debentures") and sold to other trusts established or to be
established by the Corporation, in each case similar to the Trust
(the "Other Trusts"), and are unsecured obligations of the
Corporation and subordinate and junior in right of payment to all
Senior Indebtedness of the Corporation to the extent and in the
manner set forth in the Indenture. See "Description of New
Securities--Description of Junior Subordinated Debentures." The New
Guarantee ranks pari passu with the Old Guarantee, and all other
guarantees issued by the Corporation with respect to capital
securities issued or to be issued by Other Trusts (the "Other
Guarantees") and constitutes an unsecured obligation of the
Corporation and ranks subordinate and junior in right of payment to
all Senior Indebtedness of the Corporation to the extent and in the
manner set forth in the Guarantee Agreement. See "Description of New
Securities--Description of Guarantee."
Redemption..................... The Trust Securities are subject to mandatory redemption in a Like
Amount: (i) in whole but not in part, on the Stated Maturity Date
upon repayment of the Junior Subordinated Debentures; (ii) in whole
but not in part, at any time before December 1, 2007,
contemporaneously with the optional prepayment of the Junior
Subordinated Debentures by the Corporation upon the occurrence and
continuation of a Special Event (as defined herein); and (iii) in
whole or in part, at any time on or after December 1, 2007,
contemporaneously with the optional prepayment by the Corporation of
all or part of the Junior Subordinated Debentures, in each case at
the applicable Redemption Price. See "Description of New
Securities--Description of Capital Securities--Redemption."
Rating......................... The New Capital Securities are expected to be rated "BB-" by Duff &
Phelps Credit Rating Co. and "BB" by Thomson BankWatch, Inc., which
are the ratings which such agencies have given to the Old Capital
Securities. A security rating is not a recommendation to buy, sell
or hold securities and may be subject to revision or withdrawal at
any time by the assigning rating organization.
Transfer ...................... The Capital Securities will be issued, and may be transferred, only
in blocks having a Liquidation Amount of not less than $100,000 (100
Capital Securities) and in $1,000 increments above that amount. Any
transfer, sale or other disposition of Capital Securities resulting
in a block having a Liquidation Amount of less than $100,000 shall be
deemed to be void and of no legal effect whatsoever.
Absence of Market for the
New Capital Securities......... The New Capital Securities will be a new issue of securities for
which there currently is no market. Sandler O'Neill & Partners,
L.P., the initial purchaser of the Old Capital Securities (the
"Initial Purchaser"), informed the Corporation and the Trust in
connection with the offering of the Old Capital Securities that it
intends to make a market in the New Securities when issued. However,
neither Initial Purchaser is obligated to make a market in the Old
Capital Securities or the New Capital Securities, and any such market
making may be discontinued at any time without notice. Accordingly,
there can be no assurance as to the development or liquidity of any
market for the Capital Securities. The Trust and the Corporation do
not intend to apply for listing of the Capital Securities on any
securities exchange or for quotation through the National Association
of Securities Dealers Automated Quotation System. See "Plan of
Distribution."
</TABLE>
RISK FACTORS
Prospective investors should consider carefully, in addition to the
other information contained in this Prospectus, the following factors in
connection with the Exchange Offer and the New Capital Securities offered
hereby.
Ranking of Subordinated Obligations Under the Guarantee and the Junior
Subordinated Debentures; Limitations on Sources of Funds
The obligations of the Corporation under the Guarantee issued by it for
the benefit of holders of Capital Securities and under the Junior Subordinated
Debentures are unsecured and rank subordinate and junior in right of payment to
all present and future Senior Indebtedness of the Corporation to the extent and
in the manner set forth in the Indenture and the Guarantee, respectively. No
payment may be made of the principal of, or premium, if any, or interest on the
Junior Subordinated Debentures, or in respect of any redemption, retirement,
purchase or other acquisition of any of the Junior Subordinated Debentures, at
any time when: (i) there shall have occurred and be continuing a default, in any
payment in respect of any Senior Indebtedness, or there has been an acceleration
of the maturity thereof because of a default; or (ii) in the event of the
acceleration of the maturity of the Junior Subordinated Debentures until payment
has been made on all Senior Indebtedness. At December 31, 1997, the Corporation
had $1.5 billion of Senior Indebtedness outstanding, including deposits. Because
the Corporation is a holding company, the right of the Corporation to
participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise (and thus the ability of
holders of the Capital Securities to benefit indirectly from such distribution)
is subject to the prior claims of creditors of that subsidiary, except to the
extent that the Corporation may itself be recognized as a creditor of such
subsidiary. At December 31, 1997, the subsidiaries of the Corporation had total
liabilities (excluding liabilities owed to the Corporation) of $1.4 billion,
including deposits. Accordingly, the Junior Subordinated Debentures effectively
will be subordinated to all existing and future liabilities of the Corporation's
subsidiaries including the Corporation's subsidiaries' deposit liabilities,
which aggregated $998.9 million at December 31, 1997, and holders of Junior
Subordinated Debentures should look only to the assets of the Corporation for
payments on the Junior Subordinated Debentures. The Guarantee constitutes an
unsecured obligation of the Corporation and ranks subordinate and junior in
right of payment to all Senior Indebtedness of the Corporation in the same
manner as the Junior Subordinated Debentures. None of the Indenture, the
Guarantee or the Trust Agreement places any limitation on the amount of secured
or unsecured debt, including Senior Indebtedness, that may be incurred by the
Corporation or any of its subsidiaries. See "Description of New Securities --
Description of Guarantee -- Status of Guarantee" and "-- Description of Junior
Subordinated Debentures" --"General" and "--Subordination."
The ability of the Trust to pay amounts due on the Capital Securities
is solely dependent upon the Corporation making payments on the Junior
Subordinated Debentures as and when required.
The Corporation is a holding company and almost all of the operating
assets of the Corporation are owned by the Corporation's subsidiaries. The
Corporation relies primarily on dividends from the Banks to meet its obligations
for payment of principal and interest on its outstanding debt obligations and
corporate expenses. There are regulatory limitations on the payment of dividends
directly or indirectly to the Corporation from the Banks. In addition to
restrictions on the payment of dividends, the Banks are subject to certain
restrictions imposed by federal law on any extensions of credit to, and certain
other transactions with, the Corporation and certain other affiliates, and on
investments in stock or other securities thereof. Such restrictions prevent the
Corporation and such other affiliates from borrowing from the Banks, unless the
loans are secured by various types of collateral. Furthermore, such secured
loans, other transactions and investments by the Banks are generally limited in
amount as to the Corporation and as to each of such other affiliates to 10% of
the Bank's capital and surplus and as to the Corporation and all of such other
affiliates to an aggregate of 20% of the Bank's capital and surplus.
Each of the Banks, with the exception of The First National Bank of
Clifton Forge ("Clifton Forge"), and Tysons National Bank ("Tysons"), is a state
member bank of the Federal Reserve System. As a result the Banks, with the
exception of Clifton Forge and Tysons, are regulated by the Federal Reserve
Board and (except for Commerce Bank which is a Maryland bank) the Virginia State
Corporation Commission ("SCC"). Commerce Bank as a Maryland Bank is regulated by
the Maryland Banking Commissioner. Clifton Forge, Tysons and the Trust Company
are national banking associations and are regulated by the Office of the
Comptroller of the Currency ("OCC"), and in addition, Clifton Forge and Tysons
are a member banks of the Federal Reserve System and regulated by the Federal
Reserve Board. There are various regulatory limitations applicable to the
payment of dividends by the Banks and the Trust Company as well as the payment
of dividends by the Corporation to its shareholders. Under the laws of Virginia,
state chartered banks are required to obtain the prior approval of the SCC if
cash dividends declared in any given year exceed net income for that year plus
net income for the prior two years, less all dividends paid during the current
year and two prior years. For a Maryland state-chartered bank, dividends may be
paid out of undivided profits or, with the prior approval of the Maryland
Banking Commissioner, from surplus in excess of 100% of required capital stock
after providing for all expenses, losses, interest, and taxes that are due or
accrued. National banking associations, on the other hand, are not permitted to
pay dividends out of undivided profits until their surplus equals their capital.
Dividends are generally prohibited unless at least a tenth of their net income
for the preceding half year (if the dividend is a quarterly or semiannual
dividend) or for the preceding two consecutive half year periods (if the
dividend is an annual dividend) have been carried into a surplus. In the case of
the Banks, the Trust Company and the Corporation, the payment of dividends may
also be limited by other factors, such as requirements to maintain capital above
regulatory guidelines. Under existing supervisory practices at December 31, 1997
the Banks could have paid additional dividends of $36.5 million without
obtaining prior regulatory approval. The Trust Company is already paying
dividends out of its retained earnings to the Corporation. Bank regulatory
agencies have authority to prohibit any Bank and the Trust Company or the
Corporation from engaging in an unsafe or unsound practice in conducting their
business. The payment of dividends, depending upon the financial condition of
the Bank in question, the Trust Company or the Corporation, could be deemed to
constitute such an unsafe or unsound practice. The Federal Reserve Board has
stated that, as a matter of prudent banking, a bank or bank holding company
should not maintain its existing rate of cash dividends on common stock unless:
(i) the organization's net income available to common shareholders over the past
year has been sufficient to fund fully the dividends; and (ii) the prospective
rate of earnings retention appears consistent with the organization's capital
needs, asset quality, and overall financial condition.
Under the Federal Deposit Insurance Act ("FDIA"), insured depository
institutions such as the Banks are prohibited from making capital distributions,
including the payment of dividends, if, after making such distribution, the
institution would become "undercapitalized" (as such term is used in the
statute). Based on the Banks' current financial condition, the Corporation does
not expect that this provision will have any impact on its ability to obtain
dividends from the Banks in the near future.
In addition to limitations on dividends, the Banks are limited in the
amount of loans and other extensions of credit that may be extended to the
Corporation, and any such loans or extensions of credit are subject to
collateral security requirements. Generally, up to 10% of each Bank's regulatory
capital, surplus, undivided profits, allowance for loan losses and contingency
reserves may be loaned to the Corporation. There are other restrictions
applicable to the transactions between the Banks and the Corporation. As of
December 31, 1997, approximately $13.8 million of credit was available to the
Corporation under this limitation.
Option to Extend Interest Payment Period; Tax Consequences; Market Price
Consequences
So long as no Debenture Event of Default (as defined herein) has
occurred and is continuing, the Corporation has the right under the Indenture to
defer payments of interest on the Junior Subordinated Debentures at any time and
from time to time for a period not exceeding 10 consecutive semi-annual periods
with respect to each Extension Period, provided that no Extension Period shall
end on a date other than an Interest Payment Date or extend beyond the Stated
Maturity Date. As a consequence of any such deferral, semi-annual Distributions
on the Trust Securities by the Trust will be deferred (and the amount of
Distributions to which holders of the Trust Securities are entitled will
accumulate additional Distributions thereon at the rate of 8.90% per annum,
compounded semi-annually, but not exceeding the interest rate then accruing on
the Junior Subordinated Debentures) from the relevant payment date for such
Distributions during any such Extension Period. During the pendency of any
Extension Period, the Corporation generally will be prohibited from declaring or
paying dividends on the Corporation's capital stock. See "Description of New
Securities--Description of Capital Securities--Distributions."
Prior to the termination of any such Extension Period, the Corporation
may further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods, end on
a date other than an Interest Payment Date or to extend beyond the Stated
Maturity Date. Upon the termination of any such Extension Period and the payment
of all interest then accrued and unpaid on the Junior Subordinated Debentures
(together with interest thereon at the annual rate of 8.90%, compounded
semi-annually, to the extent permitted by applicable law), the Corporation may
elect to begin a new Extension Period, subject to the above requirements. There
is no limitation on the number of times that the Corporation may elect to begin
an Extension Period. See "Description of New Securities--Description of Capital
Securities--Distributions" and "--Description of Junior Subordinated
Debentures--Option to Extend Interest Payment Date."
The Corporation has no current plan to exercise its right to defer
payments of interest on the Junior Subordinated Debentures. However, should the
Corporation exercise its right to defer payments of interest on the Junior
Subordinated Debentures, each holder of Trust Securities will be required to
accrue income (as original issue discount ("OID")) in respect of the deferred
stated interest allocable to its Trust Securities for United States federal
income tax purposes, which will be allocated but not distributed to holders of
Trust Securities. As a result, each holder of Capital Securities will recognize
income for United States federal income tax purposes in advance of the receipt
of cash and will not receive the cash related to such income from the Trust if
the holder disposes of the Capital Securities prior to the record date for the
payment of Distributions thereafter. See "Certain Federal Income Tax
Considerations--Interest Income and Original Issue Discount" and "--Sales of
Capital Securities."
Should the Corporation elect to exercise its right to defer payments of
interest on the Junior Subordinated Debentures in the future, the market price
of the Capital Securities is likely to be affected. A holder that disposes of
its Capital Securities during an Extension Period, therefore, might not receive
the same return on its investment as a holder that continues to hold its Capital
Securities. In addition, the mere existence of the Corporation's right to defer
payments of interest on the Junior Subordinated Debentures may cause the market
price of the Capital Securities to be more volatile than the market prices of
other securities on which OID accrues and that are not subject to such
deferrals.
Special Event Redemption
Upon the occurrence and continuation of a Special Event (including a
Tax Event or a Regulatory Capital Event (in each case as defined under
"Description of New Securities--Description of Junior Subordinated
Debentures--Special Event Prepayment")) prior to the Initial Optional Prepayment
Date, the Corporation will have the right to prepay the Junior Subordinated
Debentures in whole (but not in part) at the Special Event Prepayment Price
within 90 days following the occurrence of such Special Event and therefore
cause a mandatory redemption of the Trust Securities at the Special Event
Redemption Price. The exercise of such right is subject to the Corporation
having received any required regulatory approval. See "Description of New
Securities--Description of Capital Securities--Redemption."
Proposed Tax Legislation
Last year, the United States Treasury Department proposed legislation
that would, among other things, deny an issuer a deduction for United States
federal income tax purposes for the payment of interest in respect of certain
types of debt obligations (the "Administration's Proposal"). This legislation
was not adopted. Congress continues to discuss, however, various changes to the
federal tax code, including a flat tax or a national "sales tax." It is
impossible to predict what changes Congress may make to existing tax laws and
what effect these changes may have on the deduction of interest for certain debt
obligations and other tax issues affecting this investment. See "Description of
New Securities--Description of Capital Securities--Redemption" and "Description
of Junior Subordinated Debentures--Special Event Prepayment." See also "Certain
Federal Income Tax Considerations--Proposed Tax Legislation."
Liquidation Distribution of Junior Subordinated Debentures
The Corporation has the right at any time to terminate the Trust and,
after satisfaction of liabilities to creditors of the Trust as required by
applicable law, to cause the Junior Subordinated Debentures to be distributed to
the holders of the Trust Securities in liquidation of the Trust. Such right is
subject to: (i) the Corporation having received an opinion of counsel to the
effect that such distribution will not be a taxable event to the holders of
Capital Securities; and (ii) receipt of any required regulatory approval. Under
current United States federal income tax law, a distribution of Junior
Subordinated Debentures upon the dissolution of the Trust would not be a taxable
event to holders of the Capital Securities. Upon the occurrence of a Special
Event, a dissolution of the Trust in which holders of the Capital Securities
receive cash would be a taxable event to such holders. See "Certain Federal
Income Tax Considerations--Receipt of Junior Subordinated Debentures or Cash
Upon Liquidation of the Trust."
Possible Adverse Effect on Market Prices
There can be no assurance as to the market prices for Capital
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Capital Securities if a termination of the Trust were to occur.
Accordingly, the Capital Securities or the Junior Subordinated Debentures may
trade at a discount from the price that the investor paid to purchase the
Capital Securities offered hereby. Because holders of Capital Securities may
receive Junior Subordinated Debentures in liquidation of the Trust and because
Distributions are otherwise limited to payments on the Junior Subordinated
Debentures, prospective purchasers of Capital Securities are also making an
investment decision with regard to the Junior Subordinated Debentures and should
carefully review all the information regarding the Junior Subordinated
Debentures contained herein. See "Description of New Securities--Description of
Junior Subordinated Debentures."
Rights Under the Guarantee
The Guarantee guarantees to the holders of the Capital Securities the
following payments, to the extent not paid by or on behalf of the Trust: (i) any
accumulated and unpaid Distributions required to be paid on the Capital
Securities, to the extent that the Trust has funds on hand legally available
therefor at such time; (ii) the applicable Redemption Price with respect to the
Capital Securities called for redemption, to the extent that the Trust has funds
on hand legally available therefor at such time; and (iii) upon a voluntary or
involuntary termination, winding up or liquidation of the Trust (unless the
Junior Subordinated Debentures are distributed to holders of the Capital
Securities), the lesser of (a) the aggregate of the Liquidation Amount and all
accumulated and unpaid Distributions to the date of payment, to the extent that
the Trust has funds on hand legally available therefor at such time, and (b) the
amount of assets of the Trust remaining available for distribution to holders of
the Capital Securities at such time, after the satisfaction of liabilities to
creditors of the Trust as provided by applicable law.
The holders of a majority in Liquidation Amount of the Capital
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
Guarantee or to direct the exercise of any trust power conferred upon the
Guarantee Trustee under the Guarantee. Any holder of the Capital Securities may
institute a legal proceeding directly against the Corporation to enforce its
rights under the Guarantee without first instituting a legal proceeding against
the Trust, the Guarantee Trustee or any other person or entity. If the
Corporation defaults on its obligation to pay amounts payable under the Junior
Subordinated Debentures, the Trust will not have sufficient funds for the
payment of Distributions or amounts payable on redemption of the Capital
Securities or otherwise, and, in such event, holders of the Capital Securities
will not be able to rely upon the Guarantee for payment of such amounts.
Instead, in the event a Debenture Event of Default shall have occurred and be
continuing and such event is attributable to the failure of the Corporation to
pay the principal of (or premium, if any) or interest (including Additional Sums
(as defined below) and Compounded Interest (as defined below), if any) or
Liquidated Damages, if any, on the Junior Subordinated Debentures on the payment
date on which such payment is due and payable, then a holder of Capital
Securities may institute a legal proceeding directly against the Corporation for
enforcement of payment to such holder of the principal of (or premium, if any)
or interest (including Additional Sums and Compounded Interest, if any) or
Liquidated Damages, if any, on such Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Capital Securities of
such holder (a "Direct Action"). Notwithstanding any payments made to a holder
of Capital Securities by the Corporation in connection with a Direct Action, the
Corporation shall remain obligated to pay the principal of (and premium, if any)
and interest (including Additional Sums and Compounded Interest, if any) or
Liquidated Damages, if any, on the Junior Subordinated Debentures, and the
Corporation shall be subrogated to the rights of the holder of such Capital
Securities with respect to payments on the Capital Securities to the extent of
any payments made by the Corporation to such holder in any Direct Action. Except
as described herein, holders of Capital Securities will not be able to exercise
directly any other remedy available to the holders of the Junior Subordinated
Debentures or to assert directly any other rights in respect of the Junior
Subordinated Debentures. See "Description of New Securities--Description of
Junior Subordinated Debentures--Enforcement of Certain Rights by Holders of
Capital Securities," "--Debenture Events of Default" and "--Description of
Guarantee." The Trust Agreement provides that each holder of Capital Securities
by acceptance thereof agrees to the provisions of the Indenture. The Bank of New
York acts as Guarantee Trustee and holds the Guarantee for the benefit of the
holders of the Capital Securities. The Bank of New York also acts as Property
Trustee and as Debenture Trustee under the Indenture. The Bank of New York
(Delaware) acts as Delaware Trustee under the Trust Agreement.
Limited Voting Rights
Holders of Capital Securities generally will have limited voting rights
relating only to the modification of the Capital Securities and the exercise of
the Trust's rights as holder of Junior Subordinated Debentures. Holders of
Capital Securities will not be entitled to vote to appoint, remove or replace,
or to increase or decrease the number of, the Issuer Trustees, which voting
rights are vested exclusively in the holder of the Common Securities except upon
the occurrence of certain events described herein. The Property Trustee, the
Administrative Trustees and the Corporation may amend the Trust Agreement
without the consent of holders of Capital Securities to ensure that the Trust
will be classified for United States federal income tax purposes as a grantor
trust even if such action adversely affects the interests of such holders.
Holders of Capital Securities will have no voting rights with respect to any
matters submitted to a vote of the Corporation's stockholders. See "Description
of New Securities--Description of Capital Securities--Voting Rights; Amendment
of the Trust Agreement" and "--Removal of Issuer Trustees."
Consequences of a Failure to Exchange Old Capital Securities
The Old Capital Securities have not been registered under the
Securities Act or any state securities laws and therefore may not be offered,
sold or otherwise transferred except in compliance with the registration
requirements of the Securities Act and any other applicable securities laws, or
pursuant to an exemption therefrom or in a transaction not subject thereto, and
in each case in compliance with certain other conditions and restrictions. Old
Capital Securities which remain outstanding after consummation of the Exchange
Offer will continue to bear a legend reflecting such restrictions on transfer.
In addition, upon consummation of the Exchange Offer, holders of Old Capital
Securities which remain outstanding will not be entitled to any rights to have
such Old Capital Securities registered under the Securities Act or to any
similar rights under the Registration Rights Agreement. The Corporation and the
Trust do not intend to register under the Securities Act any Old Capital
Securities which remain outstanding after consummation of the Exchange Offer.
To the extent that Old Capital Securities are tendered and accepted in
the Exchange Offer, a holder's ability to sell untendered Old Capital Securities
could be adversely affected. In addition, although the Old Capital Securities
have been designated for trading in the Private Offerings, Resale and Trading
through Automated Linkages ("PORTAL") market, to the extent that Old Capital
Securities are tendered and accepted in connection with the Exchange Offer, any
trading market for Old Capital Securities which remain outstanding after the
Exchange Offer could be adversely affected.
The New Capital Securities and any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer will vote together as a
single class for purposes of determining whether holders of the requisite
percentage in outstanding Liquidation Amount thereof have taken certain actions
or exercised certain rights under the Trust Agreement. See "Description of New
Securities--Description of Capital Securities--Voting Rights; Amendment of the
Trust Agreement."
The Old Capital Securities provide, among other things, that, if a
registration statement relating to the Exchange Offer has not been filed by
April 18, 1998 and declared effective by May 18, 1998, the Distribution rate
borne by the Old Capital Securities commencing on November 19, 1997 will
increase by 0.25% per annum until the Exchange Offer is consummated. Upon
consummation of the Exchange Offer, holders of Old Capital Securities will not
be entitled to any increase in the Distribution rate thereon or any further
registration rights under the Registration Rights Agreement. The New Capital
Securities will not be entitled to any such increase in the Distribution rate
thereon. See "Description of Old Capital Securities."
Trading Characteristics of the Capital Securities
The Capital Securities may trade at a price that does not fully reflect
the value of accrued but unpaid interest with respect to the underlying Junior
Subordinated Debentures. A holder who uses the accrual method of accounting for
tax purposes (and a cash method holder, if the Junior Subordinated Debentures
are deemed to have been issued with OID) and who disposes of its Capital
Securities between record dates for payments of distributions thereon will be
required to include accrued but unpaid interest on the Junior Subordinated
Debentures through the date of disposition in income as ordinary income (i.e.,
interest or, possibly, OID), and to add such amount to its adjusted tax basis in
its share of the underlying Junior Subordinated Debentures deemed disposed of.
To the extent the selling price is less than the holder's adjusted tax basis
(which will include all accrued but unpaid interest), a holder will recognize a
capital loss. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax purposes.
See "Certain Federal Income Tax Considerations -- Interest Income and Original
Issue Discount" and "-- Sales of Capital Securities."
Absence of Public Market
The Old Capital Securities have not been registered under the
Securities Act and will continue to be subject to restrictions on
transferability under the Securities Act and applicable state securities laws if
they are not exchanged for New Capital Securities. Although the New Capital
Securities generally may be resold or otherwise transferred by the holders (who
are not Affiliates of the Corporation or the Trust) without compliance with the
registration requirements under the Securities Act, they will constitute a new
issue of securities with no established trading market. Capital Securities may
be transferred by the holders thereof only in blocks having a Liquidation Amount
of not less than $100,000 (100 Capital Securities). The Corporation and the
Trust were advised by the Initial Purchaser in connection with the offering of
the Old Capital Securities that the Initial Purchaser intends to make a market
in the Old Capital Securities. However, the Initial Purchaser is not obligated
to do so and any market-making activity with respect to the New Capital
Securities may be discontinued at any time without notice. In addition, such
market-making activity will be subject to the limits imposed by the Securities
Act and the Exchange Act and may be limited during the Exchange Offer.
Accordingly, no assurance can be given that an active public or other market
will develop for the New Capital Securities or the Old Capital Securities or as
to the liquidity of or the trading market for the New Capital Securities or the
Old Capital Securities. If an active public market does not develop, the market
price and liquidity of the New Capital Securities may be adversely affected.
If a public trading market develops for the New Capital Securities,
future trading prices will depend on many factors, including, among other
things, prevailing interest rates, the Corporation's results of operations and
the market for similar securities. Depending on prevailing interest rates, the
market for similar securities and other factors, including the financial
condition of the Corporation, the New Capital Securities may trade at a
discount.
Notwithstanding the registration of the New Capital Securities in the
Exchange Offer, holders who are Affiliates of the Corporation or the Trust may
publicly offer for sale or resell the New Capital Securities only in compliance
with the provisions of Rule 144 under the Securities Act.
Each Participating Broker-Dealer that receives New Capital Securities for
its own account in exchange for Old Capital Securities must acknowledge that it
will deliver a prospectus in connection with any resale of such New Capital
Securities. See "Plan of Distribution."
Exchange Offer Procedures
Issuance of the New Capital Securities in exchange for Old Capital
Securities pursuant to the Exchange Offer will be made only after a timely
receipt by the Trust of such Old Capital Securities, a properly completed and
duly executed Letter of Transmittal or Agent's Message in lieu thereof and all
other required documents. Therefore, holders of the Old Capital Securities
desiring to tender such Old Capital Securities in exchange for New Capital
Securities should allow sufficient time to ensure timely delivery. None of the
Corporation, the Trust or the Exchange Agent is under any duty to give
notification of defects or irregularities with respect to the tenders of Old
Capital Securities for exchange.
Year 2000
The Year 2000 technology problem represents risks to all corporations
due to the potential failure of date related systems. To address this potential
threat, the Corporation is devoting significant time and resources to manage our
Year 2000 project. The Year 2000 Task Force has been established, and ad hoc
committee comprised of representatives from most management and operations
functions. This committee provides management with guidance and oversight in
addressing the Corporation's Year 2000 initiatives.
The Corporation's critical core applications are provided by an outside
vendor, Information Technology Incorporated. This vendor has indicated that the
ITI software is Year 2000 compliant, and the Corporation intends to test this
software in conjunction with existing hardware during 1998 to verify compliance.
The Corporation has identified certain non-critical applications that are not
Year 2000 compliant, and these systems are scheduled for replacement during 1998
and 1999. The availability and continued use of these automated processes is
dependent on the Corporation's ability to meet these schedules. Costs associated
with the purchase and installation of these systems are considered to be normal
technology improvements that are consistent with the planned growth of the
Corporation and a part of the normal budgetary process.
In addition, the Corporation has implemented several highly successful
education programs that focus on providing current, accurate information on the
problem to employees, local industry, small businesses and community leaders in
an effort to encourage others to also become proactive. However, there is no
guarantee that unexpected Year 2000-related problems, causing monetary or
service losses to the Corporation, will not develop from internal systems,
outside vendors, or bank customers.
THE TRUST
The Trust is a statutory business trust created under Delaware law upon
the filing of a certificate of trust with the Secretary of State of the State of
Delaware. The Trust exists for the exclusive purposes of: (i) issuing and
selling the Trust Securities (which represent undivided beneficial interests in
the assets of the Trust); (ii) investing the gross proceeds from the sale of the
Trust Securities in the Junior Subordinated Debentures; and (iii) engaging in
only those other activities necessary, advisable or incidental thereto.
Accordingly, the Junior Subordinated Debentures will be the sole assets of the
Trust and payments under the Junior Subordinated Debentures will be the sole
source of revenue of the Trust. All of the Common Securities are owned directly
by the Corporation. The Common Securities rank pari passu, and payments will be
made thereon pro rata, with the Capital Securities, except that upon the
occurrence and the continuance of an event of default, the rights of the
Corporation as holder of the Common Securities to payments in respect of
Distributions and payments upon liquidation, redemption or otherwise will be
subordinated and rank junior to the rights of the holders of the Capital
Securities. See "Description of New Securities--Description of Capital
Securities -Subordination of Common Securities." The Corporation acquired Common
Securities in a Liquidation Amount equal to at least 3% of the total capital of
the Trust. The Trust has a term of approximately 31 years, but may terminate
earlier as provided in the Trust Agreement. The Trust's business and affairs are
conducted by trustees (the "Issuer Trustees") appointed by the Corporation as
the direct holder of the Common Securities. The Issuer Trustees are The Bank of
New York as the Property Trustee (the "Property Trustee"), The Bank of New York
(Delaware) as the Delaware Trustee (the "Delaware Trustee") and three individual
trustees (the "Administrative Trustees") who are officers of the Corporation.
The Bank of New York, as Property Trustee, acts as sole indenture trustee under
the Trust Agreement. The Bank of New York also acts as indenture trustee under
the Guarantee and the Indenture. See "Description of New Securities Description
of Guarantee" and "--Description of Junior Subordinated Debentures." The holder
of the Common Securities or, if an Event of Default under the Trust Agreement
has occurred and is continuing, the holders of not less than a majority in
Liquidation Amount of the Capital Securities, will be entitled to appoint,
remove or replace the Property Trustee and/or the Delaware Trustee. In no event
will the holders of the Capital Securities have the right to vote to appoint,
remove or replace the Administrative Trustees; such voting rights will be vested
exclusively in the holder of the Common Securities. The duties and obligations
of each Issuer Trustee are governed by the Trust Agreement. The Corporation as
issuer of the Junior Subordinated Debentures will pay all fees, expenses, debts
and obligations (other than the payment of principal, interest and premium, if
any, on the Trust Securities) related to the Trust and the Exchange Offer,
except as provided herein, and will pay, directly or indirectly, all ongoing
costs, expenses and liabilities of the Trust. The principal executives office of
the Trust is c/o MainStreet BankGroup Incorporated, 200 East Church Street,
Martinsville, Virginia 24112-5409.
<PAGE>
THE CORPORATION
MainStreet BankGroup Incorporated (the "Corporation") is a multi-bank
holding company headquartered in Martinsville, Virginia. Organized in 1977, the
Corporation, through its affiliate banks (the "Banks"), and MainStreet Trust
Company, National Association, a nationally chartered trust company (the "Trust
Company"), engages in a general banking business and provides a broad spectrum
of full-service banking and trust services to consumers, businesses,
institutions and governments, including accepting demand, savings and time
deposits; making commercial, personal, installment, mortgage and construction
loans; issuing letters of credit; and providing discount brokerage, trust
services, bank-card services, mortgage banking and investment services.
The Banks seek customers whose total financial requirements they can
serve. As a result, most of the Banks' business customers are small and
medium-sized entities. While the Corporation considers this middle market to be
its primary business market, the Corporation's lead bank, Piedmont Trust Bank,
has banking relationships with many of the larger textile and furniture
manufacturing companies located in its market area.
Principal markets served by the Corporation and its Banks are: the City
of Martinsville and Henry County; the Town of Hillsville and City of Galax, and
Carroll and Grayson Counties; the Towns of Ferrum and Rocky Mount and Franklin
County; the Town of Forest, City of Lynchburg, and Bedford, Campbell and Amherst
Counties; the Town of Stuart and Patrick County; the Towns of Saltville and
Chilhowie and Smyth County; the City of Richmond, the towns of Mechanicsville
and Ashland, and Hanover, Chesterfield, and Henrico Counties; the towns of
McLean and Reston and Fairfax County; and the City of Clifton Forge, City of
Richmond, and Alleghany, Bath and northern Botetourt Counties, Virginia and
contiguous areas; and the City of Prince George County, Maryland, College Park,
Maryland, and contiguous areas. The Corporation's affiliate Banks operate a
total of 45 offices in these markets.
The Corporation continually seeks acquisition opportunities for banks
and bank related financial institutions. On March 13, 1998, the Corporation
announced an agreement to acquire Ballston Bancorp, Inc., the holding company
for the Bank of Northern Virginia, an $80 million bank with three offices in the
Arlington, Virginia area.
During 1994, the Corporation moved to a centralized approach in
management, providing direction to the Banks and performing selected services in
the compliance, data processing, financial management, human resources,
investment, accounting, marketing, mortgage, trust and audit areas. The Banks
still are permitted to approve loans up to a certain credit limit, above which
central credit administration must consent. The Banks also must approve
investments and other activities in their areas consistent with past practices
and the needs of their communities. To coordinate the activities of the Banks
and to maintain internal controls, the Corporation utilizes a planning and
budgeting process which involves the Corporation officers, presidents of the
Banks, and principal department heads. Performance targets and budget goals are
developed for each Bank on an annual basis, with financial and operating results
reported and reviewed periodically during the year.
During 1997, the Corporation organized the Trust Company to offer
fiduciary services in all the markets served by its affiliate banks and
elsewhere. This centralized approach to fiduciary services allows the
Corporation affiliates to offer to the customer a broader array of more
sophisticated products more efficiently and effectively than could otherwise be
accomplished.
The principal executive offices of the Corporation are located at 200
East Church Street, Martinsville, Virginia 24112-5409 and its telephone number
is (540) 632-2971.
MainStreet Trust Company, National Association. The Trust Company was
incorporated as a national banking association in 1997 with its business limited
to trust and related fiduciary services. At December 31, 1997, it had assets in
excess of $728.3 million under management, including substantially all of the
trust assets of Piedmont Trust Bank which were transferred to the Trust Company
on January 31, 1997. Its primary service area includes the markets of all its
affiliate banks. The Trust Company is supervised and examined by the OCC and
engages solely in the provision of trust and fiduciary services.
SELECTED CONSOLIDATED FINANCIAL DATA OF THE CORPORATION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The selected consolidated financial data below should be read in
connection with the financial information included in the Corporation's Annual
Report on Form 10-K for the year ended December 31, 1997.
SELECTED FINANCIAL DATA
(In Thousands, Except Per Share Data and Ratios)
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C>
SUMMARY OF OPERATIONS
Interest Income $ 115,425 $ 98,201 $ 85,414 $ 73,356 $ 70,057
Interest Expense 58,779 44,775 38,404 30,310 29,837
---------- -------- ---------- -------- --------
Net Interest Income 56,646 53,426 47,010 43,046 40,220
Provision for Loan Losses 4,011 3,451 1,725 3,476 2,115
---------- -------- ---------- -------- --------
Net Interest Income After Provision
For Loan Losses 52,635 49,975 45,285 39,570 38,105
Noninterest Income 13,726 11,617 9,069 2,187 7,273
Noninterest Expense 40,952 37,254 34,290 33,568 32,549
---------- -------- ---------- -------- --------
Income Before Income Taxes 25,409 24,338 20,064 8,189 12,829
Income Tax Expense 8,152 7,685 5,934 1,157 3,167
---------- -------- ---------- -------- --------
NET INCOME $ 17,257 $ 16,653 $ 14,130 $ 7,032 $ 9,662
========== ======== ========== ======== ========
PER SHARE DATA (1) Net Income:
Basic $ 1.44 $ 1.39 $ 1.26 $ .65 $ .90
Diluted 1.44 1.38 1.17 .62 .85
Cash Dividends .57 .49 .35 .30 .27
Net Book Value 10.72 9.57 8.69 7.02 7.42
DAILY AVERAGES
Total Assets $1,481,268 $1,218,753 $1,048,166 $972,971 $915,820
Interest-Earning Assets 1,401,212 1,159,237 989,455 913,007 866,101
Securities Available for Sale 456,566 259,779 176,995 214,092 223,493
Securities Held to Maturity 81,204 107,569 131,308 80,490 52,542
Loans, Net of Unearned Income 853,418 773,252 666,222 595,645 556,192
Allowance for Loan Losses 11,505 10,327 9,668 9,477 9,802
Deposits 970,495 913,658 880,099 853,030 802,283
Interest-Bearing Liabilities 1,206,247 973,160 834,352 778,243 738,535
Shareholders' Equity 123,409 110,205 88,960 79,988 77,360
</TABLE>
Selected Financial Data Continued
(In Thousands, Except Per Share Data and Ratios)
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C>
AT YEAR END
Total Assets $1,716,410 $1,358,127 $1,129,600 $990,169 $954,529
Interest-Earning Assets 1,628,088 1,274,397 1,070,223 924,147 897,622
Securities Available for Sale 673,526 339,136 216,504 127,166 203,967
Securities Held to Maturity 72,243 97,922 117,052 158,130 85,771
Loans, Net of Unearned Income 878,777 829,979 714,453 632,971 556,855
Allowance for Loan Losses 11,786 10,903 9,605 9,547 9,329
Deposits 998,862 940,691 898,777 867,735 831,413
Interest-Bearing Liabilities 1,430,157 1,099,369 890,737 787,145 764,691
Shareholders' Equity 128,652 114,069 103,632 76,595 80,221
RATIOS
Return on Average Assets 1.17% 1.37% 1.35% .72% 1.06%
Return on Average Shareholders' Equity 13.98 15.11 15.88 8.79 12.49
Average Shareholders' Equity to Average Assets 8.33 9.04 8.49 8.22 8.45
Efficiency Ratio 57.59 56.65 59.26 61.60 61.60
Net Interest Margin (2) 4.13 4.72 4.89 4.88 4.81
CREDIT QUALITY RATIOS
Allowance for Loan Losses to Nonperforming Loans 189.24% 171.65% 162.99% 201.29% 174.50%
Allowance for Loan Losses to Nonperforming Assets (3) 150.29 146.82 123.39 130.96 89.56
Allowance for Loan Losses to Year-End Loans, Net
of Unearned Income 1.34 1.31 1.34 1.51 1.68
Net Charge-Offs to Average Loans, Net of Unearned
Income .37 .28 .25 .55 .40
</TABLE>
- ----------------------
(1) Share Data for the Corporation has been retroactively adjusted to reflect a
2-for-1 stock split in the form of a stock dividend to shareholders of record on
March 4, 1996 and a 5-for-4 stock split in the form of a stock dividend to
shareholders of record on July 15, 1993.
(2) Net interest margin is calculated on a taxable equivalent basis, using a tax
rate of 35% for 1997 and 1996 and 34% for all preceding years.
(3) Nonperforming assets include nonaccrual loans, loan past due 90 days or
more, other real estate and other repossessed assets.
<PAGE>
The following table reflects financial data for the periods indicated,
restated to include the acquisition of Regency Financial Shares, Inc. in March
of this year, accounted for by pooling of interests.
RESTATED SELECTED FINANCIAL DATA
(In Thousands, Except Per Share Data and Ratios)
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three Months Ended March 31 Years Ended December 31
-------------------------- ------------------------------------------
1998 1997 1997 1996 1995
---- ---- ---- ---- ----
<S> <C>
SUMMARY OF OPERATIONS
Interest Income $ 36,069 $ 27,863 $ 121,304 $ 103,623 $ 90,411
Interest Expense 19,802 13,690 61,554 47,162 40,597
-------------------------- ------------------------------------------
Net Interest Income 16,267 14,173 59,750 56,461 49,814
Provision for Loan Losses 1,084 963 4,652 3,510 1,813
-------------------------- ------------------------------------------
Net Interest Income After
Provison For Loan Losses 15,183 13,210 55,098 52,951 48,001
Noninterest Income 3,776 3,964 13,879 11,782 9,196
Noninterest Expense 11,767 10,919 43,727 39,282 36,066
-------------------------- ------------------------------------------
Income Before Income Taxes 7,192 6,255 25,250 25,451 21,131
Income Tax Expense 2,294 1,971 8,152 8,054 6,297
-------------------------- ------------------------------------------
NET INCOME $ 4,898 $ 4,284 $17,098 $ 17,397 $ 14,834
========================== ==========================================
PER SHARE DATA (1) Net Income:
Basic 0.38 0.34 $ 1.36 $ 1.38 $ 1.26
Diluted 0.38 0.34 1.35 1.38 1.17
Cash Dividends 0.15 0.13 .57 0.47 0.34
Net Book Value 11.65 9.68 10.72 9.66 8.77
DAILY AVERAGES
Total Assets $ 1,969,111 $1,451,550 $ 1,554,578 $ 1,283,437 $ 1,106,749
Interest-Earning Assets 1,863,960 1,369,457 1,470,357 1,220,725 1,045,449
Securities Available for Sale 778,197 392,411 477,650 276,562 193,431
Securities Held to Maturity 65,542 87,672 81,204 107,569 131,308
Loans, Net of Unearned Income 992,677 882,329 901,480 817,957 705,779
Allowance for Loan Losses 13,538 11,744 12,124 10,881 10,171
Deposits 1,151,325 1,001,745 1,032,179 966,865 928,857
Interest-Bearing Liabilities 1,626,189 1,178,382 1,265,599 1,026,909 882,876
Shareholders' Equity 157,240 124,793 130,505 116,901 94,729
AT PERIOD END
Total Assets $ 2,014,648 $1,506,855 $ 1,794,242 $1,430,125 $1,192,398
Interest-Earning Assets 1,886,546 1,415,534 1,700,604 1,341,213 1,129,519
Securities Available for Sale 806,877 420,925 693,957 353,398 231,002
Securities Held to Maturity 57,103 92,886 72,243 97,922 117,052
Loans, Net of Unearned Income 998,699 886,740 925,718 878,160 756,471
Allowance for Loan Losses 13,832 12,097 12,375 11,496 10,129
Deposits 1,191,437 1,035,450 1,063,732 1,000,084 951,661
Interest-Bearing Liabilities 1,649,202 1,222,052 1,493,030 1,157,232 938,671
Shareholders' Equity 155,281 121,628 135,719 121,137 109,955
RATIOS
Return on Average Assets 1.01% 1.20% 1.10% 1.36% 1.34%
Return on Average Shareholders's Equity 12.63 13.92 13.10 14.88 15.66
Average Shareholders's Equity to Average 7.99 8.60 8.39 9.11 8.56
Assets
Efficiency Ratio 57.40 61.67 58.77 56.93 59.29
Net Interest Margin 3.61 4.29 4.15 4.73 4.89
(2)
CREDIT QUALITY RATIOS
Allowance for Loan Losses to Nonperforming 140.06% 189.58% 160.76% 178.54% 171.27%
Loans
Allowance for Loan Losses to Nonperforming 117.06 166.72 132.89 153.01 129.78
Assets (3)
Allowance for Loan Losses to Period-End 1.39 1.36 1.34 1.31 1.34
Loans, Net of Unearned Income
Net Charge-Offs to Average Loans, Net of 0.24 0.17 0.42 0.26 0.24
Unearned Income
</TABLE>
<PAGE>
RECENT DEVELOPMENTS
The Corporation has completed two (2) recent bank acquisitions. On
February 28, 1998, the Corporation completed the acquisition of Tysons Financial
Corporation ("Tysons"), a Virginia corporation, located in McLean, Virginia, and
the holding company for Tysons National Bank. That Bank has a main office and
three branches located in Fairfax County, Virginia. The transaction was valued
at approximately $17.2 million. Tysons at December 31, 1997 had assets of $101.9
million, deposits of $90.8 million, shareholders' equity of $8.5 million, and
net income for the year of $215 thousand. This transaction was accounted for as
a purchase.
On March 10, 1998, the Corporation completed its acquisition of Regency
Financial Shares ("Regency"), a Virginia corporation, located in Richmond,
Virginia, the holding company for Regency Bank. Regency Bank has a main office
in Richmond, Virginia and a branch office in each of Henrico County, and
Chesterfield County, Virginia, suburbs of Richmond. At December 31, 1997,
Regency reported total assets of $77.8 million, deposits of $64.9 million,
shareholders' equity of $7.1 million, and net loss of $159 thousand. The
acquisition of Regency was accounted for as a pooling of interests.
If the Tysons and Regency transactions had been completed as of year
end, the total assets, deposits, shareholders' equity, and net income of the
Corporation would have been $1.9 billion, $1.2 billion, $152.8 million and $17.3
million, respectively.
On March 13, 1998, the Corporation announced that it had reached an
agreement to acquire Ballston Bancorp, Inc. ("Ballston"), the holding company
for the Bank of Northern Virginia, a bank with a total of three (3) offices in
the Arlington, Virginia area. At December 31, 1997, Ballston reported total
assets, deposits, shareholders' equity and net income of $80.3 million, $65.0
million, $8.3 million, and $770.8 thousand. This transaction is valued at
approximately $19.5 million. The parties expect the transaction to close prior
to September 30, 1998.
USE OF PROCEEDS
Neither the Corporation nor the Trust will receive any cash proceeds
from the issuance of the New Capital Securities offered hereby. The Old Capital
Securities surrendered in exchange for the New Capital Securities will be
retired and canceled.
The proceeds to the Trust from the offering of the Old Capital
Securities was $50,000,000 (before giving effect to approximately $1,250,000 of
expenses of the offering payable by the Corporation). All of the proceeds from
the sale of Old Capital Securities were invested by the Trust in the Junior
Subordinated Debentures. The net proceeds were added by the Corporation to its
general corporate funds and will be available for general corporate purposes,
including, without limitation, increasing the Corporation's investment in the
Banks for the possible acquisition of additional facilities, the financing of
one or more future acquisitions by the Corporation, and the funding of
repurchases of the Corporation's common stock which may be made from time to
time. As of the date of this Prospectus, the Corporation has not entered into
any agreement or understanding with respect to any such acquisitions or any
other material transactions other than the pending acquisition disclosed under
"MainStreet BankGroup Incorporated--Recent Developments." Initially, the net
proceeds may be used to make short-term investments.
<PAGE>
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges
of the Corporation on a consolidated basis for the respective periods indicated.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------
1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------------
<S> <C>
Ratios of Earnings to Fixed Charges:
Including interest on deposits 1.43x 1.54x 1.52x 1.27x 1.43x
Excluding interest on deposits 2.22x 3.55x 6.10x 6.95x 10.30x
</TABLE>
The following table sets forth the ratios of earnings to fixed charges
of the Corporation on a consolidated basis for the respective periods indicated,
with unaudited ratios restated to reflect the acquisition of Regency Financial
Shares, Inc. in March of this year, accounted for by pooling of interests.
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, December 31,
----------------------------- ------------------------------
1998 1997 1997 1996 1995
- ----------------------------------------------------------------------------- ------------------------------
<S> <C>
Ratios of Earnings to Fixed Charges:
Including interest on deposits 1.36x 1.46x 1.41x 1.54x 1.52x
Excluding interest on deposits 1.78x 2.53x 2.20x 3.61x 6.12x
</TABLE>
For purposes of computing the ratios of earnings to fixed charges,
earnings represent net income (loss) before extraordinary items and cumulative
effect of changes in accounting principles plus applicable income taxes and
fixed charges. Fixed charges, excluding interest on deposits, include gross
interest expense (other than on deposits) and the portion deemed representative
of the interest factor of rent expense, net of income from subleases. Fixed
charges, including gross interest on deposits, include all interest expense and
the portion deemed representative of the interest factor of rent expense, net of
income from subleases.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust is treated as a subsidiary
of the Corporation and, accordingly, the accounts of the Trust are included in
the consolidated financial statements of the Corporation. The Capital Securities
are presented as a separate line item in the consolidated balance sheets of the
Corporation, entitled "Corporation-Obligated, Mandatorily Redeemable Capital
Securities of Subsidiary Trust Holding Solely Junior Subordinated Debentures of
the Corporation," and appropriate disclosures about the Capital Securities, the
Guarantee and the Junior Subordinated Debentures are included in the notes to
the consolidated financial statements for financial reporting purposes. For
financial reporting purposes, the Corporation records Distributions payable on
the Capital Securities as interest expense in the consolidated statements of
income.
CAPITALIZATION
The following tables sets forth the consolidated capitalization of the
Corporation as of December 31, 1997, which reflects the consummation of the
offering of the Capital Securities. The following data should be read in
conjunction with the financial information included in documents incorporated
herein by reference. See "Incorporation of Certain Documents by Reference."
<PAGE>
CAPITALIZATION
(IN 000'S)
<TABLE>
<CAPTION>
As of March 31, 1998
(Unaudited)
Excluding Including
Trust Trust
Preferred Preferred
--------- ---------
<S> <C>
Total Long-Term Debt and Capital Lease Obligations $ 337,682 $ 337,682
Corporation-Obligated Mandatorily Redeemable Capital Securities of
Subsidiary Trust Holding Solely Junior Subordinated Debentures
of the Corporation - 50,000
-------- --------
Shareholders' Equity:
Preferred Stock, Authorized 1,000,000 Shares; None Outstanding - -
Common Stock, $5 Par Value, Authorized 20,000,000 Shares;
Issued and Outstanding 11,996,165 Shares 66,655 66,655
Capital in Excess of Par 22,971 22,971
Retained Earnings 64,225 64,225
Unearned Compensation (135) (135)
Net Unrealized Gains (Losses) on Securities, Net 1,565 1,565
-------- --------
Total Shareholders' Equity 155,281 155,281
--------- ----------
Total Long-Term Debt, Capital Lease Obligations and
Shareholders' Equity $ 492,963 $ 542,963
========= =========
</TABLE>
- ----------------------------
(1) Reflects the Capital Securities at their issue price. As described herein,
the sole assets of the Trust, which is a subsidiary of the Corporation, are the
$50,000,000 aggregate principal amount of the Junior Subordinated Debentures
(including the amounts attributable to the issuance of the Common Securities of
the Trust), which will mature on December 1, 2027. The Corporation owns all of
the Common Securities issued by the Trust.
THE EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
In connection with the sale of the Old Capital Securities, the
Corporation and the Trust entered into the Registration Rights Agreement with
the Initial Purchaser, pursuant to which the Corporation and the Trust agreed to
file and to use their best efforts to cause to be declared effective by the
Commission a registration statement with respect to the exchange of the Old
Capital Securities for capital securities with terms identical in all material
respects to the terms of the Old Capital Securities. A copy of the Registration
Rights Agreement has been filed as an Exhibit to the Registration Statement of
which this Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual obligations
of the Corporation and the Trust under the Registration Rights Agreement. The
form and terms of the New Capital Securities are the same as the form and terms
of the Old Capital Securities except that the New Capital Securities: (i) have
been registered under the Securities Act and therefore will not be subject to
certain restrictions on transfer under federal and state securities laws; and
(ii) will not provide for any increase in the Distribution rate thereon. In that
regard, the Old Capital Securities provide, among other things, that, if a
registration statement relating to the Exchange Offer has not been filed by
April 18, 1998, and declared effective by May 18, 1998, the Distribution rate
borne by the Old Capital Securities, commencing on November 19, 1997, will
increase by 0.25% per annum on the Liquidation Amount of the Old Capital
Securities until the Exchange Offer is consummated. Upon consummation of the
Exchange Offer, holders of Old Capital Securities will not be entitled to any
increase in the Distribution rate thereon or any further registration rights
under the Registration Rights Agreement. See "Risk Factors--Consequences of a
Failure to Exchange Old Capital Securities" and "Description of Old Capital
Securities."
The Exchange Offer is not being made to, nor will the Trust accept
tenders for exchange from, holders of Old Capital Securities in any jurisdiction
in which the Exchange Offer or the acceptance thereof would not be in compliance
with the securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect
to the Exchange Offer means any person in whose name the Old Capital Securities
are registered on the books of the Trust or any other person who has obtained a
properly completed bond power from the registered holder, or any participant in
the DTC system whose name appears on a security position listing as the holder
of such Old Capital Securities and who desires to deliver such Old Capital
Securities by book-entry transfer at DTC.
Pursuant to the Exchange Offer, the Corporation will exchange as soon
as practicable after the date hereof, the Old Guarantee for the New Guarantee
and the Old Junior Subordinated Debentures, in an amount corresponding to the
Old Capital Securities accepted for exchange, for a like aggregate principal
amount of the New Junior Subordinated Debentures. The New Guarantee and the New
Junior Subordinated Debentures have been registered under the Securities Act.
See "Risk Factors."
Terms of the Exchange Offer
The Trust hereby offers, upon the terms and subject to the conditions
set forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $50,000,000 aggregate Liquidation Amount of New Capital
Securities for a like aggregate Liquidation Amount of Old Capital Securities
properly tendered on or prior to the Expiration Date and not properly withdrawn
in accordance with the procedures described below. The Trust will issue,
promptly after the Expiration Date, an aggregate Liquidation Amount of up to
$50,000,000 of New Capital Securities in exchange for a like aggregate
Liquidation Amount of outstanding Old Capital Securities tendered and accepted
in connection with the Exchange Offer. Holders may tender their Old Capital
Securities in whole or in part in a Liquidation Amount of not less than $100,000
(100 Capital Securities) or any integral multiple of $1,000 Liquidation Amount
(one Capital Security) in excess thereof, provided that if less that all of the
Old Capital Securities are tendered in exchange by a tendering Holder, the
untendered Liquidation Amount held by that Holder must be $100,000 or any
integral multiple of $1,000 in excess thereof.
The Exchange Offer is not conditioned upon any minimum Liquidation
Amount of Old Capital Securities being tendered. As of the date of this
Prospectus, $50,000,000 aggregate Liquidation Amount of the Old Capital
Securities is outstanding.
Holders of Old Capital Securities do not have any appraisal or
dissenters' rights in connection with the Exchange Offer. Old Capital Securities
which are not tendered for or are tendered but not accepted in connection with
the Exchange Offer will remain outstanding and be entitled to the benefits of
the Trust Agreement, but will not be entitled to any further registration rights
under the Registration Rights Agreement. See "Risk Factors--Consequences of a
Failure to Exchange Old Capital Securities" and "Description of Old Securities."
If any tendered Old Capital Securities are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Old Capital Securities
will be returned, without expense, to the tendering holder thereof promptly
after the Expiration Date.
Holders who tender Old Capital Securities in connection with the
Exchange Offer will not be required to pay brokerage commissions or fees or,
subject to the instructions in the Letter of Transmittal, transfer taxes with
respect to the exchange of Old Capital Securities in connection with the
Exchange Offer. The Corporation will pay all charges and expenses, other than
certain applicable taxes described below, in connection with the Exchange Offer.
See "--Fees and Expenses."
NEITHER THE BOARD OF DIRECTORS OF THE CORPORATION NOR ANY TRUSTEE OF
THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF OLD CAPITAL SECURITIES AS TO
WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR OLD
CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN
AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD CAPITAL SECURITIES
MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER
AND, IF SO, THE AGGREGATE AMOUNT OF OLD CAPITAL SECURITIES TO TENDER BASED ON
SUCH HOLDERS' OWN FINANCIAL POSITION AND REQUIREMENTS.
Expiration, Date; Extensions; Amendments
The term "Expiration Date" means 5:00 p.m., New York City time, on June
15, 1998 unless the Exchange Offer is extended by the Corporation or the Trust
(in which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended).
The Corporation and the Trust expressly reserve the right in their sole
and absolute discretion, subject to applicable law, at any time and from time to
time: (i) to delay the acceptance of the Old Capital Securities for exchange;
(ii) to terminate the Exchange Offer (whether or not any Old Capital Securities
have theretofore been accepted for exchange) if the Corporation and the Trust
determine, in their sole and absolute discretion, that any of the events or
conditions referred to under "--Conditions to the Exchange Offer" have occurred
or exist or have not been satisfied; (iii) to extend the Expiration Date of the
Exchange Offer and retain all Old Capital Securities tendered pursuant to the
Exchange Offer, subject, however, to the right of holders of Old Capital
Securities to withdraw their tendered Old Capital Securities as described under
"--Withdrawal Rights;" and (iv) to waive any condition or otherwise amend the
terms of the Exchange Offer in any respect. If the Exchange Offer is amended in
a manner determined by the Corporation and the Trust to constitute a material
change, or if the Corporation and the Trust waive a material condition of the
Exchange Offer, the Corporation and the Trust will promptly disclose such
amendment by means of a Prospectus supplement that will be distributed to the
registered holders of the Old Capital Securities, and the Corporation and the
Trust will extend the Exchange Offer to the extent required by Rule 14e-1 under
the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will
be followed promptly by oral or written notice thereof to the Exchange Agent and
by making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Corporation and the Trust may choose to make any public
announcement and subject to applicable law, the Corporation and the Trust shall
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a release to an appropriate news
agency.
Acceptance for Exchange and Issuance of New Capital Securities
Upon the terms and subject to the conditions of the Exchange Offer,
promptly after the Expiration Date, the Trust will exchange, and will issue to
the Exchange Agent, New Capital Securities for Old Capital Securities validly
tendered and not withdrawn.
In all cases, delivery of New Capital Securities in exchange for Old
Capital Securities tendered and accepted for exchange pursuant to the Exchange
Offer will be made only after timely receipt by the Exchange Agent of: (i) Old
Capital Securities or a book-entry confirmation of a book-entry transfer of Old
Capital Securities into the Exchange Agent's account at DTC, including an
Agent's Message if the tendering holder has not delivered a Letter of
Transmittal; (ii) the Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or (in the
case of a book-entry transfer) an Agent's Message in lieu of the Letter of
Transmittal; and (iii) any other documents required by the Letter of
Transmittal.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Old Capital Securities into the Exchange Agent's account
at DTC. The term "Agent's Message" means a message, transmitted by DTC to and
received by the Exchange Agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the tendering
participant, which acknowledgment states that such participant has received and
agrees to be bound by the Letter of Transmittal and that the Trust and the
Corporation may enforce such Letter of Transmittal against such participant.
Subject to the terms and conditions of the Exchange Offer, the
Corporation and the Trust will be deemed to have accepted for exchange, and
thereby exchanged, Old Capital Securities validly tendered and not withdrawn as,
if and when the Trust gives oral or written notice to the Exchange Agent of the
Corporation's and the Trust's acceptance of such Old Capital Securities for
exchange pursuant to the Exchange Offer. The Exchange Agent will act as agent
for the Trust for the purpose of receiving tenders of Old Capital Securities,
Letters of Transmittal and related documents, and as agent for tendering holders
for the purpose of receiving Old Capital Securities, Letters of Transmittal and
related documents and transmitting New Capital Securities to validly tendering
holders. Such exchange will be made promptly after the Expiration Date. If, for
any reason whatsoever, acceptance for exchange or the exchange of any Old
Capital Securities tendered pursuant to the Exchange Offer is delayed (whether
before or after the Trust's acceptance for exchange of Old Capital Securities)
or the Corporation and the Trust extend the Exchange Offer or are unable to
accept for exchange or exchange Old Capital Securities tendered pursuant to the
Exchange Offer, then, without prejudice to the Corporation's and the Trust's
rights set forth herein, the Exchange Agent may, nevertheless, on behalf of the
Corporation and the Trust and subject to Rule 14e-1(c) under the Exchange Act,
retain tendered Old Capital Securities and such Old Capital Securities may not
be withdrawn except to the extent tendering holders are entitled to withdrawal
rights as described under "--Withdrawal Rights."
Pursuant to the Letter of Transmittal or Agent's Message in lieu
thereof, a holder of Old Capital Securities will warrant and agree in the Letter
of Transmittal that it has full power and authority to tender, exchange, sell,
assign and transfer Old Capital Securities, that the Trust will acquire good,
marketable and unencumbered title to the tendered Old Capital Securities, free
and clear of all liens, restrictions, charges and encumbrances, and the Old
Capital Securities tendered for exchange are not subject to any adverse claims
or proxies. The holder also will warrant and agree that it will, upon request,
execute and deliver any additional documents deemed by the Corporation, the
Trust or the Exchange Agent to be necessary or desirable to complete the
exchange, sale, assignment and transfer of the Old Capital Securities tendered
pursuant to the Exchange Offer.
Procedures for Tendering Old Capital Securities
Valid Tender. Except as set forth below, in order for Old Capital
Securities to be validly tendered pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, or (in the case of a book-entry transfer) an
Agent's Message in lieu of a Letter of Transmittal, and any other required
documents, must be received by the Exchange Agent at one of its addresses set
forth under "--Exchange Agent," and: (i) tendered Old Capital Securities must be
received by the Exchange Agent; or (ii) such Old Capital Securities must be
tendered pursuant to the procedures for book-entry transfer set forth below and
a book-entry confirmation, including an Agent's Message if the tendering holder
has not delivered a Letter of Transmittal, must be received by the Exchange
Agent, in each case on or prior to the Expiration Date, or (iii) the guaranteed
delivery procedures set forth below must be complied with.
If less than all of the Old Capital Securities are tendered, a
tendering holder should fill in the amount of Old Capital Securities being
tendered in the appropriate box on the Letter of Transmittal or so indicate in
an Agent's Message in lieu of the Letter of Transmittal and the untendered
Liquidation Amount must be $100,000 or any integral multiple of $1,000 in excess
thereof. The entire amount of Old Capital Securities delivered to the Exchange
Agent will be deemed to have been tendered unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN-RECEIPT
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book-Entry Transfer. The Exchange Agent will establish an account with
respect to the Old Capital Securities at DTC for purposes of the Exchange Offer
within two business days after the date of this Prospectus. Any financial
institution that is a participant in DTC's book-entry transfer facility system
may make a book-entry delivery of the Old Capital Securities by causing DTC to
transfer such Old Capital Securities into the Exchange Agent's account at DTC in
accordance with DTC's procedures for transfers. However, although delivery of
Old Capital Securities may be effected through book-entry transfer into the
Exchange Agent's account at DTC, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message in lieu of the Letter of Transmittal, and any
other required documents, must in any case be delivered to and received by the
Exchange Agent at its address set forth under "--Exchange Agent" on or prior to
the Expiration Date, or the guaranteed delivery procedure set forth below must
be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES
NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Signature Guarantees. Certificates for the Old Capital Securities need
not be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless: (i) a certificate for the Old Capital Securities is
registered in a name other than that of the person surrendering the certificate;
or (ii) such holder completes the box entitled "Special Issuance Instructions"
or "Special Delivery Instructions" in the Letter of Transmittal. In the case of
(i) or (ii) above, such certificates for Old Capital Securities must be duly
endorsed or accompanied by a properly executed bond power, with the endorsement
or signature on the bond power and on the Letter of Transmittal guaranteed by a
firm or other entity identified in Rule 17Ad-15 under the Exchange Act as an
"eligible guarantor institution," including (as such terms are defined therein):
(i) a bank; (ii) a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer; (iii) a credit union; (iv) a national
securities exchange, registered securities association or clearing agency; or
(v) a savings association that is a participant in a Securities Transfer
Association (an "Eligible Institution"), unless surrendered on behalf of such
Eligible Institution. See Instruction 1 to the Letter of Transmittal.
Guaranteed Delivery. If a holder desires to tender Old Capital
Securities pursuant to the Exchange Offer and the certificates for such Old
Capital Securities are not immediately available or time will not permit all
required documents to reach the Exchange Agent on or prior to the Expiration
Date, or the procedure for book-entry transfer cannot be completed on a timely
basis, such Old Capital Securities may nevertheless be tendered, provided that
all of the following guaranteed delivery procedures are complied with:
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of Transmittal, is
received by the Exchange Agent, as provided below, on or prior to the Expiration
Date; and
(iii) the certificates (or a book-entry confirmation) representing all
tendered Old Capital Securities, in proper form for transfer, together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), or Agent's Message in lieu thereof, with any required signature
guarantees and any other documents required by the Letter of Transmittal, are
received by the Exchange Agent within three New York Stock Exchange trading days
after the date of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or
transmitted by facsimile or mail to the Exchange Agent and must include a
guarantee by an Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of New Capital
Securities in exchange for Old Capital Securities tendered and accepted for
exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Old Capital Securities, or of a
book-entry confirmation with respect to such Old Capital Securities, and a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), or Agent's Message in lieu thereof, together with any required
signature guarantees and any other documents required by the Letter of
Transmittal. Accordingly, the delivery of New Capital Securities might not be
made to all tendering holders at the same time, and will depend upon when Old
Capital Securities, book-entry confirmations with respect to Old Capital
Securities and other required documents are received by the Exchange Agent.
The Corporation's and the Trust's acceptance for exchange of Old
Capital Securities tendered pursuant to any of the procedures described above
will constitute a binding agreement between the tendering holder, the
Corporation and the Trust upon the terms and subject to the conditions of the
Exchange Offer.
Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange of
any tendered Old Capital Securities will be determined by the Corporation and
the Trust, in their sole discretion, whose determination shall be final and
binding on all parties. The Corporation and the Trust reserve the absolute
right, in their sole and absolute discretion, to reject any and all tenders
determined by them not to be in proper form or the acceptance of which, or
exchange for, may, in the opinion of counsel to the Corporation and the Trust,
be unlawful. The Corporation and the Trust also reserve the absolute right,
subject to applicable law, to waive any of the conditions of the Exchange Offer
as set forth under "--Conditions to the Exchange Offer" or any condition or
irregularity in any tender of Old Capital Securities of any particular holder
whether or not similar conditions or irregularities are waived in the case of
other holders.
The interpretation by the Corporation and the Trust of the terms and
conditions of the Exchange Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding. No tender of Old Capital
Securities will be deemed to have been validly made until all irregularities
with respect to such tender have been cured or waived. None of the Corporation,
the Trust, any affiliates or assigns of the Corporation or the Trust, the
Exchange Agent or any other person shall be under any duty to give any
notification of any irregularities in tenders or incur any liability for failure
to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of
attorney or any other document required by the Letter of Transmittal is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by the
Corporation and the Trust, proper evidence satisfactory to the Corporation and
the Trust, in their sole discretion, of such person's authority to so act must
be submitted.
A beneficial owner of Old Capital Securities that are held by or
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee or custodian is urged to contact such entity promptly if such
beneficial holder wishes to participate in the Exchange Offer.
Resales of New Capital Securities
The Trust is making the Exchange Offer for the New Capital Securities
in reliance on the position of the staff of the Division of Corporation Finance
of the Commission as set forth in certain no-action letters addressed to third
parties in other transactions. However, neither the Corporation nor the Trust
sought its own no-action letter and there can be no assurance that the staff of
the Division of Corporation Finance of the Commission would make a similar
determination with respect to the Exchange Offer as it has in such no-action
letters to third parties. Based on these interpretations by the staff of the
Division of Corporation Finance of the Commission, and subject to the two
immediately following sentences, the Corporation and the Trust believe that New
Capital Securities issued pursuant to this Exchange Offer in exchange for Old
Capital Securities may be offered for resale, resold and otherwise transferred
by a holder thereof (other than a holder who is a broker-dealer) without further
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such New Capital Securities are acquired in the
ordinary course of such holder's business and that such holder is not
participating, and has no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the Securities Act) of
such New Capital Securities. However, any holder of Old Capital Securities who
is an Affiliate of the Corporation or the Trust or who intends to participate in
the Exchange Offer for the purpose of distributing New Capital Securities, or
any broker-dealer who purchased Old Capital Securities from the Trust to resell
pursuant to Rule 144A or any other available exemption under the Securities Act:
(i) will not be able to rely on the interpretations of the staff of the Division
of Corporation Finance of the Commission set forth in the above-mentioned
no-action letters; (ii) will not be permitted or entitled to tender such Old
Capital Securities in the Exchange Offer; and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Old Capital Securities,
unless such sale is made pursuant to an exemption from such requirements. In
addition, as described below, Participating Broker-Dealers must deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resales of New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old
Capital Securities for New Capital Securities in the Exchange Offer will be
required to represent that: (i) it is not an Affiliate of the Corporation or the
Trust; (ii) any New Capital Securities to be received by it are being acquired
in the ordinary course of its business; and (iii) it has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such New Capital Securities. The Letter of
Transmittal contains the foregoing representations. In addition, the Corporation
and the Trust may require such holder, as a condition to such holder's
eligibility to participate in the Exchange Offer, to furnish to the Corporation
and the Trust (or an agent thereof) in writing information as to the number of
"beneficial owners" (within the meaning of Rule 13d-3 under the Exchange Act) on
behalf of whom such holder holds the Capital Securities to be exchanged in the
Exchange Offer. Each Participating Broker-Dealer will be deemed to have
acknowledged by execution of the Letter of Transmittal or delivery of an Agent's
Message that it acquired the Old Capital Securities for its own account as the
result of market-making activities or other trading activities and must agree
that it will deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of such New Capital Securities. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
Participating Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. Based on the position
taken by the staff of the Division of Corporation Finance of the Commission in
the no-action letters referred to above, the Corporation and the Trust believe
that Participating Broker-Dealers who acquired Old Capital Securities for their
own accounts as a result of market-making activities or other trading activities
may fulfill their prospectus delivery requirements with respect to the New
Capital Securities received upon exchange of such Old Capital Securities (other
than Old Capital Securities which represent an unsold allotment from the
original sale of the Old Capital Securities) with a prospectus meeting the
requirements of the Securities Act, which may be the prospectus prepared for an
exchange offer so long as it contains a description of the plan of distribution
with respect to the resale of such New Capital Securities. Accordingly, this
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer during the period referred to below in
connection with resales of New Capital Securities received in exchange for Old
Capital Securities where such Old Capital Securities were acquired by such
Participating Broker-Dealer for its own account as a result of market-making or
other trading activities. Subject to certain provisions set forth in the
Registration Rights Agreement, the Corporation and the Trust have agreed that
this Prospectus, as it may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer in connection with resales of such New
Capital Securities for a period ending 90-days after the Expiration Date
(subject to extension under certain limited circumstances described below) or,
if earlier, when all such New Capital Securities have been disposed of by such
Participating Broker-Dealer. See "Plan of Distribution." However, a
Participating Broker-Dealer who intends to use this Prospectus in connection
with the resale of New Capital Securities received in exchange for Old Capital
Securities pursuant to the Exchange Offer must notify the Corporation or the
Trust, or cause the Corporation or the Trust to be notified, on or prior to the
Expiration Date, that it is a Participating Broker-Dealer. Such notice may be
given in the space provided for that purpose in the Letter of Transmittal or may
be delivered to the Exchange Agent at one of the addresses set forth herein
under "--Exchange Agent." Any person, including any Participating Broker-Dealer,
who is an Affiliate of the Corporation or the Trust may not rely on such
no-action letters and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
In that regard, each Participating Broker-Dealer who surrenders Old
Capital Securities pursuant to the Exchange Offer will be deemed to have agreed,
by execution of the Letter of Transmittal or delivery of an Agent's Message in
lieu thereof, that, upon receipt of notice from the Corporation or the Trust of
the occurrence of any event or the discovery of any fact which makes any
statement contained or incorporated by reference in this Prospectus untrue in
any material respect or which causes this Prospectus to omit to state a material
fact necessary in order to make the statements contained or incorporated by
reference herein, in light of the circumstances under which they were made, not
misleading or of the occurrence of certain other events specified in the
Registration Rights Agreement, such Participating Broker-Dealer will suspend the
sale of New Capital Securities (or the New Guarantee or the New Junior
Subordinated Debentures, as applicable) pursuant to this Prospectus until the
Corporation or the Trust has amended or supplemented this Prospectus to correct
such misstatement or omission and has furnished copies of the amended or
supplemented Prospectus to such Participating Broker-Dealer or the Corporation
or the Trust has given notice that the sale of the New Capital Securities (or
the New Guarantee or the New Junior Subordinated Debentures, as applicable) may
be resumed, as the case may be. If the Corporation or the Trust gives such
notice to suspend the sale of the New Capital Securities (or the New Guarantee
or the New Junior Subordinated Debentures, as applicable), it shall extend the
90-day period referred to above during which Participating Broker-Dealers are
entitled to use this Prospectus in connection with the resale of New Capital
Securities by the number of days during the period from and including the date
of the giving of such notice to and including the date when Participating
Broker-Dealers shall have received copies of the amended or supplemented
Prospectus necessary to permit resales of the New Capital Securities or to and
including the date on which the Corporation or the Trust has given notice that
the sale of New Capital Securities (or the New Guarantee or the New Junior
Subordinated Debentures, as applicable) may be resumed, as the case may be.
Withdrawal Rights
Except as otherwise provided herein, tenders of Old Capital Securities
may be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written or facsimile
transmission of such notice of withdrawal must be timely received by the
Exchange Agent at one of its addresses set forth under "--Exchange Agent" on or
prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Old Capital Securities to be withdrawn, the
aggregate principal amount of Old Capital Securities to be withdrawn, and (if
certificates for such Old Capital Securities have been tendered) the name of the
registered holder of the Old Capital Securities as set forth on the Old Capital
Securities, if different from that of the person who tendered such Old Capital
Securities. If Old Capital Securities have been delivered or otherwise
identified to the Exchange Agent, then prior to the physical release of such Old
Capital Securities, the tendering holder must submit the certificate numbers
shown on the particular Old Capital Securities to be withdrawn and the signature
on the notice of withdrawal must be guaranteed by an Eligible Institution,
except in the case of Old Capital Securities tendered for the account of an
Eligible Institution. If Old Capital Securities have been tendered pursuant to
the procedures for book-entry transfer set forth in "--Procedures for Tendering
Old Capital Securities," the notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawal of Old Capital
Securities, in which case a notice of withdrawal will be effective if delivered
to the Exchange Agent by written or facsimile transmission. Withdrawals of
tenders of Old Capital Securities may not be rescinded. Old Capital Securities
properly withdrawn will not be deemed validly tendered for purposes of the
Exchange Offer, but may be retendered at any subsequent time on or prior to the
Expiration Date by following any of the procedures described above under
"--Procedures for Tendering Old Capital Securities."
All questions as to the validity, form and eligibility (including time
of receipt) of such withdrawal notices will be determined by the Corporation and
the Trust, in their sole discretion, whose determination shall be final and
binding on all parties. None of the Corporation, the Trust, any affiliates or
assigns of the Corporation or the Trust, the Exchange Agent or any other person
shall be under any duty to give any notification of any irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification. Any Old Capital Securities which have been tendered but which are
withdrawn will be returned to the holder thereof promptly after withdrawal.
Distributions on New Capital Securities
Holders of Old Capital Securities whose Old Capital Securities are
accepted for exchange will not receive Distributions on such Old Capital
Securities and will be deemed to have waived the right to receive any
Distributions on such Old Capital Securities accumulated from and after November
19, 1997. Accordingly, holders of New Capital Securities as of the record date
for the payment of Distributions on June 1, 1998 will be entitled to receive
Distributions accumulated from and after November 19, 1997.
Conditions to the Exchange Offer
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Corporation and the Trust will not be
required to accept for exchange, or to exchange, any Old Capital Securities for
any New Capital Securities, and, as described below, may terminate the Exchange
Offer (whether or not any Old Capital Securities have theretofore been accepted
for exchange) or may waive any conditions to or amend the Exchange Offer, if any
of the following conditions have occurred or exists or have not been satisfied:
(a) there shall occur a change in the current interpretation by the
staff of the Commission which permits the New Capital Securities issued pursuant
to the Exchange Offer in exchange for Old Capital Securities to be offered for
resale, resold and otherwise transferred by holders thereof (other than
broker-dealers and any such holder which is an Affiliate of the Corporation or
the Trust) without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Capital Securities are
acquired in the ordinary course of such holders' business and such holders have
no arrangement or understanding with any person to participate in the
distribution of such New Capital Securities; or
(b) any law, statute, rule or regulation shall have been adopted or
enacted which, in the judgment of the Corporation or the Trust, would reasonably
be expected to impair its ability to proceed with the Exchange Offer;
(c) any action or proceeding shall have been instituted or threatened
in any court or by or before any governmental agency or body with respect to the
Exchange Offer which, in the Corporation's and the Trust's judgment, would
reasonably be expected to impair the ability of the Trust or the Corporation to
proceed with the Exchange Offer;
(d) a banking moratorium shall have been declared by United States
federal or state authorities which, in the Corporation's and the Trust's
judgment, would reasonably be expected to impair the ability of the Trust or the
Corporation to proceed with the Exchange Offer;
(e) trading on the New York Stock Exchange or generally in the United
States over-the-counter market shall have been suspended by order of the
Commission or any other governmental authority which, in the Corporation's and
the Trust's judgment, would reasonably be expected to impair the ability of the
Issuer or the Corporation to proceed with the Exchange Offer; or
(f) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration Statement
or proceedings shall have been initiated or, to the knowledge of the Corporation
or the Trust, threatened for that purpose, or any governmental approval which
either the Corporation or the Trust shall, in its sole discretion, deem
necessary for the consummation of the Exchange Offer as contemplated hereby has
not been obtained.
If the Corporation and the Trust determine in their sole and absolute
discretion that any of the foregoing events or conditions has occurred or exists
or has not been satisfied, the Corporation and the Trust may, subject to
applicable law, terminate the Exchange Offer (whether or not any Old Capital
Securities have theretofore been accepted for exchange) or may waive any such
condition or otherwise amend the terms of the Exchange Offer in any respect. If
such waiver or amendment constitutes a material change to the Exchange Offer,
the Corporation and the Trust will promptly disclose such waiver or amendment by
means of a Prospectus supplement that will be distributed to the registered
holders of the Old Capital Securities and will extend the Exchange Offer to the
extent required by Rule 14e-1 under the Exchange Act.
Exchange Agent
The Bank of New York has been appointed as Exchange Agent for the
Exchange Offer. Delivery of the Letters of Transmittal and any other required
documents, questions, requests for assistance, and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed to
the Exchange Agent as follows:
<PAGE>
<TABLE>
<S> <C>
By Registered or Certified Mail: By Hand or Overnight Delivery:
-------------------------------- -----------------------------
The Bank of New York The Bank of New York
101 Barclay Street - 7E 101 Barclay Street
New York, New York 10286 Corporate Trust Services Window
Attention: Reorganization Section Ground Level
Odell Romeo New York, New York 10286
Attention: Reorganization Section
Odell Romeo
</TABLE>
Confirm by Telephone
or for Information call:
(212) 815-6337
Facsimile Transmission:
(Eligible Institutions Only)
(212) 815-6339
Delivery to other than the above addresses or facsimile number will not
constitute a valid delivery.
Fees and Expenses
The Corporation has agreed to pay the Exchange Agent reasonable and
customary fees for its services and will reimburse it for its reasonable
out-of-pocket expenses in connection therewith. The Corporation will also pay
brokerage houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this Prospectus
and related documents to the beneficial owners of Old Capital Securities, and in
handling or tendering for their customers.
Holders who tender their Old Capital Securities for exchange will not
be obligated to pay any transfer taxes in connection therewith. If, however, New
Capital Securities are to be delivered to, or are to be issued in the name of,
any person other than the registered holder of the Old Capital Securities
tendered, or if a transfer tax is imposed for any reason other than the exchange
of Old Capital Securities in connection with the Exchange Offer, then the amount
of any such transfer taxes (whether imposed on the registered holder or any
other persons) will be payable by the tendering holder. If satisfactory evidence
of payment of such taxes or exemption therefrom is not submitted with the Letter
of Transmittal, the amount of such transfer taxes will be billed directly to
such tendering holder.
Neither the Corporation nor the Trust will make any payment to brokers,
dealers or other nominees soliciting acceptances of the Exchange Offer.
<PAGE>
DESCRIPTION OF NEW SECURITIES
Description of Capital Securities
Pursuant to the terms of the Trust Agreement, the Trust has issued the
Old Capital Securities and the Common Securities and will issue the New Capital
Securities. The New Capital Securities will represent undivided beneficial
interests in the Trust and the holders of the New Capital Securities and the Old
Capital Securities will be entitled to a preference over the Common Securities
in certain circumstances with respect to Distributions and amounts payable on
redemption of the Trust Securities or liquidation of the Trust. See
"--Subordination of Common Securities." The Trust Agreement has been qualified
under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
This summary of certain provisions of the Capital Securities, the Common
Securities and the Trust Agreement describes the material terms of the Capital
Securities but does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the Trust
Agreement, including the definitions therein of certain terms.
General. The Capital Securities (including the Old Capital Securities
and the New Capital Securities) are limited to $50,000,000 aggregate Liquidation
Amount at any one time outstanding. The Capital Securities rank pari passu, and
payments thereon will be made pro rata, with the Common Securities except as
described under "--Subordination of Common Securities." Legal title to the
Junior Subordinated Debentures is held by the Property Trustee in trust for the
benefit of the holders of the Capital Securities and the holder of the Common
Securities. The Guarantee is a guarantee on a subordinated and junior basis with
respect to the Capital Securities, but does not guarantee payment of
Distributions or amounts payable on redemption of the Capital Securities or on
liquidation of the Trust when the Trust does not have funds on hand legally
available for such payments. See "--Description of Guarantee."
Distributions. Distributions on the Capital Securities are cumulative
from November 19, 1997, the date of original issuance of the Old Capital
Securities, and are payable semi-annually in arrears on June 1 and December 1of
each year, commencing June 1, 1998, at the annual rate of 8.90% of the
Liquidation Amount to the holders of the Capital Securities on the relevant
record dates. The record dates are the fifteenth day of the month which precedes
the month in which the relevant Distribution Date (as defined below) falls. The
amount of Distributions payable for any period will be computed on the basis of
a 360-day year of twelve 30-day months and, for any period of less than a full
calendar month, the number of days elapsed in such month. In the event that any
date on which Distributions are payable on the Capital Securities is not a
Business Day (as defined below), 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 to any such delay), with the same force
and effect as if made on such date such payment was originally payable (each
date on which Distributions are payable in accordance with the foregoing, a
"Distribution Date"). A "Business Day" shall mean any day other than a Saturday
or a Sunday, or a day on which banking institutions in New York, New York or
Martinsville, Virginia are authorized or required by law or executive order to
remain closed.
So long as no "Event of Default" (as defined in the Indenture) with
respect to the Junior Subordinated Debentures (a "Debenture Event of Default")
shall have occurred and be continuing, the Corporation has the right under the
Indenture to elect to defer the payment of interest on the Junior Subordinated
Debentures at any time or from time to time for a period not exceeding 10
consecutive semi-annual periods with respect to each Extension Period, provided
that no Extension Period may end on a date other than an Interest Payment Date,
or extend beyond the Stated Maturity Date. Upon any such election, semi-annual
Distributions on the Capital Securities will be deferred by the Trust during any
such Extension Period. Distributions to which holders of the Capital Securities
are entitled during any such Extension Period will accumulate additional
Distributions thereon at the rate per annum of 8.90% thereof, compounded
semi-annually from the relevant Distribution Date, but not exceeding the
interest rate then accruing on the Junior Subordinated Debentures. The term
"Distributions," as used herein, shall include any such additional
Distributions.
Prior to the termination of any such Extension Period, the Corporation
may further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods, to end
on a date other than an Interest Payment Date or to extend beyond the Stated
Maturity Date. Upon the termination of any such Extension Period and the payment
of all amounts then due on any Interest Payment Date, the Corporation may elect
to begin a new Extension Period, subject to the above requirements. No interest
shall be due and payable during an Extension Period, except at the end thereof.
The Corporation must give the Property Trustee, the Administrative Trustees and
the Debenture Trustee notice of its election of any such Extension Period (or an
extension thereof) at least five Business Days prior to the earlier of: (i) the
date the Distributions on the Capital Securities would have been payable except
for the election to begin such Extension Period; and (ii) the date the
Administrative Trustees are required to give notice to any securities exchange
or automated quotation system or to holders of the Capital Securities of the
record date or the date such Distributions are payable, but in any event not
less than five Business Days prior to such record date. There is no limitation
on the number of times that the Corporation may elect to begin an Extension
Period. See "--Description of Junior Subordinated Debentures--Option to Extend
Interest Payment Date" and "Certain Federal Income Tax Considerations--Interest
Income and Original Issue Discount."
During any such Extension Period, the Corporation 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 Corporation's capital stock;
(ii) make any payment of principal of or premium, if any, on or repay,
repurchase or redeem any debt securities of the Corporation (including Other
Debentures) that rank pari passu with or junior in right of payment to the
Junior Subordinated Debentures; or (iii) make any guarantee payments with
respect to any guarantee by the Corporation of the debt securities of any
subsidiary of the Corporation (including Other Guarantees) if such guarantee
ranks pari passu with or junior in right of payment to the Junior Subordinated
Debentures (other than (a) dividends or distributions in shares of, or options,
warrants or rights to subscribe for or purchase shares of, common stock of the
Corporation, (b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto, (c) payments under the Guarantee, (d) as a result of a
reclassification of the Corporation's capital stock or the exchange or
conversion of one class or series of the Corporation's capital stock for another
class or series of the Corporation's capital stock, (e) the purchase of
fractional interests in shares of the Corporation's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged and (f) purchases of common stock related to the
issuance of common stock or rights under any of the Corporation's benefit plans
for its directors, officers or employees or any of the Corporation's dividend
reinvestment plans). The Corporation has no current intention to exercise its
option to defer payments of interest on the Junior Subordinated Debentures.
The revenue of the Trust available for distribution to holders of
Capital Securities will be limited to payments under the Junior Subordinated
Debentures in which the Trust has invested the proceeds from the issuance and
sale of the Trust Securities. See "--Description of Junior Subordinated
Debentures--General." If the Corporation does not make interest payments on the
Junior Subordinated Debentures, the Property Trustee will not have funds
available to pay Distributions on the Capital Securities. The payment of
Distributions (if and to the extent the Trust has funds on hand legally
available for the payment of such Distributions) is guaranteed by the
Corporation on a limited basis as set forth herein under "--Description of
Guarantee."
Redemption. Upon repayment on the Stated Maturity Date or prepayment in
whole or in part prior to the Stated Maturity Date of the Junior Subordinated
Debentures (other than following the distribution of the Junior Subordinated
Debentures to the holders of the Trust Securities), the proceeds from such
repayment or prepayment shall be applied by the Property Trustee to redeem a
Like Amount (as defined below) of the Trust Securities, upon not less than 30
nor more than 60 days' notice of a date of redemption (the "Redemption Date"),
at the applicable Redemption Price, which shall be equal to: (i) in the case of
the repayment of the Junior Subordinated Debentures on the Stated Maturity Date,
the Maturity Redemption Price (equal to the principal of, and accrued and unpaid
interest on, the Junior Subordinated Debentures); (ii) in the case of the
optional prepayment of the Junior Subordinated Debentures before the Initial
Optional Prepayment Date upon the occurrence and continuation of a Special
Event, the Special Event Redemption Price (equal to the Special Event Prepayment
Price in respect of the Junior Subordinated Debentures); and (iii) in the case
of the optional prepayment of the Junior Subordinated Debentures on or after the
Initial Optional Prepayment Date, the Optional Redemption Price (equal to the
Optional Prepayment Price in respect of the Junior Subordinated Debentures). See
"--Description of Junior Subordinated Debentures--Optional Prepayment" and
"--Special Event Prepayment." If less than all of the Junior Subordinated
Debentures are to be prepaid on a Redemption Date, then the proceeds of such
prepayment shall be allocated pro rata to the Trust Securities.
"Like Amount" means: (i) with respect to a redemption of the Trust
Securities, Trust Securities having a Liquidation Amount equal to the principal
amount of Junior Subordinated Debentures to be paid in accordance with their
terms; and (ii) with respect to a distribution of Junior Subordinated Debentures
upon the liquidation of the Trust, Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Trust Securities of the
holder to whom such Junior Subordinated Debentures are distributed.
The Corporation has the option to prepay the Junior Subordinated
Debentures: (i) in whole or in part, on or after the Initial Optional Prepayment
Date, at the applicable Optional Prepayment Price; and (ii) in whole but not in
part, at any time before the Initial Optional Prepayment Date, upon the
occurrence of a Special Event, at the Special Event Prepayment Price, in each
case subject to the receipt of any required regulatory approval. See
"--Description of Junior Subordinated Debentures-Optional Prepayment" and
"--Special Event Prepayment."
Liquidation of the Trust and Distribution of Junior Subordinated
Debentures. The Corporation has the right at any time to terminate the Trust
and, after satisfaction of liabilities to creditors of the Trust as required by
applicable law, to cause the Junior Subordinated Debentures to be distributed to
the holders of the Trust Securities in liquidation of the Trust. Such right is
subject to: (i) the Corporation having received an opinion of counsel to the
effect that such distribution will not be a taxable event to holders of Capital
Securities; and (ii) the receipt of any required regulatory approval.
The Trust shall automatically terminate upon the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of the Corporation;
(ii) the distribution of a Like Amount of the Junior Subordinated Debentures to
the holders of the Trust Securities, if the Corporation, as Sponsor, has given
written direction to the Property Trustee to terminate the Trust (which
direction is optional and, except as described above, wholly within the
discretion of the Corporation, as Sponsor); (iii) redemption of all of the Trust
Securities as described under "--Redemption;" (iv) expiration of the term of the
Trust; and (v) the entry of an order for the dissolution of the Trust by a court
of competent jurisdiction.
If a termination occurs as described in clause (i); (ii); (iv); or (v)
above, the Trust shall be liquidated by the Issuer Trustees as expeditiously as
the Issuer Trustees determine to be possible by distributing, after satisfaction
of liabilities to creditors of the Trust as provided by applicable law, to the
holders of the Trust Securities a Like Amount of the Junior Subordinated
Debentures, unless such distribution is determined by the Property Trustee not
to be practicable, in which event such holders will be entitled to receive out
of the assets of the Trust legally available for distribution to holders, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, an amount equal to the aggregate of the Liquidation Amount plus accumulated
and unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution can be paid only
in part because the Trust has insufficient assets on hand legally available to
pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Trust Securities shall be paid on a pro rata basis,
except that if a Debenture Event of Default has occurred and is continuing, the
Capital Securities shall have a priority over the Common Securities. See
"--Subordination of Common Securities."
If the Corporation elects not to prepay the Junior Subordinated
Debentures prior to maturity in accordance with their terms and either elects
not to or is unable to liquidate the Trust and distribute the Junior
Subordinated Debentures to holders of the Trust Securities, the Trust Securities
will remain outstanding until the repayment of the Junior Subordinated
Debentures on the Stated Maturity Date.
After the liquidation date is fixed for any distribution of Junior
Subordinated Debentures to holders of the Trust Securities: (i) the Trust
Securities will no longer be deemed to be outstanding; (ii) DTC or its nominee
will receive, in respect of each registered global certificate, if any,
representing Trust Securities and held by it, a registered global certificate or
certificates representing the Junior Subordinated Debentures to be delivered
upon such distribution; and (iii) any certificates representing Trust Securities
not held by DTC or its nominee will be deemed to represent Junior Subordinated
Debentures having a principal amount equal to the Liquidation Amount of such
Trust Securities, and bearing accrued and unpaid interest in an amount equal to
the accumulated and unpaid Distributions on such Trust Securities until such
certificates are presented to the Administrative Trustees or their agent for
cancellation, whereupon the Corporation will issue to such holder, and the
Debenture Trustee will authenticate, a certificate representing such Junior
Subordinated Debentures.
