<PAGE> 1
FORM 8-A
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
National City Corporation
(Exact name of registrant as specified in charter)
Delaware 34-1111088
(State of incorporation or organization) (I.R.S. Employer Identification No.)
1900 East Ninth Street
Cleveland, OH 44114
(216) 575-2000
(Address of principal executive offices)
Securities to be registered pursuant to Section 12(b) of the Act:
National City Corporation $100,000,000 principal amount, 8 3/8% Notes due 1996,
New York Stock Exchange
National City Corporation $75,000,000 principal amount Floating Rate
Subordinated Notes due 1997, New York Stock Exchange
First Kentucky National Corporation $50,000,000 principal amount Floating Rate
Notes due 1997, New York Stock Exchange
Merchants National Corporation $65,000,000 principal amount 9 7/8% Subordinated
Notes due 1999, New York Stock Exchange
DESCRIPTIONS OF THE REGISTRANT'S SECURITIES TO BE REGISTERED:
Reference is made to each specimen copy of the note, each Prospectus and each
Indenture relating to these securities which, as exhibits, are incorporated
herein and made part hereof
<PAGE> 2
NATIONAL CITY CORPORATION
CROSS REFERENCE SHEET PURSUANT TO RULE 404(a) OF THE SECURITIES ACT
OF 1933 AND ITEM 501(b) OF REGULATION S-K, SHOWING THE LOCATION IN THE
PROSPECTUS OF THE INFORMATION REQUIRED BY FORM 8-A
<TABLE>
<CAPTION>
ITEM OF FORM 8-A LOCATION OR CAPTION IN PROSPECTUS
<S> <C>
1. Description of Registrant's Securities to be Outside front cover page of Prospectus's
Registered. and Form of Note/Security Section of
applicable Indenture.
2. Exhibits See exhibit on page 2
</TABLE>
<PAGE> 3
<TABLE>
EXHIBIT INDEX
<CAPTION>
PAGE NUMBER IN
EXHIBIT SEQUENTIALLY
NUMBER EXHIBIT DESCRIPTION NUMBERED COPY
- ------- ------------------- --------------
<S> <C> <C>
99.1 Specimen copy of National City Corporation $100,000,000 8 3/8%
Note Due 1996 1
99.2 Specimen copy of National City Corporation $75,000,000
Floating Rate Subordinated Note Due 1997 3
99.3 Specimen copy of First Kentucky National Corporation $50,000,000
Floating Rate Note Due 1997 5
99.4 Specimen copy of Merchants National Corporation $65,000,000
9 7/8% Subordinated Note Due 1999 9
99.5 Copy of the National City Corporation $100,000,000 8 3/8% Note
Due 1996 Prospectus dated March 13, 1986 and Indenture dated
March 15, 1986 13
99.6 Copy of the National City Corporation $75,000,000 Floating Rate
Subordinated Note Due 1997 Prospectus dated January 22, 1985
and Indenture dated January 15, 1985 107
99.7 Copy of the First Kentucky National Corporation $50,000,000
Floating Rate Note Due 1997 Prospectus dated October 9,
1985 and Indenture dated October 15, 1985 215
99.8 Copy of the Merchants National Corporation $65,000,000 9 7/8%
Subordinated Note Due 1999 Prospectus dated September 27,
1989, First Supplemental Prospectus dated as of April 29,
1992, Second Supplemental Prospectus dated as of December 31
1992, and Indenture dated October 1, 1989 415
</TABLE>
<PAGE> 4
EXHIBITS:
Specimen copy of National City Corporation $100,000,000 8 3/8% Note Due 1996
Specimen copy of National City Corporation $75,000,000 Floating Rate
Subordinated Note Due 1997
Specimen copy of First Kentucky National Corporation $50,000,000 Floating Rate
Note Due 1997
Specimen copy of Merchants National Corporation $65,000,000 9 7/8% Subordinated
Note Due 1999
Copy of the Prospectus and Indenture associated with the National City
Corporation $100,000,000 8 3/8% Note Due 1996
Copy of the Prospectus and Indenture associated with the National City
Corporation $75,000,000 Floating Rate Subordinated Note Due 1997
Copy of the Prospectus and Indenture associated with the First Kentucky
National Corporation $50,000,000 Floating Rate Note Due 1997
Copy of the Prospectus, Indenture, and supplemental Indentures associated with
the Merchants National Corporation $65,000,000 9 7/8% Subordinated Note Due
1999
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereto duly authorized.
(Registrant) National City Corporation
Date: January 11, 1994
By: /s/Robert G. Siefers
----------------------------------
Robert G. Siefers
Executive Vice President
<PAGE> 1
EXHIBIT 99.1
7-5438-113-86
REGISTERED
NUMBER
R
8 3/8% NOTE
DUE 1996
NATIONAL CITY CORPORATION
National City Corporation, a Delaware corporation (hereinafter called the
"Company," which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
8 3/8%
DUE 1996
CUSIP 635405 AF 0
SEE REVERSE FOR CERTAIN DEFINITIONS
S P E C I M E N
or registered assigns, the principal sum of DOLLARS
on March 15, 1996, and to pay interest thereon from March 15, 1986, or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for, semi-annually on March 15 and September 15 in each year,
commencing September 15, 1986, at the rate of 8 3/8% per annum, until the
principal hereof is paid or made available for payment. The interest so payable
and punctually paid or duly provided for, on any Interest Payment Date will as
provided in such indenture be paid to the Person in whose name this note (or
one or more Predecessor Notes) is registered at the close of business on the
Regular Record Date for such interest, which shall be the March 1 or September
1 (whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest which is payable but is not so
punctually paid or duly provided for will forthwith cease to be payable to the
Holder or such Regular Record Date and may either be paid to the Person in
whose name this Note (or one or more Predecessor Notes) is registered at the
close of business as 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 Notes of this series not less than 10 day sprior 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 Notes 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.
Payment of the principal of and any such interest on this Note will be
made at the office or agency of the Company initially maintained for that
purpose in The Borough of Manhattan, The City of New York in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, provided, however, that at the
option of the Company payment of interest may be made by check mailed on or
prior to an Interest Payment Date to the address of the Person entitled thereto
as such address shall appear in the Security Register.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereto, 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 the manual signature of an
authorized officer, this Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
In Witness Whereof, the Company has caused this instrument to be executed under
its corporate seal.
National City Corporation
Attest
Secretary
By
Chairman of the Board
SEAL
NATIONAL CITY CORPORATION
COUNTY OF DELAWARE
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the notes of the series provided for under the
within-mentioned Indenture
MORGAN GUARANTY TRUST COMPANY
By OF NEW YORK, as Trustee
Authorized Officer
<PAGE> 2
NATIONAL CITY CORPORATION
8 3/8% NOTE DUE 1996
This Note is one of a duly authorized issue of debentures, notes or other
evidences of indebtedness of the Company (herein called the "Securities"),
issued and to be issued in one or more series under an Indenture, dated as of
March 15, 1986 (herein called the "Indenture"), between the Company and Morgan
Guaranty Trust Company 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 Company, the Trustee and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. The Securities may be issued in one or more
series, which different series may be issued in various aggregate principal
amounts, may mature at different times, may bear interest (if any) at different
rates, may be subject to different redemption provisions (if any), may be
subject to different sinking, purchase or analogous funds (if any), may be
subject to different covenants and Events of Default and may otherwise vary as
in the Indenture provided. This Note is one of a series of Notes of the Company
designated as set forth on the face hereof (herein called the "8 3/8% Notes Due
1996"), limited in aggregate principal amount to $100,000,000.
This Note is not subject to redemption prior to maturity.
If an Event of Default with respect to Notes of this series shall occur
and be continuing, the principal of the Notes of this series may be declared
due and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series under
the Indenture at any time by the Company and the Trustee with the consent of
the Holders of 66 2/3% in aggregate principal amount of the Securities at the
time Outstanding of each series to be affected by such amendment or
modification. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate 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 Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this Note and of any
Note 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 Note. The Indenture contains provisions setting forth certain conditions
to the institution of proceedings by Holders of Securities with respect to the
Indenture or for any remedy under the Indenture.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note
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 Note is registerable in the Security Register,
upon surrender of this Note for registration of transfer at the office or
agency of the Company in any place where the principal of and interest on this
Note are payable, duly endorsed, or accompanied by a written instrument of
transfer in form satisfactory to the Company or the Security Registrar duly
executed, by the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Notes of this series, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
The Notes of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
this Note is exchangeable for a like aggregate principal amount of Notes of
this series of different authorized denominations, as requested by the Holder
surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name this Note is registered as the owner hereof for
all purposes, whether or not this Note is overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
-------------------------
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT -- Custodian
----------------------------------
(Cust) (Minor)
under Uniform Gifts to Minors
Act
------------------------------
(State)
Additional abbreviations may also be used though not in the above list.
-------------------------
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ---------------------------------------
- --------------------------------------------------------------------------------
Please print or typewrite name and address including
postal zip code of assignee
- --------------------------------------------------------------------------------
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
- ----------------------------------------------------------------------- attorney
to transfer said Note on the books of the Company, with full power of
substitution in the premises.
Dated:
---------------------
-----------------------------------------------
NOTICE The siganture to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever.
<PAGE> 1
EXHIBIT 99.2
7- 1405-113 -85
REGISTERED REGISTERED
NUMBER
R
FLOATING RATE FLOATING RATE
SUBORDINATED NOTE SUBORDINATED NOTE
DUE 1997 DUE 1997
NATIONAL CITY CORPORATION
National City Corporation, a Delaware corporation (hereinafter called the
"Company," which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
DUE 1997 DUE 1997
CUSIP 635405 AF 0
SEE REVERSE FOR CERTAIN DEFINITIONS
or registered assigns, the principal sum of DOLLARS
on the Interest Payment Date (as hereinafter defined) in January 1997,
and to pay interest on said principal sum quarterly on the Interest Payment
Dates in January, April, July and October in each year, commencing on the first
Interest Payment Date after the date hereof, at the rates per annum determined
as provided below, from January ...., 1985 (the "Issue Date"), or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, or, if the date hereof is an Interest Payment Date to which the interest
has been paid or duly provided for, then from the date hereof, until payment of
said principal sum has been made or duly provided for. The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date, will,
as provided in such Indenture, be paid to the person in whose name this Note
(or one or more Predecessor Notes, as defined in said Indenture) is registered
at the close of business on the date which is the 15th day (whether or not a
Business Day or a New York Business Day (as such terms are defined below))
immediately preceding such Interest Payment Date ("Regular Record Date"). Any
such interest not so punctually paid or duly provided for shall forthwith cease
to be payable to the registered holder on such Regular Record Date and may be
paid to the person in whose name this Note (or one or more Predecessor Notes)
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 Notes not less than 10 days prior to such Special Record
Date, or may be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange or national market on which
the Notes may be listed, and upon such notice as may be required by such
exchange or market, all as more fully provided in said Indenture. Payment of
the principal of and interest on this Note will be made at the office or agency
of the Company maintained for such purpose in the Borough of Manhattan, The
City of New York, in such coin or currency of the United States of America as
at the time of payment shall be legal tender for the payment of public and
private debts; PROVIDED, HOWEVER, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Note Register.
This Note shall bear interest in respect of each Interest Period (as
defined below) at the rate per annum (herein called the "Rate of Interest")
calculated for such Interest Period by Citibank, N.A., or its successor as
agent bank (herein called the "Agent Bank"), on the basis of rates supplied to
it by Citibank, N.A., Morgan Guaranty Trust Company of New York, Barclays Bank
International Limited and Deutsche Bank AG (the "Reference Banks", which term
shall include any successor Reference Bank appointed by the Company as provided
in the Notes), in accordance with the following provisions:
(i) On the second New York Business Day prior to the commencement of
each Interest Period, or if such day is not a Business Day, then the
Business Day immediately preceding such day (the "Interest Determination
Date"), the Agent Bank will request the principal London office of each of
the Reference Banks to provide the Agent Bank with its offered quotation
for United States dollar deposits for the Interest Period concerned to
leading banks in the London interbank market at approximately 11:00 A.M.
(London time) on the Interest Determination Date in question. The Rate of
Interest for such Interest Period shall, subject to (iv) below, be .... 0f
1% per annum above the arithmetic mean (rounded upwards, if necessary, to
the nearest multiple of 1/16 of 1%) of such offered quotations, as
determined by the Agent Bank.
(ii) If on any Interest Determination Date at least two but fewer than
all the Reference Banks provide the Agent Bank with such offered
quotations, the Rate of Interest for the relevant Interest Period shall,
subject to (iv) below, be determined in accordance with (i) above on the
basis of the offered quotations of those Reference Banks providing such
quotations.
(iii) If on any Interest Determination Date only of or none of the
Reference Banks provides the Agent Bank with such offered quotations, the
Rate of Interest for the relevant interest Period shall, subject to (iv)
below, be whichever is the higher of:
(a) the Rate of Interest in effect for the last preceding
Interest Period to which (i) or (ii) above shall have applied; and
(b) the Reserve Interest Rate. The "Reserve Interest Rate"
shall be the rate per annum which the Agent Bank determines to be
either (i) .... of 1% per annum above the arithmetic mean (rounded
upwards as aforesaid) of the offered rates which leading banks in The
City of New York selected by the Agent Bank (after consultation with
the Company) are quoting on the relevant Interest Determination Date
for United States dollar deposits for the next Interest Period to the
principal London office of each of the Reference Banks or those of
them (being at least two in number) to which such offered quotations
are, in the opinion of the Agent Bank,
being so made, or (ii) in the event that the Agent Bank can determine
no such arithmetic mean, .... of 1% per annum above the arithmetic mean
(rounded upwards as aforesaid) of the offered rates which leading banks in The
City of New York selected by the Agent Bank (after consultation with the
Company) are quoting on such Interest Determination Date to leading European
banks for United States dollar deposits for the next Interest Period; provided
that if the banks selected as aforesaid by the Agent Bank are not quoting as
mentioned above, the Rate of Interest shall be the Rate of Interest specified
in (a) above.
(iv) In no event shall the Rate of Interest be less than 5-1/4%
per annum.
For the purpose of this paragraph, "Business Day" shall mean any day,
other than a Saturday or Sunday, on which banking institutions in London and
The City of New York are open for business, and "New York Business Day" shall
mean any day, other than a Saturday or Sunday, on which banking institutions in
The City of New York are open for business. Interest on the Notes in respect of
each Interest Period will accrue at the applicable Rate of Interest from and
including the first day of such Interest Period to but excluding the Interest
Payment Date that is the last day of such Interest Period. The Agent Bank shall
calculate the amount of interest payable in respect of each $1,000 principal
amount of Notes for such Interest Period (the "Interest Amount") by applying
the Rate of Interest to $1,000 and multiplying such amount by the actual number
of days for which interest is payable in the applicable Interest Period divided
by 360 and rounding the resultant figure to the nearest cent (half a cent being
rounded upwards). The Notes will bear interest from the Issue Date, and such
interest will be payable on each date (an "Interest Payment Date") which,
except as provided below, is three calendar months after the preceding Interest
Payment Date or, in the case of the first Interest Payment Date, after the
Issue Date; provided, that the first Interest Payment Date shall be no later
than April 30, 1985. If any Interest Payment Date would otherwise be a day
which is not a New York Business Day, the Interest Payment Date shall be
postponed to the next day which is a New York Business Day unless it would
thereby be in the next calendar month, in which event (i) such Interest Payment
Date shall be brought forward to the immediately preceding New York Business
Day and (ii) thereafter, each subsequent Interest Payment Date shall be the
last New York Business Day of the third month after the month is which the
preceding Interest Payment Date shall have occurred. The period beginning on
the Issue Date and ending on and including the first Interest Payment Date and
each successive period beginning on an Interest Payment Date and including the
next succeeding Interest Payment Date is herein called an "Interest Period". As
soon as possible after 11:00 A.M. (London time) on each Interest Determination
Date, but in no event later than 11:00 A.M. (London time) on the New York
Business Day immediately following each such Interest Determination Date, the
Agent Bank shall notify the Company and the Trustee of the Interest Payment
Date for the next Interest Period and the Rate of Interest and the Interest
Amount determined by it, specifying to the Company the quotations upon which
the Rate of Interest is based, and in any event the Agent Bank shall notify the
Trustee and the Company before 2:00 P.M. (London time) on each Interest
Determination Date that either; (i) it has determined or is in the process of
determining the Rate of Interest and the Interest Amount or (ii) it has not
determined and is not in the process of determining the Rate of Interest and
the Interest Amount, together with its reason therefor. The Company shall use
its best efforts to cause the Agent Bank to use its best efforts to cause such
Rate of Interest, Interest Amount and Interest Payment Date to be published in
an Authorized Newspaper (as such term is defined in the Indenture) in The City
of New York as soon as possible after determination of the Rate of Interest and
the Interest Amount but in no event later than the fourth New York Business Day
following the applicable Interest Determination Date (except that no such
publication need be made after the Notes have been declared due and payable
pursuant to Section 502 of the Indenture). The Interest Amount and Interest
Payment Date so published may subsequently be amended (or appropriate
alternative arrangements made by way of adjustment) without notice in the event
of an extension or shortening of the Interest Period. The determination of the
Rate of Interest by the Agent Bank shall (in the absence of manifest error) be
final and binding upon all parties. The Company agrees that, until the Notes
are paid or payment thereof is duly provided for, there shall at all times be
at least three Reference Banks and an Agent Bank in respect of the Notes and
that each such Reference Bank and Agent Bank shall be a leading bank engaged in
transactions in Eurodollar deposits in the international Eurocurrency market,
shall not control, be controlled by, or be under common control with, the
Company and shall have an established place of business in London. In the event
that any such Reference Bank or Agent Bank shall be unwilling or unable to act
as such Reference Bank or Agent Bank or that such Agent Bank shall fail duly to
determine the Rate of Interest and the Interest Amount for any Interest Period,
the Company shall promptly appoint a Reference Bank or Agent Bank (qualified
as aforesaid), as the case may be, to act as such in its place.
The provisions of this Note are continued on the reverse side hereof
and such continued provisions shall for all purposes have the same effect as it
set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof, directly or through an
authenticating agent, by the manual signature of an authorized signatory, this
Note shall not be entitled to any benefit under said Indenture or be valid or
obligatory for any purpose.
In Witness Whereof, the Company has caused this instrument to be executed under
its corporate seal.
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
CITIBANK, N.A.
By as Trustee
Authorized Officer
SEAL
NATIONAL CITY CORPORATION
COUNTY OF DELAWARE
National City Corporation
Attest By
Secretary Chairman of the Board
<PAGE> 2
NATIONAL CITY CORPORATION
FLOATING RATE SUBORDINATED NOTE DUE 1997
This Note is one of a duly authorized issue of Notes of the Company
designated as its Floating Rate Subordinated Notes Due 1997 (the "Notes"),
limited in aggregate principal amount to $75,000,000, issued and to be issued
under an Indenture dated as of January 15, 1985 (the "Indenture"), between the
Company and Citibank, N.A., Trustee (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 thereunder of the Company, the Trustee and the holders of the Notes and
the terms upon which the Notes are, and are to be, authenticated and delivered.
Unless otherwise herein defined, all terms used in this Note which are defined
in the Indenture shall have the meanings assigned to them in the Indenture.
