<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 13, 1997
REGISTRATION NOS. 333- AND 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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<TABLE>
<C> <C>
CULLEN/FROST BANKERS, INC. CULLEN/FROST CAPITAL TRUST I
(Exact name of registrant as specified in its (Exact name of registrant as specified in its Trust
charter) Agreement)
TEXAS DELAWARE
(State or other jurisdiction of incorporation or (State or other jurisdiction of incorporation or
organization) organization)
6712 6719
(Primary standard industrial classification code (Primary standard industrial classification code
number) number)
74-1751768 74-2817357
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
100 W. HOUSTON STREET PHILLIP D. GREEN THE BANK OF NEW YORK (DELAWARE) THE CORPORATION TRUST COMPANY
SAN ANTONIO, TEXAS 78205 EXECUTIVE VICE PRESIDENT AND WHITE CLAY CENTER, ROUTE 273 CORPORATION TRUST CENTER
(210) 220-4011 CHIEF FINANCIAL OFFICER NEWARK, DELAWARE 19711 1209 ORANGE STREET
(Address, including zip code, CULLEN/FROST BANKERS, INC. (302) 451-2500 WILMINGTON, DELAWARE 19801
and telephone 100 W. HOUSTON STREET (Address, including zip code, (302) 658-7581
number, including area code, of SAN ANTONIO, TEXAS 78205 and telephone number, including (Name, address, including zip
registrant's (210) 220-4011 area code, of registrant's code, and telephone number,
principal executive offices) (Name, address, including zip principal executive offices) including area code, of agent
code, and telephone number, for service for registrant)
including area code, of agent
for service for registrant)
</TABLE>
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With a copy to:
Mark J. Menting, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
(212) 558-4000
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Approximate date of commencement of the proposed sale to the public:
As promptly as practicable after the effective date of this Registration
Statement.
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If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MINIMUM PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(2) OFFERING PRICE(2) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
8.42% Capital Securities, Series A, of
Cullen/Frost Capital Trust I(2)(3)............ 100,000 $1,000.00 $100,000,000 $30,303.03
- ------------------------------------------------------------------------------------------------------------------------------
8.42% Junior Subordinated Deferrable Interest
Debentures, Series A, of Cullen/Frost Bankers,
Inc.(2) ...................................... N/A $1,000.00 $100,000,000 N/A
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Cullen/Frost Bankers, Inc. Guarantee with
respect to Capital Securities(3)(4)........... N/A N/A N/A N/A
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Total................................. 100,000 100% $100,000,000(5) $30,303.03
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</TABLE>
(1) Estimated solely for the purpose of computing the registration fee.
(2) The Junior Subordinated Deferrable Interest Debentures were purchased by
Cullen/Frost Capital Trust I with the proceeds of the sale of the Capital
Securities. No separate consideration will be received from purchasers of
Capital Securities for the Junior Subordinated Deferrable Interest
Debentures.
(3) This Registration Statement is deemed to cover the Junior Subordinated
Deferrable Interest Debentures of Cullen/Frost Bankers, Inc., the rights of
holders of Junior Subordinated Deferrable Interest Debentures of
Cullen/Frost Bankers, Inc. under the Indenture, the rights of holders of
Capital Securities of Cullen/Frost Capital Trust I under the Trust
Agreement, the rights of holders of the Capital Securities under the
Guarantee of Cullen/Frost Bankers, Inc. and the Expense Agreement entered
into by Cullen/Frost Bankers, Inc. which taken together fully and
unconditionally guarantee the obligations of Cullen/Frost Capital Trust I
under the Capital Securities.
(4) No separate consideration will be received for the Cullen/Frost Bankers,
Inc. Guarantee.
(5) Such amount represents the aggregate liquidation amount of Capital
Securities to be issued and exchanged hereunder and the principal amounts of
Junior Subordinated Deferrable Interest Debentures that may be distributed
upon liquidation of Cullen/Frost Capital Trust I.
---------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE OR UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
CROSS-REFERENCE SHEET PURSUANT TO ITEM 501(B) OF REGULATION S-K
SHOWING THE LOCATION IN THE PROSPECTUS OF THE RESPONSES
TO THE ITEMS OF PART I OF FORM S-4.
<TABLE>
<CAPTION>
FORM S-4 ITEM LOCATION IN PROSPECTUS
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<C> <S> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus...... Outside Front Cover Page; Facing Page
2. Inside Front and Outside Back Cover Page of
Prospectus.................................. Available Information; Incorporation of
Certain Documents by Reference; Table of
Contents
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information............... Summary; Risk Factors; Consolidated Ratios
of Earnings to Fixed Charges
4. Terms of the Transaction.................... Outside Front Cover Page; Summary;
Cullen/Frost Bankers, Inc.; Cullen/Frost
Capital Trust I; Use of Proceeds;
Capitalization; Accounting Treatment; The
Exchange Offer; Description of New
Securities; Description of Old Securities;
Relationship Among the Capital Securities,
the Junior Subordinated Debentures, the
Guarantee and the Expense Agreement; Certain
Federal Income Tax Consequences; Certain
ERISA Considerations; Plan of Distribution
5. Pro Forma Financial Information............. *
6. Material Contacts with the Company Being
Acquired.................................... *
7. Additional Information Required for
Reoffering by Persons and Parties Deemed to
Be Underwriters............................. *
8. Interests of Named Experts and Counsel...... Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................. *
10. Information with Respect to S-3
Registrants................................. Incorporation of Certain Documents by
Reference; Summary; Cullen/Frost Bankers,
Inc.
11. Incorporation of Certain Information by
Reference................................... Incorporation of Certain Documents by
Reference
12. Information with Respect to S-2 or S-3
Registrants................................. *
13. Incorporation of Certain Information by
Reference................................... *
14. Information with Respect to Registrants
Other Than S-2 or S-3 Registrants........... Available Information; Cullen/Frost Capital
Trust I
15. Information with Respect to S-3 Companies... *
16. Information with Respect to S-2 or S-3
Companies................................... *
17. Information with Respect to Companies Other
Than S-2 or S-3 Companies................... *
18. Information if Proxies, Consents or
Authorizations are to be Solicited.......... *
19. Information if Proxies, Consents or
Authorizations are not to be Solicited, or
in an Exchange Offer........................ Incorporation of Certain Documents by
Reference; The Exchange Offer
</TABLE>
- ---------------
* Not applicable.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MARCH 13, 1997
PROSPECTUS
[LOGO]
$100,000,000
CULLEN/FROST CAPITAL TRUST I
OFFER TO EXCHANGE ITS 8.42% CAPITAL SECURITIES, SERIES A WHICH HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 FOR ANY AND
ALL OF ITS OUTSTANDING 8.42% CAPITAL SECURITIES, SERIES A
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
GUARANTEED, TO THE EXTENT DESCRIBED HEREIN, BY
CULLEN/FROST BANKERS, INC.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME ON , 1997, UNLESS EXTENDED.
Cullen/Frost Capital Trust I, a statutory business trust created under the
laws of the State of Delaware (the "Issuer 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 $100,000,000 aggregate Liquidation Amount of its
8.42% Capital Securities, Series A (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
8.42% Capital Securities, Series A (the "Old Capital Securities"), of which
$100,000,000 aggregate Liquidation Amount is outstanding. Pursuant to the
Exchange Offer, Cullen/Frost Bankers, Inc., a Texas corporation (the
"Corporation"), is also exchanging its guarantee of the payment of Distributions
(as defined herein) and payments on liquidation or redemption of the Old Capital
Securities (the "Old Guarantee") for a like guarantee of the New Capital
Securities (the "New Guarantee") and all of its 8.42% Junior Subordinated
Deferrable Interest Debentures, Series A (the "Old Junior Subordinated
Debentures"), of which $103,093,000 aggregate principal amount is outstanding,
for a like aggregate principal amount of its 8.42% Junior Subordinated
Deferrable Interest Debentures, Series A (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 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 Issuer Trust under the Registration Rights Agreement, dated
as of February 3, 1997 (the "Registration Rights Agreement"), among the
Corporation, the Issuer Trust and the Initial Purchasers (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).
(continued on next page)
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 18 FOR CERTAIN INFORMATION RELEVANT
TO AN INVESTMENT IN THE NEW SECURITIES.
------------------------
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 , 1997.
<PAGE> 4
(cover page continued)
The New Capital Securities will represent preferred undivided beneficial
interests in the assets of the Issuer Trust. The Corporation is the owner of all
of the common undivided beneficial interests in the assets of the Issuer Trust
(the "Common Securities" and, collectively with the Capital Securities (as
defined below), the "Trust Securities"). The Issuer Trust exists for the sole
purposes of (i) issuing and selling the Trust Securities, (ii) investing the
proceeds thereof in Junior Subordinated Debentures (as defined below) and (iii)
engaging in those activities necessary, or incidental thereto. The Junior
Subordinated Debentures will mature on February 1, 2027 ("Stated Maturity"),
which date may be shortened to a date not earlier than February 1, 2017 in
certain circumstances as described under "Description of New
Securities -- Description of Junior Subordinated Debentures -- Conditional Right
to Shorten Maturity or Redeem upon a Tax Event or Capital Treatment Event" upon
the occurrence of a Tax Event or a Capital Treatment Event (each as defined
herein) if certain conditions are met. The Corporation has committed to the
Board of Governors of the Federal Reserve System (the "Federal Reserve") that
the Corporation will not shorten the Stated Maturity (as defined herein) without
first having received the prior approval of the Federal Reserve to do so, if
then required under applicable Federal Reserve capital guidelines or policies.
The New Capital Securities will have a preference under certain circumstances
with respect to cash distributions and amounts payable on liquidation,
redemption or otherwise over the Common Securities. See "Description of New
Securities -- Description of Capital Securities -- Subordination of Common
Securities."
---------------------
As used herein, (i) the "Indenture" means the Junior Subordinated
Indenture, as amended and supplemented from time to time, between the
Corporation and The Bank of New York, as trustee (the "Debenture Trustee"),
pursuant to which the Junior Subordinated Debentures are to be issued, (ii) the
"Trust Agreement" means the Amended and Restated Trust Agreement relating to the
Issuer Trust, as amended and supplemented from time to time, among the
Corporation, as Depositor, The Bank of New York, as Property Trustee (the
"Property Trustee"), The Bank of New York (Delaware), as Delaware Trustee (the
"Delaware Trustee"), the Administrative Trustees (the "Administrative Trustees,"
and collectively with the Property Trustee and the Delaware Trustee, the "Issuer
Trustees") and the holders, from time to time, of the undivided beneficial
interests in the assets of the Issuer Trust, (iii) the "Guarantee" means the
Guarantee Agreement, as amended and supplemented from time to time, between the
Corporation and The Bank of New York, as trustee (the "Guarantee Trustee"), for
the benefit of holders of Capital Securities and (iv) the "Expense Agreement"
means the Agreement as to Expenses and Liabilities, between the Corporation, as
holder of the Common Securities, and the Issuer Trust. In addition, as the
context may require, unless expressly stated otherwise, (i) "Capital Securities"
means the Old Capital Securities and the New Capital Securities, (ii) "Junior
Subordinated Debentures" means the Old Junior Subordinated Debentures and the
New Junior Subordinated Debentures and (iii) "Guarantee" means the Old Guarantee
and the New Guarantee.
---------------------
Except as provided below, the New 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 the New Capital Securities will be shown on,
and transfers thereof will be effected through, records maintained by DTC and
its participants. Beneficial interests in the New 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. The New
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 -- Book-Entry, Delivery and Form."
Holders of the Capital Securities will be entitled to receive cumulative
cash distributions accruing from the date of initial issuance and payable
semi-annually in arrears on February 1 and August 1 of each year, commencing
August 1, 1997, at the annual rate of 8.42% of the Liquidation Amount of $1,000
per Capital 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 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
2
<PAGE> 5
(cover page continued)
each deferral period (each, an "Extension Period"), provided that no Extension
Period may extend beyond the Stated Maturity of the Junior Subordinated
Debentures. Upon the termination of any such Extension Period and the payment of
all interest then accrued and unpaid (together with interest thereon at the
annual rate of 8.42%, compounded semi-annually, to the extent permitted by
applicable law), the Corporation may elect to begin a new Extension Period
subject to the requirements set forth herein. If interest payments on the Junior
Subordinated Debentures are so deferred, Distributions on the Capital Securities
will also 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 or with respect to debt
securities of the Corporation that rank pari passu in all respects 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 Capital Securities are entitled
will accumulate) at the rate of 8.42% per annum, compounded semi-annually, and
holders of Capital Securities will be required to accrue interest income for
United States federal income tax purposes prior to the receipt of cash to which
such income is attributable. See "Description of New Securities -- Description
of Junior Subordinated Debentures -- Option to Extend Interest Payment Period"
and "Certain Federal Income Tax Consequences -- Interest Income and Original
Issue Discount."
The Corporation has, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures, the Indenture and the Expense Agreement, taken
together, fully, irrevocably and unconditionally guaranteed all of the Issuer
Trust's obligations under the Capital Securities. See "Relationship Among the
Capital Securities, the Junior Subordinated Debentures, the Guarantee and the
Expense Agreement -- Full and Unconditional Guarantee." The Guarantee of the
Corporation guarantees the payment of Distributions and payments on liquidation
or redemption of the Capital Securities, but only in each case to the extent of
funds held by the Issuer Trust, as described herein. See "Description of New
Securities -- Description of Guarantee." If the Corporation does not make
payments on the Junior Subordinated Debentures held by the Issuer Trust, the
Issuer Trust will have insufficient funds to pay Distributions on the Capital
Securities. The Guarantee does not cover payment of Distributions when the
Issuer Trust does not have sufficient funds to pay such Distributions. In such
event, a holder of Capital Securities may institute a legal proceeding directly
against the Corporation to enforce payment of such Distributions to such holder.
See "Description of New Securities -- Description of Junior Subordinated
Debentures -- Enforcement of Certain Rights by Holders of Capital Securities."
The obligations of the Corporation under the Guarantee and the Capital
Securities are subordinate and junior in right of payment to all Senior
Indebtedness (as defined in "Description of New Securities -- Description of
Junior Subordinated Debentures -- Subordination") of the Corporation. The
Corporation currently has no outstanding Senior Indebtedness.
The Capital Securities are subject to mandatory redemption, in whole or in
part, upon repayment of the Junior Subordinated Debentures at Stated Maturity or
their earlier redemption. The Junior Subordinated Debentures are redeemable
prior to maturity at the option of the Corporation (i) on or after February 1,
2007, in whole at any time or in part from time to time, or (ii) prior to
February 1, 2007, in whole (but not in part) at any time within 90 days
following the occurrence and continuation of a Tax Event or Capital Treatment
Event (each as defined herein), in each case at a redemption price set forth
herein, which includes the accrued and unpaid interest on the Junior
Subordinated Debentures so redeemed to the date fixed for redemption. The
Corporation has committed to the Federal Reserve that the Corporation will not
exercise its rights to redeem the Junior Subordinated Debentures or cause the
redemption of the Capital Securities prior to the Stated Maturity without having
received the prior approval of the Federal Reserve to do so, if then required
under applicable Federal Reserve capital guidelines or policies. See
"Description of New Securities -- Description of Junior Subordinated
Debentures -- Redemption."
The holder of the outstanding Common Securities (i.e., the Corporation) has
the right at any time to terminate the Issuer Trust and, after satisfaction of
liabilities to creditors of the Issuer Trust as provided by applicable law, to
cause the Junior Subordinated Debentures to be distributed to the holders of the
Capital Securities and Common Securities in liquidation of the Issuer Trust. The
Corporation has committed to the Federal Reserve that, so long as the
Corporation (or any affiliate) is a holder of Common Securities, the
3
<PAGE> 6
(cover page continued)
Corporation will not so terminate the Issuer Trust without having received the
prior approval of the Federal Reserve to do so, if then required under
applicable Federal Reserve capital guidelines or policies. See "Description of
New Securities -- Description of Capital Securities -- Liquidation Distribution
Upon Termination."
The Junior Subordinated Debentures are unsecured and subordinated to all
Senior Indebtedness (as defined herein) of the Corporation. See "Description of
New Securities -- Description of Junior Subordinated
Debentures -- Subordination."
In the event of the termination of the Issuer Trust, after satisfaction of
liabilities to creditors of the Issuer Trust as provided by applicable law, the
holders of the Capital Securities will be entitled to receive a Liquidation
Amount of $1,000 per Capital Security plus accumulated and unpaid Distributions
thereon to the date of payment, subject to certain exceptions, which may be in
the form of a distribution of such amount in Junior Subordinated Debentures. See
"Description of New Securities -- Description of Capital Securities --
Liquidation Distribution Upon Termination."
Prospective purchasers must carefully consider the restrictions on purchase
set forth in "Certain ERISA Considerations."
---------------------
The Corporation and the Issuer Trust are making the Exchange Offer in
reliance on the position taken by the staff of the Division of Corporation
Finance of the Securities and Exchange Commission (the "Commission") in certain
interpretive letters addressed to third parties in other transactions. However,
neither the Corporation nor the Issuer Trust has sought its own interpretive
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. Based on these interpretations, and subject to
the two immediately following sentences, the Corporation and the Issuer Trust
believe that New Capital Securities issued pursuant to the 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 Issuer Trust
within the meaning of Rule 405 under the Securities Act or who intends to
participate in the Exchange Offer for the purpose of participating in a
distribution of the Capital Securities, or any broker-dealer who purchased Old
Capital Securities from the Issuer Trust to resell pursuant to Rule 144A under
the Securities Act ("Rule 144A") or any other available exemption under the
Securities Act, (a) 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 interpretive letters, (b) will not be permitted or entitled to
tender such Old Capital Securities in the Exchange Offer and (c) 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 (a "Participating Broker-Dealer") 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. See "Plan of
Distribution" and "The Exchange Offer -- Resales of New Capital Securities."
Prior to the Exchange Offer, there has been only a limited secondary market
and no public market for the Old Capital Securities. The New Capital Securities
will be a new issue of securities for which there currently exists no market.
Although the Initial Purchasers have informed the Corporation and the Issuer
Trust that they currently intend to make a market in the New Capital Securities,
they are not obligated to do so, and any such market making may be discontinued
at any time without notice. Accordingly, there can be no assurance as to the
development or liquidity of any market for the New Capital Securities. The
Corporation currently
4
<PAGE> 7
(cover page continued)
does 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.
---------------------
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 , 1997 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is extended
by the Corporation and the Issuer 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 Issuer Trust and to the
terms and provisions of the Registration Rights Agreement. Old Capital
Securities may be tendered in whole or in part having a Liquidation Amount of
not less than $100,000 (100 Capital Securities) and or any integral multiple of
$1,000 Liquidation Amount (1 Capital Security) in excess thereof. The
Corporation has agreed to pay all expenses of the Exchange Offer, except as
otherwise specified herein. See "The Exchange Offer -- Fees and Expenses." Each
New Capital Security will pay cumulative Distributions from the most recent
Distribution Date (as defined herein) on the Old Capital Securities surrendered
in exchange for such New Capital Securities or, if no Distributions have been
paid on such Old Capital Securities, from February 3, 1997. Holders of the Old
Capital Securities whose Old Capital Securities are accepted for exchange will
not receive accumulated Distributions on such Old Capital Securities for any
period from and after the last Distribution Date on such Old Capital Securities
prior to the original issue date of the New Capital Securities or, if no such
Distributions have been paid, will not receive any accumulated 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 such Distribution Date or, if no such Distributions have been paid or duly
provided for, from and after February 3, 1997. This Prospectus, together with
the Letter of Transmittal, is being sent to all registered holders of Old
Capital Securities as of , 1997.
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 Issuer Trust will have any
further obligation to such holders (other than under certain limited
circumstances) 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 Failure to Exchange Old Capital Securities."
Neither the Corporation nor the Issuer Trust will receive any cash proceeds
from the issuance of the New Securities offered hereby. No dealer-manager is
being used in connection with this Exchange Offer. See "Use of Proceeds" and
"Plan of Distribution."
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE CORPORATION OR THE
ISSUER TRUST ACCEPT SURRENDERS 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.
5
<PAGE> 8
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities of the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Commission located at 7 World Trade Center, 13th Floor, Suite
1300, New York, New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material can also
be obtained at prescribed rates by writing to the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Such material
may also be accessed electronically by means of the Commission's Web site on the
Internet at http://www.sec.gov. In addition, the Common Stock of the Corporation
is quoted on the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ"), and such reports, proxy statements and other
information concerning the Corporation can also be inspected at the office of
the National Association of Securities Dealers, Inc. at 1735 K Street, N.W.,
Washington, D.C. 20006.
The Corporation and the Issuer Trust have filed with the Commission a
Registration Statement on Form S-4 (together with all amendments and exhibits
thereto, the "Registration Statement") under the Securities Act with respect to
the securities offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement, certain portions of which
have been omitted as permitted by the rules and regulations of the Commission.
For further information with respect to the Corporation and the securities
offered hereby, reference is made to the Registration Statement and the exhibits
and the financial statements, notes and schedules filed as a part thereof or
incorporated by reference therein, which may be inspected at the public
reference facilities of the Commission, at the addresses set forth above.
Statements made in this Prospectus concerning the contents of any documents
referred to herein are not necessarily complete, and in each instance are
qualified in all respects by reference to the copy of such document filed as an
exhibit to the Registration Statement.
No separate financial statements of the Issuer Trust have been included
herein. The Corporation and the Issuer Trust do not consider that such financial
statements would be material to holders of the Capital Securities because the
Issuer Trust is a newly formed special purpose entity, has no operating history
or independent operations and is not engaged in and does not propose to engage
in any activity other than holding as trust assets the Junior Subordinated
Debentures of the Corporation and issuing the Trust Securities. The Corporation
has, through the Guarantee, the Trust Agreement, the Junior Subordinated
Debentures, the Indenture and the Expense Agreement (each as defined herein),
taken together, fully and unconditionally guaranteed all of the Issuer Trust's
obligations under the Capital Securities. See "Cullen/Frost Capital Trust I" and
"Description of New Securities". In addition, the Corporation does not expect
that the Issuer Trust will be filing reports under the Exchange Act with the
Commission.
THE PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. 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 NOT SPECIFICALLY INCORPORATED BY REFERENCE
INTO THE TEXTS OF SUCH DOCUMENTS). REQUESTS FOR SUCH DOCUMENTS SHOULD BE
DIRECTED TO: CULLEN/FROST BANKERS, INC., 100 W. HOUSTON STREET, SAN ANTONIO,
TEXAS 78205, ATTENTION: BART R. VINCENT, TELEPHONE: (210) 220-4011. IN ORDER TO
ENSURE TIMELY DELIVERY OF SUCH DOCUMENTS, ANY REQUEST SHOULD BE MADE BY
, 1997.
6
<PAGE> 9
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Commission
pursuant to Section 13(a) or 15(d) of the Exchange Act are incorporated into
this Prospectus by reference:
1. The Corporation's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 (as amended by Form 10-K/A as filed on April 29,
1996);
2. The Corporation's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996, June 30, 1996 and September 30, 1996; and
3. The Corporation's Current Report on Form 8-K filed on February 4, 1997.
Each document or report 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 any offering of securities made by this Prospectus shall be
deemed to be incorporated by reference into this Prospectus and to be a part of
this Prospectus from the date of filing of such document. Any statement
contained herein, or in a document all or a portion of which is incorporated or
deemed to be incorporated by reference herein or therein, shall be deemed to be
modified or superseded for purposes of the Registration Statement and this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of the Registration Statement or this Prospectus.
------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE CORPORATION OR THE ISSUER TRUST. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OF ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN
OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN
THE AFFAIRS OF THE CORPORATION OR THE ISSUER TRUST SINCE THE DATE HEREOF.
---------------------
THE NEW CAPITAL SECURITIES WILL BE ISSUED, AND 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 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.
7
<PAGE> 10
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information....................................... 6
Incorporation of Certain Documents by Reference............. 7
Summary..................................................... 9
Risk Factors................................................ 18
Consolidated Ratios of Earnings to Fixed Charges............ 25
Cullen/Frost Bankers, Inc. ................................. 25
Cullen/Frost Capital Trust I................................ 26
Use of Proceeds............................................. 26
Capitalization.............................................. 27
Accounting Treatment........................................ 27
The Exchange Offer.......................................... 28
Description of New Securities............................... 37
Description of Old Securities............................... 63
Relationship Among the Capital Securities, the Junior
Subordinated Debentures, the Guarantee and the Expense
Agreement................................................. 63
Certain Federal Income Tax Consequences..................... 65
Certain ERISA Considerations................................ 68
Plan of Distribution........................................ 69
Experts..................................................... 70
</TABLE>
8
<PAGE> 11
SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements contained and incorporated by reference in
this Prospectus.
CULLEN/FROST BANKERS, INC.
The Corporation, a Texas business corporation incorporated in 1977 and
headquartered in San Antonio, Texas, is a bank holding company. The New
Galveston Company, incorporated under the laws of Delaware ("New Galveston"), is
a wholly owned second-tier bank holding company subsidiary of the Corporation
that owns all of the Corporation's banking and non-banking subsidiaries. The
Corporation's principal assets consist of all the capital stock of The Frost
National Bank ("Frost Bank") and United States National Bank of Galveston
("USNB"), both of which are located in Texas. The Corporation through its
subsidiary banks offers a wide range of banking and other financial services.
These services include commercial banking, consumer banking, international
banking, trust services, correspondent banking and discount brokerage.
CULLEN/FROST CAPITAL TRUST I
The Issuer Trust is a statutory business trust created under Delaware law
pursuant to (i) the Trust Agreement between the Corporation, as Depositor, The
Bank of New York, as Property Trustee, and The Bank of New York (Delaware), as
Delaware Trustee, and (ii) the filing of a certificate of trust with the
Delaware Secretary of State on February 3, 1997. The Issuer Trust's business and
affairs are conducted by its trustees: initially, The Bank of New York, as
Property Trustee, The Bank of New York (Delaware), as Delaware Trustee and the
Administrative Trustees named in the Trust Agreement. The Issuer Trust exists
for the exclusive purposes of (i) issuing and selling the Trust Securities, (ii)
using the proceeds from the sale of the Trust Securities to acquire the Junior
Subordinated Debentures and (iii) engaging in only those other activities
necessary or incidental thereto (such as registering the transfer of the Trust
Securities). Accordingly, the Junior Subordinated Debentures are the sole assets
of the Issuer Trust, and payments under the Junior Subordinated Debentures will
be the sole source of revenue of the Issuer Trust.
THE EXCHANGE OFFER
The Exchange Offer......... Up to $100,000,000 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 in
excess thereof, provided that if any Old Capital
Securities are tendered in exchange in part, the
untendered Liquidation Amount must be $100,000 or
any integral multiple of $1,000 in excess
thereof. The Corporation and the Issuer 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 ,
1997 (such time on such date being hereinafter
called the "Expiration Date") unless the Exchange
Offer is extended by the Corporation and the
Issuer Trust (in which case the term "Expiration
Date" shall mean the latest date and time to
which the Exchange Offer is extended). See "The
Exchange Offer -- Expiration Date; Extensions;
Amendments."
9
<PAGE> 12
Conditions to the Exchange
Offer.................... The Exchange Offer is subject to certain
conditions, which may be waived by the
Corporation and the Issuer 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."
The Corporation and the Issuer Trust reserve the
right in their sole 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 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 -- Expiration Date; Extensions;
Amendments."
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 Bank of New York, as exchange agent (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 may also effect
tenders by book-entry transfer, including an
Agent's Message in lieu of the 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 Issuer Trust. Such
documents should only be sent to the Exchange
Agent. Questions regarding how to tender and
requests for information should be directed to
the Exchange Agent. See "The Exchange
Offer -- Exchange Agent."
Resales of New Capital
Securities............... The Corporation and the Issuer 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
10
<PAGE> 13
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 Issuer Trust or who intends to
participate in the Exchange Offer for the purpose
of participating in the distribution of the
Capital Securities, or any broker-dealer who
purchased the Old Capital Securities from the
Issuer Trust to resell pursuant to Rule 144A or
any other available exemption under the
Securities Act, (a) 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 previously mentioned interpretive
letters, (b) will not be permitted or entitled to
tender such Old Capital Securities in the
Exchange Offer and (c) 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, any
Participating Broker-Dealer must deliver a
prospectus meeting the requirements of the
Securities Act in connection with any resales of
such New Capital Securities. 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 addresses, and
telephone and facsimile numbers of the Exchange
Agent are set forth under "The Exchange
Offer -- Exchange Agent" and in the Letter of
Transmittal.
Use of Proceeds............ Neither the Corporation nor the Issuer Trust will
receive any cash proceeds from the issuance of
the New Capital Securities offered hereby. See
"Use of Proceeds."
Certain United States
Federal Income Tax
Considerations; ERISA
Considerations........... Holders of Old Capital Securities should review the
information set forth under "Certain Federal
Income Tax Consequences" and "ERISA
Considerations" prior to tendering Old Capital
Securities in the Exchange Offer.
DESCRIPTION OF NEW CAPITAL SECURITIES
General.................... The New Capital Securities will represent preferred
undivided beneficial interests in the assets of
the Issuer Trust and will have a preference under
certain circumstances with respect to
Distributions and amounts payable on liquidation,
redemption or otherwise over the Common
Securities. See "Description of New
Securities -- Description of Capital
Securities -- Subordination of Common
Securities". The sole assets of the Issuer Trust
are the Junior Subordinated Debentures, and
payments under the Junior Subordinated Debentures
and the Expense Agreement will be the sole
sources of revenue of the Issuer Trust. The
Junior Subordinated Debentures are unsecured
subordinated debt securities issued under the
Indenture between the Corporation and The Bank of
New York, as trustee.
11
<PAGE> 14
Securities Offered......... Up to $100,000,000 aggregate Liquidation Amount of
the Issuer's 8.42% Capital Securities, Series A,
which have been registered under the Securities
Act (Liquidation Amount $1,000 per Capital
Security). The New Capital Securities will be
issued, and the Old Capital Securities were
issued, under the Trust Agreement. See
"Description of New Securities -- Description of
Capital Securities -- General." 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, are not subject to
certain restrictions on transfer applicable to
the Old Capital Securities and will not provide
for any increase in the Distribution rate
thereon. See "The Exchange Offer -- Purpose and
Effect of the Exchange Offer," "Description of
New Securities" and "Description of Old
Securities."
Maturity................... The Capital Securities are scheduled to mature on
February 1, 2027 (the "Stated Maturity").
However, upon the occurrence of a Tax Event or a
Capital Treatment Event, the Corporation in
certain circumstances will have the right to
shorten the Stated Maturity of the Junior
Subordinated Debentures to a date not earlier
than February 1, 2017. See "Description of New
Securities -- Description of Junior Subordinated
Debentures -- Conditional Right to Shorten
Maturity or Redeem upon a Tax Event or a Capital
Treatment Event."
Distributions.............. Holders of the New Capital Securities will be
entitled to receive as a preference cumulative
cash Distributions accruing from the date of
original issuance of the Old Capital Securities
and payable semi-annually in arrears on February
1 and August 1 of each year, commencing August 1,
1997, at a rate of 8.42% per annum to the persons
in whose names the Capital Securities are
registered at the close of business on the
relevant record dates. See "Description of New
Securities -- Description of Capital
Securities -- Distributions."
Holders of Old Capital Securities whose Old Capital
Securities are accepted for exchange will not
receive accumulated Distributions on such Old
Capital Securities for any period from and after
the last Distribution date with respect to such
Old Capital Securities prior to the original
issue date of the New Capital Securities or, if
no such Distributions have been made, will not
receive any accumulated 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 such Distribution date or, if no such
Distributions have been made, from and after
February 3, 1997.
The Junior Subordinated Debentures are unsecured
and rank subordinate and junior in right of
payment to all Senior Indebtedness (as defined
herein) of the Corporation. The ability of the
Issuer 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. See
"Risk Factors -- Ranking of Subordinated
Obligations Under the Guarantee and the Junior
Subordinated Debentures, Corporation's Source of
Funds."
12
<PAGE> 15
Option to Extend Interest
Payment Period........... 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 Debentures at any time or from
time to time by extending the interest payment
period thereon for up to 10 consecutive
semi-annual periods (an "Extension Period");
provided, however, that no Extension Period may
extend beyond the Stated Maturity of the Junior
Subordinated Debentures (February 1, 2027). If
interest payments on the Junior Subordinated
Debentures are deferred, Distributions on the
Capital Securities also will be deferred and the
Corporation will not be permitted, subject to
certain exceptions set forth herein, to declare
or pay any cash distributions with respect to the
Corporation's capital stock or debt securities of
the Corporation that rank pari passu with or
junior to the Junior Subordinated Debentures.
During an Extension Period, Distributions on the
Capital Securities will continue to accumulate
and Distributions that are in arrears will bear
interest on the amount thereof at a rate of 8.42%
per annum (to the extent permitted by law),
compounded semi-annually, and holders of the
Capital Securities will be required to accrue
interest income for United States federal income
tax purposes in advance of receipt of cash
related to such income. Upon the termination of
any 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. See "Description
of New Securities -- Description of Junior
Subordinated Debentures -- Option to Extend
Interest Payment Period" and "-- Description of
Capital Securities -- Distributions."
The Corporation has no current plan to exercise its
right to defer payments of interest by extending
the interest payment period on the Junior
Subordinated Debentures. However, should the
Corporation elect to exercise such right in the
future, the market price of the Capital
Securities is likely to be affected. See "Risk
Factors -- Option to Extend Interest Payment
Period; Tax Consequences", "Description of New
Securities -- Description of Junior Subordinated
Debentures -- Option to Extend Interest Payment
Period" and "Certain Federal Income Tax
Consequences -- Interest Income and Original
Issue Discount."
The Guarantee.............. The payment of Distributions and payments on the
liquidation of the Issuer or the redemption of
the Capital Securities are guaranteed by the
Corporation to the extent that the Issuer Trust
has sufficient funds available therefor. Such
guarantee will be subordinate and junior in right
of payment to all Senior Indebtedness of the
Corporation. See "Risk Factors -- Rights Under
the Guarantee" and "Description of New
Securities -- Description of Guarantee."
Ranking.................... The New Capital Securities will rank pari passu,
and payments thereon will be made pro rata, with
the Common Securities except as described under
"Description of New Securities -- Description of
Capital Securities -- Subordination of Common
Securities." The New Junior Subordinated
Debentures will rank pari passu with all other
junior subordinated debentures (if any) issued by
the Corporation and sold (if at all) to other
trusts (if any) established by the
13
<PAGE> 16
Corporation (if any), in each case similar to the
Issuer Trust, and will be unsecured and
subordinate and rank junior in right of payment
to the extent and in the manner set forth in the
Indenture to all Senior Indebtedness (as defined
herein). See "Description of New
Securities -- Description of Junior Subordinated
Debentures." The New Guarantee will rank pari
passu with all other guarantees (if any) issued
by the Corporation with respect to capital
securities (if any) issued by such other trusts
and will constitute an unsecured obligation of
the Corporation and will rank subordinate and
junior in right of payment to the extent and in
the manner set forth in the New Guarantee to all
Senior Indebtedness. See "Description of New
Securities -- Description of Guarantee."
Redemption................. The Capital Securities are subject to mandatory
redemption (i) in whole but not in part at the
Stated Maturity upon repayment of the Junior
Subordinated Debentures, (ii) in whole but not in
part contemporaneously with the optional
redemption at any time by the Corporation of the
Junior Subordinated Debentures at any time prior
to February 1, 2007 upon the occurrence and
continuation of a Tax Event or Capital Treatment
Event and (iii) in whole or in part at any time
on or after February 1, 2007, contemporaneously
with the optional redemption by the Corporation
of the Junior Subordinated Debentures, in each
case at the applicable Redemption Price. See
"Risk Factors -- Tax Event or Capital Treatment
Event" and "Description of New Securities --
Description of Capital Securities--Redemption."
See "Risk Factors -- Possible Tax Law Changes
Affecting the Capital Securities" for a
discussion of certain legislation proposals that,
if adopted, could give rise to a Tax Event, which
may permit the Corporation to cause a redemption
of the Capital Securities prior to February 1,
2007.
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). 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.
ERISA Considerations....... Prospective purchasers must carefully consider the
restrictions on purchase set forth under "Certain
ERISA Considerations."
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. Although J.P. Morgan Securities Inc. and
Credit Suisse First Boston Corporation, the
initial purchasers of the Old Capital Securities
(the "Initial Purchasers"), have informed the
Corporation and the Issuer Trust that they
currently intend to make a market in the New
Capital Securities, they are not obligated to do
so, and any such market making may be
discontinued at any time without notice.
Accordingly, there can be no assurance as to the
development or liquidity of any market for the
New Capital Securities. The Issuer Trust and the
Corporation do not intend to apply for listing of
the New Capital Securities on any securities
exchange or for quotation through NASDAQ.
14
<PAGE> 17
RISK FACTORS
Holders tendering Old Capital Securities in the Exchange Offer should
carefully consider the matters set forth under "Risk Factors."
For further information regarding the New Securities, see "Description of
New Securities."
15
<PAGE> 18
SELECTED CONSOLIDATED FINANCIAL INFORMATION OF THE CORPORATION
The following table presents summary consolidated financial data which has
been derived from, and should be read in conjunction with, the consolidated
financial statements, notes thereto and other information of the Corporation
found in the Corporation's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 and other financial statements of the Corporation. This
summary is qualified in its entirety by the detailed information and financial
statements included in the documents incorporated by reference herein, available
as described under "Available Information" and "Incorporation of Certain
Documents by Reference".
CULLEN/FROST BANKERS, INC.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
CONDENSED INCOME STATEMENTS
Net interest income............................. $179,082 $152,255 $136,347 $127,826 $116,657
Net interest income(1).......................... 180,079 153,136 136,989 128,709 117,786
Combined provisions (credit) for possible loan
losses and real estate valuations............. 7,300 6,882 (4,640) 18,461
Non-interest income
Trust......................................... 34,031 31,762 29,529 26,278 21,861
Service charges on deposit accounts........... 38,294 30,382 28,182 27,303 21,958
Other service charges......................... 8,764 11,055 9,366 7,972 7,888
Net securities transactions................... (980) (1,396) (4,038) 1,433 (232)
Other......................................... 14,426 15,940 13,776 13,243 10,338
-------- -------- -------- -------- --------
Total non-interest income.............. $ 94,535 $ 87,743 $ 76,815 $ 76,229 $ 61,813
Non-interest expense
Salaries & wages.............................. 71,788 58,177 52,986 53,654 46,184
Pensions and other benefits................... 15,351 10,905 9,910 12,052 9,746
Net occupancy................................. 18,782 17,992 15,777 20,749 16,963
Furniture & equipment......................... 11,789 11,259 10,937 10,155 8,295
Intangible amortization....................... 11,306 8,124 7,627 6,877 700
Other......................................... 51,564 55,382 58,325 67,146 52,299
-------- -------- -------- -------- --------
Total non-interest expense............. $180,580 $161,839 $155,562 $170,633 $134,187
Income before taxes............................. 85,737 71,277 57,600 38,062 25,822
Income taxes (credits).......................... 30,759 24,998 20,177 (9,174)(7) 1,700(6)
-------- -------- -------- -------- --------
Net income...................................... $ 54,978 $ 46,279 $ 37,423 $ 47,236 $ 24,122
Cash earnings(2)................................ 63,017 51,908 42,443 51,768 24,639
PER COMMON SHARE DATA(8)
Net income -- primary........................... $ 2.40 $ 2.04 $ 1.67 $ 2.12(7) $ 1.13(6)
Cash earnings -- primary........................ 2.75 2.29 1.89 2.32 1.12
Cash dividends.................................. .81 .57 .34 .08
Shareholders' equity............................ 16.86 15.24 13.28 12.42 9.90
Tangible shareholders' equity(3)................ 13.62 12.59 11.46 9.97 9.50
Average common and common equivalent shares (in
thousands).................................... 22,906 22,676 22,446 22,302 21,949
SELECTED FINANCIAL DATA
Return on average assets........................ 1.22% 1.17% 1.02% 1.34% .79%
Cash earnings ROA(4)............................ 1.40 1.32 1.16 1.47 .81
Return on average equity........................ 15.32 14.32 13.04 19.00 12.56
Cash earnings ROE(5)............................ 17.56 16.06 14.79 20.83 12.83
Net interest income to average earning
assets(1)..................................... 4.76 4.56 4.39 4.27 4.43
</TABLE>
- ---------------
(1) Taxable equivalent basis assuming a 35% tax rate for 1993-1996 and a 34% tax
rate for 1992.
(2) Net income before intangible amortization (goodwill and core deposit
intangibles, net of tax).
(3) Shareholders' equity excluding the SFAS 115 market value adjustment less
intangible assets, net of tax.
(4) Cash earnings as a percentage of average assets.
(5) Cash earnings as a percentage of average shareholders' equity.
(6) Includes an extraordinary credit of $6,497,000 for utilization of net
operating loss carryforwards.
(7) Includes a one-time benefit of $8,439,000 related to a change in accounting
for income taxes.
(8) Previous years restated to reflect 2 for 1 stock split.
16
<PAGE> 19
CULLEN/FROST BANKERS, INC.
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET SUMMARY
Average Balance:
Loans............................................ $ 2,087 $ 1,683 $ 1,340 $ 1,172 $ 1,046
Earning assets................................... 3,780 3,357 3,119 3,011 2,658
Total assets..................................... 4,496 3,944 3,658 3,512 3,055
Private deposits................................. 3,611 3,130 2,996 2,967 2,597
Public funds..................................... 290 163 125 117 114
Total deposits............................ 3,901 3,293 3,121 3,084 2,711
Period-End Balance:
Loans............................................ $ 2,252 $ 1,817 $ 1,483 $ 1,258 $ 1,030
Earning assets................................... 3,781 3,454 3,245 3,120 2,727
Intangible assets................................ 70 53 43 45 8
Total assets..................................... 4,888 4,200 3,794 3,639 3,151
Total deposits................................... 4,243 3,646 3,088 3,149 2,769
Shareholders' equity............................. 379 341 295 274 206
Adjusted shareholders' equity(1)................. 371 333 298 264 206
Tangible shareholders' equity(2)................. 306 282 255 220 198
ASSET QUALITY (IN THOUSANDS)
Allowance for possible loan losses................. $36,308 $31,577 $25,741(3) $26,298 $31,897
As a percentage of period-end loans.............. 1.61% 1.74% 1.74% 2.09% 3.10%
Net charge-offs (recoveries):
Real estate...................................... $(2,116) $(1,030) $ (621) $ 1,069 $ 9,039
Commercial and industrial........................ 2,511 (1,068) (2,118) (2,290) 1,858
Consumer......................................... 2,293 2,586 665 1,132 1,441
Other............................................ (119) (52) (53) (397) 3,650
------- ------- ------- ------- -------
Total..................................... $ 2,569 $ 436 $(2,127) $ (486) $15,988
As a percentage of average loans................... .12% .03% (.16)% (.04)% 1.53%
Non-performing assets:
Non-accrual and restructured loans .............. $ 9,724 $14,646 $16,627 $27,677 $41,851
Foreclosed assets................................ 2,242 1,509 3,311 3,433 9,452
------- ------- ------- ------- -------
Total..................................... $11,966 $16,155 $19,938 $31,110 $51,303
As a percentage of:
Total assets..................................... .24% .38% .53% .85% 1.63%
Total loans plus foreclosed assets............... .53 .89 1.34 2.47 4.94
</TABLE>
- ---------------
(1) Shareholders' equity excluding the SFAS 115 market value adjustment.
(2) Shareholders' equity excluding the SFAS 115 market value adjustment less
intangible assets, net of tax.
(3) Includes a reduction of $2,684,000 related to the exchange of Cullen/Frost
Bank in Dallas for Texas Commerce Bank-Corpus Christi. See "Cullen/Frost
Bankers, Inc. -- Recent Developments."
17
<PAGE> 20
RISK FACTORS
Holders of Old Capital Securities should carefully review the information
contained elsewhere in this Prospectus and should particularly consider the
following matters before deciding whether to accept the Exchange Offer. In
addition, because holders of Capital Securities may receive Junior Subordinated
Debentures in exchange therefor upon liquidation of the Issuer Trust,
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.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR
SUBORDINATED DEBENTURES, CORPORATION'S SOURCE OF FUNDS
The obligations of the Corporation under the Guarantee issued by the
Corporation for the benefit of the holders of Capital Securities and under the
Junior Subordinated Debentures are subordinate and junior in right of payment to
all Senior Indebtedness (as defined in "Description of New
Securities -- Description of Junior Subordinated Debentures -- Subordination"
and in the Indenture) of the Corporation. The Corporation currently has no
outstanding Senior Indebtedness. Because the Corporation is a holding company,
the right of the Corporation to participate in any distribution of assets of any
subsidiary of the Corporation upon such subsidiary's dissolution, winding-up,
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 a creditor of that subsidiary and its claims are
recognized. At December 31, 1996, Frost Bank had an aggregate (excluding
deposits and liabilities owed to the Corporation) of approximately $129 million
of banknotes and other borrowings outstanding. The principal source of funds for
the Corporation to satisfy its obligations under the Junior Subordinated
Debentures and the Guarantee are the Corporation's subsidiaries. There are
various legal limitations on the extent to which the Corporation's subsidiaries
may extend credit, pay dividends or otherwise supply funds to, or engage in
transactions with, the Corporation or certain of its other subsidiaries. The
prior approval of the Comptroller of the Currency is required if the total of
all dividends declared by a national bank, such as Frost Bank and USNB, in any
calendar year would exceed the bank's net profits, as defined, for that year
combined with its retained profits for the preceding two calendar years less any
required transfers to surplus. In addition, a national bank may not pay
dividends in an amount in excess of its undivided profits less certain bad
debts. Although not necessarily indicative of amounts available to be paid in
future periods, the Corporation's subsidiary national banks had approximately
$6.5 million available for payment of dividends at December 31, 1996.
Accordingly, the Junior Subordinated Debentures and Guarantee will be
effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries and holders of Junior Subordinated Debentures and the
Guarantee should look only to the assets of the Corporation for payments on the
Junior Subordinated Debentures and the Guarantee. See "Cullen/Frost Bankers,
Inc." None of the Indenture, the Guarantee, the Trust Agreement or the Expense
Agreement places any limitation on the amount of secured or unsecured debt,
including Senior Indebtedness, that may be incurred by the Corporation. See
"Description of New Securities -- Description of Guarantee -- Status of the
Guarantee" and "Description of New Securities -- Description of Junior
Subordinated Debentures -- Subordination."
The ability of the Issuer Trust to pay amounts due on the Capital
Securities is solely dependent upon the Corporation's making payments on the
Junior Subordinated Debentures as and when required, and the Corporation's
ability to pay is principally dependent upon funds furnished by the
Corporation's subsidiaries.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES
So long as no Event of Default (as defined in the Indenture) has occurred
and is continuing with respect to the Junior Subordinated Debentures (a
"Debenture Event of Default"), the Corporation has the right under the Indenture
to defer the payment of interest on the Junior Subordinated Debentures at any
time or from time to time for a period not exceeding 10 consecutive semi-annual
periods with respect to each Extension Period, provided that no Extension Period
may extend beyond the Stated Maturity of the Junior Subordinated Debentures. See
"Description of New Securities -- Description of Junior Subordinated
Debentures--Debenture Events of Default." As a consequence of any such deferral,
semi-annual Distributions on
18
<PAGE> 21
the Capital Securities by the Issuer Trust will be deferred (and the amount of
Distributions to which holders of the Capital Securities are entitled will
accumulate additional Distributions thereon at the rate of 8.42% per annum,
compounded semi-annually from the relevant payment date for such Distributions)
during any such Extension Period. During any such Extension Period, the
Corporation may not (i) make any payment of principal of or interest or premium,
if any, on or repay, repurchase or redeem any debt securities of the Corporation
that rank pari passu in all respects with or junior in interest to the Junior
Subordinated Debentures or (ii) 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 (other than (a) repurchases, redemptions
or other acquisitions of shares of capital stock of the Corporation in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of any one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Corporation (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable Extension Period, (b) as a result of an exchange or conversion
of any class or series of the Corporation's capital stock (or any capital stock
of a subsidiary of the Corporation) for any class or series of the Corporation's
capital stock or of any class or series of the Corporation's indebtedness for
any class or series of the Corporation's capital stock, (c) 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, (d) any declaration of a dividend in connection
with any stockholders' rights plan, or the issuance of rights, stock or other
property under any stockholders' rights plan, or the redemption or repurchase of
rights pursuant thereto, or (e) any dividend in the form of stock, warrants,
options or other rights where the dividend stock or the stock issuable upon
exercise of such warrants, options or other rights is the same stock as that on
which the dividend is being paid or ranks pari passu with or junior to such
stock). Prior to the termination of any such Extension Period, the Corporation
may further defer the payment of interest, provided that no Extension Period may
exceed 10 consecutive semi-annual periods or extend beyond the Stated Maturity
of the Junior Subordinated Debentures. Upon the termination of any Extension
Period and the payment of all interest then accrued and unpaid (together with
interest thereon at the annual rate of 8.42%, compounded semi-annually, to the
extent permitted by applicable law), the Corporation may elect to begin a new
Extension Period subject to the above conditions. 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 New Securities -- Description
of Junior Subordinated Debentures--Option to Extend Interest Payment Period."
Should an Extension Period occur, a holder of Capital Securities will
continue to accrue income (in the form of original issue discount) in respect of
its pro rata share of the Junior Subordinated Debentures held by the Issuer
Trust for United States federal income tax purposes. As a result, a holder of
Capital Securities will include such income in gross income for United States
federal income tax purposes in advance of the receipt of cash, and will not
receive the cash related to such income from the Issuer Trust if the holder
disposes of the Capital Securities prior to the record date for the actual
payment of Distributions. See "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue Discount" and "-- Sales or
Redemptions of Capital Securities."
The Corporation has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures. However, should the Corporation elect to exercise such
right in the future, the market price of the Capital Securities is likely to be
adversely 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, as a
result of the existence of the Corporation's right to defer interest payments,
the market price of the Capital Securities (which represent preferred undivided
beneficial interests in the assets of the Issuer Trust) may be more volatile
than the market prices of other securities on which original issue discount
accrues that are not subject to such deferrals.
19
<PAGE> 22
TAX EVENT OR CAPITAL TREATMENT EVENT
Upon the occurrence of a Tax Event or a Capital Treatment Event (whether
occurring before or after February 1, 2007), the Corporation has the right, if
certain conditions are met, (i) to shorten the maturity of the Junior
Subordinated Debentures to a date not earlier than February 1, 2017, or (ii) to
redeem the Junior Subordinated Debentures in whole (but not in part) within 90
days following the occurrence of such Tax Event or Capital Treatment Event and
thereby cause a mandatory redemption of the Capital Securities. The Corporation
has committed to the Federal Reserve that it will not cause any such
distribution, shortening of the maturity or redemption without having received
the prior approval of the Federal Reserve to do so, if then required under
applicable Federal Reserve capital guidelines or policies. See "Description of
New Securities -- Description of Junior Subordinated Debentures -- Conditional
Right to Shorten Maturity or Redeem upon a Tax Event or Capital Treatment
Event."
A "Tax Event" means, with respect to Junior Subordinated Debentures held by
the Issuer Trust, the receipt by the Issuer Trust of an opinion of counsel
experienced in such matters to the effect that, as a result of any amendment to,
or change (including any announced proposed 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 proposed
change, pronouncement or decision is announced on or after the date of issuance
of the Capital Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) the Issuer 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 Issuer Trust is, or will be within 90 days of the date of
the opinion, subject to more than a de minimis amount of other taxes, duties or
other governmental charges. With respect to Junior Subordinated Debentures which
are no longer held by the Issuer Trust, "Tax Event" means the receipt by the
Corporation 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
proposed 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 proposed change, pronouncement or decision is announced on or
after the date of issuance of the Junior Subordinated Debentures under the
Indenture, there is more than an insubstantial risk that 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 (each of the
circumstances referred to in clauses (i), (ii) and (iii) of the preceding
sentence and the circumstances referred to in this sentence being referred to
herein as an "Adverse Tax Consequence").
See "-- Possible Tax Law Changes Affecting the Capital Securities" for a
discussion of certain legislative proposals that, if adopted, could give rise to
a Tax Event, which may permit the Corporation to shorten the maturity of the
Junior Subordinated Debentures or cause a redemption of the Capital Securities
prior to February 1, 2007.
A "Capital Treatment Event" means the reasonable determination by the
Corporation that, as a result of any amendment to, or change (including any
proposed change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision thereof or therein, or as a result of any
official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or such proposed change, pronouncement, action or decision is
announced on or after the date of issuance of the Capital Securities under the
Trust Agreement, there is more than an insubstantial risk that the Corporation
will not be entitled to treat an amount equal to the Liquidation Amount of the
Capital Securities as "Tier I Capital" (or the then equivalent thereof) for
purposes of the capital adequacy guidelines of the Federal Reserve, as then in
effect and applicable to the Corporation.
20
<PAGE> 23
EXCHANGE OF CAPITAL SECURITIES FOR JUNIOR SUBORDINATED DEBENTURES
The holder of all of the outstanding Common Securities will have the right
at any time to terminate the Issuer Trust and, after satisfaction of liabilities
to creditors of the Issuer Trust as provided by applicable law, cause the Junior
Subordinated Debentures to be distributed to the holders of the Capital
Securities and Common Securities in liquidation of the Issuer Trust. The
Corporation has committed to the Federal Reserve that, so long as the
Corporation (or any affiliate) is a holder of Common Securities, the Corporation
will not exercise such right without having received the prior approval of the
Federal Reserve to do so, if then required under applicable Federal Reserve
capital guidelines or policies. See "Description of New Securities --
Description of Capital Securities -- Liquidation Distribution Upon Termination."
Under current United States federal income tax law and interpretations, and
assuming, as expected, that the Issuer Trust will not be taxable as a
corporation, a distribution of the Junior Subordinated Debentures upon a
liquidation of the Issuer Trust should not be a taxable event to holders of the
Capital Securities. However, if a Tax Event were to occur that would cause the
Issuer Trust to be subject to United States federal income tax with respect to
income received or accrued on the Junior Subordinated Debentures, a distribution
of the Junior Subordinated Debentures by the Issuer Trust could be a taxable
event to the Issuer Trust and the holders of the Capital Securities. See
"Certain Federal Income Tax Consequences -- Distribution of Junior Subordinated
Debentures to Securityholders."
SHORTENING OF STATED MATURITY OF JUNIOR SUBORDINATED DEBENTURES
Upon the occurrence of a Tax Event or a Capital Treatment Event, the
Corporation in certain circumstances will have the right to shorten the maturity
of the Junior Subordinated Debentures to a date not earlier than February 1,
2017 and thereby cause the Capital Securities to be redeemed on such earlier
date. See "Description of New Securities -- Description of Junior Subordinated
Debentures -- Conditional Right to Shorten Maturity or Redeem upon a Tax Event
or a Capital Treatment Event."
MARKET PRICES
There can be no assurance as to the market prices for Capital Securities,
or for Junior Subordinated Debentures that may be distributed in exchange for
Capital Securities if a liquidation of the Issuer Trust occurs. Accordingly, the
Capital Securities or the Junior Subordinated Debentures that a holder of
Capital Securities may receive on liquidation of the Issuer Trust may trade at a
discount to the price that the investor paid to purchase the Capital Securities
offered hereby. As a result of the existence of the Corporation's right to defer
interest payments and the corresponding accrual of income for United States
federal income tax purposes, the market price of the Capital Securities may be
more volatile than the market prices of other debt securities that are not
subject to such optional deferrals. Because holders of Capital Securities may
receive Junior Subordinated Debentures on termination of the Issuer Trust,
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 Bank of New York will act as the trustee under the Guarantee (the
"Guarantee Trustee") and will hold the Guarantee for the benefit of the holders
of the Capital Securities. The Bank of New York will also act as Debenture
Trustee for the Junior Subordinated Debentures and as Property Trustee under the
Trust Agreement. The Guarantee guarantees to the holders of the Capital
Securities the following payments, to the extent not paid by the Issuer Trust:
(i) any accumulated and unpaid Distributions required to be paid on the Capital
Securities, to the extent that the Issuer Trust has funds on hand available
therefor at such time, (ii) the Redemption Price with respect to any Capital
Securities called for redemption, to the extent that the Issuer Trust has funds
on hand available therefor at such time, and (iii) upon a voluntary or
involuntary termination, winding-up or liquidation of the Issuer Trust (unless
the Junior Subordinated Debentures are distributed to holders of the Capital
Securities), the lesser of (a) the aggregate of the Liquidation Amount
21
<PAGE> 24
and all accumulated and unpaid Distributions to the date of payment, to the
extent that the Issuer Trust has funds on hand available therefor at such time,
and (b) the amount of assets of the Issuer Trust remaining available for
distribution to holders of the Capital Securities on liquidation of the Issuer
Trust. The Guarantee is subordinate as described under "-- Ranking of
Subordinated Obligations Under the Guarantee and the Junior Subordinated
Debentures, Corporation's Source of Funds." The holders of not less than a
majority in aggregate Liquidation Amount of the outstanding 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 Issuer Trust,
the Guarantee Trustee or any other person or entity. If the Corporation were to
default on its obligation to pay amounts payable under the Junior Subordinated
Debentures, the Issuer Trust may lack funds for the payment of Distributions or
amounts payable on redemption of the Capital Securities or otherwise, and, in
such event, holders of the Capital Securities would not be able to rely upon the
Guarantee for payment of such amounts. Instead, if a Debenture Event of Default
has occurred and is continuing and such event is attributable to the failure of
the Corporation to pay any amounts payable in respect of the Junior Subordinated
Debentures on the payment date on which such payment is due and payable, then a
holder of Capital Securities may institute a legal proceeding directly against
the Corporation for enforcement of payment to such holder of any amounts payable
in respect of such Junior Subordinated Debentures having a principal amount
equal to the aggregate Liquidation Amount of the Capital Securities of such
holder (a "Direct Action"). In connection with such Direct Action, the
Corporation will have a right of set-off under the Indenture to the extent of
any payment made by the Corporation to such holder of Capital Securities in the
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 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 Guarantee and the Indenture.
LIMITED VOTING RIGHTS
Holders of Capital Securities will have limited voting rights relating
generally to the modification of the Capital Securities and the Guarantee and
the exercise of the Issuer Trust's rights as holder of Junior Subordinated
Debentures. Holders of Capital Securities will not be entitled to appoint,
remove or replace the Property Trustee, the Delaware Trustee or any
Administrative Trustee except upon the occurrence of certain events described
herein. The Property Trustee, the Administrative Trustees and the holders of all
of the Common Securities may, subject to certain conditions, amend the Trust
Agreement without the consent of holders of Capital Securities to cure any
ambiguity or make other provisions not inconsistent with other provisions under
the Trust Agreement or to ensure that the Issuer Trust (i) will not be taxable
as a corporation or will be taxable as a grantor trust for United States federal
income tax purposes, or (ii) will not be required to register as an "investment
company" under the Investment Company Act. See "Description of New
Securities -- Description of Capital Securities -- Voting Rights; Amendment of
Trust Agreement" and "--Removal of Issuer Trustees; Appointment of Successors."
CONSEQUENCES OF 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
22
<PAGE> 25
to have such Old Capital Securities registered under the Securities Act or to
any similar rights under the Registration Rights Agreement (subject to certain
limited exceptions). The Corporation and the Issuer Trust do not intend to
register under the Securities Act any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer (subject to such limited
exceptions, if applicable). 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.
The New Capital Securities and any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer will constitute a single
series of Capital Securities under the Trust Agreement and, accordingly, 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 the Capital Securities --
General."
The Old Capital Securities provide that, if the Exchange Offer is not
consummated on or prior to the 30th day after the date hereof, the Distribution
rate borne by the Old Capital Securities will increase by 0.25% per annum
commencing on the 31st day after the date hereof, until the Exchange Offer is
consummated. See "Description of Old Securities." Following consummation of the
Exchange Offer, the Capital Securities will not be entitled to any increase in
the Distribution rate thereon.
ABSENCE OF PUBLIC MARKET
The Old Capital Securities were issued to, and the Corporation believes are
currently owned by, a relatively small number of beneficial owners. The Old
Capital Securities have not been registered under the Securities Act and will be
subject to restrictions on transferability to the extent that they are not
exchanged for the New Capital Securities. Although the New Capital Securities
will generally be permitted to be resold or otherwise transferred by the holders
(who are not affiliates of the Corporation or the Issuer) 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 Issuer Trust have been advised by the Initial Purchasers
that the Initial Purchasers presently intend to make a market in the New Capital
Securities. However, the Initial Purchasers are 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 of such securities will depend on many factors, including, among
other things, prevailing interest rates, 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 Issuer 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 must acknowledge that it will deliver a prospectus in connection
with any resale of such New Capital Securities. See "Plan of Distribution."
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<PAGE> 26
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 Exchange Agent 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 should allow sufficient time to ensure timely delivery. Neither the
Corporation, the Issuer Trust nor 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.
POSSIBLE TAX LAW CHANGES AFFECTING THE CAPITAL SECURITIES
On February 6, 1997, the revenue portion of President Clinton's 1997 budget
proposal (the "Budget Proposal"), was released. If enacted, the Budget Proposal
would generally deny interest deductions for interest on an instrument issued by
a corporation that has a maximum term of more than 15 years and that is not
shown as indebtedness on the separate balance sheet of the issuer or, where the
instrument is issued to a related party (other than a corporation), where the
holder or some other related party issues a related instrument that is not shown
as indebtedness on the issuer's consolidated balance sheet. The above described
provision of the Budget Proposal is proposed to be effective generally for
instruments issued on or after the date of first Congressional committee action.
If this provision were to apply to the New Junior Subordinated Debentures, the
Corporation would be unable to deduct interest on the New Junior Subordinated
Debentures. Under current law, the Corporation will be able to deduct interest
on the New Junior Subordinated Debentures. There can be no assurance, however,
that current or future legislative proposals or final legislation will not
affect the ability of the Corporation to deduct interest on the New Junior
Subordinated Debentures. Such a change could give rise to a Tax Event, which may
permit the Corporation, if certain conditions are met, to shorten the maturity
of the Junior Subordinated Debentures to a date not earlier than February 1,
2017 or to cause a redemption of the Capital Securities before February 1, 2007.
See "Description of New Securities -- Description of Junior Subordinated
Debentures -- Redemption," "Description of New Securities -- Description of
Capital Securities -- Redemption" and "Description of New
Securities -- Description of Junior Subordinated Debentures -- Conditional Right
to Shorten Maturity or Redeem upon a Tax Event or Capital Treatment Event." See
also "Certain Federal Income Tax Consequences -- Possible Tax Law Changes." A
shortening of the Stated Maturity of the Junior Subordinated Debentures might
result in a taxable exchange to holders of Capital Securities.
24
<PAGE> 27
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the consolidated ratios of earnings to fixed
charges for the Corporation for each of the five years in the five-year period
ended December 31, 1996. For purposes of computing these ratios, earnings
represent net income, plus total taxes based on income, plus fixed charges.
Fixed charges include interest expense (ratios are presented both excluding and
including interest on deposits), the estimated interest component of net rental
expense and amortization of debt expense.
During the periods indicated below, no shares of preferred stock of the
Corporation were outstanding, and, therefore, the consolidated ratios of
earnings to fixed charges and preferred stock dividends would be identical to
the ratios set forth below.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Including interest on deposits.......................... 1.74 1.66 1.80 1.58 1.34
Excluding interest on deposits.......................... 8.35 5.08 6.62 5.87 4.39
</TABLE>
CULLEN/FROST BANKERS, INC.
GENERAL
The Corporation, a Texas business corporation incorporated in 1977 and
headquartered in San Antonio, Texas, is a bank holding company within the
meaning of the Bank Holding Company Act of 1956 and as such is registered with
the Federal Reserve. New Galveston, incorporated under the laws of Delaware, is
a wholly owned second-tier bank holding company subsidiary of the Corporation
that owns all of the Corporation's banking and non-banking subsidiaries. At
December 31, 1996, the Corporation had consolidated total assets of $4.9
billion, total deposits of $4.2 billion and shareholders' equity of $378.9
million. Based on information from the Federal Reserve, at December 31, 1995,
the Corporation was the largest of 97 unaffiliated bank holding companies
headquartered in Texas as determined based on total assets.
The Corporation's principal assets consist of all of the capital stock of
two national banks located in Texas, Frost Bank and USNB. The largest of the
Corporation's subsidiary banks is Frost Bank, the origin of which can be traced
to a mercantile partnership organized in 1868. At December 31, 1996, Frost Bank,
which accounted for approximately 98 percent of the consolidated assets, 97
percent of the consolidated loans, and 98 percent of the consolidated deposits
of the Corporation, was the largest bank headquartered in San Antonio and South
Texas. The Corporation's subsidiary banks have 52 offices in six major Texas
banking markets with 19 locations in the San Antonio area, 14 in the
Houston/Galveston area, 10 in the Corpus Christi area, 5 in Austin, 3 in San
Marcos and 1 in McAllen. The Corporation through its subsidiary banks offers a
wide range of banking and other financial services. These services include
commercial banking, consumer banking, international banking, trust services,
correspondent banking and discount brokerage.
The principal executive office of the Corporation is located at 100 W.
Houston Street, San Antonio, Texas 78205, telephone number (210) 220-4011.
RECENT DEVELOPMENTS
On March 7, 1997, the Corporation completed the acquisition of Corpus
Christi Bancshares, Inc. ("Corpus Christi") and its wholly-owned subsidiary,
Citizens State Bank of Corpus Christi ("Citizens") for an aggregate purchase
price of $32.2 million. On that date, the offices of Citizens became branch
locations of Frost Bank and, as a result, the Corporation acquired five new
offices in the Corpus Christi area of Texas. As of December 31, 1996, Corpus
Christi had total consolidated assets of $219.1 million and shareholders' equity
of $17.5 million.
25
<PAGE> 28
The Corporation regularly evaluates acquisition opportunities and regularly
conducts due diligence activities in connection with possible acquisitions. As a
result, acquisition discussions and, in some cases negotiations, regularly take
place and future acquisitions could occur.
On January 16, 1997, the Corporation reported net income of $14.4 million
for the quarter ended December 31, 1996 and $55.0 million for the year ended on
such date, a return on assets for the quarter and year ended on such date of
1.24% and 1.22%, respectively, and a return on equity for the quarter and year
ended on such date of 15.30% and 15.32%, respectively.
On April 30, 1996, the Corporation announced that its Board of Directors
had authorized it to repurchase up to 500,000 shares of its common stock from
time to time. As of the date hereof, no shares have been repurchased.
CULLEN/FROST CAPITAL TRUST I
The Issuer Trust is a statutory business trust created under Delaware law
pursuant to (i) the Trust Agreement between the Corporation, as Depositor, The
Bank of New York, as Property Trustee, and The Bank of New York (Delaware), as
Delaware Trustee, and (ii) the filing of a certificate of trust with the
Delaware Secretary of State on February 3, 1997. The Issuer Trust's business and
affairs are conducted by its trustees: initially, The Bank of New York, as
Property Trustee, The Bank of New York (Delaware), as Delaware Trustee and two
individual Administrative Trustees who are employees or officers of, or
affiliated with, the Corporation. The Issuer Trust exists for the exclusive
purposes of (i) issuing and selling the Trust Securities, (ii) using the
proceeds from the sale of the Trust Securities to acquire the Junior
Subordinated Debentures and (iii) engaging in only those other activities
necessary or incidental thereto (such as registering the transfer of the Trust
Securities). Accordingly, the Junior Subordinated Debentures will be the sole
assets of the Issuer Trust, and payments under the Junior Subordinated
Debentures will be the sole source of revenue of the Issuer Trust.
All of the Common Securities are presently owned 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 during the
continuation of a Debenture Event of Default arising as a result of any failure
by the Corporation to pay any amounts in respect of the Junior Subordinated
Debentures when due, the rights of the holders of the Common Securities to
payment in respect of Distributions and payments upon liquidation, redemption or
otherwise will be subordinated to the rights of the holders of the Capital
Securities. See "Description of New Securities -- Description of Capital
Securities--Subordination of Common Securities." The Corporation acquired Common
Securities in an aggregate liquidation amount equal to approximately, but not
less than, 3% of the total capital of the Issuer Trust. The Issuer Trust has a
term of 31 years, but may terminate earlier as provided in the Trust Agreement.
USE OF PROCEEDS
Neither the Corporation nor the Issuer Trust will receive any cash proceeds
from the issuance of the New Capital Securities offered hereby. In consideration
for issuing the New Capital Securities in exchange for Old Capital Securities as
described in this Prospectus, the Issuer Trust will receive Old Capital
Securities in like Liquidation Amount. The Old Capital Securities surrendered in
exchange for the New Capital Securities will be retired and cancelled.
The net proceeds to the Issuer Trust from the offering of the Old Capital
Securities was approximately $100 million (before deducting expenses associated
with the offering). All of the proceeds from the sale of the Old Capital
Securities were invested by the Issuer in the Old Junior Subordinated
Debentures. The Corporation intends that the net proceeds from the sale of the
Old Junior Subordinated Debentures will be added to its general corporate funds
and will be used for general corporate purposes, which may include the reduction
of short-term indebtedness, investments at the holding company level,
investments in the capital of, or extensions of credit to, the Corporation's
subsidiaries, acquisitions and the repurchase of the Corporation's common stock.
Pending such application by the Corporation, such net proceeds may be
temporarily invested in short-term interest bearing securities. The Capital
Securities are currently eligible to qualify as "Tier I Capital" under the
capital guidelines of the Federal Reserve.
26
<PAGE> 29
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Corporation and its subsidiaries as of December 31, 1996 and as adjusted to give
effect to the consummation of the offering of the Old Capital Securities, as if
such transaction had occurred on December 31, 1996. The following data should be
read in conjunction with the consolidated financial statements of the
Corporation and its subsidiaries, including the notes thereto, which are
incorporated herein by reference. See "Incorporation of Certain Documents by
Reference." The issuance of New Capital Securities in the Exchange Offer will
have no effect on the capitalization of the Corporation.
<TABLE>
<CAPTION>
DECEMBER 31,
1996
-----------------
AS
ACTUAL ADJUSTED
------ --------
(IN MILLIONS)
<S> <C> <C>
LONG-TERM DEBT
Guaranteed Preferred Beneficial Interests in Corporation's
Junior Subordinated Deferrable Interest
Debentures(a).......................................... $ -- $100.0
SHAREHOLDERS' EQUITY
Common Stock, par value $5.00 per share................... 112.4 112.4
Surplus................................................... 63.5 63.5
Retained Earnings ........................................ 195.4 195.4
Unrealized Gain on Available-for-Sale Securities, Net of
Tax.................................................... 7.6 7.6
------ ------
Total Shareholders' Equity ....................... 378.9 378.9
------ ------
Total Capitalization.............................. $378.9 $478.9
====== ======
</TABLE>
- ---------------
(a) The sole asset of the Issuer Trust is the Junior Subordinated Debentures.
The Junior Subordinated Debentures held by the Issuer Trust will mature on
February 1, 2027. The Corporation owns all of the Common Securities of the
Issuer Trust. It is anticipated that the Issuer Trust will not be subject to
the reporting requirements of the Securities Exchange Act of 1934, as
amended. See "Accounting Treatment."
ACCOUNTING TREATMENT
For financial reporting purposes, the Issuer Trust will be treated as a
subsidiary of the Corporation and, accordingly, the accounts of the Issuer Trust
will be included in the consolidated financial statements of the Corporation.
The Capital Securities will be presented as a separate line item in the
consolidated balance sheets of the Corporation, under the caption entitled
"Guaranteed Preferred Beneficial Interests in Corporation's Junior Subordinated
Deferrable Interest Debentures" and appropriate disclosures about the Capital
Securities, the Guarantee, the Junior Subordinated Debentures and the Expense
Agreement will be included in the notes to the consolidated financial
statements. For financial reporting purposes, the Corporation will record
Distributions payable on the Capital Securities as interest expense in the
consolidated statements of income.
27
<PAGE> 30
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of the Old Capital Securities, the Corporation
and the Issuer Trust entered into the Registration Rights Agreement with the
Initial Purchasers, pursuant to which the Corporation and the Issuer Trust
agreed to file and to use their reasonable best efforts to cause to become
effective with 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.
The Exchange Offer is being made to satisfy the contractual obligations of
the Corporation and the Issuer 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 have
been registered under the Securities Act and therefore will not be subject to
certain restrictions on transfer applicable to the Old Capital Securities and
will not provide for any increase in the Distribution rate thereon. 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, except under
limited circumstances. See "Risk Factors -- Consequences of Failure to Exchange
Old Capital Securities" and "Description of Old Securities."
The Exchange Offer is not being made to, nor will the Issuer Trust or the
Corporation 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 Issuer Trust or any other person who has obtained
a properly completed bond power from the registered holder, or any person whose
Old Capital Securities are held of record by DTC 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
all of the Old Junior Subordinated Debentures, of which $103,093,000 aggregate
principal amount is outstanding, for a like aggregate principal amount of the
New Junior Subordinated Debentures. The New Guarantee and $100,000,000 aggregate
principal amount of the New Junior Subordinated Debentures have been registered
under the Securities Act.
TERMS OF THE EXCHANGE
The Issuer 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 $100,000,000 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 (as defined
below) and not properly withdrawn in accordance with the procedures described
below. The Issuer will issue, promptly after the Expiration Date, an aggregate
Liquidation Amount of up to $100,000,000 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 or any integral multiple of $1,000 in excess thereof provided
that if any Old Capital Securities are tendered in exchange in part, the
untendered Liquidation Amount 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, except as set forth in the preceding
paragraph. As of the date of this Prospectus, $100,000,000 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
28
<PAGE> 31
Agreement, but will not be entitled to any further registration rights under the
Registration Rights Agreement, except under limited circumstances. See "Risk
Factors -- Consequences of 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 ADMINISTRATIVE
TRUSTEE OR ANY TRUSTEE OF THE ISSUER 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 AFTER READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL
AND CONSULTING WITH THEIR ADVISERS, IF ANY, BASED ON THEIR OWN FINANCIAL
POSITION AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on
, 1997 unless the Exchange Offer is extended by the Issuer Trust and
the Corporation (in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended).
The Issuer Trust and the Corporation 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 Issuer Trust and
the Corporation 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 Issuer Trust and the
Corporation to constitute a material change, or if the Issuer Trust and the
Corporation waive a material condition of the Exchange Offer, the Issuer Trust
and the Corporation 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 Issuer Trust and the Corporation 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 Issuer Trust and the Corporation may choose to make any
public announcement and subject to applicable law, the Issuer Trust and the
Corporation 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.
29
<PAGE> 32
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF NEW CAPITAL SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, the
Issuer Trust will exchange, and will issue to the Exchange Agent, New Capital
Securities for Old Capital Securities validly tendered and not withdrawn
(pursuant to the withdrawal rights described under "-- Withdrawal Rights")
promptly after the Expiration Date.
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, (ii) the Letter of
Transmittal (or facsimile thereof), or an Agent's Message (as defined below) in
lieu thereof, properly completed and duly executed, with any required signature
guarantees, 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.
Subject to the terms and conditions of the Exchange Offer, the Issuer Trust
and the Corporation will be deemed to have accepted for exchange, and thereby
exchanged, Old Capital Securities validly tendered and not withdrawn as, if and
when the Issuer Trust gives oral or written notice to the Exchange Agent of the
Issuer Trust's acceptance of such Old Capital Securities for exchange pursuant
to the Exchange Offer. The Exchange Agent will act as agent for the Issuer Trust
and the Corporation 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 Issuer Trust's and the Corporation's
acceptance for exchange of Old Capital Securities) or the Issuer Trust and the
Corporation 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 Issuer Trust's and the Corporation's rights set forth
herein, the Exchange Agent may, nevertheless, on behalf of the Issuer and the
Corporation 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 Issuer 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
Issuer 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 and will comply with its obligations under the
Registration Rights Agreement.
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) or an
Agent's Message, with any required signature guarantees and any other required
documents, must be received by the Exchange Agent at one of its addresses set
forth under "-- Exchange Agent," and either (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.
30
<PAGE> 33
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 acknowledgement from the tendering
participant, which acknowledgement states that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal, and the
Corporation may enforce the Letter of transmittal against such participant.
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. 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), or an Agent's Message, properly completed and duly executed, with any
required signature guarantees 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 (a) a certificate for the Old Capital Securities is
registered in a name other than that of the person surrendering the certificate
or (b) such registered holder completes the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" in the Letter of Transmittal.
In the case of (a) or (b) 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"); provided that no
guarantee needs to be provided if the Old Capital Securities are tendered for
the account of a firm that is an Eligible Institution. See Instruction 2 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 before the Expiration Date, or the
procedures 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;
31
<PAGE> 34
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of Transmittal,
or an Agent's Message, is received by the Exchange Agent, as provided
below, on or prior to 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 an Agent's Message, 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 an Agent's Message, 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 Issuer Trust's and the Corporation'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 Issuer 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 Issuer Trust, in their sole discretion, which determination shall be final
and binding on all parties. The Corporation and the Issuer Trust reserve the
absolute right, in their sole 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 view of counsel to the Corporation or the Issuer
Trust, be unlawful. The Corporation and the Issuer 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 Corporation's and the Issuer Trust's interpretation 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. The Corporation, the
Issuer Trust, any affiliates or assigns of the Corporation or the Issuer Trust,
the Exchange Agent or any other person shall not 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 Issuer Trust, proper evidence satisfactory to the
Corporation and the Issuer 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.
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<PAGE> 35
RESALES OF NEW CAPITAL SECURITIES
The Corporation and the Issuer Trust are making the Exchange Offer for the
Capital Securities in reliance on the position of the staff of the Division of
Corporation Finance of the Commission as set forth in certain interpretive
letters addressed to third parties in other transactions. However, neither the
Corporation nor the Issuer Trust sought its own interpretive 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 interpretive letters to third parties. Based on these
interpretations by the staff of the Division of Corporation Finance, and subject
to the two immediately following sentences, the Corporation and the Issuer 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 Issuer Trust
or who intends to participate in the Exchange Offer for the purpose of
participating in a distribution of the Capital Securities, or any broker-dealer
who purchased Old Capital Securities from the Issuer Trust to resell pursuant to
Rule 144A or any other available exemption under the Securities Act, (a) 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
interpretive letters, (b) will not be permitted or entitled to tender such Old
Capital Securities in the Exchange Offer and (c) 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
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 that (i) it is not an "affiliate" of the Corporation or the Issuer
Trust, (ii) any New Capital Securities to be received by it are being acquired
in the ordinary course of its business, (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, and (iv) if such
holder is not a broker-dealer, such holder 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. The Letter of Transmittal contains the foregoing
representations. In addition, the Corporation and the Issuer 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 Issuer 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 Old 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 interpretive letters referred to
above, the Corporation and the Issuer 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
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<PAGE> 36
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 Issuer 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 180 days after the Expiration Date 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
Issuer Trust may not rely on such interpretive 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, that, upon receipt of notice from the
Corporation or the Issuer 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 Guarantee
or the Junior Subordinated Debentures, as applicable) pursuant to this
Prospectus until the Corporation or the Issuer 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 Issuer Trust has given notice that the sale of
the New Capital Securities (or the Guarantee or the 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, telegraphic, telex 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 Liquidation 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 serial 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, telegraphic, telex 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 Issuer Trust, in their sole discretion, which determination shall be final
and binding on all parties. Neither the Corporation, the Issuer Trust, any
affiliates or assigns of the Corporation or the Issuer 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
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<PAGE> 37
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 THE NEW CAPITAL SECURITIES
Holders of Old Capital Securities whose Old Capital Securities are accepted
for exchange will not receive accumulated Distributions on such Old Capital
Securities for any period from and after the last Distribution Date with respect
to such Old Capital Securities prior to the original issue date of the New
Capital Securities or, if no such Distributions have been made, will not receive
any accumulated 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 such Distribution Date or, if no such
Distributions have been made, from and after February 3, 1997.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Issuer Trust and the Corporation 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 Issuer Trust within the meaning of Rule 405 under
the Securities Act) 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 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 Issuer Trust's or the Corporation's
judgment, would reasonably be expected to impair the ability of the Issuer
Trust or the Corporation to proceed with the Exchange Offer;
(c) any law, statute, rule or regulation shall have been adopted,
enacted or proposed which, in the Issuer Trust's or the Corporation's
judgment, would reasonably be expected to impair the ability of the Issuer
Trust or the Corporation to proceed with the Exchange Offer or might
otherwise adversely affect the business or financial affairs of the
Corporation;
(d) a banking moratorium shall have been declared by United States
federal or Texas or New York State authorities which, in the Corporation's
judgment, would reasonably be expected to impair the ability of the
Corporation to proceed with the Exchange Offer;
(e) trading on NASDAQ 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 Issuer Trust's
or the Corporation's judgment, would reasonably be expected to impair the
ability of the Issuer Trust or the Corporation to proceed with the Exchange
Offer;
(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 Issuer Trust, threatened for that purpose any
governmental approval has not been obtained, which approval the Issuer
Trust or the Corporation shall, in their sole discretion, deem necessary
for the consummation of the Exchange Offer as contemplated hereby; or
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<PAGE> 38
(g) any change, or any development involving a prospective change, in
the business or financial affairs of the Issuer Trust or the Corporation or
any of the Corporation's subsidiaries has occurred which, in the sole
judgment of the Issuer Trust or the Corporation, might impair the ability
of the Issuer Trust or the Corporation to proceed with the Exchange Offer
or might adversely affect the business or financial affairs of the
Corporation.