There can be no assurance as to the market prices for the Capital
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for the Trust Securities if a dissolution and liquidation of the Trust
were to occur. Accordingly, the Capital Securities that an investor may
purchase, or the Junior Subordinated Debentures that the investor may receive on
dissolution and liquidation of the Trust, may trade at a discount to the price
that the investor paid to purchase the Capital Securities offered hereby.
Redemption Procedures. If applicable, Trust Securities shall be
redeemed at the applicable Redemption Price with the proceeds from the
contemporaneous repayment or prepayment of the Junior Subordinated Debentures.
Any redemption of Trust Securities shall be made and the applicable Redemption
Price shall be payable on the Redemption Date only to the extent that the Trust
has funds legally available for the payment of such applicable Redemption Price.
See also "-Subordination of Common Securities."
If the Trust gives a notice of redemption in respect of the Capital
Securities, then, by 12:00 noon, New York City time, on the Redemption Date, to
the extent funds are legally available, with respect to the Capital Securities
held by DTC or its nominees, the Property Trustee will deposit or cause the
Paying Agent (as defined herein) to deposit irrevocably with DTC funds
sufficient to pay the applicable Redemption Price. See " Form, Denomination,
Book-Entry Procedures and Transfer." With respect to the Capital Securities held
in certificated form, the Property Trustee, to the extent funds are legally
available, will irrevocably deposit with the paying agent for the Capital
Securities funds sufficient to pay the applicable Redemption Price and will give
such paying agent irrevocable instructions and authority to pay the applicable
Redemption Price to the holders thereof upon surrender of their certificates
evidencing the Capital Securities. See " -- Payment and Paying Agency."
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date shall be payable to the holders of such Capital Securities on
the relevant record dates for the related Distribution Dates. If notice of
redemption shall have been given and funds deposited as required, then upon the
date of such deposit, all rights of the holders of the Capital Securities called
for redemption will cease, except the right of the holders of such Capital
Securities to receive the applicable Redemption Price, but without interest on
such Redemption Price, and such Capital Securities will cease to be outstanding.
In the event that any Redemption Date of Capital Securities is not a Business
Day, then the applicable Redemption Price payable on such date will be paid 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 next
succeeding Business Day falls in the next calendar year, such payment shall be
made on the immediately preceding Business Day. In the event that payment of the
applicable Redemption Price is improperly withheld or refused and not paid
either by the Trust or by the Corporation pursuant to the Guarantee as described
under "Description of Guarantee:" (i) Distributions on Capital Securities will
continue to accumulate at the then applicable rate, from the Redemption Date
originally established by the Trust to the date such applicable Redemption Price
is actually paid; and (ii) the actual payment date will be the Redemption Date
for purposes of calculating the applicable Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law), the Corporation or 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.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days prior to the Redemption Date to each holder of Trust Securities at
its registered address. Unless the Corporation defaults in payment of the
applicable Redemption Price on, or in the repayment of, the Junior Subordinated
Debentures, on and after the Redemption Date Distributions will cease to accrue
on the Trust Securities called for redemption.
Subordination of Common Securities. Payment of Distributions on, and
the Redemption Price of, the Trust Securities, as applicable, shall be made pro
rata based on the Liquidation Amount of the Trust Securities; provided, however,
that if on any Distribution Date or Redemption Date a Debenture Event of Default
shall have occurred and be continuing, no payment of any Distribution on, or
applicable Redemption Price of, any of the Common Securities, and no other
payment on account of the redemption, liquidation or other acquisition of the
Common Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions on all of the outstanding Capital
Securities for all Distribution periods terminating on or prior thereto, or in
the case of payment of the applicable Redemption Price the full amount of such
Redemption Price, shall have been made or provided for, and all funds available
to the Property Trustee shall first be applied to the payment in full in cash of
all Distributions on, or Redemption Price of, the Capital Securities then due
and payable.
In the case of any Event of Default, the Corporation as holder of the
Common Securities will be deemed to have waived any right to act with respect to
such Event of Default until the effect of such Event of Default shall have been
cured, waived or otherwise eliminated. Until any such Event of Default has been
so cured, waived or otherwise eliminated, the Property Trustee shall act solely
on behalf of the holders of the Capital Securities and not on behalf of the
Corporation as holder of the Common Securities, and only the holders of the
Capital Securities will have the right to direct the Property Trustee to act on
their behalf.
Events of Default; Notice. The occurrence of a Debenture Event of Default
constitutes an "Event of Default" under the Trust Agreement. See " --
Description of Junior Subordinated Debentures -- Debenture Events of Default."
Within ten Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of the Capital Securities, the
Administrative Trustees and the Corporation, as Sponsor, unless such Event of
Default shall have been cured or waived. The Corporation, as Sponsor, and the
Administrative Trustees are required to file annually with the Property Trustee
a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing, the
Capital Securities shall have a preference over the Common Securities as
described under " -- Liquidation of the Trust and Distribution of Junior
Subordinated Debentures" and " -- Subordination of Common Securities."
Removal of Issuer Trustees. Unless a Debenture Event of Default shall
have occurred and be continuing, any Issuer Trustee may be removed at any time
by the holder of the Common Securities. If a Debenture Event of Default has
occurred and is continuing, the Property Trustee and the Delaware Trustee may be
removed at such time by the holders of a majority in Liquidation Amount of the
outstanding Capital Securities. In no event will the holders of the Capital
Securities have the right to vote to appoint, remove or replace the
Administrative Trustees, which voting rights are vested exclusively in the
Corporation as the holder of the Common Securities. No resignation or removal of
an Issuer Trustee and no appointment of a successor trustee shall be effective
until the acceptance of appointment by the successor trustee in accordance with
the provisions of the Trust Agreement.
Merger or Consolidation of Issuer Trustees. Any Person into which the
Property Trustee, the Delaware Trustee or any Administrative Trustee that is not
a natural person may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which such Issuer Trustee shall be a party, or any Person
succeeding to all or substantially all the corporate trust business of such
Issuer Trustee, shall be the successor of such Issuer Trustee under the Trust
Agreement, provided such Person shall be otherwise qualified and eligible.
Mergers, Consolidations, Amalgamations or Replacements of the Trust.
The Trust may not merge with or into, consolidate, amalgamate, or be replaced
by, or convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to any corporation or other Person, except as
described below or as otherwise described under " -- Liquidation of the Trust
and Distribution of Junior Subordinated Debentures." The Trust may, at the
request of the Corporation, as Sponsor, with the consent of the Administrative
Trustees but without the consent of the holders of the Capital Securities, merge
with or into, consolidate, amalgamate, or be replaced by or convey, transfer or
lease its properties and assets as an entirety or substantially as an entirety
to a trust organized as such under the laws of any State; provided, that: (i)
such successor entity either (a) expressly assumes all of the obligations of the
Trust with respect to the Trust Securities or (b) substitutes for the Trust
Securities other securities having substantially the same terms as the Trust
Securities (the "Successor Securities") so long as the Successor Securities rank
the same as the Trust Securities rank in priority with respect to distributions
and payments upon liquidation, redemption and otherwise; (ii) the Corporation
expressly appoints a trustee of such successor entity possessing the same powers
and duties as the Property Trustee with respect to the Junior Subordinated
Debentures; (iii) the Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any national
securities exchange or other organization on which the Trust Securities are then
listed or quoted, if any; (iv) if the Capital Securities (including any
Successor Securities) are rated by any nationally recognized statistical rating
organization prior to such transaction, such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Capital Securities (including any Successor Securities) or, if the Junior
Subordinated Debentures are so rated, the Junior Subordinated Debentures, to be
downgraded by any such nationally recognized statistical rating organization;
(v) such merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not adversely affect the rights, preferences and privileges of the
holders of the Trust Securities (including any Successor Securities) in any
material respect; (vi) such successor entity has a purpose identical to that of
the Trust; (vii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Corporation has received an opinion from
independent counsel to the Trust experienced in such matters to the effect that
(a) such merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not adversely affect the rights, preferences and privileges of the
holders of the Trust Securities (including any Successor Securities) in any
material respect (other than any dilution of such holders' interests in the new
entity), and (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor such successor
entity will be required to register as an investment company under the
Investment Company Act of 1940, as amended (the "Investment Company Act"); and
(viii) the Corporation or any permitted successor or assignee owns all of the
common securities of such successor entity and guarantees the obligations of
such successor entity under the Successor Securities at least to the extent
provided by the Guarantee and the Common Guarantee. Notwithstanding the
foregoing, the Trust shall not, except with the consent of holders of 100% in
Liquidation Amount of the Trust Securities, consolidate, amalgamate, merge with
or into, or be replaced by or convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to, any other entity or
permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger, replacement, conveyance,
transfer or lease would cause the Trust or the successor entity not to be
classified as a grantor trust for United States federal income tax purposes. In
addition, the Property Trustee will be required pursuant to the Indenture to
exchange, as part of the Exchange Offer, the Junior Subordinated Debentures for
the Exchange Debentures, which will have terms substantially identical to the
Junior Subordinated Debentures. See "Exchange Offer; Registration Rights."
Voting Rights; Amendment of the Trust Agreement. Except as provided
below and under " -- Mergers, Consolidations, Amalgamations or Replacements of
the Trust" and " -- Description of Guarantee -- Amendments and Assignment" and
as otherwise required by law and the Trust Agreement, the holders of the Capital
Securities will have no voting rights.
The Trust Agreement may be amended from time to time by the
Corporation, the Property Trustee and the Administrative Trustees, without the
consent of the holders of the Trust Securities: (i) to cure any ambiguity,
correct or supplement any provisions in the Trust Agreement that may be
inconsistent with any other provision, or to make any other provisions with
respect to matters or questions arising under the Trust Agreement, which shall
not be inconsistent with the other provisions of the Trust Agreement; (ii) to
modify, eliminate or add to any provisions of the Trust Agreement to such extent
as shall be necessary to ensure that the Trust will be classified for United
States federal income tax purposes as a grantor trust at all times that any
Trust Securities are outstanding or to ensure that the Trust will not be
required to register as an "investment company" under the Investment Company
Act; or (iii) to modify, eliminate or add any provisions of the Trust Agreement
to such extent as shall be necessary to enable the Trust or the Corporation to
conduct an Exchange Offer in the manner contemplated by the Registration Rights
Agreement; provided, however, that in each such case such action shall not
adversely affect in any material respect the interests of the holders of the
Trust Securities. Any amendments of the Trust Agreement pursuant to the
foregoing shall become effective when notice thereof is given to the holders of
the Trust Securities. The Trust Agreement may be amended by the Issuer Trustees
and the Corporation: (i) with the consent of holders representing a majority
(based upon Liquidation Amount) of the outstanding Trust Securities; and (ii)
upon receipt by the Issuer Trustees of an opinion of counsel experienced in such
matters to the effect that such amendment or the exercise of any power granted
to the Issuer Trustees in accordance with such amendment will not affect the
Trust's status as a grantor trust for United States federal income tax purposes
or the Trust's exemption from status as an "investment company" under the
Investment Company Act, provided that, without the consent of each holder of
Trust Securities, the Trust Agreement may not be amended to: (i) change the
amount or timing of any Distribution on the Trust Securities or otherwise
adversely affect the amount of any Distribution required to be made in respect
of the Trust Securities as of a specified date; or (ii) restrict the right of a
holder of Trust Securities to institute suit for the enforcement of any such
payment on or after such date.
So long as any Junior Subordinated Debentures are held by the Property
Trustee, the Issuer Trustees shall not: (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
execute any trust or power conferred on the Debenture Trustee with respect to
the Junior Subordinated Debentures; (ii) waive certain past defaults under the
Indenture; (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Junior Subordinated
Debentures; or (iv) consent to any amendment, modification or termination of the
Indenture or the Junior Subordinated Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of the holders of
a majority in Liquidation Amount of all outstanding Capital Securities;
provided, however, that where a consent under the Indenture would require the
consent of each holder of Junior Subordinated Debentures affected thereby, no
such consent shall be given by the Property Trustee without the prior approval
of each holder of the Capital Securities. The Issuer Trustees shall not revoke
any action previously authorized or approved by a vote of the holders of the
Capital Securities except by subsequent vote of such holders. The Property
Trustee shall notify each holder of Capital Securities of any notice of default
with respect to the Junior Subordinated Debentures. In addition to obtaining the
foregoing approvals of such holders of the Capital Securities, prior to taking
any of the foregoing actions, the Issuer Trustees shall obtain an opinion of
counsel experienced in such matters to the effect that the Trust will not be
classified as an association taxable as a corporation for United States federal
income tax purposes on account of such action.
Any required approval of holders of Capital Securities may be given at
a meeting of such holders convened for such purpose or pursuant to written
consent. The Property Trustee will cause a notice of any meeting at which
holders of 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 given to each
holder of record of Capital Securities in the manner set forth in the Trust
Agreement.
No vote or consent of the holders of Capital Securities will be
required for the Trust to redeem and cancel the Capital Securities in accordance
with the Trust Agreement.
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 Corporation, the Issuer Trustees or any
affiliate of the Corporation or any Issuer Trustees, shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
Form, Denomination, Book-Entry Procedures and Transfer. In the event
that Capital Securities are issued in certificated form, the Capital Securities
will be in blocks having a Liquidation Amount of not less than $100,000 (100
Capital Securities) and may be transferred or exchanged only in such blocks in
the manner an at the offices described below.
New Capital Securities initially will be represented by one or more
Capital Securities in registered, global form (collectively, the "Global Capital
Securities"). The Global Capital Securities will be deposited upon issuance with
the Property Trustee as custodian for DTC, in New York, New York, and registered
in the name of DTC or its nominee, in each case for credit to an account of a
direct or indirect participant in DTC as described below.
Except as set forth below, the Global Capital Securities may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee and only in amounts that would not cause a
holder to own less than 100 Capital Securities. Beneficial interests in the
Global Capital Securities may not be exchanged for Capital Securities in
certificated form except in the limited circumstances described below. See
"-Exchange of Book-Entry Capital Securities for Certificated Capital
Securities."
Depositary Procedures. Other Capital Securities will be issued only in
registered, certificated (i.e., non-global) form. Other Capital Securities may
not be exchanged for beneficial interests in any Global Capital Securities,
except in the limited circumstances described below. See "-Exchange of
Certificated Capital Securities for Book-Entry Capital Securities."
Capital Securities subject to transfer under Rule 144A and Other
Capital Securities will be subject to certain restrictions on transfer and will
bear a restrictive legend. In addition, transfer of beneficial interests in the
Global Capital Securities will be subject to the applicable rules and procedures
of DTC and its direct or indirect participants, which may change from time to
time.
DTC has advised the Trust and the Corporation that DTC is a limited
purpose trust company organized under the laws of the State of New York, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in those securities between Participants through electronic book-entry changes
in accounts of its Participants, thereby eliminating the need for physical
movement of certificates. Participants include securities brokers and dealers
(including the Initial Purchaser), banks, trust companies, clearing corporations
and certain other organizations. Indirect access to DTC's system also is
available to other entities such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly (collectively, the "Indirect Participants").
Persons who are not Participants may beneficially own securities held by or on
behalf of DTC only through the Participants or the Indirect Participants. The
ownership interest and transfer of ownership interest of each actual purchaser
of each security held by or on behalf of DTC are recorded on the records of the
Participants and Indirect Participants.
DTC also has advised the Trust and the Corporation that, pursuant to
procedures established by it: (i) upon deposit of the Global Capital Securities,
DTC will credit the accounts of Participants with portions of the Liquidation
Amount of the Global Capital Securities; and (ii) ownership of such interests in
the Global Capital Securities will be shown on, and the transfer of ownership
thereof will be effected only through, records maintained by DTC (with respect
to the Participants) or by the Participants and the Indirect Participants (with
respect to other owners of beneficial interests in the Global Capital
Securities).
Investors in the Global Capital Securities may hold their interests
therein directly through DTC if they are Participants, or indirectly through
organizations that are Participants. All interests in a Global Capital Security
will be subject to the procedures and requirements of DTC. The laws of some
states require that certain persons take physical delivery in certificated form
of securities that they own. Consequently, the ability to transfer beneficial
interests in a Global Capital Security to such persons will be limited to that
extent. Because DTC can act only on behalf of Participants, which in turn act on
behalf of Indirect Participants and certain banks, the ability of a person
having beneficial interests in a Global Capital Security to pledge such
interests to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such interests, may be affected by the lack
of a physical certificate evidencing such interests. For certain other
restrictions on the transferability of the Capital Securities, see "-Exchange of
Book-Entry Capital Securities for Certificated Capital Securities" and
"-Exchange of Certificated Capital Securities for Book-Entry Capital
Securities."
EXCEPT AS DESCRIBED BELOW, OWNERS OF BENEFICIAL INTERESTS IN THE GLOBAL
CAPITAL SECURITIES WILL NOT HAVE CAPITAL SECURITIES REGISTERED IN THEIR NAME,
WILL NOT RECEIVE PHYSICAL DELIVERY OF CAPITAL SECURITIES IN CERTIFICATED FORM
AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR HOLDERS THEREOF UNDER THE
TRUST AGREEMENT FOR ANY PURPOSE.
Payments in respect of the Global Capital Security registered in the
name of DTC or its nominee will be payable by the Property Trustee to DTC in its
capacity as the registered holder under the Trust Agreement. Under the terms of
the Trust Agreement, the Property Trustee will treat the persons in whose names
the Capital Securities, including the Global Capital Securities, are registered
as the owners thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. Consequently, neither the Property Trustee nor
any agent thereof has or will have any responsibility or liability for: (i) any
aspect of DTC's records or any Participant's or Indirect Participant's records
relating to or payments made on account of beneficial interests in the Global
Capital Securities, or for maintaining, supervising or reviewing any of DTC's
records or any Participant's or Indirect Participant's records relating to the
beneficial interests in the Global Capital Securities; or (ii) any other matter
relating to the actions and practices of DTC or any of its Participants or
Indirect Participants. DTC has advised the Trust and the Corporation that its
current practice, upon receipt of any payment in respect of securities such as
the Capital Securities, is to credit the accounts of the relevant Participants
with the payment on the payment date, in amounts proportionate to their
respective holdings in Liquidation Amount of beneficial interests in the
relevant security as shown on the records of DTC unless DTC has reason to
believe it will not receive payment on such payment date. Payments by the
Participants and the Indirect Participants to the beneficial owners of New
Capital Securities will be governed by standing instructions and customary
practices and will be the responsibility of the Participants or the Indirect
Participants and will not be the responsibility of DTC, the Property Trustee,
the Trust or the Corporation. None of the Trust, the Corporation or the Property
Trustee will be liable for any delay by DTC or any of its Participants in
identifying the beneficial owners of the Capital Securities, and the Trust, the
Corporation and the Property Trustee may conclusively rely on and will be
protected in relying on instructions from DTC or its nominee for all purposes.
Beneficial interests in the Global Capital Securities will trade in
DTC's Same-Day Funds Settlement System and secondary market trading activity in
such interests will therefore settle in immediately available funds, subject in
all cases to the rules and procedures of DTC and its participants.
DTC has advised the Trust and the Corporation that it will take any
action permitted to be taken by a holder of Capital Securities (including,
without limitation, the presentation of Old Capital Securities for exchange
pursuant to the Exchange Offer) only at the direction of one or more
Participants to whose account with DTC interests in the Global Capital
Securities are credited and only in respect of such portion of the Liquidation
Amount of the Capital Securities as to which such Participant or Participants
has or have given such direction. However, if there is an Event of Default under
the Trust Agreement, DTC reserves the right to exchange the Global Capital
Securities for Capital Securities in registered certificated form and to
distribute such Capital Securities to its Participants.
So long as DTC or its nominee is the registered owner of the Global
Capital Securities, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the Capital Securities represented by the Global
Capital Securities for all purposes under the Trust Agreement.
The information in this section concerning DTC and its book-entry
system has been obtained from sources that the Trust and the Corporation believe
to be reliable, but neither the Trust nor the Corporation takes responsibility
for the accuracy thereof.
Exchange of Book-Entry Capital Securities for Certificated Capital
Securities. A Global Capital Security is exchangeable for Capital Securities in
registered certificated form if: (i) DTC (x) notifies the Trust that it is
unwilling or unable to continue as Depositary for the Global Capital Security
and the Trust thereupon fails to appoint a successor Depositary within 90 days
or (y) has ceased to be a clearing agency registered under the Exchange Act;
(ii) the Corporation in its sole discretion elects to cause the issuance of the
Capital Securities in certificated form; or (iii) there shall have occurred and
be continuing an Event of Default or any event which after notice or lapse of
time or both would be an Event of Default under the Trust Agreement. In
addition, beneficial interests in a Global Capital Security may be exchanged by
or on behalf of DTC for certificated Capital Securities upon request by DTC, but
only upon at least 20 days' prior written notice given to the Property Trustee
in accordance with DTC's customary procedures. In all cases, certificated
Capital Securities delivered in exchange for any Global Capital Security or
beneficial interests therein will be registered in the names, and issued in any
approved denominations, requested by or on behalf of the Depositary (in
accordance with its customary procedures) and will bear the legend referred to
in "Notice to Investors," unless the Property Trustee determines otherwise in
compliance with applicable law.
Exchange of Certificated Capital Securities for Book-Entry Capital
Securities. Other Capital Securities, which will be issued in certificated form,
may not be exchanged for beneficial interests in any Global Capital Security,
unless such exchange occurs in connection with a transfer of such Other Capital
Securities and the transferor first delivers to the Property Trustee a written
certificate (in the form provided in the Trust Agreement) to the effect that
such transfer will comply with the appropriate transfer restrictions applicable
to such Capital Securities.
<PAGE>
Payment and Paying Agency. Payments in respect of the Capital
Securities held in global form shall be made to the Depositary, which shall
credit the relevant accounts at the Depositary on the applicable Distribution
Dates. Payments in respect of Capital Securities that are not held by the
Depositary shall be made by check mailed to the address of the holder entitled
thereto as such address shall appear on the register maintained by the
Securities Registrar appointed under the Trust Agreement. The paying agent (the
"Paying Agent") shall initially be the Property Trustee and any co-paying agent
chosen by the Property Trustee and acceptable to the Administrative Trustees and
the Corporation. The Paying Agent shall be permitted to resign as Paying Agent
upon 30 days' written notice to the Property Trustee, the Administrative
Trustees and the Corporation. In the event that the Property Trustee shall no
longer be the Paying Agent, the Administrative Trustees shall appoint a
successor (which shall be a bank or trust company acceptable to the
Administrative Trustees and the Corporation) to act as Paying Agent.
Restrictions on Transfer. The Capital Securities will be issued and may
be transferred only in blocks having a Liquidation Amount of not less than
$100,000 (100 Capital Securities) and multiples of $1,000 in excess thereof. Any
attempted sale, transfer or other disposition of Capital Securities in a block
having a Liquidation Amount of less than $100,000 shall be deemed to be void and
of no legal effect whatsoever. 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.
Registrar and Transfer Agent. The Property Trustee will act as
registrar and transfer agent for the Capital Securities. Registration of
transfers of the Capital Securities will be effected without charge by or on
behalf of the Trust, but upon payment of any tax or other governmental charges
that may be imposed in connection with any transfer or exchange. The Trust will
not be required to register or cause to be registered the transfer of the
Capital Securities after they have been called for redemption.
Information Concerning the Property Trustee. The Property Trustee,
other than during the occurrence and continuance of an Event of Default,
undertakes to perform only such duties as are specifically set forth in the
Trust Agreement and, during the existence of an Event of Default, must exercise
the same degree of care and skill as a prudent person would exercise or use in
the conduct of his or her own affairs. Subject to this provision, the Property
Trustee is under no obligation to exercise any of the powers vested in it by the
Trust Agreement at the request of any holder of Trust Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby. If no Event of Default has occurred and is continuing
and the Property Trustee is required to decide between alternative courses of
action, construe ambiguous provisions in the Trust Agreement or is unsure of the
application of any provision of the Trust Agreement, and the matter is not one
on which holders of the Capital Securities or the Common Securities are entitled
under the Trust Agreement to vote, then the Property Trustee shall take such
action as is directed by the Corporation and, if not so directed, shall take
such action as it deems advisable and in the best interests of the holders of
the Trust Securities and will have no liability except for its own bad faith,
negligence or willful misconduct.
Miscellaneous. The Administrative Trustees are authorized and directed
to conduct the affairs of and to operate the Trust in such a way that the Trust
will not be deemed to be an "investment company" required to be registered under
the Investment Company Act or classified as an association or publicly-traded
partnership taxable as a corporation for United States federal income tax
purposes and so that the Junior Subordinated Debentures will be treated as
indebtedness of the Corporation for United States federal income tax purposes.
In this connection, the Corporation and the Administrative Trustees are
authorized to take any action, not inconsistent with applicable law, the
certificate of trust of the Trust or the Trust Agreement, that the Corporation
and the Administrative Trustees determine in their discretion to be necessary or
desirable for such purposes, as long as such action does not materially
adversely affect the interests of the holders of the Trust Securities.
Holders of the Trust Securities have no preemptive or similar rights.
The Trust may not borrow money, issue debt, execute mortgages or pledge any of
its assets.
Description of Junior Subordinated Debentures
The Old Junior Subordinated Debentures were issued and the New Junior
Subordinated Debentures will be issued as a separate series under the Indenture
between the Corporation and The Bank of New York, as trustee (the "Debenture
Trustee"). The Indenture has been qualified under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). This summary of certain terms and
provisions of the Junior Subordinated Debentures and the Indenture describes the
material terms thereof, but does not purport to be complete, and where reference
is made to particular provisions of the Indenture, such provisions, including
the definitions of certain terms, some of which are not otherwise defined
herein, are qualified in their entirety by reference to all of the provisions of
the Indenture and those terms made a part of the Indenture by the Trust
Indenture Act.
General. Concurrently with the issuance of the Old Capital Securities,
the Trust invested the proceeds thereof, together with the consideration paid by
the Corporation for the Common Securities, in Old Junior Subordinated Debentures
issued by the Corporation. Pursuant to the Exchange Offer, the Corporation will
exchange the Old Junior Subordinated Debentures, in an amount corresponding to
the Old Capital Securities accepted for exchange, for a like aggregate principal
amount of the New Junior Subordinated Debentures as soon as practicable after
the date hereof.
The Junior Subordinated Debentures bear interest from November 19, 1997
at the annual rate of 8.90% of the principal amount thereof, payable
semi-annually in arrears on June 1and December 1 of each year (each, an
"Interest Payment Date"), commencing June 1, 1998, to the person in whose name
each Junior Subordinated Debenture is registered, subject to certain exceptions,
at the close of business on the 15th day of the month preceding the month in
which the relevant payment date falls. The Junior Subordinated Debentures will
mature on December 1, 2027. It is anticipated that, until the liquidation, if
any, of the Trust, each Junior Subordinated Debenture will be held in the name
of the Property Trustee in trust for the benefit of the holders of the Trust
Securities. The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months and, for any period of less
than a full calendar month, the number of days elapsed in such month. In the
event that any date on which interest is payable on the Junior Subordinated
Debentures is not a Business Day, then payment of the interest payable on such
date will be made on the next succeeding day that is a Business Day (and without
any interest or other payment in respect of any such delay), except that if such
next succeeding Business Day falls in the next succeeding calendar year, then
such payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date. Accrued interest
that is not paid on the applicable Interest Payment Date will bear additional
interest on the amount thereof (to the extent permitted by law) at the rate per
annum of 8.90% thereof, compounded semi-annually. The term "interest," as used
herein, shall include semi-annual interest payments, interest on semi-annual
interest payments not paid on the applicable Interest Payment Date and
Additional Sums (as defined below), as applicable.
The New Junior Subordinated Debenture will be issued in denominations
of $100,000, and multiples of $1,000 in excess thereof. The New Junior
Subordinated Debentures rank pari passu with the Old Junior Subordinated
Debentures and with all Other Debentures and are unsecured and are subordinate
and junior in right of payment to all Senior Indebtedness to the extent and in
the manner set forth in the Indenture. See " -Subordination."
The Corporation is a holding company and almost all of the operating
assets of the Corporation are owned by the Corporation's subsidiaries. The
Corporation is a legal entity separate and distinct from its subsidiaries.
Holders of Junior Subordinated Debentures should look only to the Corporation
for payments on the Junior Subordinated Debentures. The principal sources of the
Corporation's income are dividends, interest and fees from its subsidiaries. The
Corporation relies primarily on dividends from the Banks to meet its obligations
for payment of principal and interest on its outstanding debt obligations and
corporate expenses. There are regulatory limitations on the payment of dividends
directly or indirectly to the Corporation from the Banks. In addition to
restrictions on the payment of dividends, the Banks are subject to certain
restrictions imposed by federal law on any extensions of credit to, and certain
other transactions with, the Corporation and certain other affiliates, and on
investments in stock or other securities thereof. Such restrictions prevent the
Corporation and such other affiliates from borrowing from the Banks unless the
loans are secured by various types of collateral. Further, such secured loans,
other transactions and investments by any of the Banks are generally limited in
amount as to the Corporation and as to each of such other affiliates to 10% of
the Banks' capital and surplus and as to the Corporation and all of such other
affiliates to an aggregate of 20% of the Banks' capital and surplus.
Because the Corporation is a holding company, the right of the
Corporation to participate in any distribution of assets of any subsidiary upon
such subsidiary's liquidation or reorganization or otherwise (and thus the
ability of holders of the Capital Securities to benefit indirectly from such
distribution), is subject to the prior claims of creditors of that subsidiary
(including depositors, in the case of the Banks), except to the extent the
Corporation may itself be recognized as a creditor of that subsidiary. At
December 31, 1997, the subsidiaries of the Corporation had total liabilities
(excluding liabilities owed to the Corporation) of $1.4 billion, including
deposit liabilities. Accordingly, the Junior Subordinated Debentures will be
effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries (including the subsidiaries' deposit liabilities) and
all liabilities of any future subsidiaries of the Corporation. The Indenture
does not limit the incurrence or issuance of other secured or unsecured debt of
the Corporation or any subsidiary, including Senior Indebtedness. See " --
Subordination."
Form, Registration and Transfer. If the Junior Subordinated Debentures
are distributed to the holders of the Trust Securities, the Junior Subordinated
Debentures may be represented by one or more global certificates registered in
the name of Cede & Co. as the nominee of DTC. The depositary arrangements for
such Junior Subordinated Debentures are expected to be substantially similar to
those in effect for the Capital Securities. For a description of DTC and the
terms of the depositary arrangements relating to payments, transfers, voting
rights, redemptions and other notices and other matters, see "Description of
Capital Securities -- Form, Denomination, Book-Entry Procedures and Transfer."
The Junior Subordinated Debentures will be issuable only in registered form
without coupons in minimum denominations of $100,000 (100 Junior Subordinated
Debentures) and integral multiples of $1,000 in excess thereof.
Payment And Paying Agents. Payment of principal of (and premium, if
any) and interest on Junior Subordinated Debentures will be made at the office
of the Debenture Trustee in the City of New York or at the office of such Paying
Agent or Paying Agents as the Corporation may designate from time to time,
except that at the option of the Corporation payment of any interest may be
made, except in the case of Junior Subordinated Debentures in global form: (i)
by check mailed to the address of the Person entitled thereto as such address
shall appear in the register for Junior Subordinated Debentures; or (ii) by
transfer to an account maintained by the Person entitled thereto as specified in
such register, provided that proper transfer instructions have been received by
the relevant Record Date. Payment of any interest on any Junior Subordinated
Debenture will be made to the Person in whose name such Junior Subordinated
Debenture is registered at the close of business on the Record Date for such
interest, except in the case of defaulted interest. The Corporation may at any
time designate additional Paying Agents or rescind the designation of any Paying
Agent; however the Corporation at all times will be required to maintain a
Paying Agent in each place of payment for the Junior Subordinated Debentures.
Any moneys deposited with the Debenture Trustee or any Paying Agent, or
then held by the Corporation in trust, for the payment of the principal of (and
premium, if any) or interest on any Junior Subordinated Debenture and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall, at the request of the Corporation, be repaid
to the Corporation and the holder of such Junior Subordinated Debenture shall
thereafter look, as a general unsecured creditor, only to the Corporation for
payment thereof.
Option to Extend Interest Payment Date. So long as no Debenture Event
of Default has occurred and is continuing, the Corporation will have the right
under the Indenture to defer the payment of interest on the Junior Subordinated
Debentures at any time and from time to time for a period not exceeding 10
consecutive semi-annual periods with respect to each Extension Period, provided
that no Extension Period shall end on a date other than an Interest Payment Date
or extend beyond the Stated Maturity Date. At the end of such Extension Period,
the Corporation must pay all interest then accrued and unpaid (together with
interest thereon at the annual rate of 8.90%, compounded semi-annually, to the
extent permitted by applicable law. During an Extension Period, interest will
continue to accrue and, if the Junior Subordinated Debentures have been
distributed to holders of the Trust Securities, holders of Junior Subordinated
Debentures (or holders of the Trust Securities while Trust Securities are
outstanding) will be required to accrue such deferred interest income for United
States federal income tax purposes prior to the receipt of cash attributable to
such income. See "Certain Federal Income Tax Considerations -- Interest Income
and Original Issue Discount."
During any such Extension Period, the Corporation 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 Corporation's capital stock;
(ii) make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Corporation (including any Other
Debentures) that rank pari passu with or junior in right of payment to the
Junior Subordinated Debentures; or (iii) make any guarantee payments with
respect to any guarantee by the Corporation of the debt securities of any
subsidiary of the Corporation (including any Other Guarantees) if such guarantee
ranks pari passu with or junior in right of payment to the Junior Subordinated
Debentures (other than (a) dividends or distributions in shares of, or options,
warrants or rights to subscribe for or purchase shares of, common stock of the
Corporation, (b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto, (c) payments under the Guarantee, (d) as a result of a
reclassification of the Corporation's capital stock or the exchange or
conversion of one class or series of the Corporation's capital stock for another
class or series of the Corporation's capital stock, (e) the purchase of
fractional interests in shares of the Corporation's capital stock pursuant to
the conversion or exchange provisions of such capital stock or the security
being converted or exchanged, and (f) purchases of common stock of the
Corporation related to the issuance of common stock or rights under any of the
Corporation's benefit plans for its directors, officers or employees or any of
the Corporation's dividend reinvestment plans). The Corporation has no current
intention to exercise its option to defer payments of interest on the Junior
Subordinated Debentures.
Prior to the termination of any such Extension Period, the Corporation
may further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods, end on
a date other than an Interest Payment Date or extend beyond the Stated Maturity
Date. Upon the termination of any such Extension Period and the payment of all
amounts then due on any Interest Payment Date, the Corporation may elect to
begin a new Extension Period, subject to the requirements set forth herein. No
interest shall be due and payable during an Extension Period, except at the end
thereof. The Corporation must give the Property Trustee, the Administrative
Trustees and the Debenture Trustee notice of its election of any Extension
Period (or an extension thereof) at least five Business Days prior to the
earlier of: (i) the date the Distributions on the Trust Securities would have
been payable except for the election to begin or extend such Extension Period;
or (ii) the date the Administrative Trustees are required to give notice to any
securities exchange or to holders of Capital Securities of the record date or
the date such Distributions are payable, but in any event not less than five
Business Days prior to such record date. The Debenture Trustee shall give notice
of the Corporation's election to begin or extend a new Extension Period to the
holders of the Capital Securities. There is no limitation on the number of times
that the Corporation may elect to begin an Extension Period.
Optional Prepayment. The Junior Subordinated Debentures will be
prepayable, in whole or in part, at the option of the Corporation on or after
December 1, 2007 (the "Initial Optional Prepayment Date"), subject to the
Corporation having received any required regulatory approval, at a prepayment
price (the "Optional Prepayment Price") equal to the percentage of the
outstanding principal amount of the Junior Subordinated Debentures specified
below, plus, in each case, accrued and unpaid interest thereon to the date of
prepayment if prepaid during the 12-month period beginning the years indicated
below:
YEAR......................................PERCENTAGE
2007........................................104.450%
2008........................................104.005%
2009........................................103.560%
2010........................................103.115%
2011........................................102.670%
2012........................................102.225%
2013........................................101.780%
2014........................................101.335%
2015........................................100.890%
2016........................................100.445%
2017 and thereafter ........................100.000%
Special Event Prepayment. Prior to the Initial Optional Prepayment
Date, if a Special Event shall occur and be continuing, the Corporation may, at
its option and subject to receipt of any required regulatory approval, prepay
the Junior Subordinated Debentures in whole (but not in part) at any time within
90 days of the occurrence of such Special Event, at a prepayment price (the
"Special Event Prepayment Price") equal to the Make-Whole Amount. The
"Make-Whole Amount" shall be equal to the greater of (x) 100% of the principal
amount of the Junior Subordinated Debentures or (y) the sum, as determined by a
Quotation Agent (as defined herein), of the present values of the remaining
scheduled payments of principal and interest on the Junior Subordinated
Debentures from the prepayment date to the Stated Maturity Date, discounted to
the prepayment date on a semi-annual basis (assuming a 360-day year consisting
of twelve 30-day months) at the Adjusted Treasury Rate, plus, in the case of
each of clauses (x) and (y), accrued and unpaid interest thereon and Liquidated
Damages, if any, to the date of prepayment. If, following the occurrence of a
Special Event, the Corporation exercises its option to prepay the Junior
Subordinated Debentures, then the proceeds of that prepayment must be applied to
redeem a Like Amount of Trust Securities at the Special Event Redemption Price.
See "Description of New Capital Securities-Redemption."
A "Special Event" means a Tax Event or a Regulatory Capital Event, as
the case may be.
A "Tax Event" means the receipt by the Corporation 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 thereunder of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after the date of original
issuance of the Trust Securities, 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 Junior Subordinated Debentures; (ii) interest payable by the Corporation
on the Junior Subordinated Debentures is not, or within 90 days of the date of
such opinion will not be, deductible by the Corporation, 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.
A "Regulatory Capital Event" means the receipt by the Corporation of an
opinion of independent bank regulatory counsel experienced in such matters to
the effect that, as a result of: (i) any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any rules, guidelines or policies of an applicable
regulatory agency; or (ii) any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, which amendment or
change is effective or such pronouncement or decision is announced on or after
the date of original issuance of the Junior Subordinated Debentures, the Capital
Securities do not constitute, or within 90 days of the date thereof, would not
constitute, Tier 1 Capital (or its then equivalent if the Corporation were
subject to such capital requirement).
"Adjusted Treasury Rate" means, with respect to any prepayment date,
the rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such prepayment date plus; (i) 2.710% if such prepayment date
occurs prior to December 1, 1998; and (ii) 2.160% in all other cases.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the remaining
term to maturity of the Junior Subordinated Debentures (the "Remaining Life") to
be prepaid 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 the Remaining Life, the two most closely
corresponding United States Treasury securities as selected by the Quotation
Agent 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.
"Treasury Rate" means: (i) the yield, under the heading which
represents the average for the immediately prior week, appearing in the most
recently published statistical release designated "Selected Interest
Rates-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 equal to the Comparable Treasury Price for such
prepayment date. The Treasury Rate shall be calculated on the third Business Day
preceding the prepayment date.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Corporation. "Reference Treasury Dealer" means a nationally-recognized U.S.
Government securities dealer in New York City selected by the Corporation.
"Comparable Treasury Price" means, with respect to any prepayment date:
(i) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such prepayment date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities;" or (ii) if such release (or any successor release) is
not published or does not contain such prices on such Business Day, (A) the
average of the Reference Treasury Dealer Quotations for such prepayment date,
after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if the Debenture Trustee obtains fewer than three such
Reference Treasury Dealer Quotations, the average of all such Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any prepayment date, the average, as determined by
the Debenture Trustee, 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 prepayment date.
Notice of any prepayment will be mailed at least 30 days but not more
than 60 days before the redemption date to each holder of Junior Subordinated
Debentures to be prepaid at its registered address. Unless the Corporation
defaults in payment of the prepayment price, on and after the prepayment date
interest ceases to accrue on such Junior Subordinated Debentures called for
prepayment.
If the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, the Corporation will pay as
additional amounts on the Junior Subordinated Debentures such amounts as shall
be necessary in order that the amount of Distributions then due and payable by
the Trust on the outstanding Trust Securities shall not be reduced as a result
of any additional taxes, duties and other governmental charges to which the
Trust has become subject as a result of a Tax Event ("Additional Sums").
Certain Covenants of the Corporation. The Corporation has agreed that
it will not: (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of the
Corporation's capital stock; (ii) make any payment of principal, interest or
premium, if any, on or repay or repurchase or redeem any debt securities of the
Corporation (including Other Debentures) that rank pari passu with or junior in
right of payment to the Junior Subordinated Debentures; or (iii) make any
guarantee payments with respect to any guarantee by the Corporation of the debt
securities of any subsidiary of the Corporation (including under Other
Guarantees) if such guarantee ranks pari passu or junior in right of payment to
the Junior Subordinated Debentures (other than (a) dividends or distributions in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, common stock of the Corporation, (b) any declaration of a dividend in
connection with the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the
Guarantee, (d) as a result of a reclassification of the Corporation's capital
stock or the exchange or conversion of one class or series of the Corporation's
capital stock for another class or series of the Corporation's capital stock,
(e) the purchase of fractional interests in shares of the Corporation's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged, and (f) purchases of common stock
related to the issuance of common stock or rights under any of the Corporation's
benefit plans for its directors, officers or employees or any of the
Corporation's dividend reinvestment plans) if at such time (1) there shall have
occurred any event of which the Corporation has actual knowledge that (a) is, or
with the giving of notice or the lapse of time, or both, would be, a Debenture
Event of Default and (b) in respect of which the Corporation shall not have
taken reasonable steps to cure, (2) the Corporation shall be in default with
respect to its payment of any obligations under the Guarantee or (3) the
Corporation shall have given notice of its election to exercise an Extension
Period as provided in the Indenture and shall not have rescinded such notice,
and such Extension Period, or any extension thereof, shall have commenced and be
continuing.
So long as the Trust Securities remain outstanding, the Corporation
also has agreed: (i) to directly or indirectly maintain 100% direct or indirect
ownership of the Common Securities, provided, however, that any permitted
successor of the Corporation under the Indenture may succeed to the
Corporation's ownership of such Common Securities; (ii) to use its reasonable
efforts to cause the Trust (a) to remain a business trust, except in connection
with the distribution of Junior Subordinated Debentures to the holders of Trust
Securities in liquidation of the Trust, the redemption of all of the Trust
Securities of the Trust, or certain mergers, consolidations or amalgamations,
each as permitted by the Trust Agreement, and (b) to otherwise continue to be
classified as a grantor trust and not an association taxable as a corporation
for United States federal income tax purposes; and (iii) to use its reasonable
efforts to cause each holder of Trust Securities to be treated as owning an
undivided beneficial interest in the Junior Subordinated Debentures.
Modification of Indenture. From time to time the Corporation and the
Debenture Trustee may, without the consent of the holders of Junior Subordinated
Debentures, amend the Indenture for specified purposes, including, among other
things, curing ambiguities, defects or inconsistencies, provided that any such
action does not materially adversely affect the interest of the holders of
Junior Subordinated Debentures, and qualifying, or maintaining the qualification
of, the Indenture under the Trust Indenture Act. The Indenture contains
provisions permitting the Corporation and the Debenture Trustee, with the
consent of the holders of a majority in aggregate principal amount of Junior
Subordinated Debentures, to modify the Indenture in a manner affecting the
rights of the holders of Junior Subordinated Debentures; provided that no such
modification may, without the consent of the holders of each outstanding Junior
Subordinated Debenture so affected: (i) change the Stated Maturity Date, or
reduce the principal amount of the Junior Subordinated Debentures or reduce the
amount payable on redemption thereof or reduce the rate or extend the time of
payment of interest thereon except pursuant to the Corporation's right under the
Indenture to defer the payment of interest as provided therein (see " -- Option
to Extend Interest Payment Date") or make the principal of, or interest or
premium on, the Junior Subordinated Debentures payable in any coin or currency
other than that provided in the Junior Subordinated Debentures, or impair or
affect the right of any holder of Junior Subordinated Debentures to institute
suit for the payment thereof; or (ii) reduce the percentage of principal amount
of Junior Subordinated Debentures, the holders of which are required to consent
to any such modification of the Indenture.
Debenture Events of Default. The Indenture provides that any one or
more of the following described events with respect to the Junior Subordinated
Debentures constitutes a "Debenture Event of Default" (whatever the reason for
such Debenture Event of Default and whether it shall be voluntary or involuntary
or be effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body): (i) failure for 30 days to pay any interest (including
Compounded Interest and Additional Sums, if any) or Liquidated Damages, if any,
on the Junior Subordinated Debentures or any Other Debentures, when due (subject
to the deferral of any due date in the case of an Extension Period); or (ii)
failure to pay any principal or premium, if any, on the Junior Subordinated
Debentures or any Other Debentures when due whether at maturity, upon
redemption, by declaration of acceleration of maturity or otherwise; or (iii)
failure to observe or perform in any material respect certain other covenants
contained in the Indenture for 90 days after written notice to the Corporation
from the Debenture Trustee or to the Corporation and the Debenture Trustee from
the holders of at least 25% in aggregate outstanding principal amount of Junior
Subordinated Debentures; or (iv) certain events in bankruptcy, insolvency or
reorganization of the Corporation.
The holders of a majority in aggregate outstanding principal amount of
the Junior Subordinated Debentures have, subject to certain exceptions, the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Debenture Trustee. The Debenture Trustee or the holders
of not less than 25% in aggregate outstanding principal amount of the Junior
Subordinated Debentures may declare the principal due and payable immediately
upon a Debenture Event of Default. The holders of a majority in aggregate
outstanding principal amount of the Junior Subordinated Debentures may annul
such declaration and waive the default if the default (other than the
non-payment of the principal of the Junior Subordinated Debentures which has
become due solely by such acceleration) has been cured and a sum sufficient to
pay all matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Debenture Trustee.
The holders of a majority in aggregate outstanding principal amount of
the Junior Subordinated Debentures affected thereby may, on behalf of the
holders of all the Junior Subordinated Debentures, waive any past default,
except a default in the payment of principal (or premium, if any) on or interest
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest (and premium, if any) or Liquidated Damages, if any,
and principal due otherwise than by acceleration has been deposited with the
Debenture Trustee) or a default in respect of a covenant or provision which
under the Indenture cannot be modified or amended without the consent of the
holder of each outstanding Junior Subordinated Debenture.
The Indenture requires the annual filing by the Corporation with the
Debenture Trustee of a certificate as to the absence of certain defaults under
the Indenture. The Indenture provides that the Debenture Trustee may withhold
notice of a Debenture Event of Default from the holders of the Junior
Subordinated Debentures if the Debenture Trustee considers it in the interest of
such holders to do so.
Enforcement of Certain Rights by Holders of Capital Securities. If a
Debenture Event of Default shall have occurred and be continuing and shall be
attributable to the failure of the Corporation to pay the principal of (or
premium, if any), or interest (including Compounded Interest and Additional
Sums, if any) or Liquidated Damages, if any, on the Junior Subordinated
Debentures on the due date, a holder of Capital Securities may institute a
Direct Action. The Corporation may not amend the Indenture to remove the
foregoing right to bring a Direct Action without the prior written consent of
the holders of all of the Capital Securities. Notwithstanding any payments made
to a holder of Capital Securities by the Corporation in connection with a Direct
Action, the Corporation shall remain obligated to pay the principal of (or
premium, if any) or interest (including Compounded Interest and Additional Sums,
if any) or Liquidated Damages, if any, on the Junior Subordinated Debentures,
and the Corporation shall be subrogated to the rights of the holder of such
Capital Securities with respect to payments on the Capital Securities to the
extent of any payments made by the Corporation to such holder in any Direct
Action.
The holders of the Capital Securities will not be able to exercise
directly any remedies, other than those set forth in the preceding paragraph,
available to the holders of the Junior Subordinated Debentures unless there
shall have been an Event of Default under the Trust Agreement. See "Description
of Capital Securities Events of Default; Notice."
Consolidation, Merger, Sale of Assets and Other Transactions. The
Indenture provides that the Corporation shall not consolidate with or merge into
any other Person or convey, transfer or lease its properties as an entirety or
substantially as an entirety to any Person, and no Person shall consolidate with
or merge into the Corporation or convey, transfer or lease its properties as an
entirety or substantially as an entirety to the Corporation, unless: (i) in case
the Corporation consolidates with or merges into another Person or conveys or
transfers its properties substantially as an entirety to any Person, the
successor Person is organized under the laws of the United States or any State
or the District of Columbia, and such successor Person expressly assumes the
Corporation's obligations under the Indenture with respect to the Junior
Subordinated Debentures; (ii) immediately after giving effect thereto, no
Debenture Event of Default, and no event which, after notice or lapse of time or
both, would become a Debenture Event of Default, shall have occurred and be
continuing; and (iii) certain other conditions as prescribed in the Indenture
are met.
The general provisions of the Indenture do not afford holders of the
Junior Subordinated Debentures protection in the event of a highly leveraged or
other transaction involving the Corporation that may adversely affect holders of
the Junior Subordinated Debentures.
Satisfaction and Discharge. The Indenture provides that when, among
other things, all Junior Subordinated Debentures not previously delivered to the
Debenture Trustee for cancellation: (i) have become due and payable; or (ii)
will become due and payable at maturity or called for redemption within one
year, and the Corporation deposits or causes to be deposited with the Debenture
Trustee funds, in trust, for the purpose and in an amount sufficient to pay and
discharge the entire indebtedness on the Junior Subordinated Debentures not
previously delivered to the Debenture Trustee for cancellation, for the
principal (and premium, if any) and interest (including Compounded Interest and
Additional Sums, if any) and Liquidated Damages, if any, to the date of the
redemption or to the Stated Maturity Date, as the case may be, then the
Indenture will cease to be of further effect (except as to the Corporation's
obligations to pay all other sums due pursuant to the Indenture and to provide
the officers' certificates and opinions of counsel described therein), and the
Corporation will be deemed to have satisfied and discharged the Indenture.
Subordination. In the Indenture, the Corporation has covenanted and
agreed that any Junior Subordinated Debentures issued thereunder will be
subordinate and junior in right of payment to all Senior Indebtedness to the
extent provided in the Indenture. Upon any payment or distribution of assets to
creditors upon any liquidation, dissolution, winding up, reorganization,
assignment for the benefit of creditors, marshaling of assets or any bankruptcy,
insolvency, debt restructuring or similar proceedings in connection with any
insolvency or bankruptcy proceeding of the Corporation, all Senior Indebtedness
must be paid in full before the holders of Junior Subordinated Debentures will
be entitled to receive or retain any payment in respect thereof.
In the event of the acceleration of the maturity of Junior Subordinated
Debentures, the holders of all Senior Indebtedness outstanding at the time of
such acceleration will first be entitled to receive payment in full of such
Senior Indebtedness before the holders of Junior Subordinated Debentures will be
entitled to receive or retain any payment in respect of the Junior Subordinated
Debentures.
No payments on account of principal, or premium, if any, or interest,
if any, in respect of the Junior Subordinated Debentures may be made if there
shall have occurred and be continuing a default in any payment with respect to
Senior Indebtedness, or an event of default with respect to any Senior
Indebtedness resulting in the acceleration of the maturity thereof, or if any
judicial proceeding shall be pending with respect to any such default.
"Indebtedness" means: (i) every obligation of the Corporation for money
borrowed; (ii) every obligation of the Corporation evidenced by bonds,
debentures, notes or other similar instruments, including obligations incurred
in connection with the acquisition of property, assets or businesses; (iii)
every reimbursement obligation of the Corporation with respect to letters of
credit, banker's acceptances or similar facilities issued for the account of the
Corporation; (iv) every obligation of the Corporation issued or assumed as the
deferred purchase price of property or services (but excluding trade accounts
payable or accrued liabilities arising in the ordinary course of business); (v)
every capital lease obligation of the Corporation; (vi) all indebtedness of the
Corporation whether incurred on or prior to the date of the Indenture or
thereafter incurred, for claims in respect of derivative products, including
interest rate, foreign exchange rate and commodity forward contracts, options
and swaps and similar arrangements; and (vii) every obligation of the type
referred to in clauses (i) through (vi) of another Person and all dividends of
another Person the payment of which, in either case, the Corporation has
guaranteed or is responsible or liable, directly or indirectly, as obligor or
otherwise.
"Indebtedness Ranking on a Parity with the Junior Subordinated
Debentures" means: (i) Indebtedness, whether outstanding on the date of
execution of the Indenture or thereafter created, assumed or incurred, to the
extent such Indebtedness by its terms ranks equally with and not prior to the
Junior Subordinated Debentures in the right of payment upon the happening of the
dissolution or winding-up or liquidation or reorganization of the Corporation;
and (ii) all other debt securities, and guarantees in respect of those debt
securities, issued to any trust other than the Trust, or a trustee of such
trust, partnership or other entity affiliated with the Corporation that is a
financing vehicle of the Corporation (a "financing entity") in connection with
the issuance by such financing entity of equity securities or other securities
guaranteed by the Corporation pursuant to an instrument that ranks pari passu
with or junior in right of payment to the Guarantee. The securing of any
Indebtedness, otherwise constituting Indebtedness Ranking on a Parity with the
Junior Subordinated Debentures, shall not be deemed to prevent such Indebtedness
from constituting Indebtedness Ranking on a Parity with the Junior Subordinated
Debentures.
"Indebtedness Ranking Junior to the Junior Subordinated Debentures"
means any Indebtedness, whether outstanding on the date of execution of the
Indenture or thereafter created, assumed or incurred, to the extent such
indebtedness by its terms ranks junior to and not equally with or prior to the
Junior Subordinated Debentures (and any other Indebtedness Ranking on a Parity
with the Junior Subordinated Debentures) in right of payment upon the happening
of the dissolution or winding-up or liquidation or reorganization of the
Corporation. The securing of any Indebtedness, otherwise constituting
Indebtedness Ranking Junior to the Junior Subordinated Debentures, shall not be
deemed to prevent such Indebtedness from constituting Indebtedness Ranking
Junior to the Junior Subordinated Debentures.
"Senior Indebtedness" means all Indebtedness, whether outstanding on
the date of execution of the Indenture or thereafter created, assumed or
incurred, except Indebtedness Ranking on a Parity with the Junior Subordinated
Debentures or Indebtedness Ranking Junior to the Junior Subordinated Debentures,
and any deferrals, renewals or extensions of such Senior Indebtedness.
The Corporation is a holding company and almost all of the operating
assets of the Corporation are owned by the Corporation's subsidiaries. The
Corporation relies primarily on dividends from the Banks to meet its obligations
for payment of principal and interest on its outstanding debt obligations and
corporate expenses. The Corporation is a legal entity separate and distinct from
its subsidiaries. Holders of Junior Subordinated Debentures should look only to
the Corporation for payments on the Junior Subordinated Debentures. There are
regulatory limitations on the payment of dividends directly or indirectly to the
Corporation from the Banks. See " -- General." In addition, the Banks are
subject to certain restrictions imposed by federal law on any extensions of
credit to, and certain other transactions with, the Corporation and certain
other affiliates, and on investments in stock or other securities thereof. Such
restrictions prevent the Corporation and such other affiliates from borrowing
from the Banks unless the loans are secured by various types of collateral.
Further, such secured loans, other transactions and investments by the Banks are
generally limited in amount as to the Corporation and as to each of such other
affiliates to 10% of the Banks' capital and surplus and as to the Corporation
and all of such other affiliates to an aggregate of 20% of the Banks' capital
and surplus. Accordingly, the Junior Subordinated Debentures will be effectively
subordinated to all existing and future liabilities of the Corporation's
subsidiaries.
Because the Corporation is a holding company, the right of the
Corporation to participate in any distribution of assets of any subsidiary upon
such subsidiary's liquidation or reorganization or otherwise (and thus the
ability of holders of the Capital Securities to benefit indirectly from such
distribution), is subject to the prior claims of creditors of that subsidiary
(including depositors, in the case of the Banks), except to the extent the
Corporation may itself be recognized as a creditor of that subsidiary. At
December 31, 1997, the subsidiaries of the Corporation had total liabilities
(excluding liabilities owed to the Corporation) of $1.4 billion, including
deposit liabilities. Accordingly, the Junior Subordinated Debentures will be
effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries (including the subsidiaries' deposit liabilities) and
all liabilities of any future subsidiaries of the Corporation. The Indenture
does not limit the incurrence or issuance of other secured or unsecured debt of
the Corporation or any subsidiary, including Senior Indebtedness. See " --
Subordination."
Restrictions on Transfer. The Junior Subordinated Debentures will be
issued, and may be transferred, only in blocks having an aggregate principal
amount of not less than $100,000 (100 Junior Subordinated Debentures) and
multiples of $1,000 in excess thereof. Any such transfer of Junior Subordinated
Debentures in a block having an aggregate principal amount of less than $100,000
shall be deemed to be void and of no legal effect whatsoever. Any such
transferee shall be deemed not to be the holder of such Junior Subordinated
Debentures for any purpose, including but not limited to the receipt of payments
on such Junior Subordinated Debentures, and such transferee shall be deemed to
have no interest whatsoever in such Junior Subordinated Debentures.
Governing Law. The Indenture and the Junior Subordinated Debentures will be
governed by and construed in accordance with the laws of the State of New York.
Information Concerning the Debenture Trustee. Following the Exchange
Offer and the qualification of the Indenture under the Trust Indenture Act, the
Debenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Debenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Junior Subordinated Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The Debenture Trustee is not required to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Debenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
DESCRIPTION OF GUARANTEE
The Old Guarantee was executed and delivered by the Corporation
concurrently with the issuance by the Trust of the Old Capital Securities for
the benefit of the holders from time to time of the Old Capital Securities. As
soon as practicable after the date hereof, the Old Guarantee will be exchanged
by the Corporation for the New Guarantee for the benefit of the holders from
time to time of the New Capital Securities. The Guarantee has been qualified
under the Trust Indenture Act. This summary of certain provisions of the
Guarantee describes the material terms of the Guarantee, but does not purport to
be complete and is subject to, and qualified in its entirety by reference to,
all of the provisions of the Guarantee, including the definitions therein of
certain terms, and the Trust Indenture Act. The Guarantee Trustee will hold the
Guarantee for the benefit of the holders of the Capital Securities.
General. The Corporation has agreed to pay in full on a subordinated
basis, to the extent set forth herein, the Guarantee Payments (as defined below)
to the holders of the Capital Securities, as and when due, regardless of any
defense, right of set-off or counterclaim that the Trust may have or assert
other than the defense of payment. The following payments with respect to the
Capital Securities, to the extent not paid by or on behalf of the Trust (the
"Guarantee Payments"), are subject to the Guarantee: (i) any accumulated and
unpaid Distributions required to be paid on the Capital Securities, to the
extent that the Trust has funds on hand legally available therefor at such time,
(ii) the applicable Redemption Price with respect to Capital Securities called
for redemption, to the extent that the Trust has funds on hand legally available
therefor at such time, or (iii) upon a voluntary or involuntary dissolution,
winding-up or liquidation of the Trust (other than in connection with the
distribution of the Junior Subordinated Debentures to holders of the Capital
Securities or the redemption of all Capital Securities), the lesser of (a) the
Liquidation Distribution, to the extent the Trust has funds legally available
therefor at the time, and (b) the amount of assets of the Trust remaining
available for distribution to holders of Capital Securities upon liquidation of
the Trust after satisfaction of liabilities to creditors of the Trust as
required by applicable law. The Corporation's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Corporation to the holders of the Capital Securities or by causing the Trust to
pay such amounts to such holders.
The Guarantee ranks subordinate and junior in right of payment to all
Senior Indebtedness to the extent provided therein. See "--Status of Guarantee."
Because the Corporation is a holding company, the right of the Corporation to
participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise is subject to the prior
claims of creditors of that subsidiary, except to the extent the Corporation may
itself be recognized as a creditor of that subsidiary. Accordingly, the
Corporation's obligations under the Guarantee effectively are subordinated to
all existing and future liabilities of the Corporation's Subsidiaries, including
the Corporation's Subsidiaries deposit liabilities, and all liabilities of any
future subsidiaries of the Corporation. Claimants should look only to the assets
of the Corporation for payments under the Guarantee. See "--Description of
Junior Subordinated Debentures--General." The Guarantee does not limit the
incurrence or issuance of other secured or unsecured debt of the Corporation,
including Senior Indebtedness, whether under the Indenture, any other indenture
that the Corporation may enter into in the future or otherwise.
The Corporation has, through the Guarantee, the Trust Agreement, the
Junior Subordinated Debentures and the Indenture, taken together, fully,
irrevocably and unconditionally guaranteed all of the Trust's obligations under
the Capital Securities. No single document standing alone, or operating in
conjunction with fewer than all of the other documents, constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
Trust's obligations under the Capital Securities. See "Relationship Among the
Capital Securities, the Junior Subordinated Debentures and the Guarantee."
Status of Guarantee. The Guarantee constitutes an unsecured obligation
of the Corporation and ranks subordinate and junior in right of payment to all
Senior Indebtedness in the same manner as the Junior Subordinated Debentures.
The New Guarantee ranks pari passu with the Old Guarantee and with all
Other Guarantees issued by the Corporation after the Issue Date with respect to
capital securities, if any, issued by Other Trusts. The Guarantee constitutes a
guarantee of payment and not of collection (i.e., the guaranteed party may
institute a legal proceeding directly against the Corporation to enforce its
rights under the Guarantee without first instituting a legal proceeding against
any other person or entity). The Guarantee will be held for the benefit of the
holders of the Capital Securities. The Guarantee will not be discharged except
by payment of the Guarantee Payments in full to the extent not paid by the Trust
or upon distribution to the holders of the Capital Securities of the Junior
Subordinated Debentures. The Guarantee does not place a limitation on the amount
of additional Senior Indebtedness that may be incurred by the Corporation.
Events of Default. An event of default under the Guarantee will occur
upon the failure of the Corporation to perform any of its payment or other
obligations thereunder, provided, however, that except with respect to a default
in payment of any Guarantee Payment, the Corporation shall have received notice
of default and shall not have cured such default within 60 days after receipt of
such notice. The holders of not less than a majority in Liquidation Amount of
the Capital Securities will have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Guarantee Trustee
in respect of the Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the Guarantee.
Any holder of the Capital Securities may institute a legal proceeding
directly against the Corporation to enforce its rights under the Guarantee
without first instituting a legal proceeding against the Trust, the Guarantee
Trustee or any other person or entity.
The Corporation, as guarantor, will be required to file annually with
the Guarantee Trustee a certificate as to whether or not the Corporation is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
Amendments and Assignment. Except with respect to any changes that do
not materially adversely affect the rights of holders of the Capital Securities
(in which case no vote will be required), the Guarantee may not be amended
without the prior approval of the holders of a majority of the Liquidation
Amount of outstanding Capital Securities. The manner of obtaining any such
approval will be as set forth under "--Description of Capital Securities--Voting
Rights; Amendment of the Trust Agreement." All guarantees and agreements
contained in the Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Corporation and shall inure to the benefit
of the holders of the Capital Securities then outstanding.
Termination. The Guarantee will terminate and be of no further force
and effect upon full payment of the applicable Redemption Price of the Capital
Securities, upon full payment of the Liquidation Amount payable upon liquidation
of the Trust or upon distribution of Junior Subordinated Debentures to the
holders of the Capital Securities. The Guarantee will continue to be effective
or will be reinstated, as the case may be, if at any time any holder of the
Capital Securities must restore payment of any sums paid under the Capital
Securities or the Guarantee.
Information Concerning the Guarantee Trustee. The Guarantee Trustee,
other than during the occurrence and continuance of a default by the Corporation
in performance of the Guarantee, will undertake to perform only such duties as
are specifically set forth in the Guarantee and, in case a default with respect
to the Guarantee has occurred, must exercise the same degree of care and skill
as a prudent person would exercise or use in the conduct of his or her own
affairs. Subject to this provision, the Guarantee Trustee will be under no
obligation to exercise any of the powers vested in it by the Guarantee at the
request of any holder of the Capital Securities unless it is offered reasonable
indemnity against the costs, expenses and liabilities that might be incurred
thereby.
Governing Law. The Guarantee will be governed by and construed in
accordance with the laws of the State of New York.
DESCRIPTION OF OLD SECURITIES
The terms of the Old Securities are identical in all materials respects
to the New Securities, except that: (i) the Old Securities have not been
registered under the Securities Act, are subject to restrictions on transfer
under federal and state securities laws and are entitled to certain rights under
the Registration Rights Agreement (which rights will terminate upon consummation
of the Exchange Offer); (ii) the New Capital Securities will not provide for any
increase in the Distribution rate thereon; and (iii) the New Junior Subordinated
Debentures will not provide for any increase in the interest rate thereon. The
Old Securities provide that, in the event that a registration statement relating
to the Exchange Offer has not been filed by April 18, 1998 and declared
effective by May 18, 1998, or, in certain limited circumstances, in the event a
shelf registration statement (the "Shelf Registration Statement") with respect
to the resale of the Old Capital Securities is not declared effective by May 18,
1998, then interest will accrue (in addition to the stated interest rate on the
Old Junior Subordinated Debentures) at the rate of 0.25% per annum on the
principal amount of the Old Junior Subordinated Debentures and Distributions
will accrue (in addition to the stated Distribution rate on the Old Capital
Securities) at the rate of 0.25% per annum on the Liquidation Amount of the Old
Capital Securities, for the period from the occurrence of such event until such
time as the Exchange Offer is consummated or any required Shelf Registration
Statement is effective. The New Securities are not, and upon consummation of the
Exchange Offer the Old Securities will not be, entitled to any such additional
interest or Distributions. Accordingly, holders of Old Capital Securities should
review the information set forth under "Risk Factors--Consequences of a Failure
to Exchange Old Capital Securities" and "Description of New Securities."
<PAGE>
RELATIONSHIP AMONG THE CAPITAL SECURITIES, THE
JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
Full and Unconditional Guarantee
Payments of Distributions and other amounts due on the Capital
Securities (to the extent the Trust has funds on hand legally available for the
payment of such Distributions) are irrevocably guaranteed by the Corporation as
and to the extent set forth under "Description of New Securities--Description of
Guarantee." Taken together, the Corporation's obligations under the Junior
Subordinated Debentures, the Indenture, the Trust Agreement and the Guarantee
provide, in the aggregate, a full, irrevocable and unconditional guarantee of
payments of Distributions and other amounts due on the Capital Securities. No
single document standing alone or operating in conjunction with fewer than all
of the other documents constitutes such guarantee. It is only the combined
operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the Trust's obligations under the
Capital Securities. If and to the extent that the Corporation does not make the
required payments on the Junior Subordinated Debentures, the Trust will not have
sufficient funds to make the related payments, including Distributions, on the
Capital Securities. The Guarantee does not cover any such payment when the Trust
does not have sufficient funds on hand legally available therefor. In such
event, the remedy of a holder of Capital Securities is to institute a Direct
Action. The obligations of the Corporation under the Guarantee are subordinate
and junior in right of payment to all Senior Indebtedness.
Sufficiency of Payments
As long as payments of interest and other payments are made when due on
the Junior Subordinated Debentures, such payments will be sufficient to cover
Distributions and other payments due on the Capital Securities, primarily
because: (i) the aggregate principal amount or Prepayment Price of the Junior
Subordinated Debentures will be equal to the sum of the Liquidation Amount or
Redemption Price, as applicable, of the Trust Securities, (ii) the interest rate
and interest and other payment dates on the Junior Subordinated Debentures will
match the Distribution rate and Distribution and other payment dates for the
Trust Securities; (iii) the Corporation, as Sponsor, shall pay for all and any
costs, expenses and liabilities of the Trust except the Trust's obligations to
holders of Trust Securities under such Trust Securities; and (iv) the Trust
Agreement provides that the Trust is not authorized to engage in any activity
that is not consistent with the limited purposes thereof.
Enforcement Rights of Holders of Capital Securities
A holder of any Capital Security may institute a legal proceeding
directly against the Corporation to enforce its rights under the Guarantee
without first instituting a legal proceeding against the Guarantee Trustee, the
Trust or any other person or entity.
A default or event of default under any Senior Indebtedness would not
constitute a default or an Event of Default under the Trust Agreement. However,
in the event of payment defaults under, or acceleration of, Senior Indebtedness,
the subordination provisions of the Indenture provide that no payments may be
made in respect of the Junior Subordinated Debentures until such Senior
Indebtedness has been paid in full or any payment default thereunder has been
cured or waived. Failure to make required payments on Junior Subordinated
Debentures would constitute an Event of Default under the Trust Agreement.
Limited Purpose of the Trust
The Trust exists for the sole purpose of issuing and selling the Trust
Securities, using the proceeds from the sale of the Trust Securities to acquire
the Junior Subordinated Debentures and engaging in only those other activities
necessary, advisable or incidental thereto. The Capital Securities represent
beneficial ownership interests in the Trust. A principal difference between the
rights of a holder of Capital Securities and a holder of Junior Subordinated
Debentures is that a holder of Junior Subordinated Debentures is entitled to
receive from the Corporation the principal amount of (and premium, if any) and
interest on Junior Subordinated Debentures held, while a holder of Capital
Securities is entitled to receive Distributions from the Trust (or, in certain
circumstances, from the Corporation under the Guarantee) if and to the extent
the Trust has funds on hand legally available for the payment of such
Distributions.
Rights Upon Termination
Unless the Junior Subordinated Debentures are distributed to holders of
the Trust Securities, upon any voluntary or involuntary termination, winding-up
or liquidation of the Trust, after satisfaction of the liabilities of creditors
of the Trust as required by applicable law, the holders of the Trust Securities
will be entitled to receive, out of assets held by the Trust, the Liquidation
Distribution in cash. See "Description of New Securities--Description of Capital
Securities--Liquidation of the Trust and Distribution of Junior Subordinated
Debentures." Upon any voluntary or involuntary liquidation or bankruptcy of the
Corporation, the Property Trustee, as holder of the Junior Subordinated
Debentures, would be a subordinated creditor of the Corporation, subordinated in
right of payment to all Senior Indebtedness as set forth in the Indenture, but
entitled to receive payment in full of principal (and premium, if any) and
interest, before any stockholders of the Corporation receive payments or
distributions. Since the Corporation is the guarantor under the Guarantee and
has agreed to pay for all costs, expenses and liabilities of the Trust (other
than the Trust's obligations to the holders of its Trust Securities), the
positions of a holder of Capital Securities and a holder of Junior Subordinated
Debentures relative to other creditors and to stockholders of the Corporation in
the event of liquidation or bankruptcy of the Corporation are expected to be
substantially the same.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
General
In the opinion of Flippin, Densmore, Morse, Rutherford & Jessee, a
Professional Corporation, special federal income tax counsel to the Corporation
and the Trust ("Tax Counsel") in connection with the Exchange Offer, the
following is a summary of certain of the material United States federal income
tax consequences of the purchase, ownership and disposition of Capital
Securities held as capital assets by a holder. This summary does not deal with
special classes of holders such as banks, thrifts, real estate investment
trusts, regulated investment companies, insurance companies, dealers in
securities or currencies, tax-exempt investors, United States Alien Holders (as
defined below) engaged in a U.S. trade or business, or persons that will hold
the Capital Securities as a position in a "straddle," as part of a "synthetic
security" or "hedge," as part of a "conversion transaction" or other integrated
investment, or as other than a capital asset. This summary also does not address
the tax consequences to persons that have a functional currency other than the
U.S. dollar or the tax consequences to shareholders, partners or beneficiaries
of a holder of Capital Securities. Further, it does not include any description
of any alternative minimum tax consequences or the tax laws of any state or
local government or of any foreign government that may be applicable to the
Capital Securities. This summary is based on the Internal Revenue Code of 1986,
as amended (the "Code"), Treasury regulations thereunder, the administrative and
judicial interpretations thereof, as of the date hereof, all of which are
subject to change, possibly on a retroactive basis. An opinion of Tax Counsel is
not binding on the Internal Revenue Service (the "IRS") or the courts. No
rulings have been or are expected to be sought from the IRS with respect to any
of the transactions described herein and no assurance can be given that the IRS
will not take contrary positions. Moreover, no assurance can be given that any
of the opinions expressed herein will not be challenged by the IRS or, if
challenged, that such a challenge would not be successful.
Exchange of Capital Securities
The exchange of Old Capital Securities for New Capital Securities
should not be a taxable event to holders for United States federal income tax
purposes. The exchange of Old Capital Securities for New Capital Securities
pursuant to the Exchange Offer should not be treated as an "exchange" for United
States federal income tax purposes, because the New Capital Securities should
not be considered to differ materially in kind or extent from the Old Capital
Securities, and because the exchange will occur by operation of the terms of the
Old Capital Securities. If, however, the exchange of the Old Capital Securities
for the New Capital Securities were treated as an exchange for United States
federal income tax purposes, such exchange should constitute a recapitalization
for federal income tax purposes. Accordingly, the New Capital Securities should
have the same issue price as the Old Capital Securities, and a holder should
have the same adjusted tax basis and holding period in the New Capital
Securities as the holder had in the Old Capital Securities immediately before
the exchange.
Classification of the Junior Subordinated Debentures
The Corporation intends to take the position that the Junior
Subordinated Debentures will be classified for United States federal income tax
purposes as indebtedness of the Corporation. The Corporation, the Trust and the
holders of the Capital Securities (by acceptance of a beneficial interest in a
Capital Security) will agree to treat the Junior Subordinated Debentures as
indebtedness of the Corporation for all United States federal income tax
purposes. No assurance can be given, however, that such position will not be
challenged by the IRS, or, if challenged, that such a challenge will not be
successful. The remainder of this discussion assumes that the Junior
Subordinated Debentures will be classified as indebtedness of the Corporation
for United States federal income tax purposes.
Classification of the Trust
Assuming full compliance with the terms of the Trust Agreement, the
Indenture, the other operative documents described in the Offering Memorandum
dated November 14, 1997 for the purpose of issuing the Old Capital Securities
and the operative documents described in the Prospectus, the Trust will be
classified for United States federal income tax purposes as a grantor trust and
not as an association taxable as a corporation. Accordingly, for United States
federal income tax purposes, each holder of Capital Securities generally will be
considered the owner of an undivided interest in the Junior Subordinated
Debentures, and each holder will be required to include in its gross income any
interest (or OID accrued) with respect to its allocable share of those Junior
Subordinated Debentures.
Interest Income and Original Issue Discount
Under Treasury regulations (the "Regulations") applicable to debt
instruments issued on or after August 13, 1996, a "remote" contingency that
stated interest will not be timely paid will be ignored in determining whether a
debt instrument is issued with OID. The Corporation believes that the likelihood
of its exercising its option to defer payments of interest is "remote" since
exercising that option would prevent the Corporation from declaring dividends on
any class of its equity securities. Accordingly, the Corporation intends to take
the position, based on the advice of Tax Counsel, that the Junior Subordinated
Debentures will not be considered to be issued with OID and, accordingly, stated
interest on the Junior Subordinated Debentures generally will be taxable to a
holder as ordinary income at the time it is paid or accrued in accordance with
such holder's method of tax accounting.
Under the Regulations, if the Corporation were to exercise its option
to defer payments of interest, the Junior Subordinated Debentures would at that
time be treated as issued with OID, and all stated interest on the Junior
Subordinated Debentures would thereafter be treated as OID as long as the Junior
Subordinated Debentures remain outstanding. In such event, all of a holder's
taxable interest income with respect to the Junior Subordinated Debentures would
thereafter be accounted for on an economic accrual basis regardless of such
holder's method of tax accounting, and actual distributions of stated interest
would not be reported as taxable income. Consequently, a holder of Capital
Securities would be required to include in gross income OID even though the
Corporation would not make actual cash payments during an Extension Period.
Moreover, under the Regulations, if the option to defer the payment of interest
was determined not to be "remote," within the meaning of the Regulations, the
Junior Subordinated Debentures would be treated as having been originally issued
with OID. In such event, all of a holder's taxable interest income with respect
to the Junior Subordinated Debentures would be accounted for on an economic
accrual basis regardless of such holder's method of tax accounting, and actual
distributions of stated interest would not be reported as taxable income. In
each case the amount of OID that will accrue in any month will approximately
equal the amount of interest accruing at the stated interest rate.
The Regulations have not yet been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take a
position contrary to Tax Counsel's interpretation herein and assert that the
Junior Subordinated Debentures were originally issued with OID.
Because income on the Capital Securities will constitute interest or
OID, corporate holders of the Capital Securities will not be entitled to a
dividends-received deduction with respect to any income recognized with respect
to the Capital Securities.
Receipt of Junior Subordinated Debentures or Cash Upon Liquidation of the Trust
The Corporation will have the right at any time to liquidate the Trust
and cause the Junior Subordinated Debentures to be distributed to the holders of
the Trust Securities. Under current law, such a distribution, for United States
federal income tax purposes, would be treated as a nontaxable event to each
holder, and each holder would receive an aggregate tax basis in the Junior
Subordinated Debentures equal to such holder's aggregate tax basis in its
Capital Securities. A holder's holding period in the Junior Subordinated
Debentures so received in liquidation of the Trust would include the period
during which the Capital Securities were held by such holder. If, however, the
Trust is characterized for United States federal income tax purposes as an
association taxable as a corporation at the time of its dissolution, the
distribution of the Junior Subordinated Debentures may constitute a taxable
event to holders of Capital Securities and a holder's holding period in Junior
Subordinated Debentures would begin on the date such Junior Subordinated
Debentures were received.
Under certain circumstances described herein (see "Description of New
Securities--Description of New Capital Securities"), the Junior Subordinated
Debentures may be redeemed for cash and the proceeds of such redemption
distributed to holders in redemption of their Capital Securities. Under current
law, such a redemption would, for United States federal income tax purposes,
constitute a taxable disposition of the redeemed Capital Securities, and a
holder could recognize gain or loss as if it sold such redeemed Capital
Securities for cash. See "--Sales of Capital Securities."
Sales of Capital Securities
A holder that sells Capital Securities (including a redemption of the
Capital Securities by the Corporation for cash) will recognize gain or loss
equal to the difference between its adjusted tax basis in the Capital Securities
and the amount realized on the sale of such Capital Securities (other than with
respect to accrued and unpaid interest which has not yet been included in
income, which will be treated as ordinary income). A holder's adjusted tax basis
in the Capital Securities generally will be its initial purchase price increased
by OID (if any) previously includable in such holder's gross income to the date
of disposition and decreased by payments (if any) received on the Capital
Securities in respect of OID. Such gain or loss generally will be a capital gain
or loss and generally will be a long-term capital gain or loss if the Capital
Securities have been held for more than eighteen months.
The Capital Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Junior Subordinated Debentures. A holder who uses the accrual method of
accounting for tax purposes (and a cash method holder, if the Junior
Subordinated Debentures are deemed to have been issued with OID) who disposes of
his Capital Securities between record dates for payments of distributions
thereon will be required to include accrued but unpaid interest on the Junior
Subordinated Debentures through the date of disposition in income as ordinary
income (i.e., interest or, possibly, OID), and to add such amount to his
adjusted tax basis in his pro rata share of the underlying Junior Subordinated
Debentures deemed disposed of. To the extent the selling price is less than the
holder's adjusted tax basis (which will include all accrued but unpaid
interest), a holder will recognize a capital loss. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes.
Proposed Tax Legislation
In 1997, the United States Treasury Department proposed legislation
that would, among other things, deny an issuer a deduction for United States
federal income tax purposes for the payment of interest in respect of certain
types of debt obligations. The Administration's Proposal would apply to debt
obligations, such as the Junior Subordinated Debentures. Accordingly, there can
be no assurance that a Tax Event will not occur. That proposed legislation was
not adopted by Congress. However, Congress continues to consider substantial
changes to the tax code, including a "flat" tax and a "national sales tax." If
the U.S. Congress should adopt changes to the current tax code, it is impossible
to predict the effect on the tax treatment of the Capital Securities and the
Junior Subordinated Debentures. Accordingly, there can be no assurance that a
Tax Event will not occur. The occurrence of a Tax Event may result in the
redemption of the Junior Subordinated Debentures for cash, in which event the
holders of Capital Securities would receive cash in redemption of their Capital
Securities.
<PAGE>
United States Alien Holders
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is not a U.S. Holder
for United States federal income tax purposes.
A "U.S. Holder" is a holder of Capital Securities who or which is a
citizen or individual resident (or is treated as a citizen or individual
resident) of the United States for federal income tax purposes, a corporation or
partnership created or organized (or treated as created or organized for federal
income tax purposes) in or under the laws of the United States or any political
subdivision thereof, or a trust or estate the income of which is includable in
its gross income for federal income tax purposes without regard to its source.
(For taxable years beginning after December 31, 1996 (or for the immediately
preceding taxable year, if the trustee of a trust so elects), a trust is a U.S.
Holder for federal income tax purposes if, and only if: (i) a court within the
United States is able to exercise primary supervision over the administration of
the trust; and (ii) one or more United States trustees have the authority to
control all substantial decisions of the trust.)
Under present United States federal income tax laws: (i) payments by
the Trust or any of its paying agents to any holder of a Capital Security who or
which is a United States Alien Holder will not be subject to United States
federal withholding tax; provided that, (a) the beneficial owner of the Capital
Security does not actually or constructively own 10 percent or more of the total
combined voting power of all classes of stock of the Corporation entitled to
vote, (b) the beneficial owner of the Capital Security is not a controlled
foreign corporation that is related to the Corporation through stock ownership,
and (c) either (A) the beneficial owner of the Capital Security certifies to the
Trust or its agent, under penalties of perjury, that it is not a United States
holder and provides its name and address or (B) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "Financial
Institution"), and holds the Capital Security in such capacity, certifies to the
Trust or its agent, under penalties of perjury, that such statement has been
received from the beneficial owner by it or by a Financial Institution between
it and the beneficial owner and furnishes the Trust or its agent with a copy
thereof; and (ii) a United States Alien Holder of a Capital Security will not be
subject to United States federal withholding tax on any gain realized upon the
sale or other disposition of a Capital Security.
As discussed above, changes in legislation affecting the United States
federal income tax treatment of the Junior Subordinated Debentures are possible,
and could adversely affect the ability of the Corporation to deduct the interest
payable on the Junior Subordinated Debentures. Moreover, any such legislation
could, as the proposed legislation would have, adversely affect United States
Alien Holders by characterizing income derived from the Junior Subordinated
Debentures as dividends, generally subject to a 30% income tax (on a withholding
basis) when paid to a United States Alien Holder, rather than as interest which,
as discussed above, is generally exempt from income tax in the hands of a United
States Alien Holder.
A United States Alien Holder that holds Capital Securities in
connection with the active conduct of a United States trade or business will be
subject to income tax on all income and gains recognized with respect to its
proportionate share of the Junior Subordinated Debentures.
Information Reporting to Holders
Generally, income on the Capital Securities will be reported to holders on
Forms 1099, which forms should be mailed to holders of Capital Securities by
January 31 following each calendar year.
Backup Withholding
Payments made on, and proceeds from the sale of, the Capital Securities
may be subject to a "backup" withholding tax of 31 percent unless the holder
complies with certain identification requirements. Any withheld amounts will be
allowed as a credit against the holder's United States federal income tax,
provided the required information is provided to the IRS.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS
INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE ACQUISITION, OWNERSHIP AND
DISPOSITION OF THE CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN
UNITED STATES FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
Each of the Corporation (the obligor with respect to the Junior
Subordinated Debentures held by the Trust), and its affiliates and the Property
Trustee may be considered a "party in interest" (within the meaning of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) or a
"disqualified person" (within the meaning of Section 4975 of the Code) with
respect to many employee benefit plans ("Plans") that are subject to ERISA and
certain employee benefit-related provisions of the Code. Any purchaser proposing
to acquire Capital Securities with assets of any Plan should consult with its
counsel. The purchase and/or holding of Capital Securities by a Plan that is
subject to the fiduciary responsibility provisions of ERISA or the prohibited
transaction provisions of Section 4975 of the Code (including individual
retirement arrangements and other plans described in Section 4975(e)(1) of the
Code) and with respect to which the Corporation, the Property Trustee or any
affiliate is a service provider (or otherwise is a party in interest or a
disqualified person) may constitute or result in a prohibited transaction under
ERISA or Section 4975 of the Code, unless such Capital Securities are acquired
pursuant to and in accordance with an applicable exemption, such as Prohibited
Transaction Class Exemption ("PTCE") 84-14 (an exemption for certain
transactions determined by an independent qualified professional asset manager),
PTCE 91-38 (an exemption for certain transactions involving banks' collective
investment funds), PTCE 90-1 (an exemption for certain transactions involving
insurance company pooled separate accounts), PTCE 95-60 (an exemption for
transactions involving certain insurance company general accounts) or PTCE 96-23
(an exemption for certain transactions determined by an in-house manager). In
addition, a Plan fiduciary considering the acquisition of Capital Securities
should be aware that the assets of the Trust may be considered "plan assets" for
ERISA purposes. In such event, any persons exercising discretion with respect to
the Junior Subordinated Debentures may become fiduciary parties in interest or
disqualified persons with respect to investing Plans. Accordingly, each
investing Plan, by purchasing the Capital Securities, will be deemed to have
directed the Trust to invest in the Junior Subordinated Debentures and to have
consented to the appointment of the Property Trustee. In this regard, it should
be noted that, in an Event of Default, the Corporation may not remove the
Property Trustee without the approval of a majority of the holders of the
Capital Securities.
A Plan fiduciary should consider whether the acquisition of Capital
Securities could result in a delegation of fiduciary authority to the Property
Trustee, and, if so, whether such a delegation of authority is permissible under
the Plan's governing instrument or any investment management agreement with the
Plan. In making such determination, a Plan fiduciary should note that the
Property Trustee is a U.S. bank qualified to be an investment manager (within
the meaning of section 3(38) of ERISA) to which such a delegation of authority
generally would be permissible under ERISA. Further, prior to an Event of
Default with respect to the Junior Subordinated Debentures, the Property Trustee
will have only limited custodial and ministerial authority with respect to Trust
assets.
THE SALE OF INVESTMENTS TO PLANS IS IN NO RESPECT A REPRESENTATION BY
THE TRUST, THE CORPORATION, THE PROPERTY TRUSTEE, THE INITIAL PURCHASER OR ANY
OTHER PERSON ASSOCIATED WITH THE SALE OF THE CAPITAL SECURITIES THAT SUCH
SECURITIES MEET ALL RELEVANT LEGAL REQUIREMENTS WITH RESPECT TO INVESTMENTS BY
PLANS GENERALLY OR ANY PARTICULAR PLAN, OR THAT SUCH SECURITIES ARE OTHERWISE
APPROPRIATE FOR PLANS GENERALLY OR ANY PARTICULAR PLAN. ANY PURCHASER PROPOSING
TO ACQUIRE CAPITAL SECURITIES WITH ASSETS OF ANY PLAN SHOULD CONSULT WITH ITS
COUNSEL.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF ALSO
AGREES, REPRESENTS AND WARRANTS THAT EITHER: (i) IT IS NOT AN EMPLOYEE BENEFIT
PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"); OR (ii) THE ACQUISITION AND HOLDING OF THIS CAPITAL SECURITY BY IT IS
NOT PROHIBITED BY EITHER SECTION 406 OF ERISA OR SECTION 4975 OF THE U.S.
INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR EXEMPT FROM ANY SUCH PROHIBITION.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Capital Securities for its own
account in connection with the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such New Capital
Securities. This Prospectus, as it may be amended or supplemented from time to
time, may be used by Participating Broker-Dealers during the period referred to
below in connection with resales of New Capital Securities received in exchange
for Old Capital Securities if such Old Capital Securities were acquired by such
Participating Broker-Dealers for their own accounts as a result of market-making
activities or other trading activities. The Corporation and the Trust have
agreed that this Prospectus, as it may be amended or supplemented from time to
time, may be used by a Participating Broker-Dealer in connection with resales of
such New Capital Securities for a period ending 90 days after the Expiration
Date (subject to extension under certain limited circumstances described herein)
or, if earlier, when all such New Capital Securities have been disposed of by
such Participating Broker-Dealer. However, a Participating Broker-Dealer who
intends to use this Prospectus in connection with the resale of New Capital
Securities received in exchange for Old Capital Securities pursuant to the
Exchange Offer must notify the Corporation or the Trust, or cause the
Corporation or the Trust to be notified, on or prior to the Expiration Date,
that it is a Participating Broker-Dealer. Such notice may be given in the space
provided for that purpose in the Letter of Transmittal or may be delivered to
the Exchange Agent at one of the addresses set forth herein under "The Exchange
Offer--Exchange Agent." See "The Exchange Offer--Resales of New Capital
Securities."
The Corporation or the Trust will not receive any cash proceeds from
the issuance of the New Capital Securities offered hereby. New Capital
Securities received by broker-dealers for their own accounts in connection with
the Exchange Offer may be sold from time to time in one or more transactions in
the over-the-counter market, in negotiated transactions, through the writing of
options on the New Capital Securities or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Capital Securities.
Any broker-dealer that resells New Capital Securities that were
received by it for its own account in connection with the Exchange Offer and any
broker or dealer that participates in a distribution of such New Capital
Securities may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any such resale of New Capital Securities and
any commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
LEGAL MATTERS
Certain legal matters will be passed upon for the Corporation by
Flippin, Densmore, Morse, Rutherford & Jessee, P.C.
EXPERTS
The consolidated financial statements of MainStreet BankGroup
Incorporated and subsidiaries included in the Corporation's Annual Report on
Form 10-K for each of the three years in the period ended December 31, 1997,
incorporated by reference in this Registration Statement, have been incorporated
herein in reliance upon the report of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of that firm as experts in accounting and
auditing.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
MainStreet's Articles of Incorporation implement the provisions of the
Virginia SCA, which provide for the indemnification of MainStreet's directors
and officers in a variety of circumstances, which may include indemnification
for liabilities under the Securities Act of 1933. Under sections 13.1-697 and
13.1-702 of the Virginia SCA, a Virginia corporation generally is authorized to
indemnify its directors and officers in civil or criminal actions if they acted
in good faith and believed their conduct to be in the best interests of the
corporation and, in the case of criminal actions, had no reasonable cause to
believe that the conduct was unlawful. MainStreet's Articles of Incorporation
require indemnification of directors and officers with respect to certain
liabilities, expenses and other amounts imposed upon them be reason of having
been a director or officer, except in the case of willful misconduct or a
knowing violation of criminal law. MainStreet also carries insurance on behalf
of directors, officers, employees or agents that may cover liabilities under the
Securities Act of 1933. In addition, the Virginia SCA and MainStreet's Articles
of Incorporation eliminate the liability of a director or officer of MainStreet
in a shareholder or derivative proceeding. This elimination of liability will
not apply in the event of willful misconduct or a knowing violation of the
criminal law or any federal or state securities law. Sections 13.1-692.1 and
13.1-696 to -704 of the Virginia SCA are hereby incorporated herein by
reference.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
4.1 Indenture of the Corporation relating to the Junior Subordinated Debentures*
4.2 Form of Certificate of New Junior Subordinated Debentures*
4.3 Certificate of Trust of MainStreet Capital Trust I*
4.4 Amended and Restated Declaration of Trust of MainStreet Capital Trust I*
4.5 Form of New Capital Security Certificate for MainStreet Capital Trust I*
4.6 Form of New Guarantee of the Corporation relating to the New Capital Securities*
4.7 Registration Rights Agreement*
5.1 Opinion and consent of Flippin, Densmore, Morse, Rutherford &
Jessee, (a professional corporation) as to legality of the New Capital
Securities, the New Junior Subordinated Debentures, and the New Guarantee to be
issued by the Corporation
5.2 Opinion and consent of Flippin, Densmore, Morse, Rutherford & Jessee, (a professional corporation)
as to effects of Delaware law.