The Indenture provides for the creation of a segregated fund (the "Note
Fund") to be held by the Trustee or an agent thereof. The Note Fund is being
created for certain United States bank regulatory purposes and, although it is
expected to provide a source of funds for the payment of the Notes, the Note
Fund will not constitute security for the Notes. Amounts in the Note Fund will
consist solely of (i) the net proceeds of the sale for cash (the "Cash
Proceeds") from time to time of shares of Common Stock or Perpetual Preferred
Stock or Other Equity Securities of the Company (as such terms are defined in
the Indenture) (such "Common Stock", "Perpetual Preferred Stock" and "Other
Equity Securities" being hereinafter in this Note collectively referred to as
"Capital") and (ii) funds equal to the market value (as determined by the
Company) of Capital sold from time to time in exchange for other property
(including, without limitation, Capital issued upon conversion of convertible
securities now or hereafter outstanding which do not constitute Capital) less
the expenses to effect any such exchanges (the "Exchange Proceeds"), in each
case which the Company from time to time shall elect to deposit into the Note
Fund. The Company has covenanted and agreed that (i) by the Interest Payment
Date in January 1989, it will have sold Capital, either for cash or in exchange
for other property, in a sufficient amount so that the aggregate of the Cash
Proceeds and the Exchange Proceeds will equal at least one-third of the
original aggregate principal amount of the Notes (or such lesser amounts as the
Federal Reserve Board (as defined in the Indenture) may permit from time to
time) and will have deposited into the Note Fund funds equivalent to such
amount, (ii) by the Interest Payment Date in January 1993, it will have sold
Capital, either for cash or in exchange for other property, in a sufficient
amount so that the aggregate of the Cash Proceeds and the Exchange Proceeds
will equal at least two-thirds of the original aggregate principal amount of
the Notes (or such lesser amount as the Federal Reserve Board may permit from
time to time) and will have deposited into the Note Fund funds equivalent to
such amount and (iii) by 60 days prior to the Interest Payment Date in January
1997, it will have sold Capital, either for cash or in exchange for other
property, in a sufficient amount so that the aggregate of the Cash Proceeds and
the Exchange Proceeds will equal not less than the original aggregate principal
amount of the Notes (or such lesser amount as the Federal Reserve Board may
permit from time to time) and will have deposited into the Note Fund funds
equivalent to such amount, provided, however, that such covenant and agreement
of the Company shall be cancelled, and amounts theretofore deposited into the
Note Fund will, at the request of the Company, be repaid to it, in the event
that the Federal Reserve Board shall determine that the indebtedness
represented by the Notes in excess of amounts theretofore deposited into the
Note Fund will not be treated for United States bank regulatory purposes as
"primary capital" of the Company or in the event that the Notes shall cease
being treated as "primary capital" of the Company or in the event that the
Company shall have redeemed the Notes pursuant to clause (ii) of the third
sentence of the second succeeding paragraph of this Note.
Unless the Notes shall have been accelerated upon the occurrence of an
Event of Default or the Company shall elect to redeem the Notes pursuant to
clause (ii) of the third sentence of the next paragraph of this Note or the
Federal Reserve Board shall have made the determination referred to in the
proviso to the final sentence of the immediately preceding paragraph, or the
Notes cease being treated as "primary capital" of the Company, the principal of
the Notes shall be payable prior to their final maturity in January 1997 solely
from funds in the Note Fund. Amounts in the Note Fund will not be available for
the payment of interest on the Notes. The obligation of the Company to make
payment of all amounts of principal of the Notes upon redemption, at their
final maturity in January 1997 and in the event of acceleration of the Notes
upon the occurrence of an Event of Default and the indebtedness of the Company
for such principal amounts, will not be affected by whether or to what extent
amounts are in the Note Fund. All interest or discount earned on investments of
amounts held in the Note Fund and any profit realized therefrom shall be
promptly paid to the Company and will not be deemed to be part of the Note Fund.
The Notes may not be redeemed before the Interest Payment Date in January
1989. On the Interest Payment Date in January 1989 and on any day thereafter,
the Notes may be redeemed, as a whole or from time to time in part, at the
option of the Company, on not less than 30 nor more than 60 days' prior notice
given as provided in the Indenture at a redemption price equal to 100% of the
principal amount of the Notes to be redeemed plus interest accrued and unpaid
to the date of redemption. Any such redemption may be made (i) solely out of
funds in the Note Fund, provided that no notice of any such redemption to be
made solely out of funds in the Note Fund may be given unless there are
sufficient funds available in the Note Fund to pay the principal amount of the
Notes to be redeemed; or (ii) from any source, irrespective of the amount of
funds available in or theretofore deposited in the Note Fund, if (x) the
Federal Reserve Board shall have approved such redemption from a source other
than funds in the Note Fund or (y) if the Federal Reserve Board shall determine
that the indebtedness represented by the Notes in excess of amounts theretofore
deposited in the Note Fund will not be treated for United States bank
regulatory purposes as "primary capital" of the Company or (z) if the Notes
shall cease being treated as "primary capital" of the Company.
Notes of a denomination larger than $1,000 may be redeemed in part in
principal amounts equal to $1,000 or any integral multiple thereof. Upon any
partial redemption of any such Notes the same shall be surrendered in exchange
for one or more new Notes for the unredeemed portion of principal. Notes (or
portions thereof) for whose redemption and payment provision is made in
accordance with the Indenture shall cease to bear interest from and after the
date fixed for redemption.
The indebtedness of the Company evidenced by the Notes, including the
principal thereof and interest thereon, is, to the extent and in the manner
set forth in the Indenture subordinate and junior in right of payment to its
obligations to holders of Senior Indebtedness of the Company (as defined in
the Indenture), and each holder of Notes, by the acceptance thereof, agrees to
and shall be bound by such provisions of the Indenture.
If an Event of Default (defined in the Indenture as certain events
involving the bankruptcy, insolvency or reorganization of the Company) shall
occur and be continuing, the principal of all the Notes may be declared due and
payable in the manner and with the effect provided in the Indenture. There is
no right of acceleration in the case of a default in the payment of interest
on the Notes or the performance of any other covenant of the Company.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note
at the time, place and rates, and in the coin or currency, herein prescribed.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the holders of the Notes under the Indenture at any
time by the Company with the consent of the holders of 66 2/3% in aggregate
principal amount of the Notes at the time Outstanding, as defined in the
Indenture. The Indenture also contains provisions permitting the holders of
specified percentages in aggregate principal amount of the Notes at the time
Outstanding, as defined in the Indenture, on behalf of the holders of all the
Notes, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the holder of this Note shall be conclusive and
binding upon such holder and upon all future holders of this Note and of any
Note issued upon the transfer hereof or in exchange herefor or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note or any
such other Note.
As provided in the Indenture and subject to certain limitations therein set
forth, this Note is transferable on the Note Register of the Company, upon
surrender of this Note for transfer at the office or agency of the Company in
any place where the principal of and interest on this note are payable, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Note Registrar duly executed by the
registered holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Notes of authorized denominations and for the same
aggregate principal amount will be issued to the designated transferee or
transferees.
The Notes are issuable only as registered Notes without coupons
in denominations of $1,000 and any integral multiple of $1,000. As provided in
the Indenture, and subject to certain limitations therein set forth, Notes are
exchangeable for a like aggregate principal amount of Notes of different
authorized denominations as requested by the holder surrendering the same.
No service charge will be made for any such transfer or exchange but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Prior to due presentment for transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment as
herein provided and for all other purposes whether or not this Note be overdue,
and neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.
_______________
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT -- ............... Custodian ................
(Cust) (Minor)
under Uniform Gifts to Minors
Act .....................................
(State)
Additional abbreviations may also be used though not in the above list.
_______________
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________
_______________________________________________________________________________
Please print or typewrite name and address including postal zip code of
assignee
_______________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
______________________________________________________________________ attorney
to transfer said Note on the books of the Company, with full power of
substitution in the premises.
Dated: __________________________
___________________________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever.
<PAGE> 1
EXHIBIT 99.3
REGISTERED REGISTERED
R $
FIRST KENTUCKY NATIONAL CORPORATION
FLOATING RATE NOTE DUE 1997
FIRST KENTUCKY NATIONAL CORPORATION, a corporation duly organized and
existing under the laws of the Commonwealth of Kentucky (herein called the
"Company", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received hereby promises to pay to
CUSIP 320652 AA 8
SEE REVERSE FOR CERTAIN DEFINITIONS
FLOATING FLOATING
RATE NOTE RATE NOTE
DUE 1997 DUE 1997
or registered assigns, the principal sum of DOLLARS
on October 31, 1997, and to pay interest on said principal sum quarterly in
arrears on the Interest Payment Dates (as defined on the reverse hereof) in
January, April, July and October in each year, commencing January 17, 1986, at
the rates per annum determined as provided on the reverse hereof, from October
17, 1985, or, if the date of this Note is later, from the most recent Interest
Payment Date to which interest has been paid or duly provided for, or, if the
date hereof is an Interest Payment Date to which interest has been paid or duly
provided for, then from the date hereof, or if this Note is dated after a
Regular Record Date and before the next succeeding Interest Payment Date, from
such next succeeding Interest Payment Date, until the principal hereof is paid
or made available for payment. The interest so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on the Regular Record
Date for such interest, which shall be the 15th day (whether or not a Business
Day) next preceding such Interest Payment Date. Any such interest not so
punctually paid or duly provided for will 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 Note (or one or more Predecessor Notes) 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 Notes 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 or national market on which the Notes may be listed,
and upon such notice as may be required by such exchange or market, all as more
fully provided in said Indenture.
Payment of the principal of and interest on this Note will be made at the
office or agency of the Company maintained for that purpose provided for in
said Indenture, in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private
debts; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Note Register.
Reference is hereby made to the further provisions of this Note 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 Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory
for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated___________________________ FIRST KENTUCKY NATIONAL CORPORATION
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Trustee
By
Authorized Officer
Attest: By:
Secretary President
<PAGE> 2
FIRST KENTUCKY NATIONAL CORPORATION
FLOATING RATE NOTE DUE 1997
This Note is one of a duly authorized issue of Notes of the Company
(herein called the "Notes"), limited in aggregate principal amount to
$50,000,000, issued under an Indenture, dated as of October 15, 1985 (herein
called the "Indenture"), between the Company and Morgan Guaranty Trust Company
of New York, Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee and Holders of the Notes and of the terms upon which the Notes are,
and are to be, authenticated and delivered.
This Note shall bear interest in respect of each Interest Period (as
defined below) at the rate per annum (the "Rate of Interest") calculated for
such Interest Period by Morgan Guaranty Trust Company of New York or its
successor as agent (the "Agent"), on the basis of rates supplied to it by
Morgan Guaranty Trust Company of New York, Manufacturers Hanover Trust Company,
National Westminster Bank PLC and Algemene Bank Nederland N.V. (the "Reference
Banks", which term shall include any successor Reference Bank appointed by the
Company as herein provided), in accordance with the following provisions:
(i) On the second Business Day prior to the commencement of
each Interest Period (the "Interest Determination Date"), the Agent
will request the principal London office of each of the Reference
Banks to provide the Agent at its London office with its offered
quotation for three-month United States dollar deposits to leading
banks in the London interbank market at approximately 11:00 A.M.
(London time) on the Interest Determination Date in question. The Rate
of Interest for such Interest Period shall be at a rate 1/8 of 1% per
annum above the arithmetic mean of such offered quotations (rounded
upward, if necessary, to the nearest multiple of 1/16 of 1%), as
determined by the Agent.
(ii) If on any Interest Determination Date at least two but
fewer than all the Reference Banks provide the Agent with such offered
quotations, the Rate of Interest for the relevant Interest Period
shall be determined in accordance with paragraph (i) above on the
basis of the offered quotations of those Reference Banks providing
such quotations.
(iii) If on any Interest Determination Date only one or none of
the Reference Banks provides the Agent with such an offered quotation,
the Rate of Interest for the relevant Interest Period shall be
whichever is the higher of:
(a) the Rate of Interest in effect for the last preceding
Interest Period to which the provisions of paragraph (i) or (ii)
above shall have applied; or
(b) the Reserve Interest Rate. The "Reserve Interest Rate"
shall be the rate per annum (rounded upward as aforesaid) which
the Agent determines to be either (x) the rate 1/8 of 1% per
annum above the arithmetic mean of the offered rates which
leading banks in New York City selected by the Agent (after
consultation with the Company) are quoting on the relevant
Interest Determination Date for three-month United States dollar
deposits to the principal London office of each of the Reference
Banks or those of them (being at least two in number) to which
such offered quotations are, in the opinion of the Agent, being
so made, or (y) in the event that the Agent can determine no such
arithmetic mean, the rate 1/8 of 1% per annum above the
arithmetic mean of the offered rates which leading banks in New
York City selected by the Agent (after consultation with the
Company) are quoting on such Interest Determination Date to
leading European banks for three-month United States dollar
deposits; provided that if the banks selected as aforesaid by the
Agent are not quoting as mentioned above, the Rate of Interest
shall be the Rate of Interest specified in (a) above.
For the purpose of determining the Rate of Interest, the term "Business
Day" shall mean each Monday, Tuesday, Wednesday, Thursday, Wednesday, Thursday
or Friday which is not a day on which banking institutions in London or New
York City are authorized or obligated by law or executive order to close; for
all other purposes of this Note, the term "Business Day" shall mean each
Monday, Tuesday, Wednesday, Thursday or Friday which is not a day on which
banking institutions in New York City are authorized or obligated by law or
executive order to close. Interest on the Notes in respect of each Interest
Period will accrue at the Rate of Interest established on the Interest
Determination Date immediately preceding the commencement of such Interest
Period from and including the first day of such Interest Period to and
including the day preceding the next Interest Payment Date. The Agent shall
calculate the amount of interest payable in respect of each $1,000 principal
amount of Notes for such Interest Period (the "Interest Amount") by applying
the Rate of Interest to $1,000 and multiplying such amount by the actual number
of days for which interest is payable on the next Interest Payment Date with
respect to the applicable Interest Period divided by 360 and rounding the
resultant figure to the nearest cent (half a cent being rounded upward).
Interest will be payable on each date (the "Interest Payment Date") which,
except as provided below, is three calendar months after the preceding Interest
Payment Date or, in the case of the first Interest Payment Date, January 17,
1986 and in the case of the final Interest Payment Date, October 31, 1997. If
any Interest Payment Date would otherwise be a day which is not a Business Day,
the Interest Payment Date shall be postponed to the next day which is a
Business Day unless it would thereby be in the next calendar month, in which
event (i) such Interest Payment Date shall be brought forward to the
immediately preceding Business Day and (ii) thereafter, each subsequent
Interest Payment Date shall be the last Business Day of the third month after
the month in which the preceding Interest Payment Date shall have occurred. The
period beginning on (and including) October 17, 1985 and ending on (but
excluding) the first Interest Payment Date and each successive period beginning
on (and including) an Interest Payment Date and ending on (but excluding) the
next succeeding Interest Payment Date is herein called an "Interest Period". As
soon as possible after 11:00 A.M. (London time) on each Interest Determination
Date, but in no event later than 11:00 A.M. (London time) on the Business Day
immediately following each such Interest Determination Date, the Agent shall
notify the Company and the Trustee of the Interest Payment Date for the next
Interest Period and the Rate of Interest and the Interest Amount determined by
it, specifying to the Company the quotations upon which the Rate of Interest is
based, and in any event the Agent shall notify the Trustee and the Company
before 2:00 P.M. (London time) on each Interest Determination Date that either;
(i) it has determined or is in the process of determining the Rate of Interest
and the Interest Amount or (ii) it has not determined and is not in the process
of determining the Rate of Interest and the Interest Amount, together with its
reasons therefor. The Agent shall use its best efforts to cause such Rate of
Interest, Interest Amount and Interest Payment Date to be published in a
leading newspaper in the English language circulated on Business Days in New
York City as soon as possible after determination of the Rate of Interest and
the Interest Amount but in no event later than the fourth Business Day
following the applicable Interest Determination Date. The Interest Amount and
Interest Payment Date so published may subsequently be amended without notice
in the event of an extension or shortening of the Interest Period. The
determination of the Rate of Interest by the Agent shall (in the absence of
manifest error) be final and binding upon all parties. The Company agrees that,
until the Notes are paid or payment thereof is duly provided for, there shall
at all times be at least four Reference Banks (one of which may be the Agent)
and an Agent in respect of the Notes and that each such Reference Bank shall be
a leading bank engaged in transactions in Eurodollar deposits in the
international Eurocurrency market, and that each Reference Bank and Agent shall
not control, be controlled by or be under common control with, the Company and
shall have an established place of business in London. Subject to the foregoing
sentence, the Company may from time to time terminate the appointment of the
Agent or any Reference Bank and appoint a replacement therefor. In the event
that any such Reference Bank or Agent shall be unwilling or unable to act as
such Reference Bank or Agent or that such Agent shall fail duly to determine
the Rate of Interest and the Interest Amount for any Interest Period, the
Company shall promptly appoint a Reference Bank or Agent (qualified as
aforesaid), as the case may be, to act as such in its place. The Company and
the Agent will agree that the Agent will not resign until a successor has been
appointed. The Company will further agree that each successor Agent shall be a
leading bank engaged in transactions in Eurodollar deposits in the
international Eurocurrency market, shall not control, be controlled by, or be
under common control with, the Company and shall have an established place of
business in London.
The Notes are subject to redemption at any time on and after the
Interest Payment Date in October 1989, upon not less than 30 days' nor more
than 60 days' notice by mail, as a whole or in part, at the election of the
Company, at a Redemption Price equal to 100% of the principal amount thereof,
together with accrued interest to the Redemption Date; provided that interest
installments whose Stated Maturity is on or prior to such Redemption Date will
be payable to the Holders of such Notes, or one or more Predecessor Notes, of
record at the close of business on the relevant Record Dates referred to on the
face hereof, all as provided in the Indenture.
In the event of the redemption of this Note in part only, a new Note or
Notes for the unredeemed portion hereof will be issued in the name of the
Holder hereof upon presentation for redemption and cancellation of this Note.
If an Event of Default shall occur and be continuing, the principal of
all the Notes may be declared due and payable in the manner and with the effect
provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Notes under the Indenture at any
time by the Company and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Notes at the time Outstanding.
The Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Notes at the time Outstanding,
on behalf of the Holders of all the Notes, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note 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 Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note
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 Note is registrable in the Note Register, upon
surrender of this Note for registration of transfer at the office or agency of
the Company in any place where the principal of and interest on this Note are
payable, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Company and the Note Registrar duly executed by,
the Holder hereof or his attorney duly authorized in writing, and thereupon one
or more new Notes, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth. Notes are
exchangeable for a like aggregate principal amount of Notes of different
authorized denominations, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the principal of or
interest on this Note, or for any claim based hereon, or otherwise in respect
hereof, or based on or in respect of the Indenture or any indenture
supplemental thereto, against any incorporator, stockholder, officer or
director, as such, past, present or future, of the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.
All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
________________________
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT -- __________ Custodian__________
(Cust) (Minor)
under Uniform Gifts to Minors
Act___________________________
(State)
Additional abbreviations may also be used though not in the above list.