If the Issuer Trust or the Corporation determine in their sole discretion
that any of the foregoing events or conditions has occurred or exists or has not
been satisfied, the Issuer Trust or the Corporation 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 Issuer
Trust or the Corporation will promptly disclose such waiver by means of an
amended or supplemented Prospectus that will be distributed to the registered
holders of the Old Capital Securities, and the Issuer Trust and the Corporation
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:
<TABLE>
<C> <C> <C>
By Hand or Overnight Facsimile Transmissions: By Registered or Certified Mail:
Delivery: (Eligible Institutions Only) The Bank of New York
(212) 571-3080 101 Barclay Street, 7E
The Bank of New York To Confirm by Telephone New York, New York 10286
101 Barclay Street or for Information Call: Attention: Reorganization Section,
Corporate Trust Services (212) 815-6333 Arwen Gibbons
Window
Ground Level
Attention: Reorganization
Section,
Arwen Gibbons
</TABLE>
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 Issuer Trust will make any payment to
brokers, dealers or others soliciting acceptances of the Exchange Offer.
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<PAGE> 39
DESCRIPTION OF NEW SECURITIES
DESCRIPTION OF CAPITAL SECURITIES
Pursuant to the terms of the Trust Agreement for the Issuer Trust, the
Issuer Trustees on behalf of the Issuer Trust have issued the Old Capital
Securities and the Common Securities and will issue the New Capital Securities.
The New Capital Securities will represent preferred undivided beneficial
interests in the assets of the Issuer Trust and the holders thereof will be
entitled to a preference in certain circumstances with respect to Distributions
and amounts payable on redemption or liquidation over the Common Securities, as
well as other benefits as described in the Trust Agreement. See
"-- Subordination of Common Securities." This summary of certain provisions of
the Capital Securities and the Trust Agreement, which describes the material
provisions thereof, does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all the provisions of the Trust
Agreement, including the definitions therein of certain terms. Wherever
particular defined terms of the Trust Agreement are referred to herein, such
defined terms are incorporated herein by reference. A copy of the form of the
Trust Agreement is available upon request from the Issuer Trustees.
General
The Capital Securities (including the Old Capital Securities and the New
Capital Securities) will be limited to $100,000,000 aggregate Liquidation Amount
outstanding. The Capital Securities will rank pari passu, and payments will be
made thereon pro rata, with the Common Securities except as described under
"-- Subordination of Common Securities." The New Capital Securities and any Old
Capital Securities which remain outstanding after consummation of the Exchange
Offer will constitute a single series of Capital Securities under the Trust
Agreement and, accordingly, 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.
Legal title to the Junior Subordinated Debentures will be held by the
Property Trustee in trust for the benefit of the holders of the Capital
Securities and Common Securities. The Guarantee will be a guarantee on a
subordinated basis with respect to the Capital Securities but will not guarantee
payment of Distributions or amounts payable on redemption or liquidation of such
Capital Securities when the Issuer Trust does not have funds on hand available
to make such payments. See "-- Description of Guarantee."
Distributions
The Capital Securities represent beneficial interests in the assets of the
Issuer Trust, and each Capital Security will be entitled to Distributions
payable at the annual rate of 8.42% of the stated Liquidation Amount of $1,000,
payable semi-annually in arrears on February 1 and August 1 of each year (each a
"Distribution Date"), to the holders of the Capital Securities at the close of
business on the January 15 or July 15 (whether or not a Business Day (as defined
below)) next preceding the relevant Distribution Date. Distributions on the
Capital Securities will be cumulative. Distributions will accumulate from the
date of initial issuance. The first Distribution Date for the Capital Securities
will be August 1, 1997. The amount of Distributions payable for any period less
than a full Distribution period will be computed on the basis of a 360-day year
of twelve 30-day months and the actual days elapsed in a partial month in such
period. Distributions payable for each full Distribution period will be computed
by dividing the rate per annum by two. If any date on which Distributions are
payable on the Capital Securities is not a Business Day, then payment of the
Distributions payable on such date will be made on the next succeeding day that
is a Business Day (without any additional Distributions or other payment in
respect of any such delay), with the same force and effect as if made on the
date such payment was originally payable.
So long as no Debenture Event of Default has occurred and is continuing,
the Corporation has the right under the Indenture to defer the payment of
interest on the Junior Subordinated Debentures at any time or from time to time
for a period not exceeding 10 consecutive semi-annual periods with respect to
each Extension Period, provided that no Extension Period may extend beyond the
Stated Maturity of the Junior Subordinated Debentures. As a consequence of any
such election, semi-annual Distributions on the Capital
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<PAGE> 40
Securities will be deferred by the Issuer Trust during any such Extension
Period. Distributions to which holders of the Capital Securities are entitled
will accumulate additional Distributions thereon at the rate per annum of 8.42%
thereof, compounded semi-annually from the relevant payment date for such
Distributions, computed on the basis of a 360-day year of twelve 30-day months
and the actual days elapsed in a partial month in such period. Additional
Distributions payable for each full Distribution period will be computed by
dividing the rate per annum by two. The term "Distributions" as used herein
shall include any such additional Distributions. During any such Extension
Period, the Corporation may not (i) make any payment of principal of or interest
or premium, if any, on or repay, repurchase or redeem any debt securities of the
Corporation that rank pari passu in all respects with or junior in interest to
the Junior Subordinated Debentures or (ii) 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 (other than (a)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Corporation in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of any one or more employees,
officers, directors or consultants, in connection with a dividend reinvestment
or stockholder stock purchase plan or in connection with the issuance of capital
stock of the Corporation (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable Extension Period, (b) as a result of an exchange or conversion
of any class or series of the Corporation's capital stock (or any capital stock
of a subsidiary of the Corporation) for any class or series of the Corporation's
capital stock or of any class or series of the Corporation's indebtedness for
any class or series of the Corporation's capital stock, (c) 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, (d) any declaration of a dividend in connection
with any stockholder's rights plan, or the issuance of rights, stock or other
property under any stockholder's rights plan, or the redemption or repurchase of
rights pursuant thereto, or (e) any dividend in the form of stock, warrants,
options or other rights where the dividend stock or the stock issuable upon
exercise of such warrants, options or other rights is the same stock as that on
which the dividend is being paid or ranks pari passu with or junior to such
stock). Prior to the termination of any such Extension Period, the Corporation
may further defer the payment of interest, provided that no Extension Period may
exceed 10 consecutive semi-annual periods or extend beyond the Stated Maturity
of the Junior Subordinated Debentures. Upon the termination of any such
Extension Period and the payment of all amounts then due, the Corporation may
elect to begin a new Extension Period. 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 Period" and "Certain Federal Income Tax Consequences -- Interest Income
and Original Issue Discount."
The Corporation has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures.
The revenue of the Issuer Trust available for distribution to holders of
the Capital Securities will be limited to payments under the Junior Subordinated
Debentures in which the Issuer Trust will invest all of the proceeds from the
issuance and sale of the Capital Securities. See "-- Description of Junior
Subordinated Debentures." If the Corporation does not make payments on the
Junior Subordinated Debentures, the Issuer Trust may not have funds available to
pay Distributions or other amounts payable on the Capital Securities. The
payment of Distributions and other amounts payable on the Capital Securities (if
and to the extent the Issuer Trust has funds legally available for and cash
sufficient to make such payments) is guaranteed by the Corporation on a limited
basis as set forth herein under "-- Description of Guarantee."
Redemption
Upon the repayment or redemption of the Junior Subordinated Debentures,
whether in whole at maturity or in whole or in part upon earlier redemption as
provided in the Indenture, the proceeds from such repayment or redemption shall
be applied by the Property Trustee to redeem a Like Amount (as defined below) of
the Trust Securities, upon not less than 30 nor more than 60 days' notice, at a
redemption price (the "Redemption Price") equal to the aggregate Liquidation
Amount of such Trust Securities plus accumulated but unpaid Distributions
thereon to the date of redemption (the "Redemption Date") and the related amount
of the
38
<PAGE> 41
premium, if any, paid by the Corporation upon the concurrent redemption of such
Junior Subordinated Debentures. See "-- Description of Junior Subordinated
Debentures -- Redemption." If less than all of the Junior Subordinated
Debentures are to be repaid or redeemed on a Redemption Date, then the proceeds
from such repayment or redemption shall be allocated to the redemption pro rata
of the Capital Securities and the Common Securities. The amount of premium, if
any, paid by the Corporation upon the redemption of all or any part of the
Junior Subordinated Debentures to be repaid or redeemed on a Redemption Date
shall be allocated to the redemption pro rata of the Capital Securities and the
Common Securities.
The Corporation has the right to redeem the Junior Subordinated Debentures
(i) on or after February 1, 2007, in whole at any time or in part from time to
time, or (ii) prior to February 1, 2007 in whole (but not in part) at any time
within 90 days following the occurrence and during the continuation of a Tax
Event or Capital Treatment Event. A redemption of the Junior Subordinated
Debentures would cause a mandatory redemption of a Like Amount of the Trust
Securities. The Corporation has committed to the Federal Reserve that the
Corporation will not redeem the Capital Securities without first having received
the prior approval of the Federal Reserve to do so, if then required under
applicable Federal Reserve guidelines or policies.
The Redemption Price, in the case of a redemption under (i) above, shall
equal the following prices, expressed in percentages of the Liquidation Amount
(as defined below), together with accumulated Distributions to but excluding the
date fixed for redemption, if redeemed during the 12-month period beginning
February 1 of the year indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ---- ----------
<S> <C>
2007........................................................ 104.210%
2008........................................................ 103.789
2009........................................................ 103.368
2010........................................................ 102.947
2011........................................................ 102.526
2012........................................................ 102.105
2013........................................................ 101.684
2014........................................................ 101.263
2015........................................................ 100.842
2016........................................................ 100.421
</TABLE>
and at 100% on or after February 1, 2017.
The Redemption Price, in the case of a redemption prior to February 1, 2007
following a Tax Event or Capital Treatment Event as described under (ii) above,
will equal for each Capital Security the Make-Whole Amount for a corresponding
$1,000 principal amount of Junior Subordinated Debentures together with
accumulated Distributions to but excluding the date fixed for redemption. The
"Make-Whole Amount" will be equal to the greater of (i) 100% of the principal
amount of such Junior Subordinated Debentures or (ii) as determined by a
Quotation Agent (as defined below), the sum of the present values of the
principal amount and premium payable as part of the Redemption Price with
respect to an optional redemption of such Junior Subordinated Debentures on
February 1, 2007, together with the present values of scheduled payments of
interest from the Redemption Date to February 1, 2007 (the "Remaining Life"), in
each case discounted to the Redemption Date on a semi-annual basis (assuming a
360-day year consisting of 30-day months) at the Adjusted Treasury Rate.
"Adjusted Treasury Rate" means, with respect to any Redemption Date, the
Treasury Rate plus (i) 1.25% if such Redemption Date occurs on or before
February 1, 1998 or (ii) 0.50% if such Redemption Date occurs after February 1,
1998.
"Treasury Rate" means (i) the yield, under the heading which represents the
average for the week immediately prior to the calculation date, 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
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<PAGE> 42
under the caption "Treasury Constant Maturities," for the maturity corresponding
to the Remaining Life (if no maturity is within three months before or after the
Remaining Life, yields for the two published maturities most closely
corresponding to the Remaining Life shall be determined and the Treasury Rate
shall be interpolated or extrapolated from such yields on a straight-line basis,
rounding to the nearest month) or (ii) if such release (or any successor
release) is not published during the week preceding the calculation date or does
not contain such yields, the rate per annum equal to the semi-annual equivalent
yield to maturity of the Comparable Treasury Issue, calculated using a price for
the Comparable Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such Redemption Date. The
Treasury Rate shall be calculated on the third Business Day preceding the
Redemption Date.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a day
on which banking institutions in The City of New York are authorized or required
by law or executive order to remain closed, or (c) a day on which the Property
Trustee's Corporate Trust Office or the Corporate Trust Office of the Debenture
Trustee is closed for business.
"Comparable Treasury Issue" means with respect to any Redemption Date the
United States Treasury security selected by the Quotation Agent as having a
maturity comparable to the Remaining Life that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the Remaining
Life. If no United States Treasury security has a maturity which is within a
period from three months before to three months after February 1, 2007, the two
most closely corresponding United States Treasury securities shall be used as
the Comparable Treasury Issue, and the Treasury Rate shall be interpolated or
extrapolated on a straight-line basis, rounding to the nearest month using such
securities.
"Quotation Agent" means J.P. Morgan Securities Inc. and its successors;
provided, however, that if the foregoing shall cease to be a primary U.S.
Government securities dealer in New York City (a "Primary Treasury Dealer"), the
Corporation shall substitute therefor another Primary Treasury Dealer.
"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any
other Primary Treasury Dealer selected by the Debenture Trustee after
consultation with the Corporation.
"Comparable Treasury Price" means (A) the average of five Reference
Treasury Dealer Quotations for such Redemption Date, after excluding the highest
and lowest such Reference Treasury Dealer Quotations, or (B) if the Debenture
Trustee obtains fewer than five 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 Redemption 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 Redemption Date.
"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount (as defined below) equal to the
principal amount of Junior Subordinated Debentures to be contemporaneously
redeemed in accordance with the Indenture, allocated to the Common Securities
and to the Capital Securities based upon the relative Liquidation Amounts of
such classes and (ii) with respect to a distribution of Junior Subordinated
Debentures to holders of Trust Securities in connection with a dissolution or
liquidation of the Issuer Trust, Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Trust Securities of the
holder to whom such Junior Subordinated Debentures are distributed.
"Liquidation Amount" means the stated amount of $1,000 per Trust Security.
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Payment of Additional Sums
If a Tax Event described in clause (i) or (iii) of the definition of Tax
Event above has occurred and is continuing and the Issuer Trust is the holder of
all of the Junior Subordinated Debentures, the Corporation will pay Additional
Sums (as defined below), if any, on the Junior Subordinated Debentures.
"Additional Sums" means the additional amounts as may be necessary in order
that the amount of Distributions then due and payable by the Issuer Trust on the
outstanding Capital Securities and Common Securities of the Issuer Trust will
not be reduced as a result of any additional taxes, duties and other
governmental charges to which the Issuer Trust has become subject as a result of
a Tax Event; provided, however, that Additional Sums shall not include any
withholding taxes arising after the occurrence of a Tax Event which have been
withheld from payments to Securityholders and for which Securityholders are
liable.
Redemption Procedures
Capital Securities redeemed on each Redemption Date shall be redeemed at
the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Junior Subordinated Debentures. Redemptions of the Capital
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Issuer Trust has funds on hand
available for the payment of such Redemption Price. See also "-- Subordination
of Common Securities."
If the Issuer Trust gives a notice of redemption in respect of the Capital
Securities, then, by 12:00 noon, New York City time, on the Redemption Date, to
the extent funds are available, in the case of Capital Securities held in
book-entry form, the Property Trustee will deposit irrevocably with DTC funds
sufficient to pay the applicable Redemption Price and will give DTC irrevocable
instructions and authority to pay the Redemption Price to the holders of the
Capital Securities. With respect to Capital Securities not held in book-entry
form, the Property Trustee, to the extent funds are available, will irrevocably
deposit with the paying agent for the Capital Securities funds sufficient to pay
the applicable Redemption Price and will give such paying agent irrevocable
instructions and authority to pay the Redemption Price to the holders thereof
upon surrender of their certificates evidencing the Capital Securities.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any Capital Securities called for redemption shall be
payable to the holders of the 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 such Capital Securities so called for redemption will
cease, except the right of the holders of such Capital Securities to receive the
Redemption Price, but without interest on such Redemption Price, and such
Capital Securities will cease to be outstanding. If any date fixed for
redemption of Capital Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
which is a Business Day (without any interest or other payment in respect of any
such delay), except that, if such Business Day falls in the next calendar year,
such payment will be made on the immediately preceding Business Day. In the
event that payment of the Redemption Price in respect of Capital Securities
called for redemption is improperly withheld or refused and not paid either by
the Issuer Trust or by the Corporation pursuant to the Guarantee as described
under "-- Description of Guarantee," Distributions on such Capital Securities
will continue to accumulate at the then applicable rate, from the Redemption
Date originally established by the Issuer Trust for such Capital Securities to
the date such Redemption Price is actually paid, in which case the actual
payment date will be the date fixed for redemption for purposes of calculating
the Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities laws), the 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, and may resell such securities as described
in "Plan of Distribution."
If less than all of the Capital Securities and Common Securities are to be
redeemed on a Redemption Date, then the aggregate Liquidation Amount of such
Capital Securities and Common Securities to be redeemed shall be allocated pro
rata to the Capital Securities and the Common Securities based upon the relative
Liquidation Amounts of such classes. The particular Capital Securities to be
redeemed shall be
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selected on a pro rata basis not more than 60 days prior to the Redemption Date
by the Property Trustee from the outstanding Capital Securities not previously
called for redemption, or if the Capital Securities are then held in the form of
a Global Capital Security (as defined below), in accordance with DTC's customary
procedures, provided, in each case, that each holder of any Capital Securities
has at least 100 Capital Securities remaining after the redemption. The Property
Trustee shall promptly notify the securities registrar for the Trust Securities
in writing of the Capital Securities selected for redemption and, in the case of
any Capital Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed. For all purposes of the Trust Agreement, unless the
context otherwise requires, all provisions relating to the redemption of Capital
Securities shall relate, in the case of any Capital Securities redeemed or to be
redeemed only in part, to the portion of the aggregate Liquidation Amount of
Capital Securities which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each registered holder of Capital
Securities to be redeemed at its address appearing on the securities register
for the Trust Securities. Unless the Corporation defaults in payment of the
Redemption Price on the Junior Subordinated Debentures, on and after the
Redemption Date interest will cease to accrue on the Junior Subordinated
Debentures or portions thereof (and, unless payment of the Redemption Price in
respect of the Capital Securities is withheld or refused and not paid either by
the Issuer Trust or the Corporation pursuant to the Guarantee, Distributions
will cease to accumulate on the Capital Securities or portions thereof) called
for redemption.
Subordination of Common Securities
Payment of Distributions on, and the Redemption Price of, the Capital
Securities and Common Securities, as applicable, shall be made pro rata based on
the Liquidation Amount of such Capital Securities and Common Securities.
However, if on any Distribution Date or Redemption Date a Debenture Event of
Default has occurred and is continuing as a result of any failure by the
Corporation to pay any amounts in respect of the Junior Subordinated Debentures
when due, no payment of any Distribution on, or Redemption Price of, any of the
Common Securities, and no other payment on account of the redemption,
liquidation or other acquisition of such Common Securities, 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 Redemption Price the full
amount of such Redemption Price on all of the outstanding Capital Securities
then called for redemption, shall have been made or provided for, and all funds
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions on, or Redemption Price of, the Capital Securities
then due and payable.
In the case of any Event of Default (as defined below) resulting from a
Debenture Event of Default, the holder of the Common Securities (i.e., the
Corporation) will be deemed to have waived any right to act with respect to any
such Event of Default under the Trust Agreement until the effect of all such
Events of Default with respect to such Capital Securities has been cured, waived
or otherwise eliminated. See "-- Events of Default; Notice" and "-- Description
of Junior Subordinated Debentures -- Debenture Events of Default." Until all
such Events of Default under the Trust Agreement with respect to the Capital
Securities have been so cured, waived or otherwise eliminated, the Property
Trustee will act solely on behalf of the holders of the Capital Securities and
not on behalf of the holders 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.
Liquidation Distribution Upon Termination
The amount payable on the Capital Securities in the event of any
liquidation of the Issuer Trust is $1,000 per Capital Security plus accumulated
and unpaid Distributions, subject to certain exceptions, which may be in the
form of a distribution of such amount in Junior Subordinated Debentures.
The holder of all of the outstanding Common Securities (i.e., the
Corporation) has the right at any time to terminate the Issuer Trust and, after
satisfaction of liabilities to creditors of the Issuer Trust as provided by
applicable law, cause the Junior Subordinated Debentures to be distributed to
the holders of the Capital
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Securities and Common Securities in liquidation of the Issuer Trust. Such right
is subject to 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. The Corporation has committed to the Federal Reserve that, so long
as the Corporation (or an affiliate) is a holder of Common Securities, it will
not exercise such right without having received the prior approval of the
Federal Reserve to do so, if then required under applicable Federal Reserve
capital guidelines or policies.
Pursuant to the Trust Agreement, the Issuer Trust will automatically
terminate on February 1, 2028 or, if earlier, will terminate on 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 holder of the Common
Securities have given written direction to the Property Trustee to terminate the
Issuer Trust (which direction, subject to the foregoing restrictions, is
optional and wholly within the discretion of the holder of Common Securities);
(iii) redemption of all of the Trust Securities as described under
"-- Redemption" and (iv) the entry of an order for the dissolution of the Issuer
Trust by a court of competent jurisdiction.
If termination of the Issuer Trust occurs automatically upon expiration of
its term, or as described in clause (i), (ii) or (iv) above, the Issuer Trust
will be liquidated by the Property Trustee as expeditiously as the Property
Trustee determines to be possible by distributing, after satisfaction of
liabilities to creditors of the Issuer Trust as provided by applicable law, to
the holders of such Trust Securities a Like Amount of the Junior Subordinated
Debentures, unless such distribution is determined by the Property Trustee not
to be practical, in which event such holders will be entitled to receive out of
the assets of the Issuer Trust available for distribution to holders, after
satisfaction of liabilities to creditors of the Issuer Trust as provided by
applicable law, an amount equal to, in the case of holders of Capital
Securities, the aggregate of the Liquidation Amount plus accumulated and unpaid
Distributions thereon to the date of payment (such amount being the "Liquidation
Distribution"). If such Liquidation Distribution can be paid only in part
because the Issuer Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Issuer Trust on its Capital Securities shall be paid on a pro rata basis. The
holder of the Common Securities (i.e. the Corporation) will be entitled to
receive distributions upon any such liquidation pro rata with the holders of the
Capital Securities, except that if a Debenture Event of Default has occurred and
is continuing as a result of any failure by the Corporation to pay any amounts
in respect of the Junior Subordinated Debentures when due, the Capital
Securities shall have a priority over the Common Securities.
Notice of liquidation will be mailed at least 30 days but not more than 60
days before the liquidation date to each registered holder of Capital Securities
at its address appearing on the securities register for the Trust Securities.
After the liquidation date fixed for any distribution of Junior Subordinated
Debentures (i) the Capital Securities will no longer be deemed to be
outstanding, (ii) DTC or its nominee, as the registered holder of the Capital
Securities, will receive a registered global certificate or certificates
representing the Junior Subordinated Debentures to be delivered upon such
distribution with respect to Capital Securities held by DTC or its nominee and
(iii) any certificates representing the Capital Securities not held by DTC or
its nominee will be deemed to represent the Junior Subordinated Debentures
having a principal amount equal to the stated Liquidation Amount of the Capital
Securities and bearing accrued and unpaid interest in an amount equal to the
accumulated and unpaid Distributions on the Capital Securities until such
certificates are presented to the security registrar for the Trust Securities
for transfer or reissuance.
If the Corporation does not redeem the Junior Subordinated Debentures prior
to maturity and the Issuer Trust is not liquidated and the Junior Subordinated
Debentures are not distributed to holders of the Capital Securities, the Capital
Securities will remain outstanding until the repayment of the Junior
Subordinated Debentures and the distribution of the Liquidation Distribution to
the holders of the Capital Securities.
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 Capital Securities if a termination and liquidation of the Issuer
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 Issuer Trust, may trade at a discount to the
price that the investor paid to purchase the Capital Securities offered hereby.
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Events of Default; Notice
Any one of the following events constitutes an "Event of Default" under the
Trust Agreement (an "Event of Default") with respect to the Capital Securities
(whatever the reason for such Event of Default and whether it is voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the occurrence of a Debenture Event of Default (see "Description
of Junior Subordinated Debentures -- Debenture Events of Default"); or
(ii) default by the Issuer Trust in the payment of any Distribution
when it becomes due and payable, and continuation of such default for a
period of 30 days; or
(iii) default by the Issuer Trust in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Issuer Trustees in the Trust Agreement
(other than a covenant or warranty a default in the performance of which or
the breach of which is dealt with in clause (ii) or (iii) above), and
continuation of such default or breach for a period of 60 days after there
has been given, by registered or certified mail, to the Issuer Trustees and
the Corporation by the holders of at least 25% in aggregate Liquidation
Amount of the outstanding Capital Securities, a written notice specifying
such default or breach and requiring it to be remedied and stating that
such notice is a "Notice of Default" under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee if a successor Property Trustee has not
been appointed within 90 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee will transmit
notice of such Event of Default to the holders of Trust Securities and the
Administrative Trustees, unless such Event of Default has been cured or waived.
The Property Trustee shall not be deemed to have knowledge of any Event of
Default unless the Property Trustee shall have received written notice to that
effect or an officer of the Property Trustee charged with the administration of
the Trust Agreement shall have obtained actual knowledge of such Event of
Default. The Corporation, as Depositor, and the Administrative Trustees are
required to file annually with the Property Trustee a certificate as to whether
or not they are in compliance with all the conditions and covenants applicable
to them under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing as a result
of any failure by the Corporation to pay any amounts in respect of the Junior
Subordinated Debentures when due, the Capital Securities will have a preference
over the Common Securities with respect to payments of any amounts in respect of
the Capital Securities as described above. See "-- Subordination of Common
Securities," "-- Liquidation Distribution Upon Termination" and "-- Description
of Junior Subordinated Debentures -- Debenture Events of Default."
The existence of an Event of Default does not entitle the holders of
Capital Securities to accelerate the maturity thereof.
Removal of Issuer Trustees; Appointment of Successors
Unless a Debenture Event of Default shall have occurred and be continuing,
any Issuer Trustee may be removed at any time by vote of the holder of the
Common Securities (i.e., the Corporation). If a Debenture Event of Default shall
have occurred and be continuing, the Property Trustee or the Delaware Trustee,
or both of them, may be removed at such time by vote of the holders of a
majority in Liquidation Amount of the Capital Securities. An Administrative
Trustee may be removed by the holder of the Common Securities at any time. If
any Issuer Trustee shall resign, be removed or become incapable of acting as an
Issuer Trustee, or if a vacancy shall occur in the office of any Issuer Trustee
for any cause, at a time when no Debenture Event of
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Default shall have occurred and be continuing, the holder of the Common
Securities is entitled to appoint a successor Issuer Trustee. If the Property
Trustee or the Delaware Trustee shall resign, be removed or become incapable of
continuing to act as the Property Trustee or the Delaware Trustee, as the case
may be, at a time when a Debenture Event of Default shall have occurred and be
continuing, the holders of the Capital Securities, by vote of the holders of a
majority in Liquidation Amount of the Capital Securities, shall promptly appoint
a successor Trustee. If an Administrative Trustee shall resign, be removed or
become incapable of acting as Administrative Trustee, at a time when a Debenture
Event of Default shall have occurred and be continuing, the holder of the Common
Securities is entitled to appoint a successor Administrative Trustee. If no
successor Issuer Trustee shall have been so appointed by the holders of the
Common Securities or the Capital Securities and accepted appointment, any holder
of Trust Securities who has been a holder of Trust Securities for at least six
months may petition any court of competent jurisdiction for the appointment of a
successor Issuer Trustee. Any Delaware Trustee must meet the applicable
requirements of Delaware law. Any Property Trustee must be a national or
state-chartered bank, and at the time of appointment have securities rated in
one of the three highest rating categories by a nationally recognized
statistical rating organization and have capital and surplus of at least
$50,000,000. No resignation or removal of an Issuer Trustee and no appointment
of a successor trustee shall be effective until the acceptance of appointment by
the successor trustee in accordance with the provisions of the Trust Agreement.
Merger or Consolidation of Issuer Trustees
Any entity into which the Property Trustee or the Delaware Trustee may be
merged or converted or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which such Issuer
Trustee is a party, or any entity succeeding to all or substantially all the
corporate trust business of such Issuer Trustee, will be the successor of such
Issuer Trustee under the Trust Agreement, provided such entity is otherwise
qualified and eligible.
Mergers, Consolidations, Amalgamations or Replacements of the Issuer Trust
The Issuer Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any entity, except as described below or as
otherwise set forth in the Trust Agreement. The Issuer Trust may, at the request
of the holders of the Common Securities and with the consent of the holders of
at least a majority in aggregate Liquidation Amount of the outstanding Capital
Securities, merge with or into, consolidate, amalgamate, or be replaced by or
convey, transfer or lease its properties and assets substantially as an entirety
to a trust organized as such under the laws of any State, so long as (i) such
successor entity either (a) expressly assumes all of the obligations of the
Issuer Trust with respect to the Capital Securities or (b) substitutes for the
Capital Securities other securities having substantially the same terms as the
Capital Securities (the "Successor Securities") so long as the Successor
Securities have the same priority as the Capital Securities with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii) a
trustee of such successor entity, possessing the same powers and duties as the
Property Trustee, is appointed to hold the Junior Subordinated Debentures, (iii)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Capital Securities (including any Successor Securities)
to be downgraded by any nationally recognized statistical rating organization,
(iv) such merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not adversely affect the rights, preferences and privileges of the
holders of the Capital Securities (including any Successor Securities) in any
material respect, (v) such successor entity has a purpose substantially
identical to that of the Issuer Trust, (vi) prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Issuer Trust has
received an opinion from independent counsel experienced in such matters to the
effect that (a) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Capital Securities (including any Successor
Securities) in any material respect and (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, neither
the Issuer Trust nor such successor entity will be required to register as an
investment company under the Investment Company Act, and (vii) the Corporation
or any permitted successor or assignee owns all of the common securities of such
successor entity and guarantees the obligations of such
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successor entity under the Successor Securities at least to the extent provided
by the Guarantee. Notwithstanding the foregoing, the Issuer Trust may not,
except with the consent of holders of 100% in aggregate Liquidation Amount of
the Capital Securities, consolidate, amalgamate, merge with or into, or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to, any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause the
Issuer Trust or the successor entity to be classified as an association taxable
as a corporation or as other than a grantor trust for United States federal
income tax purposes.
Voting Rights; Amendment of Trust Agreement
Except as provided below and under "-- Removal of Issuer Trustees;
Appointment of Successors" and "-- Description of Guarantee -- Amendments and
Assignment" and as otherwise required by law and the Trust Agreement, the
holders of the Capital Securities will have no voting rights.
The Trust Agreement may be amended from time to time by the holder of the
Common Securities (i.e., the Corporation) and the Property Trustee, without the
consent of the holders of the Capital 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 are not
inconsistent with the other provisions of the Trust Agreement, provided that any
such amendment does not adversely affect in any material respect the interests
of any holder of Trust Securities, or (ii) to modify, eliminate or add to any
provisions of the Trust Agreement to such extent as may be necessary to ensure
that the Issuer Trust will not be taxable as a corporation or will be taxable as
a grantor trust for United States federal income tax purposes at any time that
any Trust Securities are outstanding or to ensure that the Issuer Trust will not
be required to register as an "investment company" under the Investment Company
Act, and any amendments of the Trust Agreement will become effective when notice
of such amendment is given to the holders of Trust Securities. The Trust
Agreement may be amended by the holder of the Common Securities (i.e., the
Corporation) and the Property Trustee with (i) the consent of holders
representing not less than a majority in aggregate Liquidation Amount of the
outstanding Capital Securities and (ii) receipt by the Issuer Trustees of an
opinion of counsel to the effect that such amendment or the exercise of any
power granted to the Issuer Trustees in accordance with such amendment will not
affect the Issuer Trust's status as a grantor trust for United States federal
income tax purposes or cause the Issuer Trust to be classified as a corporation
for United States federal income tax purposes or the Issuer Trust's exemption
from status as an "investment company" under the Investment Company Act, except
that without the consent of each 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 Issuer Trust,
the Property Trustee will not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
execute any trust or power conferred on the Property Trustee with respect to the
Junior Subordinated Debentures, (ii) waive any past default that is waivable
under Section 5.13 of the Indenture, (iii) exercise any right to rescind or
annul a declaration that the Junior Subordinated Debentures shall be due and
payable or (iv) consent to any amendment, modification or termination of the
Indenture or the Junior Subordinated Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of the holders of
at least a majority in aggregate Liquidation Amount of the outstanding Capital
Securities, except that if a consent under the Indenture would require the
consent of each holder of Junior Subordinated Debentures affected thereby, no
such consent will be given by the Property Trustee without the prior consent of
each holder of the Capital Securities. The Property Trustee may not revoke any
action previously authorized or approved by a vote of the holders of the Capital
Securities except by subsequent vote of the holders of the Capital Securities.
The Property Trustee will 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 the holders of the Capital Securities,
before taking any of the foregoing actions, the
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Property Trustee will obtain an opinion of counsel experienced in such matters
to the effect that the Issuer Trust will not be taxable as a corporation or as
other than a grantor trust 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 holders of Capital Securities 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 registered holder 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 to
redeem and cancel Capital Securities in accordance with the Trust Agreement.
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 Corporation, the Issuer Trustees or any
affiliate of the Corporation or any Issuer Trustees, will, for purposes of such
vote or consent, be treated as if they were not outstanding.
Book Entry, Delivery and Form
The New Capital Securities will be issued in fully registered form in
minimum blocks of at least 100 (representing a minimum of $100,000 aggregate
Liquidation Amount) and the New Capital Securities must at all times be held in
blocks of at least 100. Any attempted transfer, sale or other disposition of the
New 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.
The New Capital Securities initially will be evidenced by one or more
global Capital Securities (the "Global Capital Securities") which will be
deposited with, or on behalf of, DTC and registered in the name of Cede & Co.
("Cede") as DTC's nominee. Except as set forth below, record ownership of the
Global Capital Securities may be transferred, in whole or 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.
DTC has advised the Issuer Trust and the Corporation that DTC is a
limited-purpose trust company 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. The Participants
include securities brokers and dealers (including the Initial Purchasers),
banks, trust companies, clearing corporations and certain other organizations.
Access to DTC's system is also 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 or 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 has also advised the Issuer 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 designated by the Initial
Purchasers 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 or 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).
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL CAPITAL
SECURITIES WILL NOT HAVE CAPITAL SECURITIES REGISTERED IN THEIR NAMES, 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.
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<PAGE> 50
Payment of Distributions on, and the Redemption Price of, the Global
Capital Securities will be made to Cede, as the registered holder of the Global
Capital Securities, by wire transfer of immediately available funds on each
Distribution Date or Redemption Date. Neither the Corporation nor the Issuer
Trustees (or any Administrator, securities registrar, paying agent or exchange
agent under the Trust Agreement) will have any responsibility or liability for
any aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Capital Security, for maintaining, supervising
or reviewing any records relating to such beneficial ownership interests or for
the performance by DTC or its Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations.
The Corporation and the Issuer Trust have been informed by DTC that, with
respect to any payment of Distributions on, or the Redemption Price of, the
Global Capital Security, DTC's practice is to credit Participants' accounts on
the payment date therefor with payments in amounts proportionate to their
respective beneficial interests in the Capital Securities represented by the
Global Capital Securities, as shown on the records of DTC (adjusted as necessary
so that such payments are made with respect to whole Capital Securities only),
unless DTC has reason to believe that it will not receive payment on such
payment date. Payments by Participants to owners of beneficial interests in
Capital Securities represented by the Global Capital Security held through such
Participants will be the responsibility of such Participants, as is the case
with securities held for the accounts of customers registered in "street name."
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a person
having a beneficial interest in Capital Securities represented by the Global
Capital Securities to pledge such interest to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of such
interest, may be affected by the lack of a physical certificate evidencing such
interest. Furthermore, the laws of some states require that certain persons take
physical delivery of securities in definitive form. Consequently, the ability to
transfer beneficial interests in the Global Capital Securities to such persons
may be limited.
DTC has advised the Corporation and the Issuer Trust that it will take any
action permitted to be taken by a holder of Capital Securities (including,
without limitation, the presentation of Capital Securities for exchange as
described below) 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 the aggregate Liquidation Amount of the Capital Securities
represented by the Global Capital Securities as to which such Participant or
Participants has or have given such direction.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Capital Securities among Participants of
DTC, it is under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time. The Global
Capital Security is exchangeable for definitive Capital Securities in registered
certificated form if (i) DTC advises the Corporation and the Property Trustee
that it is no longer willing or able to properly discharge its responsibilities
with respect to the Global Capital Securities, and the Property Trustee is
unable to locate a qualified successor, (ii) the Issuer Trust at its option
advises DTC in writing that it elects to terminate the book-entry system through
DTC or (iii) after the occurrence of a Debenture Event of Default.
So long as DTC or its nominee is the registered holder of the Global
Capital Security, 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 governing the
Capital Securities. Except as provided above, owners of beneficial interests in
the Global Capital Securities will not be entitled to have any of the individual
Capital Securities represented by the Global Capital Securities registered in
their names, will not receive or be entitled to receive physical delivery of any
such Capital Securities in definitive form and will not be considered the owners
or holders thereof under the Trust Agreement.
Payment and Paying Agency
Payments in respect of the Capital Securities will be made to DTC, which
will credit the relevant accounts at DTC on the applicable Distribution Dates
or, if the Capital Securities are not held by DTC, such payments will be made by
check mailed to the address of the holder entitled thereto as such address
appears
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<PAGE> 51
on the securities register for the Trust Securities. The paying agent (the
"Paying Agent") will initially be The Bank of New York and any co-paying agent
chosen by such Paying Agent and acceptable to the Administrative Trustees. The
Paying Agent will be permitted to resign as Paying Agent upon 30 days' written
notice to the Property Trustee and the Administrative Trustees. If The Bank of
New York is no longer the Paying Agent, the Property Trustee will appoint a
successor (which must be a bank or trust company reasonably acceptable to the
Administrative Trustees) to act as Paying Agent.
Registrar and Transfer Agent
The Bank of New York will act as registrar and transfer agent for the
Capital Securities.
Registration of transfers of Capital Securities will be effected without
charge by or on behalf of the Issuer Trust, but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange. The Issuer Trust will not be required to register or cause to be
registered the transfer of the Capital Securities after the Capital Securities
have been called for redemption.
Information Concerning the Property Trustee
The Property Trustee, other than during the occurrence and continuance of
an Event of Default, undertakes to perform only such duties as are specifically
set forth in the Trust Agreement and, after such Event of Default, must exercise
the same degree of care and skill as a prudent person would exercise or use in
the conduct of his or her own affairs. Subject to this provision, the Property
Trustee is under no obligation to exercise any of the powers vested in it by the
Trust Agreement at the request of any holder of Capital 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, or construe ambiguous provisions in the Trust Agreement, or is unsure of
the application of any provision of the Trust Agreement, and the matter is not
one on which holders of Trust Securities are entitled under the Trust Agreement
to vote, then the Property Trustee will take such action as it deems advisable
and in the best interests of the holders of the Trust Securities and will have
no liability except for its own bad faith, negligence or willful misconduct.
For information concerning the relationships between The Bank of New York,
the Property Trustee, and the Corporation, see "-- Description of Junior
Subordinated Debentures -- Information Concerning the Debenture Trustee."
Inspection of Trust Records; Reports by Property Trustee
Upon reasonable notice to the Administrative Trustees and the Property
Trustee, the records of the Issuer Trust shall be open to inspection by any
holder of Trust Securities during normal business hours for any purpose
reasonably related to such holder's interest as a holder of Trust Securities.
Within 60 days after December 31 of each year commencing with December 31,
1997, the Property Trustee shall transmit to all holders of Trust Securities and
to the Corporation a brief report dated as of the immediately preceding December
31 with respect to: (i) its eligibility under the Trust Agreement and the Trust
Indenture Act or, in lieu thereof, if to the best of its knowledge it has
continued to be eligible under each, a written statement to such effect; (ii) a
statement that the Property Trustee has complied with all of its obligations
under the Trust Agreement during the twelve-month period (or, in the case of the
initial report, the period since the date of issuance of the Capital Securities)
ending with such December 31 or, if the Property Trustee has not complied in any
material respect with such obligations, a description of such noncompliance; and
(iii) any change in the property and funds in its possession as Property Trustee
since the date of its last report and any action taken by the Property Trustee
in the performance of its duties hereunder which it has not previously reported
and which in its opinion materially affects the Trust Securities.
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Governing Law
The Trust Agreement and the rights and obligations of each of the Trust
Securities holders, the Issuer Trust, the Depositor, the Issuer Trustees and the
Administrative Trustees with respect to the Trust Agreement and the Trust
Securities shall be construed in accordance with and governed by the laws of the
State of Delaware.
Miscellaneous
The Administrative Trustees and the Property Trustee are authorized and
directed to conduct the affairs of and to operate the Issuer Trust in such a way
that the Issuer Trust will not be deemed to be an "investment company" required
to be registered under the Investment Company Act or classified as an
association taxable as a corporation or as other than a grantor trust 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 Property Trustee and the
holder of Common Securities (i.e., the Corporation) are authorized to take any
action, not inconsistent with applicable law, the certificate of trust of the
Issuer Trust or the Trust Agreement, that the Property Trustee and the holder of
Common Securities determine in their discretion to be necessary or desirable for
such purposes, as long as such action does not materially adversely affect the
interests of the holders of the Capital Securities.
The receipt and acceptance of a Trust Security or any interest therein by
or on behalf of a holder or any beneficial owner, without any signature or
further manifestation of assent, shall constitute the unconditional acceptance
by the holder and all others having a beneficial interest in such Trust Security
of all the terms and provisions of the Trust Agreement, the Guarantee and the
Indenture, and agreement to the subordination provisions and other terms of the
Guarantee and the Indenture, and shall constitute the agreement of the Issuer
Trust, such holder and such others that the terms and provisions of the Trust
Agreement shall be binding, operative and effective as between the Issuer Trust
and such holder and such others.
Each holder of Capital Securities shall be deemed to have agreed not to
hold the Corporation, the Property Trustee, the Delaware Trustee or the
Administrative Trustees accountable by reason of the disclosure of its name and
address, regardless of the source from which such information was derived.
Holders of the Capital Securities have no preemptive or similar rights.
The Issuer Trust may not borrow money or issue debt or mortgage 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 separate series under the Indenture,
under which The Bank of New York is acting as Debenture Trustee. This summary of
certain terms and provisions of the Junior Subordinated Debentures and the
Indenture, which describes the material terms thereof, does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the Indenture, including the definitions therein of
certain terms. Whenever particular defined terms of the Indenture (as amended or
supplemented from time to time) are referred to herein, such defined terms are
incorporated herein by reference. A copy of the form of Indenture is available
from the Debenture Trustee upon request.
General
Concurrently with the issuance of the Capital Securities, the Issuer Trust
invested the proceeds thereof, together with the consideration paid by the
Corporation for the Common Securities, in the Old Junior Subordinated Debentures
issued by the Corporation. Pursuant to the Exchange Offer, the Corporation will
exchange the Old Junior Subordinated Debentures for the New Junior Subordinated
Debentures as soon as practicable after the date hereof. No Old Junior
Subordinated Debentures will remain outstanding after such exchange. The
following is a description of the New Junior Subordinated Debentures (referred
to in this subsection as the "Junior Subordinated Debentures"). The Junior
Subordinated Debentures will bear interest, accruing from the date of initial
issuance, at the annual rate of 8.42% of the principal amount thereof, payable
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semi-annually in arrears on February 1 and August 1 of each year (each, an
"Interest Payment Date"), commencing August 1, 1997, to the person in whose name
each Junior Subordinated Debenture is registered at the close of business on the
fifteenth day (whether or not a Business Day) next preceding such Interest
Payment Date. It is anticipated that, until the liquidation, if any, of the
Issuer Trust, each Junior Subordinated Debenture will be 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 less than a full
interest period will be computed on the basis of a 360-day year of twelve 30-day
months and the actual days elapsed in a partial month in such period. The amount
of interest payable for any full interest period will be computed by dividing
the rate per annum by two. If any date on which interest is payable on the
Junior Subordinated Debentures is not a Business Day, then payment of the
interest payable on such date will be made on the next succeeding day that is a
Business Day (without any interest or other payment in respect of any such
delay), with the same force and effect as if made on the date such payment was
originally payable. 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 8.42%, compounded semi-annually and
computed on the basis of a 360-day year of twelve 30-day months and the actual
days elapsed in a partial month in such period. The amount of additional
interest payable for any full interest period will be computed by dividing the
rate per annum by two. The term "interest" as used herein includes 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 Junior Subordinated Debentures will mature on February 1, 2027, subject
to the Corporation's right to shorten the maturity thereof as described below
under "-- Conditional Right to Shorten Maturity or Redeem upon a Tax Event or
Capital Treatment Event."
The Junior Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Senior Indebtedness of the
Corporation. Because the Corporation is a holding company, the right of the
Corporation to participate in any distribution of assets of any subsidiary of
the Corporation, upon such subsidiary's dissolution, winding-up, liquidation or
reorganization or otherwise (and thus the ability of holders of the Junior
Subordinated Debentures 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 a creditor of that subsidiary and its
claims are recognized. The principal source of funds for the Corporation to
satisfy its obligations under the Junior Subordinated Debentures and the
Guarantee are the Corporation's subsidiaries. There are various legal
limitations on the extent to which the Corporation's subsidiaries may extend
credit, pay dividends or otherwise supply funds to the Corporation or certain of
its other subsidiaries. Accordingly, the Junior Subordinated Debentures will be
effectively subordinated to all existing and future liabilities of the
Corporation's subsidiaries, and holders of Junior Subordinated Debentures should
look only to the assets of the Corporation for payments on the Junior
Subordinated Debentures. See "Cullen/Frost Bankers, Inc." The Indenture does not
limit the incurrence or issuance of other secured or unsecured debt by the
Corporation, including Senior Indebtedness, whether under the Indenture or any
existing or other indenture that the Corporation may enter into in the future or
otherwise. See "-- Subordination."
Option To Extend Interest Payment Period
So long as no Debenture Event of Default has occurred and is continuing,
the Corporation has the right at any time during the term of the Junior
Subordinated Debentures to defer the payment of interest at any time or from
time to time for a period not exceeding 10 consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the Junior Subordinated Debentures. 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 8.42%, compounded
semi-annually and computed on the basis of a 360-day year of twelve 30-day
months and the actual days elapsed in a partial month in such period, to the
extent permitted by applicable law). The amount of additional interest payable
for any full interest period will be computed by dividing the rate per annum by
two. During an Extension Period, interest will continue to accrue and holders of
Junior Subordinated Debentures (or holders of Capital
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<PAGE> 54
Securities while outstanding) will be required to accrue interest income for
United States federal income tax purposes. See "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue Discount."
During any such Extension Period, the Corporation may not (i) make any
payment of principal of or interest or premium, if any, on or repay, repurchase
or redeem any debt securities of the Corporation that rank pari passu in all
respects with or junior in interest to the Junior Subordinated Debentures or
(ii) 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 (other than (a) repurchases, redemptions or other acquisitions of
shares of capital stock of the Corporation in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
any one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment or stockholder stock purchase plan or in connection
with the issuance of capital stock of the Corporation (or securities convertible
into or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of an exchange or conversion of any class or series of the Corporation's
capital stock (or any capital stock of a subsidiary of the Corporation) for any
class or series of the Corporation's capital stock or of any class or series of
the Corporation's indebtedness for any class or series of the Corporation's
capital stock, (c) 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, (d) any
declaration of a dividend in connection with any stockholders' rights plan, or
the issuance of rights, stock or other property under any stockholders' rights
plan, or the redemption or repurchase of rights pursuant thereto, or (e) any
dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock). Prior to the termination of any
such Extension Period, the Corporation may further defer the payment of
interest, provided that no Event of Default has occurred and is continuing and
provided that no Extension Period may exceed 10 consecutive semi-annual periods
or extend beyond the Stated Maturity of the Junior Subordinated Debentures. Upon
the termination of any such Extension Period and the payment of all amounts then
due, the Corporation may elect to begin a new Extension Period subject to the
above conditions. No interest shall be due and payable during an Extension
Period, except at the end thereof. The Corporation must give the Issuer Trustees
notice of its election of such Extension Period at least five Business Days
prior to the earlier of (i) the date the Distributions on the Capital Securities
would have been payable but for the election to begin such Extension Period and
(ii) the date the Property Trustee is required to give notice to holders of the
Capital Securities of the record date or the date such Distributions are
payable. The Property Trustee will give notice of the Corporation's election to
begin 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.
Redemption
The Junior Subordinated Debentures are redeemable prior to maturity at the
option of the Corporation (i) on or after February 1, 2007, in whole at any time
or in part from time to time, or (ii) prior to February 1, 2007, in whole (but
not in part) at any time within 90 days following the occurrence and during the
continuation of a Tax Event or Capital Treatment Event (each as defined under
"-- Description of Capital Securities -- Redemption"), in each case at the
redemption price described below. The proceeds of any such redemption will be
used by the Issuer Trust to redeem a Like Amount of the Capital Securities. The
Corporation has committed to the Federal Reserve that the Corporation will not
exercise its right to redeem the Junior Subordinated Debentures prior to the
Stated Maturity without having received the prior approval of the Federal
Reserve to do so, if then required under applicable Federal Reserve capital
guidelines or policies.
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The redemption price for Junior Subordinated Debentures in the case of a
redemption under (i) above shall equal the following prices, expressed in
percentages of the principal amount, together with accrued interest to but
excluding the date fixed for redemption. If redeemed during the 12-month period
beginning February 1 of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ---- ----------
<S> <C>
2007........................................................ 104.210%
2008........................................................ 103.789
2009........................................................ 103.368
2010........................................................ 102.947
2011........................................................ 102.526
2012........................................................ 102.105
2013........................................................ 101.684
2014........................................................ 101.263
2015........................................................ 100.842
2016........................................................ 100.421
</TABLE>
and at 100% on or after February 1, 2017.
The redemption price for Junior Subordinated Debentures, in the case of a
redemption prior to February 1, 2007 following a Tax Event or Capital Treatment
Event, as described under (ii) above, will equal the Make-Whole Amount (as
defined under "-- Description of Capital Securities -- Redemption"), together
with accrued and unpaid interest to but excluding the date fixed for redemption.
Additional Sums
The Corporation has covenanted in the Indenture that, so long as no Event
of Default has occurred and is continuing, if and for so long as (i) the Issuer
Trust is the holder of all Junior Subordinated Debentures and (ii) the Issuer
Trust is required to pay any additional taxes, duties or other governmental
charges as a result of a Tax Event, the Corporation will pay Additional Sums on
the Junior Subordinated Debentures. See "-- Description of Capital
Securities -- Redemption."
Conditional Right to Shorten Maturity or Redeem upon a Tax Event or Capital
Treatment Event
If a Tax Event or a Capital Treatment Event occurs and (i) in the opinion
of counsel to the Corporation experienced in such matters, there would in all
cases, after effecting the termination of the Issuer Trust and the distribution
of the Junior Subordinated Debentures to the holders of the Capital Securities
in exchange therefor, be more than an insubstantial risk that an Adverse Tax
Consequence (as defined in "Risk Factors -- Tax Event or Capital Treatment
Event") would continue to exist, (ii) in the reasonable determination of the
Corporation, there would in all cases, after effecting the termination of the
Issuer Trust and the distribution of the Junior Subordinated Debentures to the
holders of the Capital Securities in exchange therefor upon liquidation of the
Issuer Trust, be more than an insubstantial risk that the Corporation will not
be entitled to treat an amount equal to the Liquidation Amount of the Capital
Securities as "Tier I Capital" (or the equivalent thereof) or (iii) the Junior
Subordinated Debentures are not held by the Issuer Trust, then the Corporation
shall have the right:
(a) to shorten the Stated Maturity of the Junior Subordinated
Debentures to the minimum extent required, but in any event to a date not
earlier than February 1, 2017 (the action referred to in this clause (a)
being referred to herein as a "Maturity Advancement"), such that, in the
opinion of counsel to the Corporation experienced in such matters, after
advancing the Stated Maturity, interest paid on the Junior Subordinated
Debentures will be deductible for federal income tax purposes, or
(b) if either (x) in the opinion of counsel to the Corporation
experienced in such matters, there would in all cases, after effecting a
Maturity Advancement, be more than an insubstantial risk that an Adverse
Tax Consequence would continue to exist or (y) in the reasonable
determination of the
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<PAGE> 56
Corporation, there would in all cases, after effecting a Maturity
Advancement, be more than an insubstantial risk that the Corporation will
not be entitled to treat an amount equal to the Liquidation Amount of the
Capital Securities as "Tier I Capital" (or the then equivalent thereof) for
purposes of the capital adequacy guidelines of the Federal Reserve, as then
in effect and applicable to the Corporation, to redeem the Junior
Subordinated Debentures, prior to February 1, 2007, in whole but not in
part, at any time within 90 days following the occurrence of the Tax Event
or Capital Treatment Event at a Redemption Price equal to the Make-Whole
Amount (as defined under "-- Description of Capital
Securities -- Redemption") plus accrued and unpaid interest thereon to the
Redemption Date. See "-- Certain Terms of Capital Securities -- Liquidation
of Issuer Trust and Distribution of Junior Subordinated Debentures to
Holders" and "-- Redemption" and "Certain Terms of Junior Subordinated
Debentures -- General" and "-- Redemption."
Holders of Capital Securities should consult their own tax advisors
regarding the tax consequences to them of a Maturity Advancement.
See "Certain Federal Tax Law Consequences -- Possible Tax Law Changes" for
a discussion of certain legislative proposals that, if adopted, could give rise
to a Tax Event, which may permit the Corporation to shorten the Stated Maturity
of the Junior Subordinated Debentures or cause a redemption of the Capital
Securities prior to February 1, 2007.
Registration, Denomination and Transfer
The Junior Subordinated Debentures will initially be registered in the name
of the Property Trustee, as trustee of the Issuer Trust. If the Junior
Subordinated Debentures are distributed to holders of Capital Securities, it is
anticipated that the depositary arrangements for the Junior Subordinated
Debentures will be substantially identical to those in effect for the Capital
Securities. See "-- Description of Capital Securities -- Book Entry, Delivery
and Form."
Although DTC has agreed to the procedures described above, it is under no
obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
the Corporation within 90 days of receipt of notice from DTC to such effect, the
Corporation will cause the Junior Subordinated Debentures to be issued in
definitive form.
Payments on Junior Subordinated Debentures represented by a global security
will be made to Cede, the nominee for DTC, as the registered holder of the
Junior Subordinated Debentures, as described under "-- Description of the
Capital Securities -- Book Entry, Delivery and Form." If Junior Subordinated
Debentures are issued in certificated form, principal and interest will be
payable, the transfer of the Junior Subordinated Debentures will be registrable,
and Junior Subordinated Debentures will be exchangeable for Junior Subordinated
Debentures of other authorized denominations of a like aggregate principal
amount, at the corporate trust office of the Debenture Trustee or at the offices
of any Paying Agent or transfer agent appointed by the Corporation, provided
that payment of interest may be made at the option of the Corporation by check
mailed to the address of the persons entitled thereto or by wire transfer.
The Junior Subordinated Debentures will be issuable only in registered form
without coupons in minimum denominations of $100,000 and integral multiples of
$1,000 in excess thereof. Junior Subordinated Debentures will be exchangeable
for other Junior Subordinated Debentures of like tenor, of any authorized
denominations, and of a like aggregate principal amount.
Junior Subordinated Debentures may be presented for exchange as provided
above, and may be presented for registration of transfer (with the form of
transfer endorsed thereon, or a satisfactory written instrument of transfer,
duly executed), at the office of the securities registrar appointed under the
Indenture or at the office of any transfer agent designated by the Corporation
for such purpose without service charge and upon payment of any taxes and other
governmental charges as described in the Indenture. The Corporation will appoint
the Debenture Trustee as securities registrar under the Indenture. The
Corporation may at any time designate additional transfer agents with respect to
the Junior Subordinated Debentures.
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In the event of any redemption, neither the Corporation nor the Debenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures during a period beginning at the opening of
business 15 days before the day of selection for redemption of the Junior
Subordinated Debentures to be redeemed and ending at the close of business on
the day of mailing of the relevant notice of redemption or (ii) transfer or
exchange any Junior Subordinated Debentures so selected for redemption, except,
in the case of any Junior Subordinated Debentures being redeemed in part, any
portion thereof not to be redeemed.
Any 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.
Restrictions on Certain Payments; Certain Covenants of the Corporation
The Corporation has covenanted that it will not (i) make any payment of
principal of, or interest or premium, if any, on or repay, repurchase or redeem
any debt securities of the Corporation that rank pari passu in all respects with
or junior in interest to the Junior Subordinated Debentures or (ii) 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
(other than (a) repurchases, redemptions or other acquisitions of shares of
capital stock of the Corporation in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of any one or
more employees, officers, directors or consultants, in connection with a
dividend reinvestment or stockholder stock purchase plan or in connection with
the issuance of capital stock of the Corporation (or securities convertible into
or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable event, (b) as a result of an
exchange or conversion of any class or series of the Corporation's capital stock
(or any capital stock of a subsidiary of the Corporation) for any class or
series of the Corporation's capital stock or of any class or series of the
Corporation's indebtedness for any class or series of the Corporation's capital
stock, (c) 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, (d) any declaration of a
dividend in connection with any stockholders' rights plan, or the issuance of
rights, stock or other property under any stockholders' rights plan, or the
redemption or repurchase of rights pursuant thereto, or (e) any dividend in the
form of stock, warrants, options or other rights where the dividend stock or the
stock issuable upon exercise of such warrants, options or other rights is the
same stock as that on which the dividend is being paid or ranks pari passu with
or junior to such stock), if at such time (i) there has occurred any event (a)
of which the Corporation has actual knowledge that with the giving of notice or
the lapse of time, or both, would constitute a Debenture Event of Default and
(b) that the Corporation has not taken reasonable steps to cure, (ii) if the
Junior Subordinated Debentures are held by the Issuer Trust, the Corporation is
in default with respect to its payment of any obligations under the Guarantee or
(iii) the Corporation has given notice of its selection of an Extension Period
as provided in the Indenture and has not rescinded such notice, or such
Extension Period, or any extension thereof, is continuing.
The Corporation has covenanted in the Indenture (i) to continue to hold,
directly or indirectly, 100% of the Common Securities, provided that certain
successors that are permitted pursuant to the Indenture may succeed to the
Corporation's ownership of the Common Securities, (ii) as holder of the Common
Securities, not to voluntarily terminate, wind-up or liquidate the Issuer Trust,
other than (a) in connection with a distribution of Junior Subordinated
Debentures to the holders of the Capital Securities in liquidation of the Issuer
Trust or (b) in connection with certain mergers, consolidations or amalgamations
permitted by the Trust Agreement and (iii) to use its reasonable efforts,
consistent with the terms and provisions of the Trust Agreement, to cause the
Issuer Trust to continue not to be taxable as a corporation and to be taxable as
a grantor trust for United States federal income tax purposes. In addition, the
Corporation has committed to the Federal Reserve that, so long as the
Corporation is the holder of the Common Securities, the Corporation will not
voluntarily terminate or liquidate the Issuer Trust prior to the Stated Maturity
without having received the
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prior approval of the Federal Reserve to do so, if then required under
applicable Federal Reserve capital guidelines or policies.
Modification of Indenture
From time to time the Corporation and the Debenture Trustee may, without
the consent of the holders of the Junior Subordinated Debentures, amend, waive
or supplement the provisions of 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 interests of the
holders of the Junior Subordinated Debentures or the holders of the Capital
Securities so long as they remain outstanding) 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 not less than a majority in principal amount of
the Junior Subordinated Debentures, to modify the Indenture in a manner
affecting the rights of the holders of the Junior Subordinated Debentures,
except that no such modification may, without the consent of the holder of each
outstanding Junior Subordinated Debenture so affected, (i) change the Stated
Maturity of the Junior Subordinated Debentures, or reduce the principal amount
thereof, the rate of interest thereon or any premium payable upon the redemption
thereof, or change the place of payment where, or the currency in which, any
such amount is payable or impair the right to institute suit for the enforcement
of any Junior Subordinated Debenture or (ii) reduce the percentage of principal
amount of Junior Subordinated Debentures, the holders of which are required to
consent to any such modification of the Indenture. Furthermore, so long as any
of the Capital Securities remain outstanding, no such modification may be made
that adversely affects the holders of such Capital Securities in any material
respect, and no termination of the Indenture may occur, and no waiver of any
Debenture Event of Default or compliance with any covenant under the Indenture
may be effective, without the prior consent of the holders of at least a
majority of the aggregate Liquidation Amount of the outstanding Capital
Securities unless and until the principal of (and premium, if any, on) the
Junior Subordinated Debentures and all accrued and unpaid interest thereon have
been paid in full and certain other conditions are satisfied.
Debenture Events of Default
The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debentures that has occurred and
is continuing constitutes an "Event of Default" with respect to the Junior
Subordinated Debentures:
(i) failure for 30 days to pay any interest on the Junior Subordinated
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 of or premium, if any, on the Junior
Subordinated Debentures when due whether at maturity, upon redemption, by
declaration of acceleration 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 the holders of at least
25% in aggregate outstanding principal amount of the outstanding Junior
Subordinated Debentures; or
(iv) certain events of bankruptcy, insolvency or reorganization of the
Corporation.
For purposes of the Trust Agreement and this Prospectus, each such Event of
Default under the Junior Subordinated Debenture is referred to as a "Debenture
Event of Default." As described in "-- Description of Capital
Securities -- Events of Default; Notice," the occurrence of a Debenture Event of
Default will also constitute an Event of Default in respect of the Trust
Securities.
The holders of at least a majority in aggregate principal amount of
outstanding Junior Subordinated Debentures have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee. The Debenture Trustee or the holders of not less than 25% in
aggregate principal amount of outstanding Junior Subordinated Debentures may
declare the principal due and payable
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immediately upon a Debenture Event of Default, and, should the Debenture Trustee
or such holders of Junior Subordinated Debentures fail to make such declaration,
the holders of at least 25% in aggregate Liquidation Amount of the outstanding
Capital Securities shall have such right. The holders of a majority in aggregate
principal amount of outstanding Junior Subordinated Debentures may annul such
declaration and waive the default if all defaults (other than the non-payment of
the principal of Junior Subordinated Debentures which has become due solely by
such acceleration) have been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee. Should the holders of Junior
Subordinated Debentures fail to annul such declaration and waive such default,
the holders of a majority in aggregate Liquidation Amount of the outstanding
Capital Securities shall have such right.
The holders of at least a majority in aggregate principal amount of the
outstanding Junior Subordinated Debentures affected thereby may, on behalf of
the holders of all the Junior Subordinated Debentures, waive any past default,
except a default in the payment of principal (or premium if any) or interest
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee) or a default in respect of a covenant
or provision which under the Indenture cannot be modified or amended without the
consent of the holder of each outstanding Junior Subordinated Debenture. See
"-- Modification of Indenture." The Corporation is required to file annually
with the Debenture Trustee a certificate as to whether or not the Corporation is
in compliance with all the conditions and covenants applicable to it under the
Indenture.
If a Debenture Event of Default occurs and is continuing, the Debenture
Trustee will have the right to declare the principal of and the interest on the
Junior Subordinated Debentures, and any other amounts payable under the
Indenture, to be forthwith due and payable and to enforce its other rights as a
creditor with respect to the Junior Subordinated Debentures.
Enforcement of Certain Rights by Holders of Capital Securities
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Corporation to pay any amounts
payable in respect of the Junior Subordinated Debentures on the date such
amounts are otherwise payable, a registered holder of Capital Securities may
institute a legal proceeding directly against the Corporation for enforcement of
payment to such holder of an amount equal to the amount payable in respect of
Junior Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Capital Securities held by such holder (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. The Corporation will have the right under the
Indenture to set-off any payment made to such holder of Capital Securities by
the Corporation in connection with a Direct Action.
The holders of the Capital Securities would not be able to exercise
directly any remedies available to the holders of the Junior Subordinated
Debentures except under the circumstances described in the preceding paragraph.
See "-- Description of Capital Securities -- Events of Default; Notice."
Consolidation, Merger, Sale of Assets and Other Transactions
The Indenture provides that the Corporation may not consolidate with or
merge into any other Person or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, and no Person may consolidate
with or merge into the Corporation or convey, transfer or lease its properties
and assets substantially as an entirety to the Corporation, unless (i) if the
Corporation consolidates with or merges into another Person or conveys or
transfers its properties and assets substantially as an entirety to any Person,
the successor Person is organized under the laws of the United States or any
state or the District of Columbia, and such successor Person expressly assumes
the Corporation's obligations in respect of 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 constitute a
Debenture Event of Default, has occurred and is continuing; and (iii) certain
other conditions as prescribed in the Indenture are satisfied.
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The 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 the Stated Maturity 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 to the
date of the deposit or to the Stated Maturity, as the case may be, then the
Indenture will cease to be of further effect (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
The Junior Subordinated Debentures will be subordinate and junior in right
of payment, to the extent set forth in the Indenture, to all Senior Indebtedness
(as defined below) of the Corporation. If the Corporation defaults in the
payment of any principal, premium, if any, or interest, if any, or any other
amount payable on any Senior Indebtedness when the same becomes due and payable,
whether at maturity or at a date fixed for redemption or by declaration of
acceleration or otherwise, then, unless and until such default has been cured or
waived or has ceased to exist or all Senior Indebtedness has been paid, no
direct or indirect payment (in cash, property, securities, by set-off or
otherwise) may be made or agreed to be made on the Junior Subordinated
Debentures, or in respect of any redemption, repayment, retirement, purchase or
other acquisition of any of the Junior Subordinated Debentures.
As used herein, "Senior Indebtedness" means any obligation of the
Corporation to its creditors, whether now outstanding or subsequently incurred,
other than any obligation as to which, in the instrument creating or evidencing
the obligation or pursuant to which the obligation is outstanding, it is
provided that such obligation is not Senior Indebtedness, but does not include
trade accounts payable and accrued liabilities arising in the ordinary course of
business. Senior Indebtedness will include any subordinated debt securities
issued in the future other than the Junior Subordinated Debentures or any junior
subordinated debt securities issued in the future with subordination terms
substantially similar to those of the Junior Subordinated Debentures. The
Corporation has no outstanding Senior Indebtedness.
In the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to the Corporation, its creditors or its property, (ii) any proceeding for the
liquidation, dissolution or other winding up of the Corporation, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Corporation for the benefit of creditors or (iv) any
other marshalling of the assets of the Corporation, all Senior Indebtedness
(including any interest thereon accruing after the commencement of any such
proceedings) shall first be paid in full before any payment or distribution,
whether in cash, securities or other property, shall be made on account of the
Junior Subordinated Debentures. In such event, any payment or distribution on
account of the Junior Subordinated Debentures, whether in cash, securities or
other property, that would otherwise (but for the subordination provisions) be
payable or deliverable in respect of the Junior Subordinated Debentures will be
paid or delivered directly to the holders of Senior Indebtedness in accordance
with the priorities then existing among such holders until all Senior
Indebtedness (including any interest thereon accruing after the commencement of
any such proceedings) has been paid in full.
In the event of any such proceeding, after payment in full of all sums
owing with respect to Senior Indebtedness, the holders of Junior Subordinated
Debentures, together with the holders of any obligations of the Corporation
ranking on a parity with the Junior Subordinated Debentures, will be entitled to
be paid from
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the remaining assets of the Corporation the amounts at the time due and owing on
the Junior Subordinated Debentures and such other obligations before any payment
or other distribution, whether in cash, property or otherwise, will be made on
account of any capital stock or obligations of the Corporation ranking junior to
the Junior Subordinated Debentures and such other obligations. If any payment or
distribution on account of the Junior Subordinated Debentures of any character
or any security, whether in cash, securities or other property is received by
any holder of any Junior Subordinated Debentures in contravention of any of the
terms hereof and before all the Senior Indebtedness has been paid in full, such
payment or distribution or security will be received in trust for the benefit
of, and must be paid over or delivered and transferred to, the holders of the
Senior Indebtedness at the time outstanding in accordance with the priorities
then existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay all such Senior
Indebtedness in full. By reason of such subordination, in the event of the
insolvency of the Corporation, holders of Senior Indebtedness may receive more,
ratably, and holders of the Junior Subordinated Debentures may receive less,
ratably, than the other creditors of the Corporation. Such subordination will
not prevent the occurrence of any Event of Default in respect of the Junior
Subordinated Debentures.
The Indenture places no limitation on the amount of additional Senior
Indebtedness that may be incurred by the Corporation. The Corporation may from
time to time incur additional indebtedness constituting Senior Indebtedness.
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
The Debenture Trustee, other than during the occurrence and continuance of
a Debenture Event of Default, undertakes to perform only such duties as are
specifically set forth in the Junior Subordinated Debenture and, after the
occurrence and continuance of a Debenture 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. The Debenture Trustee, other than during the
occurrence and continuance of a default by the Corporation in performance of its
obligations under the Indenture, 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 that might be incurred thereby. The
Debenture Trustee is not required to expend or risk its own funds or otherwise
incur personal financial liability in the performance of its duties if the
Debenture Trustee reasonably believes that repayment or adequate indemnity is
not reasonably assured to it.
The Bank of New York, the Debenture Trustee, may serve from time to time as
trustee under other indentures or trust agreements with the Corporation or its
subsidiaries relating to other issues of their securities. The Bank of New York
is the registrar and transfer agent for the Corporation's common stock. In
addition, the Corporation and certain of its affiliates may have other banking
relationships with The Bank of New York.
DESCRIPTION OF GUARANTEE
The Old Guarantee was executed and delivered by the Corporation
concurrently with the issuance of Old Capital Securities by the Issuer Trust for
the benefit of the holders from time to time of the Capital Securities. As soon
as practicable after the date hereof, the Old Guarantee will be exchanged by the
Corporation for the New Guarantee. The Bank of New York will act as Guarantee
Trustee under the Guarantee. This summary of certain provisions of the
Guarantee, which describes the material provisions thereof, 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. A copy of the form of Guarantee is available upon request from
the Guarantee Trustee. The Guarantee Trustee will hold the Guarantee for the
benefit of the holders of the Capital Securities.
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General
The Corporation has irrevocably and unconditionally agreed (and under the
New Guarantee will irrevocably and unconditionally agree) 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 Issuer
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 Issuer Trust (the "Guarantee Payments"), will be subject to the
Guarantee: (i) any accumulated and unpaid Distributions required to be paid on
such Capital Securities, to the extent that the Issuer Trust has funds on hand
available therefor at such time, (ii) the Redemption Price with respect to any
Capital Securities called for redemption, to the extent that the Issuer Trust
has funds on hand available therefor at such time, and (iii) upon a voluntary or
involuntary termination, winding-up or liquidation of the Issuer Trust (unless
the Junior Subordinated Debentures are distributed to holders of the Capital
Securities), the lesser of (a) the Liquidation Distribution, to the extent that
the Issuer Trust has funds on hand available therefor at such time, and (b) the
amount of assets of the Issuer Trust remaining available for distribution to
holders of the Capital Securities on liquidation of the Issuer Trust. 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 Issuer Trust to pay such amounts to such holders.
The Guarantee will be an irrevocable guarantee on a subordinated basis of
the Issuer Trust's obligations under the Capital Securities, but will apply only
to the extent that the Issuer Trust has funds sufficient to make such payments,
and is not a guarantee of collection.
If the Corporation does not make payments on the Junior Subordinated
Debentures held by the Issuer Trust, the Issuer Trust will not be able to pay
any amounts payable in respect of the Capital Securities and will not have funds
legally available therefor. The Guarantee will rank subordinate and junior in
right of payment to all Senior Indebtedness of the Corporation. See "-- Status
of the Guarantee." Because the Corporation is a holding company, the right of
the Corporation to participate in any distribution of assets of any subsidiary
of the Corporation upon such subsidiary's dissolution, winding-up, liquidation
or reorganization or otherwise is subject to the prior claims of creditors of
that subsidiary, except to the extent that the Corporation may itself be a
creditor of that subsidiary and its claims are recognized. The principal source
of funds for the Corporation to satisfy its obligations under the Junior
Subordinated Debentures and the Guarantee are the Corporation's subsidiaries.
There are also various legal limitations on the extent to which the
Corporation's subsidiaries, may extend credit, pay dividends or otherwise supply
funds to the Corporation or certain of its other subsidiaries. Accordingly, the
Corporation's obligations under the Guarantee will be effectively subordinated
and junior in right of payment to all existing and future liabilities of the
Corporation's subsidiaries, and claimants under the Guarantee should look only
to the assets of the Corporation for payments thereunder. See "Cullen/Frost
Bankers, Inc." 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 or 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, the Indenture and the Expense Agreement, taken
together, fully, irrevocably and unconditionally guaranteed all of the Issuer
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 Issuer Trust's obligations in respect of the Capital Securities. See
"Relationship Among the Capital Securities, the Junior Subordinated Debentures,
the Guarantee and the Expense Agreement."
Status of the Guarantee
The Guarantee will constitute an unsecured obligation of the Corporation
and will rank subordinate and junior in right of payment to all Senior
Indebtedness of the Corporation in the same manner as the Junior Subordinated
Debentures.
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The Guarantee will constitute a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). The
Guarantee will be held by the Guarantee Trustee for the benefit of the holders
of the Capital Securities. The Guarantee will not be discharged except by
payment of the Guarantee Payments in full to the extent not paid by the Issuer
Trust or distribution to the holders of the Capital Securities of the Junior
Subordinated Debentures.
Amendments and Assignment
Except with respect to any changes which do not materially adversely affect
the rights of holders of the Capital Securities (in which case no vote will be
required), the Guarantee may not be amended without the prior approval of the
holders of not less than a majority of the aggregate Liquidation Amount of the
outstanding Capital Securities. The manner of obtaining any such approval will
be as set forth under "-- Description of the Capital Securities -- Voting
Rights; Amendment of Trust Agreement." All guarantees and agreements contained
in the Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Corporation and shall inure to the benefit of the holders
of the Capital Securities then outstanding.
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, or to
perform any non-payment obligation if such nonpayment default remains unremedied
for 30 days. The holders of not less than a majority in aggregate Liquidation
Amount of the outstanding 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 or power conferred upon the Guarantee Trustee under the Guarantee.
Any registered holder of 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 Issuer Trust,
the Guarantee Trustee or any other person or entity.
The Corporation, as guarantor, is 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.
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, undertakes to
perform only such duties as are specifically set forth in the Guarantee and,
after the occurrence of an event of default with respect to the Guarantee, must
exercise the same degree of care and skill as a prudent person would exercise or
use in the conduct of his or her own affairs. Subject to this provision, the
Guarantee Trustee is under no obligation to exercise any of the powers vested in
it by the Guarantee at the request of any holder of the Capital Securities
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred thereby.
For information concerning the relationship between The Bank of New York,
the Guarantee Trustee, and the Corporation, see "-- Description of Junior
Subordinated Debentures -- Information Concerning the Debenture Trustee."
Termination of the Guarantee
The Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of the Capital Securities, upon full
payment of the amounts payable with respect to the Capital Securities upon
liquidation of the Issuer 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
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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.
Governing Law
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
THE EXPENSE AGREEMENT
Pursuant to an Agreement as to Expenses and Liabilities entered into by the
Corporation and the Issuer Trust pursuant to the Trust Agreement (as amended or
supplemented from time to time, the "Expense Agreement"), the Corporation, as
Depositor, will irrevocably and unconditionally guarantee to each person or
entity to whom the Issuer Trust becomes indebted or liable, the full payment of
any costs, expenses or liabilities of the Issuer Trust, other than obligations
of the Issuer Trust to pay to holders of the Trust Securities of the amounts due
such holders pursuant to the terms of the Trust Securities. The Expense
Agreement will constitute an unsecured obligation of the Corporation and will
rank subordinate and junior in right of payment to all Senior Indebtedness of
the Corporation in the same manner as the Guarantee and the Junior Subordinated
Debentures.
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DESCRIPTION OF OLD SECURITIES
The terms of the Old Securities are identical in all material respect to
the New Securities, except that (i) the Old Securities have not been registered
under the Securities Act, are subject to certain restrictions on transfer and
are entitled to certain rights under the applicable Registration Rights
Agreement (which rights will terminate upon consummation of the Exchange Offer,
except under limited circumstances); (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 Registration Rights Agreement provides that in the event (i)
the registration statement relating to the New Securities is not filed on or
prior to the 150th day after the issuance of the Old Capital Securities, (ii)
such registration statement is not declared effective within 30 days of the
required filing date, (iii) the Exchange Offer is not consummated on or before
the date 30 days after the effectiveness of such registration statement, or,
(iv) in certain limited circumstances, a shelf registration statement (the
"Shelf Registration Statement") with respect to the resale of the Old Capital
Securities is not filed or declared effective within a specified time, then
interest will accrue (in addition to the stated interest rate on the Junior
Subordinated Debentures) at the rate of 0.25% per annum on the principal amount
of the Junior Subordinated Debentures and Distributions will accrue (in addition
to the stated Distribution rate on the Capital Securities) at the rate of 0.25%
per annum on the Liquidation Amount of the Capital Securities, for the period
from the occurrence of such event until such time as the relevant event has been
cured or no longer exists. 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 Failure to Exchange Old Capital Securities" and "Description of
New Securities."
RELATIONSHIP AMONG THE CAPITAL SECURITIES, THE JUNIOR
SUBORDINATED DEBENTURES, THE GUARANTEE AND THE EXPENSE AGREEMENT
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Capital Securities
(to the extent the Issuer Trust has funds available for such payment) 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, the Expense 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 Issuer Trust's obligations in respect of the
Capital Securities. If and to the extent that the Corporation does not make
payments on the Junior Subordinated Debentures, the Issuer Trust will not have
sufficient funds to pay Distributions or other amounts due on the Capital
Securities. The Guarantee does not cover payment of amounts payable with respect
to the Capital Securities when the Issuer Trust does not have sufficient funds
to pay such amounts. In such event, the remedy of a holder of the Capital
Securities is to institute a legal proceeding directly against the Corporation
for enforcement of payment of the Corporation's obligations under Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Capital Securities held by such holder.
The obligations of the Corporation under the Junior Subordinated
Debentures, the Guarantee and the Expense Agreement are subordinate and junior
in right of payment to all Senior Indebtedness.
SUFFICIENCY OF PAYMENTS
As long as payments are made when due on the Junior Subordinated
Debentures, such payments will be sufficient to cover Distributions and other
payments distributable on the Capital Securities, primarily because (i) the
aggregate principal amount of the Junior Subordinated Debentures will be equal
to the sum of the aggregate stated Liquidation Amount of the Capital Securities
and Common Securities; (ii) the interest rate
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and interest and other payment dates on the Junior Subordinated Debentures will
match the Distribution rate, Distribution Dates and other payment dates for the
Capital Securities; (iii) the Corporation will pay for all and any costs,
expenses and liabilities of the Issuer Trust except the Issuer Trust's
obligations to holders of the Trust Securities; and (iv) the Trust Agreement
further provides that the Issuer Trust will not engage in any activity that is
not consistent with the limited purposes of the Issuer Trust.