8 Opinion of Flippin, Densmore, Morse, Rutherford & Jessee, (a professional corporation) as to
certain federal income tax matters
12.1 Computation of ratio of earnings to fixed charges (excluding interest on deposits)*
12.2 Computation of ratio of earnings to fixed charges (including interest on deposits)*
12.3 Restated computation of ratios of earnings to fixed charges (excluding interest on deposits)
12.4 Restated computation of ratios of earnings to fixed charges (including interest on deposits)
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Flippin, Densmore, Morse, Rutherford & Jessee, P.C. (included in Exhibits 5.1, 5.2,
and 8)*
24.1 Power of Attorney of certain officers and directors of the Corporation (located on the
signature page hereto)
24.2 Power of Attorney of new director of the Corporation (located on the
signature page hereto)
25.1 Form T-1 Statement of Eligibility of The Bank of New York to act as trustee under the Indenture
25.2 Form T-1 Statement of Eligibility of The Bank of New York to act as trustee under the
Declaration of Trust of MainStreet Capital Trust I
25.3 Form T-1 Statement of Eligibility of The Bank of New York
under the New Guarantee for the benefit of the holders of New
Capital Securities of MainStreet Capital Trust I
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Request for Acceleration of Effectiveness of the Registration Statement
</TABLE>
- ---------------------
* Filed previously.
ITEM 22. UNDERTAKINGS
Each of the undersigned Registrants hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, as
amended, each filing of a Registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in this Registration Statement shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Each of the undersigned Registrants hereby also undertakes:
(1) to file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most
recent post-effective amendment thereto) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective Registration Statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement; provided, however, that paragraphs (1)(i) and
(1)(ii) do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed by a Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by
reference in this Registration Statement.
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
each undersigned Registrant pursuant to the provisions, or otherwise, each
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by each undersigned Registrant
of expenses incurred or paid by a director, officer of controlling person of
each Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, each Registrant will, unless in the opinion of its
counsel the matter has been settled by the controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
Each of the undersigned Registrants hereby undertakes to respond to
requests for information that is incorporated by reference into the Prospectus
pursuant to Item 4, 10(b), 11 or 13 of this Form within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
Each of the undersigned Registrants hereby undertakes to supply by
means of a post-effective amendment all information concerning a transaction,
and the company being acquired or involved therein, that was not the subject of
and included in the registration statement when it became effective.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, MainStreet
BankGroup Incorporated certifies that it has reasonable grounds that it meets
all of the requirements for filing on Form S-4 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Martinsville, Commonwealth of Virginia on the
14th day of May, 1998.
MAINSTREET BANKGROUP INCORPORATED
By: /s/Michael R. Brenan
--------------------------------------
Michael R. Brenan
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each of the directors and/or officers of
MainStreet BankGroup Incorporated whose signature appears below hereby appoints
James E. Adams and Rebecca J. Jenkins, and each of them severally, as his or her
attorney-in-fact to sign in his or her name and behalf, in any and all
capacities stated below and to file with the Securities and Exchange Commission
any and all amendments, including post-effective amendments, to this
Registration Statement on Form S-4, making such changes in the Registration
Statement as appropriate, and generally to do all such things in their behalf in
their capacities as directors and/or officers to enable MainStreet BankGroup
Incorporated to comply with the provisions of the Securities Act of 1933, and
all requirements of the Securities and Exchange Commission.
/s/Michael R. Brenan Date: May 14, 1998
- -------------------------------------
Michael R. Brenan
President, Chief Executive
Officer and Chairman of the Board
(principal executive officer and chairman)
/s/James E. Adams Date: May 14, 1998
- -------------------------------------
James E. Adams
Executive Vice President and
Chief Financial Officer
(principal financial and
accounting officer)
/s/W. Christopher Beeler, Jr. Date: May 14, 1998
- - -------------------------------------
W. Christopher Beeler, Jr.
Director
/s/Thomas B. Bishop Date: May 14, 1998
- - -------------------------------------
Thomas B. Bishop
Director
<PAGE>
/s/Alfred J. T. Byrne Date: May 14, 1998
- - -------------------------------------
Alfred J. T. Byrne
Director
/s/William L. Cooper, III Date: May 14, 1998
- -------------------------------------
William L. Cooper, III
Director
/s/Billy P. Craft Date: May 14, 1998
- -------------------------------------
Billy P. Craft
Director
/s/Phillip W. Dean Date: May 14, 1998
- -------------------------------------
Phillip W. Dean
Director
/s/I. Patricia Henry Date: May 14, 1998
- -------------------------------------
I. Patricia Henry
Director
/s/Larry E. Hutchens Date: May 14, 1998
- -------------------------------------
Larry E. Hutchens
Director
<PAGE>
/s/William O. McCabe,. Jr., M.D. Date: May 14, 1998
- -------------------------------------
William O. McCabe, Jr., M.D.
Director
/s/Albert L. Prillaman Date: May 14, 1998
- -------------------------------------
Albert L. Prillaman
Director
/s/C. Leland Bassett Date: May 14, 1998
- -------------------------------------
Leland Bassett
Director
Pursuant to the requirements of the Securities Act of 1933, MainStreet
Capital Trust I certifies that it has reasonable grounds to believe that it
meets all the requirements for filing on Form S-4 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Martinsville, Commonwealth of Virginia, on the
14th day of May 1998.
MAINSTREET CAPITAL TRUST I
By: /s/James E. Adams
------------------------------
James E. Adams
Administrative Trustee
By: /s/Rebecca J. Jenkins
------------------------------
Rebecca J. Jenkins
Administrative Trustee
By: /s/Brenda H. Smith
------------------------------
Brenda H. Smith
Administrative Trustee
EXHIBIT 4.1
(Indenture, dated as of November 19, 1997, between the Corporation and
The Bank of New York as trustee, relating to Junior Subordinated Deferrable
Interest Debentures due 2027 of MainStreet BankGroup Incorporated)
EXHIBIT 4.1
MAINSTREET BANKGROUP INCORPORATED
------------------------------
------------------------------
INDENTURE
Dated as of November 19, 1997
------------------------------
THE BANK OF NEW YORK
as Debenture Trustee
------------------------------
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
<PAGE>
TIE-SHEET
of provisions of Trust Indenture Act of 1939 with Indenture dated as of
November 19, 1997 between MainStreet BankGroup Incorporated and The Bank of New
York, as Debenture Trustee:
<TABLE>
<CAPTION>
ACT SECTION INDENTURE SECTION
<S> <C>
310(a)(1)......................................................................................................6.09
(a)(2) .....................................................................................................6.09
310(a)(3).......................................................................................................N/A
(a)(4).......................................................................................................N/A
310(a)(5)................................................................................................6.10, 6.11
310(b)..........................................................................................................N/A
310(c).........................................................................................................6.13
311(a) and (b)..................................................................................................N/A
311(c)................................................................................................4.01, 4.02(a)
312(a).........................................................................................................4.02
312(b) and (c).................................................................................................4.04
313(a).........................................................................................................4.04
313(b)(1)......................................................................................................4.04
313(b)(2)......................................................................................................4.04
313(c).........................................................................................................4.04
313(d).........................................................................................................4.04
314(a).........................................................................................................4.03
314(b)..........................................................................................................N/A
314(c)(1) and (2)..............................................................................................6.07
314(c)(3).......................................................................................................N/A
314(d) .........................................................................................................N/A
314(e).........................................................................................................6.07
314(f) .........................................................................................................N/A
315(a)(c) and (d)..............................................................................................6.01
315(b) ........................................................................................................5.08
315(e) ........................................................................................................5.09
316(a)(1) .....................................................................................................5.07
316(a)(2) ......................................................................................................N/A
316(a) last sentence ..........................................................................................2.09
316(b) ........................................................................................................9.02
317(a) ........................................................................................................5.05
317(b) ........................................................................................................6.05
318(a) .......................................................................................................13.08
</TABLE>
THIS TIE-SHEET IS NOT PART OF THE INDENTURE AS EXECUTED.
<PAGE>
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
Page
ARTICLE I
<S> <C>
DEFINITIONS............................................................................................ 1
SECTION 1.01 Definitions............................................................................ 1
Additional Sums 1
Adjusted Treasury Rate................................................................................. 2
Affiliate ....................................................................................... 2
Authenticating Agent................................................................................... 2
Bankruptcy Law 2
Board of Directors..................................................................................... 2
Board Resolution....................................................................................... 2
Business Day ..................................................................................... 2
Capital Securities..................................................................................... 2
Commission ...................................................................................... 2
Common Securities...................................................................................... 3
Common Securities Guarantee............................................................................ 3
Common Stock 3
Comparable Treasury Issue.............................................................................. 3
Comparable Treasury Price.............................................................................. 3
Corporation ..................................................................................... 4
Corporation Request.................................................................................... 4
Compounded Interest.................................................................................... 4
Custodian ...................................................................................... 4
Debenture Event of Default............................................................................. 4
Debentureholder 4
Holder of Junior Subordinated Debentures............................................................... 4
Debenture Register..................................................................................... 4
Debenture Trustee...................................................................................... 4
Declaration ..................................................................................... 5
Default ..................................................................................... 5
Deferred Interest...................................................................................... 5
Definitive Junior Subordinated Debentures.............................................................. 5
Depositary ....................................................................................... 5
Dissolution Event...................................................................................... 5
Exchange Act ...................................................................................... 5
Exchange Offer 5
Extension Period....................................................................................... 5
Global Junior Subordinated Debenture................................................................... 6
Guarantee ....................................................................................... 6
Indebtedness" 6
Indebtedness Ranking on a Parity with the Junior Subordinated Debentures............................... 6
Indebtedness Ranking Junior to the Junior Subordinated Debentures...................................... 7
Indenture ....................................................................................... 7
Initial Optional Prepayment Date....................................................................... 7
Interest Payment Date.................................................................................. 7
Junior Subordinated Debentures......................................................................... 7
Liquidated Damages..................................................................................... 7
MainStreet Capital Trust I............................................................................. 7
Make Whole Amount...................................................................................... 8
Mortgage ....................................................................................... 8
Non Book-Entry Capital Securities...................................................................... 8
Officers ....................................................................................... 8
Officers' Certificate.................................................................................. 8
Opinion of Counsel..................................................................................... 8
Optional Prepayment Price.............................................................................. 8
Other Debentures....................................................................................... 8
Other Guarantees....................................................................................... 8
Outstanding ....................................................................................... 8
Person ....................................................................................... 9
Predecessor Junior Subordinated Debenture.............................................................. 9
Prepayment Price....................................................................................... 9
Principal Office of the Debenture Trustee.............................................................. 9
Property Trustee....................................................................................... 10
Purchase Agreement..................................................................................... 10
Quotation Agent 10
Reference Treasury Dealer.............................................................................. 10
Reference Treasury Dealer Quotations................................................................... 10
Registration Rights Agreement.......................................................................... 10
Regulatory Capital Event............................................................................... 10
Responsible Officer.................................................................................... 11
Restricted Junior Subordinated Debenture............................................................... 11
Rule 144A ....................................................................................... 11
Securities Act .......................................................................................11
Senior Indebtedness.................................................................................... 11
Series A Junior Subordinated Debentures................................................................ 11
Series B Junior Subordinated Debentures................................................................ 11
Special Event ....................................................................................... 11
Special Event Prepayment Price......................................................................... 11
Stated Maturity Date................................................................................... 11
Subsidiary ....................................................................................... 11
Tax Event ....................................................................................... 12
Trust Securities....................................................................................... 13
U.S. Government Obligations............................................................................ 13
- --------
* This Table of Contents shall not, for any purpose, be deemed to be a part
of the Indenture.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARTICLE II
Page
<S> <C>
JUNIOR SUBORDINATED DEBENTURES......................................................................... 14
SECTION 2.01 Forms Generally............................................................. 14
SECTION 2.02 Execution and Authentication................................................ 14
SECTION 2.03 Form and Payment............................................................ 14
SECTION 2.04 Legends..................................................................... 15
SECTION 2.05 Global Junior Subordinated Debenture........................................ 15
SECTION 2.06 Interest.................................................................... 18
SECTION 2.07 Transfer and Exchange....................................................... 18
SECTION 2.08 Replacement Junior Subordinated Debentures.................................. 21
SECTION 2.09 Temporary Junior Subordinated Debentures.................................... 22
SECTION 2.10 Cancellation................................................................ 23
SECTION 2.11 Defaulted Interest.......................................................... 23
SECTION 2.12 CUSIP Numbers............................................................... 24
ARTICLE III
PARTICULAR COVENANTS OF THE CORPORATION.................................. 24
SECTION 3.01. Payment of Principal, Premium and Interest.................................. 24
SECTION 3.02. Offices for Notices and Payments, etc.................................................. 25
SECTION 3.03. Appointments to Fill Vacancies in Debenture Trustee's Office................ 26
SECTION 3.04. Provision as to Paying Agent........................................................... 26
SECTION 3.05. Certificate to Debenture Trustee....................................................... 27
SECTION 3.06. Compliance with Consolidation Provisions.................................... 27
SECTION 3.07. Limitation on Dividends..................................................... 28
SECTION 3.08. Covenants as to MainStreet Capital Trust I.................................. 28
SECTION 3.09. Payment of Expenses......................................................... 29
SECTION 3.10. Payment Upon Resignation or Removal......................................... 30
ARTICLE IV
DEBENTUREHOLDERS' LISTS AND REPORTS BY THE
CORPORATION AND THE DEBENTURE TRUSTEE................................... 30
SECTION 4.01. Debentureholders' Lists................................................................ 30
SECTION 4.02. Preservation and Disclosure of Lists................................................... 30
SECTION 4.03. Reports by the Corporation............................................................. 32
SECTION 4.04. Reports by the Debenture Trustee....................................................... 33
ARTICLE V
REMEDIES OF THE DEBENTURE TRUSTEE AND DEBENTUREHOLDERS
ON EVENT OF DEFAULT............................................ 34
SECTION 5.01. Debenture Events of Default............................................................ 34
SECTION 5.02. Payment of Junior Subordinated Debentures on Default; Suit Therefor......... 36
SECTION 5.03. Application of Moneys Collected by Debenture Trustee........................ 39
SECTION 5.04. Proceedings by Debentureholders........................................................ 39
SECTION 5.05. Proceedings by Debenture Trustee....................................................... 41
SECTION 5.06. Remedies Cumulative and Continuing..................................................... 41
SECTION 5.07. Direction of Proceedings and Waiver of Defaults by Majority of
Debentureholders............................................................ 41
SECTION 5.08. Notice of Defaults..................................................................... 42
SECTION 5.09. Undertaking to Pay Costs............................................................... 43
ARTICLE VI
CONCERNING THE DEBENTURE TRUSTEE...................................... 44
SECTION 6.01. Duties and Responsibilities of Debenture Trustee....................................... 44
SECTION 6.02. Reliance on Documents, Opinions, etc................................................... 45
SECTION 6.03. No Responsibility for Recitals, etc.................................................... 47
SECTION 6.04. Debenture Trustee, Authenticating Agent, Paying Agents, Transfer
Agents or Registrar May Own Junior Subordinated Debentures.................. 48
SECTION 6.05. Moneys to be Held in Trust............................................................. 48
SECTION 6.06. Compensation and Expenses of Debenture Trustee......................................... 48
SECTION 6.07. Officers' Certificate as Evidence...................................................... 49
SECTION 6.08. Conflicting Interest of Debenture Trustee.............................................. 50
SECTION 6.09. Eligibility of Debenture Trustee....................................................... 50
SECTION 6.10. Resignation or Removal of Debenture Trustee............................................ 50
SECTION 6.11. Acceptance by Successor Debenture Trustee.............................................. 52
SECTION 6.12. Succession by Merger, etc.............................................................. 53
SECTION 6.13. Limitation on Rights of Debenture Trustee as a Creditor..................... 54
SECTION 6.14. Authenticating Agents.................................................................. 54
ARTICLE VII
CONCERNING THE DEBENTUREHOLDERS...................................... 55
SECTION 7.01. Action by Junior Subordinated Debentureholders.............................. 55
SECTION 7.02. Proof of Execution by Debentureholders................................................. 56
SECTION 7.03. Who Are Deemed Absolute Owners......................................................... 56
SECTION 7.04. Junior Subordinated Debentures Owned by Corporation Deemed Not
Outstanding................................................................. 57
SECTION 7.05. Revocation of Consents; Future Holders Bound................................ 57
ARTICLE VIII
DEBENTUREHOLDERS' MEETINGS......................................... 58
SECTION 8.01. Purposes of Meetings................................................................... 58
SECTION 8.02. Call of Meetings by Debenture Trustee.................................................. 58
SECTION 8.03. Call of Meetings by Corporation or Debentureholders......................... 59
SECTION 8.04. Qualifications for Voting.............................................................. 59
SECTION 8.05. Regulations............................................................................ 59
SECTION 8.06. Voting 60
ARTICLE IX
AMENDMENTS................................................. 61
SECTION 9.01. Without Consent of Debentureholders......................................... 61
SECTION 9.02. With Consent of Debentureholders....................................................... 63
SECTION 9.03. Compliance with Trust Indenture Act; Effect of Supplemental Indentures...... 64
SECTION 9.04. Notation on Junior Subordinated Debentures............................................. 64
SECTION 9.05. Evidence of Compliance of Supplemental Indenture to be Furnished to
Debenture Trustee........................................................... 65
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE............................. 65
SECTION 10.01. Corporation May Consolidate, etc., on Certain Terms......................... 65
SECTION 10.02. Successor Corporation to be Substituted for Corporation..................... 66
SECTION 10.03. Opinion of Counsel to be Given Debenture Trustee....................................... 66
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE.................................. 67
SECTION 11.01. Discharge of Indenture................................................................. 67
SECTION 11.02. Deposited Moneys and U.S. Government Obligations to be Held in Trust
by Debenture Trustee........................................................ 68
SECTION 11.03. Paying Agent to Repay Moneys Held...................................................... 68
SECTION 11.04. Return of Unclaimed Moneys............................................................. 68
SECTION 11.05. Defeasance Upon Deposit of Moneys or U.S. Government Obligations............ 69
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS........................................... 70
SECTION 12.01. Indenture and Junior Subordinated Debentures Solely Corporate
Obligations................................................................. 70
ARTICLE XIII
MISCELLANEOUS PROVISIONS.......................................... 71
SECTION 13.01. Successors 71
SECTION 13.02. Official Acts by Successor Corporation................................................. 71
SECTION 13.03. Surrender of Corporation Powers........................................................ 71
SECTION 13.04. Addresses for Notices, etc............................................................. 71
SECTION 13.05. Governing Law.......................................................................... 72
SECTION 13.06. Evidence of Compliance with Conditions Precedent............................ 72
SECTION 13.07. Business Days.......................................................................... 73
SECTION 13.08. Trust Indenture Act to Control......................................................... 73
SECTION 13.09. Table of Contents, Headings, etc....................................................... 73
SECTION 13.10. Execution in Counterparts.............................................................. 73
SECTION 13.11. Separability........................................................................... 73
SECTION 13.12. Assignment 74
SECTION 13.13. Acknowledgement of Rights.............................................................. 74
ARTICLE XIV
PREPAYMENT OF JUNIOR SUBORDINATED DEBENTURES -- MANDATORY AND
OPTIONAL SINKING FUND........................................... 74
SECTION 14.01. Special Event Prepayment............................................................... 74
SECTION 14.02. Optional Prepayment by Corporation..................................................... 75
SECTION 14.03. No Sinking Fund........................................................................ 76
SECTION 14.04. Notice of Prepayment; Selection of Junior Subordinated Debentures........... 76
SECTION 14.05. Payment of Junior Subordinated Debentures Called for Prepayment............. 77
ARTICLE XV
SUBORDINATION OF JUNIOR SUBORDINATED DEBENTURES.............................. 78
SECTION 15.01. Agreement to Subordinate............................................................... 78
SECTION 15.02. Default on Senior Indebtedness......................................................... 79
SECTION 15.03. Liquidation; Dissolution; Bankruptcy................................................... 80
SECTION 15.04. Subrogation............................................................................ 81
SECTION 15.05. Debenture Trustee to Effectuate Subordination.......................................... 82
SECTION 15.06. Notice by the Corporation.............................................................. 83
SECTION 15.07. Rights of the Debenture Trustee; Holders of Senior Indebtedness............. 84
SECTION 15.08. Subordination May Not Be Impaired........................................... 85
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD.................................... 85
SECTION 16.01. Extension of Interest Payment Period................................................... 85
SECTION 16.02. Notice of Extension.................................................................... 86
TESTIMONIUM/SIGNATURES...........................................................................................88
EXHIBIT A.......................................................................................................A-1
</TABLE>
<PAGE>
THIS INDENTURE, dated as of November 19, 1997, between
MainStreet BankGroup Incorporated, a Delaware corporation (hereinafter sometimes
called the "Corporation"), and The Bank of New York, a New York banking
corporation, as debenture trustee (hereinafter sometimes called the "Debenture
Trustee"),
W I T N E S S E T H :
In consideration of the premises, and the purchase of the
Junior Subordinated Debentures by the holders thereof, the Corporation covenants
and agrees with the Debenture Trustee for the equal and proportionate benefit of
the respective holders from time to time of the Junior Subordinated Debentures,
as follows:
ARTICLE I
DEFINITIONS
<PAGE>
SECTION 1.01. Definitions.
The terms defined in this Section 1.01 (except as herein
otherwise expressly provided or unless the context otherwise requires) for all
purposes of this Indenture shall have the respective meanings specified in this
Section 1.01. All other terms used in this Indenture which are defined in the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), or which
are by reference therein defined in the Securities Act, shall (except as herein
otherwise expressly provided or unless the context otherwise requires) have the
meanings assigned to such terms in said Trust Indenture Act and in said
Securities Act as in force at the date of this Indenture as originally executed.
The following terms have the meanings given to them in the Declaration: (i)
Clearing Agency; (ii) Delaware Trustee; (iii) Property Trustee; (iv)
Administrative Trustees; (v) Series A Capital Securities; (vi) Series B Capital
Securities; (vii) Direct Action; and (viii) Distributions. All accounting terms
used herein and not expressly defined shall have the meanings assigned to such
terms in accordance with generally accepted accounting principles, and the term
"generally accepted accounting principles" means such accounting principles as
are generally accepted at the time of any computation. The words "herein",
"hereof" and "hereunder" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision. Headings are used for convenience of reference only and do not
affect interpretation. The singular includes the plural and vice versa.
"Additional Sums" shall have the meaning set forth in
Section 2.06(c).
"Adjusted Treasury Rate" means, with respect to any prepayment
date pursuant to Section 14.01, the rate per annum equal to the semi-annual
equivalent yield to maturity of the Comparable Treasury Issue, assuming a price
for the Comparable Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such prepayment date plus:
(i) 2.710% if such prepayment date occurs on or prior to December 1, 1998; and
(ii) 2.160% in all other cases.
"Affiliate" shall have the meaning given to that term in Rule
405 under the Securities Act or any successor rule thereunder.
"Authenticating Agent" shall mean any agent or agents of the
Debenture Trustee which at the time shall be appointed and acting pursuant to
Section 6.14.
"Bankruptcy Law" shall mean Title 11, U.S. Code, or any similar federal or
state law for the relief of debtors.
"Board of Directors" shall mean either the Board of Directors
of the Corporation or any duly authorized committee of that board.
"Board Resolution" shall mean a copy of a resolution certified
by the Secretary or an Assistant Secretary of the Corporation to have been duly
adopted by the Board of Directors and to be in full force and effect on the date
of such certification, and delivered to the Debenture Trustee.
"Business Day" shall mean, with respect to any series of
Junior Subordinated Debentures, any day other than a Saturday or a Sunday or a
day on which banking institutions in New York, New York or Martinsville,
Virginia are authorized or required by law or executive order to close.
"Capital Securities" shall mean undivided beneficial interests
in the assets of the Trust which are designated as "Capital Securities" and rank
pari passu with the Common Securities issued by the Trust; provided, however,
that if a Debenture Event of Default has occurred and is continuing, no payments
in respect of Distributions on, or payments upon liquidation, prepayment or
otherwise with respect to, the Common Securities shall be made until the holders
of the Capital Securities shall be paid in full the Distributions and the
liquidation, prepayment and other payments to which they are entitled.
References to "Capital Securities" shall include collectively any Series A
Capital Securities and Series B Capital Securities.
"Commission" shall mean the Securities and Exchange
Commission, as from time to time constituted, created under the Exchange Act, or
if at any time after the execution of this Indenture such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"Common Securities" shall mean undivided beneficial interests
in the assets of the Trust which are designated as "Common Securities" and rank
pari passu with Capital Securities issued by the Trust; provided, however, that
if a Debenture Event of Default has occurred and is continuing, no payments in
respect of Distributions on, or payments upon liquidation, prepayment or
otherwise with respect to, the Common Securities shall be made until the holders
of the Capital Securities shall be paid in full the Distributions and the
liquidation, prepayment and other payments to which they are then entitled.
"Common Securities Guarantee" shall mean any guarantee that
the Corporation may enter into with any Person or Persons that operates directly
or indirectly for the benefit of holders of Common Securities.
"Common Stock" shall mean the Common Stock, par value $5.00
per share, of the Corporation or any other class of stock resulting from changes
or reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
"Comparable Treasury Issue" means the United States Treasury
security selected by the Quotation Agent as having a maturity comparable to the
remaining term of the Junior Subordinated Debentures (the "Remaining Life") to
be prepaid 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 the Remaining Life, the two most closely
corresponding United States Treasury securities as selected by the Quotation
Agent 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.
"Comparable Treasury Price" means, with respect to any
prepayment date pursuant to Section 14.01: (i) the average of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) on the third Business Day preceding such prepayment
date, as set forth in the daily statistical release (or any successor release)
published by the Federal Reserve Bank of New York and designated "Composite 3:30
p.m. Quotations for U.S. Government Securities"; or (ii) if such release (or any
successor release) is not published or does not contain such prices on such
Business Day, (A) the average of the Reference Treasury Dealer Quotations for
such prepayment date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations, or (B) if the Debenture Trustee obtains fewer than
three such Reference Treasury Dealer Quotations, the average of all such
Quotations.
"Corporation" shall mean MainStreet BankGroup Incorporated, a
Virginia corporation, and, subject to the provisions of Article X, shall include
its successors and assigns.
"Corporation Request" or "Corporation Order" shall mean a
written request or order signed in the name of the Corporation by the Chairman,
the Chief Executive Officer, the President, a Vice Chairman, a Vice President,
the Comptroller, the Secretary or an Assistant Secretary of the Corporation, and
delivered to the Debenture Trustee.
"Compounded Interest" shall have the meaning set forth in
Section 16.01.
"Custodian" shall mean any receiver, trustee, assignee,
liquidator, or similar official under any Bankruptcy Law.
"Debenture Event of Default" shall mean any event specified in
Section 5.01, continued for the period of time, if any, and after the giving of
the notice, if any, therein designated.
"Debentureholder", "holder of Junior Subordinated Debentures",
or other similar terms, shall mean any Person in whose name at the time a
particular Junior Subordinated Debenture is registered on the register kept by
the Corporation or the Debenture Trustee for that purpose in accordance with the
terms hereof.
"Debenture Register" shall mean (i) prior to a Dissolution
Event, the list of holders provided to the Debenture Trustee pursuant to Section
4.01, and (ii) following a Dissolution Event, any Debenture Register maintained
by a Debenture registrar for the Junior Subordinated Debentures appointed by the
Corporation following the execution of a supplemental indenture providing for
transfer procedures as provided for in Section 2.07(a).
"Debenture Trustee" shall mean the Person identified as
"Debenture Trustee" in the first paragraph hereof, and, subject to the
provisions of Article VI hereof, shall also include its successors and assigns
as Debenture Trustee hereunder. The term "Debenture Trustee" as used with
respect to a particular series of the Junior Subordinated Debentures shall mean
the trustee with respect to that series.
"Declaration" means the Amended and Restated Declaration of
Trust of the Trust, dated as of November 19, 1997, as amended from time to time.
"Default" means any event, act or condition that with notice
or lapse of time, or both, would constitute a Debenture Event of Default.
"Defaulted Interest" shall have the same meaning set forth in
Section 2.11.
"Deferred Interest" shall have the meaning set forth in
Section 16.01.
"Definitive Junior Subordinated Debentures" shall mean those
securities issued in fully registered certificated form not otherwise in global
form.
"Depositary" shall mean, with respect to the Junior
Subordinated Debentures, for which the Corporation shall determine that such
Junior Subordinated Debentures will be issued as a Global Junior Subordinated
Debenture, The Depository Trust Company, New York, New York, another clearing
agency, or any successor registered as a clearing agency under the Exchange Act
or other applicable statute or regulation, which, in each case, shall be
designated by the Corporation pursuant to Section 2.05(d).
"Dissolution Event" means the liquidation of the Trust
pursuant to the Declaration, and the distribution of the Junior Subordinated
Debentures held by the Property Trustee to the holders of the Trust Securities
issued by the Trust pro rata in accordance with the Declaration.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Exchange Offer" means the offer that may be made pursuant to
the Registration Rights Agreement (i) by the Corporation to exchange Series B
Junior Subordinated Debentures for Series A Junior Subordinated Debentures and
to exchange a Series B Guarantee for a Series A Guarantee and (ii) by the Trust
to exchange Series B Capital Securities for Series A Capital Securities.
"Extension Period" shall have the meaning set forth in
Section 16.01.
"Global Junior Subordinated Debenture" means, with respect to
the Junior Subordinated Debentures, a Junior Subordinated Debenture executed by
the Corporation and delivered by the Debenture Trustee to the Depositary or
pursuant to the Depositary's instruction, all in accordance with the Indenture,
which shall be registered in the name of the Depositary or its nominee.
"Guarantee" shall mean any guarantee that the Corporation may
enter into with The Bank of New York or other Persons that operates directly or
indirectly for the benefit of holders of Capital Securities and shall include a
Series A Guarantee and a Series B Guarantee with respect to the Series A Capital
Securities and the Series B Capital Securities, respectively.
"Indebtedness" shall mean: (i) every obligation of the
Corporation for money borrowed; (ii) every obligation of the Corporation
evidenced by bonds, debentures, notes or other similar instruments, including
obligations incurred in connection with the acquisition of property, assets or
businesses; (iii) every reimbursement obligation of the Corporation with respect
to letters of credit, banker's acceptances or similar facilities issued for the
account of the Corporation; (iv) every obligation of the Corporation issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of the Corporation; (vi) all
indebtedness of the Corporation whether incurred on or prior to the date of the
Indenture or thereafter incurred, for claims in respect of derivative products,
including interest rate, foreign exchange rate and commodity forward contracts,
options and swaps and similar arrangements; and (vii) every obligation of the
type referred to in clauses (i) through (vi) of another Person and all dividends
of another Person the payment of which, in either case, the Corporation has
guaranteed or is responsible or liable for, directly or indirectly, as obligor
or otherwise.
"Indebtedness Ranking on a Parity with the Junior Subordinated
Debentures" shall mean: (i) Indebtedness, whether outstanding on the date of
execution of this Indenture or hereafter created, assumed or incurred, to the
extent such Indebtedness by its terms ranks equally with and not prior to the
Junior Subordinated Debentures in the right of payment upon the happening of the
dissolution or winding-up or liquidation or reorganization of the Corporation
and (ii) all other debt securities, and guarantees in respect of those debt
securities, issued to any trust other than the Trust, or a trustee of such
trust, partnership or other entity affiliated with the Corporation that is a
financing vehicle of the Corporation (a "financing entity") in connection with
the issuance by such financing entity of equity securities or other securities
guaranteed by the Corporation pursuant to an instrument that ranks pari passu
with or junior in right of payment to the Guarantee. The securing of any
Indebtedness, otherwise constituting Indebtedness Ranking on a Parity with the
Junior Subordinated Debentures, shall not be deemed to prevent such Indebtedness
from constituting Indebtedness Ranking on a Parity with the Junior Subordinated
Debentures.
"Indebtedness Ranking Junior to the Junior Subordinated
Debentures" shall mean any Indebtedness, whether outstanding on the date of
execution of this Indenture or hereafter created, assumed or incurred, to the
extent such Indebtedness by its terms ranks junior to and not equally with or
prior to the Junior Subordinated Debentures (and any other Indebtedness Ranking
on a Parity with the Junior Subordinated Debentures) in right of payment upon
the happening of the dissolution or winding-up or liquidation or reorganization
of the Corporation. The securing of any Indebtedness, otherwise constituting
Indebtedness Ranking Junior to the Junior Subordinated Debentures, shall not be
deemed to prevent such Indebtedness from constituting Indebtedness Ranking
Junior to the Junior Subordinated Debentures.
"Indenture" shall mean this instrument as originally executed
or, if amended as herein provided, as so amended.
"Initial Optional Prepayment Date" means December 1, 2007.
"Interest Payment Date" shall have the meaning set forth in
Section 2.06(a).
"Junior Subordinated Debentures" means, collectively, the Series A Junior
Subordinated Debentures and the Series B Junior Subordinated Debentures.
"Like Amount" means (i) with respect to a redemption of the
Trust Securities, Trust Securities having a liquidation amount equal to the
principal amount of Junior Subordinated Debentures to be paid in accordance with
their terms and (ii) with respect to a distribution of Junior Subordinated
Debentures upon the liquidation of the Trust, Junior Subordinated Debentures
having a principal amount equal to the liquidation amount of the Trust
Securities of the holder to whom Junior Subordinated Debentures are distributed.
"Liquidated Damages" shall have the meaning set forth in the
Registration Rights Agreement.
"MainStreet Capital Trust I" or the "Trust" shall mean
MainStreet Capital Trust I, a Delaware business trust created for the purpose of
issuing its undivided beneficial interests in connection with the issuance of
Junior Subordinated Debentures under this Indenture.
"Make Whole Amount" shall mean an amount equal to the greater
of (x) 100% of the principal amount of the Junior Subordinated Debentures to be
prepaid or (y) the sum, as determined by a Quotation Agent, of the present
values of the remaining scheduled payments of principal and interest on such
Junior Subordinated Debentures, discounted to the prepayment date on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Adjusted Treasury Rate, plus, in the case of each of clauses (x) and (y),
accrued and unpaid interest thereon, including Compounded Interest and
Additional Sums, if any, and Liquidated Damages, if any, to the date of such
prepayment.
"Mortgage" shall mean and include any mortgage, pledge, lien,
security interest, conditional sale or other title retention agreement or other
similar encumbrance.
"Non Book-Entry Capital Securities" shall have the meaning set
forth in Section 2.05(a)(ii).
"Officers" shall mean any of the Chairman, the Chief Executive
Officer, the President, a Vice President, the Chief Financial Officer, the
Secretary or an Assistant Secretary of the Corporation.
"Officers' Certificate" shall mean a certificate signed by two
Officers and delivered to the Debenture Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel,
who may be an employee of the Corporation, and who shall be reasonably
acceptable to the Debenture Trustee.
"Optional Prepayment Price" shall have the meaning set forth
in Section 14.02(a).
"Other Debentures" means all junior subordinated debentures
issued by the Corporation from time to time and sold to trusts to be established
by the Corporation (if any), in each case similar to the Trust.
"Other Guarantees" means all guarantees to be issued by the
Corporation with respect to capital securities (if any) and issued to other
trusts to be established by the Corporation (if any), in each case similar to
the Trust.
The term "outstanding" when used with reference to the Junior
Subordinated Debentures, shall mean, subject to the provisions of Section 7.04,
as of any particular time, all Junior Subordinated Debentures authenticated and
made available for delivery by the Debenture Trustee or the Authenticating Agent
under this Indenture, except
(a) Junior Subordinated Debentures theretofore cancelled
by the Debenture Trustee or the Authenticating Agent
or delivered to the Debenture Trustee for
cancellation;
(b) Junior Subordinated Debentures, or portions thereof,
for the payment or prepayment of which moneys in the
necessary amount shall have been deposited in trust
with the Debenture Trustee or with any paying agent
(other than the Corporation) or shall have been set
aside and segregated in trust by the Corporation (if
the Corporation shall act as its own paying agent);
provided that, if such Junior Subordinated
Debentures, or portions thereof, are to be prepaid
prior to maturity thereof, notice of such prepayment
shall have been given as set forth in Article XIV or
provision satisfactory to the Debenture Trustee shall
have been made for giving such notice; and
(c) Junior Subordinated Debentures in lieu of or in
substitution for which other Junior Subordinated
Debentures shall have been authenticated and
delivered pursuant to the terms of Section 2.08
unless proof satisfactory to the Corporation and the
Debenture Trustee is presented that any such Junior
Subordinated Debentures are held by bona fide holders
in due course.
"Person" shall mean any individual, corporation, estate,
partnership, joint venture, association, joint-stock company, limited liability
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Junior Subordinated Debenture" of any particular
Junior Subordinated Debenture means every previous Junior Subordinated Debenture
evidencing all or a portion of the same debt and as that evidenced by such
particular Junior Subordinated Debenture; and, for the purposes of this
definition, any Junior Subordinated Debenture authenticated and made available
for delivery under Section 2.08 in lieu of a lost, destroyed or stolen Junior
Subordinated Debenture shall be deemed to evidence the same debt as the lost,
destroyed or stolen Junior Subordinated Debenture.
"Prepayment Price" means the Special Event Prepayment Price
or the Optional Prepayment Price, as the context requires.
"Principal Office of the Debenture Trustee", or other similar
term, shall mean the office of the Debenture Trustee, at which at any particular
time its principal corporate trust business shall be administered.
"Property Trustee" shall have the same meaning as set forth
in the Declaration.
"Purchase Agreement" shall mean the Purchase Agreement dated
November 13, 1997 among the Corporation, the Trust and the initial purchaser
named therein.
"Quotation Agent" means the Reference Treasury Dealer
appointed by the Corporation.
"Reference Treasury Dealer" means a nationally recognized U.S.
Government securities dealer in New York City selected by the Corporation.
"Reference Treasury Dealer Quotations" means, with respect to
each Reference Treasury Dealer and any prepayment date pursuant to Section
14.01, the average, as determined by the Debenture Trustee, 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 prepayment date.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of November 19, 1997, by and among the Corporation, the
Trust and the initial purchaser named therein, as such agreement may be amended,
modified or supplemented from time to time.
"Regulatory Capital Event" means that the Corporation shall
have received an opinion of independent bank regulatory counsel experienced in
such matters to the effect that, as a result of: (i) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any rules, guidelines or policies of an
applicable regulatory agency; or (ii) any official administrative pronouncement
or judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or such pronouncement or decision is announced
on or after the date of original issuance of the Junior Subordinated Debentures,
the Capital Securities do not constitute, or within 90 days of the date thereof,
would not constitute, Tier 1 Capital (or its then equivalent if the Corporation
were subject to such capital requirement); provided, however, that the
distribution of the Junior Subordinated Debentures in connection with the
liquidation of the Trust by the Corporation, as sponsor, shall not in and of
itself constitute a Regulatory Capital Event unless such liquidation shall have
occurred in connection with a Tax Event.
"Responsible Officer" shall mean any officer of the Debenture
Trustee's Corporate Trust Administration department with direct responsibility
for the administration of the Indenture and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Restricted Junior Subordinated Debenture" shall mean Junior
Subordinated Debentures that bear or are required to bear the legends relating
to transfer restrictions under the Securities Act set forth in Exhibit A hereto.
"Rule 144A" means Rule 144A under the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Senior Indebtedness" shall mean all Indebtedness, whether
outstanding on the date of execution of this Indenture or hereafter created,
assumed or incurred, except Indebtedness Ranking on a Parity with the Junior
Subordinated Debentures or Indebtedness Ranking Junior to the Junior
Subordinated Debentures, and any deferrals, renewals or extensions of such
Senior Indebtedness.
"Series A Junior Subordinated Debentures" means the
Corporation's Series A 8.90% Junior Subordinated Deferrable Interest Debentures
due December 1, 2027, as authenticated and issued under this Indenture.
"Series B Junior Subordinated Debentures" means the
Corporation's Series B 8.90% Junior Subordinated Deferrable Interest Debentures
due December 1, 2027, as authenticated and issued under this Indenture.
"Special Event" means either a Regulatory Capital Event or a
Tax Event.
"Special Event Prepayment Price" shall mean, with respect to
any prepayment of the Junior Subordinated Debentures following a Special Event,
an amount in cash equal to the Make Whole Amount.
"Stated Maturity Date" shall mean December 1, 2027.
"Subsidiary" shall mean with respect to any Person, (i) any
corporation at least a majority of the outstanding voting stock of which is
owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries, (ii) any
general partnership, joint venture or similar entity, at least a majority of
whose outstanding partnership or similar interests shall at the time be owned by
such Person, or by one or more of its Subsidiaries, or by such Person and one or
more of its Subsidiaries and (iii) any limited partnership of which such Person
or any of its Subsidiaries is a general partner. For the purposes of this
definition, "voting stock" means shares, interests, participations or other
equivalents in the equity interest (however designated) in such Person having
ordinary voting power for the election of a majority of the directors (or the
equivalent) of such Person, other than shares, interests, participations or
other equivalents having such power only by reason of the occurrence of a
contingency.
"Tax Event" shall mean the receipt by the Corporation 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 thereunder of the United States or any
political subdivision or taxing authority thereof or therein, or as a result of
any official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of original
issuance of the Junior Subordinated 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 Junior Subordinated Debentures, (ii) interest
payable by the Corporation on the Junior Subordinated Debentures is not, or
within 90 days of the date of such opinion will not be, deductible by the
Corporation, 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.
"Treasury Rate" means: (i) the yield, under the heading which
represents the average for the immediately prior week, 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 equal to the Comparable Treasury Price for such prepayment date. The
Treasury Rate shall be calculated on the third Business Day preceding the
prepayment date.
"Trust Indenture Act" shall mean the Trust Indenture Act of
1939 as in force at the date of execution of this Indenture, except as provided
in Section 9.03; provided, however, that, in the event the Trust Indenture Act
is amended after such date, "Trust Indenture Act" shall mean, to the extent
required by any such amendment, the Trust Indenture Act as so amended.
"Trust Securities" shall mean the Capital Securities and the
Common Securities, collectively.
"U.S. Government Obligations" shall mean securities that are
(i) direct obligations of the United States of America for the payment of which
its full faith and credit is pledged or (ii) obligations of a Person controlled
or supervised by and acting as an agency or instrumentality of the United States
of America the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America, which, in either case
under clauses (i) or (ii) are not callable or prepayable at the option of the
issuer thereof, and shall also include a depository receipt issued by a bank or
trust company as custodian with respect to any such U.S. Government Obligation
or a specific payment of interest on or principal of any such U.S. Government
Obligation held by such custodian for the account of the holder of a depository
receipt, provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of interest on or principal
of the U.S. Government Obligation evidenced by such depository receipt.
SECTION 1.02. Business Day Certificate.
On the date of execution and delivery of this Indenture (with
respect to the remainder of calendar year 1997) and thereafter, within 15 days
prior to the end of each calendar year while this Indenture remains in effect
(with respect to the succeeding calendar years), the Corporation shall deliver
to the Debenture Trustee an Officers' Certificate specifying the days on which
banking institutions or trust companies in Martinsville, Virginia are authorized
or obligated by law or executive order to be closed.
ARTICLE II
JUNIOR SUBORDINATED DEBENTURES
SECTION 2.01. Forms Generally.
The Junior Subordinated Debentures and the Debenture Trustee's
certificate of authentication shall be substantially in the form of Exhibit A,
the terms of which are incorporated in and made a part of this Indenture. The
Junior Subordinated Debentures may have notations, legends or endorsements
required by law, stock exchange rule, agreements to which the Corporation is
subject or usage. Each Junior Subordinated Debenture shall be dated the date of
its authentication. The Junior Subordinated Debentures shall be issued in
denominations of $1,000 and integral multiples thereof.
SECTION 2.02. Execution and Authentication.
Two Officers shall sign the Junior Subordinated Debentures for
the Corporation by manual or facsimile signature. If an Officer whose signature
is on a Junior Subordinated Debenture no longer holds that office at the time
the Junior Subordinated Debenture is authenticated, the Junior Subordinated
Debenture shall nevertheless be valid.
A Junior Subordinated Debenture shall not be valid until
authenticated by the manual signature of the Debenture Trustee. The signature of
the Debenture Trustee shall be conclusive evidence that the Junior Subordinated
Debenture has been authenticated under this Indenture. The form of Debenture
Trustee's certificate of authentication to be borne by the Junior Subordinated
Debentures shall be substantially as set forth in Exhibit A hereto.
The Debenture Trustee shall, upon a Corporation Order,
authenticate for original issue up to, and the aggregate principal amount of
Junior Subordinated Debentures outstanding at any time may not exceed,
$51,547,000 aggregate principal amount of the Junior Subordinated Debentures,
except as provided in Sections 2.07, 2.08, 2.09 and 14.05. The series of Junior
Subordinated Debentures to be initially issued hereunder shall be the Series A
Junior Subordinated Debentures.
SECTION 2.03. Form and Payment.
Except as provided in Section 2.05, the Junior Subordinated
Debentures shall be issued in fully registered certificated form without
interest coupons. Principal of, premium, if any, and interest on the Junior
Subordinated Debentures issued in certificated form will be payable, the
transfer of such Junior Subordinated Debentures will be registrable and such
Junior Subordinated Debentures will be exchangeable for Junior Subordinated
Debentures bearing identical terms and provisions at the office or agency of the
Corporation maintained for such purpose under Section 3.02; provided, however,
that payment of interest with respect to Junior Subordinated Debentures (other
than a Global Junior Subordinated Debenture) may be made at the option of the
Corporation (i) by check mailed to the holder at such address as shall appear in
the Debenture Register or (ii) by transfer to an account maintained by the
Person entitled thereto, provided that proper transfer instructions have been
received in writing by the relevant record date. Notwithstanding the foregoing,
so long as the holder of any Junior Subordinated Debentures is the Property
Trustee, the payment of the principal of, premium, if any, and interest
(including Compounded Interest and Additional Sums, if any) and Liquidated
Damages, if any, on such Junior Subordinated Debentures held by the Property
Trustee will be made at such place and to such account as may be designated by
the Property Trustee.
SECTION 2.04. Legends.
(a) Except as permitted by subsection (b) of this Section 2.04
or as otherwise determined by the Corporation in accordance with applicable law,
each Junior Subordinated Debenture shall bear the applicable legends relating to
restrictions on transfer pursuant to the Securities Act and any other applicable
securities laws in substantially the form set forth on Exhibit A hereto.
(b) In the event of an Exchange Offer, the Corporation shall
issue and the Debenture Trustee, upon Corporation Order, shall authenticate
Series B Junior Subordinated Debentures in exchange for Series A Junior
Subordinated Debentures accepted for exchange in the Exchange Offer, which
Series B Junior Subordinated Debentures shall not bear the legends required by
subsection (a) above, in each case unless the holder of such Series A Junior
Subordinated Debentures is either (A) a broker-dealer who purchased such Series
A Junior Subordinated Debentures directly from the Corporation for resale
pursuant to Rule 144A or any other available exemption under the Securities Act,
(B) a Person participating in the distribution of the Series A Junior
Subordinated Debentures or (C) a Person who is an Affiliate of the Corporation.
SECTION 2.05. Global Junior Subordinated Debenture.
(a) In connection with a Dissolution Event,
(i) if any Capital Securities are held in book-entry
form, a Like Amount of Definitive Junior Subordinated Debentures shall
be presented to the Debenture Trustee (if an arrangement with the
Depositary has been maintained) by the Property Trustee in exchange for
a Global Junior Subordinated Debenture (as may be required pursuant to
Section 2.07), to be registered in the name of the Depositary, or its
nominee, and delivered by the Debenture Trustee to the Depositary for
crediting to the accounts of its participants pursuant to the
instructions of the Administrative Trustees; the Corporation upon any
such presentation shall execute a Global Junior Subordinated Debenture
in such aggregate principal amount and deliver the same to the
Debenture Trustee for authentication and delivery in accordance with
this Indenture; and payments on the Junior Subordinated Debentures
issued as a Global Junior Subordinated Debenture will be made to the
Depositary; and
(ii) if any Capital Securities are held in
certificated form, the related Definitive Junior Subordinated
Debentures may be presented to the Debenture Trustee by the Property
Trustee and any Capital Security certificate which represents Capital
Securities other than Capital Securities in book-entry form ("Non
Book-Entry Capital Securities") will be deemed to represent beneficial
interests in Junior Subordinated Debentures presented to the Debenture
Trustee by the Property Trustee having an aggregate principal amount
equal to the aggregate liquidation amount of the Non Book-Entry Capital
Securities until such Capital Security certificates are presented to
the Debenture registrar for the Junior Subordinated Debentures for
transfer or reissuance, at which time such Capital Security
certificates will be cancelled and a Junior Subordinated Debenture,
registered in the name of the holder of the Capital Security
certificate or the transferee of the holder of such Capital Security
certificate, as the case may be, with an aggregate principal amount
equal to the aggregate liquidation amount of the Capital Security
certificate cancelled, will be executed by the Corporation and
delivered to the Debenture Trustee for authentication and delivery in
accordance with this Indenture. Upon the issuance of such Junior
Subordinated Debentures, Junior Subordinated Debentures with an
equivalent aggregate principal amount that were presented by the
Property Trustee to the Debenture Trustee will be cancelled.
(b) A Global Junior Subordinated Debenture shall represent the
aggregate amount of outstanding Junior Subordinated Debentures from time to time
endorsed thereon; provided, that the aggregate amount of outstanding Junior
Subordinated Debentures represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges and prepayments. Any endorsement
of a Global Junior Subordinated Debenture to reflect the amount of any increase
or decrease in the amount of outstanding Junior Subordinated Debentures
represented thereby shall be made by the Debenture Trustee, in accordance with
instructions given by the Corporation as required by this Section 2.05.
(c) A Global Junior Subordinated Debenture may be transferred,
in whole but not in part, only to the Depositary, another nominee of the
Depositary, or to a successor Depositary selected or approved by the Corporation
or to a nominee of such successor Depositary.
(d) If at any time the Depositary notifies the Corporation
that it is unwilling or unable to continue as Depositary or the Depositary has
ceased to be a clearing agency registered under the Exchange Act, and a
successor Depositary is not appointed by the Corporation within 90 days after
the Corporation receives such notice or becomes aware of such condition, as the
case may be, the Corporation will execute, and the Debenture Trustee, upon
receipt of a Corporation Order, will authenticate and make available for
delivery the Definitive Junior Subordinated Debentures, in authorized
denominations, and in an aggregate principal amount equal to the principal
amount of the Global Junior Subordinated Debenture, in exchange for such Global
Junior Subordinated Debenture. If there is a Debenture Event of Default, the
Depositary shall have the right to exchange the Global Junior Subordinated
Debenture for Definitive Junior Subordinated Debentures. In addition, the
Corporation may at any time determine that the Junior Subordinated Debentures
shall no longer be represented by a Global Junior Subordinated Debenture. In the
event of such a Debenture Event of Default or such a determination, the
Corporation shall execute, and subject to Section 2.07, the Debenture Trustee,
upon receipt of an Officers' Certificate evidencing such determination by the
Corporation and a Corporation Order, will authenticate and make available for
delivery the Definitive Junior Subordinated Debentures, in authorized
denominations, and in an aggregate principal amount equal to the principal
amount of the Global Junior Subordinated Debenture in exchange for such Global
Junior Subordinated Debenture. Upon the exchange of the Global Junior
Subordinated Debenture for such Definitive Junior Subordinated Debentures, in
authorized denominations, the Global Junior Subordinated Debenture shall be
cancelled by the Debenture Trustee. Such Definitive Junior Subordinated
Debentures issued in exchange for the Global Junior Subordinated Debenture shall
be registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Debenture Trustee. The Debenture Trustee shall
deliver such Definitive Junior Subordinated Debentures to the Depositary for
delivery to the Persons in whose names such Definitive Junior Subordinated
Debentures are so registered.
SECTION 2.06 Interest.
(a) Each Junior Subordinated Debenture will bear interest at
the rate of 8.90% per annum (the "Coupon Rate") from the most recent date to
which interest has been paid or duly provided for or, if no interest has been
paid or duly provided for, from November 19, 1997, until the principal thereof
becomes due and payable, and at the Coupon Rate on any overdue principal (and
premium, if any) and (to the extent that payment of such interest is enforceable
under applicable law) on any overdue installment of interest, compounded
semi-annually, payable (subject to the provisions of Article XVI) semi-annually
in arrears on June 1 and December 1 of each year (each, an "Interest Payment
Date") commencing on June 1, 1998, to the Person in whose name such Junior
Subordinated Debenture or any predecessor Junior Subordinated Debenture is
registered, at the close of business on the regular record date for such
interest installment, which shall be the fifteenth day of the month immediately
preceding the month in which the relevant Interest Payment Date falls.
(b) Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months and, for any period less than a full calendar
month, the number of days elapsed in such month. In the event that any Interest
Payment Date falls on a day that is not a Business Day, then payment of interest
payable on such date will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of any such delay),
except that if such next succeeding Business Day falls in the next succeeding
calendar year, then such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such
date.
(c) During such time as the Property Trustee is the holder of
any Junior Subordinated Debentures, the Corporation shall pay any additional
amounts on the Junior Subordinated Debentures as may be necessary in order that
the amount of Distributions then due and payable by the Trust on the outstanding
Trust Securities shall not be reduced as a result of any additional taxes,
duties or other governmental charges to which the Trust has become subject as a
result of a Tax Event ("Additional Sums").
SECTION 2.07. Transfer and Exchange.
(a) Transfer Restrictions. (i) The Series A Junior
Subordinated Debentures, and those Series B Junior Subordinated Debentures with
respect to which any Person described in Section 2.04(b)(A), (B) or (C) is the
beneficial owner, may not be transferred except in compliance with the legend
contained in Exhibit A unless otherwise determined by the Corporation in
accordance with applicable law. Upon any distribution of the Junior Subordinated
Debentures following a Dissolution Event, the Corporation and the Debenture
Trustee shall enter into a supplemental indenture pursuant to Section 9.01 to
provide for the transfer restrictions and procedures with respect to the Junior
Subordinated Debentures substantially similar to those contained in the
Declaration to the extent applicable in the circumstances existing at such time.
(ii) The Junior Subordinated Debentures will be issued and may be
transferred only in blocks having an aggregate principal amount of not less
than $100,000 and in multiples of $1,000 in excess thereof. Any such
transfer of the Junior Subordinated Debentures in a block having an
aggregate principal amount of less than $100,000 shall be deemed to be void
and of no legal effect whatsoever. Any such transferee shall be deemed not
to be the holder of such Junior Subordinated Debentures for any purpose,
including but not limited to the receipt of payments on such Junior
Subordinated Debentures, and such transferee shall be deemed to have no
interest whatsoever in such Junior Subordinated Debentures.
(b) General Provisions Relating to Transfers and Exchanges. To
permit registrations of transfers and exchanges, the Corporation shall execute
and the Debenture Trustee shall authenticate Definitive Junior Subordinated
Debentures and Global Junior Subordinated Debentures at the request of the
Debenture registrar for the Junior Subordinated Debentures. All Definitive
Junior Subordinated Debentures and Global Junior Subordinated Debentures issued
upon any registration of transfer or exchange of Definitive Junior Subordinated
Debentures or Global Junior Subordinated Debentures shall be the valid
obligations of the Corporation, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Definitive Junior Subordinated
Debentures or Global Junior Subordinated Debentures surrendered upon such
registration of transfer or exchange.
No service charge shall be made to a holder for any
registration of transfer or exchange, but the Corporation may require payment of
a sum sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith.
The Corporation shall not be required to (i) issue, register
the transfer of or exchange Junior Subordinated Debentures during a period
beginning at the opening of business 15 days before the day of mailing of a
notice of prepayment or any notice of selection of Junior Subordinated
Debentures for prepayment under Article XIV hereof and ending at the close of
business on the day of such mailing; or (ii) register the transfer of or
exchange any Junior Subordinated Debenture so selected for prepayment in whole
or in part, except the unredeemed portion of any Junior Subordinated Debenture
being prepaid in part.
Prior to due presentment for the registration of a transfer of
any Junior Subordinated Debenture, the Debenture Trustee, the Corporation and
any agent of the Debenture Trustee or the Corporation may deem and treat the
Person in whose name any Junior Subordinated Debenture is registered as the
absolute owner of such Junior Subordinated Debenture for the purpose of
receiving payment of principal of and premium, if any, and interest on such
Junior Subordinated Debentures, and none of the Debenture Trustee, the
Corporation and any agents of the Debenture Trustee or the Corporation shall be
affected by notice to the contrary.
Each holder of a Junior Subordinated Debenture agrees to
indemnify the Corporation and the Debenture Trustee against any liability that
may result from the transfer, exchange or assignment of such holder's Junior
Subordinated Debenture in violation of any provision of this Indenture and/or
applicable United States federal or state securities laws.
The Debenture Trustee shall have no obligation or duty to
monitor, determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Junior Subordinated Debenture (including any
transfers between or among Depositary Participants or beneficial owners of
interests in any Global Junior Subordinated Debenture) other than to require
delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by the terms
of, this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
(c) Exchange of Series A Junior Subordinated Debentures for
Series B Junior Subordinated Debentures. The Series A Junior Subordinated
Debentures may be exchanged for Series B Junior Subordinated Debentures pursuant
to the terms of the Exchange Offer. The Debenture Trustee shall make the
exchange as follows:
The Corporation shall present the Debenture Trustee with an
Officers' Certificate certifying the following:
(A) upon issuance of the Series B Junior Subordinated
Debentures, the transactions contemplated by the
Exchange Offer have been consummated; and
(B) the principal amount of Series A Junior Subordinated
Debentures properly tendered in the Exchange Offer
that are represented by a Global Junior Subordinated
Debenture, the principal amount of Series A Junior
Subordinated Debentures properly tendered in the
Exchange Offer that are represented by Definitive
Junior Subordinated Debentures, the name of each
holder of such Definitive Junior Subordinated
Debentures, the principal amount properly tendered in
the Exchange Offer by each such holder and the name
and address to which Definitive Junior Subordinated
Debentures for Series B Junior Subordinated
Debentures shall be registered and sent for each such
holder.
The Debenture Trustee, upon receipt of (i) such Officers'
Certificate, (ii) an Opinion of Counsel (x) to the effect that the Series B
Junior Subordinated Debentures have been registered under Section 5 of the
Securities Act and the Indenture has been qualified under the Trust Indenture
Act and (y) with respect to the matters set forth in Section 3(p) of the
Registration Rights Agreement and (iii) a Corporation Order, shall authenticate
(A) a Global Junior Subordinated Debenture representing Series B Junior
Subordinated Debentures in aggregate principal amount equal to the aggregate
principal amount of Series A Junior Subordinated Debentures represented by a
Global Junior Subordinated Debenture indicated in such Officers' Certificate as
having been properly tendered and (B) Definitive Junior Subordinated Debentures
representing Series B Junior Subordinated Debentures registered in the names of,
and in the principal amounts indicated in, such Officers' Certificate.
If the principal amount of the Global Junior Subordinated
Debenture for the Series B Junior Subordinated Debentures is less than the
principal amount of the Global Junior Subordinated Debenture for the Series A
Junior Subordinated Debentures, the Debenture Trustee shall make an endorsement
on such Global Junior Subordinated Debenture for Series A Junior Subordinated
Debentures indicating a reduction in the principal amount represented thereby.
The Debenture Trustee shall make available for delivery such
Definitive Junior Subordinated Debentures representing Series B Junior
Subordinated Debentures to the holders thereof as indicated in such Officers'
Certificate.
SECTION 2.08. Replacement Junior Subordinated Debentures.
If any mutilated Junior Subordinated Debenture is surrendered
to the Debenture Trustee, or the Corporation and the Debenture Trustee receive
evidence to their satisfaction of the destruction, loss or theft of any Junior
Subordinated Debenture, the Corporation shall issue and the Debenture Trustee
shall authenticate a replacement Junior Subordinated Debenture if the Debenture
Trustee's requirements for replacements of Junior Subordinated Debentures are
met. An indemnity bond must be supplied by the holder that is sufficient in the
judgment of the Debenture Trustee and the Corporation to protect the
Corporation, the Debenture Trustee, any agent thereof or any authenticating
agent from any loss that any of them may suffer if a Junior Subordinated
Debenture is replaced. The Corporation or the Debenture Trustee may charge for
its expenses in replacing a Junior Subordinated Debenture.
Every replacement Junior Subordinated Debenture is an
obligation of the Corporation and shall be entitled to all of the benefits of
this Indenture equally and proportionately with all other Junior Subordinated
Debentures duly issued hereunder.
SECTION 2.09. Temporary Junior Subordinated Debentures.
Pending the preparation of Definitive Junior Subordinated
Debentures, the Corporation may execute, and upon Corporation Order the
Debenture Trustee shall authenticate and make available for delivery, temporary
Junior Subordinated Debentures that are printed, lithographed, typewritten,
mimeographed or otherwise reproduced, in any authorized denomination,
substantially of the tenor of the Definitive Junior Subordinated Debentures in
lieu of which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Junior
Subordinated Debentures may determine, as conclusively evidenced by their
execution of such Junior Subordinated Debentures.
If temporary Junior Subordinated Debentures are issued, the
Corporation shall cause Definitive Junior Subordinated Debentures to be prepared
without unreasonable delay. The Definitive Junior Subordinated Debentures shall
be printed, lithographed or engraved, or provided by any combination thereof, or
in any other manner permitted by the rules and regulations of any applicable
securities exchange, all as determined by the officers executing such Definitive
Junior Subordinated Debentures. After the preparation of Definitive Junior
Subordinated Debentures, the temporary Junior Subordinated Debentures shall be
exchangeable for Definitive Junior Subordinated Debentures upon surrender of the
temporary Junior Subordinated Debentures at the office or agency maintained by
the Corporation for such purpose pursuant to Section 3.02 hereof, without charge
to the Holder. Upon surrender for cancellation of any one or more temporary
Junior Subordinated Debentures, the Corporation shall execute, and the Debenture
Trustee shall authenticate and make available for delivery, in exchange therefor
the same aggregate principal amount of Definitive Junior Subordinated Debentures
of authorized denominations. Until so exchanged, the temporary Junior
Subordinated Debentures shall in all respects be entitled to the same benefits
under this Indenture as Definitive Junior Subordinated Debentures.
SECTION 2.10. Cancellation.
The Corporation at any time may deliver Junior Subordinated
Debentures to the Debenture Trustee for cancellation. The Debenture Trustee and
no one else shall cancel all Junior Subordinated Debentures surrendered for
registration of transfer, exchange, payment, replacement or cancellation and
shall retain cancelled Junior Subordinated Debentures in accordance with its
normal practices (subject to the record retention requirement of the Exchange
Act) unless the Corporation directs them to be returned to it. The Corporation
may not issue new Junior Subordinated Debentures to replace Junior Subordinated
Debentures that have been prepaid or paid or that have been delivered to the
Debenture Trustee for cancellation.
SECTION 2.11. Defaulted Interest.
Any interest on any Junior Subordinated Debenture that is
payable, but is not punctually paid or duly provided for, on any Interest
Payment Date (herein called "Defaulted Interest") shall forthwith cease to be
payable to the holder on the relevant regular record date by virtue of having
been such holder; and such Defaulted Interest shall be paid by the Corporation,
at its election, as provided in clause (a) or clause (b) below:
(a) The Corporation may make payment of any Defaulted Interest
on Junior Subordinated Debentures to the Persons in whose names such
Junior Subordinated Debentures (or their respective Predecessor Junior
Subordinated Debentures) are registered at the close of business on a
special record date for the payment of such Defaulted Interest, which
shall be fixed in the following manner: the Corporation shall notify
the Debenture Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each such Junior Subordinated Debenture and the
date of the proposed payment, and at the same time the Corporation
shall deposit with the Debenture Trustee an amount of money equal to
the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Debenture
Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this clause provided.
Thereupon the Debenture Trustee shall fix a special record date for the
payment of such Defaulted Interest which shall not be more than 15 nor
less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Debenture Trustee of the
notice of the proposed payment. The Debenture Trustee shall promptly
notify the Corporation of such special record date and, in the name and
at the expense of the Corporation, shall cause notice of the proposed
payment of such Defaulted Interest and the special record date therefor
to be mailed, first class postage prepaid, to each Debentureholder at
his or her address as it appears in the Debenture Register, not less
than 10 days prior to such special record date. Notice of the proposed
payment of such Defaulted Interest and the special record date therefor
having been mailed as aforesaid, such Defaulted Interest shall be paid
to the Persons in whose names such Junior Subordinated Debentures (or
their respective Predecessor Junior Subordinated Debentures) are
registered on such special record date and shall be no longer payable
pursuant to the following clause (b).
(b) The Corporation may make payment of any Defaulted Interest
on any Junior Subordinated Debentures in any other lawful manner not
inconsistent with the requirements of any securities exchange on which
such Junior Subordinated Debentures may be listed, and upon such notice
as may be required by such exchange, if, after written notice given by
the Corporation to the Debenture Trustee of the proposed payment
pursuant to this clause, such manner of payment shall be deemed
practicable by the Debenture Trustee.
SECTION 2.12. CUSIP Numbers.
The Corporation in issuing the Junior Subordinated Debentures
may use "CUSIP" numbers (if then generally in use), and, if so, the Debenture
Trustee shall use "CUSIP" numbers in notices of prepayment as a convenience to
Debentureholders; provided that any such notice may state that no representation
is made as to the correctness of such numbers either as printed on the Junior
Subordinated Debentures or as contained in any notice of a prepayment and that
reliance may be placed only on the other identification numbers printed on the
Junior Subordinated Debentures, and any such prepayment shall not be affected by
any defect in or omission of such numbers. The Corporation will promptly notify
the Debenture Trustee of any change in the CUSIP numbers.
ARTICLE III
PARTICULAR COVENANTS OF THE CORPORATION
. SECTION 3.01. Payment of Principal, Premium and Interest
The Corporation covenants and agrees for the benefit of the
holders of the Junior Subordinated Debentures that it will duly and punctually
pay or cause to be paid the principal of and premium, if any, and interest on
the Junior Subordinated Debentures at the place, at the respective times and in
the manner provided herein. Except as provided in Section 2.03, each installment
of interest on the Junior Subordinated Debentures may be paid by mailing checks
for such interest payable to the order of the holders of each such Junior
Subordinated Debenture entitled thereto as they appear in the Debenture
Register. The Corporation further covenants to pay any and all amounts,
including, without limitation, Additional Sums, as may be required pursuant to
Section 2.06(c), Liquidated Damages, if any, on the dates and in the manner
required under the Registration Rights Agreement and Compounded Interest, as may
be required pursuant to Section 16.01.
SECTION 3.02. Offices for Notices and Payments, etc.
So long as any of the Junior Subordinated Debentures remain
outstanding, the Corporation will maintain in New York, New York an office or
agency where the Junior Subordinated Debentures may be presented for payment, an
office or agency where the Junior Subordinated Debentures may be presented for
registration of transfer and for exchange as in this Indenture provided and an
office or agency where notices and demands to or upon the Corporation in respect
of the Junior Subordinated Debentures or of this Indenture may be served. The
Corporation will give to the Debenture Trustee written notice of the location of
any such office or agency and of any change of location thereof. Until otherwise
designated from time to time by the Corporation in a notice to the Debenture
Trustee, any such office or agency for all of the above purposes shall be the
Principal Office of the Debenture Trustee. In case the Corporation shall fail to
maintain any such office or agency in New York, New York or shall fail to give
such notice of the location or of any change in the location thereof,
presentations and demands may be made and notices may be served at the Principal
Office of the Debenture Trustee.
In addition to any such office or agency, the Corporation may
from time to time designate one or more offices or agencies outside New York,
New York, where the Junior Subordinated Debentures may be presented for payment,
registration of transfer and for exchange in the manner provided in this
Indenture, and the Corporation may from time to time rescind such designation,
as the Corporation may deem desirable or expedient; provided, however, that no
such designation or rescission shall in any manner relieve the Corporation of
its obligation to maintain any such office or agency in New York, New York, for
the purposes above mentioned. The Corporation will give to the Debenture Trustee
prompt written notice of any such designation or rescission thereof.
. SECTION 3.03. Appointments to Fill Vacancies in Debenture
Trustee's Office
The Corporation, whenever necessary to avoid or fill a vacancy
in the office of Debenture Trustee, will appoint, in the manner provided in
Section 6.10, a Debenture Trustee, so that there shall at all times be a
Debenture Trustee hereunder.
SECTION 3.04. Provision as to Paying Agent.
(a) If the Corporation shall appoint a paying agent other
than the Debenture Trustee with respect to the Junior
Subordinated Debentures, it will cause such paying
agent to execute and deliver to the Debenture Trustee
an instrument in which such agent shall agree with
the Debenture Trustee, subject to the provision of
this Section 3.04,
(1) that it will hold all sums held by it as
such agent for the payment of the principal
of and premium, if any, or interest on the
Junior Subordinated Debentures (whether such
sums have been paid to it by the Corporation
or by any other obligor on the Junior
Subordinated Debentures) in trust for the
benefit of the holders of the Junior
Subordinated Debentures; and
(2) that it will give the Debenture Trustee
notice of any failure by the Corporation (or
by any other obligor on the Junior
Subordinated Debentures) to make any payment
of the principal of and premium or interest
(including Additional Sums and Compounded
Interest, if any) and Liquidated Damages, if
any, on the Junior Subordinated Debentures
when the same shall be due and payable.
(b) If the Corporation shall act as its own paying agent,
it will, on or before each due date of the principal
of and premium, if any, or interest on the Junior
Subordinated Debentures, set aside, segregate and
hold in trust for the benefit of the holders of the
Junior Subordinated Debentures a sum sufficient to
pay such principal, premium or interest so becoming
due and will notify the Debenture Trustee of any
failure to take such action and of any failure by the
Corporation (or by any other obligor under the Junior
Subordinated Debentures) to make any payment of the
principal of and premium, if any, or interest on the
Junior Subordinated Debentures when the same shall
become due and payable.
(c) Anything in this Section 3.04 to the contrary
notwithstanding, the Corporation may, at any time,
for the purpose of obtaining a satisfaction and
discharge with respect to the Junior Subordinated
Debentures hereunder, or for any other reason, pay or
cause to be paid to the Debenture Trustee all sums
held in trust for such Junior Subordinated Debentures
by the Debenture Trustee or any paying agent
hereunder, as required by this Section 3.04, such
sums to be held by the Debenture Trustee upon the
trusts herein contained.
(d) Anything in this Section 3.04 to the contrary
notwithstanding, the agreement to hold sums in trust
as provided in this Section 3.04 is subject to
Sections 11.03 and 11.04.
SECTION 3.05. Certificate to Debenture Trustee.
The Corporation will deliver to the Debenture Trustee on or
before 120 days after the end of each fiscal year in each year, commencing with
the first fiscal year ending after the date hereof, so long as Junior
Subordinated Debentures are outstanding hereunder, an Officers' Certificate, one
of the signers of which shall be the principal executive, principal financial or
principal accounting officer of the Corporation, stating that in the course of
the performance by the signers of their duties as officers of the Corporation
they would normally have knowledge of any default by the Corporation in the
performance of any covenants contained herein, stating whether or not they have
knowledge of any such default and, if so, specifying each such default of which
the signers have knowledge and the nature thereof. For purposes of this Section
3.05, default shall be determined without regard to any period of grace or
requirement of notice provided for herein.
. SECTION 3.06. Compliance with Consolidation Provisions
The Corporation will not, while any of the Junior Subordinated
Debentures remain outstanding, consolidate with, or merge into, or merge into
itself, or sell or convey all or substantially all of its property to any other
Person unless the provisions of Article X hereof are complied with.
. SECTION 3.07. Limitation on Dividends
The Corporation will not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Corporation's capital stock, (ii) make any payment
of principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Corporation (including any Other Debentures) that rank
pari passu with or junior in right of payment to the Junior Subordinated
Debentures or (iii) make any guarantee payments with respect to any guarantee by
the Corporation of the debt securities of any Subsidiary of the Corporation
(including any Other Guarantees) if such guarantee ranks pari passu with or
junior in right of payment to the Junior Subordinated Debentures (other than (a)
dividends or distributions in shares of, or options, warrants or rights to
subscribe for or purchase shares of, Common Stock, (b) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the
Guarantee, (d) as a result of a reclassification of the Corporation's capital
stock or the exchange or conversion of one class or series of the Corporation's
capital stock for another class or series of the Corporation's capital stock,
(e) the purchase of fractional interests in shares of the Corporation's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged and (f) purchases of Common Stock
related to the issuance of Common Stock or rights under any of the Corporation's
benefit plans for its directors, officers or employees or any of the
Corporation's dividend reinvestment plans), if at such time (1) there shall have
occurred any event of which the Corporation has actual knowledge that (a) is, or
with the giving of notice or the lapse of time, or both, would be, a Debenture
Event of Default and (b) in respect of which the Corporation shall not have
taken reasonable steps to cure, (2) the Corporation shall be in default with
respect to its payment of any obligations under the Guarantee or (3) the
Corporation shall have given notice of its election to exercise its right to
extend the interest payment period pursuant to Section 16.01 and any such
extension shall have commenced and be continuing.
SECTION 3.08. Covenants as to MainStreet Capital Trust I
In the event Junior Subordinated Debentures are issued to the
Trust or a trustee of such trust in connection with the issuance of Trust
Securities by the Trust, for so long as such Trust Securities remain
outstanding, the Corporation (i) will maintain 100% direct or indirect ownership
of the Common Securities; provided, however, that any successor of the
Corporation, permitted pursuant to Article X, may succeed to the Corporation's
ownership of such Common Securities, (ii) will use its reasonable efforts to
cause the Trust (a) to remain a business trust, except in connection with the
distribution of Junior Subordinated Debentures to the holders of Trust
Securities in liquidation of the Trust, the redemption of all of the Trust
Securities, or certain mergers, consolidations or amalgamations, each as
permitted by the Declaration, and (b) to otherwise continue to be classified as
a grantor trust and not an association taxable as a corporation for United
States federal income tax purposes and (iii) to use its reasonable efforts to
cause each holder of Trust Securities to be treated as owning an undivided
beneficial interest in the Junior Subordinated Debentures.
. SECTION 3.09. Payment of Expenses
In connection with the offering, sale and issuance of the
Junior Subordinated Debentures to the Trust and in connection with the sale of
the Trust Securities by the Trust, the Corporation, in its capacity as borrower
with respect to the Junior Subordinated Debentures, shall:
(a) pay all costs and expenses relating to the offering, sale
and issuance of the Junior Subordinated Debentures, including commissions to the
initial purchaser payable pursuant to the Purchase Agreement, fees and expenses
in connection with any exchange offer, filing of a shelf registration statement
or other action to be taken pursuant to the Registration Rights Agreement and
compensation of the Debenture Trustee in accordance with the provisions of
Section 6.06;
(b) pay all costs and expenses of the Trust (including, but
not limited to, costs and expenses relating to the organization of the Trust,
the offering, sale and issuance of the Trust Securities (including commissions
to the initial purchaser in connection therewith), the fees and expenses of the
Property Trustee and the Delaware Trustee, the costs and expenses relating to
the operation of the Trust, including without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, paying agent(s),
registrar(s), transfer agent(s), duplicating, travel and telephone and other
telecommunications expenses and costs and expenses incurred in connection with
the acquisition, financing, and disposition of assets of the Trust;
(c) be primarily and fully liable for any indemnification
obligations arising with respect to the Declaration;
(d) pay any and all taxes (other than United States
withholding taxes attributable to the Trust or its assets) and all liabilities,
costs and expenses with respect to such taxes of the Trust; and
(e) pay all other fees, expenses, debts and obligations (other
than in respect of the Trust Securities) related to the Trust.
. SECTION 3.10. Payment Upon Resignation or Removal
Upon termination of this Indenture or the removal or
resignation of the Debenture Trustee, unless otherwise stated, the Corporation
shall pay to the Debenture Trustee all amounts accrued and owing to the date of
such termination, removal or resignation. Upon termination of the Declaration or
the removal or resignation of the Delaware Trustee or the Property Trustee, as
the case may be, pursuant to Section 5.7 of the Declaration, the Corporation
shall pay to the Delaware Trustee or the Property Trustee, as the case may be,
all amounts accrued and owing to the date of such termination, removal or
resignation.
ARTICLE IV
DEBENTUREHOLDERS' LISTS AND REPORTS BY THE
CORPORATION AND THE DEBENTURE TRUSTEE
SECTION 4.01. Debentureholders' Lists.
The Corporation covenants and agrees that it will furnish or
cause to be furnished to the Debenture Trustee:
(a) on a semi-annual basis on each regular record date
for the Junior Subordinated Debentures, a list, in
such form as the Debenture Trustee may reasonably
require, of the names and addresses of the
Debentureholders as of such record date; and
(b) at such other times as the Debenture Trustee may
request in writing, within 30 days after the receipt
by the Corporation, of any such request, a list of
similar form and content as of a date not more than
15 days prior to the time such list is furnished,
except that, no such lists need be furnished so long as the
Debenture Trustee is in possession thereof by reason of its
acting as Debenture registrar for the Junior Subordinated
Debentures.
SECTION 4.02. Preservation and Disclosure of Lists.
(a) The Debenture Trustee shall preserve, in as current a
form as is reasonably practicable, all information as
to the names and addresses of the holders of the
Junior Subordinated Debentures (1) contained in the
most recent list furnished to it as provided in
Section 4.01 or (2) received by it in the capacity of
Junior Subordinated Debentures registrar (if so
acting) hereunder. The Debenture Trustee may destroy
any list furnished to it as provided in Section 4.01
upon receipt of a new list so furnished.
(b) In case three or more holders of Junior Subordinated
Debentures (hereinafter referred to as "applicants")
apply in writing to the Debenture Trustee and furnish
to the Debenture Trustee reasonable proof that each
such applicant has owned a Junior Subordinated
Debenture for a period of at least six months
preceding the date of such application, and such
application states that the applicants desire to
communicate with other holders of Junior Subordinated
Debentures or with holders of all Junior Subordinated
Debentures with respect to their rights under this
Indenture and is accompanied by a copy of the form of
proxy or other communication which such applicants
propose to transmit, then the Debenture Trustee shall
within 5 Business Days after the receipt of such
application, at its election, either:
(1) afford such applicants access to the
information preserved at the time by
the Debenture Trustee in accordance
with the provisions of subsection
(a) of this Section 4.02, or
(2) inform such applicants as to the
approximate number of holders of all
Junior Subordinated Debentures,
whose names and addresses appear in
the information preserved at the
time by the Debenture Trustee in
accordance with the provisions of
subsection (a) of this Section 4.02,
and as to the approximate cost of
mailing to such Debentureholders the
form of proxy or other
communication, if any, specified in
such application.
If the Debenture Trustee shall elect not to
afford such applicants access to such information,
the Debenture Trustee shall, upon the written request
of such applicants, mail to each Debentureholder
whose name and address appear in the information
preserved at the time by the Debenture Trustee in
accordance with the provisions of subsection (a) of
this Section 4.02 a copy of the form of proxy or
other communication which is specified in such
request with reasonable promptness after a tender to
the Debenture Trustee of the material to be mailed
and of payment, or provision for the payment, of the
reasonable expenses of mailing.
(c) Each and every holder of Junior Subordinated
Debentures, by receiving and holding the same, agrees
with the Corporation and the Debenture Trustee that
neither the Corporation nor the Debenture Trustee nor
any paying agent shall be held accountable by reason
of the disclosure of any such information as to the
names and addresses of the holders of Junior
Subordinated Debentures in accordance with the
provisions of subsection (b) of this Section 4.02,
regardless of the source from which such information
was derived, and that the Debenture Trustee shall not
be held accountable by reason of mailing any material
pursuant to a request made under said subsection (b).
SECTION 4.03. Reports by the Corporation.
(a) The Corporation covenants and agrees to file with the
Debenture Trustee, within 15 days after the date on
which the Corporation is required to file the same
with the Commission, copies of the annual reports and
of the information, documents and other reports (or
copies of such portions of any of the foregoing as
said Commission may from time to time by rules and
regulations prescribe) which the Corporation may be
required to file with the Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act; or,
if the Corporation is not required to file
information, documents or reports pursuant to either
of such sections, then to provide to the Debenture
Trustee, such of the supplementary and periodic
information, documents and reports which would have
been required pursuant to Section 13 of the Exchange
Act in respect of a security listed and registered on
a national securities exchange as may be prescribed
from time to time in such rules and regulations.
(b) The Corporation covenants and agrees to file with the
Debenture Trustee and the Commission, in accordance
with the rules and regulations prescribed from time
to time by said Commission, such additional
information, documents and reports with respect to
compliance by the Corporation with the conditions and
covenants provided for in this Indenture as may be
required from time to time by such rules and
regulations.
(c) The Corporation covenants and agrees to transmit by
mail to all holders of Junior Subordinated
Debentures, as the names and addresses of such
holders appear upon the Debenture Register, within 30
days after the filing thereof with the Debenture
Trustee, such summaries of any information, documents
and reports required to be filed by the Corporation
pursuant to subsections (a) and (b) of this Section
4.03 as may be required by rules and regulations
prescribed from time to time by the Commission.
(d) Delivery of such reports, information and documents
to the Debenture Trustee is for informational
purposes only and the Debenture Trustee's receipt of
such shall not constitute constructive notice of any
information contained therein or determinable from
information contained therein, including the
Corporation's compliance with any of its covenants
hereunder (as to which the Debenture Trustee is
entitled to rely exclusively on Officers'
Certificates).
(e) So long as is required for an offer or sale of the
Junior Subordinated Debentures to qualify for an
exemption under Rule 144A under the Securities Act,
the Corporation shall, upon request, provide the
information required by clause (d)(4) thereunder to
each Debentureholder and to each beneficial owner and
prospective purchaser of Junior Subordinated
Debentures identified by each Debentureholder of
Restricted Junior Subordinated Debentures, unless
such information is furnished to the Commission
pursuant to Section 13 or 15(d) of the Exchange Act.
SECTION 4.04. Reports by the Debenture Trustee.
(a) The Debenture Trustee shall transmit to
Debentureholders such reports concerning the
Debenture Trustee and its actions under this
Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided
pursuant thereto. If required by Section 313(a) of
the Trust Indenture Act, the Debenture Trustee shall,
within sixty days after each December 15 following
the date of this Indenture, commencing December 15,
1997, deliver to Debentureholders a brief report,
dated as of such December 15, which complies with the
provisions of such Section 313(a).
(b) A copy of each such report shall, at the time of such
transmission to Debentureholders, be filed by the
Debenture Trustee with each stock exchange, if any,
upon which the Junior Subordinated Debentures are
listed, with the Commission and with the Corporation.
The Corporation will promptly notify the Debenture
Trustee when the Junior Subordinated Debentures are
listed on any stock exchange and of any delisting
thereof.
ARTICLE V
REMEDIES OF THE DEBENTURE TRUSTEE AND DEBENTUREHOLDERS
ON EVENT OF DEFAULT
SECTION 5.01. Debenture Events of Default.
One or more of the following events of default shall
constitute a Debenture Event of Default hereunder (whatever the reason for such
Debenture Event of Default and whether it shall be voluntary or involuntary or
be effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or governmental
body):
(a) default in the payment of any interest (including
Compounded Interest and Additional Sums, if any) or
Liquidated Damages, if any, on the Junior
Subordinated Debentures or any Other Debentures when
due, and continuance of such default for a period of
30 days; provided, however, that a valid extension of
an interest payment period by the Corporation in
accordance with the terms hereof shall not constitute
a default in the payment of interest for this
purpose; or
(b) default in the payment of any principal or premium,
if any, on the Junior Subordinated Debentures or any
Other Debentures when due whether at maturity, upon
redemption, by declaration of acceleration of
maturity or otherwise; or
(c) default in the performance, or breach, of any
covenant or warranty of the Corporation in this
Indenture (other than a covenant or warranty a
default in whose performance or whose breach is
elsewhere in this Section specifically dealt with),
and continuance of such default or breach for a
period of 90 days after there has been given, by
registered or certified mail, to the Corporation by
the Debenture Trustee or to the Corporation and the
Debenture Trustee by the holders of at least 25% in
aggregate principal amount of the outstanding Junior
Subordinated Debentures 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) a court having jurisdiction in the premises shall
enter a decree or order for relief in respect of the
Corporation in an involuntary case under any
applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Corporation
or for any substantial part of its property, or
ordering the winding-up or liquidation of its affairs
and such decree or order shall remain unstayed and in
effect for a period of 90 consecutive days; or
(e) the Corporation shall commence a voluntary case under
any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, shall consent
to the entry of an order for relief in an involuntary
case under any such law, or shall consent to the
appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the
Corporation or of any substantial part of its
property, or shall make any general assignment for
the benefit of creditors, or shall fail generally to
pay its debts as they become due.
If a Debenture Event of Default with respect to Junior
Subordinated Debentures at the time outstanding occurs and is continuing, then
in every such case the Debenture Trustee or the holders of not less than 25% in
aggregate principal amount of the Junior Subordinated Debentures then
outstanding may declare the principal amount of all Junior Subordinated
Debentures to be due and payable immediately, by a notice in writing to the
Corporation (and to the Debenture Trustee if given by the holders of the
outstanding Junior Subordinated Debentures), and upon any such declaration the
same shall become immediately due and payable.
The foregoing provisions, however, are subject to the
condition that if, at any time after the principal of the Junior Subordinated
Debentures shall have been so declared due and payable, and before any judgment
or decree for the payment of the moneys due shall have been obtained or entered
as hereinafter provided, (i) the Corporation shall pay or shall deposit with the
Debenture Trustee a sum sufficient to pay (A) all matured installments of
interest (including Compounded Interest and Additional Sums, if any) and
Liquidated Damages, if any, upon all the Junior Subordinated Debentures and the
principal of and premium, if any, on any and all Junior Subordinated Debentures
which shall have become due otherwise than by acceleration (with interest upon
such principal and premium, if any, and, to the extent that payment of such
interest is enforceable under applicable law, on overdue installments of
interest, at the same rate as the rate of interest specified in the Junior
Subordinated Debentures to the date of such payment or deposit) and (B) such
amount as shall be sufficient to cover compensation due to the Debenture Trustee
and each predecessor Debenture Trustee, their respective agents, attorneys and
counsel, pursuant to Section 6.06, and (ii) any and all Debenture Events of
Default under the Indenture, other than the non-payment of the principal of the
Junior Subordinated Debentures which shall have become due solely by such
declaration of acceleration, shall have been cured, waived or otherwise remedied
as provided herein, then, in every such case, the holders of a majority in
aggregate principal amount of the Junior Subordinated Debentures then
outstanding, by written notice to the Corporation and to the Debenture Trustee,
may rescind and annul such declaration and its consequences, but no such waiver
or rescission and annulment shall extend to or shall affect any subsequent
default or shall impair any right consequent thereon.
In case the Debenture Trustee shall have proceeded to enforce
any right under this Indenture and such proceedings shall have been discontinued
or abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Debenture Trustee, then and in every
such case the Corporation, the Debenture Trustee and the holders of the Junior
Subordinated Debentures shall be restored respectively to their several
positions and rights hereunder, and all rights, remedies and powers of the
Corporation, the Debenture Trustee and the holders of the Junior Subordinated
Debentures shall continue as though no such proceeding had been taken.
. SECTION 5.02. Payment of Junior Subordinated Debentures
on Default; Suit Therefor
The Corporation covenants that (a) in case default shall be
made in the payment of any installment of interest (including Compounded
Interest and Additional Sums, if any) and Liquidated Damages, if any, upon any
of the Junior Subordinated Debentures as and when the same shall become due and
payable, and such default shall have continued for a period of 30 days, or (b)
in case default shall be made in the payment of the principal of or premium, if
any, on any of the Junior Subordinated Debentures as and when the same shall
have become due and payable, whether at maturity of the Junior Subordinated
Debentures or upon prepayment or by declaration or otherwise, then, upon demand
of the Debenture Trustee, the Corporation will pay to the Debenture Trustee, for
the benefit of the holders of the Junior Subordinated Debentures, the whole
amount that then shall have become due and payable on all such Junior
Subordinated Debentures for principal and premium, if any, or interest
(including Compounded Interest and Additional Sums, if any) and Liquidated
Damages, if any, or both, as the case may be, with interest upon the overdue
principal and premium, if any, and (to the extent that payment of such interest
is enforceable under applicable law and, if the Junior Subordinated Debentures
are held by the Trust or a trustee of such trust, without duplication of any
other amounts paid by the Trust or a trustee in respect thereof) upon the
overdue installments of interest (including Compounded Interest and Additional
Sums, if any) and Liquidated Damages, if any, at the rate borne by the Junior
Subordinated Debentures; and, in addition thereto, such further amount as shall
be sufficient to cover the costs and expenses of collection, including a
reasonable compensation to the Debenture Trustee, its agents, attorneys and
counsel, and any other amount due to the Debenture Trustee pursuant to Section
6.06.