____________________
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_____________________________________________
______________________________________________________________________________
Please print or typewrite name and address including
postal zip code of assignee
______________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
____________________________________________________________________ attorney
to transfer said Note on the books of the Company, with full power of
substitution in the premises.
Dated: __________________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever.
<PAGE> 1
EXHIBIT 99.4
THIS NOTE IS NOT A DEPOSIT AND
IS NOT INSURED BY A FEDERAL AGENCY
REGISTERED REGISTERED
NO. R MERCHANTS NATIONAL CORPORATION $
9 7/8% SUBORDINATED NOTE DUE 1999
CUSIP 589152 AA 5
MERCHANTS NATIONAL CORPORATION, a corporation duly organized and existing under
the laws of the State of Indiana (herein called the "Company"), for value
received, hereby promises to pay to
, or registered assigns, the princial sum of DOLLARS
on October 1, 1999, at the office or agency of the Company maintained for that
purpose in the Borough of Manhattan, The City of New York, in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, and to pay interest,
semiannually on April 1 and October 1 of each year commencing April 1, 1990, on
said principal sum at such office or agency, in like coin or currency, at the
rate per annum specified in the title of this Note. Interest on this Note will
accrue from the most recent date to which interest has been paid or duly
provided for, unless no interest has been paid or duly provided for on this
Note, in which case from October 1, 1989, until payment of the princial has
been made or duly provided for. Notwithstanding the foregoing, when there is no
existing default in the payment of interest on the Notes, if the date of this
Note is after the close of business on the record date (as defined below), and
before the following April 1 or October 1, as the case may be, this Note shall
bear interest from such April 1 or October 1; provided, however, that if the
Company shall default in the payment of interest due on such April 1 or October
1 and a record date for such payment in default after such April 1 or October,
as the case may be, is established pursuant to the Indenture, then this Note
shall bear interest from the next preceding April 1 or October 1 to which
interest has been paid or duly provided for or, if no interest has been paid or
duly provided for on the Notes, from October 1, 1989. The interest so payable
on any April 1 or October 1 will, subject to certain exceptions provided in the
Indenture referred to on the reverse of this Note, be paid to the person in
whose name this Note (or one or more Predecessor Notes, as such term is defined
in the Indenture) is registered at the close of business on the March 15 or
September 15 next preceding such April 1 or October 1 or, if such March 15 or
September 15 is not a Business Day, the next preceding day which is a Business
Day (a "record date") and may, at the option of the Company, be paid by check
mailed to the registered address of such person. As used in this Note, the term
"Business Day" shall mean any day other than a Saturday or Sunday or a day on
which banking organizations in the Borough of Manhattan, The City of New York,
are authorized or obligated by law, regulation or executive order to close.
Interest on this Note shall be calculated on the basis of a 360-day year
consisting of twelve 30-day months.
Reference is made to the further provisions of this Note set forth on the
reverse of this Note, including, without limitation, provisions subordinating
the payment of principal and interest on this Note to the prior payment in full
of all Senior Indebtedness (as defined in the Indenture). Such further
provision shall for all purposes have the same effect as though fully set forth
at this place.
This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication on this Note shall have been duly signed by
the Trustee under the Indenture referred to on the reverse of this Note.
IN WITNESS WHEREOF, Merchants National Corporation has caused this
instrument to be duly executed under its corporate seal.
MERCHANTS NATIONAL CORPORATION
Attest:
Secretary
By
President
CORPORATE SEAL
MERCHANTS NATIONAL CORPORATION
INDIANA
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes described in the within-mentioned Indenture.
MANUFACTURERS HANOVER TRUST COMPANY, As Trustee
By
Authorized Officer
<PAGE> 2
MERCHANTS NATIONAL CORPORATION
9 7/8% SUBORDINATED NOTE DUE 1999
This Note is one of a duly authorized issue of Notes of the Company,
designated as its 9 7/8% Subordinated Notes Due 1999 (herein called the
"Notes"), limited (except as otherwise provided in the Indenture mentioned
below) to the aggregate principal amount of $65,000,000, all issued or to be
issued under and pursuant to an indenture dated as of October 1, 1989, as it
may be amended or supplemented from time to time (herein called the
"Indenture"), duly executed and delivered by the Company to Manufacturers
Hanover Trust Company, as Trustees (herein called the "Trustee"), to which
Indenture reference is hereby made for a description of the rights, limitations
of rights, obligations, duties and immunities under the Indenture of the
Trustee, the Comapny and the holders of Notes.
The payment of principal of and interest on this Note is expressly
subordinated and subject in right of payment, as provided in the Indenture, to
the prior payment of any and all Senior Indebtedness of the Company, as
defined in the Indenture, and this Note is issued subject to such provisions,
and each holder of this Note, by accepting the same, (a) agrees, expressly for
the benefit of the present and future holders of Senior Indebtedness, whether
now or hereafter outstanding, to and will be bound by such provisions and (b)
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination so provided and
appoints the Trustee his attorney-in-fact for any such purpose.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of this Note may be declared, and
upon such declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Comapny and the Trustee,
with the consent of the holders of not less than 66 2/3 percent in aggregate
principal amount of the Notes at the time outstanding, evidenced in the manner
provided in the Indenture, to execute supplemental indentures adding any
provision to or changing in any manner or eliminating any of the provisions of
the Indenture or of any supplemental indenture or modifying in any manner the
rights of the holders of the Notes, provided, however, that no such
supplemental indenture shall (a) without the consent of the holder of each Note
affected thereby, change the stated maturity of the principal of, or any
instalment of interest on, any Note or reduce the principal amount of any Note
or the interest on any Note, or change any place of payment where, or the coin
or currency in which, any Note or the interest on any Note is payable, or
impair the right to institute suit for the enforcement of any such payment on
or after its stated maturity, or modify certain other provisions of the
Indenture, or (b) without the consent of the holders of all Notes then
outstanding, reduce the percentage in principal amount of the Notes, 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 the Indenture or certain defaults under the Indenture and
their consequences) provided for in the Indenture. It is also provided in the
Indenture that, prior to any declaration that the principal of the Notes
outstanding is due and payable, the holders of a majority in aggregate
principal amount of the Notes at the time outstanding may on behalf of the
holders of all the Notes waive any past default or Event of Default under the
Indenture and its consequences except a default under a covenant in the
Indenture that cannot be modified without the consent of each holder of a Note
affected thereby. Any such consent or waiver by the holder of this Note (unless
revoked as provided in the Indenture) shall be conclusive and binding upon such
holder and upon all future holders and owners of this Note and any Notes which
may be issued in exchange or substitution for this Note, irrespective of
whether or not any notation of such consent or waiver is made upon this Note or
such other Notes.
No reference in this Note to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note
at the place, at the respective times, at the rate and in the coin or currency
prescribed in this Note.
The Notes are issuable in registered form without coupons in denominations
of $1,000 and any integral multiple of $1,000 At the office or agency of the
Company in the Borough of Manhattan, The City of New York, and in the manner
and subject to the limitations provided in the Indenture, but without payment
of any service charge, Notes may be exchanged for a like aggregate principal
amount of Notes of other authorized denominations.
Upon due presentment for registration of transfer of this Note at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, a new Note or Notes of authorized denominations for an equal aggregate
principal amount will be issued to the transferee in exchange for this Note,
subject to the limitations provided in the Indenture, without charge except for
any tax or other governmental charge imposed in connection with such transfer.
Prior to due presentment for registration of transfer of this Note, the
Company, the Trustee, any paying agent and any Note registrar may deem and
treat the registered holder of this Note as the absolute owner of this Note
(whether or not payment on this Note shall be overdue and notwithstanding any
notation of ownership or other writing on this Note made by anyone other than
the Company or any Note registrar), for the purpose of receiving payment of
this Note, or on account of this Note, and for all other purposes, and neither
the Company nor the Trustee nor any paying agent nor any Note registrar shall
be affected by any notice to the contrary. All payments made to or upon the
order of such registered holder shall, to the extent of the sum or sums paid,
satisfy and discharge liability for monies payable on this Note.
No recourse for the payment of the principal of or interest on this Note,
or for any claim based on this Note or otherwise in respect of this Note, and
no recourse under or upon any obligation, covenant or agreement of the Company
in the Indenture or any indenture supplemental to the Indenture or in this
Note, or because of the creation of any indebtedness represented by this Note,
shall be had against any incorporator, stockholder, officer or director, as
such, past present or future, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise, all such liability being, by the
acceptance of this Note and as part of the consideration for the issue of
this Note, expressly waived and released.
This Note shall be deemed to be a contract made under the laws of the State
of New York, and for all purposes shall be construed in accordance with and
governed by the laws of the State of New York.
__________________
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this Security, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM-as tenants in common
TEN ENT-as tenants by the entireties
JT TEN -as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT-_______________ Custodian_____________
(Cust) (Minor)
under Uniform Gifts to Minors Act
_______________________________________
(State)
Additional abbreviations may also be used though not in the above list.
___________________
ASSIGNMENT FORM
If you the holder want to assign this Note, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Note to
_______________________________________________________________________________
_______________________________________________________________________________
(Insert assignee's social security or tax ID number)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint________________________________________________________
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
_______________________________________________________________________________
Date:______ Your Signature:____________________________________________________
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee:___________________________________________________________
<PAGE> 1
PROSPECTUS
$100,000,000
NATIONAL CITY CORPORATION
8 3/8% NOTES DUE 1996
The Notes will mature on March 15, 1996. Interest on the Notes is payable
semiannually on March 15 and September 15 of each year, commencing September
15, 1986. The Notes may not be redeemed prior to maturity.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC (1) DISCOUNT NATIONAL CITY (1)(2)
<S> <C> <C> <C>
Per Note...................... 99.875% .675% 99.200%
Total ......................... $99,875,000 $675,000 $99,200,000
- ----------------------------------------------------------------------------------------------
<FN>
(1) Plus accrued interest from March 15, 1986 to date of delivery.
(2) Before deducting expenses payable by National City estimated to be $224,000.
</TABLE>
The Notes are offered subject to receipt and acceptance by the Underwriters, to
prior sale and to the Underwriters' right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice. It is expected
that delivery of the Notes will be made at the office of Salomon Brothers Inc,
One New York Plaza, New York, New York, or through the facilities of The
Depository Trust Company, on or about March 20, 1986.
SALOMON BROTHERS INC KEEFE, BRUYETTE & WOODS, INC.
The date of this Prospectus is March 13, 1986.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT
OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE
OF THE NOTES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHER-
WISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
National City Corporation ("National City") is subject to the informational
requirements of the Securities Exchange Act of 1984, as amended (the "Exchange
Act") and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Such reports, proxy statements and other information can be inspected and
copied at the Public Reference Section of the Commission at 450 Fifth Street
N.W., Washington, D.C. 20549, and at the Commission's New York Regional
Office, Room 1100, Federal Building, 26 Federal Plaza, New York, New York
10278, and Chicago Regional Office, Room 1228, Everett McKinley Dirksen
Building, 219 South Dearborn Street, Chicago, Illinois 60604, and copies of
such materials can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street N.W., Washington, D.C. 20549, at prescribed
rates. National City has filed with the Commission a Registration Statement
on Form S-8 (the "Registration Statement") under the Securities Act of 1933, as
amended, with respect to the Notes offered hereby. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. The Registration Statement and the exhibits thereto may be
inspected without charge at the office of the Commission at 450 Fifth Street
N.W., Washington, D.C. 20549, and copies thereof may be obtained from the
Commission upon payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by National City with the
Commission are incorporated herein by reference:
(a) Annual Report on Form 10-K for the year ended December 31, 1985,
filed pursuant to Section 13 of the Exchange Act; and
(b) Current Report on Form 8-K dated February 4, 1986, filed pursuant
to Section 13 of the Exchange Act.
All reports subsequently filed pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act prior to the termination of the offering of the Notes
offered hereby shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date of filing of such documents.
NATIONAL CITY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, ON THE REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR
ALL OF THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER THAN EXHIBITS).
WRITTEN REQUESTS SHOULD BE DIRECTED TO: NATIONAL CITY CORPORATION, 1900 EAST
NINTH STREET, CLEVELAND, OHIO 44114, ATTENTION: THOMAS A. RICHLOVSKY, VICE
PRESIDENT AND TREASURER. TELEPHONE REQUESTS MAY BE DIRECTED TO (216) 575-2000.
2
<PAGE> 3
NATIONAL CITY CORPORATION
National City Corporation ("National City") is the largest bank holding
company in the State of Ohio and ranks among the 35 largest in the United
States on the basis of total assets. National City operates 11 commercial banks
(10 national banks and 1 state bank) throughout Ohio, with 324 banking offices
in 53 of Ohio's 88 counties. National City became Ohio's largest bank holding
company on November 9, 1984, when it acquired, pursuant to a merger, Bancohio
Corporation, then Ohio's third largest bank holding company. National City's
two principal commercial banking subsidiaries are National City Bank, Cleveland
and Bancohio National Bank, Columbus. National City also owns trust companies
in Ohio and Florida and non-banking subsidiaries that engage in venture
capital, small business investment, insurance, mortgage banking and other
financial activities. At December 31, 1985, National City had consolidated
total assets of $12.5 billion, deposits of $9.4 billion and stockholders'
equity of $737 million.
National City is a legal entity separate and distinct from its subsidiary
banks. The principal source of National City's income is dividends from its
subsidiary banks. Under Federal law, the total of all dividends declared by a
national bank in any calendar year may not, without the approval of the
Comptroller of the Currency, exceed the aggregate of such bank's net profits
(as defined) for that year and retained net profits (as defined) for the
preceding two years. National City's state-chartered banking subsidiary is
likewise under limitations imposed by the State of Ohio and the Board of
Governors of the Federal Reserve System. Under these limitations, National
City's subsidiary banks are permitted to declare aggregate dividends of
approximately $77 million, in addition to their 1986 net income, without the
prior approval of their respective regulatory authorities. The Comptroller of
the Currency also has authority under the Financial Institutions Supervisory
Act to prohibit a national bank from engaging in what, in his opinion,
constitutes an unsafe or unsound practice in conducting its business. The
payment of dividends could, depending upon the financial condition of the
subsidiary banks, be deemed to constitute such an unsafe or unsound practice.
In addition, the subsidiary banks are subject to the Federal Reserve Act on
extensions of credit to, investments in, and certain other transactions with,
National City and its other subsidiaries.
National City is incorporated in the State of Delaware. The executive
offices of National City are located at 1900 East Ninth Street, Cleveland, Ohio
44114, and its telephone number is (218) 575-2000.
APPLICATION OF PROCEEDS
National City intends to utilize the net proceeds from the sale of the
Notes for general corporate purposes, which will include repayment of
outstanding borrowings under its $100 million revolving credit facility and may
include additional investments in and advances to subsidiaries. National City
may also use a portion of the net proceeds for possible future acquisitions of
bank and non-bank subsidiaries, both in and outside of Ohio, but there are no
present plans or understandings with respect to any such acquisitions. As of
March 10, 1986, borrowings under the revolving credit facility amounted to $25
million and bore a floating rate of interest (which at that date was 8.35%).
Pending ultimate application, the net proceeds from the sale of the Notes will
be used to make short-term investments or reduce other short-term borrowings.
It is the present policy of National City to provide additional capital
funds for its subsidiaries, if required, through the sale of securities by
National City, rather than through direct financings by the subsidiaries. Based
upon the anticipated growth of its subsidiaries and the financial needs of
National City, National City may, from time to time, engage in additional
financings of a character and in amounts to be determined.
3
<PAGE> 4
<TABLE>
SELECTED FINANCIAL DATA
The following table sets forth, in summary form, certain consolidated
financial data for National City and its subsidiaries for each of the five
years in the period ended December 31, 1985 and is qualified in its entirety by
the detailed information and financial statements included in the documents
incorporated herein by reference. See "Incorporation of Certain Documents by
Reference".
<CAPTION>
Year ended December 31,
-----------------------------------------------------------
1985 1984 1983 1982 1981
------- ------- ------- ------- -------
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Operating Results:
Net Interest Income $ 435.9 $ 242.5 $ 180.3 $ 156.2 $ 120.5
Tax Equivalent Adjustment 56.2 39.2 39.3 40.6 44.1
------- ------- ------- ------- -------
Net Interest Income --
Fully Taxable Equivalent 492.1 281.7 219.6 196.8 164.6
Provisions for Loan and
Other Credit Losses (40.8) (20.2) (28.7) (15.8) (11.5)
Fees and Other Income 171.1 88.6 68.1 55.7 46.6
Security Gains (Losses) 6.1 .4 (17.2) (5.5) (6.8)
Trading Account Profits .9 -- .6 1.8 1.7
Gain on Sale of Buildings -- -- 18.2 -- --
Non-Interest Expense (430.9) (232.0) (179.7) (152.7) (122.7)
------- ------- ------- ------- -------
Income before Tax Equivalent Adjustment
and Income Taxes 198.5 118.5 80.9 80.3 71.9
Tax Equivalent Adjustment (56.2) (39.2) (39.3) (40.6) (44.1)
------- ------- ------- ------- -------
Income before Income Taxes 142.3 79.3 41.6 39.7 27.8
Income Taxes (Benefit) 33.9 13.4 (6.5) (3.9) (12.2)
------- ------- ------- ------- -------
Net Income $ 108.4 $ 65.9 $ 48.1 $ 43.6 $ 40.0
======= ======= ======= ======= =======
Per Share Data (a):
Net Income --
Primary $ 4.55 $ 3.63 $ 2.84 $ 2.50 $ 2.27
Assuming Full Dilution 3.96 3.45 2.74 2.47 2.27
Dividends Declared 1.37 1/2 1.26 2/3 1.23 1/3 1.22 1.22
Book Value (at end of period) 28.77 25.93 24.73 23.08 21.52
Average Shares Outstanding (in thousands) (a) 21,063 17,633 16,919 17,450 17,617
Average Balances:
Assets $11,787 $ 7,309 $ 6,247 $ 5,739 $ 5,109
Loans 7,238 4,000 3,107 2,527 2,216
Investment Securities 1,734 1,216 1,252 1,106 1,154
Earning Assets 10,193 6,311 5,355 4,850 4,302
Deposits 8,963 5,279 4,315 3,874 3,316
Corporate Long-Term Debt 186 115 143 85 54
Stockholders' Equity 699 475 406 385 369
Financial Ratios:
Net Interest Margin (b) 4.83% 4.46% 4.10% 4.06% 3.83%
Return on Average Equity 15.52 13.87 11.84 11.31 10.84
Return on Average Assets .92 .90 .77 .76 .78
Total Dividend Payout 38.5 37.4 43.5 48.7 53.8
Ratios at End of Period:
Reserve for Loan Losses to Loans 1.41% 1.54% 1.24% 1.26% 1.27%
Underperforming Assets to Loans (c) 1.5 2.4 1.6 2.9 1.4
Underperforming Assets to Total Assets (c) .9 1.4 .8 1.3 .6
Primary Capital Ratio 7.24 6.79(d) 6.99 6.31 7.54
Total Capital Ratio 7.96 7.48(d) 7.54 6.85 7.54
Ratio of Earnings to Fixed Charges (e):
Excluding Interest on Deposits 1.94x 1.61x 1.35x 1.30x 1.16x
Including Interest on Deposits 1.20 1.16 1.10 1.09 1.06
<FN>
- -------------
(a) Share data adjusted for three-for-two stock splits declared in December
1983, and December 1985.