Notwithstanding anything to the contrary in the Indenture, the Corporation
has the right to set-off any payment it is otherwise required to make thereunder
against and to the extent the Corporation has theretofore made, or is
concurrently on the date of such payment making, a payment under the Guarantee
or in connection with a Direct Action.
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 Issuer Trust
or any other person or entity. See "Description of New Securities -- Description
of Guarantee."
A default or event of default under any Senior Indebtedness of the
Corporation would not constitute a default or Event of Default in respect of the
Capital Securities. However, in the event of payment defaults under, or
acceleration of, Senior Indebtedness of the Corporation, 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 the Junior Subordinated Debentures would constitute an
Event of Default under the Trust Agreement. See "Description of New
Securities -- Description of Junior Subordinated Debentures -- Subordination."
LIMITED PURPOSE OF ISSUER TRUST
The Capital Securities represent beneficial interests in the assets of the
Issuer Trust, and the Issuer Trust exists for the sole purpose of issuing its
Capital Securities and Common Securities and investing the proceeds thereof in
Junior Subordinated Debentures and engaging in only those other activities
necessary or incidental thereto. A principal difference between the rights of a
holder of a Capital Security and a holder of a Junior Subordinated Debenture is
that a holder of a Junior Subordinated Debenture is entitled to receive from the
Corporation payments on Junior Subordinated Debentures held, while a holder of
Capital Securities is entitled to receive Distributions or other amounts
distributable with respect to the Capital Securities from the Issuer Trust (or
from the Corporation under the Guarantee) only if and to the extent the Issuer
Trust has funds available for the payment of such Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or liquidation of
the Issuer Trust, other than any such termination, winding-up or liquidation
involving the distribution of the Junior Subordinated Debentures, after
satisfaction of liabilities to creditors of the Issuer Trust as required by
applicable law, the holders of the Capital Securities will be entitled to
receive, out of assets held by the Issuer Trust, the Liquidation Distribution in
cash. See "Description of New Securities -- Description of Capital Securities --
Liquidation Distribution Upon Termination." Upon any voluntary or involuntary
liquidation or bankruptcy of the Corporation, the Property Trustee, as
registered holder of the Junior Subordinated Debentures, would be a subordinated
creditor of the Corporation, subordinated and junior in right of payment to all
Senior Indebtedness as set forth in the Indenture, but entitled to receive
payment in full of all amounts payable with respect to the Junior Subordinated
Debentures before any stockholders of the Corporation receive payments or
distributions. Since the Corporation is the guarantor under the Guarantee and
has agreed under the Expense Agreement to pay for all costs, expenses and
liabilities of the Issuer Trust (other than the Issuer Trust's obligations to
the holders of the Trust Securities), the positions of a holder of the Capital
Securities and a holder of such Junior Subordinated Debentures relative to other
creditors and to stockholders of the
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Corporation in the event of liquidation or bankruptcy of the Corporation are
expected to be substantially the same.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material United States federal income tax
consequences of the purchase, ownership and disposition of Capital Securities.
This summary only addresses the tax consequences to a person that acquires
Capital Securities on their original issue at their original offering price and
that is (i) an individual citizen or resident of the United States, (ii) a
corporation or partnership organized in or under the laws of the United States
or any state thereof or the District of Columbia or (iii) an estate or trust the
income of which is subject to United States federal income tax regardless of
source (a "United States Person"). This summary does not address all tax
consequences that may be applicable to a United States Person that is a
beneficial owner of Capital Securities, nor does it address the tax consequences
to (i) persons that are not United States Persons, (ii) persons that may be
subject to special treatment under United States federal income tax law, such as
banks, insurance companies, thrift institutions, regulated investment companies,
real estate investment trusts, tax-exempt organizations and dealers in
securities or currencies, (iii) persons that will hold Capital Securities as
part of a position in a "straddle" or as part of a "hedging," "conversion" or
other integrated investment transaction for United States federal income tax
purposes, (iv) persons whose functional currency is not the United States dollar
or (v) persons that do not hold Capital Securities as capital assets.
The statements of law or legal conclusion set forth in this summary
constitute the opinion of Sullivan & Cromwell, counsel to the Corporation and
the Issuer Trust. This summary is based upon the Internal Revenue Code of 1986,
as amended (the "Code"), Treasury regulations, Internal Revenue Service ("IRS")
rulings and pronouncements and judicial decisions now in effect, all of which
are subject to change at any time. Such changes may be applied retroactively in
a manner that could cause the tax consequences to vary substantially from the
consequences described below, possibly adversely affecting a beneficial owner of
Capital Securities. In particular, legislation has been proposed in the past
that could adversely affect the Corporation's ability to deduct interest on the
Junior Subordinated Debentures, which may in turn permit the Corporation to
cause a redemption of the Capital Securities. See "-- Possible Tax Law Changes."
The authorities on which this summary is based are subject to various
interpretations, and it is therefore possible that the United States federal
income tax treatment of the purchase, ownership and disposition of Capital
Securities may differ from the treatment described below.
PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS IN
LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES AS TO THE UNITED STATES FEDERAL TAX
CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF CAPITAL SECURITIES,
AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES AND THE ISSUER TRUST
In connection with the issuance of the Old Capital Securities, under
current law and assuming compliance with the terms of the Trust Agreement, the
Issuer Trust will not be taxable as a corporation for United States federal
income tax purposes. As a result, each beneficial owner of Capital Securities (a
"Securityholder") will be required to include in its gross income its pro rata
share of the interest income, including original issue discount ("OID"), paid or
accrued with respect to the Junior Subordinated Debentures whether or not cash
is actually distributed to the Securityholders. See "-- Interest Income and
Original Issue Discount."
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under recently issued Treasury regulations applicable to debt instruments
issued on or after August 13, 1996 (the "Regulations"), a contingency that
stated interest will not be timely paid that is "remote" because of the terms of
the relevant debt instrument will be ignored in determining whether such debt
instrument is
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issued with OID. As a result of the terms and conditions of the Junior
Subordinated Debentures that prohibit certain payments with respect to the
Corporation's capital stock and indebtedness if the Corporation elects to extend
interest payment periods, the Corporation believes that the likelihood of its
exercising its option to defer payments of interest is remote. Based on the
foregoing, the Corporation believes that the Junior Subordinated Debentures will
not be considered to be issued with OID at the time of their original issuance
and, accordingly, a Securityholder should include in gross income such
Securityholder's allocable share of paid or accrued interest on the Junior
Subordinated Debentures. The following disclosure assumes that unless and until
the Corporation exercises its option to defer interest on the Junior
Subordinated Debentures, the Junior Subordinated Debentures will not be issued
with OID.
Under the Regulations, if the Corporation exercises its option to defer any
payment 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 remained outstanding. In such event, all of a Securityholder's
taxable interest income with respect to the Junior Subordinated Debentures would
be accounted for as OID on an economic accrual basis regardless of such
Securityholder's method of tax accounting, and actual distributions of stated
interest would not be reported as taxable income. Consequently, a Securityholder
would be required to include in gross income OID even though the Corporation
would not make any actual cash payments during an Extension Period.
The Regulations have not been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take a
position contrary to the interpretation herein.
Because income on the Capital Securities will constitute interest or OID,
corporate Securityholders will not be entitled to a dividends-received deduction
with respect to any income recognized with respect to the Capital Securities.
Subsequent uses of the term "interest" in this summary include income in
the form of OID.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES TO SECURITYHOLDERS
Under current law, a distribution by the Issuer Trust of the Junior
Subordinated Debentures as described under "Description of New
Securities -- Description of Capital Securities -- Liquidation Distribution Upon
Termination" will be non-taxable and will result in the Securityholder receiving
directly his or her pro rata share of the Junior Subordinated Debentures
previously held indirectly through the Issuer Trust, with a holding period and
aggregate tax basis equal to the holding period and aggregate tax basis such
Securityholder had in its Capital Securities before such distribution. If,
however, the liquidation of the Issuer Trust were to occur because the Issuer
Trust is subject to United States federal income tax with respect to income
accrued or received on the Junior Subordinated Debentures, the distribution of
Junior Subordinated Debentures to Securityholders by the Issuer Trust would be a
taxable event to the Issuer Trust and each Securityholder, and the
Securityholder would recognize gain or loss as if the Securityholder had
exchanged its Capital Securities for the Junior Subordinated Debentures it
received upon the liquidation of the Issuer Trust. A Securityholder will include
interest in income in respect of Junior Subordinated Debentures received from
the Issuer Trust in the manner described above under "-- Interest Income and
Original Issue Discount."
SALES OR REDEMPTIONS OF CAPITAL SECURITIES
A Securityholder that sells (including a redemption for cash) Capital
Securities 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. Assuming that the Corporation does not exercise its
option to defer payment of interest on the Junior Subordinated Debentures, a
Securityholder's adjusted tax basis in the Capital Securities generally will be
its initial purchase price. If the Junior Subordinated Debentures are deemed to
be issued with OID as a result of the Corporation's deferral of any interest
payment, a Securityholder's tax basis in the Capital Securities generally will
be its initial purchase price, increased by OID previously includible in such
Securityholder's gross income to the date of disposition and decreased by
distributions or other payments received on the Capital Securities since and
including the date of the first
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Extension Period. Such gain or loss generally will be a capital gain or loss
(except to the extent any amount realized is treated as a payment of accrued
interest with respect to such Securityholder's pro rata share of the Junior
Subordinated Debentures required to be included in income) and generally will be
a long-term capital gain or loss if the Capital Securities have been held for
more than one year.
Although the matter is not free from doubt, an exchange of Old Capital
Securities for New Capital Securities should not be taxable to Securityholders.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest income paid or accrued on the Capital Securities
held of record by United States Persons (other than corporations and other
exempt Securityholders) will be reported to the IRS. "Backup" withholding at a
rate of 31% will apply to payments of interest to non-exempt United States
Persons unless the Securityholder furnishes its taxpayer identification number
in the manner prescribed in applicable Treasury regulations, certifies that such
number is correct, certifies as to no loss of exemption from backup withholding
and meets certain other conditions.
Payment of the proceeds from the disposition of Capital Securities to or
through the United States office of a broker is subject to information reporting
and backup withholding unless the Securityholder establishes an exemption from
information reporting and backup withholding.
Any amounts withheld from a Securityholder under the backup withholding
rules will be allowed as a refund or a credit against such Securityholder's
United States federal income tax liability, provided the required information is
furnished to the IRS.
It is anticipated that income on the Capital Securities will be reported to
Securityholders on Form 1099 and mailed to Securityholders by January 31
following each calendar year.
POSSIBLE TAX LAW CHANGES
On February 6, 1997, the revenue portion of President Clinton's 1997 budget
proposal (the "Budget Proposal"), was released. If enacted, the Budget Proposal
would generally deny interest deductions for interest on an instrument issued by
a corporation that has a maximum term of more than 15 years and that is not
shown as indebtedness on the separate balance sheet of the issuer or, where the
instrument is issued to a related party (other than a corporation), where the
holder or some other related party issues a related instrument that is not shown
as indebtedness on the issuer's consolidated balance sheet. The above described
provision of the Budget Proposal is proposed to be effective generally for
instruments issued on or after the date of first Congressional committee action.
If this provision were to apply to the New Junior Subordinated Debentures, the
Corporation would be unable to deduct interest on the New Junior Subordinated
Debentures. Under current law, the Corporation will be able to deduct interest
on the New Junior Subordinated Debentures. There can be no assurance, however,
that current or future legislative proposals or final legislation will not
affect the ability of the Corporation to deduct interest on the New Junior
Subordinated Debentures. Such a change could give rise to a Tax Event, which may
permit the Corporation, if certain conditions are met, to shorten the maturity
of the Junior Subordinated Debentures to a date not earlier than February 1,
2017 or to cause a redemption of the Capital Securities before February 1, 2007.
See "Description of New Securities -- Description of Capital
Securities -- Redemption" and "Description of New Securities -- Description of
Junior Subordinated Debentures--Conditional Right to Shorten Maturity or Redeem
upon a Tax Event or Capital Treatment Event." A shortening of the Stated
Maturity of the Junior Subordinated Debentures might result in a taxable
exchange to holders of Capital Securities.
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CERTAIN ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (a "Plan"), should consider the fiduciary standards of ERISA in the
context of the Plan's particular circumstances before authorizing an investment
in the Capital Securities. Accordingly, among other factors, the fiduciary
should consider whether the investment would satisfy the prudence and
diversification requirements of ERISA and would be consistent with the documents
and instruments governing the Plan.
Section 406 of ERISA and Section 4975 of the Code prohibit Plans, as well
as individual retirement accounts and Keogh plans subject to Section 4975 of the
Code (also "Plans"), from engaging in certain transactions involving "plan
assets" with persons who are "parties in interest" under ERISA or "disqualified
persons" under the Code ("Parties in Interest") with respect to such Plan. A
violation of these "prohibited transaction" rules may result in an excise tax or
other liabilities under ERISA and/or Section 4975 of the Code for such persons,
unless exemptive relief is available under an applicable statutory or
administrative exemption. Employee benefit plans that are governmental plans (as
defined in Section 3(32) of ERISA), certain church plans (as defined in Section
3(33) of ERISA) and foreign plans (as described in Section 4(b)(4) of ERISA) are
not subject to the requirements of ERISA or Section 4975 of the Code.
Under a regulation (the "Plan Assets Regulation") issued by the U.S.
Department of Labor (the "DOL"), the assets of the Issuer Trust would be deemed
to be "plan assets" of a Plan for purposes of ERISA and Section 4975 of the Code
if "plan assets" of the Plan were used to acquire an equity interest in the
Issuer Trust and no exception were applicable under the Plan Assets Regulation.
An "equity interest" is defined under the Plan Assets Regulation as any interest
in an entity other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features and
specifically includes a beneficial interest in a trust.
Pursuant to an exception contained in the Plan Assets Regulation, the
assets of the Issuer Trust would not be deemed to be "plan assets" of investing
Plans if, immediately after the most recent acquisition of any equity interest
in the Issuer Trust, less than 25% of the value of each class of equity
interests in the Issuer Trust were held by Plans, other employee benefit plans
not subject to ERISA or Section 4975 of the Code (such as governmental, church
and foreign plans), and entities holding assets deemed to be "plan assets" of
any Plan (collectively, "Benefit Plan Investors"). No assurance can be given
that the value of the Capital Securities held by Benefit Plan Investors will be
less than 25% of the total value of such Capital Securities at the completion of
the initial offering or thereafter, and no monitoring or other measures will be
taken with respect to the satisfaction of the conditions to this exception. All
of the Common Securities were purchased and are held by the Corporation.
Certain transactions involving the Issuer Trust could be deemed to
constitute direct or indirect prohibited transactions under ERISA and Section
4975 of the Code with respect to a Plan if the Capital Securities were acquired
with "plan assets" of such Plan and the assets of the Issuer Trust were deemed
to be "plan assets" of Plans investing in the Issuer Trust. For example, if the
Corporation is a Party in Interest with respect to an investing Plan (either
directly or by reason of its ownership of the Bank or other subsidiaries),
extensions of credit between the Corporation and the Issuer Trust (as
represented by the Junior Subordinated Debentures and the Guarantee) would
likely be prohibited by Section 406(a)(1)(B) of ERISA and Section 4975(c)(1)(B)
of the Code, unless exemptive relief were available under an applicable
administrative exemption (see below). In addition, if the Corporation were
considered to be a fiduciary with respect to the Issuer Trust as a result of
certain powers it holds (such as the powers to remove and replace the Property
Trustee and the Administrative Trustees), the optional redemption or
acceleration of the Junior Subordinated Debentures could be considered to be
prohibited transactions under Section 406(b) of ERISA and Section 4975(c)(1)(E)
of the Code. In order to avoid such prohibited transactions, each investing
Plan, by purchasing the Capital Securities, will be deemed to have directed the
Issuer Trust to invest in the Junior Subordinated Debentures and to have
appointed the Property Trustee.
The DOL has issued five prohibited transaction class exemptions ("PTCEs")
that may provide exemptive relief if required for direct or indirect prohibited
transactions that may arise from the purchase or
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holding of the Capital Securities if assets of the Issuer Trust were deemed to
be "plan assets" of Plans investing in the Issuer Trust as described above.
Those class exemptions are PTCE 96-23 (for certain transactions determined by
in-house asset managers), PTCE 95-60 (for certain transactions involving
insurance company general accounts), PTCE 91-38 (for certain transactions
involving bank collective investment funds), PTCE 90-1 (for certain transactions
involving insurance company separate accounts), and PTCE 84-14 (for certain
transactions determined by independent qualified professional asset managers).
Because the Capital Securities may be deemed to be equity interests in the
Issuer Trust for purposes of applying ERISA and Section 4975 of the Code, the
Capital Securities may not be purchased or held by any Plan, any entity whose
underlying assets include "plan assets" by reason of any Plan's investment in
the entity (a "Plan Asset Entity") or any person investing "plan assets" of any
Plan, unless such purchaser or holder is eligible for the exemptive relief
available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14. 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 it either (a) is not a Plan
or a Plan Asset Entity and is not purchasing such securities on behalf of or
with "plan assets" of any Plan or (b) is eligible for the exemptive relief
available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14.
Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in non-exempt prohibited transactions, it is particularly
important that fiduciaries or other persons considering purchasing the Capital
Securities on behalf of or with "plan assets" of any Plan consult with their
counsel regarding the potential consequences if the assets of the Issuer Trust
were deemed to be "plan assets" and the availability of exemptive relief under
PTCE 96-23, 95-60, 91-38, 90-1 or 84-14.
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 Issuer Trust has 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 180 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. See "The Exchange Offer -- Resales of New Capital Securities."
The Issuer 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.
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EXPERTS
The consolidated financial statements of the Corporation at December 31,
1995 and 1994, and for each of the three years in the period ended December 31,
1995, incorporated by reference in the Corporation's Annual Report on Form 10-K
for the year ended December 31, 1995, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon, included therein,
and incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
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PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) Article 2.02-1 of the Texas Business Corporation Act grants to each
Texas corporation the power to indemnify its directors and officers against
liability for certain of their acts.
(b) Article V of the Corporation's Bylaws provides for indemnification of
any person who was, is or is threatened to be made, party to any threatened,
pending or completed action, suit or proceeding, by reason of the fact that he
or she is or was a director or officer of the Corporation or is or was serving
at the request of the Corporation as a director, officer, partner, venturer,
proprietor, trustee, employee, agent or similar functionary of another foreign
or domestic corporation, partnership, joint venture, trust, or other enterprise,
against all expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection with
such action, suit or proceeding. Reasonable expenses incurred in defending a
civil or criminal action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of (i) a written affirmation by the director, officer, employee or agent who may
be entitled to such indemnification of his or her good faith belief that he or
she has met the standard of conduct necessary for indemnification under the
applicable statute, and (ii) a written undertaking by or on behalf of the
director, officer, employee or agent who may be entitled to such indemnification
to repay such amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the Corporation. The Corporation's obligation to
indemnify and to prepay expenses shall arise, and all rights granted to
directors, officers, employees or agents hereunder shall vest, at the time of
the occurrence of the transaction or event to which such action, suit or
proceeding relates, or at the time that the action or conduct to which such
action, suit or proceeding relates was first taken or engaged in (or omitted to
be taken or engaged in), regardless of when such action, suit or proceeding is
first threatened, commenced or completed.
(c) Article 11 of the Amended and Restated Articles of Incorporation of the
Corporation provides, as permitted by the Texas Miscellaneous Corporation Laws
Act, Art. 1302-7.06, that the directors of the Company have no personal
liability for monetary damages for breach of directors' fiduciary duty of care.
The provision does not change the liability of a director for breach of his or
her duty of loyalty to the Corporation or to shareholders, acts or omissions not
in good faith or which involve intentional misconduct, or a knowing violation of
law, an act or omission for which the liability of a director is expressly
provided for by an applicable statute, or in respect of any transaction from
which a director received an improper personal benefit.
(d) The Corporation maintains liability insurance coverage for its
directors and officers and those of its subsidiaries. This coverage insures such
persons against certain losses that may be incurred by them in their respective
capacities as directors or officers with respect to which they may or may not be
indemnified under the provisions of Article V of the Bylaws of the Corporation
or otherwise.
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ITEM 21. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<C> <S>
4(a) Junior Subordinated Indenture, dated as of February 3, 1997,
between Cullen/Frost Bankers, Inc. and The Bank of New York,
as Trustee
4(b) Form of 8.42% Junior Subordinated Debenture (included in
Exhibit 4(a))
4(c) Certificate of Trust of Cullen/Frost Capital Trust I, dated
February 3, 1997
4(d) Declaration of Trust of Cullen/Frost Capital Trust I, dated
February 3, 1997
4(e) Amended and Restated Trust Agreement of Cullen/Frost Capital
Trust I (including the related form of Expense Agreement),
dated as of February 3, 1997
4(f) Form of Capital Securities Certificate (included in Exhibit
4(e))
4(g) Form of Guarantee Agreement
4(h) Registration Rights Agreement, dated February 3, 1997, among
Cullen/Frost Bankers, Inc., Cullen/Frost Capital Trust I,
J.P. Morgan Securities, Inc. and Credit Suisse First Boston
Corporation
5(a) Opinion of Baker & Botts L.L.P.*
5(b) Opinion of Richards, Layton & Finger*
5(c) Opinion of Sullivan & Cromwell*
8 Opinion of Sullivan & Cromwell as to certain federal income
tax matters
12 Computations of Consolidated Ratios of Earnings to Fixed
Charges
23(a) Consent of Ernst & Young LLP
23(b) Consent of Baker & Botts L.L.P. (included in Exhibit 5(a))*
23(c) Consent of Richards, Layton & Finger (included in Exhibit
5(b))*
23(d) Consent of Sullivan & Cromwell (included in Exhibit 5(c))*
23(e) Consent of Sullivan & Cromwell (included in Exhibit 8)
24(a) Power of Attorney (included in Signature Page)
24(b) Certified copy of Resolutions of the Board of Directors of
Cullen/Frost Bankers, Inc. granting a power of attorney to
designated officers
25(a) Form T-1 Statement of Eligibility of The Bank of New York to
act as Trustee under the Amended and Restated Trust
Agreement
25(b) Form T-1 Statement of Eligibility of The Bank of New York to
act as Property Trustee under the Junior Subordinated
Indenture
25(c) Form T-1 Statement of Eligibility of The Bank of New York to
act as Guarantee Trustee under the Guarantee for the benefit
of Holders of the Capital Securities
27 The Corporation's Financial Data Schedule (incorporated by
reference to Exhibit (27) to the Corporation's Quarterly
Report on Form 10-Q for the quarterly period ended September
30, 1996)
99(a) Form of Letter of Transmittal and instructions thereto
99(b) Form of Notice of Guaranteed Delivery
99(c) Form of Exchange Agent Agreement among Cullen/Frost Bankers,
Inc., Cullen/Frost Capital Trust I and The Bank of New York
</TABLE>
- ---------------
* to be filed by amendment
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 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.
II-2
<PAGE> 75
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of a
Registrant pursuant to the foregoing provisions, or otherwise, each of the
undersigned Registrants 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 a
Registrant of expenses incurred by a director, officer or controlling person of
a 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 of the undersigned Registrants will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Each of the Registrants hereby 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 the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
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 and 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 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the 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.
Each of the undersigned Registrants hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Items 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 involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE> 76
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Cullen/Frost Bankers, Inc. certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-4 and has duly caused
this Form S-4 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Antonio, State of Texas, as of the twelfth day of
March, 1997.
CULLEN/FROST BANKERS, INC.
By: /s/ PHILLIP D. GREEN
------------------------------------
Phillip D. Green
Executive Vice President and
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints T.C. Frost, Richard W. Evans, Jr., Phillip D.
Green and Jerry Salinas, his or her true and lawful attorneys-in-fact and
agents, with full power or substitution and resubstitution, for him or her and
in his or her name, place and stead, in any and all capacities, to sign any and
all amendments, including post-effective amendments, to the Registration
Statement of Cullen/Frost Bankers, Inc. and Cullen/Frost Capital Trust I on Form
S-4 and any exhibits thereto, and to file the same, with all exhibits thereto,
and other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully and to
all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or his or
her substitute or substitutes, may lawfully do or cause to be done by virtue
hereof in connection with effecting the filing of the Registration Statement.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated and on March 10, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ T.C. FROST Senior Chairman, Chief Executive Officer and
- ----------------------------------------------------- Director
T.C. Frost
/s/ RICHARD W. EVANS, JR. Chairman of the Board, Chief Operating
- ----------------------------------------------------- Officer and Director
Richard W. Evans, Jr.
/s/ ROBERT S. MCCLANE President and Director
- -----------------------------------------------------
Robert S. McClane
/s/ PHILLIP D. GREEN Executive Vice President and Chief Financial
- ----------------------------------------------------- Officer
Phillip D. Green
/s/ JERRY SALINAS Senior Vice President and Controller
- -----------------------------------------------------
Jerry Salinas
Director
- -----------------------------------------------------
Isaac Arnold, Jr.
</TABLE>
II-4
<PAGE> 77
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ ROYCE S. CALDWELL Director
- -----------------------------------------------------
Royce S. Caldwell
/s/ RUBEN R. CARDENAS Director
- -----------------------------------------------------
Ruben R. Cardenas
/s/ HENRY E. CATTO Director
- -----------------------------------------------------
Henry E. Catto
/s/ HARRY H. CULLEN Director
- -----------------------------------------------------
Harry H. Cullen
/s/ ROY H. CULLEN Director
- -----------------------------------------------------
Roy H. Cullen
/s/ EUGENE H. DAWSON, SR. Director
- -----------------------------------------------------
Eugene H. Dawson, Sr.
/s/ RUBEN M. ESCOBEDO Director
- -----------------------------------------------------
Ruben M. Escobedo
Director
- -----------------------------------------------------
W.N. Finnegan, III
/s/ JAMES W. GORMAN, JR. Director
- -----------------------------------------------------
James W. Gorman, Jr.
Director
- -----------------------------------------------------
James L. Hayne
/s/ RICHARD M. KLEBERG, III Director
- -----------------------------------------------------
Richard M. Kleberg, III
/s/ IDA CLEMENT STEEN Director
- -----------------------------------------------------
Ida Clement Steen
/s/ CURTIS VAUGHAN, JR. Director
- -----------------------------------------------------
Curtis Vaughan, Jr.
/s/ MARY BETH WILLIAMSON Director
- -----------------------------------------------------
Mary Beth Williamson
</TABLE>
II-5
<PAGE> 78
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Cullen/Frost Capital Trust I certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-4 and has duly caused
this Form S-4 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Monterrey, State of Nuevo Leon, Mexico, as of March
12, 1997.
CULLEN/FROST CAPITAL TRUST I
By: CULLEN/FROST BANKERS, INC., as
Depositor
By: /s/ RICHARD W. EVANS, JR.
----------------------------------
Richard W. Evans, Jr.
Chairman of the Board and
Chief Operating Officer
II-6
<PAGE> 79
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<C> <S>
4(a) Junior Subordinated Indenture, dated as of February 3, 1997,
between Cullen/Frost Bankers, Inc. and The Bank of New York,
as Trustee
4(b) Form of 8.42% Junior Subordinated Debenture (included in
Exhibit 4(a))
4(c) Certificate of Trust of Cullen/Frost Capital Trust I, dated
February 3, 1997
4(d) Declaration of Trust of Cullen/Frost Capital Trust I, dated
February 3, 1997
4(e) Amended and Restated Trust Agreement of Cullen/Frost Capital
Trust I (including the related form of Expense Agreement),
dated as of February 3, 1997
4(f) Form of Capital Securities Certificate (included in Exhibit
4(e))
4(g) Form of Guarantee Agreement
4(h) Registration Rights Agreement, dated February 3, 1997, among
Cullen/Frost Bankers, Inc., Cullen/Frost Capital Trust I,
J.P. Morgan Securities, Inc. and Credit Suisse First Boston
Corporation
5(a) Opinion of Baker & Botts L.L.P.*
5(b) Opinion of Richards, Layton & Finger*
5(c) Opinion of Sullivan & Cromwell*
8 Opinion of Sullivan & Cromwell as to certain federal income
tax matters
12 Computations of Consolidated Ratios of Earnings to Fixed
Charges
23(a) Consent of Ernst & Young LLP
23(b) Consent of Baker & Botts L.L.P. (included in Exhibit 5(a))*
23(c) Consent of Richards, Layton & Finger (included in Exhibit
5(b))*
23(d) Consent of Sullivan & Cromwell (included in Exhibit 5(c))*
23(e) Consent of Sullivan & Cromwell (included in Exhibit 8)
24(a) Power of Attorney (included in Signature Page)
24(b) Certified copy of Resolutions of the Board of Directors of
Cullen/Frost Bankers, Inc. granting a power of attorney to
designated officers
25(a) Form T-1 Statement of Eligibility of The Bank of New York to
act as Trustee under the Amended and Restated Trust
Agreement
25(b) Form T-1 Statement of Eligibility of The Bank of New York to
act as Property Trustee under the Junior Subordinated
Indenture
25(c) Form T-1 Statement of Eligibility of The Bank of New York to
act as Guarantee Trustee under the Guarantee for the benefit
of Holders of the Capital Securities
27 The Corporation's Financial Data Schedule (incorporated by
reference to Exhibit (27) to the Corporation's Quarterly
Report on Form 10-Q for the quarterly period ended September
30, 1996)
99(a) Form of Letter of Transmittal and instructions thereto
99(b) Form of Notice of Guaranteed Delivery
99(c) Form of Exchange Agent Agreement among Cullen/Frost Bankers,
Inc., Cullen/Frost Capital Trust I and The Bank of New York
</TABLE>
- ---------------
* to be filed by amendment
<PAGE> 1
EXHIBIT 4(a)
================================================================================
CULLEN/FROST BANKERS, INC.
to
THE BANK OF NEW YORK,
as Trustee
-------------
JUNIOR SUBORDINATED INDENTURE
DATED AS OF FEBRUARY 3, 1997
-------------
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
<S> <C>
SECTION 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Compliance Certificate and Opinions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 1.3. Forms of Documents Delivered to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 1.4. Acts of Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 1.5. Notices, Etc. to Trustee and Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 1.6. Notice to Holders; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 1.7. Conflict with Trust Indenture Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 1.8. Effect of Headings and Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 1.9. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 1.10. Separability Clause. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 1.11. Benefits of Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 1.12. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 1.13. Non-Business Days. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE II
SECURITY FORMS
SECTION 2.1. Forms Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.2. Form of Face of Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.3. Form of Reverse of Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.4. Additional Provisions Required in Global Security. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.5. Form of Trustee's Certificate of Authentication. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE III
THE SECURITIES
SECTION 3.1. Title and Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.2. Denominations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.3. Execution, Authentication, Delivery and Dating. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.4. Temporary Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.5. Global Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.6. Registration, Transfer and Exchange Generally; Certain Transfers and Exchanges; Securities Act Legends. 28
SECTION 3.7. Mutilated, Destroyed, Lost and Stolen Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.8. Payment of Interest and Additional Interest; Interest Rights Preserved. . . . . . . . . . . . . . . . 32
SECTION 3.9. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.10. Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 3.11. Computation of Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.12. Deferrals of Interest Payment Dates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.13. Right of Set-Off. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.14. Agreed Tax Treatment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.15. Shortening or Extension of Stated Maturity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.16. CUSIP Numbers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.2. Application of Trust Money. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE V
REMEDIES
SECTION 5.1. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment. . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee. . . . . . . . . . . . . . . . . . . . 39
SECTION 5.4. Trustee May File Proofs of Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.5. Trustee May Enforce Claim Without Possession of Securities. . . . . . . . . . . . . . . . . . . . . . 41
SECTION 5.6. Application of Money Collected. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 5.7. Limitation on Suits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium and Interest; Direct Action by Holders of
Capital Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.9. Restoration of Rights and Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.10. Rights and Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.11. Delay or Omission Not Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.12. Control by Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.13. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.14. Undertaking for Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.15. Waiver of Usury, Stay or Extension Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VI
THE TRUSTEE
SECTION 6.1. Certain Duties and Responsibilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 6.2. Notice of Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 6.3. Certain Rights of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities. . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 6.5. May Hold Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 6.7. Compensation and Reimbursement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 6.8. Disqualification; Conflicting Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 6.9. Corporate Trustee Required; Eligibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 6.10. Resignation and Removal; Appointment of Successor. . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 6.11. Acceptance of Appointment by Successor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business. . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.13. Preferential Collection of Claims Against Corporation. . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 6.14. Appointment of Authenticating Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND CORPORATION
SECTION 7.1. Corporation to Furnish Trustee Names and Addresses of Holders. . . . . . . . . . . . . . . . . . . . . 53
SECTION 7.2. Preservation of Information, Communications to Holders. . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 7.3. Reports by Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 7.4. Reports by Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1. Corporation May Consolidate, Etc., Only on Certain Terms. . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.2. Successor Corporation Substituted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures without Consent of Holders. . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.2. Supplemental Indentures with Consent of Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.3. Execution of Supplemental Indentures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 9.4. Effect of Supplemental Indentures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 9.5. Conformity with Trust Indenture Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 9.6. Reference in Securities to Supplemental Indentures. . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE X
COVENANTS
SECTION 10.1. Payment of Principal, Premium and Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.2. Maintenance of Office or Agency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 10.3. Money for Security Payments to be Held in Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 10.4. Statement as to Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.5. Waiver of Certain Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.6. Additional Sums. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 10.7. Additional Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.8. Original Issue Discount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.1. Applicability of This Article. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 11.2. Election to Redeem; Notice to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 11.3. Selection of Securities to be Redeemed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 11.4. Notice of Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 11.5. Deposit of Redemption Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 11.6. Payment of Securities Called for Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 11.7. Right of Redemption of Securities Initially Issued to an Issuer Trust. . . . . . . . . . . . . . . . 65
ARTICLE XII
SINKING FUNDS
SECTION 12.1. Applicability of Article. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 12.2. Satisfaction of Sinking Fund Payments with Securities. . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 12.3. Redemption of Securities for Sinking Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE XIII
SUBORDINATION OF SECURITIES
SECTION 13.1. Securities Subordinate to Senior Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 13.2. No Payment When Senior Indebtedness in Default; Payment Over of Proceeds Upon Dissolution, Etc . . . 68
SECTION 13.3. Payment Permitted If No Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 13.4. Subrogation to Rights of Holders of Senior Indebtedness. . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 13.5. Provisions Solely to Define Relative Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 13.6. Trustee to Effectuate Subordination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 13.7. No Waiver of Subordination Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 13.8. Notice to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 13.9. Reliance on Judicial Order or Certificate of Liquidating Agent. . . . . . . . . . . . . . . . . . . . 72
SECTION 13.10. Trustee Not Fiduciary for Holders of Senior Indebtedness. . . . . . . . . . . . . . . . . . . . . . 72
SECTION 13.11. Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustee's Rights. . . . . . . . 72
SECTION 13.12. Article Applicable to Paying Agents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
EXHIBIT
Exhibit A Form of Restricted Securities Certificate
</TABLE>
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JUNIOR SUBORDINATED INDENTURE, dated as of February 3, 1997, between
CULLEN/FROST BANKERS, INC., a Texas corporation (the "Corporation"), having its
principal office at 100 West Houston Street, San Antonio, Texas 78205, and THE
BANK OF NEW YORK, a New York banking corporation, as Trustee (the "Trustee").
RECITALS OF THE CORPORATION
WHEREAS, the Corporation has duly authorized the execution and
delivery of this Indenture to provide for the issuance from time to time of its
unsecured junior subordinated debt securities in series (hereinafter called the
"Securities") of substantially the tenor hereinafter provided, including
Securities issued to evidence loans made to the Corporation of the proceeds
from the issuance from time to time by one or more business trusts (each an
"Issuer Trust") of undivided preferred beneficial interests in the assets of
such Issuer Trusts (the "Capital Securities") and undivided common beneficial
interests in the assets of such Issuer Trusts (the "Common Securities" and,
collectively with the Capital Securities, the "Trust Securities"), and to
provide the terms and conditions upon which the Securities are to be
authenticated, issued and delivered; and
WHEREAS, all things necessary to make this Indenture a valid agreement
of the Corporation, in accordance with its terms, have been done.
NOW THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities or of any
series thereof, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) The terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as
the singular;
(2) All other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(3) The words "include", "includes" and "including" shall be
deemed to be followed by the phrase "without limitation";
(4) All accounting terms not otherwise defined herein have the
meanings assigned to them
<PAGE> 7
in accordance with generally accepted accounting principles;
(5) Whenever the context may require, any gender shall be
deemed to include the others;
(6) Unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the
case may be, of this Indenture; and
(7) The words "hereby", "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or other subdivision.
"Act" when used with respect to any Holder has the meaning specified
in Section 1.4.
"Additional Interest" means the interest, if any, that shall accrue on
any interest on the Securities of any series the payment of which has not been
made on the applicable Interest Payment Date and which shall accrue at the rate
per annum specified or determined as specified in such Security.
"Additional Sums" has the meaning specified in Section 10.6.
"Additional Taxes" means any additional taxes, duties and other
governmental charges to which an Issuer Trust has become subject from time to
time as a result of a Tax Event.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent Member" means any member of, or participant in, the Depositary.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Security, in each case to the
extent applicable to such transaction and as in effect from time to time.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.14 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"Bankruptcy Code" means Title 11 of the United States Code or any
successor statute thereto, in each case as amended from time to time.
"Board of Directors" means the board of directors of the Corporation
or the Executive Committee of the board of directors of the Corporation (or any
other committee of the board of directors of the Corporation performing similar
functions) or a committee designated by the board of directors of the
Corporation (or such committee), comprised of two or more members of the board
of directors of the Corporation or officers of the Corporation, or both.
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"Board Resolution" means 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, or officers of the Corporation to which
authority to act on behalf of the Board of Directors has been delegated, and to
be in full force and effect on the date of such certification, and delivered to
the Trustee.
"Business Day" means any day other than (i) a Saturday or Sunday, (ii)
a day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed, or (iii) a day on which
the Corporate Trust Office of the Trustee, or, with respect to the Securities
of a series initially issued to an Issuer Trust for so long as such Securities
are held by such Issuer Trust, the "Corporate Trust Office" (as defined in the
related Trust Agreement) of the Property Trustee under the related Trust
Agreement, is closed for business.
"Capital Securities" has the meaning specified in the first recital of
this Indenture.
"Capital Treatment Event" means, in respect of any Issuer Trust, the
reasonable determination by the Corporation (as evidenced by an Officers'
Certificate delivered to the Trustee) that, as a result of the occurrence of
any amendment to, or change (including any announced prospective change) in,
the laws (or any rules or regulations thereunder) of the United States or any
political subdivision thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying such laws, rules or regulations, which amendment or change is
effective or such pronouncement, action or decision is announced on or after
the date of the issuance of the Capital Securities of such Issuer Trust, there
is more than an insubstantial risk that the Corporation will not be entitled to
treat an amount equal to the aggregate Liquidation Amount (as such term is
defined in the related Trust Agreement) of such Capital Securities as "Tier 1
Capital" (or the then equivalent thereof) for purposes of the capital adequacy
guidelines of the Board of Governors of the Federal Reserve System, as then in
effect and applicable to the Corporation.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties on such date.
"Common Securities" has the meaning specified in the first recital of
this Indenture.
"Common Stock" means the common stock, par value $5.00 per share, of
the Corporation.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be
administered.
"corporation" includes a corporation, association, company, limited
liability company, joint-stock company or business trust.
"Corporation" means the Person named as the "Corporation" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Corporation" shall mean such successor corporation.
"Corporation Request" and "Corporation Order" mean, respectively, the
written request or order
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<PAGE> 9
signed in the name of the Corporation by its Chairman of the Board of
Directors, its Vice Chairman of the Board of Directors, its President or a Vice
President, and by its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary, and delivered to the Trustee.
"Defaulted Interest" has the meaning specified in Section 3.8.
"Delaware Trustee" means, with respect to any Issuer Trust, the Person
identified as the "Delaware Trustee" in the related Trust Agreement, solely in
its capacity as Delaware Trustee of such Issuer Trust under such Trust
Agreement and not in its individual capacity, or its successor in interest in
such capacity, or any successor Delaware trustee appointed as therein provided.
"Depositary" means, with respect to the Securities of any series
issuable or issued in whole or in part in the form of one or more Global
Securities, the Person designated as Depositary by the Corporation pursuant to
Section 3.1 with respect to such series (or any successor thereto).
"Discount Security" means any security that provides for an amount
less than the principal amount thereof to be due and payable upon a declaration
of acceleration of the Maturity thereof pursuant to Section 5.2.
"Distributions," with respect to the Trust Securities issued by an
Issuer Trust, means amounts payable in respect of such Trust Securities as
provided in the related Trust Agreement and referred to therein as
"Distributions."
"Dollar" or "$" means the currency of the United States of America
that, as at the time of payment, is legal tender for the payment of public and
private debts.
"Event of Default", unless otherwise specified with respect to a
series of Securities as contemplated by Section 3.1, has the meaning specified
in Article V.
"Exchange Act" means the Securities Exchange Act of 1934 or any
statute successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 1.4.
"Extension Period" has the meaning specified in Section 3.12.
"Global Security" means a Security in the form prescribed in Section
2.4 evidencing all or part of a series of Securities, issued to the Depositary
or its nominee for such series, and registered in the name of such Depositary
or its nominee.
"Guarantee Agreement" means, with respect to any Issuer Trust, the
Guarantee Agreement executed by the Corporation for the benefit of the Holders
of the Capital Securities issued by such Issuer Trust as modified, amended or
supplemented from time to time.
"Holder" means a Person in whose name a Security is registered in the
Securities Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be
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supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof and shall include the terms
of each particular series of Securities established as contemplated by Section
3.1.
"Institutional Accredited Investor" means an institutional accredited
investor within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act.
"Interest Payment Date" means, as to each series of Securities, the
Stated Maturity of an installment of interest on such Securities.
"Investment Company Act" means the Investment Company Act of 1940 or
any successor statute thereto, in each case as amended from time to time.
"Issuer Trust" has the meaning specified in the first recital of this
Indenture.
"Maturity" when used with respect to any Security means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in
Section 5.1(3).
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the Senior Chairman of the Board, the President or a Vice President,
and by the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary, of the Corporation and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for or an employee of the Corporation or any Affiliate of the
Corporation.
"Original Issue Date" means the date of issuance specified as such in
each Security.
"Outstanding" means, when used in reference to any Securities, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities for whose payment money in the necessary
amount has been theretofore deposited with the Trustee or any Paying
Agent in trust for the Holders of such Securities; and
(iii) Securities in substitution for or in lieu of which other
Securities have been authenticated and delivered or that have been
paid pursuant to Section 3.7, unless proof satisfactory to the Trustee
is presented that any such Securities are held by Holders in whose
hands such Securities are valid, binding and legal obligations of the
Corporation;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver
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<PAGE> 11
hereunder, Securities owned by the Corporation or any other obligor upon the
Securities or any Affiliate of the Corporation or such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Securities
that the Trustee knows to be so owned shall be so disregarded. Securities so
owned that have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Securities and that the pledgee is not the
Corporation or any other obligor upon the Securities or any Affiliate of the
Corporation or such other obligor. Upon the written request of the Trustee, the
Corporation shall furnish to the Trustee promptly an Officers' Certificate
listing and identifying all Securities, if any, known by the Corporation to be
owned or held by or for the account of the Corporation, or any other obligor on
the Securities or any Affiliate of the Corporation or such obligor, and subject
to the provisions of Section 6.1, the Trustee shall be entitled to accept such
Officers' Certificate as conclusive evidence of the facts therein set forth and
of the fact that all Securities not listed therein are Outstanding for the
purpose of any such determination. Notwithstanding anything herein to the
contrary, Securities of any series initially issued to an Issuer Trust that are
owned by such Issuer Trust shall be deemed to be Outstanding notwithstanding
the ownership by the Corporation or an Affiliate of any beneficial interest in
such Issuer Trust.
"Paying Agent" means the Trustee or any Person authorized by the
Corporation to pay the principal of (or premium, if any) or interest on, or
other amounts in respect of, any Securities on behalf of the Corporation.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Place of Payment" means, with respect to the Securities of any
series, the place or places where the principal of (and premium, if any) and
interest on the Securities of such series are payable pursuant to Sections 3.1
and 3.12.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security. For the purposes of this definition, any security
authenticated and delivered under Section 3.7 in lieu of a mutilated,
destroyed, lost or stolen Security shall be deemed to evidence the same debt as
the mutilated, destroyed, lost or stolen Security.
"Proceeding" has the meaning specified in Section 13.2.
"Property Trustee" means, with respect to any Issuer Trust, the Person
identified as the "Property Trustee" in the related Trust Agreement, solely in
its capacity as Property Trustee of such Issuer Trust under such Trust
Agreement and not in its individual capacity, or its successor in interest in
such capacity, or any successor property trustee appointed as therein provided.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture or the terms of such Security.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at
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which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date with respect to the Securities of a series means, unless otherwise
provided pursuant to Section 3.1 with respect to Securities of such series, the
date that is fifteen days next preceding such Interest Payment Date (whether or
not a Business Day).
"Responsible Officer", when used with respect to the Trustee, means
the chairman or any vice-chairman of the board of directors, the chairman or
any vice-chairman of the executive committee of the board of directors, the
chairman of the trust committee, the president, any vice president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer, the
cashier, any assistant cashier, any trust officer or assistant trust officer,
the controller or any assistant controller or any other officer of the 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 his
knowledge of and familiarity with the particular subject.
"Restricted Securities Certificate" means a certificate substantially
in the form set forth in Exhibit A.
"Restricted Securities Legend" means a legend substantially in the
form of the legend required in the form of Security set forth in Section 2.2 to
be placed upon a Restricted Security.
"Restricted Security" means each Security required pursuant to Section
3.6(c) to bear a Restricted Securities Legend.
"Rights Plan" means a plan of the Corporation providing for the
issuance by the Corporation to all holders of its Common Stock, par value $5.00
per share, of rights entitling the holders thereof to subscribe for or purchase
shares of any class or series of capital stock of the Corporation which rights
(i) are deemed to be transferred with such shares of such Common Stock, and
(ii) are also issued in respect of future issuances of such Common Stock, in
each case until the occurrence of a specified event or events.
"Rule 144A Information" shall be such information with respect to the
Corporation as is specified pursuant to Rule 144A(d)(4) under the Securities
Act (or any successor provision thereto).
"Securities" or "Security" means any debt securities or debt security,
as the case may be, authenticated and delivered under this Indenture.
"Securities Act" means the Securities Act of 1933 or any successor
statute thereto, in each case as amended from time to time.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 3.6.
"Senior Indebtedness" means any obligation of the Corporation to its
creditors, whether now outstanding or subsequently incurred, other than any
obligation as to which, in the instrument creating or evidencing the obligation
or pursuant to which the obligation is outstanding, it is provided that such
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obligation is not Senior Indebtedness, but does not include trade accounts
payable and accrued liabilities arising in the ordinary course of business.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 3.7.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof (or premium, if any) or interest (including
any Additional Interest) thereon, means the date specified pursuant to the
terms of such Security as the fixed date on which the principal of such
Security or such installment of principal (or premium, if any) or interest
(including any Additional Interest) is due and payable, as such date may, in
the case of the stated maturity of the principal on any security, be shortened
or extended as provided pursuant to the terms of such Security and this
Indenture and, in the case of any installment of interest, subject to the
deferral of any such date in the case of any Extension Period.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Corporation or
by one or more other Subsidiaries, or by the Corporation and one or more other
Subsidiaries. For purposes of this definition, "voting stock" means stock that
ordinarily has voting power for the election of directors, whether at all times
or only so long as no senior class of stock has such voting power by reason of
any contingency.
"Successor Security" of any particular Security means every Security
issued after, and evidencing all or a portion of the same debt as that
evidenced by, such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 3.7 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security
shall be deemed to evidence the same debt as the mutilated, destroyed, lost or
stolen Security.
"Tax Event" means (a) with respect to a series of Securities held by
an Issuer Trust, the receipt by such Issuer Trust of an Opinion of Counsel (as
defined in the relevant Trust Agreement) experienced in such matters to the
effect that, as a result of any amendment to, or change (including any
announced proposed change) in, the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority thereof or
therein, or as a result of any official administrative pronouncement or
judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or which pronouncement or decision is
announced on or after the date of issuance of the Capital Securities of such
Issuer Trust, there is more than an insubstantial risk that (i) such Issuer
Trust is, or will be within 90 days of the delivery of such Opinion of Counsel,
subject to United States Federal income tax with respect to income received or
accrued on the corresponding series of Securities issued by the Corporation to
such Issuer Trust, (ii) interest payable by the Corporation on such
corresponding series of Securities is not, or within 90 days of the delivery of
such Opinion of Counsel will not be, deductible by the Corporation, in whole or
in part, for United States Federal income tax purposes, or (iii) such Issuer
Trust is, or will be within 90 days of the delivery of such Opinion of Counsel,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges, and (b) with respect to a series of Securities which are
no longer held by an Issuer Trust, the receipt by the Corporation 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
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<PAGE> 14
decision is announced on or after the date of issuance of such series of
Securities, there is more than an insubstantial risk that interest payable by
the Corporation on such series of Securities is not, or within 90 days of the
delivery of such Opinion of Counsel will not be, deductible by the Corporation,
in whole or in part, for United States Federal income tax purposes.
"Trust Agreement" means, with respect to any Issuer Trust, the trust
agreement or other governing instrument of such Issuer Trust.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument, solely in its capacity as such and not in its
individual capacity, until a successor Trustee shall have become such pursuant
to the applicable provisions of this Indenture, and thereafter "Trustee" shall
mean or include each Person who is then a Trustee hereunder and, if at any time
there is more than one such Person, "Trustee" as used with respect to the
Securities of any series shall mean the Trustee with respect to Securities of
that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbb), as amended and as in effect on the date as of this
Indenture, except as provided in Section 9.5.
"Trust Securities" has the meaning specified in the first recital of
this Indenture.
"Vice President," when used with respect to the Corporation, means any
duly appointed vice president, whether or not designated by a number or a word
or words added before or after the title "vice president."
SECTION 1.2. Compliance Certificate and Opinions.
Upon any application or request by the Corporation to the Trustee to
take any action under any provision of this Indenture, the Corporation shall
furnish to the Trustee an Officers' Certificate stating that all conditions
precedent (including covenants compliance with which constitutes a condition
precedent), if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent (including covenants
compliance with which constitutes a condition precedent), if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular application or request,
no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than the
certificates provided pursuant to Section 10.4) shall include:
(1) a statement by each individual signing such certificate or opinion
that such individual has read such covenant or condition and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions of such individual
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he or she has
made such examination or investigation as is necessary to enable him or her to
express an informed opinion as to whether or not
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such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of such individual, such
condition or covenant has been complied with.
SECTION 1.3. Forms of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Corporation may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to matters upon which his or her certificate or
opinion is based are erroneous. Any such certificate or Opinion of Counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Corporation
stating that the information with respect to such factual matters is in the
possession of the Corporation, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions, or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.4. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given to or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments is or
are delivered to the Trustee, and, where it is hereby expressly required, to
the Corporation. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Holders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.1) conclusive in
favor of the Trustee and the Corporation, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him or her the
execution thereof. Where such execution is by a Person acting in other than his
or her individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his or her authority.
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<PAGE> 16
(c) The fact and date of the execution by any Person of any such
instrument or writing, or the authority of the Person executing the same, may
also be proved in any other manner that the Trustee deems sufficient and in
accordance with such reasonable rules as the Trustee may determine.
(d) The ownership of Securities shall be proved by the Securities
Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done or suffered to be done by the Trustee or the Corporation in
reliance thereon, whether or not notation of such action is made upon such
Security.
(f) The Corporation may set any day as a record date for the purpose
of determining the Holders of Outstanding Securities of any series entitled to
give, make or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Indenture to be
given, made or taken by Holders of Securities of such series, provided that the
Corporation may not set a record date for, and the provisions of this paragraph
shall not apply with respect to, the giving or making of any notice,
declaration, request or direction referred to in the next succeeding paragraph.
If any record date is set pursuant to this paragraph, the Holders of
Outstanding Securities of the relevant series on such record date, and no other
Holders, shall be entitled to take the relevant action, whether or not such
Holders remain Holders after such record date, provided that no such action
shall be effective hereunder unless taken on or prior to the applicable
Expiration Date (as defined below) by Holders of the requisite principal amount
of Outstanding Securities of such series on such record date. Nothing in this
paragraph shall be construed to prevent the Corporation from setting a new
record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be cancelled and of no effect),
and nothing in this paragraph shall be construed to render ineffective any
action taken by Holders of the requisite principal amount of Outstanding
Securities of the relevant series on the date such action is taken. Promptly
after any record date is set pursuant to this paragraph, the Corporation, at
its own expense, shall cause notice of such record date, the proposed action by
Holders and the applicable Expiration Date to be given to the Trustee in
writing and to each Holder of Securities of the relevant series in the manner
set forth in Section 1.6.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
join in the giving or making of (i) any Notice of Default, (ii) any declaration
of acceleration referred to in Section 5.2, (iii) any request to institute
proceedings referred to in Section 5.7(2), or (iv) any direction referred to in
Section 5.12, in each case with respect to Securities of such series. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of such series on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date, provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities of such series on such record date. Nothing in this paragraph shall
be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be cancelled and of no effect), and nothing in
this paragraph shall be construed to render ineffective any action taken by
Holders of the requisite principal amount of Outstanding Securities of the
relevant series
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<PAGE> 17
on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Trustee, at the Corporation's expense, shall
cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Corporation in writing and to
each Holder of Securities of the relevant series in the manner set forth in
Section 1.6.
With respect to any record date set pursuant to this Section, the
party hereto that sets such record date may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day, provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto
in writing, and to each Holder of Securities of the relevant series in the
manner set forth in Section 1.6, on or prior to the existing Expiration Date.
If an Expiration Date is not designated with respect to any record date set
pursuant to this Section, the party hereto that set such record date shall be
deemed to have initially designated the 180th day after such record date as the
Expiration Date with respect thereto, subject to its right to change the
Expiration Date as provided in this paragraph. Notwithstanding the foregoing,
no Expiration Date shall be later than the 180th day after the applicable
record date.
(g) Without limiting the foregoing, a Holder entitled hereunder to
take any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
SECTION 1.5. Notices, Etc. to Trustee and Corporation.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder, any holder of Capital Securities or the
Corporation shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Trustee at its Corporate Trust
office, or
(2) the Corporation by the Trustee, any Holder or any holder of
Capital Securities shall be sufficient for every purpose (except as otherwise
provided in Section 5.1) hereunder if in writing and mailed, first class,
postage prepaid, to the Corporation addressed to it at the address of its
principal office specified in the first paragraph of this instrument or at any
other address previously furnished in writing to the Trustee by the
Corporation.
SECTION 1.6. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first class postage prepaid, to each Holder affected
by such event, at the address of such Holder as it appears in the Securities
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. If, by reason of the suspension
of or irregularities in regular mail service or for any other reason, it shall
be impossible or impracticable to mail notice of any event to Holders when said
notice is required to be given pursuant to any provision of this Indenture or
of the relevant Securities, then any manner of giving such notice as shall be
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail
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<PAGE> 18
such notice, nor any defect in any notice so mailed, to any particular Holder
shall affect the sufficiency of such notice with respect to other Holders.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
SECTION 1.7. Conflict with Trust Indenture Act.
Except as otherwise expressly provided herein, the Trust Indenture Act
shall apply as a matter of contract to this Indenture for purposes of
interpretation, construction and defining the rights and obligations hereunder,
and this Indenture, the Corporation, and the Trustee shall be deemed for all
purposes hereof to be subject to and governed by the Trust Indenture Act to the
same extent as would be the case if this Indenture were qualified under that
Act on the date hereof. Except as otherwise provided herein, if and to the
extent that any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by any of Sections 310 to 317, inclusive, of the Trust
Indenture Act through operation of Section 318(c) thereof, such imposed duties
shall control.
SECTION 1.8. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 1.9. Successors and Assigns.
All covenants and agreements in this Indenture by the Corporation
shall bind its successors and assigns, whether so expressed or not.
SECTION 1.10. Separability Clause.
If any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.11. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
and assigns, the holders of Senior Indebtedness, the Holders of the Securities
and, to the extent expressly provided in Sections 5.1, 5.2, 5.8, 5.9, 5.11,
5.13, 9.1 and 9.2, the holders of Capital Securities, any benefit or any legal
or equitable right, remedy or claim under this Indenture.
SECTION 1.12. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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<PAGE> 19
SECTION 1.13. Non-Business Days.
If any Interest Payment Date, Redemption Date or Stated Maturity of
any Security shall not be a Business Day, then (notwithstanding any other
provision of this Indenture or the Securities) payment of interest or principal
(and premium, if any) or other amounts in respect of such Security need not be
made on such date, but may be made on the next succeeding Business Day (and no
interest shall accrue in respect of the amounts whose payment is so delayed for
the period from and after such Interest Payment Date, Redemption Date or Stated
Maturity, as the case may be, until such next succeeding Business Day) except
that, if such Business Day falls in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day (in each case
with the same force and effect as if made on the Interest Payment Date or
Redemption Date or at the Stated Maturity).
ARTICLE II
SECURITY FORMS
SECTION 2.1. Forms Generally.
The Securities of each series and the Trustee's certificate of
authentication shall be in substantially the forms set forth in this Article,
or in such other form or forms as shall be established by or pursuant to a
Board Resolution or in one or more indentures supplemental hereto, in each case
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture and may have such letters,
numbers or other marks of identification and such legends or endorsements
placed thereon as may be required to comply with applicable tax laws or the
rules of any securities exchange or as may, consistently herewith, be
determined by the officers executing such securities, as evidenced by their
execution of the Securities. If the form of Securities of any series is
established by action taken pursuant to a Board Resolution, a copy of an
appropriate record of such action shall be certified by the Secretary or an
Assistant Secretary of the Corporation and delivered to the Trustee at or prior
to the delivery of the Corporation Order contemplated by Section 3.3 with
respect to the authentication and delivery of such Securities.
The definitive Securities shall be printed, lithographed or engraved
or produced by any combination of these methods, if required by any securities
exchange on which the Securities may be listed, on a steel engraved border or
steel engraved borders or may be produced in any other manner permitted by the
rules of any securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as evidenced by their
execution of such securities.
SECTION 2.2. Form of Face of Security.
CULLEN/FROST BANKERS, INC.
[TITLE OF SECURITY]
[IF THE SECURITY IS A RESTRICTED SECURITY, INSERT -- THE SECURITIES
EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (A) BY THE INITIAL INVESTOR (I) TO A PERSON
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<PAGE> 20
WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) IN AN
OFFSHORE TRANSACTION COMPLYING WITH THE PROVISIONS OF REGULATION S UNDER THE
SECURITIES ACT, OR (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), OR (B) BY ANY
SUBSEQUENT INVESTOR, AS SET FORTH IN (A) ABOVE AND, IN ADDITION, TO AN
INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, AND, IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER JURISDICTIONS OF THE UNITED
STATES. THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE
FOREGOING RESTRICTIONS. SECURITIES OWNED BY AN INITIAL INVESTOR THAT IS NOT A
QUALIFIED INSTITUTIONAL BUYER MAY NOT BE HELD IN BOOK-ENTRY FORM AND MAY NOT BE
TRANSFERRED WITHOUT CERTIFICATION THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS, AS PROVIDED IN THE INDENTURE REFERRED TO BELOW. NO REPRESENTATION
CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR
RESALES OF THE CAPITAL SECURITIES.]
No. $
CULLEN/FROST BANKERS, INC., a corporation organized and existing under
the laws of Texas (hereinafter called the "Corporation", which term includes
any successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to _______________, or registered assigns, the
principal sum of __________ Dollars on __________ __, [if the Security is a
Global Security, then insert, if applicable--, or such other principal amount
represented hereby as may be set forth in the records of the Securities
Registrar hereinafter referred to in accordance with the Indenture,] [;
provided that the Corporation may (i) shorten the Stated Maturity of the
principal of this Security to a date not earlier than __________, and (ii)
extend the Stated Maturity of the principal of this Security at any time on one
or more occasions, subject to certain conditions specified in Section 3.15 of
the Indenture, but in no event to a date later than __________]. The
Corporation further promises to pay interest on said principal sum from _____
_________, ___ or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, [monthly] [quarterly] [semi-annually] [if
applicable, insert--(subject to deferral as set forth herein)] in arrears on
[insert applicable Interest Payment Dates] of each year, commencing
_______________, ___, at the rate of ___% per annum, [if applicable
insert--together with Additional Sums, if any, as provided in Section 10.6 of
the Indenture] until the principal hereof is paid or duly provided for or made
available for payment [if applicable, insert-- ; provided that any overdue
principal, premium or Additional Sums and any overdue installment of interest
shall bear Additional Interest at the rate of____% per annum (to the extent
that the payment of such interest shall be legally enforceable), compounded
[monthly] [quarterly] [semi-annually], from the dates such amounts are due
until they are paid or made available for payment, and such interest shall be
payable on demand]. The amount of interest payable for any period less than a
full interest period shall be computed on the basis of a 360-day year of twelve
30-day months and the actual days elapsed in a partial month in such period.
The amount of interest payable for any full interest period shall be computed
by dividing the applicable rate per annum by [twelve/four/two]. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided in the Indenture, be paid to the Person in
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<PAGE> 21
whose name this Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest
installment [if applicable insert--, which shall be the [____________ or
____________] (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date]. Any such interest not so punctually paid
or duly provided for shall forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Securities
of this series not less than 10 days prior to such Special Record Date, or be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities of this series
may be listed, and upon such notice as may be required by such exchange, all as
more fully provided in said Indenture.
[If applicable, insert--So long as no Event of Default has occurred
and is continuing, the Corporation shall have the right, at any time during the
term of this Security, from time to time to defer the payment of interest on
this Security for up to ______ consecutive [monthly] [quarterly] [semi-annual]
interest payment periods with respect to each deferral period (each an
"Extension Period") [If applicable, insert--, during which Extension Periods
the Corporation shall have the right to make partial payments of interest on
any Interest Payment Date, and] at the end of which the Corporation shall pay
all interest then accrued and unpaid including any Additional Interest, as
provided below; provided, however, that no Extension Period shall extend beyond
the Stated Maturity of the principal of this Security [If Stated Maturity can
be shortened or extended, insert--, as then in effect,] and no such Extension
Period may end on a date other than an Interest Payment Date; and provided,
further, however, that during any such Extension Period, the Corporation shall
not (i) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Corporation that rank
pari passu in all respects with or junior in interest to this Security, or (ii)
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 (other than (a) repurchases, redemptions or other acquisitions of shares
of capital stock of the Corporation in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of any one or
more employees, officers, directors or consultants, in connection with a
dividend reinvestment or stockholder stock purchase plan or in connection with
the issuance of capital stock of the Corporation (or securities convertible
into or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of an exchange or conversion of any class or series of the Corporation's
capital stock (or any capital stock of a Subsidiary of the Corporation) for any
class or series of the Corporation's capital stock or of any class or series of
the Corporation's indebtedness for any class or series of the Corporation's
capital stock, (c) 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, (d) any
declaration of a dividend in connection with any Rights Plan, or the issuance
of rights, stock or other property under any Rights Plan, or the redemption or
repurchase of rights pursuant thereto, or (e) any dividend in the form of
stock, warrants, options or other rights where the dividend stock or the stock
issuable upon exercise of such warrants, options or other rights is the same
stock as that on which the dividend is being paid or ranks pari passu with or
junior to such stock). Prior to the termination of any such Extension Period,
the Corporation may further defer the payment of interest, provided that no
Extension Period shall exceed ______ consecutive [monthly] [quarterly]
[semi-annual] interest payment periods, extend beyond the Stated Maturity of
the principal of this Security or end on a date other than an Interest Payment
Date. Upon the termination of any such Extension Period and upon the payment of
all accrued and unpaid interest and any Additional Interest then due on any
Interest
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<PAGE> 22
Payment Date, the Corporation may elect to begin a new Extension Period,
subject to the above conditions. No interest shall be due and payable during an
Extension Period, except at the end thereof, but each installment of interest
that would otherwise have been due and payable during such Extension shall bear
Additional Interest (to the extent that the payment of such interest shall be
legally enforceable) at the rate of ____% per annum, compounded [monthly]
[quarterly] [semi-annually] and calculated as set forth in the first paragraph
of this Security, from the dates on which amounts would otherwise have been due
and payable until paid or made available for payment. The Corporation shall
give the Holder of this Security and the Trustee notice of its election to
begin any Extension Period at least one Business Day prior to the next
succeeding Interest Payment Date on which interest on this Security would be
payable but for such deferral [if applicable, insert--or so long as such
Securities are held by [insert name of applicable Issuer Trust], at least one
Business Day prior to the earlier of (i) the next succeeding date on which
Distributions on the Capital Securities of such Issuer Trust would be payable
but for such deferral, and (ii) the date on which the Property Trustee of such
Issuer Trust is required to give notice to holders of such Capital Securities
of the record date or the date such Distributions are payable].
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Corporation maintained for
that purpose in the [insert Place of Payment], in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts [if applicable, insert--; provided, however, that
at the option of the Corporation payment of interest may be made (i) by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Securities Register, or (ii) by wire transfer in immediately
available funds at such place and to such account as may be designated by the
Person entitled thereto as specified in the Securities Register].
The indebtedness evidenced by this Security 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 Security is issued subject
to the provisions of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such actions as may be necessary or appropriate to effectuate the subordination
so provided, and (c) appoints the Trustee his or her attorney-in-fact for any
and all such purposes. Each Holder hereof, by his or her acceptance hereof,
waives all notice of the acceptance of the subordination provisions contained
herein and in the Indenture by each holder of Senior Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each such holder upon
said provisions.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
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<PAGE> 23
IN WITNESS WHEREOF, the Corporation has caused this instrument to be duly
executed.
CULLEN/FROST BANKERS, INC.
By:
-------------------------------------
Name:
Title:
Attest:
_______________________________________
[Secretary or Assistant Secretary]
SECTION 2.3. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Corporation (herein called the "Securities"), issued and to be issued in one or
more series under the Junior Subordinated Indenture, dated as of February 3,
1997 (herein called the "Indenture"), between the Corporation and THE BANK OF
NEW YORK, as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the
Corporation, the Trustee, the holders of Senior Indebtedness and the Holders of
the Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof [if applicable, insert--, limited in aggregate principal amount
to $ ___________].
All terms used in this Security that are defined in the Indenture [if
applicable, insert--or in the Amended and Restated Trust Agreement, dated as of
________ __, ____ (as modified, amended or supplemented from time to time, the
"Trust Agreement"), relating to [insert name of Issuer Trust] (the "Issuer
Trust") among the Corporation, as Depositor, the Trustees named therein and the
Holders from time to time of the Trust Securities issued pursuant thereto,
shall have the meanings assigned to them in the Indenture [if applicable,
insert--or the Trust Agreement, as the case may be].
[If applicable, insert--The Corporation may at any time, at its
option, on or after _________, ____, and subject to the terms and conditions of
Article XI of the Indenture, redeem this Security in whole at any time or in
part from time to time, at the following Redemption Prices (expressed as
percentages of the principal amount hereof): If redeemed during the 12-month
period beginning _____________,
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<PAGE> 24
Year Redemption
Price
and thereafter at a Redemption Price equal to 100% of the principal amount
hereof, together, in the case of any such redemption, with accrued interest [if
applicable, insert--, including any Additional Interest,] to but excluding the
date fixed for redemption.]
[If applicable, insert--In addition, upon the occurrence and during
the continuation of a Tax Event or a Capital Treatment Event in respect of the
Issuer Trust, the Corporation may, at its option, at any time within 90 days of
the occurrence and during the continuation of such Tax Event or Capital
Treatment Event, as the case may be, redeem this Security, in whole but not in
part, subject to the terms and conditions of Article XI of the Indenture, at a
redemption price equal to [insert formula].
[If the Security is subject to redemption of any kind, insert--In the
event of redemption of this Security in part only, a new Security or Securities
of this series for the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.]
The Indenture contains provisions for satisfaction and discharge of
the entire indebtedness of this Security upon compliance by the Corporation
with certain conditions set forth in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the Corporation and the Trustee at any time to enter into a supplemental
indenture or indentures for the purpose of modifying in any manner the rights
and obligations of the Corporation and of the Holders of the Securities, with
the consent of the Holders of not less than a majority in principal amount of
the Outstanding Securities of each series to be affected by such supplemental
indenture. The Indenture also contains provisions permitting Holders of
specified percentages in principal amount of the Securities of each series at
the time Outstanding, on behalf of the Holders of all Securities of such
series, to waive compliance by the Corporation with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and
of any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.
[If the Security is not a Discount Security, insert--As provided in
and subject to the provisions of the Indenture, if an Event of Default with
respect to the Securities of this series at the time Outstanding occurs and is
continuing, then and in every such case the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Outstanding Securities of this
series may declare the principal amount of all the Securities of this series to
be due and payable immediately, by a notice in writing to the Corporation (and
to the Trustee if given by Holders) [if applicable, insert--, provided that, if
upon an Event of Default, the Trustee or such Holders fail to declare the
principal of all the Outstanding Securities of this series to be immediately
due and payable, the holders of at least 25% in aggregate Liquidation Amount of
the Capital Securities then Outstanding shall have the right to make such
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<PAGE> 25
declaration by a notice in writing to the Corporation and the Trustee]; and
upon any such declaration the principal amount of and the accrued interest
(including any Additional Interest) on all the Securities of this series shall
become immediately due and payable, provided that the payment of principal and
interest (including any Additional Interest) on such Securities shall remain
subordinated to the extent provided in Article XIII of the Indenture.]
[If the Security is a Discount Security, insert--As provided in and
subject to the provisions of the Indenture, if an Event of Default with respect
to the Securities of this series at the time Outstanding occurs and is
continuing, then and in every such case the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Outstanding Securities of this
series may declare an amount of principal of the Securities of this series to
be due and payable immediately, by a notice in writing to the Corporation (and
to the Trustee if given by Holders) [if applicable, insert--, provided that, if
upon an Event of Default, the Trustee or such Holders fail to declare such
principal amount of the Outstanding Securities of this series to be immediately
due and payable, the holders of at least 25% in aggregate Liquidation Amount of
the Capital Securities then Outstanding shall have the right to make such
declaration by a notice in writing to the Corporation and the Trustee]. The
principal amount payable upon such acceleration shall be equal to--insert
formula for determining the amount]. Upon any such declaration, such amount of
the principal of and the accrued interest (including any Additional Interest)
on all the Securities of this series shall become immediately due and payable,
provided that the payment of such principal and interest (including any
Additional Interest) on all the Securities of this series shall remain
subordinated to the extent provided in Article XIII of the Indenture. Upon
payment (i) of the amount of principal so declared due and payable and (ii) of
interest on any overdue principal, premium and interest (in each case to the
extent that the payment of such interest shall be legally enforceable), all of
the Corporation's obligations in respect of the payment of the principal of and
premium and interest, if any, on this Security shall terminate.]
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Corporation,
which is absolute and unconditional, to pay the principal of (and premium, if
any) and interest [insert if applicable--including any Additional Interest)] on
this Security at the times, place and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the
Securities Register, upon surrender of this Security for registration of
transfer at the office or agency of the Corporation maintained under Section
10.2 of the Indenture for such purpose, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Corporation and the
Securities Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Securities
of this series, of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $_______ ___ and any integral multiple of
$____________ in excess thereof. As provided in the Indenture and subject to
certain limitations therein set forth, Securities of this series are
exchangeable for a like aggregate principal amount of Securities of this series
and of like tenor of a different authorized denomination, as requested by the
Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the
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Corporation may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Corporation, the Trustee and any agent of the Corporation or the
Trustee may treat the Person in whose name this Security is registered as the
owner hereof for all purposes, whether or not this Security be overdue, and
neither the Corporation, the Trustee nor any such agent shall be affected by
notice to the contrary.
The Corporation and, by its acceptance of this Security or a
beneficial interest therein, the Holder of, and any Person that acquires a
beneficial interest in, this Security agree that for United States Federal,
state and local tax purposes it is intended that this Security constitute
indebtedness.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
SECTION 2.4. Additional Provisions Required in Global Security.
Unless otherwise specified as contemplated by Section 3.1, any Global
Security issued hereunder shall, in addition to the provisions contained in
Sections 2.2 and 2.3, bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY
OR A NOMINEE OF A DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR
SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE AND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY,
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
SECTION 2.5. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially
the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
Dated:
THE BANK OF NEW YORK, as Trustee
By:
------------------------------------
Authorized Signatory
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ARTICLE III
THE SECURITIES
SECTION 3.1. Title and Terms.
The aggregate principal amount of Securities that may be authenticated
and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section 3.3,
set forth or determined in the manner provided in an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior to the
issuance of Securities of a series:
(a) the title of the securities of such series, which shall
distinguish the Securities of the series from all other Securities;
(b) the limit, if any, upon the aggregate principal amount of
the Securities of such series that may be authenticated and delivered
under this Indenture (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in
lieu of, other Securities of the series pursuant to Section 3.4, 3.6,
3.7, 9.6 or 11.6 and except for any Securities that, pursuant to
Section 3.3, are deemed never to have been authenticated and delivered
hereunder); provided, however, that the authorized aggregate principal
amount of such series may be increased above such amount by a Board
Resolution to such effect;
(c) the Person to whom any interest on a Security of the
series shall be payable, if other than the Person in whose name that
security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest;
(d) the Stated Maturity or Maturities on which the principal
of the Securities of such series is payable or the method of
determination thereof, and any dates on which or circumstances under
which, the Corporation shall have the right to extend or shorten such
Stated Maturity or Maturities;
(e) the rate or rates, if any, at which the Securities of such
series shall bear interest, if any, the rate or rates and extent to
which Additional Interest, if any, shall be payable in respect of any
Securities of such series, the date or dates from which any such
interest or Additional Interest shall accrue, the Interest Payment
Dates on which such interest shall be payable, the right, pursuant to
Section 3.12 or as otherwise set forth therein, of the Corporation to
defer or extend an Interest Payment Date, and the Regular Record Date
for the interest payable on any Interest Payment Date or the method by
which any of the foregoing shall be determined;
(f) the place or places where the principal of (and premium,
if any) and interest (including any Additional Interest) on the
Securities of such series shall be payable, the place or places where
the Securities of such series may be presented for registration of
transfer or exchange, any restrictions that may be applicable to any
such transfer or exchange in addition to or in lieu of those set forth
herein, and the place or places where notices and demands to or upon
the
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Corporation in respect of the Securities of such series may be made;
(g) the period or periods within or the date or dates on
which, if any, the price or prices at which and the terms and
conditions upon which the Securities of such series may be redeemed,
in whole or in part, at the option of the Corporation, and if other
than by a Board Resolution, the manner in which any election by the
Corporation to redeem such Securities shall be evidenced;
(h) the obligation or the right, if any, of the Corporation to
redeem, repay or purchase the Securities of such series pursuant to
any sinking fund, amortization or analogous provisions, or at the
option of a Holder thereof, and the period or periods within which,
the price or prices at which, the currency or currencies (including
currency unit or units) in which and the other terms and conditions
upon which Securities of the series shall be redeemed, repaid or
purchased, in whole or in part, pursuant to such obligation;
(i) the denominations in which any Securities of such series
shall be issuable, if other than denominations of $1,000 and any
integral multiple thereof;
(j) if other than Dollars, the currency or currencies
(including any currency unit or units) in which the principal of (and
premium, if any) and interest and Additional Interest, if any, on the
Securities of the series shall be payable, or in which the Securities
of the series shall be denominated and the manner of determining the
equivalent thereof in Dollars for purposes of the definition of
Outstanding;
(k) the additions, modifications or deletions, if any, in the
Events of Default or covenants of the Corporation set forth herein
with respect to the Securities of such series;
(l) if other than the principal amount thereof, the portion of
the principal amount of Securities of such series that shall be
payable upon declaration of acceleration of the Maturity thereof;
(m) if the principal amount payable at the Stated Maturity of
any Securities of the series will not be determinable as of any one or
more dates prior to the Stated Maturity, the amount which shall be
deemed to be the principal amount of such Securities as of any such
date for any purpose thereunder or hereunder, including the principal
amount thereof which shall be due and payable upon any Maturity other
than the Stated Maturity or which shall be deemed to be Outstanding as
of any date prior to the Stated Maturity (or, in any such case, the
manner in which such amount deemed to be the principal amount shall be
determined);
(n) the additions or changes, if any, to this Indenture with
respect to the Securities of such series as shall be necessary to
permit or facilitate the issuance of the Securities of such series in
bearer form, registrable or not registrable as to principal, and with
or without interest coupons;
(o) any index or indices used to determine the amount of
payments of principal of and premium, if any, on the Securities of
such series or the manner in which such amounts will be determined;
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(p) if applicable, that any Securities of the series shall be
issuable in whole or in part in the form of one or more Global
Securities and, in such case, the respective Depositaries for such
Global Securities, the form of any legend or legends that shall be
borne by any such Global Security in addition to or in lieu of that
set forth in Section 2.4 and any circumstances in addition to or in
lieu of those set forth in Section 3.6 in which any such Global
Security may be exchanged in whole or in part for Securities
registered, and any transfer of such Global Security in whole or in
part may be registered, in the name or names of Persons other than the
Depositary for such Global Security or a nominee thereof;
(q) the appointment of any Paying Agent or agents for the
Securities of such series;
(r) the terms of any right to convert or exchange Securities
of such series into any other securities or property of the
Corporation, and the additions or changes, if any, to this Indenture
with respect to the Securities of such series to permit or facilitate
such conversion or exchange;
(s) if such Securities are to be issued to an Issuer Trust,
the form or forms of the Trust Agreement and Guarantee Agreement
relating thereto;
(t) if other than as set forth herein, the relative degree, if
any, to which the Securities of the series shall be senior to or be
subordinated to other series of Securities in right of payment,
whether such other series of Securities are Outstanding or not;
(u) any addition to or change in the Events of Default which
applies to any Securities of the series and any change in the right of
the Trustee or the requisite Holders of such Securities to declare the
principal amount thereof due and payable pursuant to Section 5.2;
(v) any addition to or change in the covenants set forth in
Article X which applies to Securities of the series; and
(w) any other terms of the Securities of such series (which
terms shall not be inconsistent with the provisions of this Indenture,
except as permitted by Section 9.1(6)).
All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided herein or in
or pursuant to such Board Resolution and set forth, or determined in the manner
provided, in such Officers' Certificate or in any indenture supplemental
hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the
Corporation and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of the series.
The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article XIII.
SECTION 3.2. Denominations.
The Securities of each series shall be in registered form without
coupons and shall be issuable
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in denominations of $100,000 and any integral multiple of $1,000 in excess
thereof, unless otherwise specified as contemplated by Section 3.1.
SECTION 3.3. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Corporation by its
Chairman of the Board, its Senior Chairman of the Board, its President or one
of its Vice Presidents, under and attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Securities
may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Corporation shall bind the
Corporation, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities. At any
time and from time to time after the execution and delivery of this Indenture,
the Corporation may deliver Securities of any series executed by the
Corporation to the Trustee for authentication, together with a Corporation
Order for the authentication and delivery of such Securities, and the Trustee
in accordance with the Corporation Order shall authenticate and make available
for delivery such Securities. If the form or terms of the Securities of the
series have been established by or pursuant to one or more Board Resolutions as
permitted by Sections 2.1 and 3.1, in authenticating such Securities, and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive, and (subject to
Section 6.1) shall be fully protected in relying upon, an Opinion of Counsel
stating,
(1) if the form of such Securities has been established by or
pursuant to Board Resolution as permitted by Section 2.1, that such
form has been established in conformity with the provisions of this
Indenture;
(2) if the terms of such Securities have been established by
or pursuant to Board Resolution as permitted by Section 3.1, that such
terms have been established in conformity with the provisions of this
Indenture; and
(3) that such Securities, when authenticated and made
available for delivery by the Trustee and issued by the Corporation in
the manner and subject to any conditions specified in such Opinion of
Counsel, 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.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
that is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 3.1 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 3.1 or the Corporation Order and Opinion of
Counsel otherwise required pursuant to such preceding paragraph at or prior to
the authentication of each Security
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of such series if such documents are delivered at or prior to the
authentication upon original issuance of the first Security of such series to
be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose, unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
officers, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder. Notwithstanding the foregoing, if any Security shall have
been authenticated and delivered hereunder but never issued and sold by the
Corporation, and the Corporation shall deliver such Security to the Trustee for
cancellation as provided in Section 3.10, for all purposes of this Indenture
such Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
SECTION 3.4. Temporary Securities.