In case the Corporation shall fail forthwith to pay such
amounts upon such demand, the Debenture Trustee, in its own name and as trustee
of an express trust, shall be entitled and empowered to institute any actions or
proceedings at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceeding to judgment or final
decree, and may enforce any such judgment or final decree against the
Corporation or any other obligor on the Junior Subordinated Debentures and
collect in the manner provided by law out of the property of the Corporation or
any other obligor on the Junior Subordinated Debentures, wherever situated, the
moneys adjudged or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy
or for the reorganization of the Corporation or any other obligor on the Junior
Subordinated Debentures under Title 11, United States Code, or any other
applicable law, or in case a receiver or trustee shall have been appointed for
the property of the Corporation or such other obligor, or in the case of any
other similar judicial proceedings relative to the Corporation or other obligor
upon the Junior Subordinated Debentures, or to the creditors or property of the
Corporation or such other obligor, the Debenture Trustee, irrespective of
whether the principal of the Junior Subordinated Debentures shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Debenture Trustee shall have made any demand pursuant to the
provisions of this Section 5.02, shall be entitled and empowered, by
intervention in such proceedings or otherwise, to file and prove a claim or
claims for the whole amount of principal and interest owing and unpaid in
respect of the Junior Subordinated Debentures and, in case of any judicial
proceedings, to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Debenture Trustee
(including any claim for amounts due to the Debenture Trustee pursuant to 6.06)
and of the Debentureholders allowed in such judicial proceedings relative to the
Corporation or any other obligor on the Junior Subordinated Debentures, or to
the creditors or property of the Corporation or such other obligor, unless
prohibited by applicable law and regulations, to vote on behalf of the holders
of the Junior Subordinated Debentures in any election of a trustee or a standby
trustee in arrangement, reorganization, liquidation or other bankruptcy or
insolvency proceedings or person performing similar functions in comparable
proceedings, and to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute the same after the deduction
of its charges and expenses; and any receiver, assignee or trustee in bankruptcy
or reorganization is hereby authorized by each of the Debentureholders to make
such payments to the Debenture Trustee, and, in the event that the Debenture
Trustee shall consent to the making of such payments directly to the
Debentureholders, to pay to the Debenture Trustee such amounts as shall be
sufficient to cover reasonable compensation to the Debenture Trustee, each
predecessor Debenture Trustee and their respective agents, attorneys and
counsel, and all other amounts due to the Debenture Trustee pursuant to Section
6.06.
Nothing herein contained shall be construed to authorize the
Debenture Trustee to authorize or consent to or accept or adopt on behalf of any
Debentureholder any plan of reorganization, arrangement, adjustment or
composition affecting the Junior Subordinated Debentures or the rights of any
holder thereof or to authorize the Debenture Trustee to vote in respect of the
claim of any Debentureholder in any such proceeding.
All rights of action and of asserting claims under this
Indenture, or under any of the Junior Subordinated Debentures, may be enforced
by the Debenture Trustee without the possession of any of the Junior
Subordinated Debentures, or the production thereof on any trial or other
proceeding relative thereto, and any such suit or proceeding instituted by the
Debenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment shall be for the ratable benefit of the
holders of the Junior Subordinated Debentures.
In any proceedings brought by the Debenture Trustee (and also
any proceedings involving the interpretation of any provision of this Indenture
to which the Debenture Trustee shall be a party) the Debenture Trustee shall be
held to represent all the holders of the Junior Subordinated Debentures, and it
shall not be necessary to make any holders of the Junior Subordinated Debentures
parties to any such proceedings.
SECTION 5.03. Application of Moneys Collected by Debenture
Trustee
Any moneys collected by the Debenture Trustee shall be applied
in the following order, at the date or dates fixed by the Debenture Trustee for
the distribution of such moneys, upon presentation of the Junior Subordinated
Debentures in respect of which moneys have been collected, and stamping thereon
the payment, if only partially paid, and upon surrender thereof if fully paid:
First: To the payment of costs and expenses of collection applicable
to the Junior Subordinated Debentures and all other amounts due to the
Debenture Trustee under Section 6.06;
Second: To the payment of all Senior Indebtedness of the Corporation
if and to the extent required by Article XV;
Third: In case the principal of the outstanding Junior
Subordinated Debentures in respect of which moneys have been collected shall not
have become due and be unpaid, to the payment of the amounts then due and unpaid
upon Junior Subordinated Debentures for principal of (and premium, if any) and
interest (including Compounded Interest and Additional Sums, if any) and
Liquidated Damages, if any, on the Junior Subordinated Debentures, in respect of
which or for the benefit of which money has been collected, ratably, without
preference of priority of any kind, according to the amounts due on such Junior
Subordinated Debentures for principal (and premium, if any) and interest,
respectively; and
Fourth: To the Corporation.
SECTION 5.04. Proceedings by Debentureholders.
No holder of any Junior Subordinated Debenture shall have any
right by virtue of or by availing of any provision of this Indenture to
institute any suit, action or proceeding in equity or at law upon or under or
with respect to this Indenture or for the appointment of a receiver or trustee,
or for any other remedy hereunder, unless such holder previously shall have
given to the Debenture Trustee written notice of a Debenture Event of Default
and of the continuance thereof with respect to the Junior Subordinated
Debentures specifying such Debenture Event of Default, as hereinbefore provided,
and unless also the holders of not less than 25% in aggregate principal amount
of the Junior Subordinated Debentures then outstanding shall have made written
request upon the Debenture Trustee to institute such action, suit or proceeding
in its own name as Debenture Trustee hereunder and shall have offered to the
Debenture Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the Debenture
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity shall have failed to institute any such action, suit or proceeding, it
being understood and intended, and being expressly covenanted by the taker and
holder of every Junior Subordinated Debenture with every other taker and holder
and the Debenture Trustee, that no one or more holders of Junior Subordinated
Debentures shall have any right in any manner whatever by virtue of or by
availing of any provision of this Indenture to affect, disturb or prejudice the
rights of any other holder of Junior Subordinated Debentures, or to obtain or
seek to obtain priority over or preference to any other such holder, or to
enforce any right under this Indenture, except in the manner herein provided and
for the equal, ratable and common benefit of all holders of Junior Subordinated
Debentures.
Notwithstanding any other provisions in this Indenture,
however, the right of any holder of any Junior Subordinated Debenture to receive
payment of the principal of (and premium, if any) and interest on (including
Compounded Interest and Additional Sums, if any) and Liquidated Damages, if any,
on such Junior Subordinated Debenture, on or after the same shall have become
due and payable, or to institute suit for the enforcement of any such payment,
shall not be impaired or affected without the consent of such holder and by
accepting a Junior Subordinated Debenture hereunder it is expressly understood,
intended and covenanted by the taker and holder of every Junior Subordinated
Debenture with every other such taker and holder and the Debenture Trustee, that
no one or more holders of Junior Subordinated Debentures shall have any right in
any manner whatsoever by virtue or by availing of any provision of this
Indenture to affect, disturb or prejudice the rights of the holders of any other
Junior Subordinated Debentures, or to obtain or seek to obtain priority over or
preference to any other such holder, or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all holders of Junior Subordinated Debentures. For the
protection and enforcement of the provisions of this Section, each and every
Debentureholder and the Debenture Trustee shall be entitled to such relief as
can be given either at law or in equity.
The Corporation and the Debenture Trustee acknowledge that
pursuant to the Declaration, the holders of Capital Securities are entitled, in
the circumstances and subject to the limitations set forth therein, to commence
a Direct Action with respect to any Debenture Event of Default under this
Indenture and the Junior Subordinated Debentures.
SECTION 5.05. Proceedings by Debenture Trustee.
In case a Debenture Event of Default occurs with respect to
Junior Subordinated Debentures and is continuing, the Debenture Trustee may in
its discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Debenture Trustee
shall deem most effectual to protect and enforce any of such rights, either by
suit in equity or by action at law or by proceeding in bankruptcy or otherwise,
whether for the specific enforcement of any covenant or agreement contained in
this Indenture or in aid of the exercise of any power granted in this Indenture,
or to enforce any other legal or equitable right vested in the Debenture Trustee
by this Indenture or by law.
SECTION 5.06. Remedies Cumulative and Continuing.
All powers and remedies given by this Article V to the
Debenture Trustee or to the Debentureholders shall, to the extent permitted by
law, be deemed cumulative and not exclusive of any other powers and remedies
available to the Debenture Trustee or the holders of the Junior Subordinated
Debentures, by judicial proceedings or otherwise, to enforce the performance or
observance of the covenants and agreements contained in this Indenture or
otherwise established with respect to the Junior Subordinated Debentures, and no
delay or omission of the Debenture Trustee or of any holder of any of the Junior
Subordinated Debentures to exercise any right or power accruing upon any
Debenture Event of Default occurring and continuing as aforesaid shall impair
any such right or power, or shall be construed to be a waiver of any such
default or an acquiescence therein; and, subject to the provisions of Section
5.04, every power and remedy given by this Article V or by law to the Debenture
Trustee or to the Debentureholders may be exercised from time to time, and as
often as shall be deemed expedient, by the Debenture Trustee or by the
Debentureholders.
. SECTION 5.07. Direction of Proceedings and Waiver of
Defaults by Majority of Debentureholders
The holders of a majority in aggregate principal amount of the
Junior Subordinated Debentures at the time outstanding shall have the right to
direct the time, method, and place of conducting any proceeding for any remedy
available to the Debenture Trustee, or exercising any trust or power conferred
on the Debenture Trustee; provided, however, that (subject to the provisions of
Section 6.01) the Debenture Trustee shall have the right to decline to follow
any such direction if the Debenture Trustee shall determine that the action so
directed would be unjustly prejudicial to the holders not taking part in such
direction or if the Debenture Trustee being advised by counsel determines that
the action or proceeding so directed may not lawfully be taken or if the
Debenture Trustee in good faith by its board of directors or trustees, executive
committee, or a trust committee of directors or trustees and/or Responsible
Officers shall determine that the action or proceedings so directed would
involve the Debenture Trustee in personal liability. Prior to any declaration
accelerating the maturity of the Junior Subordinated Debentures, the holders of
a majority in aggregate principal amount of the Junior Subordinated Debentures
at the time outstanding may on behalf of the holders of all of the Junior
Subordinated Debentures waive any past default or Debenture Event of Default and
its consequences except a default (a) in the payment of principal of (or
premium, if any, on) or interest on (including Compounded Interest and
Additional Sums, if any) or Liquidated Damages, if any, on any of the Junior
Subordinated Debentures (unless such default has been cured and a sum sufficient
to pay all matured installments of interest (including Compounded Interest and
Additional Sums, if any) (and premium, if any) and principal due otherwise than
by acceleration has been deposited with the Debenture Trustee) or (b) in respect
of covenants or provisions hereof which cannot be modified or amended without
the consent of the holder of each Junior Subordinated Debenture affected;
provided, however, that if the Junior Subordinated Debentures are held by the
Property Trustee, such waiver or modification to such waiver shall not be
effective until the holders of a majority in aggregate liquidation amount of
Trust Securities shall have consented to such waiver or modification to such
waiver; provided further, that if the consent of the holder of each outstanding
Junior Subordinated Debenture is required, such waiver shall not be effective
until each holder of the Trust Securities shall have consented to such waiver.
Upon any such waiver, the default covered thereby shall be deemed to be cured
for all purposes of this Indenture and the Corporation, the Debenture Trustee
and the holders of the Junior Subordinated Debentures shall be restored to their
former positions and rights hereunder, respectively; but no such waiver shall
extend to any subsequent or other default or impair any right consequent
thereon. Whenever any default or Debenture Event of Default hereunder shall have
been waived as permitted by this Section 5.07, said default or Debenture Event
of Default shall for all purposes of the Junior Subordinated Debentures and this
Indenture be deemed to have been cured and to be not continuing.
SECTION 5.08. Notice of Defaults.
(a) The Debenture Trustee shall, within 90 days after the
occurrence of a Default with respect to the Junior Subordinated Debentures
actually known to a Responsible Officer of the Debenture Trustee, mail to all
Debentureholders, as the names and addresses of such holders appear upon the
Debenture Register, notice of all Defaults known to the Debenture Trustee,
unless such Default shall have been cured before the giving of such notice (the
term "Default" for the purpose of this Section 5.08 being hereby defined to be
any of the events specified in clauses (a), (b), (c), (d) and (e) of Section
5.01, not including periods of grace, if any, provided for therein, and
irrespective of the giving of written notice specified in clause (c) of Section
5.01); and provided that, except in the case of default in the payment of the
principal of (or premium, if any, on) or interest (including Compounded Interest
or Additional Sums, if any) or Liquidated Damages, if any, on any of the Junior
Subordinated Debentures, the Debenture Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee,
or a trust committee of directors and/or Responsible Officers of the Debenture
Trustee in good faith determines that the withholding of such notice is in the
interests of the Debentureholders; and provided further, that in the case of any
default of the character specified in Section 5.01(c), no such notice to
Debentureholders shall be given until at least 60 days after the occurrence
thereof, but shall be given within 90 days after such occurrence.
(b) Within five Business Days after the occurrence of any
Debenture Event of Default actually known to a Responsible Officer of the
Debenture Trustee, the Debenture Trustee shall transmit notice of such Debenture
Event of Default to all Debentureholders as their names and addresses appear on
the Debenture Register, unless such Debenture Event of Default shall have been
cured or waived.
SECTION 5.09. Undertaking to Pay Costs.
All parties to this Indenture agree, and each holder of any
Junior Subordinated Debenture by his acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Debenture Trustee for any action taken or omitted by it as Debenture
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees and expenses, against any
party litigant in such suit, having due regard to the merits and good faith of
the claims or defenses made by such party litigant; but the provisions of this
Section 5.09 shall not apply to any suit instituted by the Debenture Trustee, to
any suit instituted by any Debentureholder, or group of Debentureholders,
holding in the aggregate more than 10% in aggregate principal amount of the
Junior Subordinated Debentures outstanding, or to any suit instituted by any
Debentureholder for the enforcement of the payment of the principal of (or
premium, if any) or interest (including Compounded Interest and Additional Sums,
if any) or Liquidated Damages, if any, on any Junior Subordinated Debenture
against the Corporation on or after the same shall have become due and payable.
ARTICLE VI
CONCERNING THE DEBENTURE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Debenture
Trustee.
With respect to the holders of the Junior Subordinated
Debentures issued hereunder, the Debenture Trustee, prior to the occurrence of a
Debenture Event of Default and after the curing or waiving of all Debenture
Events of Default which may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture. In case a
Debenture Event of Default has occurred (which has not been cured or waived),
the Debenture Trustee shall exercise such of the rights and powers vested in it
by this Indenture, and use the same degree of care and skill in their exercise,
as a prudent person would exercise or use under the circumstances in the conduct
of his or her own affairs.
No provision of this Indenture shall be construed to relieve
the Debenture Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that
(a) prior to the occurrence of a Debenture Event of
Default and after the curing or waiving of all
Debenture Events of Default which may have occurred,
(1) the duties and obligations of the Debenture
Trustee shall be determined solely by the
express provisions of this Indenture, and
the Debenture Trustee shall not be liable
except for the performance of such duties
and obligations as are specifically set
forth in this Indenture, and no implied
covenants or obligations shall be read into
this Indenture against the Debenture
Trustee; and
(2) in the absence of bad faith on the part of
the Debenture Trustee, the Debenture Trustee
may conclusively rely, as to the truth of
the statements and the correctness of the
opinions expressed therein, upon any
certificates or opinions furnished to the
Debenture Trustee and conforming to the
requirements of this Indenture; but, in the
case of any such certificates or opinions
which by any provision hereof are
specifically required to be furnished to the
Debenture Trustee, the Debenture Trustee
shall be under a duty to examine the same to
determine whether or not they conform to the
requirements of this Indenture;
(b) the Debenture Trustee shall not be liable for any
error of judgment made in good faith by a Responsible
Officer or Responsible Officers, unless it shall be
proved that the Debenture Trustee was negligent in
ascertaining the pertinent facts; and
(c) the Debenture 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 Debentureholders pursuant to Section 5.07,
relating to the time, method and place of conducting
any proceeding for any remedy available to the
Debenture Trustee, or exercising any trust or power
conferred upon the Debenture Trustee, under this
Indenture.
None of the provisions contained in this Indenture shall
require the Debenture Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if there is reasonable ground for
believing that the repayment of such funds or liability is not reasonably
assured to it under the terms of this Indenture or adequate indemnity against
such risk is not reasonably assured to it.
Whether or not therein expressly so provided, every provision
of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Debenture Trustee shall be subject to the provisions
of this Section.
SECTION 6.02. Reliance on Documents, Opinions, etc.
Except as otherwise provided in Section 6.01:
(a) the Debenture Trustee may rely and shall be protected
in acting or refraining from acting upon any
resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order,
bond, note, debenture or other paper or document
believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(b) any request, direction, order or demand of the
Corporation mentioned herein may be sufficiently
evidenced by an Officers' Certificate (unless other
evidence in respect thereof be herein specifically
prescribed); and any Board Resolution may be
evidenced to the Debenture Trustee by a copy thereof
certified by the Secretary or an Assistant Secretary
of the Corporation;
(c) the Debenture Trustee may consult with counsel of its
selection and any advice or Opinion of Counsel shall
be full and complete authorization and protection in
respect of any action taken or suffered omitted by it
hereunder in good faith and in accordance with such
advice or Opinion of Counsel;
(d) the Debenture Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by
this Indenture at the request, order or direction of
any of the Debentureholders, pursuant to the
provisions of this Indenture, unless such
Debentureholders shall have offered to the Debenture
Trustee reasonable and sufficient security or
indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby;
(e) the Debenture Trustee shall not be liable for any
action taken or omitted by it in good faith and
believed by it to be authorized or within the
discretion or rights or powers conferred upon it by
this Indenture; nothing contained herein shall,
however, relieve the Debenture Trustee of the
obligation, upon the occurrence of a Debenture Event
of Default (that has not been cured or waived), to
exercise such of the rights and powers vested in it
by this Indenture, and to use the same degree of care
and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the
conduct of his own affairs;
(f) the Debenture 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, coupon or other paper or
document, unless requested in writing to do so by the
holders of a majority in aggregate principal amount
of the outstanding Junior Subordinated Debentures;
provided, however, that if the payment within a
reasonable time to the Debenture ------- Trustee of
the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation
is, in the opinion of the Debenture Trustee, not
reasonably assured to the Debenture Trustee by the
security afforded to it by the terms of this
Indenture, the Debenture Trustee may require
reasonable indemnity against such expense or
liability as a condition to so proceeding;
(g) the Debenture Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder
either directly or by or through agents (including
any Authenticating Agent) or attorneys, and the
Debenture Trustee shall not be responsible for any
misconduct or negligence on the part of any such
agent or attorney appointed by it with due care;
(h) the Debenture Trustee shall not be charged with
knowledge of any Default or Debenture Event of
Default with respect to the Junior Subordinated
Debentures unless (1) such default is a default under
Sections 5.01(a) (other than a default with respect
to the payment of Compounded Interest, Liquidated
Damages or Additional Sums) and 5.01(b) of the
Indenture, (2) a Responsible Officer shall have
actual knowledge of such Default or Debenture Event
of Default or (3) written notice of such Default or
Debenture Event of Default shall have been given to
the Debenture Trustee by the Corporation or any other
obligor on the Junior Subordinated Debentures or by
any holder of the Junior Subordinated Debentures and
such notice references the Junior Subordinated
Debentures and this Indenture; and
(i) the Debenture Trustee shall not be liable for any
action taken, suffered or omitted by it in good
faith, without negligence or willful misconduct and
believed by it to be authorized or within the
discretion or rights or powers conferred upon it by
this Indenture.
SECTION 6.03. No Responsibility for Recitals, etc.
The recitals contained herein and in the Junior Subordinated
Debentures (except in the certificate of authentication of the Debenture Trustee
or the Authenticating Agent) shall be taken as the statements of the
Corporation, and the Debenture Trustee and the Authenticating Agent assume no
responsibility for the correctness of the same. The Debenture Trustee and the
Authenticating Agent make no representations as to the validity or sufficiency
of this Indenture or of the Junior Subordinated Debentures. The Debenture
Trustee and the Authenticating Agent shall not be accountable for the use or
application by the Corporation of any Junior Subordinated Debentures or the
proceeds of any Junior Subordinated Debentures authenticated and made available
for delivery by the Debenture Trustee or the Authenticating Agent in conformity
with the provisions of this Indenture.
SECTION 6.04. Debenture Trustee, Authenticating Agent,
Paying Agents, Transfer Agents or . Registrar May Own Junior Subordinated
Debentures
The Debenture Trustee or any Authenticating Agent or any
paying agent or any transfer agent or any Debenture registrar for the Junior
Subordinated Debentures, in its individual or any other capacity, may become the
owner or pledgee of Junior Subordinated Debentures with the same rights it would
have if it were not Debenture Trustee, Authenticating Agent, paying agent,
transfer agent or Debenture registrar for the Junior Subordinated Debentures.
SECTION 6.05. Moneys to be Held in Trust.
Subject to the provisions of Section 11.04, all moneys
received by the Debenture Trustee or any paying agent shall, until used or
applied as herein provided, be held in trust for the purpose for which they were
received, but need not be segregated from other funds except to the extent
required by law. The Debenture Trustee and any paying agent shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed in writing with the Corporation. So long as no Debenture Event of Default
shall have occurred and be continuing, all interest allowed on any such moneys
shall be paid from time to time upon the written order of the Corporation,
signed by the Chairman of the Board of Directors, the President or a Vice
President or the Treasurer or an Assistant Treasurer of the Corporation.
SECTION 6.06. Compensation and Expenses of Debenture
Trustee.
The Corporation, as issuer of Junior Subordinated Debentures
under this Indenture, covenants and agrees to pay to the Debenture Trustee from
time to time, and the Debenture Trustee shall be entitled to, such compensation
as shall be agreed to in writing between the Corporation and the Debenture
Trustee (which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust), and the Corporation will pay or
reimburse the Debenture Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Debenture Trustee in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all persons not regularly in its employ) except any such expense, disbursement
or advance as may arise from its negligence or bad faith. The Corporation also
covenants to indemnify each of the Debenture Trustee or any predecessor
Debenture Trustee (and its officers, agents, directors and employees) for, and
to hold it harmless against, any and all loss, damage, claim, liability or
expense including taxes (other than taxes based on the income of the Debenture
Trustee) incurred without negligence or bad faith on the part of the Debenture
Trustee and arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim of liability in the premises. The obligations of the
Corporation under this Section 6.06 to compensate and indemnify the Debenture
Trustee and to pay or reimburse the Debenture Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder.
Such additional indebtedness shall be secured by a lien prior to that of the
Junior Subordinated Debentures upon all property and funds held or collected by
the Debenture Trustee as such, except funds held in trust for the benefit of the
holders of particular Junior Subordinated Debentures.
When the Debenture Trustee incurs expenses or renders services
in connection with a Debenture Event of Default specified in Section 5.01(d) or
Section 5.01(e), the expenses (including the reasonable charges and expenses of
its counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the resignation
or removal of the Debenture Trustee and the defeasance or other termination of
this Indenture.
SECTION 6.07. Officers' Certificate as Evidence.
Except as otherwise provided in Sections 6.01 and 6.02,
whenever in the administration of the provisions of this Indenture the Debenture
Trustee shall deem it necessary or desirable that a matter be proved or
established prior to taking or omitting any action hereunder, such matter
(unless other evidence in respect thereof is herein specifically prescribed)
may, in the absence of negligence or bad faith on the part of the Debenture
Trustee, be deemed to be conclusively proved and established by an Officers'
Certificate delivered to the Debenture Trustee, and such certificate, in the
absence of negligence or bad faith on the part of the Debenture Trustee, shall
be full warrant to the Debenture Trustee for any action taken or omitted by it
under the provisions of this Indenture upon the faith thereof.
SECTION 6.08. Conflicting Interest of Debenture Trustee.
If the Debenture Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Debenture Trustee and the Corporation shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.
SECTION 6.09. Eligibility of Debenture Trustee.
The Debenture Trustee hereunder shall at all times be a
corporation organized and doing business under the laws of the United States of
America or any state or territory thereof or of the District of Columbia, or a
corporation or other Person permitted to act as trustee by the Commission
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least 50 million U.S. dollars ($50,000,000) and
subject to supervision or examination by federal, state, territorial, or
District of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 6.09 the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published.
The Corporation may not, nor may any Person directly or
indirectly controlling, controlled by, or under common control with the
Corporation, serve as Debenture Trustee.
In case at any time the Debenture Trustee shall cease to be
eligible in accordance with the provisions of this Section 6.09, the Debenture
Trustee shall resign immediately in the manner and with the effect specified in
Section 6.10.
SECTION 6.10. Resignation or Removal of Debenture Trustee.
(a) The Debenture Trustee, or any trustee or trustees
hereafter appointed, may at any time resign by giving
written notice of such resignation to the Corporation
and by mailing notice thereof to the holders of the
Junior Subordinated Debentures at their addresses as
they shall appear on the Debenture Register. Upon
receiving such notice of resignation, the Corporation
shall promptly appoint a successor trustee or
trustees by written instrument, in duplicate, one
copy of which instrument shall be delivered to the
resigning Debenture Trustee and one copy to the
successor trustee. If no successor trustee shall
have been so appointed and have accepted appointment
within 30 days after the mailing of such notice of
resignation to the affected Debentureholders, the
resigning Debenture Trustee may petition any court of
competent jurisdiction for the appointment of a
successor trustee, or any Debentureholder who has
been a bona fide holder of a Junior Subordinated
Debenture for at least six months may, subject to the
provisions of Section 5.09, on behalf of himself and
all others similarly situated, petition any such
court for the appointment of a successor trustee.
Such court may thereupon, after such notice, if any,
as it may deem proper and prescribe, appoint a
successor trustee.
(b) In case at any time any of the following shall occur:
(1) the Debenture Trustee shall fail to comply
with the provisions of Section 6.08 after
written request therefor by the Corporation
or by any Debentureholder who has been a
bona fide holder of Junior Subordinated
Debentures for at least six months, or
(2) the Debenture Trustee shall cease to be
eligible in accordance with the provisions
of Section 6.09 and shall fail to resign
after written request therefor by the
Corporation or by any such Debentureholder,
or
(3) the Debenture Trustee shall become incapable
of acting, or shall be adjudged a bankrupt
or insolvent, or a receiver of the Debenture
Trustee or of its property shall be
appointed, or any public officer shall take
charge or control of the Debenture Trustee
or of its property or affairs for the
purpose of rehabilitation, conservation or
liquidation,
then, in any such case, the Corporation may remove
the Debenture Trustee and appoint a successor trustee
by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Debenture
Trustee so removed and one copy to the successor
trustee, or, subject to the provisions of Section
5.09, any Debentureholder who has been a bona fide
holder of a Junior Subordinated Debenture for at
least six months may, on behalf of himself and all
others similarly situated, petition any court of
competent jurisdiction for the removal of the
Debenture Trustee and the appointment of a successor
trustee. Such court may thereupon, after such notice,
if any, as it may deem proper and prescribe, remove
the Debenture Trustee and appoint a successor
trustee.
(c) The holders of a majority in aggregate principal
amount of the Junior Subordinated Debentures at the
time outstanding may at any time remove the Debenture
Trustee and nominate a successor trustee, which shall
be deemed appointed as successor trustee unless
within 10 days after such nomination the Corporation
objects thereto, or if no successor trustee shall
have been so appointed and shall have accepted
appointment within 30 days after such removal, in
which case the Debenture Trustee so removed or any
Debentureholder, upon the terms and conditions and
otherwise as in subsection (a) of this Section 6.10
provided, may petition any court of competent
jurisdiction for an appointment of a successor
trustee.
(d) Any resignation or removal of the Debenture Trustee
and appointment of a successor trustee pursuant to
any of the provisions of this Section 6.10 shall
become effective upon acceptance of appointment by
the successor trustee as provided in Section 6.11.
SECTION 6.11. Acceptance by Successor Debenture Trustee.
Any successor trustee appointed as provided in Section 6.10
shall execute, acknowledge and deliver to the Corporation and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the retiring trustee shall become effective and such
successor trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as trustee herein; but,
nevertheless, on the written request of the Corporation or of the successor
trustee, the trustee ceasing to act shall, upon payment of any amounts then due
it pursuant to the provisions of Section 6.06, execute and deliver an instrument
transferring to such successor trustee all the rights and powers of the trustee
so ceasing to act and shall duly assign, transfer and deliver to such successor
trustee all property and money held by such retiring trustee thereunder. Upon
request of any such successor trustee, the Corporation shall execute any and all
instruments in writing for more fully and certainly vesting in and confirming to
such successor trustee all such rights and powers. Any trustee ceasing to act
shall, nevertheless, retain a lien upon all property or funds held or collected
by such trustee to secure any amounts then due it pursuant to the provisions of
Section 6.06.
No successor trustee shall accept appointment as provided in
this Section 6.11 unless at the time of such acceptance such successor trustee
shall be qualified under the provisions of Section 6.08 and eligible under the
provisions of Section 6.09.
Upon acceptance of appointment by a successor trustee as
provided in this Section 6.11, the Corporation shall mail notice of the
succession of such trustee hereunder to the holders of Junior Subordinated
Debentures at their addresses as they shall appear on the Debenture Register. If
the Corporation fails to mail such notice within 10 days after the acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Corporation.
SECTION 6.12. Succession by Merger, etc.
Any corporation into which the Debenture Trustee may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Debenture Trustee
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of the Debenture Trustee, shall be the successor of
the Debenture Trustee hereunder without the execution or filing of any paper or
any further act on the part of any of the parties hereto.
In case at the time such successor to the Debenture Trustee
shall succeed to the trusts created by this Indenture any Junior Subordinated
Debentures shall have been authenticated but not delivered, any such successor
to the Debenture Trustee may adopt the certificate of authentication of any
predecessor trustee, and deliver such Junior Subordinated Debentures so
authenticated; and in case at that time any of the Junior Subordinated
Debentures shall not have been authenticated, any successor to the Debenture
Trustee may authenticate such Junior Subordinated Debentures either in the name
of any predecessor hereunder or in the name of the successor trustee; and in all
such cases such certificates shall have the full force which the Junior
Subordinated Debentures or this Indenture elsewhere provides that the
certificate of the Debenture Trustee shall have; provided, however, that the
right to adopt the certificate of authentication of any predecessor Debenture
Trustee or authenticate Junior Subordinated Debentures in the name of any
predecessor Debenture Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.
. SECTION 6.13. Limitation on Rights of Debenture Trustee
as a Creditor
The Debenture Trustee shall comply with Section 311(a) of the
Trust Indenture Act, excluding any creditor relationship described in Section
311(b) of the Trust Indenture Act. A Debenture Trustee who has resigned or been
removed shall be subject to Section 311(a) of the Trust Indenture Act to the
extent included therein.
SECTION 6.14. Authenticating Agents.
There may be one or more Authenticating Agents appointed by
the Debenture Trustee upon the request of the Corporation with power to act on
its behalf and subject to its direction in the authentication and delivery of
Junior Subordinated Debentures issued upon exchange or transfer thereof as fully
to all intents and purposes as though any such Authenticating Agent had been
expressly authorized to authenticate and deliver Junior Subordinated Debentures;
provided, that the Debenture Trustee shall have no liability to the Corporation
for any acts or omissions of the Authenticating Agent with respect to the
authentication and delivery of Junior Subordinated Debentures. Any such
Authenticating Agent shall at all times be a corporation organized and doing
business under the laws of the United States or of any state or territory
thereof or of the District of Columbia authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of at least
$5,000,000 and being subject to supervision or examination by federal, state,
territorial or District of Columbia authority. If such corporation publishes
reports of condition at least annually pursuant to law or the requirements of
such authority, then for the purposes of this Section 6.14 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. If at
any time an Authenticating Agent shall cease to be eligible in accordance with
the provisions of this Section, it shall resign immediately in the manner and
with the effect herein specified in this Section.
Any corporation into which any Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, consolidation or conversion to which any
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate trust business of any Authenticating Agent, shall be the successor of
such Authenticating Agent hereunder, if such successor corporation is otherwise
eligible under this Section 6.14 without the execution or filing of any paper or
any further act on the part of the parties hereto or such Authenticating Agent.
Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Debenture Trustee and to the Corporation.
The Debenture Trustee may at any time terminate the agency of any Authenticating
Agent by giving written notice of termination to such Authenticating Agent and
to the Corporation. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible under this Section 6.14, the Debenture Trustee may, and upon the
request of the Corporation shall, promptly appoint a successor Authenticating
Agent eligible under this Section 6.14, shall give written notice of such
appointment to the Corporation and shall mail notice of such appointment to all
Debentureholders as the names and addresses of such holders appear on the
Debenture Register. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all rights, powers, duties and
responsibilities of its predecessor hereunder, with like effect as if originally
named as Authenticating Agent herein.
The Corporation, as borrower, agrees to pay to any
Authenticating Agent from time to time reasonable compensation for its services.
Any Authenticating Agent shall have no responsibility or liability for any
action taken by it as such in accordance with the directions of the Debenture
Trustee.
ARTICLE VII
CONCERNING THE DEBENTUREHOLDERS
SECTION 7.01. Action by Junior Subordinated
Debentureholders
Whenever in this Indenture it is provided that the holders of
a specified percentage in aggregate principal amount of the Junior Subordinated
Debentures may take any action (including the making of any demand or request,
the giving of any notice, consent or waiver or the taking of any other action),
the fact that at the time of taking any such action the holders of such
specified percentage have joined therein may be evidenced (a) by any instrument
or any number of instruments of similar tenor executed by such Debentureholders
in person or by agent or proxy appointed in writing, or (b) by the record of
such holders of Junior Subordinated Debentures voting in favor thereof at any
meeting of such Debentureholders duly called and held in accordance with the
provisions of Article VIII, or (c) by a combination of such instrument or
instruments and any such record of such a meeting of such Debentureholders.
If the Corporation shall solicit from the Debentureholders any
request, demand, authorization, direction, notice, consent, waiver or other
action, the Corporation may, at its option, as evidenced by an Officers'
Certificate, fix in advance a record date for the determination of
Debentureholders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other action, but the Corporation shall
have no obligation to do so. If such a record date is fixed, such request,
demand, authorization, direction, notice, consent, waiver or other action may be
given before or after the record date, but only the Debentureholders of record
at the close of business on the record date shall be deemed to be
Debentureholders for the purposes of determining whether Debentureholders of the
requisite proportion of outstanding Junior Subordinated Debentures have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other action, and for that purpose the
outstanding Junior Subordinated Debentures shall be computed as of the record
date; provided, however, that no such authorization, agreement or consent by
such Debentureholders on the record date shall be deemed effective unless it
shall become effective pursuant to the provisions of this Indenture not later
than six months after the record date.
SECTION 7.02. Proof of Execution by Debentureholders.
Subject to the provisions of Section 6.01, 6.02 and 8.05,
proof of the execution of any instrument by a Debentureholder or his agent or
proxy shall be sufficient if made in accordance with such reasonable rules and
regulations as may be prescribed by the Debenture Trustee or in such manner as
shall be satisfactory to the Debenture Trustee. The ownership of Junior
Subordinated Debentures shall be proved by the Debenture Register or by a
certificate of the Debenture registrar for the Junior Subordinated Debentures.
The Debenture Trustee may require such additional proof of any matter referred
to in this Section as it shall deem necessary.
The record of any Debentureholders' meeting shall be proved
in the manner provided in Section 8.06.
SECTION 7.03. Who Are Deemed Absolute Owners.
Prior to due presentment for registration of transfer of any
Junior Subordinated Debenture, the Corporation, the Debenture Trustee, any
Authenticating Agent, any paying agent, any transfer agent and any Debenture
registrar for the Junior Subordinated Debentures may deem the person in whose
name such Junior Subordinated Debenture shall be registered upon the Debenture
Register to be, and may treat him as, the absolute owner of such Junior
Subordinated Debenture (whether or not such Junior Subordinated Debenture shall
be overdue) for the purpose of receiving payment of or on account of the
principal of and premium, if any, and (subject to Section 2.06) interest on such
Junior Subordinated Debenture and for all other purposes; and neither the
Corporation nor the Debenture Trustee nor any Authenticating Agent nor any
paying agent nor any transfer agent nor any Debenture registrar for the Junior
Subordinated Debentures shall be affected by any notice to the contrary. All
such payments so made to any holder for the time being or upon his order shall
be valid, and, to the extent of the sum or sums so paid, effectual to satisfy
and discharge the liability for moneys payable upon any such Junior Subordinated
Debenture.
. SECTION 7.04. Junior Subordinated Debentures Owned by
Corporation Deemed Not Outstanding
In determining whether the holders of the requisite aggregate
principal amount of Junior Subordinated Debentures have concurred in any
direction, consent or waiver under this Indenture, Junior Subordinated
Debentures which are owned by the Corporation or any other obligor on the Junior
Subordinated Debentures or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Corporation or
any other obligor on the Junior Subordinated Debentures shall be disregarded and
deemed not to be outstanding for the purpose of any such determination; provided
that for the purposes of determining whether the Debenture Trustee shall be
protected in relying on any such direction, consent or waiver, only Junior
Subordinated Debentures which a Responsible Officer of the Debenture Trustee
actually knows are so owned shall be so disregarded. Junior Subordinated
Debentures so owned which have been pledged in good faith may be regarded as
outstanding for the purposes of this Section 7.04 if the pledgee shall establish
to the satisfaction of the Debenture Trustee the pledgee's right to vote such
Junior Subordinated Debentures and that the pledgee is not the Corporation or
any such other obligor or Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Corporation or
any such other obligor. In the case of a dispute as to such right, any decision
by the Debenture Trustee taken upon the advice of counsel shall be full
protection to the Debenture Trustee.
. SECTION 7.05. Revocation of Consents; Future Holders Bound
At any time prior to (but not after) the evidencing to the
Debenture Trustee, as provided in Section 7.01, of the taking of any action by
the holders of the percentage in aggregate principal amount of the Junior
Subordinated Debentures specified in this Indenture in connection with such
action, any holder of a Junior Subordinated Debenture (or any Junior
Subordinated Debenture issued in whole or in part in exchange or substitution
therefor), subject to Section 7.01, the serial number of which is shown by the
evidence to be included in the group of Junior Subordinated Debentures the
holders of which have consented to such action may, by filing written notice
with the Debenture Trustee at its Principal Office and upon proof of holding as
provided in Section 7.02, revoke such action so far as concerns such Junior
Subordinated Debenture (or so far as concerns the principal amount represented
by any exchanged or substituted Junior Subordinated Debenture). Except as
aforesaid any such action taken by the holder of any Junior Subordinated
Debenture shall be conclusive and binding upon such holder and upon all future
holders and owners of such Junior Subordinated Debenture, and of any Junior
Subordinated Debenture issued in exchange or substitution therefor, irrespective
of whether or not any notation in regard thereto is made upon such Junior
Subordinated Debenture or any Junior Subordinated Debenture issued in exchange
or substitution therefor.
ARTICLE VIII
DEBENTUREHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings.
A meeting of Debentureholders may be called at any time and
from time to time pursuant to the provisions of this Article VIII for any of the
following purposes:
(a) to give any notice to the Corporation or to the
Debenture Trustee, or to give any directions to the
Debenture Trustee, or to consent to the waiving of
any default hereunder and its consequences, or to
take any other action authorized to be taken by
Debentureholders pursuant to any of the provisions of
Article V;
(b) to remove the Debenture Trustee and nominate a
successor trustee pursuant to the provisions of
Article VI;
(c) to consent to the execution of an indenture or
indentures supplemental hereto pursuant to the
provisions of Section 9.02; or
(d) to take any other action authorized to be taken by or
on behalf of the holders of any specified aggregate
principal amount of such Junior Subordinated
Debentures under any other provision of this
Indenture or under applicable law.
SECTION 8.02. Call of Meetings by Debenture Trustee.
The Debenture Trustee, at the expense of the Corporation, may
at any time call a meeting of Debentureholders to take any action specified in
Section 8.01, to be held at such time and at such place in New York, New York,
as the Debenture Trustee shall determine. Notice of every meeting of the
Debentureholders, setting forth the time and the place of such meeting and in
general terms the action proposed to be taken at such meeting, shall be mailed
to holders of Junior Subordinated Debentures at their addresses as they shall
appear on the Securities Register. Such notice shall be mailed not less than 20
nor more than 180 days prior to the date fixed for the meeting.
. SECTION 8.03. Call of Meetings by Corporation or
Debentureholders
In case at any time the Corporation, pursuant to a resolution
of the Board of Directors, or the holders of at least 10% in aggregate principal
amount of the Junior Subordinated Debentures then outstanding, shall have
requested the Debenture Trustee to call a meeting of Debentureholders, by
written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Debenture Trustee shall not have mailed the notice
of such meeting within 20 days after receipt of such request, then the
Corporation or such Debentureholders may determine the time and the place in New
York, New York for such meeting and may call such meeting to take any action
authorized in Section 8.01, by mailing notice thereof as provided in Section
8.02.
SECTION 8.04. Qualifications for Voting.
To be entitled to vote at any meeting of Debentureholders a
Person shall (a) be a holder of one or more Junior Subordinated Debentures or
(b) a Person appointed by an instrument in writing as proxy by a holder of one
or more Junior Subordinated Debentures. The only Persons who shall be entitled
to be present or to speak at any meeting of Debentureholders shall be the
Persons entitled to vote at such meeting and their counsel and any
representatives of the Debenture Trustee and its counsel and any representatives
of the Corporation and its counsel.
SECTION 8.05. Regulations.
Notwithstanding any other provisions of this Indenture, the
Debenture Trustee may make such reasonable regulations as it may deem advisable
for any meeting of Debentureholders, in regard to proof of the holding of Junior
Subordinated Debentures and of the appointment of proxies, and in regard to the
appointment and duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it shall think fit.
The Debenture Trustee shall, by an instrument in writing,
appoint a temporary chairman of the meeting, unless the meeting shall have been
called by the Corporation or by Debentureholders as provided in Section 8.03, in
which case the Corporation or the Debentureholders calling the meeting, as the
case may be, shall in like manner appoint a temporary chairman. A permanent
chairman and a permanent secretary of the meeting shall be elected by majority
vote of the meeting.
Subject to the provisions of Section 8.04, at any meeting each
holder of Junior Subordinated Debentures or proxy therefor shall be entitled to
one vote for each $1,000 principal amount of Junior Subordinated Debentures held
or represented by him; provided, however, that no vote shall be cast or counted
at any meeting in respect of any Junior Subordinated Debenture challenged as not
outstanding and ruled by the chairman of the meeting to be not outstanding. The
chairman of the meeting shall have no right to vote other than by virtue of
Junior Subordinated Debentures held by him or instruments in writing as
aforesaid duly designating him as the person to vote on behalf of other
Debentureholders. Any meeting of Debentureholders duly called pursuant to the
provisions of Section 8.02 or 8.03 may be adjourned from time to time by a
majority of those present, and the meeting may be held as so adjourned without
further notice.
SECTION 8.06. Voting.
The vote upon any resolution submitted to any meeting of
holders of Junior Subordinated Debentures shall be by written ballots on which
shall be subscribed the signatures of such holders or of their representatives
by proxy and the serial number or numbers of the Junior Subordinated Debentures
held or represented by them. The permanent chairman of the meeting shall appoint
two inspectors of votes who shall count all votes cast at the meeting for or
against any resolution and who shall make and file with the secretary of the
meeting their verified written reports in triplicate of all votes cast at the
meeting. A record in duplicate of the proceedings of each meeting of
Debentureholders shall be prepared by the secretary of the meeting and there
shall be attached to said record the original reports of the inspectors of votes
on any vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was mailed as provided in Section 8.02. The record
shall show the serial numbers of the Junior Subordinated Debentures voting in
favor of or against any resolution. The record shall be signed and verified by
the affidavits of the permanent chairman and secretary of the meeting and one of
the duplicates shall be delivered to the Corporation and the other to the
Debenture Trustee to be preserved by the Debenture Trustee, the latter to have
attached thereto the ballots voted at the meeting. The holders of the Series A
Capital Securities and the Series B Capital Securities shall vote for all
purposes as a single class.
Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
ARTICLE IX
AMENDMENTS
. SECTION 9.01. Without Consent of Debentureholders
The Corporation and the Debenture Trustee may from time to
time and at any time amend the Indenture, without the consent of the
Debentureholders, for one or more of the following purposes:
(a) to evidence the succession of another Person to the
Corporation, or successive successions, and the
assumption by the successor Person of the covenants,
agreements and obligations of the Corporation
pursuant to Article X hereof;
(b) to add to the covenants of the Corporation such
further covenants, restrictions or conditions for the
protection of the Debentureholders as the Board of
Directors and the Debenture Trustee shall consider to
be for the protection of the Debentureholders, and to
make the occurrence, or the occurrence and
continuance, of a default in any of such additional
covenants, restrictions or conditions a default or a
Debenture Event of Default permitting the enforcement
of all or any of the remedies provided in this
Indenture as herein set forth; provided, however,
that in respect of any such additional covenant,
restriction or condition such amendment may provide
for a particular period of grace after default (which
period may be shorter or longer than that allowed in
the case of other defaults) or may provide for an
immediate enforcement upon such default or may limit
the remedies available to the Debenture Trustee upon
such default;
(c) to provide for the issuance under this Indenture of
Junior Subordinated Debentures in coupon form
(including Junior Subordinated Debentures registrable
as to principal only) and to provide for
exchangeability of such Junior Subordinated
Debentures with the Junior Subordinated Debentures
issued hereunder in fully registered form and to make
all appropriate changes for such purpose;
(d) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental
indenture which may be defective or inconsistent with
any other provision contained herein or in any
supplemental indenture, or to make such other
provisions in regard to matters or questions arising
under this Indenture; provided that any such action
shall not materially adversely affect the interests
of the holders of the Junior Subordinated Debentures;
(e) to evidence and provide for the acceptance of
appointment hereunder by a successor trustee with
respect to the Junior Subordinated Debentures;
(f) to make provision for transfer procedures,
certification, book-entry provisions, the form of
restricted securities legends, if any, to be placed
on Junior Subordinated Debentures, and all other
matters required pursuant to Section 2.07 or
otherwise necessary, desirable or appropriate in
connection with the issuance of Junior Subordinated
Debentures to holders of Capital Securities in the
event of a distribution of Junior Subordinated
Debentures by the Trust following a Dissolution
Event; provided that any such action shall not
materially adversely affect the interests of the
holders of the Junior Subordinated Debentures;
(g) to qualify or maintain qualification of this
Indenture under the Trust Indenture Act; or
(h) to make any change that does not adversely affect the
rights of any Debentureholder in any material
respect.
The Debenture Trustee is hereby authorized to join with the
Corporation in the execution of any supplemental indenture to effect such
amendment, to make any further appropriate agreements and stipulations which may
be therein contained and to accept the conveyance, transfer and assignment of
any property thereunder, but the Debenture Trustee shall not be obligated to,
but may in its discretion, enter into any such supplemental indenture which
affects the Debenture Trustee's own rights, duties or immunities under this
Indenture or otherwise.
Any amendment to the Indenture authorized by the provisions of
this Section 9.01 may be executed by the Corporation and the Debenture Trustee
without the consent of the holders of any of the Junior Subordinated Debentures
at the time outstanding, notwithstanding any of the provisions of Section 9.02.
SECTION 9.02. With Consent of Debentureholders.
With the consent (evidenced as provided in Section 7.01) of
the holders of a majority in aggregate principal amount of the Junior
Subordinated Debentures at the time outstanding, the Corporation, when
authorized by a Board Resolution, and the Debenture Trustee may from time to
time and at any time amend the Indenture for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the holders of the
Junior Subordinated Debentures; provided, however, that no such amendment shall,
without the consent of the holders of each Junior Subordinated Debenture then
outstanding and affected thereby (i) change the Stated Maturity Date of any
Junior Subordinated Debenture, or reduce the rate or extend the time of payment
of interest thereon (except as contemplated by Article XVI), or reduce the
principal amount thereof, or reduce any amount payable on prepayment thereof, or
make the principal thereof or any interest or premium thereon payable in any
coin or currency other than that provided in the Junior Subordinated Debentures,
or impair or affect the right of any Debentureholder to institute suit for
payment thereof, or (ii) reduce the aforesaid percentage of Junior Subordinated
Debentures, the holders of which are required to consent to any such amendment
to the Indenture, provided, however, that if the Junior Subordinated Debentures
are held by the Trust, such amendment shall not be effective until the holders
of a majority in liquidation amount of Trust Securities shall have consented to
such amendment; provided, further, that if the consent of the holder of each
outstanding Junior Subordinated Debenture is required, such amendment shall not
be effective until each holder of the Trust Securities shall have consented to
such amendment.
Upon the request of the Corporation accompanied by a copy of a
resolution of the Board of Directors certified by its Secretary or Assistant
Secretary authorizing the execution of any supplemental indenture affecting such
amendment, and upon the filing with the Debenture Trustee of evidence of the
consent of Debentureholders as aforesaid, the Debenture Trustee shall join with
the Corporation in the execution of such supplemental indenture unless such
supplemental indenture affects the Debenture Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Debenture
Trustee may in its discretion, but shall not be obligated to, enter into such
supplemental indenture.
Promptly after the execution by the Corporation and the
Debenture Trustee of any supplemental indenture pursuant to the provisions of
this Section, the Debenture Trustee shall transmit by mail, first class postage
prepaid, a notice, prepared by, and at the expense of, the Corporation, setting
forth in general terms the substance of such supplemental indenture, to the
Debentureholders as their names and addresses appear upon the Debenture
Register. Any failure of the Debenture Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture.
It shall not be necessary for the consent of the
Debentureholders under this Section 9.02 to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.
. SECTION 9.03. Compliance with Trust Indenture Act;
Effect of Supplemental Indentures
Any supplemental indenture executed pursuant to the provisions
of this Article IX shall comply with the Trust Indenture Act. Upon the execution
of any supplemental indenture pursuant to the provisions of this Article IX,
this Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Debenture Trustee, the Corporation
and the holders of Junior Subordinated Debentures shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.04. Notation on Junior Subordinated Debentures.
Junior Subordinated Debentures authenticated and delivered
after the execution of any supplemental indenture affecting such series pursuant
to the provisions of this Article IX may bear a notation in form approved by the
Debenture Trustee as to any matter provided for in such supplemental indenture.
If the Corporation or the Debenture Trustee shall so determine, new Junior
Subordinated Debentures so modified as to conform, in the opinion of the
Debenture Trustee and the Board of Directors, to any modification of this
Indenture contained in any such supplemental indenture may be prepared and
executed by the Corporation, authenticated by the Debenture Trustee or the
Authenticating Agent and delivered in exchange for the Junior Subordinated
Debentures then outstanding.
SECTION 9.05. Evidence of Compliance of Supplemental
Indenture to be Furnished to Debenture
. Trustee
The Debenture Trustee, subject to the provisions of Sections
6.01 and 6.02, may receive, and shall be fully protected in relying upon, in
addition to the document required by Section 13.06, an Officers' Certificate and
an Opinion of Counsel as conclusive evidence that any supplemental indenture
executed pursuant hereto complies with the requirements of this Article IX.
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
. SECTION 10.01. Corporation May Consolidate, etc., on
Certain Terms
Nothing contained in this Indenture or in any of the Junior
Subordinated Debentures shall prevent any consolidation or merger of the
Corporation with or into any other Person (whether or not affiliated with the
Corporation, as the case may be), or successive consolidations or mergers in
which the Corporation or its successor or successors, as the case may be, shall
be a party or parties, or shall prevent any sale, conveyance, transfer or lease
of the property of the Corporation, or its successor or successors as the case
may be, as an entirety, or substantially as an entirety, to any other Person
(whether or not affiliated with the Corporation, or its successor or successors,
as the case may be) authorized to acquire and operate the same; provided, that
(a) the Corporation is the surviving Person, or the Person formed by or
surviving any such consolidation or merger (if other than the Corporation) or to
which such sale, conveyance, transfer or lease of property is made is a Person
organized and existing under the laws of the United States or any State thereof
or the District of Columbia, and (b) upon any such consolidation, merger, sale,
conveyance, transfer or lease, the due and punctual payment of the principal of
(and premium, if any) and interest on the Junior Subordinated Debentures
according to their tenor and the due and punctual performance and observance of
all the covenants and conditions of this Indenture to be kept or performed by
the Corporation shall be expressly assumed, by supplemental indenture (which
shall conform to the provisions of the Trust Indenture Act as then in effect)
satisfactory in form to the Debenture Trustee executed and delivered to the
Debenture Trustee by the Person formed by such consolidation, or into which the
Corporation shall have been merged, or by the Person which shall have acquired
such property, as the case may be, and (c) after giving effect to such
consolidation, merger, sale, conveyance, transfer or lease, no Default or
Debenture Event of Default shall have occurred and be continuing.
. SECTION 10.02. Successor Corporation to be Substituted for
Corporation
In case of any such consolidation, merger, conveyance or
transfer and upon the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Debenture Trustee and satisfactory in
form to the Debenture Trustee, of the obligation of due and punctual payment of
the principal of (and premium, if any, on) and interest on all of the Junior
Subordinated Debentures and the due and punctual performance and observance of
all of the covenants and conditions of this Indenture to be performed or
observed by the Corporation, such successor Person shall succeed to and be
substituted for the Corporation, with the same effect as if it had been named
herein as the party of the first part, and the Corporation thereupon shall be
relieved of any further liability or obligation hereunder or upon the Junior
Subordinated Debentures. Such successor Person thereupon may cause to be signed,
and may issue either in its own name or in the name of MainStreet BankGroup
Incorporated, any or all of the Junior Subordinated Debentures issuable
hereunder which theretofore shall not have been signed by the Corporation and
delivered to the Debenture Trustee or the Authenticating Agent; and, upon the
order of such successor Person instead of the Corporation and subject to all the
terms, conditions and limitations in this Indenture prescribed, the Debenture
Trustee or the Authenticating Agent shall authenticate and deliver any Junior
Subordinated Debentures which previously shall have been signed and delivered by
the officers of the Corporation to the Debenture Trustee or the Authenticating
Agent for authentication, and any Junior Subordinated Debentures which such
successor Person thereafter shall cause to be signed and delivered to the
Debenture Trustee or the Authenticating Agent for that purpose. All the Junior
Subordinated Debentures so issued shall in all respects have the same legal rank
and benefit under this Indenture as the Junior Subordinated Debentures
theretofore or thereafter issued in accordance with the terms of this Indenture
as though all of such Indentures had been issued at the date of the execution
hereof.
SECTION 10.03. Opinion of Counsel to be Given Debenture
Trustee.
The Debenture Trustee, subject to the provisions of Sections
6.01 and 6.02, may receive an Opinion of Counsel as conclusive evidence that any
consolidation, merger, sale, conveyance, transfer or lease, and any assumption,
permitted or required by the terms of this Article X complies with the
provisions of this Article X.
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01. Discharge of Indenture.
When (a) the Corporation shall deliver to the Debenture
Trustee for cancellation all Junior Subordinated Debentures theretofore
authenticated (other than any Junior Subordinated Debentures which shall have
been destroyed, lost or stolen and which shall have been replaced as provided in
Section 2.08) and not theretofore cancelled, or (b) all the Junior Subordinated
Debentures not theretofore cancelled or delivered to the Debenture Trustee for
cancellation shall have become due and payable, or are by their terms to become
due and payable within one year or are to be called for prepayment within one
year under arrangements satisfactory to the Debenture Trustee for the giving of
notice of prepayment, and the Corporation shall deposit with the Debenture
Trustee, in trust, funds sufficient to pay on the Stated Maturity Date or upon
prepayment all of the Junior Subordinated Debentures (other than any Junior
Subordinated Debentures which shall have been destroyed, lost or stolen and
which shall have been replaced as provided in Section 2.08) not theretofore
cancelled or delivered to the Debenture Trustee for cancellation, including
principal (and premium, if any) and interest (including Compounded Interest and
Additional Sums, if any) and Liquidated Damages, if any, due or to become due to
the Stated Maturity Date or prepayment date, as the case may be, but excluding,
however, the amount of any moneys for the payment of principal of (or premium,
if any) or interest (including Compounded Interest and Additional Sums, if any)
or Liquidated Damages, if any, on the Junior Subordinated Debentures (1)
theretofore repaid to the Corporation in accordance with the provisions of
Section 11.04, or (2) paid to any State or to the District of Columbia pursuant
to its unclaimed property or similar laws, and if in either case the Corporation
shall also pay or cause to be paid all other sums payable hereunder by the
Corporation, then this Indenture shall cease to be of further effect except for
the provisions of Sections 2.02, 2.07, 2.08, 3.01, 3.02, 3.04, 6.06, 6.10 and
11.04 hereof, which shall survive until such Junior Subordinated Debentures
shall mature and be paid. Thereafter, Sections 6.06, 6.10 and 11.04 shall
survive, and the Debenture Trustee, on demand of the Corporation accompanied by
any Officers' Certificate and an Opinion of Counsel and at the cost and expense
of the Corporation, shall execute proper instruments acknowledging satisfaction
of and discharging this Indenture; the Corporation, however, hereby agrees to
reimburse the Debenture Trustee for any costs or expenses thereafter reasonably
and properly incurred by the Debenture Trustee in connection with this Indenture
or the Junior Subordinated Debentures.
SECTION 11.02. Deposited Moneys and U.S. Government
Obligations to be Held in Trust by Debenture Trustee
Subject to the provisions of Section 11.04, all moneys and
U.S. Government Obligations deposited with the Debenture Trustee pursuant to
Sections 11.01 or 11.05 shall be held in trust and applied by it to the payment,
either directly or through any paying agent (including the Corporation if acting
as its own paying agent), to the holders of the particular Junior Subordinated
Debentures for the payment of which such moneys or U.S. Government Obligations
have been deposited with the Debenture Trustee, of all sums due and to become
due thereon for principal, premium, if any, and interest.
The Corporation shall pay and indemnify the Debenture Trustee
against any tax, fee or other charge imposed on or assessed against the U.S.
Government Obligations deposited pursuant to Section 11.05 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the holders of outstanding Junior
Subordinated Debentures.
SECTION 11.03. Paying Agent to Repay Moneys Held.
Upon the satisfaction and discharge of this Indenture all
moneys then held by any paying agent of the Junior Subordinated Debentures
(other than the Debenture Trustee) shall, upon written demand of the
Corporation, be repaid to it or paid to the Debenture Trustee, and thereupon
such paying agent shall be released from all further liability with respect to
such moneys.
SECTION 11.04. Return of Unclaimed Moneys.
Any moneys deposited with or paid to the Debenture Trustee or
any paying agent for payment of the principal of (or premium, if any) or
interest on Junior Subordinated Debentures and not applied but remaining
unclaimed by the holders of Junior Subordinated Debentures for two years after
the date upon which the principal of (or premium, if any) or interest (including
Compounded Interest and Additional Sums, if any) or Liquidated Damages, if any,
on such Junior Subordinated Debentures, as the case may be, shall have become
due and payable, shall be repaid to the Corporation by the Debenture Trustee or
such paying agent on written demand; and the holder of any of the Junior
Subordinated Debentures shall thereafter look only to the Corporation for any
payment which such holder may be entitled to collect and all liability of the
Debenture Trustee or such paying agent with respect to such moneys shall
thereupon cease.
. SECTION 11.05. Defeasance Upon Deposit of Moneys or U.S.
Government Obligations
The Corporation shall be deemed to have been Discharged (as
defined below) from its obligations with respect to the Junior Subordinated
Debentures on the 91st day after the applicable conditions set forth below have
been satisfied:
(1) the Corporation shall have deposited or caused to be
deposited irrevocably with the Debenture Trustee or
the Defeasance Agent (as defined below) as trust
funds in trust, specifically pledged as security for,
and dedicated solely to, the benefit of the holders
of the Junior Subordinated Debentures (i) money in an
amount, or (ii) U.S. Government Obligations which
through the payment of interest and principal in
respect thereof in accordance with their terms will
provide, not later than one day before the due date
of any payment, money in an amount, or (iii) a
combination of (i) and (ii), sufficient, in the
opinion (with respect to (ii) and (iii)) of a
nationally recognized firm of independent public
accountants expressed in a written certification
thereof delivered to the Debenture Trustee and the
Defeasance Agent, if any, to pay and discharge each
installment of principal of and interest and premium,
if any, on the outstanding Junior Subordinated
Debentures on the dates such installments of
principal, interest or premium are due;
(2) if the Junior Subordinated Debentures are then listed
on any national securities exchange, the Corporation
shall have delivered to the Debenture Trustee and the
Defeasance Agent, if any, an Opinion of Counsel to
the effect that the exercise of the option under this
Section 11.05 would not cause such Junior
Subordinated Debentures to be delisted from such
exchange;
(3) no Default or Debenture Event of Default with respect
to the Junior Subordinated Debentures shall have
occurred and be continuing on the date of such
deposit; and
(4) the Corporation shall have delivered to the Debenture
Trustee and the Defeasance Agent, if any, an Opinion
of Counsel to the effect that holders of the Junior
Subordinated Debentures will not recognize income,
gain or loss for United States federal income tax
purposes as a result of the exercise of the option
under this Section 11.05 and will be subject to
United States federal income tax on the same amount
and in the same manner and at the same times as would
have been the case if such option had not been
exercised.
"Discharged" means that the Corporation shall be deemed to
have paid and discharged the entire indebtedness represented by, and obligations
under, the Junior Subordinated Debentures and to have satisfied all the
obligations under this Indenture relating to the Junior Subordinated Debentures
(and the Debenture Trustee, at the expense of the Corporation, shall execute
proper instruments acknowledging the same), except (A) the rights of holders of
Junior Subordinated Debentures to receive, from the trust fund described in
clause (1) above, payment of the principal of and the interest and premium, if
any, on the Junior Subordinated Debentures when such payments are due; (B) the
Corporation's obligations with respect to the Junior Subordinated Debentures
under Sections 2.07, 2.08, 5.02 and 11.04; and (C) the rights, powers, trusts,
duties and immunities of the Debenture Trustee hereunder.
"Defeasance Agent" means another financial institution which
is eligible to act as Debenture Trustee hereunder and which assumes all of the
obligations of the Debenture Trustee necessary to enable the Debenture Trustee
to act hereunder. In the event such a Defeasance Agent is appointed pursuant to
this Section, the following conditions shall apply:
(1) The Debenture Trustee shall have approval rights over
the document appointing such Defeasance Agent and the
document setting forth such Defeasance Agent's rights
and responsibilities;
(2) The Defeasance Agent shall provide verification to
the Debenture Trustee acknowledging receipt of
sufficient money and/or U. S. Government Obligations
to meet the applicable conditions set forth in this
Section 11.05.
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 12.01. Indenture and Junior Subordinated Debentures
Solely Corporate Obligations
No recourse for the payment of the principal of or premium, if
any, or interest on any Junior Subordinated Debenture, or for any claim based
thereon or otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of the Corporation in this Indenture, or in
any Junior Subordinated Debenture, or because of the creation of any
indebtedness represented thereby, shall be had against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Corporation or of any successor Person to the Corporation, either directly or
through the Corporation or any successor Person to the Corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that all such
liability is hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issue of the Junior
Subordinated Debentures.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. Successors.
All the covenants, stipulations, promises and agreements in
this Indenture contained by the Corporation shall bind its successors and
assigns whether so expressed or not.
SECTION 13.02. Official Acts by Successor Corporation.
Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or
officer of the Corporation shall and may be done and performed with like force
and effect by the like board, committee or officer of any corporation that shall
at the time be the lawful sole successor of the Corporation.
SECTION 13.03. Surrender of Corporation Powers.
The Corporation by instrument in writing executed by authority
of 2/3 (two-thirds) of its Board of Directors and delivered to the Debenture
Trustee may surrender any of the powers reserved to the Corporation, and
thereupon such power so surrendered shall terminate both as to the Corporation,
as the case may be, and as to any successor Person.
<PAGE>
SECTION 13.04. Addresses for Notices, etc.
Any notice or demand which by any provision of this Indenture
is required or permitted to be given or served by the Debenture Trustee or by
the holders of Junior Subordinated Debentures on the Corporation may be given or
served by being deposited postage prepaid by first class mail, registered or
certified mail, overnight courier service or confirmed telecopy addressed (until
another address is filed by the Corporation with the Debenture Trustee for the
purpose) to the Corporation at Church & Ellsworth Streets, Martinsville,
Virginia 24115, Attention: [Vice President, Secretary and Chief Financial
Officer]. Any notice, direction, request or demand by any Debentureholder to or
upon the Debenture Trustee shall be deemed to have been sufficiently given or
made, for all purposes, if given or made in writing at the office of the
Debenture Trustee, 101 Barclay Street, 21W, New York, New York 10286, Attention:
Corporate Trust Trustee Administration (unless another address is provided by
the Debenture Trustee to the Corporation for such purpose). Any notice or
communication to a Debentureholder shall be mailed by first class mail to his or
her address shown on the register kept by the Debenture registrar for the Junior
Subordinated Debentures.
SECTION 13.05. Governing Law.
This Indenture and each Junior Subordinated Debenture shall be
deemed to be a contract made under the laws of the State of New York, and for
all purposes shall be governed by and construed in accordance with the laws of
said State, without regard to conflicts of laws principles thereof.
. SECTION 13.06. Evidence of Compliance with Conditions
Precedent
Upon any application or demand by the Corporation to the
Debenture Trustee to take any action under any of the provisions of this
Indenture, the Corporation shall furnish to the Debenture Trustee an Officers'
Certificate stating that in the opinion of the signers all conditions precedent,
if any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Each certificate or opinion provided for in this Indenture and
delivered to the Debenture Trustee with respect to compliance with a condition
or covenant provided for in this Indenture (except certificates delivered
pursuant to Section 3.05) shall include (1) a statement that the Person making
such certificate or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based; (3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
SECTION 13.07. Business Days.
In any case where the date of payment of principal of (or
premium, if any) or interest on the Junior Subordinated Debentures will not be a
Business Day, the payment of such principal of (or premium, if any) or interest
on the Junior Subordinated Debentures need not be made on such date but may be
made on the next succeeding Business Day, with the same force and effect as if
made on the date of payment and no interest shall accrue for the period from and
after such date, except that if such next succeeding Business Day falls in the
next succeeding calendar year, then such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date.
SECTION 13.08. Trust Indenture Act to Control.
If and to the extent that any provision of this Indenture
limits, qualifies or conflicts with the duties imposed by Sections 310 to 318,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 13.09. Table of Contents, Headings, etc.
The table of contents and the titles and headings of the
articles and sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 13.10. Execution in Counterparts.
This Indenture may be executed in any number of counterparts,
each of which shall be an original, but such counterparts shall together
constitute but one and the same instrument.
SECTION 13.11. Separability.
In case any one or more of the provisions contained in this
Indenture or in the Junior Subordinated Debentures shall for any reason be held
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
Indenture or of the Junior Subordinated Debentures, but this Indenture and the
Junior Subordinated Debentures shall be construed as if such invalid or illegal
or unenforceable provision had never been contained herein or therein.
SECTION 13.12. Assignment.
The Corporation will have the right at all times to assign any
of its respective rights or obligations under this Indenture to a direct or
indirect wholly owned Subsidiary of the Corporation, provided that, in the event
of any such assignment, the Corporation will remain liable for all such
obligations. Subject to the foregoing, the Indenture is binding upon and inures
to the benefit of the parties thereto and their respective successors and
assigns. This Indenture may not otherwise be assigned by the parties thereto.
<PAGE>
SECTION 13.13. Acknowledgement of Rights.
The Corporation acknowledges that, with respect to any Junior
Subordinated Debentures held by MainStreet Capital Trust I or a trustee of such
trust, if the Property Trustee of such Trust fails to enforce its rights under
this Indenture as the holder of the Junior Subordinated Debentures held as the
assets of MainStreet Capital Trust I, any holder of Capital Securities may
institute legal proceedings directly against the Corporation to enforce such
Property Trustee's rights under this Indenture without first instituting any
legal proceedings against such Property Trustee or any other person or entity.
Notwithstanding the foregoing, if a Debenture Event of Default has occurred and
is continuing and such event is attributable to the failure of the Corporation
to pay principal of (or premium, if any) or interest on the Junior Subordinated
Debentures when due, the Corporation acknowledges that a holder of Capital
Securities may directly institute a proceeding for enforcement of payment to
such holder of the principal of (or premium, if any) or interest on the Junior
Subordinated Debentures having a principal amount equal to the aggregate
liquidation amount of the Capital Securities of such holder on or after the
respective due date specified in the Junior Subordinated Debentures.
ARTICLE XIV
PREPAYMENT OF JUNIOR SUBORDINATED DEBENTURES -- MANDATORY AND
OPTIONAL SINKING FUND
SECTION 14.01. Special Event Prepayment.
If, prior to the Initial Optional Prepayment Date, a Special
Event has occurred and is continuing, then notwithstanding Section 14.02(a) but
subject to Section 14.02(c), the Corporation shall have the right, at any time
within 90 days following the occurrence of such Special Event, upon (i) not less
than 45 days written notice to the Debenture Trustee and (ii) not less than 30
days nor more than 60 days written notice to the Debentureholders, to prepay the
Junior Subordinated Debentures, in whole (but not in part), at the Special Event
Prepayment Price. Following a Special Event, the Corporation shall take such
action as is necessary to promptly determine the Special Event Prepayment Price,
including without limitation the appointment by the Corporation of a Quotation
Agent. The Special Event Prepayment Price shall be paid prior to 12:00 noon, New
York, New York time, on the date of such prepayment or such earlier time as the
Corporation determines, provided that the Corporation shall deposit with the
Debenture Trustee an amount sufficient to pay the Special Event Prepayment Price
by 10:00 a.m., New York time, on the date such Special Event Prepayment Price is
to be paid.
SECTION 14.02. Optional Prepayment by Corporation.
(a) Subject to the provisions of this Article XIV, the
Corporation shall have the right to prepay the Junior Subordinated Debentures,
in whole or in part, at any time on or after the Initial Optional Prepayment
Date, upon not less than 30 days and not more than 60 days' notice, at the
prepayment prices set forth below plus, in each case, accrued and unpaid
interest thereon (including Compounded Interest and Additional Sums, if any) and
Liquidated Damages, if any, to the applicable date of prepayment (the "Optional
Prepayment Price") if prepaid during the 12-month period beginning December 1 of
the years indicated below.
Percentage
Year of Principal
2007 104.450%
2008 104.005%
2009 103.560%
2010 103.115%
2011 102.670%
2012 102.225%
2013 101.780%
2014 101.335%
2015 100.890%
2016 100.445%
2017 and thereafter 100.000%
If the Junior Subordinated Debentures are only partially
prepaid pursuant to this Section 14.02, the Junior Subordinated Debentures to be
prepaid shall be selected on a pro rata basis not more than 60 days prior to the
date fixed for prepayment from the outstanding Junior Subordinated Debentures
not previously called for prepayment, provided, however, that with respect to
Debentureholders that would be required to hold Junior Subordinated Debentures
with an aggregate principal amount of less than $100,000 but more than an
aggregate principal amount of zero as a result of such pro rata prepayment, the
Corporation shall prepay Junior Subordinated Debentures of each such
Debentureholder so that after such prepayment such Debentureholder shall hold
Junior Subordinated Debentures either with an aggregate principal amount of at
least $100,000 or such Debentureholder no longer holds any Junior Subordinated
Debentures, and shall use such method (including, without limitation, by lot) as
the Corporation shall deem fair and appropriate, provided, further, that any
such proration may be made on the basis of the aggregate principal amount of
Junior Subordinated Debentures held by each Debentureholder and may be made by
making such adjustments as the Corporation deems fair and appropriate in order
that only Junior Subordinated Debentures in denominations of $1,000 or integral
multiples thereof shall be prepaid. The Optional Prepayment Price shall be paid
prior to 12:00 noon, New York time, on the date of such prepayment or at such
earlier time as the Corporation determines, provided that the Corporation shall
deposit with the Debenture Trustee an amount sufficient to pay the Optional
Prepayment Price by 10:00 a.m., New York time, on the date such Optional
Prepayment Price is to be paid.
(b) Notwithstanding the first sentence of Section 14.02(a),
upon the entry of an order for dissolution of the Trust by a court of competent
jurisdiction, the Junior Subordinated Debentures thereafter will be subject to
optional prepayment, in whole only, but not in part, on or after December 1,
2007, at the optional prepayment prices set forth in Section 14.02 and otherwise
in accordance with this Article XIV.
(c) Any prepayment of Junior Subordinated Debentures pursuant
to Section 14.01 or Section 14.02 shall be subject to the Corporation obtaining
any required regulatory approvals.
SECTION 14.03. No Sinking Fund.
The Junior Subordinated Debentures are not entitled to the
benefit of any sinking fund.
. SECTION 14.04. Notice of Prepayment; Selection of Junior
Subordinated Debentures
In case the Corporation shall desire to exercise the right to
prepay all, or, as the case may be, any part of the Junior Subordinated
Debentures in accordance with their terms, it shall fix a date for prepayment
and shall mail a notice of such prepayment at least 30 and not more than 60 days
prior to the date fixed for prepayment to the holders of Junior Subordinated
Debentures to be so prepaid as a whole or in part at their last addresses as the
same appear on the Debenture Register. Such mailing shall be by first class
mail. The notice if mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the holder receives such
notice. In any case, failure to give such notice by mail or any defect in the
notice to the holder of any Junior Subordinated Debenture designated for
prepayment as a whole or in part shall not affect the validity of the
proceedings for the prepayment of any other Junior Subordinated Debenture.
Each such notice of prepayment shall specify the CUSIP number
of the Junior Subordinated Debentures to be prepaid, the date fixed for
prepayment, the prepayment price at which the Junior Subordinated Debentures are
to be prepaid (or the method by which such prepayment price is to be
calculated), the place or places of payment that payment will be made upon
presentation and surrender of the Junior Subordinated Debentures, that interest
accrued to the date fixed for prepayment will be paid as specified in said
notice, and that on and after said date interest thereon or on the portions
thereof to be prepaid will cease to accrue. If less than all the Junior
Subordinated Debentures are to be prepaid, the notice of prepayment shall
specify the numbers of the Junior Subordinated Debentures to be prepaid. In case
any Junior Subordinated Debenture is to be prepaid in part only, the notice of
prepayment shall state the portion of the principal amount thereof to be prepaid
and shall state that on and after the date fixed for prepayment, upon surrender
of such Junior Subordinated Debenture, a new Junior Subordinated Debenture or
Junior Subordinated Debentures in principal amount equal to the portion thereof
that has not been prepaid will be issued.
By 10:00 a.m. New York time on the prepayment date specified
in the notice of prepayment given as provided in this Section, the Corporation
will deposit with the Debenture Trustee or with one or more paying agents an
amount of money sufficient to prepay on the prepayment date all the Junior
Subordinated Debentures so called for prepayment at the appropriate Prepayment
Price, together with accrued interest to the date fixed for prepayment.
The Corporation will give the Debenture Trustee notice not
less than 45 days prior to the prepayment date as to the aggregate principal
amount of Junior Subordinated Debentures to be prepaid and the Debenture Trustee
shall select, in such manner as in its sole discretion it shall deem appropriate
and fair, the Junior Subordinated Debentures or portions thereof (in integral
multiples of $1,000, except as otherwise set forth in the applicable form of
Junior Subordinated Debenture) to be prepaid.
. SECTION 14.05. Payment of Junior Subordinated Debentures
Called for Prepayment
If notice of prepayment has been given as provided in Section
14.04, the Junior Subordinated Debentures or portions of Junior Subordinated
Debentures with respect to which such notice has been given shall become due and
payable on the date and at the place or places stated in such notice at the
applicable Prepayment Price, together with interest accrued to the date fixed
for prepayment (subject to the rights of holders of Junior Subordinated
Debentures at the close of business on a regular record date in respect of an
Interest Payment Date occurring on or prior to the prepayment date), and on and
after said date (unless the Corporation shall default in the payment of such
Junior Subordinated Debentures at the Prepayment Price, together with interest
accrued to said date) interest (including Compounded Interest and Additional
Sums, if any) and Liquidated Damages, if any, on the Junior Subordinated
Debentures or portions of Junior Subordinated Debentures so called for
prepayment shall cease to accrue. On presentation and surrender of such Junior
Subordinated Debentures at a place of payment specified in said notice, the said
Junior Subordinated Debentures or the specified portions thereof shall be paid
and prepaid by the Corporation at the applicable Prepayment Price, together with
interest (including Compounded Interest and Additional Sums, if any) and
Liquidated Damages, if any, accrued thereon to the date fixed for prepayment
(subject to the rights of holders of Junior Subordinated Debentures on the close
of business on a regular record date in respect of an Interest Payment Date
occurring on or prior to the prepayment date).
Upon presentation of any Junior Subordinated Debenture prepaid
in part only, the Corporation shall execute and the Debenture Trustee shall
authenticate and make available for delivery to the holder thereof, at the
expense of the Corporation, a new Junior Subordinated Debenture or Junior
Subordinated Debentures of authorized denominations, in principal amount equal
to the portion of the Junior Subordinated Debenture so presented that has not
been prepaid.
ARTICLE XV
SUBORDINATION OF JUNIOR SUBORDINATED DEBENTURES
SECTION 15.01. Agreement to Subordinate.
The Corporation covenants and agrees, and each holder of
Junior Subordinated Debentures issued hereunder likewise covenants and agrees,
that the Junior Subordinated Debentures shall be issued subject to the
provisions of this Article XV; and each holder of a Junior Subordinated
Debenture, whether upon original issue or upon transfer or assignment thereof,
accepts and agrees to be bound by such provisions.
The payment by the Corporation of the principal of, premium,
if any, and interest (including Compounded Interest and Additional Sums, if any)
and Liquidated Damages, if any, on all Junior Subordinated Debentures issued
hereunder shall, to the extent and in the manner hereinafter set forth, be
subordinated and junior in right of payment to all Senior Indebtedness, whether
outstanding at the date of this Indenture or thereafter incurred.
No provision of this Article XV shall prevent the occurrence
of any Default or Debenture Event of Default hereunder.
SECTION 15.02. Default on Senior Indebtedness.
In the event and during the continuation of any default by the
Corporation in the payment of principal, premium, interest or any other payment
due on any Senior Indebtedness, or in the event that the maturity of any Senior
Indebtedness has been accelerated because of a default, then, in either case, no
payment shall be made by the Corporation with respect to the principal
(including prepayment payments) of (or premium, if any) or interest on the
Junior Subordinated Debentures (including Compounded Interest and Additional
Sums (if any) and Liquidated Damages, if any, or any other amounts which may be
due on the Junior Subordinated Debentures pursuant to the terms hereof or
otherwise).
In the event of the acceleration of the maturity of the Junior
Subordinated Debentures, then no payment shall be made by the Corporation with
respect to the principal (including prepayment payments) of (or premium, if any)
or interest on the Junior Subordinated Debentures (including Compounded Interest
and Additional Sums (if any) and Liquidated Damages, if any, or any other
amounts which may be due on the Junior Subordinated Debentures pursuant to the
terms hereof or otherwise) until the holders of all Senior Indebtedness
outstanding at the time of such acceleration shall receive payment in full of
such Senior Indebtedness (including any amounts due upon acceleration).
In the event that, notwithstanding the foregoing, any payment
shall be received by the Debenture Trustee when such payment is prohibited by
the preceding paragraphs of this Section 15.02, such payment shall be held in
trust for the benefit of, and shall be paid over or delivered to, the holders of
Senior Indebtedness or their respective representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior Indebtedness
may have been issued, as their respective interests may appear, but only to the
extent that the holders of the Senior Indebtedness (or their representative or
representatives or a trustee) notify the Debenture Trustee in writing within 90
days of such payment of the amounts then due and owing on such Senior
Indebtedness, and only the amounts specified in such notice to the Debenture
Trustee shall be paid to the holders of such Senior Indebtedness.
SECTION 15.03. Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Corporation or distribution of assets
of the Corporation of any kind or character, whether in cash, property or
securities, to creditors upon any dissolution, winding-up, liquidation or
reorganization of the Corporation, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all Senior
Indebtedness of the Corporation shall first be paid in full, or payment thereof
provided for in money in accordance with its terms, before any payment is made
by the Corporation on account of the principal of (or premium, if any) or
interest on the Junior Subordinated Debentures (including Compounded Interest
and Additional Sums (if any) and Liquidated Damages, if any, or any other
amounts which may be due on the Junior Subordinated Debentures pursuant to the
terms hereof or otherwise); and upon any such dissolution or winding-up or
liquidation or reorganization, any payment by the Corporation, or distribution
of assets of the Corporation of any kind or character, whether in cash, property
or securities, which the Debentureholders or the Debenture Trustee would be
entitled to receive from the Corporation, except for the provisions of this
Article XV, shall be paid by the Corporation or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the Debentureholders or by the Debenture Trustee under the
Indenture if received by them or it, directly to the holders of Senior
Indebtedness of the Corporation (pro rata to such holders on the basis of the
respective amounts of Senior Indebtedness held by such holders, as calculated by
the Corporation) or their representative or representatives, or to the trustee
or trustees under any indenture pursuant to which any instruments evidencing
such Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay all such Senior Indebtedness in full, in
money or money's worth, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness, before any
payment or distribution is made to the Debentureholders or to the Debenture
Trustee.
In the event that, notwithstanding the foregoing, any payment
or distribution of assets of the Corporation of any kind or character prohibited
by the foregoing, whether in cash, property or securities, shall be received by
the Debenture Trustee before all Senior Indebtedness is paid in full, or
provision is made for such payment in money in accordance with its terms, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, as their respective interests may appear, as calculated by
the Corporation, for application to the payment of all Senior Indebtedness
remaining unpaid to the extent necessary to pay all such Senior Indebtedness in
full in money in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the benefit of the holders of such
Senior Indebtedness.
For purposes of this Article XV, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Corporation as
reorganized or readjusted, or securities of the Corporation or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this Article
XV with respect to the Junior Subordinated Debentures to the payment of Senior
Indebtedness that may at the time be outstanding, provided that (i) such Senior
Indebtedness is assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of such
Senior Indebtedness are not, without the consent of such holders, altered by
such reorganization or readjustment. The consolidation of the Corporation with,
or the merger of the Corporation into, another Person or the liquidation or
dissolution of the Corporation following the sale, conveyance, transfer or lease
of its property as an entirety, or substantially as an entirety, to another
Person upon the terms and conditions provided for in Article X of this Indenture
shall not be deemed a dissolution, winding-up, liquidation or reorganization for
the purposes of this Section 15.03 if such other Person shall, as a part of such
consolidation, merger, sale, conveyance, transfer or lease, comply with the
conditions stated in Article X of this Indenture. Nothing in Section 15.02 or in
this Section 15.03 shall apply to claims of, or payments to, the Debenture
Trustee under or pursuant to Section 6.06 of this Indenture.
SECTION 15.04. Subrogation.
Subject to the payment in full of all Senior Indebtedness, the
rights of the Debentureholders shall be subrogated to the rights of the holders
of such Senior Indebtedness to receive payments or distributions of cash,
property or securities of the Corporation, as the case may be, applicable to
such Senior Indebtedness until the principal of (and premium, if any) and
interest on the Junior Subordinated Debentures shall be paid in full; and, for
the purposes of such subrogation, no payments or distributions to the holders of
such Senior Indebtedness of any cash, property or securities to which the
Debentureholders or the Debenture Trustee would be entitled except for the
provisions of this Article XV, and no payment over pursuant to the provisions of
this Article XV to or for the benefit of the holders of such Senior Indebtedness
by Debentureholders or the Debenture Trustee, shall, as between the Corporation,
its creditors other than holders of Senior Indebtedness of the Corporation, and
the holders of the Junior Subordinated Debentures, be deemed to be a payment by
the Corporation to or on account of such Senior Indebtedness. It is understood
that the provisions of this Article XV are and are intended solely for the
purposes of defining the relative rights of the holders of the Junior
Subordinated Debentures, on the one hand, and the holders of such Senior
Indebtedness on the other hand.
Nothing contained in this Article XV or elsewhere in this
Indenture or in the Junior Subordinated Debentures is intended to or shall
impair, as between the Corporation, its creditors other than the holders of
Senior Indebtedness of the Corporation, and the holders of the Junior
Subordinated Debentures, the obligation of the Corporation, which is absolute
and unconditional, to pay to the holders of the Junior Subordinated Debentures
the principal of (and premium, if any) and interest (including Compounded
Interest and Additional Sums, if any) and Liquidated Damages, if any, on the
Junior Subordinated Debentures as and when the same shall become due and payable
in accordance with their terms, or is intended to or shall affect the relative
rights of the holders of the Junior Subordinated Debentures and creditors of the
Corporation, as the case may be, other than the holders of Senior Indebtedness
of the Corporation, as the case may be, nor shall anything herein or therein
prevent the Debenture Trustee or the holder of any Junior Subordinated Debenture
from exercising all remedies otherwise permitted by applicable law upon default
under the Indenture, subject to the rights, if any, under this Article XV of the
holders of such Senior Indebtedness in respect of cash, property or securities
of the Corporation, as the case may be, received upon the exercise of any such
remedy.
Upon any payment or distribution of assets of the Corporation
referred to in this Article XV, the Debenture Trustee, subject to the provisions
of Article VI of this Indenture, and the Debentureholders shall be entitled to
conclusively rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person making such
payment or distribution, delivered to the Debenture Trustee or to the
Debentureholders, for the purposes of ascertaining the Persons entitled to
participate in such distribution, the holders of Senior Indebtedness and other
indebtedness of the Corporation, as the case may be, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article XV.
SECTION 15.05. Debenture Trustee to Effectuate
Subordination.
Each Debentureholder by such Debentureholder's acceptance
thereof authorizes and directs the Debenture Trustee on such Debentureholder's
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article XV and appoints the Debenture Trustee
such Debentureholder's attorney-in-fact for any and all such purposes.
SECTION 15.06. Notice by the Corporation.
The Corporation shall give prompt written notice to a
Responsible Officer of the Debenture Trustee of any fact known to the
Corporation that would prohibit the making of any payment of monies to or by the
Debenture Trustee in respect of the Junior Subordinated Debentures pursuant to
the provisions of this Article XV. Notwithstanding the provisions of this
Article XV or any other provision of this Indenture, the Debenture Trustee shall
not be charged with knowledge of the existence of any facts that would prohibit
the making of any payment of monies to or by the Debenture Trustee in respect of
the Junior Subordinated Debentures pursuant to the provisions of this Article
XV, unless and until a Responsible Officer of the Debenture Trustee shall have
received written notice thereof from the Corporation or a holder or holders of
Senior Indebtedness or from any trustee therefor; and before the receipt of any
such written notice, the Debenture Trustee, subject to the provisions of Article
VI of this Indenture, shall be entitled in all respects to assume that no such
facts exist; provided, however, that if the Debenture Trustee shall not have
received the notice provided for in this Section 15.06 at least two Business
Days prior to the date upon which by the terms hereof any money may become
payable for any purpose (including, without limitation, the payment of the
principal of (or premium, if any) or interest (including Compounded Interest and
Additional Sums, if any) and Liquidated Damages, if any, on any Junior
Subordinated Debenture), then, anything herein contained to the contrary
notwithstanding, the Debenture Trustee shall have full power and authority to
receive such money and to apply the same to the purposes for which they were
received, and shall not be affected by any notice to the contrary that may be
received by it within two Business Days prior to such date.
The Debenture Trustee, subject to the provisions of Article VI
of this Indenture, shall be entitled to conclusively rely on a written notice
delivered to it by a Person representing himself to be a holder of Senior
Indebtedness of the Corporation (or a trustee on behalf of such holder), as the
case may be, to establish that such notice has been given by a holder of such
Senior Indebtedness or a trustee on behalf of any such holder or holders. In the
event that the Debenture Trustee determines in good faith that further evidence
is required with respect to the right of any Person as a holder of such Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article XV, the Debenture Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Debenture Trustee as to the amount of such
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article XV, and, if such
evidence is not furnished, the Debenture Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to receive
such payment.
Upon any payment or distribution of assets of the Corporation
referred to in this Article XV, the Debenture Trustee and the Debentureholders
shall be entitled to rely upon any order or decree entered by any court of
competent jurisdiction in which such insolvency, bankruptcy, receivership,
liquidation, reorganization, dissolution, winding-up or similar case or
proceeding is pending, or a certificate of the trustee in bankruptcy,
liquidating trustee, custodian, receiver, assignee for the benefit of creditors,
agent or other person making such payment or distribution, delivered to the
Debenture Trustee or to the Debentureholders, for the purpose of ascertaining
the persons entitled to participate in such payment or distribution, the holders
of Senior Indebtedness and other indebtedness of the Corporation, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article XV.
. SECTION 15.07. Rights of the Debenture Trustee; Holders of
Senior Indebtedness
The Debenture Trustee in its individual capacity shall be
entitled to all the rights set forth in this Article XV in respect of any Senior
Indebtedness at any time held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Debenture
Trustee of any of its rights as such holder.
With respect to the holders of Senior Indebtedness of the
Corporation, the Debenture Trustee undertakes to perform or to observe only such
of its covenants and obligations as are specifically set forth in this Article
XV, and no implied covenants or obligations with respect to the holders of such
Senior Indebtedness shall be read into this Indenture against the Debenture
Trustee. The Debenture Trustee shall not be deemed to owe any fiduciary duty to
the holders of such Senior Indebtedness and, subject to the provisions of
Article VI of this Indenture, the Debenture Trustee shall not be liable to any
holder of such Senior Indebtedness if it shall pay over or deliver to
Debentureholders, the Corporation or any other Person money or assets to which
any holder of such Senior Indebtedness shall be entitled by virtue of this
Article XV or otherwise.
Nothing in this Article XV shall apply to claims of, or
payments to, the Debenture Trustee under or pursuant to Section 6.06.
. SECTION 15.08. Subordination May Not Be Impaired
No right of any present or future holder of any Senior
Indebtedness of the Corporation to enforce subordination as herein provided
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Corporation, as the case may be, or by any act or failure
to act, in good faith, by any such holder, or by any noncompliance by the
Corporation, as the case may be, with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof that any such holder may
have or otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness of the Corporation may, at any
time and from time to time, without the consent of or notice to the Debenture
Trustee or the Debentureholders, without incurring responsibility to the
Debentureholders and without impairing or releasing the subordination provided
in this Article XV or the obligations hereunder of the holders of the Junior
Subordinated Debentures to the holders of such Senior Indebtedness, do any one
or more of the following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, such Senior Indebtedness, or
otherwise amend or supplement in any manner such Senior Indebtedness or any
instrument evidencing the same or any agreement under which such Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing such Senior Indebtedness;
(iii) release any Person liable in any manner for the collection of such Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Corporation, as the case may be, and any other Person.
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 16.01. Extension of Interest Payment Period.