(b) Fully taxable equivalent net interest income divided by average earning
assets.
(c) Loans or other assets are generally considered to be underperforming when
payments become past due or are expected to become past due or when their
yield after renegotiation is less than finding costs. Underperforming
assets include non-accrual and renegotiated loans and securities, and real
estate received in settlement of loans.
(d) After giving effect to $75.0 million capital notes issued in January 1985.
(e) The ratio of earnings to fixed charges has been computed by dividing income
before income taxes and fixed charges by fixed charges. Fixed charges
excluding interest on deposits consist of interest on indebtedness and
one-third of net rental expense (which is deemed representative of the
interest factor). Fixed charges including interest on deposits consist of
the foregoing items plus interest on deposits.
</TABLE>
4
<PAGE> 5
MANAGEMENT'S DISCUSSION OF 1985 RESULTS
EARNINGS SUMMARY
Net income for the year 1985 was $108.4 million, an increase of 64.6% from
$65.9 million earned in 1984. Fully diluted earnings per share for the year
were $3.96, an increase of 14.8% over the $3.45 earned in 1984. The return on
average assets and return on average equity for 1985 were .92% and 15.52%,
respectively, compared with .90% and 13.87% for 1984.
The level of earnings in 1985 and the growth over 1984 were significantly
influenced by the purchase of BancOhio Corporation and its principal unit,
BancOhio National Bank, in November 1984, as well as the strong earnings
performance at National City Bank, Cleveland. The contribution to
consolidated net income from the BancOhio unit, which was owned by National
City for the full year 1985, was $31.3 million, as compared to its $7.5 million
contribution during the two months it was owned during 1984. During 1985,
earnings at National City Bank, Cleveland, increased 48.9% to $59.7 million
compared to $40.1 million during the prior year.
NET INTEREST INCOME
Net interest income on a fully taxable equivalent basis was $492.1 million
in 1985, compared to $281.7 million in 1984. This 74.7% increase represents the
effect of both an increase in volume of average earning assets from $6.3
billion in 1984 to $10.2 billion in 1985, principally due to the BancOhio
Corporation acquisition and to increases in the domestic commercial and
consumer loan portfolios, as well as an improvement in net interest margin to
4.83% in 1985 from 4.46% in 1984. The improvement in margin was due to the
combination of an increase in loans as a percent of earning assets and a
decline in the cost of core deposits, the primary funding source for earning
assets.
FEES AND OTHER INCOME/NON-INTEREST EXPENSE
Increases in fees and other income from $88.6 million in 1984 to $171.1
million in 1985 reflect primarily the additional volumes of fee-based
businesses acquired with BancOhio Corporation, including mortgage banking and
credit card processing.
Increases in non-interest expense from $232.0 million during 1984 to
$431.0 million during 1985 were principally the result of the acquisition of
BancOhio National Bank's large branch system and operational support
facilities. Non-interest expense, net of fees and other income, equalled 52.8%
of fully taxable net interest income for the year 1985, compared to 50.9% in
1984. National City's ongoing objective is to achieve a net overhead ratio of
less than 50% through continued consolidation programs and staff controls.
ASSET QUALITY
The provision for loan and other credit losses for 1985 was $40.8 million,
compared with $20.2 million in 1984. Net charge-offs for the year amounted to
$42.0 million compared to $26.6 million in 1984. The reserve for loan losses
was $108.6 million at December 31, 1985, compared to $109.4 million at December
31, 1984. Reserves as a percentage of period end loans were 1.41% at December
31, 1985, compared to 1.54% at December 31, 1984. Based on its assessment of
general economic conditions, the composition and credit quality of the loan
portfolio and historical loss experience, management believes that the reserve
is adequate. Total underperforming assets decreased to $117.0 million at
December 31, 1985, from $171.7 million at December 31, 1984, reflecting ag-
gressive credit administration policies. The decline in underperforming assets
was reflected in the higher level of net charge-offs in 1985. Underperforming
assets as a percentage of loans decreased to 1.5% at December 31, 1985, from
2.4% at December 31, 1984.
National City's Mexican exposure totaled $145.1 million at December 31,
1985, 91% from the public sector and 9% from the private sector. Approximately
80% of the public sector exposure consisted of credits originally extended to
private financial institutions. Of the total exposure, $68.4 million has been
restructured, and it is anticipated that further restructuring will take place
in 1986. The restructurings lowered the average interest margin on the subject
debt from 1.3125 percentage points over base rate to 1.25 percentage points
over LIBOR. During 1985, additional advances (under previously disclosed
commitments) of $1.4 million were made to Mexican borrowers, principal in the
amount of $7 million was repaid on short-term money market advances, interest
in the amount of $14.2 million was received, and $14.8 million was recorded as
interest income on all Mexican outstandings. At December 31, 1985, $3.5 million
of Mexican outstandings (all private sector) were classified as
underperforming.
5
<PAGE> 6
<TABLE>
CAPITALIZATION
The following table sets forth the capitalization of National City at
December 31, 1985, and as adjusted to give effect to the sale of the Notes
offered hereby and the repayment of borrowings under the revolving credit
facility. The table should be read in conjunction with the financial
information incorporated herein by reference or appearing elsewhere herein.
<CAPTION>
OUTSTANDING AS ADJUSTED
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
LONG-TERM DEBT
Senior Debt
Notes offered hereby ............................................... $ --- $ 100,000
Borrowings under revolving credit facility ......................... 20,000(a) ---
14.25% Notes due 1992 .............................................. 20,151 20,151
Other .............................................................. 4,868 4,868
-------- ----------
45,019 125,019
Consolidated subsidiaries (b)
Banks ........................................................... 23,798 23,798
Non-banks ....................................................... 4,099 4,099
-------- ----------
Total Senior Debt ............................................. 72,916 152,916
Subordinated Debt
Floating Rate Subordinated Notes due 1997 .......................... 74,792 74,792
9.50% Convertible Subordinated
Debentures due 2010 ............................................. 50,000 50,000
11.25% Convertible Subordinated Notes due 1997 ..................... 13,764 13,764
-------- ----------
Total Subordinated Debt ....................................... 138,556 138,556
-------- ----------
Total Long-Term Debt .......................................... 211,472 291,472
STOCKHOLDERS' EQUITY
Preferred Stock, without par value, authorized 5,000,000 shares
Outstanding:
12,000 shares Adjustable Rate Cumulative Preferred .............. 30,000 30,000
2,667,190 shares Series A Convertible Preferred (c) ............. 93,352 93,352
Common Stock, $4 par value, authorized 50,000,000 shares
Outstanding (c):
21,326,140 shares ............................................... 85,305 85,305
Capital Surplus ...................................................... 134,860 134,860
Retained Earnings .................................................... 393,310 393,310
-------- ----------
Total Stockholders' Equity .................................... 736,827 736,827
-------- ----------
Total Long-Term Debt and Stockholders' Equity ................. $948,299 $1,028,299
======== ==========
<FN>
- ---------------
(a) As of March 10, 1986, borrowings under the revolving credit facility
amounted to $25.0 million.
(b) These are direct obligations of subsidiaries and, as such, constitute
claims against such subsidiaries prior to National City's equity interest
therein.
(c) Effective March 3, 1986, all shares of the Series A Convertible Preferred
Stock were redeemed for shares of Common Stock at the rate of 1.47 shares
of Common Stock per share of Series A Convertible Preferred Stock.
At December 31, 1985, National City also had commercial paper outstanding
of $125.4 million. During 1985, the amount of commercial paper outstanding
averaged $110.0 million. At December 31, 1985, National City's commercial
paper had an average maturity of 34 days and an average interest rate of 7.99%.
</TABLE>
6
<PAGE> 7
DESCRIPTION OF NOTES
The Notes will be issued under an Indenture (the "Indenture") dated as of
March 15, 1986, between National City and Morgan Guaranty Trust Company of New
York, as trustee (the "Trustee"), a copy of which is filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The Indenture
provides for the issuance of debt securities in series (collectively, the
"Securities"), without limit as to the aggregate principal amount issuable
thereunder. As of the date hereof, no Securities are outstanding under the
Indenture. The following summaries of certain provisions of the Indenture do
not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all the provisions of the Indenture, including the
definitions therein of certain terms. Whenever particular sections or defined
terms of the Indenture are referred to, it is intended that such sections or
defined terms shall be incorporated herein by reference.
Because National City is a holding company, its rights and the rights of
its creditors, including the holders of the Notes offered hereby, to
participate in the assets of any subsidiary upon the latter's liquidation or
recapitalization will generally be subject to the prior claims of the
subsidiary's creditors (including, in the case of banking subsidiaries, their
respective depositors), except to the extent that National City may itself be a
creditor with recognized claims against the subsidiary. For a discussion of the
status of National City in respect of its subsidiaries and certain limitations
on transactions between them which affect holders of the Notes, see "National
City Corporation".
GENERAL
The Notes will be unsecured general obligations of National City and will
not be subordinated in right of payment to any other unsecured indebtedness of
National City. The Notes will be limited to $100,000,000 aggregate principal
amount, will be issued in fully registered form only, in denominations of
$1,000 and integral multiples thereof, and will mature March 15, 1996.
(Sections 301 and 302 and Notes).
Interest on the Notes will be payable at the rate per annum shown on the
cover page of this Prospectus from March 15, 1986, or from the most recent
Interest Payment Date to which interest has been paid or provided for,
semiannually on March 15 and September 15 of each year, commencing on
September 15, 1986, to the persons in whose names the Notes are registered at
the close of business on the March 1 and September 1, as the case may be, next
preceding such Interest Payment Date. Unless other arrangements are made,
interest will be paid by checks mailed to such persons at their registered
addresses. (Sections 301 and 307 and Notes). The Notes will not be subject to
redemption prior to maturity through the operation of a sinking fund or
otherwise.
Principal of the Notes will be payable, and, subject to the limitations
provided in the Indenture, Notes will be transferable and exchangeable, at the
corporate trust office of the Trustee, 30 West Broadway, New York, New York
10015, Attention: Corporate Trust Department. (Sections 301, 305 and 1002).
No service charge will be made for any transfer or exchange of the Notes,
but National City may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith. (Section 305).
COVENANTS
Limitation on Disposition or Issuance of Capital Stock of Certain
Subsidiaries. The Indenture contains a covenant that, except as otherwise
provided below, National City will not sell, assign, pledge, transfer or
otherwise dispose of, or permit the issuance of, or permit a Subsidiary to
sell, assign, pledge, transfer, or otherwise dispose of, any shares of Capital
Stock of any Subsidiary or any securities convertible into Capital Stock of any
Subsidiary which is: (a) a Principal Constituent Bank; or (b) a Subsidiary
which owns shares of Capital Stock or any securities convertible into Capital
Stock of a Principal Constituent Bank; provided, however, that such covenant
does not prohibit (i) any dispositions made by National City or any Subsidiary
(A) acting in a fiduciary capacity for any Person other than National City or
any Subsidiary or (B) to National City or any of its wholly-owned (except for
directors' qualifying shares) Subsidiaries or (ii) the merger or
7
<PAGE> 8
consolidation of a Principal Constituent Bank with and into a Constituent Bank
or the merger or consolidation of any Principal Constituent Bank with and into
any other Principal Constituent Bank. Such covenant also does not prohibit
sales, assignments, pledges, transfers, issuances or other dispositions of
shares of Capital Stock of a corporation referred to in (a) or (b) above where:
(i) the sales, assignments, transfers, other dispositions or issuances are
made, in the minimum amount required by law, to any Person for the purpose of
the qualification of such Person to serve as a director; or (ii) the sales,
assignments, pledges, transfers, issuances or other dispositions are made in
compliance with an order of a court or a regulatory authority of competent
jurisdiction or as a condition imposed by any such court or authority to the
acquisition by National City, directly or indirectly, of any other corporation
or entity; or (iii) in the case of a disposition or issuance of shares of
Capital Stock or any securities convertible into Capital Stock of a Principal
Constituent Bank, or sales of Capital Stock or any securities convertible into
Capital Stock of any Subsidiary included in (b) above, the sales, assignments,
transfers, other dispositions or issuances are for fair market value (as
determined by the Board of Directors of National City and the Subsidiary
disposing of such shares or securities) and, after giving effect to such
disposition and to any potential dilution (if the shares or securities are
convertible into Capital Stock), National City and its directly or indirectly
wholly-owned (except for directors' qualifying shares) Subsidiaries, will own
directly not less than 80% of the Capital Stock of such Principal Constituent
Bank or Subsidiary; or (iv) a Principal Constituent Bank sells or issues
additional shares of Capital Stock to its shareholders at any price, so long as
immediately after such sale National City owns, directly or indirectly, at
least as great a percentage of the Capital Stock of such Principal Constituent
Bank as it owned prior to such sale or issuance of additional shares. A
Constituent Bank is a Subsidiary which is a Bank. A Principal Constituent Bank
is a Constituent Bank the consolidated assets of which constitute 15% or more
of National City's consolidated assets. At the date of this Prospectus,
National City Bank, Cleveland and BancOhio National Bank are the only Principal
Constituent Banks. (Section 1005).
Liens. The Indenture contains a covenant prohibiting National City from
creating or permitting any liens upon any shares of Capital Stock of any
Constituent Bank to secure any indebtedness without securing the Securities
(including the Notes) equally and ratably with all indebtedness secured
thereby. (Section 1007).
Acquisitions. The Indenture contains a covenant prohibiting National City
from acquiring Capital Stock of any corporation or acquiring substantially all
the assets and liabilities of any corporation, unless, immediately after such
acquisition, National City would be in full compliance with the Indenture.
(Section 1008).
EVENTS OF DEFAULT
The following are Events of Default under the Indenture with respect to
Securities of any series (including the Notes): (a) failure to pay principal of
or any premium on any Security of that series when due; (b) failure to pay any
interest on any Security of that series when due, continued for 30 days; (c)
failure to deposit any sinking fund payment, when and as due, in respect of any
Security of that series; (d) failure to perform, or breach, of any other
covenant or warranty of National City in the Indenture (other than a covenant
included in the Indenture solely for the benefit of series of Securities other
than that series), continued for 90 days after written notice as provided in
the Indenture; (e) certain events of bankruptcy, insolvency or reorganization;
and (f) any other Event of Default provided with respect to Securities of that
series. (Section 501). If an Event of Default with respect to Securities of any
series occurs and is continuing, either the Trustee or the Holders of at least
25% in aggregate principal amount of the Outstanding Securities of that series
may declare the principal amount of all the Securities of that series to be due
and payable immediately. At any time after a declaration of acceleration with
respect to Securities of any series has been made, but before a judgment or
decree based on acceleration has been obtained, the Holders of a majority in
aggregate principal amount of Outstanding Securities of that series may, under
certain circumstances, rescind and annul such acceleration. (Section 502).
8
<PAGE> 9
The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the Holders unless such Holders shall have
offered to the Trustee reasonable indemnity. (Section 603). The Indenture
provides that the Holders of a majority in aggregate principal amount of the
Outstanding Securities of any series will have the right to direct the time,
method and place of conducting any proceedings for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Securities of that series; provided that the Trustee may decline
to act if such direction is contrary to law or the Indenture, would unduly
prejudice the rights of other Holders or would involve the Trustee in personal
liability. (Section 512).
No Holder of any Security of any series (including the Notes) will have
any right to institute any proceeding with respect to the Indenture or for any
remedy thereunder, unless such Holder shall have previously given to the
Trustee written notice of a continuing Event of Default with respect to the
Securities of that series and unless also the Holders of at least 25% in
aggregate principal amount of the Outstanding Securities of that series shall
have made written request, and offered reasonable indemnity, to the Trustee to
institute such proceeding as Trustee, and the Trustee shall not have received
from the Holders of a majority in principal amount of the Outstanding
Securities of that series a direction inconsistent with such request and shall
have failed to institute such proceeding within 60 days. (Section 507).
However, the Holder of any Security will have an absolute right to receive
payment of the principal of (and premium, if any) and interest on such Security
on the due dates expressed in such Security and to institute suit for the
enforcement of any such payment. (Section 508).
National City is required to furnish to the Trustee annually a statement
as to the performance by National City of certain of its obligations under the
Indenture and as to any default in such performance. (Section 1009).
MODIFICATION AND WAIVER
Modifications to and amendments of the Indenture may be made by National
City and the Trustee with the consent of the Holders of 66 2/3% in aggregate
principal amount of the Outstanding Securities of each series affected by such
modification or amendment; provided, however, that no such modification or
amendment may without the consent of the Holder of each Outstanding Security
affected thereby (a) change the Stated Maturity of the principal of, or any
installment of principal or interest on, any Security, (b) reduce the principal
amount of, or any premium or interest on, any Security, (c) change the place or
currency of payment of principal of, or any premium or interest on, any
Security, (d) impair the right to institute suit for the enforcement of any
payment on or with respect to any Security or (e) reduce the percentage in
principal amount of Outstanding Securities of any series, the consent of whose
Holders is required for modification or amendment of the Indenture or for
waiver of compliance with certain provisions of the Indenture or for waiver of
certain defaults. (Section 902).
The Holders of 50% in aggregate principal amount of the Outstanding
Securities of each series may, on behalf of all Holders of Securities of that
series, waive, insofar as that series is concerned, compliance by National City
with certain restrictive provisions of the Indenture, including those
provisions described above under "Covenants". (Section 1010). The Holders of
50% in aggregate principal amount of the Outstanding Securities of any series
may, on behalf of all Holders of Securities of that series, waive any past
default under the Indenture with respect to Securities of that series, except a
default in the payment of principal of, or any premium or interest on, any
Security 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 Security of the series affected. (Section 513).
9
<PAGE> 10
CONSOLIDATION, MERGER AND SALE OF ASSETS
National City may consolidate with or merge into, or convey, transfer or
lease its assets substantially as an entirety to, any corporation organized
under the laws of any domestic jurisdiction, provided that the successor
corporation assumes National City's obligations on the Securities (including
the Notes) and under the Indenture, that after giving effect to the transaction
no Event of Default, and no event which, after notice or lapse of time, would
become an Event of Default, shall have occurred and be continuing, and that
certain other conditions are met. (Section 801).