Pending the preparation of definitive Securities of any series, the
Corporation may execute, and upon Corporation Order the Trustee shall
authenticate and make available for delivery, temporary Securities that are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any
denomination, substantially of the tenor of the definitive Securities of such
series in lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such
Securities may determine, as evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Corporation will
cause definitive Securities of such series to be prepared without unreasonable
delay. After the preparation of definitive Securities, the temporary Securities
shall be exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Corporation designated for that
purpose without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Securities, the Corporation shall execute and the Trustee
shall authenticate and make available for delivery in exchange therefor one or
more definitive Securities of the same series, of any authorized denominations
having the same Original Issue Date and Stated Maturity and having the same
terms as such temporary Securities. Until so exchanged, the temporary
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of such series.
SECTION 3.5. Global Securities.
(a) Each Global Security issued under this Indenture shall be
registered in the name of the Depositary designated by the Corporation for such
Global Security or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such Global Security shall
constitute a single Security for all purposes of this Indenture.
(b) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the
name of any Person other than the Depositary for such Global Security or a
nominee thereof unless (i) such Depositary advises the Trustee in writing that
such Depositary is no longer willing
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or able to properly discharge its responsibilities as Depositary with respect
to such Global Security, and the Corporation is unable to locate a qualified
successor, (ii) the Corporation executes and delivers to the Trustee a
Corporation Order stating that the Corporation elects to terminate the
book-entry system through the Depositary, (iii) there shall have occurred and
be continuing an Event of Default, or (iv) in the case of a transfer of a
beneficial interest in such Security to a Person that is not a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act,
upon reasonable prior notice of such transfer by the Depositary or its
authorized representative to the Securities Registrar and delivery to the
Securities Registrar of a Restricted Securities Certificate duly authorized by
the Depositary or its authorized representative to the Securities Registrar and
delivery to the Securities Registrar of a Restricted Securities Certificate
duly authorized by the Depositary or its authorized representatives.
(c) If any Global Security is to be exchanged for other Securities or
cancelled in whole, it shall be surrendered by or on behalf of the Depositary
or its nominee to the Securities Registrar for exchange or cancellation as
provided in this Article III. If any Global Security is to be exchanged for
other Securities or cancelled in part, or if another Security is to be
exchanged in whole or in part for a beneficial interest in any Global Security,
then either (i) such Global Security shall be so surrendered for exchange or
cancellation as provided in this Article III or (ii) the principal amount
thereof shall be reduced, subject to Section 3.6(b)(v), or increased by an
amount equal to the portion thereof to be so exchanged or cancelled, or equal
to the principal amount of such other Security to be so exchanged for a
beneficial interest therein, as the case may be, by means of an appropriate
adjustment made on the records of the Securities Registrar, whereupon the
Trustee, in accordance with the Applicable Procedures, shall instruct the
Depositary or its authorized representative to make a corresponding adjustment
to its records. Upon any such surrender or adjustment of a Global Security by
the Depositary, accompanied by registration instructions, the Trustee shall,
subject to Section 3.5(b) and as otherwise provided in this Article III,
authenticate and deliver any Securities issuable in exchange for such Global
Security (or any portion thereof) in accordance with the instructions of the
Depositary. The Trustee shall not be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be fully protected in
relying on, such instructions.
(d) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Article III, Section 9.6 or 11.6 or
otherwise, shall be authenticated and delivered in the form of, and shall be, a
Global Security, unless such Security is registered in the name of a Person
other than the Depositary for such Global Security or a nominee thereof.
(e) Securities distributed to holders of Book-Entry Capital Securities
(as defined in the applicable Trust Agreement) upon the dissolution of an
Issuer Trust shall be distributed in the form of one or more Global Securities
registered in the name of a Depositary or its nominee, and deposited with the
Securities Registrar, as custodian for such Depositary, or with such
Depositary, for credit by the Depositary to the respective accounts of the
beneficial owners of the Securities represented thereby (or such other accounts
as they may direct). Securities distributed to holders of Capital Securities
other than Book-Entry Capital Securities upon the dissolution of an Issuer
Trust shall not be issued in the form of a Global Security or any other form
intended to facilitate book-entry trading in beneficial interests in such
Securities.
(f) The Depositary or its nominee, as the registered owner of a Global
Security, shall be the Holder of such Global Security for all purposes under
this Indenture and the Securities, and owners of beneficial interests in a
Global Security shall hold such interests pursuant to the Applicable
Procedures.
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Accordingly, any such owner's beneficial interest in a Global Security shall be
shown only on, and the transfer of such interest shall be effected only
through, records maintained by the Depositary or its nominee or its Agent
Members. Neither the Trustee nor the Securities Registrar shall have any
liability in respect of any transfers effected by the Depositary.
(g) The rights of owners of beneficial interests in a Global Security
shall be exercised only through the Depositary and shall be limited to those
established by law and agreements between such owners and the Depositary and/or
its Agent Members.
SECTION 3.6. Registration, Transfer and Exchange Generally; Certain
Transfers and Exchanges; Securities Act Legends.
(a) The Corporation shall cause to be kept at the Corporate Trust
Office of the Trustee a register in which, subject to such reasonable
regulations as it may prescribe, the Corporation shall provide for the
registration of Securities and of transfers of Securities. Such register is
herein sometimes referred to as the "Securities Register." The Trustee is
hereby appointed "Securities Registrar" for the purpose of registering
Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at the
offices or agencies of the Corporation designated for that purpose the
Corporation shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new
Securities of the same series of any authorized denominations of like tenor and
aggregate principal amount and bearing such restrictive legends as may be
required by this Indenture.
At the option of the Holder, Securities may be exchanged for other
Securities of the same series of any authorized denominations, of like tenor
and aggregate principal amount and bearing such restrictive legends as may be
required by this Indenture, upon surrender of the Securities to be exchanged at
such office or agency. Whenever any securities are so surrendered for exchange,
the Corporation shall execute, and the Trustee shall authenticate and deliver,
the Securities that the Holder making the exchange is entitled to receive.
All Securities issued upon any transfer or exchange of Securities
shall be the valid obligations of the Corporation, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such transfer or exchange.
Every Security presented or surrendered for transfer or exchange shall
(if so required by the Corporation or the Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Corporation and the Securities Registrar, duly executed by the Holder thereof
or such Holder's attorney duly authorized in writing.
No service charge shall be made to a Holder for any transfer or
exchange of Securities, but the Corporation may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Securities.
Neither the Corporation nor the Trustee shall be required, pursuant to
the provisions of this Section, (i) to issue, register the transfer of or
exchange any Security of any series during a period beginning at the opening of
business 15 days before the day of selection for redemption of Securities of
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that series pursuant to Article XI and ending at the close of business on the
day of mailing of the notice of redemption, or (ii) to register the transfer of
or exchange any Security so selected for redemption in whole or in part,
except, in the case of any such Security to be redeemed in part, any portion
thereof not to be redeemed.
(b) Certain Transfers and Exchanges. Notwithstanding any other
provision of this Indenture, transfers and exchanges of Securities and
beneficial interests in a Global Security shall be made only in accordance with
this Section 3.6(b).
(i) Restricted Non-Global Security to Global Security. If the Holder
of a Restricted Security (other than a Global Security) wishes at any time to
transfer all or any portion of such Security to a Person who wishes to take
delivery thereof in the form of a beneficial interest in a Global Security,
such transfer may be effected only in accordance with the provisions of this
Clause (b)(i) and subject to the Applicable Procedures. Upon receipt by the
Securities Registrar of (A) such Security as provided in Section 3.6(a) and
instructions satisfactory to the Securities Registrar directing that a
beneficial interest in the Global Security in a specified principal amount not
greater than the principal amount of such Security be credited to a specified
Agent Member's account and (B) a Restricted Securities Certificate duly
executed by such Holder or such Holder's attorney duly authorized in writing,
then the Securities Registrar shall cancel such Security (and issue a new
Security in respect of any untransferred portion thereof) as provided in
Section 3.6(a) and increase the aggregate principal amount of the Global
Security by the specified principal amount as provided as provided in Section
3.5(c).
(ii) Non-Global Security to Non-Global Security. A Security that is
not a Global Security may be transferred, in whole or in part, to a Person who
takes delivery in the form of another Security that is not a Global Security as
provided in Section 3.6(a), provided that if the Security to be transferred in
whole or in part is a Restricted Security, the Securities Registrar shall have
received a Restricted Securities Certificate duly executed by the transferor
Holder or such Holder's attorney duly authorized in writing.
(iii) Exchanges Between Global Security and Non-Global Security. A
beneficial interest in a Global Security may be exchanged for a Security that
is not a Global Security as provided in Section 3.5.
(iv) Certain Initial Transfers of Non-Global Securities. In the case
of Securities initially issued other than in global form, an initial transfer
or exchange of such Securities that does not involve any change in beneficial
ownership may be made to an Institutional Accredited Investor or Investors as
if such transfer or exchange were not an initial transfer or exchange; provided
that written certification shall be provided by the transferee and transferor
of such Securities to the Securities Registrar that such transfer or exchange
does not involve a change in beneficial ownership.
(v) Limitations relating to Principal Amount. Notwithstanding any
other provision of this Indenture and unless otherwise specified as permitted
by Section 3.1, Securities or portions thereof may be transferred or exchanged
only in principal amounts of not less than $100,000. Any transfer, exchange or
other disposition of Securities in contravention of this Section 3.6(b)(v)
shall be deemed to be void and of no legal effect whatsoever, any such
transferee shall be deemed not to be the Holder or owner of any beneficial
interest in such Securities for any purpose, including but not limited to the
receipt of interest payable on such Securities, and such transferee shall be
deemed to have no interest whatsoever in such Securities.
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(c) Restricted Securities Legend. Except as set forth below, all
Securities shall bear a Restricted Securities Legend:
(i) subject to the following Clauses of this Section 3.6(c), a
Security or any portion thereof that is exchanged, upon transfer or otherwise,
for a Global Security or any portion thereof shall bear the Restricted
Securities Legend while represented thereby;
(ii) subject to the following Clauses of this Section 3.6(c), a new
Security which is not a Global Security and is issued in exchange for another
Security (including a Global Security) or any portion thereof, upon transfer or
otherwise, shall bear a Restricted Securities Legend;
(iii) a new Security (other than a Global Security) that does not bear
a Restricted Securities Legend may be issued in exchange for or in lieu of a
Restricted Security or any portion thereof that bears such a legend if, in the
Corporation's judgment, placing such a legend upon such new Security is not
necessary to ensure compliance with the registration requirements of the
Securities Act, and the Trustee, at the written direction of the Corporation in
the form of an Officers' Certificate, shall authenticate and deliver such a new
Security as provided in this Article III;
(iv) notwithstanding the foregoing provisions of this Section 3.6(c),
a Successor Security of a Security that does not bear a Restricted Securities
Legend shall not bear such form of legend unless the Corporation has reasonable
cause to believe that such Successor Security is a "restricted security" within
the meaning of Rule 144, in which case the Trustee, at the written direction of
the Corporation in the form of an Officers' Certificate, shall authenticate and
deliver a new Security bearing a Restricted Securities Legend in exchange for
such Successor Security as provided in this Article III; and
(v) Securities distributed to a holder of Capital Securities upon
dissolution of an Issuer Trust shall bear a Restricted Securities Legend if the
Capital Securities so held bear a similar legend.
SECTION 3.7. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee together with
such security or indemnity as may be required by the Corporation or the Trustee
to save each of them harmless, the Corporation shall execute and the Trustee
shall authenticate and deliver in exchange therefor a new Security of the same
series, of like tenor and aggregate principal amount, bearing the same legends,
and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Corporation and to the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security, and (ii) such security or indemnity as may be required by them to
save each of them harmless, then, in the absence of notice to the Corporation
or the Trustee that such Security has been acquired by a bona fide purchaser,
the Corporation shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same series, of like tenor and aggregate
principal amount and bearing the same legends as such destroyed, lost or stolen
Security, and bearing a number not contemporaneously outstanding.
If any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Corporation in its discretion may,
instead of issuing a new Security, pay such Security.
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Upon the issuance of any new Security under this Section, the
Corporation may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Corporation, whether or not the destroyed, lost
or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of the same series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.8. Payment of Interest and Additional Interest; Interest
Rights Preserved.
Interest and Additional Interest on any Security of any series that is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date, shall be paid to the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest in respect of Securities of such series, except
that, unless otherwise provided in the Securities of such series, interest and
any Additional Interest payable on the Stated Maturity of the principal of a
Security shall be paid to the Person to whom principal is paid. The initial
payment of interest on any Security of any series that is issued between a
Regular Record Date and the related Interest Payment Date shall be payable as
provided in such Security or in the Board Resolution pursuant to Section 3.1
with respect to the related series of Securities.
Any interest on any Security that is due and payable, but is not
timely paid or duly provided for, on any Interest Payment Date for Securities
of such series (herein called "Defaulted Interest"), shall forthwith cease to
be payable to the registered Holder on the relevant Regular Record Date by
virtue of having been such Holder, and such Defaulted Interest may be paid by
the Corporation, at its election in each case, as provided in Clause (1) or (2)
below:
(1) The Corporation may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities of such series in respect
of which interest is in default (or their respective Predecessor Securities)
are registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed in the following
manner. The Corporation shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Corporation shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this Clause provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest, which shall be not more than 15 days and not less than 10 days prior
to the date of the proposed payment and not less than 10 days after the receipt
by the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Corporation of such Special Record Date and, in the name
and at the expense of the Corporation, shall cause notice of the proposed
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payment of such Defaulted Interest and the Special Record Date therefor to be
mailed, first class, postage prepaid, to each Holder of a Security of such
series at the address of such Holder as it appears in the Securities Register
not less than 10 days prior to such Special Record Date. The Trustee may, in
its discretion, in the name and at the expense of the Corporation, cause a
similar notice to be published at least once in a newspaper, customarily
published in the English language on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, but such
publication shall not be a condition precedent to the establishment of such
Special Record Date. Notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the Persons in whose names the Securities
of such series (or their respective Predecessor Securities) are registered on
such Special Record Date and shall no longer be payable pursuant to the
following Clause (2).
(2) The Corporation may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities of the series in respect of which interest is
in default may be listed and, upon such notice as may be required by such
exchange (or by the Trustee if the Securities are not listed), if, after notice
given by the Corporation to the Trustee of the proposed payment pursuant to
this Clause, such payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon transfer of or in exchange for or in lieu
of any other Security shall carry the rights to interest accrued and unpaid,
and to accrue, that were carried by such other Security.
SECTION 3.9. Persons Deemed Owners.
The Corporation, the Trustee and any agent of the Corporation or the
Trustee shall treat the Person in whose name any Security is registered as the
owner of such Security for the purpose of receiving payment of principal of and
(subject to Section 3.8) any interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Corporation, the Trustee nor any agent of the Corporation or the Trustee shall
be affected by notice to the contrary.
No holder of any beneficial interest in any Global Security held on
its behalf by a Depositary shall have any rights under this Indenture with
respect to such Global Security, and such Depositary may be treated by the
Corporation, the Trustee and any agent of the Corporation or the Trustee as the
owner of such Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Corporation, the Trustee or any
agent of the Corporation or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by a Depositary or
impair, as between a Depositary and such holders of beneficial interests, the
operation of customary practices governing the exercise of the rights of the
Depositary (or its nominee) as Holder of any Security.
SECTION 3.10. Cancellation.
All Securities surrendered for payment, redemption, transfer or
exchange shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee, and any such Securities and Securities surrendered
directly to the Trustee for any such purpose shall be promptly canceled by it.
The Corporation may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder that the
Corporation may have acquired in any manner whatsoever, and all
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Securities so delivered shall be promptly canceled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
canceled as provided in this Section, except as expressly permitted by this
Indenture. All canceled Securities shall be returned to the Corporation by the
Trustee.
SECTION 3.11. Computation of Interest.
Except as otherwise specified as contemplated by Section 3.1 for
Securities of any series, interest on the Securities of each series for any
partial period shall be computed on the basis of a 360-day year of twelve
30-day months and the actual number of days elapsed in any partial month in
such period, and interest on the Securities of each series for a full period
shall be computed by dividing the rate per annum by the number of interest
periods that together constitute a full twelve months.
SECTION 3.12. Deferrals of Interest Payment Dates.
If specified as contemplated by Section 2.1 or Section 3.1 with
respect to the Securities of a particular series, so long as no Event of
Default has occurred and is continuing, the Corporation shall have the right,
at any time during the term of such series, from time to time to defer the
payment of interest on such Securities for such period or periods as may be
specified as contemplated by Section 3.1 (each, an "Extension Period"), during
which Extension Periods the Corporation shall, if so specified as contemplated
by Section 3.1, have the right to make partial payments of interest on any
Interest Payment Date. No Extension Period shall end on a date other than an
Interest Payment Date. At the end of any such Extension Period the Corporation
shall pay all interest then accrued and unpaid on the Securities (together with
Additional Interest thereon, if any, at the rate specified for the Securities
of such series to the extent permitted by applicable law); provided, however,
that no Extension Period shall extend beyond the Stated Maturity of the
principal of the Securities of such series; and provided further, however that
during any such Extension Period, the Corporation shall not (i) make any
payment of principal of or interest or premium, if any, on or repay, repurchase
or redeem any debt securities of the Corporation that rank pari passu in all
respects with or junior in interest to the Securities of such series, or (ii)
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 (other than (a) repurchases, redemptions or other acquisitions of shares
of capital stock of the Corporation in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of any one or
more employees, officers, directors or consultants, in connection with a
dividend reinvestment or stockholder stock purchase plan or in connection with
the issuance of capital stock of the Corporation (or securities convertible
into or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of an exchange or conversion of any class or series of the Corporation's
capital stock (or any capital stock of a Subsidiary of the Corporation) for any
class or series of the Corporation's capital stock or of any class or series of
the Corporation's indebtedness for any class or series of the Corporation's
capital stock, (c) 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, (d) any
declaration of a dividend in connection with any Rights Plan, or the issuance
of rights, stock or other property under any Rights Plan, or the redemption or
repurchase of rights pursuant thereto, or (e) any dividend in the form of
stock, warrants, options or other rights where the dividend stock or the stock
issuable upon exercise of such warrants, options or other rights is the same
stock as that on which the dividend is being paid or ranks pari passu with or
junior to such stock). Prior to the termination of any such Extension Period,
the Corporation may further defer the payment of interest, provided that no
Event of Default has occurred and is continuing, and provided,
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further that no Extension Period shall exceed the period or periods specified
in such Securities, extend beyond the Stated Maturity of the principal of such
Securities or end on a date other than an Interest Payment Date. Upon the
termination of any such Extension Period and upon the payment of all accrued
and unpaid interest and any Additional Interest then due on any Interest
Payment Date, the Corporation may elect to begin a new Extension Period,
subject to the above conditions. No interest or Additional Interest shall be
due and payable during an Extension Period, except at the end thereof, but each
installment of interest that would otherwise have been due and payable during
such Extension Period shall bear Additional Interest as and to the extent as
may be specified as contemplated by Section 3.1. The Corporation shall give the
Holders of the Securities of such series and the Trustee notice of its election
to begin any such Extension Period at least five Business Days prior to the
next succeeding Interest Payment Date on which interest on Securities of such
series would be payable but for such deferral or, with respect to any
Securities of a series issued to an Issuer Trust, so long as any such
Securities are held by such Issuer Trust, at least five Business Days prior to
the earlier of (i) the next succeeding date on which Distributions on the
Capital Securities of such Issuer Trust would be payable but for such deferral,
and (ii) the date on which the Property Trustee of such Issuer Trust is
required to give notice to holders of such Capital Securities of the record
date or the date such Distributions are payable.
The Trustee shall promptly give notice of the Corporation's election
to begin any such Extension Period to the Holders of the Outstanding Securities
of such series.
SECTION 3.13. Right of Set-Off.
With respect to the Securities of a series initially issued to an
Issuer Trust, notwithstanding anything to the contrary herein, the Corporation
shall have the right to set off any payment it is otherwise required to make in
respect of any such Security to the extent the Corporation has theretofore
made, or is concurrently on the date of such payment making, a payment under
the Guarantee Agreement relating to such Security or to a holder of Capital
Securities pursuant to an action undertaken under Section 5.8 of this
Indenture.
SECTION 3.14. Agreed Tax Treatment.
Each Security issued hereunder shall provide that the Corporation and,
by its acceptance of a Security or a beneficial interest therein, the Holder
of, and any Person that acquires a beneficial interest in, such Security agree
that for United States Federal, state and local tax purposes it is intended
that such Security constitutes indebtedness.
SECTION 3.15. Shortening or Extension of Stated Maturity.
If specified as contemplated by Section 2.1 or Section 3.1 with
respect to the Securities of a particular series, the Corporation shall have
the right to (i) shorten the Stated Maturity of the principal of the Securities
of such series at any time to any date, and (ii) extend the Stated Maturity of
the principal of the Securities of such series at any time at its election for
one or more periods, provided that, if the Corporation elects to exercise its
right to extend the Stated Maturity of the principal of the Securities of such
series pursuant to Clause (ii) above, at the time such election is made and at
the time of extension, such conditions as may be specified in such Securities
shall have been satisfied.
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SECTION 3.16. CUSIP Numbers.
The Corporation in issuing the Securities may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption and other similar or related materials as a convenience
to Holders; provided that any such notice or other materials may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of redemption or other
materials and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be
affected by any defect in or omission of such numbers.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall, upon Corporation Request, cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for and as otherwise provided
in this Section 4.1) and the Trustee, on demand of and at the expense of the
Corporation, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities that have been destroyed, lost or stolen
and that have been replaced or paid as provided in Section 3.7 and
(ii) Securities for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Corporation and
thereafter repaid to the Corporation or discharged from such trust, as
provided in Section 10.3) have been delivered to the Trustee for
cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year of the date of deposit, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the
name, and at the expense, of the Corporation,
and the Corporation, in the case of subclause (B)(i), (ii) or (iii)
above, has deposited or caused to be deposited with the Trustee as
trust funds in trust for such purpose an amount in the currency or
currencies in which the Securities of such series are payable
sufficient to pay and discharge the entire indebtedness on such
Securities not theretofore delivered to the Trustee for cancellation,
for principal (and premium, if any) and interest (including any
Additional Interest)
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to the date of such deposit (in the case of Securities that have
become due and payable) or to the Stated Maturity or Redemption Date,
as the case may be;
(2) the Corporation has paid or caused to be paid all other sums
payable hereunder by the Corporation; and
(3) the Corporation has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Corporation to the Trustee under Section 6.7, the
obligations of the Trustee to any Authenticating Agent under Section 6.14 and,
if money shall have been deposited with the Trustee pursuant to subclause (B)
of Clause (1) of this Section, the obligations of the Trustee under Section 4.2
and the last paragraph of Section 10.3 shall survive.
SECTION 4.2. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3, all
money deposited with the Trustee pursuant to Section 4.1 shall be held in trust
and applied by the Trustee, in accordance with the provisions of the Securities
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Corporation acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest (including any Additional Interest) for the payment of which
such money or obligations have been deposited with or received by the Trustee.
ARTICLE V
REMEDIES
SECTION 5.1. Events of Default.
"Event of Default", wherever used herein with respect to the
Securities of any series, means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body) except as may be specified pursuant to
Section 3.1:
(1) default in the payment of any interest upon any Security of that
series, including any Additional Interest in respect thereof, when it becomes
due and payable, and continuance of such default for a period of 30 days
(subject to the deferral of any due date in the case of an Extension Period);
or
(2) default in the payment of the principal of (or premium, if any,
on) any Security of that series at its Maturity; or
(3) failure on the part of the Corporation duly to observe or perform
any other of the covenants
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or agreements on the part of the Corporation in the Securities of that series
or in this Indenture for a period of 90 days after the date on which written
notice of such failure, requiring the Corporation to remedy the same, shall
have been given to the Corporation by the Trustee by registered or certified
mail or to the Corporation and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Outstanding Securities of that series; or
(4) the entry of a decree or order by a court having jurisdiction in
the premises adjudging the Corporation a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization of the Corporation under the
Bankruptcy Code or any other similar applicable Federal or State law, which
decree or order shall have continued undischarged and unstayed for a period of
60 days; or the entry of a decree or order of a court having jurisdiction in
the premises for the appointment of a receiver or liquidator or trustee or
assignee in bankruptcy or insolvency of the Corporation or of its property, or
for the winding up or liquidation of its affairs, which decree or order shall
have continued undischarged and unstayed for a period of 60 days; or
(5) the commencement by the Corporation of voluntary proceedings to be
adjudicated a bankrupt, or consent by the Corporation to the filing of a
bankruptcy proceeding against it, or the filing by the Corporation of a
petition or answer or consent seeking reorganization under the Bankruptcy Code
or any other similar Federal or State law, or consent by the Corporation to the
filing of any such petition, or the consent by the Corporation to the
appointment of a receiver or liquidator or trustee or assignee in bankruptcy or
insolvency of it or of its property, or the making by the Corporation of an
assignment for the benefit of creditors, or the admission by the Corporation in
writing of its inability to pay its debts generally as they become due; or
(6) any other Event of Default provided with respect to Securities of
that series.
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 5.1(4) or 5.1(5)) with respect to Securities of any series at the time
Outstanding occurs and is continuing, then and in every such case the Trustee
or the Holders of not less than 25% in aggregate principal amount of the
Outstanding Securities of that series may declare the principal amount (or, if
the Securities of that series are Discount Securities, such portion of the
principal amount as may be specified in the terms of that series) of all the
Securities of that series to be due and payable immediately, by a notice in
writing to the Corporation (and to the Trustee if given by Holders), provided
that, in the case of the Securities of a series issued to an Issuer Trust, if,
upon an Event of Default, the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Securities of such series fail to declare
the principal of all the Outstanding Securities of such series to be
immediately due and payable, the holders of at least 25% in aggregate
Liquidation Amount (as defined in the related Trust Agreement) of the related
series of Capital Securities issued by such Issuer Trust then outstanding shall
have the right to make such declaration by a notice in writing to the
Corporation and the Trustee; and upon any such declaration such principal
amount (or specified portion thereof) of and the accrued interest (including
any Additional Interest) on all the Securities of such series shall become
immediately due and payable. If an Event of Default specified in Section 5.1(4)
or 5.1(5) with respect to Securities of any series at the time Outstanding
occurs, the principal amount of all the Securities of such series (or, if the
Securities of such series are Discount Securities, such portion of the
principal amount of such Securities as may be specified by the terms of that
series) shall automatically, and without any declaration or other action on the
part of the Trustee or
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any Holder, become immediately due and payable. Payment of principal and
interest (including any Additional Interest) on such Securities shall remain
subordinated to the extent provided in Article XIII notwithstanding that such
amount shall become immediately due and payable as herein provided.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in
this Article provided, the Holders of a majority in aggregate principal amount
of the Outstanding Securities of that series, by written notice to the
Corporation and the Trustee, may rescind and annul such declaration and its
consequences if:
(1) the Corporation has paid or deposited with the Trustee a sum
sufficient to pay:
(A) all matured installments of interest on all Securities of such
series,
(B) any accrued Additional Interest on all Securities of such series,
(C) the principal of (and premium, if any, on) any Securities of such
series that have become due otherwise than by such declaration of acceleration
and interest and Additional Interest thereon at the rate borne by the
Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel; and
(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series that
has become due solely by such acceleration, have been cured or waived as
provided in Section 5.13.
In the case of Securities of a series initially issued to an Issuer
Trust, if the Holders of such Securities fail to annul such declaration and
waive such default, the holders of a majority in aggregate Liquidation Amount
(as defined in the related Trust Agreement) of the related series of Capital
Securities issued by such Issuer Trust then outstanding shall also have the
right to rescind and annul such declaration and its consequences by written
notice to the Corporation and the Trustee, subject to the satisfaction of the
conditions set forth in Clauses (1) and (2) above of this Section 5.2.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Corporation covenants that if:
(1) default is made in the payment of any installment of interest
(including any Additional Interest) on any Security of any series when such
interest becomes due and payable and such default continues for a period of 30
days, or
(2) default is made in the payment of the principal of (and premium,
if any, on) any Security at the Maturity thereof,
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the Corporation will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities, the whole amount then due and
payable on such Securities for principal, including any sinking fund payment or
analogous obligations (and premium, if any) and interest (including any
Additional Interest), and, in addition thereto, all amounts owing the Trustee
under Section 6.7.
If the Corporation fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, and may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Corporation or any other obligor upon such
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Corporation or any other
obligor upon the Securities, wherever situated.
If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee is authorized to proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
SECTION 5.4. Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Corporation or any other obligor upon the Securities
or the property of the Corporation or of such other obligor or their creditors,
(a) the Trustee (irrespective of whether the principal of the
Securities of any series shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether
the Trustee shall have made any demand on the Corporation for the
payment of overdue principal (and premium, if any) or interest
(including any Additional Interest)) shall be entitled and empowered,
by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest (including any
Additional Interest) owing and unpaid in respect to the
Securities and to file such other papers or documents as may
be necessary or advisable and to take any and all actions as
are authorized under the Trust Indenture Act in order to have
the claims of the Holders and any predecessor to the Trustee
under Section 6.7 allowed in any such judicial proceedings;
and
(ii) in particular, the Trustee shall be authorized
to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same in
accordance with Section 5.6; and
(b) any custodian, receiver, assignee, trustee, liquidator,
sequestrator (or other similar official) in any such judicial
proceeding is hereby authorized by each Holder to make such payments
to the Trustee for distribution in accordance with Section 5.6, and in
the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due
to it and any predecessor Trustee under Section 6.7.
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Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
SECTION 5.5. Trustee May Enforce Claim Without Possession of
Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall,
subject to Article XIII and after provision for the payment of all the amounts
owing the Trustee and any predecessor Trustee under Section 6.7, its agents and
counsel, be for the ratable benefit of the Holders of the Securities in respect
of which such judgment has been recovered.
SECTION 5.6. Application of Money Collected.
Any money or property collected or to be applied by the Trustee with
respect to a series of Securities pursuant to this Article shall be applied in
the following order, at the date or dates fixed by the Trustee and, in case of
the distribution of such money or property on account of principal (or premium,
if any) or interest (including any Additional Interest), upon presentation of
the Securities and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any
predecessor Trustee under Section 6.7;
SECOND: Subject to Article XIII, to the payment of the amounts then
due and unpaid upon Securities of such series for principal (and premium, if
any) and interest (including any Additional Interest) in respect of which or
for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and payable on
such series of Securities for principal (and premium, if any) and interest
(including any Additional Interest), respectively;
THIRD: To the Person or Persons entitled thereto; and
FOURTH: The balance, if any, to the Corporation.
SECTION 5.7. Limitation on Suits.
Subject to Section 5.8, no Holder of any Securities of any series
shall have any right to institute any proceeding, judicial or otherwise, with
respect to this Indenture or for the appointment of a receiver, assignee,
trustee, liquidator, sequestrator (or other similar official) or for any other
remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of that series;
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(2) the Holders of not less than 25% in aggregate principal amount of
the Outstanding Securities of that series shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default in its
own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
aggregate principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing itself of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Securities, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all such Holders.
SECTION 5.8. Unconditional Right of Holders to Receive Principal,
Premium and Interest; Direct Action by Holders of Capital Securities.
Notwithstanding any other provision in this Indenture, the Holder of
any Security of any series shall have the right, which is absolute and
unconditional, to receive payment of the principal of (and premium, if any) and
(subject to Sections 3.8 and 3.12) interest (including any Additional Interest)
on such Security on the respective Stated Maturities expressed in such Security
(or, in the case of redemption, on the Redemption Date) and to institute suit
for the enforcement of any such payment, and such right shall not be impaired
without the consent of such Holder. In the case of Securities of a series
issued to an Issuer Trust, any registered holder of the series of Capital
Securities issued by such Issuer Trust shall have the right, upon the
occurrence of an Event of Default described in Section 5.1(1) or 5.1(2), to
institute a suit directly against the Corporation for enforcement of payment to
such holder of principal of (premium, if any) and (subject to Sections 3.8 and
3.12) interest (including any Additional Interest) on the Securities having a
principal amount equal to the aggregate Liquidation Amount (as defined in the
related Trust Agreement) of such Capital Securities held by such holder.
SECTION 5.9. Restoration of Rights and Remedies.
If the Trustee, any Holder or any holder of Capital Securities issued
by any Issuer Trust has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee, such
Holder or such holder of Capital Securities, then and in every such case the
Corporation, the Trustee, such Holders and such holder of Capital Securities
shall, subject to any determination in such proceeding, be restored severally
and respectively to their former positions hereunder, and thereafter all rights
and remedies of the Trustee, such Holder and such holder of Capital Securities
shall continue as though no such proceeding had been instituted.
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SECTION 5.10. Rights and Remedies Cumulative.
Except as otherwise provided in the last paragraph of Section 3.7, no
right or remedy herein conferred upon or reserved to the Trustee or the Holders
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee, any Holder of any Security with
respect to the Securities of the related Series or any holder of any Capital
Security to exercise any right or remedy accruing upon any Event of Default
with respect to the Securities of the related series shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee
or to the Holders and the right and remedy given to the holders of Capital
Securities by Section 5.8 may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee, the Holders or the holders of Capital
Securities, as the case may be.
SECTION 5.12. Control by Holders.
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities of any series shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on the Trustee, with
respect to the Securities of such series, provided that:
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee
that is not inconsistent with such direction, and
(3) subject to the provisions of Section 6.1, the Trustee shall have
the right to decline to follow such direction if a Responsible Officer or
Officers of the Trustee shall, in good faith, determine that the proceeding so
directed would be unjustly prejudicial to the Holders not joining in any such
direction or would involve the Trustee in personal liability.
SECTION 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities of any series affected thereby and, in the case
of any Securities of a series initially issued to an Issuer Trust, the holders
of a majority in aggregate Liquidation Amount (as defined in the related Trust
Agreement) of the Capital Securities issued by such Issuer Trust may waive any
past default hereunder and its consequences with respect to such series except
a default:
(1) in the payment of the principal of (or premium, if any) or
interest (including any Additional
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Interest) on any Security of such series (unless such default has been cured
and the Corporation has paid to or deposited with the Trustee a sum sufficient
to pay all matured installments of interest (including any Additional Interest)
and all principal of (and premium, if any, on) all Securities of that series
due otherwise than by acceleration), or
(2) in respect of a covenant or provision hereof that under Article IX
cannot be modified or amended without the consent of each Holder of any
Outstanding Security of such series affected.
Any such waiver shall be deemed to be on behalf of the Holders of all
the Securities of such series or, in the case of a waiver by holders of Capital
Securities issued by such Issuer Trust, by all holders of Capital Securities
issued by such Issuer Trust.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken
or omitted by it as Trustee, the filing by any party litigant in such suit of
an undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in aggregate principal amount of the Outstanding
Securities of any series, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium, if any) or interest
(including any Additional Interest) on any Security on or after the respective
Stated Maturities expressed in such Security.
SECTION 5.15. Waiver of Usury, Stay or Extension Laws.
The Corporation covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any usury, stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Corporation (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
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ARTICLE VI
THE TRUSTEE
SECTION 6.1. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in the case
of any such certificates or opinions that by any provisions hereof are
specifically required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not they conform to
the requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction of
Holders pursuant to Section 5.12 relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Indenture
with respect to the Securities of a series.
(d) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
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SECTION 6.2. Notice of Defaults.
Within 90 days after actual knowledge by a Responsible Officer of the
Trustee of the occurrence of any default hereunder with respect to the
Securities of any series, the Trustee shall transmit by mail to all Holders of
Securities of such series, as their names and addresses appear in the
Securities Register, notice of such default, unless such default shall have
been cured or waived; provided, however, that, except in the case of a default
in the payment of the principal of (or premium, if any) or interest (including
any Additional Interest) on any Security of such series, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determines that the withholding of such
notice is in the interests of the Holders of Securities of such series; and
provided, further, that, in the case of any default of the character specified
in Section 5.1(3), no such notice to Holders of Securities of such series shall
be given until at least 30 days after the occurrence thereof. For the purpose
of this Section, the term "default" means any event that is, or after notice or
lapse of time or both would become, an Event of Default with respect to
Securities of such series.
SECTION 6.3. Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
Security or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(b) any request or direction of the Corporation mentioned herein shall
be sufficiently evidenced by a Corporation Request or Corporation Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, indenture,
Security or other paper or document, but the Trustee in its discretion may make
such inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine
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to make such inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Corporation, personally or by agent or
attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Corporation, and neither the Trustee nor any Authenticating Agent assumes
any responsibility for their correctness. The Trustee makes no representations
as to the validity or sufficiency of this Indenture or of the Securities.
Neither the Trustee nor any Authenticating Agent shall be accountable for the
use or application by the Corporation of the Securities or the proceeds
thereof.
SECTION 6.5. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Securities Registrar or any other agent of the Corporation, in its individual
or any other capacity, may become the owner or pledgee of Securities and,
subject to Sections 6.8 and 6.13, may otherwise deal with the Corporation with
the same rights it would have if it were not Trustee, Authenticating Agent,
Paying Agent, Securities Registrar or such other agent.
SECTION 6.6. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Corporation.
SECTION 6.7. Compensation and Reimbursement.
The Corporation agrees
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder in such amounts as the Corporation
and the Trustee shall agree from time to time (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust);
(2) to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense (including the reasonable compensation and the
expenses and disbursements of its agents and counsel)
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incurred without negligence or bad faith, arising out of or in connection with
the acceptance or administration of this trust or the performance of its duties
hereunder, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder. This indemnification shall survive the termination
of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 5.1(4) or 5.1(5) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under the Bankruptcy Reform Act of 1978 or any successor
statute.
SECTION 6.8. Disqualification; Conflicting Interests.
(a) The Trustee for the Securities of any series issued hereunder
shall be subject to the provisions of Section 310(b) of the Trust Indenture
Act. Nothing herein shall prevent the Trustee from filing with the Commission
the application referred to in the second to last paragraph of said Section
310(b).
(b) The Trust Agreement and the Guarantee Agreement with respect to
each Issuer Trust shall be deemed to be specifically described in this
Indenture for the purposes of clause (i) of the first proviso contained in
Section 310(b) of the Trust Indenture Act.
SECTION 6.9. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be:
(a) a corporation organized and doing business under the laws of the
United States of America or of any State or Territory or the District of
Columbia, authorized under such laws to exercise corporate trust powers and
subject to supervision or examination by Federal, State, Territorial or
District of Columbia authority, or
(b) a corporation or other Person organized and doing business under
the laws of a foreign government that is permitted to act as Trustee pursuant
to a rule, regulation or order of the Commission, authorized under such laws to
exercise corporate trust powers, and subject to supervision or examination by
authority of such foreign government or a political subdivision thereof
substantially equivalent to supervision or examination applicable to United
States institutional trustees,
in either case having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by Federal or State authority. If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then, for the purposes of this Section, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article. Neither the Corporation nor any Person
directly or indirectly controlling, controlled by or under common control with
the Corporation shall serve as Trustee for the Securities of any series issued
hereunder.
SECTION 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant
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to this Article shall become effective until the acceptance of appointment by
the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time with respect to the Securities
of one or more series by giving written notice thereof to the Corporation. If
an instrument of acceptance by a successor Trustee shall not have been
delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in aggregate
principal amount of the Outstanding Securities of such series, delivered to the
Trustee and to the Corporation.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.8 after written
request therefor by the Corporation or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.9 and shall
fail to resign after written request therefor by the Corporation or by any such
Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property shall
be appointed or any public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of rehabilitation, conservation
or liquidation,
then, in any such case, (i) the Corporation, acting pursuant to the authority
of a Board Resolution, may remove the Trustee with respect to the Securities of
all series issued hereunder, or (ii) subject to Section 5.14, any Holder who
has been a bona fide Holder of a Security for at least six months may, on
behalf of such Holder and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee with respect to the
Securities of all series issued hereunder and the appointment of a successor
Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause with
respect to the Securities of one or more series, the Corporation, by a Board
Resolution, shall promptly appoint a successor Trustee with respect to the
Securities of that or those series. If, within one year after such resignation,
removal or incapability, or the occurrence of such vacancy, a successor Trustee
with respect to the Securities of any series shall be appointed by Act of the
Holders of a majority in aggregate principal amount of the Outstanding
Securities of such series delivered to the Corporation and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment, become the successor Trustee with respect to
the Securities of such series and supersede the successor Trustee appointed by
the Corporation. If no successor Trustee with respect to the Securities of any
series shall have been so appointed by the Corporation or the Holders and
accepted appointment in the manner hereinafter provided, any Holder who has
been a bona fide Holder of a Security of such series for at least six months
may, subject to Section 5.14, on behalf of such Holder and all others similarly
situated, petition any court of competent jurisdiction for the appointment of a
successor Trustee with respect to the Securities of such series.
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(f) The Corporation shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any series
by mailing written notice of such event by first-class mail, postage prepaid,
to the Holders of Securities of such series as their names and addresses appear
in the Securities Register. Each notice shall include the name of the successor
Trustee with respect to the Securities of such series and the address of its
Corporate Trust Office.
SECTION 6.11. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Corporation and to the retiring Trustee
an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; but, on the
request of the Corporation or the successor Trustee, such retiring Trustee
shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Corporation,
the retiring Trustee and each successor Trustee with respect to the Securities
of one or more series shall execute and deliver an indenture supplemental
hereto wherein each successor Trustee shall accept such appointment and which
(1) shall contain such provisions as shall be necessary or desirable to
transfer and confirm to, and to vest in, each successor Trustee all the rights,
powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates, (2) if the retiring Trustee is not retiring with respect to
all Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute such Trustees
co-trustees of the same trust and that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution and delivery of
such supplemental indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts, and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates; but, on request of the Corporation or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee
hereunder with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Corporation shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all rights, powers and trusts referred to
in paragraph (a) or (b) of this Section, as the case may be.
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(d) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
SECTION 6.12. Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated, and in case
any Securities shall not have been authenticated, any successor to the Trustee
may authenticate such Securities either in the name of any predecessor Trustee
or in the name of such successor Trustee, and in all cases the certificate of
authentication shall have the full force which it is provided anywhere in the
Securities or in this Indenture that the certificate of the Trustee shall have.
SECTION 6.13. Preferential Collection of Claims Against Corporation.
If and when the Trustee shall be or become a creditor of the
Corporation (or any other obligor upon the Securities), the Trustee shall be
subject to the provisions of the Trust Indenture Act regarding the collection
of claims against the Corporation (or any such other obligor).
SECTION 6.14. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect
to one or more series of Securities, which shall be authorized to act on behalf
of the Trustee to authenticate Securities of such series issued upon original
issue and upon exchange, registration of transfer or partial redemption thereof
or pursuant to Section 3.6, and Securities so authenticated shall be entitled
to the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Corporation and shall at all times be a corporation organized and doing
business under the laws of the United States of America, or of any State or
Territory thereof or the District of Columbia, authorized under such laws to
act as Authenticating Agent, having a combined capital and surplus of not less
than $50,000,000 and subject to supervision or examination by Federal or State
authority. If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section the combined capital
and surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section, such Authenticating Agent
shall resign immediately in the manner and with the effect specified in this
Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to
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which such Authenticating Agent shall be a party, or any corporation succeeding
to all or substantially all of the corporate trust business of an
Authenticating Agent shall be the successor Authenticating Agent hereunder,
provided such corporation shall be otherwise eligible under this Section,
without the execution or filing of any paper or any further act on the part of
the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Corporation. The Trustee may at any
time terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Corporation. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
such Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent, which shall be acceptable to the Corporation and shall give notice of
such appointment in the manner provided in Section 1.6 to all Holders of
Securities of the series with respect to which such Authenticating Agent will
serve. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provision of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 6.7.
If an appointment with respect to one or more series is made pursuant
to this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated therein
referred to in the within mentioned Indenture.
Dated:
THE BANK OF NEW YORK,
As Trustee
By:
------------------------------------
As Authenticating Agent
By:
------------------------------------
Authorized Signatory
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ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND CORPORATION
SECTION 7.1. Corporation to Furnish Trustee Names and Addresses of
Holders.
The Corporation will furnish or cause to be furnished to the Trustee:
(a) semi-annually, on or before June 30 and December 31 of
each year, a list, in such form as the Trustee may reasonably require,
of the names and addresses of the Holders as of a date not more than
15 days prior to the delivery thereof, and
(b) at such other times as the 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,
in each case to the extent such information is in the possession or control of
the corporation and has not otherwise been received by the Trustee in its
capacity as Securities Registrar.
SECTION 7.2. Preservation of Information, Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as Securities
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided in the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Corporation and the Trustee that neither the Corporation nor
the Trustee nor any agent of either of them shall be held accountable by reason
of the disclosure of information as to the names and addresses of the Holders
made pursuant to the Trust Indenture Act.
SECTION 7.3. Reports by Trustee.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act, at the times and in the manner provided pursuant thereto.
(b) Reports so required to be transmitted at stated intervals of not
more than 12 months shall be transmitted within 60 days after May 15 of each
calendar year, commencing with May 15, 1997 after the first issuance of
Securities under this Indenture.
(c) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the
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Trustee with each securities exchange upon which any Securities are listed and
also with the Commission. The Corporation will notify the Trustee when any
Securities are listed on any securities exchange.
SECTION 7.4. Reports by Corporation.
The Corporation shall file with the Trustee and with the Commission,
and transmit to Holders, such information, documents and other reports, and
such summaries thereof, as may be required pursuant to the Trust Indenture Act
at the times and in the manner provided in the Trust Indenture Act; provided
that any such information, documents or reports required to be filed with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act shall be
filed with the Trustee within 15 days after the same is required to be filed
with the Commission. At any time when the Corporation is not subject to Section
13 or 15(d) of the Exchange Act, upon the request of a Holder or beneficial
owner of a Security, the Corporation shall promptly furnish Rule 144A
Information, or cause such information to be furnished, to such Holder or
beneficial owner or to a prospective purchaser of such Security designated by
such Holder or beneficial owner in order to permit compliance by such Holder or
beneficial owner with Rule 144A under the Securities Act in connection with the
resale of such Security by such Holder or beneficial owner; provided, however,
that the Corporation shall not be required to furnish such information at any
time to a prospective purchaser located outside the United States who is not a
"U.S. person" within the meaning of Regulation S under the Securities Act. The
Corporation also shall comply with the other provisions of Trust Indenture Act
Section 314(a).
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1. Corporation May Consolidate, Etc., Only on Certain Terms.
The Corporation shall not consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, and no Person shall consolidate with or merge into
the Corporation or convey, transfer or lease its properties and assets
substantially as an entirety to the Corporation, unless:
(1) if the Corporation shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, the corporation formed by such consolidation or into
which the Corporation is merged or the Person that acquires by conveyance or
transfer, or that leases, the properties and assets of the Corporation
substantially as an entirety shall be a corporation, partnership or trust
organized and existing under the laws of the United States of America or any
State thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the principal of
(and premium, if any) and interest (including any Additional Interest) on all
the Securities of every series and the performance of every covenant of this
Indenture on the part of the Corporation to be performed or observed;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event that, after notice or lapse of time, or both, would
constitute an Event of Default, shall have happened and be continuing; and
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(3) the Corporation has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and any such supplemental indenture
comply with this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with; and the Trustee, subject
to Section 6.1, may rely upon such Officers' Certificate and Opinion of Counsel
as conclusive evidence that such transaction complies with this Section 8.1.
SECTION 8.2. Successor Corporation Substituted.
Upon any consolidation or merger by the Corporation with or into any
other Person, or any conveyance, transfer or lease by the Corporation of its
properties and assets substantially as an entirety to any Person in accordance
with Section 8.1, the successor corporation formed by such consolidation or
into which the Corporation is merged or to which such conveyance, transfer or
lease is made shall succeed to, and be substituted for, and may exercise every
right and power of, the Corporation under this Indenture with the same effect
as if such successor Person had been named as the Corporation herein; and in
the event of any such conveyance, transfer or lease the Corporation shall be
discharged from all obligations and covenants under the Indenture and the
Securities.
Such successor Person may cause to be executed, and may issue either
in its own name or in the name of the Corporation, any or all of the Securities
issuable hereunder that theretofore shall not have been signed by the
Corporation and delivered to the Trustee; 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 Trustee shall authenticate and
shall deliver any Securities that previously shall have been signed and
delivered by the officers of the Corporation to the Trustee for authentication
pursuant to such provisions and any Securities that such successor Person
thereafter shall cause to be executed and delivered to the Trustee on its
behalf for the purpose pursuant to such provisions. All the Securities so
issued shall in all respects have the same legal rank and benefit under this
Indenture as the Securities theretofore or thereafter issued in accordance with
the terms of this Indenture.
In case of any such consolidation, merger, sale, conveyance or lease,
such changes in phraseology and form may be made in the Securities thereafter
to be issued as may be appropriate.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures without Consent of Holders.
Without the consent of any Holders, the Corporation, when authorized
by a Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the
Corporation, and the assumption by any such successor of the covenants
of the Corporation herein and in the Securities contained; or
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(2) to convey, transfer, assign, mortgage or pledge any
property to or with the Trustee or to surrender any right or power
herein conferred upon the Corporation; or
(3) to establish the form or terms of Securities of any series
as permitted by Sections 2.1 or 3.1; or
(4) to add to the covenants of the Corporation for the benefit
of the Holders of all or any series of Securities (and if such
covenants are to be for the benefit of less than all series of
Securities, stating that such covenants are expressly being included
solely for the benefit of the series specified) or to surrender any
right or power herein conferred upon the Corporation; or
(5) to add any additional Events of Default for the benefit of
the Holders of all or any series of Securities (and if such additional
Events of Default are to be for the benefit of less than all series of
Securities, stating that such additional Events of Default are
expressly being included solely for the benefit of the series
specified); or
(6) to change or eliminate any of the provisions of this
Indenture, provided that any such change or elimination shall (a)
become effective only when there is no Security Outstanding of any
series created prior to the execution of such supplemental indenture
that is entitled to the benefit of such provision or (b) not apply to
any Outstanding Securities; or
(7) to cure any ambiguity, to correct or supplement any
provision herein that may be defective or inconsistent with any other
provision herein, or to make any other provisions with respect to
matters or questions arising under this Indenture, provided that such
action pursuant to this clause (7) shall not adversely affect the
interest of the Holders of Securities of any series in any material
respect or, in the case of the Securities of a series issued to an
Issuer Trust and for so long as any of the corresponding series of
Capital Securities issued by such Issuer Trust shall remain
outstanding, the holders of such Capital Securities; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one
or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee,
pursuant to the requirements of Section 6.11(b); or
(9) to comply with the requirements of the Commission in order
to effect or maintain qualification of this Indenture under the Trust
Indenture Act.
SECTION 9.2. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities of each series
affected by such supplemental indenture, by Act of said Holders delivered to
the Corporation and the Trustee, the Corporation, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities of such series
under this Indenture; provided, however, that no such supplemental indenture
shall, without the consent of the Holder of each
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Outstanding Security of each series affected thereby,
(1) change the Stated Maturity of the principal of, or any installment
of interest (including any Additional Interest) on, any Security, or reduce the
principal amount thereof or the rate of interest thereon or any premium payable
upon the redemption thereof, or reduce the amount of principal of a Discount
Security that would be due and payable upon a declaration of acceleration of
the Maturity thereof pursuant to Section 5.2, or change the place of payment
where, or the coin or currency in which, any Security or interest thereon is
payable, or impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of redemption,
on or after the Redemption Date), or
(2) reduce the percentage in aggregate principal amount of the
Outstanding Securities of any series, the consent of whose Holders is required
for any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences) provided for in
this Indenture, or
(3) modify any of the provisions of this Section, Section 5.13 or
Section 10.5, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Security affected thereby;
provided, further, that, in the case of the Securities of a series issued to an
Issuer Trust, so long as any of the corresponding series of Capital Securities
issued by such Issuer Trust remains outstanding, (i) no such amendment shall be
made that adversely affects the holders of such Capital Securities in any
material respect, and no termination of this Indenture shall occur, and no
waiver of any Event of Default or compliance with any covenant under this
Indenture shall be effective, without the prior consent of the holders of at
least a majority of the aggregate Liquidation Amount (as defined in the related
Trust Agreement) of such Capital Securities then outstanding unless and until
the principal of (and premium, if any, on) the Securities of such series and
all accrued and (subject to Section 3.8) unpaid interest (including any
Additional Interest) thereon have been paid in full, and (ii) no amendment
shall be made to Section 5.8 of this Indenture that would impair the rights of
the holders of Capital Securities issued by any Issuer Trust provided therein
without the prior consent of the holders of each such Capital Security then
outstanding unless and until the principal of (and premium, if any, on) the
Securities of such series and all accrued and (subject to Section 3.8) unpaid
interest (including any Additional Interest) thereon have been paid in full.
A supplemental indenture that changes or eliminates any covenant or
other provision of this Indenture that has expressly been included solely for
the benefit of one or more particular series of Securities or any corresponding
series of Capital Securities of an Issuer Trust that holds the Securities of
any series, or that modifies the rights of the Holders of Securities of such
series or holders of such Capital Securities of such corresponding series with
respect to such covenant or other provision, shall be deemed not to affect the
rights under this Indenture of the Holders of Securities of any other series or
holders of Capital Securities of any other such corresponding series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
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SECTION 9.3. Execution of Supplemental Indentures.
In executing or accepting the additional trusts created by any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 6.1) shall be fully protected in relying upon,
an Officers' Certificate and an Opinion of Counsel stating that the execution
of such supplemental indenture is authorized or permitted by this Indenture,
and that all conditions precedent herein provided for relating to such action
have been complied with. The Trustee may, but shall not be obligated to, enter
into any such supplemental indenture that affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise.
SECTION 9.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
SECTION 9.5. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 9.6. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Corporation, bear a notation in form approved by the Corporation as to any
matter provided for in such supplemental indenture. If the Corporation shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Corporation, to any such supplemental indenture may be prepared
and executed by the Corporation and authenticated and delivered by the Trustee
in exchange for Outstanding Securities of such series.
ARTICLE X
COVENANTS
SECTION 10.1. Payment of Principal, Premium and Interest.
The Corporation covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of (and premium,
if any) and interest (including any Additional Interest) on the Securities of
that series in accordance with the terms of such Securities and this Indenture.
SECTION 10.2. Maintenance of Office or Agency.
The Corporation will maintain in each Place of Payment for any series
of Securities an office or agency where Securities of that series may be
presented or surrendered for payment, where Securities
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of that series may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Corporation in respect of the
Securities of that series and this Indenture may be served. The Corporation
initially appoints the Trustee, acting through its Corporate Trust Office, as
its agent for said purposes. The Corporation will give prompt written notice to
the Trustee of any change in the location of any such office or agency. If at
any time the Corporation shall fail to maintain such office or agency or shall
fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Corporation hereby appoints the Trustee as its
agent to receive all such presentations, surrenders, notices and demands.
The Corporation may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for
any or all of such purposes, and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall
in any manner relieve the Corporation of its obligation to maintain an office
or agency in each Place of Payment for Securities of any series for such
purposes. The Corporation will give prompt written notice to the Trustee of any
such designation and any change in the location of any such office or agency.
SECTION 10.3. Money for Security Payments to be Held in Trust.
If the Corporation shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any, an) or interest on any of the Securities of
such series, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided, and will promptly notify the Trustee
of its failure so to act.
Whenever the Corporation shall have one or more Paying Agents, it
will, prior to 10:00 a.m., New York City time, on each due date of the
principal of (or premium, if any) or interest (including any Additional
Interest) on any Securities, deposit with a Paying Agent a sum sufficient to
pay the principal (and premium, if any) or interest (including any Additional
Interest) so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal (and premium, if any) or interest (including
any Additional Interest), and (unless such Paying Agent is the Trustee) the
Corporation will promptly notify the Trustee of its failure so to act.
The Corporation will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the principal
of (and premium, if any) or interest (including any Additional
Interest) on the Securities of a series in trust for the benefit of
the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Corporation
(or any other obligor upon such Securities) in the making of any
payment of principal (and premium, if any) or interest (including any
Additional Interest) in respect of any Security of any Series;
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(3) at any time during the continuance of any default with
respect to a series of Securities, upon the written request of the
Trustee, forthwith pay to the Trustee all sums so held in trust by
such Paying Agent with respect to such series; and
(4) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent.
The Corporation may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Corporation Order direct any Paying Agent to pay, to the Trustee all sums
held in trust by the Corporation or such Paying Agent, such sums to be held by
the Trustee upon the same trusts as those upon which such sums were held by the
Corporation or such Paying Agent; and, upon such payment by any Paying Agent to
the Trustee, such Paying Agent shall be released from all further liability
with respect to such money.
Any money deposited with the 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 (including any Additional Interest) on any Security and
remaining unclaimed for two years after such principal (and premium, if any) or
interest has become due and payable shall (unless otherwise required by
mandatory provision of applicable escheat or abandoned or unclaimed property
law) be paid on Corporation Request to the Corporation, or (if then held by the
Corporation) shall (unless otherwise required by mandatory provision of
applicable escheat or abandoned or unclaimed property law) be discharged from
such trust; and the Holder of such Security shall thereafter, as an unsecured
general creditor, look only to the Corporation for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Corporation as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Corporation cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the Borough of
Manhattan, The City of New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then
remaining will be repaid to the Corporation.
SECTION 10.4. Statement as to Compliance.
The Corporation shall deliver to the Trustee, within 120 days after
the end of each fiscal year of the Corporation ending after the date hereof, an
Officers' Certificate covering the preceding calendar year, stating whether or
not to the best knowledge of the signers thereof the Corporation is in default
in the performance, observance or fulfillment of or compliance with any of the
terms, provisions, covenants and conditions of this Indenture, and if the
Corporation shall be in default, specifying all such defaults and the nature
and status thereof of which they may have knowledge. For the purpose of this
Section 10.4, compliance shall be determined without regard to any grace period
or requirement of notice provided pursuant to the terms of this Indenture.
SECTION 10.5. Waiver of Certain Covenants.
Subject to the rights of holders of Capital Securities specified in
Section 9.2, if any, the Corporation may omit in any particular instance to
comply with any covenant or condition provided pursuant to Section 3.1, 9.1(3)
or 9.1(4) with respect to the Securities of any series, if before or after
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the time for such compliance the Holders of at least a majority in aggregate
principal amount of the Outstanding Securities of such series shall, by Act of
such Holders, either waive such compliance in such instance or generally waive
compliance with such covenant or condition, but no such waiver shall extend to
or affect such covenant or condition except to the extent so expressly waived,
and, until such waiver shall become effective, the obligations of the
Corporation in respect of any such covenant or condition shall remain in full
force and effect.
SECTION 10.6. Additional Sums.
In the case of the Securities of a series initially issued to an
Issuer Trust, so long as no Event of Default has occurred and is continuing and
except as otherwise specified as contemplated by Section 2.1 or Section 3.1, if
(i) an Issuer Trust is the Holder of all of the Outstanding Securities of such
series, and (ii) a Tax Event has occurred and is continuing in respect of such
Issuer Trust, the Corporation shall pay to such Issuer Trust (and its permitted
successors or assigns under the related Trust Agreement) for so long as such
Issuer Trust (or its permitted successor or assignee) is the registered holder
of the Outstanding Securities of such series, such additional sums as may be
necessary in order that the amount of Distributions (including any Additional
Amounts (as defined in such Trust Agreement)) then due and payable by such
Issuer Trust on the related Capital Securities and Common Securities that at
any time remain outstanding in accordance with the terms thereof shall not be
reduced as a result of any Additional Taxes arising from such Tax Event;
provided, however, that Additional Sums shall not include any withholding taxes
arising after the occurrence of a Tax Event and which have been withheld from
payments to Holders of Trust Securities and for which Holders are liable (the
"Additional Sums"). Whenever in this Indenture or the Securities there is a
reference in any context to the payment of principal of or interest on the
Securities, such mention shall be deemed to include mention of the payments of
the Additional Sums provided for in this paragraph to the extent that, in such
context, Additional Sums are, were or would be payable in respect thereof
pursuant to the provisions of this paragraph and express mention of the payment
of Additional Sums (if applicable) in any provisions hereof shall not be
construed as excluding Additional Sums in those provisions hereof where such
express mention is not made; provided, however, that the deferral of the
payment of interest pursuant to Section 3.12 or the Securities shall not defer
the payment of any Additional Sums that may be due and payable.
SECTION 10.7. Additional Covenants.
The Corporation covenants and agrees with each Holder of Securities of
each series that it shall not (x) make any payment of principal of or interest
or premium, if any, on or repay, repurchase or redeem any debt securities of
the Corporation that rank pari passu in all respects with or junior in interest
to the Securities of such series, or (y) declare or pay any dividends or
distributions on, or redeem purchase, acquire or make a liquidation payment
with respect to, any shares of the Corporation's capital stock (other than (a)
repurchases, redemptions or other acquisitions of shares of capital stock of
the Corporation in connection with any employment contract, benefit plan or
other similar arrangement with or for the benefit of any one or more employees,
officers, directors or consultants, in connection with a dividend reinvestment
or stockholder stock purchase plan or in connection with the issuance of
capital stock of the Corporation (or securities convertible into or exercisable
for such capital stock) as consideration in an acquisition transaction entered
into prior to the applicable Extension Period, (b) as a result of an exchange
or conversion of any class or series of the Corporation's capital stock (or any
capital stock of a Subsidiary of the Corporation) for any class or series of
the Corporation's capital stock
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or of any class or series of the Corporation's indebtedness for any class or
series of the Corporation's capital stock, (c) 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, (d) any declaration of a dividend in connection with
any Rights Plan, or the issuance of rights, stock or other property under any
Rights Plan, or the redemption or repurchase of rights pursuant thereto, or (e)
any dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock) if at such time (i) there shall
have occurred any event (A) of which the Corporation has actual knowledge that
with the giving of notice or the lapse of time, or both, would constitute an
Event of Default with respect to the Securities of such series, and (B) which
the Corporation shall not have taken reasonable steps to cure, (ii) if the
Securities of such series are held by an Issuer Trust, the Corporation shall be
in default with respect to its payment of any obligations under the Guarantee
Agreement relating to the Capital Securities issued by such Issuer Trust, or
(iii) the Corporation shall have given notice of its election to begin an
Extension Period with respect to the Securities of such series as provided
herein and shall not have rescinded such notice, or such Extension Period, or
any extension thereof, shall be continuing.
The Corporation also covenants with each Holder of Securities of a
series issued to an Issuer Trust (i) to hold, directly or indirectly, 100% of
the Common Securities of such Issuer Trust, provided that any permitted
successor of the Corporation hereunder may succeed to the Corporation's
ownership of such Common Securities, (ii) as holder of such Common Securities,
not to voluntarily terminate, wind-up or liquidate such Issuer Trust, other
than (a) in connection with a distribution of the Securities of such series to
the holders of the related Capital Securities in liquidation of such Issuer
Trust, or (b) in connection with certain mergers, consolidations or
amalgamations permitted by the related Trust Agreement, and (iii) to use its
reasonable efforts, consistent with the terms and provisions of such Trust
Agreement, to cause such Issuer Trust to continue to be taxable as a grantor
trust and not to be taxable as a corporation for United States federal income
tax purposes.
SECTION 10.8. Original Issue Discount.
For each year during which any Securities that were issued with
original issue discount are Outstanding, the Corporation shall furnish to each
Paying Agent in a timely fashion such information as may be reasonably
requested by each Paying Agent in order that each Paying Agent may prepare the
information which it is required to report for such year on Internal Revenue
Service Forms 1096 and 1099 pursuant to Section 6049 of the Internal Revenue
Code of 1986, as amended. Such information shall include the amount of
original issue discount includible in income for each $1,000 of principal
amount at Stated Maturity of outstanding Securities during such year.
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.1 Applicability of This Article.
Redemption of Securities of any series (whether by operation of a
sinking fund or otherwise) as permitted or required by any form of Security
issued pursuant to this Indenture shall be made in
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accordance with such form of Security and this Article; provided, however, that
if any provision of any such form of Security shall conflict with any provision
of this Article, the provision of such form of Security shall govern. Except as
otherwise set forth in the form of Security for such series, each Security of a
series shall be subject to partial redemption only in the amount of $1,000 or
any integral multiples thereof.
SECTION 11.2. Election to Redeem; Notice to Trustee.
The election of the Corporation to redeem any Securities shall be
evidenced by or pursuant to a Board Resolution. In case of any redemption at
the election of the Corporation, the Corporation shall, at least 45 days prior
to the Redemption Date (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee and, in the case of Securities of a series held by
an Issuer Trust, the Property Trustee under the related Trust Agreement, of
such date and of the principal amount of Securities of the applicable series to
be redeemed and provide the additional information required to be included in
the notice or notices contemplated by Section 11.4; provided that in the case
of any series of Securities initially issued to an Issuer Trust, for so long as
such Securities are held by such Issuer Trust, such notice shall be given not
less than 30 nor more than 75 days prior to such Redemption Date (unless a
shorter notice shall be satisfactory to the Property Trustee under the related
Trust Agreement). In the case of any redemption of Securities prior to the
expiration of any restriction on such redemption provided in the terms of such
Securities, the Corporation shall furnish the Trustee with an Officers'
Certificate and an Opinion of Counsel evidencing compliance with such
restriction.
SECTION 11.3. Selection of Securities to be Redeemed.
If less than all the Securities of any series are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of a portion of the principal amount of any Security of such series,
provided that the unredeemed portion of the principal amount of any Security
shall be in an authorized denomination (which shall not be less than the
minimum authorized denomination) for such Security.
The Trustee shall promptly notify the Corporation in writing of the
Securities selected for partial redemption and the principal amount thereof to
be redeemed. For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security that has been or is to be
redeemed.
SECTION 11.4. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not later than the thirtieth day, and not earlier than the
sixtieth day, prior to the Redemption Date, to each Holder of Securities to be
redeemed, at the address of such Holder as it appears in the Securities
Register, provided that in the case of any series of Securities initially
issued to an Issuer Trust, for so long as such Securities are held by such
Issuer Trust, such notice shall be given not less than 45 nor more than 75 days
prior to such Redemption Date (unless a shorter notice shall be satisfactory to
the Property Trustee under the related Trust Agreement).
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With respect to Securities of each series to be redeemed, each notice
of redemption shall provide the CUSIP number, if any, of the Securities to be
redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Price or, if the Redemption Price cannot be
calculated prior to the time the notice is required to be sent, the estimate of
the Redemption Price together with a statement that it is an estimate and that
the actual Redemption Price will be calculated on the third Business Day prior
to the Redemption Date (and if an estimate is provided, a further notice shall
be sent of the actual Redemption Price on the date that such Redemption Price
is calculated);
(c) if less than all Outstanding Securities of such particular series
are to be redeemed, the identification (and, in the case of partial redemption,
the respective principal amounts) of the particular Securities to be redeemed;
(d) that on the Redemption Date, the Redemption Price will become due
and payable upon each such Security or portion thereof, and that interest
(including any Additional Interest) thereon, if any, shall cease to accrue on
and after said date;
(e) the place or places where such Securities are to be surrendered
for payment of the Redemption Price;
(f) that the redemption is for a sinking fund, if such is the case;
(g) such other provisions as may be required in respect of the terms
of a particular series of Securities.
Notice of redemption of Securities to be redeemed at the election of
the Corporation shall be given by the Corporation or, at the Corporation's
request, by the Trustee in the name and at the expense of the Corporation and
shall be irrevocable. The notice if mailed in the manner provided above shall
be conclusively presumed to have been duly given, whether or not the Holder
receives such notice. In any case, a failure to give such notice by mail or any
defect in the notice to the Holder of any Security designated for redemption as
a whole or in part shall not affect the validity of the proceedings for the
redemption of any other Security.
SECTION 11.5. Deposit of Redemption Price.
Prior to 10:00 a.m., New York City time, on the Redemption Date
specified in the notice of redemption given as provided in Section 11.4, the
Corporation will deposit with the Trustee or with one or more Paying Agents (or
if the Corporation is acting as its own Paying Agent, the Corporation will
segregate and hold in trust as provided in Section 10.3) an amount of money
sufficient to pay the Redemption Price of, and any accrued interest (including
any Additional Interest) on, all the Securities (or portions thereof) that are
to be redeemed on that date.
SECTION 11.6. Payment of Securities Called for Redemption.
If any notice of redemption has been given as provided in Section
11.4, the Securities or portion
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of Securities with respect to which such notice has been given shall become due
and payable on the date and at the place or places stated in such notice at the
applicable Redemption Price, together with accrued interest (including any
Additional Interest) to the Redemption Date. On presentation and surrender of
such Securities at a Place of Payment in said notice specified, the said
Securities or the specified portions thereof shall be paid and redeemed by the
Corporation at the applicable Redemption Price, together with accrued interest
(including any Additional Interest) to the Redemption Date; provided, however,
that, unless otherwise specified as contemplated by Section 3.1, installments
of interest (including any Additional Interest) whose Stated Maturity is on or
prior to the Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, registered as such at the close of
business on the relevant record dates according to their terms and the
provisions of Section 3.8.
Upon presentation of any Security redeemed in part only, the
Corporation shall execute and the Trustee shall authenticate and deliver to the
Holder thereof, at the expense of the Corporation, a new Security or Securities
of the same series, of authorized denominations, in aggregate principal amount
equal to the unredeemed portion of the Security so presented and having the
same Original Issue Date, Stated Maturity and terms.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal of and premium, if any, on such
Security shall, until paid, bear interest from the Redemption Date at the rate
prescribed therefor in the Security.
SECTION 11.7. Right of Redemption of Securities Initially Issued to an
Issuer Trust.
In the case of the Securities of a series initially issued to an
Issuer Trust, except as otherwise specified as contemplated by Section 3.1, the
Corporation, at its option, may redeem such Securities (i) on or after the date
specified in such Security, in whole at any time or in part from time to time,
or (ii) upon the occurrence and during the continuation of a Tax Event or a
Capital Treatment Event, at any time within 90 days following the occurrence
and during the continuation of such Tax Event or Capital Treatment Event, in
whole (but not in part), in each case at a Redemption Price specified in such
Security, together with accrued interest (including any Additional Interest)
to, but excluding, the Redemption Date.
If less than all the Securities of any such series are to be redeemed,
the aggregate principal amount of such Securities remaining Outstanding after
giving effect to such redemption shall be sufficient to satisfy any provisions
of the Trust Agreement related to the Issuer Trust to which such Securities
were issued, including any requirement in such Trust Agreement as to the
minimum Liquidation Amount (as defined in such Trust Agreement) of Capital
Securities that may be held by a holder of Capital Securities thereunder.
ARTICLE XII
SINKING FUNDS
SECTION 12.1. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund
for the retirement of
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Securities of any series except as otherwise specified as contemplated by
Section 3.1 for such Securities.
The minimum amount of any sinking fund payment provided for by the
terms of any Securities of any series is herein referred to as a "mandatory
sinking fund payment", and any sinking fund payment in excess of such minimum
amount that is permitted to be made by the terms of such Securities of any
series is herein referred to as an "optional sinking fund payment". If provided
for by the terms of any Securities of any series, the cash amount of any
sinking fund payment may be subject to reduction as provided in Section 12.2.
Each sinking fund payment shall be applied to the redemption of Securities of
any series as provided for by the terms of such Securities.
SECTION 12.2. Satisfaction of Sinking Fund Payments with Securities.
In lieu of making all or any part of a mandatory sinking fund payment
with respect to any Securities of a series in cash, the Corporation may at its
option, at any time no more than 16 months and no less than 45 days prior to
the date on which such sinking fund payment is due, deliver to the Trustee
Securities of such series (together with the unmatured coupons, if any,
appertaining thereto) theretofore purchased or otherwise acquired by the
Corporation, except Securities of such series that have been redeemed through
the application of mandatory or optional sinking fund payments pursuant to the
terms of the Securities of such series, accompanied by a Corporation Order
instructing the Trustee to credit such obligations and stating that the
Securities of such series were originally issued by the Corporation by way of
bona fide sale or other negotiation for value; provided that the Securities to
be so credited have not been previously so credited. The Securities to be so
credited shall be received and credited for such purpose by the Trustee at the
redemption price for such Securities, as specified in the Securities so to be
redeemed, for redemption through operation of the sinking fund and the amount
of such sinking fund payment shall be reduced accordingly.
SECTION 12.3. Redemption of Securities for Sinking Fund.
Not less than 45 days prior to each sinking fund payment date for any
series of Securities, the Corporation will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
such Securities pursuant to the terms of such Securities, the portion thereof,
if any, which is to be satisfied by payment of cash in the currency in which
the Securities of such series are payable (except as provided pursuant to
Section 3.1) and the portion thereof, if any, that is to be satisfied by
delivering and crediting Securities pursuant to Section 12.2 and will also
deliver to the Trustee any Securities to be so delivered. Such Officers'
Certificate shall be irrevocable and upon its delivery the Corporation shall be
obligated to make the cash payment or payments therein referred to, if any, on
or before the succeeding sinking fund payment date. In the case of the failure
of the Corporation to deliver such Officers' Certificate (or, as required by
this Indenture, the Securities and coupons, if any, specified in such Officers'
Certificate) by the due date therefor, the sinking fund payment due on the
succeeding sinking fund payment date for such series shall be paid entirely in
cash and shall be sufficient to redeem the principal amount of the Securities
of such series subject to a mandatory sinking fund payment without the right to
deliver or credit securities as provided in Section 12.2 and without the right
to make the optional sinking fund payment with respect to such series at such
time.
Any sinking fund payment or payments (mandatory or optional) made in
cash plus any unused balance of any preceding sinking fund payments made with
respect to the Securities of any particular
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series shall be applied by the Trustee (or by the Corporation if the
Corporation is acting as its own Paying Agent) on the sinking fund payment date
on which such payment is made (or, if such payment is made before a sinking
fund payment date, on the sinking fund payment date immediately following the
date of such payment) to the redemption of Securities of such series at the
Redemption Price specified in such Securities with respect to the sinking fund.
Any sinking fund moneys not so applied or allocated by the Trustee (or, if the
Corporation is acting as its own Paying Agent, segregated and held in trust by
the Corporation as provided in Section 10.3) for such series and together with
such payment (or such amount so segregated) shall be applied in accordance with
the provisions of this Section 12.3. Any and all sinking fund moneys with
respect to the Securities of any particular series held by the Trustee (or if
the Corporation is acting as its own Paying Agent, segregated and held in trust
as provided in Section 10.3) on the last sinking fund payment date with respect
to Securities of such series and not held for the payment or redemption of
particular Securities of such series shall be applied by the Trustee (or by the
Corporation if the Corporation is acting as its own Paying Agent), together
with other moneys, if necessary, to be deposited (or segregated) sufficient for
the purpose, to the payment of the principal of the Securities of such series
at Maturity. The Trustee shall select the Securities to be redeemed upon such
sinking fund payment date in the manner specified in Section 11.3 and cause
notice of the redemption thereof to be given in the name of and at the expense
of the Corporation in the manner provided in Section 11.4. Such notice having
been duly given, the redemption of such Securities shall be made upon the terms
and in the manner stated in Section 11.6. On or before each sinking fund
payment date, the Corporation shall pay to the Trustee (or, if the Corporation
is acting as its own Paying Agent, the Corporation shall segregate and hold in
trust as provided in Section 10.3) in cash a sum in the currency in which
Securities of such series are payable (except as provided pursuant to Section
3.1) equal to the principal (and premium, if any) and any interest (including
any Additional Interest) accrued to the Redemption Date for Securities or
portions thereof to be redeemed on such sinking fund payment date pursuant to
this Section 12.3.
Neither the Trustee nor the Corporation shall redeem any Securities of
a series with sinking fund moneys or mail any notice of redemption of
Securities of such series by operation of the sinking fund for such series
during the continuance of a default in payment of interest, if any, on any
Securities of such series or of any Event of Default (other than an Event of
Default occurring as a consequence of this paragraph) with respect to the
Securities of such series, except that if the notice of redemption shall have
been provided in accordance with the provisions hereof, the Trustee (or the
Corporation, if the Corporation is then acting as its own Paying Agent) shall
redeem such Securities if cash sufficient for that purpose shall be deposited
with the Trustee (or segregated by the Corporation) for that purpose in
accordance with the terms of this Article XII. Except as aforesaid, any moneys
in the sinking fund for such series at the time when any such default or Event
of Default shall occur and any moneys thereafter paid into such sinking fund
shall, during the continuance of such default or Event of Default, be held as
security for the payment of the Securities and coupons, if any, of such series;
provided, however, that in case such default or Event of Default shall have
been cured or waived herein, such moneys shall thereafter be applied on the
next sinking fund payment date for the Securities of such series on which such
moneys may be applied pursuant to the provisions of this Section 12.3.
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ARTICLE XIII
SUBORDINATION OF SECURITIES
SECTION 13.1. Securities Subordinate to Senior Indebtedness.
The Corporation covenants and agrees, and each Holder of a Security,
by its acceptance thereof, likewise covenants and agrees, that, to the extent
and in the manner hereinafter set forth in this Article, the payment of the
principal of (and premium, if any) and interest (including any Additional
Interest) on each and all of the Securities of each and every series are hereby
expressly made subordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness.
SECTION 13.2. No Payment When Senior Indebtedness in Default; Payment
Over of Proceeds Upon Dissolution, Etc.
If the Corporation shall default in the payment of any principal of
(or premium, if any) or interest, if any, or any other amount payable on any
Senior Indebtedness when the same becomes due and payable, whether at maturity
or at a date fixed for prepayment or by declaration of acceleration or
otherwise, then, upon written notice of such default to the Corporation by the
holders of Senior Indebtedness or any trustee therefor, unless and until such
default shall have been cured or waived or shall have ceased to exist or all
Senior Indebtedness has been paid, no direct or indirect payment (in cash,
property, securities, by set-off or otherwise) shall be made or agreed to be
made on account of the principal of (or premium, if any) or interest (including
any Additional Interest) on any of the Securities, or in respect of any
redemption, repayment, retirement, purchase or other acquisition of any of the
Securities.
In the event of (a) any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment, composition or other similar
proceedings relating to the Corporation, its creditors or its property, (b) any
proceeding for the liquidation, dissolution or other winding up of the
Corporation, voluntary or involuntary, whether or not involving insolvency or
bankruptcy proceedings, (c) any assignment by the Corporation for the benefit
of creditors or (d) any other marshalling of the assets of the Corporation
(each such event, if any, herein sometimes referred to as a "Proceeding"), all
Senior Indebtedness (including any interest thereon accruing after the
commencement of any such proceedings) shall first be paid in full before any
payment or distribution, whether in cash, securities or other property, shall
be made to any Holder of any of the Securities on account thereof. Any payment
or distribution, whether in cash, securities or other property (other than
securities of the Corporation or any other corporation provided for by a plan
of reorganization or readjustment the payment of which is subordinate, at least
to the extent provided in these subordination provisions with respect to the
indebtedness evidenced by the Securities, to the payment of all Senior
Indebtedness at the time outstanding and to any securities issued in respect
thereof under any such plan of reorganization or readjustment), which would
otherwise (but for these subordination provisions) be payable or deliverable in
respect of the Securities of any series shall be paid or delivered directly to
the holders of Senior Indebtedness in accordance with the priorities then
existing among such holders until all Senior Indebtedness (including any
interest thereon accruing after the commencement of any Proceeding) shall have
been paid in full.