So long as no Debenture Event of Default has occurred and is
continuing, the Corporation shall have the right, at any time and from time to
time during the term of the Junior Subordinated Debentures, to defer payments of
interest by extending the interest payment period of such Junior Subordinated
Debentures for a period not exceeding 10 consecutive semi-annual periods,
including the first such semi-annual period during such extension period (the
"Extension Period"), during which Extension Period no interest shall be due and
payable; provided that no Extension Period shall end on a date other than an
Interest Payment Date or extend beyond the Stated Maturity Date. To the extent
permitted by applicable law, interest, the payment of which has been deferred
because of the extension of the interest payment period pursuant to this Section
16.01, will bear interest thereon at the Coupon Rate compounded semi-annually
for each semi-annual period of the Extension Period ("Compounded Interest"). At
the end of the Extension Period, the Corporation shall pay all interest accrued
and unpaid on the Junior Subordinated Debentures, including any Additional Sums
and Compounded Interest (together, "Deferred Interest") that shall be payable to
the holders of the Junior Subordinated Debentures in whose names the Junior
Subordinated Debentures are registered in the Debenture Register on the first
record date preceding the end of the Extension Period. Before the termination of
any Extension Period, the Corporation may further defer payments of interest by
further extending such period, provided that such period, together with all such
previous and further extensions within such Extension Period, shall not exceed
10 consecutive semi-annual periods, including the first such semi-annual period
during such Extension Period, end on a date other than an Interest Payment Date
or extend beyond the Stated Maturity Date. Upon the termination of any Extension
Period and the payment of all Deferred Interest then due, the Corporation may
commence a new Extension Period, subject to the foregoing requirements. No
interest shall be due and payable during an Extension Period, except at the end
thereof, but the Corporation may prepay at any time all or any portion of the
interest accrued during an Extension Period.
SECTION 16.02. Notice of Extension.
(a) If the Property Trustee is the only registered holder of
the Junior Subordinated Debentures at the time the Corporation selects an
Extension Period, the Corporation shall give written notice to the
Administrative Trustees, the Property Trustee and the Debenture Trustee of its
selection of such Extension Period five Business Days before the earlier of (i)
the next succeeding date on which Distributions on the Trust Securities issued
by the Trust are payable, or (ii) the date the Trust is required to give notice
of the record date, or the date such Distributions are payable, to any national
securities exchange or to holders of the Capital Securities issued by the Trust,
but in any event at least five Business Days before such record date.
(b) If the Property Trustee is not the only holder of the
Junior Subordinated Debentures at the time the Corporation selects an Extension
Period, the Corporation shall give the holders of the Junior Subordinated
Debentures and the Debenture Trustee written notice of its selection of such
Extension Period at least 10 Business Days before the earlier of (i) the next
succeeding Interest Payment Date, or (ii) the date the Corporation is required
to give notice of the record or payment date of such interest payment to any
national securities exchange.
(c) The semi-annual period in which any notice is given
pursuant to paragraphs (a) or (b) of this Section 16.02 shall be counted as one
of the 10 semi-annual periods permitted in the maximum Extension Period
permitted under Section 16.01.
The Bank of New York hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions hereinabove set
forth.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed by their respective officers thereunto duly
authorized, as of the day and year first above written.
MAINSTREET BANKGROUP INCORPORATED
By /s/ James E. Adams
Name: James E. Adams
Title: Executive Vice President, Chief
Financial Officer and Treasurer
THE BANK OF NEW YORK,
as Debenture Trustee
By /s/ Van K. Brown
Name: Van K. Brown
Title: Assistant Vice President
<PAGE>
EXHIBIT A
(FORM OF FACE OF JUNIOR SUBORDINATED DEBENTURE)
[IF THE JUNIOR SUBORDINATED DEBENTURE IS A GLOBAL JUNIOR
SUBORDINATED DEBENTURE, INSERT: THIS JUNIOR SUBORDINATED DEBENTURE IS A GLOBAL
JUNIOR SUBORDINATED DEBENTURE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A
DEPOSITARY. THIS JUNIOR SUBORDINATED DEBENTURE IS EXCHANGEABLE FOR JUNIOR
SUBORDINATED DEBENTURES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND NO TRANSFER OF THIS JUNIOR SUBORDINATED DEBENTURE (OTHER THAN A
TRANSFER OF THIS JUNIOR SUBORDINATED DEBENTURE AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.
UNLESS THIS JUNIOR SUBORDINATED DEBENTURE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC") TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY JUNIOR SUBORDINATED DEBENTURE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL IN AS MUCH AS SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.]
THIS JUNIOR SUBORDINATED DEBENTURE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS JUNIOR
SUBORDINATED DEBENTURE 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, REGISTRATION.
THE HOLDER OF THIS JUNIOR SUBORDINATED DEBENTURE BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS JUNIOR
SUBORDINATED DEBENTURE, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION
DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE DATE HEREOF
AND THE LAST DATE ON WHICH THE CORPORATION OR ANY "AFFILIATE" OF THE CORPORATION
WAS THE OWNER OF THIS JUNIOR SUBORDINATED DEBENTURE (OR ANY PREDECESSOR OF THIS
JUNIOR SUBORDINATED DEBENTURE) ONLY (A) TO THE CORPORATION, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) SO LONG AS THIS JUNIOR SUBORDINATED DEBENTURE IS ELIGIBLE FOR RESALE
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, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES
ACT THAT IS ACQUIRING THIS JUNIOR SUBORDINATED DEBENTURE FOR ITS OWN ACCOUNT, OR
FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL 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 (E) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT,
SUBJECT TO THE RIGHT OF THE CORPORATION PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER (i) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO THE
CORPORATION, AND (ii) PURSUANT TO CLAUSE (D), TO REQUIRE THAT A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THE REVERSE OF THIS JUNIOR SUBORDINATED
DEBENTURE IS COMPLETED AND DELIVERED BY THE TRANSFEREE TO THE CORPORATION. SUCH
HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS JUNIOR
SUBORDINATED DEBENTURE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND.
THE JUNIOR SUBORDINATED DEBENTURES WILL BE ISSUED AND MAY BE
TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN
$100,000. ANY SUCH TRANSFER OF JUNIOR SUBORDINATED DEBENTURES IN A BLOCK HAVING
AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID
AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE
THE HOLDER OF SUCH JUNIOR SUBORDINATED DEBENTURES FOR ANY PURPOSE, INCLUDING BUT
NOT LIMITED TO THE RECEIPT OF PRINCIPAL, PREMIUM (IF ANY) OR INTEREST OF SUCH
JUNIOR SUBORDINATED DEBENTURES, AND SUCH TRANSFEREE SHALL BE DEEMED TO HAVE NO
INTEREST WHATSOEVER IN SUCH JUNIOR SUBORDINATED DEBENTURES. THE HOLDER OF THIS
JUNIOR SUBORDINATED DEBENTURE BY ITS ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS
AND WARRANTS THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR (ii)
THE ACQUISITION AND HOLDING OF THIS JUNIOR SUBORDINATED DEBENTURE BY IT IS NOT
PROHIBITED BY EITHER SECTION 406 OF ERISA OR SECTION 4975 OF THE U.S.
INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR EXEMPT FROM ANY SUCH PROHIBITION.
No. D-1
CUSIP No. 560633 AA 7
MAINSTREET BANKGROUP INCORPORATED
SERIES A 8.90% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE
DUE DECEMBER 1, 2027
MainStreet BankGroup Incorporated, a Virginia corporation (the
"Corporation", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
MainStreet Capital Trust I, or registered assigns, the principal sum of
$51,547,000 on December 1, 2027 (the "Stated Maturity Date"), unless previously
prepaid, and to pay interest on the outstanding principal amount hereof from
November 19, 1997, or from the most recent interest payment date (each such
date, an "Interest Payment Date") to which interest has been paid or duly
provided for, semi-annually (subject to deferral as set forth herein) in arrears
on June 1 and December 1 of each year, commencing June 1, 1998, at the rate of
8.90% per annum until the principal hereof shall have become due and payable,
and on any overdue principal and premium, if any, and (without duplication and
to the extent that payment of such interest is enforceable under applicable law)
on any overdue installment of interest at the same rate per annum compounded
semi-annually. The amount of interest payable on any Interest Payment Date shall
be computed on the basis of a 360-day year of twelve 30-day months and, for any
period less than a full calendar month, the number of days elapsed in such
month. In the event that any date on which the principal of (or premium, if any)
or interest on this Junior Subordinated Debenture is payable is not a Business
Day, then the payment 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 next succeeding Business Day falls in
the next calendar year, then such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. Pursuant to the Indenture, in certain circumstances the
Corporation will be required to pay Additional Sums and Compounded Interest
(each as defined in the Indenture) with respect to this Junior Subordinated
Debenture. Pursuant to the Registration Rights Agreement, in certain limited
circumstances the Corporation will be required to pay Liquidated Damages (as
defined in the Registration Rights Agreement) with respect to this Junior
Subordinated Debenture.
The interest installment so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Junior Subordinated
Debenture (or one or more Predecessor Junior Subordinated Debentures, as defined
in said Indenture) is registered at the close of business on the regular record
date for such interest installment, which shall be at the close of business on
the 15th day of the month preceding the month in which the relevant interest
payment date falls. Any such interest installment not punctually paid or duly
provided for shall forthwith cease to be payable to the holders on such regular
record date and may be paid to the Person in whose name this Junior Subordinated
Debenture (or one or more Predecessor Junior Subordinated Debentures) is
registered at the close of business on a special record date to be fixed by the
Debenture Trustee for the payment of such defaulted interest, notice whereof
shall be given to the holders of Junior Subordinated Debentures not less than 10
days prior to such special record date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Junior Subordinated Debentures may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in the
Indenture.
The principal of (and premium, if any) and interest (including
Compounded Interest and Additional Sums, if any) and Liquidated Damages, if any,
on this Junior Subordinated Debenture shall be payable at the office or agency
of the Debenture Trustee maintained for that purpose in any coin or currency of
the United States of America that at the time of payment is legal tender for
payment of public and private debts; provided, however, that, payment of
interest may be made at the option of the Corporation by (i) check mailed to the
holder at such address as shall appear in the Debenture Register or (ii) by
transfer to an account maintained by the Person entitled thereto, provided that
proper written transfer instructions have been received by the relevant record
date. Notwithstanding the foregoing, so long as the Holder of this Junior
Subordinated Debenture is the Property Trustee, the payment of the principal of
(and premium, if any) and interest (including Compounded Interest and Additional
Sums, if any) and Liquidated Damages, if any, on this Junior Subordinated
Debenture will be made at such place and to such account as may be designated by
the Property Trustee.
The indebtedness evidenced by this Junior Subordinated
Debenture is, to the extent provided in the Indenture, subordinate and junior in
right of payment to the prior payment in full of all Senior Indebtedness, and
this Junior Subordinated Debenture is issued subject to the provisions of the
Indenture with respect thereto. Each holder of this Junior Subordinated
Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Debenture Trustee on his or her
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination so provided and (c) appoints the Debenture Trustee
his or her attorney-in-fact for any and all such purposes. Each holder hereof,
by his or her acceptance hereof, hereby waives all notice of the acceptance of
the subordination provisions contained herein and in the Indenture by each
holder of Senior Indebtedness, whether now outstanding or hereafter incurred,
and waives reliance by each such holder upon said provisions.
This Junior Subordinated Debenture shall not be entitled to
any benefit under the Indenture hereinafter referred to, be valid or become
obligatory for any purpose until the Certificate of Authentication hereon shall
have been signed by or on behalf of the Debenture Trustee.
<PAGE>
The provisions of this Junior Subordinated Debenture are
continued on the reverse side hereof and such provisions shall for all purposes
have the same effect as though fully set forth at this place.
IN WITNESS WHEREOF, the Corporation has caused this instrument
to be duly executed and sealed this 19th day of November, 1997.
MAINSTREET BANKGROUP INCORPORATED
By: ____________________________
Name: James E. Adams
Title: Executive Vice President,
Chief Financial Officer and Treasurer
Attest:
By: _______________________
Name: Rebecca J. Jenkins
Title: Executive Vice President
CERTIFICATE OF AUTHENTICATION
This is one of the Junior Subordinated Debentures referred to
in the within-mentioned Indenture.
THE BANK OF NEW YORK,
not in its individual capacity but
solely as Debenture Trustee
By____________________
Authorized Signatory
<PAGE>
(FORM OF REVERSE OF JUNIOR SUBORDINATED DEBENTURE)
This Junior Subordinated Debenture is one of the Junior
Subordinated Debentures of the Corporation (herein sometimes referred to as the
"Junior Subordinated Debentures"), specified in the Indenture, all issued or to
be issued under and pursuant to an Indenture, dated as of November 19, 1997 (the
"Indenture"), duly executed and delivered between the Corporation and The Bank
of New York, as Debenture Trustee (the "Debenture Trustee"), to which Indenture
reference is hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Debenture Trustee, the
Corporation and the holders of the Junior Subordinated Debentures.
Upon the occurrence and continuation of a Special Event prior
to December 1, 2007 (the "Initial Optional Prepayment Date"), the Corporation
shall have the right, at any time within 90 days following the occurrence of
such Special Event, to prepay this Junior Subordinated Debenture in whole (but
not in part) at the Special Event Prepayment Price. "Special Event Prepayment
Price" shall mean, with respect to any prepayment of the Junior Subordinated
Debentures following a Special Event, an amount in cash equal to the Make Whole
Amount. The "Make Whole Amount" shall mean an amount equal to the greater of (i)
100% of the principal amount of the Junior Subordinated Debentures to be prepaid
or (ii) the sum, as determined by a Quotation Agent, of the present values of
the remaining scheduled payments of principal and interest on such Junior
Subordinated Debentures, discounted to the prepayment date on a semi-annual
basis (assuming a 360-day year consisting of twelve 30-day months) at the
Adjusted Treasury Rate, plus, in the case of each of clauses (i) and (ii),
accrued and unpaid interest thereon, including Compounded Interest and
Additional Sums, if any, and Liquidated Damages, if any, to the date of such
prepayment.
In addition, the Corporation shall have the right to prepay
this Junior Subordinated Debenture, in whole or in part, at any time on or after
the Initial Optional Prepayment Date (an "Optional Prepayment"), upon not less
than 30 days and not more than 60 days' notice, at the prepayment prices set
forth below plus, in each case, accrued and unpaid interest thereon (including
Additional Sums and Compounded Interest, if any) and Liquidated Damages, if any,
to the applicable date of prepayment (the "Optional Prepayment Price") if
prepaid during the 12-month period beginning December 1 of the years indicated
below.
Percentage
Year of Principal
2007 104.450%
2008 104.005%
2009 103.560%
2010 103.115%
2011 102.670%
2012 102.225%
2013 101.780%
2014 101.335%
2015 100.890%
2016 100.445%
2017 and thereafter 100.000%
The Optional Prepayment Price or the Special Event Prepayment
Price, as the case requires, shall be paid prior to 12:00 noon, New York time,
on the date of such prepayment or at such earlier time as the Corporation
determines, provided, that the Corporation shall deposit with the Debenture
Trustee an amount sufficient to pay the applicable Prepayment Price by 10:00
a.m. New York time on the date such Prepayment Price is to be paid. Any
prepayment pursuant to this paragraph will be made upon not less than 30 days
nor more than 60 days notice. If the Junior Subordinated Debentures are only
partially prepaid by the Corporation pursuant to an Optional Prepayment, the
particular Junior Subordinated Debentures to be prepaid shall be selected on a
pro rata basis not more than 60 days prior to the date fixed for prepayment from
the outstanding Junior Subordinated Debentures not previously called for
prepayment, provided, however, that with respect to Debentureholders that would
be required to hold Junior Subordinated Debentures with an aggregate principal
amount of less than $100,000 but more than an aggregate principal amount of zero
as a result of such pro rata prepayment, the Corporation shall prepay Junior
Subordinated Debentures of each such Debentureholder so that after such
prepayment such Debentureholder shall hold Junior Subordinated Debentures either
with an aggregate principal amount of at least $100,000 or such Debentureholder
no longer holds any Junior Subordinated Debentures and shall use such method
(including, without limitation, by lot) as the Corporation shall deem fair and
appropriate, provided, further, that any such proration may be made on the basis
of the aggregate principal amount of Junior Subordinated Debentures held by each
Debentureholder thereof and may be made by making such adjustments as the
Corporation deems fair and appropriate in order that only Junior Subordinated
Debentures in denominations of $1,000 or integral multiples thereof shall be
prepaid.
In the event of prepayment of this Junior Subordinated
Debenture in part only, a new Junior Subordinated Debenture or Junior
Subordinated Debentures for the portion hereof that has not been prepaid will be
issued in the name of the holder hereof upon the cancellation hereof.
Notwithstanding the foregoing, any prepayment of Junior
Subordinated Debentures by the Corporation shall be subject to the prior receipt
of any required regulatory approvals.
In case a Debenture Event of Default, as defined in the
Indenture, shall have occurred and be continuing, the principal of all of the
Junior Subordinated Debentures may be declared, and upon such declaration shall
become, due and payable, in the manner, with the effect and subject to the
conditions provided in the Indenture.
The Indenture contains provisions permitting the Corporation
and the Debenture Trustee, with the consent of the holders of a majority in
aggregate principal amount of the Junior Subordinated Debentures at the time
outstanding, as defined in the Indenture, to execute supplemental indentures for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of modifying in any manner the rights
of the holders of the Junior Subordinated Debentures; provided, however, that no
such supplemental indenture shall, without the consent of each holder of Junior
Subordinated Debentures then outstanding and affected thereby, (i) change the
Stated Maturity Date of any Junior Subordinated Debenture, or reduce the rate or
extend the time of payment of interest thereon (subject to Article XVI of the
Indenture), or reduce the principal amount thereof, or reduce any amount payable
on prepayment thereof, or make the principal thereof or any interest or premium
thereon payable in any coin or currency other than that provided in the Junior
Subordinated Debentures, or impair or affect the right of any holder of Junior
Subordinated Debentures to institute suit for payment thereof, or (ii) reduce
the aforesaid percentage of Junior Subordinated Debentures, the holders of which
are required to consent to any such supplemental indenture. The Indenture also
contains provisions permitting the holders of a majority in aggregate principal
amount of the Junior Subordinated Debentures at the time outstanding affected
thereby, on behalf of all of the holders of the Junior Subordinated Debentures,
to waive any past default in the performance of any of the covenants contained
in the Indenture, or established pursuant to the Indenture, and its
consequences, except a default in the payment of the principal of or premium, if
any, or interest on any of the Junior Subordinated Debentures or a default in
respect of any covenant or provision under which the Indenture cannot be
modified or amended without the consent of each holder of Junior Subordinated
Debentures then outstanding. Any such consent or waiver by the holder of this
Junior Subordinated Debenture (unless revoked as provided in the Indenture)
shall be conclusive and binding upon such Holder and upon all future holders and
owners of this Junior Subordinated Debenture and of any Junior Subordinated
Debenture issued in exchange hereof or in place hereof (whether by registration
of transfer or otherwise), irrespective of whether or not any notation of such
consent or waiver is made upon this Junior Subordinated Debenture.
No reference herein to the Indenture and no provision of this
Junior Subordinated Debenture or of the Indenture shall alter or impair the
obligation of the Corporation, which is absolute and unconditional, to pay the
principal of (and premium, if any) and interest (including Compounded Interest
and Additional Sums, if any) and Liquidated Damages, if any, on this Junior
Subordinated Debenture at the time and place and at the rate and in the money
herein prescribed.
So long as no Debenture Event of Default shall have occurred
and be continuing, the Corporation shall have the right, at any time and from
time to time during the term of the Junior Subordinated Debentures, to defer
payments of interest by extending the interest payment period of such Junior
Subordinated Debentures for a period not exceeding 10 consecutive semi-annual
periods, including the first such semi-annual period during such extension
period, and not extending beyond the Stated Maturity Date of the Junior
Subordinated Debentures (an "Extension Period") or ending on a date other than
an Interest Payment Date, at the end of which period the Corporation shall pay
all interest then accrued and unpaid (together with interest thereon at the rate
specified for the Junior Subordinated Debentures to the extent that payment of
such interest is enforceable under applicable law). Before the termination of
any such Extension Period, the Corporation may further defer payments of
interest by further extending such Extension Period, provided that such
Extension Period, together with all such previous and further extensions within
such Extension Period, (i) shall not exceed 10 consecutive semi-annual periods,
including the first semi-annual period during such Extension Period, (ii) shall
not end on any date other than an Interest Payment Date, and (iii) shall not
extend beyond the Stated Maturity Date. Upon the termination of any such
Extension Period and the payment of all accrued and unpaid interest and any
additional amounts then due, the Corporation may commence a new Extension
Period, subject to the foregoing requirements.
The Corporation has agreed that it will not (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Corporation's capital stock,
(ii) make any payment of principal, interest or premium, if any, on or repay or
repurchase or redeem any debt securities of the Corporation (including any other
Debentures) that rank pari passu with or junior in right of payment to the
Junior Subordinated Debentures or (iii) make any guarantee payments with respect
to any guarantee by the Corporation of the debt securities of any Subsidiary of
the Corporation (including any Other Guarantees) if such guarantee ranks pari
passu with or junior in right of payment to the Junior Subordinated Debentures
(other than (a) dividends or distributions in shares of, or options, warrants or
rights to subscribe for or purchase shares of, Common Stock, (b) any declaration
of a dividend in connection with the implementation of a stockholders' rights
plan, or the issuance of stock under any such plan in the future, or the
redemption or repurchase of any such rights pursuant thereto, (c) payments under
the Guarantee, (d) as a result of a reclassification of the Corporation's
capital stock or the exchange or conversion of one class or series of the
Corporation's capital stock for another class or series of the Corporation's
capital stock, (e) the purchase of fractional interests in shares of the
Corporation's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged and (f)
purchases of Common Stock related to the issuance of Common Stock or rights
under any of the Corporation's benefit plans for its directors, officers or
employees or any of the Corporation's dividend reinvestment plans), if at such
time (1) there shall have occurred any event of which the Corporation has actual
knowledge that (a) is, or with the giving of notice or the lapse of time, or
both, would be, a Debenture Event of Default and (b) in respect of which the
Corporation shall not have taken reasonable steps to cure, (2) the Corporation
shall be in default with respect to its payment of any obligations under the
Guarantee or (3) the Corporation shall have given notice of its election to
exercise its right to extend the interest payment period and any such extension
shall be continuing.
Subject to (i) the receipt of any required regulatory
approval, and (ii) the receipt by the Corporation of an opinion of counsel to
the effect that such distribution will not be a taxable event to holders of
Capital Securities, the Corporation will have the right at any time to liquidate
the Trust and cause the Junior Subordinated Debentures to be distributed to the
holders of the Trust Securities in liquidation of the Trust.
The Junior Subordinated Debentures are issuable only in
registered form without coupons in minimum denominations of $100,000 and
multiples of $1,000 in excess thereof. As provided in the Indenture and subject
to the transfer restrictions limitations as may be contained herein and therein
from time to time, this Junior Subordinated Debenture is transferable by the
holder hereof on the Debenture Register of the Corporation, upon surrender of
this Junior Subordinated Debenture for registration of transfer at the office or
agency of the Corporation in New York, New York accompanied by a written
instrument or instruments of transfer in form satisfactory to the Corporation or
the Debenture Trustee duly executed by the holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Junior Subordinated
Debentures of authorized denominations and for the same aggregate principal
amount and series will be issued to the designated transferee or transferees. No
service charge will be made for any such registration of transfer, but the
Corporation may require payment of a sum sufficient to cover any tax or other
governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this
Junior Subordinated Debenture, the Corporation, the Debenture Trustee, any
authenticating agent, any paying agent, any transfer agent and the registrar may
deem and treat the holder hereof as the absolute owner hereof (whether or not
this Junior Subordinated Debenture shall be overdue and notwithstanding any
notice of ownership or writing hereon made by anyone other than the Debenture
registrar for the Junior Subordinated Debentures) for the purpose of receiving
payment of or on account of the principal hereof and premium, if any, and
(subject to the Indenture) interest due hereon and for all other purposes, and
neither the Corporation nor the Debenture Trustee nor any authenticating agent
nor any paying agent nor any transfer agent nor any registrar shall be affected
by any notice to the contrary.
No recourse shall be had for the payment of the principal of
or premium, if any, or interest on this Junior Subordinated Debenture, or for
any claim based hereon, or otherwise in respect hereof, or based on or in
respect of the Indenture, against any incorporator, stockholder, officer or
director, past, present or future, as such, of the Corporation or of any
predecessor or successor Person, whether by virtue of any constitution, statute
or rule of law, or by the enforcement of any assessment or penalty or otherwise,
all such liability being, by the acceptance hereof and as part of the
consideration for the issuance hereof, expressly waived and released.
All terms used in this Junior Subordinated Debenture that are
defined in the Indenture shall have the meanings assigned to them in the
Indenture.
THE INDENTURE AND THE JUNIOR SUBORDINATED DEBENTURES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.
<PAGE>
EXHIBIT 4.2
(Form of Certificate of New Junior Subordinated Debenture)
(FORM OF FACE OF JUNIOR SUBORDINATED DEBENTURE)
IF THE JUNIOR SUBORDINATED DEBENTURE IS A GLOBAL JUNIOR SUBORDINATED
DEBENTURE, INSERT: THIS JUNIOR SUBORDINATED DEBENTURE IS A GLOBAL JUNIOR
SUBORDINATED DEBENTURE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED
TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY.
THIS JUNIOR SUBORDINATED DEBENTURE IS EXCHANGEABLE FOR JUNIOR SUBORDINATED
DEBENTURES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO
TRANSFER OF THIS JUNIOR SUBORDINATED DEBENTURE (OTHER THAN A TRANSFER OF THIS
JUNIOR SUBORDINATED DEBENTURE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS JUNIOR SUBORDINATED DEBENTURE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC")
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY JUNIOR SUBORDINATED DEBENTURE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS
SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE JUNIOR SUBORDINATED DEBENTURES WILL BE ISSUED AND MAY BE
TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN
$100,000 (100 SECURITIES). ANY SUCH TRANSFER OF JUNIOR SUBORDINATED DEBENTURES
IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 SHALL BE
DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL
BE DEEMED NOT TO BE THE HOLDER OF SUCH JUNIOR SUBORDINATED DEBENTURES FOR ANY
PURPOSE, INCLUDING BUT NOT LIMITED TO THE RECEIPT OF PRINCIPAL, PREMIUM (IF ANY)
OR INTEREST OF SUCH JUNIOR SUBORDINATED DEBENTURES, AND SUCH TRANSFEREE SHALL BE
DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH JUNIOR SUBORDINATE DEBENTURES.
THE HOLDER OF THIS JUNIOR SUBORDINATED DEBENTURE BY ITS ACCEPTANCE
HEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT AN
EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA") OR (ii) THE ACQUISITION AND HOLDING OF THIS JUNIOR
SUBORDINATED DEBENTURE BY IT IS NOT PROHIBITED BY EITHER SECTION 406 OF ERISA OR
SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR EXEMPT
FROM ANY SUCH PROHIBITION.
MAINSTREET BANKGROUP INCORPORATED
SERIES B 8.90% JUNIOR SUBORDINATED DEFERRABLE
INTEREST DEBENTURE DUE DECEMBER 1, 2027
MainStreet BankGroup Incorporated, a Virginia corporation (the
"Corporation", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
MainStreet Capital Trust I or registered assigns, the principal sum of
________________________ dollars ($__________) on December 1, 2027 (the "Stated
Maturity Date"), unless previously prepaid, and to pay interest on the
outstanding principal amount hereof from November 19, 1997, or from the most
recent interest payment date (each such date, an "Interest Payment Date") to
which interest has been paid or duly provided for, semi-annually (subject to
deferral as set forth herein) in arrears on June 1 and December 1 of each year,
commencing June 1, 1998, at the rate of 8.90% per annum until the principal
hereof shall have become due and payable, and on any overdue principal and
premium, if any, and (without duplication and to the extent that payment of such
interest is enforceable under applicable law) on any overdue installment of
interest at the same rate per annum compounded semi-annually. The amount of
interest payable on any Interest Payment Date shall be computed on the basis of
a 360-day year of twelve 30-day months and, for any period less than a full
calendar month, the number of days elapsed in such month. In the event that any
date on which the principal of (or premium, if any) or interest on this Junior
Subordinated Debenture is payable is not a Business Day, then the payment
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 next succeeding Business Day falls in the next calendar
year, then such payment shall be made on the immediately preceding Business Day,
in each case with the same force and effect as if made on such date. Pursuant to
the Indenture, in certain circumstances the Corporation will be required to pay
Additional Sums and Compounded Interest (each as defined in the Indenture) with
respect to this Junior Subordinated Debenture. Pursuant to the Registration
Rights Agreement, in certain limited circumstances the Corporation will be
required to pay Liquidated Damages (as defined in the Registration Rights
Agreement) with respect to this Junior Subordinated Debenture.
The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Junior Subordinated Debenture (or one
or more Predecessor Junior Subordinated Debenture, as defined in said Indenture)
is registered at the close of business on the regular record date for such
interest installment, which shall be at the close of business on the 15th day of
the month preceding the month in which the relevant interest payment date falls.
Any such interest installment not punctually paid or duly provided for shall
forthwith cease to be payable to the holders on such regular record date and may
be paid to the Person in whose name this Junior Subordinated Debenture (or one
or more Predecessor Junior Subordinated Debentures) is registered at the close
of business on a special record date to be fixed by the Debenture Trustee for
the payment of such defaulted interest, notice whereof shall be given to the
holders of Junior Subordinated Debentures not less than 10 days prior to such
special record date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Junior Subordinated Debentures may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture.
The principal of (and premium, if any) and interest (including
Compounded Interest and Additional Sums, if any) and Liquidated Damages, if any,
on this Junior Subordinated Debenture shall be payable at the office or agency
of the Debenture Trustee maintained for that purpose in any coin or currency of
the United States of America that at the time of payment is legal tender for
payment of public and private debts; provided, however, that, payment of
interest may be made at the option of the Corporation by (i) check mailed to the
holder at such address as shall appear in the Debenture Register or (ii) by
transfer to an account maintained by the Person entitled thereto, provided that
proper written transfer instructions have been received by the relevant record
date. Notwithstanding the foregoing, so long as the Holder of this Junior
Subordinated Debenture is the Property Trustee, the payment of the principal of
(and premium, if any) and interest (including Compounded Interest and Additional
Sums, if any) and Liquidated Damages, if any, on this Junior Subordinated
Debenture will be made at such place and to such account as may be designated by
the Property Trustee.
The indebtedness evidenced by this Junior Subordinated Debenture is, to
the extent provided in the Indenture, subordinate and junior in right of payment
to the prior payment in full of all Senior Indebtedness, and this Junior
Subordinated Debenture is issued subject to the provisions of the Indenture with
respect thereto. Each holder of this Junior Subordinated Debenture, by accepting
the same, (a) agrees to and shall be bound by such provisions, (b) authorizes
and directs the Debenture Trustee on his or her behalf to take such action as
may be necessary or appropriate to acknowledge or effectuate the subordination
so provided and (c) appoints the Debenture Trustee his or her attorney-in-fact
for any and all such purposes. Each holder hereof, by his or her acceptance
hereof, hereby waives all notice of the acceptance of the subordination
provisions contained herein and in the Indenture by each holder of Senior
Indebtedness, whether now outstanding or hereafter incurred, and waives reliance
by each such holder upon said provisions.
This Junior Subordinated Debenture shall not be entitled to any benefit
under the Indenture hereinafter referred to, be valid or become obligatory for
any purpose until the Certificate of Authentication hereon shall have been
signed by or on behalf of the Debenture Trustee.
The provisions of this Junior Subordinated Debenture are continued on
the reverse side hereof and such provisions shall for all purposes have the same
effect as though fully set forth at this place.
IN WITNESS WHEREOF, the Corporation has caused this instrument to be
duly executed and sealed this ____day of __________, 1998.
MAINSTREET BANKGROUP INCORPORATED.
By: __________________________
Name: James E. Adams
Title: Executive Vice President,
Chief Financial Officer and
Treasurer
Attest:
By: _______________________
Name: Rebecca J. Jenkins
Title: Executive Vice President
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Junior Subordinated Debentures referred to in the
within-mentioned Indenture.
THE BANK OF NEW YORK,
not in its individual capacity but solely
as Debenture Trustee
By __________________________
Authorized Signatory
(FORM OF REVERSE OF SECURITY)
This Junior Subordinated Debenture is one of the Junior Subordinated
Debentures of the Corporation (herein sometimes referred to as the "Junior
Subordinated Debentures"), specified in the Indenture, all issued or to be
issued under and pursuant to an Indenture, dated as of November 19, 1997 (the
"Indenture"), duly executed and delivered between the Corporation and The Bank
of New York, as Debenture Trustee (the "Debenture Trustee"), to which Indenture
reference is hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Debenture Trustee, the
Corporation and the holders of the Junior Subordinated Debentures.
Upon the occurrence and continuation of a Special Event prior to
December 1, 2007 (the "Initial Optional Redemption Date"), the Corporation shall
have the right, at any time within 90 days following the occurrence of such
Special Event, to prepay this Junior Subordinated Debenture in whole (but not in
part) at the Special Event Prepayment Price. "Special Event Prepayment Price"
shall mean, with respect to any prepayment of the Junior Subordinated Debentures
following a Special Event, an amount in cash equal to the Make Whole Amount. The
"Make Whole Amount" shall mean an amount equal to the greater of (i) 100% of the
principal amount of the Junior Subordinated Debentures to be prepaid or (ii) the
sum, as determined by a Quotation Agent, of the present values of remaining
scheduled payments of principal and interest on such Junior Subordinated
Debentures, discounted to the prepayment date on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate,
plus, in the case of each of clauses (i) and (ii), any accrued and unpaid
interest thereon, including Compounded Interest and Additional Sums, if any, and
Liquidated Damages, if any, to the date of such prepayment.
In addition, the Corporation shall have the right to prepay this Junior
Subordinated Debenture, in whole or in part, at any time on or after the Initial
Optional Prepayment Date (an "Optional Prepayment"), upon not less than 30 days
and not more than 60 days' notice, at the prepayment prices set forth below
plus, in each case, accrued and unpaid interest thereon (including Additional
Sums and Compounded Interest, if any) and Liquidated Damages, if any, to the
applicable date of prepayment (the "Optional Prepayment Price") if prepaid
during the 12-month period beginning December 1 of the years indicated below.
Year Percentage
2007 104.450%
2008 104.005%
2009 103.560%
2010 103.115%
2011 102.670%
2012 102.225%
2013 101.780%
2014 101.335%
2015 100.890%
2016 100.445%
2017 and thereafter 100.000%
The Optional Prepayment Price or the Special Event Prepayment Price, as
the case requires, shall be paid prior to 12:00 noon, New York time, on the date
of such prepayment or at such earlier time as the Corporation determines,
provided, that the Corporation shall deposit with the Debenture Trustee an
amount sufficient to pay the applicable Prepayment Price by 10:00 a.m., New York
time, on the date such Prepayment Price is to be paid. Any prepayment pursuant
to this paragraph will be made upon not less than 30 days nor more than 60 days
notice. If the Junior Subordinated Debentures are only partially prepaid by the
Corporation pursuant to an Optional Prepayment, the particular Junior
Subordinated Debentures to be prepaid shall be selected on a pro rata basis not
more than 60 days prior to the date fixed for prepayment from the outstanding
Junior Subordinated Debentures not previously called for prepayment, provided,
however, that with respect to Debentureholders that would be required to hold
Junior Subordinated Debentures with an aggregate principal amount of less than
$100,000 but more than an aggregate principal amount of zero as a result of such
pro rata prepayment, the Corporation shall prepay Junior Subordinated Debentures
of each such Debentureholder so that after such prepayment such Debentureholder
shall hold Junior Subordinated Debentures either with an aggregate principal
amount of at least $100,000 or such debentureholder no longer holds any Junior
Subordinated Debentures and shall use such method (including, without
limitation, by lot) as the Corporation shall deem fair and appropriate,
provided, further, that any such proration may be made on the basis of the
aggregate principal amount of Junior Subordinated Debentures held by each
Debentureholder thereof and may be made by making such adjustments as the
Corporation deems fair and appropriate in order that only Junior subordinated
Debentures in denominations of $1,000 or integral multiples thereof shall be
prepaid.
In the event of prepayment of this Junior Subordinated Debenture in
part only, a new Junior Subordinated debenture or Junior Subordinated Debentures
for the portion hereof that has not been prepaid will be issued in the name of
the holder hereof upon the cancellation hereof.
Notwithstanding the foregoing, any prepayment of Junior Subordianted
Debentures by the Corporation shall be subject to the receipt of any required
regulatory approval.
In case a Debenture Event of Default, as defined in the Indenture,
shall have occurred and be continuing, the principal of all of the Junior
Subordinated Debentures may be declared, and upon such declaration shall become,
due and payable, in the manner, with the effect and subject to the conditions
provided in the Indenture.
The Indenture contains provisions permitting the Corporation and the
Debenture Trustee, with the consent of the holders of a majority in aggregate
principal amount of the Junior Subordinated Debentures at the time outstanding,
as defined in the Indenture, to execute supplemental indentures for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of modifying in any manner the rights of the
holders of the Junior Subordinated Debentures; provided, however, that no such
supplemental indenture shall, without the consent of each holder of Junior
Subordinated Debentures then outstanding and affected thereby, (i) change the
Stated Maturity Date of any Junior Subordinated Debentures, or reduce the rate
or extend the time of payment of interest thereon (subject to Article XVI of the
Indenture), or reduce the principal amount thereof, or reduce any amount payable
on prepayment thereof, or make the principal thereof or any interest or premium
thereon payable in any coin or currency other than that provided in the Junior
Subordinated Debentures, or impair or affect the right of any holder of Junior
Subordinated Debentures to institute suit for the payment thereof, or (ii)
reduce the aforesaid percentage of Junior Subordinated Debentures, the holders
of which are required to consent to any such supplemental indenture. The
Indenture also contains provisions permitting the holders of a majority in
aggregate principal amount of the Junior Subordinated Debentures at the time
outstanding affected thereby, on behalf of all of the holders of the Junior
Subordinated Debentures, to waive any past default in the performance of any of
the covenants contained in the Indenture, or established pursuant to the
Indenture, and its consequences, except a default in the payment of the
principal of or premium, if any, or interest on any of the Junior Subordinated
Debentures or a default in respect of any covenant or provision under which the
Indenture cannot be modified or amended without the consent of each holder of
Junior Subordinated Debentures then outstanding. Any such consent or waiver by
the holder of this Junior Subordinated Debenture (unless revoked as provided in
the Indenture) shall be conclusive and binding upon such Holder and upon all
future holders and owners of this Junior Subordinated Debenture and of any
Junior Subordinated Debenture issued in exchange hereof or in place hereof
(whether by registration of transfer or otherwise), irrespective of whether or
not any notation of such consent or waiver is made upon this Junior Subordinated
Debenture.
No reference herein to the Indenture and no provision of this Junior
Subordinated Debenture or of the Indenture shall alter or impair the obligation
of the Corporation, which is absolute and unconditional, to pay the principal of
(and premium, if any) and interest (including Compounded Interest and Additional
Sums, if any) and Liquidated Damages, if any, on this Junior Subordinated
Debenture at the time and place and at the rate and in the money herein
prescribed.
So long as no Debenture Event of Default shall have occurred and be
continuing, the Corporation shall have the right, at any time and from time to
time during the term of the Junior Subordinated Debentures, to defer payments of
interest by extending the interest payment period of such Junior Subordinated
Debentures for a period not exceeding 10 consecutive semi-annual periods,
including the first such semi-annual period during such extension period, and
not extending beyond the Stated Maturity Date of the Junior Subordinated
Debentures (an "Extension Period") or ending on a date other than an Interest
Payment Date, at the end of which period the Corporation shall pay all interest
then accrued and unpaid (together with interest thereon at the rate specified
for the Junior Subordinated Debentures to the extent that payment of such
interest is enforceable under applicable law). Before the termination of any
such Extension Period, the Corporation may further defer payments of interest by
further extending such Extension Period, provided that such Extension Period,
together with all such previous and further extensions within such Extension
Period, (i) shall not exceed 10 consecutive semi-annual periods, including the
first semi-annual period during such Extension Period, (ii) shall not end on any
date other than an Interest Payment Date, and (iii) shall not extend beyond the
Stated Maturity Date. Upon the termination of any such Extension Period and the
payment of all accrued and unpaid interest and any additional amounts then due,
the Corporation may commence a new Extension Period, subject to the foregoing
requirements.
The Corporation has agreed that it will not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Corporation's capital stock,
(ii) make any payment of principal, interest or premium, if any, on or repay or
repurchase or redeem any debt securities of the Corporation (including any other
Debentures) that rank pari passu with or junior in right of payment to the
Junior Subordinated Debentures or (iii) make any guarantee payments with respect
to any guarantee by the Corporation of the debt securities of any Subsidiary of
the Corporation (including any Other Guarantees) if such guarantee ranks pari
passu or junior in right of payment to the Junior Subordinated Debentures (other
than (a) dividends or distributions in shares of, or options, warrants or rights
to subscribe for or purchase shares of, Common Stock (b) any declaration of a
dividend in connection with the implementation of a stockholder's rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the
Guarantee, (d) as a result of a reclassification of the Corporation's capital
stock or the exchange or the conversion of one class or series of the
Corporation's capital stock for another class or series of the Corporation's
capital stock, (e) the purchase of fractional interests in shares of the
Corporation's capital stock pursuant to the exchange or conversion provisions of
such capital stock or the security being exchanged or converted and (f)
purchases of Common Stock related to the issuance of Common Stock or rights
under any of the Corporation's benefit plans for its directors, officers or
employees or any of the Corporation's dividend reinvestment plans) if at such
time (1) there shall have occurred any event of which the Corporation has actual
knowledge that (a) is or, with the giving of notice or the lapse of time, or
both, would be, a Debenture Event of Default and (b) in respect of which the
Corporation shall not have taken reasonable steps to cure, (2) the Corporation
shall be in default with respect to its payment obligations under the Guarantee
or (3) the Corporation shall have given notice of its election to exercise its
right to extend the interest payment period and any such extension shall be
continuing.
Subject to (i) the receipt of any required regulatory approval, and
(ii) the receipt by the Corporation of an opinion of counsel to the effect that
such distribution will not be a taxable event to holders of Capital Securities,
the Corporation will have the right at any time to liquidate the Trust and cause
the Junior Subordinated Debentures to be distributed to the holders of the Trust
Securities in liquidation of the Trust.
The Junior Subordinated Debentures are issuable only in registered form
without coupons in denominations of $100,000 and multiples of $1,000 in excess
thereof. As provided in the Indenture and subject to the transfer restrictions
limitations as may be contained herein and therein from time to time, this
Junior Subordinated Debenture is transferable by the holder hereof on the
Debenture Register of the Corporation, upon surrender of this Junior
Subordinated Debenture for registration of transfer at the office or agency of
the Corporation in New York, New York accompanied by a written instrument or
instruments of transfer in form satisfactory to the Corporation or the Debenture
Trustee duly executed by the holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Junior Subordinated Debentures of
authorized denominations and for the same aggregate principal amount and series
will be issued to the designated transferee or transferees. No service charge
will be made for any such registration of transfer, but the Corporation may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in relation thereto.
Prior to due presentment for registration of transfer of this Junior
Subordinated Debenture, the Corporation, the Debenture Trustee, any
authenticating agent, any paying agent, any transfer agent and the registrar may
deem and treat the holder hereof as the absolute owner hereof (whether or not
this Junior Subordinated Debenture shall be overdue and notwithstanding any
notice of ownership or writing hereon made by anyone other than the Debenture
Registrar for the Junior Subordinated Debentures) for the purpose of receiving
payment of or on account of the principal hereof and premium, if any, and
(subject to the Indenture) interest due hereon and for all other purposes, and
neither the Corporation nor the Debenture Trustee nor any authenticating agent
nor any paying agent nor any transfer agent nor any registrar shall be affected
by any notice to the contrary.
No recourse shall be had for the payment of the principal of or
premium, if any, or interest on this Junior Subordinated Debenture, or for any
claim based hereon, or otherwise in respect hereof, or based on or in respect of
the Indenture, against any incorporator, stockholder, officer or director, past,
present or future, as such, of the Corporation or of any predecessor or
successor Person, whether by virtue of any constitution, statute or rule of law,
or by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issuance hereof, expressly waived and released.
All terms used in this Junior Subordinated Debenture that are defined
in the Indenture shall have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE JUNIOR SUBORDINATED DEBENTURES SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.
EXHIBIT 4.3
(Certificate of Trust of MainStreet Capital Trust I)
CERTIFICATE OF TRUST
OF
MAINSTREET CAPITAL TRUST I
This Certificate of Trust is being executed as of November 12,
1997 for the purposes of organizing a business trust pursuant to the Delaware
Business Trust Act, 12 Del.C.
Sections 3801 et seq. (the "Act").
The undersigned hereby certifies as follows:
1. Name. The name of the business trust is
"MainStreet Capital Trust I" (the "Trust").
2. Delaware Trustee. The name and business address of
the Delaware resident trustee of the Trust meeting the requirements of Section
3807 of the Act are as follows:
The Bank of New York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711.
3. Effective. This Certificate of Trust shall be
effective immediately upon filing in the Office of the Secretary of the State of
Delaware.
IN WITNESS WHEREOF, the undersigned, being all the trustees of
the Trust, have duly executed this Certificate of Trust as of the day and year
first above written.
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: /s/ Frederick W. Clark
Name: Frederick W. Clark
Authorized Signatory
ADMINISTRATIVE TRUSTEE
By: /s/ James E. Adams
Name: James E. Adams
ADMINISTRATIVE TRUSTEE
By: /s/ Rebecca J. Jenkins
Name: Rebecca J. Jenkins
ADMINISTRATIVE TRUSTEE
By: /s/ Brenda H. Smith
Name: Brenda H. Smith
MAINSTREET BANKGROUP INCORPORATED,
as Sponsor
By: /s/ James E. Adams
Name: James E. Adams
Title: Executive Vice President,
Chief Financial Officer and Treasurer
<PAGE>
EXHIBIT 4.4
(Amended and Restated Declaration of Trust relation to MainStreet
Capital Trust I, dated as of November 19, 1997, between MainStreet BankGroup
Incorporated and the trustees named therein)
AMENDED AND RESTATED DECLARATION
OF TRUST
MAINSTREET CAPITAL TRUST I
Dated as of November 19, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions................................................................. 2
-----------
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application............................................ 10
--------------------------------
SECTION 2.2 Lists of Holders of Trust Securities........................................ 11
------------------------------------
SECTION 2.3 Reports by the Property Trustee............................................. 11
-------------------------------
SECTION 2.4 Periodic Reports to Property Trustee........................................ 11
------------------------------------
SECTION 2.5 Evidence of Compliance with Conditions Precedent............................ 12
------------------------------------------------
SECTION 2.6 Events of Default; Waiver................................................... 12
-------------------------
SECTION 2.7 Event of Default; Notice.................................................... 14
------------------------
ARTICLE III
ORGANIZATION
SECTION 3.1 Name........................................................................ 15
----
SECTION 3.2 Office...................................................................... 15
------
SECTION 3.3 Purpose..................................................................... 15
-------
SECTION 3.4 Authority................................................................... 15
---------
SECTION 3.5 Title to Property of the Trust.............................................. 16
------------------------------
SECTION 3.6 Powers and Duties of the Administrative Trustees............................ 16
------------------------------------------------
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees........................ 19
----------------------------------------------------
SECTION 3.8 Powers and Duties of the Property Trustee................................... 20
-----------------------------------------
SECTION 3.9 Certain Duties and Responsibilities of the Property
---------------------------------------------------
Trustee..................................................................... 23
SECTION 3.10 Certain Rights of Property Trustee.......................................... 25
----------------------------------
SECTION 3.11 Delaware Trustee............................................................ 27
----------------
SECTION 3.12 Execution of Documents...................................................... 28
----------------------
SECTION 3.13 Not Responsible for Recitals or Issuance of Trust
-------------------------------------------------
Securities.................................................................. 28
SECTION 3.14 Duration of Trust........................................................... 28
-----------------
SECTION 3.15 Mergers..................................................................... 28
-------
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities..................................... 30
---------------------------------------
SECTION 4.2 Responsibilities of the Sponsor............................................. 30
-------------------------------
SECTION 4.3 Right to Proceed............................................................ 31
----------------
SECTION 4.4 Right to Terminate Trust.................................................... 31
------------------------
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees: Appointment of Co-Trustee............................... 32
---------------------------------------------
SECTION 5.2 Delaware Trustee............................................................ 32
----------------
SECTION 5.3 Property Trustee; Eligibility............................................... 33
-----------------------------
SECTION 5.4 Certain Qualifications of Administrative Trustees and
-----------------------------------------------------
Delaware Trustee Generally.................................................. 34
SECTION 5.5 Administrative Trustees..................................................... 34
-----------------------
SECTION 5.6 Delaware Trustee............................................................ 35
-----------------
SECTION 5.7 Appointment, Removal and Resignation of Trustees............................ 35
------------------------------------------------
SECTION 5.8 Vacancies among Trustees.................................................... 37
------------------------
SECTION 5.9 Effect of Vacancies......................................................... 37
-------------------
SECTION 5.10 Meetings.................................................................... 37
--------
SECTION 5.11 Delegation of Power......................................................... 38
-------------------
SECTION 5.12 Merger, Conversion, Consolidation or Succession to
--------------------------------------------------
Business.................................................................... 38
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions............................................................... 39
-------------
ARTICLE VII
ISSUANCE OF TRUST SECURITIES
SECTION 7.1 General Provisions Regarding Trust Securities............................... 39
---------------------------------------------
SECTION 7.2 Execution and Authentication................................................ 40
----------------------------
SECTION 7.3 Form and Dating............................................................. 41
---------------
SECTION 7.4 Registrar, Paying Agent and Exchange Agent.................................. 43
------------------------------------------
SECTION 7.5 Paying Agent to Hold Money in Trust......................................... 43
-----------------------------------
SECTION 7.6 Replacement Trust Securities................................................ 44
----------------------------
SECTION 7.7 Outstanding Capital Securities.............................................. 44
------------------------------
SECTION 7.8 Capital Securities in Treasury.............................................. 44
------------------------------
SECTION 7.9 Temporary Trust Securities.................................................. 45
--------------------------
SECTION 7.10 Cancellation................................................................ 46
------------
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust........................................................ 46
--------------------
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Trust Securities................................................ 47
----------------------------
SECTION 9.2 Transfer Procedures and Restrictions........................................ 49
------------------------------------
SECTION 9.3 Deemed Trust Security Holders............................................... 58
-----------------------------
SECTION 9.4 Book-Entry Interests........................................................ 58
--------------------
SECTION 9.5 Notices to Clearing Agency.................................................. 59
--------------------------
SECTION 9.6 Appointment of Successor Clearing Agency.................................... 59
----------------------------------------
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF TRUST SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability................................................................... 59
---------
SECTION 10.2 Exculpation................................................................. 60
-----------
SECTION 10.3 Fiduciary Duty.............................................................. 60
--------------
SECTION 10.4 Indemnification............................................................. 61
---------------
SECTION 10.5 Outside Businesses.......................................................... 65
------------------
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year................................................................. 66
-----------
SECTION 11.2 Certain Accounting Matters.................................................. 66
--------------------------
SECTION 11.3 Banking..................................................................... 66
-------
SECTION 11.4 Withholding................................................................. 67
-----------
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.................................................................. 67
----------
SECTION 12.2 Meetings of the Holders; Action by Written Consent.......................... 69
--------------------------------------------------
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee.......................... 71
--------------------------------------------------
SECTION 13.2 Representations and Warranties of Delaware Trustee.......................... 72
--------------------------------------------------
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 Registration Rights Agreement............................................... 73
-----------------------------
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices..................................................................... 73
-------
SECTION 15.2 Governing Law............................................................... 74
-------------
SECTION 15.3 Intention of the Parties.................................................... 75
------------------------
SECTION 15.4 Headings.................................................................... 75
--------
SECTION 15.5 Successors and Assigns...................................................... 75
----------------------
SECTION 15.6 Partial Enforceability...................................................... 75
----------------------
SECTION 15.7 Counterparts................................................................ 75
------------
ANNEX I TERMS OF TRUST SECURITIES............................................................I-1
EXHIBIT A-1 FORM OF CAPITAL SECURITY CERTIFICATE............................................... A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE................................................ A2-4
</TABLE>
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Section of
Trust Indenture Act................. Section of
of 1939, as amended................. Declaration
- ------------------- -----------
<S> <C>
310(a)................................................................. 5.3
310(b)................................................................. 5.3(c), 5.3(d)
311(a)................................................................. 2.2(b)
311(b)................................................................. 2.2(b)
312(a)................................................................. 2.2(a)
312(b)................................................................. 2.2(b)
313.................................................................... 2.3
314(a)................................................................. 2.4; 3.6(j)
314(c)................................................................. 2.5
315(a)................................................................. 3.9
315(b)................................................................. 2.7(a)
315(c)................................................................. 3.9(a)
315(d)................................................................. 3.9(b)
316(a)................................................................. 2.6
316(c)................................................................. 3.6(e)
317(a)................................................................. 3.8(e); 3.8(h)
317(b)................................................................. 3.8(i); 7.5
- ---------------
</TABLE>
* This Cross-Reference Table does not constitute part of the Declaration
and shall not affect the interpretation of any of its terms or
provisions.
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
MAINSTREET CAPITAL TRUST I
November 19, 1997
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration")
dated and effective as of November 19, 1997, by the Trustees (as defined
herein), the Sponsor (as defined herein) and by the holders, from time to time,
of undivided beneficial interests in the Trust to be issued pursuant to this
Declaration;
WHEREAS, the Trustees and the Sponsor established MainStreet
Capital Trust I (the "Trust"), a trust formed under the Delaware Business Trust
Act pursuant to a Declaration of Trust dated as of November 12, 1997 (the
"Original Declaration"), and a Certificate of Trust filed with the Secretary of
State of the State of Delaware on November 12, 1997, 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 Junior Subordinated Debentures of the Debenture Issuer (each as
hereinafter defined), and engaging in only those other activities necessary,
advisable or incidental thereto;
WHEREAS, as of the date hereof, no interests in the Trust
have been issued;
WHEREAS, all of the Trustees 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
and that this Declaration constitute the governing instrument of such 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.
<PAGE>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION I.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;
(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 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.
"Administrative Trustee" has the meaning set forth in
Section 5.1(b).
"Affiliate" has the same meaning as given to that term in Rule
405 under the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent, Registrar or Exchange Agent.
"Authorized Officer" of a Person means any other Person that
is authorized to legally bind such former Person.
"Book-Entry Interest" means a beneficial interest in a Global
Capital Security registered in the name of a Clearing Agency or its nominee,
ownership and transfers of which shall be maintained and made through book
entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a Saturday or a Sunday
or a day on which banking institutions in New York, New York or Martinsville,
Virginia are authorized or required by law or executive order to remain closed.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. ss. 3801 et seq., as it may be amended from time to time, or
any successor legislation.
"Capital Security Beneficial Owner" means, with respect to a
Book-Entry Interest, a Person who is the beneficial owner of such Book-Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"Capital Securities" means, collectively, the Series A Capital
Securities and the Series B Capital Securities.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting as
depositary for the Capital Securities and in whose name or in the name of a
nominee of that organization shall be registered a Global Certificate and which
shall undertake to effect book entry transfers and pledges of the Capital
Securities.
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time the
Clearing Agency effects book entry transfers and pledges of securities deposited
with the Clearing Agency.
"Closing Time" means the "Closing Time" under the Purchase
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor legislation.
"Commission" means the United States Securities and Exchange
Commission as from time to time constituted, or if at any time after the
execution of this Declaration such Commission is not existing and performing the
duties now assigned to it under applicable federal securities laws, then the
body performing such duties at such time.
"Common Securities" has the meaning specified in Section
7.1(a).
"Common Securities Guarantee" means the guarantee agreement,
dated as of November 19, 1997, of the Sponsor in respect of the Common
Securities.
"Common Securities Subscription Agreement" means the common
securities subscription agreement, dated as of November 19, 1997, between the
Trust and the Sponsor in respect of the Common Securities.
"Corporate Trust Office" means the office of the Property
Trustee at which the corporate trust business of the Property Trustee shall, at
any particular time, be principally administered, which office at the date of
execution of this Agreement is located at 101 Barclay Street, 21W, New York, New
York 10286.
"Corporation Indemnified Person" means (a) any Administrative
Trustee; (b) any Affiliate of any Administrative Trustee; (c) any officers,
directors, shareholders, members, partners, employees, representatives or agents
of any Administrative Trustee; or (d) any officer, employee or agent of the
Trust or its Affiliates.
"Covered Person" means: (a) any officer, director,
shareholder, partner, member, representative, employee or agent of (i) the Trust
or (ii) the Trust's Affiliates; and (b) any Holder of Trust Securities.
"Debenture Issuer" means MainStreet BankGroup Incorporated, a
Virginia corporation, or any successor entity resulting from any consolidation,
amalgamation, merger or other business combination, in its capacity as issuer of
the Junior Subordinated Debentures under the Indenture.
"Debenture Subscription Agreement" means the debenture
subscription agreement, dated as of November 19, 1997, between the Debenture
Issuer and the Trust in respect of the Series A Junior Subordinated Debentures.
"Debenture Trustee" means The Bank of New York, a New York
banking corporation, as trustee under the Indenture until a successor is
appointed thereunder, and thereafter means such successor trustee.
"Default" means an event, act or condition that with notice or
lapse of time, or both, would constitute an Event of Default.
"Definitive Capital Securities" shall have the meaning set
forth in Section 7.3(c).
"Delaware Trustee" has the meaning set forth in Section 5.1.
"Direct Action" shall have the meaning set forth in Section
3.8(e).
"Distribution" means a distribution payable to Holders in
accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing
Agency.
"Event of Default" in respect of the Trust Securities means an
Event of Default (as defined in the Indenture) that has occurred and is
continuing in respect of the Junior Subordinated Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"Exchange Agent" has the meaning set forth in Section 7.4.
"Exchange Offer" means the offer that may be made pursuant to
the Registration Rights Agreement (i) by the Trust to exchange Series B Capital
Securities for Series A Capital Securities and (ii) by the Debenture Issuer to
exchange Series B Junior Subordinated Debentures for Series A Junior
Subordinated Debentures and the Series B Guarantee for the Series A Guarantee.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 10.4(b).
"Fiscal Year" has the meaning set forth in Section 11.1.
"Global Capital Security" has the meaning set forth in Section
7.3(a).
"Guarantee" means, collectively, the Series A Guarantee and
the Series B Guarantee.
"Holder" means a Person in whose name a Trust Security or
Successor Trust Security is registered, such Person being a beneficial owner
within the meaning of the Business Trust Act.
"Indemnified Person" means a Corporation Indemnified Person or
a Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of November 19, 1997,
among the Debenture Issuer and the Debenture Trustee, as amended from time to
time.
"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.
"Junior Subordinated Debentures" means, collectively, the
Series A Junior Subordinated Debentures and the Series B Junior Subordinated
Debentures.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Like Amount" has the meaning set forth in Exhibit I.
"List of Holders" has the meaning set forth in Section 2.2(a).
"Liquidated Damages" has the meaning set forth in the
Registration Rights Agreement.
"Majority in liquidation amount" means, with respect to the
Trust Securities, except as provided in the terms of the Capital Securities or
by the Trust Indenture Act, Holder(s) of outstanding Trust 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
Trust Securities of the relevant class.
"Offering Memorandum" has the meaning set forth in Section
3.6(b)(i).
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman, the Chief Executive Officer, the President,
a Vice President, the Chief Financial Officer, the Secretary or an Assistant
Secretary. Any Officers' Certificate delivered by the Trust shall be signed by
at least one Administrative Trustee. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for 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
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who
may be an employee of the Sponsor, and who shall be acceptable to the Property
Trustee.
"Participants" has the meaning specified in Section 7.3(b).
"Paying Agent" has the meaning specified in Section 7.4.
"Payment Amount" has the meaning specified in Section 6.1.
"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.
"PORTAL" has the meaning set forth in Section 3.6(b)(iii).
"Property Trustee" has the meaning set forth in Section
5.3(a).
"Property Trustee Account" has the meaning set forth in Section 3.8(c)(i).
"Purchase Agreement" means the Purchase Agreement for the
initial offering and sale of Capital Securities in the form of Exhibit C.
"QIBs" shall mean qualified institutional buyers as defined in Rule 144A.
"Quorum" means a majority of the Administrative Trustees or,
if there are only two Administrative Trustees, both of them.
"Registrar" has the meaning set forth in Section 7.4.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of November 19, 1997, by and among the Trust, the Debenture
Issuer and the Initial Purchaser named therein, as amended from time to time.
"Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Related Party" means, with respect to the Sponsor, any direct
or indirect wholly owned subsidiary of the Sponsor or any other Person that
owns, directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means any officer within the Corporate
Trust Office of the Property Trustee with direct responsibility for the
administration of this Declaration and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.
"Restricted Definitive Capital Securities" has the meaning set forth in
Section 7.3(c).
"Restricted Capital Security" means a Capital Security required by Section 9.2
to contain a Restricted Securities Legend.
"Restricted Securities Legend" has the meaning set forth in Section 9.2(i).
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act,
or any successor rule or regulation.
"Rule 144" means Rule 144 under the Securities Act, as such
rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission.
"Rule 144A" means Rule 144A under the Securities Act, as such
rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor legislation.
"Series A Capital Securities" has the meaning specified in Section 7.1(a).
"Series A Guarantee" means the guarantee agreement dated as of
November 19, 1997, by the Sponsor in respect of the Series A Capital Securities.
"Series A Junior Subordinated Debentures" means the Series A
8.90% Junior Subordinated Deferrable Interest Debentures due December 1, 2027 of
the Debenture Issuer issued pursuant to the Indenture.
"Series B Capital Securities" has the meaning specified in Section 7.1(a).
"Series B Guarantee" means the guarantee agreement to be
entered into in connection with the Exchange Offer by the Sponsor in respect of
the Series B Capital Securities.
"Series B Junior Subordinated Debentures" means the Series B
8.90% Junior Subordinated Deferrable Interest Debentures due December 1, 2027 of
the Debenture Issuer issued pursuant to the Indenture in the event of the
Exchange Offer.
"Special Event" has the meaning set forth in Section 4(c) of Annex I hereto.
"Sponsor" means MainStreet BankGroup Incorporated, a Virginia
corporation, or any successor entity resulting from any merger, consolidation,
amalgamation or other business combination, in its capacity as sponsor of the
Trust.
"Successor Delaware Trustee" has the meaning set forth in Section 5.7(b)(ii).
"Successor Entity" has the meaning set forth in Section 3.15(b)(i).
"Successor Property Trustee" has the meaning set forth in Section 3.8(f)(ii).
"Successor Trust Securities" has the meaning set forth in Section 3.15(b)(i).
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"10% in liquidation amount" means, with respect to the Trust
Securities, except as provided in the terms of the Capital Securities or by the
Trust Indenture Act, Holder(s) of outstanding Trust 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 Trust Securities
of the relevant class.
"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 from time to time, or any successor legislation.
"Trust Securities" means the Common Securities together with the Capital
Securities.
"Trust Securities Guarantees" means the Common Securities Guarantee and the
Guarantee.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue as a trustee in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as trustees 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.
"Unrestricted Global Capital Security" has the meaning set forth in Section
9.2(b).
ARTICLE II
TRUST INDENTURE ACT
SECTION II.1 Trust Indenture Act; Application
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration in order for this
Declaration to be qualified under the Trust Indenture Act and shall, to the
extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this
Declaration limits, qualifies or conflicts with the duties imposed by ss.ss. 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
(d) The application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Trust Securities as equity
securities representing undivided beneficial interests in the assets of the
Trust.
SECTION II.2 Lists of Holders of Trust Securities
(a) Each of the Sponsor and the Administrative Trustees on
behalf of the Trust shall provide the Property Trustee, unless the Property
Trustee is Registrar for the Trust Securities, (i) within 14 days after each
record date for payment of Distributions, a list, in such form as the Property
Trustee may reasonably require, of the names and addresses of the Holders ("List
of Holders") as of such record date, provided that neither the Sponsor nor the
Administrative Trustees on behalf of the Trust shall be obligated to provide
such List of Holders at any time that the List of Holders does not differ from
the most recent List of Holders given to the Property Trustee by the Sponsor and
the Administrative Trustees on behalf of the Trust, and (ii) at any other time,
within 30 days of receipt by the Trust of a written request for a List of
Holders as of a date no more than 14 days before such List of Holders is given
to the Property Trustee. The Property Trustee shall preserve, in as current a
form as is reasonably practicable, all information contained in Lists of Holders
given to it or which it receives in the capacity as Paying Agent (if acting in
such capacity), provided that the Property Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations
under ss.ss. 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION II.3 Reports by the Property Trustee
Within 60 days after December 15 of each year, commencing
December 15, 1997, the Property Trustee shall provide to the Holders of the
Capital Securities such reports as are required by ss. 313 of the Trust
Indenture Act, if any, in the form and in the manner provided by ss. 313 of the
Trust Indenture Act. The Property Trustee shall also comply with the
requirements of ss. 313(d) of the Trust Indenture Act.
SECTION II.4 Periodic Reports to Property Trustee
Each of the Sponsor and the Administrative Trustees on behalf
of the Trust shall provide to the Property Trustee such documents, reports and
information as are required by ss. 314 (if any) and the compliance certificate
required by ss. 314 of the Trust Indenture Act in the form, in the manner and at
the times required by ss. 314 of the Trust Indenture Act.
SECTION II.5 Evidence of Compliance with Conditions Precedent
Each of the Sponsor and the Administrative Trustees on behalf
of the Trust shall provide to the Property Trustee such evidence of compliance
with any conditions precedent provided for in this Declaration that relate to
any of the matters set forth in ss. 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to ss.
314(c)(1) of the Trust Indenture Act may be given in the form of an Officers'
Certificate.
SECTION II.6 Events of Default; Waiver
(a) The Holders of a Majority in liquidation amount of Capital
Securities may, by vote, on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default in respect of the Capital Securities
and its consequences, provided that, if the underlying Event of Default under
the Indenture:
(i) is not waivable under the Indenture, the Event of Default under the
Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority
in aggregate principal amount of the holders of the Junior Subordinated
Debentures (a "Super Majority") to be waived under the Indenture, the
Event of Default under the Declaration may only be waived by the vote
of the Holders of at least the proportion in aggregate liquidation
amount of the Capital Securities that the relevant Super Majority
represents of the aggregate principal amount of the Junior Subordinated
Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of ss.
316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of the Trust
Indenture Act is hereby expressly excluded from this Declaration and the Trust
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
default shall cease to exist, and any Event of Default with respect to the
Capital Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or an Event of Default with respect to the Capital
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Capital Securities of an Event of Default with respect to the Capital
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote,
or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the
Common Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such Event
of Default under the Declaration as provided below in this Section
2.6(b), the Event of Default under the Declaration shall also not be
waivable; or
(ii) requires the consent or vote of a Super Majority to be
waived, except where the Holders of the Common Securities are deemed to
have waived such Event of Default under the Declaration as provided
below in this Section 2.6(b), the Event of Default under the
Declaration may only be waived by the vote of the Holders of at least
the proportion in aggregate liquidation amount of the Common Securities
that the relevant Super Majority represents of the aggregate principal
amount of the Junior Subordinated Debentures outstanding;
provided further, the Holders of Common Securities will be deemed to have waived
any such Event of Default and all Events of Default with respect to the Common
Securities and their consequences if all Events of Default with respect to the
Capital Securities have been cured, waived or otherwise eliminated, and until
such Events of Default have been so cured, waived or otherwise eliminated, the
Property Trustee will be deemed to be acting solely on behalf of the Holders of
the Capital Securities and only the Holders of the Capital Securities will have
the right to direct the Property Trustee in accordance with the terms of the
Trust Securities. The foregoing provisions of this Section 2.6(b) shall be in
lieu of ss.ss. 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such
ss.ss. 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby
expressly excluded from this Declaration and the Trust Securities, as permitted
by the Trust Indenture Act. Subject to the foregoing provisions of this Section
2.6(b), upon such waiver, any such default shall cease to exist and any Event of
Default with respect to the Common Securities arising therefrom shall be deemed
to have been cured for every purpose of this Declaration, but no such waiver
shall extend to any subsequent or other default or Event of Default with respect
to the Common Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Property Trustee, at the direction of the Holders of the Capital Securities,
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu of
ss. 316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Trust Securities, as permitted by the Trust Indenture Act.
SECTION II.7 Event of Default; Notice
(a) The Property Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders, notices of all defaults with respect to the Trust
Securities actually known to a Responsible Officer, unless such defaults have
been cured before the giving of such notice (the term "defaults" for the
purposes of this Section 2.7(a) being hereby defined to be an Event of Default
as defined in the Indenture, not including any periods of grace provided for
therein and irrespective of the giving of any notice provided therein); provided
that, except for a default in the payment of principal of (or premium, if any)
or interest (including Compounded Interest and Additional Sums (as such terms
are defined in the Indenture), if any) or Liquidated Damages on any of the
Junior Subordinated Debentures, the Property Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer in good faith
determines that the withholding of such notice is in the interests of the
Holders.
(b) The Property Trustee shall not be deemed to have knowledge
of any default except:
(i) a default under Sections 5.01(a) (other than the payment
of Compounded Interest, Additional Sums and Liquidated Damages) and
5.01(b) of the Indenture; or
(ii) any default as to which the Property Trustee shall have
received written notice or of which a Responsible Officer charged with
the administration of the Declaration shall have actual knowledge.
(c) Within five Business Days after the occurrence of any
Event of Default actually known to the Property Trustee, the Property Trustee
shall transmit notice of such Event of Default to the Holders of the Capital
Securities, the Administrative Trustees and the Sponsor, unless such Event of
Default shall have been cured or waived. The Sponsor and the Administrative
Trustees shall file annually with the Property Trustee a certification as to
whether or not they are in compliance with all the conditions and covenants
applicable to them under this Declaration.
ARTICLE III
ORGANIZATION
SECTION III.1 Name
The Trust is named "MainStreet Capital Trust I" as such name
may be modified from time to time by the Administrative Trustees following
written notice to the Delaware Trustee, the Property Trustee and the Holders.
The Trust's activities may be conducted under the name of the Trust or any other
name deemed advisable by the Administrative Trustees.
SECTION III.2 Office
The address of the principal office of the Trust is c/o
MainStreet BankGroup Incorporated, Church and Ellsworth Streets, Martinsville,
Virginia 24115. On ten Business Days' written notice to the Delaware Trustee,
the Property Trustee and the Holders of Trust Securities, the Administrative
Trustees may designate another principal office.
SECTION III.3 Purpose
The exclusive purposes and functions of the Trust are (a) to
issue and sell Trust Securities, (b) use the proceeds from the sale of the Trust
Securities to acquire the Junior Subordinated Debentures, and (c) except as
otherwise limited herein, to engage in only those other activities necessary,
advisable or incidental thereto. The Trust shall not borrow money, issue debt or
reinvest proceeds derived from investments, mortgage or 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 III.4 Authority
Subject to the limitations provided in this Declaration and to
the specific duties of the Property Trustee, the Administrative Trustees shall
have exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Administrative Trustees in accordance with their powers
shall constitute the act of and serve to bind the Trust and an action taken by
the Property Trustee on behalf of the Trust 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.
SECTION III.5 Title to Property of the Trust
Except as provided in Section 3.8 with respect to the Junior
Subordinated Debentures and the Property Trustee 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 III.6 Powers and Duties of the Administrative Trustees
The Administrative Trustees shall have the exclusive power,
duty and authority, and are hereby authorized and directed, to cause the Trust
to engage in the following activities:
(a) to execute, enter into and deliver the Common Securities
Subscription Agreement and to execute, deliver, issue and sell the Trust
Securities in accordance with this Declaration; provided, however, that except
as contemplated in Section 7.1(a), (i) the Trust may issue no more than one
series of Capital Securities and no more than one series of Common Securities,
(ii) there shall be no interests in the Trust other than the Trust Securities,
and (iii) the issuance of Trust Securities shall be limited to a simultaneous
issuance of both Capital Securities and Common Securities at the Closing Time;
(b) in connection with the issue and sale of the Capital
Securities and the consummation of the Exchange Offer, at the direction of the
Sponsor, to:
(i) prepare and execute, if necessary, an offering memorandum
(the "Offering Memorandum") in preliminary and final form prepared by
the Sponsor, in relation to the offering and sale of Series A Capital
Securities to QIBs in reliance on Rule 144A under the Securities Act
and to institutional "accredited investors" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act), and to execute
and file with the Commission, at such time as determined by the
Sponsor, any Registration Statement, including any amendments thereto,
as contemplated by the Registration Rights Agreement;
(ii) execute and file any documents prepared by the Sponsor,
or take any acts as determined by the Sponsor to be necessary in order
to qualify or register all or part of the Capital Securities in any
State in which the Sponsor has determined to qualify or register such
Capital Securities for sale;
(iii) execute and file an application, prepared by the
Sponsor, to permit the Capital Securities to trade or be quoted or
listed in or on the Private Offerings, Resales and Trading through
Automated Linkages ("PORTAL") Market or any other securities exchange,
quotation system or the Nasdaq Stock Market's National Market;
(iv) execute and deliver letters, documents, or instruments
with DTC and other Clearing Agencies relating to the Capital
Securities;
(v) if required, execute and file with the Commission a
registration statement on Form 8-A, including any amendments thereto,
prepared by the Sponsor, relating to the registration of the Capital
Securities under Section 12(b) of the Exchange Act; and
(vi) execute, enter into and deliver the Purchase Agreement
and the Registration Rights Agreement providing for, among other
things, the sale and registration of the Capital Securities;
(c) to execute, enter into and deliver the Debenture
Subscription Agreement, to acquire the Series A Junior Subordinated Debentures
with the proceeds of the sale of the Series A Capital Securities and the Common
Securities and to exchange the Series A Junior Subordinated Debentures for a
like principal amount of Series B Junior Subordinated Debentures, pursuant to
the Exchange Offer; provided, however, that the Administrative Trustees shall
cause legal title to the Junior Subordinated Debentures to be held of record in
the name of the Property Trustee for the benefit of the Holders;
(d) to give the Sponsor and the Property Trustee prompt written notice of the
occurrence of a Special Event;
(e) to establish a record date with respect to all actions to
be taken hereunder that require a record date be established, including and with
respect to, for the purposes of ss. 316(c) of the Trust Indenture Act,
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;
(f) to take all actions and perform such duties as may be required of the
Administrative Trustees pursuant to the terms of the Trust Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate,
resort to legal action, or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee
has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who
may be designated as officers with titles) and managers, contractors, advisors,
and consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under the Trust
Indenture Act;
(j) to give the certificate required by ss. 314(a)(4) of the
Trust Indenture Act to the Property Trustee, which certificate may be executed
by any Administrative Trustee;
(k) to incur expenses that are necessary or incidental to carry out any of the
purposes of the Trust;
(l) to act as, or appoint another Person to act as, Registrar
and Exchange Agent for the Trust Securities or to appoint a Paying Agent for the
Trust Securities as provided in Section 7.4 except for such time as such power
to appoint a Paying Agent is vested in the Property Trustee;
(m) to give prompt written notice to the Property Trustee and
to Holders of any notice received from the Debenture Issuer of its election to
defer payments of interest on the Junior Subordinated Debentures by extending
the interest payment period under the Indenture;
(n) to take all action that may be necessary or appropriate
for the preservation and the continuation of the Trust's valid existence,
rights, franchises and privileges as a statutory business trust under the laws
of the State of Delaware and of each other jurisdiction in which such existence
is necessary to protect the limited liability of the Holders or to enable the
Trust to effect the purposes for which the Trust was created;
(o) to take any action, not inconsistent with this Declaration
or with applicable law, that the Administrative Trustees determine in their
discretion to be necessary or desirable in carrying out the activities of the
Trust as set out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment Company required to
be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States federal income tax
purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the
Junior Subordinated Debentures will be treated as indebtedness of the
Debenture Issuer for United States federal income tax purposes;
(p) to take all action necessary to consummate the Exchange
Offer or otherwise cause the Capital Securities to be registered pursuant to an
effective registration statement in accordance with the provisions of the
Registration Rights Agreement;
(q) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with respect
to the Trust to be duly prepared and filed by the Administrative Trustees, on
behalf of the Trust; and
(r) to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf of the Trust in all
matters necessary or incidental to the foregoing.
The Administrative Trustees must exercise the powers set forth
in this Section 3.6 in a manner that is consistent with the purposes and
functions of the Trust set out in Section 3.3, and the Administrative Trustees
shall not take any action that is inconsistent with the purposes and functions
of the Trust set forth in Section 3.3.
Subject to this Section 3.6, the Administrative Trustees shall
have none of the powers or the authority of the Property Trustee set forth in
Section 3.8.
Any expenses incurred by the Administrative Trustees pursuant
to this Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION III.7 Prohibition of Actions by the Trust and the Trustees
(a) The Trust shall not, and the Trustees (including the
Property Trustee and the Delaware Trustee) shall not, engage in any activity
other than as required or authorized by this Declaration. The Trust shall not:
(i) invest any proceeds received by the Trust from holding the
Junior Subordinated Debentures, but shall distribute all such proceeds
to Holders pursuant to the terms of this Declaration and of the Trust
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 Junior Subordinated Debentures;
(v) possess any power or otherwise act in such a way as to vary the Trust
assets or the terms of the Trust Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial ownership of, or
beneficial interest in, the Trust other than the Trust Securities;
(vii) other than as provided in this Declaration or Annex I, (A) direct the
time, method and place of conducting any proceeding with respect to any remedy
available to the Debenture Trustee, or exercising any trust or power conferred
upon the Debenture Trustee with respect to the Junior Subordinated Debentures,
(B) waive any past default that is waivable under the Indenture, or (C)
exercise any right to rescind or annul any declaration that the principal of
all the Junior Subordinated Debentures shall be due and payable; or
(viii) consent to any amendment, modification or termination of the Indenture
or the Junior Subordinated Debentures where such consent shall be required
unless the Trust shall have received an opinion of independent tax counsel
experienced in such matters to the effect that such amendment, modification or
termination will not cause the Trust to be classified as a grantor trust for
United States federal income tax purposes.
SECTION III.8 Powers and Duties of the Property Trustee
(a) The legal title to the Junior Subordinated Debentures
shall be owned by and held of record in the name of the Property Trustee in
trust for the benefit of the Holders. The right, title and interest of the
Property Trustee to the Junior Subordinated Debentures shall vest automatically
in each Person who may hereafter be appointed as Property Trustee in accordance
with Section 5.7. Such vesting and cessation of title shall be effective whether
or not conveyancing documents with regard to the Junior Subordinated Debentures
have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title
and interest in the Junior Subordinated Debentures to the Administrative
Trustees or to the Delaware Trustee (if the Property Trustee does not also act
as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing
trust account (the "Property Trustee Account") in the name of and under
the exclusive control of the Property Trustee on behalf of the Holders
and, upon the receipt of payments of funds made in respect of the
Junior Subordinated Debentures held by the Property Trustee, deposit
such funds into the Property Trustee Account and make payments or cause
the Paying Agent to make payments to the Holders from the Property
Trustee Account in accordance with Section 6.1. Funds in the Property
Trustee Account shall be held uninvested until disbursed in accordance
with this Declaration. The Property Trustee Account shall be an account
that is maintained with a banking institution the rating on whose
long-term unsecured indebtedness by a "nationally recognized
statistical rating organization", as that term is defined for purposes
of Rule 436(g)(2) under the Securities Act, is at least investment
grade;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of the Trust
Securities to the extent the Junior Subordinated Debentures are
redeemed or mature; and
(iii) upon written notice of distribution issued by the
Administrative Trustees in accordance with the terms of the Trust
Securities, engage in such ministerial activities as shall be necessary
or appropriate to effect the distribution of the Junior Subordinated
Debentures to Holders upon the occurrence of certain events.
(d) The Property Trustee shall take all actions and perform
such duties as may be specifically required of the Property Trustee pursuant to
the terms of this Declaration and the Trust Securities.
(e) Subject to Section 3.9(a), the Property Trustee shall take
any Legal Action which arises out of or in connection with an Event of Default
of which a Responsible Officer has actual knowledge or the Property Trustee's
duties and obligations under this Declaration or the Trust Indenture Act and if
the Property Trustee shall have failed to take such Legal Action, the Holders of
the Capital Securities may take such Legal Action, to the same extent as if such
Holders of Capital Securities held an aggregate principal amount of Junior
Subordinated Debentures equal to the aggregate liquidation amount of such
Capital Securities, without first proceeding against the Property Trustee or the
Trust; 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 the principal of or premium, if any, or interest (including Compounded
Interest and Additional Sums, if any) or Liquidated Damages, if any, on the
Junior Subordinated Debentures on the date such principal, premium, if any, or
interest (including Compounded Interest and Additional Sums, if any) or
Liquidated Damages, if any, is otherwise payable (or in the case of redemption,
on the redemption date), then a Holder of Capital Securities may directly
institute a proceeding for enforcement of payment to such Holder of the
principal of or premium, if any or interest (including Compounded Interest and
Additional Sums, if any) or Liquidated Damages, if any, on the Junior
Subordinated 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 Junior Subordinated
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 Capital
Securities to the extent of any payment made by the Debenture Issuer to such
Holder of Capital Securities in such Direct Action. Except as provided in the
preceding sentences, the Holders of Capital Securities will not be able to
exercise directly any other remedy available to the holders of the Junior
Subordinated Debentures.
(f) The Property Trustee shall not resign as a Trustee unless either:
(i) the Trust has been completely liquidated and the proceeds of the
liquidation distributed to the Holders pursuant to the terms of the Trust
Securities; or
(ii) a successor Property Trustee has been appointed and has accepted that
appointment in accordance with Section 5.7 (a "Successor Property Trustee").
(g) The Property Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a holder of Junior
Subordinated Debentures under the Indenture and, if an Event of Default actually
known to a Responsible Officer occurs and is continuing, the Property Trustee
shall, for the benefit of Holders, enforce its rights as holder of the Junior
Subordinated Debentures subject to the rights of the Holders pursuant to the
terms of this Declaration and the Trust Securities.
(h) The Property Trustee shall be authorized to undertake any
actions set forth in ss. 317(a) of the Trust Indenture Act.
(i) For such time as the Property Trustee is the Paying Agent,
the Property Trustee may authorize one or more Persons to act as additional
Paying Agents and to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all Trust Securities and any
such Paying Agent shall comply with ss. 317(b) of the Trust Indenture Act. Any
such additional Paying Agent may be removed by the Property Trustee at any time
the Property Trustee remains as Paying Agent and a successor Paying Agent or
additional Paying Agents may be (but are not required to be) appointed at any
time by the Property Trustee while the Property Trustee is so acting as Paying
Agent.
(j) Subject to this Section 3.8, the Property Trustee shall
have none of the duties, liabilities, powers or the authority of the
Administrative Trustees set forth in Section 3.6.
Notwithstanding anything expressed or implied to the contrary
in this Declaration or any Annex or Exhibit hereto, (i) the Property Trustee
must exercise the powers set forth in this Section 3.8 in a manner that is
consistent with the purposes and functions of the Trust set out in Section 3.3,
and (ii) the Property Trustee shall not take any action that is inconsistent
with the purposes and functions of the Trust set out in Section 3.3.
SECTION III.9 Certain Duties and Responsibilities of the Property Trustee
(a) The Property Trustee, before the occurrence of any Event
of Default and after the curing or waiving 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 in the Trust Securities and no implied
covenants shall be read into this Declaration against the Property Trustee. In
case an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6) of which a Responsible Officer has actual knowledge,
the Property 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) No provision of this Declaration shall be construed to
relieve the Property Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Property
Trustee shall be determined solely by the express provisions
of this Declaration and in the Trust Securities and the
Property Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Declaration and in the Trust Securities, and
no implied covenants or obligations shall be read into this
Declaration against the Property Trustee; and
(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Property Trustee and conforming to the
requirements of this Declaration; provided, however, that in
the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to
the Property Trustee, the Property Trustee shall be under a
duty to examine the same to determine whether or not on their
face they conform to the requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall
be proved that the Property Trustee was negligent in ascertaining the
pertinent facts;
(iii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Trust Securities relating to the
time, method and place of conducting any proceeding for any remedy
available to the Property Trustee, or exercising any trust or power
conferred upon the Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Property Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Declaration or indemnity reasonably satisfactory to the Property
Trustee against such risk or liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Junior
Subordinated Debentures and the Property Trustee Account shall be to
deal with such property in a similar manner as the Property Trustee
deals with similar property for its own account, subject to the
protections and limitations on liability afforded to the Property
Trustee under this Declaration and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability for
or with respect to the value, genuineness, existence or sufficiency of
the Junior Subordinated Debentures or the payment of any taxes or
assessments levied thereon or in connection therewith;
(vii) the Property 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. Money held by the Property Trustee need
not be segregated from other funds held by it except in relation to the
Property Trustee Account maintained by the Property Trustee pursuant to
Section 3.8(c)(i) and except to the extent otherwise required by law;
and
(viii) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the Sponsor
with their respective duties under this Declaration, nor shall the
Property Trustee be liable for any default or misconduct of the
Administrative Trustees or the Sponsor.
SECTION III.10 Certain Rights of Property Trustee
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) any direction or act of the Sponsor or the
Administrative Trustees contemplated by this Declaration may be
sufficiently evidenced by an Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder,
the Property Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Sponsor or the
Administrative Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or
securities laws) or any rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel or other
experts of its selection and the advice or opinion of such counsel and
experts with respect to legal matters or advice within the scope of
such experts' area of expertise shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with such
advice or opinion, such counsel may be counsel to the Sponsor or any of
its Affiliates, and may include any of its employees. The Property
Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of
competent jurisdiction;
(vi) the Property 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 Holder, unless such Holder shall
have provided to the Property Trustee security and indemnity,
reasonably satisfactory to the Property Trustee, against the costs,
expenses (including reasonable attorneys' fees and expenses and the
expenses of the Property Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such request
or direction, including such reasonable advances as may be requested by
the Property Trustee provided, that, nothing contained in this Section
3.10(a)(vi) shall be taken to relieve the Property Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the
rights and powers vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Property Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents, custodians, nominees or attorneys and the Property
Trustee shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by it
hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders, and the signature of
the Property 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 Property 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
Property Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration the
Property Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Property Trustee (i) may request instructions from the
Holders which instructions may only be given by the Holders of the same
proportion in liquidation amount of the Trust Securities as would be
entitled to direct the Property Trustee under the terms of the Trust
Securities in respect of such remedy, right or action, (ii) may refrain
from enforcing such remedy or right or taking such other action until
such instructions are received, and (iii) shall be protected in
conclusively relying on or acting in or accordance with such
instructions;
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under any obligation to
take any action that is discretionary under the provisions of this
Declaration; and
(xii) the Property Trustee shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith, without
negligence, and reasonably believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this
Declaration.
(b) No provision of this Declaration shall be deemed to impose
any duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION III.11 Delaware Trustee
Notwithstanding any other provision of this Declaration other
than Section 5.2, the Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and
responsibilities of the Administrative Trustees or the Property Trustee
described in this Declaration. Except as set forth in Section 5.2, 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. In the event the Delaware
Trustee shall at any time be required to take any action or perform any duty
hereunder, the Delaware Trustee shall be entitled to the benefits of Section
3.9(b)(ii)-(viii) and Section 3.10. No implied covenants or obligations shall be
read into this Declaration against the Delaware Trustee.
SECTION III.12 Execution of Documents
Unless otherwise determined by the Administrative Trustees,
and except as otherwise required by the Business Trust Act, a majority of the
Administrative Trustees or, if there are only two, any Administrative Trustee
or, if there is only one, such Administrative Trustee is authorized to execute
and deliver on behalf of the Trust any documents that the Administrative
Trustees have the power and authority to execute pursuant to Section 3.6;
provided that any Registration Statements contemplated by the Registration
Rights Agreement and referred to in Section 3.6(b)(i), including any amendments
thereto, shall be signed by all of the Administrative Trustees.
SECTION III.13 Not Responsible for Recitals or Issuance of Trust Securities
The recitals contained in this Declaration and the Trust
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 or the Trust Securities.
SECTION III.14 Duration of Trust
The Trust, unless terminated pursuant to the provisions of
Article VIII hereof, shall have existence up to November 19, 2028.
SECTION III.15 Mergers
(a) The Trust may not merge with or into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, except as described in
Section 3.15(b) and (c).
(b) The Trust may, at the request of the Sponsor, with the
consent of the Administrative Trustees or, if there are more than two, a
majority of the Administrative Trustees and without the consent of the Holders,
the Delaware Trustee or the Property Trustee, merge with or into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to, a trust organized as
such under the laws of any State; provided that:
(i) such successor entity (the "Successor Entity")
either:
(A) expressly assumes all of the obligations
of the Trust under the Trust Securities; or
(B) substitutes for the Trust Securities other
securities having substantially the same terms as the Trust
Securities (the "Successor Trust Securities") so long as the
Successor Trust Securities rank the same as the Trust
Securities rank with respect to Distributions and payments
upon liquidation, redemption and otherwise;
(ii) the Sponsor expressly appoints a trustee of the Successor
Entity that possesses the same powers and duties as the Property
Trustee as the holder of the Junior Subordinated Debentures;
(iii) the Successor Trust Securities are listed, or any
Successor Trust 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;
(iv) if the Capital Securities (including any Successor Trust
Securities) are rated by any nationally recognized statistical rating
organization prior to such transaction, such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause
the Capital Securities (including any Successor Trust Securities), or
if the Junior Subordinated Debentures are so rated, the Junior
Subordinated Debentures, to be downgraded by any nationally recognized
statistical rating organization;
(v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the Holders (including the holders of any
Successor Trust Securities) in any material respect (other than with
respect to any dilution of such Holders' interests in the new entity);
(vi) such Successor Entity has a purpose identical to
that of the Trust;
(vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Sponsor has received an
opinion of counsel to the Trust experienced in such matters to the
effect that:
(A) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the Holders
(including the holders of any Successor Trust Securities) in
any material respect (other than with respect to any dilution
of the Holders' interest in the new entity); and
(B) following such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease,
neither the Trust nor the Successor Entity will be required to
register as an Investment Company;
(viii) the Sponsor or any permitted successor or assignee owns
all of the common securities of such Successor Entity and guarantees
the obligations of such Successor Entity under the Successor Trust
Securities at least to the extent provided by the Guarantee and the
Common Securities Guarantee; and
(ix) there shall have been furnished to the Property Trustee
an Officer's Certificate and an Opinion of Counsel, each to the effect
that all conditions precedent in this Declaration to such transaction
have been satisfied.
(c) Notwithstanding Section 3.15(b), the Trust shall not,
except with the consent of Holders of 100% in liquidation amount of the Trust
Securities, consolidate, amalgamate, merge with or into, or be replaced by, or
convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to, any other Person or permit any other Person to
consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or lease
would cause the Trust or the Successor Entity not to be classified as a grantor
trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION IV.1 Sponsor's Purchase of Common Securities
At the Closing Time, pursuant to the Common Security
Subscription Agreement, the Sponsor will purchase all of the Common Securities
then issued by the Trust, in an amount equal to at least 3% of the total capital
of the Trust, at the same time as the Series A Capital Securities are issued and
sold.