REGARDING THE TRUSTEE
Morgan Guaranty Trust Company of New York, the Trustee, has its principal
corporate trust office at 30 West Broadway, New York, New York 10015. National
City and its subsidiary banks have normal banking relationships with the
Trustee.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, National City has agreed to sell to each of the Underwriters named
below, and each of the Underwriters, for whom Salomon Brothers Inc and Keefe,
Bruyette & Woods, Inc. are acting as Representatives, has severally agreed to
purchase from National City, the principal amount of Notes set opposite its
name below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
UNDERWRITER OF NOTES
----------- ----------
<S> <C>
Salomon Brothers Inc $ 20,900,000
Keefe, Bruyette & Woods, Inc. 20,900,000
The First Boston Corporation 3,000,000
Goldman, Sachs & Co. 3,000,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated 3,000,000
Morgan Stanley & Co. Incorporated 3,000,000
Shearson Lehman Brothers Inc. 3,000,000
Bear, Stearns & Co. Inc. 2,400,000
Alex. Brown & Sons, Inc. 2,400,000
Dillon, Read & Co. Inc. 2,400,000
Donaldson, Lufkin & Jenrette Securities Corporation 2,400,000
Drexel Burnham Lambert Incorporated 2,400,000
E. F. Hutton & Company Inc. 2,400,000
Kidder, Peabody & Co. Incorporated 2,400,000
Lazard Freres & Co. 2,400,000
McDonald & Company Securities, Inc. 2,400,000
The Ohio Company 2,400,000
PaineWebber Incorporated 2,400,000
Prescott, Ball & Turben, Inc. 2,400,000
Prudential-Bache Securities Inc. 2,400,000
L. F. Rothschild, Unterberg, Towbin, Inc. 2,400,000
M. A. Schapiro & Co., Inc. 2,400,000
Smith Barney, Harris Upham & Co. Incorporated 2,400,000
Wertheim & Co., Inc. 2,400,000
Dean Witter Reynolds Inc. 2,400,000
------------
Total $100,000,000
============
</TABLE>
10
<PAGE> 11
In the Underwriting Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all the
Notes offered hereby if any Notes are purchased. In the event of default by an
Underwriter, the Underwriting Agreement provides that, in certain
circumstances, purchase commitments of the nondefaulting Underwriters may be
increased or the Underwriting Agreement may be terminated. National City has
been advised by the Representatives that the several Underwriters propose
initially to offer the Notes to the public at the public offering price set
forth on the cover page of this Prospectus and to certain dealers at such price
less a concession not in excess of.40% of the principal amount of the Notes.
Underwriters may allow and such dealers may reallow a concession not in excess
of.25% of the principal amount of the Notes. After the initial public
offering, the public offering price and such concessions may be changed.
The Underwriting Agreement provides that National City will indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933, as amended, or contribute to payments the
Underwriters may be required to make in respect thereof
LEGAL OPINIONS
The legality of the Notes offered hereby will be passed upon for National
City by Jones, Day, Reavis & Pogue, 1700 Huntington Building, Cleveland, Ohio
44115 and for the Underwriters by Cravath, Swaine & Moore, One Chase Manhattan
Plaza, New York, New York 10005. Mr. Allen C. Holmes, a member of the firm of
Jones, Day, Reavis & Pogue, is a director of National City and National City
Bank. Mr. Holmes owns 1,515 shares of Common Stock of National City.
EXPERTS
The consolidated financial statements of National City Corporation
incorporated by reference in this Prospectus and the Registration Statement
have been examined by Ernst & Whinney, independent accountants, for the periods
indicated in their report thereon which is included in the Annual Report on
Form 10-K for the year ended December 31, 1985. The consolidated financial
statements examined by Ernst & Whinney have been incorporated herein by
reference in reliance on their report given on their authority as experts in
accounting and auditing.
11
<PAGE> 12
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS
BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS, OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESEN-
TATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY NATIONAL CITY OR BY ANY OF
THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL UNDER ANY CIRCUMSTANCES CREATE AN IM-
PLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF NATIONAL CITY SINCE THE DATE HEREOF.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR
IN WHICH THE PERSON MAKING SUCH OFFER OR SO-
LICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
----------------
<TABLE>
TABLE OF CONTENTS
<CAPTION>
PAGE
------
<S> <C>
Available Information............... 2
Incorporation of Certain Documents
By Reference...................... 2
National City Corporation........... 3
Application of Proceeds............. 3
Selected Financial Data............. 4
Management's Discussion of
1985 Results...................... 5
Capitalization...................... 6
Description of Notes................ 7
Underwriting........................ 10
Legal Opinions...................... 11
Experts............................. 11
</TABLE>
$100,000,000
NATIONAL CITY CORPORATION
8 3/8% NOTES DUE 1996
NATIONAL CITY
CORPORATION
SALOMON BROTHERS INC
KEEFE, BRUYETTE & WOODS, INC.
PROSPECTUS
DATED MARCH 13, 1986
<PAGE> 13
[CONFORMED]
==============================================================
NATIONAL CITY CORPORATION
TO
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
as Trustee
--------------
Indenture
--------------
Dated as of March 15, 1986
===============================================================
<PAGE> 14
<TABLE>
NATIONAL CITY CORPORATION
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939 AND
INDENTURE, DATED AS OF MARCH 15, 1986
<CAPTION>
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
- ---------------- -----------------
<S> <C>
Section 310(a)(1) ................................................. 609
(a)(2) ................................................. 609
(a)(3) ................................................. Not Applicable
(a)(4) ................................................. Not Applicable
(b) ................................................. 608
610
Section 311(a) ................................................. 613(a)
(b) ................................................. 613(b)
(b)(2) ................................................. 703(a)(2)
703(b)
Section 312(a) ................................................. 701
702(a)
(b) ................................................. 702(b)
(c) ................................................. 702(c)
Section 313(a) ................................................. 703(a)
(b) ................................................. 703(b)
(c) ................................................. 703(a), 703(b)
(d) ................................................. 703(c)
Section 314(a) ................................................. 704
(b) ................................................. Not Applicable
(c)(1) ................................................. 102
(c)(2) ................................................. 102
(c)(3) ................................................. Not Applicable
(d) ................................................. Not Applicable
(e) ................................................. 102
Section 315(a) ................................................. 601(a)
(b) ................................................. 602
703(a)(6)
(c) ................................................. 601(b)
(d) ................................................. 601(c)
(d)(1) ................................................. 601(a)
(d)(2) ................................................. 601(c)(2)
(d)(3) ................................................. 601(c)(3)
(e) ................................................. 514
Section 316(a) ................................................. 101
(a)(1)(A) ................................................. 502
512
(a)(1)(B) ................................................. 513
(a)(2) ................................................. Not Applicable
(b) ................................................. 508
Section 317(a)(1) ................................................. 503
(a)(2) ................................................. 504
(b) ................................................. 1003
Section 318(a) ................................................. 107
<FN>
- ---------
Note: This reconciliation and tie shall not, for any purpose, be deemed a part
of the Indenture.
</TABLE>
<PAGE> 15
<TABLE>
TABLE OF CONTENTS
-----------------
<CAPTION>
PAGE
----
<S> <C>
Parties.................................................................... 1
Recitals of the Company.................................................... 1
ARTICLE ONE
Definitions and Other Provisions of General Application
Section 101. Definitions............................................... 1
Act....................................................... 2
Affiliate................................................. 2
Authenticating Agent...................................... 2
Bank...................................................... 2
Board of Directors........................................ 2
Board Resolution.......................................... 2
Business Day.............................................. 2
Capital Stock............................................. 3
Commission................................................ 3
Company................................................... 3
Company Request; Company Order............................ 3
Constituent Bank.......................................... 3
Corporate Trust Office.................................... 3
corporation............................................... 3
Defaulted Interest........................................ 3
Event of Default.......................................... 3
Holder.................................................... 3
Indenture................................................. 3
interest.................................................. 4
Interest Payment Date..................................... 4
Maturity.................................................. 4
Officers' Certificate..................................... 4
Opinion of Counsel........................................ 4
Original Issue Discount Security.......................... 4
Outstanding............................................... 4
Paying Agent.............................................. 5
Person.................................................... 5
Place of Payment.......................................... 5
Predecessor Security...................................... 5
Principal Constituent Bank................................ 5
Redemption Date........................................... 6
<FN>
- ---------------
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
</TABLE>
<PAGE> 16
ii
PAGE
<TABLE> ----
<S> <C> <C>
Redemption Price........................................... 6
Regular Record Date........................................ 6
Responsible Officer........................................ 6
Securities................................................. 6
Security Register and Security Registrar................... 6
Special Record Date........................................ 6
Stated Maturity............................................ 6
Subsidiary................................................. 6
Trustee.................................................... 6
Trust Indenture Act........................................ 6
Vice President............................................. 7
Voting Stock............................................... 7
Section 102. Compliance Certificates and Opinions....................... 7
Section 103. Form of Documents Delivered to Trustee..................... 7
Section 104. Acts of Holders............................................ 8
Section 105. Notices, Etc., to Trustee and Company...................... 9
Section 106. Notice to Holders; Waiver.................................. 9
Section 107. Conflict with Trust Indenture Act.......................... 9
Section 108. Effect of Headings and Table of Contents...................10
Section 109. Successors and Assigns.....................................10
Section 110. Separability Clause........................................10
Section 111. Benefits of Indenture......................................10
Section 112. Governing Law..............................................10
Section 113. Legal Holidays.............................................10
ARTICLE TWO
Security Forms
Section 201. Forms Generally............................................10
Section 202. Form of Face of Security...................................11
Section 203. Form of Reverse of Security................................13
Section 204. Form of Trustee's Certificate of Authentication............17
ARTICLE THREE
The Securities
Section 301. Amount Unlimited; Issuable in Series.......................17
Section 302. Denominations..............................................19
Section 303. Execution, Authentication, Delivery and Dating.............19
Section 304. Temporary Securities.......................................20
</TABLE>
<PAGE> 17
iii
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 305. Registration, Registration of Transfer and Exchange...........21
Section 306. Mutilated, Destroyed, Lost and Stolen Securities..............22
Section 307. Payment of Interest; Interest Rights Preserved................22
Section 308. Persons Deemed Owners.........................................24
Section 309. Cancellation..................................................24
Section 310. Computation of Interest.......................................24
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge of Indenture.......................24
Section 402. Application of Trust Money....................................26
ARTICLE FIVE
Remedies
Section 501. Events of Default............................................26
Section 502. Acceleration of Maturity; Rescission and Annulment...........28
Section 503. Collection of Indebtedness and Suits for Enforcement by
Trustee...................................................29
Section 504. Trustee May File Proofs of Claim.............................29
Section 505. Trustee May Enforce Claims Without Possession of
Securities................................................30
Section 506. Application of Money Collected...............................31
Section 507. Limitation on Suits..........................................31
Section 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest......................................32
Section 509. Restoration of Rights and Remedies...........................32
Section 510. Rights and Remedies Cumulative...............................32
Section 511. Delay or Omission Not Waiver.................................32
Section 512. Control by Holders...........................................33
Section 513. Waiver of Past Defaults......................................33
Section 514. Undertaking for Costs........................................33
Section 515. Waiver of Stay or Extension Laws.............................34
ARTICLE SIX
The Trustee
Section 601. Certain Duties and Responsibilities..........................34
Section 602. Notice of Defaults...........................................35
Section 603. Certain Rights of Trustee....................................36
Section 604. Not Responsible for Recitals or Issuance of Securities.......37
</TABLE>
<PAGE> 18
iv
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 605. May Hold Securities.........................................................37
Section 606. Money Held in Trust.........................................................37
Section 607. Compensation and Reimbursement..............................................37
Section 608. Disqualification; Conflicting Interests.....................................38
(a) Elimination of Conflicting Interest or Resignation..................38
(b) Notice of Failure to Eliminate Conflicting Interest or
Resign............................................................38
(c) "Conflicting Interest" Demand.......................................38
(d) Definitions of Certain Terms Used in This Section...................41
(e) Calculation of Percentages of Securities............................42
Section 609. Corporate Trustee Required; Eligibility.....................................43
Section 610. Resignation and Removal; Appointment of Successor...........................44
Section 611. Acceptance of Appointment by Successor......................................45
Section 612. Merger, Conversion, Consolidation or Succession to
Business................................................................47
Section 613. Preferential Collection of Claims Against Company...........................47
(a) Segregation and Apportionment of Certain Collections
by Trustee, Certain Exceptions....................................47
(b) Certain Creditor Relationships Excluded from
Segregation and Apportionment.....................................50
(c) Definitions of Certain Terms Used in This Section...................50
Section 614. Appointment of Authenticating Agent.........................................51
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
Section 701. Company to Furnish Trustee Names and Addresses of
Holders.................................................................53
Section 702. Preservation of Information; Communications to Holders......................53
Section 703. Reports by Trustee..........................................................54
Section 704. Reports by Company..........................................................56
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
Section 801. Company May Consolidate, Etc., Only on Certain
Terms...................................................................56
Section 802. Successor Corporation Substituted...........................................57
</TABLE>
<PAGE> 19
v
<TABLE>
ARTICLE NINE
Supplemental Indentures
<CAPTION>
PAGE
----
<S> <C>
Section 901. Supplemental Indentures without Consent of Holders..........................58
Section 902. Supplemental Indentures with Consent of Holders.............................59
Section 903. Execution of Supplemental Indentures........................................60
Section 904. Effect of Supplemental Indentures...........................................60
Section 905. Conformity with Trust Indenture Act.........................................60
Section 906. Reference in Securities to Supplemental Indentures..........................61
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, Premium and Interest..................................61
Section 1002. Maintenance of Office or Agency.............................................61
Section 1003. Money for Securities Payments to Be Held in Trust...........................62
Section 1004. Corporate Existence.........................................................63
Section 1005. Limitation Upon Sale or Issuance of Capital Stock
of Certain Subsidiaries.................................................63
Section 1006. Payment of Taxes and Other Claims...........................................65
Section 1007. Liens.......................................................................65
Section 1008. Limitation on Certain Acquisitions..........................................65
Section 1009. Statement to Compliance.....................................................66
Section 1010. Waiver of Certain Covenants.................................................66
ARTICLE ELEVEN
Redemption of Securities
Section 1101. Applicability of Article....................................................66
Section 1102. Election to Redeem; Notice to Trustee.......................................67
Section 1103. Selection by Trustee of Securities to Be Redeemed...........................67
Section 1104. Notice of Redemption........................................................67
Section 1105. Deposit of Redemption Price.................................................68
Section 1106. Securities Payable on Redemption Date.......................................68
Section 1107. Securities Redeemed in Part.................................................69
ARTICLE TWELVE
Sinking Funds
Section 1201. Applicability of Article....................................................69
Section 1202. Satisfaction of Sinking Fund Payments with Securities.......................70
Section 1203. Redemption of Securities for Sinking Fund...................................70
Testimonium................................................................................71
Signatures and Seals.......................................................................71
Acknowledgements...........................................................................72
</TABLE>
<PAGE> 20
INDENTURE, dated as of March 15, 1986, between NATIONAL CITY
CORPORATION, a corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Company"), having its principal office at
1900 East Ninth Sheet, Cleveland, Ohio 44114 and Morgan Guaranty Trust
Company of New York, a corporation duly organized and existing under the laws
of the State of New York, as Trustee (herein called the "Trustee").
Recitals of the Company
The Company has duly authorized the execution and delivery of this Inden-
ture to provide for the issuance from time to time of its unsecured debentures,
notes or other evidences of indebtedness (herein called the "Securities"), to
be issued in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the Com-
pany, 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 series thereof, as
follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
Section 101. 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 which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the mean-
ings assigned to them in accordance with generally accepted accounting
principles and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any
computation required or permitted hereunder shall mean such accounting
principles as are generally accepted at the date of such computation; and
<PAGE> 21
2
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
"Act", when used with respect to any Holder, has the meaning specified in
Section 104.
"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.
"Authenticating Agent" means any person authorized by the Trustee pursuant
to Section 614.
"Bank" means (i) any institution organized under the laws of the United
States, any State of the United States, the District of Columbia, any territory
of the United States, Puerto Rico, Guam, American Samoa or the Virgin Islands
which (a) accepts deposits that the depositor has a legal right to withdraw on
demand, and (b) engages in the business of making commercial loans and (ii) any
trust company organized under any of the foregoing laws.
"Board of Directors" means either the board of directors of the Company,
any duly authorized committee of that board or any officer of the Company duly
authorized by the board of directors of the Company to take a specified action
or make a specified determination (the authorization of such officer being
evidenced by a copy of a resolution certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the board of directors of
the Company and to be in full force and effect on the date of such
certification and delivered to the Trustee).
"Board Resolution" means a copy of a resolution or action certified by
the Secretary or an Assistant Secretary of the Company to have been duly
adopted or taken by the Board of Directors and to be in full force and effect
on the date of such certification and delivered to the Trustee.
"Business Day" when used with respect to any Place of Payment, means each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banks and trust companies in that Place of Payment are authorized or obligated
by law to close.
<PAGE> 22
3
"Capital Stock" means, as to shares of a particular corporation,
outstanding shares of stock of any class whether now or hereafter authorized,
irrespective of whether such class shall be limited to a fixed sum or
percentage in respect of the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the voluntary liquidation,
dissolution or winding up of such corporation.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934,
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.
"Company" means the Person named as the "Company" 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
"Company" shall mean such successor corporation.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its President,
a Vice Chairman or a Vice President, and by its Treasurer, an Assistant
Treasurer, its Controller, an Assistant Controller, its Secretary or an
Assistant Secretary, and delivered to the Trustee.
"Constituent Bank" means any Subsidiary which is a Bank.
"Corporate Trust Office" means the office of the Trustee, at which at any
particular time its corporate trust business shall be administered, which
office at the date of execution of this Indenture is located at 30 West
Broadway, New York, New York 10015.
"corporation" includes corporations, associations, companies and business
trusts.
"Defaulted Interest" has the meaning specified in Section 307.
"Event of Default" has the meaning specified in Section 501.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and also includes the terms of particular series of Securities established as
contemplated by Section 301.
<PAGE> 23
4
"interest," when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
"Interest Payment Date," when used with respect to any Security, means
the Stated Maturity of an instalment of interest on such Security.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an instalment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President, a Vice Chairman or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller, the
Secretary or an Assistant Secretary, of the Company, and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of or counsel for the Company and who shall be satisfactory to the
Trustee.
"Original Issue Discount Security" means any Security which 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 502.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Securities; provided that, if such
Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to
the Trustee has been made; and
(iii) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities
in respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
<PAGE> 24
5
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by or held for the account of the Company or any other obligor upon the
Securities or any Affiliate of the Company or of 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
which the Trustee knows to be so owned or so held shall be so disregarded.
Securities so owned or so held which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor. Upon request of the Trustee,
the Company shall furnish to the Trustee promptly an Officers' Certificate
listing and identifying all Securities, if any, known by the Company to be
owned by or held fur the account of the Company or any other obligor upon the
Securities, or any Affiliate of the Company or of such obligor and 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 and not otherwise excluded from the provisions hereof are Outstanding
for the purposes of any such determination.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or govern-
ment or any agency or political subdivision thereof.
"Place of Payment", when used with respect to the Securities of any
series, means the place or places where the principal of (and premium, if any)
and interest on the Securities of that series are payable as specified as
contemplated by Section 301.
"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; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 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.
"Principal Constituent Bank" means any Constituent Bank the total assets
of which as set forth in the most recent statement of condition of such Bank
equal more than 15% of the total assets of all Constituent Banks as determined
from the most recent statements of condition of the Constituent Banks.
<PAGE> 25
6
"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.
"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that purpose
as contemplated by Section 301.
"Responsible Officer", when used with respect to the Trustee, means the
chairman or vice chairman of the board of directors, the chairman or vice
chairman of the trust committee of the board of directors, the president, any
vice president, the secretary, the treasurer or any trust officer or assistant
trust officer of the Trustee.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and
delivered under this Indenture.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
instalment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such instalment of principal or interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding Voting
Stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
"Trustee" means the Person named as the "Trustee" in the first paragraph
of this instrument until a successor Trustee shall have become such with
respect to one or more series of Securities 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 as in force at
the date as of which this instrument was executed, except as provided in
Section 905.