In the event of any Proceeding, after payment in full of all sums
owing with respect to Senior Indebtedness, the Holders of the Securities,
together with the holders of any obligations of the
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Corporation ranking on a parity with the Securities, shall be entitled to be
paid from the remaining assets of the Corporation the amounts at the time due
and owing on account of unpaid principal of (and premium, if any) and interest
on the Securities and such other obligations before any payment or other
distribution, whether in cash, property or otherwise, shall be made on account
of any capital stock or any obligations of the Corporation ranking junior to
the Securities and such other obligations. If, notwithstanding the foregoing,
any payment or distribution of any character or any security, whether in cash,
securities or other property (other than securities of the Corporation or any
other corporation provided for by a plan of reorganization or readjustment the
payment of which is subordinate, at least to the extent provided in these
subordination provisions with respect to the indebtedness evidenced by the
Securities, to the payment of all Senior Indebtedness at the time outstanding
and to any securities issued in respect thereof under any such plan of
reorganization or readjustment), shall be received by the Trustee or any Holder
in contravention of any of the terms hereof and before all Senior Indebtedness
shall have been paid in full, such payment or distribution or security shall be
received in trust for the benefit of, and shall be paid over or delivered and
transferred to, the holders of the Senior Indebtedness at the time outstanding
in accordance with the priorities then existing among such holders for
application to the payment of all Senior Indebtedness remaining unpaid, to the
extent necessary to pay all such Senior Indebtedness in full. In the event of
the failure of the Trustee or any Holder to endorse or assign any such payment,
distribution or security, each holder of Senior Indebtedness is hereby
irrevocably authorized to endorse or assign the same.
The Trustee and the Holders shall take such action (including, without
limitation, the delivery of this Indenture to an agent for the holders of
Senior Indebtedness or consent to the filing of a financing statement with
respect hereto) as may, in the opinion of counsel designated by the holders of
a majority in principal amount of the Senior Indebtedness at the time
outstanding, be necessary or appropriate to assure the effectiveness of the
subordination effected by these provisions.
The provisions of this Section 13.2 shall not impair any rights,
interests, remedies or powers of any secured creditor of the Corporation in
respect of any security interest the creation of which is not prohibited by the
provisions of this Indenture.
The securing of any obligations of the Corporation, otherwise ranking
on a parity with the Securities or ranking junior to the Securities, shall not
be deemed to prevent such obligations from constituting, respectively,
obligations ranking on a parity with the Securities or ranking junior to the
Securities.
SECTION 13.3. Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this Indenture or in
any of the Securities shall prevent (a) the Corporation, at any time, except
during the pendency of the conditions described in the first paragraph of
Section 13.2 or of any Proceeding referred to in Section 13.2, from making
payments at any time of principal of (and premium, if any) or interest
(including any Additional Interest) on the Securities, or (b) the application
by the Trustee of any moneys deposited with it hereunder to the payment of or
on account of the principal of (and premium, if any) or interest (including any
Additional Interest) on the Securities or the retention of such payment by the
Holders, if, at the time of such application by the Trustee, it did not have
knowledge that such payment would have been prohibited by the provisions of
this Article.
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SECTION 13.4. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all amounts due or to become due on
all Senior Indebtedness, or the provision for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of Senior
Indebtedness, the Holders of the Securities shall be subrogated to the extent
of the payments or distributions made to the holders of such Senior
Indebtedness pursuant to the provisions of this Article (equally and ratably
with the holders of all indebtedness of the Corporation that by its express
terms is subordinated to Senior Indebtedness of the Corporation to
substantially the same extent as the Securities are subordinated to the Senior
Indebtedness and is entitled to like rights of subrogation by reason of any
payments or distributions made to holders of such Senior Indebtedness) to the
rights of the holders of such Senior Indebtedness to receive payments and
distributions of cash, property and securities applicable to the Senior
Indebtedness until the principal of (and premium, if any) and interest
(including any Additional Interest) on the Securities shall be paid in full.
For purposes of such subrogation, no payments or distributions to the holders
of the Senior Indebtedness of any cash, property or securities to which the
Holders of the Securities or the Trustee would be entitled except for the
provisions of this Article, and no payments over pursuant to the provisions of
this Article to the holders of Senior Indebtedness by Holders of the Securities
or the Trustee, shall, as among the Corporation, its creditors other than
holders of Senior Indebtedness, and the Holders of the Securities, be deemed to
be a payment or distribution by the Corporation to or on account of the Senior
Indebtedness.
SECTION 13.5. Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities
is intended to or shall (a) impair, as between the Corporation and the Holders
of the Securities, the obligations of the Corporation, which are absolute and
unconditional, to pay to the Holders of the Securities the principal of (and
premium, if any) and interest (including any Additional Interest) on the
Securities as and when the same shall become due and payable in accordance with
their terms; or (b) affect the relative rights against the Corporation of the
Holders of the Securities and creditors of the Corporation other than their
rights in relation to the holders of Senior Indebtedness; or (c) prevent the
Trustee or the Holder of any Security (or to the extent expressly provided
herein, the holder of any Capital Security) from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture,
including filing and voting claims in any Proceeding, subject to the rights, if
any, under this Article of the holders of Senior Indebtedness to receive cash,
property and securities otherwise payable or deliverable to the Trustee or such
Holder.
SECTION 13.6. Trustee to Effectuate Subordination.
Each Holder of a Security by his or her acceptance thereof authorizes
and directs the Trustee on his or her behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination
provided in this Article and appoints the Trustee his or her attorney-in-fact
for any and all such purposes.
SECTION 13.7. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as
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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 or by any act or failure
to act, in good faith, by any such holder, or by any noncompliance by the
Corporation with the terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof that any such holder may have or be
otherwise charged with.
Without in any way limiting the generality of the immediately
preceding paragraph, the holders of Senior Indebtedness may, at any time and
from to time, without the consent of or notice to the Trustee or the Holders of
the Securities of any series, without incurring responsibility to such Holders
of the Securities and without impairing or releasing the subordination provided
in this Article or the obligations hereunder of such Holders of the Securities
to the holders of Senior Indebtedness, do any one or more of the following: (i)
change the manner, place or terms of payment or extend the time of payment of,
or renew or alter, Senior Indebtedness, or otherwise amend or supplement in any
manner Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness; (iii) release any Person liable in any manner for
the collection of Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Corporation and any other Person.
SECTION 13.8. Notice to Trustee.
The Corporation shall give prompt written notice to the Trustee of any
fact known to the Corporation that would prohibit the making of any payment to
or by the Trustee in respect of the Securities. Notwithstanding the provisions
of this Article or any other provision of this Indenture, the Trustee shall not
be charged with knowledge of the existence of any facts that would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Corporation or a holder of Senior Indebtedness or from any trustee, agent or
representative therefor; provided, however, that if the Trustee shall not have
received the notice provided for in this Section at least three Business Days
prior to the date upon which by the terms hereof any monies may become payable
for any purpose (including, the payment of the principal of (and premium, if
any, on) or interest (including any Additional Interest) on any Security),
then, anything herein contained to the contrary notwithstanding, the Trustee
shall have full power and authority to receive such monies and to apply the
same to the purpose for which they were received and shall not be affected by
any notice to the contrary that may be received by it within two Business Days
prior to such date.
Subject to the provisions of Section 6.1, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself or herself to be a holder of Senior Indebtedness (or a
trustee or attorney-in-fact therefor) to establish that such notice has been
given by a holder of Senior Indebtedness (or a trustee or attorney-in-fact
therefor). In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article, and if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
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SECTION 13.9. Reliance on Judicial Order or Certificate of Liquidating
Agent.
Upon any payment or distribution of assets of the Corporation referred
to in this Article, the Trustee, subject to the provisions of Section 6.1, and
the Holders of the Securities shall be entitled to rely upon any order or
decree entered by any court of competent jurisdiction in which such Proceeding
is pending, or a certificate of the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee for the benefit of creditors, agent or
other Person making such payment or distribution, delivered to the Trustee or
to the Holders of Securities, for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of the
Senior Indebtedness and other indebtedness of the 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.
SECTION 13.10. Trustee Not Fiduciary for Holders of Senior
Indebtedness.
The Trustee, in its capacity as trustee under this Indenture, shall
not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness
and shall not be liable to any such holders if it shall in good faith
mistakenly pay over or distribute to Holders of Securities or to the
Corporation or to any other Person cash, property or securities to which any
holders of Senior Indebtedness shall be entitled by virtue of this Article or
otherwise.
SECTION 13.11. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness that
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
SECTION 13.12. Article Applicable to Paying Agents.
If at any time any Paying Agent other than the Trustee shall have been
appointed by the Corporation and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
-71-
<PAGE> 77
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed.
CULLEN/FROST BANKERS, INC.
By: /s/ Phillip D. Green
------------------------------------
Name: Phillip D. Green
Title: Executive Vice President &
Chief Financial Officer
Attest: /s/ Diane Jack
--------------------------------
Diane Jack
THE BANK OF NEW YORK,
as Trustee
By: /s/ Remo J. Reale
------------------------------------
Name: Remo J. Reale
Title: Assistant Vice President
<PAGE> 78
Exhibit A
[Form of Restricted Securities Certificate]
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to Section 3.6(b) of
the Indenture referred to below)
[_________________________],
as Securities Registrar
[address]
Re: [Title of Securities] of Cullen/Frost Bankers, Inc.
(the "Securities")
Reference is made to the Junior Subordinated Indenture, dated as of
February 3, 1997 (the "Indenture"), between Cullen/Frost Bankers, Inc., a Texas
corporation, and The Bank of New York, as Trustee. Terms used herein and
defined in the Indenture or in Regulation S, Rule 144A or Rule 144 under the
U.S. Securities Act of 1933 (the "Securities Act") are used herein as so
defined.
This certificate relates to $_____________ aggregate principal
amount of Securities, which are evidenced by the following certificate(s) (the
"Specified Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
CURRENTLY IN BOOK-ENTRY FORM: Yes ___ No ___ (check one)
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so.
Such beneficial owner or owners are referred to herein collectively as the
"Owner". If the Specified Securities are represented by a Global Security, they
are held through a Depositary (except in the name of the "The Depository Trust
Company") or an Agent Member in the name of the Undersigned, as or on behalf of
the Owner. If the Specified Securities are not represented by a Global
Security, they are registered in the name of the Undersigned, as or on behalf
of the Owner.
The Owner has requested that the Specified Securities be
transferred to a person (the "Transferee") who will take delivery in the form
of a Restricted Security. In connection with such transfer, the Owner hereby
certifies that, unless such transfer is being effected pursuant to an effective
registration statement under the Securities Act, it is being effected in
accordance with Rule 144A, Rule 904 of Regulation S or Rule 144 under the
Securities Act and all applicable securities laws of the states of the United
States and other jurisdictions.
A-1
<PAGE> 79
Accordingly, the Owner hereby further certifies as:
(1) Rule 144A Transfers. If the transfer is being
effected in accordance with Rule 144A:
(A) the Specified Securities are being
transferred to a person that the Owner and any person acting
on its behalf reasonably believe is a "qualified institutional
buyer" within the meaning of Rule 144A, acquiring for its own
account or for the account of a qualified institutional buyer;
and
(B) the Owner and any person acting on its behalf
have taken reasonable steps to ensure that the Transferee is
aware that the Owner may be relying on Rule 144A in connection
with the transfer; and
(2) Rule 904 Transfers. If the transfer is being
effected in accordance with Rule 904:
(A) the Owner is not a distributor of the
Securities, an affiliate of the Corporation or any such
distributor or a person acting in behalf of any of the
foregoing;
(B) the offer of the Specified Securities was not
made to a person in the United States;
(C) either;
(i) at the time the buy order was
originated, the Transferee was outside the United
States or the Owner and any person acting on its
behalf reasonably believed that the Transferee was
outside the United States, or
(ii) the transaction is being executed
in, on or through the facilities of the Eurobond
market, as regulated by the Association of
International Bond Dealers, or another designated
offshore securities market and neither the Owner nor
any person acting on its behalf knows that the
transaction has been prearranged with a buyer in the
United States;
(D) no directed selling efforts have been made in
the United States by or on behalf of the Owner or any
affiliate thereof; and
(E) the transaction is not part of a plan or
scheme to evade the registration requirements of the
Securities act.
A-2
<PAGE> 80
(3) Rule 144 Transfers. If the transfer is being
effected pursuant to Rule 144:
(A) the transfer is occurring after a holding
period of at least two years (computed in accordance with
paragraph (d) of Rule 144) has elapsed since the date the
Specified Securities were acquired from the Corporation or
from an affiliate (as such term is defined in Rule 144) of the
Corporation, whichever is later, and is being effected in
accordance with the applicable amount, manner of sale and
notice requirements of paragraphs (e), (f) and (h) of Rule
144;
(B) the transfer is occurring after a holding
period by the Owner of at least three years has elapsed since
the date the Specified Securities were acquired from the
Corporation or from an affiliate (as such term is defined in
Rule 144) of the Corporation, whichever is later, and the
Owner is not, and during the preceding three months has not
been, an affiliate of the Corporation; or
(C) the Owner is a qualified institutional buyer
within the meaning of Rule 144a, and is transferring the
Securities to an institution that is an "accredited investor"
within the meaning of Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act in a transaction exempt
from the registration requirements of the Securities Act.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Corporation and the "Initial Purchaser"
(as defined in the Trust Agreement relating to the Issuer Trust to which the
Securities were initially issued).
Dated:
---------------------------------------
(Print the name of the Undersigned, as
such term is defined in the second
paragraph of this certificate.)
By:
------------------------------------
Name:
Title:
(If the Undersigned is a corporation,
partnership or fiduciary, the title
of the person signing on behalf of
the Undersigned must be stated.)
A-3
<PAGE> 1
EXHIBIT 4(c)
CERTIFICATE OF TRUST OF
CULLEN/FROST CAPITAL TRUST I
THIS Certificate of Trust of Cullen/Frost Capital Trust I (the
"Trust") dated February 3, 1997, is being duly executed and filed by The Bank
of New York (Delaware), a Delaware banking corporation, as trustee, to form a
business trust under the Delaware Business Trust Act (12 Del. C. Section 3801
et seq.).
1. Name. The name of the business trust formed hereby
is Cullen/Frost Capital Trust I.
2. Delaware Trustee. The name and business address of
the trustee of the Trust in the State of Delaware is The Bank of New York
(Delaware), White Clay Center, Newark, Delaware 19711.
3. Effective Date. This Certificate of Trust shall be
effective upon filing with the Secretary of State.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of
the Trust, has executed this Certificate of Trust as of the date first above
written.
THE BANK OF NEW YORK (DELAWARE),
as trustee
By: /s/ Walter Gitlin
-----------------------------------
Name: Walter Gitlin
Title: Authorized Signatory
<PAGE> 1
EXHIBIT 4(d)
DECLARATION OF TRUST
OF
CULLEN/FROST CAPITAL TRUST I
THIS DECLARATION OF TRUST is made as of February 3, 1997 (this
"Declaration"), by and between, Cullen/Frost Bankers, Inc., as sponsor (the
"Sponsor"), and The Bank of New York (Delaware), a Delaware banking
corporation, as trustee (the "Trustee"). The Sponsor and the Trustee hereby
agree as follows:
1. The trust created hereby shall be known as "Cullen/Frost
Capital Trust I" (the "Trust"), in which name the Trustee or the Sponsor, to
the extent provided herein, may conduct the business of the Trust, make and
execute contracts, and sue and be sued.
2. The Sponsor hereby assigns, transfers, conveys and sets over
to the Trust the sum of $10. Such amount shall constitute the initial trust
estate. It is the intention of the parties hereto that the Trust created
hereby constitute a business trust under Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. Section 3801, et seq. (the "Business Trust Act"), and that
this document constitute the governing instrument of the Trust. The Trustee is
hereby authorized and directed to execute and file a certificate of trust with
the Delaware Secretary of State in such form as the Trustee may approve.
3. The Sponsor and the Trustee will enter into an amended and
restated Trust Agreement or Declaration satisfactory to each such party to
provide for the contemplated operation of the Trust created hereby and the
issuance of the Capital Securities and Common Securities referred to therein.
Prior to the execution and delivery of such amended and restated Trust
Agreement or Declaration, the Trustee shall not have any duty or obligation
hereunder or with respect of the trust estate, except as otherwise required by
applicable law or as may be necessary to obtain prior to such execution and
delivery any licenses, consents or approvals required by applicable law or
otherwise. Notwithstanding the foregoing, the Trustee may take all actions
deemed proper as are necessary to effect the transactions contemplated herein.
4. The Sponsor, as sponsor of the Trust, is hereby authorized, in
its discretion, (i) to prepare one or more offering memoranda in preliminary
and final form relating to the offering and sale of the Capital Securities of
the Trust in a transaction exempt from the registration requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and such other forms or
filings as may be required by the 1993 Act, the Securities Exchange Act of
1934, as amended, or the Trust Indenture Act of 1939, as amended, in each case
relating to the Capital Securities of the Trust; (ii) to file and execute on
behalf of the Trust, such applications, reports, surety bonds, irrevocable
consents, appointments of attorney for service of process and other papers and
documents that shall be necessary or desirable to register or establish the
exemption from registration of the Capital Securities of the Trust under the
securities or "Blue Sky" laws of such jurisdictions as the Sponsor, on behalf
of the Trust, may deem necessary or desirable; (iii) to execute and file an
application, and all other applications, statements, certificates, agreements
and other instruments that shall be necessary or desirable, to the Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL")
<PAGE> 2
Market and, if and at such time as determined by the Sponsor, to the New York
Stock Exchange or any other national stock exchange or the Nasdaq National
Market for listing or quotation of the Capital Securities of the Trust; (iv) to
execute and deliver letters or documents to, or instruments for filing with, a
depository relating to the Capital Securities of the Trust; and (v) to execute,
deliver and perform on behalf of the Trust one or more purchase agreements,
registration rights agreements, dealer manager agreements, escrow agreements
and other related agreements providing for or relating to the sale of the
Capital Securities of the Trust.
In the event that any filing referred to in this Section 4 is required
by the rules and regulations of the Commission, PORTAL or state securities or
Blue Sky laws to be executed on behalf of the Trust by the Trustee, the
Trustee, in its capacity as trustee of the Trust, is hereby authorized and
directed to join in any such filing and to execute on behalf of the Trust any
and all of the foregoing, it being understood that the Trustee, in its capacity
as trustee of the Trust, shall not be required to join in any such filing or
execute on behalf of the Trust any such document unless required by the rules
and regulations of the Commission, PORTAL or state securities or Blue Sky laws.
5. This Declaration may be executed in one or more counterparts.
6. The number of trustees of the Trust initially shall be one and
thereafter the number of trustees of the Trust shall be such number as shall be
fixed from time to time by a written instrument signed by the Sponsor which may
increase or decrease the number of trustees of the Trust; provided, however,
that to the extent required by the Business Trust Act, one trustee of the Trust
shall either be a natural person who is a resident of the State of Delaware or,
if not a natural person, an entity which has its principal place of business in
the State of Delaware. Subject to the foregoing, the Sponsor is entitled to
appoint or remove without cause any trustee of the Trust at any time. Any
trustee of the Trust may resign upon thirty days' prior notice to the Sponsor.
7. This Declaration shall be governed by, and construed in
accordance with, the laws of the State of Delaware (with regard to conflict of
laws principles).
8. In the event that this Declaration is not amended and restated
within three days after the date hereof, the Trust shall automatically
terminate.
9. To the fullest extent permitted by applicable law, the Sponsor
shall indemnify and hold harmless the Trustee from and against any loss, damage
or claim incurred by the Trustee by reason of any act or omission performed or
omitted by the Trustee in good faith on behalf of the Trust and in a matter the
Trustee reasonably believed to be within the scope of authority conferred on
the Trustee by this Declaration, except that the Trustee shall not be entitled
to be indemnified, in respect of any loss, damage or claim incurred by the
Trustee by reason of gross negligence or willful misconduct with respect to
such acts or omissions.
-2-
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Declaration to
be duly executed as of the day and year first above written.
CULLEN/FROST BANKERS, INC.
as Sponsor
By: /s/ Phillip D. Green
------------------------------------
Name: Philip D. Green
Title: Executive Vice President and
Chief Financial Officer
THE BANK OF NEW YORK (DELAWARE),
not in its individual capacity but
solely as trustee of the Trust
By: /s/ Walter Gitlin
------------------------------------
Name: Walter Gitlin
Title:
-3-
<PAGE> 1
EXHIBIT 4(e)
================================================================================
AMENDED AND RESTATED TRUST AGREEMENT
AMONG
CULLEN/FROST BANKERS, INC.,
as Depositor
THE BANK OF NEW YORK,
as Property Trustee
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
AND
THE SEVERAL HOLDERS OF THE TRUST SECURITIES
Dated as of February 3, 1997
CULLEN/FROST CAPITAL TRUST I
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I.
DEFINED TERMS
<S> <C>
SECTION 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II.
CONTINUATION OF THE ISSUER TRUST
SECTION 2.1. Name. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.2. Office of the Delaware Trustee; Principal Place of Business. 12
SECTION 2.3. Initial Contribution of Trust Property; Organizational
Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.4. Issuance of the Capital Securities. . . . . . . . . . . . 12
SECTION 2.5. Issuance of the Common Securities; Subscription and
Purchase of Debentures. . . . . . . . . . . . . . . . . . 13
SECTION 2.6. Declaration of Trust. . . . . . . . . . . . . . . . . . . 13
SECTION 2.7. Authorization to Enter into Certain Transactions. . . . . 14
SECTION 2.8. Assets of Trust. . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.9. Title to Trust Property. . . . . . . . . . . . . . . . . . 18
ARTICLE III.
PAYMENT ACCOUNT
SECTION 3.1. Payment Account. . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IV.
DISTRIBUTIONS; REDEMPTION
SECTION 4.1. Distributions. . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.2. Redemption. . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.3. Subordination of Common Securities. . . . . . . . . . . . 21
SECTION 4.4. Payment Procedures. . . . . . . . . . . . . . . . . . . . 22
SECTION 4.5. Tax Returns and Reports. . . . . . . . . . . . . . . . . . 22
SECTION 4.6. Payment of Taxes, Duties, Etc. of the Issuer Trust. . . . 23
SECTION 4.7. Payments under Indenture or Pursuant to Direct Actions. . 23
</TABLE>
i
<PAGE> 3
ARTICLE V.
TRUST SECURITIES CERTIFICATES
<TABLE>
<S> <C> <C>
SECTION 5.1. Initial Ownership. . . . . . . . . . . . . . . . . . . . . 23
SECTION 5.2. The Trust Securities Certificates. . . . . . . . . . . . . 24
SECTION 5.3. Execution and Delivery of Trust Securities Certificates. . 24
SECTION 5.4. Book-Entry Capital Securities. . . . . . . . . . . . . . . 24
SECTION 5.5. Registration of Transfer and Exchange of Capital
Securities Certificates; Restricted Capital Securities
Legends. . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.6. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates. . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.7. Persons Deemed Holders. . . . . . . . . . . . . . . . . . 31
SECTION 5.8. Access to List of Holders' Names and Addresses. . . . . . 31
SECTION 5.9. Maintenance of Office or Agency. . . . . . . . . . . . . . 31
SECTION 5.10. Appointment of Paying Agent. . . . . . . . . . . . . . . . 31
SECTION 5.11. Ownership of Common Securities by Depositor. . . . . . . . 32
SECTION 5.12. Notices to Clearing Agency. . . . . . . . . . . . . . . . 32
SECTION 5.13. Rights of Holders; Waivers of Past Defaults. . . . . . . . 33
ARTICLE VI.
ACTS OF HOLDERS; MEETINGS; VOTING
SECTION 6.1. Limitations on Voting Rights. . . . . . . . . . . . . . . 35
SECTION 6.2. Notice of Meetings. . . . . . . . . . . . . . . . . . . . 36
SECTION 6.3. Meetings of Holders of the Capital Securities. . . . . . . 36
SECTION 6.4. Voting Rights. . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.5. Proxies, etc. . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.6. Holder Action by Written Consent. . . . . . . . . . . . . 37
SECTION 6.7. Record Date for Voting and Other Purposes. . . . . . . . . 37
SECTION 6.8. Acts of Holders. . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.9. Inspection of Records. . . . . . . . . . . . . . . . . . . 39
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties of the Property Trustee and
the Delaware Trustee. . . . . . . . . . . . . . . . . . . 39
SECTION 7.2. Representations and Warranties of Depositor. . . . . . . . 40
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE VIII.
THE ISSUER TRUSTEES
SECTION 8.1. Certain Duties and Responsibilities. . . . . . . . . . . . 41
SECTION 8.2. Certain Notices. . . . . . . . . . . . . . . . . . . . . . 43
SECTION 8.3. Certain Rights of Property Trustee. . . . . . . . . . . . 44
SECTION 8.4. Not Responsible for Recitals or Issuance of Securities. . 46
SECTION 8.5. May Hold Securities. . . . . . . . . . . . . . . . . . . . 46
SECTION 8.6. Compensation; Indemnity; Fees. . . . . . . . . . . . . . . 46
SECTION 8.7. Corporate Property Trustee Required; Eligibility of Issuer
Trustees . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.8. Conflicting Interests. . . . . . . . . . . . . . . . . . . 48
SECTION 8.9. Co-Trustees and Separate Trustee. . . . . . . . . . . . . 48
SECTION 8.10. Resignation and Removal; Appointment of Successor. . . . . 49
SECTION 8.11. Acceptance of Appointment by Successor. . . . . . . . . . 51
SECTION 8.12. Merger, Conversion, Consolidation or Succession to
Business. . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 8.13. Preferential Collection of Claims Against Depositor or
Issuer Trust. . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 8.14. Trustee May File Proofs of Claim. . . . . . . . . . . . . 52
SECTION 8.15. Reports by Property Trustee. . . . . . . . . . . . . . . . 52
SECTION 8.16. Reports to the Property Trustee. . . . . . . . . . . . . . 53
SECTION 8.17. Evidence of Compliance with Conditions Precedent. . . . . 53
SECTION 8.18. Number of Issuer Trustees. . . . . . . . . . . . . . . . . 54
SECTION 8.19. Delegation of Power. . . . . . . . . . . . . . . . . . . . 54
ARTICLE IX.
TERMINATION, LIQUIDATION AND MERGER
SECTION 9.1. Termination Upon Expiration Date. . . . . . . . . . . . . 55
SECTION 9.2. Early Termination. . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.3. Termination. . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.4. Liquidation. . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.5. Mergers, Consolidations, Amalgamations or Replacements of
Issuer Trust. . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE X.
MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Holders. . . . . . . . . . . . . . 58
SECTION 10.2. Amendment. . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 10.3. Separability. . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.4. Governing Law. . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.5. Payments Due on Non-Business Day. . . . . . . . . . . . . 60
SECTION 10.6. Successors. . . . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C> <C> <C>
SECTION 10.7. Headings. . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.8. Reports, Notices and Demands. . . . . . . . . . . . . . . 61
SECTION 10.9. Agreement Not to Petition. . . . . . . . . . . . . . . . . 61
SECTION 10.10. Trust Indenture Act; Conflict with Trust Indenture Act. . 62
SECTION 10.11. Acceptance of Terms of Trust Agreement, Guarantee
Agreement, Indenture and the Registration Rights
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 10.12. Limited Liability . . . . . . . . . . . . . . . . . . . . 62
EXHIBITS
Exhibit A Certificate of Trust
Exhibit B Form of Certificate Depository Agreement
Exhibit C Form of Common Securities Certificate
Exhibit D Form of Expense Agreement
Exhibit E Form of Capital Securities Certificate
Exhibit F Form of Restricted Securities Certificate
</TABLE>
iv
<PAGE> 6
AMENDED AND RESTATED TRUST AGREEMENT, dated as of February 3, 1997,
among (i) Cullen/Frost Bankers, Inc., a Texas corporation (including any
successors or assigns, the "Depositor"), (ii) The Bank of New York, a New York
banking corporation, as property trustee (in such capacity, the "Property
Trustee" and, in its separate corporate capacity and not in its capacity as
Property Trustee, the "Bank"), (iii) The Bank of New York (Delaware), a
Delaware banking corporation, as Delaware trustee (in such capacity, the
"Delaware Trustee"), (iv) Diane Jack, an individual, and Robert L. McDonald, an
individual, each of whose address is c/o The Bank of New York (Delaware), White
Clay Center, Route 273, Newark, Delaware 19711, Attention: Corporate Trust
Department (each, an "Administrative Trustee" and, collectively, the
"Administrative Trustees") (the Property Trustee, the Delaware Trustee and the
Administrative Trustees being referred to collectively as the "Issuer
Trustees"), and (v) the several Holders, as hereinafter defined.
WITNESSETH
WHEREAS, the Depositor, the Property Trustee and the Delaware Trustee
have heretofore duly declared and established a business trust pursuant to the
Delaware Business Trust Act by entering into the Declaration of Trust, dated as
of February 3, 1997 (the "Original Trust Agreement"), and by the execution and
filing by the Delaware Trustee with the Secretary of State of the State of
Delaware of the Certificate of Trust, filed on February 3, 1997, attached as
Exhibit A; and
WHEREAS, the Depositor and the Issuer Trustees desire to amend and
restate the Original Trust Agreement in its entirety as set forth herein to
provide for, among other things, (i) the issuance of the Common Securities by
the Issuer Trust to the Depositor, (ii) the issuance and sale of the Capital
Securities by the Issuer Trust pursuant to the Purchase Agreement, (iii) the
acquisition by the Issuer Trust from the Depositor of all of the right, title
and interest in the Debentures, and (iv) the appointment of the Administrative
Trustees;
NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, each party, for the benefit of the
other parties and for the benefit of the Holders, hereby amends and restates
the Original Trust Agreement in its entirety and agrees as follows:
<PAGE> 7
ARTICLE I.
DEFINED TERMS
SECTION 1.1. Definitions.
For all purposes of this Trust Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(a) The terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(b) All other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation";
(d) All accounting terms used but not defined herein have the meanings
assigned to them in accordance with United States generally accepted accounting
principles;
(e) Unless the context otherwise requires, any reference to an
"Article", a "Section" or an "Exhibit" refers to an Article, a Section or an
Exhibit, as the case may be, of or to this Trust Agreement; and
(f) The words "hereby", "herein", "hereof" and "hereunder" and other
words of similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.
"Act" has the meaning specified in Section 6.8.
"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, the amount of Additional Interest (as
defined in the Indenture) paid by the Depositor on a Like Amount of Debentures
for such period.
"Additional Sums" has the meaning specified in Section 10.6 of the
Indenture.
"Administrative Trustees" means each of the Persons identified as an
"Administrative Trustee" in the preamble to this Trust Agreement, solely in
such Person's capacity as Administrative Trustee of the Issuer Trust heretofore
formed and continued hereunder and not in such Person's individual capacity, or
any successor Administrative Trustee appointed as herein provided.
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"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Book-Entry Capital Security, the rules and procedures
of the Clearing Agency for such Book-Entry Capital Security, in each case to
the extent applicable to such transaction and as in effect from time to time.
"Bank" has the meaning specified in the preamble to this Trust
Agreement.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction in
the premises judging such Person a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjudication or
composition of or in respect of such Person under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law, or
appointing a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of such Person or of any substantial part of its property or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order unstayed and in effect for a period of 60 consecutive
days; or
(b) the institution by such Person of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law, or the
consent by it to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or similar official) of
such Person or of any substantial part of its property, or the making by it of
an assignment for the benefit of creditors, or the admission by it in writing
of its inability to pay its debts generally as they become due and its
willingness to be adjudicated a bankrupt, or the taking of corporate action by
such Person in furtherance of any such action.
"Bankruptcy Laws" has the meaning specified in Section 10.9.
"Board of Directors" means the board of directors of the Depositor or
the Executive Committee of the board of directors of the Depositor (or any
other committee of the board of directors of the Depositor performing similar
functions) or a committee designated by the board of directors of the Depositor
(or any such committee), comprised of two or more members of the board of
directors of the Depositor or officers of the Depositor, or both.
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"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Depositor to have been duly adopted
by the Depositor's Board of Directors, or officers of the Depositor to which
authority to act on behalf of the Board of Directors has been delegated and to
be in full force and effect on the date of such certification, and delivered to
the Issuer Trustees.
"Book-Entry Capital Securities Certificate" means a Capital Securities
Certificate evidencing ownership of Book-Entry Capital Securities.
"Book-Entry Capital Security" means a Capital Security, the ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 5.4.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a
day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed, or (c) a day on which the
Property Trustee's Corporate Trust Office or the Corporate Trust Office of the
Debenture Trustee is closed for business.
"Capital Security" means an undivided beneficial interest in the
assets of the Issuer Trust, having a Liquidation Amount of $1,000 and having
the rights provided therefor in this Trust Agreement, including the right to
receive Distributions and a Liquidation Distribution to the extent provided
herein. The Capital Securities shall consist of the Original Capital Securities
and, if issued, the New Capital Securities.
"Capital Securities Certificate" means a certificate evidencing
ownership of Capital Securities, substantially in the form attached as Exhibit
E.
"Certificate Depository Agreement" means the agreement among the
Issuer Trust, the Depositor and DTC, as the initial Clearing Agency, dated as
of the Closing Date, substantially in the form attached as Exhibit B, as the
same may be amended and supplemented from time to time.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. DTC will be the initial Clearing Agency.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
"Closing Date" means the Time of Delivery, which date is also the date
of execution and delivery of this Trust Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
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<PAGE> 10
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, as
amended, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.
"Common Security" means an undivided beneficial interest in the assets
of the Issuer Trust, having a Liquidation Amount of $1,000 and having the
rights provided therefor in this Trust Agreement, including the right to
receive Distributions and a Liquidation Distribution to the extent provided
herein.
"Common Securities Certificate" means a certificate evidencing
ownership of Common Securities, substantially in the form attached as Exhibit
C.
"Corporate Trust Office" means (i) when used with respect to the
Property Trustee, the principal office of the Property Trustee located in The
City of New York, and (ii) when used with respect to the Debenture Trustee, the
principal office of the Debenture Trustee located in The City of New York.
"Debenture Event of Default" means any "Event of Default" specified in
Section 5.1 of the Indenture.
"Debenture Redemption Date" means, with respect to any Debentures to
be redeemed under the Indenture, the date fixed for redemption of such
Debentures under the Indenture.
"Debenture Trustee" means the Person identified as the "Trustee" in
the Indenture, solely in its capacity as Trustee pursuant to the Indenture and
not in its individual capacity, or its successor in interest in such capacity,
or any successor Trustee appointed as provided in the Indenture.
"Debentures" means the Depositor's 8.42% Junior Subordinated
Deferrable Interest Debentures, Series A, issued pursuant to the Indenture.
"Definitive Capital Securities Certificates" means either or both (as
the context requires) of (i) Capital Securities Certificates issued as Book-
Entry Capital Securities Certificates as provided in Section 5.2 or 5.4, and
(ii) Capital Securities Certificates issued in certificated, fully registered
form as provided in Section 5.2, 5.4 or 5.5.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. Section 3801 et seq., as it may be amended from time
to time.
"Delaware Trustee" means the Person identified as the "Delaware
Trustee" in the preamble to this Trust Agreement, solely in its capacity as
Delaware Trustee of the trust
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heretofore formed and continued hereunder and not in its individual capacity,
or its successor in interest in such capacity, or any successor Delaware
trustee appointed as herein provided.
"Depositor" has the meaning specified in the preamble to this Trust
Agreement.
"Distribution Date" has the meaning specified in Section 4.1(a).
"Distributions" means amounts payable in respect of the Trust
Securities as provided in Section 4.1.
"DTC" means The Depository Trust Company.
"Early Termination Event" has the meaning specified in Section 9.2.
"Event of Default" means any one of the following events (whatever the
reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Issuer Trust in the payment of any Distribution
when it becomes due and payable, and continuation of such default for
a period of 30 days; or
(c) default by the Issuer Trust in the payment of any Redemption Price
of any Trust Security when it becomes due and payable; or
(d) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Issuer Trustees in this Trust
Agreement (other than those specified in clause (b) or (c) above) and
continuation of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, to the Issuer
Trustees and to the Depositor by the Holders of at least 25% in
aggregate Liquidation Amount of the Outstanding Capital Securities a
written notice specifying such default or breach and requiring it to
be remedied and stating that such notice is a "Notice of Default"
hereunder; or
(e) the occurrence of a Bankruptcy Event with respect to the Property
Trustee if a successor Property Trustee has not been appointed within
90 days thereof.
"Exchange Act" means the Securities Exchange Act of 1934, and any
successor statute thereto, in each case as amended from time to time.
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"Expense Agreement" means the Agreement as to Expenses and
Liabilities, dated as of the Closing Date, between the Depositor and the Issuer
Trust, substantially in the form attached as Exhibit D, as amended from time to
time.
"Expiration Date" has the meaning specified in Section 9.1.
"Guarantee Agreement" means the Guarantee Agreement executed and
delivered by the Depositor and The Bank of New York, as guarantee trustee,
contemporaneously with the execution and delivery of this Trust Agreement, for
the benefit of the holders of the Capital Securities, as amended from time to
time.
"Holder" means a Person in whose name a Trust Security or Trust
Securities are registered in the Securities Register; any such Person shall be
deemed to be a beneficial owner within the meaning of the Delaware Business
Trust Act.
"Indenture" means the Junior Subordinated Indenture, dated as of
February 3, 1997, between the Depositor and the Debenture Trustee, as trustee,
as amended or supplemented from time to time.
"Initial Purchasers" has the meaning specified in the Purchase
Agreement.
"Institutional Accredited Investor" means an institutional accredited
investor within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act.
"Issuer Trust" means the Delaware business trust known as
"Cullen/Frost Capital Trust I" which was formed on February 3, 1997 under the
Delaware Business Trust Act pursuant to the Original Trust Agreement and the
filing of the Certificate of Trust, and continued pursuant to this Trust
Agreement.
"Issuer Trustees" means, collectively, the Property Trustee and the
Delaware Trustee.
"Investment Company Act" means the Investment Company Act of 1940, or
any successor statute thereto, in each case as amended from time to time.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of any Trust
Securities, Trust Securities having a Liquidation Amount equal to the principal
amount of Debentures to be contemporaneously redeemed in accordance with the
Indenture, the proceeds of which will be used to pay the Redemption Price of
such Trust Securities, and (b) with respect to a distribution of Debentures to
Holders of Trust Securities in connection with a dissolution or liquidation of
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the Issuer Trust, Debentures having a principal amount equal to the Liquidation
Amount of the Trust Securities of the Holder to whom such Debentures are
distributed.
"Liquidation Amount" means the stated amount of $1,000 per Trust
Security.
"Liquidation Date" means the date of the dissolution, winding-up or
termination of the Issuer Trust pursuant to Section 9.4.
"Liquidation Distribution" has the meaning specified in Section
9.4(d).
"Majority in Liquidation Amount of the Capital Securities" or
"Majority in Liquidation Amount of the Common Securities" means, except as
provided by the Trust Indenture Act, Capital Securities or Common Securities,
as the case may be, representing more than 50% of the aggregate Liquidation
Amount of all then Outstanding Capital Securities or Common Securities, as the
case may be.
"New Capital Securities" has the meaning specified in Section 2.4.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman of the Board, the President or a Vice President, and
by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary, of the Depositor, and delivered to the Issuer Trustees. Any
Officers' Certificate delivered with respect to compliance with a condition or
covenant provided for in this Trust Agreement shall include:
(a) a statement by each officer signing the Officers' Certificate that
such officer has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by such officer in rendering the Officers'
Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of such officer, such
condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for or an employee of the Corporation or any Affiliate of the
Corporation.
"Original Capital Securities" has the meaning specified in Section
2.4.
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"Original Trust Agreement" has the meaning specified in the recitals
to this Trust Agreement.
"Other Capital Securities" means the Capital Securities sold by the
Initial Purchasers in the initial offering contemplated by the Purchase
Agreement to Institutional Accredited Investors in reliance on an exemption
from the registration requirements of the Securities Act other than Rule 144A,
as specified by the Initial Purchasers to the Depositor and the Property
Trustee.
"Outstanding", when used with respect to Trust Securities, means, as
of the date of determination, all Trust Securities theretofore executed and
delivered under this Trust Agreement, except:
(a) Trust Securities theretofore cancelled by the Property Trustee or
delivered to the Property Trustee for cancellation;
(b) Trust Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Property
Trustee or any Paying Agent; provided that, if such Trust Securities
are to be redeemed, notice of such redemption has been duly given
pursuant to this Trust Agreement; and
(c) Trust Securities that have been paid or in exchange for or in lieu
of which other Capital Securities have been executed and delivered
pursuant to Sections 5.4, 5.5, 5.6 and 5.11;
provided, however, that in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Capital Securities have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Capital Securities owned by the Depositor, any Issuer Trustee or any Affiliate
of the Depositor or of any Issuer Trustee shall be disregarded and deemed not
to be Outstanding, except that (a) in determining whether any Issuer Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Capital Securities that such Issuer
Trustee knows to be so owned shall be so disregarded, and (b) the foregoing
shall not apply at any time when all of the outstanding Capital Securities are
owned by the Depositor, one or more of the Issuer Trustees and/or any such
Affiliate. Capital Securities so owned that have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of
the Administrative Trustee the pledgee's right so to act with respect to such
Capital Securities and that the pledgee is not the Depositor or any Affiliate
of the Depositor.
"Owner" means each Person who is the beneficial owner of Book-Entry
Capital Securities as reflected in the records of the Clearing Agency or, if a
Clearing Agency Participant is not the Owner, then as reflected in the records
of a Person maintaining an account with such Clearing Agency (directly or
indirectly, in accordance with the rules of such Clearing Agency).
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"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 5.10 and shall initially be the Bank.
"Payment Account" means a segregated non-interest-bearing corporate
trust account maintained by the Property Trustee in its trust department for
the benefit of the Holders in which all amounts paid in respect of the
Debentures will be held and from which the Property Trustee, through the Paying
Agent, shall make payments to the Holders in accordance with Sections 4.1 and
4.2.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, company,
limited liability company, trust, unincorporated association, or government or
any agency or political subdivision thereof, or any other entity of whatever
nature.
"PORTAL" means the Private Offering, Resales and Trading through
Automatic Linkages (PORTAL) Market, and any successor market thereto.
"Property Trustee" means the Person identified as the "Property
Trustee" in the preamble to this Trust Agreement, solely in its capacity as
Property Trustee of the trust heretofore formed and continued hereunder and not
in its individual capacity, or its successor in interest in such capacity, or
any successor property trustee appointed as herein provided.
"Purchase Agreement" means the Purchase Agreement, dated February 3,
1997, among the Issuer Trust, the Depositor and the Initial Purchasers.
"Redemption Date" means, with respect to any Trust Security to be
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Debenture Redemption Date and the stated maturity
of the Debentures shall be a Redemption Date for a Like Amount of Trust
Securities.
"Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, plus the related amount of the premium,
if any, paid by the Depositor upon the concurrent redemption of a Like Amount
of Debentures.
"Registration Default" has the meaning specified in Section 2(c) of
the Registration Rights Agreement.
"Registration Default Distributions" has the meaning specified in
Section 2(c) of the Registration Rights Agreement.
"Registration Default Interest" has the meaning specified in Section
2(c) of the Registration Rights Agreement.
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"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of February 3, 1997, among the Depositor, the Issuer Trust
and the Initial Purchasers for the benefit of themselves and the Holders as the
same may be amended from time to time in accordance with the terms thereof.
"Regulation D" means Regulation D under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Relevant Trustee" shall have the meaning specified in Section 8.10.
"Restricted Capital Securities" means all Capital Securities the
Capital Securities Certificate for which is required pursuant to Section 5.5(c)
to bear a Restricted Capital Securities Legend. Such term includes the Book-
Entry Capital Securities Certificate.
"Restricted Capital Securities Legend" means a legend substantially in
the form of the legend required in the form of Capital Securities Certificate
set forth in Exhibit E to be placed upon a Restricted Securities Certificate.
"Restricted Securities Certificate" means a certificate substantially
in the form set forth in Exhibit F.
"Rule 144A" means Rule 144A under the Securities Act (or any successor
provision), as it may be amended from time to time.
"Rule 144A Capital Securities" means the Capital Securities purchased
by the Initial Purchasers from the Issuer Trust pursuant to the Purchase
Agreement, other than the Other Capital Securities.
"Securities Act" means the Securities Act of 1933, and any successor
statute thereto, in each case as amended from time to time.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 5.5.
"Successor Capital Securities" of any particular Capital Securities
Certificate means every Capital Securities Certificate issued after, and
evidencing all or a portion of the same beneficial interest in the Issuer Trust
as that evidenced by, such particular Capital Securities Certificate; and, for
the purposes of this definition, any Capital Securities Certificate executed
and delivered under Section 5.6 in exchange for or in lieu of a mutilated,
destroyed, lost or stolen Capital Securities Certificate shall be deemed to
evidence the same beneficial interest in the Issuer Trust as the mutilated,
destroyed, lost or stolen Capital Securities Certificate.
"Time of Delivery" has the meaning specified in the Purchase
Agreement.
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"Trust Agreement" means this Amended and Restated Trust Agreement, as
the same may be modified, amended or supplemented in accordance with the
applicable provisions hereof, including (i) all exhibits, and (ii) for all
purposes of this Trust Agreement and any such modification, amendment or
supplement, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this Trust Agreement and any such modification, amendment or
supplement, respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Trust Property" means (a) the Debentures, (b) any cash on deposit in,
or owing to, the Payment Account, and (c) all proceeds and rights in respect of
the foregoing and any other property and assets for the time being held or
deemed to be held by the Property Trustee pursuant to the trusts of this Trust
Agreement.
"Trust Security" means any one of the Common Securities or the Capital
Securities.
"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Capital Securities Certificates.
"Vice President," when used with respect to the Corporation, means any
duly appointed vice president, whether or not designated by a number or a word
or words added before or after the title "vice president."
ARTICLE II.
CONTINUATION OF THE ISSUER TRUST
SECTION 2.1. Name.
The trust continued hereby shall be known as "Cullen/Frost Capital
Trust I", as such name may be modified from time to time by the Administrative
Trustees following written notice to the Holders of Trust Securities and the
Issuer Trustees, in which name the Issuer Trustees may conduct the business of
the Issuer Trust, make and execute contracts and other instruments on behalf of
the Issuer Trust and sue and be sued.
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SECTION 2.2. Office of the Delaware Trustee; Principal Place of
Business.
The address of the Delaware Trustee in the State of Delaware is The
Bank of New York (Delaware), White Clay Center, Route 273, Newark, Delaware
19711, Attention: Corporate Trust Department, or such other address in the
State of Delaware as the Delaware Trustee may designate by written notice to
the Holders, the Depositor, the Property Trustee and the Administrative
Trustee. The principal executive office of the Issuer Trust is c/o The Bank of
New York (Delaware), White Clay Center, Route 273, Newark, Delaware 19711,
Attention: Corporate Trust Department. All agents for service of process for
the Issuer Trust shall be located outside the State of Texas.
SECTION 2.3. Initial Contribution of Trust Property;
Organizational Expenses.
The Property Trustee acknowledges receipt in trust from the Depositor
in connection with the Original Trust Agreement of the sum of $10, which
constituted the initial Trust Property. The Depositor shall pay organizational
expenses of the Trust as they arise or shall, upon request of any Issuer
Trustee, promptly reimburse such Issuer Trustee for any such expenses paid by
such Issuer Trustee. The Depositor shall make no claim upon the Trust Property
for the payment of such expenses.
SECTION 2.4. Issuance of the Capital Securities.
On February 3, 1997, the Depositor, both on its own behalf and on
behalf of the Issuer Trust pursuant to the Original Trust Agreement, executed
and delivered the Purchase Agreement. Contemporaneously with the execution and
delivery of this Trust Agreement, an Administrative Trustee, on behalf of the
Issuer Trust, shall manually execute in accordance with Sections 5.3 and 8.9(a)
and the Property Trustee shall deliver to the Initial Purchasers, Capital
Securities Certificates, registered in the names requested by the Initial
Purchasers, evidencing an aggregate of 100,000 Capital Securities having an
aggregate Liquidation Amount of $100,000,000, against receipt of the aggregate
purchase price of such Capital Securities of $100,000,000 by the Property
Trustee (the "Original Capital Securities"). The Original Capital Securities
shall consist of Book-Entry Capital Securities and Other Capital Securities.
In addition, an Administrative Trustee, on behalf of the Trust, may
execute Capital Securities Certificates in accordance with Sections 5.3 and
8.9(a) representing an additional class of Capital Securities to be issued only
in exchange for all or part of the Original Capital Securities pursuant to the
exchange offer contemplated by the Registration Rights Agreement (the "New
Capital Securities"); provided, that the aggregate number of issued and
outstanding Capital Securities shall not at any time exceed 100,000, less the
number of Capital Securities redeemed pursuant to Section 4.2.
SECTION 2.5. Issuance of the Common Securities; Subscription
and Purchase of Debentures.
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Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrative Trustee, on behalf of the Issuer Trust, shall
execute in accordance with Sections 5.3 and 8.9(a) and the Property Trustee
shall deliver to the Depositor Common Securities Certificates, registered in
the name of the Depositor, evidencing an aggregate of 3,093 Common Securities
having an aggregate Liquidation Amount of $3,093,000, against receipt of the
aggregate purchase price of such Common Securities of $3,093,000, to the
Property Trustee. Contemporaneously therewith, an Administrative Trustee, on
behalf of the Issuer Trust, shall subscribe for and purchase from the Depositor
the Debentures, registered in the name of the Property Trustee on behalf of the
Trust and having an aggregate principal amount equal to $103,093,000, and, in
satisfaction of the purchase price for such Debentures, the Property Trustee,
on behalf of the Issuer Trust, shall deliver to the Depositor the sum of
$103,093,000 (being the sum of the amounts delivered to the Property Trustee
pursuant to (i) the second sentence of Section 2.4, and (ii) the first sentence
of this Section 2.5).
SECTION 2.6. Declaration of Trust.
The exclusive purposes and functions of the Issuer Trust are (a) to
issue and sell Trust Securities and use the proceeds from such sale to acquire
the Debentures, and (b) to engage in those activities necessary or incidental
thereto. The Depositor hereby appoints the Issuer Trustees as trustees of the
Issuer Trust, to have all the rights, powers and duties to the extent set forth
herein, and the Issuer Trustees hereby accept such appointment. The Property
Trustee hereby declares that it will hold the Trust Property in trust upon and
subject to the conditions set forth herein for the benefit of the Issuer Trust
and the Holders. The Administrative Trustees shall have all rights, powers, and
duties set forth herein in accordance with applicable law with respect to
accomplishing the purposes of the Issuer Trust. The Delaware Trustee shall not
be entitled to exercise any powers, nor shall the Delaware Trustee have any of
the duties and responsibilities of the Property Trustee or the Administrative
Trustees, or any of the duties and responsibilities of the Issuer Trustees
generally, set forth herein. The Delaware Trustee shall be one of the trustees
of the Issuer Trust for the sole and limited purpose of fulfilling the
requirements of Section 3807 of the Delaware Business Trust Act and for taking
such actions as are required to be taken by a Delaware trustee under the
Delaware Business Trust Act.
SECTION 2.7. Authorization to Enter into Certain Transactions.
(a) The Issuer Trustees shall conduct the affairs of the Issuer Trust
in accordance with the terms of this Trust Agreement. Subject to the
limitations set forth in paragraph (b) of this Section, and in accordance with
the following provisions (i) and (ii), the Issuer Trustees shall have the
authority to enter into all transactions and agreements determined by the
Issuer Trustees to be appropriate in exercising the authority, express or
implied, otherwise granted to the Issuer Trustees under this Trust Agreement,
and to perform all acts in furtherance thereof, including the following:
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(i) Each Administrative Trustee shall have the power and
authority to act on behalf of the Issuer Trust with respect to the
following matters:
(A) the issuance and sale of the Trust Securities;
(B) to cause the Issuer Trust to enter into, and
to execute, deliver and perform on behalf of the Issuer Trust,
the Expense Agreement, the Certificate Depository Agreement,
the Registration Rights Agreement and such other agreements as
may be necessary or desirable in connection with the purposes
and function of the Issuer Trust;
(C) assisting in compliance with the Registration
Rights Agreement, including filings under the Securities Act,
applicable state securities or blue sky laws, and the Trust
Indenture Act;
(D) assisting in the listing of the Capital
Securities upon such securities exchange or exchanges as shall
be determined by the Depositor, with the registration of the
Capital Securities under the Securities Exchange Act of 1934,
as amended, if required, and with the preparation and filing
of all periodic and other reports and other documents pursuant
to the foregoing;
(E) assisting in obtaining the designation of the
Capital Securities for trading in PORTAL (if applicable);
(F) assisting in the sending of notices (other
than notices of default) and other information regarding the
Trust Securities and the Debentures to the Holders in
accordance with this Trust Agreement;
(G) the consent to the appointment of a Paying
Agent, authenticating agent and Securities Registrar in
accordance with this Trust Agreement (which consent shall not
be unreasonably withheld);
(H) execution of the Trust Securities on behalf of
the Trust in accordance with this Trust Agreement;
(I) execution and delivery of closing
certificates, if any, pursuant to the Purchase Agreement and
application for a taxpayer identification number for the
Issuer Trust;
(J) unless otherwise determined by the Property
Trustee or Holders of at least a Majority in Liquidation
Amount of the Capital Securities or as otherwise required by
the Delaware Business Trust Act or the Trust Indenture Act, to
execute on behalf of the Issuer Trust (either acting alone or
together with any or
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all of the Administrative Trustees) any documents that the
Administrative Trustees have the power to execute pursuant to
this Trust Agreement; and
(K) the taking of any action incidental to the
foregoing as the Issuer Trustees may from time to time
determine is necessary or advisable to give effect to the
terms of this Trust Agreement.
(ii) The Property Trustee shall have the power, duty and
authority to act on behalf of the Issuer Trust with respect to the
following matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal and any
other payments made in respect of the Debentures and the
holding of such amounts in the Payment Account;
(D) the distribution through the Paying Agent of
amounts distributable to the Holders in respect of the Trust
Securities;
(E) the exercise of all of the rights, powers and
privileges of a holder of the Debentures;
(F) the sending of notices of default and other
information regarding the Trust Securities and the Debentures
to the Holders in accordance with this Trust Agreement;
(G) the distribution of the Trust Property in
accordance with the terms of this Trust Agreement;
(H) to the extent provided in this Trust
Agreement, the winding up of the affairs of and liquidation of
the Issuer Trust and the preparation, execution and filing of
the certificate of cancellation with the Secretary of State of
the State of Delaware; and
(I) after an Event of Default (other than under
paragraph (b), (c), (d) or (e) of the definition of such term
if such Event of Default is by or with respect to the Property
Trustee) the taking of any action incidental to the foregoing
as the Property Trustee may from time to time determine is
necessary or advisable to give effect to the terms of this
Trust Agreement and protect and conserve the Trust Property
for the benefit of the Holders (without consideration of the
effect of any such action on any particular Holder).
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(b) So long as this Trust Agreement remains in effect, the Issuer
Trust (or the Issuer Trustees acting on behalf of the Issuer Trust) shall not
undertake any business, activities or transaction except as expressly provided
herein or contemplated hereby. In particular, the Issuer Trustees acting on
behalf of the Issuer Trust shall not (i) acquire any investments or engage in
any activities not authorized by this Trust Agreement, (ii) sell, assign,
transfer, exchange, mortgage, pledge, set-off or otherwise dispose of any of
the Trust Property or interests therein, including to Holders, except as
expressly provided herein, (iii) take any action that would reasonably be
expected to cause the Issuer Trust to become taxable as a corporation or
classified as other than a grantor trust for United States Federal income tax
purposes, (iv) incur any indebtedness for borrowed money or issue any other
debt, (v) take or consent to any action that would result in the placement of a
Lien on any of the Trust Property or (vi) on or after the date hereof, enter
into any contract or agreement for or on behalf of the Issuer Trust (other than
the Certificate Depositary Agreement or any other depositary agreement with any
securities exchange or automated quotation system) that does not expressly
provide that the Holders of the Trust Securities, in their capacity as such,
have limited liability (in accordance with the provisions of the Delaware
Business Trust Act) for the liabilities and obligations of the Issuer Trust,
which express provision may be in the following form:
"The Holders of the Trust Securities, in their capacities as
such, shall not be personally liable for any liabilities or
obligations of the Issuer Trust arising out of this Agreement, and the
parties hereto hereby agree that the Holders of the Trust Securities,
in their capacities as such, shall be entitled to the same limitation
of personal liability extended to stockholders of private corporations
for profit organized under the General Corporation Law of the State of
Delaware."
The Property Trustee shall defend all claims and demands of all Persons at any
time claiming any Lien on any of the Trust Property adverse to the interest of
the Issuer Trust or the Holders in their capacity as Holders. All actions of
the Administrative Trustees shall be taken outside of the State of Texas.
(c) In connection with the issue and sale of the Capital Securities,
the Depositor shall have the right and responsibility to assist the Issuer
Trust with respect to, or effect on behalf of the Issuer Trust, the following
(and any actions taken by the Depositor in furtherance of the following prior
to the date of this Trust Agreement are hereby ratified and confirmed in all
respects):
(i) the preparation by the Issuer Trust of an Offering
Circular in relation to the Capital Securities, including any
amendments thereto and the taking of any action necessary or desirable
to sell the Capital Securities in a transaction or a series of
transactions exempt from the registration requirements of the
Securities Act of 1933, as amended;
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(ii) the compliance by the Issuer Trust with the Registration
Rights Agreement, including the preparation and filing by the Issuer
Trust with the Commission and the execution on behalf of the Issuer
Trust of a registration statement or statements on the appropriate
form in relation to the Capital Securities, including any amendments
thereto pursuant to the Registration Rights Agreement;
(iii) the determination of the States in which to take
appropriate action to qualify or register for sale all or part of the
Capital Securities and the determination of any and all such acts,
other than actions that must be taken by or on behalf of the Issuer
Trust, and the advice to the Issuer Trust of actions they must take on
behalf of the Issuer Trust, and the preparation for execution and
filing of any documents to be executed and filed by the Issuer Trust
or on behalf of the Issuer Trust, as the Depositor deems necessary or
advisable in order to comply with the applicable laws of any such
States in connection with the sale of the Capital Securities;
(iv) the negotiation of the terms of, and the execution and
delivery of, the Purchase Agreement providing for the sale of the
Capital Securities; and
(v) the taking of any other actions necessary or desirable to
carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the Issuer
Trustees are authorized and directed to conduct the affairs of the Issuer Trust
and to operate the Issuer Trust so that the Issuer Trust will not be deemed to
be an "investment company" required to be registered under the Investment
Company Act, and will not be taxable as a corporation or classified as other
than a grantor trust for United States Federal income tax purposes and so that
the Debentures will be treated as indebtedness of the Depositor for United
States Federal income tax purposes. In this connection, each Administrative
Trustee, the Property Trustee and the Holders of at least a Majority in
Liquidation Amount of the Common Securities are authorized to take any action,
not inconsistent with applicable law, the Certificate of Trust or this Trust
Agreement, that such Administrative Trustee, the Property Trustee or Holders of
Common Securities determine in their discretion to be necessary or desirable
for such purposes, as long as such action does not adversely affect in any
material respect the interests of the Holders of the Outstanding Capital
Securities. In no event shall the Issuer Trustees be liable to the Issuer Trust
or the Holders for any failure to comply with this section that results from a
change in law or regulation or in the interpretation thereof.
SECTION 2.8. Assets of Trust.
The assets of the Issuer Trust shall consist of the Trust Property.
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SECTION 2.9. Title to Trust Property.
Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and administered
by the Property Trustee in trust for the benefit of the Issuer Trust and the
Holders in accordance with this Trust Agreement.
ARTICLE III.
PAYMENT ACCOUNT
SECTION 3.1. Payment Account.
(a) On or prior to the Closing Date, the Property Trustee shall
establish the Payment Account. The Property Trustee and its agents shall have
exclusive control and sole right of withdrawal with respect to the Payment
Account for the purpose of making deposits in and withdrawals from the Payment
Account in accordance with this Trust Agreement. All monies and other property
deposited or held from time to time in the Payment Account shall be held by the
Property Trustee in the Payment Account for the exclusive benefit of the
Holders and for distribution as herein provided, including (and subject to) any
priority of payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account,
promptly upon receipt, all payments of principal of or interest on, and any
other payments or proceeds with respect to, the Debentures. Amounts held in the
Payment Account shall not be invested by the Property Trustee pending
distribution thereof.
ARTICLE IV.
DISTRIBUTIONS; REDEMPTION
SECTION 4.1. Distributions.
(a) The Trust Securities represent undivided beneficial interests in
the Trust Property, and Distributions (including of Additional Amounts and/or
Registration Default Distributions, if applicable) will be made on the Trust
Securities at the rate and on the dates that payments of interest (including of
Additional Interest, as defined in the Indenture) are made on the Debentures.
Accordingly:
(i) Distributions on the Issuer Trust Securities shall
be cumulative, and will accumulate whether or not there are funds of
the Trust available for the payment of Distributions. Distributions
shall accumulate from February 6, 1997, and, except in the
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event (and to the extent) that the Depositor exercises its right to
defer the payment of interest on the Debentures pursuant to the
Indenture, shall be payable semi-annually in arrears on February 1 and
August 1 of each year, commencing on August 1, 1997. If any date on
which a Distribution is otherwise payable on the Trust Securities is
not a Business Day, then the payment of such Distribution shall be
made on the next succeeding day that is a Business Day (and without
any interest or other payment in respect of any such delay), with the
same force and effect as if made on the date on which such payment was
originally payable (each date on which distributions are payable in
accordance with this Section 4.1(a), a "Distribution Date").
(ii) The Trust Securities shall be entitled to
Distributions payable at a rate of 8.42% per annum of the Liquidation
Amount of the Trust Securities. Notwithstanding the foregoing, in the
event of a Registration Default, Registration Default Distributions
shall be payable on the Trust Securities in the amount and on the
terms provided in the Registration Rights Agreement, assuming that
payments of Registration Default Interest on the Debentures are made
when due. The amount of Distributions payable for any period less
than a full Distribution period shall be computed on the basis of a
360-day year of twelve 30-day months and the actual number of days
elapsed in a partial month in a period. Distributions payable for each
full Distribution period will be computed by dividing the rate per
annum by two. The amount of Distributions payable for any period shall
include any Additional Amounts and Registration Default Distributions
in respect of such period.
(iii) Distributions on the Trust Securities shall be
made by the Property Trustee from the Payment Account and shall be
payable on each Distribution Date only to the extent that the Issuer
Trust has funds then on hand and available in the Payment Account for
the payment of such Distributions.
(b) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they appear on the
Securities Register for the Trust Securities at the close of business on the
relevant record date, which shall be at the close of business on the fifteenth
day (whether or not a Business Day) next preceding the relevant Distribution
Date.
SECTION 4.2. Redemption.
(a) On each Debenture Redemption Date and on the stated maturity of
the Debentures, the Issuer Trust will be required to redeem a Like Amount of
Trust Securities at the Redemption Price.
(b) Notice of redemption shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not less than 30 nor more than 60
days prior to the Redemption Date to each Holder of Trust Securities to be
redeemed, at such Holder's address appearing in the Security Register. All
notices of redemption shall state:
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(i) the Redemption Date;
(ii) the Redemption Price or if the Redemption Price cannot be
calculated prior to the time the notice is required to be sent, the
estimate of the Redemption Price together with a statement that it is
an estimate and that the actual Redemption Price will be calculated on
the third Business Day prior to the Redemption Date (and if an
estimate is provided, a further notice shall be sent of the actual
Redemption Price on the date that such Redemption Price is
calculated);
(iii) the CUSIP number or CUSIP numbers of the Capital
Securities affected;
(iv) if less than all the Outstanding Trust Securities are to
be redeemed, the identification and the aggregate Liquidation Amount
of the particular Trust Securities to be redeemed;
(v) that on the Redemption Date the Redemption Price will
become due and payable upon each such Trust Security to be redeemed
and that Distributions thereon will cease to accumulate on and after
said date, except as provided in Section 4.2(d) below; and
(vi) the place or places where the Trust Securities are to be
surrendered for the payment of the Redemption Price.
The Trust in issuing the Trust Securities may use "CUSIP" or "private
placement" numbers (if then generally in use), and, if so, the Property Trustee
shall indicate the "CUSIP" or "private placement" numbers of the Trust
Securities in notices of redemption and related materials as a convenience to
Holders; provided that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Trust Securities
or as contained in any notice of redemption and related materials.
(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the proceeds from the contemporaneous
redemption of Debentures. Redemptions of the Trust Securities shall be made and
the Redemption Price shall be payable on each Redemption Date only to the
extent that the Issuer Trust has funds then on hand and available in the
Payment Account for the payment of such Redemption Price.
(d) If the Property Trustee gives a notice of redemption in respect of
any Capital Securities, then, by 12:00 noon, New York City time, on the
Redemption Date, subject to Section 4.2(c), the Property Trustee will, with
respect to Book-Entry Capital Securities, irrevocably deposit with the Clearing
Agency for such Book-Entry Capital Securities, to the extent available
therefor, funds sufficient to pay the applicable Redemption Price and will give
such Clearing Agency irrevocable instructions and authority to pay the
Redemption Price to the Holders of the Capital Securities. With respect to
Capital Securities that are not Book-Entry
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Capital Securities, the Property Trustee, subject to Section 4.2(c), will
irrevocably deposit with the Paying Agent, to the extent available therefor,
funds sufficient to pay the applicable Redemption Price and will give the
Paying Agent irrevocable instructions and authority to pay the Redemption Price
to the Holders of the Capital Securities upon surrender of their Capital
Securities Certificates. Notwithstanding the foregoing, Distributions payable
on or prior to the Redemption Date for any Trust Securities called for
redemption shall be payable to the Holders of such Trust Securities as they
appear on the Securities Register for the Trust Securities on the relevant
record dates for the related Distribution Dates. If notice of redemption shall
have been given and funds deposited as required, then upon the date of such
deposit, all rights of Holders holding Trust Securities so called for
redemption will cease, except the right of such Holders to receive the
Redemption Price and any Distribution payable in respect of the Trust
Securities on or prior to the Redemption Date, but without interest, and such
Securities will cease to be outstanding. In the event that any date on which
any Redemption Price is payable is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (without any interest or other payment in respect of any
such delay), except that, if such Business Day falls in the next calendar year,
such payment will be made on the immediately preceding Business Day, in each
case, with the same force and effect as if made on such date. In the event that
payment of the Redemption Price in respect of any Trust Securities called for
redemption is improperly withheld or refused and not paid either by the Issuer
Trust or by the Depositor pursuant to the Guarantee Agreement, Distributions on
such Trust Securities will continue to accumulate, as set forth in Section 4.1,
from the Redemption Date originally established by the Issuer Trust for such
Trust Securities to the date such Redemption Price is actually paid, in which
case the actual payment date will be the date fixed for redemption for purposes
of calculating the Redemption Price.
(e) Subject to Section 4.3(a), if less than all the Outstanding Trust
Securities are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of Trust Securities to be redeemed shall be allocated pro
rata to the Common Securities and the Capital Securities based upon the
relative Liquidation Amounts of such classes. The particular Capital Securities
to be redeemed shall be selected on a pro rata basis based upon their
respective Liquidation Amounts not more than 60 days prior to the Redemption
Date by the Property Trustee from the Outstanding Capital Securities not
previously called for redemption, provided that so long as the Capital
Securities are in book-entry-only form, such selection shall be made in
accordance with the customary procedures for the Clearing Agency for the
Capital Securities, and provided further that, after giving effect to such
redemption, no Holder shall hold Capital Securities with an aggregate
Liquidation Amount of less than $100,000. The Property Trustee shall promptly
notify the Securities Registrar in writing of the Capital Securities selected
for redemption and, in the case of any Capital Securities selected for partial
redemption, the Liquidation Amount thereof to be redeemed. For all purposes of
this Trust Agreement, unless the context otherwise requires, all provisions
relating to the redemption of Capital Securities shall relate, in the case of
any Capital Securities redeemed or to be redeemed only in part, to the portion
of the aggregate Liquidation Amount of Capital Securities that has been or is
to be redeemed.
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SECTION 4.3. Subordination of Common Securities.
(a) Payment of Distributions (including any Additional Amounts and/or
Registration Default Distributions, if applicable) on, the Redemption Price of,
and the Liquidation Distribution in respect of the Trust Securities, as
applicable, shall be made, subject to Section 4.2(e), pro rata among the Common
Securities and the Capital Securities based on the Liquidation Amount of the
Trust Securities; provided, however, that if on any Distribution Date,
Redemption Date or Liquidation Date any Event of Default resulting from a
Debenture Event of Default specified in Section 5.1(1) or 5.1(2) of the
Indenture shall have occurred and be continuing, no payment of any Distribution
(including any Additional Amounts and/or Registration Default Distributions, if
applicable) on, Redemption Price of, or Liquidation Distribution in respect of
any Common Security, and no other payment on account of the redemption,
liquidation or other acquisition of Common Securities, shall be made unless
payment in full in cash of all accumulated and unpaid Distributions (including
any Additional Amounts and/or Registration Default Distributions, if
applicable) on all Outstanding Capital Securities for all Distribution periods
terminating on or prior thereto, or in the case of payment of the Redemption
Price the full amount of such Redemption Price on all Outstanding Capital
Securities then called for redemption, or in the case of payment of the
Liquidation Distribution the full amount of such Liquidation Distribution on
all Outstanding Capital Securities, shall have been made or provided for, and
all funds immediately available to the Property Trustee shall first be applied
to the payment in full in cash of all Distributions (including any Additional
Amounts and/or Registration Default Distributions, if applicable) on, or the
Redemption Price of, the Capital Securities then due and payable.
(b) In the case of the occurrence of any Event of Default resulting
from any Debenture Event of Default, the Holders of the Common Securities shall
have no right to act with respect to any such Event of Default under this Trust
Agreement until the effect of all such Events of Default with respect to the
Capital Securities have been cured, waived or otherwise eliminated. Until all
such Events of Default under this Trust Agreement with respect to the Capital
Securities have 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 Holders 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.
SECTION 4.4. Payment Procedures.
Payments of Distributions (including any Additional Amounts and/or
Registration Default Distributions, if applicable) in respect of the Capital
Securities shall be made by check mailed to the address of the Person entitled
thereto as such address shall appear on the Securities Register or, if the
Capital Securities are held by a Clearing Agency, such Distributions shall be
made to the Clearing Agency in immediately available funds. Payments in respect
of the Common Securities shall be made in such manner as shall be mutually
agreed between the Property Trustee and the Holders of the Common Securities.
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SECTION 4.5. Tax Returns and Reports.
The Administrative Trustees shall prepare (or cause to be prepared),
at the Depositor's expense, and file all United States Federal, state and local
tax and information returns and reports required to be filed by or in respect
of the Issuer Trust. In this regard, the Administrative Trustees shall (a)
prepare and file (or cause to be prepared and filed) all Internal Revenue
Service forms required to be filed in respect of the Issuer Trust in each
taxable year of the Issuer Trust, and (b) prepare and furnish (or cause to be
prepared and furnished) to each Holder all Internal Revenue Service forms
required to be provided by the Issuer Trust. The Administrative Trustees shall
provide the Depositor and the Property Trustee with a copy of all such returns
and reports promptly after such filing or furnishing. The Issuer Trustees shall
comply with United States Federal withholding and backup withholding tax laws
and information reporting requirements with respect to any payments to Holders
under the Trust Securities.
SECTION 4.6. Payment of Taxes, Duties, Etc. of the Issuer
Trust.
Upon receipt under the Debentures of Additional Sums, the Property
Trustee shall promptly pay any taxes, duties or governmental charges of
whatsoever nature (other than withholding taxes) imposed on the Issuer Trust by
the United States or any other taxing authority.
SECTION 4.7. Payments under Indenture or Pursuant to Direct
Actions.
Any amount payable hereunder to any Holder of Capital Securities (or
any Owner with respect thereto) shall be reduced by the amount of any
corresponding payment such Holder (or Owner) has directly received pursuant to
Section 5.8 of the Indenture or Section 5.13 of this Trust Agreement.
ARTICLE V.
TRUST SECURITIES CERTIFICATES
SECTION 5.1. Initial Ownership.
Upon the formation of the Issuer Trust and the contribution by the
Depositor pursuant to Section 2.3 and until the issuance of the Trust
Securities, and at any time during which no Trust Securities are outstanding,
the Depositor shall be the sole beneficial owner of the Issuer Trust.
SECTION 5.2. The Trust Securities Certificates.
(a) The Capital Securities Certificates shall be issued in minimum
denominations of $1,000 Liquidation Amount (and in blocks of at least 100
Capital Securities) and integral multiples thereof, and the Common Securities
Certificates shall be issued in denominations of
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$1,000 Liquidation Amount and integral multiples thereof. The Trust Securities
Certificates shall be executed on behalf of the Issuer Trust by manual or
facsimile signature of at least one Administrative Trustee and, if executed on
behalf of the Issuer Trust by facsimile, countersigned by a transfer agent or
its agent. The Capital Securities Certificates shall be authenticated by the
Property Trustee by manual or facsimile signature of an authorized signatory
thereof and, if executed by such authorized signatory of the Property Trustee
by facsimile, countersigned by a transfer agent or its agent. Trust Securities
Certificates bearing the manual signatures of individuals who were, at the time
when such signatures shall have been affixed, authorized to sign on behalf of
the Issuer Trust or the Property Trustee or, if executed on behalf of the
Issuer Trust or the Property Trustee by facsimile, countersigned by a transfer
agent or its agent, shall be validly issued and entitled to the benefits of
this Trust Agreement, notwithstanding that such individuals or any of them
shall have ceased to be so authorized prior to the delivery of such Trust
Securities Certificates or did not hold such offices at the date of delivery of
such Trust Securities Certificates. A transferee of a Trust Securities
Certificate shall become a Holder, and shall be entitled to the rights and
subject to the obligations of a Holder hereunder, upon due registration of such
Trust Securities Certificate in such transferee's name pursuant to Section 5.5.
(b) Upon their original issuance, Capital Securities Certificates
representing Rule 144A Capital Securities shall be issued in the form of one or
more Book-Entry Capital Securities Certificates registered in the name of DTC,
as Clearing Agency, or its nominee and deposited with DTC or a custodian for
DTC for credit by DTC to the respective accounts of the Owners thereof (or such
other accounts as they may direct).
(c) Upon their original issuance, Capital Securities Certificates
representing Other Capital Securities shall not be issued in the form of a
Book-Entry Capital Securities Certificate or in any other form intended to
facilitate book-entry trading in beneficial interests in such Capital
Securities.
(d) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive Common
Securities Certificate.
SECTION 5.3. Execution and Delivery of Trust Securities
Certificates.
At the Time of Delivery, the Administrative Trustees shall cause Trust
Securities Certificates, in an aggregate Liquidation Amount as provided in
Sections 2.4 and 2.5, to be executed on behalf of the Issuer Trust and
delivered to or upon the written order of the Depositor, executed by one
authorized officer thereof, without further corporate action by the Depositor,
in authorized denominations.
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SECTION 5.4. Book-Entry Capital Securities.
(a) Each Book-Entry Capital Securities Certificate issued under this
Agreement shall be registered in the name of the Clearing Agency or a nominee
thereof and delivered to such Clearing Agency or a nominee thereof or custodian
therefor, and each such Book-Entry Capital Securities Certificate shall
constitute a single Capital Securities Certificate for all purposes of this
Agreement.
(b) Notwithstanding any other provision in this Trust Agreement, no
Book-Entry Capital Securities Certificate may be exchanged in whole or in part
for Capital Securities Certificates registered, and no transfer of a Book-Entry
Capital Securities Certificate in whole or in part may be registered, in the
name of any Person other than the Clearing Agency for such Book-Entry Capital
Securities Certificates or a nominee thereof unless (a) the Clearing Agency
advises the Property Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities with respect to the
Book-Entry Capital Securities Certificates, and the Property Trustee is unable
to locate a qualified successor, (b) the Issuer Trust at its option advises the
Depositary in writing that it elects to terminate the book-entry system through
the Clearing Agency, (c) a Debenture Event of Default has occurred and is
continuing, or (d) in the case of a transfer of a beneficial interest in such
Capital Security to a Person that is not a "qualified institutional buyer"
within the meaning of Rule 144A under the Securities Act, upon reasonable prior
notice of such transfer by the Depositary or its authorized representative to
the Securities Registrar and delivery to the Securities Registrar of a
Restricted Securities Certificate duly authorized by the Depositary or its
authorized representative; provided, however, that no Definitive Capital
Securities Certificate shall be issued in an amount representing less than 100
Capital Securities. Upon the occurrence of any event specified in clause (a),
(b) or (c) above, the Administrative Trustees shall notify the Clearing Agency
and instruct the Clearing Agency to notify all Owners of Book-Entry Capital
Securities, the Delaware Trustee and the Administrative Trustees of the
occurrence of such event and of the availability of the Definitive Capital
Securities Certificates to Owners of such class or classes, as applicable,
requesting the same; provided, however, that no Definitive Capital Securities
Certificate shall be issued in an amount representing less than 100 Capital
Securities.
(c) If any Book-Entry Capital Securities Certificate is to be
exchanged for other Capital Securities Certificates or cancelled in part, or if
any other Capital Securities Certificate is to be exchanged in whole or in part
for Book-Entry Capital Securities represented by a Book-Entry Capital
Securities Certificate, then either (i) such Book-Entry Capital Securities
Certificate shall be so surrendered for exchange or cancellation as provided in
this Article Five or (ii) the aggregate Liquidation Amount represented by such
Book-Entry Capital Securities Certificate shall be reduced, subject to Section
5.2, or increased by an amount equal to the Liquidation Amount represented by
that portion of the Book-Entry Capital Securities Certificate to be so
exchanged or cancelled, or equal to the Liquidation Amount represented by such
other Capital Securities Certificates to be so exchanged for Book-Entry Capital
Securities represented thereby, as the case may be, by means of an appropriate
adjustment made on the records of the Securities Registrar,
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whereupon the Property Trustee, in accordance with the Applicable Procedures,
shall instruct the Clearing Agency or its authorized representative to make a
corresponding adjustment to its records. Upon surrender to the Administrative
Trustees or the Securities Registrar of the Book-Entry Capital Securities
Certificate or Certificates by the Clearing Agency, accompanied by registration
instructions, the Administrative Trustees, or any one of them, shall execute
the Definitive Capital Securities Certificates in accordance with the
instructions of the Clearing Agency; provided, however, that no Definitive
Capital Securities Certificate shall be issued in an amount representing less
than 100 Capital Securities. None of the Securities Registrar or the Issuer
Trustees shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Capital Securities Certificates, the Issuer
Trustees shall recognize the Holders of the Definitive Capital Securities
Certificates as Holders. The Definitive Capital Securities Certificates shall
be printed, lithographed or engraved or may be produced in any other manner as
is reasonably acceptable to the Administrative Trustees, as evidenced by the
execution thereof by the Administrative Trustees or any one of them.
(d) Every Capital Securities Certificate executed and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Book-Entry
Capital Securities Certificate or any portion thereof, whether pursuant to this
Article V or Article IV or otherwise, shall be executed and delivered in the
form of, and shall be, a Book-Entry Capital Securities Certificate, unless such
Capital Securities Certificate is registered in the name of a Person other than
the Clearing Agency for such Book-Entry Capital Securities Certificate or a
nominee thereof.