SECTION IV.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 prepare the Offering Memorandum and to prepare for
filing by the Trust with the Commission any Registration Statement, including
any amendments thereto, as contemplated by the Registration Rights Agreement;
(b) 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;
(c) if deemed necessary or advisable by the Sponsor, to
prepare for filing by the Trust an application to permit the Capital Securities
to trade or be quoted or listed in or on the PORTAL market, or any other
securities exchange, quotation system or the Nasdaq Stock Market's National
Market;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A, including any amendments thereto, relating
to the registration of the Capital Securities under Section 12(b) of the
Exchange Act; and
(e) to negotiate the terms of the Purchase Agreement and the
Registration Rights Agreement providing for the sale and registration of the
Capital Securities.
SECTION IV.3 Right to Proceed
The Sponsor acknowledges the rights of the Holders of Capital
Securities, in the event that a failure of the Trust to pay Distributions on the
Capital Securities is attributable to the failure of the Debenture Issuer to pay
interest or principal on the Junior Subordinated Debentures, to institute a
proceeding directly against the Debenture Issuer for enforcement of its payment
obligations on the Junior Subordinated Debentures.
SECTION IV.4 Right to Terminate Trust
The Sponsor will have the right at any time to terminate the
Trust and, after satisfaction of liabilities to creditors of the Trust as
required by applicable law, to cause the Junior Subordinated Debentures to be
distributed to the holders of the Trust Securities in liquidation of the Trust.
Such right is subject to (i) the Administrative Trustees and the Property
Trustee having received an opinion of counsel to the effect that such
distribution will not cause the holders of Capital Securities to recognize gain
or loss for United States federal income tax purposes and (ii) the receipt of
any required regulatory approvals.
ARTICLE V
TRUSTEES
SECTION V.1 Number of Trustees: Appointment of Co-Trustee
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Trust Securities,
the Sponsor may, by written instrument, increase or decrease the number of
Trustees; and
(b) after the issuance of any Trust Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a Majority in
liquidation amount of the Common Securities voting as a class at a meeting of
the Holders of the Common Securities;
provided, however, that, the number of Trustees shall in no event be less than
two (2); provided further that (1) one Trustee, in the case of a natural person,
shall be a person who is a resident of the State of Delaware or that, if not a
natural person, is an entity which has its principal place of business in the
State of Delaware (the "Delaware Trustee"); (2) there shall be at least one
Trustee who is an employee or officer of, or is affiliated with, the Sponsor (an
"Administrative Trustee"); and (3) one Trustee shall be the Property Trustee for
so long as this Declaration is required to qualify as an indenture under the
Trust Indenture Act, and such Trustee may also serve as Delaware Trustee if it
meets the applicable requirements. Notwithstanding the above, unless an Event of
Default shall have occurred and be continuing, at any time or times, for the
purpose of meeting the legal requirements of the Trust Indenture Act or of any
jurisdiction in which any part of the Trust's property may at the time be
located, the Holders of a Majority in liquidation amount of the Common
Securities acting as a class at a meeting of the Holders of the Common
Securities, and the Administrative Trustees shall have power to appoint one or
more Persons either to act as a co-trustee, jointly with the Property Trustee,
of all or any part of the Trust's property, or to act as separate trustee of any
such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such Person or Persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of this Declaration. In case an Event of Default has
occurred and is continuing, the Property Trustee alone shall have power to make
any such appointment of a co-trustee.
SECTION V.2 Delaware Trustee
If required by the Business Trust Act, 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 has its principal
place of business in the State of Delaware, and otherwise meets the requirements
of applicable law,
provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application.
SECTION V.3 Property Trustee; Eligibility
(a) There shall at all times be one Trustee (the "Property
Trustee") which shall act as Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or Person permitted by
the Commission to act as an institutional trustee under the Trust
Indenture Act, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least 50 million
U.S. dollars ($50,000,000), and subject to supervision or examination
by federal, state, territorial or District of Columbia authority. If
such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the supervising or examining
authority referred to above, then for the purposes of this Section
5.3(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.
(b) If at any time the Property Trustee shall cease to be
eligible to so act under Section 5.3(a), the Property Trustee shall immediately
resign in the manner and with the effect set forth in Section 5.7(c).
(c) If the Property Trustee has or shall acquire any
"conflicting interest" within the meaning of ss. 310(b) of the Trust Indenture
Act, the Property Trustee and the Holder of the Common Securities (as if it were
the obligor referred to in ss. 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of ss. 310(b) of the Trust Indenture Act.
(d) The Guarantee shall be deemed to be specifically described
in this Declaration for purposes of clause (i) of the first provision contained
in Section 310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
The Bank of New York
101 Barclay Street, 21W
New York, New York 10286
fax: (212) 815-5915
phone: (212) 815-6286
Attention: Corporate Trust
Trustee Administration
SECTION V.4 Certain Qualifications of Administrative Trustees and Delaware
Trustee Generally
Each Administrative Trustee and the Delaware Trustee (unless
the Property Trustee also acts as Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more Authorized Officers.
SECTION V.5 Administrative Trustees
The initial Administrative Trustees shall be:
James E. Adams
Rebecca J. Jenkins
Brenda H. Smith
c/o MainStreet BankGroup Incorporated
Church and Ellsworth Streets
Martinsville, Virginia 24115
Fax: (860) 314-6404
Tel: (860) 314-6400
(a) Except as expressly set forth in this Declaration and
except if a meeting of the Administrative Trustees is called with respect to any
matter over which the Administrative Trustees have power to act, any power of
the Administrative Trustees may be exercised by, or with the consent of, any one
such Administrative Trustee.
(b) Unless otherwise determined by the Administrative
Trustees, and except as otherwise required by the Business Trust Act or
applicable law, any Administrative Trustee is authorized to execute on behalf of
the Trust any documents which the Administrative Trustees have the power and
authority to cause the Trust to execute pursuant to Section 3.6, provided, that,
the Registration Statement referred to in Section 3.6, including any amendments
thereto, shall be signed by all of the Administrative Trustees; and
(c) An Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purposes of signing any documents which the
Administrative Trustees have power and authority to cause the Trust to execute
pursuant to Section 3.6.
SECTION V.6 Delaware Trustee.
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711
SECTION V.7 Appointment, Removal and Resignation of Trustees
(a) Subject to Section 5.7(b) hereof and to Section 6(b) of
Annex I hereto, Trustees may be appointed or removed without cause at any time:
(i) until the issuance of any Trust Securities, by
written instrument executed by the Sponsor;
(ii) unless an Event of Default shall have occurred and be
continuing after the issuance of any Trust Securities, by vote of the
Holders of a Majority in liquidation amount of the Common Securities
voting as a class at a meeting of the Holders of the Common Securities;
and
(iii) if an Event of Default shall have occurred and be
continuing after the issuance of the Trust Securities, with respect to
the Property Trustee or the Delaware Trustee, by vote of Holders of a
Majority in liquidation amount of the Capital Securities voting as a
class at a meeting of Holders of the Capital Securities.
(b) (i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.7(a) until a Successor Property Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Property Trustee and delivered to the Administrative Trustees
and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be
removed in accordance with this Section 5.7(a) until a successor
Trustee possessing the qualifications to act as Delaware Trustee under
Sections 5.2 and 5.4 (a "Successor Delaware Trustee") has been
appointed and has accepted such appointment by written instrument
executed by such Successor Delaware Trustee and delivered to the
Administrative Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
that:
(i) No such resignation of the Trustee that acts as the
Property Trustee shall be effective:
(A) until a Successor Property Trustee has been
appointed and has accepted such appointment by instrument
executed by such Successor Property Trustee and delivered to
the Trust, the Sponsor and the resigning Property Trustee; or
(B) until the assets of the Trust have been
completely liquidated and the proceeds thereof distributed to
the Holders; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and delivered to the Trust,
the Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Securities or, if an Event of
Default shall have occurred and be continuing after the issuance of the Trust
Securities, the Holders of the Capital Securities shall use their best efforts
to promptly appoint a Successor Delaware Trustee or Successor Property Trustee,
as the case may be, if the Property Trustee or the Delaware Trustee delivers an
instrument of resignation in accordance with this Section 5.7.
(e) If no Successor Property Trustee or Successor Delaware
Trustee shall have been appointed and accepted appointment as provided in this
Section 5.7 within 30 days after delivery of an instrument of resignation or
removal, the Property Trustee or Delaware Trustee resigning or being removed, as
applicable, may petition any court of competent jurisdiction for appointment of
a Successor Property Trustee or Successor Delaware Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper and
prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable
for the acts or omissions to act of any Successor Property Trustee or Successor
Delaware Trustee, as the case may be.
(g) At the time of resignation or removal of the Property
Trustee or the Delaware Trustee, the Debenture Issuer shall pay to such Trustee
any amounts that may be owed to such Trustee pursuant to Section 10.4.
SECTION V.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 5.1, or if the number of
Trustees is increased pursuant to Section 5.1, a vacancy shall occur. A
resolution certifying the existence of such vacancy by the Administrative
Trustees or, if there are more than two, a majority of the Administrative
Trustees shall be conclusive evidence of the existence of such vacancy. The
vacancy shall be filled with a Trustee appointed in accordance with Section 5.7.
SECTION V.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 Administrative Trustees shall occur, until such vacancy
is filled by the appointment of an Administrative Trustee in accordance with
Section 5.7, the Administrative Trustees in office, regardless of their number,
shall have all the powers granted to the Administrative Trustees and shall
discharge all the duties imposed upon the Administrative Trustees by this
Declaration.
SECTION V.10 Meetings
If there is more than one Administrative Trustee, meetings of
the Administrative Trustees shall be held from time to time upon the call of any
Administrative Trustee. Regular meetings of the Administrative Trustees may be
held at a time and place fixed by resolution of the Administrative Trustees.
Notice of any in-person meetings of the Administrative Trustees 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 such meeting. Notice of
any telephonic meetings of the Administrative Trustees 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 an Administrative Trustee at a meeting shall constitute a waiver
of notice of such meeting except where an Administrative Trustee 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 Administrative
Trustees may be taken at a meeting by vote of a majority of the Administrative
Trustees 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 Administrative Trustees. In the event
there is only one Administrative Trustee, any and all action of such
Administrative Trustee shall be evidenced by a written consent of such
Administrative Trustee.
SECTION V.11 Delegation of Power
(a) Any Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purpose of executing any documents
contemplated in Section 3.6, including any registration statement or amendment
thereto filed with the Commission, or making any other governmental filing; and
(b) the Administrative Trustees shall have power to delegate
from time to time to such of their number or to officers of the Trust the doing
of such things and the execution of such instruments either in the name of the
Trust or the names of the Administrative Trustees or otherwise as the
Administrative Trustees may deem expedient, to the extent such delegation is not
prohibited by applicable law or contrary to the provisions of the Trust, as set
forth herein.
SECTION V.12 Merger, Conversion, Consolidation or Succession to Business
Any Person into which the Property Trustee or the Delaware Trustee or
any Administrative Trustee that is not a natural person, as the case may be, may
be merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Property
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 Property Trustee or the Delaware Trustee, as the case may be, shall be the
successor of the Property Trustee or the Delaware Trustee, as the case may be,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, provided such Person shall be otherwise
qualified and eligible under this Article.
ARTICLE VI
DISTRIBUTIONS
SECTION VI.1 Distributions
Holders shall receive Distributions in accordance with the
applicable terms of the relevant Holder's Trust Securities. If and to the extent
that the Debenture Issuer makes a payment of interest (including Compounded
Interest and Additional Sums), premium and/or principal on the Junior
Subordinated Debentures held by the Property Trustee or Liquidated Damages or
any other payments pursuant to the Registration Rights Agreement with respect to
the Junior Subordinated Debentures held by the Property Trustee (the amount of
any such payment being a "Payment Amount"), the Property 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 VII
ISSUANCE OF TRUST SECURITIES
SECTION VII.1 General Provisions Regarding Trust Securities
(a) The Administrative Trustees shall on behalf of the Trust
issue one class of capital securities representing undivided beneficial
interests in the assets of the Trust having such terms as are set forth in Annex
I (the "Series A Capital Securities") and one class 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
Administrative Trustees shall on behalf of the Trust issue one class of capital
securities representing undivided beneficial interests in the Trust having such
terms as set forth in Annex I (the "Series B Capital Securities") in exchange
for the Series A Capital Securities accepted for exchange in the Exchange Offer,
which Series B Capital Securities shall not bear the legends required by Section
9.2(i) unless the Holder of such Series A Capital Securities is either (A) a
broker-dealer who purchased such Series A Capital Securities directly from the
Trust for resale pursuant to Rule 144A or any other available exemption under
the Securities Act, (B) a Person participating in the distribution of the Series
A Capital Securities or (C) a Person who is an Affiliate of the Trust. The Trust
shall issue no securities or other interests in the assets of the Trust other
than the Capital Securities and the Common Securities.
(b) The consideration received by the Trust for the issuance
of the Trust Securities shall constitute a contribution to the capital of the
Trust and shall not constitute a loan to the Trust.
(c) Upon issuance of the Trust Securities as provided in this
Declaration, the Trust Securities so issued shall be deemed to be validly
issued, fully paid and non-assessable.
(d) 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.
SECTION VII.2 Execution and Authentication
(a) The Trust Securities shall be signed on behalf of the
Trust by an Administrative Trustee by manual or facsimile signature. In case any
Administrative Trustee of the Trust who shall have signed any of the Trust
Securities shall cease to be such Administrative Trustee before the Trust
Securities so signed shall be delivered by the Trust, such Trust Securities
nevertheless may be delivered as though the person who signed such Trust
Securities had not ceased to be such Administrative Trustee; and any Trust
Securities may be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Trust Security, shall be the Administrative
Trustees of the Trust, although at the date of the execution and delivery of the
Declaration any such person was not an Administrative Trustee.
(b) One Administrative Trustee shall sign the Trust Securities
for the Trust by manual or facsimile signature. Unless otherwise determined by
the Trust, such signature shall, in the case of Common Securities, be a manual
signature.
A Trust Security shall not be valid until authenticated by the
manual signature of an authorized signatory of the Property Trustee. The
signature shall be conclusive evidence that the Trust Security has been
authenticated under this Declaration.
Upon a written order of the Trust signed by one Administrative
Trustee, the Property Trustee shall authenticate the Capital Securities for
original issue. The aggregate number of Capital Securities outstanding at any
time shall not exceed the number set forth in the Terms in Annex I hereto except
as provided in Section 7.6.
The Property Trustee may appoint an authenticating agent
acceptable to the Trust to authenticate Trust Securities. An authenticating
agent may authenticate Trust Securities whenever the Property Trustee may do so.
Each reference in this Declaration to authentication by the Property Trustee
includes authentication by such agent. An authenticating agent has the same
rights as the Property Trustee to deal with the Sponsor or an Affiliate.
SECTION VII.3 Form and Dating
The Capital Securities shall be evidenced by one or more
certificates substantially in the form of Exhibit A-1 and the Common Securities
shall be evidenced by one or more certificates substantially in the form of
Exhibit A-2, each of which is hereby incorporated in and expressly made a part
of this Declaration. The Property Trustee's certificate of authentication shall
be substantially in the form set forth in Exhibits A-1 and A-2. Certificates
representing the Trust Securities may be printed, lithographed or engraved or
may be produced in any other manner as is reasonably acceptable to the
Administrative Trustees, as evidenced by their execution thereof. The Trust
Securities may have letters, CUSIP or other 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 Trust). The Trust at the direction of the Sponsor shall furnish any such
legend not contained in Exhibit A-1 to the Property Trustee in writing. Each
Capital Security shall be dated the date of its authentication. The terms and
provisions of the Trust Securities set forth in Annex I and the forms of Trust
Securities set forth in Exhibits A-1 and A-2 are part of the terms of this
Declaration and to the extent applicable, the Property Trustee and the Sponsor,
by their execution and delivery of this Declaration, expressly agree to such
terms and provisions and to be bound thereby.
(a) Global Trust Securities. Trust Securities offered and sold
to QIBs in reliance on Rule 144A, as provided in the Purchase Agreement, shall
be issued in the form of one or more permanent global Trust Securities in
definitive, fully registered form without distribution coupons with the
appropriate global legends and Restricted Securities Legend set forth in Exhibit
A-1 hereto (a "Global Capital Security"), which shall be deposited on behalf of
the purchasers of the Capital Securities represented thereby with the Property
Trustee, at its New York, New York office, as custodian for the Clearing Agency,
and registered in the name of the Clearing Agency or a nominee of the Clearing
Agency, duly executed by the Trust and authenticated by the Property Trustee as
hereinafter provided. The number of Capital Securities represented by a Global
Capital Security may from time to time be increased or decreased by adjustments
made on the records of the Property Trustee and the Clearing Agency or its
nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 7.3(b) shall apply
only to the Global Capital Securities and such other Capital Securities in
global form as may be authorized by the Trust to be deposited with or on behalf
of the Clearing Agency.
An Administrative Trustee shall execute and the Property
Trustee shall, in accordance with this Section 7.3, authenticate and make
available for delivery initially one or more Global Capital Securities that (i)
shall be registered in the name of Cede & Co. or other nominee of such Clearing
Agency and (ii) shall be delivered by the Property Trustee to such Clearing
Agency or pursuant to such Clearing Agency's written instructions or held by the
Property Trustee as custodian for the Clearing Agency.
Members of, or participants in, the Clearing Agency
("Participants") shall have no rights under this Declaration with respect to any
Global Capital Security held on their behalf by the Clearing Agency or by the
Property Trustee as the custodian of the Clearing Agency or under such Global
Capital Security, and the Clearing Agency may be treated by the Trust, the
Property Trustee and any agent of the Trust or the Property Trustee as the
absolute owner of such Global Capital Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Trust, the
Property Trustee or any agent of the Trust or the Property Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Clearing Agency or impair, as between the Clearing Agency and its
Participants, the operation of customary practices of such Clearing Agency
governing the exercise of the rights of a holder of a beneficial interest in any
Global Capital Security.
(c) Definitive Capital Securities. Except as provided in
Section 7.9 or 9.2(f)(i), owners of beneficial interests in a Global Capital
Security will not be entitled to receive physical delivery of certificated
Capital Securities ("Definitive Capital Securities"). Purchasers of Trust
Securities (other than QIBs) who are "accredited investors" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) will receive Capital
Securities in the form of individual certificates in definitive, fully
registered form without distribution coupons and with the Restricted Securities
Legend set forth in Exhibit A-1 hereto ("Restricted Definitive Capital
Securities"); provided, however, that upon transfer of such Restricted
Definitive Capital Securities to a QIB, such Restricted Definitive Capital
Securities will, unless the Global Capital Security has previously been
exchanged, be exchanged for an interest in a Global Capital Security pursuant to
the provisions of Section 9.2. Restricted Definitive Capital Securities will
bear the Restricted Securities Legend set forth on Exhibit A-1 unless removed in
accordance with this Section 7.3 or Section 9.2.
(d) Authorized Denominations. The Capital Securities
are issuable only in denominations of $1,000 and any integral multiple thereof.
SECTION VII.4 Registrar, Paying Agent and Exchange Agent
The Trust shall maintain in New York, New York (i) an office
or agency where Capital Securities may be presented for registration of transfer
("Registrar"), (ii) an office or agency where Capital Securities may be
presented for payment ("Paying Agent") and (iii) an office or agency where Trust
Securities may be presented for exchange ("Exchange Agent"). The Registrar shall
keep a register of the Capital Securities and of their transfer. The Trust may
appoint the Registrar, the Paying Agent and the Exchange Agent and may appoint
one or more co-registrars, one or more additional paying agents and one or more
additional exchange agents in such other locations as it shall determine. The
term "Registrar" includes any additional registrar, "Paying Agent" includes any
additional paying agent and the term "Exchange Agent" includes any additional
exchange agent. The Trust may change any Paying Agent, Registrar, co-registrar
or Exchange Agent without prior notice to any Holder. The Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' written notice to the
Administrative Trustees. The Trust shall notify the Property Trustee in writing
of the name and address of any Agent not a party to this Declaration. If the
Trust fails to appoint or maintain another entity as Registrar, Paying Agent or
Exchange Agent, the Property Trustee shall act as such. The Trust or any of its
Affiliates may act as Paying Agent, Registrar, or Exchange Agent. The Trust
shall act as Paying Agent, Registrar and Exchange Agent for the Common
Securities.
The Trust initially appoints the Property Trustee as
Registrar, Paying Agent and Exchange Agent for the Capital Securities.
SECTION VII.5 Paying Agent to Hold Money in Trust
The Trust shall require each Paying Agent other than the
Property Trustee to agree in writing that the Paying Agent will hold in trust
for the benefit of Holders or the Property Trustee all money held by the Paying
Agent for the payment of liquidation amounts or Distributions, and will notify
the Property Trustee in writing if there are insufficient funds for such
purpose. While any such insufficiency continues, the Property Trustee may
require a Paying Agent to pay all money held by it to the Property Trustee. The
Trust at any time may require a Paying Agent to pay all money held by it to the
Property Trustee and to account for any money disbursed by it. Upon payment over
to the Property Trustee, the Paying Agent (if other than the Trust or an
Affiliate of the Trust) shall have no further liability for the money. If the
Trust or the Sponsor or an Affiliate of the Trust or the Sponsor acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Paying Agent.
SECTION VII.6 Replacement Trust Securities
If a Holder claims that a Trust Security owned by it has been
lost, destroyed or wrongfully taken or if such Trust Security is mutilated and
is surrendered to the Trust or in the case of the Capital Securities to the
Property Trustee, the Trust shall issue and the Property Trustee shall, upon
written order of the Trust, authenticate a replacement Trust Security if the
Property Trustee's and the Trust's requirements, as the case may be, are met. An
indemnity bond must be provided by the Holder which, in the judgment of the
Property Trustee and the Sponsor, is sufficient to protect the Trustees, the
Sponsor, the Trust or any authenticating agent from any loss which any of them
may suffer if a Trust Security is replaced. The Trust may charge such Holder for
its expenses in replacing a Trust Security.
SECTION VII.7 Outstanding Capital Securities
The Capital Securities outstanding at any time are all the
Capital Securities authenticated by the Property Trustee except for those
cancelled by it, those delivered to it for cancellation, and those described in
this Section as not outstanding.
If a Capital Security is replaced, paid or purchased pursuant
to Section 7.6 hereof, it ceases to be outstanding unless the Property Trustee
receives proof satisfactory to it that the replaced, paid or purchased Capital
Security is held by a bona fide purchaser.
If Capital Securities are considered paid in accordance with
the terms of this Declaration, they cease to be outstanding and Distributions on
them shall cease to accumulate.
A Capital Security does not cease to be outstanding because
one of the Trust, the Sponsor or an Affiliate of the Sponsor holds the Trust
Security.
SECTION VII.8 Capital Securities in Treasury
In determining whether the Holders of the required amount of
Trust Securities have concurred in any direction, waiver or consent, Capital
Securities owned by the Trust, the Sponsor or an Affiliate of the Sponsor, as
the case may be, shall be disregarded and deemed not to be outstanding, except
that for the purposes of determining whether the Property Trustee shall be fully
protected in relying on any such direction, waiver or consent, only Trust
Securities which the Property Trustee actually knows are so owned shall be so
disregarded.
SECTION VII.9 Temporary Trust Securities
(a) Until Definitive Trust Securities are ready for delivery,
the Trust may prepare and, in the case of the Capital Securities, the Property
Trustee shall authenticate temporary Trust Securities. Temporary Trust
Securities shall be substantially in the form of Definitive Trust Securities but
may have variations that the Trust considers appropriate for temporary Trust
Securities. Without unreasonable delay, the Trust shall prepare and, in the case
of the Capital Securities, the Property Trustee shall authenticate Definitive
Trust Securities in exchange for temporary Trust Securities.
(b) A Global Capital Security deposited with the Clearing
Agency or with the Property Trustee as custodian for the Clearing Agency
pursuant to Section 7.3 shall be transferred to the beneficial owners thereof in
the form of certificated Capital Securities only if such transfer complies with
Section 9.2 and (i) the Clearing Agency notifies the Sponsor that it is
unwilling or unable to continue as Clearing Agency for such Global Capital
Security or if at any time such Clearing Agency ceases to be a "clearing agency"
registered under the Exchange Act and a clearing agency is not appointed by the
Sponsor within 90 days of such notice, (ii) a Default or an Event of Default has
occurred and is continuing or (iii) the Trust at its sole discretion elects to
cause the issuance of certificated Capital Securities.
(c) Any Global Capital Security that is transferable to the
beneficial owners thereof in the form of certificated Capital Securities
pursuant to this Section 7.9 shall be surrendered by the Clearing Agency to the
Property Trustee located in New York, New York, to be so transferred, in whole
or from time to time in part, without charge, and the Property Trustee shall
authenticate and make available for delivery, upon such transfer of each portion
of such Global Capital Security, an equal aggregate liquidation amount of Trust
Securities of authorized denominations in the form of certificated Capital
Securities. Any portion of a Global Capital Security transferred pursuant to
this Section shall be registered in such names as the Clearing Agency shall
direct. Any Capital Security in the form of certificated Capital Securities
delivered in exchange for an interest in the Restricted Global Capital Security
shall, except as otherwise provided by Sections 7.3 and 9.1, bear the Restricted
Securities Legend set forth in Exhibit A-1 hereto.
(d) Subject to the provisions of Section 7.9(c), the Holder of
a Global Capital Security may grant proxies and otherwise authorize any Person,
including Participants and Persons that may hold interests through Participants,
to take any action which such Holder is entitled to take under this Declaration
or the Trust Securities.
(e) In the event of the occurrence of any of the events
specified in Section 7.9(b), the Trust will promptly make available to the
Property Trustee a reasonable supply of certificated Capital Securities in fully
registered form without distribution coupons.
SECTION VII.10 Cancellation
The Trust at any time may deliver Capital Securities to the
Property Trustee for cancellation. The Registrar, Paying Agent and Exchange
Agent shall forward to the Property Trustee any Capital Securities surrendered
to them for registration of transfer, redemption, exchange or payment. The
Property Trustee shall promptly cancel all Capital Securities, surrendered for
registration of transfer, redemption, exchange, payment, replacement or
cancellation and shall dispose of cancelled Capital Securities in accordance
with its customary procedures unless the Trust otherwise directs. The Trust may
not issue new Capital Securities to replace Capital Securities that it has paid
or that have been delivered to the Property Trustee for cancellation or that any
Holder has exchanged.
SECTION VII.11 CUSIP Numbers.
The Trust in issuing the Capital Securities may use "CUSIP"
numbers (if then generally in use), and, if so, the Property Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders of Capital
Securities; provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Capital
Securities or as contained in any notice of a redemption and that reliance may
be placed only on the other identification numbers printed on the Capital
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Sponsor will promptly notify the Property Trustee
of any change in the CUSIP numbers.
ARTICLE VIII
TERMINATION OF TRUST
SECTION VIII.1 Termination of Trust
(a) The Trust shall automatically terminate:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution or
liquidation or its equivalent with respect to the Sponsor; or the
revocation of the Sponsor's charter and the expiration of 90 days after
the date of revocation without a reinstatement thereof;
(iii) following the distribution of a Like Amount of the
Junior Subordinated Debentures to the Holders, provided that, the
Property Trustee has received written notice from the Sponsor directing
the Property Trustee to terminate the Trust (which direction is
optional, and except as otherwise expressly provided below, within the
discretion of the Sponsor) and provided, further, that such direction
and such distribution is conditioned on (a) the receipt by the Sponsor
of any required regulatory approval, and (b) the Administrative
Trustees' receipt of an opinion of an independent tax counsel
experienced in such matters, which opinion may rely on published
rulings of the Internal Revenue Service, to the effect that the Holders
will not recognize any gain or loss for United States federal income
tax purposes as a result of the dissolution of the Trust and the
distribution of Junior Subordinated Debentures;
(iv) upon the entry of a decree of judicial dissolution
of the Trust by a court of competent jurisdiction;
(v) when all of the Trust 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
Trust Securities;
(vi) upon the redemption or repayment of the Junior
Subordinated Debentures at Maturity; or
(vii) the expiration of the term of the Trust provided in
Section 3.14.
(b) As soon as is practicable upon completion of winding up of
the Trust following the occurrence of an event referred to in Section 8.1(a),
the Administrative Trustees shall file a certificate of cancellation with the
Secretary of State of the State of Delaware in accordance with the Business
Trust Act.
(c) The provisions of Section 3.9 and Article X shall survive
the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION IX.1 Transfer of Trust Securities
(a) Trust 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 Trust Securities. Any transfer or purported transfer of
any Trust Security not made in accordance with this Declaration shall be null
and void.
(b) Subject to this Article IX, Capital Securities may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Declaration. Any transfer or purported transfer of any Trust
Security not made in accordance with this Declaration shall be null and void.
(c) For so long as the Trust Securities remain outstanding,
the Sponsor will covenant (i) to directly or indirectly maintain 100% direct or
indirect ownership of the Common Securities of the Trust, provided that any
permitted successor of the Sponsor under the Indenture may succeed to the
Sponsor's ownership of such Common Securities, (ii) not to cause, as sponsor of
the Trust, or to permit, as Holder of the Common Securities, the dissolution,
winding-up or termination of the Trust, except in connection with a distribution
of the Junior Subordinated Debentures as provided in the Declaration and in
connection with certain mergers, consolidations or amalgamations permitted by
this Declaration and (iii) to use its reasonable efforts to cause the Trust (a)
to remain a business trust, except in connection with the distribution of Junior
Subordinated Debentures to the Holders of Trust Securities in liquidation of the
Trust, the redemption of all of the Trust Securities, or certain mergers,
consolidations or amalgamations, each as permitted by this Declaration, and (b)
to otherwise continue to be classified as a grantor trust for United States
federal income tax purposes.
(d) The Administrative Trustees shall provide for the
registration of Trust Securities and of the transfer of Trust Securities, which
will be effected without charge but only upon payment (with such indemnity as
the Administrative Trustees 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 Trust Securities, the Administrative Trustees
shall cause one or more new Trust Securities to be issued in the name of the
designated transferee or transferees. Every Trust Security surrendered for
registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Administrative Trustees duly executed by
the Holder or such Holder's attorney duly authorized in writing. Each Trust
Security surrendered for registration of transfer shall be canceled by the
Property Trustee (in the case of Capital Securities) or the Trust (in the case
of Common Securities). A transferee of a Trust Security shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Trust Security. By acceptance of a Trust Security, each
transferee shall be deemed to have agreed to be bound by this Declaration.
SECTION IX.2 Transfer Procedures and Restrictions
(a) General. Except as otherwise provided in Section 9.2(b),
if Capital Securities are issued upon the transfer, exchange or replacement of
Capital Securities bearing the Restricted Securities Legend set forth in Exhibit
A-1 hereto, or if a request is made to remove such Restricted Securities Legend
on Capital Securities, the Capital Securities so issued shall bear the
Restricted Securities Legend, or the Restricted Securities Legend shall not be
removed, as the case may be, unless there is delivered to the Trust and the
Property Trustee such satisfactory evidence, which shall include an Opinion of
Counsel licensed to practice law in the State of New York, as may be reasonably
required by the Sponsor and the Property Trustee, that neither the legend nor
the restrictions on transfer set forth therein are required to ensure that
transfers thereof are made pursuant to an exception from the registration
requirements of the Securities Act or, with respect to Restricted Trust
Securities, that such Trust Securities are not "restricted" within the meaning
of Rule 144. Upon provision of such satisfactory evidence, the Property Trustee,
at the written direction of the Trust, shall authenticate and make available for
delivery Capital Securities that do not bear the legend.
(b) Transfers After Effectiveness of a Registration Statement.
After the effectiveness of a Registration Statement with respect to any Capital
Securities, all requirements pertaining to legends on such Capital Securities
will cease to apply (other than the legend requiring that transfers of Capital
Securities be made in blocks having an aggregate liquidation amount of not less
than $100,000), and beneficial interests in a Global Capital Security without
legends will be available to transferees of such Capital Securities, upon
exchange of the transferring Holder's Restricted Definitive Capital Security or
directions to transfer such Holder's beneficial interest in the Global Capital
Security as the case may be. No such transfer or exchange of a Restricted
Definitive Capital Security or of an interest in the Global Capital Security
shall be effective unless the transferor delivers to the Trust a certificate in
a form substantially similar to that attached hereto as the form of "Assignment"
in Exhibit A-1. Except as otherwise provided in Section 9.2(m), after the
effectiveness of a Registration Statement, the Trust shall issue and the
Property Trustee, upon a written order of the Trust signed by one Administrative
Trustee, shall authenticate a Global Capital Security without the Restricted
Securities Legend (the "Unrestricted Global Capital Security") to deposit with
the Clearing Agency to evidence transfers of beneficial interests from the (i)
Global Capital Security and (ii) Restricted Definitive Capital Securities.
(c) Transfer and Exchange of Definitive Capital
Securities. When Definitive Capital Securities are presented to the Registrar
or co-registrar:
(x) to register the transfer of such Definitive Capital
Securities; or
(y) to exchange such Definitive Capital Securities which
became mutilated, destroyed, defaced, stolen or lost, for an equal
number of Definitive Capital Securities,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Capital Securities surrendered for
transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Trust and
the Registrar or co-registrar, duly executed by the Holder thereof or
his attorney duly authorized in writing; and
(ii) in the case of Definitive Capital Securities that are
Restricted Definitive Capital Securities:
(A) if such Restricted Capital Securities are being
delivered to the Registrar by a Holder for registration in the
name of such Holder, without transfer, a certification from
such Holder to that effect; or
(B) if such Restricted Capital Securities are being
transferred: (i) a certification from the transferor in a form
substantially similar to that attached hereto as the form of
"Assignment" in Exhibit A-1, and (ii) if the Trust or
Registrar so requests, evidence reasonably satisfactory to
them as to the compliance with the restrictions set forth in
the Restricted Securities Legend.
(d) Restrictions on Transfer of a Definitive Capital Security
for a Beneficial Interest in a Global Capital Security. A Definitive Capital
Security may not be exchanged for a beneficial interest in a Global Capital
Security except upon satisfaction of the requirements set forth below. Upon
receipt by the Property Trustee of a Definitive Capital Security, duly endorsed
or accompanied by appropriate instruments of transfer, in form satisfactory to
the Property Trustee, together with:
(i) if such Definitive Capital Security is a Restricted
Capital Security, certification (in a form substantially similar to
that attached hereto as the form of "Assignment" in Exhibit A-1); and
(ii) whether or not such Definitive Capital Security is a
Restricted Capital Security, written instructions directing the
Property Trustee to make, or to direct the Clearing Agency to make, an
adjustment on its books and records with respect to the appropriate
Global Capital Security to reflect an increase in the number of the
Capital Securities represented by such Global Capital Security,
then the Property Trustee shall cancel such Definitive Capital Security and
cause, or direct the Clearing Agency to cause, the aggregate number of Capital
Securities represented by the appropriate Global Capital Security to be
increased accordingly. If no Global Capital Securities are then outstanding, the
Trust shall issue and the Property Trustee shall authenticate, upon written
order of any Administrative Trustee, an appropriate number of Capital Securities
in global form.
(e) Transfer and Exchange of Global Capital Securities.
Subject to Section 9.2(f), the transfer and exchange of Global Capital
Securities or beneficial interests therein shall be effected through the
Clearing Agency, in accordance with this Declaration (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Clearing Agency therefor.
(f) Transfer of a Beneficial Interest in a Global Capital
Security for a Definitive Capital Security.
(i) Any Person having a beneficial interest in a Global
Capital Security may upon request, but only upon 20 days prior written
notice to the Property Trustee, and if accompanied by the information
specified below, exchange such beneficial interest for a Definitive
Capital Security representing the same number of Capital Securities.
Upon receipt by the Property Trustee from the Clearing Agency or its
nominee on behalf of any Person having a beneficial interest in a
Global Capital Security of written instructions or such other form of
instructions as is customary for the Clearing Agency or the Person
designated by the Clearing Agency as having such a beneficial interest
in a Restricted Capital Security and a certification from the
transferor (in a form substantially similar to that attached hereto as
the form of "Assignment" in Exhibit A-1), which may be submitted by
facsimile, then the Property Trustee will cause the aggregate number of
Capital Securities represented by the applicable Global Capital
Security to be reduced on its books and records and, following such
reduction, the Trust will execute and the Property Trustee will
authenticate and make available for delivery to the transferee a
Definitive Capital Security.
(ii) Definitive Capital Securities issued in exchange for a
beneficial interest in a Global Capital Security pursuant to this
Section 9.2(f) shall be registered in such names and in such authorized
denominations as the Clearing Agency, pursuant to instructions from its
Clearing Agency Participants or otherwise, shall instruct the Property
Trustee in writing. The Property Trustee shall make available for
delivery such Capital Securities to the Persons in whose names such
Capital Securities are so registered in accordance with such
instructions of the Clearing Agency.
(g) Restrictions on Transfer and Exchange of Global Capital
Securities. Notwithstanding any other provisions of this Declaration (other than
the provisions set forth in subsection (h) of this Section 9.2), a Global
Capital Security may not be transferred as a whole except by the Clearing Agency
to a nominee of the Clearing Agency or another nominee of the Clearing Agency or
by the Clearing Agency or any such nominee to a successor Clearing Agency or a
nominee of such successor Clearing Agency.
(h) Authentication of Definitive Capital Securities. If at any
time:
(i) there occurs a Default or an Event of Default which
is continuing, or
(ii) the Trust, in its sole discretion, notifies the Property
Trustee in writing that it elects to cause the issuance of Definitive
Capital Securities under this Declaration,
then the Trust will execute, and the Property Trustee, upon receipt of a written
order of the Trust signed by one Administrative Trustee requesting the
authentication and delivery of Definitive Capital Securities to the Persons
designated by the Trust, will authenticate and make available for delivery
Definitive Capital Securities, equal in number to the number of Capital
Securities represented by the Global Capital Securities, in exchange for such
Global Capital Securities.
(i) Legend.
(i) Except as permitted by the following paragraph (ii), each
Capital Security certificate evidencing the Global Capital Securities
and the Definitive Capital Securities (and all Capital Securities
issued in exchange therefor or substitution thereof) shall bear a
legend (the "Restricted Securities Legend") in substantially the
following form:
THE CAPITAL SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAW. NEITHER THIS CAPITAL 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, REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL
SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH
MAINSTREET BANKGROUP INCORPORATED (THE "CORPORATION") OR ANY
"AFFILIATE" OF THE CORPORATION WAS THE OWNER OF THIS CAPITAL
SECURITY (OR ANY PREDECESSOR OF THIS CAPITAL SECURITY) ONLY
(A) TO THE CORPORATION, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) SO LONG AS THIS CAPITAL SECURITY IS
ELIGIBLE FOR RESALE 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, (D) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS
OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
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 (E)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT TO
THE RIGHT OF THE TRUST AND THE CORPORATION PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D) OR (E) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND
(ii) PURSUANT TO CLAUSE (D) TO REQUIRE THAT THE TRANSFEROR
DELIVER TO THE TRUST A LETTER FROM THE TRANSFEREE
SUBSTANTIALLY IN THE FORM OF ANNEX A TO THE OFFERING
MEMORANDUM DATED NOVEMBER 14, 1997. SUCH HOLDER FURTHER AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CAPITAL
SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND.
THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED
ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN
$100,000 (100 CAPITAL SECURITIES). ANY SUCH TRANSFER OF
CAPITAL SECURITIES IN A BLOCK HAVING A LIQUIDATION AMOUNT OF
LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL
EFFECT WHATSOEVER. 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.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF
ALSO AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT
A PLAN OR PLAN ASSETS ENTITY OR (ii) THE ACQUISITION AND
HOLDING OF THIS CAPITAL SECURITY BY IT IS NOT PROHIBITED BY
EITHER SECTION 406 OF ERISA OR SECTION 4975 OF THE U.S.
INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR IS EXEMPT FROM
ANY SUCH PROHIBITION.
(ii) Upon any sale or transfer of a Restricted Capital
Security (including any Restricted Capital Security represented by a
Global Capital Security) pursuant to an effective registration
statement under the Securities Act or pursuant to Rule 144 under the
Securities Act after such registration statement ceases to be
effective:
(A) in the case of any Restricted Capital Security
that is a Definitive Capital Security, the Registrar shall
permit the Holder thereof to exchange such Restricted Capital
Security for a Definitive Capital Security that does not bear
the Restricted Securities Legend and rescind any restriction
on the transfer of such Restricted Capital Security; and
(B) in the case of any Restricted Capital Security
that is represented by a Global Capital Security, the
Registrar shall permit the Holder of such Global Capital
Security to exchange such Global Capital Security for another
Global Capital Security that does not bear the Restricted
Securities Legend.
(j) Cancellation or Adjustment of Global Capital
Security. At such time as all beneficial interests in a Global Capital Security
have either been exchanged for Definitive Capital Securities to the extent
permitted by this Declaration or redeemed, repurchased or canceled in accordance
with the terms of this Declaration, such Global Capital Security shall be
returned to the Clearing Agency for cancellation or retained and canceled by the
Property Trustee. At any time prior to such cancellation, if any beneficial
interest in a Global Capital Security is exchanged for Definitive Capital
Securities, Capital Securities represented by such Global Capital Security shall
be reduced and an adjustment shall be made on the books and records of the
Clearing Agency and the Registrar, to reflect such reduction.
(k) Obligations with Respect to Transfers and Exchanges
of Capital Securities.
(i) To permit registrations of transfers and exchanges, the
Trust shall execute and the Property Trustee shall authenticate
Definitive Capital Securities and Global Capital Securities at the
Registrar's or co-registrar's request in accordance with the terms of
this Declaration.
(ii) Registrations of transfers or exchanges will be effected
without charge, but only upon payment (with such indemnity as the Trust
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 or co-registrar shall not be required to
register the transfer of or exchange of (a) Capital Securities during a
period beginning at the opening of business 15 days before the day of
mailing of a notice of redemption or any notice of selection of Capital
Securities for redemption and ending at the close of business on the
day of such mailing; or (b) any Capital Security so selected for
redemption in whole or in part, except the unredeemed portion of any
Capital Security being redeemed in part.
(iv) Prior to the due presentation for registration of
transfer of any Capital Security, the Trust, the Property Trustee, the
Paying Agent, the Registrar or any co-registrar may deem and treat the
Person in whose name a Capital Security is registered as the absolute
owner of such Capital Security for the purpose of receiving
Distributions on such Capital Security and for all other purposes
whatsoever, and none of the Trust, the Property Trustee, the Paying
Agent, the Registrar or any co-registrar shall be affected by notice to
the contrary.
(v) All Capital Securities issued upon any 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 transfer or
exchange.
(l) No Obligation of the Property Trustee.
(i) The Property Trustee shall have no responsibility or
obligation to any beneficial owner of a Global Capital Security, a
Clearing Agency Participant in the Clearing Agency or other Person with
respect to the accuracy of the records of the Clearing Agency or its
nominee or of any Clearing Agency Participant thereof, with respect to
any ownership interest in the Capital Securities or with respect to the
delivery to any Clearing Agency Participant, beneficial owner or other
Person (other than the Clearing Agency) of any notice (including any
notice of redemption) or the payment of any amount, under or with
respect to such Capital Securities. All notices and communications to
be given to the Holders and all payments to be made to Holders under
the Capital Securities shall be given or made only to or upon the order
of the registered Holders (which shall be the Clearing Agency or its
nominee in the case of a Global Capital Security). The rights of
beneficial owners in any Global Capital Security shall be exercised
only through the Clearing Agency subject to the applicable rules and
procedures of the Clearing Agency. The Property Trustee may
conclusively rely and shall be fully protected in relying upon
information furnished by the Clearing Agency or any agent thereof with
respect to its Clearing Agency Participants and any beneficial owners.
(ii) The Property Trustee and the Registrar shall have no
obligation or duty to monitor, determine or inquire as to compliance
with any restrictions on transfer imposed under this Declaration or
under applicable law with respect to any transfer of any interest in
any Capital Security (including any transfers between or among Clearing
Agency Participants or beneficial owners in any Global Capital
Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if
and when expressly required by, the terms of this Declaration, and to
examine the same to determine substantial compliance as to form with
the express requirements hereof.
(m) Exchange of Series A Capital Securities for Series B
Capital Securities. The Series A Capital Securities may be exchanged for Series
B Capital Securities pursuant to the terms of the Exchange Offer. The Property
Trustee shall make the exchange as follows:
The Sponsor shall present the Property Trustee with an
Officers' Certificate certifying the following:
(A) upon issuance of the Series B Capital
Securities, the transactions contemplated
by the Exchange Offer have been
consummated; and
(B) the number of Series A Capital Securities
properly tendered in the Exchange Offer
that are represented by a Global Capital
Security and the number of Series A
Capital Securities properly tendered in
the Exchange Offer that are represented by
Definitive Capital Securities, the name of
each Holder of such Definitive Capital
Securities, the liquidation amount of
Capital Securities properly tendered in
the Exchange Offer by each such Holder and
the name and address to which Definitive
Capital Securities for Series B Capital
Securities shall be registered and sent
for each such Holder.
The Property Trustee, upon receipt of (i) such Officers'
Certificate and (ii) an Opinion of Counsel (x) to the effect that the Series B
Capital Securities have been registered under Section 5 of the Securities Act
and the Indenture has been qualified under the Trust Indenture Act and (y) with
respect to the matters set forth in Section 3(p) of the Registration Rights
Agreement, shall authenticate (A) a Global Capital Security, executed and
delivered by the Trust to the Property Trustee, representing Series B Capital
Securities in aggregate liquidation amount equal to the aggregate liquidation
amount of Series A Capital Securities represented by a Global Capital Security
indicated in such Officers' Certificate as having been properly tendered and (B)
Definitive Capital Securities, executed and delivered by the Trust to the
Property Trustee, representing Series B Capital Securities registered in the
names of and in the liquidation amounts indicated in such Officers' Certificate.
If, upon consummation of the Exchange Offer, less than all the
outstanding Series A Capital Securities shall have been properly tendered and
not withdrawn, the Property Trustee shall make an endorsement on the Global
Capital Security representing Series A Capital Securities indicating the
reduction in the number and aggregate liquidation amount represented thereby as
a result of the Exchange Offer.
The Trust shall deliver such authenticated Definitive Capital
Securities representing Series B Capital Securities to the Holders thereof as
indicated in such Officers' Certificate.
(n) Minimum Transfers. Series A Capital Securities and, when
issued, Series B Capital Securities may only be transferred in minimum blocks of
$100,000 aggregate liquidation amount. Any transfer of Series A Capital
Securities or Series B Capital Securities in a block having an aggregate
liquidation amount of less than $100,000 shall be deemed to be voided and of no
legal effect whatsoever. Any such transferee shall be deemed not to be a Holder
of such Series A or Series B 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.
SECTION IX.3 Deemed Trust Security Holders
The Trustees may treat the Person in whose name any Trust
Security shall be registered on the books and records of the Trust as the sole
owner of such Trust Security 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 Trust Security on the part of
any Person, whether or not the Trust shall have actual or other notice thereof.
SECTION IX.4 Book-Entry Interests
Global Capital Securities shall initially be registered on the
books and records of the Trust in the name of Cede & Co., the nominee of the
Clearing Agency and shall be in the form of a global certificate (the "Global
Certificate"), and no Capital Security Beneficial Owner will receive a
definitive Capital Security certificate representing such Capital Security
Beneficial Owner's interests in such Global Capital Securities, except as
provided in Section 9.2 and Section 7.9. Unless and until definitive, fully
registered Capital Securities certificates have been issued to the Capital
Security Beneficial Owners pursuant to Section 9.2 and Section 7.9:
(a) the provisions of this Section 9.4 shall be in full
force and effect;
(b) the Trust and the Trustees shall be entitled to deal with
the Clearing Agency for all purposes of this Declaration (including the
payment of Distributions on the Global Capital Securities and receiving
approvals, votes or consents hereunder) as the Holder of the Capital
Securities and the sole holder of the Global Certificate and shall have
no obligation to the Capital Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4
conflict with any other provisions of this Declaration, the provisions
of this Section 9.4 shall control; and
(d) the rights of the Capital Security Beneficial Owners shall
be exercised only through the Clearing Agency and shall be limited to
those established by law and agreements between such Capital Security
Beneficial Owners and the Clearing Agency and/or the Clearing Agency
Participants and receive and transmit payments of Distributions on the
Global Certificate to such Clearing Agency Participants. DTC will make
book entry transfers among the Clearing Agency Participants.
SECTION IX.5 Notices to Clearing Agency
Whenever a notice or other communication to the Capital
Security Holders is required under this Declaration, the Trustees shall give all
such notices and communications specified herein to be given to the Holders of
Global Capital Securities to the Clearing Agency, and shall have no notice
obligations to the Capital Security Beneficial Owners.
SECTION IX.6 Appointment of Successor Clearing Agency
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Capital Securities, the Administrative
Trustees may, in their sole discretion, appoint a successor Clearing Agency with
respect to such Capital Securities.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF TRUST SECURITIES, TRUSTEES OR OTHERS
SECTION X.1 Liability
(a) Except as expressly set forth in this Declaration, the
Trust Securities Guarantees and the terms of the Trust 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 which
shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder any deficit
upon dissolution of the Trust or otherwise.
(b) The Debenture Issuer shall be liable for all of the debts
and obligations of the Trust (other than in respect of the Trust 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 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.
. TION X.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 gross 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 who has been selected 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 might properly be paid.
SECTION X.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 Property Trustee under the Trust Indenture
Act), are agreed by the parties hereto to replace such other duties and
liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises
between any Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder of Trust Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) 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.
SECTION X.4 Indemnification
(a) (i) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Corporation 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 a
Corporation 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
Corporation 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 Debenture Issuer shall indemnify, to the full extent
permitted by law, any Corporation 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 a
Corporation 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 Corporation 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 a Corporation 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 10.4(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) actually and reasonably incurred by him in connection
therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the
Debenture Issuer only as authorized in the specific case upon a
determination that indemnification of the Corporation 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 (1) by the Administrative Trustees by a
majority vote of a Quorum consisting of such Administrative Trustees
who were not parties to such action, suit or proceeding, (2) if such a
Quorum is not obtainable, or, even if obtainable, if a Quorum of
disinterested Administrative Trustees so directs, by independent legal
counsel in a written opinion, or (3) by the Common Security Holder of
the Trust.
(v) Expenses (including attorneys' fees and expenses) incurred
by a Corporation Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding referred to
in paragraphs (i) and (ii) of this Section 10.4(a) shall be paid by the
Debenture Issuer in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of
such Corporation Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by
the Debenture Issuer as authorized in this Section 10.4(a).
Notwithstanding the foregoing, no advance shall be made by the
Debenture Issuer if a determination is reasonably and promptly made (i)
by the Administrative Trustees by a majority vote of a Quorum of
disinterested Administrative Trustees, (ii) if such a Quorum is not
obtainable, or, even if obtainable, if a Quorum of disinterested
Administrative Trustees so directs, by independent legal counsel in a
written opinion or (iii) the Common Security Holder of the Trust, that,
based upon the facts known to the Administrative Trustees, counsel or
the Common Security Holder at the time such determination is made, such
Corporation 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 Corporation 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 Administrative Trustees,
independent legal counsel or Common Security Holder reasonably
determine that such person deliberately breached his duty to the Trust
or its Common or Capital Security Holders.
(vi) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other paragraphs of this Section
10.4(a) shall not be deemed exclusive of any other rights to which
those seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of stockholders or disinterested
directors of the Debenture Issuer 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 10.4(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each
Corporation Indemnified Person who serves in such capacity at any time
while this Section 10.4(a) is in effect. Any repeal or modification of
this Section 10.4(a) shall not affect any rights or obligations then
existing.
(vii) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a Corporation
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 Debenture Issuer would have the power to
indemnify him against such liability under the provisions of this
Section 10.4(a).
(viii) For purposes of this Section 10.4(a), 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 10.4(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent
entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Section 10.4(a) shall, unless
otherwise provided when authorized or ratified, continue as to a person
who has ceased to be a Corporation Indemnified Person and shall inure
to the benefit of the heirs, executors and administrators of such a
person.
(b) The Debenture Issuer agrees to indemnify the (i) Property
Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee
or the Delaware Trustee, and (iv) any officers, directors, shareholders,
members, partners, employees, representatives, custodians, nominees or agents of
the Property Trustee or the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense including taxes (other than taxes based on the income
of such Fiduciary Indemnified Person) incurred without negligence or bad faith
on the part of such Fiduciary Indemnified Person, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending against or investigating any claim or liability in
connection with the exercise or performance of any of the powers or duties of
such Fiduciary Indemnified Person hereunder. The obligation to indemnify as set
forth in this Section 10.4(b) shall survive the resignation or removal of the
Property Trustee or the Delaware Trustee and the satisfaction and discharge of
this Declaration.
(c) The Sponsor agrees to pay the Property Trustee and the
Delaware Trustee, from time to time, such compensation for all services rendered
by the Property Trustee and the Delaware Trustee hereunder as may be mutually
agreed upon in writing by the Sponsor and the Property Trustee or the Delaware
Trustee, as the case may be, and, except as otherwise expressly provided herein,
to reimburse the Property Trustee and the Delaware Trustee upon its or their
request for all reasonable expenses (including counsel fees and expenses),
disbursements and advances incurred or made by the Property Trustee or the
Delaware Trustee, as the case may be, in accordance with the provisions of this
Declaration, except any such expense, disbursement or advance as may be
attributable to its or their negligence or bad faith.
SECTION X.5 Outside Businesses
Any Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee may engage in or possess an interest in other business ventures
of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders 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. No Covered Person, the Sponsor, the Delaware Trustee, or the
Property 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 Property 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 Property 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 or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION XI.1 Fiscal Year
The fiscal year ("Fiscal Year") of the Trust shall be the
calendar year, or such other year as is required by the Code.
SECTION XI.2 Certain Accounting Matters
(a) At all times during the existence of the Trust, the
Administrative Trustees shall keep, or cause to be kept, 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 Trust shall use the accrual method of
accounting for United States federal income tax purposes. 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 Administrative Trustees.
(b) The Administrative Trustees shall cause to be duly
prepared and delivered to each of the Holders, any annual United States federal
income tax information statement, required by the Code, containing such
information with regard to the Trust Securities held by each Holder as is
required by the Code and the Treasury Regulations. Notwithstanding any right
under the Code to deliver any such statement at a later date, the Administrative
Trustees shall endeavor to deliver all such information statements within 30
days after the end of each Fiscal Year of the Trust.
(c) The Administrative Trustees shall cause to be duly
prepared and filed with the appropriate taxing authority, 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 Administrative Trustees on behalf of the Trust with
any state or local taxing authority.
SECTION XI.3 Banking
The Trust may maintain one or more bank accounts in the name
and for the sole benefit of the Trust; provided, however, that all payments of
funds in respect of the Junior Subordinated Debentures held by the Property
Trustee shall be made directly to the Property Trustee Account and no other
funds of the Trust shall be deposited in the Property Trustee Account. The sole
signatories for such accounts shall be designated by the Administrative
Trustees; provided, however, that the Property Trustee shall designate the
signatories for the Property Trustee Account.
SECTION XI.4 Withholding
The Trust and the Administrative Trustees shall comply with
all withholding requirements under United States federal, state and local law.
The Trust shall request, and the Holders shall provide to the Trust, such forms
or certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably be
requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Administrative Trustees 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
Trust 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 in the amount of the withholding to the Holder.
In the event of any claim of excess withholding, 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 Trust may reduce
subsequent Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION XII.1 Amendments
(a) Except as otherwise provided in this Declaration
(including Section 7 of Annex I hereto) or by any applicable terms of the Trust
Securities, this Declaration may only be amended by a written instrument
approved and executed by:
(i) the Administrative Trustees (or if there are more
than two Administrative Trustees, a majority of the Administrative
Trustees);
(ii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Property Trustee, the Property
Trustee; and
(iii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Delaware Trustee, the Delaware
Trustee.
(b) No amendment shall be made, and any such purported
amendment shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Property Trustee shall have first received 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 Trust Securities);
(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or immunities of the
Property Trustee, the Property 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 Trust 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 Trust Securities) and that all conditions
precedent, if any, in this Declaration to the execution and
delivery of such amendment have been satisfied,
provided, however, that the Property Trustee shall not be required to sign any
such amendment; and
(iii) to the extent the result of such amendment would be
to:
(A) cause the Trust to fail to continue 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 Property Trustee in contravention of the Trust
Indenture Act;
(C) cause the Trust to be deemed to be an
Investment Company required to be registered under the
Investment Company Act; or
(D) adversely affect any right of the Property
Trustee (including rights to indemnification) hereunder,
create or increase any duty or obligation of, or in any other
manner adversely affect, the Property Trustee.
(c) At such time after the Trust has issued any Trust
Securities that remain outstanding, any amendment that would adversely affect
the rights, privileges or preferences of any Holder may be effected only with
such additional requirements as may be set forth in the terms of such Trust
Securities;
(d) Section 10.1(c) and this Section 12.1 shall not be
amended without the consent of all of the Holders;
(e) Article Four shall not be amended without the
consent of the Holders of a Majority in liquidation amount of the Common
Securities;
(f) The rights of the holders of the Common Securities under
Article Five 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 Common Securities; and
(g) Notwithstanding Section 12.1(c), this Declaration may be
amended without the consent of the Holders to:
(i) cure any ambiguity, correct or supplement any provision in
this Declaration that may be inconsistent with any other provision of
this Declaration or to make any other provisions with respect to
matters or questions arising under this Declaration which shall not be
inconsistent with the other provisions of the Declaration;
(ii) to modify, eliminate or add to any provisions of the
Declaration to such extent as shall be necessary to ensure that the
Trust will be classified for United States federal income tax purposes
as a grantor trust at all times that any Trust Securities are
outstanding or to ensure that the Trust will not be required to
register as an Investment Company under the Investment Company Act; and
(iii) to modify, eliminate or add any provisions of the
Declaration to such extent as shall be necessary to enable the Trust or
the Sponsor to conduct an Exchange Offer in the manner contemplated by
the Registration Rights Agreement;
provided, however, that in each such case, such action shall not adversely
affect in any material respect the interests of the Holders, and any amendments
of this Declaration shall become effective when notice thereof is given to the
Holders.
SECTION XII.2 Meetings of the Holders; Action by Written Consent
(a) Meetings of the Holders of any class of Trust Securities
may be called at any time by the Administrative Trustees (or as provided in the
terms of the Trust Securities) to consider and act on any matter on which
Holders of such class of Trust Securities are entitled to act under the terms of
this Declaration, the terms of the Trust Securities or the rules of any stock
exchange on which the Capital Securities are listed or admitted for trading. The
Administrative Trustees 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 Trust Securities. Such direction shall be given by delivering to the
Administrative Trustees one or more notices in writing stating that the signing
Holders wish to call a meeting and indicating the general or specific purpose
for which the meeting is to be called. Any Holders calling a meeting shall
specify in writing the Trust Security Certificates held by the Holders
exercising the right to call a meeting and only those Trust Securities specified
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 Trust Securities, the following provisions shall apply to meetings of
Holders:
(i) notice of any such meeting shall be given to all the
Holders having a right to vote thereat at least seven days and not more
than 60 days before the date of such meeting. Whenever a vote, consent
or approval of the Holders 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, such vote, consent or
approval may be given at a meeting of the Holders. Any action that may
be taken at a meeting of the Holders may be taken without a meeting if
a consent in writing setting forth the action so taken is signed by the
Holders owning not less than the minimum amount of Trust Securities in
liquidation amount that would be necessary to authorize or take such
action at a meeting at which all Holders 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 entitled to vote who have not
consented in writing. The Administrative Trustees may specify that any
written ballot submitted to the Trust Security Holder for the purpose
of taking any action without a meeting shall be returned to the Trust
within the time specified by the Administrative Trustees;
(ii) each Holder may authorize any Person to act for it by
proxy on all matters in which a Holder 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 eleven
months from the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the Holder 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 were stockholders of a Delaware
corporation;
(iii) each meeting of the Holders shall be conducted by the
Administrative Trustees or by such other Person that the Administrative
Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the
terms of the Trust Securities, the Trust Indenture Act or the listing
rules of any stock exchange on which the Capital Securities are then
listed or trading, otherwise provides, the Administrative Trustees, in
their sole discretion, shall establish all other provisions relating to
meetings of Holders, including notice of the time, place or purpose of
any meeting at which any matter is to be voted on by any Holders,
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.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION XIII.1 Representations and Warranties of Property Trustee
The Trustee that acts as initial Property Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) The Property Trustee is a banking corporation, a national
banking association or a bank or trust company organized under the laws of the
United States, any State of the United States or the District of Columbia, as
the case may be, in any case with trust powers 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 Property
Trustee of this Declaration has been duly authorized by all necessary corporate
action on the part of the Property Trustee. This Declaration has been duly
executed and delivered by the Property Trustee and constitutes a legal, valid
and binding obligation of the Property Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law);
(c) The execution, delivery and performance of this
Declaration by the Property Trustee does not conflict with or constitute a
breach of the charter or by-laws of the Property Trustee; and
(d) No consent, approval or authorization of, or registration
with or notice to, any Delaware or federal banking authority is required for the
execution, delivery or performance by the Property Trustee of this Declaration.
SECTION XIII.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 a banking corporation or national
banking association duly organized, validly existing and in good standing under
the laws of the State of Delaware or the United States, as the case may be, 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 Delaware
Trustee of this Declaration has been duly authorized by all necessary corporate
action on the part of the Delaware Trustee. This Declaration has been duly
executed and delivered by the Delaware Trustee and constitutes a legal, valid
and binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law);
(c) No consent, approval or authorization of, or registration
with or notice to, any federal banking authority is required for the execution,
delivery or performance by the Delaware Trustee of this Declaration; and
(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.
ARTICLE XIV
REGISTRATION RIGHTS
SECTION XIV.1 Registration Rights Agreement
The Holders of the Capital Securities, the Junior Subordinated
Debentures and the Guarantee are entitled to the benefits of a Registration
Rights Agreement. In certain limited circumstances set forth in the Registration
Rights Agreement, the Debenture Issuer shall be required to pay Liquidated
Damages with respect to the Junior Subordinated Debentures. Unless otherwise
stated, the term "Distribution", as used in this Declaration, includes such
Liquidated Damages.
ARTICLE XV
MISCELLANEOUS
SECTION XV.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 or mailed by first class mail, overnight courier service or confirmed
telecopy, as follows:
(a) if given to the Trust, in care of the Administrative
Trustees at the Trust's mailing address set forth below (or such other address
as the Trust may give notice of to the Property Trustee, the Delaware Trustee
and the Holders):
MainStreet BankGroup Incorporated
Church and Ellsworth Streets
Martinsville, Virginia 24115
fax: (540) 666-3675
phone: (540) 632-2971
Attention: James E. Adams,
Administrative Trustee
(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):
The Bank of New York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711
(c) if given to the Property Trustee, at the Property
Trustee's mailing address set forth below (or such other address as the Property
Trustee may give notice of to the Holders):
The Bank of New York
101 Barclay Street, 21W
New York, New York 10286
fax: (212) 815-5915
phone: (212) 815-6286
Attention: Corporate Trust
Trustee Administration
(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 to the Property Trustee and the
Trust):
MainStreet BankGroup Incorporated
Church and Ellsworth Streets
Martinsville, Virginia 24115
fax: (540) 666-3675
phone: (540) 632-2971
Attention: James E. Adams
Executive Vice President
(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 XV.2 Governing Law
This Declaration and the rights of the parties hereunder shall
be governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION XV.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 XV.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 XV.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 so expressed.
SECTION XV.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 XV.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 to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused these presents
to be executed as of the day and year first above written.
MAINSTREET CAPITAL TRUST I
By: /s/ James E. Adams
James E. Adams, as
Administrative Trustee
By: /s/ Rebecca J. Jenkins
Rebecca J. Jenkins, as
Administrative Trustee
By: /s/ Brenda H. Smith
Brenda H. Smith, as
Administrative Trustee
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: /s/ Walter N. Gitlin
Name: Walter N. Gitlin
Title: Authorized Signatory
THE BANK OF NEW YORK,
as Property Trustee
By: /s/ Van K. Brown
Name: Van K. Brown
Title: Assistant Vice President
MAINSTREET BANKGROUP INCORPORATED,
as Sponsor and Debenture Issuer
By: /s/ James E. Adams
Name: James E. Adams
Title: Executive Vice President,
Chief Financial Officer and
Treasurer
<PAGE>
ANNEX I
TERMS OF
SERIES A/SERIES B 8.90% CAPITAL SECURITIES
8.90% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated
Declaration of Trust, dated as of November 19, 1997 (as amended from time to
time, the "Declaration"), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Trust Securities are set out
below (each capitalized term used but not defined herein has the meaning set
forth in the Declaration or, if not defined in such Declaration, as defined in
the Offering Memorandum referred to below in Section 2(c) of this Annex I):
<PAGE>
1. Designation and Number.
(a) Capital Securities. 50,000 Series A Capital Securities of
the Trust and 50,000 Series B Capital Securities of the Trust, each series with
an aggregate liquidation amount with respect to the assets of the Trust of 50
million dollars ($50,000,000), and each with a liquidation amount with respect
to the assets of the Trust of $1,000 per security, are hereby designated for the
purposes of identification only as "Series A 8.90% Capital Securities" and
"Series B 8.90% Capital Securities", respectively (collectively, the "Capital
Securities"). The 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 exchange or
quotation system on or in which the Capital Securities are listed, traded or
quoted.
(b) Common Securities. 1,547 Common Securities of the Trust
with an aggregate liquidation amount with respect to the assets of the Trust of
one million five hundred forty seven thousand dollars ($1,547,000) and a
liquidation amount with respect to the assets of the Trust of $1,000 per
security, are hereby designated for the purposes of identification only as
"8.90% Common Securities" (collectively, the "Common Securities"). The
certificates evidencing the Common Securities shall be 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 Trust Security will be fixed
at a rate per annum of 8.90% (the "Coupon Rate") of the liquidation amount of
$1,000 per Trust Security (the "Liquidation Amount"), such rate being the rate
of interest payable on the Junior Subordinated Debentures to be held by the
Property Trustee. Distributions in arrears for more than one semi-annual period
will bear additional distributions thereon compounded semi-annually at the
Coupon Rate (to the extent permitted by applicable law). Pursuant to the
Registration Rights Agreement, in certain limited circumstances the Debenture
Issuer will be required to pay Liquidated Damages with respect to the Junior
Subordinated Debentures. The term "Distributions", as used herein, includes
distributions of any such interest and Liquidated Damages payable unless
otherwise stated. A Distribution is payable only to the extent that payments are
made in respect of the Junior Subordinated Debentures held by the Property
Trustee and to the extent the Property Trustee has funds on hand legally
available therefor.
(b) Distributions on the Trust Securities will be cumulative,
will accumulate from the most recent date to which Distributions have been paid
or, if no Distributions have been paid, from November 19, 1997, and will be
payable semi-annually in arrears on June 1 and December 1 of each year,
commencing on June 1, 1998 (each, a "Distribution Date"), except as otherwise
described below. Distributions will be computed on the basis of a 360-day year
consisting of twelve 30-day months and for any period less than a full calendar
month on the basis of the actual number of days elapsed in such month. As long
as no Event of Default has occurred and is continuing under the Indenture, the
Debenture Issuer has the right under the Indenture to defer payments of interest
by extending the interest payment period at any time and from time to time on
the Junior Subordinated Debentures for a period not exceeding 10 consecutive
semi-annual periods, including the first such semi-annual period during such
period (each an "Extension Period"), during which Extension Period no interest
shall be due and payable on the Junior Subordinated Debentures, provided that no
Extension Period shall end on a date other than an Interest Payment Date for the
Junior Subordinated Debentures or extend beyond the Maturity Date of the Junior
Subordinated Debentures. As a consequence of such deferral, Distributions will
also be deferred. Despite such deferral, Distributions will continue to
accumulate with additional Distributions thereon (to the extent permitted by
applicable law but not at a rate greater than the rate at which interest is then
accruing on the Junior Subordinated Debentures) at the Coupon Rate compounded
semi-annually during any such Extension Period. Prior to the termination of any
such Extension Period, the Debenture Issuer may further defer payments of
interest by further extending such Extension Period; provided that such
Extension Period, together with all such previous and further extensions within
such Extension Period, may not exceed 10 consecutive semi-annual periods,
including the first semi-annual period during such Extension Period, or extend
beyond the Maturity Date of the Junior Subordinated Debentures. Upon the
termination of any Extension Period and the payment of all amounts then due, the
Debenture Issuer may commence a new Extension Period, subject to the above
requirements.
(c) Distributions on the Trust Securities will be payable to
the Holders thereof as they appear on the books and records of the Trust on the
close of business on the 15th day of the month prior to the month in which the
relevant payment occurs, which Distribution Dates correspond to the interest
payment dates on the Junior Subordinated Debentures. Subject to any applicable
laws and regulations and the provisions of the Declaration, each such payment in
respect of the Capital Securities will be made as described under the heading
"Description of Capital Securities -- Form, Denomination, Book-Entry Procedures
and Transfer" in the Offering Memorandum dated November 14, 1997, of the
Debenture Issuer and the Trust relating to the Trust Securities and the Junior
Subordinated Debentures. The relevant record dates for the Common Securities
shall be the same as the record dates for the Capital Securities. Distributions
payable on any Trust Securities that are not punctually paid on any Distribution
Date, as a result of the Debenture Issuer having failed to make a payment under
the Junior Subordinated Debentures, will cease to be payable to the Holder on
the relevant record date, and such defaulted Distribution will instead be
payable to the Person in whose name such Trust 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 Trust
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 next succeeding Business Day is in the next succeeding calendar year,
such payment shall be made on the immediately preceding Business Day with the
same force and effect as if made on such 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.
3. Liquidation Distribution Upon Dissolution.
In the event of any termination of the Trust, or if the
Sponsor otherwise gives notice of its election to liquidate the Trust pursuant
to Section 8.1(a)(iii) of the Declaration, the Trust shall be liquidated by the
Administrative Trustees as expeditiously as the Administrative Trustees
determine to be possible by distributing to the Holders, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, a Like
Amount (as defined below) of the Junior Subordinated Debentures, unless such
distribution is determined by the Property Trustee not to be practicable, in
which event such Holders will be entitled to receive Pro Rata out of the assets
of the Trust legally available for distribution to Holders an amount equal to
the aggregate of the liquidation amount of $1,000 per Trust Security plus
accumulated and unpaid Distributions thereon to the date of payment, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law (such amount being the "Liquidation Distribution").
"Like Amount" means (i) with respect to a redemption of the
Trust Securities, Trust Securities having a Liquidation Amount equal to the
principal amount of Junior Subordinated Debentures to be paid in accordance with
their terms and (ii) with respect to a distribution of Junior Subordinated
Debentures upon the liquidation of the Trust, Junior Subordinated Debentures
having a principal amount equal to the Liquidation Amount of the Trust
Securities of the Holder to whom such Junior Subordinated Debentures are
distributed.
If, upon any such liquidation, the Liquidation Distribution
can be paid only in part because the Trust has insufficient assets on hand
legally available to pay in full the aggregate Liquidation Distribution, then
the amounts payable directly by the Trust on the Trust Securities shall be paid
on a Pro Rata basis except that if a Junior Subordinated Debenture Event of
Default has occurred and is continuing, the Capital Securities shall have
priority over the Common Securities.
4. Redemption and Distribution.
(a) Upon the repayment of the Junior Subordinated Debentures
in whole or in part, at maturity or otherwise (either at the option of the
Debenture Issuer or pursuant to a Special Event, as described below), the
proceeds from such repayment shall be simultaneously applied by the Property
Trustee (subject to the Property Trustee having received written notice no later
than 45 days prior to such repayment) to redeem a Like Amount of the Trust
Securities at a redemption price equal to (i) in the case of the repayment of
the Junior Subordinated Debentures at maturity, the Maturity Redemption Price
(as defined below), (ii) in the case of the optional prepayment of the Junior
Subordinated Debentures upon the occurrence and continuation of a Special Event,
the Special Event Redemption Price (as defined below) and (iii) in the case of
the optional prepayment of the Junior Subordinated Debentures on or after
December 1, 2007, the Optional Redemption Price (as defined below). The Maturity
Redemption Price, the Special Event Redemption Price and the Optional Redemption
Price are referred to collectively as the "Redemption Price". Holders will be
given not less than 30 nor more than 60 days notice of such redemption.
(b) (i) The "Maturity Redemption Price", with respect to a
redemption of Trust Securities, shall mean an amount equal to the principal of
and accrued and unpaid interest on the Junior Subordinated Debentures as of the
maturity date thereof.
(ii) In the case of an optional redemption, if fewer than all
the outstanding Trust Securities are to be so redeemed, the Trust Securities to
be redeemed will be determined as described in Section 4(f)(ii) below. Upon the
entry of an order for the dissolution of the Trust by a court of competent
jurisdiction, the Junior Subordinated Debentures thereafter will be subject to
optional repayment, in whole, but not in part, on or after December 1, 2007 (the
"Initial Optional Redemption Date").
The Debenture Issuer shall have the right (subject to the
conditions in the Indenture) to elect to prepay the Junior Subordinated
Debentures, in whole or in part, at any time on or after the Initial Optional
Redemption Date, upon not less than 30 days' and not more than 60 days' notice,
at a price equal to the Optional Redemption Price (as defined below) and,
simultaneous with such prepayment, to cause a Like Amount of the Trust
Securities to be redeemed by the Trust at the Optional Redemption Price on a Pro
Rata basis. "Optional Redemption Price" shall mean a price equal to the
percentage of the liquidation amount of Trust Securities to be redeemed plus
accumulated and unpaid Distributions thereon, if any, to the date of such
redemption if redeemed during the 12-month period beginning December 1 of the
years indicated below:
Percentage of
Year Principal
2007 104.450%
2008 104.005%
2009 103.560%
2010 103.115%
2011 102.670%
2012 102.225%
2013 101.780%
2014 101.335%
2015 100.890%
2016 100.445%
2017 and
thereafter 100.000%
(c) If at any time a Tax Event or a Regulatory Capital Event
(each as defined below, and each a "Special Event") occurs, the Debenture Issuer
shall have the right (subject to the conditions set forth in the Indenture) at
any time prior to the Initial Optional Redemption Date, upon not less than 30
nor more than 60 days' notice, to prepay the Junior Subordinated Debentures in
whole, but not in part, within the 90 days following the occurrence of such
Special Event (the "90 Day Period"), and, simultaneous with such prepayment, to
cause a Like Amount of the Trust Securities to be redeemed by the Trust at the
Special Event Redemption Price on a Pro Rata basis.
"Make Whole Amount" shall mean an amount equal to the greater
of (x) 100% of the principal of a Like Amount of Junior Subordinated Debentures
to be prepaid or (y) the sum, as determined by a Quotation Agent (as defined in
the Indenture), of the present values of the remaining scheduled payments of
principal and interest on such Like Amount of Junior Subordinated Debentures,
discounted to the prepayment date on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at the Adjusted Treasury Rate (as
defined in the Indenture), plus, in the case of each of clauses (x) and (y),
accrued and unpaid interest thereon, including Compounded Interest and
Additional Sums (each as defined in the Indenture), if any, and Liquidated
Damages, if any, to the date of such prepayment.
"Tax Event" shall mean 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 thereunder of the United
States or any political subdivision or taxing authority thereof or therein, or
as a result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement or decision is announced on or after the date
of original issuance of the Junior Subordinated 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 Junior Subordinated Debentures, (ii)
interest payable by the Debenture Issuer on the Junior Subordinated 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.
"Regulatory Capital Event" shall mean that the Debenture
Issuer shall have received an opinion of independent bank regulatory counsel
experienced in such matters to the effect that, as a result of: (i) any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any rules,
guidelines or policies of an applicable regulatory agency; or (ii) any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or such
pronouncement or decision is announced on or after the date of original issuance
of the Junior Subordinated Debentures, the Capital Securities do not constitute,
or within 90 days of the date thereof, would not constitute, Tier 1 Capital (or
its then equivalent if the Debenture Issuer were subject to such capital
requirement); provided, however, that the distribution of the Junior
Subordinated Debentures in connection with the liquidation of the Trust by the
Debenture Issuer, as Sponsor, shall not in and of itself constitute a Regulatory
Capital Event unless such liquidation shall have occurred in connection with a
Tax Event.
"Special Event Redemption Price" shall mean, with respect to
any redemption of the Trust Securities following a Special Event, an amount in
cash equal to the Make Whole Amount.
(d) On and from the date fixed by the Administrative Trustees
for any distribution of Junior Subordinated Debentures and liquidation of the
Trust: (i) the Trust Securities will no longer be deemed to be outstanding, (ii)
the Clearing Agency or its nominee (or any successor Clearing Agency or its
nominee), as the Holder of the Capital Securities, will receive a registered
global certificate or certificates representing the Junior Subordinated
Debentures to be delivered upon such distribution, and (iii) any certificates
representing Trust Securities not held by the Clearing Agency or its nominee (or
any successor Clearing Agency or its nominee) will be deemed to represent
beneficial interests in a Like Amount of Junior Subordinated Debentures until
such certificates are presented to the Debenture Issuer or its agent for
transfer or reissue.
(e) The Trust may not redeem fewer than all the outstanding
Trust Securities unless all accumulated and unpaid Distributions have been paid
on all Trust Securities for all semi-annual Distribution periods terminating on
or before the date of redemption.
(f) The procedure with respect to redemptions or distributions
of Trust Securities shall be as follows:
(i) Notice of any redemption of, or notice of distribution of
Junior Subordinated Debentures in exchange for, the Trust Securities (a
"Redemption/Distribution Notice") will be given by the Trust by mail to
each Holder 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 Junior Subordinated 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(f)(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. Each
Redemption/Distribution Notice shall be addressed to the Holders at the
address of each such Holder appearing in the books and records of the
Trust. No defect in the Redemption/Distribution Notice or in the
mailing of either 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 Trust
Securities are to be redeemed, the particular Trust Securities to be
redeemed shall be selected on a Pro Rata basis (based upon Liquidation
Amounts) not more than 60 days prior to the date fixed for redemption
from the outstanding Capital Securities not previously called for
redemption, provided, however, that with respect to Holders that would
be required to hold less than 100 but more than zero Trust Securities
as a result of such pro rata redemption, the Trust shall redeem Trust
Securities of each such Holder so that after such redemption such
Holder shall hold either 100 Trust Securities or such Holder no longer
holds any Trust Securities, and shall use such method (including,
without limitation, by lot) as the Trust shall deem fair and
appropriate, provided, further, that any such proration may be made on
the basis of the aggregate Liquidation Amount of Trust Securities held
by each Holder thereof and may be made by making such adjustments as
the Trust deems fair and appropriate in order that only Trust
Securities in denominations of $1,000 or integral multiples thereof
shall be redeemed. In respect of Capital Securities registered in the
name of and held of record by the Clearing Agency or its nominee (or
any successor Clearing Agency or its nominee) or any nominee, the
distribution of the proceeds of such redemption will be made to the
Clearing Agency and disbursed by such Clearing Agency in accordance
with the procedures applied by such agency or nominee.
(iii) If Trust Securities are to be redeemed and the Trust
gives a Redemption/Distribution Notice, (which notice will be
irrevocable), then (A) with respect to Capital Securities issued in
book-entry form, by 12:00 noon, New York City time, on the redemption
date, provided that the Debenture Issuer has paid the Property Trustee
a sufficient amount of cash in connection with the related redemption
or maturity of the Junior Subordinated Debentures by 10:00 a.m., New
York City time, on the maturity date or the date of redemption, as the
case requires, the Property Trustee will deposit irrevocably with the
Clearing Agency or its nominee (or successor Clearing Agency or its
nominee) funds sufficient to pay the applicable Redemption Price with
respect to such Capital Securities and will give the Clearing Agency
irrevocable instructions and authority to pay the Redemption Price to
the relevant Clearing Agency Participants, and (B) with respect to
Capital Securities issued in certificated form and Common Securities,
provided that the Debenture Issuer has paid the Property Trustee a
sufficient amount of cash in connection with the related redemption or
maturity of the Junior Subordinated Debentures, the Property Trustee
will pay the relevant Redemption Price to the Holders by check mailed
to the address of the relevant 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, if applicable, then immediately prior to the
close of business on the date of such deposit, or on the redemption
date, as applicable, Distributions will cease to accumulate on the
Trust Securities so called for redemption and all rights of Holders so
called for redemption will cease, except the right of the Holders of
such Trust Securities to receive the Redemption Price, but without
interest on such Redemption Price, and such Trust Securities shall
cease to be outstanding.
(iv) Payment of accumulated and unpaid Distributions on the
Redemption Date of the Trust Securities will be subject to the rights
of Holders on the close of business on a regular record date in respect
of a Distribution Date occurring on or prior to such Redemption Date.
Neither the Administrative Trustees nor the Trust shall be
required to register or cause to be registered the transfer of (i) any Trust
Securities beginning on the opening of business 15 days before the day of
mailing of a notice of redemption or any notice of selection of Trust Securities
for redemption or (ii) any Trust Securities selected for redemption except the
unredeemed portion of any Trust Security being redeemed. If any date fixed for
redemption of Trust Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay) except that, if such next succeeding Business Day falls in the
next calendar year, such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such
date fixed for redemption. If payment of the Redemption Price in respect of any
Trust Securities is improperly withheld or refused and not paid either by the
Property Trustee or by the Sponsor as guarantor pursuant to the relevant Trust
Securities Guarantee, Distributions on such Trust Securities will continue to
accumulate 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.
(v) Redemption/Distribution Notices shall be sent by the
Property Trustee on behalf of the Trust to (A) in respect of the
Capital Securities, the Clearing Agency or its nominee (or any
successor Clearing Agency or its nominee) if the Global Certificates
have been issued or, if Definitive Capital Security Certificates have
been issued, to the Holder thereof, and (B) in respect of the Common
Securities to the Holder thereof.
(vi) Subject to the foregoing and applicable law (including,
without limitation, United States federal securities laws and banking
laws), provided 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.
(b) So long as any Junior Subordinated Debentures are held by
the Property Trustee, the Trustees shall not (i) direct the time, method and
place of conducting any proceeding for any remedy available to the Debenture
Trustee or executing any trust or power conferred on such Debenture Trustee with
respect to the Junior Subordinated Debentures, (ii) waive any past default that
is waivable under Section 5.07 of the Indenture, (iii) exercise any right to
rescind or annul a declaration of acceleration of the maturity of the principal
of the Junior Subordinated Debentures or (iv) consent to any amendment,
modification or termination of the Indenture or the Junior Subordinated
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a majority in liquidation amount
of all outstanding Capital Securities; provided, however, that where a consent
under the Indenture would require the consent of each holder of Junior
Subordinated Debentures affected thereby, no such consent shall be given by the
Property Trustee without the prior approval of each Holder of the Capital
Securities. The Trustees shall not revoke any action previously authorized or
approved by a vote of the Holders of the Capital Securities except by subsequent
vote of such Holders. The Property Trustee shall notify each Holder of Capital
Securities of any notice of default with respect to the Junior Subordinated
Debentures. In addition to obtaining the foregoing approvals of such Holders of
the Capital Securities, prior to taking any of the foregoing actions, the
Trustees shall obtain an opinion of counsel experienced in such matters to the
effect that the Trust will continue to be classified as a grantor trust for
United States federal income tax purposes on account of such action.
If an Event of Default under the Declaration has occurred and
is continuing and such event is attributable to the failure of the Debenture
Issuer to pay principal of or premium, if any, or interest on the Junior
Subordinated Debentures on the due date (or in the case of redemption, on the
redemption date), then a Holder of Capital Securities may directly institute a
proceeding for enforcement of payment to such Holder of the principal of or
premium, if any, or interest on a Like Amount of Junior Subordinated Debentures
(a "Direct Action") on or after the respective due date specified in the Junior
Subordinated Debentures. In connection with such Direct Action, the rights of
the Common Securities Holder will be subrogated to the rights of such Holder of
Capital Securities to the extent of any payment made by the Debenture Issuer to
such Holder of Capital Securities in such Direct Action. Except as provided in
the second preceding sentence, the Holders of Capital Securities will not be
able to exercise directly any other remedy available to the holders of the
Junior Subordinated Debentures.
Any approval or direction of Holders of Capital Securities may
be given at a separate meeting of Holders of Capital Securities convened for
such purpose, at a meeting of all of the Holders of Trust Securities or pursuant
to written consent. The Property Trustees will cause a notice of any meeting at
which Holders of 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 Capital 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 Capital Securities
will be required for the Trust to redeem and cancel Capital Securities or to
distribute the Junior Subordinated Debentures in accordance with the Declaration
and the terms of the Trust Securities.
Notwithstanding that Holders of 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 be entitled to vote or consent and shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
(a) Except as provided under Sections 6(b), 6(c), and 7 or as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) Unless an Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by the holder of the Common
Securities. If an Event of Default has occurred and is continuing, the Property
Trustee and the Delaware Trustee may be removed at such time by the holders of a
Majority in liquidation amount of the outstanding Capital Securities. In no
event will the holders of the Capital Securities have the right to vote to
appoint, remove or replace the Administrative Trustees, which voting rights are
vested exclusively in the Sponsor as the holder of the Common Securities. No
resignation or removal of a Trustee and no appointment of a successor trustee
shall be effective until the acceptance of appointment by the successor trustee
in accordance with the provisions of the Declaration.
(c) So long as any Junior Subordinated Debentures are held by
the Property Trustee, the Trustees shall not (i) direct the time, method and
place of conducting any proceeding for any remedy available to the Debenture
Trustee, or executing any trust or power conferred on such Debenture Trustee
with respect to the Junior Subordinated Debentures, (ii) waive any past default
that is waivable under Section 5.07 of the Indenture, (iii) exercise any right
to rescind or annul a declaration of acceleration of the maturity of the
principal of the Junior Subordinated Debentures or (iv) consent to any
amendment, modification or termination of the Indenture or the Junior
Subordinated Debentures, where such consent shall be required, without, in each
case, obtaining the prior approval of the Holders of a Majority in liquidation
amount of all outstanding Common Securities; provided, however, that where a
consent under the Indenture would require the consent of each holder of Junior
Subordinated Debentures affected thereby, no such consent shall be given by the
Property Trustee without the prior approval of each Holder of the Common
Securities. The Trustees shall not revoke any action previously authorized or
approved by a vote of the Holders of the Common Securities except by subsequent
vote of such Holders. The Property Trustee shall notify each Holder of Common
Securities of any notice of default with respect to the Junior Subordinated
Debentures. In addition to obtaining the foregoing approvals of such Holders of
the Common Securities prior to taking any of the foregoing actions, the Trustees
shall obtain an opinion of counsel experienced in such matters to the effect
that the Trust will continue to be classified as a grantor trust for United
States federal income tax purposes on account of such action.
If an Event of Default under the Declaration has occurred and
is continuing and such event is attributable to the failure of the Debenture
Issuer to pay principal of or premium, if any, or interest on the Junior
Subordinated Debentures on the due date (or in the case of redemption, on the
redemption date), then a Holder of Common Securities may institute a Direct
Action for enforcement of payment to such Holder of the principal of or premium,
if any, or interest on a Like Amount of Junior Subordinated Debentures on or
after the respective due date specified in the Junior Subordinated Debentures.
In connection with such Direct Action, the rights of the Common Securities
Holder will be subordinated to the rights of such Holder of Capital Securities
to the extent of any payment made by the Debenture Issuer to such Holder of
Common Securities in such Direct Action. Except as provided in the second
preceding sentence, the Holders of Common Securities will not be able to
exercise directly any other remedy available to the holders of the Junior
Subordinated Debentures.
Any approval or direction of Holders of Common Securities may
be given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Trust Securities or pursuant to
written consent. The Administrative Trustees will cause a notice of any meeting
at which Holders of 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 record of 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 Junior Subordinated Debentures in accordance with the Declaration
and the terms of the Trust Securities.
7. Amendments to Declaration and Indenture.
In addition to the requirements set out in Section 12.1 of the
Declaration, the Declaration may be amended from time to time by the Sponsor,
the Property Trustee and the Administrative Trustees without the consent of the
Holders (i) to cure any ambiguity, correct or supplement any provisions in the
Declaration that may be inconsistent with any other provisions, or to make any
other provisions with respect to matters or questions arising under the
Declaration which shall not be inconsistent with the other provisions of the
Declaration, (ii) to modify, eliminate or add to any provisions of the
Declaration to such extent as shall be necessary to ensure that the Trust will
be classified for United States federal income tax purposes as a grantor trust
at all times that any Trust Securities are outstanding or to ensure that the
Trust will not be required to register as an "Investment Company" under the
Investment Company Act and (iii) to modify, eliminate or add any provisions of
the Declaration to such extent as shall be necessary to enable the Trust or the
Sponsor to conduct an Exchange Offer in the manner contemplated by the
Registration Rights Agreement; provided, however, that in each case, such action
shall not adversely affect in any material respect the interests of any Holder,
and any amendments of the Declaration shall become effective when notice thereof
is given to the Holders. The Declaration may also be amended by the Trustees and
the Sponsor with (i) the consent of Holders representing a Majority in
liquidation amount of all outstanding Trust Securities, and (ii) receipt by the
Trustees of an Opinion of Counsel to the effect that such amendment or the
exercise of any power granted to the Trustees in accordance with such amendment
will not affect the Trust's status as a grantor trust for United States federal
income tax purposes or the Trust's exemption from status as an Investment
Company under the Investment Company Act, provided that, without the consent of
each Holder of Trust Securities, the Declaration may not be amended to (i)
change the amount or timing of any Distribution on the Trust Securities or
otherwise adversely affect the amount of any Distribution required to be made in
respect of the Trust Securities as of a specified date or (ii) restrict the
right of a holder of Trust Securities to institute suit for the enforcement of
any such payment on or after such date.
8. Pro Rata.
A reference in these terms of the Trust Securities to any
payment, distribution or treatment as being "Pro Rata" shall mean pro rata to
each Holder according to the aggregate liquidation amount of the Trust
Securities held by the relevant Holder in relation to the aggregate liquidation
amount of all Trust Securities outstanding unless, in relation to a payment, an
Event of Default under the Declaration 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 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 Common Securities pro rata according to the aggregate liquidation
amount of Common Securities held by the relevant Holder relative to the
aggregate liquidation amount of all Common Securities outstanding.
9. Ranking.
The Capital Securities rank pari passu with the Common
Securities and payment thereon shall be made Pro Rata with the Common
Securities, except that, if an Event of Default under the Declaration occurs and
is continuing, no payments in respect of Distributions on, or payments upon
liquidation, redemption or otherwise with respect to, the Common Securities
shall be made until the Holders of the Capital Securities shall be paid in full
the Distributions, Redemption Price, Liquidation Distribution and other payments
to which they are entitled at such time.