<PAGE> 26
7
"Vice President", when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
"Voting Stock" means stock of the class or classes having general voting
power under ordinary circumstances to elect at least a majority of the board of
directors, managers or trustees of such corporation (irrespective of whether or
not at the time stock of any other class or classes shall or might have voting
power by reason of the happening of any contingency).
Section 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, 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, 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 shall include:
(1) a statement that each individual signing such certificate or
opinion 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 contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 103. Form 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
<PAGE> 27
8
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 Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more applica-
tions, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given 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 agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee or the Security Registrar, as applicable, and, where it is hereby
expressly required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Section
601) conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.
(b) The fact and date of the execution of any such instrument or writing,
or the authority of any Person executing the same, may be proved in any
reasonable manner which the Trustee or the Security Registrar, as the case may
be, deems sufficient.
(c) The ownership of Securities shall be proved by the Security Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
registration of
<PAGE> 28
9
transfer thereof or in exchange therefor or in lieu thereof or the Holder of
any Predecessor Security in respect of anything done, omitted or suffered to be
done by the Trustee, the Security Registrar or the Company in reliance thereon,
whether or not notation of such action is made upon such Security.
Section 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Secretary of the Company at the address of its principal
office specified in the first paragraph of this instrument, or at any
other address previously furnished in writing to the Trustee by the
Company.
Section 106. 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 his address as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed for
the giving of such notice. In any case where notice to Holders is given by
mall, neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mall service or by reason
of any other cause it shall be impracticable to give such notice by mall, then
such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
Section 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Indenture by any of
the provisions of the Trust Indenture Act, such required provision shall
control.
<PAGE> 29
10
Section 108. 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 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
Section 110. Separability Clause.
In case 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 111. 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
hereunder and the Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
Section 112. Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of New York.
Section 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal (and premium, if any) need not
be made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the Interest Payment Date or Redemption Date, or at the Stated
Maturity, provided that no interest shall accrue for the period from and after
such Interest Payment Date, Redemption Date or Stated Maturity, as the case may
be.
ARTICLE TWO
Security Forms
Section 201. Forms Generally.
The Securities of each series shall be in substantially the form set forth
in this Article or in such other form as shall be established by or pursuant to
a Board Resolution or in one or more indentures supplemental hereto, in each
case with
<PAGE> 30
11
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 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 Company and delivered to the
Trustee at or prior to the delivery of the Company Order contemplated by
Section 303 for the authentication and delivery of such Securities.
The Trustee's certificates of authentication shall be in substantially the
form set forth in this Article.
The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities, as evidenced by their
execution of such Securities.
Section 202. Form of Face of Security.
[If the Security is an Original Issue Discount Security, insert--- For
purposes of Section 1273 of the United States Internal Revenue Code of 1954, as
amended, the issue price of this Security is % of its principal amount and the
issue date is , 19 ]
National City Corporation
No.............. $.....................
National City Corporation, a Delaware corporation (hereinafter called
the "Company", which term includes any successor corporation under the Inden-
ture hereinafter referred to), for value received, hereby promises to pay to
...........................................................................
.............................., or registered assigns, the principal sum of
........................................................................
Dollars on ................................................................ [If
the Security is to bear interest prior to Maturity, insert---, and to pay
interest thereon from ........, or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, semi-annually on ..........,
and ................. in each year, commencing ........, at the rate of .....%
per annum, until the principal hereof is paid or made available for payment. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in
whose name this Security (or one or more Predecessor Securities) is registered
<PAGE> 31
12
at the close of business on the Regular Record Date for such interest, 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 which is payable but is not so punctually paid or duly provided for
will 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 the Security is not to bear interest prior to Maturity, insert---The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal of this Security shall bear
interest at the rate of % per annum (to the extent that the payment of such
interest shall be legally enforceable), which shall accrue from the date of
such default in payment to the date payment of such principal has been made or
duly provided for. Interest on any overdue principal shall be payable on
demand. Any such interest on any overdue principal that is not so paid on
demand shall bear interest at the rate of ....% per annum (to the extent that
the payment of such interest shall be legally enforceable), which shall
accrue from the date of such demand for payment to the date payment of such
interest has been made or duly provided for, and such interest shall also be
payable on demand.]
Payment of the principal of (and premium, if any) and [if applicable,
insert---any such] interest on this Security will be made at the office or
agency of the Company initially maintained for that purpose in [insert
applicable 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 Company payment of interest may be made by check drawn upon any Paying
Agent and mailed on or prior to an Interest Payment Date to the address of the
Person entitled thereto as such address shall appear in the Security Register].
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, directly or through an
authenticating agent, by the manual signature of an authorized officer, this
Security shall not be
<PAGE> 32
13
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
In Witness Whereof, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
National City Corporation
By
--------------------------
[Seal]
Attest:
- -----------------------------------
Section 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of debentures, notes or
other evidences of indebtedness of the Company (herein called the
"Securities"), issued and to be issued in one or more series under an
Indenture, dated as of March 15, 1986 (herein called the "Indenture"), between
the Company and Morgan Guaranty Trust Company 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 Company, the Trustee and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered. The Securities may be issued in one or
more series, which different series may be issued in various aggregate
principal amounts, may mature at different times, may bear interest (if any) at
different rates, may be subject to different redemption provisions (if any),
may be subject to different sinking, purchase or analogous funds (if any), may
be subject to different covenants and Events of Default and may otherwise vary
as in the Indenture provided. This Security is one of a series of Securities of
the Company designated as set forth on the face hereof (herein called the
"............."), limited in aggregate principal amount to $..............
[If applicable, insert---The Securities of this series are subject to
redemption upon not less than 30 days' notice by mall, [if applicable,
insert---(1) on ...... in any year commencing with the year ......... and ending
with the year ....... through operation of the sinking fund for this series
at a Redemption Price equal to 100% of the principal amount, and (2)] at any
time [on or after .... ...., 19....], as a whole or in part, at the election
of the
<PAGE> 33
14
Company, (at the following Redemption Prices (expressed as percentages of the
principal amount): If redeemed [on or before .... ....., .......%, and if
redeemed] during the 12-month period beginning...........................
of the years indicated,
<TABLE>
<CAPTION>
REDEMPTION REDEMPTION
YEAR PRICE YEAR PRICE
- ---- ---------- ---- ----------
<S> <C> <C> <C>
% %
</TABLE>
and thereafter] at a Redemption Price equal to % of the principal amount,
together in the case of any such redemption [if applicable, insert---(whether
through operation of the sinking fund or otherwise)] with accrued interest to
the Redemption Date, but interest instalments whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at the close of
business on the relevant Regular Record Dates referred to on the face hereof,
all as provided in the Indenture.]
[If applicable, insert---The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, (1) on ........... in
any year commencing with the year .......... and ending with the year.......
through operation of the sinking fund for this series at the Redemption Prices
for redemption through operation of the sinking fund (expressed as percentages
of the principal amount) set forth in the table below, and (2) at any time [on
or after ........], as a whole or in part, at the election of the Company, at
the Redemption Prices for redemption otherwise than through operation of the
sinking fund (expressed as percentages of the principal amount) set forth in
the table below: If redeemed during the 12-month period beginning .......... of
the years indicated,
<TABLE>
<CAPTION>
REDEMPTION PRICE REDEMPTION PRICE FOR
FOR REDEMPTION REDEMPTION OTHERWISE
THROUGH OPERATION THAN THROUGH OPERATION
YEAR OF THE SINKING FUND OF THE SINKING FUND
- ---- ------------------- ----------------------
<S> <C> <C>
% %
</TABLE>
<PAGE> 34
15
and thereafter at a Redemption Price equal to ....% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest instalments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Regular Record Dates referred to on the face hereof, all as provided in the
Indenture.]
[Notwithstanding the foregoing, the Company may not, prior to .......,
redeem any Securities of this series as contemplated by [Clause (2) of] the
preceding paragraph as a part of, or in anticipation of, any refunding
operation by the application, directly or indirectly, of moneys borrowed having
an interest cost to the Company (calculated in accordance with generally
accepted financial practice) less than ..... % per annum.]
[The sinking fund for this series provides for the redemption on .......
in each year beginning with the year ....... and ending with the year ...... of
[not less than] $....... [("mandatory sinking fund") and not more than $.......
aggregate principal amount of Securities of this series. [Securities of this
series acquired or redeemed by the Company otherwise than through [mandatory]
sinking fund payments may be credited against subsequent [mandatory] sinking
fund payments otherwise required to be made.] ]
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.
[If the Security is not an Original Issue Discount Security,---If an Event
of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.]
[If the Security is an Original Issue Discount Security,---If an Event of
Default with respect to Securities of this series shall occur and be
continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to---insert formula for determining the
amount. Upon payment (i) of the amount of principal so declared due and payable
and (ii) of interest on any overdue principal and overdue interest (in each
case to the extent that the payment of such interest shall be legally
enforceable), all of the Company's obligations in respect of the payment of the
principal of and interest, if any, on the Securities of this series shall
terminate.]
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
<PAGE> 35
16
Company and the rights of the Holders of the Securities of each series under
the Indenture at any time by the Company and the Trustee with the consent of
the Holders of 66 2/3% in aggregate principal amount of the Securities at the
time Outstanding of each series to be affected by such amendment or
modification. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate 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 Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and
of any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security. The Indenture contains provisions setting forth
certain conditions to the institution of proceedings by Holders of Securities
with respect to the Indenture or for any remedy under the Indenture.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest 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 Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of (and
premium, if any) and interest on this Security are payable, duly endorsed, or
accompanied by a written instrument of transfer in form satisfactory to the
Company or the Security Registrar duly executed, by the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities
of this series, 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 thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
this Security is exchangeable for a like aggregate principal amount of
Securities of this series of different authorized denominations, as requested
by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
<PAGE> 36
17
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof
for all purposes, whether or not this Security is overdue, and neither the
Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
Section 204. Form of Trustee's Certificate of Authentication.
This is one of the Securities of the series provided for under the within-
mentioned Indenture.
Morgan Guaranty Trust Company
of New York, as Trustee
By............................
Authorized Officer
ARTICLE THREE
The Securities
Section 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which 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 set forth in an Officers'
Certificate, or established in one or more indentures supplemental hereto,
prior to the issuance of Securities of any series,
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from all other Securities);
(2) any limit upon the aggregate principal amount of the Securities
of the series which 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 304, 305, 306, 906 or 1107);
(3) the date or dates on which the principal of the Securities of
the series is payable;
(4) the rate or rates at which the Securities of the series shall
bear interest, if any, the date or dates from which such interest shall
accrue, the
<PAGE> 37
18
Interest Payment Dates on which such interest shall be payable, the
Regular Record Date for the interest payable on any Interest Payment Date
and the method of computation of such interest if other than on the basis
of a 360-day year of twelve 30-day months;
(5) the place or places, if any, in addition to, or instead of, the
Borough of Manhattan, The City of New York, where the principal of (and
premium, if any) and interest on Securities of the series initially shall
be payable;
(6) the period or periods within which, the price or prices at which
and the terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Company;
(7) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions
upon which Securities of the series shall be redeemed or purchased, in
whole or in part, pursuant to such obligation;
(8) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be
issuable;
(9) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section
502; and
(10) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical except
as to denomination and except as may otherwise be provided in or pursuant to
such Board Resolution and set forth in such Officers' Certificate or in any
such indenture supplemental hereto.
At the option of the Company, interest on the Securities of any series
that bears interest may be paid by mailing a check, on or before the applicable
Interest Payment Date, to the address of the person entitled thereto as such
address shall appear in the Securities Register.
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 Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
<PAGE> 38
19
Section 302. Denominations.
The Securities of each series shall be issuable in registered form without
coupons in such denominations as shall be specified as contemplated by Section
301. In the absence of any such provisions with respect to the Securities of
any series, the Securities of such series shall be issuable in denominations of
$1,000 and any integral multiple thereof.
Section 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its President, one of its Vice Chairmen or its Treasurer, under
its corporate seal reproduced thereon 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 Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for
the authentication and delivery of such Securities, and the Trustee in
accordance with the Company Order and subject to the provisions hereof shall
authenticate and deliver such Securities. If the form or terms of the
Securities of the series have been established in or pursuant to one or more
Board Resolutions as permitted by Sections 201 and 301, 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 601) shall be fully protected in relying upon,
an Opinion of Counsel stating:
(a) if the form of such Securities has been established by or
pursuant to Board Resolution as permitted by Section 201, that such form
has been established in conformity with the provisions of this Indenture;
(b) if the terms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 301, that such terms
have been established in conformity with the provisions of this Indenture;
(c) that all conditions precedent to the authentication and delivery
of such Securities have been complied with and that such Securities, when
authenticated and delivered by the Trustee and issued by the Company in
the manner and subject to any conditions specified in such Opinion of
Counsel,
<PAGE> 39
20
will constitute valid and legally binding obligations of the Company, en-
forceable in accordance with their terms, subject to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting the enforcement of creditors' rights and to
general equity principles; and
(d) that such other conditions as the Trustee may reasonably request
have been complied with.
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
which is not reasonably acceptable to the Trustee.
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 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 and is entitled to the benefits of this Indenture.
Section 304. Temporary Securities.
Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will cause
definitive Securities of that series to be prepared without unreasonable delay.
After the preparation of definitive Securities of such series, the temporary
Securities of such series shall be exchangeable for definitive Securities of
such series upon surrender of the temporary Securities of such series at the
office or agency of the Company in a Place of Payment for that series, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of the same series of authorized denominations. Until so
exchanged the temporary
<PAGE> 40
21
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of such series.
Section 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the office of the Security Registrar
designated pursuant to this Section 305 or Section 1002 a register (herein
sometimes referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is
hereby initially appointed Security Registrar for the purpose of registering
Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security of any series
at the office or agency in a Place of Payment for that series, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Securities of the
same series, of any authorized denominations and of a like aggregate principal
amount.
At the option of the Holder, Securities of any series may be exchanged for
other Securities of the same series, of any authorized denominations and of a
like aggregate principal amount, upon surrender of the Securities to be
exchanged at such office or agency. Whenever any Securities are so surrendered
for exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Security Registrar) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company or the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.
Neither the Company nor the Security Registrar shall be required (i) to
issue, register the transfer of or exchange Securities of any series during a
period beginning at the opening of business 15 days before the day of the
mailing of a notice of redemption of Securities of that series selected for
redemption under
<PAGE> 41
22
Section 1103 and ending at the close of business on the day of such mailing, or
(ii) to register the transfer of or exchange any Security so selected for
redemption in whole or in part, except the unredeemed portion of any Security
being redeemed in part.
Section 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee and there is
delivered to the Company and the Trustee such security or indemnity as may be
required by them to save each of them and any agent of either of them harmless,
then the Company shall execute and the Trustee may authenticate and deliver in
exchange therefor a new Security of the same series and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and 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 and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Trustee may
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in lieu
of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall
be entitled to all the benefits of this Indenture equally and proportionately
with any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent permitted by law) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 307. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
<PAGE> 42
23
name that Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest.
Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities of such series (or their re-
spective Predecessor Securities) are registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest,
which shall be fixed in the following manner. The Company shall notify
the Trustee in writing of the amount of Defaulted Interest proposed to be
paid on each Security of such series and the date of the proposed
payment, and at the same time the Company shall deposit with the Trustee
an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
Clause provided. Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than
15 days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of the
notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the expense
of the Company, shall cause notice of the proposed payment of such De-
faulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder of Securities of such series
at his address as it appears in the Security Register, not less than 10
days prior to such Special Record Date. Notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor having been
so mailed, such Defaulted Interest shall be paid to the Persons in whose
names the Securities of such series (or their respective Predecessor
Securities) are registered at the close of business on such Special
Record Date and shall no longer be payable pursuant to the following
Clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with
the requirements of any securities exchange on which such Securities may
be listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the proposed payment
pur-
<PAGE> 43
24
suant to this Clause, such manner of payment shall be deemed practicable
by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of 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, which were carried by such other Security.
Section 308. Persons Deemed Owners.
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of (and premium, if
any) and (subject to Section 307) interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
Section 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
for cancellation. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and all
Securities so delivered shall be promptly cancelled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
cancelled as provided in this Section, except as expressly permitted by this
Indenture. All cancelled Securities held by the Trustee shall be destroyed and
the Trustee shall provide to the Company, if requested by the Company, a
certificate of destruction.
Section 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a year of twelve 30-day months.
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect
(except as to (i) remaining rights of registration of transfer, substitution
and
<PAGE> 44
25
exchange of Securities, (ii) rights hereunder of Holders to receive payments of
principal of (and premium, if any) and interest on the Securities, and other
rights, duties and obligations of the Holders as beneficiaries hereof with
respect to the amounts, if any, so deposited with the Trustee, and (iii) the
rights, obligations and immunities of the Trustee hereunder), and the Trustee,
at the expense of the Company, 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 which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section
306 and (ii) Securities for whose payment money has theretofore
been deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged from
such trust, as provided in Section 1003) 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, 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 Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds
in trust for the purpose an amount 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 to the date of such deposit (in the
case of Securities which have become due and payable) or to the
Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
<PAGE> 45
26
In the event there are Securities of two or more series hereunder, the Trustee
shall be required to execute an instrument acknowledging satisfaction and
discharge of this Indenture only if requested to do so with respect to
Securities of all series as to which it is Trustee and if the other conditions
thereto are met. In the event there are two or more Trustees hereunder, then
the effectiveness of any such instrument shall be conditioned upon receipt of
such instruments from all Trustees hereunder.
Notwithstanding the satisfaction and discharge of this Indenture, the obli-
gations of the Company to the Trustee under Section 607, the obligations of the
Trustee to any Authenticating Agent under Section 614 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 402 and the last
paragraph of Section 1003 shall survive.
Section 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee; but such money need not be segregated from other funds except to the
extent required by law.
ARTICLE FIVE
Remedies
Section 501. Events of Default.
"Event of Default", wherever used herein with respect to 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):
(1) default in the payment of any interest upon any Security of that
series when it becomes due and payable, and continuance of such default
for a period of 30 days; 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) default in the deposit of any sinking fund payment, when and as
due by the terms of a Security of that series; or
<PAGE> 46
27
(4) default in the performance, or breach, of any covenant or warranty of
the Company in this Indenture (other than a covenant or warranty a default in
whose performance or whose breach is elsewhere in this Section specifi- cally
dealt with or which has expressly been included in this Indenture solely for
the benefit of series of Securities other than that series), and continuance of
such default or breach for a period of 90 days after there has been given, by
registered or certified mall, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities of that series 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
(5) the entry by a court or other applicable governmental authority
having jurisdiction in the premises of (A) a decree or order for relief in
respect of the Company or a Principal Constituent Bank in an involuntary
case or proceeding under any applicable Federal or State bankruptcy, in-
solvency, reorganization or other similar law or (B) a decree or order
adjudging the Company or a Principal Constituent Bank a bankrupt or insolvent
or appointing a custodian, receiver, liquidator, assignee, trustee, seques-
trator or other similar official of the Company or a Principal Constituent
Bank 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
for relief or any such other decree or order unstayed and in effect for a
period of 60 consecutive days; or
(6) the commencement by the Company or a Principal Constituent Bank of a
voluntary case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by either
of the foregoing to the entry of a decree or order for relief in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding, or the filing by either of the
foregoing of a petition or answer or consent seeking reorganization or relief
under any applicable Federal or State law, or the consent by either of the
foregoing to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Company or a Principal Constituent Bank
or of any substantial part of the property of either, or the making by either
of the foregoing of an assignment for the benefit of creditors, or the
admission by either of the foregoing in writing of its inability to pay its
debts generally as they become due, or the taking of corporate action by the
Company or a Principal Constituent Bank in furtherance of any such action; or
<PAGE> 47
28
(7) any other Event of Default provided with respect to Securities of
that series.