(e) The Clearing Agency or its nominee, as registered owner of a Book-
Entry Capital Securities Certificate, shall be the Holder of such Book-Entry
Capital Securities Certificate for all purposes under this Agreement and the
Book-Entry Capital Securities Certificate, and Owners with respect to a Book-
Entry Capital Securities Certificate shall hold such interests pursuant to the
Applicable Procedures. The Securities Registrar and the Issuer Trustees shall
be entitled to deal with the Clearing Agency for all purposes of this Trust
Agreement relating to the Book-Entry Capital Securities Certificates (including
the payment of the Liquidation Amount of and Distributions on the Book-Entry
Capital Securities represented thereby and the giving of instructions or
directions by Owners of Book-Entry Capital Securities represented thereby) as
the sole Holder of the Book-Entry Capital Securities represented thereby and
shall have no obligations to the Owners thereof. None of the Property Trustee,
the Administrative Trustees nor the Securities Registrar shall have any
liability in respect of any transfers effected by the Clearing Agency.
The rights of the Owners of the Book-Entry Capital Securities shall be
exercised only through the Clearing Agency and shall be limited to those
established by law, the Applicable Procedures and agreements between such
Owners and the Clearing Agency and/or the Clearing Agency Participants.
Pursuant to the Certificate Depository Agreement, unless and until Definitive
Capital Securities Certificates are issued pursuant to Section 5.4(b), the
initial Clearing Agency will make book-entry transfers among the Clearing
Agency Participants and receive and transmit
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payments on the Capital Securities to such Clearing Agency Participants, and
none of the Depositor or the Issuer Trustees shall have any responsibility or
obligation with respect thereto.
SECTION 5.5. Registration of Transfer and Exchange of Capital
Securities Certificates; Restricted Capital Securities Legends.
(a) The Property Trustee shall keep or cause to be kept, at the office
or agency maintained pursuant to Section 5.9, a register or registers for the
purpose of registering Trust Securities Certificates and transfers and
exchanges of Trust Securities Certificates (the "Securities Register") in which
the registrar and transfer agent with respect to the Trust Securities (the
"Securities Registrar"), subject to such reasonable regulations as it may
prescribe, shall provide for the registration of Capital Securities
Certificates and Common Securities Certificates (subject to Section 5.11 in the
case of the Common Securities Certificates) and registration of transfers and
exchanges of Capital Securities Certificates as herein provided. The Person
acting as the Property Trustee shall at all times also be the Securities
Registrar.
Upon surrender for registration of transfer of any Capital Securities
Certificate at the office or agency maintained pursuant to Section 5.9, the
Administrative Trustees or any one of them shall execute and deliver to the
Property Trustee, and the Property Trustee shall deliver, in the name of the
designated transferee or transferees, one or more new Capital Securities
Certificates in authorized denominations of a like aggregate Liquidation Amount
dated the date of execution by such Administrative Trustee; provided that no
Holder may transfer any Capital Security if giving effect to such transfer
would cause any Holder to hold less than $100,000 aggregate Liquidation Amount
of Capital Securities. Any purported transfer prohibited by the preceding
proviso shall be null and void and of no force or effect and the purported
transferee of the affected Capital Securities shall be deemed to have no
interest whatsoever in such Capital Securities.
The Securities Registrar shall not be required, (i) to issue, register
the transfer of or exchange any Capital Security during a period beginning at
the opening of business 15 days before the day of selection for redemption of
such Capital Securities pursuant to Article IV and ending at the close of
business on the day of mailing of the notice of redemption, or (ii) to register
the transfer of or exchange any Capital Security so selected for redemption in
whole or in part, except, in the case of any such Capital Security to be
redeemed in part, any portion thereof not to be redeemed.
Every Capital Securities Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Securities Registrar duly
executed by the Holder or its attorney duly authorized in writing. Each Capital
Securities Certificate surrendered for registration of transfer or exchange
shall be cancelled and subsequently disposed of by the Property Trustee in
accordance with such Person's customary practice.
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No service charge shall be made for any registration of transfer or
exchange of Capital Securities Certificates, but the Securities Registrar may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of Capital
Securities Certificates.
(b) Notwithstanding any other provision of this Agreement, transfers
and exchanges of Original Capital Securities Certificates and beneficial
interests in a Book-Entry Capital Securities Certificate of the kinds specified
in this Section 5.5(b) shall be made only in accordance with this Section
5.5(b).
(i) Non-Book-Entry Capital Securities Certificate to Book-
Entry Capital Securities Certificate. If the Holder of a Capital
Securities Certificate (other than a Book-Entry Capital Securities
Certificate) wishes at any time to transfer all or any portion of such
Capital Securities Certificate to a Person who wishes to take delivery
thereof in the form of a beneficial interest in a Book-Entry Capital
Securities Certificate, such transfer may be effected only in
accordance with the provisions of this Clause (b)(i) and subject to
the Applicable Procedures. Upon receipt by the Securities Registrar of
(A) such Capital Securities Certificate as provided in Section 5.5(a)
and instructions satisfactory to the Securities Registrar directing
that a beneficial interest in the Book-Entry Capital Securities
Certificate of a specified number of Capital Securities not greater
than the number of Capital Securities represented by such Capital
Securities Certificate be credited to a specified Clearing Agency
Participant's account and (B) a Restricted Securities Certificate duly
executed by such Holder or his attorney duly authorized in writing,
then the Securities Registrar shall cancel such Capital Securities
Certificate (and issue a new Capital Securities Certificate in respect
of any untransferred portion thereof) as provided in Section 5.5(a)
and increase the aggregate Liquidation Amount of the Book-Entry
Capital Securities Certificate by the Liquidation Amount represented
by such Capital Securities so transferred as provided in Section
5.4(c).
(ii) Non-Book-Entry Capital Securities Certificate to Non-
Book-Entry Capital Securities Certificate. A Capital Securities
Certificate that is not a Book-Entry Capital Securities Certificate
may be transferred, in whole or in part, to a Person who takes
delivery in the form of another Capital Securities Certificate that is
not a Book- Entry Capital Securities Certificate as provided in
Section 5.5(a), provided that if the Capital Securities Certificate
evidences Restricted Securities Certificate, then the Securities
Registrar shall have received a Restricted Securities Certificate duly
executed by the transferor Holder or his attorney duly authorized in
writing in which case the transferee Holder shall take delivery in the
form of a Restricted Capital Securities Certificate (subject to
Section 5.5(c)).
(iii) Exchanges between Book-Entry Capital Securities
Certificate and Non-Book-Entry Capital Securities Certificate. A
beneficial interest in a Book-Entry Capital Securities Certificate may
be exchanged for a Capital Securities Certificate that is not a
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Book-Entry Capital Securities Certificate as provided in Section 5.4,
provided that such interest shall be exchanged for a Restricted
Capital Securities Certificate (subject in each case to Section
5.5(c)).
(iv) Certain Initial Transfers of Non-Book-Entry Capital
Securities Certificates. In the case of Capital Securities
Certificates initially issued other than in global form, an initial
transfer or exchange of such Capital Securities Certificates that does
not involve any change in beneficial ownership may be made to an
Institutional Accredited Investor or Investors as if such transfer or
exchange were not an initial transfer or exchange, provided that
written certification shall be provided by the transferor and
transferee of such Securities to the Securities Registrar that such
transfer or exchange does not involve a change in beneficial
ownership.
(v) Limitations Relating to Size of Blocks.
Notwithstanding any other provision of this Trust Agreement, Capital
Securities may only be transferred or exchanged in blocks having a
Liquidation Amount of not less than $100,000. In addition, Capital
Securities may not be transferred or exchanged by any Holder if,
following such transfer or exchange, such Holder would have Capital
Securities with an aggregate Liquidation Amount of less than $100,000.
Any transfer, exchange or other disposition of Capital Securities in
contravention of this Section 5.5(b)(v) shall be deemed to be void and
of no legal effect whatsoever, any such transferee shall be deemed not
to be the Holder or Owner of such Capital Security 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.
(c) Restricted Capital Securities Legend. Certificates
evidencing Rule 144A Capital Securities, Other Capital Securities and their
respective Successor Capital Securities shall bear a Restricted Capital
Securities Legend, subject to the following:
(i) subject to the following Clauses of this Section 5.5(c), a
Capital Securities Certificate or any portion thereof that is
exchanged, upon transfer or otherwise, for a Book-Entry Capital
Securities Certificate or any portion thereof shall bear a Restricted
Capital Securities Legend;
(ii) subject to the following Clauses of this Section 5.5(c),
a new Capital Securities Certificate that is not a Book-Entry Capital
Securities Certificate and is issued in exchange for another Capital
Securities Certificate (including a Book-Entry Capital Securities
Certificate) or any portion thereof, upon transfer or otherwise,
shall, bear a Restricted Capital Securities Legend;
(iii) a new Capital Securities Certificate that does not bear
a Restricted Capital Securities Legend may be issued in exchange for
or in lieu of a Capital Securities Certificate (other than a
Book-Entry Capital Securities Certificate) or any portion thereof
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that bears such a legend if, in the Depositor's judgment, placing such
a legend upon such new Capital Securities Certificate is not necessary
to ensure compliance with the registration requirements of the
Securities Act, and the Administrative Trustees, at the direction of
the Depositor, shall execute and deliver such a new Capital Securities
Certificate as provided in this Article V;
(iv) notwithstanding the foregoing provisions of this Section
5.5(c), a Successor Capital Securities Certificate of a Capital
Securities Certificate that does not bear a Restricted Capital
Securities Legend shall not bear such form of legend unless the
Depositor has reasonable cause to believe that such Successor Capital
Securities Certificate is a "restricted security" within the meaning
of Rule 144 under the Securities Act, in which case the Administrative
Trustees, at the direction of the Depositor, shall execute and deliver
a new Capital Securities Certificate bearing a Restricted Capital
Securities Legend in exchange for such Successor Capital Securities
Certificate as provided in this Article Five;
(v) any Original Capital Securities which are sold or
otherwise disposed of pursuant to an effective registration statement
under the Securities Act (including the Shelf Registration
contemplated by the Registration Rights Agreement), together with
their Successor Capital Securities shall not bear a Restricted Capital
Securities Legend; the Depositor or an Administrative Trustee shall
inform the Property Trustee in writing of the effective date of any
such registration statement registering the Original Capital
Securities under the Securities Act and shall notify the Property
Trustee at any time when prospectuses may not be delivered with
respect to Original Capital Securities to be sold pursuant to such
registration statement. The Property Trustee shall not be liable for
any action taken or omitted to be taken by it in good faith in
accordance with the aforementioned registration statement; and
(vi) New Capital Securities shall not bear a Restricted
Capital Securities Legend.
(d) Before registering for transfer or exchange any
Capital Securities Certificates issued in certificated fully registered form as
provided in Sections 5.2, 5.4 or 5.5 of the Trust Agreement, the Property
Trustee as Securities Registrar may require an Opinion of Counsel or other
evidence satisfactory to it (which may include a certificate from such
purchaser or Holder) that 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 or
another applicable exemption with respect to such purchase or holding and, in
the case of any purchaser or Holder relying on any exemption other than PTCE
96-23, 95-60, 91-38, 90-1 or 84-14, an opinion of counsel or other evidence
satisfactory to the Property Trustee with respect to the availability of such
exemption. Any purchaser or Holder of any Capital Securities or any interest
therein will be deemed to have represented by its purchase and holding thereof
that it either (i) is not a Plan or a Plan Asset Entity and is not purchasing
such Capital Securities on behalf of or with "plan assets" of any Plan, or (ii)
is eligible for the exemptive relief available
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under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or another applicable exemption
with respect to such purchase or holding.
SECTION 5.6. Mutilated, Destroyed, Lost or Stolen Trust
Securities Certificates.
If (a) any mutilated Trust Securities Certificate shall be surrendered
to the Securities Registrar, or if the Securities Registrar shall receive
evidence to its satisfaction of the destruction, loss or theft of any Trust
Securities Certificate, and (b) there shall be delivered to the Securities
Registrar and the Administrative Trustees such security or indemnity as may be
required by them to save each of them harmless, then in the absence of notice
that such Trust Securities Certificate shall have been acquired by a bona fide
purchaser, the Administrative Trustees, or any one of them, on behalf of the
Issuer Trust shall execute and make available for delivery, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Trust Securities
Certificate, a new Trust Securities Certificate of like class, tenor and
denomination. In connection with the issuance of any new Trust Securities
Certificate under this Section 5.6, the Administrative Trustees or the
Securities Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Trust Securities Certificate issued pursuant to this Section
shall constitute conclusive evidence of an undivided beneficial interest in the
assets of the Issuer Trust corresponding to that evidenced by the lost, stolen
or destroyed Trust Securities Certificate, as if originally issued, whether or
not the lost, stolen or destroyed Trust Securities Certificate shall be found
at any time.
SECTION 5.7. Persons Deemed Holders.
The Issuer Trustees and the Securities Registrar shall each treat the
Person in whose name any Trust Securities Certificate shall be registered in
the Securities Register as the owner of such Trust Securities Certificate for
the purpose of receiving Distributions and for all other purposes whatsoever,
and none of the Issuer Trustees and the Securities Registrar shall be bound by
any notice to the contrary.
SECTION 5.8. Access to List of Holders' Names and Addresses.
Each Holder and each Owner shall be deemed to have agreed not to hold
the Depositor or the Issuer Trustees accountable by reason of the disclosure of
its name and address, regardless of the source from which such information was
derived.
SECTION 5.9. Maintenance of Office or Agency.
The Property Trustee shall designate, with the consent of the
Administrative Trustees, which consent shall not be unreasonably withheld, an
office or offices or agency or agencies where Capital Securities Certificates
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Issuer Trustees in respect of the Trust Securities
Certificates may be served. The Property Trustee initially designates The Bank
of New York, 101
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Barclay Street, Floor 21W, New York, New York 10286, Attention: Corporate Trust
Administration, as its office and agency for such purposes. The Property
Trustee shall give prompt written notice to the Depositor, the Administrative
Trustees and to the Holders of any change in the location of the Securities
Register or any such office or agency.
SECTION 5.10. Appointment of Paying Agent.
The Paying Agent shall make Distributions to Holders from the Payment
Account and shall report the amounts of such Distributions to the Property
Trustee and the Administrative Trustees. Any Paying Agent shall have the
revocable power to withdraw funds from the Payment Account solely for the
purpose of making the Distributions referred to above. The Property Trustee may
revoke such power and remove the Paying Agent in its sole discretion. The
Paying Agent shall initially be the Bank. Any Person acting as Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' written notice to
the Administrative Trustees and the Property Trustee. If the Bank shall no
longer be the Paying Agent or a successor Paying Agent shall resign or its
authority to act be revoked, the Property Trustee shall appoint a successor
(which shall be a bank or trust company) that is reasonably acceptable to the
Administrative Trustees to act as Paying Agent. Such successor Paying Agent or
any additional Paying Agent shall execute and deliver to the Issuer Trustees an
instrument in which such successor Paying Agent or additional Paying Agent
shall agree with the Issuer Trustees that as Paying Agent, such successor
Paying Agent or additional Paying Agent will hold all sums, if any, held by it
for payment to the Holders in trust for the benefit of the Holders entitled
thereto until such sums shall be paid to such Holders. The Paying Agent shall
return all unclaimed funds to the Property Trustee and upon removal of a Paying
Agent such Paying Agent shall also return all funds in its possession to the
Property Trustee. The provisions of Sections 8.1, 8.3 and 8.6 herein shall
apply to the Bank also in its role as Paying Agent, for so long as the Bank
shall act as Paying Agent and, to the extent applicable, to any other paying
agent appointed hereunder. Any reference in this Agreement to the Paying Agent
shall include any co-paying agent unless the context requires otherwise.
SECTION 5.11. Ownership of Common Securities by Depositor.
At the Time of Delivery, the Depositor shall acquire, and thereafter
shall retain, beneficial and record ownership of the Common Securities. The
Depositor may not transfer the Common Securities except (i) in connection with
a consolidation or merger of the Depositor into another corporation, or any
conveyance, transfer or lease by the Depositor of its properties and assets
substantially as an entirety to any Person, pursuant to Section 8.1 of the
Indenture, or (ii) to the Depositor or an Affiliate thereof in compliance with
applicable law (including the Securities Act of 1933, as amended, and
applicable state securities and blue sky laws). To the fullest extent permitted
by law, any attempted transfer of the Common Securities other than as set forth
in the next proceeding sentence shall be void. The Administrative Trustees
shall cause each Common Securities Certificate issued to the Depositor to
contain a legend stating substantially "THIS CERTIFICATE IS NOT TRANSFERABLE
EXCEPT TO THE DEPOSITOR OR AN
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AFFILIATE OF THE DEPOSITOR IN COMPLIANCE WITH APPLICABLE LAW AND SECTION 5.11
OF THE TRUST AGREEMENT."
SECTION 5.12. Notices to Clearing Agency.
To the extent that a notice or other communication to the Holders is
required under this Trust Agreement, for so long as Capital Securities are
represented by a Book-Entry Capital Securities Certificate, the Administrative
Trustees and the Issuer Trustee shall give all such notices and communications
specified herein to be given to the Clearing Agency, and shall have no
obligations to the Owners.
SECTION 5.13. Rights of Holders; Waivers of Past Defaults.
(a) The legal title to the Trust Property is vested exclusively in the
Property Trustee (in its capacity as such) in accordance with Section 2.9, and
the Holders shall not have any right or title therein other than the undivided
beneficial interest in the assets of the Issuer Trust conferred by their Trust
Securities and they shall have no right to call for any partition or division
of property, profits or rights of the Issuer Trust except as described below.
The Trust Securities shall be personal property giving only the rights
specifically set forth therein and in this Trust Agreement. The Trust
Securities shall have no preemptive or similar rights and when issued and
delivered to Holders against payment of the purchase price therefor will be
fully paid and nonassessable by the Issuer Trust. The Holders of the Trust
Securities, in their capacities as such, shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware.
(b) For so long as any Capital Securities remain Outstanding, if, upon
a Debenture Event of Default, the Debenture Trustee fails or the holders of not
less than 25% in principal amount of the outstanding Debentures fail to declare
the principal of all of the Debentures to be immediately due and payable, the
Holders of at least 25% in Liquidation Amount of the Capital Securities then
Outstanding shall have the right to make such declaration by a notice in
writing to the Property Trustee, the Depositor and the Debenture Trustee.
At any time after a declaration of acceleration with respect to the
Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Debenture Trustee as in the Indenture
provided, if the Property Trustee fails to annul any such declaration and waive
such default, the Holders of at least a Majority in Liquidation Amount of the
Capital Securities, by written notice to the Property Trustee, the Depositor
and the Debenture Trustee, may rescind and annul such declaration and its
consequences if:
(i) the Depositor has paid or deposited with the Debenture
Trustee a sum sufficient to pay
(A) all overdue installments of interest on all of
the Debentures,
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(B) any accrued Additional Interest on all of the
Debentures,
(C) the principal of (and premium, if any, on) any
Debentures that have become due otherwise than by such
declaration of acceleration and interest and Additional
Interest thereon at the rate borne by the Debentures, and
(D) all sums paid or advanced by the Debenture
Trustee under the Indenture and the reasonable compensation,
expenses, disbursements and advances of the Debenture Trustee
and the Property Trustee, their agents and counsel; and
(ii) all Events of Default with respect to the Debentures,
other than the non-payment of the principal of the Debentures that has
become due solely by such acceleration, have been cured or waived as
provided in Section 5.13 of the Indenture.
The Holders of at least a Majority in Liquidation Amount of the
Capital Securities may, on behalf of the Holders of all the Capital Securities,
waive any past default under the Indenture, except a default in the payment of
principal or interest (unless such default has been cured and a sum sufficient
to pay all matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Debenture Trustee) or a default in
respect of a covenant or provision that under the Indenture cannot be modified
or amended without the consent of the holder of each outstanding Debenture. No
such rescission shall affect any subsequent default or impair any right
consequent thereon.
Upon receipt by the Property Trustee of written notice declaring such
an acceleration, or rescission and annulment thereof, by Holders of any part of
the Capital Securities a record date shall be established for determining
Holders of Outstanding Capital Securities entitled to join in such notice,
which record date shall be at the close of business on the day the Property
Trustee receives such notice. The Holders on such record date, or their duly
designated proxies, and only such Persons, shall be entitled to join in such
notice, whether or not such Holders remain Holders after such record date;
provided, that, unless such declaration of acceleration, or rescission and
annulment, as the case may be, shall have become effective by virtue of the
requisite percentage having joined in such notice prior to the day that is 90
days after such record date, such notice of declaration of acceleration, or
rescission and annulment, as the case may be, shall automatically and without
further action by any Holder be canceled and of no further effect. Nothing in
this paragraph shall prevent a Holder, or a proxy of a Holder, from giving,
after expiration of such 90-day period, a new written notice of declaration of
acceleration, or rescission and annulment thereof, as the case may be, that is
identical to a written notice that has been canceled pursuant to the proviso to
the preceding sentence, in which event a new record date shall be established
pursuant to the provisions of this Section 5.13(b).
(c) For so long as any Capital Securities remain Outstanding, to the
fullest extent permitted by law and subject to the terms of this Trust
Agreement and the Indenture, upon a Debenture Event of Default specified in
Section 5.1(1) or 5.1(2) of the Indenture, any Holder of
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Capital Securities shall have the right to institute a proceeding directly
against the Depositor, pursuant to Section 5.8 of the Indenture, for
enforcement of payment to such Holder of any amounts payable in respect of
Debentures having an aggregate principal amount equal to the aggregate
Liquidation Amount of the Capital Securities of such Holder (a "Direct
Action"). Except as set forth in Section 5.13(b) and this Section 5.13(c), the
Holders of Capital Securities shall have no right to exercise directly any
right or remedy available to the holders of, or in respect of, the Debentures.
(d) Except as otherwise provided in paragraphs (a), (b) and (c) of
this Section 5.13, the Holders of at least a Majority in Liquidation Amount of
the Capital Securities may, on behalf of the Holders of all the Capital
Securities, waive any past default or Event of Default and its consequences.
Upon such waiver, any such default or Event of Default shall cease to exist,
and any default or Event of Default arising therefrom shall be deemed to have
been cured, for every purpose of this Trust Agreement, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.
ARTICLE VI.
ACTS OF HOLDERS; MEETINGS; VOTING
SECTION 6.1. Limitations on Voting Rights.
(a) Except as expressly provided in this Trust Agreement and in the
Indenture and as otherwise required by law, no Holder of Capital Securities
shall have any right to vote or in any manner otherwise control the
administration, operation and management of the Issuer Trust or the obligations
of the parties hereto, nor shall anything herein set forth, or contained in the
terms of the Trust Securities Certificates, be construed so as to constitute
the Holders from time to time as partners or members of an association.
(b) So long as any Debentures are held by the Property Trustee on
behalf of the Issuer Trust, the Property Trustee shall not (i) direct the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee, or execute any trust or power conferred on the Debenture
Trustee with respect to the Debentures, (ii) waive any past default that may be
waived under Section 5.13 of the Indenture, (iii) exercise any right to rescind
or annul a declaration that the principal of all the Debentures shall be due
and payable, or (iv) consent to any amendment, modification or termination of
the Indenture or the Debentures, where such consent shall be required, without,
in each case, obtaining the prior approval of the Holders of at least a
Majority in Liquidation Amount of the Capital Securities, provided, however,
that where a consent under the Indenture would require the consent of each
Holder of Debentures affected thereby, no such consent shall be given by the
Property Trustee without the prior written consent of each Holder of Capital
Securities. The Property Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the Capital Securities,
except by
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a subsequent vote of the Holders of the Capital Securities. The Property
Trustee shall notify all Holders of the Capital Securities of any notice of
default received with respect to the Debentures. In addition to obtaining the
foregoing approvals of the Holders of the Capital Securities, prior to taking
any of the foregoing actions, the Issuer Trustees shall, at the expense of the
Depositor, obtain an Opinion of Counsel experienced in such matters to the
effect that such action shall not cause the Issuer Trust to be taxable as a
corporation or classified as other than a grantor trust for United States
Federal income tax purposes.
(c) If any proposed amendment to the Trust Agreement provides for, or
the Issuer Trustees otherwise propose to effect, (i) any action that would
adversely affect in any material respect the powers, preferences or special
rights of the Capital Securities, whether by way of amendment to the Trust
Agreement or otherwise, or (ii) the dissolution, winding-up or termination of
the Issuer Trust, other than pursuant to the terms of this Trust Agreement,
then the Holders of Outstanding Capital Securities as a class will be entitled
to vote on such amendment or proposal and such amendment or proposal shall not
be effective except with the approval of the Holders of at least a Majority in
Liquidation Amount of the Capital Securities. Notwithstanding any other
provision of this Trust Agreement, no amendment to this Trust Agreement may be
made if, as a result of such amendment, it would cause the Issuer Trust to be
taxable as a corporation or classified as other than a grantor trust for United
States Federal income tax purposes.
SECTION 6.2. Notice of Meetings.
Notice of all meetings of the Holders of the Capital Securities,
stating the time, place and purpose of the meeting, shall be given by the
Property Trustee pursuant to Section 10.8 to each Holder of Capital Securities,
at such Holder's registered address, at least 15 days and not more than 90 days
before the meeting. At any such meeting, any business properly before the
meeting may be so considered whether or not stated in the notice of the
meeting. Any adjourned meeting may be held as adjourned without further notice.
SECTION 6.3. Meetings of Holders of the Capital Securities.
No annual meeting of Holders is required to be held. The Property
Trustee, however, shall call a meeting of the Holders of the Capital Securities
to vote on any matter upon the written request of the Holders of at least 25%
in aggregate Liquidation Amount of the Outstanding Capital Securities and the
Administrative Trustees or the Property Trustee may, at any time in their
discretion, call a meeting of the Holders of the Capital Securities to vote on
any matters as to which such Holders are entitled to vote.
The Holders of at least a Majority in Liquidation Amount of the
Capital Securities, present in person or by proxy, shall constitute a quorum at
any meeting of the Holders of the Capital Securities.
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If a quorum is present at a meeting, an affirmative vote by the
Holders present, in person or by proxy, holding Capital Securities representing
at least a Majority in aggregate Liquidation Amount of the Capital Securities
held by the Holders present, either in person or by proxy, at such meeting
shall constitute the action of the Holders of the Capital Securities, unless
this Trust Agreement requires a greater number of affirmative votes.
SECTION 6.4. Voting Rights.
Holders shall be entitled to one vote for each $1,000 of Liquidation
Amount represented by their Outstanding Trust Securities in respect of any
matter as to which such Holders are entitled to vote.
SECTION 6.5. Proxies, etc.
At any meeting of Holders, any Holder entitled to vote thereat may
vote by proxy, provided that no proxy shall be voted at any meeting unless it
shall have been placed on file with the Property Trustee, or with such other
officer or agent of the Issuer Trust as the Property Trustee may direct, for
verification prior to the time at which such vote shall be taken. Pursuant to a
resolution of the Property Trustee, proxies may be solicited in the name of the
Property Trustee or one or more officers of the Property Trustee. Only Holders
of record shall be entitled to vote. When Trust Securities are held jointly by
several persons, any one of them may vote at any meeting in person or by proxy
in respect of such Trust Securities, but if more than one of them shall be
present at such meeting in person or by proxy, and such joint owners or their
proxies so present disagree as to any vote to be cast, such vote shall not be
received in respect of such Trust Securities. A proxy purporting to be executed
by or on behalf of a Holder shall be deemed valid unless challenged at or prior
to its exercise, and the burden of proving invalidity shall rest on the
challenger. No proxy shall be valid more than three years after its date of
execution.
SECTION 6.6. Holder Action by Written Consent.
Any action that may be taken by Holders at a meeting may be taken
without a meeting if Holders holding at least a Majority in Liquidation Amount
of all Capital Securities entitled to vote in respect of such action (or such
larger proportion thereof as shall be required by any other provision of this
Trust Agreement) shall consent to the action in writing.
SECTION 6.7. Record Date for Voting and Other Purposes.
For the purposes of determining the Holders who are entitled to notice
of and to vote at any meeting or by written consent, or to participate in any
distribution on the Trust Securities in respect of which a record date is not
otherwise provided for in this Trust Agreement, or for the purpose of any other
action, the Administrative Trustees or Property Trustee may from time to time
fix a date, not more than 90 days prior to the date of any meeting of Holders
or the payment
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of a distribution or other action, as the case may be, as a record date for the
determination of the identity of the Holders of record for such purposes.
SECTION 6.8. Acts of Holders.
Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Trust Agreement to be given, made
or taken by Holders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Holders in person or by an agent
duly appointed in writing; and, except as otherwise expressly provided herein,
such action shall become effective when such instrument or instruments are
delivered to the Property Trustee. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Trust Agreement and (subject to
Section 8.1) conclusive in favor of the Issuer Trustees, if made in the manner
provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner that any Issuer Trustee receiving the same deems
sufficient.
The ownership of Trust Securities shall be proved by the Securities
Register.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Trust Security shall bind every future Holder
of the same Trust Security and the Holder of every Trust Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Issuer
Trustees or the Issuer Trust in reliance thereon, whether or not notation of
such action is made upon such Trust Security.
Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Trust Security may do so
with regard to all or any part of the Liquidation Amount of such Trust Security
or by one or more duly appointed agents each of which may do so pursuant to
such appointment with regard to all or any part of such Liquidation Amount.
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If any dispute shall arise among the Holders or the Issuer Trustees
with respect to the authenticity, validity or binding nature of any request,
demand, authorization, direction, consent, waiver or other Act of such Holder
or Issuer Trustee under this Article VI, then the determination of such matter
by the Property Trustee shall be conclusive with respect to such matter.
A Holder may institute a legal proceeding directly against the
Depositor under the Guarantee Agreement to enforce its rights under the
Guarantee Agreement without first instituting a legal proceeding against the
Guarantee Trustee (as defined in the Guarantee Agreement), the Issuer Trust,
any Issuer Trustee or any person or entity.
SECTION 6.9. Inspection of Records.
Upon reasonable notice to the Administrative Trustees and the Property
Trustee, the records of the Issuer Trust shall be open to inspection by Holders
during normal business hours for any purpose reasonably related to such
Holder's interest as a Holder.
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties of the Property
Trustee and the Delaware Trustee.
The Property Trustee and the Delaware Trustee, each severally on
behalf of and as to itself, hereby represents and warrants for the benefit of
the Depositor and the Holders that:
(a) the Property Trustee is a national banking association, duly
organized, validly existing and in good standing under the laws of the United
States;
(b) the Property Trustee has full corporate power, authority and legal
right to execute, deliver and perform its obligations under this Trust
Agreement and has taken all necessary action to authorize the execution,
delivery and performance by it of this Trust Agreement;
(c) the Delaware Trustee is a Delaware corporation;
(d) the Delaware Trustee has full corporate power, authority and legal
right to execute, deliver and perform its obligations under this Trust
Agreement and has taken all necessary action to authorize the execution,
delivery and performance by it of this Trust Agreement;
(e) this Trust Agreement has been duly authorized, executed and
delivered by the Property Trustee and the Delaware Trustee and constitutes the
valid and legally binding agreement of each of the Property Trustee and the
Delaware Trustee enforceable against each of them in accordance
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with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles;
(f) the execution, delivery and performance of this Trust Agreement
has been duly authorized by all necessary corporate or other action on the part
of the Property Trustee and the Delaware Trustee and does not require any
approval of stockholders of the Property Trustee and the Delaware Trustee and
such execution, delivery and performance will not (i) violate the Charter or
By-laws of the Property Trustee or the Delaware Trustee, (ii) violate any
provision of, or constitute, with or without notice or lapse of time, a default
under, or result in the creation or imposition of, any Lien on any properties
included in the Trust Property pursuant to the provisions of, any indenture,
mortgage, credit agreement, license or other agreement or instrument to which
the Property Trustee or the Delaware Trustee is a party or by which it is
bound, or (iii) violate any law, governmental rule or regulation of the United
States or the State of Delaware, as the case may be, governing the banking,
trust or general powers of the Property Trustee or the Delaware Trustee (as
appropriate in context) or any order, judgment or decree applicable to the
Property Trustee or the Delaware Trustee;
(g) neither the authorization, execution or delivery by the Property
Trustee or the Delaware Trustee of this Trust Agreement nor the consummation of
any of the transactions by the Property Trustee or the Delaware Trustee (as
appropriate in context) contemplated herein requires the consent or approval
of, the giving of notice to, the registration with or the taking of any other
action with respect to any governmental authority or agency under any existing
law of the United States or the State of Delaware governing the banking, trust
or general powers of the Property Trustee or the Delaware Trustee (as
appropriate in context); and
(h) there are no proceedings pending or, to the best of each of the
Property Trustee's and the Delaware Trustee's knowledge, threatened against or
affecting the Property Trustee or the Delaware Trustee in any court or before
any governmental authority, agency or arbitration board or tribunal that,
individually or in the aggregate, would materially and adversely affect the
Issuer Trust or would question the right, power and authority of the Property
Trustee or the Delaware Trustee, as the case may be, to enter into or perform
its obligations as one of the Issuer Trustees under this Trust Agreement.
SECTION 7.2. Representations and Warranties of Depositor.
The Depositor hereby represents and warrants for the benefit of the
Holders that:
(a) the Trust Securities Certificates issued at the Time of Delivery
on behalf of the Issuer Trust have been duly authorized and will have been duly
and validly executed, issued and delivered by the Issuer Trustees pursuant to
the terms and provisions of, and in accordance with the requirements of, this
Trust Agreement and the Holders will be, as of such date, entitled to the
benefits of this Trust Agreement; and
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(b) there are no taxes, fees or other governmental charges payable by
the Issuer Trust (or the Issuer Trustees on behalf of the Issuer Trust) under
the laws of the State of Delaware or any political subdivision thereof in
connection with the execution, delivery and performance by either Issuer
Trustee of this Trust Agreement.
ARTICLE VIII.
THE ISSUER TRUSTEES
SECTION 8.1. Certain Duties and Responsibilities.
(a) The duties and responsibilities of the Issuer Trustees shall be as
provided by this Trust Agreement subject to Section 10.10 hereof.
Notwithstanding the foregoing, but subject to Section 8.1(c), no provision of
this Trust Agreement shall require any of the Issuer Trustees to expend or risk
its or their own funds or otherwise incur any financial liability in the
performance of any of its or their duties hereunder, or in the exercise of any
of its or their rights or powers, if it or they shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Trust Agreement relating to the
conduct or affecting the liability of or affording protection to the Issuer
Trustees shall be subject to the provisions of this Section 8.1. Nothing in
this Trust Agreement shall be construed to release an Administrative Trustee
from liability for his or her own negligent action, its own negligent failure
to act, or his or her own willful misconduct. To the extent that, at law or in
equity, an Issuer Trustee has duties and liabilities relating to the Issuer
Trust or to the Holders, such Issuer Trustee shall not be liable to the Issuer
Trust or to any Holder for such Issuer Trustee's good faith reliance on the
provisions of this Trust Agreement. The provisions of this Trust Agreement, to
the extent that they restrict the duties and liabilities of the Issuer Trustees
otherwise existing at law or in equity, are agreed by the Depositor and the
Holders to replace such other duties and liabilities of the Issuer Trustees.
(b) All payments made by the Property Trustee or a Paying Agent in
respect of the Trust Securities shall be made only from the revenue and
proceeds from the Trust Property and only to the extent that there shall be
sufficient revenue or proceeds from the Trust Property to enable the Property
Trustee or a Paying Agent to make payments in accordance with the terms hereof.
Each Holder, by its acceptance of a Trust Security, agrees that it will look
solely to the revenue and proceeds from the Trust Property to the extent
legally available for distribution to it as herein provided and that the Issuer
Trustees are not personally liable to it for any amount distributable in
respect of any Trust Security or for any other liability in respect of any
Trust Security. This Section 8.1(b) does not limit the liability of the Issuer
Trustees expressly set forth elsewhere in this Trust Agreement or, in the case
of the Property Trustee, in the Trust Indenture Act.
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(c) If an Event of Default has occurred and is continuing, the
Property Trustee shall enforce this Trust Agreement for the benefit of the
Holders.
(d) The Property Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Trust Agreement (including pursuant to Section 10.10), and no implied
covenants shall be read into this Trust Agreement against the Property Trustee.
If an Event of Default has occurred (that has not been cured or waived pursuant
to Section 5.13, the Property Trustee shall exercise such of the rights and
powers vested in it by this Trust Agreement, and use the same degree of care
and skill in its exercise thereof, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(e) No provision of this Trust Agreement shall be construed to relieve
the Property Trustee or the Delaware Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Property
Trustee shall be determined solely by the express provisions
of this Trust Agreement (including pursuant to Section 10.10),
and the Property Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Trust Agreement (including pursuant to
Section 10.10); and
(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Property Trustee and conforming to the
requirements of this Trust Agreement; but in the case of any
such certificates or opinions that by any provision hereof or
of the Trust Indenture Act are specifically required to be
furnished to the Property Trustee, the Property Trustee shall
be under a duty to examine the same to determine whether or
not they conform to the requirements of this Trust Agreement.
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by an authorized officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of at least a Majority in
Liquidation Amount of the Capital Securities relating to the time,
method and place of conducting any proceeding for any remedy available
to the Property
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Trustee, or exercising any trust or power conferred upon the Property
Trustee under this Trust Agreement;
(iv) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and
the Payment Account shall be to deal with such Property in a similar
manner as the Property Trustee deals with similar property for its own
account, subject to the protections and limitations on liability
afforded to the Property Trustee under this Trust Agreement and the
Trust Indenture Act;
(v) the Property Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree with the
Depositor; and money held by the Property Trustee need not be
segregated from other funds held by it except in relation to the
Payment Account maintained by the Property Trustee pursuant to Section
3.1 and except to the extent otherwise required by law;
(vi) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the
Depositor with their respective duties under this Trust Agreement, nor
shall the Property Trustee be liable for the default or misconduct of
any other Issuer Trustee or the Depositor; and
(vii) Subject to Section 8.1(c), no provision of this Trust
Agreement shall require the Property Trustee to expend or risk its own
funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its
rights or powers, if the Property Trustee shall have reasonable
grounds for believing that the repayment of such funds or liability is
not reasonably assured to it under the terms of this Trust Agreement
or adequate indemnity against such risk or liability is not reasonably
assured to it.
(f) The Administrative Trustees shall not be responsible for
monitoring the compliance by the Issuer Trustees or the Depositor with their
respective duties under this Trust Agreement, nor shall either Administrative
Trustee be liable for the default or misconduct of any other Administrative
Trustee, the Issuer Trustees or the Depositor.
SECTION 8.2. Certain Notices.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit, in
the manner and to the extent provided in Section 10.8, notice of such Event of
Default to the Holders and the Administrative Trustees, unless such Event of
Default shall have been cured or waived.
Within five Business Days after the receipt of notice of the
Depositor's exercise of its right to defer the payment of interest on the
Debentures pursuant to the Indenture, the Property Trustee shall transmit, in
the manner and to the extent provided in Section 10.8, notice of such
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exercise to the Holders and the Administrative Trustees, unless such exercise
shall have been revoked.
The Property Trustee shall not be deemed to have knowledge of any
Event of Default unless the Property Trustee shall have received written notice
or a Responsible Officer of the Property Trustee charged with the
administration of this Trust Agreement shall have obtained actual knowledge of
such Event of Default.
SECTION 8.3. Certain Rights of Property Trustee.
Subject to the provisions of Section 8.1:
(a) the Property Trustee may rely and shall be protected in acting or
refraining from acting in good faith upon any resolution, Opinion of Counsel,
certificate, written representation of a Holder or transferee, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties;
(b) if (i) in performing its duties under this Trust Agreement the
Property Trustee is required to decide between alternative courses of action,
(ii) in construing any of the provisions of this Trust Agreement the Property
Trustee finds the same ambiguous or inconsistent with any other provisions
contained herein, or (iii) the Property Trustee is unsure of the application of
any provision of this Trust Agreement, then, except as to any matter as to
which the Holders of the Capital Securities are entitled to vote under the
terms of this Trust Agreement, the Property Trustee shall deliver a notice to
the Depositor requesting the Depositor's opinion as to the course of action to
be taken and the Property Trustee shall take action in accordance with such
opinion;
(c) any direction or act of the Depositor contemplated by this Trust
Agreement shall be sufficiently evidenced by an Officers' Certificate;
(d) any direction or act of an Administrative Trustee contemplated by
this Trust Agreement shall be sufficiently evidenced by a certificate executed
by such Administrative Trustee and setting forth such direction or act;
(e) the Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or re-registration thereof;
(f) the Property Trustee may consult with counsel (which counsel may
be counsel to the Depositor or any of its Affiliates, and may include any of
its employees) and the advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon and in accordance
with
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such advice; the Property Trustee shall have the right at any time to seek
instructions concerning the administration of this Trust Agreement from any
court of competent jurisdiction;
(g) the Property Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Holders pursuant to this Trust Agreement, unless such
Holders shall have offered to the Property Trustee reasonable security or
indemnity against the costs, expenses and liabilities that might be incurred by
it in compliance with such request or direction; provided that, nothing
contained in this Section 8.3(g) shall be taken to relieve the Property
Trustee, upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Trust Agreement;
(h) the Property Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other evidence of indebtedness or other paper or document,
unless requested in writing to do so by one or more Holders;
(i) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through its
agents or attorneys;
(j) whenever in the administration of this Trust Agreement the
Property Trustee shall deem it desirable to receive instructions with respect
to enforcing any remedy or right or taking any other action hereunder, the
Property Trustee (i) may request instructions from the Holders (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
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terms of the Trust Securities in respect of such remedy, right or action), (ii)
may refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be protected in acting in
accordance with such instructions; and
(k) the Property Trustee shall not be under any obligation to take any
action that is discretionary under the provisions of this Trust Agreement.
No provision of this Trust Agreement shall be deemed to impose any
duty or obligation on any Issuer Trustee 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 such Person shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to any Issuer Trustee shall be
construed to be a duty.
SECTION 8.4. Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Trust Securities Certificates
shall be taken as the statements of the Issuer Trust and the Depositor, and the
Issuer Trustees do not assume any responsibility for their correctness. The
Issuer Trustees shall not be accountable for the use or application by the
Depositor of the proceeds of the Debentures.
SECTION 8.5. May Hold Securities.
Any Issuer Trustee or any other agent of any Issuer Trustee or the
Issuer Trust, in its individual or any other capacity, may become the owner or
pledgee of Trust Securities and, subject to Sections 8.8 and 8.13, and except
as provided in the definition of the term "Outstanding" in Article I, may
otherwise deal with the Issuer Trust with the same rights it would have if it
were not an Issuer Trustee or such other agent.
SECTION 8.6. Compensation; Indemnity; Fees.
The Depositor agrees:
(a) to pay to the Issuer Trustees from time to time such compensation
for all services rendered by them hereunder as may be agreed in writing by the
Depositor and the Issuer Trustees from time to time (which compensation shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Issuer Trustees upon request for all reasonable expenses, disbursements and
advances incurred or made by the Issuer Trustees in accordance with any
provision of this Trust Agreement (including the reasonable compensation and
the expenses and disbursements of their agents and counsel), except any such
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expense, disbursement or advance as may be attributable to their negligence,
bad faith or wilful misconduct; and
(c) to the fullest extent permitted by applicable law, to indemnify
and hold harmless (i) each Issuer Trustee, (ii) any Affiliate of any Issuer
Trustee, (iii) any officer, director, shareholder, employee, representative or
agent of any Issuer Trustee, and (iv) any employee or agent of the Issuer Trust
(referred to herein as an "Indemnified Person") from and against any loss,
damage, liability, tax, penalty, expense or claim of any kind or nature
whatsoever incurred by such Indemnified Person by reason of the creation,
operation or termination of the Issuer Trust or any act or omission performed
or omitted by such Indemnified Person in good faith on behalf of the Issuer
Trust and in a manner such Indemnified Person reasonably believed to be within
the scope of authority conferred on such Indemnified Person by this Trust
Agreement, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such
Indemnified Person by reason of negligence, bad faith or wilful misconduct with
respect to such acts or omissions.
The provisions of this Section 8.6 shall survive the termination of
this Trust Agreement and the removal or resignation of any Issuer Trustee.
No Issuer Trustee may claim any Lien on any Trust Property as a result
of any amount due pursuant to this Section 8.6.
The Depositor and any Issuer Trustee may engage in or possess an
interest in other business ventures of any nature or description, independently
or with others, similar or dissimilar to the business of the Issuer Trust, and
the Issuer Trust and the Holders of Trust Securities shall have no rights by
virtue of this Trust Agreement in and to such independent ventures or the
income or profits derived therefrom, and the pursuit of any such venture, even
if competitive with the business of the Issuer Trust, shall not be deemed
wrongful or improper. Neither the Depositor nor any Issuer Trustee shall be
obligated to present any particular investment or other opportunity to the
Issuer Trust even if such opportunity is of a character that, if presented to
the Issuer Trust, could be taken by the Issuer Trust, and the Depositor or any
Issuer Trustee shall have the right to take for its own account (individually
or as a partner or fiduciary) or to recommend to others any such particular
investment or other opportunity. Any Issuer Trustee may engage or be interested
in any financial or other transaction with the Depositor or any Affiliate of
the Depositor, or may act as depository for, trustee or agent for, or act on
any committee or body of holders of, securities or other obligations of the
Depositor or its Affiliates.
SECTION 8.7. Corporate Property Trustee Required; Eligibility
of Issuer Trustees.
(a) There shall at all times be a Property Trustee hereunder with
respect to the Trust Securities. The Property Trustee shall be a Person that is
a national or state chartered bank and eligible pursuant to the Trust Indenture
Act to act as such and that has a combined capital and surplus of at least
$50,000,000. If any such Person publishes reports of condition at least
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annually, pursuant to law or to the requirements of its supervising or
examining authority, then for the purposes of this Section and to the extent
permitted by the Trust Indenture Act, the combined capital and surplus of such
Person shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. If at any time the Property
Trustee with respect to the Trust Securities shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article. At the
time of appointment, the Property Trustee must have securities rated in one of
the three highest rating categories by a nationally recognized statistical
rating organization.
(b) There shall at all times be one or more Administrative Trustees
hereunder with respect to the Trust Securities. Each Administrative Trustee
shall be either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more persons authorized to bind that
entity.
(c) There shall at all times be a Delaware Trustee with respect to the
Trust Securities. The Delaware Trustee shall either be (i) a natural person who
is at least 21 years of age and a resident of the State of Delaware, or (ii) a
legal entity with its principal place of business in the State of Delaware and
that otherwise meets the requirements of applicable Delaware law and that shall
act through one or more persons authorized to bind such entity.
SECTION 8.8. Conflicting Interests.
(a) If the Property Trustee has or shall acquire a conflicting
interest within the meaning of the Trust Indenture Act, the Property Trustee
shall either eliminate such interest or resign, to the extent and in the manner
provided by, and subject to the provisions of, the Trust Indenture Act and this
Trust Agreement.
(b) The Guarantee Agreement and the Indenture shall be deemed to be
specifically described in this Trust Agreement for the purposes of clause (i)
of the first proviso contained in Section 310(b) of the Trust Indenture Act.
SECTION 8.9. Co-Trustees and Separate Trustee.
Unless an Event of Default shall have occurred and be continuing, at
any time or times, for the purpose of meeting the legal requirements of the
Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property may at the time be located, the Property Trustee shall have power to
appoint, and upon the written request of the Property Trustee, the Depositor
and the Administrative Trustees shall for such purpose join with the Property
Trustee in the execution, delivery, and performance of all instruments and
agreements necessary or proper to appoint, one or more Persons approved by the
Property Trustee either to act as co-trustee, jointly with the Property
Trustee, of all or any part of such Trust Property, or to the extent required
by law to act as separate trustee of any such property, in either case with
such powers as may be provided
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in the instrument of appointment, and to vest in such Person or Persons in the
capacity aforesaid, any property, title, right or power deemed necessary or
desirable, subject to the other provisions of this Section. Any co-trustee or
separate trustee appointed pursuant to this Section shall either be (i) a
natural person who is at least 21 years of age and a resident of the United
States, or (ii) a legal entity with its principal place of business in the
United States that shall act through one or more persons authorized to bind
such entity.
Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right, or power, any and
all such instruments shall, on request, be executed, acknowledged and delivered
by the Depositor.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms,
namely:
(a) The Trust Securities shall be executed by one or more
Administrative Trustees, and the Trust Securities shall be delivered by the
Property Trustee, and all rights, powers, duties, and obligations hereunder in
respect of the custody of securities, cash and other personal property held by,
or required to be deposited or pledged with, the Property Trustee specified
hereunder shall be exercised solely by the Property Trustee and not by such co-
trustee or separate trustee.
(b) The rights, powers, duties, and obligations hereby conferred or
imposed upon the Property Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed by
the Property Trustee or by the Property Trustee and such co-trustee or separate
trustee jointly, as shall be provided in the instrument appointing such co-
trustee or separate trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the Property
Trustee shall be incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations shall be exercised and performed by
such co-trustee or separate trustee.
(c) The Property Trustee at any time, by an instrument in writing
executed by it, with the written concurrence of the Depositor, may accept the
resignation of or remove any co-trustee or separate trustee appointed under
this Section, and, in case a Debenture Event of Default has occurred and is
continuing, the Property Trustee shall have power to accept the resignation of,
or remove, any such co-trustee or separate trustee without the concurrence of
the Depositor. Upon the written request of the Property Trustee, the Depositor
shall join with the Property Trustee in the execution, delivery and performance
of all instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee or separate trustee so
resigning or removed may be appointed in the manner provided in this Section.
(d) No co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Property Trustee or any other
trustee hereunder.
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(e) The Property Trustee shall not be liable by reason of any act of a
co-trustee or separate trustee.
(f) Any Act of Holders delivered to the Property Trustee shall be
deemed to have been delivered to each such co-trustee and separate trustee.
SECTION 8.10. Resignation and Removal; Appointment of Successor.
No resignation or removal of any Issuer Trustee (the "Relevant
Trustee") and no appointment of a successor Issuer Trustee pursuant to this
Article shall become effective until the acceptance of appointment by the
successor Issuer Trustee in accordance with the applicable requirements of
Section 8.11.
Subject to the immediately preceding paragraph, the Relevant Trustee
may resign at any time by giving written notice thereof to the Holders. If the
instrument of acceptance by the successor Issuer Trustee required by Section
8.11 shall not have been delivered to the Relevant Trustee within 60 days after
the giving of such notice of resignation, the Relevant Trustee may petition, at
the expense of the Trust, any court of competent jurisdiction for the
appointment of a successor Relevant Trustee.
Unless a Debenture Event of Default shall have occurred and be
continuing, any Issuer Trustee may be removed at any time by Act of the Common
Securityholder. If a Debenture Event of Default shall have occurred and be
continuing, the Property Trustee or the Delaware Trustee, or both of them, may
be removed at such time by Act of the Holders of a majority in Liquidation
Amount of the Capital Securities, delivered to the Relevant Trustee (in its
individual capacity and on behalf of the Issuer Trust). An Administrative
Trustee may be removed by the Common Securityholder at any time.
If any Issuer Trustee shall resign, be removed or become incapable of
acting as an Issuer Trustee, or if a vacancy shall occur in the office of any
Issuer Trustee for any cause, at a time when no Debenture Event of Default
shall have occurred and be continuing, the Common Securityholder, by Act of the
Common Securityholder delivered to the retiring Issuer Trustee, shall promptly
appoint a successor Issuer Trustee or Trustees, and the retiring Trustee shall
comply with the applicable requirements of Section 8.11. If the Property
Trustee or the Delaware Trustee shall resign, be removed or become incapable of
continuing to act as the Property Trustee or the Delaware Trustee, as the case
may be, at a time when a Debenture Event of Default shall have occurred and be
continuing, the Capital Securityholders, by Act of the Securityholders of a
majority in Liquidation Amount of the Capital Securities then Outstanding
delivered to the retiring Relevant Trustee, shall promptly appoint a successor
Relevant Trustee or Trustees, and such successor Trustee shall comply with the
applicable requirements of Section 8.11. If an Administrative Trustee shall
resign, be removed or become incapable of acting as Administrative Trustee, at
a time when a Debenture Event of Default shall have occurred and be continuing,
the Common Securityholder by Act of the Common Securityholder delivered to the
Administrative
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Trustee shall promptly appoint a successor Administrative Trustee or
Administrative Trustees and such successor Administrative Trustee or Trustees
shall comply with the applicable requirements of Section 8.11. If no successor
Relevant Trustee shall have been so appointed by the Common Securityholder or
the Capital Securityholders and accepted appointment in the manner required by
Section 8.11, the Relevant Trustee and any Securityholder who has been a
Securityholder of Trust Securities for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Relevant Trustee.
The Property Trustee shall give notice of each resignation and each
removal of an Issuer Trustee and each appointment of a successor Issuer Trustee
to all Holders in the manner provided in Section 10.8 and shall give notice to
the Depositor and the Administrative Trustees. Each notice shall include the
name of the successor Relevant Trustee and the address of its Corporate Trust
Office if it is the Property Trustee.
Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or a Delaware Trustee who is
a natural person dies or becomes, in the opinion of the Holder of the Common
Securities, incompetent or incapacitated, the vacancy created by such death,
incompetence or incapacity may be filled by (a) the unanimous act of the
remaining Administrative Trustees if there are at least two of them or (b)
otherwise by the Depositor (with the successor in each case being a Person who
satisfies the eligibility requirement for Administrative Trustees or Delaware
Trustee, as the case may be, set forth in Section 8.7).
SECTION 8.11. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Relevant Trustee,
the retiring Relevant Trustee and each successor Relevant Trustee with respect
to the Trust Securities shall execute and deliver an amendment hereto wherein
each successor Relevant Trustee shall accept such appointment and which (a)
shall contain such provisions as shall be necessary or desirable to transfer
and confirm to, and to vest in, each successor Relevant Trustee all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Trust Securities and the Issuer Trust and (b) shall add to or change any of the
provisions of this Trust Agreement as shall be necessary to provide for or
facilitate the administration of the Issuer Trust by more than one Relevant
Trustee, it being understood that nothing herein or in such amendment shall
constitute such Relevant Trustees co-trustees and upon the execution and
delivery of such amendment the resignation or removal of the retiring Relevant
Trustee shall become effective to the extent provided therein and each such
successor Relevant Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Relevant Trustee; but, on request of the Issuer Trust or any successor Relevant
Trustee such retiring Relevant Trustee shall duly assign, transfer and deliver
to such successor Relevant Trustee all Trust Property, all proceeds thereof and
money held by such retiring Relevant Trustee hereunder with respect to the
Trust Securities and the Issuer Trust.
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Upon request of any such successor Relevant Trustee, the Issuer Trust
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Relevant Trustee all such rights, powers and
trusts referred to in the first or second preceding paragraph, as the case may
be.
No successor Relevant Trustee shall accept its appointment unless at
the time of such acceptance such successor Relevant Trustee shall be qualified
and eligible under this Article.
SECTION 8.12. Merger, Conversion, Consolidation or Succession to
Business.
Any Person into which the Property Trustee or the Delaware Trustee may
be merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which such Relevant
Trustee shall be a party, or any Person, succeeding to all or substantially all
the corporate trust business of such Relevant Trustee, shall be the successor
of such Relevant Trustee hereunder, provided that such Person shall be
otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto.
SECTION 8.13. Preferential Collection of Claims Against
Depositor or Issuer Trust.
If and when the Property Trustee shall be or become a creditor of the
Depositor or the Issuer Trust (or any other obligor upon the Capital
Securities), the Property Trustee shall be subject to the provisions of the
Trust Indenture Act regarding the collection of claims against the Depositor or
the Issuer Trust (or any such other obligor).
SECTION 8.14. Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other similar judicial
proceeding relative to the Issuer Trust or any other obligor upon the Trust
Securities or the property of the Issuer Trust or of such other obligor or
their creditors, the Property Trustee (irrespective of whether any
Distributions on the Trust Securities shall then be due and payable and
irrespective of whether the Property Trustee shall have made any demand on the
Issuer Trust for the payment of any past due Distributions) shall be entitled
and empowered, to the fullest extent permitted by law, by intervention in such
proceeding or otherwise:
(a) to file and prove a claim for the whole amount of any
Distributions owing and unpaid in respect of the Trust Securities and to file
such other papers or documents as may be necessary or advisable in order to
have the claims of the Property Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel) and of the Holders allowed in such judicial proceeding, and
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(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Property Trustee and, in the event the
Property Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement adjustment or compensation affecting
the Trust Securities or the rights of any Holder thereof or to authorize the
Property Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 8.15. Reports by Property Trustee.
(a) Within 60 days after December 31 of each year commencing with
December 31, 1997, the Property Trustee shall transmit to all Holders in
accordance with Section 10.8, and to the Depositor, a brief report dated as of
the immediately preceding December 31 with respect to:
(i) its eligibility under Section 8.7 or, in lieu thereof, if
to the best of its knowledge it has continued to be eligible under
said Section, a written statement to such effect;
(ii) a statement that the Property Trustee has complied with
all of its obligations under this Trust Agreement during the twelve-
month period (or, in the case of the initial report, the period since
the Closing Date) ending with such December 31 or, if the Property
Trustee has not complied in any material respect with such
obligations, a description of such noncompliance; and
(iii) any change in the property and funds in its possession
as Property Trustee since the date of its last report and any action
taken by the Property Trustee in the performance of its duties
hereunder which it has not previously reported and which in its
opinion materially affects the Trust Securities.
(b) In addition the Property Trustee shall transmit to Holders such
reports concerning the Property Trustee and its actions under this Trust
Agreement as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto.
(c) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Property Trustee with the Depositor.
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SECTION 8.16. Reports to the Property Trustee.
Each of the Depositor and the Administrative Trustees shall provide to
the Property Trustee such documents, reports and information as required by
Section 314 of the Trust Indenture Act (if any) and the compliance certificate
required by Section 314(a) of the Trust Indenture Act in the form, in the
manner and at the times required by Section 314 of the Trust Indenture Act. The
Depositor and the Administrative Trustees shall annually file with the Property
Trustee a certificate specifying whether such Person is in compliance with all
of the terms and covenants applicable to such Person hereunder.
SECTION 8.17. Evidence of Compliance with Conditions Precedent.
Each of the Depositor and the Administrative Trustees shall provide to
the Property Trustee such evidence of compliance with any conditions precedent,
if any, provided for in this Trust Agreement that relate to any of the matters
set forth in Section 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to Section 314(c)(1) of the
Trust Indenture Act shall be given in the form of an Officers' Certificate.
SECTION 8.18. Number of Issuer Trustees.
(a) The number of Issuer Trustees shall be two, provided that the
Property Trustee and the Delaware Trustee may be the same Person.
(b) If an Issuer Trustee ceases to hold office for any reason, a
vacancy shall occur. The vacancy shall be filled with an Issuer Trustee
appointed in accordance with Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of an Issuer Trustee shall not
operate to annul, dissolve or terminate the Issuer Trust.
SECTION 8.19. Delegation of Power.
(a) Any Administrative Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21
his or her power for the purpose of executing any documents contemplated in
Section 2.7(a) or making any governmental filing; and
(b) The Administrative Trustees shall have power to delegate from time
to time to such of their number the doing of such things and the execution of
such instruments either in the name of the Issuer Trust or the names of the
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 this Trust Agreement.
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ARTICLE IX.
TERMINATION, LIQUIDATION AND MERGER
SECTION 9.1. Termination Upon Expiration Date.
Unless earlier terminated, the Issuer Trust shall automatically
terminate on February 1, 2028 (the "Expiration Date"), following the
distribution of the Trust Property in accordance with Section 9.4.
SECTION 9.2. Early Termination.
The first to occur of any of the following events is an "Early
Termination Event":
(a) the occurrence of a Bankruptcy Event in respect of, or the
dissolution or liquidation of, the Depositor;
(b) the written direction to the Property Trustee from all of the
Holders of the Common Securities at any time to terminate the Issuer Trust and
to distribute the Debentures to Holders in exchange for the Capital Securities
(which direction is optional and wholly within the discretion of the Holders of
the Common Securities);
(c) the redemption of all of the Capital Securities in connection with
the redemption of all the Debentures; and
(d) the entry of an order for dissolution of the Issuer Trust by a
court of competent jurisdiction.
SECTION 9.3. Termination.
The respective obligations and responsibilities of the Issuer Trustees
and the Issuer Trust created and continued hereby shall terminate upon the
latest to occur of the following: (a) the distribution by the Property Trustee
to Holders of all amounts required to be distributed hereunder upon the
liquidation of the Issuer Trust pursuant to Section 9.4, or upon the redemption
of all of the Trust Securities pursuant to Section 4.2; (b) the payment of any
expenses owed by the Issuer Trust; and (c) the discharge of all administrative
duties of the Administrative Trustees, including the performance of any tax
reporting obligations with respect to the Issuer Trust or the Holders.
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SECTION 9.4. Liquidation.
(a) If an Early Termination Event specified in clause (a), (b) or (d)
of Section 9.2 occurs or upon the Expiration Date, the Issuer Trust shall be
liquidated by the Property Trustee as expeditiously as the Property Trustee
determines to be possible by distributing, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, to each Holder a
Like Amount of Debentures, subject to Section 9.4(d). Notice of liquidation
shall be given by the Property Trustee by first-class mail, postage prepaid
mailed not less than 30 nor more than 60 days prior to the Liquidation Date to
each Holder of Trust Securities at such Holder's address appearing in the
Securities Register. All such notices of liquidation shall:
(i) state the Liquidation Date;
(ii) state that from and after the Liquidation Date, the Trust
Securities will no longer be deemed to be Outstanding and any Trust
Securities Certificates not surrendered for exchange will be deemed to
represent a Like Amount of Debentures; and
(iii) provide such information with respect to the mechanics
by which Holders may exchange Trust Securities Certificates for
Debentures, or if Section 9.4(d) applies receive a Liquidation
Distribution, as the Property Trustee (after consultation with the
Administrative Trustees) shall deem appropriate.
(b) Except where Section 9.2(c) or 9.4(d) applies, in order to effect
the liquidation of the Issuer Trust and distribution of the Debentures to
Holders, the Property Trustee, either itself acting as exchange agent or
through the appointment of a separate exchange agent, shall establish a record
date for such distribution (which shall be not more than 30 days prior to the
Liquidation Date) and, establish such procedures as it shall deem appropriate
to effect the distribution of Debentures in exchange for the Outstanding Trust
Securities Certificates.
(c) Except where Section 9.2(c) or 9.4(d) applies, after the
Liquidation Date, (i) the Trust Securities will no longer be deemed to be
Outstanding, (ii) certificates representing a Like Amount of Debentures will be
issued to Holders of Trust Securities Certificates, upon surrender of such
Certificates to the exchange agent for exchange, (iii) any Trust Securities
Certificates not so surrendered for exchange will be deemed to represent a Like
Amount of bearing accrued and unpaid interest in an amount equal to the
accumulated and unpaid Distributions on such Trust Securities Certificates
until such certificates are so surrendered (and until such certificates are so
surrendered, no payments of interest or principal will be made to Holders of
Trust Securities Certificates with respect to such Debentures) and (iv) all
rights of Holders holding Trust Securities will cease, except the right of such
Holders to receive Debentures upon surrender of Trust Securities Certificates.
(d) If, notwithstanding the other provisions of this Section 9.4,
whether because of an order for dissolution entered by a court of competent
jurisdiction or otherwise, distribution of the
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Debentures in the manner provided herein is determined by the Property Trustee
not to be practical, or if an Early Termination Event specified in clause (c)
of Section 9.2 occurs, the Trust Property shall be liquidated, and the Issuer
Trust shall be dissolved, wound-up or terminated, by the Property Trustee in
such manner as the Property Trustee determines. In such event, on the date of
the dissolution, winding-up or other termination of the Issuer Trust, Holders
will be entitled to receive out of the assets of the Issuer Trust available for
distribution to Holders, after satisfaction of liabilities to creditors of the
Issuer Trust as provided by applicable law, an amount equal to the Liquidation
Amount per Trust Security plus accumulated and unpaid Distributions thereon to
the date of payment (such amount being the "Liquidation Distribution"). If,
upon any such dissolution, winding up or termination, the Liquidation
Distribution can be paid only in part because the Issuer Trust has insufficient
assets available to pay in full the aggregate Liquidation Distribution, then,
subject to the next succeeding sentence, the amounts payable by the Issuer
Trust on the Trust Securities shall be paid on a pro rata basis (based upon
Liquidation Amounts). The Holders of the Common Securities will be entitled to
receive Liquidation Distributions upon any such dissolution, winding-up or
termination pro rata (determined as aforesaid) with Holders of Capital
Securities, except that, if a Debenture Event of Default specified in Section
5.1(1) or 5.1(2) of the Indenture has occurred and is continuing, the Capital
Securities shall have a priority over the Common Securities as provided in
Section 4.3.
SECTION 9.5. Mergers, Consolidations, Amalgamations or
Replacements of Issuer Trust.
The Issuer Trust may not merge with or into, consolidate, amalgamate,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except pursuant
to this Section 9.5. At the request of the Holders of the Common Securities,
with the consent of the Holders of at least a Majority in Liquidation Amount of
the Outstanding Capital Securities, the Issuer Trust may merge with or into,
consolidate, amalgamate, or be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety to a trust organized as such
under the laws of any State; provided, that (i) such successor entity either
(a) expressly assumes all of the obligations of the Issuer Trust with respect
to the Capital Securities, or (b) substitutes for the Capital Securities other
securities having substantially the same terms as the Capital Securities (the
"Successor Securities") so long as the Successor Securities have the same
priority as the Capital Securities with respect to distributions and payments
upon liquidation, redemption and otherwise, (ii) a trustee of such successor
entity possessing the same powers and duties as the Property Trustee is
appointed to hold the Debentures, (iii) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Capital Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (iv) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does
not adversely affect the rights, preferences and privileges of the holders of
the Capital Securities (including any Successor Securities) in any material
respect, (v) such successor entity has a purpose substantially identical to
that of the Issuer Trust, (vi) prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, each of the Issuer
Trust and the Property Trustee has received an
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Opinion of Counsel to the effect that (a) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the Holders of the Capital
Securities (including any Successor Securities) in any material respect, and
(b) following such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, neither the Issuer Trust nor such successor
entity will be required to register as an "investment company" under the
Investment Company Act, and (vii) the Depositor or its permitted transferee
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 Agreement. Notwithstanding the foregoing,
the Issuer Trust shall not, except with the consent of holders of all of the
Capital Securities, consolidate, amalgamate, merge with or into, or be replaced
by or convey, transfer or lease its properties and assets substantially as an
entirety to any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause
the Issuer Trust or the successor entity to be taxable as a corporation or
classified as other than a grantor trust for United States Federal income tax
purposes.
ARTICLE X.
MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Holders.
Except as set forth in Section 9.2, the death or incapacity of any
person having an interest, beneficial or otherwise, in Trust Securities shall
not operate to terminate this Trust Agreement, nor entitle the legal
representatives or heirs of such person or any Holder for such person, to claim
an accounting, take any action or bring any proceeding in any court for a
partition or winding up of the arrangements contemplated hereby, nor otherwise
affect the rights, obligations and liabilities of the parties hereto or any of
them.
SECTION 10.2. Amendment.
(a) This Trust Agreement may be amended from time to time by the
Property Trustee and the Holders of all of the Common Securities, without the
consent of any Holder of the Capital Securities, (i) to cure any ambiguity,
correct or supplement any provision herein that may be inconsistent with any
other provision herein, or to make any other provisions with respect to matters
or questions arising under this Trust Agreement, which shall not be
inconsistent with the other provisions of this Trust Agreement; provided,
however, that such action shall not adversely affect in any material respect
the interests of any Holder, or (ii) to modify, eliminate or add to any
provisions of this Trust Agreement to such extent as shall be necessary to
ensure that the Issuer Trust will not be taxable as a corporation or classified
as other than a grantor trust for United States Federal income tax purposes at
all times that any Trust Securities are outstanding
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or to ensure that the Issuer Trust will not be required to register as an
"investment company" under the Investment Company Act.
(b) Except as provided in Section 10.2(c) hereof, any provision of
this Trust Agreement may be amended by the Property Trustee, the Delaware
Trustee and the Holders of all of the Common Securities and with (i) the
consent of Holders of at least a Majority in Liquidation Amount of the Capital
Securities, and (ii) receipt by the Issuer Trustees of an Opinion of Counsel to
the effect that such amendment or the exercise of any power granted to the
Issuer Trustees in accordance with such amendment will not affect the Trust's
status as a grantor trust or cause the Issuer Trust to be taxable as a
corporation for United States Federal income tax purposes or affect the Issuer
Trust's exemption from status as an "investment company" under the Investment
Company Act.
(c) In addition to and notwithstanding any other provision in this
Trust Agreement, without the consent of each affected Holder (such consent
being obtained in accordance with Section 6.3 or 6.6 hereof), this Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount
of any Distribution required to be made in respect of the Trust Securities as
of a specified date, or (ii) restrict the right of a Holder to institute suit
for the enforcement of any such payment on or after such date; and
notwithstanding any other provision herein, without the unanimous consent of
the Holders (such consent being obtained in accordance with Section 6.3 or 6.6
hereof), this paragraph (c) of this Section 10.2 may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement, no
Issuer Trustee shall enter into or consent to any amendment to this Trust
Agreement that would cause the Issuer Trust to fail or cease to qualify for the
exemption from status as an "investment company" under the Investment Company
Act or to be taxable as a corporation or to be classified as other than a
grantor trust for United States Federal income tax purposes.
(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Depositor and the Administrative Trustees, this
Trust Agreement may not be amended in a manner that imposes any additional
obligation on the Depositor or the Administrative Trustees.
(f) In the event that any amendment to this Trust Agreement is made,
the Administrative Trustees or the Property Trustee shall promptly provide to
the Depositor a copy of such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be
required to enter into any amendment to this Trust Agreement that affects its
own rights, duties or immunities under this Trust Agreement. The Property
Trustee shall be entitled to receive an Opinion of Counsel and an Officers'
Certificate stating that any amendment to this Trust Agreement is in compliance
with this Trust Agreement.
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SECTION 10.3. Separability.
In case any provision in this Trust Agreement or in the Trust
Securities Certificates shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 10.4. Governing Law.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
HOLDERS, THE ISSUER TRUST, THE DEPOSITOR, THE ISSUER TRUSTEES WITH RESPECT TO
THIS TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE WITHOUT REFERENCE TO ITS
CONFLICTS OF LAWS PROVISIONS.
SECTION 10.5. Payments Due on Non-Business Day.
If the date fixed for any payment on any Trust Security shall be a day
that is not a Business Day, then such payment need not be made on such date but
may be made on the next succeeding day that is a Business Day (except as
otherwise provided in Sections 4.1(A) and 4.2(d)), with the same force and
effect as though made on the date fixed for such payment, and no Distributions
shall accumulate on such unpaid amount for the period after such date.
SECTION 10.6. Successors.
This Trust Agreement shall be binding upon and shall inure to the
benefit of any successor to the Depositor, the Issuer Trust, the Administrative
Trustees and any Issuer Trustee, including any successor by operation of law.
Except in connection with a consolidation, merger or sale involving the
Depositor that is permitted under Article Eight of the Indenture and pursuant
to which the assignee agrees in writing to perform the Depositor's obligations
hereunder, the Depositor shall not assign its obligations hereunder.
SECTION 10.7. Headings.
The Article and Section headings are for convenience only and shall
not affect the construction of this Trust Agreement.
SECTION 10.8. Reports, Notices and Demands.
Any report, notice, demand or other communication that by any
provision of this Trust Agreement is required or permitted to be given or
served to or upon any Holder or the Depositor may be given or served in writing
by deposit thereof, first-class postage prepaid, in the United States mail,
hand delivery or facsimile transmission, in each case, addressed, (a) in the
case of
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a Holder of Capital Securities, to such Holder as such Holder's name and
address may appear on the Securities Register; and (b) in the case of the
Holder of the Common Securities or the Depositor, to Cullen/Frost Bankers,
Inc., Attention: Phillip D. Green, facsimile no.: (210) 220-4117, or to such
other address as may be specified in a written notice by the Holder of the
Common Securities or the Depositor, as the case may be to the Property Trustee.
Such notice, demand or other communication to or upon a Holder shall be deemed
to have been sufficiently given or made, for all purposes, upon hand delivery,
mailing or transmission. Such notice, demand or other communication to or upon
the Depositor shall be deemed to have been sufficiently given or made only upon
actual receipt of the writing by the Depositor.
Any notice, demand or other communication that by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
the Issuer, the Property Trustee, the Delaware Trustee, the Administrative
Trustees or the Trust shall be given in writing addressed to such Person as
follows: (a) with respect to the Property Trustee to The Bank of New York, 101
Barclay Street, Floor 21W, New York, New York 10286, Attention: Corporate Trust
Administration; (b) with respect to the Delaware Trustee, to The Bank of New
York (Delaware), White Clay Center, Route 273, Newark, Delaware 19711,
Attention: Corporate Trust Department, (c) with respect to the Administrative
Trustees, to them c/o The Bank of New York (Delaware), White Clay Center, Route
273, Newark, Delaware 19711, Attention: Corporate Trust Department, marked
"Attention: Administrative Trustees of Cullen/Frost Capital Trust I", and (d)
with respect to the Issuer Trust, to its principal office specified in Section
2.1, with a copy to the Property Trustee. Such notice, demand or other
communication to or upon the Issuer Trust, the Property Trustee or the
Administrative Trustees shall be deemed to have been sufficiently given or made
only upon actual receipt of the writing by the Issuer Trust, the Property
Trustee or such Administrative Trustee.
SECTION 10.9. Agreement Not to Petition.
Each of the Issuer Trustees and the Depositor agree for the benefit of
the Holders that, until at least one year and one day after the Issuer Trust
has been terminated in accordance with Article IX, they shall not file, or join
in the filing of, a petition against the Issuer Trust under any bankruptcy,
insolvency, reorganization or other similar law (including the United States
Bankruptcy Code) (collectively, "Bankruptcy Laws") or otherwise join in the
commencement of any proceeding against the Issuer Trust under any Bankruptcy
Law. If the Depositor takes action in violation of this Section 10.9, the
Property Trustee agrees, for the benefit of Holders, that at the expense of the
Depositor, it shall file an answer with the bankruptcy court or otherwise
properly contest the filing of such petition by the Depositor against the
Issuer Trust or the commencement of such action and raise the defense that the
Depositor has agreed in writing not to take such action and should be stopped
and precluded therefrom and such other defenses, if any, as counsel for the
Issuer Trustee or the Issuer Trust may assert.
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SECTION 10.10. Trust Indenture Act; Conflict with Trust Indenture
Act.
(a) Except as otherwise expressly provided herein, the Trust Indenture
Act shall apply as a matter of contract to this Trust Agreement for purposes of
interpretation, construction and defining the rights and obligations hereunder,
and this Trust Agreement, the Depositor and the Property Trustee shall be
deemed for all purposes hereof to be subject to and governed by the Trust
Indenture Act to the same extent as would be the case if this Trust Agreement
were qualified under that Act on the date hereof. Except as otherwise expressly
provided herein, if and to the extent that any provision of this Trust
Agreement limits, qualifies or conflicts with the duties imposed by Sections
310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
(b) The Property Trustee shall be the only Issuer Trustee that is a
trustee for the purposes of the Trust Indenture Act.
(d) The application of the Trust Indenture Act to this Trust Agreement
shall not affect the nature of the Trust Securities as equity securities
representing undivided beneficial interests in the assets of the Issuer Trust.
SECTION 10.11. Acceptance of Terms of Trust Agreement, Guarantee
Agreement, Indenture and Registration Rights Agreement.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN
BY OR ON BEHALF OF A HOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR
FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE
BY THE HOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST
SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT, THE GUARANTEE
AGREEMENT AND THE INDENTURE, AND AGREEMENT TO THE SUBORDINATION PROVISIONS AND
OTHER TERMS OF THE GUARANTEE AGREEMENT AND THE INDENTURE AND TO THE TERMS AND
PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT, AND SHALL CONSTITUTE THE
AGREEMENT OF THE ISSUER TRUST, SUCH HOLDER AND SUCH OTHERS THAT THE TERMS AND
PROVISIONS OF THIS TRUST AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT SHALL
BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE ISSUER TRUST AND SUCH HOLDER
AND SUCH OTHERS.
SECTION 10.12. Limited Liability.
The Holders of the Trust Securities, in their capacities as such,
shall not be personally liable for any liabilities or obligations of the Issuer
Trust arising out of this Agreement, and the parties hereto hereby agree that
the Holders of the Trust Securities, in their capacities as such,
63
<PAGE> 69
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.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
64
<PAGE> 70
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Trust Agreement.
CULLEN/FROST BANKERS, INC.,
as Depositor
By: /s/ Phillip D. Green
---------------------------------
Name: Phillip D. Green
Title: Executive Vice
President &
Chief Financial Officer
THE BANK OF NEW YORK,
as Property Trustee
By: /s/ Remo J. Reale
---------------------------------
Name: Remo J. Reale
Title: Assistant Vice
President
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: /s/ Mary Jane Morrissey
---------------------------------
Name: Mary Jane Morrissey
Title:
By: /s/ Diane Jack
---------------------------------
Diane Jack,
as Administrative Trustee
By: /s/ Robert L. McDonald
---------------------------------
Robert L. McDonald,
as Administrative Trustee
<PAGE> 71
Exhibit C
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO THE DEPOSITOR OR AN AFFILIATE OF
THE DEPOSITOR IN COMPLIANCE WITH APPLICABLE LAW AND SECTION 5.11 OF THE TRUST
AGREEMENT
CERTIFICATE NUMBER NUMBER OF COMMON SECURITIES
C-1 3,093
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
CULLEN/FROST CAPITAL TRUST I
8.42% COMMON SECURITIES
(LIQUIDATION AMOUNT $1,000 PER COMMON SECURITY)
Cullen/Frost Capital Trust I, a statutory business trust formed under
the laws of the State of Delaware (the "Issuer Trust"), hereby certifies that
Cullen/Frost Bankers, Inc. (the "Holder") is the registered owner of Three
Thousand Ninety Three (3,093) common securities of the Issuer Trust
representing beneficial interests in the assets of the Issuer Trust and
designated the 8.42% Common Securities (liquidation amount $1,000 per Common
Security) (the "Common Securities"). Except in accordance with Section 5.11 of
the Trust Agreement (as defined below), the Common Securities are not
transferable and any attempted transfer hereof other than in accordance
therewith shall be void. The designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities are set
forth in, and this certificate and the Common Securities represented hereby are
issued and shall in all respects be subject to the terms and provisions of, the
Amended and Restated Trust Agreement of the Issuer Trust, dated as of February
3, 1997, as the same may be amended from time to time (the "Trust Agreement"),
among Cullen/Frost Bankers, Inc., as Depositor, The Bank of New York, as
Property Trustee, The Bank of New York (Delaware), as Delaware Trustee, the
Administrative Trustees named therein and the Holders of Trust Securities,
including the designation of the terms of the Common Securities as set forth
therein. The Issuer Trust will furnish a copy of the Trust Agreement to the
Holder without charge upon written request to the Issuer Trust at its principal
place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder. Terms used but not
defined herein have the meanings set forth in the Trust Agreement.
IN WITNESS WHEREOF, one of the Administrative Trustees of the Issuer
Trust has executed this certificate this 6th day of February, 1997.
CULLEN/FROST CAPITAL TRUST I
By: /s/ DIANE JACK
---------------------------
Name: Diane Jack
Administrative Trustee
<PAGE> 72
Exhibit D
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT AS TO EXPENSES AND LIABILITIES, dated as of February 3,
1997, between Cullen/Frost Bankers, Inc., a Texas corporation, in its capacity
as Depositor (as defined in the Trust Agreement referred to below), and
Cullen/Frost Capital Trust I, a Delaware business trust (the "Issuer Trust").