10. Acceptance of Trust Securities Guarantee and
Indenture.
Each Holder of Capital Securities and Common Securities, by
the acceptance thereof, agrees to the provisions of the Guarantee and the Common
Securities Guarantee, respectively, including the subordination provisions
therein and to the provisions of the Indenture.
11. No Preemptive Rights.
The issuance of Capital Securities and the issuance of Common
Securities is not subject to preemptive or other similar rights. The Holders
shall have no preemptive 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, the Common Securities Guarantee (as may be appropriate), and/or the
Indenture (including any supplemental indenture) to a Holder without charge upon
written request to the Sponsor at its principal place of business.
<PAGE>
EXHIBIT A-1
FORM OF SERIES A CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[IF THIS GLOBAL SECURITY IS A GLOBAL CAPITAL SECURITY, INSERT:
THIS CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY WITHIN THE MEANING OF THE
DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY") OR A NOMINEE OF THE CLEARING
AGENCY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY OR ITS NOMINEE ONLY IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS
CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY
THE CLEARING AGENCY TO A NOMINEE OF THE CLEARING AGENCY OR BY A NOMINEE OF THE
CLEARING AGENCY TO THE CLEARING AGENCY OR ANOTHER NOMINEE OF THE CLEARING
AGENCY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.]
[IF THIS GLOBAL SECURITY IS A RULE 144A GLOBAL SECURITY,
INSERT: UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THE CAPITAL SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER
THIS CAPITAL 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, REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY, PRIOR TO THE
DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH MAINSTREET
BANKGROUP INCORPORATED (THE "CORPORATION") OR ANY "AFFILIATE" OF THE CORPORATION
WAS THE OWNER OF THIS CAPITAL SECURITY (OR ANY PREDECESSOR OF THIS CAPITAL
SECURITY) ONLY (A) TO THE CORPORATION, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS THIS
CAPITAL SECURITY IS ELIGIBLE FOR RESALE 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, (D) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1),
(2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS
CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL 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 (E) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE
TRUST AND THE CORPORATION PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT
TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii)
PURSUANT TO CLAUSE (D), TO REQUIRE THAT THE TRANSFEROR DELIVER TO THE TRUST A
LETTER FROM THE TRANSFEREE SUBSTANTIALLY IN THE FORM OF ANNEX A TO THE OFFERING
MEMORANDUM DATED NOVEMBER 14, 1997. SUCH HOLDER FURTHER AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS CAPITAL SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED
ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 (100
CAPITAL SECURITIES). ANY SUCH TRANSFER OF CAPITAL SECURITIES IN A BLOCK HAVING A
LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER. 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.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF
ALSO AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT A PLAN OR PLAN
ASSETS ENTITY OR (ii) THE ACQUISITION AND HOLDING OF THIS CAPITAL SECURITY BY IT
IS NOT PROHIBITED BY EITHER SECTION 406 OF ERISA OR SECTION 4975 OF THE U.S.
INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR IS EXEMPT FROM ANY SUCH
PROHIBITION.
<PAGE>
Certificate Number Aggregate Liquidation
CS-1 Amount: $50,000,000
CUSIP NO. 56063F AA 0
Certificate Evidencing Series A Capital Securities
of
MainStreet Capital Trust I
Series A 8.90% Capital Securities
(liquidation amount $1,000 per Capital Security)
MainStreet Capital Trust I, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of [$_________ in
aggregate liquidation amount of Capital Securities of the Trust]1 [the aggregate
liquidation amount of Capital Securities of the Trust specified in Schedule A
hereto]2 representing undivided beneficial interests in the assets of the Trust
designated the Series A 8.90% Capital Securities (liquidation amount $1,000 per
Capital Security) (the "Capital Securities"). 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 and shall in all respects be subject to the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as of November 19,
1997, as the same may be amended from time to time (the "Declaration"),
including the designation of the terms of the Capital Securities as set forth in
Annex I to the Declaration. Capitalized terms used but not defined herein shall
have the meaning given them in the Declaration. The Sponsor will provide a copy
of the Declaration, the Guarantee, the Common Securities Guarantee (as may be
appropriate), and the Indenture (including any supplemental indenture) to a
Holder without charge upon written request to the Trust at its principal place
of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Junior Subordinated Debentures as indebtedness
and the Capital Securities as evidence of indirect beneficial ownership in the
Junior Subordinated Debentures.
- ----------------
1 Insert in Definitive Capital Securities only.
2 Insert in Global Capital Securities only.
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate
this 19th day of November, 1997.
MAINSTREET CAPITAL TRUST I
By:________________________________
Name: James E. Adams
Title: Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
Dated: November 19, 1997
THE BANK OF NEW YORK,
not in its individual capacity but solely as Property
Trustee
By:
Authorized Signatory
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed
at a rate per annum of 8.90% (the "Coupon Rate") of the liquidation amount of
$1,000 per Capital Security, such rate being the rate of interest payable on the
Junior Subordinated Debentures to be held by the Property Trustee. 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). Pursuant to the Registration Rights Agreement, in certain
limited circumstances the Debenture Issuer will be required to pay Liquidated
Damages (as defined in the Registration Rights Agreement) with respect to the
Junior Subordinated Debentures. The term "Distributions", as used herein,
includes such cash distributions and any such interest and such Liquidated
Damages payable unless otherwise stated. A Distribution is payable only to the
extent that payments are made in respect of the Junior Subordinated Debentures
held by the Property Trustee and to the extent the Property Trustee has funds on
hand legally available therefor.
Distributions on the Capital Securities will be cumulative,
will accumulate from the most recent date to which Distributions have been paid
or, if no Distributions have been paid, from November 19, 1997 and will be
payable semi-annually in arrears, on June 1 and December 1 of each year,
commencing on June 1, 1998, except as otherwise described below. Distributions
will be computed on the basis of a 360-day year consisting of twelve 30-day
months and, for any period less than a full calendar month, the number of days
elapsed in such month. As long as no Event of Default has occurred and is
continuing under the Indenture, the Debenture Issuer has the right under the
Indenture to defer payments of interest by extending the interest payment period
at any time and from time to time on the Junior Subordinated Debentures for a
period not exceeding 10 consecutive calendar semi-annual periods, including the
first such semi-annual period during such extension period (each an "Extension
Period"), provided that no Extension Period shall end on a date other than an
Interest Payment Date for the Junior Subordinated Debentures or extend beyond
the Maturity Date of the Junior Subordinated Debentures. As a consequence of
such deferral, Distributions will also be deferred. Despite such deferral,
semi-annual Distributions will continue to accumulate with interest thereon (to
the extent permitted by applicable law, but not at a rate exceeding the rate of
interest then accruing on the Junior Subordinated Debentures) at the Coupon Rate
compounded semi-annually during any such Extension Period. Prior to the
termination of any such Extension Period, the Debenture Issuer may further defer
payments of interest by further extending such Extension Period; provided that
such Extension Period, together with all such previous and further extensions
within such Extension Period, may not exceed 10 consecutive semi-annual periods,
including the first semi-annual period during such Extension Period, end on a
date other than an Interest Payment Date for the Junior Subordinated Debentures
or extend beyond the Maturity Date of the Junior Subordinated Debentures.
Payments of accumulated Distributions will be payable to Holders as they appear
on the books and records of the Trust on the first record date after the end of
the Extension Period. Upon the termination of any Extension Period and the
payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
Subject to receipt by the Sponsor of any required regulatory
approvals and to certain other conditions set forth in the Declaration and the
Indenture, the Property Trustee may, at the direction of the Sponsor, at any
time liquidate the Trust and cause the Junior Subordinated Debentures to be
distributed to the holders of the Trust Securities in liquidation of the Trust
or, simultaneously with any redemption of the Junior Subordinated Debentures,
cause a Like Amount of the Trust Securities to be redeemed by the Trust.
The Capital Securities shall be redeemable as provided in the
Declaration.
<PAGE>
---------------------
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
=================================================================
___________________________________________________________ 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***: ___________________________________
- -------------------
*** 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 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 Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities and
Exchange Act of 1934, as amended.
<PAGE>
[Include the following if the Capital Security bears a Restricted Capital
Securities Legend --
In connection with any transfer of any of the Capital Securities evidenced by
this certificate, the undersigned confirms that such Capital Securities are
being:
CHECK ONE BOX BELOW
(1) [ ] exchanged for the undersigned's own account without transfer;
or
(2) [ ] transferred pursuant to and in compliance with Rule 144A
under the Securities Act of 1933; or
(3) [ ] transferred to an institutional "accredited investor" within
the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule
501 under the Securities Act of 1933 that is acquiring the
Capital Securities for its own account, or for the account of
such an institutional "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 of 1933; or
(4) [ ] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933; or
(5) [ ] transferred pursuant to an effective Registration Statement.
Unless one of the boxes is checked, the Registrar will refuse to register any of
the Capital Securities evidenced by this certificate in the name of any Person
other than the registered Holder thereof; provided, however, that if box (3) or
(4) is checked, the Registrar may require, prior to registering any such
transfer of the Capital Securities, such legal opinions, certifications and
other information as the Trust has reasonably requested to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act of 1933, such as
the exemption provided by Rule 144 under such Act; provided, further, that (i)
if box (2) is checked, the transferee must also certify that it is a qualified
institutional buyer as defined in Rule 144A or (ii) if box (3) is checked, the
transferee must also provide to the Registrar a Transferee Letter of
Representation in the form attached to the Offering Memorandum of the Trust
dated November 14, 1997; provided, further, that after the date that a
Registration Statement has been filed and so long as such Registration Statement
continues to be effective, the Registrar may only permit transfers for which box
(5) has been checked.
Signature
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS COMMON
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, REGISTRATION.
THE HOLDER OF THIS COMMON SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS COMMON SECURITY, PRIOR TO THE
DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE
LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH EAGLE
FINANCIAL CORP. (THE "COMPANY") OR ANY "AFFILIATE" OF THE COMPANY WAS THE OWNER
OF THIS CAPITAL SECURITY (OR ANY PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A)
TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS THIS COMMON SECURITY IS
ELIGIBLE FOR RESALE 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, (D) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501
UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS COMMON SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL 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 (E) PURSUANT TO
ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT, SUBJECT TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND (ii) PURSUANT TO CLAUSE (D), TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE REVERSE OF THIS COMMON
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEREE TO THE TRUST. SUCH HOLDER
FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS COMMON SECURITY
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
<PAGE>
Certificate Evidencing Common Securities
of
MainStreet Capital Trust I
8.90% Common Securities
(liquidation amount $1,000 per Common Security)
MainStreet Capital Trust I, a statutory business trust formed
under the laws of the State of Delaware (the "Trust"), hereby certifies that
MainStreet BankGroup Incorporated (the "Holder") is the registered owner of
1,547 common securities of the Trust representing undivided beneficial interests
in the assets of the Trust designated the 8.90% Common Securities (liquidation
amount $1,000 per Common Security) (the "Common Securities"). The Common
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 Common
Securities represented hereby are issued and shall in all respects be subject to
the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of November 19, 1997, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Common Securities
as set forth in Annex I to the Declaration. Capitalized terms used but not
defined herein shall have the meaning given them in the Declaration. The Sponsor
will provide a copy of the Declaration, the Common Securities Guarantee, the
Capital Securities Guarantee (as may be appropriate) and the Indenture
(including any supplemental indenture) to a Holder without charge upon written
request to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Common Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate
this 19th day of November, 1997.
MAINSTREET CAPITAL TRUST I
By:________________________________
Name: James E. Adams
Title: Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Common Securities referred to in the
within-mentioned Declaration.
Dated: November 19, 1997
THE BANK OF NEW YORK,
not in its individual capacity but solely as
Property Trustee
By:
Authorized
Signatory
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at
a rate per annum of 8.90% (the "Coupon Rate") of the liquidation amount of
$1,000 per Common Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. 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). Pursuant to the
Registration Rights Agreement, in certain limited circumstances the Debenture
Issuer will be required to pay Liquidated Damages (as defined in the
Registration Rights Agreement) with respect to the Debentures. The term
"Distributions", as used herein, includes such cash distributions and any such
interest and such Liquidated Damages payable unless otherwise stated. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the Property
Trustee has funds available therefor.
Distributions on the Common Securities will be cumulative,
will accrue from the most recent date to which Distributions have been paid or,
if no Distributions have been paid, from November 19, 1997 and will be payable
semi-annually in arrears, on June 1 and December 1 of each year, commencing on
June 1, 1998, except as otherwise described below. Distributions will be
computed on the basis of a 360-day year consisting of twelve 30-day months and,
for any period less than a full calendar month, the number of days elapsed in
such month. As long as no Event of Default has occurred and is continuing under
the Indenture, the Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period at any time and
from time to time on the Debentures for a period not exceeding 10 consecutive
calendar semi-annual periods, including the first such semi-annual period during
such extension period (each an "Extension Period"), provided that no Extension
Period shall end on a date other than an Interest Payment Date for the
Debentures or extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral, Distributions will also be deferred. Despite such
deferral, Distributions will continue to accumulate with interest thereon (to
the extent permitted by applicable law, but not at a rate exceeding the rate of
interest then accruing on the Debentures) at the Coupon Rate compounded
semi-annually during any such Extension Period. Prior to the termination of any
such Extension Period, the Debenture Issuer may further defer payments of
interest by further extending such Extension Period; provided that such
Extension Period, together with all such previous and further extensions within
such Extension Period, may not exceed 10 consecutive semi-annual periods,
including the first semi-annual period during such Extension Period, or end on a
date other than an Interest Payment Date for the Debentures or extend beyond the
Maturity Date of the Debentures. Payments of accrued Distributions will be
payable to Holders as they appear on the books and records of the Trust on the
first record date after the end of the Extension Period. Upon the termination of
any Extension Period and the payment of all amounts then due, the Debenture
Issuer may commence a new Extension Period, subject to the above requirements.
<PAGE>
Subject to the receipt by the Sponsor of any required
regulatory approval and to certain other conditions set forth in the Declaration
and the Indenture, the Property Trustee may, at the direction of the Sponsor, at
any time liquidate the Trust and cause the Debentures to be distributed to the
holders of the Trust Securities in liquidation of the Trust or, simultaneous
with any redemption of the Debentures, cause a Like Amount of the Trust
Securities to be redeemed by the Trust.
Under certain circumstances, the right of the holders of the
Common Securities shall be subordinate to the rights of the holders of the
Capital Securities (as defined in the Declaration), as provided in the
Declaration.
The Common Securities shall be redeemable as provided in the
Declaration.
EXHIBIT 4.5
(Form of New Capital Security Certificate for MainStreet Capital Trust I)
SERIES B CAPITAL SECURITY CERTIFICATE
FORM OF FACE OF SECURITY
IF THIS CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY, INSERT:
THIS CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY WITHIN THE MEANING OF THE
DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY") OR A NOMINEE OF THE CLEARING
AGENCY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY OR ITS NOMINEE ONLY IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS
CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY
THE CLEARING AGENCY TO A NOMINEE OF THE CLEARING AGENCY OR BY A NOMINEE OF THE
CLEARING AGENCY TO THE CLEARING AGENCY OR ANOTHER NOMINEE OF THE CLEARING
AGENCY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED
ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 (100
CAPITAL SECURITIES). ANY SUCH TRANSFER OF CAPITAL SECURITIES IN A BLOCK HAVING A
LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER. 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.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF
ALSO AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT A PLAN OR PLAN
ASSETS ENTITY OR (ii) THE ACQUISITION AND HOLDING OF THIS CAPITAL SECURITY BY IT
IS NOT PROHIBITED BY EITHER SECTION 406 OF ERISA OR SECTION 4975 OF THE U.S.
INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR IS EXEMPT FROM ANY SUCH
PROHIBITION.
<PAGE>
Certificate Number Aggregate Liquidation
Amount: $
CUSIP NO.
Certificate Evidencing Series B Capital Securities
of
MainStreet Capital Trust I
Series B 8.90% Capital Securities
(liquidation amount $1,000 per Capital Security)
MainStreet 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]3 [the aggregate liquidation amount of Capital Securities of the
Trust specified in Schedule A hereto]4 representing undivided beneficial
interests in the assets of the Trust designated the Series B 8.90% Capital
Securities (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 and shall in all respects be subject to
the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of November 19, 1997, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Capital Securities
as set forth in Annex I to the Declaration. Capitalized terms used but not
defined herein shall have the meaning given them in the Declaration. The Sponsor
will provide a copy of the Declaration, the Capital Securities Guarantee, the
Common Securities Guarantee (as may be appropriate), and the Indenture
(including any supplemental indenture) to a Holder without charge upon written
request to the Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Capital Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Junior Subordinated Debentures as indebtedness
and the Capital Securities as evidence of indirect beneficial ownership in the
Junior Subordinated Debentures.
- --------------------
3 Insert in Definitive Capital Securities only.
4 Insert in Global Capital Securities only.
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate.
Dated: ____________________, 1998.
MAINSTREET CAPITAL TRUST I
By:________________________________
Name: James E. Adams
Title: Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
Dated: _____________________, 1998
THE BANK OF NEW YORK,
not in its individual capacity but solely as
Property Trustee
By:
Authorized Signatory
<PAGE>
FORM OF REVERSE OF SECURITY
Distributions payable on each Capital Security will be fixed
at a rate per annum of 8.90% (the "Coupon Rate") of the liquidation amount of
$1,000 per Capital Security, such rate being the rate of interest payable on the
Junior Subordinated Debentures to be held by the Property Trustee. 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). Pursuant to the Registration Rights Agreement, in certain
limited circumstances the Debenture Issuer will be required to pay Liquidated
Damages (as defined in the Registration Rights Agreement) with respect to the
Junior Subordinated Debentures. The term "Distributions", as used herein,
includes such cash distributions and any such interest and such Liquidated
Damages payable unless otherwise stated. A Distribution is payable only to the
extent that payments are made in respect of the Junior Subordinated Debentures
held by the Property Trustee and to the extent the Property Trustee has funds on
hand legally available therefor.
Distributions on the Capital Securities will be cumulative,
will accumulate from the most recent date to which Distributions have been paid
or duly provided for, if no Distributions have been paid, from November 19, 1997
and will be payable semi-annually in arrears, on June 1 and December 1 of each
year, commencing on June 1, 1998, except as otherwise described below.
Distributions will be computed on the basis of a 360-day year consisting of
twelve 30-day months and, for any period less than a full calendar month, the
number of days elapsed in such month. As long as no Event of Default has
occurred and is continuing under the Indenture, the Debenture Issuer has the
right under the Indenture to defer payments of interest by extending the
interest payment period at any time and from time to time on the Junior
Subordinated Debentures for a period not exceeding 10 consecutive calendar
semi-annual periods, including the first such semi-annual period during such
extension period (each an "Extension Period"), provided that no Extension Period
shall end on a date other than an Interest Payment Date for the Junior
Subordinated Debentures or extend beyond the Maturity Date of the Junior
Subordinated Debentures. As a consequence of such deferral, Distributions will
also be deferred. Despite such deferral, semi-annual Distributions will continue
to accumulate with interest thereon (to the extent permitted by applicable law,
but not at a rate exceeding the rate of interest then accruing on the Junior
Subordinated Debentures) at the Coupon Rate compounded semi-annually during any
such Extension Period. Prior to the termination of any such Extension Period,
the Debenture Issuer may further defer payments of interest by further extending
such Extension Period; provided that such Extension Period, together with all
such previous and further extensions within such Extension Period, may not
exceed 10 consecutive semi-annual periods, including the first semi-annual
period during such Extension Period, end on a date other than an Interest
Payment Date for the Junior Subordinated Debentures or extend beyond the
Maturity Date of the Junior Subordinated Debentures. Payments of accumulated
Distributions will be payable to Holders as they appear on the books and records
of the Trust on the first record date after the end of the Extension Period.
Upon the termination of any Extension Period and the payment of all amounts then
due, the Debenture Issuer may commence a new Extension Period, subject to the
above requirements.
Subject to receipt of any required regulatory approvals and to
certain other conditions set forth in the Declaration and the Indenture, the
Property Trustee may, at the direction of the Sponsor, at any time liquidate the
Trust and cause the Junior Subordinated Debentures to be distributed to the
holders of the Trust Securities in liquidation of the Trust or, simultaneously
with any redemption of the Junior Subordinated Debentures, cause a Like Amount
of the Trust Securities to be redeemed by the Trust.
The Capital Securities shall be redeemable as provided in the
Declaration.
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
=================================================================
___________________________________________________________ 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***: ___________________________________
- ----------------
*** 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 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 Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities and
Exchange Act of 1934, as amended.
<PAGE>
Schedule A
The initial number of Capital Securities evidenced by the Certificate
to which this Schedule is attached is ______ (having an aggregate liquidation
amount of $________). The notations in the following table evidence decreases
and increases in the number of Capital Securities evidenced by such Certificate.
TABLE CAPTION
Number of Capital
Decrease in Num-
Increase in Num-
Securities Remaining
Number of Capital
Number of Capital after such Decrease
Notation by Securities
Securities or Increase
Registrar
EXHIBIT 4.6
Form of New Guarantee of the Corporation relating to the New Capital Securities
<PAGE>
====================================
SERIES B CAPITAL SECURITIES GUARANTEE AGREEMENT
MainStreet BankGroup Incorporated
Dated as of , 1998
====================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation.................................................. 2
------------------------------
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application................................................ 6
--------------------------------
SECTION 2.2 Lists of Holders of Securities.................................................. 6
------------------------------
SECTION 2.3 Reports by the Guarantee Trustee................................................ 6
--------------------------------
SECTION 2.4 Periodic Reports to Guarantee Trustee........................................... 7
-------------------------------------
SECTION 2.5 Evidence of Compliance with Conditions Precedent................................ 7
------------------------------------------------
SECTION 2.6 Events of Default; Waiver....................................................... 7
-------------------------
SECTION 2.7 Event of Default; Notice........................................................ 7
------------------------
SECTION 2.8 Conflicting Interests........................................................... 8
---------------------
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee...................................... 8
------------------------------------------
SECTION 3.2 Certain Rights of Guarantee Trustee............................................. 10
-----------------------------------
SECTION 3.3. Not Responsible for Recitals or Issuance of Series B
----------------------------------------------------
Guarantee....................................................................... 12
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Guarantee Trustee; Eligibility.................................................. 12
------------------------------
SECTION 4.2 Appointment, Removal and Resignation of Guarantee Trustee....................... 13
---------------------------------------------------------
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee....................................................................... 14
---------
SECTION 5.2 Waiver of Notice and Demand..................................................... 14
---------------------------
SECTION 5.3 Obligations Not Affected........................................................ 14
------------------------
SECTION 5.4 Rights of Holders............................................................... 16
-----------------
SECTION 5.5 Guarantee of Payment............................................................ 16
--------------------
SECTION 5.6 Subrogation..................................................................... 16
-----------
SECTION 5.7 Independent Obligations......................................................... 16
-----------------------
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions...................................................... 17
--------------------------
SECTION 6.2 Ranking......................................................................... 17
-------
ARTICLE VII
TERMINATION
SECTION 7.1 Termination..................................................................... 18
-----------
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation..................................................................... 18
-----------
SECTION 8.2 Indemnification................................................................. 19
---------------
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns.......................................................... 19
----------------------
SECTION 9.2 Amendments...................................................................... 19
----------
SECTION 9.3 Notices......................................................................... 20
-------
SECTION 9.4 Benefit......................................................................... 21
-------
SECTION 9.5 Governing Law................................................................... 21
-------------
</TABLE>
<PAGE>
SERIES B CAPITAL SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Series B Guarantee"), dated as
of , 1998, is executed and delivered by MAINSTREET BANKGROUP INCORPORATED,
a Virginia corporation (the "Guarantor"), and THE BANK OF NEW YORK, a New York
banking corporation, as trustee (the "Guarantee Trustee"), for the benefit of
the Holders (as defined herein) from time to time of the Series B Capital
Securities (as defined herein) issued by MAINSTREET CAPITAL TRUST I, a Delaware
statutory business trust (the "Trust").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of November 19, 1997, among the trustees of
the Trust, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Trust, the Trustee intends
to issue capital securities designated the Series B 8.90% Capital Securities
(collectively the "Series B Capital Securities") in exchange for its outstanding
Series A 8.90% Capital Securities (collectively the "Series A Capital
Securities") upon consummation of the Exchange Offer (as defined in the
Declaration), such Series B Capital Securities to be issued in a number, up to
50,000, and with an aggregate liquidation amount, up to $50,000,000, equal to
the number and aggregate liquidation amount of the Series A Capital Securities
exchanged for Series B Capital Securities pursuant to the Exchange Offer; and
WHEREAS, as incentive for the Holders to exchange the Series A
Capital Securities for the Series B Capital Securities in the Exchange Offer,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth in this Series B Guarantee, to pay to the Holders of the Series B
Capital Securities the Guarantee Payments (as defined below). The Guarantor
agrees to make certain other payments on the terms and conditions set forth
herein.
WHEREAS, the Guarantor has executed and delivered (i) a Common
Securities Guarantee Agreement, dated as of November 19, 1997 (the "Common
Securities Guarantee"), and (ii) a Series A Capital Securities Guarantee
Agreement, dated as of November 19, 1997 (the "Series A Guarantee"), in each
case with terms substantially similar to this Series B Guarantee, and for the
benefit of the holders of the Common Securities (as defined herein) and the
Series A Capital Securities, respectively, except that if an Event of Default
(as defined in the Declaration) has occurred and is continuing, the rights of
holders of the Common Securities to receive Guarantee Payments under the Common
Securities Guarantee are subordinated, to the extent and in the manner set forth
in the Common Securities Guarantee, to the rights of holders of Series B Capital
Securities and the Series A Capital Securities to receive Guarantee Payments
under this Series B Guarantee and the Series A Guarantee, as the case may be.
NOW, THEREFORE, in consideration of the purchase by each
Holder, which purchase the Guarantor hereby acknowledges shall benefit the
Guarantor, the Guarantor executes and delivers this Series B Guarantee for the
benefit of the Holders of the Series B Capital Securities.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Series B Guarantee, unless the context otherwise
requires:
(a) Capitalized terms used in this Series B Guarantee but not
defined in the preamble above have the respective meanings assigned to them in
this Section 1.1;
(b) Terms defined in the Declaration as at the date of
execution of this Series B Guarantee have the same meaning when used in this
Series B Guarantee unless otherwise defined in this Series B Guarantee;
(c) a term defined anywhere in this Series B Guarantee has the
same meaning throughout;
(d) all references to "the Series B Guarantee" or "this Series
B Guarantee" are to this Series B Guarantee as modified, supplemented or amended
from time to time;
(e) all references in this Series B Guarantee to Articles and
Sections are to Articles and Sections of this Series B Guarantee, unless
otherwise specified;
(f) a term defined in the Trust Indenture Act has the same
meaning when used in this Series B Guarantee, unless otherwise defined in this
Series B Guarantee or unless the context otherwise requires; and
(g) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule
405 under the Securities Act of 1933, as amended, or any successor rule
thereunder.
"Business Day" means any day other than a Saturday or a Sunday
or a day on which banking institutions in New York, New York or Martinsville,
Virginia are authorized or required by law or executive order to remain closed.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Trust.
"Corporate Trust Office" means the office of the Guarantee
Trustee at which the corporate trust business of the Guarantee Trustee shall, at
any particular time, be principally administered, which office at the date of
execution of this Agreement is located at 101 Barclay Street, 21W, New York, New
York 10286.
"Covered Person" means any Holder or beneficial owner of
Series B Capital Securities.
"Debenture Event of Default" shall mean any event specified in
Section 5.01 of the Indenture.
"Event of Default" means a default by the Guarantor on any of
its payment or other obligations under this Series B Guarantee.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Series B Capital
Securities, to the extent not paid or made by the Trust: (i) any accumulated and
unpaid Distributions (as defined in the Declaration) required to be paid on the
Series B Capital Securities, to the extent that the Trust has funds on hand
legally available therefor at such time; (ii) the applicable redemption price,
including all accumulated and unpaid Distributions to the date of redemption
(the "Redemption Price") with respect to the Series B Capital Securities called
for redemption, to the extent that the Trust has funds on hand legally available
therefor at such time; and (iii) upon a voluntary or involuntary dissolution,
winding-up or liquidation of the Trust (other than in connection with the
distribution of the Junior Subordinated Debentures to Holders or the redemption
of all Series B Capital Securities), the lesser of (a) the aggregate of the
liquidation amount and all accumulated and unpaid Distributions on the Series B
Capital Securities to the date of payment, to the extent the Trust has funds
legally available therefor at the time, and (b) the amount of assets of the
Trust remaining available for distribution to Holders after satisfaction of
liabilities to creditors of the Trust as required by applicable law. If an Event
of Default has occurred and is continuing, no Guarantee Payments under the
Common Securities Guarantee with respect to the Common Securities or any
guarantee payment under any Other Common Securities Guarantees shall be made
until the Holders shall be paid in full the Guarantee Payments to which they are
entitled under this Series B Guarantee.
"Guarantee Trustee" means The Bank of New York, a New York
banking corporation, until a Successor Guarantee Trustee has been appointed and
has accepted such appointment pursuant to the terms of this Series B Guarantee
and thereafter means each such Successor Guarantee Trustee.
"Holder" shall mean any holder, as registered on the books and
records of the Trust, of any Series B Capital Securities; provided, however,
that, in determining whether the holders of the requisite percentage of Series B
Capital Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any Person actually known to a
Responsible Officer of the Guarantee Trustee to be an Affiliate of the
Guarantor.
"Indemnified Person" means the Guarantee Trustee, any
Affiliate of the Guarantee Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives, nominees, custodians or agents of
the Guarantee Trustee.
"Indenture" means the Indenture dated as of November 19, 1997,
among the Guarantor (the "Debenture Issuer") and The Bank of New York, as
trustee, pursuant to which the Junior Subordinated Debentures are to be issued
to the Property Trustee of the Trust.
"Junior Subordinated Debentures" means the series of
subordinated debt securities of the Guarantor designated the Series B 8.90%
Junior Subordinated Deferrable Interest Debentures due 2027 held by the Property
Trustee (as defined in the Declaration).
"Majority in liquidation amount of the Series B Capital
Securities" means, except as provided in the terms of the Declaration or by the
Trust Indenture Act, Holder(s), 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 Series B Capital Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman, the Chief Executive Officer, the President,
a Vice President, the Chief Financial Officer, the Secretary or an Assistant
Secretary. Any Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Series B Guarantee (other than
pursuant to Section 314(a)(4) of the Trust Indenture Act) shall include:
(a) a statement that each officer signing the Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(c) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Other Common Securities Guarantees" shall have the same
meaning as "Other Guarantees" as defined in the Common Securities Guarantee.
"Other Debentures" means all junior subordinated debentures
issued by the Guarantor from time to time and sold to any other trust,
partnership or other entity affiliated with the Guarantor that is a financing
vehicle of the Guarantor (if any), in each case similar to the Trust.
"Other Guarantees" means all guarantees to be issued by the
Guarantor with respect to capital securities (if any) similar to the Series B
Capital Securities issued by other trusts to be established by the Guarantor (if
any), in each case similar to the Trust.
"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.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of November 19, 1997, by and among the Guarantor, the Trust
and the initial purchaser named therein as such agreement may be amended,
modified or supplemented from time to time.
"Responsible Officer" means any officer within the Corporate
Trust Office of the Guarantee Trustee, including any Vice President, any
Assistant Vice President, any Assistant Secretary, the Treasurer, any Assistant
Treasurer or other officer the Corporate Trust Office of the Guarantee Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.
"Subsidiary" shall have the same meaning as "Subsidiary" as
defined in the Indenture.
"Successor Guarantee Trustee" means a successor Guarantee
Trustee possessing the qualifications to act as Guarantee Trustee under Section
4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
"Trust Securities" means the Common Securities and the Series
A Capital Securities and Series B Capital Securities, collectively.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
(a) This Series B Guarantee is subject to the provisions of
the Trust Indenture Act that are required to be part of this Series B Guarantee
and shall, to the extent applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this Series B
Guarantee limits, qualifies or conflicts with the duties imposed by Section 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
SECTION 2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Guarantee Trustee (unless
the Guarantee Trustee is otherwise the registrar of the Capital Securities) with
a list, in such form as the Guarantee Trustee may reasonably require, of the
names and addresses of the Holders ("List of Holders") as of such date, (i)
within three Business Days after May 15 and November 15 of each year, and (ii)
at any other time within 30 days of receipt by the Guarantor of a written
request for a List of Holders as of a date no more than 14 days before such List
of Holders is given to the Guarantee Trustee, provided, that the Guarantor shall
not be obligated to provide such List of Holders at any time the List of Holders
does not differ from the most recent List of Holders given to the Guarantee
Trustee by the Guarantor. The Guarantee Trustee may destroy any List of Holders
previously given to it on receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations
under Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Guarantee Trustee
Within 60 days after December 15 of each year, commencing
December 15, 1997, the Guarantee Trustee shall provide to the Holders such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Guarantee Trustee shall also comply with the other requirements of Section
313 of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Guarantee Trustee
The Guarantor shall provide to the Guarantee Trustee such
documents, reports and information as are required by Section 314 (if any) and
the compliance certificate required by Section 314 of the Trust Indenture Act in
the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act provided that such compliance certificate shall be delivered on or
before 120 days after the end of each fiscal year of the Guarantor. Delivery of
such reports, information and documents to the Guarantee Trustee is for
informational purposes only and the Guarantee Trustee's receipt of such shall
not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Guarantor's
compliance with any of its covenants hereunder (as to which the Guarantee
Trustee is entitled to rely exclusively on Officers' Certificates).
SECTION 2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Guarantee Trustee such
evidence of compliance with the conditions precedent, if any, provided for in
this Series B Guarantee that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of an
Officers' Certificate.
SECTION 2.6 Event of Default; Waiver
The Holders of a Majority in liquidation amount of Series B
Capital Securities may, by vote, on behalf of all Holders, waive any past Event
of Default and its consequences. Upon such waiver, any such Event of Default
shall cease to exist, and any Event of Default arising therefrom shall be deemed
to have been cured, for every purpose of this Series B Guarantee, but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent thereon.
SECTION 2.7 Event of Default; Notice
(a) The Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default hereunder, transmit by mail, first class
postage prepaid, to all Holders, notices of all Events of Default actually known
to a Responsible Officer, unless such defaults have been cured before the giving
of such notice, provided, that, except in the case of default in the payment of
any Guarantee Payment, the Guarantee Trustee shall be protected in withholding
such notice if and so long as a Responsible Officer in good faith determines
that the withholding of such notice is in the interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Guarantee Trustee shall have
received written notice from the Guarantor, or a Responsible Officer charged
with the administration of the Declaration shall have obtained actual knowledge,
of such Event of Default.
SECTION 2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described
in this Series B Guarantee for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee
(a) This Series B Guarantee shall be held by the Guarantee
Trustee for the benefit of the Holders, and the Guarantee Trustee shall not
transfer this Series B Guarantee to any Person except a Holder exercising his or
her rights pursuant to Section 5.4(b) or to a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act as
Successor Guarantee Trustee. The right, title and interest of the Guarantee
Trustee shall automatically vest in any Successor Guarantee Trustee, and such
vesting and succession of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of such
Successor Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible
Officer has occurred and is continuing, the Guarantee Trustee shall enforce this
Series B Guarantee for the benefit of the Holders.
(c) The Guarantee Trustee, before the occurrence of any Event
of Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Series B Guarantee, and no implied covenants or obligations shall be read
into this Series B Guarantee against the Series B Guarantee Trustee. In case an
Event of Default has occurred (that has not been cured or waived pursuant to
Section 2.6) and is actually known to a Responsible Officer, the Guarantee
Trustee shall exercise such of the rights and powers vested in it by this Series
B Guarantee, and use the same degree of care and skill in its exercise thereof,
as a prudent person would exercise or use under the circumstances in the conduct
of his or her own affairs.
(d) No provision of this Series B Guarantee shall be construed
to relieve the Guarantee Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Guarantee
Trustee shall be determined solely by the express provisions
of this Series B Guarantee, and the Guarantee Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Series B
Guarantee, and no implied covenants or obligations shall be
read into this Series B Guarantee against the Guarantee
Trustee; and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or
opinions furnished to the Guarantee Trustee and conforming to
the requirements of this Series B Guarantee; but in the case
of any such certificates or opinions that by any provision
hereof are specifically required to be furnished to the
Guarantee Trustee, the Guarantee Trustee shall be under a duty
to examine the same to determine whether or not they conform
to the requirements of this Series B Guarantee;
(ii) the Guarantee Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer, unless it
shall be proved that the Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a Majority in
liquidation amount of the Series B Capital Securities relating to the
time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee, or exercising any trust or power
conferred upon the Guarantee Trustee under this Series B Guarantee; and
(iv) no provision of this Series B Guarantee shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if the Guarantee
Trustee shall have reasonable grounds for believing that the repayment
of such funds or liability is not reasonably assured to it under the
terms of this Series B Guarantee or indemnity, reasonably satisfactory
to the Guarantee Trustee, against such risk or liability is not
reasonably assured to it.
SECTION 3.2 Certain Rights of Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may conclusively rely, and shall be
fully protected in acting or refraining from acting, upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Series B Guarantee may be sufficiently evidenced by an Officers'
Certificate.
(iii) Whenever, in the administration of this Series B
Guarantee, the Guarantee Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting any
action hereunder, the Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on its
part, request and conclusively rely upon an Officers' Certificate
which, upon receipt of such request, shall be promptly delivered by the
Guarantor.
(iv) The Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
(v) The Guarantee Trustee may consult with counsel of its
selection, and the advice or opinion of such counsel with respect to
legal matters shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in
good faith and in accordance with such advice or opinion. Such counsel
may be counsel to the Guarantor or any of its Affiliates and may
include any of its employees. The Guarantee Trustee shall have the
right at any time to seek instructions concerning the administration of
this Series B Guarantee from any court of competent jurisdiction.
(vi) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Series B
Guarantee at the request or direction of any Holder, unless such Holder
shall have provided to the Guarantee Trustee such security and
indemnity, reasonably satisfactory to the Guarantee Trustee, against
the costs, expenses (including attorneys' fees and expenses and the
expenses of the Guarantee Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such request
or direction, including such reasonable advances as may be requested by
the Guarantee Trustee; provided that, nothing contained in this Section
3.2(a)(vi) shall be taken to relieve the Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the
rights and powers vested in it by this Series B Guarantee.
(vii) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit.
(viii) The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents, nominees, custodians or attorneys, and the Guarantee
Trustee shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by it
hereunder.
(ix) Any action taken by the Guarantee Trustee or its agents
hereunder shall bind the Holders, and the signature of the Guarantee
Trustee or its agents alone shall be sufficient and effective to
perform any such action. No third party shall be required to inquire as
to the authority of the Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of this Series B
Guarantee, both of which shall be conclusively evidenced by the
Guarantee Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Series B Guarantee
the Guarantee Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other
action hereunder, the Guarantee Trustee (i) may request instructions
from the Holders of a Majority in liquidation amount of the Series B
Capital Securities, (ii) may refrain from enforcing such remedy or
right or taking such other action until such instructions are received,
and (iii) shall be protected in conclusively relying on or acting in
accordance with such instructions.
(xi) The Guarantee Trustee shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith, without
negligence, and reasonably believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Series B
Guarantee.
(b) No provision of this Series B Guarantee shall be deemed to
impose any duty or obligation on the Guarantee Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on it
in any jurisdiction in which it shall be illegal, or in which the Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Series B Guarantee
The recitals contained in this Series B Guarantee shall be
taken as the statements of the Guarantor, and the Guarantee Trustee does not
assume any responsibility for their correctness. The Guarantee Trustee makes no
representation as to the validity or sufficiency of this Series B Guarantee.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Guarantee Trustee; Eligibility
(a) There shall at all times be a Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation or other Person organized and doing
business under the laws of the United States of America or any state or
territory thereof or of the District of Columbia, or a corporation or
other Person permitted by the Securities and Exchange Commission to act
as an institutional trustee under the Trust Indenture Act, authorized
under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least 50 million U.S. dollars ($50,000,000),
and subject to supervision or examination by federal, state,
territorial or District of Columbia authority. If such corporation or
other Person publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining authority
referred to above, then, for the purposes of this Section 4.1(a)(ii),
the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Guarantee Trustee shall immediately
resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Guarantee Trustee and Guarantor shall in all respects comply
with the provisions of Section 310(b) of the Trust Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of Guarantee Trustee
(a) Subject to Section 4.2(b), the Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor except during an
Event of Default.
(b) The Guarantee Trustee shall not be removed in accordance
with Section 4.2(a) until a Successor Guarantee Trustee has been appointed and
has accepted such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.
(c) The Guarantee Trustee shall hold office until a Successor
Guarantee Trustee shall have been appointed or until its removal or resignation.
The Guarantee Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing executed by the Guarantee
Trustee and delivered to the Guarantor, which resignation shall not take effect
until a Successor Guarantee Trustee has been appointed and has accepted such
appointment by instrument in writing executed by such Successor Guarantee
Trustee and delivered to the Guarantor and the resigning Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery of an instrument of removal or resignation, the Guarantee
Trustee resigning or being removed may petition any court of competent
jurisdiction for appointment of a Successor Guarantee Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint
a Successor Guarantee Trustee.
(e) No Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Guarantee Trustee.
(f) Upon termination of this Series B Guarantee or removal or
resignation of the Guarantee Trustee pursuant to this Section 4.2, the Guarantor
shall pay to the Guarantee Trustee all amounts due to the Guarantee Trustee
accrued to the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Guarantee Trustee for the benefit of the Holders the Guarantee
Payments (without duplication of amounts theretofore paid by the Trust), as and
when due, regardless of any defense, right of set-off or counterclaim that the
Trust may have or assert. The Guarantor's obligation to make a Guarantee Payment
may be satisfied by direct payment of the required amounts by the Guarantor to
the Holders or by causing the Trust to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this
Series B Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Trust or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the
Guarantor under this Series B Guarantee shall in no way be affected or impaired
by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Trust of any express or implied
agreement, covenant, term or condition relating to the Series B Capital
Securities to be performed or observed by the Trust;
(b) the extension of time for the payment by the Trust of all
or any portion of the Distributions, Redemption Price, Liquidation Distribution
or any other sums payable under the terms of the Series B Capital Securities or
the extension of time for the performance of any other obligation under, arising
out of, or in connection with, the Series B Capital Securities (other than an
extension of time for payment of Distributions, Redemption Price, Liquidation
Distribution or other sum payable that results from the extension of any
interest payment period on the Junior Subordinated Debentures permitted by the
Indenture);
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right, privilege, power
or remedy conferred on the Holders pursuant to the terms of the Series B Capital
Securities, or any action on the part of the Trust granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Trust or any of the
assets of the Trust;
(e) any invalidity of, or defect or deficiency in, the
Series B Capital Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred;
(g) the consummation of the Exchange Offer; or
(h) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor with
respect to the Guarantee Payments shall be absolute and unconditional under any
and all circumstances.
There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the
Series B Capital Securities have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Guarantee Trustee
in respect of this Series B Guarantee or exercising any trust or power conferred
upon the Guarantee Trustee under this Series B Guarantee.
(b) If the Guarantee Trustee fails to enforce such Series B
Guarantee, any Holder may institute a legal proceeding directly against the
Guarantor to enforce the Guarantee Trustee's rights under this Series B
Guarantee, without first instituting a legal proceeding against the Trust, the
Guarantee Trustee or any other person or entity. The Guarantor waives any right
or remedy to require that any action be brought first against the Trust or any
other person or entity before proceeding directly against the Guarantor.
SECTION 5.5 Guarantee of Payment
This Series B Guarantee creates a guarantee of payment and not
of collection.
SECTION 5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of
the Holders against the Trust in respect of any amounts paid to such Holders by
the Guarantor under this Series B Guarantee; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any right that it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Series B Guarantee, if, at the time of any such
payment, any amounts are due and unpaid under this Series B Guarantee. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.
SECTION 5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Trust with respect to the Series B Capital
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Series B
Guarantee notwithstanding the occurrence of any event referred to in subsections
(a) through (h), inclusive, of Section 5.3 hereof.
RTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
So long as any Series B Capital Securities remain outstanding, the
Guarantor will not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
the Guarantor's capital stock, (ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Guarantor (including any Other Debentures) that rank pari passu with or junior
in right of payment to the Junior Subordinated Debentures or (iii) make any
guarantee payments with respect to any guarantee by the Guarantor of the debt
securities of any Subsidiary of the Guarantor (including any Other Guarantees)
if such guarantee ranks pari passu with or junior in right of payment to the
Junior Subordinated Debentures (other than (a) dividends or distributions in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, common stock of the Guarantor, (b) any declaration of a dividend in
connection with the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the Series A
Guarantee and Series B Guarantee, (d) as a result of a reclassification of the
Guarantor's capital stock or the exchange or conversion of one class or series
of the Guarantor's capital stock for another class or series of the Guarantor's
capital stock, (e) the purchase of fractional interests in shares of the
Guarantor's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged and (f)
purchases of common stock of the Guarantor related to the issuance of such
common stock or rights under any of the Guarantor's benefit plans for its
directors, officers or employees or any of the Guarantor's dividend reinvestment
plans), if at such time (1) there shall have occurred any event of which the
Guarantor has actual knowledge that (a) is, or with the giving of notice or the
lapse of time, or both, would be, a Debenture Event of Default and (b) in
respect of which the Guarantor shall not have taken reasonable steps to cure,
(2) the Guarantor shall be in default with respect to its payment of any
obligations under this Series B Guarantee or (3) the Guarantor shall have given
notice of its election to exercise its right to extend the interest payment
period pursuant to Section 16.01 of the Indenture and such extension shall have
commenced and be continuing.
SECTION 6.2 Ranking
This Series B Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to Senior Indebtedness (as defined in the Indenture), to the same extent
and in the same manner that the Junior Subordinated Debentures are subordinated
to Senior Indebtedness pursuant to the Indenture (except as indicated below), it
being understood that the terms of Article XV of the Indenture shall apply to
the obligations of the Guarantor under this Series B Guarantee as if (x) such
Article XV were set forth herein in full and (y) such obligations were
substituted for the term "Junior Subordinated Debentures" appearing in such
Article XV, except that with respect to Section 15.03 of the Indenture only, the
term "Senior Indebtedness" shall mean all liabilities of the Guarantor, whether
or not for money borrowed (other than obligations in respect of Other
Guarantees), (ii) pari passu with the most senior preferred or preference stock
now or hereafter issued by the Guarantor, any guarantee now or hereafter entered
into by the Guarantor in respect of any preferred or preference stock of any
Affiliate of the Guarantor and any Other Guarantee, and (iii) senior to the
Guarantor's capital stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
This Series B Guarantee shall terminate (i) upon full payment
of the Redemption Price (as defined in the Declaration) of all Series B Capital
Securities, or (ii) upon liquidation of the Trust, following the full payment of
the amounts payable in accordance with the Declaration or the distribution of
the Junior Subordinated Debentures to the Holders. Notwithstanding the
foregoing, this Series B Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder must restore payment
of any sums paid under the Series B Capital Securities or under this Series B
Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this Series
B Guarantee and in a manner that such Indemnified Person reasonably believed to
be within the scope of the authority conferred on such Indemnified Person by
this Series B Guarantee or by law, except that an Indemnified Person shall be
liable for any such loss, damage or claim incurred by reason of such Indemnified
Person's negligence or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders might properly be paid.
SECTION 8.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against, any and all loss,
liability, damage, claim or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the termination of this
Series B Guarantee and shall survive the resignation or removal of the Guarantee
Trustee.
<PAGE>
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
All guarantees and agreements contained in this Series A
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
then outstanding.
SECTION 9.2 Amendments
Except with respect to any changes that do not materially
adversely affect the rights of Holders (in which case no consent of Holders will
be required), this Series B Guarantee may only be amended with the prior
approval of the Holders of a Majority in liquidation amount of the Securities
(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). The provisions of the Declaration with
respect to consents to amendments thereof (whether at a meeting or otherwise)
shall apply to the giving of such approval.
SECTION 9.3 Notices
All notices provided for in this Series B Guarantee shall be
in writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by first class mail, as follows:
(a) If given to the Trust, in care of the Administrative
Trustee at the Trust's mailing address set forth below (or such other address as
the Trust may give notice of to the Holders and the Guarantee Trustee):
MainStreet Capital Trust I
c/o MainStreet BankGroup Incorporated
Church & Ellsworth Streets
Martinsville, Virginia 24115
Attention: James E. Adams
Administrative Trustee
Telecopy: (540) 666-3675
<PAGE>
(b) If given to the Guarantee Trustee, at the Guarantee
Trustee's mailing address set forth below (or such other address as the
Guarantee Trustee may give notice of to the Holders and the Trust):
The Bank of New York
101 Barclay Street, 21W
New York, New York 10286
Attention: Corporate Trust
Trustee Administration
Telecopy: (212) 815-5915
(c) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may give notice
of to the Holders and the Guarantee Trustee):
MainStreet BankGroup Incorporated
Church & Ellsworth Streets
Martinsville, Virginia 24115
Attention: James E. Adams
Executive Vice President
Telecopy: (540) 666-3675
(d) If given to any 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 9.4 Benefit
This Series B Guarantee is solely for the benefit of the
Holders and, subject to Section 3.1(a), is not separately transferable from the
Series B Capital Securities.
SECTION 9.5 Governing Law
THIS SERIES B GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
<PAGE>
THIS SERIES B GUARANTEE is executed as of the day and year
first above written.
MAINSTREET BANKGROUP INCORPORATED, as Guarantor
By:_______________________________________
Name: James E. Adams
Title: Executive Vice President, Chief
Financial Officer and Treasurer
THE BANK OF NEW YORK, as
Guarantee Trustee
By:_______________________________________
Name:
Title:
EXHIBIT 4.7
(Registration Rights Agreement)
REGISTRATION RIGHTS AGREEMENT
Dated November 19, 1997
among
MAINSTREET BANKGROUP INC.
MAINSTREET CAPITAL TRUST I
and
SANDLER O'NEILL & PARTNERS, L.P.
as Initial Purchaser
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into as of November 19, 1997 among MAINSTREET BANKGROUP INC., a
Virginia corporation (the "Corporation"), MAINSTREET CAPITAL TRUST I, a business
trust formed under the laws of the state of Delaware (the "Trust"), and SANDLER
O'NEILL & PARTNERS, L.P., (the "Initial Purchaser").
This Agreement is made pursuant to the Purchase Agreement
dated November 13, 1997 (the "Purchase Agreement"), among the Corporation, as
issuer of the Series A 8.90% Junior Subordinated Deferrable Interest Debentures
due 2027 (the "Subordinated Debentures"), the Trust and the Initial Purchaser,
which provides for, among other things, the sale by the Trust to the Initial
Purchaser of 50,000 of the Trust's Series A 8.90% Capital Securities,
liquidation amount $1,000 per Capital Security (the "Capital Securities"), the
proceeds of which will be used by the Trust to purchase Subordinated Debentures.
The Capital Securities, together with the Subordinated Debentures and the
Corporation's guarantee of the Capital Securities (the "Capital Securities
Guarantee"), are collectively referred to as the "Securities". In order to
induce the Initial Purchaser to enter into the Purchase Agreement, the
Corporation and the Trust have agreed to provide to the Initial Purchaser and
their direct and indirect transferees the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the
following capitalized defined terms shall have the following meanings:
"Additional Distributions" shall have the meaning set forth in Section
2(e) hereof.
"Advice" shall have the meaning set forth in the last paragraph of
Section 3 hereof.
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act or any successor rule thereunder.
"Applicable Period" shall have the meaning set forth in Section 3(t)
hereof.
"Business Day" means any day other than a Saturday, a Sunday, or a day
on which banking institutions in New York, New York or Martinsville, Virginia
are authorized or required by law or executive order to close.
"Closing Time" shall mean the Closing Time as defined in the Purchase
Agreement.
"Corporation" shall have the meaning set forth in the preamble to this
Agreement and also includes the Corporation's successors and permitted assigns.
"Declaration" or "Declaration of Trust" shall mean the Amended and
Restated Declaration of Trust of MainStreet Capital Trust I, dated as of
November 19, 1997, by the trustees named therein and the Corporation as sponsor.
"Depositary" shall mean The Depository Trust Company, or any other
depositary appointed by the Trust; provided, however, that such depositary must
have an address in the Borough of Manhattan, in The City of New York.
"Effectiveness Period" shall have the meaning set forth in Section 2(b)
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Exchange Offer" shall mean the offer by the Corporation and the Trust
to the Holders to exchange all of the Registrable Securities (other than Private
Exchange Securities) for a like principal amount of Exchange Securities pursuant
to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the
Securities Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another appropriate
form), and all amendments and supplements to such registration statement, in
each case including the Prospectus contained therein, all exhibits thereto and
all material incorporated by reference therein.
"Exchange Period" shall have the meaning set forth in Section 2(a)
hereof.
"Exchange Securities" shall mean (i) with respect to the Subordinated
Debentures, the Series B 8.90% Junior Subordinated Deferrable Interest
Debentures due December 1, 2027 (the "Exchange Debentures") containing terms
substantially identical to the Subordinated Debentures (except that they will
not contain terms with respect to the transfer restrictions under the Securities
Act (other than requiring minimum transfers thereof to be in blocks of $100,000
aggregate principal amount), and will not provide for any Liquidated Damages
thereon), (ii) with respect to the Capital Securities, the Trust's Series B
8.90% Capital Securities, liquidation amount $1,000 per Capital Security (the
"Exchange Capital Securities") which will have terms substantially identical to
the Capital Securities (except they will not contain terms with respect to
transfer restrictions under the Securities Act (other than requiring minimum
transfers thereof to be in blocks of $100,000 aggregate liquidation amount), and
will not provide for any increase in Additional Distributions thereon) and (iii)
with respect to the Capital Securities Guarantee, the Corporation's guarantee
(the "Exchange Capital Securities Guarantee") of the Exchange Capital Securities
which will have terms substantially identical to the Capital Securities
Guarantee.
"Holder" shall mean the Initial Purchaser, for so long as it owns any
Registrable Securities, and each of its respective successors, assigns and
direct and indirect transferees who become registered owners of Registrable
Securities under the Indenture or Declaration of Trust.
"Indenture" shall mean the Indenture relating to the Subordinated
Debentures and the Exchange Debentures dated as of November 19, 1997 between the
Corporation, as issuer, and The Bank of New York, as trustee, as the same may be
amended from time to time in accordance with the terms thereof.
"Initial Purchaser" shall have the meaning set forth in the preamble to
this Agreement.
"Inspectors" shall have the meaning set forth in Section 3(n) hereof.
"Issue Date" shall mean November 19, 1997, the date of original
issuance of the Securities.
"Liquidated Damages" shall have the meaning set forth in Section 2(e)
hereof.
"Majority Holders" shall mean the Holders of a majority of the
aggregate liquidation amount of outstanding Capital Securities.
"Participating Broker-Dealer" shall have the meaning set forth in
Section 3(t) hereof.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, limited liability company, or a government or
agency or political subdivision thereof.
"Private Exchange" shall have the meaning set forth in Section 2(a)
hereof.
"Private Exchange Securities" shall have the meaning set forth in
Section 2(a) hereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
therein.
"Purchase Agreement" shall have the meaning set forth in the preamble
to this Agreement.
"Records" shall have the meaning set forth in Section 3(n) hereof.
"Registrable Securities" shall mean the Securities and, if issued, the
Private Exchange Securities; provided, however, that Securities or Private
Exchange Securities, as the case may be, shall cease to be Registrable
Securities when (i) a Registration Statement with respect to such Securities or
Private Exchange Securities for the exchange or resale thereof, as the case may
be, shall have been declared effective under the Securities Act and such
Securities or Private Exchange Securities, as the case may be, shall have been
disposed of pursuant to such Registration Statement, (ii) such Securities or
Private Exchange Securities, as the case may be, shall have been sold to the
public pursuant to Rule 144(k) (or any similar provision then in force, but not
Rule 144A) under the Securities Act or are eligible to be sold without
restriction as contemplated by Rule 144(k), (iii) such Securities or Private
Exchange Securities, as the case may be, shall have ceased to be outstanding or
(iv) with respect to the Securities, such Securities shall have been exchanged
for Exchange Securities upon consummation of the Exchange Offer and are
thereafter freely tradeable by the holder thereof (other than an Affiliate of
the Corporation).
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Corporation with this Agreement, including
without limitation: (i) all SEC or National Association of Securities Dealers,
Inc. (the "NASD") registration and filing fees, including, if applicable, the
fees and expenses of any "qualified independent underwriter" (and its counsel)
that is required to be retained by any Holder of Registrable Securities in
accordance with the rules and regulations of the NASD, (ii) all fees and
expenses incurred in connection with compliance with state securities or blue
sky laws (including reasonable fees and disbursements of one counsel for all
underwriters or Holders as a group in connection with blue sky qualification of
any of the Exchange Securities or Registrable Securities) and compliance with
the rules of the NASD, (iii) all expenses of any Persons in preparing or
assisting in preparing, word processing, printing and distributing any
Registration Statement, any Prospectus and any amendments or supplements
thereto, and in preparing or assisting in preparing, printing and distributing
any underwriting agreements, securities sales agreements and other documents
relating to the performance of and compliance with this Agreement, (iv) all
rating agency fees, (v) the fees and disbursements of counsel for the
Corporation and of the independent certified public accountants of the
Corporation, including the expenses of any "cold comfort" letters required by or
incident to such performance and compliance, (vi) the reasonable fees and
expenses of the Trustee and its counsel and any exchange agent or custodian,
(vii) all fees and expenses incurred in connection with the listing, if any, of
any of the Exchange Securities or the Registrable Securities on any securities
exchange or exchanges, and (viii) the reasonable fees and expenses of any
special experts retained by the Corporation in connection with any Registration
Statement.
"Registration Statement" shall mean any registration statement of the
Corporation and the Trust which covers any of the Exchange Securities or
Registrable Securities pursuant to the provisions of this Agreement, and all
amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Rule 144(k) Period" shall mean the period of two years (or such
shorter period as may hereafter be referred to in Rule 144(k) under the
Securities Act (or similar successor rule)) commencing on the Issue Date.
"SEC" shall mean the Securities and Exchange Commission.
"Securities" shall have the meaning set forth in the preamble to this
Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Shelf Registration" shall mean a registration effected pursuant to
Section 2(b) hereof.
"Shelf Registration Event" shall have the meaning set forth in Section
2(b) hereof.
"Shelf Registration Event Date" shall have the meaning set forth in
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Corporation and the Trust pursuant to the provisions of Section
2(b) hereof which covers all of the Registrable Securities or all of the Private
Exchange Securities, as the case may be, on an appropriate form under Rule 415
under the Securities Act, or any similar rule that may be adopted by the SEC,
and all amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"TIA" shall have the meaning set forth in Section 3(l) hereof.
"Trustees" shall mean any and all trustees with respect to (i) the
Capital Securities under the Declaration, (ii) the Subordinated Debentures under
the Indenture and (iii) the Capital Securities Guarantee.
2. Registration Under the Securities Act.
(a) Exchange Offer. Except as set forth in Section 2(b) below,
the Corporation and the Trust shall, for the benefit of the Holders, at the
Corporation's cost, use commercially reasonable efforts to (i) cause to be filed
with the SEC within 150 days after the Issue Date an Exchange Offer Registration
Statement on an appropriate form under the Securities Act relating to the
Exchange Offer, (ii) cause such Exchange Offer Registration Statement to be
declared effective under the Securities Act by the SEC not later than the date
which is 180 days after the Issue Date, and (iii) keep such Exchange Offer
Registration Statement effective for not less than 30 calendar days (or longer
if required by applicable law) after the date notice of the Exchange Offer is
mailed to the Holders. Upon the effectiveness of the Exchange Offer Registration
Statement, the Corporation and the Trust shall promptly commence the Exchange
Offer, it being the objective of such Exchange Offer to enable each Holder
eligible and electing to exchange Registrable Securities for a like principal
amount of Exchange Debentures or a like liquidation amount of Exchange Capital
Securities, together with the Exchange Guarantee, as applicable (assuming that
such Holder (i) is not an Affiliate of the Trust or the Corporation, (ii) is not
a broker-dealer tendering Registrable Securities acquired directly from the
Corporation for its own account, (iii) acquires the Exchange Securities in the
ordinary course of such Holder's business and (iv) has no arrangements or
understandings with any Person to participate in the Exchange Offer for the
purpose of distributing the Exchange Securities) to transfer such Exchange
Securities from and after their receipt without any limitations or restrictions
under the Securities Act and under state securities or blue sky laws (other than
requiring minimum transfers in blocks having an aggregate principal or
liquidation amount, as the case may be, of $100,000).
In connection with the Exchange Offer, the Corporation and the
Trust shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter of
transmittal and related documents;
(ii) keep the Exchange Offer open for acceptance for a period of not
less than 30 days after the date notice thereof is mailed to the Holders (or
longer if required by applicable law) (such period referred to herein as the
"Exchange Period");
(iii) utilize the services of the Depositary for the Exchange Offer;
(iv) permit Holders to withdraw tendered Securities at any time prior
to the close of business, New York time, on the last Business Day of the
Exchange Period, by sending to the institution specified in the notice, a
telegram, telex, facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Securities delivered for exchange, and a
statement that such Holder is withdrawing his election to have such Securities
exchanged;
(v) notify each Holder that any Security not tendered by such Holder in
the Exchange Offer will remain outstanding and continue to accrue interest or
accumulate distributions, as the case may be, but will not retain any rights
under this Agreement (except in the case of the Initial Purchaser and
Participating Broker-Dealers as provided herein); and
(vi) otherwise comply in all respects with all applicable laws
relating to the Exchange Offer.
If the Initial Purchaser determines upon advice of its outside
counsel that it is not eligible to participate in the Exchange Offer with
respect to the exchange of Securities constituting any portion of an unsold
allotment in the initial distribution, as soon as practicable upon receipt by
the Corporation and the Trust of a written request from such Initial Purchaser,
the Corporation and the Trust, as applicable, shall issue and deliver to such
Initial Purchaser in exchange (the "Private Exchange") for the Securities held
by such Initial Purchaser, a like liquidation amount of Capital Securities of
the Trust or, in the event the Trust is liquidated and Subordinated Debentures
are distributed, a like principal amount of the Subordinated Debentures of the
Corporation, together with the Exchange Guarantee, in each case that are
identical (except that such securities may bear a customary legend with respect
to restrictions on transfer pursuant to the Securities Act) to the Exchange
Securities (the "Private Exchange Securities") and which are issued pursuant to
the Indenture, the Declaration or the Guarantee (which provides that the
Exchange Securities will not be subject to the transfer restrictions set forth
in the Indenture or the Declaration, as applicable (other than requiring minimum
transfers in blocks having an aggregate principal or liquidation amount, as the
case may be, of $100,000), and that the Exchange Securities, the Private
Exchange Securities and the Securities will vote and consent together on all
matters as one class and that none of the Exchange Securities, the Private
Exchange Securities and the Securities will have the right to vote or consent as
a separate class on any matter). The Private Exchange Securities shall be of the
same series as the Exchange Securities and the Corporation and the Trust will
seek to cause the CUSIP Service Bureau to issue the same CUSIP Numbers for the
Private Exchange Securities as for the Exchange Securities issued pursuant to
the Exchange Offer.
As soon as practicable after the close of the Exchange Offer
and, if applicable, the Private Exchange, the Corporation and the Trust, as the
case requires, shall:
(i) accept for exchange all Securities or portions thereof tendered
and not validly withdrawn pursuant to the Exchange Offer or the Private
Exchange;
(ii) deliver, or cause to be delivered, to the applicable Trustee for
cancellation all Securities or portions thereof so accepted for exchange by the
Corporation; and
(iii) issue, and cause the applicable Trustee under the Indenture, the
Declaration or the Guarantee, as applicable, to promptly authenticate and
deliver to each Holder, new Exchange Securities or Private Exchange Securities,
as applicable, equal in principal amount to the principal amount of the
Subordinated Debentures or equal in liquidation amount to the liquidation amount
of the Capital Securities (together with the guarantee thereof) as are
surrendered by such Holder.
Distributions on each Exchange Capital Security and interest
on each Exchange Debenture and Private Exchange Security issued pursuant to the
Exchange Offer and in the Private Exchange will accrue from the last date on
which a Distribution or interest was paid on the Capital Security or the
Subordinated Debenture surrendered in exchange therefor or, if no Distribution
or interest has been paid on such Capital Security or Subordinated Debenture,
from the Issue Date. To the extent not prohibited by any law or applicable
interpretation of the staff of the SEC, the Corporation and the Trust shall use
their best efforts to complete the Exchange Offer as provided above, and shall
comply with the applicable requirements of the Securities Act, the Exchange Act
and other applicable laws in connection with the Exchange Offer. The Exchange
Offer shall not be subject to any conditions, other than that the Exchange Offer
does not violate applicable law or any applicable interpretation of the staff of
the SEC. Each Holder of Registrable Securities who wishes to exchange such
Registrable Securities for Exchange Securities in the Exchange Offer will be
required to make certain customary representations in connection therewith,
including, in the case of any Holder of Capital Securities, representations that
(i) it is not an Affiliate of the Trust or the Corporation, (ii) the Exchange
Securities to be received by it were acquired in the ordinary course of its
business and (iii) at the time of the Exchange Offer, it has no arrangement with
any person to participate in the distribution (within the meaning of the
Securities Act) of the Exchange Capital Securities. The Corporation and the
Trust shall inform the Initial Purchaser, after consultation with the applicable
Trustees, of the names and addresses of the Holders to whom the Exchange Offer
is made, and the Initial Purchaser shall have the right to contact such Holders
and otherwise facilitate the tender of Registrable Securities in the Exchange
Offer.
Upon consummation of the Exchange Offer in accordance with
this Section 2(a), the provisions of this Agreement shall continue to apply,
mutatis mutandis, solely with respect to Registrable Securities that are Private
Exchange Securities and Exchange Securities held by Participating
Broker-Dealers, and the Corporation and the Trust shall have no further
obligation to register the Registrable Securities (other than Private Exchange
Securities) held by any Holder pursuant to Section 2(b) of this Agreement.
(b) Shelf Registration. In the event that (i) the Corporation,
the Trust or the Majority Holders reasonably determine, after conferring with
counsel, that the Exchange Offer Registration provided in Section 2(a) above is
not available under applicable law and regulations and currently prevailing
interpretations of the staff of the SEC, (ii) the Corporation shall determine in
good faith that there is a reasonable likelihood that, or a material uncertainty
exists as to whether, consummation of the Exchange Offer would result in (x) the
Trust becoming subject to federal income tax with respect to income received or
accrued on the Subordinated Debentures or the Exchange Debentures (collectively,
the "Debentures"), (y) interest payable by the Corporation on the Debentures not
being deductible by the Corporation for United States federal income tax
purposes or (z) the Trust becoming subject to more than a de minimis amount of
other taxes, duties or governmental charges, (iii) the Exchange Offer
Registration Statement is not declared effective within 180 days of the Issue
Date or (iv) upon the request of the Initial Purchaser with respect to any
Registrable Securities held by it, if such Initial Purchaser is not permitted,
in the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, pursuant to
applicable law or applicable interpretations of the staff of the SEC, to
participate in the Exchange Offer and thereby receive securities that are freely
tradeable without restriction under the Securities Act and applicable blue sky
or state securities laws (any of the events specified in (i)-(iv) being a "Shelf
Registration Event" and the date of occurrence thereof, the "Shelf Registration
Event Date"), then in addition to or in lieu of conducting the Exchange Offer
contemplated by Section 2(a), as the case may be, the Corporation and the Trust
shall use their best efforts to cause to be filed as promptly as practicable
after such Shelf Registration Event Date, as the case may be, and, in any event,
within 45 days after such Shelf Registration Event Date (which shall be no
earlier than 75 days after the Issue Date), a Shelf Registration Statement
providing for the sale by the Holders of all of the Registrable Securities, and
shall use its best efforts to have such Shelf Registration Statement declared
effective by the SEC as soon as practicable. No Holder of Registrable Securities
shall be entitled to include any of its Registrable Securities in any Shelf
Registration pursuant to this Agreement unless and until such Holder agrees in
writing to be bound by all of the provisions of this Agreement applicable to
such Holder and furnishes to the Corporation and the Trust in writing, within 15
days after receipt of a request therefor, such information as the Corporation
and the Trust may, after conferring with counsel with regard to information
relating to Holders that would be required by the SEC to be included in such
Shelf Registration Statement or Prospectus included therein, reasonably request
for inclusion in any Shelf Registration Statement or Prospectus included
therein. Each Holder as to which any Shelf Registration is being effected agrees
to furnish to the Corporation and the Trust all information with respect to such
Holder necessary to make the information previously furnished to the Corporation
by such Holder not materially misleading.
The Corporation and the Trust agree to use their best efforts
to keep the Shelf Registration Statement continuously effective and usable for
resales for (a) the Rule 144(k) Period in the case of a Shelf Registration
Statement filed pursuant to Section 2(b)(i), (ii) or (iii) or (b) 270 days in
the case of a Shelf Registration Statement filed pursuant to Section 2(b)(iv)
(subject in each case to extension pursuant to the last paragraph of Section 3
hereof), or for such shorter period which will terminate when all of the
Registrable Securities covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement or cease to be outstanding
(the "Effectiveness Period"). The Corporation and the Trust shall not permit any
securities other than Registrable Securities to be included in the Shelf
Registration. In the event a Shelf Registration Statement is declared effective,
the Corporation and the Trust will provide to each Holder a reasonable number of
copies of the Prospectus which is a part of the Shelf Registration Statement and
notify each such Holder when the Shelf Registration has become effective. The
Corporation and the Trust will use their best efforts to take such other actions
as are required to permit unrestricted resales of the Registrable Securities.
The Corporation and the Trust further agree, if necessary, to supplement or
amend the Shelf Registration Statement, if required by the rules, regulations or
instructions applicable to the registration form used by the Corporation for
such Shelf Registration Statement or by the Securities Act or by any other rules
and regulations thereunder for shelf registrations, and the Corporation and the
Trust agree to furnish to the Holders of Registrable Securities copies of any
such supplement or amendment promptly after its being used or filed with the
SEC.
(c) Expenses. The Corporation, as issuer of the Subordinated
Debentures, shall pay all Registration Expenses in connection with any
Registration Statement filed pursuant to Section 2(a) and/or 2(b) hereof and
will reimburse the Initial Purchaser for the reasonable fees and disbursements
of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Initial Purchaser,
incurred in connection with the Exchange Offer and, if applicable, the Private
Exchange, and either Skadden, Arps, Slate, Meagher & Flom LLP or any one other
counsel designated in writing by the Majority Holders to act as counsel for the
Holders of the Registrable Securities in connection with a Shelf Registration
Statement, which other counsel shall be reasonably satisfactory to the
Corporation. Except as provided herein, each Holder shall pay all expenses of
its counsel, underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Securities
pursuant to the Shelf Registration Statement.
(d) Effective Registration Statement. An Exchange Offer
Registration Statement pursuant to Section 2(a) hereof or a Shelf Registration
Statement pursuant to Section 2(b) hereof will not be deemed to have become
effective unless it has been declared effective by the SEC; provided, however,
that if, after it has been declared effective, the offering of Registrable
Securities pursuant to such Exchange Offer Registration Statement or Shelf
Registration Statement is interfered with by any stop order, injunction or other
order or requirement of the SEC or any other governmental agency or court, such
Registration Statement will be deemed not to have been effective during the
period of such interference, until the offering of Registrable Securities
pursuant to such Registration Statement may legally resume. The Corporation and
the Trust will be deemed not to have used their best efforts to cause the
Exchange Offer Registration Statement or the Shelf Registration Statement, as
the case may be, to become, or to remain, effective during the requisite period
if either of them voluntarily takes any action that would result in any such
Registration Statement not being declared effective or that would result in the
Holders of Registrable Securities covered thereby not being able to exchange or
offer and sell such Registrable Securities during that period unless such action
is required by applicable law.
(e) Liquidated Damages. In the event that:
(i) neither the Exchange Offer Registration Statement
is filed with the SEC on or prior to the 150th day after the Issue Date nor a
Shelf Registration Statement is filed with the SEC on or prior to the 45th day
after the Shelf Registration Event Date in respect of a Shelf Registration Event
attributable to any of the events set forth in Sections 2(b)(i), (ii) and (iii)
(provided that in no event shall such date be earlier than 75 days after the
Issue Date), then commencing on the day after the applicable required filing
date, liquidated damages ("Liquidated Damages") shall accrue on the principal
amount of the Subordinated Debentures, and additional distributions ("Additional
Distributions") shall accumulate on the liquidation amount of the Trust
Securities (as such term is defined in the Declaration), each at a rate of .25%
per annum; or
(ii) neither the Exchange Offer Registration
Statement nor a Shelf Registration Statement is declared effective by the SEC on
or prior to the 180th day after the Issue Date (in the case of an Exchange Offer
Registration Statement) or on or prior to the later of (A) the 30th day after
the date such Shelf Registration Statement was required to be filed and (B) the
180th day after the Issue Date (in the case of a Shelf Registration Statement,
in respect of a Shelf Registration Event attributable to any of the events set
forth in Sections 2(b)(i), (ii) and (iii)), then, commencing on the 181st day
after the Issue Date (in the case of an Exchange Offer Registration Statement)
or the later of (A) the 31st day after the day such Shelf Registration Statement
was required to be filed and (B) the 181st day after the Issue Date (in the case
of a Shelf Registration Statement, in respect of a Shelf Registration Event
attributable to any of the events set forth in Sections 2(b)(i), (ii) and
(iii)), Liquidated Damages shall accrue on the principal amount of the
Subordinated Debentures, and Additional Distributions shall accumulate on the
liquidation amount of the Trust Securities, each at a rate of .25% per annum;
(iii) (A) the Trust has not exchanged Exchange
Capital Securities for all Capital Securities or the Corporation has not
exchanged Exchange Guarantees or Exchange Subordinated Debentures for all
Guarantees or Subordinated Debentures, as the case may be, validly tendered, in
accordance with the terms of the Exchange Offer on or prior to the 45th day
after the date on which the Exchange Offer Registration Statement was declared
effective or (B) if applicable, the Shelf Registration Statement in respect of
Shelf Registration Event attributable to any of the events set forth in Sections
2(b)(i), (ii) and (iii) has been declared effective and such Shelf Registration
Statement ceases to be effective or usable for resales (whether as a result of
an event contemplated by Section 3(e) or otherwise) at any time prior to the
expiration of the Rule 144(k) Period (other than after such time as all
Securities have been disposed of thereunder or otherwise cease to be Registrable
Securities), then Liquidated Damages shall accrue on the principal amount of
Subordinated Debentures, and Additional Distributions shall accumulate on the
liquidation amount of the Trust Securities, each at a rate of .25% per annum
commencing on (x) the 46th day after such effective date, in the case of (A)
above, or (y) the day such Shelf Registration Statement ceases to be effective
or usable for resales in the case of (B) above;
provided, however, that neither the Liquidated Damages rate on the Subordinated
Debentures, nor the Additional Distribution rate on the liquidation amount of
the Trust Securities, may exceed in the aggregate .25% per annum; provided,
further, however, that (1) upon the filing of the Exchange Offer Registration
Statement or a Shelf Registration Statement (in the case of clause (i) above),
(2) upon the effectiveness of the Exchange Offer Registration Statement or a
Shelf Registration Statement (in the case of clause (ii) above), or (3) upon the
exchange of Exchange Capital Securities, Exchange Guarantees and Exchange
Debentures for all Capital Securities, Guarantees and Subordinated Debentures
tendered (in the case of clause (iii)(A) above), or at such time as the Shelf
Registration Statement which had ceased to remain effective or usable for
resales again becomes effective and usable for resales (in the case of clause
(iii)(B) above), Liquidated Damages on the principal amount of the Subordinated
Debentures and Additional Distributions on the liquidation amount of the Trust
Securities as a result of such clause (or the relevant subclause thereof) shall
cease to accrue and accumulate.
Any amounts of Liquidated Damages and Additional Distributions due
pursuant to Section 2(e)(i), (ii) or (iii) above will be payable in cash on the
next succeeding June 1 and December 1, as the case may be, to Holders on the
relevant record dates for the payment of interest and distributions pursuant to
the Indenture and the Declaration, respectively.
(f) Specific Enforcement. Without limiting the remedies
available to the Holders, the Corporation and the Trust acknowledge that any
failure by the Corporation or the Trust to comply with its obligations under
Section 2(a) and Section 2(b) hereof may result in material irreparable injury
to the Holders for which there is no adequate remedy at law, that it would not
be possible to measure damages for such injuries precisely and that, in the
event of any such failure, any Holder may obtain such relief as may be required
to specifically enforce the Corporation's and the Trust's obligations under
Section 2(a) and Section 2(b) hereof.
(g) Distribution of Subordinated Debentures. Notwithstanding
any other provisions of this Agreement, in the event that Subordinated
Debentures are distributed to holders of Capital Securities in liquidation of
the Trust pursuant to the Declaration, (i) all references in this Section 2 and
in Section 3 to Securities, Registrable Securities and Exchange Securities shall
not include the Capital Securities and Capital Securities Guarantee or Exchange
Capital Securities and Exchange Capital Securities Guarantee issued or to be
issued in exchange therefor in the Exchange Offer and (ii) all requirements for
action to be taken by the Trust in this Section 2 and in Section 3 shall cease
to apply and all requirements for action to be taken by the Corporation in this
Section 2 and in Section 3 shall apply to the Subordinated Debentures and
Exchange Debentures issued or to be issued in exchange therefor in the Exchange
Offer.
3. Registration Procedures. In connection with the obligations
of the Corporation and the Trust with respect to the Registration Statements
pursuant to Sections 2(a) and 2(b) hereof, the Corporation and the Trust shall
use their best efforts to:
(a) prepare and file with the SEC a Registration Statement or
Registration Statements as prescribed by Sections 2(a) and 2(b) hereof
within the relevant time period specified in Section 2 hereof on the
appropriate form under the Securities Act, which form (i) shall be
selected by the Corporation and the Trust, (ii) shall, in the case of a
Shelf Registration, be available for the sale of the Registrable
Securities by the selling Holders thereof and, in the case of an
Exchange Offer, be available for the exchange of Registrable
Securities, and (iii) shall comply as to form in all material respects
with the requirements of the applicable form and include all financial
statements required by the SEC to be filed therewith; and use their
best efforts to cause such Registration Statement to become effective
and remain effective (and, in the case of a Shelf Registration
Statement, usable for resales) in accordance with Section 2 hereof;
provided, however, that if (1) such filing is pursuant to Section 2(b),
or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2(a) is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Securities, before filing any Registration Statement
or Prospectus or any amendments or supplements thereto, the Corporation
and the Trust shall furnish to and afford the Holders of the
Registrable Securities and each such Participating Broker-Dealer, as
the case may be, covered by such Registration Statement, their counsel
and the managing underwriters, if any, a reasonable opportunity to
review copies of all such documents (including copies of any documents
to be incorporated by reference therein and all exhibits thereto)
proposed to be filed. The Corporation and the Trust shall not file any
Registration Statement or Prospectus or any amendments or supplements
thereto in respect of which the Holders must be afforded an opportunity
to review prior to the filing of such document if the Majority Holders
or such Participating Broker-Dealer, as the case may be, their counsel
or the managing underwriters, if any, shall reasonably object;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary to keep such Registration Statement effective for the
Effectiveness Period or the Applicable Period, as the case may be; and
cause each Prospectus to be supplemented, if so determined by the
Corporation or the Trust or requested by the SEC, by any required
prospectus supplement and as so supplemented to be filed pursuant to
Rule 424 (or any similar provision then in force) under the Securities
Act, and comply with the provisions of the Securities Act, the Exchange
Act and the rules and regulations promulgated thereunder applicable to
it with respect to the disposition of all securities covered by each
Registration Statement during the Effectiveness Period or the
Applicable Period, as the case may be, in accordance with the intended
method or methods of distribution by the selling Holders thereof
described in this Agreement (including sales by any Participating
Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify each
Holder of Registrable Securities included in the Shelf Registration
Statement, at least three Business Days prior to filing, that a Shelf
Registration Statement with respect to the Registrable Securities is
being filed and advising such Holder that the distribution of
Registrable Securities will be made in accordance with the method
selected by the Majority Holders; and (ii) furnish to each Holder of
Registrable Securities included in the Shelf Registration Statement and
to each underwriter of an underwritten offering of Registrable
Securities, if any, without charge, as many copies of each Prospectus,
including each preliminary Prospectus, and any amendment or supplement
thereto and such other documents as such Holder or underwriter may
reasonably request, in order to facilitate the public sale or other
disposition of the Registrable Securities; and (iii) consent to the use
of the Prospectus or any amendment or supplement thereto by each of the
selling Holders of Registrable Securities included in the Shelf
Registration Statement in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any amendment or
supplement thereto;
(d) in the case of a Shelf Registration, use their best
efforts to register or qualify the Registrable Securities under all
applicable state securities or "blue sky" laws of such jurisdictions by
the time the applicable Registration Statement is declared effective by
the SEC as any Holder of Registrable Securities covered by a
Registration Statement and each underwriter of an underwritten offering
of Registrable Securities shall reasonably request in writing in
advance of such date of effectiveness, and do any and all other acts
and things which may be reasonably necessary or advisable to enable
such Holder and underwriter to consummate the disposition in each such
jurisdiction of such Registrable Securities owned by such Holder;
provided, however, that the Corporation and the Trust shall not be
required to (i) qualify as a foreign corporation or as a dealer in
securities in any jurisdiction where it would not otherwise be required
to qualify but for this Section 3(d), (ii) file any general consent to
service of process in any jurisdiction where it would not otherwise be
subject to such service of process or (iii) subject itself to taxation
in any such jurisdiction if it is not then so subject;
(e) (1) in the case of a Shelf Registration or (2) if
Participating Broker-Dealers from whom the Corporation or the Trust has
received prior written notice that they will be utilizing the
Prospectus contained in the Exchange Offer Registration Statement as
provided in Section 3(t) hereof, are seeking to sell Exchange
Securities and are required to deliver Prospectuses, promptly notify
each Holder of Registrable Securities, or such Participating
Broker-Dealers, as the case may be, their counsel and the managing
underwriters, if any, and promptly confirm such notice in writing (i)
when a Registration Statement has become effective and when any
post-effective amendments and supplements thereto become effective,
(ii) of any request by the SEC or any state securities authority for
amendments and supplements to a Registration Statement or Prospectus or
for additional information after the Registration Statement has become
effective, (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a
Registration Statement or the qualification of the Registrable
Securities or the Exchange Securities to be offered or sold by any
Participating Broker-Dealer in any jurisdiction described in paragraph
3(d) hereof or the initiation of any proceedings for that purpose, (iv)
in the case of a Shelf Registration, if, between the effective date of
a Registration Statement and the closing of any sale of Registrable
Securities covered thereby, the representations and warranties of the
Corporation and the Trust contained in any purchase agreement,
securities sales agreement or other similar agreement cease to be true
and correct in all material respects, (v) of the happening of any event
or the failure of any event to occur or the discovery of any facts or
otherwise, during the Effectiveness Period which makes any statement
made in such Registration Statement or the related Prospectus untrue in
any material respect or which causes such Registration Statement or
Prospectus to omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, and (vi) the Corporation and the Trust's
reasonable determination that a post-effective amendment to the
Registration Statement would be appropriate;
(f) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement at
the earliest possible moment;
(g) in the case of a Shelf Registration, furnish to each
Holder of Registrable Securities included within the coverage of such
Shelf Registration Statement, without charge, at least one conformed
copy of each Registration Statement relating to such Shelf Registration
and any post-effective amendment thereto (without documents
incorporated therein by reference or exhibits thereto, unless
requested);
(h) in the case of a Shelf Registration, cooperate with the
selling Holders of Registrable Securities to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends (other
than with respect to restrictions requiring minimum transfers in blocks
having an aggregate principal or liquidation amount, as the case may
be, of $100,000) and in such denominations (consistent with the
provisions of the Indenture and the Declaration) and registered in such
names as the selling Holders or the underwriters may reasonably request
at least two Business Days prior to the closing of any sale of
Registrable Securities pursuant to such Shelf Registration Statement;
(i) in the case of a Shelf Registration or an Exchange Offer
Registration, upon the occurrence of any circumstance contemplated by
Section 3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, use their best
efforts to prepare a supplement or post-effective amendment to such
Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; and to notify each Holder to suspend use of
the Prospectus as promptly as practicable after the occurrence of such
an event, and each Holder hereby agrees to suspend use of the
Prospectus until the Corporation has amended or supplemented the
Prospectus to correct such misstatement or omission;
(j) in the case of a Shelf Registration, a reasonable time
prior to the filing of any document which is to be incorporated by
reference into a Registration Statement or a Prospectus after the
initial filing of a Registration Statement, provide a reasonable number
of copies of such document to the Holders; and make such of the
representatives of the Corporation and the Trust as shall be reasonably
requested by the Holders of Registrable Securities or the Initial
Purchaser on behalf of such Holders available for discussion of such
document;
(k) obtain a CUSIP number for all Exchange Capital Securities
and the Capital Securities (and if the Trust has made a distribution of
the Subordinated Debentures to the Holders of the Capital Securities,
the Subordinated Debentures or the Exchange Debentures) as the case may
be, not later than the effective date of a Registration Statement, and
provide the Trustee with printed certificates for the Exchange
Securities or the Registrable Securities, as the case may be, in a form
eligible for deposit with the Depositary;
(l) cause the Indenture, the Declaration, the Guarantee and
the Exchange Guarantee to be qualified under the Trust Indenture Act of
1939 (the "TIA") in connection with the registration of the Exchange
Securities or Registrable Securities, as the case may be, and effect
such changes to such documents as may be required for them to be so
qualified in accordance with the terms of the TIA and execute, and use
their best efforts to cause the relevant trustee to execute, all
documents as may be required to effect such changes, and all other
forms and documents required to be filed with the SEC to enable such
documents to be so qualified in a timely manner;
(m) in the case of a Shelf Registration, enter into such
agreements (including underwriting agreements) as are customary in
underwritten offerings and take all such other appropriate actions in
connection therewith as are reasonably requested by the holders of at
least 25% in aggregate principal or liquidation amount, as the case may
be, of the Registrable Securities in order to expedite or facilitate
the registration or the disposition of the Registrable Securities;
provided, that the Corporation and the Trust shall not be required to
enter into any such agreement more than twice with respect to all of
the Registrable Securities and may delay entering into such agreement
until the consummation of any underwritten public offering which the
Corporation shall have undertaken;
(n) in the case of a Shelf Registration, whether or not an
underwriting agreement is entered into and whether or not the
registration is an underwritten registration, if requested by (x) the
Initial Purchaser, in the case where such Initial Purchaser holds
Securities acquired by it as part of its initial allotment and (y)
Holders of at least 25% in aggregate principal or liquidation amount,
as the case may be, of the Registrable Securities covered thereby: (i)
make such representations and warranties to Holders of such Registrable
Securities and the underwriters (if any), with respect to the business
of the Trust, the Corporation and its subsidiaries as then conducted
and the Registration Statement, Prospectus and documents, if any,
incorporated or deemed to be incorporated by reference therein, in each
case, as are customarily made by issuers to underwriters in
underwritten offerings, and confirm the same if and when requested;
(ii) obtain opinions of counsel to the Corporation and the Trust and
updates thereof (which may be in the form of a reliance letter) in form
and substance reasonably satisfactory to the managing underwriters (if
any) and the Holders of a majority in principal amount of the
Registrable Securities being sold, addressed to each selling Holder and
the underwriters (if any) covering the matters customarily covered in
opinions requested in underwritten offerings and such other matters as
may be reasonably requested by such underwriters (it being agreed that
the matters to be covered by such opinion may be subject to customary
qualifications and exceptions); (iii) obtain "cold comfort" letters and
updates thereof in form and substance reasonably satisfactory to the
managing underwriters from the independent certified public accountants
of the Corporation and the Trust (and, if necessary, any other
independent certified public accountants of any subsidiary of the
Corporation and the Trust or of any business acquired by the
Corporation and the Trust for which financial statements and financial
data are, or are required to be, included in the Registration
Statement), addressed to each of the underwriters, such letters to be
in customary form and covering matters of the type customarily covered
in "cold comfort" letters in connection with underwritten offerings and
such other matters as reasonably requested by such underwriters in
accordance with Statement on Auditing Standards No. 72; and (iv) if an
underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures no less favorable than those
set forth in Section 4 hereof (or such other provisions and procedures
acceptable to Holders of a majority in aggregate principal amount or
liquidation amount, as the case may be, of Registrable Securities
covered by such Registration Statement and the managing underwriters
and agents) customary for such agreements with respect to all parties
to be indemnified pursuant to said Section (including, without
limitation, such underwriters and selling Holders). The above shall be
done at each closing under such underwriting agreement, or as and to
the extent required thereunder;
(o) if (1) a Shelf Registration is filed pursuant to Section
2(b) or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2(a) is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Securities during the Applicable Period, make
reasonably available for inspection by any selling Holder of such
Registrable Securities or Participating Broker-Dealer, as applicable,
who certifies to the Corporation and the Trust that it has a current
intention to sell Registrable Securities pursuant to the Shelf
Registration, any underwriter participating in any such disposition of
Registrable Securities, if any, and any attorney, accountant or other
agent retained by any such selling Holder or each such Participating
Broker-Dealer, as the case may be, or underwriter (collectively, the
"Inspectors"), at the offices where normally kept, during the
Corporation's normal business hours, all financial and other records,
pertinent corporate documents and properties of the Trust, the
Corporation and its subsidiaries (collectively, the "Records") as shall
be reasonably necessary to enable them to exercise any applicable due
diligence responsibilities, and cause the officers, directors and
employees of the Trust, the Corporation and its subsidiaries to supply
all relevant information in each case reasonably requested by any such
Inspector in connection with such Registration Statement. Records and
information which the Corporation and the Trust determine, in good
faith, to be confidential and any Records and information which it
notifies the Inspectors are confidential shall not be disclosed to any
Inspector unless such Inspector enters into a written agreement with
the Corporation providing for the confidentiality of such Records and
information, and such Inspector shall not disclose any such Records or
information, except when (i) the disclosure of such Records is
necessary to avoid or correct a material misstatement or omission in
such Registration Statement, (ii) the release of such Records or
information is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction or is necessary in connection with any
action, suit or proceeding or (iii) such Records or information
previously have been made generally available to the public. Each
selling Holder of such Registrable Securities and each such
Participating Broker-Dealer will be required to agree in writing that
information obtained by it as a result of such inspections shall be
deemed confidential and shall not be used by it as the basis for any
market transactions in the securities of the Trust or the Corporation
unless and until such is made generally available to the public through
no fault of an Inspector or a Selling Holder. Each selling Holder of
such Registrable Securities and each such Participating Broker-Dealer
will be required to further agree in writing that it will, upon
learning that disclosure of such Records is sought in a court of
competent jurisdiction, or in connection with any action, suit or
proceeding give notice to the Corporation and allow the Corporation at
its expense to undertake appropriate action to prevent disclosure of
the Records deemed confidential;
(p) comply with all applicable rules and regulations of the
SEC so long as any provision of this Agreement shall be applicable and
make generally available to their securityholders earning statements
satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) no later than 45 days after the end of any 12-month
period (or 90 days after the end of any 12-month period if such period
is a fiscal year) (i) commencing at the end of any fiscal quarter in
which Registrable Securities are sold to underwriters in a firm
commitment or best efforts underwritten offering and (ii) if not sold
to underwriters in such an offering, commencing on the first day of the
first fiscal quarter of the Corporation after the effective date of a
Registration Statement, which statements shall cover said 12-month
periods provided that the Corporation's obligations under this
paragraph (o) shall be satisfied by the timely filing of its quarterly
and annual reports on Forms 10-Q and 10-K;
(q) upon consummation of an Exchange Offer or a Private
Exchange, if requested by a Trustee, obtain an opinion of counsel to
the Corporation addressed to the Trustee for the benefit of all Holders
of Registrable Securities participating in the Exchange Offer or the
Private Exchange, as the case may be, substantially to the effect that
(i) the Corporation and the Trust, as the case requires, has duly
authorized, executed and delivered the Exchange Securities and Private
Exchange Securities, and (ii) each of the Exchange Securities or the
Private Exchange Securities, as the case may be, constitutes a legal,
valid and binding obligation of the Corporation or the Trust, as the
case requires, enforceable against the Corporation or the Trust, as the
case requires, in accordance with its respective terms (in each case,
with customary exceptions);
(r) if an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Securities by Holders to
the Corporation or the Trust, as applicable (or to such other Person as
directed by the Corporation or the Trust, respectively), in exchange
for the Exchange Securities or the Private Exchange Securities, as the
case may be, the Corporation or the Trust, as applicable, shall mark,
or cause to be marked, on such Registrable Securities delivered by such
Holders that such Registrable Securities are being cancelled in
exchange for the Exchange Securities or the Private Exchange
Securities, as the case may be; in no event shall such Registrable
Securities be marked as paid or otherwise satisfied;
(s) cooperate with each seller of Registrable Securities
covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be
made with the NASD;
(t) use its best efforts to take all other steps necessary to
effect the registration of the Registrable Securities covered by a
Registration Statement contemplated hereby;
(u) (A) in the case of the Exchange Offer Registration
Statement (i) include in the Exchange Offer Registration Statement a
section entitled "Plan of Distribution," which section shall be
reasonably acceptable to the Initial Purchaser or another
representative of the Participating Broker-Dealers, and which shall
contain a summary statement of the positions taken or policies made by
the staff of the SEC with respect to the potential "underwriter" status
of any broker-dealer (a "Participating Broker-Dealer") that holds
Registrable Securities acquired for its own account as a result of
market-making activities or other trading activities and that will be
the beneficial owner (as defined in Rule 13d-3 under the Exchange Act)
of Exchange Securities to be received by such Participating
Broker-Dealer in the Exchange Offer, whether such positions or policies
have been publicly disseminated by the staff of the SEC or such
positions or policies, in the reasonable judgment of the Initial
Purchaser or such other representative, represent the prevailing views
of the staff of the SEC, including a statement that any such
Participating Broker-Dealer who receives Exchange Securities for
Registrable Securities pursuant to the Exchange Offer may be deemed a
statutory underwriter and must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of
such Exchange Securities, (ii) furnish to each Participating
Broker-Dealer who has delivered to the Corporation the notice referred
to in Section 3(e), without charge, as many copies of each Prospectus
included in the Exchange Offer Registration Statement, including any
preliminary prospectus, and any amendment or supplement thereto, as
such Participating Broker-Dealer may reasonably request (each of the
Corporation and the Trust hereby consents to the use of the Prospectus
forming part of the Exchange Offer Registration Statement or any
amendment or supplement thereto by any Person subject to the prospectus
delivery requirements of the Securities Act, including all
Participating Broker-Dealers, in connection with the sale or transfer
of the Exchange Securities covered by the Prospectus or any amendment
or supplement thereto), (iii) use their best efforts to keep the
Exchange Offer Registration Statement effective and to amend and
supplement the Prospectus contained therein in order to permit such
Prospectus to be lawfully delivered by all Persons subject to the
prospectus delivery requirements of the Securities Act for such period
of time as such Persons must comply with such requirements under the
Securities Act and applicable rules and regulations in order to resell
the Exchange Securities; provided, however, that such period shall not
be required to exceed 90 days (or such longer period if extended
pursuant to the last sentence of Section 3 hereof) (the "Applicable
Period"), and (iv) include in the transmittal letter or similar
documentation to be executed by an exchange offeree in order to
participate in the Exchange Offer (x) the following provision:
"If the exchange offeree is a broker-dealer holding
Registrable Securities acquired for its own account as a
result of market-making activities or other trading
activities, it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any
resale of Exchange Securities received in respect of such
Registrable Securities pursuant to the Exchange Offer";
and (y) a statement to the effect that by a broker-dealer making the
acknowledgment described in clause (x) and by delivering a Prospectus in
connection with the exchange of Registrable Securities, the broker-dealer will
not be deemed to admit that it is an underwriter within the meaning of the
Securities Act; and
(B) in the case of any Exchange Offer Registration Statement,
the Corporation and the Trust agree to deliver to the Initial Purchaser
or to another representative of the Participating Broker-Dealers, if
requested by the Initial Purchaser or such other representative of
Participating Broker-Dealers, on behalf of the Participating
Broker-Dealers upon consummation of the Exchange Offer (i) an opinion
of counsel in form and substance reasonably satisfactory to the Initial
Purchaser or such other representative of the Participating
Broker-Dealers, covering the matters customarily covered in opinions
requested in connection with Exchange Offer Registration Statements and
such other matters as may be reasonably requested (it being agreed that
the matters to be covered by such opinion may be subject to customary
qualifications and exceptions), (ii) an officers' certificate
containing certifications substantially similar to those set forth in
Section 5(f) of the Purchase Agreement and such additional
certifications as are customarily delivered in a public offering of
debt securities and (iii) as well as upon the effectiveness of the
Exchange Offer Registration Statement, a comfort letter, in each case,
in customary form if permitted by Statement on Auditing Standards No.