Section 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the
time Outstanding occurs and is continuing, then in every such case the Trustee
or the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal amount (or, if the
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms of that series) of all
of the Securities of that series to be due and payable immediately, by a notice
in writing to the Company (and to the Trustee if given by Holders), and upon
any such declaration such principal amount (or specified amount) shall become
immediately due and payable.
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 principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum suf-
ficient to pay
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of
that series which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or
rates prescribed therefor in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed
therefor in such Securities, and
(D) all sums paid or advanced by the Trustee hereunder, the
Security Registrar and any Paying Agent and the reasonable compen-
sation, expenses, disbursements and advances of any one of them and
their 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 which have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right con-
sequent thereon.
<PAGE> 48
29
Section 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any Security
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 (or premium,
if any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest on and, to the
extent that payment of such interest shall be legally enforceable, interest on
any overdue principal (and premium, if any) and on any overdue interest, at the
rate or rates prescribed therefor in such Securities, and, in addition thereto,
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.
Section 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall
<PAGE> 49
30
then be due and payable as therein expressed or by declaration or otherwise
and irrespective of whether the Trustee or any predecessor trustee shall have
made any demand on the Company for the payment of overdue principal or
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 owing and unpaid in respect of the
Securities and to file such other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee or any predecessor
trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee or any predecessor trustee, its
agents and counsel) and of the Holders allowed in such judicial
proceeding, and
(ii) 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 Trustee 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 it for the reasonable compensation,
expenses, disbursements and advances of the Trustee and any predecessor
trustee, its agents and counsel, and any other amounts due the Trustee and any
predecessor trustee under Section 607.
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.
Section 505. Trustee May Enforce Claims 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, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
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31
Section 506. Application of Money Collected.
Any money collected by the Trustee 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 on account of principal (or premium,
if any) or 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 under Section
607; and
Second: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Securities for principal (and
premium, if any) and interest, respectively.
Section 507. Limitation on Suits.
No Holder of any Security 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 or trustee, 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;
(2) the Holders of not less than 25% in principal amount of the Out-
standing 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 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 of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders or Holders of any other series, or to obtain or to seek to obtain
priority or preference over any other of such Holders or to enforce any right
under this
<PAGE> 51
32
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all of such Holders.
Section 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of (and premium, if any) and (subject to Section 307)
interest on such Security on the Stated Maturity or 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 rights shall
not be impaired without the consent of such Holder.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder 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 or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
Section 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to 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 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default 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 may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
<PAGE> 52
33
Section 512. Control by Holders.
The Holders of a majority in 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 which is not inconsistent with such direction,
(3) such direction is not unduly prejudicial to the rights of other
Holders, and
(4) such direction would not involve the Trustee in personal
liability.
Section 513. Waiver of Past Defaults.
The Holders of not less than 50% in principal amount of the Outstanding
Securities of any series may on behalf of the Holders of all the Securities
of such series waive any past default hereunder with respect to such series
and its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Security of such series, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
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 514. 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, suffered 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 for the merits and good faith of the claims
<PAGE> 53
34
or defenses made by such party litigant; but the provisions of this Section
shall not apply to any suit instituted by the Company, 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 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
on any Security on or after the Stated Maturity or Maturities expressed in such
Security (or, in the case of redemption, on or after the Redemption Date).
Section 515. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any
such law and covenants that it will not hinder, delay or impede the exercise of
any power herein granted to the Trustee, but will suffer and permit the
exercise of every such power as though no such law had been enacted.
ARTICLE SIX
The Trustee
Section 601. 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 which by
any provision hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine the same to
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 man would exercise or use under the circumstances in the conduct of
his own affairs.
<PAGE> 54
35
(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
Sub-section (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;
(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 the Holders of a majority in principal amount of the
Outstanding Securities of any series, 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 such series; and
(4) 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.
(d) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
Section 602. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder known to the
Trustee 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 Security Register, notice of such default
hereunder, 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 on any Security of such series or in the
payment of any sinking fund instalment with respect to Securities 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 or Responsible Officers of the Trustee in good faith determine that
the withholding of such notice is in the interest of the Holders of Securities
of such series; and provided further, that in the case of any default of the
character specified in Section 501(4) with respect to Securities of such
series,
<PAGE> 55
36
no such notice to Holders shall be given until at least 30 days after the
occurrence thereof. For the purpose of this Section, the term default" means
any event which is, or after notice or lapse of time or both would become, an
Event of Default with respect to Securities of such series.
Section 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(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, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(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 which 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, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney;
<PAGE> 56
37
(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; and
(h) the Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture.
Section 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the
Company, and neither the Trustee nor any Authenticating Agent assumes
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Securities. Neither
the Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Securities or the proceeds thereof.
Section 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to
Sections 608 and 613, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other agent.
Section 606. Money Held in Trust.
Money held by the Trustee in trust or by any Paying Agent hereunder need
not be segregated from other funds except to the extent required by law.
Neither the Trustee nor any Paying Agent shall be under any liability for
interest on any money received by it hereunder.
Section 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee, the Security Registrar, any Authenticating
Agent and any Paying Agent, as the case may be, from time to time reason-
able compensation for all services rendered by them hereunder (which com-
pensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
<PAGE> 57
38
(2) except as otherwise expressly provided herein, to reimburse the
Trustee, the Security Registrar, any Authenticating Agent and any Paying
Agent, as the case may be, upon their request for all reasonable expenses,
disbursements and advances incurred or made by any one of them in accord-
ance with any provision of this Indenture (including the reasonable compen-
sation and the expenses and disbursements of their agents and counsel),
except any such expense, disbursement or advance as may be attributable to
their negligence or bad faith; and
(3) to indemnify the Trustee, any predecessor trustee, the Security
Registrar, any Authenticating Agent and any Paying Agent, as the case may
be, for, and to hold each of them harmless against, any loss, liability or
expense incurred without negligence or bad faith arising out of or in con-
nection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending themselves
against any claim or liability in connection with the exercise or
performance of any of their powers or duties hereunder.
As security for the performance of the obligations of the Company
under this Section, the Trustee shall have a claim prior to the Securities
upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the Holders of particular
Securities.
Section 608. Disqualification; Conflicting Interests.
(a) If the Trustee has or shall acquire any conflicting interest, as
defined in this Section, with respect to the Securities of any series, it
shall, within 90 days after ascertaining that it has such conflicting interest,
either eliminate such conflicting interest or resign with respect to the
Securities of that series in the manner and with the effect hereinafter
specified in this Article.
(b) In the event that the Trustee shall fail to comply with the provisions
of Subsection (a) of this Section with respect to the Securities of any series,
the Trustee shall, within 10 days after the expiration of such 90-day period,
transmit by mail to all Holders of Securities of that series, as their names
and addresses appear in the Security Register, notice of such failure.
(c) For the purposes of this Section, the Trustee shall be deemed to have a
conflicting interest with respect to the Securities of any series, if
(1) the Trustee is trustee under this Indenture with respect to the
Outstanding Securities of any series other than that series or is
trustee under another indenture under which any other securities, or
certificates of interest or participation in any other securities, of the
Company are outstanding, unless such other indenture is a collateral trust
indenture under which the
<PAGE> 58
39
only collateral consists of Securities issued under this Indenture, provided
that there shall be excluded from the operation of this paragraph (A) this
Indenture with respect to the Securities of any series other than that series,
and (B) any indenture or indentures under which other securities, or certifi-
cates of interest or participation in other securities, of the Company are
outstanding, if
(i) this Indenture and such other indenture or indentures are whol-
ly unsecured and such other indenture or indentures are hereafter qual-
ified under the Trust Indenture Act, unless the Commission shall have
found and declared by order pursuant to Section 305(b) or Section
307(c) of the Trust Indenture Act that differences exist between the
provisions of this Indenture with respect to Securities of that series and
one or more other series or the provisions of such other indenture or
indentures which are so likely to involve a material conflict of interest
as to make it necessary in the public interest or for the protection of
investors to disqualify the Trustee from acting as such under this
Indenture with respect to the Securities of that series and such other
series or under such other indenture or indentures, or
(ii) the Company shall have sustained the burden of proving, on
application to the Commission and after opportunity for hearing there-
on, that trusteeship under this Indenture with respect to the Securities
of that series and such other series or such other indenture or indentures
is not so likely to involve a material conflict of interest as to make it
necessary in the public interest or for the protection of investors to
disqualify the Trustee from acting as such under this Indenture with
respect to the Securities of that series and such other series or under
such other indenture or indentures;
(2) the Trustee or any of its directors or executive officers is an
obligor upon the Securities or an underwriter for the Company;
(3) the Trustee directly or indirectly controls or is directly or
indirectly controlled by or is under direct or indirect common control with the
Company or an underwriter for the Company;
(4) the Trustee or any of its directors or executive officers is a
director, officer, partner, employee, appointee or representative of the
Company, or of an underwriter (other than the Trustee itself) for the Company
who is currently engaged in the business of underwriting, except that (i) one
individual may be a director or an executive officer, or both, of the Trustee
and a director or an executive officer, or both, of the Company but may not be
at the same time an executive officer of both the Trustee and the Company; (ii)
if and so long as the number of directors of the Trustee in office is more
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40
than nine, one additional individual may be a director or an executive officer,
or both, of the Trustee and a director of the Company; and (iii) the Trustee
may be designated by the Company or by any underwriter for the Company to act
in the capacity of transfer agent, registrar, custodian, paying agent, fiscal
agent, escrow agent or depositary, or in any other similar capacity, or,
subject to the provisions of paragraph (1) of this Subsection, to act as
trustee, whether under an indenture or otherwise;
(5) 10% or more of the voting securities of the Trustee is beneficially
owned either by the Company or by any director, partner or executive officer
thereof, or 20% or more of such voting securities is beneficially owned,
collectively, by any two or more of such persons; or 10% or more of the
voting securities of the Trustee is beneficially owned either by an underwriter
for the Company or by any director, partner or executive officer thereof, or
is beneficially owned, collectively, by any two or more such persons;
(6) the Trustee is the beneficial owner of, or holds as collateral security
for an obligation which is in default (as hereinafter in this Subsection de-
fined), (i) 5% more of the voting securities, or 10% or more of any other
class of security, of the Company not including the Securities issued under
this Indenture and securities issued under any other indenture under which
the Trustee is also trustee, or (ii) 10% or more of any class of security of an
underwriter for the Company;
(7) the Trustee is the beneficial owner of, or holds as collateral security
for an obligation which is in default (as hereinafter in this Subsection de-
fined), 5% more of the voting securities of any person who, to the knowledge
of the Trustee, owns 10% or more of the voting securities of, or controls
directly or indirectly or is under direct or indirect common control with, the
Company;
(8) the Trustee is the beneficial owner of, or holds as collateral security
for an obligation which is in default (as hereinafter in this Subsection de-
fined), 10% or more of any class of security of any person who, to the
knowledge of the Trustee, owns 50% or more of the voting securities of the
Company; or
(9) the Trustee owns, on May 15 in any calendar year, in the capacity
of executor, administrator, testamentary or inter vivos trustee, guardian,
committee or conservator, or in any other similar capacity, an aggregate of
25% or more of the voting securities, or of any class of security, of any
person, the beneficial ownership of a specified percentage of which would
have constituted a conflicting interest under paragraph (6), (7) or (8) of this
Subsection. As to any such securities of which the Trustee acquired owner-
<PAGE> 60
41
ship through becoming executor, administrator or testamentary trustee of
an estate which included them, the provisions of the preceding sentence
shall not apply, for a period of two years from the date of such
acquisition, to the extent that such securities included in such estate do
not exceed 25% of such voting securities or 25% of any such class of
security. Promptly after May 15 in each calendar year, the Trustee shall
make a check of its holdings of such securities in any of the
above-mentioned capacities as of such May 15. If the Company fails to
make payment in full of the principal of (or premium, if any) or interest
on any of the Securities when and as the same becomes due and payable, and
such failure continues for 30 days thereafter, the Trustee shall make a
prompt check of its holdings of such securities in any of the
above-mentioned capacities as of the date of the expiration of such 30-day
period, and after such date, notwithstanding the foregoing provisions of
this paragraph, all such securities so held by the Trustee, with sole or
joint control over such securities vested in it, shall, but only so long
as such failure shall continue, be considered as though beneficially owned
by the Trustee for the purposes of paragraphs (6), (7) and (8) of this
Subsection.
The specification of percentages in paragraphs (5) to (9), inclusive, of
this Subsection shall not be construed as indicating that the ownership of such
percentages of the securities of a person is or is not necessary or
sufficient to constitute direct or indirect control for the purposes of
paragraph (3) or (7) of this Subsection.
For the purposes of paragraphs (6), (7), (8) and (9) of this Subsection
only, (i) the terms "security" and "securities" shall include only such
securities as are generally known as corporate securities, but shall not
include any note or other evidence of indebtedness issued to evidence an
obligation to repay moneys lent to a person by one or more banks, trust
companies or banking firms, or any certificate of interest or participation in
any such note or evidence of indebtedness; (ii) an obligation shall be deemed
to be "in default" when a default in payment of principal shall have continued
for 30 days or more and shall not have been cured; and (iii) the Trustee shall
not be deemed to be the owner or holder of (A) any security which it holds as
collateral security, as trustee or otherwise, for an obligation which is not in
default as defined in Clause (ii) above, or (B) any security which it holds as
collateral security under this Indenture, irrespective of any default
hereunder, or (C) any security which it holds as agent for collection, or as
custodian, escrow agent or depositary, or in any similar representative
capacity.
(d) For the purposes of this Section:
(1) The term "underwriter", when used with reference to the Company,
means every person who, within three years prior to the time as of which
the
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42
determination is made, has purchased from the Company with a view to, or
has offered or sold for the Company in connection with, the distribution of
any security of the Company outstanding at such time, or has participated
or has had a direct or indirect participation in any such undertaking, or
has participated or has had a participation in the direct or indirect
underwriting of any such undertaking, but such term shall not include a
person whose interest was limited to a commission from an underwriter or
dealer not in excess of the usual and customary distributors' or sellers'
commission.
(2) The term "director" means any director of a corporation or any
individual performing similar functions with respect to any organization,
whether incorporated or unincorporated.
(3) The term "person" means an individual, a corporation, a partner-
ship, an association, a joint-stock company, a trust, an unincorporated
organization or a government or political subdivision thereof. As used
in this paragraph, the term "trust" shall include only a trust where the
interest or interests of the beneficiary or beneficiaries are evidenced by
a security.
(4) The term "voting security" means any security presently entitling
the owner or holder thereof to vote in the direction or management of the
affairs of a person, or any security issued under or pursuant to any
trust, agreement or arrangement whereby a trustee or trustees or agent or
agents for the owner or holder of such security are presently entitled to
vote in the direction or management of the affairs of a person.
(5) The term Company means any obligor upon the Securities.
(6) The term "executive officer" means the president, every vice
president, every trust officer, the cashier, the secretary and the
treasurer of a corporation, and any individual customarily performing
similar functions with respect to any organization whether incorporated or
unincorporated, but shall not include the chairman of the board of
directors.
(e) The percentages of voting securities and other securities specified in
this Section shall be calculated in accordance with the following provisions:
(1) A specified percentage of the voting securities of the Trustee,
the Company or any other person referred to in this Section (each of whom
is referred to as a "person" in this paragraph) means such amount of the
outstanding voting securities of such person as entitles the holder or
holders thereof to cast such specified percentage of the aggregate votes
which the holders of all the outstanding voting securities of such person
are entitled to cast in the direction or management of the affairs of such
person.
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(2) A specified percentage of a class of securities of a person means
such percentage of the aggregate amount of securities of the class out-
standing.
(3) The term "amount", when used in regard to securities, means the
principal amount if relating to evidences of indebtedness, the number of
shares if relating to capital shares and the number of units if relating
to any other kind of security.
(4) The term "outstanding" means issued and not held by or for the
account of the issuer. The following securities shall not be deemed out-
standing within the meaning of this definition:
(i) securities of an issuer held in a sinking fund relating to
securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking fund relating to
another class of securities of the issuer, if the obligation
evidenced by such other class of securities is not in default as to
principal or interest or otherwise;
(iii) securities pledged by the issuer thereof as security for
an obligation of the issuer not in default as to principal or
interest or otherwise; and
(iv) securities held in escrow if placed in escrow by the issuer
thereof;
provided, however, that any voting securities of an issuer shall be deemed
outstanding if any person other than the issuer is entitled to exercise the
voting rights thereof.
(5) A security shall be deemed to be of the same class as another
security if both securities confer upon the holder or holders thereof
substantially the same rights and privileges; provided, however, that,
in the case of secured evidences of indebtedness, all of which are issued
under a single indenture, differences in the interest rates or maturity
dates of various series thereof shall not be deemed sufficient to
constitute such series different classes; and provided further, that, in
the case of unsecured evidences of indebtedness, differences in the
interest rates or maturity dates thereof shall not be deemed sufficient to
constitute them securities of different classes, whether or not they are
issued under a single indenture.
Section 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any
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44
State thereof or the District of Columbia, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $25,000,000, and 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 said 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.
Section 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
(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 Company. If the
instrument of acceptance by a successor Trustee required by Section 611 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 principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the Com-
pany.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608(a) after
written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company 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 of affairs for the purpose of
rehabilitation, conservation or liquidation,
<PAGE> 64
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then, in any such case, (i) the Company by a Board resolution may remove the
Trustee with respect to all securities, or (ii) subject to Section 514, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities 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 Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of one or
more or all of such series and that at any time there shall be only one Trustee
with respect to the Securities of any particular series) and shall comply with
the applicable requirements of Section 611. 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 principal amount of the
Outstanding Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable requirements
of Section 611, become the successor Trustee with respect to the Securities of
such series and to that extent supersede the successor Trustee appointed by the
Company. If no successor Trustee with respect to the Securities of any series
shall have been so appointed by the Company or the Holders and accepted
appointment in the manner required by Section 611, any holder who has been a
bona fide Holder of a Security of such series 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 Trustee with respect
to the Securities of such series.
(f) The Company 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 all
Holders of Securities of such series as their names and addresses appear in
the Security 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 611. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee
an instrument accepting such appointment, and thereupon the resignation or
removal of the
<PAGE> 65
46
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on the request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers, and trusts of the retiring Trustee and shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder, subject nevertheless to the
prior claim provided for in Section 6.07.
(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 Company, 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, 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 that no Trustee shall be responsible
for any notice given to, or received by, or any act or failure to act on the
part of any other Trustee hereunder, 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, such retiring
Trustee shall with respect to the Securities of that or those series to which
the appointment of such successor Trustee relates have no further
responsibility for the exercise of rights and powers or for the performance of
the duties and obligations vested in the Trustee under this Indenture, 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 Company
or any successor Trustee, such retiring Trustee shall duly assign, transfer and
deliver to such successor Trustee, to the extent contemplated by such
supplemental indenture, the
<PAGE> 66
47
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, subject nevertheless to the prior claim provided for in
Section 6.07.