WHEREAS, the Issuer Trust intends to issue its Common Securities (the
"Common Securities") to and acquire Debentures from Cullen/Frost Bankers, Inc.,
a Texas Corporation, and to issue and sell 8.42% Capital Securities (the
"Capital Securities") with such powers, preferences and special rights and
restrictions as are set forth in the Amended and Restated Trust Agreement of
the Issuer Trust, dated as of February 3, 1997, among Cullen/Frost Bankers,
Inc., as Depositor, The Bank of New York, as Property Trustee, The Bank of New
York (Delaware), as Delaware Trustee, the Administrative Trustees named therein
and the Holders of Trust Securities, as the same may be amended from time to
time (the "Trust Agreement");
WHEREAS, terms used but not defined herein have the meanings set forth
in the Trust Agreement;
NOW, THEREFORE, for good and valid consideration, the receipt and
sufficiency of which are hereby acknowledged:
ARTICLE I
SECTION 1.1. Guarantee by the Depositor. Subject to the terms and
conditions hereof, the Depositor hereby irrevocably and unconditionally
guarantees to each person or entity to whom the Issuer Trust is now or
hereafter becomes indebted or liable (the "Beneficiaries") the full payment,
when and as due, of any and all Obligations (as hereinafter defined) to such
Beneficiaries. As used herein, "Obligations" means any costs, expenses or
liabilities of the Issuer Trust, other than obligations of the Issuer Trust to
pay to holders of any Trust Securities the amounts due such holders pursuant to
the terms of the Trust Securities. This Agreement is intended to be for the
benefit of, and to be enforceable by, all such Beneficiaries, whether or not
such Beneficiaries have received notice hereof.
SECTION 1.2. Subordination of Guarantee. The guarantee and other
liabilities and obligations of the Depositor under this Agreement shall
constitute unsecured obligations of the Depositor and shall rank subordinate
and junior in right of payment to all Senior Indebtedness (as defined in the
Indenture) of the Depositor to the extent and in the manner set forth in the
Indenture with respect to the Debentures, and the provisions of Article XIII of
the Indenture will apply, mutatis mutandis, to the obligations of the Depositor
hereunder. The obligations of the Depositor hereunder do not constitute Senior
Indebtedness (as defined in the Indenture) of the Depositor.
SECTION 1.3. Term of Agreement. This Agreement shall terminate and be
of no further force and effect upon the dissolution of the Issuer Trust;
provided, however, that this Agreement shall continue to be effective or shall
be reinstated, as the case may be, if at any time any holder of Capital
Securities or any Beneficiary must restore payment of any sums paid under the
Capital Securities, under any Obligation, under the Guarantee Agreement dated
the date hereof by Cullen/Frost Bankers, Inc., as Guarantor, and The Bank of
New York as guarantee trustee, or under this Agreement for any reason
whatsoever. This Agreement is continuing, irrevocable, unconditional and
absolute.
<PAGE> 73
SECTION 1.4. Waiver of Notice. The Depositor hereby waives notice of
acceptance of this Agreement and of any Obligation to which it applies or may
apply, and the Depositor hereby waives presentment, demand for payment,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 1.5. No Impairment. The obligations, covenants, agreements and
duties of the Depositor under this Agreement shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the extension of time for the payment by the Issuer Trust of
all or any portion of the Obligations or for the performance of any other
obligation under, arising out of, or in connection with, the Obligations;
(b) any failure, omission, delay or lack of diligence on the part
of the Beneficiaries to enforce, assert or exercise any right, privilege, power
or remedy conferred on the Beneficiaries with respect to the Obligations or any
action on the part of the Issuer Trust granting indulgence or extension of any
kind; or
(c) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Issuer Trust or any of
the assets of the Issuer Trust (other than the liquidation of the Trust in
accordance with the terms thereof).
There shall be no obligation of the Beneficiaries to give notice to, or obtain
the consent of, the Depositor with respect to the happening of any of the
foregoing.
SECTION 1.6. Enforcement. A Beneficiary may enforce this Agreement
directly against the Depositor and the Depositor waives any right or remedy to
require that any action be brought against the Issuer Trust or any other person
or entity before proceeding against the Depositor.
SECTION 1.7. Subrogation. The Depositor shall be subrogated to all
rights (if any) of the Trust in respect of any amounts paid to the
Beneficiaries by the Depositor under this Agreement; provided, however, that
the Depositor shall not (except to the extent required by mandatory provisions
of law) be entitled to enforce or exercise any rights which it may acquire by
way of subrogation or any indemnity, reimbursement or other agreement, in all
cases as a result of payment under this Agreement, if, at the time of any such
payment, any amounts are due and unpaid under this Agreement.
ARTICLE II
SECTION 2.1. Assignment. This Agreement may not be assigned by either
party hereto without the consent of the other, and any purported assignment
without such consent shall be void.
SECTION 2.2. Binding Effect. All guarantees and agreements contained
in this Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Depositor and shall inure to the benefit of the
Beneficiaries.
SECTION 2.3. Amendment. So long as there remains any Beneficiary or
any Capital Securities are outstanding, this Agreement shall not be modified or
amended in any manner adverse to such Beneficiary or to the holders of the
Capital Securities without the consent of such Beneficiary or the holders of
the Capital Securities, as the case may be.
-2-
<PAGE> 74
SECTION 2.4. Notices. Any notice, request or other communication
required or permitted to be given hereunder shall be given in writing by
delivering the same against receipt therefor by facsimile transmission
(confirmed by mail), telex or by registered or certified mail, addressed as
follows (and if so given, shall be deemed given when mailed or upon receipt of
an answer-back, if sent by telex):
Cullen Frost Capital Trust I
c/o The Bank of New York
101 Barclay Street, Floor 21W
New York, New York 10286
Facsimile No.: (212) 815-5915
Attention: Corporate Trust Administration
With a copy to:
Cullen/Frost Bankers, Inc.
100 West Houston Street
San Antonio, Texas 78205
Facsimile No.: (210) 220-4117
Attention: Phillip D. Green
SECTION 2.5. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 2.6. Limited Liability.
The Holders of the Trust Securities, in their capacities as such,
shall not be personally liable for any liabilities or obligations of the Issuer
Trust arising out of this Agreement, and the parties hereto hereby agree that
the Holders of the Trust Securities, in their capacities as such, shall be
entitled to the same limitation of personal liability extended to stockholders
of private corporations for profit organized under the General Corporation Law
of the State of Delaware.
-3-
<PAGE> 75
THIS AGREEMENT is executed as of the day and year first above written.
CULLEN/FROST BANKERS, INC.
By:
---------------------------------------
Name:
Title:
CULLEN/FROST CAPITAL TRUST I
By:
---------------------------------------
Name:
Administrative Trustee
<PAGE> 76
Exhibit E
CULLEN/FROST CAPITAL TRUST I
8.42% CAPITAL SECURITY, SERIES A
This Capital Securities Certificate is a Book-Entry Capital Securities
Certificate within the meaning of the Trust Agreement hereinafter referred to
and is registered in the name of a Depositary or a nominee of a Depositary.
This Capital Securities Certificate is exchangeable for Capital Securities
Certificates registered in the name of a person other than the Depositary or
its nominee only in the limited circumstances described in the Trust Agreement
and may not be transferred except as a whole by the Depositary to a nominee of
the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary, except in the limited circumstances described in the
Trust Agreement.
Unless this Capital Security Certificate is presented by an authorized
representative of The Depository Trust Company, a New York Corporation ("DTC"),
to Cullen/Frost Capital Trust I or its agent for registration of transfer,
exchange or payment, and any Capital Security Certificate issued is registered
in the name of Cede & Co. or such other name as is requested by an authorized
representative of DTC (and any payment 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 A PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
<PAGE> 77
CERTIFICATE NUMBER NUMBER OF CAPITAL SECURITIES
P-
AGGREGATE LIQUIDATION AMOUNT
$
CUSIP NO.
CERTIFICATE EVIDENCING CAPITAL SECURITIES
OF
CULLEN/FROST CAPITAL TRUST I
8.42% CAPITAL SECURITIES, SERIES A
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
Cullen/Frost Capital Trust I, a statutory business trust formed under the
laws of the State of Delaware (the "Issuer Trust"), hereby certifies that Cede
& Co. (the "Holder") is the registered owner of capital securities of the Trust
representing a beneficial interest in the assets of the Trust and designated
the Cullen/Frost Capital Trust I 8.42% Capital Securities, Series A
(liquidation amount $1,000 per Capital Security) (the "Capital Securities").
The Capital Securities are transferable on the books and records of the Issuer
Trust, in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer as provided in
Section 5.5 of the Trust Agreement (as defined below). The designations,
rights, privileges, restrictions, preferences and other terms and provisions of
the Capital Securities are set forth in, and this certificate and the Capital
Securities represented hereby are issued and shall in all respects be subject
to the terms and provisions of, the Amended and Restated Trust Agreement of the
Issuer Trust, dated as of February 3, 1997, as the same may be amended from
time to time (the "Trust Agreement"), among Cullen/Frost Bankers, Inc. (the
"Corporation"), as Depositor, The Bank of New York, as Property Trustee, The
Bank of New York
-2-
<PAGE> 78
(Delaware), as Delaware Trustee, the Administrative Trustees named therein and
the Holders of Trust Securities, including the designation of the terms of the
Capital Securities as set forth therein. The Holder is entitled to the benefits
of the Guarantee Agreement, dated as of February 3, 1997 (the "Guarantee
Agreement"), by and between Cullen/Frost Bankers, Inc., as Guarantor, and The
Bank of New York, as Guarantee Trustee, to the extent provided therein.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder and by acceptance hereof
agrees to the provisions of (i) the Guarantee, (ii) the Junior Subordinated
Indenture, dated as of February 3, 1997 (the "Indenture"), between the
Corporation and The Bank of New York, as trustee, and (iii) the Registration
Rights Agreement, dated as of February 3, 1997 (the "Registration Rights
Agreement"), among the Corporation, the Issuer Trust and the initial purchasers
of the Capital Securities. The Issuer Trust will furnish a copy of the Trust
Agreement, the Guarantee Agreement, the Indenture and the Registration Rights
Agreement to the Holder without charge upon written request to the Issuer Trust
at its principal place of business or registered office.
Unless the certificate of authentication hereon has been executed by the
Property Trustee by manual signature, this Security shall not be entitled to
any benefit under the Trust Agreement, the Guarantee, the Indenture or the
Registration Rights Agreement or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, one of the Administrative Trustees of the Issuer Trust
has executed this certificate this day of , 199 .
CULLEN/FROST CAPITAL TRUST I
By:
-------------------------------------
Name:
Administrative Trustee
CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in
the within-mentioned Trust Agreement.
THE BANK OF NEW YORK,
as Property Trustee
By:
---------------------------------------
Authorized Signatory
Date of Authentication:
-3-
<PAGE> 79
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security 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 Issuer
Trust. The agent may substitute another to act for him or her.
Date:
--------------------
Signature:
- --------------------------------------------------------------------------------
(Sign exactly as your name appears on the other side of this Capital Security
Certificate)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
-4-
<PAGE> 80
Exhibit F
[FORM OF RESTRICTED SECURITIES CERTIFICATE]
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to Section 5.5(b) of the Trust Agreement)
[ ],
-------------------------
as Security Registrar
[address]
Re: 8.42% Capital Securities, Series A of Cullen/Frost
Capital Trust I
(the "Trust") (the "Capital Securities")
Reference is made to the Amended and Restated Trust Agreement,
dated as of February 3, 1997 (the "Trust Agreement"), among Cullen/Frost
Bankers, Inc., as Depositor, The Bank of New York, as Property Trustee, The
Bank of New York (Delaware), as Delaware Trustee, the Administrative Trustees
named therein and the Holders (as defined therein) from time to time. Terms
used herein and defined in the Trust Agreement or in Regulation S, Rule 144A or
Rule 144 under the U.S. Securities Act of 1933 (the "Securities Act") are used
herein as so defined.
This certificate relates to $_____________ aggregate
Liquidation Amount of Capital Securities, which are evidenced by the following
certificate(s) (the "Specified Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
CURRENTLY IN BOOK-ENTRY FORM: _____ Yes _____ No (check one)
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so.
Such beneficial owner or owners are referred to herein collectively as the
"Owner". If the Specified Securities are represented by a Book-Entry Capital
Securities Certificate, they are held through the Clearing Agency or a Clearing
Agency Participant in the name of the Undersigned, as or on behalf of the
Owner. If the Specified Securities are not represented by a Book-Entry Capital
Securities Certificate, they are registered in the name of the Undersigned, as
or on behalf of the Owner.
The Owner has requested that the Specified Securities be
transferred to a person (the "Transferee") who will take delivery in the form
of a Restricted Capital Security. In connection with such transfer, the Owner
hereby certifies that, unless such transfer is being effected pursuant to an
effective registration statement under the Securities Act, it is being
<PAGE> 81
effected in accordance with Rule 144A, Rule 904 or Rule 144 under the Securities
Act and all applicable securities laws of the states of the United States and
other jurisdictions. Accordingly, the Owner hereby further certifies as:
(1) Rule 144A Transfers. If the transfer is being
effected in accordance with Rule 144A:
(A) the Specified Securities are being
transferred to a person that the Owner and any person acting
on its behalf reasonably believe is a "qualified institutional
buyer" within the meaning of Rule 144A, acquiring for its own
account or for the account of a qualified institutional buyer;
and
(B) the Owner and any person acting on its behalf
have taken reasonable steps to ensure that the Transferee is
aware that the Owner may be relying on Rule 144A in connection
with the transfer; and
(2) Rule 904 Transfers. If the transfer is being
effected in accordance with Rule 904:
(A) the Owner is not a distributor of the
Securities, an affiliate of the Depositor or the Trust or any
such distributor or a person acting on behalf of any of the
foregoing;
(B) the offer of the Specified Securities was not
made to a person in the United States;
(C) either;
(i) at the time the buy order was
originated, the Transferee was outside the United
States or the Owner and any person acting on its
behalf reasonably believed that the Transferee was
outside the United States, or
(ii) the transaction is being executed
in, on or through the facilities of the Eurobond
market, as regulated by the Association of
International Bond Dealers, or another designated
offshore securities market and neither the Owner nor
any person acting on its behalf knows that the
transaction has been prearranged with a buyer in the
United States;
(D) no directed selling efforts have been made in
the United States by or on behalf of the Owner or any
affiliate thereof; and
(E) the transaction is not part of a plan or
scheme to evade the registration requirements of the
Securities Act.
F-2
<PAGE> 82
(3) Rule 144 Transfers. If the transfer is being
effected pursuant to Rule 144:
(A) the transfer is occurring after a holding
period of at least two years (computed in accordance with
paragraph (d) of Rule 144) has elapsed since the date the
Specified Securities were acquired from the Depositor or the
Trust or from an affiliate (as such term is defined in Rule
144) of the Depositor or the Trust, whichever is later, and is
being effected in accordance with the applicable amount,
manner of sale and notice requirements of paragraphs (e), (f)
and (h) of Rule 144;
(B) the transfer is occurring after a holding
period of at least three years has elapsed since the date the
Specified Securities were acquired from the Depositor or the
Trust or from an affiliate (as such term is defined in Rule
144) of the Depositor or the Trust, whichever is later, and
the Owner is not, and during the preceding three months has
not been, an affiliate of the Depositor or the Trust; or
(C) the Owner is a "qualified institutional
buyer" within the meaning of Rule 144A, and is transferring
the Securities to an institution that is an "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act in a transaction
exempt from the registration requirements of the Securities
Act.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Depositor, the Trust and the Initial
Purchasers.
Dated:
(Print the name of the Undersigned,
as such term is defined in the second
paragraph of this certificate.)
By:
Name:
Title:
(If the Undersigned is a corporation,
partnership or fiduciary, the title
of the person signing on behalf of
the Undersigned must be stated.)
F-3
<PAGE> 1
EXHIBIT 4(g)
================================================================================
CAPITAL SECURITIES GUARANTEE AGREEMENT
BY AND AMONG
CULLEN/FROST BANKERS, INC.,
as Guarantor
and
THE BANK OF NEW YORK,
as Guarantee Trustee
RELATING TO
CULLEN/FROST CAPITAL TRUST I
------------------------------
Dated as of , 1997
------------------------------
================================================================================
<PAGE> 2
CULLEN/FROST CAPITAL TRUST I
Certain Sections of this Guarantee Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Section of Section of
Trust Indenture Act Guarantee Agreement
- ------------------- -------------------
<S> <C>
310 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(c), 2.8
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1, 2.5, 3.2
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1, 3.2
315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(c)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d)
316 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1, 2.6, 5.4
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3, 5.7
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2
317 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
</TABLE>
________________
Note: This reconciliation and tie sheet shall not, for any purpose, be deemed
to be a part of the Guarantee Agreement.
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<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.2. List of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.3. Reports by the Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.4. Periodic Reports to the Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.5. Evidence of Compliance with Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.6. Events of Default; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.7. Event of Default; Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.8. Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.2. Certain Rights of Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.3. Compensation; Indemnity; Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1. Guarantee Trustee; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.2. Appointment, Removal and Resignation of the Guarantee Trustee . . . . . . . . . . . . . . . . . 10
ARTICLE V
GUARANTEE
SECTION 5.1. Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.2. Waiver of Notice and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.3. Obligations Not Affected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.4. Rights of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 5.5. Guarantee of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.6. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.7. Independent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VI
COVENANTS AND SUBORDINATION
SECTION 6.1. Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6.2. Pari Passu Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VII
TERMINATION
SECTION 7.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 8.2. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 8.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 8.4. Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 8.5. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 8.6. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 8.7. Limited Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
-iii-
<PAGE> 5
GUARANTEE AGREEMENT, dated as of , 1997, among CULLEN/FROST
BANKERS, INC., a Texas corporation (the "Guarantor"), having its principal
office at 100 West Houston Street, San Antonio, Texas 78205, 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
Capital Securities (as defined herein) of CULLEN/FROST CAPITAL TRUST I, a
Delaware statutory business trust (the "Issuer Trust").
RECITALS OF THE CORPORATION
WHEREAS, pursuant to an Amended and Restated Trust Agreement, dated as
of February 3, 1997 (the "Trust Agreement"), among Cullen/Frost Bankers, Inc.,
as Depositor, the Property Trustee, the Delaware Trustee and the Administrative
Trustees named therein and the holders from time to time of undivided
beneficial interests in the assets of the Issuer Trust, the Issuer Trust issued
$100,000,000 aggregate Liquidation Amount (as defined in the Trust Agreement)
of its 8.42% Capital Securities, Series A (liquidation amount $1,000 per
capital security) (the "Old Capital Securities"), representing beneficial
interests in the assets of the Issuer Trust and having the terms set forth in
the Trust Agreement; and
WHEREAS, the Old Capital Securities were issued by the Issuer Trust
and the proceeds thereof, together with the proceeds from the issuance of the
Issuer Trust's Common Securities (as defined herein), were used to purchase the
Debentures (as defined in the Trust Agreement) of the Guarantor, which
Debentures were deposited with The Bank of New York, as Property Trustee under
the Trust Agreement, as trust assets; and
WHEREAS, as an incentive for the Holders to purchase Capital
Securities, the Guarantor irrevocably and unconditionally agreed, to the extent
set forth in the Guarantee Agreement dated as of February 3, 1997 among the
Guarantor and the Guarantee Trustee, for the benefit of the Holders of the Old
Capital Securities (the "Old Guarantee"), to pay to the Holders of the Old
Capital Securities the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein.
WHEREAS, pursuant to the Registration Rights Agreement, dated as of
February 3, 1997 among the Guarantor, the Issuer Trust and the Initial
Purchasers named therein (the "Registration Rights Agreement"), the Guarantor
and the Issuer Trust agreed to file a registration statement (the "Registration
Statement") to exchange, inter alia, the Old Capital Securities for a like
amount of new capital securities (the "New Capital Securities", and together
with the Old Capital Securities, the "Capital Securities") and the Old Guarantee
for the Guarantee (as defined herein) for the benefit of the Holders of the
Capital Securities.
WHEREAS, the Guarantee will be substantially identical to the Old
Guarantee except that the Guarantee will be registered pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), and the Guarantee will not contain provisions restricting
transfer in the absence of registration under the Securities Act;
NOW, THEREFORE, in consideration of the purchase of Capital Securities
by each Holder, which purchase the Guarantor hereby acknowledges shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for
the benefit of the Holders from time to time.
<PAGE> 6
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions.
For all purposes of this Guarantee Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) The terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(b) All other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation";
(d) All accounting terms used but not defined herein have the meanings
assigned to them in accordance with United States generally accepted accounting
principles;
(e) Unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may be,
of this Guarantee Agreement; and
(f) The words "hereby", "herein", "hereof" and "hereunder" and other
words of similar import refer to this Guarantee Agreement as a whole and not to
any particular Article, Section or other subdivision.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Board of Directors" means the board of directors of the Guarantor or
the Executive Committee of the board of directors of the Guarantor (or any
other committee of the board of directors of the Guarantor performing similar
functions) or a committee designated by the board of directors of the Guarantor
(or such committee), comprised of two or more members of the board of directors
of the Guarantor or officers of the Guarantor, or both.
"Capital Securities" has the meaning specified in the recitals to this
Guarantee Agreement.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer Trust.
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<PAGE> 7
"Event of Default" means (i) a default by the Guarantor in any of its
payment obligations under this Guarantee Agreement or (ii) a default by the
Guarantor in any other obligation hereunder that remains unremedied for 30
days.
"Guarantee Agreement" means this Guarantee Agreement, as modified,
amended or supplemented from time to time.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Capital Securities, to the extent not
paid or made by or on behalf of the Issuer Trust: (i) any accumulated and
unpaid Distributions (as defined in the Trust Agreement) required to be paid on
the Capital Securities, to the extent the Issuer Trust shall have funds on hand
available therefor at such time; (ii) the Redemption Price (as defined in the
Trust Agreement) with respect to any Capital Securities called for redemption
by the Issuer Trust, to the extent the Issuer Trust shall have funds on hand
available therefor at such time; and (iii) upon a voluntary or involuntary
termination, winding-up or liquidation of the Issuer Trust, unless Debentures
are distributed to the Holders, the lesser of (a) the Liquidation Distribution
(as defined in the Trust Agreement) with respect to the Capital Securities, to
the extent that the Issuer Trust shall have funds on hand available therefor at
such time, and (b) the amount of assets of the Issuer Trust remaining available
for distribution to Holders on liquidation of the Issuer.
"Guarantee Trustee" means The Bank of New York, solely in its capacity
as Guarantee Trustee and not in its individual capacity, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee Agreement, and thereafter means each such
Successor Guarantee Trustee.
"Guarantor" has the meaning specified in the first paragraph of this
Guarantee Agreement.
"Holder" means any Holder (as defined in the Trust Agreement) of any
Capital Securities; provided, however, that in determining whether the holders
of the requisite percentage of Capital Securities have given any request,
notice, consent or waiver hereunder, "Holder" shall not include the Guarantor,
the Guarantee Trustee, or any Affiliate of the Guarantor or the Guarantee
Trustee.
"Indenture" means the Junior Subordinated Indenture, dated as of
February 3, 1997, between Cullen/Frost Bankers, Inc. and The Bank of New York,
as trustee, as the same may be modified, amended or supplemented from time to
time.
"Issuer Trust" has the meaning specified in the first paragraph of
this Guarantee Agreement.
"List of Holders" has the meaning specified in Section 2.2(a).
"Majority in Liquidation Amount of the Capital Securities" means,
except as provided by the Trust Indenture Act, Capital Securities representing
more than 50% of the aggregate Liquidation Amount (as defined in the Trust
Agreement) of all Capital Securities then Outstanding (as defined in the Trust
Agreement).
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman or a Vice Chairman of the Board of Directors
of such Person or the President or a Vice
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<PAGE> 8
President of such Person, and by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of the Guarantor, and delivered to the
Guarantee Trustee. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Guarantee
Agreement shall include:
(a) a statement by each officer signing the Officers' Certificate that
such officer has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by such officer in rendering the Officers'
Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of such officer, such
condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint-stock company, company,
limited liability company, trust, business trust, unincorporated association,
or government or any agency or political subdivision thereof, or any other
entity of whatever nature.
"Responsible Officer" means, with respect to the Guarantee Trustee,
any Senior Vice President, any Vice President, any Assistant Vice President,
the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer,
any Trust Officer or Assistant Trust Officer or any other officer of the
Corporate Trust Department of the Guarantee Trustee and also means, with
respect to a particular matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Agreement" means the Amended and Restated Trust Agreement of
the Issuer Trust referred to in the recitals to this Guarantee Agreement, as
modified, amended or supplemented from time to time.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this Guarantee Agreement was executed; provided,
however, that in the event the Trust Indenture Act of 1939 is amended after
such date, "Trust Indenture Act" means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended.
"Vice President," when used with respect to the Corporation, means any
duly appointed vice president, whether or not designated by a number or a word
or words added before or after the title "vice president."
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<PAGE> 9
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application.
Except as otherwise expressly provided herein, the Trust Indenture Act
shall apply as a matter of contract to this Guarantee Agreement for purposes of
interpretation, construction and defining the rights and obligations hereunder,
and this Guarantee Agreement, the Guarantor and the Guarantee Trustee shall be
deemed for all purposes hereof to be subject to and governed by the Trust
Indenture Act to the same extent as would be the case if this Guarantee
Agreement were qualified under that Act on the date hereof. Except as otherwise
expressly provided herein, if and to the extent that any provision of this
Guarantee Agreement limits, qualifies or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2. List of Holders.
(a) The Guarantor shall furnish or cause to be furnished to the
Guarantee Trustee (a) semiannually, on or before June 30 and December 31 of
each year, a list, in such form as the Guarantee Trustee may reasonably
require, of the names and addresses of the Holders (a "List of Holders") as of
a date not more than 15 days prior to the delivery thereof, and (b) at such
other times as the Guarantee Trustee may request in writing, within 30 days
after the receipt by the Guarantor of any such request, a List of Holders as of
a date not more than 15 days prior to the time such list is furnished, in each
case to the extent such information is in the possession or control of the
Guarantor and has not otherwise been received by the Guarantee Trustee in its
capacity as such. 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 the requirements of
Section 311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3. Reports by the Guarantee Trustee.
Within 60 days after May 15 of each year, commencing May 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. If this Guarantee Agreement
shall have been qualified under the Trust Indenture Act, the Guarantee Trustee
shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.
SECTION 2.4. Periodic Reports to the Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee and the Holders
such documents, reports and information, if any, as required by Section 314 of
the Trust Indenture Act and the compliance certificate required by Section 314
of the Trust Indenture Act, in the form, in the manner and at the times
required by Section 314 of the Trust Indenture Act, provided that such
documents, reports and information shall be required to be provided to the
Securities and Exchange Commission only if this Guarantee Agreement shall have
been qualified under the Trust Indenture Act.
-5-
<PAGE> 10
SECTION 2.5. Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this
Guarantee Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer of the Guarantor pursuant to Section 314(c)(1) may be given
in the form of an Officers' Certificate.
SECTION 2.6. Events of Default; Waiver.
The Holders of at least a Majority in Liquidation Amount of the
Capital Securities may, by vote, on behalf of the Holders of all the Capital
Securities, waive any past default or Event of Default and its consequences.
Upon such waiver, any such default or Event of Default shall cease to exist,
and any default or Event of Default arising therefrom shall be deemed to have
been cured, for every purpose of this Guarantee Agreement, 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, transmit by mail, first class postage prepaid, to the
Holders, notice of any such Event of Default known to the Guarantee Trustee,
unless such Event of Default has been cured before the giving of such notice,
provided that, except in the case of a default in the payment of a Guarantee
Payment, the Guarantee Trustee shall be protected in withholding such notice if
and so long as the board of directors, the executive committee or a trust
committee of directors and/or Responsible Officers of the Guarantee Trustee in
good faith determines that the withholding of such notice is in the interests
of the Holders.
(b) The Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default unless the Guarantee Trustee shall have received written
notice, or a Responsible Officer charged with the administration of this
Guarantee Agreement shall have obtained written notice, of such Event of
Default.
SECTION 2.8. Conflicting Interests.
The Trust Agreement and the Indenture shall be deemed to be
specifically described in this Guarantee Agreement for the purposes of clause
(i) of the first proviso contained in Section 310(b) of the Trust Indenture
Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee Trustee
for the benefit of the Holders, and the Guarantee Trustee shall not transfer
this Guarantee Agreement to any Person except
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<PAGE> 11
to a Successor Guarantee Trustee on acceptance by such Successor Guarantee
Trustee of its appointment to act as Guarantee Trustee hereunder. The right,
title and interest of the Guarantee Trustee, as such, hereunder shall
automatically vest in any Successor Guarantee Trustee, upon acceptance by such
Successor Guarantee Trustee of its appointment hereunder, and such vesting and
cessation of title shall be effective whether or not conveyancing documents
have been executed and delivered pursuant to the appointment of such Successor
Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the
Holders.
(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 Guarantee Agreement (including pursuant to Section 2.1), and no implied
covenants shall be read into this Guarantee Agreement against the Guarantee
Trustee. If an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6), the Guarantee Trustee shall exercise such of the
rights and powers vested in it by this Guarantee Agreement, and use the same
degree of care and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(d) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action, its
own negligent failure to act or its own wilful misconduct, except that:
(i) Prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Guarantee
Trustee shall be determined solely by the express provisions
of this Guarantee Agreement (including pursuant to Section
2.1), and the Guarantee Trustee shall not be liable except for
the performance of such duties and obligations as are
specifically set forth in this Guarantee Agreement (including
pursuant to Section 2.1); and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or
opinions furnished to the Guarantee Trustee and conforming to
the requirements of this Guarantee Agreement; but in the case
of any such certificates or opinions that by any provision
hereof or of the Trust Indenture Act are specifically required
to be furnished to the Guarantee Trustee, the Guarantee
Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Guarantee Agreement.
(ii) The Guarantee Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the
Guarantee Trustee, unless it shall be proved that the Guarantee
Trustee was negligent in ascertaining the pertinent facts upon which
such judgment was made.
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<PAGE> 12
(iii) The Guarantee Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in Liquidation Amount of the 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 Guarantee Agreement.
(iv) Subject to Section 3.1(b), no provision of this Guarantee
Agreement shall require the Guarantee Trustee to expend or risk its
own funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its
rights or powers, if the Guarantee Trustee shall have reasonable
grounds for believing that the repayment of such funds or liability is
not reasonably assured to it under the terms of this Guarantee
Agreement or adequate indemnity against such risk or liability is not
reasonably assured to it.
SECTION 3.2. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document reasonably believed by it to
be genuine and to have been signed, sent or presented by the proper
party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Guarantee Agreement shall be sufficiently evidenced by an
Officers' Certificate unless otherwise prescribed herein.
(iii) Whenever, in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting to take
any action hereunder, the Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on
its part, request and rely upon an Officers' Certificate which, upon
receipt of such request from the Guarantee Trustee, shall be promptly
delivered by the Guarantor.
(iv) The Guarantee Trustee may consult with legal counsel, and
the written advice or opinion of such legal counsel with respect to
legal matters shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or opinion.
Such legal counsel may be legal counsel to the Guarantor or any of its
Affiliates and may be one of its employees. The Guarantee Trustee
shall have the right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of competent
jurisdiction.
(v) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee
Agreement at the request or direction of any Holder unless such Holder
shall have provided to the Guarantee Trustee such adequate security
and
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indemnity as would satisfy a reasonable person in the position of the
Guarantee Trustee against the costs, expenses (including attorneys'
fees and expenses) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable
advances as may be requested by the Guarantee Trustee; provided that
nothing contained in this Section 3.2(a)(v) 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
Guarantee Agreement.
(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through its agents or attorneys, and the Guarantee Trustee shall
not be responsible for any misconduct or negligence on the part of any
such agent or attorney appointed by it with due care hereunder.
(viii) Whenever in the administration of this Guarantee
Agreement the Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking
any other action hereunder, the Guarantee Trustee (A) may request
instructions from the Holders, (B) may refrain from enforcing such
remedy or right or taking such other action until such instructions
are received, and (C) shall be protected in acting in accordance with
such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to impose
any duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty to act in accordance with such power and
authority.
SECTION 3.3. Compensation; Indemnity; Fees.
The Guarantor agrees:
(a) to pay to the Guarantee Trustee from time to time such
compensation for all services rendered by it hereunder as may be
agreed in writing by the Guarantor and the Guarantee Trustee from time
to time (which compensation shall not be limited by any provision of
law in regard to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Guarantee Trustee upon request for all reasonable
expenses, disbursements and advances incurred or made by the Guarantee
Trustee in accordance with any provision of this Guarantee Agreement
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel),
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except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(c) to indemnify the Guarantee Trustee for, and to hold it
harmless against, any loss, liability or expense incurred without
negligence, wilful misconduct or bad faith on the part of the
Guarantee Trustee, arising out of or in connection with the acceptance
or administration of this Guarantee Agreement, including the costs and
expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or
duties hereunder.
The Guarantee Trustee will not claim or exact any lien or charge on any
Guarantee Payments as a result of any amount due to it under this Guarantee
Agreement.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1. Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of
at least $50,000,000, and shall be a corporation meeting the
requirements of Section 310(a) of the Trust Indenture Act. If such
corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of its supervising or examining
authority, then, for the purposes of this Section 4.1 and to the
extent permitted by the Trust Indenture Act, the combined capital and
surplus of such corporation shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Guarantee Trustee shall cease to be eligible to
so act under Section 4.1(a), the Guarantee Trustee shall immediately resign in
the manner and with the effect set out in Section 4.2.
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.
SECTION 4.2. Appointment, Removal and Resignation of the Guarantee
Trustee.
(a) Subject to Section 4.2(c), the Guarantee Trustee may be appointed
or removed at any time by the action of the Holders of a Majority in
Liquidation Amount of the Capital Securities delivered to the Guarantee Trustee
and the Guarantor (i) for cause or (ii) if a Debenture Event of Default (as
defined in the Trust Agreement) shall have occurred and be continuing at any
time.
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(b) Subject to Section 4.2(c), the Guarantee Trustee may resign from
office (without need for prior or subsequent accounting) by giving written
notice thereof to the Holders and the Guarantor and by appointing a successor
Guarantee Trustee. The Guarantee Trustee shall appoint a successor by
requesting from at least three Persons meeting the requirements of Section
4.1(a) their expenses and charges to serve as the Guarantee Trustee, and
selecting the Person who agrees to the lowest expenses and charges.
(c) The Guarantee Trustee appointed hereunder shall hold office until
a Successor Guarantee Trustee shall have been appointed and shall have accepted
such appointment. No removal or resignation of a Guarantee Trustee shall be
effective 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 and, in the case of any
resignation, 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 to the Holders and the Guarantor of a notice of resignation, the
resigning Guarantee Trustee may petition, at the expense of the Guarantor, 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) If a resigning Guarantee Trustee shall fail to appoint a
successor, or if a Guarantee Trustee shall be removed or become incapable of
acting as Guarantee Trustee and a replacement shall not be appointed prior to
such resignation or removal, or if a vacancy shall occur in the office of
Guarantee Trustee for any cause, the Holders of the Capital Securities, by the
action of the Holders of record of not less than 25% in aggregate Liquidation
Amount (as defined in the Trust Agreement) of the Capital Securities then
Outstanding (as defined in the Trust Agreement) delivered to such Guarantee
Trustee, may appoint a Successor Guarantee Trustee or Trustees. If no successor
Guarantee Trustee shall have been so appointed by the Holders of the Capital
Securities and accepted appointment, any Holder, on behalf of such Holder and
all others similarly situated, or any other Guarantee Trustee, may petition any
court of competent jurisdiction for the appointment of a successor Guarantee
Trustee.
ARTICLE V
GUARANTEE
SECTION 5.1. Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by or on behalf of the Issuer Trust), as and when due, regardless of any
defense, right of set-off or counterclaim that the Issuer Trust may have or
assert, except the defense of payment. The Guarantor's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
the Guarantor to the Holders or by causing the Issuer Trust to pay such amounts
to the Holders.
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SECTION 5.2. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the
Guarantee Trustee, the Issuer Trust or any other Person before proceeding
against the Guarantor, protest, notice of nonpayment, notice of dishonor,
notice of redemption and all other notices and demands.
SECTION 5.3. Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee Agreement shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer Trust of any express or
implied agreement, covenant, term or condition relating to the Capital
Securities to be performed or observed by the Issuer Trust;
(b) the extension of time for the payment by the Issuer Trust
of all or any portion of the Distributions (other than an extension of
time for payment of Distributions that results from the extension of
any interest payment period on the Debentures as provided in the
Indenture), Redemption Price, Liquidation Distribution or any other
sums payable under the terms of the Capital Securities or the
extension of time for the performance of any other obligation under,
arising out of, or in connection with, the Capital Securities;
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to the
terms of the Capital Securities, or any action on the part of the
Issuer Trust granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of
debt of, or other similar proceedings affecting, the Issuer Trust or
any of the assets of the Issuer Trust;
(e) any invalidity of, or defect or deficiency in, the Capital
Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor
(other than payment of the underlying obligation), it being the intent
of this Section 5.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain the
consent of, the Guarantor with respect to the happening of any of the
foregoing.
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SECTION 5.4. Rights of Holders.
The Guarantor expressly acknowledges that: (i) this Guarantee
Agreement will be deposited with the Guarantee Trustee to be held for the
benefit of the Holders; (ii) the Guarantee Trustee has the right to enforce
this Guarantee Agreement on behalf of the Holders; (iii) 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 this Guarantee Agreement or
exercising any trust or power conferred upon the Guarantee Trustee under this
Guarantee Agreement; and (iv) any Holder may institute a legal proceeding
directly against the Guarantor to enforce its rights under this Guarantee
Agreement without first instituting a legal proceeding against the Guarantee
Trustee, the Issuer Trust or any other Person.
SECTION 5.5. Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment
of the Guarantee Payments in full (without duplication of amounts theretofore
paid by the Issuer Trust) or upon the distribution of Debentures to Holders as
provided in the Trust Agreement.
SECTION 5.6. Subrogation.
The Guarantor shall be subrogated to all rights (if any) of the
Holders against the Issuer Trust in respect of any amounts paid to the Holders
by the Guarantor under this Guarantee Agreement; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any rights which it may acquire by way
of subrogation or any indemnity, reimbursement or other agreement, in all cases
as a result of payment under this Guarantee Agreement, if, at the time of any
such payment, any amounts are due and unpaid under this Guarantee Agreement. If
any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guarantor agrees to hold such amount in trust for the Holders and
to pay over such amount to the Holders.
SECTION 5.7. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer Trust with respect to the 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 Guarantee
Agreement notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
COVENANTS AND SUBORDINATION
SECTION 6.1. Subordination.
The obligations of the Guarantor under this Guarantee Agreement will
constitute unsecured obligations of the Guarantor and will rank subordinate and
junior in right of payment to all Senior
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Indebtedness (as defined in the Indenture) of the Guarantor to the extent and
in the manner set forth in the Indenture with respect to the Debentures, and
the provisions of Article XIII of the Indenture will apply, mutatis mutandis,
to the obligations of the Guarantor hereunder. The obligations of the Guarantor
hereunder do not constitute Senior Indebtedness (as defined in the Indenture)
of the Guarantor.
SECTION 6.2. Pari Passu Guarantees.
The obligations of the Guarantor under this Guarantee Agreement shall
rank pari passu with the obligations of the Guarantor under (i) any similar
guarantee agreements issued by the Guarantor on behalf of the holders of
preferred or capital securities issued by any Issuer Trust (as defined in the
Indenture), (ii) the Indenture and the Securities (as defined therein) issued
thereunder; (iii) the Expense Agreement (as defined in the Trust Agreement) and
any similar expense agreements entered into by the Guarantor in connection with
the offering of Capital Securities (as defined in the Indenture) by any Issuer
Trust (as defined in the Indenture), and (iv) any other security, guarantee or
other agreement or obligation that is expressly stated to rank pari passu with
the obligations of the Guarantor under this Guarantee Agreement or with any
obligation that ranks pari passu with the obligations of the Guarantor under
this Guarantee Agreement.
ARTICLE VII
TERMINATION
SECTION 7.1. Termination.
This Guarantee Agreement shall terminate and be of no further force
and effect upon (i) full payment of the Redemption Price (as defined in the
Trust Agreement) of all Capital Securities, (ii) the distribution of Debentures
to the Holders in exchange for all of the Capital Securities or (iii) full
payment of the amounts payable in accordance with Article IX of the Trust
Agreement upon liquidation of the Issuer Trust. Notwithstanding the foregoing,
this Guarantee Agreement will continue to be effective or will be reinstated,
as the case may be, if at any time any Holder is required to repay any sums
paid with respect to Capital Securities or this Guarantee Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Successors and Assigns.
All guarantees and agreements contained in this Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the Capital
Securities then outstanding. Except in connection with a consolidation, merger
or sale involving the Guarantor that is permitted under Article VIII of the
Indenture and pursuant to which the successor or assignee agrees in writing to
perform the Guarantor's obligations hereunder, the Guarantor shall not assign
its obligations hereunder, and any purported assignment other than in
accordance with this provision shall be void.
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SECTION 8.2. Amendments.
Except with respect to any changes that do not adversely affect the
rights of the Holders in any material respect (in which case no consent of the
Holders will be required), this Guarantee Agreement may only be amended with
the prior approval of the Holders of not less than a Majority in Liquidation
Amount of the Capital Securities. The provisions of Article VI of the Trust
Agreement concerning meetings of the Holders shall apply to the giving of such
approval.
SECTION 8.3. Notices.
Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied or mailed by first class mail as follows:
(a) if given to the Guarantor, to the address or telecopy number set
forth below or such other address or telecopy number as the Guarantor may give
notice to the Guarantee Trustee and the Holders:
Cullen/Frost Bankers, Inc.
100 West Houston Street
San Antonio, Texas 78205
Attention: Phillip D. Green
Telecopy: 210-220-4117
(b) if given to the Guarantee Trustee, at the Issuer Trust's address
or telecopy number set forth below or such other address or telecopy number as
the Guarantee Trustee may give notice to the Guarantor and Holders:
The Bank of New York
101 Barclay Street, Floor 21W
New York, New York 10286
Attention: Corporate Trust Administration
Telecopy: 212-815-5915
with a copy to:
Cullen/Frost Capital Trust I
c/o The Bank of New York (Delaware)
White Clay Center, Route 273
Newark, Delaware 19711
Attention: Corporate Trust Department
Telecopy: 302-454-6179
(c) if given to any Holder, at the address set forth on the books and
records of the Issuer Trust.
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All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 8.4. Benefit.
This Guarantee Agreement is solely for the benefit of the Holders and
is not separately transferable from the Capital Securities.
SECTION 8.5. Governing Law.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 8.6. Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
SECTION 8.7. Limited Liability.
The Holders of the Trust Securities, in their capacities as such,
shall not be personally liable for any liabilities or obligations of the Issuer
Trust arising out of this Agreement, and the parties hereto hereby agree that
the Holders of the Trust Securities, in their capacities as such, shall be
entitled to the same limitation of personal liability extended to stockholders
of private corporations for profit organized under the General Corporation Law
of the State of Delaware.
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IN WITNESS WHEREOF, the parties hereto have executed this Guarantee
Agreement as of the day and year first above written.
CULLEN/FROST BANKERS, INC.
By:
-----------------------------
Name:
Title:
THE BANK OF NEW YORK,
as Guarantee Trustee
By:
-----------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 4(h)
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of February 3, 1997, among
Cullen/Frost Bankers, Inc., a Texas corporation (the "Guarantor"), Cullen/Frost
Capital Trust I, a Delaware statutory business trust (the "Trust"), and the
Purchasers of the 8.42% Capital Securities, Series A, of the Trust, which are
guaranteed by the Guarantor.
1. Certain Definitions.
For purposes of this Registration Rights Agreement, the following terms
shall have the following respective meanings:
(a) "Administrative Trustees" shall mean the Administrative Trustees
named under the Trust Agreement.
(b) "Capital Securities" shall mean the 8.42% Capital Securities,
Series A, Liquidation Amount $1,000 per Capital Security, to be issued
under the Trust Agreement and sold to the Purchasers, and securities issued
in exchange therefor, other than Debentures, or in lieu thereof pursuant to
the Trust Agreement.
(c) "Closing Date" shall mean the date on which the Capital Securities
are initially issued.
(d) "Commission" shall mean the Securities and Exchange Commission, or
any other federal agency at the time administering the Exchange Act or the
Securities Act, whichever is the relevant statute for the particular
purpose.
(e) "Debentures" shall mean the 8.42% Junior Subordinated Deferrable
Interest Debentures due February 1, 2027 of the Guarantor to be issued
under the Indenture, and securities issued in exchange therefor or in lieu
thereof pursuant to the Indenture.
(f) "Effective Time", in the case of (i) an Exchange Offer, shall mean
the time and date as of which the Commission declares the Exchange Offer
Registration Statement effective or as of which the Exchange Offer
Registration Statement otherwise becomes effective and (ii) a Shelf
Registration, shall mean the time and date as of which the Commission
declares the Shelf Registration effective or as of which the Shelf
Registration otherwise becomes effective.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, or
any successor thereto, as the same shall be amended from time to time.
(h) "Exchange Offer" shall have the meaning assigned thereto in
Section 2(a) hereof.
(i) "Exchange Offer Registration Statement" shall have the meaning
assigned thereto in Section 2(a) hereof.
(j) "Exchange Registration" shall have the meaning assigned thereto in
Section 3(f) hereof.
(k) "Exchange Securities" shall have the meaning assigned thereto in
Section 2(a) hereof.
<PAGE> 2
(l) "Guarantee" shall mean the guarantee of the Capital Securities by
the Guarantor under the Guarantee Agreement, dated as of February 3, 1997,
between the Guarantor and The Bank of New York, as Guarantee Trustee.
(m) The term "holder" shall mean the Purchasers for so long as any of
them owns any Registrable Securities, and such of their respective
successors and assigns who acquire Registrable Securities, directly or
indirectly, from such persons or from any successor or assign of such
persons, in each case for so long as such person owns any Registrable
Securities.
(n) "Indenture" shall mean the Indenture, dated as of February 3,
1997, between the Guarantor and The Bank of New York, as Trustee, as the
same shall be amended from time to time.
(o) "Liquidation Amount" shall mean the stated amount of $1,000 per
Trust Security.
(p) The term "person" shall mean a corporation, association,
partnership, organization, business, individual, government or political
subdivision thereof or governmental agency.
(q) "Purchase Agreement" shall mean the Purchase Agreement, dated as
of February 3, 1997, among the Purchasers, the Trust and the Guarantor.
(r) "Purchasers" shall mean the Purchasers named in Schedule I to the
Purchase Agreement.
(s) "Registrable Securities" shall mean the Securities; provided,
however, that such Securities shall cease to be Registrable Securities when
(i) in the circumstances contemplated by Section 2(a) hereof, such
Securities have been exchanged for Exchange Securities in an Exchange Offer
as contemplated in Section 2(a) (provided that any Exchange Securities
received by a broker-dealer in an Exchange Offer in exchange for
Registrable Securities that were not acquired by the broker-dealer directly
from the Guarantor will also be Registerable Securities through and
including the earlier of the 180th day after the Exchange Offer is
completed or such time as such broker-dealer no longer owns such Exchange
Securities); (ii) in the circumstances contemplated by Section 2(b) hereof,
a registration statement registering such Securities under the Securities
Act has been declared or becomes effective and such Securities have been
sold or otherwise transferred by the holder thereof pursuant to such
effective registration statement; (iii) such Securities are sold pursuant
to Rule 144 under circumstances in which any legend borne by such
Securities relating to restrictions on transferability thereof, under the
Securities Act or otherwise, is removed or such Securities are eligible to
be sold pursuant to paragraph (k) of Rule 144; or (iv) such Securities
shall cease to be outstanding.
(t) "Registration Default" shall have the meaning assigned thereto in
Section 2(c) hereof.
(u) "Registration Default Interest" shall have the meaning assigned
thereto in Section 2(c) hereof.
(v) "Registration Default Distributions" shall have the meaning
assigned thereto in Section 2(c).
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<PAGE> 3
(w) "Registration Expenses" shall have the meaning assigned thereto in
Section 4 hereof.
(x) "Resale Period" shall have the meaning assigned thereto in
Section 2(a) hereof.
(y) "Restricted Holder" shall mean (i) a holder that is an affiliate
of the Guarantor within the meaning of Rule 405, (ii) a holder who acquires
Exchange Securities outside the ordinary course of such holder's business
or (iii) a holder who has arrangements or understandings with any person to
participate in the Exchange Offer for the purpose of distributing Exchange
Securities.
(z) "Rule 144," "Rule 405" and "Rule 415" shall mean, in each case,
such rule promulgated under the Securities Act.
(aa) "Securities" shall mean, collectively, the Capital Securities,
the Guarantee and the Debentures.
(ab) "Securities Act" shall mean the Securities Act of 1933, or any
successor thereto, as the same shall be amended from time to time.
(ac) "Shelf Registration" shall have the meaning assigned thereto in
Section 2(b) hereof.
(ad) "Trust Agreement" shall mean the Amended and Restated Trust
Agreement, dated as of February 3, 1997, among the Guarantor, the trustees
named therein and the holders of Securities issued thereunder.
(ae) "Trust Indenture Act" shall mean the Trust Indenture Act of 1939,
or any successor thereto, as the same shall be amended from time to time.
(af) "Trust Securities" shall mean collectively the Capital Securities
and the Common Securities to be issued under the Trust Agreement to the
Guarantor.
Unless the context otherwise requires, any reference herein to a
"Section" or "clause" refers to a Section or clause, as the case may be, of
this Registration Rights Agreement, and the words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Registration Rights
Agreement as a whole and not to any particular Section or other subdivision.
Unless the context otherwise requires, any reference to a statute, rule or
regulation refers to the same (including any successor statute, rule or
regulation thereto) as it may be amended from time to time.
2. Registration Under the Securities Act.
(a) Except as set forth in Section 2(b) below, the Guarantor and the Trust
agree to use their reasonable best efforts to file under the Securities Act
within 150 days after the Closing Date, a registration statement (the "Exchange
Offer Registration Statement") relating to an offer to exchange (the "Exchange
Offer") any and all of the Securities for a like aggregate amount of capital
securities issued by the Trust and guaranteed by the Guarantor and underlying
junior subordinated deferrable interest debentures of the Guarantor, which
capital securities, guarantee and debentures are identical to the Capital
Securities, the Guarantee and the Debentures, respectively (and are entitled to
the benefits of trust indentures which have been qualified under the Trust
Indenture Act) except that they have been registered pursuant
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<PAGE> 4
to an effective registration statement under the Securities Act, do not contain
restrictions on transfers and do not contain provisions for the additional
interest and additional distributions contemplated in Section 2(c) below (such
new securities hereinafter called "Exchange Securities"). The Guarantor and
the Trust agree to use their reasonable best efforts to cause the Exchange
Offer Registration Statement to become effective under the Securities Act
within 180 days after the Closing Date. The Exchange Offer will be registered
under the Securities Act on the appropriate form and will comply with all
applicable tender offer rules and regulations under the Exchange Act. The
Guarantor and the Trust further agree to use their reasonable best efforts to
commence and complete the Exchange Offer promptly after the Exchange Offer
Registration Statement has become effective, hold the Exchange Offer open for
at least 30 days and exchange Exchange Securities for all Securities that have
been properly tendered and not withdrawn on or prior to the expiration of the
Exchange Offer. The Exchange Offer will be deemed to have been completed only
if the Exchange Securities received by holders other than Restricted Holders in
the Exchange Offer for Securities are, upon receipt, transferable by each such
holder without restriction under the Securities Act and the Exchange Act and
without material restrictions under the blue sky or securities laws of a
substantial majority of the States of the United States of America. The
Exchange Offer shall be deemed to have been completed upon the earlier to occur
of (i) the Guarantor and the Trust having exchanged the Exchange Securities for
all outstanding Securities pursuant to the Exchange Offer and (ii) the
Guarantor having exchanged, pursuant to the Exchange Offer, Exchange Securities
for all Securities that have been properly tendered and not withdrawn before
the expiration of the Exchange Offer, which shall be on a date that is at least
30 days following the commencement of the Exchange Offer. The Guarantor and the
Trust, agree (x) to include in the registration statement a prospectus for use
in connection with any resales of Exchange Securities by a holder that is a
broker-dealer, other than resales of Exchange Securities received by a
broker-dealer pursuant to the Exchange Offer in exchange for Registrable
Securities acquired by such broker-dealer directly from the Trust, and (y) to
keep the Exchange Offer Registration Statement effective for a period (the
"Resale Period") beginning when Exchange Securities are first issued in the
Exchange Offer and ending upon the earlier of (i) either (a) the expiration of
the 180th day after the Exchange Offer has been completed or (b) in the event
the Guarantor and the Trust have at any time notified any broker-dealers
pursuant to Section 3(f)(iii) hereof, the day beyond the 180th day after the
Exchange Offer has been completed that reflects an additional period of days
equal to the number of days during all of the periods from and including the
dates the Guarantor and the Trust give notice pursuant to Section 3(f)(iii)(F)
hereof to and including the date when broker-dealers receive an amended or
supplemented prospectus necessary to permit resales of Exchange Securities or
to and including the date on which the Guarantor and the Trust give notice that
the resale of Exchange Securities under the Exchange Offer Registration
Statement may resume or (ii) such time as such broker-dealers no longer own any
Registrable Securities. With respect to such registration statement, each
broker-dealer that holds Exchange Securities received in an Exchange Offer in
exchange for Registerable Securities not acquired by it directly from the
Guarantor shall have the benefit of the rights of indemnification and
contribution set forth in Section 6 hereof.
(b) If (i) prior to the consummation of the Exchange Offer existing
applicable law or Commission interpretations are changed such that the capital
securities, related guarantee of the Guarantor and underlying debentures of the
Guarantor to be received by holders other than Restricted Holders in the
Exchange Offer for Registrable Securities are not or would not be, upon
receipt, transferable by each such holder without restriction under the
Securities Act, (ii) the Exchange Offer Registration Statement is not declared
effective within 180 days of the Closing Date, (iii) the Guarantor has received
an opinion of counsel, rendered by a law firm having a recognized national tax
practice, to the effect that, as a result of the consummation
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<PAGE> 5
of the Exchange Offer, there is more than an insubstantial risk that (a) the
Trust is, or will be, subject to United States federal income tax with respect
to income received or accrued on the Debentures, (b) interest payable by the
Guarantor on the Debentures is not, or will not be, deductible by the
Guarantor, in whole or in part, for United States federal income tax purposes,
or (c) the Trust is, or will be, subject to more than a de minimis amount of
other taxes, duties or other governmental charges, then in addition to or in
lieu of conducting the Exchange Offer contemplated by Section 2(a), the
Guarantor and the Trust shall file under the Securities Act as promptly as
practicable a "shelf" registration statement providing for the registration of,
and the sale on a continuous or delayed basis by the holders of, all of the
Registrable Securities, pursuant to Rule 415 or any similar rule that may be
adopted by the Commission (the "Shelf Registration"). The Administrative
Trustees will promptly deliver to the holders of the Capital Securities, the
Property Trustee and the Delaware Trustee, or the Guarantor will promptly
deliver to the holders of the Debentures, if not the Trust, written notice that
the Guarantor and the Trust will be complying with the provisions of this
Section 2(b). The Guarantor and the Trust agree to use their reasonable best
efforts to cause the Shelf Registration to become or be declared effective and
to keep such Shelf Registration continuously effective for a period ending on
the earlier of (i) either (x) the third anniversary of the Closing Date or (y)
in the event the Guarantor and the Trust have at any time suspended the use of
the prospectus contained in the Shelf Registration pursuant to Section 3(c)
hereof, the date beyond the third anniversary of the Closing Date that reflects
an additional period of days equal to the number of days during all of the
periods from and including the dates the Guarantor and the Trust give notice of
such suspension pursuant to Section 3(c) to and including the date when holders
of Registrable Securities receive an amended or supplemented prospectus
necessary to permit resales as Registrable Securities under the Registration
Shelf or to and including the date on which the Guarantor and Trust give notice
that the resale to Registrable Securities may resume or (ii) such time as there
are no longer any Registrable Securities outstanding. The Guarantor and the
Trust further agree to supplement or make amendments to the Shelf Registration,
as and when required by the rules, regulations or instructions applicable to
the registration form used by the Guarantor and the Trust for such Shelf
Registration or by the Securities Act or rules and regulations thereunder for
shelf registration, and the Guarantor and the Trust agree to furnish to the
holders of the Registrable Securities copies of any such supplement or
amendment prior to its being used or promptly following its filing with the
Commission.
(c) If the Guarantor or the Trust fail to comply with this Registration
Rights Agreement or if the Exchange Offer Registration Statement or the Shelf
Registration Statement fails to become effective (any such event a
"Registration Default"), then, as liquidated damages, registration default
interest (the "Registration Default Interest") shall become payable in respect
of the Debentures, and corresponding registration default Distributions (the
"Registration Default Distributions"), shall become payable on the Trust
Securities as follows:
(i) if (A) neither the Exchange Offer Registration Statement nor a
Shelf Registration Statement is filed with the Commission on or prior to
the 150th day after the Closing Date or (B) notwithstanding that the
Guarantor and the Trust have consummated or will consummate an Exchange
Offer, the Guarantor and the Trust are required to file a Shelf
Registration and such Shelf Registration is not filed on or prior to the
date required by this Registration Rights Agreement, then commencing on the
day after either such required filing date, Registration Default Interest
shall accrue on the principal amount of the Debentures, and Registration
Default Distributions shall accumulate on the Liquidation Amount of the
Trust Securities, each at a rate of 0.25% per annum; or
(ii) if (A) neither the Exchange Offer Registration Statement nor a
Shelf Registration is declared effective by the Commission on or prior to
the 30th day after the applicable required filing date or (B)
notwithstanding that the Guarantor and the Trust have consummated or will
consummate an Exchange Offer, the Guarantor and the Trust are
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<PAGE> 6
required to file a Shelf Registration and such Shelf Registration is not
declared effective by the Commission on or prior to the 30th day after the
date such Shelf Registration was required to be filed, then commencing on
the 31st day after the applicable required filing date, Registration
Default Interest shall accrue on the principal amount of the Debentures,
and Registration Default Distributions shall accumulate on the Liquidation
Amount of the Trust Securities, each at a rate of 0.25% per annum; or
(iii) if (A) the Trust and the Guarantor have not exchanged Exchange
Securities for all Securities validly tendered, in accordance with the
terms of the Exchange Offer on or prior to the 30th day after the date on
which the Exchange Offer Registration Statement was declared effective or
(B) if applicable, the Shelf Registration has been declared effective and
such Shelf Registration ceases to be effective at any time prior to the
third anniversary of the Closing Date (other than after such time as there
are no longer any Registrable Securities), then Registration Default
Interest shall accrue on the principal amount of Debentures, and
Registration Default Distributions shall accumulate on the Liquidation
Amount of the Trust Securities, each at a rate of 0.25% per annum
commencing on (x) the 31st day after such effective date, in the case of
(A) above, or (y) the day such Shelf Registration ceases to be effective in
the case of (B) above;
provided, however, that neither the Registration Default Interest rate on the
Debentures, nor the Registration Default Distributions rate on the Liquidation
Amount of the Trust Securities, shall exceed in the aggregate 0.25% per annum;
provided, further, however, that (1) upon the filing of the Exchange Offer
Registration Statement or a Shelf Registration (in the case of clause (i)
above), (2) upon the effectiveness of the Exchange Offer Registration Statement
or a Shelf Registration (in the case of clause (ii) above), or (3) upon the
exchange of Exchange Securities for all securities tendered (in the case of
clause (iii) (A) above), or upon the effectiveness of the Shelf Registration
which had ceased to remain effective (in the case of clause (iii) (B) above),
Registration Default Interest on the Debentures, and Registration Default
Distributions on the Liquidation Amount of the Trust Securities as a result of
such clause (or the relevant subclause thereof), as the case may be, shall
cease to accrue.
(d) Any reference herein to a registration statement shall be deemed to
include any document incorporated therein by reference as of the applicable
Effective Time and any reference herein to any post-effective amendment to a
registration statement shall be deemed to include any document incorporated
therein by reference as of a time after such Effective Time.
(e) Notwithstanding any other provisions of this Registration Rights
Agreement, in the event that Debentures are distributed to holders of Capital
Securities in liquidation of the Trust pursuant to the Trust Agreement (a) all
references in this Section 2 and Section 3 to Securities, Registrable
Securities and Exchange Securities shall not include the Capital Securities and
Guarantee or Capital Securities and Guarantee issued or to be issued in
exchange therefor in the Exchange Offer, (ii) all requirements for action to be
taken by the Trust in this Section 2 and Section 3 shall cease to apply and all
requirements for action to be taken by the Guarantor in this Section 2 and
Section 3 shall apply to Debentures and Debentures issued or to be issued in
exchange therefor in the Exchange Offer.
3. Registration Procedures.
The following provisions shall apply to registration statements filed
pursuant to Section 2:
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<PAGE> 7
(a) At or before the Effective Time of the Exchange Offer or the Shelf
Registration, as the case may be, the Guarantor and the Trust shall qualify the
Indenture (if not already qualified), the Trust Agreement and the Guarantee
under the Trust Indenture Act of 1939.
(b) In connection with the Guarantor's and the Trust's obligations with
respect to the Shelf Registration, if applicable, the Guarantor and the Trust
shall, as soon as reasonably practicable (or as otherwise specified herein):
(i) prepare and file with the Commission a registration statement with
respect to the Shelf Registration on any form which may be utilized by the
Trust and the Guarantor and which shall permit the disposition of the
Registrable Securities in accordance with the intended method or methods
thereof, as specified in writing by the holders of the Registrable
Securities, and use its reasonable best efforts to cause such registration
statement to become effective as soon as practicable thereafter;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus included
therein as may be necessary to effect and maintain the effectiveness of
such registration statement for the period specified in Section 2(b) hereof
and as may be required by the applicable rules and regulations of the
Commission and the instructions applicable to the form of such registration
statement, and furnish to the holders of the Registrable Securities copies
of any such supplement or amendment simultaneously with or prior to its
being used or filed with the Commission;
(iii) comply, as to all matters within the Guarantor's and the Trust's
control, with the provisions of the Securities Act with respect to the
disposition of all of the Registrable Securities covered by such
registration statement in accordance with the intended methods of
disposition by the holders thereof provided for in such registration
statement;
(iv) provide to any of (A) the holders of the Registrable Securities
to be included in such registration statement, (B) the underwriters (which
term, for purposes of this Exchange and Registration Rights Agreement,
shall include a person deemed to be an underwriter within the meaning of
Section 2(11) of the Securities Act), if any, thereof, (C) the sales or
placement agent, if any, therefor, (D) counsel for such underwriters or
agent and (E) not more than one counsel for all the holders of such
Registrable Securities who so request of the Guarantor in writing the
opportunity to participate in the preparation of such registration
statement, each prospectus included therein or filed with the Commission
and each amendment or supplement thereto;
(v) for a reasonable period prior to the filing of such registration
statement, and throughout the period specified in Section 2(b), make
available at reasonable times at the Guarantor's principal place of
business or such other reasonable place for inspection by the persons
referred to in Section 3(b)(iv) who shall certify to the Guarantor and the
Trust that they have a current intention to sell the Registrable Securities
pursuant to the Shelf Registration such financial and other information and
books and records of the Guarantor, and cause the officers, employees,
counsel and independent certified public accountants of the Guarantor to
respond to such inquiries, as shall be reasonably necessary, in the
judgment of the respective counsel referred to in such Section, to conduct
a reasonable investigation within the meaning of Section 11 of the
Securities Act; provided, however, that each such party shall be required
to maintain in confidence and not to disclose to any other person any
information or records reasonably designated by the Guarantor in writing as
being confidential, until such time as (A) such information becomes a
matter of public record (whether by virtue of its inclusion in such
registration statement or otherwise), or
7
<PAGE> 8
(B) such person shall be required so to disclose such information pursuant
to a subpoena or order of any court or other governmental agency or body
having jurisdiction over the matter (subject to the requirements of such
order, and only after such person shall have given the Guarantor prompt
prior written notice of such requirement), or (C) such information is
required to be set forth in such registration statement or the prospectus
included therein or in an amendment to such registration statement or an
amendment or supplement to such prospectus in order that such registration
statement, prospectus, amendment or supplement, as the case may be, does
not contain an untrue statement of a material fact or omit to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing;
(vi) promptly notify the selling holders of Registrable Securities,
the sales or placement agent, if any, therefor and the managing underwriter
or underwriters, if any, thereof and confirm such advice in writing, (A)
when such registration statement or the prospectus included therein or any
prospectus amendment or supplement or post-effective amendment has been
filed, and, with respect to such registration statement or any
post-effective amendment, when the same has become effective, (B) of any
comments by the Commission and by the Blue Sky or securities commissioner
or regulator of any state with respect thereto or any request by the
Commission for amendments or supplements to such registration statement or
prospectus or for additional information, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of such
registration statement or the initiation or threatening of any proceedings
for that purpose, (D) if at any time the representations and warranties of
the Guarantor or the Trust contemplated by Section 3(b)(xv) or Section 5
cease to be true and correct in all material respects, (E) of the receipt
by the Guarantor or the Trust of any notification with respect to the
suspension of the qualification of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for
such purpose, or (F) at any time when a prospectus is required to be
delivered under the Securities Act, that such registration statement,
prospectus, prospectus amendment or supplement or post-effective amendment
does not conform in all material respects to the applicable requirements of
the Securities Act and the Trust Indenture Act and the rules and
regulations of the Commission thereunder or contains an untrue statement of
a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of the circumstances then existing;
(vii) use its reasonable best efforts to obtain the withdrawal of any
order suspending the effectiveness of such registration statement or any
post-effective amendment thereto at the earliest practicable date;
(viii) if requested by any managing underwriter or underwriters, any
placement or sales agent or any holder of Registrable Securities, promptly
incorporate in a prospectus supplement or post-effective amendment such
information as is required by the applicable rules and regulations of the
Commission and as such managing underwriter or underwriters, such agent or
such holder specifies should be included therein relating to the terms of
the sale of such Registrable Securities, including information with respect
to the principal amount of Registrable Securities being sold by such holder
or agent or to any underwriters, the name and description of such holder,
agent or underwriter, the offering price of such Registrable Securities and
any discount, commission or other compensation payable in respect thereof,
the purchase price being paid therefor by such underwriters and with
respect to any other terms of the offering of the Registrable Securities to
be sold by such holder or agent or to such underwriters; and make all
required filings of such prospectus
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<PAGE> 9
supplement or post-effective amendment promptly after notification of the
matters to be incorporated in such prospectus supplement or post-effective
amendment;
(ix) furnish to each holder of Registrable Securities, each placement
or sales agent, if any, therefor, each underwriter, if any, thereof and the
respective counsel referred to in Section 3(b)(iv) an executed copy (or, in
the case of a holder of Registrable Securities, a conformed copy) of such
registration statement, each such amendment and supplement thereto (in each
case including all exhibits thereto (in the case of a holder of Registrable
Securities, upon request) and documents incorporated by reference therein)
and such number of copies of such registration statement (excluding
exhibits thereto and documents incorporated by reference therein unless
specifically so requested by such holder, agent or underwriter, as the case
may be) and of the prospectus included in such registration statement
(including each preliminary prospectus and any summary prospectus), in
conformity in all material respects with the applicable requirements of the
Securities Act and the Trust Indenture Act and the rules and regulations of
the Commission thereunder, and such other documents, as such holder, agent,
if any, and underwriter, if any, may reasonably request in order to
facilitate the offering and disposition of the Registrable Securities owned
by such holder, offered or sold by such agent or underwritten by such
underwriter and to permit such holder, agent and underwriter to satisfy the
prospectus delivery requirements of the Securities Act; and the Guarantor
and the Trust hereby consent to the use of such prospectus (including such
preliminary and summary prospectus) and any amendment or supplement thereto
by each such holder and by any such agent and underwriter, in each case in
the form most recently provided to such person by the Guarantor or the
Trust, in connection with the offering and sale of the Registrable
Securities covered by the prospectus (including such preliminary and
summary prospectus) or any supplement or amendment thereto;
(x) use its reasonable best efforts to (A) register or qualify the
Registrable Securities to be included in such registration statement under
such securities laws or blue sky laws of such United States jurisdictions
as any holder of such Registrable Securities and each placement or sales
agent, if any, therefor and underwriter, if any, thereof shall reasonably
request, (B) keep such registrations or qualifications in effect and comply
with such laws so as to permit the continuance of offers, sales and
dealings therein in such jurisdictions during the period the Shelf
Registration is required to remain effective under Section 2(b) above and
for so long as may be necessary to enable any such holder, agent or
underwriter to complete its distribution of Securities pursuant to such
registration statement but in any event not later than the date through
which the Guarantor and the Trust are required to keep the Shelf
Registration Effective pursuant to Section 2(b) and (C) take any and all
other actions as may be reasonably requested to enable each such holder,
agent, if any, and underwriter, if any, to consummate the disposition in
such jurisdictions of such Registrable Securities; provided, however, that
neither the Guarantor nor the Trust shall be required for any such purpose
to (1) qualify as a foreign corporation in any jurisdiction wherein it
would not otherwise be required to qualify but for the requirements of this
Section 3(b)(x), (2) consent to general service of process in any such
jurisdiction or (3) make any changes to its certificate of incorporation or
by-laws or any agreement between it and its stockholders;
(xi) use its reasonable best efforts to obtain the consent or
approval of each governmental agency or authority, whether federal, state
or local, which may be required to be obtained by the Guarantor or the
Trust to effect the Shelf Registration or the offering or sale in
connection therewith or to enable the selling holder or holders to offer,
or to consummate the disposition of, their Registrable Securities;
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<PAGE> 10
(xii) cooperate with the holders of the Registrable Securities and the
managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold,
which certificates shall be printed, lithographed or engraved, or produced
by any combination of such methods, and which shall not bear any
restrictive legends, except as may be required by applicable law; and, in
the case of an underwritten offering, enable such Registrable Securities to
be in such denominations and registered in such names as the managing
underwriters may request at least two business days prior to any sale of
the Registrable Securities;
(xiii) provide a CUSIP number for all applicable Registrable
Securities, not later than the Effective Time;
(xiv) enter into one or more underwriting agreements, engagement
letters, agency agreements, "best efforts" underwriting agreements or
similar agreements, as appropriate, including customary provision agreed to
by the Guarantor relating to indemnification and contribution, and take
such other actions in connection therewith as any holders of Registrable
Securities aggregating at least 33 1/3% in aggregate principal amount of
the Registrable Securities at the time outstanding shall reasonably request
in order to expedite or facilitate the disposition of such Registrable
Securities; provided, that the Guarantor and the Trust shall not be
required to enter into any such agreement more than once 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 Guarantor shall have then undertaken;
(xv) whether or not an agreement of the type referred to in Section
(3)(b)(xiv) hereof is entered into and whether or not any portion of the
offering contemplated by such registration statement is an underwritten
offering or is made through a placement or sales agent or any other entity,
(A) make such representations and warranties to the holders of such
Registrable Securities and the placement or sales agent, if any, therefor
and the underwriters, if any, thereof in form, substance and scope as are
customarily made by the Guarantor in connection with an offering of debt
securities pursuant to any appropriate agreement or to a registration
statement filed on the form applicable to the Shelf Registration; (B)
obtain an opinion of counsel to the Guarantor and an opinion of counsel to
the Trust in each case in customary form and covering such matters, of the
type customarily covered by such an opinion, and in the case of the
Guarantor as customarily given in public offerings of the Guarantor's debt
securities as the managing underwriters, if any, or as any holders of at
least 25% in aggregate principal amount of the Registrable Securities at
the time outstanding may reasonably request, addressed to such holder or
holders and the placement or sales agent, if any, therefor and the
underwriters, if any, thereof and dated the effective date of such
registration statement (and if such registration statement contemplates an
underwritten offering of a part or all of the Registrable Securities, dated
the date of the closing under the underwriting agreement relating thereto);
(C) obtain a "cold comfort" letter or letters from the independent
certified public accountants of the Guarantor addressed to the selling
holders of Registrable Securities, the placement or sales agent, if any,
therefor or the underwriters, if any, thereof, dated (i) the effective date
of such registration statement and (ii) the effective date of any
prospectus supplement to the prospectus included in such registration
statement or post-effective amendment to such registration statement which
includes audited financial statements as of a date or for a period
subsequent to that of the latest such statements included in such
prospectus (and, if such registration statement contemplates an
underwritten offering pursuant to any prospectus supplement to the
prospectus included in such registration statement or post-effective
amendment to such registration statement which includes
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<PAGE> 11
unaudited or audited financial statements as of a date or for a period
subsequent to that of the latest such statements included in such
prospectus, dated the date of the closing under the underwriting agreement
relating thereto), such letter or letters to be in customary form and
covering such matters of the type customarily covered by letters of such
type in public offerings of debt securities of the Guarantor; (D) deliver
such documents and certificates, including officers' or trustees' or
Administrative Trustees' certificates, as applicable, as may be reasonably
requested by any holders of at least 25% in aggregate principal amount of
the Registrable Securities at the time outstanding or the placement or
sales agent, if any, therefor and the managing underwriters, if any,
thereof to evidence the accuracy of the representations and warranties made
pursuant to clause (A) above or those contained in Section 5(a) hereof and
the compliance with or satisfaction of any agreements or conditions
contained in the underwriting agreement or other agreement entered into by
the Guarantor or the Trust, as applicable; and (E) undertake such
obligations relating to expense reimbursement, indemnification and
contribution as are provided in Section 6 hereof;
(xvi) notify in writing each holder of Registrable Securities of any
proposal by the Guarantor and/or the Trust to amend or waive any provision
of this Registration Rights Agreement pursuant to Section 9(h) hereof and
of any amendment or waiver effected pursuant thereto, each of which notices
shall contain the text of the amendment or waiver proposed or effected, as
the case may be;
(xvii) in the event that any broker-dealer registered under the
Exchange Act shall underwrite any Registrable Securities or participate as
a member of an underwriting syndicate or selling group or "assist in the
distribution" (within the meaning of the Rules of Conduct Practice and the
By-Laws of the National Association of Securities Dealers, Inc. ("NASD") or
any successor thereto, as amended from time to time) thereof, whether as a
holder of such Registrable Securities or as an underwriter, a placement or
sales agent or a broker or dealer in respect thereof, or otherwise, assist
such broker-dealer in complying with the requirements of such Rules and
By-Laws, including by (A) if such Rules shall so require, permitting a
"qualified independent underwriter" (as defined in such Schedule (or any
successor thereto)) to participate in the preparation of the registration
statement relating to such Registrable Securities, to exercise usual
standards of due diligence in respect thereto and, if any portion of the
offering contemplated by such registration statement is an underwritten
offering or is made through a placement or sales agent, to recommend the
yield of such Registrable Securities, (B) indemnifying any such qualified
independent underwriter to the extent of the indemnification of
underwriters provided in Section 6 hereof, and (C) providing such
information to such broker-dealer as may be required in order for such
broker-dealer to comply with the requirements of the Rules of Conduct of
the NASD; and
(xviii) make generally available to its security holders as soon as
practicable but in any event not later than eighteen months after the
effective date of such registration statement, an earning statement of the
Guarantor and its subsidiaries complying with Section 11(a) of the
Securities Act (including, at the option of the Guarantor, Rule 158
thereunder).
In case any of the foregoing obligations is dependent upon information provided
or to be provided by a party other than the Guarantor or the Trust, such
obligation shall be subject to the provision of such information.
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(c) In the event that the Guarantor and the Trust would be required,
pursuant to Section 3(b)(vi)(F) above, to notify the selling holders of
Registrable Securities, the placement or sales agent, if any, therefor and the
managing underwriters, if any, thereof, the Guarantor and the Trust shall
promptly prepare and furnish to each such holder, to each placement or sales
agent, if any, and to each such underwriter, if any, a reasonable number of
copies of a prospectus supplemented or amended so that, as thereafter delivered
to purchasers of Registrable Securities, such prospectus shall conform in all
material respects to the applicable requirements of the Securities Act and the
Trust Indenture Act and the rules and regulations of the Commission thereunder
and shall not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing. Each holder
of Registrable Securities agrees that upon receipt of any notice from the
Guarantor or the Trust, pursuant to Section 3(b)(vi)(F) hereof, such holder
shall forthwith discontinue the disposition of Registrable Securities pursuant
to the registration statement applicable to such Registrable Securities until
such holder (i) shall have received copies of such amended or supplemented
prospectus and, if so directed by the Guarantor or the Trust, such holder shall
deliver to the Guarantor (at the Guarantor's expense) all copies, other than
permanent file copies, then in such holder's possession of the prospectus
covering such Registrable Securities at the time of receipt of such notice or
(ii) shall have received notice from the Guarantor or the Trust that the
disposition of Registrable Securities pursuant to the Shelf Registration may
continue.
(d) The Guarantor and the Trust may require each holder of Registrable
Securities as to which any registration pursuant to Section 2(b) is being
effected to furnish to the Guarantor such information regarding such holder and
such holder's intended method of distribution of such Registrable Securities as
the Guarantor and the Trust may from time to time reasonably request in
writing, but only to the extent that such information is required in order to
comply with the Securities Act. Each such holder agrees to notify the Guarantor
and the Trust as promptly as practicable of any inaccuracy or change in
information previously furnished by such holder to the Guarantor and the Trust
or of the occurrence of any event in either case as a result of which any
prospectus relating to such registration contains or would contain an untrue
statement of a material fact regarding such holder or such holder's intended
method of disposition of such Registrable Securities or omits to state any
material fact regarding such holder or such holder's intended method of
disposition of such Registrable Securities required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, and promptly to furnish to the Guarantor and the
Trust any additional information required to correct and update any previously
furnished information or required so that such prospectus shall not contain,
with respect to such holder or the disposition of such Registrable Securities,
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing.
(e) Until the expiration of three years after the Closing Date, the
Guarantor will not, and will not permit any of its "affiliates" (as defined in
Rule 144) to, resell any of the Capital Securities or Debentures that have been
reacquired by any of them except pursuant to an effective registration
statement under the Act.
(f) In connection with the Guarantor's and the Trust's obligations with
respect to the registration of Exchange Securities as contemplated by Section
2(a) (the "Exchange Registration"), if applicable, the Guarantor and the Trust
shall, as soon as reasonably practicable (or as otherwise specified):
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(i) prepare and file with the Commission such amendments and
supplements to the Exchange Offer Registration Statement and the prospectus
included therein as may be necessary to effect and maintain the
effectiveness thereof for the periods and purposes contemplated in Section
2(a) hereof and as may be required by the applicable rules and regulations
of the Commission and the instructions applicable to the form of the
Exchange Offer Registration Statement, and promptly provide each
broker-dealer holding Exchange Securities with such number of copies of the
prospectus included therein (as then amended or supplemented), in
conformity in all material respects with the requirements of the Securities
Act and the Trust Indenture Act and the rules and regulations of the
Commission thereunder, as such broker-dealer reasonably may request prior
to the expiration of the Resale Period, for use in connection with resales
of Exchange Securities;
(ii) promptly notify each broker-dealer that has requested or received
copies of the prospectus included in the Exchange Offer Registration
Statement, and confirm such advice in writing, (A) when the Exchange Offer
Registration Statement or the prospectus included therein or any prospectus
amendment or supplement or post-effective amendment has been filed, and,
with respect to the Exchange Offer Registration Statement or any
post-effective amendment, when the same has become effective, (B) of any
comments by the Commission and by the Blue Sky or securities commissioner
or regulator of any state with respect thereto or any request by the
Commission for amendments or supplements to the Exchange Offer Registration
Statement or prospectus or for additional information, (C) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Exchange Offer Registration Statement or the initiation or threatening of
any proceedings for that purpose, (D) if at any time the representations
and warranties of the Guarantor and/or the Trust contemplated by Section 5
cease to be true and correct in all material respects, (E) of the receipt
by the Guarantor or the Trust of any notification with respect to the
suspension of the qualification of the Exchange Securities for sale in any
United States jurisdiction or the initiation or threatening of any
proceeding for such purpose, or (F) at any time during the Resale Period
when a prospectus is required to be delivered under the Securities Act,
that the Exchange Offer Registration Statement, prospectus, prospectus
amendment or supplement or post-effective amendment does not conform in all
material respects to the applicable requirements of the Securities Act and
the Trust Indenture Act and the rules and regulations of the Commission
thereunder or contains an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then
existing;
(iii) in the event that the Guarantor and the Trust would be required,
pursuant to Section 3(f)(ii)(F) above, to notify any broker-dealers holding
Exchange Securities, promptly prepare and furnish to each such holder a
reasonable number of copies of a prospectus supplemented or amended so
that, as thereafter delivered to purchasers of such Exchange Securities
during the Resale Period, such prospectus shall conform in all material
respects to the applicable requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission thereunder
and shall not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then
existing or notify such broker-dealers that the date of Exchange Securities
pursuant to the Exchange Offer Registration Statement may continue.