72.
The Corporation or the Trust may require each seller of
Registrable Securities as to which any registration is being effected to furnish
to the Corporation or the Trust, as applicable, such information regarding such
seller as may be required by the staff of the SEC to be included in a
Registration Statement. The Corporation or the Trust may exclude from such
registration the Registrable Securities of any seller who unreasonably fails to
furnish such information within a reasonable time after receiving such request.
The Corporation shall have no obligation to register under the Securities Act
the Registrable Securities of a seller who so fails to furnish such information.
In the case of a Shelf Registration Statement, or if
Participating Broker-Dealers who have notified the Corporation and the Trust
that they will be utilizing the Prospectus contained in the Exchange Offer
Registration Statement as provided in Section 3(t) hereof, are seeking to sell
Exchange Securities and are required to deliver Prospectuses, each Holder agrees
that, upon receipt of any notice from the Corporation or the Trust of the
happening of any event of the kind described in Section 3(e)(ii), 3(e)(iii),
3(e)(v) or 3(e)(vi) hereof, such Holder will forthwith discontinue disposition
of Registrable Securities pursuant to a Registration Statement until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(i) hereof or until it is advised in writing (the
"Advice") by the Corporation and the Trust that the use of the applicable
Prospectus may be resumed, and, if so directed by the Corporation and the Trust,
such Holder will deliver to the Corporation or the Trust (at the Corporation's
or the Trust's expense, as the case requires) all copies in such Holder's
possession, other than permanent file copies then in such Holder's possession,
of the Prospectus covering such Registrable Securities or Exchange Securities,
as the case may be, current at the time of receipt of such notice. If the
Corporation or the Trust shall give any such notice to suspend the disposition
of Registrable Securities or Exchange Securities, as the case may be, pursuant
to a Registration Statement, the Corporation and the Trust shall use their best
efforts to file and have declared effective (if an amendment) as soon as
practicable an amendment or supplement to the Registration Statement and shall
extend the period during which such Registration Statement is required to be
maintained effective and usable for resales pursuant to this Agreement by the
number of days in the period from and including the date of the giving of such
notice to and including the date when the Corporation and the Trust shall have
made available to the Holders (x) copies of the supplemented or amended
Prospectus necessary to resume such dispositions or (y) the Advice.
4. Indemnification and Contribution. (a) In connection with
any Registration Statement, the Corporation and the Trust shall, jointly and
severally, indemnify and hold harmless the Initial Purchaser, each Holder, each
underwriter who participates in an offering of the Registrable Securities, each
Participating Broker-Dealer, each Person, if any, who controls any of such
parties within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act and each of their respective partners, directors, officers,
employees and agents, as follows:
(i) from and against any and all loss, liability, claim,
damage and expense whatsoever, joint or several, as incurred, arising
out of any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement (or any amendment
thereto), covering Registrable Securities or Exchange Securities,
including all documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any Prospectus (or any
amendment or supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(ii) from and against any and all loss, liability, claim,
damage and expense whatsoever, joint or several, as incurred, to the
extent of the aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any court or governmental agency or
body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue
statement or omission, if such settlement is effected with the prior
written consent of the Corporation; and
(iii) from and against any and all expenses whatsoever, as
incurred (including reasonable fees and disbursements of counsel chosen
by such Holder, such Participating Broker-Dealer, or any underwriter
(except to the extent otherwise expressly provided in Section 4(c)
hereof)), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any court
or governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under subparagraph (i) or (ii) of this Section
4(a);
provided, however, that (i) this indemnity does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished in writing to the
Corporation or the Trust by such Holder, such Participating Broker-Dealer or any
underwriter with respect to such Holder, Participating Broker-Dealer or any
underwriter, as the case may be, for use in a Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto)
and (ii) the Corporation and the Trust shall not be liable to any such Holder,
Participating Broker-Dealer, any underwriter or controlling person, with respect
to any untrue statement or alleged untrue statement or omission or alleged
omission in any preliminary Prospectus, to the extent that any such loss,
liability, claim, damage or expense of any Holder, Participating Broker-Dealer,
any underwriter or controlling person results from the fact that such Holder,
any underwriter or Participating Broker-Dealer sold Securities to a person to
whom there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the final Prospectus as then amended or supplemented if the
Corporation had previously furnished copies thereof to such Holder, underwriter
or Participating Broker-Dealer and the loss, liability, claim, damage or expense
of such Holder, underwriter, Participating Broker-Dealer or controlling person
results from an untrue statement or omission of a material fact contained in the
preliminary Prospectus which was corrected in the final Prospectus. Any amounts
advanced by the Corporation or the Trust to an indemnified party pursuant to
this Section 4 as a result of such losses shall be returned to the Corporation
or the Trust if it shall be finally determined by such a court in a judgment not
subject to appeal or final review that such indemnified party was not entitled
to indemnification by the Corporation or the Trust.
(b) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Corporation, the Trust, any underwriter and the
other selling Holders and each of their respective partners, directors, officers
(including each officer of the Corporation and the Trust who signed the
Registration Statement), employees and agents and each Person, if any, who
controls the Corporation, the Trust, any underwriter or any other selling Holder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all loss, liability, claim, damage and
expense whatsoever described in the indemnity contained in Section 4(a) hereof,
as incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in a Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Corporation or the Trust by such selling Holder with respect to such Holder
expressly for use in such Registration Statement (or any amendment thereto), or
any such Prospectus (or any amendment or supplement thereto); provided, however,
that in the case of a Shelf Registration Statement, no such Holder shall be
liable for any claims hereunder in excess of the amount of net proceeds received
by such Holder from the sale of Registrable Securities pursuant to such Shelf
Registration Statement.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, enclosing a copy of all papers properly
served on such indemnified party, but failure to so notify an indemnifying party
shall not relieve such indemnifying party from any liability which it may have
under this Section 4, except to the extent that it is materially prejudiced by
such failure. An indemnifying party may participate at its own expense in the
defense of such action. If an indemnifying party so elects within a reasonable
time after receipt of such notice, an indemnifying party, severally or jointly
with any other indemnifying parties receiving such notice, may assume the
defense of such action with counsel chosen by it and reasonably acceptable to
the indemnified parties defendant in such action, provided, however, that if (i)
representation of such indemnified party by the same counsel would present a
conflict of interest or (ii) the actual or potential defendants in, or targets
of, any such action include both the indemnified party and the indemnifying
party and any such indemnified party reasonably determines that there may be
legal defenses available to such indemnified party which are different from or
in addition to those available to such indemnifying party, then in the case of
clauses (i) and (ii) of this Section 4(c) such indemnifying party and counsel
for each indemnifying party or parties shall not be entitled to assume such
defense. If an indemnifying party is not entitled to assume the defense of such
action as a result of the proviso to the preceding sentence, counsel for such
indemnifying party and counsel for each indemnified party or parties shall be
entitled to conduct the defense of such indemnified party or parties. If an
indemnifying party assumes the defense of such action, in accordance with and as
permitted by the provisions of this paragraph, such indemnifying parties shall
not be liable for any fees and expenses of counsel for the indemnified parties
incurred thereafter in connection with such action. In no event shall the
indemnifying parties be liable for the fees and expenses of more than one
counsel (in addition to local counsel), separate from its own counsel, for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 4 (whether or not the indemnified parties are
actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional written release in form and substance
satisfactory to the indemnified parties of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(d) Notwithstanding the last sentence of Section 4(c), if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for reasonable fees and expenses of counsel
pursuant to Section 4(a)(iii) above, such indemnifying party agrees that it
shall be liable for any settlement effected without its written consent if (i)
such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement; provided that an indemnifying party shall not be
liable for any such settlement effected without its consent if such indemnifying
party (1) reimburses such indemnified party in accordance with such request to
the extent it considers reasonable and (2) provides written notice to the
indemnified party substantiating the unpaid balance as unreasonable, in each
case prior to the date of such settlement.
(e) In order to provide for just and equitable contribution in
circumstances under which any of the indemnity provisions set forth in this
Section 4 is for any reason held to be unavailable to the indemnified parties
although applicable in accordance with its terms, the Corporation, the Trust,
and the Holders shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity agreement
incurred by the Corporation, the Trust, and the Holders, as incurred; provided
that no Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any Person
that was not guilty of such fraudulent misrepresentation. As between the
Corporation, the Trust, and the Holders, such parties shall contribute to such
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnity agreement in such proportion as shall be
appropriate to reflect the relative fault of the Corporation and Trust, on the
one hand, and the Holders, on the other hand, with respect to the statements or
omissions which resulted in such loss, liability, claim, damage or expense, or
action in respect thereof, as well as any other relevant equitable
considerations. The relative fault of the Corporation and the Trust, on the one
hand, and of the Holders, on the other hand, shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Corporation or the Trust, on the one
hand, or by or on behalf of the Holders, on the other, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Corporation, the Trust and the Holders of the
Registrable Securities agree that it would not be just and equitable if
contribution pursuant to this Section 4 were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the relevant equitable considerations. For purposes of this Section 4, each
Affiliate of a Holder, and each director, officer, employee, agent and Person,
if any, who controls a Holder or such Affiliate within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as such Holder, and each director of each of the
Corporation or the Trust, each officer of each of the Corporation or the Trust
who signed the Registration Statement, and each Person, if any, who controls
each of the Corporation and the Trust within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as each of the Corporation or the Trust.
5. Participation in an Underwritten Registration. No Holder
may participate in an underwritten registration hereunder unless such Holder (a)
agrees to sell such Holder's Registrable Securities on the basis provided in the
underwriting arrangement approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all reasonable questionnaires,
powers of attorney, indemnities, underwriting agreements, lock-up letters and
other documents reasonably required under the terms of such underwriting
arrangements.
6. Selection of Underwriters. The Holders of Registrable
Securities covered by the Shelf Registration Statement who desire to do so may
sell the securities covered by such Shelf Registration in an underwritten
offering, subject to the provisions of Section 3(l) hereof. In any such
underwritten offering, the underwriter or underwriters and manager or managers
that will administer the offering will be selected by the Holders of a majority
in aggregate principal amount or liquidation amount, as applicable, of the
Registrable Securities included in such offering; provided, however, that such
underwriters and managers must be reasonably satisfactory to the Corporation and
the Trust.
7. Miscellaneous.
(a) Rule 144 and Rule 144A. For so long as the Corporation or
the Trust is subject to the reporting requirements of Section 13 or 15 of the
Exchange Act and any Registrable Securities remain outstanding, each of the
Corporation and the Trust, as the case may be, will use its best efforts to file
the reports required to be filed by it under the Securities Act and Section
13(a) or 15(d) of the Exchange Act and the rules and regulations adopted by the
SEC thereunder, provided that if it ceases to be so required to file such
reports, it will, upon the request of any Holder of Registrable Securities (a)
make publicly available such information as is necessary to permit sales of its
securities pursuant to Rule 144 under the Securities Act, (b) deliver such
information to a prospective purchaser as is necessary to permit sales of its
securities pursuant to Rule 144A under the Securities Act, and (c) take such
further action that is reasonable in the circumstances, in each case, to the
extent required from time to time to enable such Holder to sell its Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (i) Rule 144 under the Securities Act, as such
rule may be amended from time to time, (ii) Rule 144A under the Securities Act,
as such rule may be amended from time to time, or (iii) any similar rules or
regulations hereafter adopted by the SEC. Upon the request of any Holder of
Registrable Securities, the Corporation and the Trust will deliver to such
Holder a written statement as to whether it has complied with such requirements.
(b) No Inconsistent Agreements. The Corporation or the Trust
has not entered into, nor will the Corporation or the Trust on or after the date
of this Agreement enter into, any agreement which is inconsistent with the
rights granted to the Holders of Registrable Securities in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Corporation's or the Trust's other
issued and outstanding securities under any such agreements.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Corporation and the Trust has obtained the written
consent of Holders of at least a majority in aggregate principal amount of the
outstanding Registrable Securities affected by such amendment, modification,
supplement, waiver or departure; provided that no amendment, modification or
supplement or waiver or consent to the departure with respect to the provisions
of Section 4 hereof shall be effective as against any Holder of Registrable
Securities unless consented to in writing by such Holder of Registrable
Securities. Notwithstanding the foregoing sentence, (i) this Agreement may be
amended, without the consent of any Holder of Registrable Securities, by written
agreement signed by the Corporation, the Trust and the Initial Purchaser, to
cure any ambiguity, correct or supplement any provision of this Agreement that
may be inconsistent with any other provision of this Agreement or to make any
other provisions with respect to matters or questions arising under this
Agreement which shall not be inconsistent with other provisions of this
Agreement, (ii) this Agreement may be amended, modified or supplemented, and
waivers and consents to departures from the provisions hereof may be given by
written agreement signed by the Corporation, the Trust and the Initial Purchaser
to the extent that any such amendment, modification, supplement, waiver or
consent is, in their reasonable judgment, necessary or appropriate to comply
with applicable law (including any interpretation of the Staff of the SEC) or
any change therein and (iii) to the extent any provision of this Agreement
relates to the Initial Purchaser, such provision may be amended, modified or
supplemented, and waivers or consents to departures from such provisions may be
given, by written agreement signed by the Initial Purchaser, the Corporation and
the Trust.
(d) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Corporation or the Trust by means of a notice given in accordance with the
provisions of this Section 7(d), which address initially is, with respect to the
Initial Purchaser, the address set forth in the Purchase Agreement; and (ii) if
to the Corporation or the Trust, initially at the Corporation's address set
forth in the Purchase Agreement and thereafter at such other address, notice of
which is given in accordance with the provisions of this Section 7(d).
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the next Business Day, if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications
shall be concurrently delivered by the Person giving the same to the Trustee, at
the address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of the
Initial Purchaser, including, without limitation and without the need for an
express assignment, subsequent Holders; provided, however, that nothing herein
shall be deemed to permit any assignment, transfer or other disposition of
Registrable Securities in violation of the terms of the Purchase Agreement or
the Indenture. If any transferee of any Holder shall acquire Registrable
Securities, in any manner, whether by operation of law or otherwise, such
Registrable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Securities, such Person
shall be conclusively deemed to have agreed to be bound by and to perform all of
the terms and provisions of this Agreement and such Person shall be entitled to
receive the benefits hereof.
(f) Third Party Beneficiary. The Initial Purchaser and any
Participating Broker-Dealer shall be a third party beneficiary of the agreements
made hereunder between the Corporation and the Trust, on the one hand, and the
Holders, on the other hand, and shall have the right to enforce such agreements
directly to the extent it deems such enforcement necessary or advisable to
protect its rights or the rights of Holders hereunder.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN
MADE IN THE STATE OF NEW YORK. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS. EACH OF THE
PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) Securities Held by the Corporation, the Trust or its
Affiliates. Whenever the consent or approval of Holders of a specified
percentage of Registrable Securities is required hereunder, Registrable
Securities held by the Corporation, the Trust or its Affiliates shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
MAINSTREET BANKGROUP INC.
By: /s/ James E. Adams
Name: James E. Adams
Title: Executive Vice President
MAINSTREET CAPITAL TRUST I
By: /s/ James E. Adams
Name: James E. Adams
Title: Administrative Trustee
By: /s/ Rebecca J. Jenkins
Name: Rebecca J. Jenkins
Title: Administrative Trustee
By: /s/ Brenda H. Smith
Name: Brenda H. Smith
Title: Administrative Trustee
Confirmed and accepted as of
the date first above
written:
SANDLER O'NEILL & PARTNERS, L.P.
By: SANDLER O'NEILL & PARTNERS, CORP.,
the sole general partner
By: /s/ Catherine A. Lawton
Name: Catherine A. Lawton
Title: Vice President
EXHIBIT 5.1
Law Offices
FLIPPIN, DENSMORE, MORSE, RUTHERFORD & JESSEE
300 First Campbell Square
Roanoke, Virginia 24011
Telephone (540) 510-3000
May 14, 1998
Board of Directors
MainStreet BankGroup Incorporated
200 E. Church Street
Martinsville, Virginia 24112-5409
Gentlemen:
In connection with the registration under the Securities Act of 1933,
as amended (the "Act"), of $50,000,000 aggregate principal amount of Junior
Subordinated Deferrable Interest Debentures (the "Debt Securities") of
MainStreet BankGroup, Inc., a Virginia corporation (the "Corporation"),
$50,000,000 aggregate liquidation amount of Capital Securities (the "Capital
Securities") of MainStreet Capital Trust I, a business trust created under the
laws of the State of Delaware (the "Issuer"), and the Guarantee with respect to
the Capital Securities (the "Guarantee") to be executed and delivered by the
Corporation for the benefit of the holders from time to time of the Capital
Securities, we, as your counsel, have examined such corporate records,
certificates and other documents, and such questions of law, as we have
considered necessary or appropriate for the purposes of this opinion.
Upon the basis of such examination, we advise you that, when:
(i) the Registration Statement relating to the Debt Securities, the
Capital Securities and the Guarantee has become effective under
the Act;
(ii) the Guarantee Agreement relating to the Guarantee with respect to
the Capital Securities of the Issuer has been duly executed and
delivered;
(iii) the Debt Securities have been duly executed and authenticated in
accordance with the Indenture and issued and delivered as
contemplated in the Registration Statement; and
(iv) the Capital Securities have been duly executed in accordance with
the Amended and Restated Declaration of Trust of the Issuer and
issued and delivered as contemplated in the Registration
Statement, the Debt Securities and the Guarantee relating to the
Capital Securities of the Issuer will constitute valid and
legally binding obligations of the Corporation, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
The foregoing opinion is limited to the Federal laws of the United
States, the laws of the State of New York and the laws of the Commonwealth of
Virginia, and we are expressing no opinion as to the effect of the laws of any
other jurisdiction.
<PAGE>
Board of Directors
May 14, 1998
Page 2
Also, we have relied as to certain matters on information obtained from
public officials, officers of the Corporation and other sources believed by us
to be responsible.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to us under the heading "Validity
of New Securities" in the Prospectus. In giving such consent, we do not thereby
admit that we are in the category of persons whose consent is required under
Section 7 of the Act.
Very truly yours,
FLIPPIN, DENSMORE, MORSE, RUTHERFORD
& JESSEE, a Professional Corporation
Exhibit 5.2
FLIPPIN, DENSMORE, MORSE, RUTHERFORD & JESSEE
300 First Campbell Square
Roanoke, Virginia 24011
----
TEL: (540) 510-3000
FAX: (540) 510-3050
May 14, 1998
MainStreet Capital Trust I
MainStreet BankGroup Incorporated
200 E. Church Street
Martinsville, Virginia 24112-5409
Ladies and Gentlemen:
We have acted as special counsel to MainStreet BankGroup Incorporated,
a Virginia corporation and bank holding company (the "Corporation"), and
MainStreet Capital Trust I, a business trust formed under the Business Trust Act
of the State of Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C.
Sections 3801 et. seq.) (the "Trust"), in connection with the preparation of the
Registration Statement on Form S-4 (as amended, the "Registration Statement"),
an amendment to which is to be filed by the Corporation and the Trust with the
Securities and Exchange Commission (the "Commission") on the date hereof. The
Registration Statement relates to the registration under the Securities Act of
1933, as amended (the "Act"), of $50,000,000 aggregate liquidation amount of
9.875% Series B Capital Securities (the "Capital Securities") in connection with
a proposed exchange offer (the "Exchange Offer").
The Capital Securities are to be issued pursuant to the Amended and
Restated Declaration of Trust of the Trust, dated as of March 10, 1997 (the
"Declaration"), among the administrative trustees named therein, The Bank of New
York, as property trustee (the "Property Trustee"), The Bank of New York
(Delaware), as Delaware trustee, and the Corporation, as sponsor.
This opinion is being furnished in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Act.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the Registration
Statement; (ii) an executed copy of the Registration Rights Agreement, dated as
of November 19, 1997 (the "Registration Rights Agreement"), among the
Corporation, the Trust, and Sandler O'Neill & Partners, L.P; (iii) the form of
the Capital Securities and a specimen certificate thereof; (iv) the Certificate
of Trust of the Trust filed with the Secretary of State of the State of Delaware
on November 12, 1997; and (v) the Declaration. We have also examined originals
or copies, certified or otherwise identified to our satisfaction, of such other
documents, certificates and records as we have deemed necessary or appropriate
as a basis for the opinions set forth herein.
<PAGE>
MainStreet Capital Trust I
MainStreet BankGroup Incorporated
May 14, 1998
Page 2
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination of documents executed by parties other than the Trust, we have
assumed that such parties had the power, corporate or other, to enter into and
perform all obligations thereunder and have also assumed the due authorization
by all requisite action, corporate or other, and execution and delivery by such
parties of such documents and the validity and binding effect thereof on such
parties. As to any facts material to the opinions expressed herein which we did
not independently establish or verify, we have relied upon oral or written
statements and representations of officers, trustees and other representatives
of the Corporation, the Trust and others.
We are providing this opinion with regard to the laws of the State of
Delaware, and we do not express any opinion as to the laws of any other
jurisdiction.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Capital Securities have been duly authorized for issuance by the
Trust, and when (i) the Registration Statement becomes effective and the
Declaration has been qualified under the Trust Indenture Act of 1939, as
amended, and (ii) the Capital Securities are duly executed, authenticated and
issued in accordance with the Declaration and delivered and issued in the
Exchange Offer as contemplated by the Registration Rights Agreement and the
Registration Statement, the Capital Securities will represent, subject to the
qualifications set forth in paragraph 2 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
2. The holders of the Capital Securities will be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware. We bring to your attention, however, that the holders of the
Capital Securities may be obligated, pursuant to the Declaration, to (i) provide
indemnity and/or security in connection with, and pay taxes or governmental
charges arising from, transfers of Capital Securities and the issuance of
replacement Capital Securities and (ii) provide security and indemnity in
connection with requests of or directions to the Property Trustee to exercise
its rights and powers under the Declaration.
We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement. We also consent to the reference to
our firm under the caption "Validity of New Securities" in the Registration
Statement. In giving this consent, we do not thereby admit that we are included
in the category of persons whose consent is required under Section 7 of the Act
or the rules and regulations of the Commission. This opinion is expressed as of
the date hereof, and we disclaim any undertaking to advise you of any subsequent
changes in the facts stated or assumed herein or of any subsequent changes in
applicable law.
Very truly yours,
FLIPPIN, DENSMORE, MORSE, RUTHERFORD
& JESSEE, a Professional Corporation
Exhibit 8
FLIPPIN, DENSMORE, MORSE, RUTHERFORD & JESSEE
300 First Campbell Square
Roanoke, Virginia 24011
----
TEL: (540) 510-3000
FAX: (540) 510-3050
May 14, 1998
Board of Directors
MainStreet BankGroup Incorporated
P. O. Box 4831
Martinsville, Virginia 24115-4831
Gentlemen:
As special federal income tax counsel to MainStreet Capital Trust I
(the "Issuer") and MainStreet BankGroup Incorporated in connection with the
exchange offer by the Issuer of $50,000,000 of its 8.90% Series B Capital
Securities pursuant to the prospectus (the "Prospectus") contained in the
Registration Statement for the Exchange Offer, and assuming full compliance with
the terms of the Trust Agreement, the Indenture, the other operative documents
described in the Offering Memorandum dated November 14, 1997 for the purpose of
issuing the Old Capital Securities and the operative documents described in the
Prospectus, we hereby confirm to you our opinion as set forth under the heading
"Certain Federal Income Tax Consequences" in the Prospectus, subject to the
limitations set forth therein. Capitalized terms used in this letter, but not
defined herein, shall have the meanings given thereto in the Prospectus.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to us under the heading "Certain
Federal Income Tax Consequences" in the Prospectus.
Very truly yours,
FLIPPIN, DENSMORE, MORSE,
RUTHERFORD & JESSEE,
A PROFESSIONAL CORPORATION
Ratios of Earnings to Fixed Charges (Excluding Interest on Deposits)
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------------------------------
1997 1996 1995 1994 1993
------------ ------------ ------------ ----------- -----------
<S> <C>
Earnings:
Net Income $17,257 $16,653 $14,130 $ 7,032 $ 9,662
Income Tax Expense 8,152 7,685 5,934 1,157 3,167
------------ ------------ ------------ ----------- -----------
Pretax Earnings $25,409 $24,338 $20,064 $ 8,189 $12,829
============ ============ ============ =========== ===========
Fixed Charges:
Interest on Borrowed Funds $20,909 $ 9,556 $ 3,915 $ 1,355 $ 1,358
Amortization of Debt - - - - 16
------------ ------------ ------------ ----------- -----------
Total Fixed Charges $20,909 $ 9,556 $ 3,931 $ 1,376 $ 1,379
============ ============ ============ =========== ===========
Earnings for Ratio Calculations $46,318 $33,894 $23,995 $ 9,565 $14,208
============ ============ ============ =========== ===========
Ratio of Earnings to Fixed
Charges (Interest on
Deposits Included) 2.22x 3.55x 6.10x 6.95x 10.30x
============ ============ ============ ============ =============
</TABLE>
Restated Ratios of Earnings to Fixed Charges (Including Interest on Deposits)
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------------------------------
1997 1996 1995 1994 1993
------------ ------------ ------------ ----------- -----------
<S> <C>
Earnings:
Net Income $17,257 $16,653 $14,130 $ 7,032 $ 9,662
Income Tax Expense 8,152 7,685 5,934 1,157 3,167
------------ ------------ ------------ ----------- -----------
Pretax Earnings $25,409 $24,338 $20,064 $ 8,189 $12,829
============ ============ ============ =========== ===========
Fixed Charges:
Interest on Borrowed Funds $20,909 $ 9,556 $ 3,915 $ 1,355 $ 1,358
Interest on Deposits 37,870 35,219 34,489 28,955 28,479
Amortization of Debt - - 16 21 21
------------ ------------ ------------ ----------- -----------
Total Fixed Charges $58,779 $44,775 $38,420 $30,331 $29,858
============ ============ ============ =========== ===========
Earnings for Ratio Calculations $26,994 $19,945 $86,804 $72,613 $61,744
============ ============ ============ =========== ===========
Ratio of Earnings to Fixed
Charges (Interest on
Deposits Included) 1.43x 1.54x 1.52x 1.27x 1.43x
============ ============ ============ ============ =============
</TABLE>
Restated Ratios of Earnings to Fixed Charges (Excluding Interest on Deposits)
<TABLE>
<CAPTION>
Three Months
Ended March 31, Years Ended December 31,
------------------------- --------------------------------------
1998 1997 1997 1996 1995
------------ ------------ ------------ ----------- -----------
<S> <C>
Earnings:
Net Income $ 4,898 $ 4,284 $17,098 $17,397 $14,834
Income Tax Expense 2,294 1,971 8,152 8,054 6,297
------------ ------------ ------------ ----------- -----------
Pretax Earnings $ 7,192 $ 6,255 $ 25,250 $25,451 $21,131
============ ============ ============ =========== ===========
Fixed Charges:
Interest on Borrowed Funds $ 9,189 $ 4,100 $21,119 $ 9,767 $ 4,111
Amortization of Debt - - - 16
------------ ------------ ------------ ----------- -----------
Total Fixed Charges $ 9,189 $ 4,100 $21,119 $ 9,767 $ 4,127
============ ============ ============ =========== ===========
Earnings for Ratio Calculations $16,381 $10,355 $46,369 $35,218 $25,258
============ ============ ============ =========== ===========
Ratio of Earnings to Fixed
Charges (Interest on
Deposits Included) 1.78x 2.53x 2.20x 3.61x 6.12x
============ ============ ============ =========== ===========
</TABLE>
Restated Ratios of Earnings to Fixed Charges (Including Interest on Deposits)
<TABLE>
<CAPTION>
Three Months
Ended March 31, Years Ended December 31,
------------------------- --------------------------------------
1998 1997 1997 1996 1995
------------ ------------ ------------ ----------- -----------
<S> <C>
Earnings:
Net Income $ 4,898 $ 4,284 $17,098 $17,397 $14,834
Income Tax Expense 2,294 1,971 8,152 8,054 6,297
------------ ------------ ------------ ----------- -----------
Pretax Earnings $ 7,192 $ 6,255 $25,250 $25,451 $21,131
============ ============ ============ =========== ===========
Fixed Charges:
Interest on Borrowed Funds $ 9,189 $ 4,100 $21,119 $ 9,767 $ 4,111
Interest on Deposits 10,613 9,590 40,435 37,395 36,486
Amortization of Debt - - - - 16
------------ ------------ ------------ ----------- -----------
Total Fixed Charges $19,802 $13,690 $61,554 $47,162 $40,613
============ ============ ============ =========== ===========
Earnings for Ratio Calculations $26,994 $19,945 $86,804 $72,613 $61,744
============ ============ ============ =========== ===========
Ratio of Earnings to Fixed
Charges (Interest on
Deposits Included) 1.36x 1.46x 1.41x 1.54x 1.52x
============ ============ ============ ============ =============
</TABLE>
EXHIBIT 23.1
(CONSENT OF COOPERS & LYBRAND L.L.P.)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration
statement of MainStreet BankGroup Incorporated on Form S-4 of our report dated
January 16, 1998, on our audits of the consolidated financial statements of
MainStreet BankGroup Incorporated as of December 31, 1997 and 1996, and for each
of the three years in the period ended December 31, 1997, which report is
included in the Annual Report on Form 10-K. We also consent to the reference to
our firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
Greensboro, North Carolina
May 14, 1998
EXHIBIT 24.1
(Power of Attorney of Certain Officers and Directors of the Corporation)
Power of Attorney
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned officer and/or
director of MainStreet BankGroup Incorporated, a Virginia corporation (the
"Corporation"), does hereby constitute and appoint Michael R. Brenan, James E.
Adams and Rebecca J. Jenkins, and each of them (with full power to each of them
to act alone), his true and lawful Attorneys in Fact and Agents for him and on
his behalf and in his name, place and stead in any and all capacities and
particularly as an officer and/or director of the Corporation to sign, execute
and affix his seal thereto and file any documents, including any and all
amendments, relating to the registration with the Securities and Exchange
Commission of any applicable form under the Securities Act of 1933, as they deem
appropriate, of the 8.90% Capital Securities (the "Capital Securities") of
MainStreet Capital Trust I (the "Trust", a business trust formed under the laws
of the state of Delaware), the 8.90% Junior Subordinated Deferrable Interest
Debentures (the "Debentures") due December 1, 2027, and the Corporation's
guarantee of the Capital Securities (the "Capital Securities Guarantee") and all
other instruments, securities, documents and agreements related to the Capital
Securities, the Debentures, the Capital Securities Guarantee, and the
relationships between the Trust, the Corporation and the Initial Purchaser, and
all such instruments, securities, documents and agreements related to the
exchange or substitution of such instruments, securities, documents and
agreements and make changes to any of the documents referred to above and
generally to do all such things in their behalf in their capacities as officers
and directors to enable the Corporation to comply with the provisions of the
Securities Act of 1933 and all requirements of the Securities and Exchange
Commission.
WITNESS the signatures and seals of the undersigned this 18th day of
February, 1998.
/s/ James E. Adams
(SEAL)
James E. Adams
/s/ W. Christopher Beeler, Jr.
(SEAL)
W. Christopher Beeler, Jr.
/s/ Thomas B. Bishop
(SEAL)
Thomas B. Bishop
/s/ Michael R. Brenan
(SEAL)
Michael R. Brenan
/s/ William L. Cooper, III
(SEAL)
William L. Cooper, III
/s/ Billy P. Craft
(SEAL)
Billy P. Craft
/s/ Phillip W. Dean
(SEAL)
Phillip W. Dean
/s/ I. Patricia Henry
(SEAL)
I. Patricia Henry
/s/ Larry E. Hutchens
(SEAL)
Larry E. Hutchens
/s/ George J. Kostel
(SEAL)
George J. Kostel
/s/ Dr. William O. McCabe, Jr.
(SEAL)
Dr. William O. McCabe, Jr.
/s/ Albert L. Prillaman
(SEAL)
Albert L. Prillaman
/s/ Alfred J. T. Byrne
(SEAL)
Alfred J. T. Byrne
Virginia
State )
) to-wit:
Martinsville )
City )
I, Gayle F. Gilley, a Notary Public in and for the City of Martinsville, in
the State of Virginia, do hereby certify that James E. Adams, W. Christopher
Beeler, Jr., Thomas B. Bishop, Michael R. Brenan, William L. Cooper, III, Billy
P. Craft, Phillip W. Dean, I. Patricia Henry, Larry E. Hutchens, George J.
Kostel, Dr. William O. McCabe, Jr., Albert L. Prillaman and Alfred J. T. Byrne
whose names are signed to the foregoing writing bearing date the 18th day of
February, 1998, this day personally appeared before me and acknowledge the same
in my City/County and State aforesaid.
GIVEN under my hand and seal this 18th day of February, 1998.
/s/ Gayle F. Gilley
Notary Public
My Commission Expires:
12-31-2000
EXHIBIT 24.2
(Power of Attorney of New Director of the Corporation)
Power of Attorney
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned director of
MainStreet BankGroup Incorporated, a Virginia corporation (the "Corporation"),
does hereby constitute and appoint Michael R. Brenan, James E. Adams and Rebecca
J. Jenkins, and each of them (with full power to each of them to act alone), his
true and lawful Attorneys in Fact and Agents for him and on his behalf and in
his name, place and stead in any and all capacities and particularly as an
officer and/or director of the Corporation to sign, execute and affix his seal
thereto and file any documents, including any and all amendments, relating to
the registration with the Securities and Exchange Commission of any applicable
form under the Securities Act of 1933, as they deem appropriate, of the 8.90%
Capital Securities (the "Capital Securities") of MainStreet Capital Trust I (the
"Trust", a business trust formed under the laws of the state of Delaware), the
8.90% Junior Subordinated Deferrable Interest Debentures (the "Debentures") due
December 1, 2027, and the Corporation's guarantee of the Capital Securities (the
"Capital Securities Guarantee") and all other instruments, securities, documents
and agreements related to the Capital Securities, the Debentures, the Capital
Securities Guarantee, and the relationships between the Trust, the Corporation
and the Initial Purchaser, and all such instruments, securities, documents and
agreements related to the exchange or substitution of such instruments,
securities, documents and agreements and make changes to any of the documents
referred to above and generally to do all such things in their behalf in their
capacities as officers and directors to enable the Corporation to comply with
the provisions of the Securities Act of 1933 and all requirements of the
Securities and Exchange Commission.
Page 1 of 2
WITNESS the signature and seal of the undersigned this 12th day of May,
1998.
/s/ C. Leland Bassett (SEAL)
C. Leland Bassett
Witnessed on the date hereof by:
/s/ J. A. Truelove
Signature
J. A. Truelove
Name
Company Director
Occupation
Managing Director
Title
Pear Tree Farm
Watson Lane
Wingerworth
Chesterfield
S426QK Derbyshire
England
Address
Page 2 of 2
EXHIBIT 25.1
(Form T-1 Statement of Eligibility of
The Bank of New York to act as trustee under the Indenture)
THIS CONFORMING PAPER FORMAT DOCUMENT IS
BEING SUBMITTED PURSUANT TO RULE 901(d) OF REGULATION S-T
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
MAINSTREET BANKGROUP INCORPORATED
(Exact name of obligor as specified in its charter)
Virginia 54-1046817
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
P.O. Box 4831
Martinsville, Virginia 24115-4831
(Address of principal executive offices) (Zip code)
----------------------
Series B Junior Subordinated Deferrable
Interest Debentures
(Title of the indenture securities)
===============================================================================
<PAGE>
1. General information. Furnish the following information as to the
Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
</TABLE>
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission,
are incorporated herein by reference as an exhibit hereto, pursuant to
Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17
C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
-2-
<PAGE>
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED
PURSUANT TO RULE 901(d) OF REGULATION S-T
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 12th day of May, 1998.
THE BANK OF NEW YORK
By: /s/WALTER N. GITLIN
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
<PAGE>
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a
a member of the Federal Reserve System, at the close of business December 31,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ................. $ 5,742,986
Interest-bearing balances .......... 1,342,769
Securities:
Held-to-maturity securities ........ 1,099,736
Available-for-sale securities ...... 3,882,686
Federal funds sold and Securities pur-
chased under agreements to resell..... 2,568,530
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................35,019,608
LESS: Allowance for loan and
lease losses ..............627,350
LESS: Allocated transfer risk
reserve..........................0
Loans and leases, net of unearned
income, allowance, and reserve 34,392,258
Assets held in trading accounts ...... 2,521,451
Premises and fixed assets (including
capitalized leases) ................ 659,209
Other real estate owned .............. 11,992
Investments in unconsolidated
subsidiaries and associated
companies .......................... 226,263
Customers' liability to this bank on
acceptances outstanding ............ 1,187,449
Intangible assets .................... 781,684
Other assets ......................... 1,736,574
-----------
Total assets ......................... $56,153,587
===========
LIABILITIES
Deposits:
In domestic offices ................ $27,031,362
Noninterest-bearing ......11,899,507
Interest-bearing .........15,131,855
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 13,794,449
Noninterest-bearing .........590,999
Interest-bearing .........13,203,450
Federal funds purchased and Securities
sold under agreements to repurchase. 2,338,881
Demand notes issued to the U.S.
Treasury ........................... 173,851
Trading liabilities .................. 1,695,216
Other borrowed money:
With remaining maturity of one year
or less .......................... 1,905,330
With remaining maturity of more than
one year through three years...... 0
With remaining maturity of more than
three years ...................... 25,664
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,195,923
Subordinated notes and debentures .... 1,012,940
Other liabilities .................... 2,018,960
-----------
Total liabilities .................... 51,192,576
-----------
EQUITY CAPITAL
Common stock ......................... 1,135,284
Surplus .............................. 731,319
Undivided profits and capital
reserves ........................... 3,093,726
Net unrealized holding gains
(losses) on available-for-sale
securities ......................... 36,866
Cumulative foreign currency transla-
tion adjustments ................... ( 36,184)
------------
Total equity capital ................. 4,961,011
------------
Total liabilities and equity
capital ............................ $56,153,587
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
-
Thomas A. Renyi |
Alan R. Griffith | Directors
J. Carter Bacot |
-
EXHIBIT 25.2
(Form T-1 Statement of Eligibility of
The Bank of New York to act as trustee under
the Declaration of Trust of MainStreet Capital Trust I)
CONFORMED COPY
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
MAINSTREET CAPITAL TRUST I
(Exact name of obligor as specified in its charter)
Delaware Applied For
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
P.O. Box 4831
Martinsville, Virginia 24115-4831
(Address of principal executive offices) (Zip code)
----------------------
Series B Capital Securities
(Title of the indenture securities)
===============================================================================
<PAGE>
1. General information. Furnish the following information as to the
Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
<S> <C>
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
</TABLE>
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission,
are incorporated herein by reference as an exhibit hereto, pursuant to
Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17
C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
-2-
<PAGE>
CONFORMED COPY
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 12th day of May, 1998.
THE BANK OF NEW YORK
By: /s/WALTER N. GITLIN
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
<PAGE>
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a
a member of the Federal Reserve System, at the close of business December 31,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ................. $ 5,742,986
Interest-bearing balances .......... 1,342,769
Securities:
Held-to-maturity securities ........ 1,099,736
Available-for-sale securities ...... 3,882,686
Federal funds sold and Securities pur-
chased under agreements to resell..... 2,568,530
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................35,019,608
LESS: Allowance for loan and
lease losses ..............627,350
LESS: Allocated transfer risk
reserve..........................0
Loans and leases, net of unearned
income, allowance, and reserve 34,392,258
Assets held in trading accounts ...... 2,521,451
Premises and fixed assets (including
capitalized leases) ................ 659,209
Other real estate owned .............. 11,992
Investments in unconsolidated
subsidiaries and associated
companies .......................... 226,263
Customers' liability to this bank on
acceptances outstanding ............ 1,187,449
Intangible assets .................... 781,684
Other assets ......................... 1,736,574
-----------
Total assets ......................... $56,153,587
===========
LIABILITIES
Deposits:
In domestic offices ................ $27,031,362
Noninterest-bearing ......11,899,507
Interest-bearing .........15,131,855
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 13,794,449
Noninterest-bearing .........590,999
Interest-bearing .........13,203,450
Federal funds purchased and Securities
sold under agreements to repurchase. 2,338,881
Demand notes issued to the U.S.
Treasury ........................... 173,851
Trading liabilities .................. 1,695,216
Other borrowed money:
With remaining maturity of one year
or less .......................... 1,905,330
With remaining maturity of more than
one year through three years...... 0
With remaining maturity of more than
three years ...................... 25,664
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,195,923
Subordinated notes and debentures .... 1,012,940
Other liabilities .................... 2,018,960
-----------
Total liabilities .................... 51,192,576
-----------
EQUITY CAPITAL
Common stock ......................... 1,135,284
Surplus .............................. 731,319
Undivided profits and capital
reserves ........................... 3,093,726
Net unrealized holding gains
(losses) on available-for-sale
securities ......................... 36,866
Cumulative foreign currency transla-
tion adjustments ................... ( 36,184)
------------
Total equity capital ................. 4,961,011
------------
Total liabilities and equity
capital ............................ $56,153,587
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
-
Thomas A. Renyi |
Alan R. Griffith | Directors
J. Carter Bacot |
-
EXHIBIT 25.3
(Form T-1 Statement of Eligibility of
The Bank of New York to act as trustee under
the New Guarantee for the benefit of the holders of
New Capital Securities of MainStreet Capital Trust I)
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING
SUBMITTED PURSUANT TO RULE 901(d) OF REGULATION S-T
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
MAINSTREET BANKGROUP INCORPORATED
(Exact name of obligor as specified in its charter)
Virginia 54-1046817
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
P.O. Box 4831
Martinsville, Virginia 24115-4831
(Address of principal executive offices) (Zip code)
----------------------
Guarantee with respect to Series B
Capital Securites of MainStreet Capital Trust I
(Title of the indenture securities)
===============================================================================
<PAGE>
1. General information. Furnish the following information as to the
Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
</TABLE>
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission,
are incorporated herein by reference as an exhibit hereto, pursuant to
Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17
C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
-2-
<PAGE>
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED
PURSUANT TO RULE 901(d) OF REGULATION S-T
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 12th day of May, 1998.
THE BANK OF NEW YORK
By: /s/WALTER N. GITLIN
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
<PAGE>
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a
a member of the Federal Reserve System, at the close of business December 31,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ................. $ 5,742,986
Interest-bearing balances .......... 1,342,769
Securities:
Held-to-maturity securities ........ 1,099,736
Available-for-sale securities ...... 3,882,686
Federal funds sold and Securities pur-
chased under agreements to resell..... 2,568,530
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................35,019,608
LESS: Allowance for loan and
lease losses ..............627,350
LESS: Allocated transfer risk
reserve..........................0
Loans and leases, net of unearned
income, allowance, and reserve 34,392,258
Assets held in trading accounts ...... 2,521,451
Premises and fixed assets (including
capitalized leases) ................ 659,209
Other real estate owned .............. 11,992
Investments in unconsolidated
subsidiaries and associated
companies .......................... 226,263
Customers' liability to this bank on
acceptances outstanding ............ 1,187,449
Intangible assets .................... 781,684
Other assets ......................... 1,736,574
-----------
Total assets ......................... $56,153,587
===========
LIABILITIES
Deposits:
In domestic offices ................ $27,031,362
Noninterest-bearing ......11,899,507
Interest-bearing .........15,131,855
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 13,794,449
Noninterest-bearing .........590,999
Interest-bearing .........13,203,450
Federal funds purchased and Securities
sold under agreements to repurchase. 2,338,881
Demand notes issued to the U.S.
Treasury ........................... 173,851
Trading liabilities .................. 1,695,216
Other borrowed money:
With remaining maturity of one year
or less .......................... 1,905,330
With remaining maturity of more than
one year through three years...... 0
With remaining maturity of more than
three years ...................... 25,664
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,195,923
Subordinated notes and debentures .... 1,012,940
Other liabilities .................... 2,018,960
-----------
Total liabilities .................... 51,192,576
-----------
EQUITY CAPITAL
Common stock ......................... 1,135,284
Surplus .............................. 731,319
Undivided profits and capital
reserves ........................... 3,093,726
Net unrealized holding gains
(losses) on available-for-sale
securities ......................... 36,866
Cumulative foreign currency transla-
tion adjustments ................... ( 36,184)
------------
Total equity capital ................. 4,961,011
------------
Total liabilities and equity
capital ............................ $56,153,587
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
-
Thomas A. Renyi |
Alan R. Griffith | Directors
J. Carter Bacot |
-
EXHIBIT 99.1
(Form of Letter of Transmittal)
LETTER OF TRANSMITTAL
MAINSTREET CAPITAL TRUST I
Offer to Exchange its
Series B 8.90% Capital Securities
(Liquidation Amount $1,000 per Capital Security) which
have been registered under the Securities Act of 1933
for any and all of its outstanding
Series A 8.90% Capital Securities
(Liquidation Amount $1,000 per Capital Security)
Pursuant to the Prospectus
dated May 15, 1998
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON JUNE 15, 1998, UNLESS THE OFFER IS EXTENDED.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
THE BANK OF NEW YORK
<TABLE>
<CAPTION>
By Registered or Certified Mail: By Hand or Overnight
Delivery:
<S> <C>
The Bank of New York The Bank of New York
101 Barclay Street, 7E 101 Barclay Street, 7E
New York, New York 10286 Ground Level
Attn: Reorganization Area 7E New York, New York 10286
Teresa Gass Attn: Reorganization Area 7E
Teresa Gass
</TABLE>
Confirm by Telephone or for Information call:
(212) 815-5942
Facsimile Transmissions:
(ELIGIBLE INSTITUTIONS ONLY)
(212) 815-5942
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A
NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
Capitalized terms used but not defined herein shall have the same
meaning given them in the Prospectus (as defined below).
This Letter of Transmittal is to be completed by holders of Old Capital
Securities (as defined below) either if (i) Old Capital Securities are to be
forwarded herewith or (ii) tenders of Old Capital Securities are to be made by
book-entry transfer to an account maintained by The Bank of New York (the
"Exchange Agent") at The Depository Trust Company ("DTC") pursuant to the
procedures set forth in "The Exchange Offer--Procedures for Tendering Old
Capital Securities" in the Prospectus.
Holders of Old Capital Securities whose certificates (the
"Certificates") for such Old Capital Securities are not immediately available or
who cannot deliver their Certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date (as defined in the Prospectus)
or who cannot complete the procedures for book-entry transfer on or prior to the
Expiration Date, must tender their Old Capital Securities according to the
guaranteed delivery procedures set forth in "The Exchange Offer--Procedures for
Tendering Old Capital Securities" in the Prospectus.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE
EXCHANGE AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
<PAGE>
ALL TENDERING HOLDERS COMPLETE THIS BOX:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD CAPITAL SECURITIES TENDERED
(See Instruction 4)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
If blank, please print name and address of Old Capital Securities tendered:
registered holder: (Attach additional list if necessary)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Liquidation Amount of
Aggregate Old Capital Securities
Liquidation Amount Tendered
Certificate of Old Capital (if less than all are
Number(s)* Securities tendered)**
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
TOTAL
AMOUNT
TENDERED: ------------------------------------------------------
* Need not be completed by book-entry holders.
** Old Capital Securities may be tendered in whole or in part in denominations
of $100,000 and integral multiples of $1,000 in excess thereof, provided that if
any Old Capital Securities are tendered for exchange in part, the untendered
principal amount thereof must be $100,000 or any integral multiple of $1,000 in
excess thereof. All Old Capital Securities held shall be deemed tendered unless
a lesser number is specified in this column.
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
[ ] CHECK HERE IF TENDERED OLD CAPITAL SECURITIES ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH
DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: ________________________________________________
DTC Account Number: ___________________________________________________
Transaction Code Number: ______________________________________________
[ ] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OLD CAPITAL SECURITIES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name of Registered Holder(s):
- ------------------------------------------------------------------------
Window Ticket Number (if any):
--------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
---------------
Name of Institution which Guaranteed Delivery:
- ----------------------------------------------------------
If Guaranteed Delivered is to be made By Book-Entry Transfer:
Name of Tendering Institution:
- ------------------------------------------------------------------------------
DTC Account Number:
-----------------------------------------
Transaction Code Number:
-------------------------------------
[ ] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NONEXCHANGED OR
NONTENDERED OLD CAPITAL SECURITIES ARE TO BE RETURNED BY CREDITING THE DTC
ACCOUNT NUMBER SET FORTH ABOVE.
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD CAPITAL
SECURITIES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING
ACTIVITIES (A "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
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Address:
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Area Code and Telephone Number:
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Contact Person:
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Ladies and Gentlemen:
The undersigned hereby tenders to MainStreet Capital Trust I, a trust
created under the laws of Delaware (the "Trust") and MainStreet BankGroup
Incorporated., a Virginia corporation (the "Corporation"), the above-described
aggregate Liquidation Amount of the Trust's Series A 8.90% Capital Securities
(the "Old Capital Securities") in exchange for a like aggregate Liquidation
Amount of the Trust's Series B 8.90% Capital Securities (the "New Capital
Securities") which have been registered under the Securities Act of 1933 (the
"Securities Act"), upon the terms and subject to the conditions set forth in the
Prospectus, dated May 15, 1998 (as the same may be amended or supplemented from
time to time, the "Prospectus"), receipt of which is acknowledged, and in this
Letter of Transmittal (which, together with the Prospectus, constitute the
"Exchange Offer").
Subject to and effective upon the acceptance for exchange of all or any
portion of the Old Capital Securities tendered herewith in accordance with the
terms and conditions of the Exchange Offer (including, if the Exchange Offer is
extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Trust all right, title and interest in and to such Old Capital
Securities as are being tendered herewith. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent as its agent and attorney-in-fact
(with full knowledge that the Exchange Agent also is acting as agent of the
Corporation and the Trust in connection with the Exchange Offer) with respect to
the tendered Old Capital Securities, with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
subject only to the right of withdrawal described in the Prospectus, to (i)
deliver Certificates for Old Capital Securities to the Corporation or the Trust
together with all accompanying evidences of transfer and authenticity to, or
upon the order of, the Trust, upon receipt by the Exchange Agent, as the
undersigned's agent, of the New Capital Securities to be issued in exchange for
such Old Capital Securities, (ii) present Certificates for such Old Capital
Securities for transfer, and to transfer the Old Capital Securities on the books
of the Trust, and (iii) receive for the account of the Trust all benefits and
otherwise exercise all rights of beneficial ownership of such Old Capital
Securities, all in accordance with the terms and conditions of the Exchange
Offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS
FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE OLD
CAPITAL SECURITIES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR
EXCHANGE, THE TRUST WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE
THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES,
AND THAT THE OLD CAPITAL SECURITIES TENDERED HEREBY ARE NOT SUBJECT TO ANY
ADVERSE CLAIMS OR PROXIES. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND
DELIVER ANY ADDITIONAL DOCUMENTS DEEMED BY THE CORPORATION, THE TRUST OR THE
EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO COMPLETE THE EXCHANGE, ASSIGNMENT
AND TRANSFER OF THE OLD CAPITAL SECURITIES TENDERED HEREBY, AND THE UNDERSIGNED
WILL COMPLY WITH ITS OBLIGATIONS UNDER THE REGISTRATION RIGHTS AGREEMENT. THE
UNDERSIGNED HAS READ AND AGREES TO ALL OF THE TERMS OF THE EXCHANGE OFFER.
The name(s) and address(es) of the registered holder(s) of the Old
Capital Securities tendered hereby should be printed above, if they are not
already set forth above, as they appear on the Certificates representing such
Old Capital Securities. The Certificate number(s) of the Old Capital Securities
that the undersigned wishes to tender should be indicated in the appropriate
boxes above.
If any tendered Old Capital Securities are not exchanged pursuant to
the Exchange Offer for any reason, or if Certificates are submitted for more Old
Capital Securities than are tendered or accepted for exchange, Certificates for
such nonexchanged or nontendered Old Capital Securities will be returned (or, in
the case of Old Capital Securities tendered by book-entry transfer, such Old
Capital Securities will be credited to an account maintained at DTC), without
expense to the tendering holder, promptly following the expiration or
termination of the Exchange Offer.
The undersigned understands that tenders of Old Capital Securities
pursuant to any one of the procedures described in "The Exchange
Offer--Procedures for Tendering Old Capital Securities" in the Prospectus and in
the Instructions herein will, upon the Corporation's and the Trust's acceptance
for exchange of such tendered Old Capital Securities, constitute a binding
agreement between the undersigned, the Corporation and the Trust upon the terms
and subject to the conditions of the Exchange Offer. The undersigned recognizes
that, under certain circumstances set forth in the Prospectus, the Corporation
and the Trust may not be required to accept for exchange any of the Old Capital
Securities tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the New Capital
Securities be issued in the name(s) of the undersigned or, in the case of a
book-entry transfer of Old Capital Securities, that such New Capital Securities
be credited to the account indicated above maintained at DTC. If applicable,
substitute Certificates representing Old Capital Securities not exchanged or not
accepted for exchange will be issued to the undersigned or, in the case of a
book-entry transfer of Old Capital Securities, will be credited to the account
indicated above maintained at DTC. Similarly, unless otherwise indicated under
"Special Delivery Instructions," please deliver New Capital Securities to the
undersigned at the address shown below the undersigned's signature.
BY TENDERING OLD CAPITAL SECURITIES AND EXECUTING THIS LETTER OF
TRANSMITTAL, THE UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT (i) THE
UNDERSIGNED IS NOT AN "AFFILIATE" OF THE CORPORATION OR THE TRUST WITHIN THE
MEANING OF RULE 405 UNDER THE SECURITIES ACT, (ii) ANY NEW CAPITAL SECURITIES TO
BE RECEIVED BY THE UNDERSIGNED ARE BEING ACQUIRED IN THE ORDINARY COURSE OF ITS
BUSINESS, (iii) THE UNDERSIGNED HAS NO ARRANGEMENT OR UNDERSTANDING WITH ANY
PERSON TO PARTICIPATE IN THE DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES
ACT) OF NEW CAPITAL SECURITIES TO BE RECEIVED IN THE EXCHANGE OFFER AND (iv) IF
THE UNDERSIGNED IS NOT A BROKER-DEALER, THE UNDERSIGNED IS NOT ENGAGED IN, AND
DOES NOT INTEND TO ENGAGE IN, A DISTRIBUTION (WITHIN THE MEANING OF THE
SECURITIES ACT) OF SUCH NEW CAPITAL SECURITIES. BY TENDERING OLD CAPITAL
SECURITIES PURSUANT TO THE EXCHANGE OFFER AND EXECUTING THIS LETTER OF
TRANSMITTAL, A HOLDER OF OLD CAPITAL SECURITIES WHICH IS A BROKER-DEALER
REPRESENTS AND AGREES, CONSISTENT WITH CERTAIN INTERPRETIVE LETTERS ISSUED BY
THE STAFF OF THE DIVISION OF CORPORATION FINANCE OF THE SECURITIES AND EXCHANGE
COMMISSION TO THIRD PARTIES, THAT (a) SUCH OLD CAPITAL SECURITIES HELD BY THE
BROKER-DEALER ARE HELD ONLY AS A NOMINEE OR (b) SUCH OLD CAPITAL SECURITIES WERE
ACQUIRED BY SUCH BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING
ACTIVITIES OR OTHER TRADING ACTIVITIES AND IT WILL DELIVER THE PROSPECTUS (AS
AMENDED OR SUPPLEMENTED FROM TIME TO TIME) MEETING THE REQUIREMENTS OF THE
SECURITIES ACT IN CONNECTION WITH ANY RESALE OF SUCH NEW CAPITAL SECURITIES
(PROVIDED THAT, BY SO ACKNOWLEDGING AND BY DELIVERING A PROSPECTUS, SUCH
BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT IT IS AN "UNDERWRITER" WITHIN THE
MEANING OF THE SECURITIES ACT).
THE CORPORATION AND THE TRUST HAVE AGREED THAT, SUBJECT TO THE
PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT, THE PROSPECTUS, AS IT MAY BE
AMENDED OR SUPPLEMENTED FROM TIME TO TIME, MAY BE USED BY A PARTICIPATING
BROKER-DEALER (AS DEFINED BELOW) IN CONNECTION WITH RESALES OF NEW CAPITAL
SECURITIES RECEIVED IN EXCHANGE FOR OLD CAPITAL SECURITIES, WHERE SUCH OLD
CAPITAL SECURITIES WERE ACQUIRED BY SUCH PARTICIPATING BROKER-DEALER FOR ITS OWN
ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES, FOR
A PERIOD ENDING 90 DAYS AFTER THE EXPIRATION DATE (SUBJECT TO EXTENSION UNDER
CERTAIN LIMITED CIRCUMSTANCES DESCRIBED IN THE PROSPECTUS) OR, IF EARLIER, WHEN
ALL SUCH NEW CAPITAL SECURITIES HAVE BEEN DISPOSED OF BY SUCH PARTICIPATING
BROKER-DEALER. IN THAT REGARD, EACH BROKER-DEALER WHO ACQUIRED OLD CAPITAL
SECURITIES FOR ITS OWN ACCOUNT AND AS A RESULT OF MARKET-MAKING OR OTHER TRADING
ACTIVITIES (A "PARTICIPATING BROKER-DEALER"), BY TENDERING SUCH OLD CAPITAL
SECURITIES AND EXECUTING THIS LETTER OF TRANSMITTAL, AGREES THAT, UPON RECEIPT
OF NOTICE FROM THE CORPORATION OR THE TRUST OF THE OCCURRENCE OF ANY EVENT OR
THE DISCOVERY OF ANY FACT WHICH MAKES ANY STATEMENT CONTAINED OR INCORPORATED BY
REFERENCE THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT
MISLEADING OR OF THE OCCURRENCE OF CERTAIN OTHER EVENTS SPECIFIED IN THE
REGISTRATION RIGHTS AGREEMENT, SUCH PARTICIPATING BROKER-DEALER WILL SUSPEND THE
SALE OF NEW CAPITAL SECURITIES PURSUANT TO THE PROSPECTUS UNTIL THE CORPORATION
AND THE TRUST HAVE AMENDED OR SUPPLEMENTED THE PROSPECTUS TO CORRECT SUCH
MISSTATEMENT OR OMISSION AND HAS FURNISHED COPIES OF THE AMENDED OR SUPPLEMENTED
PROSPECTUS TO THE PARTICIPATING BROKER-DEALER OR THE CORPORATION OR THE TRUST
HAS GIVEN NOTICE THAT THE SALE OF THE NEW CAPITAL SECURITIES MAY BE RESUMED, AS
THE CASE MAY BE. IF THE CORPORATION OR THE TRUST GIVES SUCH NOTICE TO SUSPEND
THE SALE OF THE NEW CAPITAL SECURITIES, IT SHALL EXTEND THE 90-DAY PERIOD
REFERRED TO ABOVE DURING WHICH PARTICIPATING BROKER-DEALERS ARE ENTITLED TO USE
THE PROSPECTUS IN CONNECTION WITH THE RESALE OF NEW CAPITAL SECURITIES BY THE
NUMBER OF DAYS DURING THE PERIOD FROM AND INCLUDING THE DATE OF THE GIVING OF
SUCH NOTICE TO AND INCLUDING THE DATE WHEN PARTICIPATING BROKER-DEALERS SHALL
HAVE RECEIVED COPIES OF THE SUPPLEMENTED OR AMENDED PROSPECTUS NECESSARY TO
PERMIT RESALES OF THE NEW CAPITAL SECURITIES OR TO AND INCLUDING THE DATE ON
WHICH THE CORPORATION OR THE TRUST HAS GIVEN NOTICE THAT THE SALE OF NEW CAPITAL
SECURITIES MAY BE RESUMED, AS THE CASE MAY BE.
As a result, a Participating Broker-Dealer who intends to use the
Prospectus in connection with resales of New Capital Securities received in
exchange for Old Capital Securities pursuant to the Exchange Offer must notify
the Corporation and the Trust, or cause the Corporation and the Trust to be
notified, on or prior to the Expiration Date, that it is a Participating
Broker-Dealer. Such notice may be given in the space provided above or may be
delivered to the Exchange Agent at the address set forth in the Prospectus under
"The Exchange Offer--Exchange Agent."
Holders of Old Capital Securities whose Old Capital Securities are
accepted for exchange will not receive Distributions on such Old Capital
Securities and the undersigned waives the right to receive any Distribution on
such Old Capital Securities accumulated from and after November 19, 1997.
Accordingly, holders of New Capital Securities as of the record date for the
payment of Distributions on June 1, 1998 will be entitled to Distributions
accumulated from and after November 19, 1997.
All authority herein conferred or agreed to be conferred in this Letter
of Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Except as
stated in the Prospectus, this tender is irrevocable.
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HOLDER(S) SIGN HERE (See Instructions 2, 5 and 6) (Please
Complete Substitute Form W-9 Below) (Note: Signature(s) must
be guaranteed if required by Instruction 2)
Must be signed by registered holder(s) exactly as name(s) appear(s) on
Certificates(s) for the Old Capital Securities hereby tendered or on a security
position listing, or by any person(s) authorized to become the registered
holder(s) by endorsements and documents transmitted herewith (including such
opinions of counsel, certificates and other information as may be required by
the Corporation, the Trust or the Exchange Agent to comply with the restrictions
on transfer applicable to the Old Capital Securities). If signature is by an
attorney-in-fact, executor, administrator, trustee, guardian, officer of a
corporation or another acting in a fiduciary capacity or representative
capacity, please set forth the signer's full title. See Instruction 5.
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(SIGNATURE(S) OF HOLDER(S))
Date: ___________________, 1998
Name(s):
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[PLEASE PRINT] (TAX ID OR SSN(S))
Area Code(s) and Telephone Number:
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GUARANTEE OF SIGNATURE(S) (See
Instructions 2 and 5)
Authorized Signature:
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Name
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(PLEASE PRINT)
Date: __________________, 1998
Capacity or Title:
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Name of Firm:
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Address:
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(INCLUDE ZIP CODE)
<TABLE>
<S> <C>
Area Code and Telephone Number:
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5 and 6) See Instructions 1, 5 and 6)
To be completed ONLY if New Capital To be completed ONLY if New Capital
Securities and/or any Old Capital Securities Securities and/or any Old Capital
Securities that are not tendered are to be issued in that are not tendered are to be sent to
the name of someone other than the registered someone other than the registered holder of
holder of the Old Capital Securities whose the Old Capital Securities whose name(s) name
appear(s) above, or to the registered appear(s) above.
holder(s) at an address other than that
shown above.
Issue: Mail:
[ ] New Capital Securities to: [ ] New Capital Securities to:
[ ] Old Capital Securities not tendered to: [ ] Old Capital Securities not
tendered to:
Name: Name:
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Address: Address:
===================================== ===================================
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[Include Zip Code] [Include Zip Code]
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[Taxpayer ID or Social Security Number] [Taxpayer ID or Social Security
Number]
</TABLE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be completed either if (a)
tenders are to be made pursuant to the procedures for tender by book-entry
transfer set forth under "The Exchange Offer--Procedures for Tendering Old
Capital Securities" in the Prospectus and an Agent's Message is not delivered or
(b) Certificates are to be forwarded herewith. Timely confirmation of a
book-entry transfer of such Old Capital Securities into the Exchange Agent's
account at DTC, or Certificates as well as this Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent at its addresses set forth
herein on or prior to the Expiration Date. Tenders by book-entry transfer also
may be made by delivering an Agent's Message in lieu of this Letter of
Transmittal. The term "book-entry confirmation" means a confirmation of
book-entry transfer of Old Capital Securities into the Exchange Agent's account
at DTC. The term "Agent's Message" means a message transmitted by DTC to and
received by the Exchange Agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the tendering
participant, which acknowledgment states that such participant has received and
agrees to be bound by the Letter of Transmittal (including the representations
contained herein) and that the Trust and the Corporation may enforce the Letter
of Transmittal against such participant. Old Capital Securities may be tendered
in whole or in part in the Liquidation Amount of $100,000 (100 Capital
Securities) and integral multiples of $1,000 in excess thereof, provided that,
if any Old Capital Securities are tended for exchange in part, the untendered
Liquidation Amount thereof must be $100,000 (100 Capital Securities) or any
integral multiple of $1,000 in excess thereof.
Holders who wish to tender their Old Capital Securities and (i) who
cannot complete the procedures for delivery by book-entry transfer on or prior
to the Expiration Date, (ii) who cannot deliver their Old Capital Securities,
this Letter of Transmittal and all other required documents to the Exchange
Agent on or prior to the Expiration Date or (iii) whose Old Capital Securities
are not immediately available, may tender their Old Capital Securities by
properly completing and duly executing a Notice of Guaranteed Delivery pursuant
to the guaranteed delivery procedures set forth under "The Exchange
Offer--Procedures for Tendering Old Capital Securities" in the Prospectus.
Pursuant to such procedures: (a) such tender must be made by or through an
Eligible Institution (as defined below); (b) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form made available
by the Corporation, must be received by the Exchange Agent on or prior to the
Expiration Date; and (c) the Certificates (or a book-entry confirmation (as
defined above and in the Prospectus)) representing all tendered Old Capital
Securities, in proper form for transfer, together with a Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, with any required
signature guarantees and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent within three New York Stock
Exchange, Inc. trading days after the date of execution of such Notice of
Guaranteed Delivery, all as provided in "The Exchange Offer--Procedures for
Tendering Old Capital Securities" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by facsimile or mail to the Exchange Agent, and must include a
guarantee by an Eligible Institution in the form set forth in such Notice. For
Old Capital Securities to be properly tendered pursuant to the guaranteed
delivery procedure, the Exchange Agent must receive a Notice of Guaranteed
Delivery on or prior to the Expiration Date. As used herein and in the
Prospectus, "Eligible Institution" means a firm or other entity identified in
Rule 17Ad-15 under the Exchange Act as "an eligible guarantor institution,"
including (as such terms are defined therein) (i) a bank; (ii) a broker, dealer,
municipal securities broker or dealer or government securities broker or dealer;
(iii) a credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings association that is a
participant in a Securities Transfer Association.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Neither the Corporation nor the Trust will accept any alternative,
conditional or contingent tenders. Each tendering holder, by execution of a
Letter of Transmittal (or facsimile thereof), waives any right to receive any
notice of the acceptance of such tender.
2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if:
(i) this Letter of Transmittal is signed by the registered holder
(which term, for purposes of this document, shall include any participant in DTC
whose name appears on a security position listing as the owner of the Old
Capital Securities) of Old Capital Securities tendered herewith, unless such
holder(s) has completed either the box entitled "Special Issuance Instructions"
or the box entitled "Special Delivery Instructions" above, or
(ii) such Old Capital Securities are tendered for the account of a firm
that is an Eligible Institution.
In all other cases, an Eligible Institution must guarantee the signature(s) on
this Letter of Transmittal. See Instruction 5.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Old Capital Securities" is inadequate, the Certificate number(s)
and/or the Liquidation Amount of Old Capital Securities and any other required
information should be listed on a separate signed schedule which is attached to
this Letter of Transmittal.
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of Old Capital
Securities will be accepted only in the principal amount of $100,000 (100
Capital Securities) and integral multiples of $1,000 in excess thereof, provided
that if any Old Capital Securities are tendered for exchange in part, the
untendered principal amount thereof must be $100,000 (100 Capital securities) or
any integral multiple of $1,000 in excess thereof. If less than all the Old
Capital Securities evidenced by any Certificate submitted are to be tendered,
fill in the Liquidation Amount of Old Capital Securities which are to be
tendered in the box entitled "Liquidation Amount of Old Capital Securities
Tendered (if less than all are tendered)." In such case, a new Certificate(s)
for the remainder of the Old Capital Securities that were evidenced by your Old
Certificate(s) will be sent to the holder of the Old Capital Securities,
promptly after the Expiration Date, unless the appropriate boxes on this Letter
of Transmittal are completed. All Old Capital Securities represented by
Certificates delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of Old Capital Securities
may be withdrawn at any time on or prior to the Expiration Date. In order for a
withdrawal to be effective on or prior to that time, a written or facsimile
transmission of such notice of withdrawal must be received by the Exchange Agent
at one of its addresses set forth above or in the Prospectus on or prior to the
Expiration Date. Any such notice of withdrawal must specify the name of the
person who tendered the Old Capital Securities to be withdrawn, the aggregate
Liquidation Amount of Old Capital Securities to be withdrawn, and (if
Certificates for Old Capital Securities have been tendered) the name of the
registered holder of the Old Capital Securities as set forth on the Certificate
for the Old Capital Securities, if different from that of the person who
tendered such Old Capital Securities. If Certificates for the Old Capital
Securities have been delivered or otherwise identified to the Exchange Agent,
then prior to the physical release of such Certificates for the Old Capital
Securities, the tendering holder must submit the serial numbers shown on the
particular Certificates for the Old Capital Securities to be withdrawn and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of Old Capital Securities tendered for the
account of an Eligible Institution. If Old Capital Securities have been tendered
pursuant to the procedures for book-entry transfer set forth under "The Exchange
Offer--Procedures for Tendering Old Capital Securities" in the Prospectus, the
notice of withdrawal must specify the name and number of the account at DTC to
be credited with the withdrawal of Old Capital Securities, in which case a
notice of withdrawal will be effective if delivered to the Exchange Agent by
written or facsimile transmission on or prior to the Expiration Date.
Withdrawals of tenders of Old Capital Securities may not be rescinded. Old
Capital Securities properly withdrawn will not be deemed validly tendered for
purposes of the Exchange Offer, but may be retendered at any subsequent time on
or prior to the Expiration Date by following any of the procedures described in
the Prospectus under "The Exchange Offer--Procedures for Tendering Old Capital
Securities."
All questions as to the validity, form and eligibility (including time
of receipt) of such withdrawal notices will be determined by the Corporation and
the Trust, in their sole discretion, whose determination shall be final and
binding on all parties. None of the Corporation, the Trust, any affiliates or
assigns of the Corporation and the Trust, the Exchange Agent nor any other
person shall be under any duty to give any notification of any irregularities in
any notice of withdrawal or incur any liability for failure to give any such
notification. Any Old Capital Securities which have been tendered but which are
withdrawn will be returned to the holder thereof without cost to such holder
promptly after withdrawal.
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS.
If this Letter of Transmittal is signed by the registered holder(s) of the Old
Capital Securities tendered hereby, the signature(s) must correspond exactly
with the name(s) as written on the face of the Certificate(s) without
alteration, enlargement or any change whatsoever.
If any of the Old Capital Securities tendered hereby are owned of
record by two or more joint owners, all such owners must sign this Letter of
Transmittal.
If any tendered Old Capital Securities are registered in different
name(s) on several Certificates, it will be necessary to complete, sign and
submit as many separate Letters of Transmittal (or facsimiles thereof) as there
are different registrations of Certificates.
If this Letter of Transmittal or any Certificates or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and must submit proper
evidence satisfactory to the Corporation and the Trust, in their sole
discretion, of such persons' authority to so act.
When this Letter of Transmittal is signed by the registered holder(s)
of the Old Capital Securities listed and transmitted hereby, no endorsement(s)
of Certificate(s) or separate bond power(s) are required unless New Capital
Securities are to be issued in the name of a person other than the registered
holder(s). Signature(s) on such Certificate(s) or bond power(s) must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Old Capital Securities listed, the Certificates must
be endorsed or accompanied by appropriate bond powers, signed exactly as the
name or names of the registered owner(s) appear(s) on the Certificates, and also
must be accompanied by such opinions of counsel, certifications and other
information as the Corporation, the Trust or the Exchange Agent may require in
accordance with the restrictions on transfer applicable to the Old Capital
Securities. Signatures on such Certificates or bond powers must be guaranteed by
an Eligible Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If New Capital
Securities are to be issued in the name of a person other than the signer of
this Letter of Transmittal, or if New Capital Securities are to be sent to
someone other than the signer of this Letter of Transmittal or to an address
other than that shown above, the appropriate boxes on this Letter of Transmittal
should be completed. Certificates for Old Capital Securities not exchanged will
be returned by mail or, if tendered by book-entry transfer, by crediting the
account indicated above maintained at DTC. See Instruction 4.
7. IRREGULARITIES. The Corporation and the Trust will determine, in
their sole discretion, all questions as to the form of documents, validity,
eligibility (including time of receipt) and acceptance for exchange of any
tender of Old Capital Securities, which determination shall be final and binding
on all parties. The Corporation and the Trust reserve the absolute right, in
their sole and absolute discretion, to reject any and all tenders determined by
either of them not to be in proper form or the acceptance of which, or exchange
for, may, in the view of counsel to the Corporation and the Trust, be unlawful.
The Corporation and the Trust also reserve the absolute right, subject to
applicable law, to waive any of the conditions of the Exchange Offer set forth
in the Prospectus under "The Exchange Offer--Certain Conditions to the Exchange
Offer" or any conditions or irregularity in any tender of Old Capital Securities
of any particular holder whether or not similar conditions or irregularities are
waived in the case of other holders. The Corporation's and the Trust's
interpretation of the terms and conditions of the Exchange Offer (including this
Letter of Transmittal and the instructions hereto) will be final and binding. No
tender of Old Capital Securities will be deemed to have been validly made until
all irregularities with respect to such tender have been cured or waived. None
of the Corporation, the Trust, any affiliates or assigns of the Corporation, the
Trust, the Exchange Agent, or any other person shall be under any duty to give
notification of any irregularities in tenders or incur any liability for failure
to give such notification.
8. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Exchange Agent at its address
and telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the Prospectus, this Letter of Transmittal and the Notice
of Guaranteed Delivery may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal
income tax law, a holder whose tendered Old Capital Securities are accepted for
exchange is required to provide the Exchange Agent with such holder's correct
taxpayer identification number ("TIN") on Substitute Form W-9 below. If the
Exchange Agent is not provided with the correct TIN, the Internal Revenue
Service (the "IRS") may subject the holder or other payee to a $50 penalty. In
addition, payments to such holders or other payees with respect to Old Capital
Securities exchanged pursuant to the Exchange Offer may be subject to 31% backup
withholding.
The box in Part 2 of the Substitute Form W-9 may be checked if the
tendering holder has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the box in Part 2 is checked, the
holder or other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 2 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Exchange Agent will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Exchange Agent. The Exchange Agent will retain such amounts
withheld during the 60 day period following the date of the Substitute Form W-9.
If the holder furnishes the Exchange Agent with its TIN within 60 days after the
date of the Substitute Form W-9, the amounts retained during the 60 day period
will be remitted to the holder and no further amounts shall be retained or
withheld from payments made to the holder thereafter. If, however, the holder
has not provided the Exchange Agent with its TIN within such 60 day period,
amounts withheld will be remitted to the IRS as backup withholding. In addition,
31% of all payments made thereafter will be withheld and remitted to the IRS
until a correct TIN is provided.
The holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered owner of
the Old Capital Securities or of the last transferee appearing on the transfers
attached to, or endorsed on, the Old Capital Securities. If the Old Capital
Securities are registered in more than one name or are not in the name of the
actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
Certain holders (including, among others, corporations, financial
institutions and certain foreign persons) may not be subject to these backup
withholding and reporting requirements. Such holders should nevertheless
complete the attached Substitute Form W-9 below, and write "exempt" on the face
thereof, to avoid possible erroneous backup withholding. A foreign person may
qualify as an exempt recipient by submitting a properly completed IRS Form W-8,
signed under penalties of perjury, attesting to that holder's exempt status.
Please consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
holders are exempt from backup withholding.
Backup withholding is not an additional U.S. Federal income tax.
Rather, the U.S. Federal income tax liability of a person subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained.
10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificate(s)
representing Old Capital Securities have been lost, destroyed or stolen, the
holder should promptly notify the Exchange Agent. The holder will then be
instructed as to the steps that must be taken in order to replace the
Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed or stolen
Certificate(s) have been followed.
11. SECURITY TRANSFER TAXES. Holders who tender their Old Capital
Securities for exchange will not be obligated to pay any transfer taxes in
connection therewith. If, however, New Capital Securities are to be delivered
to, or are to be issued in the name of, any person other than the registered
holder of the Old Capital Securities tendered, or if a transfer tax is imposed
for any reason other than the exchange of Old Capital Securities in connection
with the Exchange Offer, then the amount of any such transfer tax (whether
imposed on the registered holder or any other persons) will be payable by the
tendering holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF) AND ALL OTHER
REQUIRED DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE
EXPIRATION DATE.
<PAGE>
TO BE COMPLETED BY ALL
TENDERING SECURITYHOLDERS
(SEE INSTRUCTION 9)
PAYER'S NAME: MAINSTREET CAPITAL TRUST I
<TABLE>
<CAPTION>
<S> <C>
SUBSTITUTE Part 1 - PLEASE PROVIDE TIN_____________________
Form W-9 YOUR TIN IN THE BOX AT Social Security Number
or
RIGHT AND CERTIFY BY Employer Identification
Number
SIGNING AND DATING BELOW
------------------------------------------------------------
Department of the Treasury Part 2
Internal Revenue Service Awaiting TIN [ ]
-----------------------------
</TABLE>
CERTIFICATION - UNDER THE PENALTIES OF PERJURY, I
CERTIFY THAT (1) the number shown on this form is my
correct taxpayer identification number (or I am
waiting for a number to be issued to me), (2) I am
not subject to backup withholding either because (i)
I am exempt from backup withholding, (ii) I have not
been notified by the Internal Revenue Service ("IRS")
that I am subject to backup withholding as a result
of a failure to report all interest or dividends, or
(iii) the IRS has notified me that I am no longer
subject to backup withholding, and (3) any other
information provided on this form is true and
correct.
Payer's Request for Taxpayer
Identification Number (TIN) SIGNATURE___________________________
and Certification DATE________________________________
You must cross out item (iii) in Part (2) above if you
have been notified by the IRS that you are subject to
backup withholding because of underreporting interest or
dividends on your tax return and you have not been
notified by the IRS that you are no longer subject to
backup withholding.
------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN CERTAIN CIRCUMSTANCES
RESULT IN BACKUP WITHHOLDING OF 31% OF ANY AMOUNTS PAID TO YOU PURSUANT TO THE
EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
- --------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of payment, 31%
of all payments made to me on account of the New Capital Securities shall be
retained until I provide a taxpayer identification number to the Exchange Agent
and that, if I do not provide my taxpayer identification number within 60 days,
such retained amounts shall be remitted to the Internal Revenue Service as
backup withholding and 31% of all reportable payments made to me thereafter will
be withheld and remitted to the Internal Revenue Service until I provide a
taxpayer identification number.
Signature: _______________________________________ Date: ______________________
EXHIBIT 99.2
(Form of Notice of Guaranteed Delivery)
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
SERIES A 8.90% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
OF
MAINSTREET CAPITAL TRUST I
UNCONDITIONALLY GUARANTEED BY MAINSTREET BANKGROUP INCORPORATED
This Notice of Guaranteed Delivery, or one substantially equivalent to
this form, must be used to accept the Exchange Offer (as defined below) if (i)
the procedures for delivery by book-entry transfer cannot be completed on or
prior to the Expiration Date (as defined in the Prospectus referred to below),
(ii) certificates for the Trust's (as defined below) Series A 8.90% Capital
Securities (the "Old Capital Securities") are not immediately available or (iii)
Old Capital Securities, the Letter of Transmittal and all other required
documents cannot be delivered to The Bank of New York (the "Exchange Agent") on
or prior to the Expiration Date. This Notice of Guaranteed Delivery may be
delivered by hand, overnight courier or mail, or transmitted by facsimile
transmission, to the Exchange Agent. See "The Exchange Offer--Procedures for
Tendering Old Capital Securities" in the Prospectus.
The Exchange Agent for the Exchange Offer is:
THE BANK OF NEW YORK
By Registered or Certified Mail: By Hand or Overnight
Delivery:
The Bank of New York The Bank of New York
101 Barclay Street, 7E101 Barclay Street
New York, New York 10286 Corporate Trust Services
Window
Attn: Reorganization Department Ground Level
Odell Romeo New York, New York 10286
Attn: Reorganization
Department
Odell Romeo
Confirm by Telephone or for Information
call:
(212) 815-6337
Facsimile Transmissions:
(ELIGIBLE INSTITUTIONS ONLY)
(212) 815-6339
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA A
FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
LADIES AND GENTLEMEN:
The undersigned hereby tenders to MainStreet Capital Trust I, a trust created
under the laws of Delaware (the "Trust"), upon the terms and subject to the
conditions set forth in the Prospectus dated April , 1998 (as the same may be
amended or supplemented from time to time, the "Prospectus"), and the related
Letter of Transmittal (which together constitute the "Exchange Offer"), receipt
of which is hereby acknowledged, the aggregate liquidation amount of Old Capital
Securities set forth below pursuant to the guaranteed delivery procedures set
forth in the Prospectus under the caption "The Exchange Offer--Procedures for
Tendering Old Capital Securities."
Aggregate Liquidation Amount Name(s) of Registered Holder(s):
Tendered: _______________________________
- ------------------------------ -------------------------------
Certificate No(s). (if available): Address(es):
==================== ===============================
If Old Capital Securities will be tendered by book-entry transfer, provide the
following information:
Area Code and Telephone Number(s): ____________________________________
DTC Account Number: _______________________
Date: ________________________Signature(s): _______________________________
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm or other entity identified in Rule 17Ad-15
under the Securities Exchange Act of 1934, as amended, as an "eligible guarantor
institution," including (as such terms are defined therein): (i) bank; (ii) a
broker, dealer, municipal securities broker, municipal securities dealer,
government securities broker, government securities dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association recognized program (each of the foregoing being
referred to as an "Eligible Institution"), hereby guarantees to deliver to the
Exchange Agent, at one of its addresses set forth above, either the Old Capital
Securities tendered hereby in proper form for transfer, or confirmation of the
book-entry transfer of such Old Capital Securities to the Exchange Agent's
account at The Depository Trust Company ("DTC"), pursuant to the procedures for
book-entry transfer set forth in the Prospectus, in either case together with
one or more properly completed and duly executed Letter(s) of Transmittal (or
facsimile thereof) and any other required documents within three business days
after the date of execution of this Notice of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Letter(s) of
Transmittal and the Old Capital Securities tendered hereby to the Exchange Agent
within the time period set forth above and that failure to do so could result in
a financial loss to the undersigned.
Name of Firm:
- ---------------------------------- -----------------------------
(Authorized Signature)
Address: _____________________________
__________________________________ (Title)
- ---------------------------------- -----------------------------
__________________________________ (Name. Please Type or Print)
(Zip Code)
Area Code and Telephone Number:
____________________________ Date:
- ------------------------
NOTE: DO NOT SEND OLD CAPITAL SECURITIES WITH THIS NOTICE OF GUARANTEED
DELIVERY. ACTUAL SURRENDER OF OLD CAPITAL SECURITIES MUST BE MADE PURSUANT TO,
AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF
TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS.
EXHIBIT 99.3
(Request for Acceleration of Effectiveness of Registration Statement)
May 13, 1998
VIA EDGAR
Securities & Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549-1004
Attn: Jessica Livingston, Esquire
Re: MainStreet BankGroup Incorporated
MainStreet Capital Trust I
Registration Statement on Form S-4
File Nos. 333-49383 and 333-49383-01
Dear Ms. Livingston:
On behalf of MainStreet BankGroup Incorporated, (the "Company") and the
MainStreet Capital Trust I (the "Trust") we enclose for filing Amendment No. 1
to the Form S-4 previously filed with the Commission on April 15, 1998. This
final (we hope) draft includes selected financial information for the quarter
ended March 31, 1998, as well as year end data.
We expect to print and mail this document on Friday, May 15, 1998.
Accordingly, pursuant to Rule 461 under the Securities Act of 1933, the Company
and the Trust named in the above-referenced Registration Statement hereby
requests acceleration of the effectiveness of the Registration Statement to 9:00
a.m. on Friday, May 15, 1998, or as soon thereafter as is practicable. Please
confirm the effectiveness of this Registration Statement by calling Hugh Wellons
at (804) 692-8682 as early as possible on Friday May 15. Thank you for your help
in this matter.
Sincerely,
/s/ Rebecca J. Jenkins
By: Rebecca J. Jenkins
Executive Vice President, General Counsel and
Secretary,
MainStreet BankGroup Incorporated and
Administrative Trustee, MainStreet Capital Trust I