(iv) use its reasonable best efforts to obtain the withdrawal of any
order suspending the effectiveness of the Exchange Offer Registration
Statement or any post-effective amendment thereto at the earliest
practicable date;
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<PAGE> 14
(v) use its reasonable best efforts to (A) register or qualify the
Exchange Securities under the securities laws or blue sky laws of such
jurisdictions as are contemplated by Section 2(a) no later than the
commencement of the Exchange Offer, (B) keep such registrations or
qualifications in effect and comply with such laws so as to permit the
continuance of offers, sales and dealings therein in such jurisdictions
until the expiration of the Resale Period and (C) take any and all other
actions as may be reasonably necessary or advisable to enable each
broker-dealer holding Exchange Securities to consummate the disposition
thereof in such jurisdictions; provided, however, that neither the
Guarantor nor the Trust shall be required for any such purpose to (1)
qualify as a foreign corporation in any jurisdiction wherein it would not
otherwise be required to qualify but for the requirements of this Section
3(f)(v), (2) consent to general service of process in any such jurisdiction
or (3) make any changes to its certificate of incorporation or by-laws or
any agreement between it and its stockholders;
(vi) use its reasonable best efforts to obtain the consent or
approval of each United States governmental agency or authority, whether
federal, state or local, which may be required to be obtained by the
Guarantor or the Trust to effect the Exchange Registration, the Exchange
Offer and the offering and sale of Exchange Securities by broker-dealers
during the Resale Period;
(vii) provide a CUSIP number for all applicable Exchange Securities,
not later than the applicable Effective Time;
(viii) make generally available to its security holders as soon as
practicable but no later than eighteen months after the effective date of
such registration statement, an earning statement of the Guarantor and its
subsidiaries complying with Section 11(a) of the Securities Act (including,
at the option of the Guarantor, Rule 158 thereunder).
In case any of the foregoing obligations is dependent upon information provided
or to be provided by a party other than the Guarantor or the Trust, such
obligation shall be subject to the provision of such information.
4. Registration Expenses.
The Guarantor agrees to bear and to pay or cause to be paid promptly
upon request being made therefor all expenses incident to the Guarantor's and
the Trust's performance of or compliance with this Registration Rights
Agreement, including (a) all Commission and any NASD registration and filing
fees and expenses, (b) all fees and expenses in connection with the
qualification of the Securities or Exchange Securities for offering and sale
under the State securities and blue sky laws referred to in Section 3(b)(x) and
Section 3(f)(v) hereof, including reasonable fees and disbursements of one
counsel for the placement or sales agent or underwriters in connection with
such qualifications, (c) all expenses relating to the preparation, printing,
distribution and reproduction of each registration statement required to be
filed hereunder, each prospectus included therein or prepared for distribution
pursuant hereto, each amendment or supplement to the foregoing, the
certificates representing the Securities and all other documents relating
hereto, (d) messenger and delivery expenses, (e) fees and expenses of the
Trustee under the Indenture, the Property Trustee and Debenture Trustee under
the Trust Agreement and the Guarantee Trustee under the Guarantee and of any
escrow agent or custodian, (f) internal expenses (including all salaries and
expenses of the Guarantor's officers and employees performing legal or
accounting duties), (g) fees, disbursements and expenses of counsel and
independent certified public accountants of the Guarantor (including the
expenses of any opinions or "cold comfort" letters required by or incident to
such performance
14
<PAGE> 15
and compliance) and (h) reasonable fees, disbursements and expenses of one
counsel for the holders of Registrable Securities retained in connection with a
Shelf Registration, as selected by the holders of at least a majority in
aggregate principal amount of the Registrable Securities being registered, and
fees, expenses and disbursements of any other persons, including special
experts, retained by the Guarantor in connection with such registration
(collectively, the "Registration Expenses"). To the extent that any
Registration Expenses are incurred, assumed or paid by any holder of
Registrable Securities or any placement or sales agent therefor or underwriter
thereof, the Guarantor shall reimburse such person for the full amount of the
Registration Expenses so incurred, assumed or paid promptly after receipt of a
request therefor. Notwithstanding the foregoing, the holders of the Registrable
Securities being registered shall pay all agency fees and commissions and
underwriting discounts and commissions attributable to the sale of such
Registrable Securities and the fees and disbursements of any counsel or other
advisors or experts retained by such holders (severally or jointly), other than
the counsel and experts specifically referred to above.
5. Representations and Warranties.
Each of the Guarantor and the Trust represents and warrants to, and agrees
with, the Purchasers and each of the holders from time to time of Registrable
Securities that:
(a) Each registration statement covering Registrable Securities and
each prospectus (including any preliminary or summary prospectus) contained
therein or furnished pursuant to Section 3(c) or Section 3(f) hereof and
any further amendments or supplements to any such registration statement or
prospectus, when it becomes effective or is filed with the Commission, as
the case may be, and, in the case of an underwritten offering of
Registrable Securities, at the time of the closing under the underwriting
agreement relating thereto, will conform in all material respects to the
applicable requirements of the Securities Act and the Trust Indenture Act
and the rules and regulations of the Commission thereunder and will not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; and at all times subsequent to the Effective Time
when a prospectus would be required to be delivered under the Securities
Act, other than from (i) such time as a notice has been given to holders of
Registrable Securities pursuant to Section 3(b)(vi)(F) or Section
3(f)(ii)(F) hereof until (ii) such time as the Guarantor furnishes an
amended or supplemented prospectus pursuant to Section 3(c) or Section
3(f)(iii) hereof, each such registration statement, and each prospectus
(including any summary prospectus) contained therein or furnished pursuant
to Section 3(b) or Section 3(f) hereof, as then amended or supplemented,
will conform in all material respects to the applicable requirements of the
Securities Act and the Trust Indenture Act and the rules and regulations of
the Commission thereunder and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing; provided, however, that this
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Guarantor and the Trust by a holder of Registrable
Securities expressly for use therein.
(b) Any documents incorporated by reference in any prospectus referred
to in Section 5(a) hereof, when they become or became effective or are or
were filed with the Commission, as the case may be, will conform or
conformed in all material respects to the requirements of the Securities
Act or the Exchange Act, as applicable, and none of such documents will
contain or contained an untrue statement of a material fact or will omit or
omitted to state a material fact required to be stated therein or necessary
to make the
15
<PAGE> 16
statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Guarantor and the Trust by a holder of Registrable
Securities expressly for use therein.
(c) The compliance by the Guarantor and the Trust with all of the
provisions of this Registration Rights Agreement and the consummation of
the transactions herein contemplated will not constitute a breach of or
default under, the corporate charter or by-laws of the Guarantor, or the
Trust Agreement of the Trust, or any material agreement, indenture or
instrument relating to indebtedness for money borrowed to which the
Guarantor or to the best knowledge of the Guarantor, the Trust is a party
or, to the best knowledge of the Guarantor, the Trust, as applicable, any
law, order, rule, regulation or decree of any court or governmental agency
or authority located in the United States having jurisdiction over the
Guarantor or any property of the Guarantor or the Trust or any property of
the Trust, as applicable; and, to the best knowledge of the Guarantor and
the Trust, no consent, authorization or order of, or filing or registration
with, any court or governmental agency or authority is required for the
consummation by the Guarantor or the Trust, as applicable, of the
transactions contemplated by this Registration Rights Agreement, except the
registration under the Securities Act contemplated hereby, qualification of
the Indenture, the Guarantee and the Trust Agreement under the Trust
Indenture Act and such consents, approvals, authorizations, registrations
or qualifications as may be required under State securities or "blue sky"
laws.
(d) This Registration Rights Agreement has been duly authorized,
executed and delivered by the Guarantor or the Trust, as applicable.
6. Indemnification.
(a) Indemnification by the Guarantor and the Trust. Upon the registration
of the Registrable Securities pursuant to Section 2(a) or 2(b) hereof, and in
consideration of the agreements of the Purchasers contained herein, and as an
inducement to the Purchasers to purchase the Capital Securities, each of the
Guarantor and the Trust shall, and it hereby agrees jointly and severally to,
indemnify and hold harmless each of the holders of Registrable Securities to be
included in such registration, and each person who participates as a placement
or sales agent or as an underwriter in any offering or sale of such Registrable
Securities and each person who controls any such person against any losses,
claims, damages or liabilities, joint or several, to which such holder, agent
or underwriter may become subject under the Securities Act, the Exchange Act or
other federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any registration statement under
which such Registrable Securities were registered under the Securities Act, or
any preliminary, final or summary prospectus contained therein or furnished by
the Guarantor or the Trust to any such holder, agent or underwriter, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading and each of
the Guarantor and the Trust shall, and it hereby agrees jointly and severally
to, reimburse each such holder, such agent and such underwriter for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the Guarantor and the Trust shall not be liable to any such
person in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such
16
<PAGE> 17
registration statement, or preliminary, final or summary prospectus, or
amendment or supplement thereto, in reliance upon and in conformity with
written information furnished to the Guarantor and the Trust by holders of
Registrable Securities expressly for use therein. This indemnity agreement
will be in addition to any liability which the Guarantor or the Trust may
otherwise have.
(b) Indemnification by the Holders and any Agents and Underwriters. The
Guarantor and the Trust may require, as a condition to including any
Registrable Securities in any registration statement filed pursuant to Section
2(b) hereof and to entering into any underwriting agreement with respect
thereto, that the Guarantor and the Trust shall have received an undertaking
reasonably satisfactory to it from the holder of such Registrable Securities
and from each underwriter named in any such underwriting agreement, severally
and not jointly, to indemnify and hold harmless the Guarantor and the Trust,
each of the Guarantor's directors, and each person who controls the Guarantor
or the Trust within the meaning of either the Securities Act or the Exchange
Act, to the same extent as the foregoing indemnity from the Guarantor and the
Trust, but only with reference to written information furnished to the
Guarantor and the Trust by or on behalf of such person specifically for use in
any registration statement, or any preliminary or final or summary prospectus
contained therein or any amendment or supplement thereto. This indemnity
agreement will be in addition to any liability which any such person may
otherwise have.
(c) Promptly after receipt by an indemnified party under Section 6(a)
or (b) of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve the indemnifying party from any liability which it may have to any
indemnified party otherwise than under Section 6(a) or (b). In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and to the extent that it may elect by written
notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof,
with counsel satisfactory to such indemnified party; provided that, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party
or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to assume the defense of such action and
approval by the indemnified party of counsel, the indemnifying party will not
be liable to such indemnified party under Section 8(a) or (b) for any legal or
other expenses subsequently incurred by such indemnified party (other than
reasonable costs of investigation) in connection with the defense thereof
unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate national counsel, approved by the Representatives, representing the
indemnified parties who are parties to such action), (ii) the indemnifying
party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party; and except that, if clause (i) or (iii) is applicable, such
liability shall be only in respect of the counsel referred to in such clause
(i) or (iii).
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<PAGE> 18
(d) Contribution. Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 6(a) or Section 6(b) are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and the indemnified party in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by such indemnifying party or by
such indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if
contributions pursuant to this Section 6(d) were determined by pro rata
allocation (even if the holders or any agents or underwriters or all of them
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to in this Section 6(d). The amount paid or payable by an indemnified party as
a result of the losses, claims, damages, or liabilities (or actions in respect
thereof) referred to above shall be deemed to include any legal or other fees
or expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 6(d), no holder shall be required to contribute any
amount in excess of the amount by which the dollar amount of the proceeds
received by such holder from the sale of any Registrable Securities (after
deducting any fees, discounts and commissions applicable thereto) exceeds the
amount of any damages which such holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission, and no underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation. The holders' and any underwriters' obligations in this
Section 6(d) to contribute shall be several in proportion to the principal
amount of Registrable Securities registered or underwritten, as the case may
be, by them and not joint.
(e) The obligations of the Guarantor and the Trust under this Section 6
shall be in addition to any liability which the Guarantor and the Trust may
otherwise have and shall extend, upon the same terms and conditions, to each
officer, director and partner of each holder, agent and underwriter and each
person, if any, who controls any holder, agent or underwriter within the
meaning of the Securities Act; and the obligations of the holders and any
agents or underwriters contemplated by this Section 6 shall be in addition to
any liability which the respective holder, agent or underwriter may otherwise
have and shall extend, upon the same terms and conditions, to each officer and
director of the Guarantor (including any person who, with his consent, is named
in any registration statement as about to become a director of the Guarantor),
to each Trustee and Administrative Trustee under the Trust Agreement and to
each person, if any, who controls the Guarantor and the Trust within the
meaning of the Securities Act.
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<PAGE> 19
7. Underwritten Offerings.
(a) Selection of Underwriters. If any of the Registrable Securities covered
by the Shelf Registration are to be sold pursuant to an underwritten offering,
the managing underwriter or underwriters thereof shall be designated by the
holders of at least a majority in aggregate principal amount of the Registrable
Securities to be included in such offering, provided that such designated
managing underwriter or underwriters is or are reasonably acceptable to the
Guarantor.
(b) Participation by Holders. Each holder of Registrable Securities hereby
agrees with each other such holder that no such holder may participate in any
underwritten offering hereunder unless such holder (i) agrees to sell such
holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
8. Rule 144.
The Guarantor covenants to the holders of Registrable Securities that the
Guarantor shall use its reasonable best efforts to timely file the reports
required to be filed by it under the Exchange Act or the Securities Act
(including the reports under Section 13 and 15(d) of the Exchange Act referred
to in subparagraph (c)(1) of Rule 144 adopted by the Commission under the
Securities Act) and the rules and regulations adopted by the Commission
thereunder, and shall take such further action as any holder of Registrable
Securities may reasonably request, all to the extent required from time to time
to enable such holder to sell Registrable Securities without registration under
the Securities Act within the limitations of the exemption provided by Rule 144
under the Securities Act, as such Rule may be amended from time to time, or any
similar or successor rule or regulation hereafter adopted by the Commission.
Upon the request of any holder of Registrable Securities in connection with
that holder's sale pursuant to Rule 144, the Guarantor shall deliver to such
holder a written statement as to whether it has complied with such
requirements.
9. Miscellaneous.
(a) No Inconsistent Agreements. Each of the Guarantor and the Trust
represents, warrants, covenants and agrees that it has not granted, and shall
not grant, registration rights with respect to Registrable Securities which
would be inconsistent with the terms contained in this Exchange and
Registration Rights Agreement.
(b) Specific Performance. The parties hereto acknowledge that there would
be no adequate remedy at law if any party fails to perform any of its
obligations hereunder and that each party may be irreparably harmed by any such
failure, and accordingly agree that each party, in addition to any other remedy
to which it may be entitled at law or in equity, shall be entitled to compel
specific performance of the obligations of any other party under this Exchange
and Registration Rights Agreement in accordance with the terms and conditions
of this Exchange and Registration Rights Agreement, in any court of the United
States or any State thereof having jurisdiction.
(c) Notices. All notices, requests, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered by hand, if delivered personally or by courier, or
three days after being deposited in the mail
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<PAGE> 20
(registered or certified mail, postage prepaid, return receipt requested) as
follows: If to the Guarantor, to it at Cullen/Frost Bankers, Inc., 100 West
Houston, San Antonio, Texas 78205, Attention: Secretary; and if to the Trust,
to it at Cullen/Frost Capital Trust I, c/o The Bank of New York (Delaware),
White Clay Center, Route 273, Newark, Delaware 19711, Attention: Corporate
Trust Department; and if to a holder, to the address of such holder set forth
in the security register or other records of the Trust or the Guarantor, as the
case may be, or to such other address as the Guarantor, the Trust or any such
holder may have furnished to the other in writing in accordance herewith,
except that notices of change of address shall be effective only upon receipt.
(d) Parties in Interest. All the terms and provisions of this Registration
Rights Agreement shall be binding upon, shall inure to the benefit of and shall
be enforceable by the respective successors and assigns of the parties hereto.
In the event that any transferee of any holder of Registrable Securities shall
acquire Registrable Securities, in any manner, whether by gift, bequest,
purchase, operation of law or otherwise, such transferee shall, without any
further writing or action of any kind, be deemed a party hereto for all
purposes and such Registrable Securities shall be held subject to all of the
terms of this Registration Rights Agreement, and by taking and holding such
Registrable Securities such transferee shall be entitled to receive the
benefits of, and be conclusively deemed to have agreed to be bound by and to
perform, all of the applicable terms and provisions of this Registration Rights
Agreement.
(e) Survival. The respective indemnities, agreements, representations,
warranties and each other provision set forth in this Registration Rights
Agreement or made pursuant hereto shall remain in full force and effect
regardless of any investigation (or statement as to the results thereof) made
by or on behalf of any holder of Registrable Securities, any director, officer
or partner of such holder, any agent or underwriter or any director, officer or
partner thereof, or any controlling person of any of the foregoing, and shall
survive delivery of and payment for the Registrable Securities pursuant to the
Purchase Agreement and the transfer and registration of Registrable Securities
by such holder and the consummation of an Exchange Offer.
(f) LAW GOVERNING. THIS REGISTRATION RIGHTS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
(g) Headings. The descriptive headings of the several Sections and
paragraphs of this Registration Rights Agreement are inserted for convenience
only, do not constitute a part of this Registration Rights Agreement and shall
not affect in any way the meaning or interpretation of this Registration Rights
Agreement.
(h) Entire Agreement; Amendments. This Registration Rights Agreement and
the other writings referred to herein (including the Trust Agreement, the
Guarantee and the Indenture) or delivered pursuant hereto which form a part
hereof contain the entire understanding of the parties with respect to its
subject matter. This Registration Rights Agreement supersedes all prior
agreements and understandings between the parties with respect to its subject
matter. This Registration Rights Agreement may be amended and the observance of
any term of this Registration Rights Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively) only by
a written instrument duly executed by the Guarantor, the Trust and the holders
of at least a majority in aggregate principal amount of the Registrable
Securities at the time outstanding. Each holder of any Registrable Securities
at the time or thereafter outstanding shall be bound by any amendment or waiver
effected pursuant to this Section 9(h), whether or not any notice, writing or
marking indicating such amendment or waiver appears on such Registrable
Securities or is delivered to such holder.
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<PAGE> 21
(i) Inspection. For so long as this Registration Rights Agreement shall be
in effect, this Registration Rights Agreement and a complete list of the names
and addresses of all the holders of Registrable Securities shall be made
available for inspection and copying on any business day by any holder of
Registrable Securities for proper purposes only (which shall include any
purpose related to the rights of the holders of Registrable Securities under
the Securities, the Indenture and this Agreement) at the offices of the
Guarantor at the address thereof set forth in Section 9(c) above, at the office
of the Property Trustee or at the office of the Trustee under the Indenture.
(j) Counterparts. This agreement may be executed by the parties in
counterparts, each of which shall be deemed to be an original, but all such
respective counterparts shall together constitute one and the same instrument.
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<PAGE> 22
Agreed to and accepted as of the date referred to above.
CULLEN/FROST CAPITAL TRUST I
By: /s/ Diane Jack
-----------------------------------------
Name: Diane Jack
Title: Administrative Trustee
CULLEN/FROST BANKERS, INC.
By: /s/ Phillip D. Green
-----------------------------------------
Name: Phillip D. Green
Title: Executive Vice President &
Chief Financial Officer
J.P. Morgan Securities Inc.
By: /s/ G. B. Fitzgerald
-----------------------------------------
(J.P. Morgan Securities Inc.)
On behalf of each of the Purchasers
22
<PAGE> 1
EXHIBIT 8
[SULLIVAN & CROMWELL LETTERHEAD]
March 12, 1997
Cullen/Frost Capital Trust I,
c/o The Bank of New York (Delaware),
White Clay Center, Route 273,
Newark, Delaware 19711.
Attention: Corporate Trust Department
Ladies and Gentlemen:
As special tax counsel to Cullen/Frost Capital Trust I (the "Issuer
Trust") and Cullen/Frost Bankers, Inc. in connection with the exchange offer by
the Issuer Trust of $100,000,000 of its 8.42% Capital Securities (the
"Securities") pursuant to a preliminary prospectus dated March ___, 1997 (the
"Prospectus"), and assuming the operative documents for the Securities
described in the Prospectus will be performed in accordance with the terms
described therein, 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.
We hereby consent to the filing of this opinion as an exhibit to the
registration statement relating to the Prospectus and the reference to us under
the heading "Certain Federal Income Tax Consequences" in the Prospectus. By
giving the foregoing consent, we do not thereby admit that we come within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the rules and regulations of the Securities and
Exchange commission thereunder.
Very truly yours,
SULLIVAN & CROMWELL
<PAGE> 1
EXHIBIT 12
STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(dollars in thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Income before income taxes $ 85,737 $ 71,277 $ 57,800 $ 38,062 $ 25,822
Interest expense, including interest
on deposits 111,431 103,838 69,162 61,793 73,324
Interest portion of rental expense 3,706 3,445 3,088 4,095 3,098
-------- -------- -------- -------- --------
Earnings $200,874 $178,560 $129,850 $103,950 $102,244
======== ======== ======== ======== ========
Interest expense, including interest
on deposits 111,431 103,838 69,162 61,793 73,324
Interest portion of rental expense 3,706 3,445 3,088 4,095 3,098
-------- -------- -------- -------- --------
Fixed Charges $116,137 $107,283 $ 72,250 $ 65,888 $ 76,422
======== ======== ======== ======== ========
Consolidated Ratio of Earnings
to Fixed Charges (including
interest on deposits) 1.74 1.66 1.80 1.58 1.34
======== ======== ======== ======== ========
Income before income taxes $ 85,737 $ 71,277 $ 57,600 $ 38,062 $ 25,822
Interest expense, excluding interest
on deposits 7,056 14,029 7,168 3,714 4,517
Interest portion of rental expense 3,706 3,445 3,088 4,095 3,098
-------- -------- -------- -------- --------
Earnings $ 97,399 $ 88,751 $ 67,854 $ 45,871 $ 33,437
======== ======== ======== ======== ========
Interest expense, excluding interest
on deposits 7,056 14,029 7,166 3,714 4,517
Interest portion of rental expense 3,706 3,445 3,088 4,096 3,098
-------- -------- -------- -------- --------
Fixed Charges $ 11,862 $ 17,474 $ 10,254 $ 7,809 $ 7,615
======== ======== ======== ======== ========
Consolidated Ratio of Earnings
to Fixed Charges (excluding
interest on deposits) 8.35 6.08 6.62 5.97 4.39
======== ======== ======== ======== ========
</TABLE>
<PAGE> 1
EXHIBIT 23(a)
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of Cullen/Frost
Bankers, Inc. and Cullen/Frost Capital Trust I for the registration and
exchange of $100,000,000 of the 8.42% Capital Securities, Series A, of
Cullen/Frost Capital Trust I and to the incorporation by reference therein of
our report dated January 31, 1996, with respect to the consolidated financial
statements of Cullen/Frost Bankers, Inc. included in its Annual Report (Form
10-K) for the year ended December 31, 1995, filed with the Securities and
Exchange Commission.
ERNST & YOUNG LLP
San Antonio, Texas
March 11, 1997
<PAGE> 1
EXHIBIT 24(b)
SECRETARY'S CERTIFICATE
I, Diane Jack, Secretary of Cullen/Frost Bankers, Inc., do hereby
certify that the three (3) pages attached hereto contain true and correct
copies of resolutions duly adopted by the Board of Directors of Cullen/Frost
Bankers, Inc. on January 28, 1997.
I further certify that these resolutions have not been repealed but
are still in full force and effect.
Witness my hand and the corporate Seal of said Corporation, this 7th
day of March 1997.
/s/ DIANE JACK
------------------------
Secretary
<PAGE> 2
WHEREAS, it has been proposed that the Corporation issue and sell,
directly or through one or more business trusts created and sponsored at the
direction of the Corporation one or more series of Junior Subordinated Debt (as
the corporation one or more series of Junior subordinated Debt (as defined
below) of the Corporation in one or more private offerings (including, without
limitation, pursuant to the Securities and Exchange Commission's Rule 144A and
Regulation S) (each, an "Offering"); and
WHEREAS, in connection with an Offering, it has been proposed that the
Corporation form one or more business trusts organized under the laws of the
State of Delaware for the purpose of issuing and selling common securities and
up to $100 million in aggregate liquidation amount of preferred securities (the
"Common Securities" and the "Preferred Securities", respectively, and,
collectively, the "Trust Securities"), each representing undivided beneficial
ownership interests in the assets of such trust, the proceeds from which sale
shall be used by such trust to purchase unsecured junior subordinated debt
securities of the Corporation (the "Junior Subordinated Debt" and collectively,
with the Trust Securities and the Guarantees, as hereinafter defined, the
"Offer Securities"); and
WHEREAS, in connection with the issuance of the Trust Securities by and
trust, it has been proposed that the Corporation guarantee payments of
distributions out of monies held by such trust (the "Guarantees"): and
WHEREAS, the Board has determined that it is in the best interests of
the Corporation to authorize the preparation of one or more offering circulars,
and supplements thereto, and to authorize such other actions that are necessary
or advisable to proceed with the issuance and sale of the Offered Securities;
and
WHEREAS, the Corporation proposes to use the proceeds from the issuance
and sale of the Offered Securities for general corporate purposeS or such other
purpose as may be determined at the time of any particular Offering:
NOW, THEREFORE, BE IT
CREATION OF TRUST
RESOLVED, that T.C. Frost, Richard W. Evans, Jr., Phillip D. Green and
Jerry Salinas (collectively, the "Executive Officers") be, and each of them
hereby is, authorized and empowered, on behalf of the Corporation and in its
name, to form or cause to be formed, one or more Delaware business trusts,
pursuant to Title 12, Chapter 38 of the Delaware Code (each, a "Trust"), for
the purpose of issuing and selling the Trust
-1-
<PAGE> 3
Securities, the proceeds from which shall be used by the Trust to purchase
Junior Subordinated Debt, with the number of such Trusts so formed to be such
number as they or any of them shall deem necessary, advisable or appropriate;
and
RESOLVED, FURTHER, that the Executive Officers be, and each of them
hereby is, authorized and empowered, on behalf of the Corporation and in its
name, and on behalf of each Trust in the name of the Corporation as depositor
of the Trust, to select one or more persons, who may be employees of the
Corporation or any of its subsidiaries, to act as trustee or attorney-in-fact
or agent for such Trust (each an "Administrative Trustee" or collectively, the
"Administrative Trustees," as appropriate) as they shall deem necessary,
advisable or appropriate; and
RESOLVED, FURTHER, that the Executive Officers be, and each of them
hereby is, authorized and empowered, on behalf of the Corporation and in its
name, and on behalf of each Trust in the name of the Corporation as depositor
of the Trust, to execute or cause to be executed, and to direct the
Administrative Trustees to execute or cause to be executed, a Trust Agreement,
and in connection with the issuance of the Trust Securities, an Amended and
Restated Trust Agreement (collectively, the "Trust Agreement") and file or
cause to be filed with the Secretary of State of the State of Delaware, all
documents, including a Certificate of Trust (the "Certificate"), necessary,
advisable or appropriate to create and to give continuing effect to the Trust,
all of which documents shall be in such form and contain such terms and
provisions as such Executive Officers or any of them shall approve, such
approval to be conclusively evidenced by the execution thereof; and to select
and appoint or authorize the selection and appointment of the trustee or
trustees of the Trust; and
EXCHANGE OFFER
RESOLVED FURTHER, that the Executive Officers be, and each of them
hereby is, authorized and empowered, on behalf of the Corporation, to execute
and deliver a Registration Rights Agreement (the "Registration Rights
Agreement") among the Corporation, the Trust and the initial purchasers name in
the Purchase Agreement in such form as the Executive Officers shall approve,
such approval to be conclusively evidenced by the execution thereof; and
RESOLVED FURTHER, that the Executive Officers be, and each of them
hereby is, authorized, in the name and on behalf of the Corporation, to offer
to exchange the Offered Securities (the "Exchange Offer") for securities with
substantially identical terms to the Offered Securities (the "Exchange
Securities") pursuant to a registration statement
-2-
<PAGE> 4
to be filed under the Act, upon the terms and conditions as set forth in the
Purchase Agreement and the Registration Rights Agreement and pursuant to the
Indenture and the Trust Agreement, and to execute and deliver certificates and
other documents and instruments representing the Exchange Securities pursuant
to the Exchange Offer and,
RESOLVED FURTHER, that the Executive Officers be, and each of them hereby
is, authorized, empowered and directed, on behalf of the Corporation and its
name, and on behalf of the Trust in the name of the Corporation as sponsor of
the Trust, and to direct the Administrative Trustees, if appropriate, to
prepare and execute, or cause to be prepared and executed, one or more
registration statements on the appropriate form(s), with exhibits (the
"Registration Statement"), in connection with the offering of the Exchange
Securities or in connection with the resale of the Offered Securities under the
Act, and to cause the Registration Statement to be filed with the Securities
and Exchange Commission (the "Commission") under the Act, with such changes as
the person executing the same shall approve, such approval, to be conclusively
evidenced by the execution thereof by such person, and to prepare, execute and
file or cause to be prepared, executed and filed, any amendments to such
Registration Statement (including post-effective amendments) any supplements to
the prospectus or prospectuses contained therein and any exhibits and
amendments to any exhibits thereto that the Executive Officer or Executive
Officers taking such action shall determine to be necessary, advisable or
appropriate in connection therewith in order to effect the registration of the
qualification of the Offered Securities and/or the Exchange Securities, as the
case may be, under the Act and the Trust Indenture Act of 1939, as amended,
with the taking of any such action by such Executive Officers, as conclusively
evidenced by the execution thereof and
RESOLVED FURTHER, that the Executive Officers be, and each of them hereby
is, authorized and empowered, on behalf of the Corporation and in its name, and
on behalf of the Trust in the name of the Corporation as sponsor of the Trust,
to direct the Administrative Trustees, if appropriate, to prepare, execute and
file, or cause to be prepared, executed and filed, all certificates, letters,
applications, and any other documents connected therewith, which may be
required to be filed with the Commission with respect to the registration,
offering, issuance and sale of the Offered Securities and/or the Exchange
Securities, as the case may be, under the Act and the 1934 Act (any such
document to be in such form and to contain such terms and provisions as the
person executing the same shall approve, such approval to be conclusively
evidenced by the execution thereof by such person), and to take any and all
action that the Executive Officer or Executive Officers conclusively
evidencing such determination.
-3-
<PAGE> 1
EXHIBIT 25(a)
================================================================================
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)
----------------------
CULLEN/FROST CAPITAL TRUST I
(Exact name of obligor as specified in its charter)
Delaware 74-2817357
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
c/o Cullen/Frost Bankers, Inc.
100 W. Houston Street
San Antonio, Texas 78205
(Address of principal executive offices) (Zip code)
----------------------
8.42% Capital Securities, Series A
(Title of the indenture securities)
================================================================================
<PAGE> 2
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
- --------------------------------------------------------------------------------
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.
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 RULE
24 OF THE COMMISSION'S RULES OF PRACTICE.
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.)
-2-
<PAGE> 3
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.
-3-
<PAGE> 4
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 6th day of March, 1997.
THE BANK OF NEW YORK
By: /s/ MARY LAGUMINA
-------------------------------
Name: Mary LaGumina
Title: Assistant Vice President
<PAGE> 5
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 member of the Federal Reserve System, at the close of business September 30,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ............................... $ 4,404,522
Interest-bearing balances ....................... 732,833
Securities:
Held-to-maturity securities ..................... 789,964
Available-for-sale securities ................... 2,005,509
Federal funds sold in domestic offices of the bank:
Federal funds sold ................................ 3,364,838
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ................................ 28,728,602
LESS: Allowance for loan and
lease losses ........................... 584,525
LESS: Allocated transfer risk
reserve ................................ 429
Loans and leases, net of unearned
income, allowance, and reserve ................ 28,143,648
Assets held in trading accounts ................... 1,004,242
Premises and fixed assets (including
capitalized leases) ............................. 605,668
Other real estate owned ........................... 41,238
Investments in unconsolidated
subsidiaries and associated
companies ....................................... 205,031
Customers' liability to this bank on
acceptances outstanding ......................... 949,154
Intangible assets ................................. 490,524
Other assets ...................................... 1,305,839
-----------
Total assets ...................................... $44,043,010
===========
LIABILITIES
Deposits:
In domestic offices ............................. $20,441,318
Noninterest-bearing ..................... 8,158,472
Interest-bearing ........................ 12,282,846
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ................ 11,710,903
Noninterest-bearing ..................... 46,182
Interest-bearing ........................ 11,664,721
Federal funds purchased in
domestic offices of the
bank:
Federal funds purchased ......................... 1,565,288
Demand notes issued to the U.S. ...................
Treasury ........................................ 293,186
Trading liabilities ............................... 826,856
Other borrowed money:
With original maturity of one year
or less ....................................... 2,103,443
With original maturity of more than
one year ...................................... 20,766
Bank's liability on acceptances exe-
cuted and outstanding ........................... 951,116
Subordinated notes and debentures ................. 1,020,400
Other liabilities ................................. 1,522,884
-----------
Total liabilities ................................. 40,456,160
-----------
EQUITY CAPITAL
Common stock ...................................... 942,284
Surplus ........................................... 525,666
Undivided profits and capital
reserves ........................................ 2,129,376
Net unrealized holding gains
(losses) on available-for-sale
securities ...................................... ( 2,073)
Cumulative foreign currency transla-
tion adjustments ................................ ( 8,403)
-----------
Total equity capital .............................. 3,586,850
-----------
Total liabilities and equity
capital ......................................... $44,043,010
===========
</TABLE>
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.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Alan R. Griffith )
<PAGE> 1
EXHIBIT 25(b)
================================================================================
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)
-----------------------
CULLEN/FROST BANKERS, INC.
(Exact name of obligor as specified in its charter)
Texas 74-1751768
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
100 W. Houston Street
San Antonio, Texas 78205
(Address of principal executive offices) (Zip code)
-----------------------
8.42% Junior Subordinated Deferrable Interest
Debentures, Series A
(Title of the indenture securities)
================================================================================
<PAGE> 2
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
- --------------------------------------------------------------------------------
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.
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 RULE
24 OF THE COMMISSION'S RULES OF PRACTICE.
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.)
-2-
<PAGE> 3
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.
-3-
<PAGE> 4
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 6th day of March, 1997.
THE BANK OF NEW YORK
By: /s/ MARY LAGUMINA
-------------------------------
Name: Mary LaGumina
Title: Assistant Vice President
<PAGE> 5
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 member of the Federal Reserve System, at the close of business September 30,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ............................... $ 4,404,522
Interest-bearing balances ....................... 732,833
Securities:
Held-to-maturity securities ..................... 789,964
Available-for-sale securities ................... 2,005,509
Federal funds sold in domestic offices of the bank:
Federal funds sold ................................ 3,364,838
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ............................... 28,728,602
LESS: Allowance for loan and
lease losses ......................... 584,525
LESS: Allocated transfer risk
reserve .............................. 429
Loans and leases, net of unearned
income, allowance, and reserve ................ 28,143,648
Assets held in trading accounts ................... 1,004,242
Premises and fixed assets (including
capitalized leases) ............................. 605,668
Other real estate owned ........................... 41,238
Investments in unconsolidated
subsidiaries and associated
companies ....................................... 205,031
Customers' liability to this bank on
acceptances outstanding ......................... 949,154
Intangible assets ................................. 490,524
Other assets ...................................... 1,305,839
-----------
Total assets ...................................... $44,043,010
===========
LIABILITIES
Deposits:
In domestic offices ............................. $20,441,318
Noninterest-bearing .................... 8,158,472
Interest-bearing ....................... 12,282,846
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ................ 11,710,903
Noninterest-bearing .................... 46,182
Interest-bearing ....................... 11,664,721
Federal funds purchased in
domestic offices of the
bank:
Federal funds purchased ......................... 1,565,288
Demand notes issued to the U.S. ...................
Treasury ........................................ 293,186
Trading liabilities ............................... 826,856
Other borrowed money:
With original maturity of one year
or less ....................................... 2,103,443
With original maturity of more than
one year ...................................... 20,766
Bank's liability on acceptances exe-
cuted and outstanding ........................... 951,116
Subordinated notes and debentures ................. 1,020,400
Other liabilities ................................. 1,522,884
-----------
Total liabilities ................................. 40,456,160
-----------
EQUITY CAPITAL
Common stock ...................................... 942,284
Surplus ........................................... 525,666
Undivided profits and capital
reserves ........................................ 2,129,376
Net unrealized holding gains
(losses) on available-for-sale
securities ...................................... ( 2,073)
Cumulative foreign currency transla-
tion adjustments ................................ ( 8,403)
-----------
Total equity capital .............................. 3,586,850
-----------
Total liabilities and equity
capital ......................................... $44,043,010
===========
</TABLE>
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.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Alan R. Griffith )
<PAGE> 1
Exhibit 25(c)
================================================================================
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)
-----------------------
CULLEN/FROST BANKERS, INC.
(Exact name of obligor as specified in its charter)
Texas 74-1751768
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
100 W. Houston Street
San Antonio, Texas 78205
(Address of principal executive offices) (Zip code)
-----------------------
Guarantee of Capital Securities of
Cullen/Frost Capital Trust I
(Title of the indenture securities)
================================================================================
<PAGE> 2
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
- --------------------------------------------------------------------------------
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.
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 RULE
24 OF THE COMMISSION'S RULES OF PRACTICE.
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.)
-2-
<PAGE> 3
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.
-3-
<PAGE> 4
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 6th day of March, 1997.
THE BANK OF NEW YORK
By: /s/ MARY LAGUMINA
-------------------------------
Name: Mary LaGumina
Title: Assistant Vice President
<PAGE> 5
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 member of the Federal Reserve System, at the close of business September 30,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ............................... $ 4,404,522
Interest-bearing balances ....................... 732,833
Securities:
Held-to-maturity securities ..................... 789,964
Available-for-sale securities ................... 2,005,509
Federal funds sold in domestic offices of the bank:
Federal funds sold ................................ 3,364,838
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ............................... 28,728,602
LESS: Allowance for loan and
lease losses ......................... 584,525
LESS: Allocated transfer risk
reserve .............................. 429
Loans and leases, net of unearned
income, allowance, and reserve ................ 28,143,648
Assets held in trading accounts ................... 1,004,242
Premises and fixed assets (including
capitalized leases) ............................. 605,668
Other real estate owned ........................... 41,238
Investments in unconsolidated
subsidiaries and associated
companies ....................................... 205,031
Customers' liability to this bank on
acceptances outstanding ......................... 949,154
Intangible assets ................................. 490,524
Other assets ...................................... 1,305,839
-----------
Total assets ...................................... $44,043,010
===========
LIABILITIES
Deposits:
In domestic offices ............................. $20,441,318
Noninterest-bearing .................... 8,158,472
Interest-bearing ....................... 12,282,846
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ................ 11,710,903
Noninterest-bearing .................... 46,182
Interest-bearing ....................... 11,664,721
Federal funds purchased in
domestic offices of the
bank:
Federal funds purchased ......................... 1,565,288
Demand notes issued to the U.S. ...................
Treasury ........................................ 293,186
Trading liabilities ............................... 826,856
Other borrowed money:
With original maturity of one year
or less ....................................... 2,103,443
With original maturity of more than
one year ...................................... 20,766
Bank's liability on acceptances exe-
cuted and outstanding ........................... 951,116
Subordinated notes and debentures ................. 1,020,400
Other liabilities ................................. 1,522,884
-----------
Total liabilities ................................. 40,456,160
-----------
EQUITY CAPITAL
Common stock ...................................... 942,284
Surplus ........................................... 525,666
Undivided profits and capital
reserves ........................................ 2,129,376
Net unrealized holding gains
(losses) on available-for-sale
securities ...................................... ( 2,073)
Cumulative foreign currency transla-
tion adjustments ................................ ( 8,403)
-----------
Total equity capital .............................. 3,586,850
-----------
Total liabilities and equity
capital ......................................... $44,043,010
===========
</TABLE>
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.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Alan R. Griffith )
<PAGE> 1
EXHIBIT 99(a)
LETTER OF TRANSMITTAL
CULLEN/FROST CAPITAL TRUST I
OFFER TO EXCHANGE ITS
8.42% CAPITAL SECURITIES
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
8.42% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
PURSUANT TO THE PROSPECTUS
DATED MARCH , 1997
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON APRIL , 1997, UNLESS EXTENDED.
To: The Bank of New York, as Exchange Agent
<TABLE>
<C> <C> <C>
BY HAND OR OVERNIGHT DELIVERY: Facsimile Transmissions: BY REGISTERED OR CERTIFIED MAIL:
The Bank of New York (Eligible Institutions Only) The Bank of New York
101 Barclay Street (212) 571-3080 101 Barclay Street, 7E
Corporate Trust Services Window To Confirm by Telephone New York, New York 10286
Ground Level or for Information Call: Attention: Reorganization
New York, New York 10286 (212) 815-6333 Section,
Attention: Reorganization Arwen Gibbons
Section,
Arwen Gibbons
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF
TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS
COMPLETED.
The undersigned acknowledges that he or she has received the Prospectus,
dated March , 1997 (the "Prospectus"), of Cullen/Frost Capital Trust I (the
"Issuer") and Cullen/Frost Bankers, Inc. (the "Corporation") and this Letter of
Transmittal (the "Letter of Transmittal"), which together constitute together,
the Company's offer (the "Exchange Offer") to exchange its 8.42% Capital
Securities (the "New Capital Securities") for a like Liquidation Amount of its
outstanding 8.42% Capital Securities (the "Old Capital Securities" and, together
with the New Capital Securities, the "Capital Securities"). The terms of the New
Capital Securities are identical in all material respects to the Old Capital
Securities, except that the New Capital Securities have been registered under
the Securities Act of 1933, as amended (the "Securities Act"), and, therefore,
will not bear legends restricting their transfer and will not contain certain
provisions providing for an increase in the Distribution rate thereon. The term
"Expiration Date" shall mean 5:00 p.m., New York City time, on April , 1997,
unless the Exchange Offer is extended as provided in the Prospectus, in which
case the term "Expiration Date" shall mean the latest date and time to which the
Exchange Offer is extended. Capitalized terms used but not defined herein have
the meanings given to them in the Prospectus.
Holders who wish to tender their Old Capital Securities and (i) whose Old
Capital Securities are not immediately available or (ii) time will not permit
their Old Capital Securities, this Letter of Transmittal or an Agent's Message
(as defined in the Prospectus) and any other documents required by this Letter
of Transmittal to be delivered to the Exchange Agent prior to the Expiration
Date must tender their Old Capital Securities according to the guaranteed
delivery procedures set forth under the caption "The Exchange
Offer -- Procedures for Tendering Old Capital Securities -- Guaranteed Delivery"
in the Prospectus. See Instruction 1.
The term "Holder" with respect to the Exchange Offer means any person in
whose name Old Capital Securities are registered on the books of the Issuer or
any other person who has obtained a properly completed bond power from the
registered holder. The undersigned has completed, executed and delivered this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer. Holders who wish to tender their Old Capital
Securities must complete this Letter of Transmittal in its entirety.
<PAGE> 2
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY
BEFORE COMPLETING THIS LETTER OF TRANSMITTAL
- --------------------------------------------------------------------------------
DESCRIPTION OF OLD CAPITAL SECURITIES TENDERED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OLD CAPITAL LIQUIDATION NUMBER OF
SECURITIES AMOUNT OF BENEFICIAL HOLDERS
NAME AND ADDRESS OF TENDERED (ATTACH OLD CAPITAL FOR WHOM OLD
REGISTERED HOLDER CERTIFICATE ADDITIONAL LIST IF SECURITIES TENDERED CAPITAL SECURITIES
(PLEASE FILL IN IF BLANK) NUMBERS* NECESSARY) (IF LESS THAN ALL)** ARE HELD
<C> <C> <C> <S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
$
- ----------------------------------------------------------------------------------------------------------------
$
- ----------------------------------------------------------------------------------------------------------------
$
- ----------------------------------------------------------------------------------------------------------------
TOTAL AMOUNT TENDERED $
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* 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 Liquidation 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.
- --------------------------------------------------------------------------------
[ ] 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 (ONLY PARTICIPANTS IN DTC MAY DELIVER
CAPITAL SECURITIES BY BOOK-ENTRY TRANSFER) (SEE INSTRUCTION 1):
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 (SEE INSTRUCTION 1):
Name of Registered Holder
---------------------------------------------------
Window Ticket Number (if any)
-----------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
--------------------------
Name of Institution which Guaranteed Delivery
-------------------------------
If Guaranteed Delivery is to be made By Book-Entry Transfer:
Name of Tendering Institution
-----------------------------------------------
DTC Account Number
----------------------------------------------------------
Transaction Code Number
-----------------------------------------------------
[ ] CHECK HERE IF OLD CAPITAL SECURITIES TENDERED BY BOOK-ENTRY TRANSFER BUT NOT
EXCHANGED 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:
-----------------------------------------------------------------------
Address:
--------------------------------------------------------------------
Area Code and Telephone Number: Contact Person:
-------------- ----------------
2
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby tenders to the Issuer and the Corporation the
above-described aggregate Liquidation Amount of the Old Capital Securities in
exchange for a like aggregate Liquidation Amount of the New Capital Securities.
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 Issuer 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-at-fact
(with full knowledge that the Exchange Agent is also acting as agent of the
Corporation and the Issuer 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 Issuer together
with all accompanying evidences of transfer and authenticity to, or upon the
order of, the Issuer, 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
Issuer, and (iii) receive for the account of the Issuer 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 ISSUER 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 ISSUER OR THE
EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO COMPLETE THE EXCHANGE, SALE,
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 and address of the registered holder 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 numbers and 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 under "The Exchange Offer -- Procedures
for Tendering Old Capital Securities" in the Prospectus and in the instructions
herein will, upon the Corporation's and the Issuer's acceptance for exchange of
such tendered Old Capital Securities, constitute a binding agreement between the
undersigned, the Corporation and the Issuer upon the terms and subject to the
conditions of the Exchange Offer. The undersigned
3
<PAGE> 4
recognizes that, under certain circumstances set forth in the Prospectus, the
Corporation and the Issuer 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 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" below, 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 ISSUER 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 A 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 A
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 ISSUER 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 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 180 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 PARTICIPATING BROKER-DEALER WHO ACQUIRED OLD CAPITAL SECURITIES FOR
ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES, BY
TENDERING SUCH OLD CAPITAL SECURITIES AND EXECUTING THIS LETTER OF TRANSMITTAL,
AGREES THAT, UPON RECEIPT OF NOTICE FROM THE CORPORATION OR THE
4
<PAGE> 5
ISSUER OF THE OCCURRENCE OF ANY EVENT OR THE DISCOVERY OF ANY FACT WHICH MAKES
ANY STATEMENT CONTAINED OR INCORPORATED BY REFERENCE IN THE PROSPECTUS UNTRUE IN
ANY MATERIAL RESPECT OR WHICH CAUSES THE PROSPECTUS TO OMIT TO STATE A MATERIAL
FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS CONTAINED OR INCORPORATED BY
REFERENCE THEREIN, IN THE 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
OR THE ISSUER HAS 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 ISSUER
HAS GIVEN NOTICE THAT THE SALE OF THE NEW CAPITAL SECURITIES MAY BE RESUMED, AS
THE CASE MAY BE. IF THE CORPORATION OR THE ISSUER GIVES SUCH NOTICE TO SUSPEND
THE SALE OF THE NEW CAPITAL SECURITIES, IT SHALL EXTEND THE 180-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 ISSUER HAS GIVEN NOTICE THAT THE SALE OF NEW
CAPITAL SECURITIES MAY BE RESUMED, AS THE CASE MAY BE.
Holders of Old Capital Securities whose Old Capital Securities are accepted
for exchange will not receive accumulated Distributions on such Old Capital
Securities for any period from and after the last Distribution date to which
Distributions have been paid or duly provided for on such Old Capital Securities
prior to the original issue date of the New Capital Securities or, if no such
Distributions have been paid or duly provided for, will not receive any accrued
Distributions on such Old Capital Securities, and the undersigned waives the
right to receive any interest on such Old Capital Securities accrued from and
after such Distribution date or, if no such Distributions have been paid or duly
provided for, from and after February 3, 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.
5
<PAGE> 6
- --------------------------------------------------------------------------------
HOLDERS SIGN HERE
(SEE INSTRUCTIONS 2, 5 AND 6)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON PAGE 13)
(NOTE: SIGNATURES MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2)
Must be signed by registered holder exactly as name appears on Certificates
for the Old Capital Securities hereby tendered or on a security position
listing, or by any person authorized to become the registered holder by
endorsements and documents transmitted herewith (including such opinions of
counsel, certifications and other information as may be required by the Issuer
or the Exchange Agent for the Old Capital Securities 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE OF HOLDER)
Date: ____________________, 1997
Name
----------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title)
-----------------------------------------------------------
Address
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
--------------------------------------------------
Tax Identification or Social Security Number
------------------------------------
GUARANTEE OF SIGNATURE
(SEE INSTRUCTIONS 2 AND 5)
- --------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
Date: ,1997
-------------
Name of Firm
--------------------------------------------------------------------
Capacity (full title)
-----------------------------------------------------------
(PLEASE PRINT)
Address
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
--------------------------------------------------
- --------------------------------------------------------------------------------
6
<PAGE> 7
- --------------------------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if the New Capital Securities or any Old Capital
Securities that are not tendered are to be issued in the name of someone other
than the registered holder of the Old Capital Securities whose name appears
above.
Issue
[ ] New Capital Securities and/or
[ ] Old Capital Securities not tendered
to:
Name
----------------------------------------------------------------------------
Address
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
--------------------------------------------------
Tax Identification or Social Security Number
------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if the New Capital Securities or any Old Capital
Securities that are not tendered are to be sent to someone other than the
registered holder of the Old Capital Securities whose name appears above, or
such registered holder at an address other than that shown above.
Mail
[ ] New Capital Securities
[ ] Old Capital Securities not tendered
to:
Name
----------------------------------------------------------------------------
Address
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
--------------------------------------------------
Tax Identification or Social Security Number
------------------------------------
- --------------------------------------------------------------------------------
7
<PAGE> 8
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)
Certificates are to be forwarded herewith or (b) 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. Certificates, or timely
book-entry confirmation of a book-entry transfer of such Old Capital Securities
into the Exchange Agent's account at DTC, 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 address set forth
herein on or prior to the Expiration Date. Tenders by book-entry transfer may
also be made by delivering an Agent's Message in lieu of this Letter of
Transmittal. The term "book-entry confirmation" means a timely 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 Issuer 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 tendered 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) whose Old
Capital Securities are not immediately available or (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) who
cannot complete the procedures for delivery by book-entry transfer on or prior
to the Expiration Date, 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 in "The Exchange Offer -- Procedures
for Tendering Old Capital Securities" in the Prospectus. Pursuant to such
procedures: (i) such tender must be made by or through an Eligible Institution
(as defined below); (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form made available by the Corporation
and the Issuer, must be received by the Exchange Agent on or prior to the
Expiration Date; and (iii) the Certificates (or a book-entry confirmation (as
defined in the Prospectus)) representing all tendered Old Capital Securities, in
proper form for transfer, together with a Letter of Transmittal (or facsimile
thereof), or an Agent's Message, 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.
8
<PAGE> 9
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 DELIVERY ON OR PRIOR TO THE
EXPIRATION DATE.
Neither the Corporation nor the Issuer 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 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 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 numbers
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 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 tendered 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. 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)." In such case, a new Certificate for the remainder of the Old Capital
Securities that were evidenced by the Old Certificate 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, telegraphic,
telex or facsimile transmission of such notice of withdrawal must be timely
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 Certificates 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-
9
<PAGE> 10
entry transfer set forth under "The Exchange Offer -- 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, telegraphic, telex 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 Issuer, in their sole discretion, whose determination shall be final and
binding on all parties. The Corporation and the Issuer, any affiliates or
assigns of the Corporation and the Issuer, the Exchange Agent or any other
person shall not 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 on or prior to the Expiration Date 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 of the Old Capital
Securities tendered hereby, the signature must correspond exactly with the name
as written on the face of the Certificates 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 names 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 fiduciary or representative capacity, such
persons should so indicate when signing and must submit proper evidence
satisfactory to the Corporation and the Issuer, in their sole discretion, of
such persons' authority to so act.
When this Letter of Transmittal is signed by the registered owner of the
Old Capital Securities listed and transmitted hereby, no endorsement of
Certificates or separate bond powers are required unless New Capital Securities
are to be issued in the name of a person other than the registered holder.
Signatures on such Certificates or bond powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner of the Old Capital Securities listed, the Certificates must be
endorsed or accompanied by appropriate bond powers, signed exactly as the name
of the registered owner appears on the Certificates, and also must be
accompanied by such opinions of counsel, certifications and other information as
the Corporation, the Issuer 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 unless the appropriate boxes on this Letter of Transmittal are
completed. See Instruction 4.
7. IRREGULARITIES. The Corporation and the Issuer 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.
10
<PAGE> 11
The Corporation and the Issuer reserve the absolute right 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 or the
Issuer, be unlawful. The Corporation and the Issuer 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 -- 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 Issuer'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. The Corporation, the Issuer, any affiliates or assigns of the
Corporation, the Issuer, the Exchange Agent, or any other person shall not 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, the Notice of Guaranteed Delivery and the
Letter of Transmittal 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 the 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 3 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 3 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 3 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.
11
<PAGE> 12
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 Certificates
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
Certificates. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed or stolen
Certificates 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.
12
<PAGE> 13
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: THE BANK OF NEW YORK
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT Social Security Number OR Employer
AND CERTIFY BY SIGNING AND DATING BELOW. Identification Number
FORM W-9
-------------------------------
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
------------------------------------------------------------------------------------------------
PART 2 -- CERTIFICATION -- Under 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) and
PAYER'S REQUEST FOR (2) I am not subject to backup withholding either because: (a) I am exempt from backup
TAXPAYER withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS") that I
IDENTIFICATION am subject to backup withholding as a result of a failure to report all interest or
NUMBER (TIN) dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding.
------------------------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have PART 3 --
been notified by the IRS that you are currently subject to backup
withholding because of underreporting interest or dividends on your tax Awaiting TIN [ ]
return. However, if after being notified by the IRS that you are subject to
backup withholding, you received another notification from the IRS that you
are no longer subject to backup withholding, do not cross out such item (2).
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION
OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.
SIGNATURE DATE
------------------------------------ ------------------------
NAME (Please Print)
-------------------------------------------------------
ADDRESS (Please Print)
----------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE 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.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF
SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
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 reportable payments made to me will be withheld,
but that such amounts will be refunded to me if I then provide a Taxpayer
Identification Number within sixty (60) days.
Signature Date
-------------------------------------------- ---------------------
Name (Please Print)
------------------------------------------------------------
Address (Please Print)
---------------------------------------------------------
- --------------------------------------------------------------------------------
13
<PAGE> 1
EXHIBIT 99(b)
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
8.42% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
OF
CULLEN/FROST CAPITAL TRUST I
As set forth in the Prospectus dated March , 1997 (the "Prospectus"), of
Cullen/Frost Capital Trust I (the "Issuer") and Cullen/Frost Bankers, Inc. (the
"Corporation") under the caption "The Exchange Offer -- Procedures for Tendering
Old Capital Securities -- Guaranteed Delivery," this form must be used to accept
the Issuer's offer to exchange its 8.42% Capital Securities (the "New Capital
Securities") for a like Liquidation Amount of its outstanding 8.42% Capital
Securities (the "Old Capital Securities"), by Holders who wish to tender their
Old Capital Securities and (i) whose Old Capital Securities are not immediately
available or (ii) who cannot deliver their Old Capital Securities, the Letter of
Transmittal or an Agent's Message (as defined in the Prospectus) and any other
documents required by the Letter of Transmittal to the Exchange Agent prior to
the Expiration Date. This form must be delivered by mail or hand delivery or
transmitted, via facsimile, to the Exchange Agent at its address set forth below
not later than the Expiration Date. All capitalized terms used herein but not
defined herein shall have the meanings ascribed to them in the Prospectus.
THE EXCHANGE AGENT IS:
THE BANK OF NEW YORK
<TABLE>
<C> <C> <C>
BY HAND OR OVERNIGHT DELIVERY: Facsimile Transmissions: BY REGISTERED OR CERTIFIED MAIL:
The Bank of New York (Eligible Institutions Only) The Bank of New York
101 Barclay Street (212) 571-3080 101 Barclay Street, 7E
Corporate Trust Services Window To Confirm by Telephone New York, New York 10286
Ground Level or for Information Call: Attention: Reorganization
New York, New York 10286 (212) 815-6333 Section,
Attention: Reorganization Arwen Gibbons
Section,
Arwen Gibbons
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
The undersigned hereby tenders for exchange to the Issuer upon the terms
and subject to the conditions set forth in the Prospectus and the Letter of
Transmittal, 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 -- Guaranteed Delivery
Procedures."
The undersigned understands and acknowledges that the Exchange Offer will
expire at 5:00 p.m., New York City time, on April , 1997, unless extended by
the Issuer. The term "Expiration Date" shall mean 5:00 p.m., New York City time,
on April , 1997, unless the Exchange Offer is extended as provided in the
Prospectus, in which case the term "Expiration Date" shall mean the latest date
and time to which the Exchange Offer is extended.
All authority conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Notice of
Guaranteed Delivery shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns.
<PAGE> 2
- -------------------------------------------------------------------------------
SIGNATURE
X Date:
--------------------------------------------- ----------------------------
X Date:
--------------------------------------------- ----------------------------
Signature(s) of Registered
Holders(s)
or Authorized Signatory
Area Code and Telephone Number:
-------------------------------------------------
Name(s)
-------------------------------------------------------------------------
(Please Print)
Capacity (full title, if signing in a fiduciary or representative capacity):
- --------------------------------------------------------------------------------
Address:
------------------------------------------------------------------------
(Including Zip Code)
Taxpayer Identification or
Social Security No:
-------------------------------------------------------------
- --------------------------------------------------------------------------------
Aggregate Liquidation Amount of
Old Capital Securities Tendered
(must be in integral
multiples of $1,000): $
------------------------
Certificate Number(s) of Old Capital Securities (if available):
Aggregate Liquidation Amount
Represented by Certificates(s): $
--------------
IF TENDERED OLD CAPITAL SECURITIES WILL BE DELIVERED BY BOOK-ENTRY TRANSFER,
PROVIDE THE DEPOSITORY TRUST COMPANY ("DTC") ACCOUNT NO. AND TRANSACTION CODE
NUMBER (IF AVAILABLE):
Account No.
--------------------------------
Transaction No.
----------------------------
GUARANTY OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm or entity identified as an "eligible guarantor
institution" within the meaning of Rule 17Ad-15 promulgated under the Securities
Exchange Act of 1934, as amended, guarantees deposit with the Exchange Agent of
a properly completed and executed Letter of Transmittal (or facsimile thereof),
or an Agent's Message, as well as the certificate(s) representing all tendered
Old Capital Securities in proper form for transfer, or confirmation of the
book-entry transfer of such Old Capital Securities into the Exchange Agent's
account at the Book-Entry Transfer Facility described in the Prospectus under
the caption "The Exchange Offer -- Procedures for Tendering Old Capital
Securities -- Book-Entry Transfer" and other documents required by the Letter of
Transmittal, all by 5:00 p.m., New York City time, on the third New York Stock
Exchange trading day following the Expiration Date.
Name of Eligible Institution:
---------------------------------------------------
<TABLE>
<S> <C>
AUTHORIZED SIGNATURE
Address: Name:
---------------------------------- ----------------------------
Title:
- ------------------------------------------ ---------------------------
Area Code and Telephone No.: Date:
-------------- ----------------------------
</TABLE>
NOTE: DO NOT SEND OLD CAPITAL SECURITIES WITH THIS NOTICE. ACTUAL SURRENDER
OF OLD CAPITAL SECURITIES MUST BE PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY
EXECUTED LETTER OF TRANSMITTAL.
<PAGE> 1
Exhibit 99(c)
___________, 1997
EXCHANGE AGENT AGREEMENT
The Bank of New York
Corporate Trust Trustee Administration
101 Barclay Street - 21st Floor
New York, New York 10286
Ladies and Gentlemen:
Cullen/Frost Bankers, Inc. (the "Company") and Cullen/Frost Capital
Trust I (the "Issuer") propose to make an offer (the "Exchange Offer") to
exchange, among other securities, the outstanding 8.42% Capital Securities,
Series A of the Issuer (the "Old Capital Securities") for a like liquidation
amount of the 8.42% Capital Securities, Series A of the Issuer which are being
registered under the U.S. Securities Act of 1933 (the "New Capital Securities").
The terms and conditions of the Exchange Offer as currently contemplated will be
set forth in a prospectus, dated ___________, 1997 (the "Prospectus"), to be
distributed to all record Holders of the Old Capital Securities. The Old Capital
Securities and the New Capital Securities are collectively referred to herein as
the "Securities".
The Company hereby appoints The Bank of New York to act as exchange
agent (the "Exchange Agent") in connection with the Exchange Offer. References
hereinafter to "you" shall refer to The Bank of New York. A copy of the
Prospectus is attached hereto as Exhibit A. Capitalized terms used and not
otherwise defined herein shall have the respective meanings ascribed thereto in
the Prospectus.
A copy of each of the form of the letter of transmittal (the
"Letter of Transmittal") and the form of the notice of guaranteed delivery (the
"Notice of Guaranteed Delivery") to be used by Holders of Old Capital Securities
to surrender Old Capital Securities in order to receive New Capital Securities
pursuant to the Exchange Offer, and the form of letter to brokers and the form
of letter to clients (together, with the Letter of Transmittal and the Notice of
Guaranteed Delivery, the "Tender Documents") are attached hereto as Exhibit B.
The Exchange Offer is expected to be commenced by the Company on or
about _____________, 1997. The Letter of Transmittal accompanying the Prospectus
(or in the case of book entry securities, the Automated Tender Offer Program
("ATOP") system) is to be used by the Holders of the Old Capital
-1-
<PAGE> 2
Securities to accept the Exchange Offer and the Prospectus contains instructions
with respect to the delivery of certificates for Old Capital Securities tendered
in connection therewith.
The Exchange Offer shall expire at 5:00 P.M., New York City time, on
_____________, 1997 or on such later date or time to which the Company may
extend the Exchange Offer (the "Expiration Date"). Subject to the terms and
conditions set forth in the Prospectus, the Company expressly reserves the right
to extend the Exchange Offer from time to time and may extend the Exchange Offer
by giving oral (confirmed in writing) or written notice to you before 9:00 A.M.,
New York City time, on the business day following the previously scheduled
Expiration Date.
The Company expressly reserves the right to amend or terminate the
Exchange Offer, and not to accept for exchange any Old Capital Securities not
theretofore accepted for exchange, upon the occurrence of any of the conditions
of the Exchange Offer specified in the Prospectus under the caption "The
Exchange Offer -- Conditions to the Exchange Offer." The Company will give oral
(confirmed in writing) or written notice of any amendment, termination or
nonacceptance to you as promptly as practicable.
In carrying out your duties as Exchange Agent, you are to act in
accordance with the following instructions:
1. You will perform such duties and only such duties as are
specifically set forth in the section of the Prospectus captioned "The Exchange
Offer" or as specifically set forth herein; provided, however, that in no way
will your general duty to act in good faith be discharged by the foregoing.
2. You are to mail the Prospectus and the Tender Documents to all of
the Holders and participants on the day that you are notified by the Company and
the Issuer that the Registration Statement has become effective under the
Securities Act of 1933, as amended, or as soon as practicable thereafter, and to
make subsequent mailings thereof to any persons who become Holders prior to the
Expiration Date and to any persons as may from time to time be requested by the
Company. All mailings pursuant to this Section 1 shall be by first-class mail,
postage prepaid, unless otherwise specified by the Company or the Issuer. You
shall also accept and comply with telephone requests for information relating to
the Exchange Offer, provided that such information shall relate only to the
procedures for tendering Old Capital Securities in (or withdrawing tenders of
Old Capital Securities from) the Exchange Offer. All other requests for
information relating to the Exchange Offer shall be directed to the Company,
Attention: Bart R. Vincent.
3. You are to examine the Letters of Transmittal and
-2-
<PAGE> 3
the Old Capital Securities and other documents delivered or received by you, by
or for the Holders (including any book-entry confirmations, as such term is
defined in the Prospectus), to ascertain whether (i) the Letters of Transmittal
and any other Tender Documents are duly executed and properly completed in
accordance with the instructions set forth therein and that the book-entry
confirmations are in due and proper form and contain the information required to
be set forth therein, (ii) the Old Capital Securities have otherwise been
properly tendered, (iii) the Old Capital Securities tendered in part are
tendered in principal amounts of $100,000 (100 Capital Securities) and integral
multiples of $1,000 in excess thereof and that if any Old Capital Securities are
tendered for exchange in part, the untendered principal amount thereof is
$100,000 (100 Capital Securities) or any integral multiple of $1,000 in excess
thereof, and (iv) Holders have provided their correct Tax Identification Number
or required certification. In each case where a Letter of Transmittal or other
document has been improperly executed or completed or, for any other reason, is
not in proper form, or some other irregularity exists, you will take such action
as you consider appropriate to notify the tendering Holder of such irregularity
and as to the appropriate means of resolving the same. Determination of
questions as to the proper completion or execution of the Letters of
Transmittal, or as to the proper form for transfer of the Old Capital Securities
or as to any other irregularity in connection with the submission of Letters of
Transmittal and/or Old Capital Securities and other documents in connection with
the Exchange Offer, shall be made by the officers of, or counsel for, the
Company and the Issuer at their written instructions or oral direction confirmed
by facsimile. Any determination made by the Company and the Issuer on such
questions shall be final and binding.
4. At the written request of the Company and the Issuer or their
counsel, you shall notify tendering Holders of Old Capital Securities in the
event of any extension, termination or amendment of the Exchange Offer. In the
event of any such termination, you will return all tendered Old Capital
Securities to the persons entitled thereto, at the request and expense of the
Company.
5. Tenders of the Old Capital Securities may be made only as set
forth in the Letter of Transmittal and in the section of the Prospectus entitled
"The Exchange Offer". Notwithstanding the foregoing, tenders which officers of
the Company or the Issuer shall approve in writing as having been properly
tendered shall be considered to be properly tendered. New Capital Securities are
to be issued in exchange for Old Capital Securities pursuant to the Exchange
Offer only (i) against deposit with you prior to the Expiration Date or, in the
case of a tender in accordance with the guaranteed delivery procedures outlined
in Instruction 1 of the Letter of
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Transmittal, within three New York Stock Exchange trading days after the
Expiration Date of the Exchange Offer, together with executed Letters of
Transmittal and any other documents required by the Exchange Offer or (ii) in
the event that the Holder is a participant in The Depository Trust Company
("DTC") system, by the utilization of DTC's ATOP and any evidence required by
the Exchange Offer.
You are hereby directed to establish an account with respect to the
Old Capital Securities at DTC (the "Book Entry Transfer Facility") within two
days after the Effective Date of the Exchange Offer in accordance with Section
17A(d) of the Securities Exchange Act of 1934, and the rules and regulations
thereunder. Any financial institution that is a participant in the Book Entry
Transfer Facility system may, until the Expiration Date, make book-entry
delivery of the Old Capital Securities by causing the Book Entry Transfer
Facility to transfer such Old Capital Securities into your account in accordance
with the procedure for such transfer established by the Book Entry Transfer
Facility. In every case, however, a Letter of Transmittal (or a manually
executed facsimile thereof) or an Agent's Message, property completed and duly
executed, with any required signature guarantees and any other required
documents must be transmitted to and received by you prior to the Expiration
Date or the guaranteed delivery procedures described in the Exchange Offer must
be complied with.
6. You shall advise the Company with respect to any Old Capital
Securities received subsequent to the Expiration Date and accept its
instructions with respect to disposition of such Old Capital Securities.
7. You shall accept tenders:
(a) in cases where the Old Capital Securities are registered in two
or more names only if signed by all named Holders;
(b) in cases where the signing person (as indicated on the Letter of
Transmittal) is acting in a fiduciary or a representative capacity only when
proper evidence of his or her authority so to act is submitted; and
(c) from persons other than the registered Holder of Old Capital
Securities provided that customary transfer requirements, including any
applicable transfer taxes, are fulfilled.
You shall accept partial tenders of Old Capital Securities where so
indicated and as permitted in the Letter of Transmittal and deliver certificates
for Old Capital Securities to the transfer agent for split-up and return any
untendered Old Capital Securities to the Holder (or such other person as may be
designated in the Letter of Transmittal) as promptly as practicable after
expiration or termination of the Exchange Offer.
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8. Upon satisfaction or waiver of all of the conditions to the
Exchange Offer, the Company will notify you (such notice if given orally, to be
confirmed in writing) of its acceptance, promptly after the Expiration Date, of
all Old Capital Securities properly tendered and you, on behalf of the Company,
will exchange such Old Capital Securities for New Capital Securities and cause
such Old Capital Securities to be cancelled. Delivery of New Capital Securities
will be made on behalf of the Company by you at the rate of $1,000 principal
amount of New Capital Securities for each $1,000 principal amount of the
corresponding series of Old Capital Securities tendered promptly after notice
(such notice if given orally, to be confirmed in writing) of acceptance of said
Old Capital Securities by the Company; provided, however, that in all cases, Old
Capital Securities tendered pursuant to the Exchange Offer will be exchanged
only after timely receipt by you of certificates for such Old Capital Securities
(or confirmation of book-entry transfer into your account at the Book-Entry
Transfer Facility), a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) with any required signature guarantees and any other
required documents. You shall issue New Capital Securities only in denominations
of $1,000 or any integral multiple thereof.
9. Tenders pursuant to the Exchange Offer are irrevocable, except
that, subject to the terms and upon the conditions set forth in the Prospectus
and the Letter of Transmittal, Old Capital Securities tendered pursuant to the
Exchange Offer may be withdrawn at any time prior to the Expiration Date.
10. The Company shall not be required to exchange any Old Capital
Securities tendered if any of the conditions set forth in the Exchange Offer are
not met. Notice of any decision by the Company not to exchange any Old Capital
Securities tendered shall be given (and confirmed in writing) by the Company to
you.
11. If, pursuant to the Exchange Offer, the Company does not accept
for exchange all or part of the Old Capital Securities tendered because of an
invalid tender, the occurrence of certain other events set forth in the
Prospectus under the caption "The Exchange Offer -- Conditions to the Exchange
Offer" or otherwise, you shall as soon as practicable after the expiration or
termination of the Exchange Offer return those certificates for unaccepted Old
Capital Securities (or effect appropriate book-entry transfer), together with
any related required documents and the Letters of Transmittal relating thereto
that are in your possession, to the persons who deposited them.
12. All certificates for reissued Old Capital Securities, unaccepted
Old Capital Securities or for New Capital Securities shall be forwarded by (a)
first-class certified mail, return receipt requested under a blanket surety bond
protecting you and the Company from loss or liability arising out of the
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non-receipt or non-delivery of such certificates or (b) by registered mail
insured separately for the replacement value of each of such certificates.
13. As soon as practicable after the Expiration Date, you shall
arrange for cancellation of the Old Capital Securities submitted to you or
returned by DTC in connection with ATOP. Such Old Capital Securities shall be
cancelled and retired by you in your capacity as Property Trustee (the
"Trustee") under the Amended and Restated Trust Agreement, dated February 3,
1997, governing the Capital Securities, as you are instructed by the Company (or
a representative designated by the Company) in writing.
14. You are not authorized to pay or offer to pay any concessions,
commissions or solicitation fees to any broker, dealer, bank or other persons or
to engage or utilize any person to solicit tenders.
15. As Exchange Agent hereunder you:
(a) shall have no duties or obligations other than those
specifically set forth herein or as may be subsequently agreed to in writing by
you and the Company;
(b) will be regarded as making no representations and having
no responsibilities as to the validity, sufficiency, value or genuineness of any
of the certificates or the Old Capital Securities represented thereby deposited
with you pursuant to the Exchange Offer, and will not be required to and will
make no representation as to the validity, value or genuineness of the Exchange
Offer;
(c) shall not be obligated to take any legal action hereunder
which might in your reasonable judgment involve any expense or liability, unless
you shall have been furnished with reasonable indemnity;
(d) may reasonably rely on and shall be protected in acting in
reliance upon any certificate, instrument, opinion, notice, letter, telegram or
other document or security delivered to you and reasonably believed by you to be
genuine and to have been signed by the proper party or parties;
(e) may reasonably act upon any tender, statement, request,
comment, agreement or other instrument whatsoever not only as to its due
execution and validity and effectiveness of its provisions, but also as to the
truth and accuracy of any information contained therein, which you shall in good
faith believe to be genuine or to have been signed or represented by a proper
person or persons;
(f) may rely on and shall be protected in acting
upon written or oral instructions from any officer of the
Company;
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(g) may consult with your counsel with respect to any
questions relating to your duties and responsibilities and the advice or opinion
of such counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted to be taken by you hereunder in
good faith and in accordance with the advice or opinion of such counsel; and
(h) shall not advise any person tendering Old Capital
Securities pursuant to the Exchange Offer as to the wisdom of making such tender
or as to the market value or decline or appreciation in market value of any Old
Capital Securities.
16. You shall advise by facsimile transmission or telephone, and
promptly thereafter confirm in writing to the General Counsel of the Company and
such other person or persons as it may request, daily (and more frequently
during the week immediately preceding the Expiration Date and if otherwise
requested) up to and including the Expiration Date, as to the number of Old
Capital Securities which have been tendered pursuant to the Exchange Offer and
the items received by you pursuant to this Agreement, separately reporting and
giving cumulative totals as to items properly received and items improperly
received. In addition, you will also inform, and cooperate in making available
to, the Company or any such other person or persons upon oral request made from
time to time prior to the Expiration Date of such other information as it or he
or she reasonably requests. Such cooperation shall include, without limitation,
the granting by you to the Company and such person as the Company may request of
access to those persons on your staff who are responsible for receiving tenders,
in order to ensure that immediately prior to the Expiration Date the Company
shall have received information in sufficient detail to enable it to decide
whether to extend the Exchange Offer. You shall prepare a final list of all
persons whose tenders were accepted, the aggregate principal amount of Old
Capital Securities tendered, the aggregate principal amount of Old Capital
Securities accepted and deliver said list to the Company.
17. Letters of Transmittal and Notices of Guaranteed Delivery shall
be stamped by you as to the date and the time of receipt thereof and shall be
preserved by you for a period of time at least equal to the period of time you
preserve other records pertaining to the transfer of securities. You shall
dispose of unused Letters of Transmittal and other surplus materials by
returning them to the Company.
18. You hereby expressly waive any lien, encumbrance or right of
set-off whatsoever that you may have with respect to funds deposited with you
for the payment of transfer taxes by reasons of amounts, if any, borrowed by the
Company, or any of its subsidiaries or affiliates pursuant to any loan or credit
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agreement with you or for compensation owed to you hereunder.
19. For services rendered as Exchange Agent hereunder, you shall be
entitled to such compensation as set forth on Schedule I attached hereto.
20. You hereby acknowledge receipt of the Prospectus and the Letter
of Transmittal and further acknowledge that you have examined each of them. Any
inconsistency between this Agreement, on the one hand, and the Prospectus and
the Letter of Transmittal (as they may be amended from time to time), on the
other hand, shall be resolved in favor of the latter two documents, except with
respect to the duties, liabilities and indemnification of you as Exchange Agent,
which shall be controlled by this Agreement.
21. The Company covenants and agrees to indemnify and hold you
harmless in your capacity as Exchange Agent hereunder against any loss,
liability, cost or expense, including attorneys' fees and expenses, arising out
of or in connection with any act, omission, delay or refusal made by you in
reliance upon any signature, endorsement, assignment, certificate, order,
request, notice, instruction or other instrument or document reasonably believed
by you to be valid, genuine and sufficient and in accepting any tender or
effecting any transfer of Old Capital Securities reasonably believed by you in
good faith to be authorized, and in delaying or refusing in good faith to accept
any tenders or effect any transfer of Old Capital Securities; provided, however,
that the Company shall not be liable for indemnification or otherwise for any
loss, liability, cost or expense to the extent arising out of your bad faith,
gross negligence or willful misconduct. In no case shall the Company be liable
under this indemnity with respect to any claim against you unless the Company
shall be notified by you, by letter or cable or by facsimile confirmed by
letter, of the written assertion of a claim against you or of any other action
commenced against you, promptly after you shall have received any such written
assertion or notice of commencement of action. The Company shall be entitled to
participate at its own expense in the defense of any such claim or other action,
and, if the Company so elects, the Company shall assume the defense of any suit
brought to enforce any such claim. In the event that the Company shall assume
the defense of any such suit, the Company shall not be liable for the fees and
expenses of any additional counsel thereafter retained by you so long as the
Company shall retain counsel satisfactory to you to defend such suit.
22. You shall arrange to comply with all requirements under the tax
laws of the United States, including those relating to missing Tax
Identification Numbers, and shall file any appropriate reports with the Internal
Revenue Service. The Company understands that you are required to deduct 31% on
payments to Holders who have not supplied their correct Taxpayer Identification
Number or required certification. Such funds will be turned over to the Internal
Revenue Service in
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accordance with applicable regulations.
23. You shall deliver or cause to be delivered, in a timely manner
to each governmental authority to which any transfer taxes are payable in
respect of the exchange of Old Capital Securities, your check in the amount of
all transfer taxes so payable, and the Company shall reimburse you for the
amount of any and all transfer taxes payable in respect of the exchange of Old
Capital Securities; provided, however, that you shall reimburse the Company for
amounts refunded to you in respect of your payment of any such transfer taxes,
at such time as such refund is received by you.
24. This Agreement and your appointment as Exchange Agent hereunder
shall be construed and enforced in accordance with the laws of the State of New
York applicable to agreements made and to be performed entirely within such
state, and without regard to conflicts of law principles, and shall inure to the
benefit of, and the obligations created hereby shall be binding upon, the
successors and assigns of each of the parties hereto.
25. This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
26. In case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
27. This Agreement shall not be deemed or construed
to be modified, amended, rescinded, cancelled or waived, in
whole or in part, except by a written instrument signed by a
duly authorized representative of the party to be charged. This
Agreement may not be modified orally.
28. Unless otherwise provided herein, all notices, requests and
other communications to any party hereunder shall be in writing (including
facsimile or similar writing) and shall be given to such party, addressed to it,
at its address or telecopy number set forth below:
If to the Company:
Cullen/Frost Bankers, Inc.
100 W. Houston Street
San Antonio, TX 78204
Facsimile: (210) 220-4810
Attention: General Counsel
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If to the Issuer:
Cullen/Frost Capital Trust I
c/o Cullen/Frost Bankers, Inc.
100 W. Houston Street
San Antonio, TX 78204
Facsimile: (210) 220-4810
Attention: General Counsel
If to the Exchange Agent:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Facsimile: (212) 815-5915
Attention: Corporate Trust Trustee
Administration
29. Unless terminated earlier by the parties hereto, this Agreement
shall terminate 90 days following the Expiration Date. Notwithstanding the
foregoing, Paragraphs 19, 21 and 23 shall survive the termination of this
Agreement. Upon any termination of this Agreement, you shall promptly deliver to
the Company any certificates for Securities, funds or property then held by you
as Exchange Agent under this Agreement.
30. This Agreement shall be binding and effective as of the date
hereof.
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Please acknowledge receipt of this Agreement and confirm the
arrangements herein provided by signing and returning the enclosed copy.
CULLEN/FROST BANKERS, INC.
By:______________________
Name:
Title:
CULLEN/FROST CAPITAL TRUST I
By:______________________
Name:
Administrator
Accepted as of the date
first above written:
THE BANK OF NEW YORK, as Exchange Agent
By:_____________________
Name:
Title:
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SCHEDULE I
FEES