(c) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in
paragraph (a) or (b) of this Section, as the case may be.
(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. Any trustee ceasing to act shall, nevertheless, retain a claim
upon all property or funds held or collected by such trustee to secure any
amounts then due it pursuant to the provisions of Section 607.
Section 612. 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 cor-
poration succeeding to all or substantially all 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 with the same
effect as if such successor Trustee had itself authenticated such Securities.
Section 613. Preferential Collection of Claims Against Company.
(a) Subject to Subsection (b) of this Section, if the Trustee shall be or
shall become a creditor, directly or indirectly, secured or unsecured, of the
Company within four months prior to a default, as defined in Subsection (c) of
this Section, or subsequent to such a default, then, unless and until such
default shall be cured, the Trustee shall set apart and hold in a special
account for the benefit of the Trustee individually, the Holders of the
Securities and the holders of other indenture securities, as defined in
Subsection (c) of this Section:
(1) an amount equal to any and all reductions in the amount due and
owing upon any claim as such creditor in respect of principal or
interest, effected after the beginning of such four months' period and
valid as against the Company and its other creditors, except any such
reduction resulting from the receipt or disposition of any property
described in paragraph (2) of
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48
this Subsection, or from the exercise of any right of set-off which the
Trustee could have exercised if a petition in bankruptcy had been filed by
or against the Company upon the date of such default; and
(2) all property received by the Trustee in respect of any claims as
such creditor, either as security therefor, or in satisfaction or
composition thereof, or otherwise, after the beginning of such four
months' period, or an amount equal to the proceeds of any such property,
if disposed of, subject, however, to the rights, if any, of the Company
and its other creditors in such property or such proceeds.
Nothing herein contained, however, shall affect the right of the Trustee:
(A) to retain for its own account (i) payments made on account of any
such claim by any Person (other than the Company) who is liable thereon,
and (ii) the proceeds of the bona fide sale of any such claim by the
Trustee to a third Person, and (iii) distributions made in cash,
securities or other property in respect of claims filed against the
Company in bankruptcy or receivership or in proceedings for reorganization
pursuant to the Federal Bankruptcy Act or applicable State law;
(B) to realize, for its own account, upon any property held by it as
security for any such claim, if such property was so held prior to the
beginning of such four months' period;
(C) to realize, for its own account, but only to the extent of the
claim hereinafter mentioned, upon any property held by it as security for
any such claim, if such claim was created after the beginning of such four
months' period and such property was received as security therefor
simultaneously with the creation thereof, and if the Trustee shall sustain
the burden of proving that at the time such property was so received the
Trustee had no reasonable cause to believe that a default, as defined in
Subsection (c) of this Section, would occur within four months; or
(D) to receive payment on any claim referred to in paragraph (B) or
(C), against the release of any property held as security for such claim
as provided in paragraph (B) or (C), as the case may be, to the extent of
the fair value of such property.
For the purposes of paragraphs (B), (C) and (D), property substituted
after the beginning of such four months' period for property held as security
at the time of such substitution shall, to the extent of the fair value of the
property released, have the same status as the property released, and, to the
extent that any claim referred to in any of such paragraphs is created in
renewal of or in substitution for or for the purpose of repaying or refunding
any pre-existing claim of the Trustee as such creditor, such claim shall have
the same status as such pre-existing claim.
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If the Trustee shall be required to account, the funds and property held
in such special account and the proceeds thereof shall be apportioned among the
Trustee, the Holders and the holders of other indenture securities in such
manner that the Trustee, the Holders and the holders of other indenture
securities realize, as a result of payments from such special account and
payments of dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Federal
Bankruptcy Act or applicable State law, the same percentage of their respective
claims, figured before crediting to the claim of the Trustee anything on
account of the receipt by it from the Company of the funds and property in such
special account and before crediting to the respective claims of the Trustee
and the Holders and the holders of other indenture securities dividends on
claims filed against the Company in bankruptcy or receivership or in
proceedings for reorganization pursuant to the Federal Bankruptcy Act or
applicable State law, but after crediting thereon receipts on account of the
indebtedness represented by their respective claims from all sources other
than from such dividends and from the funds and property so held in such
special account. As used in this paragraph, with respect to any claim, the term
"dividends" shall include any distribution with respect to such claim, in
bankruptcy or receivership or proceedings for reorganization pursuant to the
Federal Bankruptcy Act or applicable State law, whether such distribution is
made in cash, securities or other property, but shall not include any such
distribution with respect to the secured portion, if any, of such claim. The
court in which such bankruptcy, receivership or proceedings for
reorganization is pending shall have jurisdiction (i) to apportion among the
Trustee, the Holders and the holders of other indenture securities, in
accordance with the provisions of this paragraph, the funds and property held
in such special account and proceeds thereof, or (ii) in lieu of such
apportionment, in whole or in part, to give the provisions of this paragraph
due consideration in determining the fairness of the distributions to be made
to the Trustee and the Holders and the holders of other indenture securities
with respect to their respective claims, in which event it shall not be
necessary to liquidate or to appraise the value of any securities or other
property held in such special account or as security for any such claim, or to
make a specific allocation of such distributions as between the secured and
unsecured portions of such claims, or otherwise to apply the provisions of this
paragraph as a mathematical formula.
Any Trustee which has resigned or been removed after the beginning of
such four months' period shall be subject to the provisions of this Subsection
as though such resignation or removal had not occurred. If any Trustee has
resigned or been removed prior to the beginning of such four months' period, it
shall be subject to the provisions of this Subsection if and only if the
following conditions exist:
(i) the receipt of property or reduction of claim, which would have
given rise to the obligation to account, if such Trustee had continued as
Trustee, occurred after the beginning of such four months' period; and
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(ii) such receipt of property or reduction of claim occurred within
four months after such resignation or removal.
(b) There shall be excluded from the operation of Subsection (a) of this
Section a creditor relationship arising from:
(1) the ownership or acquisition of securities issued under any
indenture, or any security or securities having a maturity of one year
or more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court of
competent jurisdiction or by this Indenture, for the purpose of
preserving any property which shall at any time be subject to the lien of
this Indenture or of discharging tax liens or other prior liens or
encumbrances thereon, if notice of such advances and of the circumstances
surrounding the making thereof is given to the Holders at the time and in
the manner provided in this Indenture;
(3) disbursements made in the ordinary course of business in the
capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, fiscal agent or depositary, or other similar
capacity,
(4) an indebtedness created as a result of services rendered or
premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction, as defined in Subsection (c) of
this Section;
(5) the ownership of stock or of other securities of a corporation
organized under the provisions of Section 25(a) of the Federal Reserve
Act, as amended, which is directly or indirectly a creditor of the
Company; and
(6) the acquisition, ownership, acceptance or negotiation of any
drafts, bills of exchange, acceptances or obligations which fall within
the classification of self-liquidating paper, as defined in Subsection
(c) of this Section.
(c) For the purposes of this Section only:
(1) the term "default" means any failure to make payment in full of
the principal of or interest on any of the Securities or upon the other
indenture securities when and as such principal or interest becomes due
and payable;
(2) the term "other indenture securities" means securities upon
which the Company is an obligor outstanding under any other indenture (i)
under which the Trustee is also trustee, (ii) which contains provisions
substantially similar to the provisions of this Section, and (iii) under
which a default exists at the time of the apportionment of the funds and
property held in such special account;
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(3) the term "cash transaction" means any transaction in which full
payment for goods or securities sold is made within seven days after
delivery of goods or securities in currency or in checks or other orders
drawn upon banks or bankers and payable upon demand;
(4) the term "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Company for the purpose of financing the purchase,
processing, manufacturing, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing title to,
possession of, or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security, provided the security
is received by the Trustee simultaneously with
the creation of the creditor relationship with the Company arising from
the making, drawing, negotiating or incurring of the draft, bill of
exchange, acceptance or obligation;
(5) the term "Company" means any obligor upon the Securities; and
(6) the term "Federal Bankruptcy Act" means the Bankruptcy Act or
Title 11 of the United States Code.
Section 614. Appointment of Authenticating Agent.
At any time when any of the Securities remain Outstanding 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 exchange, registration of
transfer or partial redemption thereof 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 and a certificate of authentication
executed on behalf of the Trustee by an Authenticating Agent. Each
Authenticating Agent shall be acceptable to the Company and shall at all times
be a corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia, authorized
under such laws to act as Authenticating Agent, having a combined capital and
surplus as most recently reported or determined by it sufficient under the laws
of any jurisdiction under which it is organized or in which it is doing
business to conduct a trust business, and which is otherwise authorized under
such laws to conduct such business and is subject to supervision or examination
by Federal or State authority. If at any time an Authenticating Agent shall
cease to be eligible
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in accordance with the provisions of this Section, such Authenticating Agent
shall resign immediately in the manner and with the effect specified in this
Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time (and
upon request by the Company shall) terminate the agency of an Authenticating
Agent by giving written notice thereof to such Authenticating Agent and to the
Company. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time such Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, the Trustee may
appoint a successor Authenticating Agent which shall be acceptable to the
Company. 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 provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services, and to reimburse it for its expenses,
disbursements and advances (except for any such expense, disbursement or ad-
vance attributable to its negligence or bad faith) made or incurred, under this
Section, and the Trustee shall be entitled to be reimbursed for such payments
by the Company, subject to the provisions of Section 607.
The provisions of Sections 308, 604 and 605 shall be applicable to each
Authenticating Agent.
Pursuant to each appointment made under this Section, the Securities of
each series covered by such appointment 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 provided for under the
within-mentioned Indenture.
[Name of Authenticating Agent], as
Authenticating Agent for the Trustee
By.............................
Authorized Officer
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ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
Section 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 15 days after each Regular Record
Date for series of Securities bearing interest payable semi-annually and
after each January 1 and July 1 for all other series of Securities, a
list, in such form as the Trustee may reasonably require, of the names
and addresses of the Holders of such series as of such date; and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of the date not more than 15 days
prior to the time such list is furnished;
provided, however, that if and so long as the Trustee is the Security Registrar
with respect to Securities of a particular series no such list shall be
required with respect to the Securities of such series.
Section 702. 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 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) If three or more Holders (herein referred to as "applicants") apply
in writing to the Trustee, and furnish to the Trustee reasonable proof that
each such applicant has owned a Security for a period of at least six months
preceding the date of such application, and such application states that the
applicants desire to communicate with other Holders with respect to their
rights under this Indenture or under the Securities and is accompanied by a
copy of the form of proxy or other communication which such applicants propose
to transmit, then the Trustee shall, within five business days after the
receipt of such application, at its election, either
(i) afford such applicants access to the information preserved at
the time by the Trustee in accordance with Section 702(a), or
(ii) inform such applicants as to the approximate number of Holders
whose names and addresses appear in the information preserved at the time
by the Trustee in accordance with Section 702(a), and as to the
approximate
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cost of mailing to such Holders the form of proxy or other communication,
if any, specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder whose name and address appear in the information preserved
at the time by the Trustee in accordance with Section 702(a) a copy of the form
of proxy or other communication which is specified in such request, with
reasonable promptness after a tender to the Trustee of the material to be
mailed and of payment, or provision for the payment, of the reasonable expenses
of mailing, unless within five days after such tender the Trustee shall mail to
such applicants and file with the Commission, together with a copy of the
material to be mailed, a written statement to the effect that, in the opinion
of the Trustee, such mailing would be contrary to the best interest of the
Holders or would be in violation of applicable law. Such written statement
shall specify the basis of such opinion. If the Commission, after opportunity
for a hearing upon the objections specified in the written statement so filed,
shall enter an order refusing to sustain any of such objections or if, after
the entry of an order sustaining one or more of such objections, the Commission
shall find, after notice and opportunity for hearing, that all the objections
so sustained have been met and shall enter an order so declaring, the Trustee
shall mail copies of such material to all such Holders with reasonable
promptness after the entry of such order and the renewal of such tender;
otherwise the Trustee shall be relieved of any obligation or duty to such
applicants respecting their application.
(c) Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
in accordance with Section 702(b), regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Section 702(b).
Section 703. Reports by Trustee.
(a) Within 60 days after May 15 of each year commencing with the year
1986, the Trustee shall transmit by mail to all Holders, as their names and
addresses appear in the Security Register, a brief report dated as of such May
15 with respect to:
(1) its eligibility under Section 609 and its qualifications under
Section 608, or in lieu thereof, if to the best of its knowledge it has
continued to be eligible and qualified under said Sections, a written
statement to such effect:
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(2) the character and amount of any advances (and if the Trustee
elects so to state, the circumstances surrounding the making thereof) made
by the Trustee as such which remain unpaid on the date of such report, and
for the reimbursement of which it claims or may claim a lien or charge,
prior to that of the Securities, on any property or funds held or
collected by it as Trustee, except that the Trustee shall not be required
(but may elect) to report such advances if such advances so remaining
unpaid aggregate not more than 1/2 of 1% of the principal amount of the
Securities Outstanding on the date of such report;
(3) the amount, interest rate and maturity date of all other
indebtedness owing by the Company (or by any other obligor on the
Securities) to the Trustee in its individual capacity, on the date of such
report, with a brief description of any property held as collateral
security therefor, except an indebtedness based upon a creditor
relationship arising in any manner described in Section 613(b)(2), (3),
(4), or (6);
(4) the property and funds, if any, physically in the possession of
the Trustee as such on the date of such report;
(5) any additional issue of Securities which the Trustee has not pre-
viously reported; and
(6) any action taken by the Trustee in the performance of its duties
hereunder which it has not previously reported and which in its opinion
materially affects the Securities, except action in respect of a default,
notice of which has been or is to be withheld by the Trustee in accordance
with Section 602.
(b) The Trustee shall transmit by mail to all Holders, as their names and
addresses appear in the Security Register, a brief report with respect to the
character and amount of any advances (and if the Trustee elects so to state,
the circumstances surrounding the making thereof) made by the Trustee as such
since the date of the last report transmitted pursuant to Subsection (a) of
this Section (or if no such report has yet been so transmitted, since the date
of execution of this instrument) for the reimbursement of which it claims or
may claim a lien or charge, prior to that of the Securities, on property or
funds held or collected by it as Trustee and which it has not previously
reported pursuant to this Subsection, except that the Trustee shall not be
required (but may elect) to report such advances if such advances remaining
unpaid at any time aggregate 10% or less of the principal amount of the
Securities Outstanding at such time, such report to be transmitted within 90
days after such time.
(c) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
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Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any stock exchange.
Section 704. Reports by Company.
The Company shall:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from time
to time by rules and regulations prescribe) which the Company may be
required to file with the Commission pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934; or, if the Company is
not required to file information, documents or reports pursuant to
either of said Sections, then it shall file with the Trustee and the
Commission, in accordance with rules and regulations prescribed from
time to time by the Commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant to
Section 13 of the Securities Exchange Act of 1934 in respect of a
security listed and registered on a national securities exchange as may
be prescribed from time to time in such rules and regulations;
(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission,
such additional information, documents and reports with respect to
compliance by the Company with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(3) transmit by mail to all Holders, as their names and addresses
appear in the Security Register, within 30 days after the filing thereof
with the Trustee, such summaries of any information, documents and
reports required to be filed by the Company pursuant to paragraphs (1)
and (2) of this Section as may be required by rules and regulations
prescribed from time to time by the Commission.
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
Section 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other
corporation or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, unless:
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(1) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or transfer,
or which leases, the properties and assets of the Company substantially as
an entirety shall be a corporation organized and existing under the laws
of the United States of America, 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 on all the Securities and the performance of every
covenant of this Indenture on the part of the Company to be performed or
observed;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and supplemental indenture comply with this
Article and that all conditions precedent herein provided for relating to
such transaction have been complied with.
Section 802. Successor Corporation Substituted.
Upon any consolidation by the Company with or merger by the Company into
any other corporation or any conveyance, transfer or lease of the properties
and assets of the Company substantially as an entirety in accordance with
Section 801, the successor corporation formed by such consolidation or into
which the Company is merged or to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor corporation had been named as the Company herein, and thereafter,
except in the case of a lease, the predecessor corporation shall be relieved of
all obligations and covenants under this Indenture and the Securities.
Such successor corporation may cause to be signed, and may issue either in
its own name or in the name of the Company prior to such succession, any or all
of the Securities issuable hereunder which theretofore shall not have been
signed by the Company and delivered to the Trustee; and, upon the order of such
successor corporation instead of upon the order of the Company, and subject to
all the terms, conditions and limitations in this Indenture prescribed, the
Trustee shall authenticate and shall deliver any Securities which previously
shall have been signed and delivered by the officers of the Company to the
Trustee for authentication pursuant to such provisions and any Securities which
such successor corporation thereafter shall cause to be signed and delivered
to the Trustee on
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its behalf for that 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 as though all of such Securities had been issued at
the date of the execution hereof.
ARTICLE NINE
Supplemental Indentures
Section 901. Supplemental Indentures without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may 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 corporation to the Company
and the assumption by any such successor of the covenants of the Company
herein and in the Securities; or
(2) to add to the covenants of the Company 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
such series) or to surrender with respect to all or any series of
Securities any right or power herein conferred upon the Company (and if
such right or power is to be surrendered with respect to less than all
series of Securities, stating that such right or power is being
surrendered solely with respect to such series); or
(3) to add any additional Events of Default; or
(4) to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the issuance
of Securities in bearer form, registrable or not registrable as to
principal, and with or without interest coupons; or
(5) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective only
when there is no Security Outstanding of any series created prior to the
execution of such supplemental indenture which is entitled to the
benefit of such provision; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
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(8) to evidence and provide for the acceptance of appointment here-
under 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 611(b); or
(9) to cure any ambiguity, to correct or supplement any provision
herein which 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 such action shall not
adversely affect the interests of the Holders of Securities of any series
in any material respect.
Section 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than 66 2/3% in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and
the Trustee, the Company, when authorized by a Board Resolution, and the
Trustee may enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of modifying in any manner the
rights of the Holders of Securities of such series under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
instalment of principal of or 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 the
principal of an Original Issue Discount Security that would be due and
payable upon a declaration of acceleration of the Maturity thereof
pursuant to Section 502, or change any Place of Payment where, or the
coin or currency in which, any Security or any premium or the 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 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 513 or
Section 1010, except to increase any such percentage or to provide that
certain other
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provisions of this Indenture cannot be modified or waived without the con-
sent of the Holder of each Outstanding Security affected thereby;
provided, however, that this clause shall not be deemed to require the
consent of any Holder with respect to changes in the references to "the
Trustee" and concomitant changes in this Section and Section 1010 or the
deletion of this proviso, in accordance with the requirements of Sections
611 (b) and 901 (8).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the right under
this Indenture of the Holders of Securities of any other 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.
Section 903. 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 601) shall be fully protected in relying upon
(a) an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture and (b) an Officers'
Certificate stating that no default in payment and no Event of Default has
occurred or is continuing and that all conditions precedent to the Company's
execution and delivery of a valid supplemental indenture have been satisfied.
The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 904. 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 905. 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.
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Section 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution
of any supplemental indenture pursuant to this Article may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture. If the Company shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, Premium and Interest.
The Company 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 (if any) on the Securities of that series in accordance
with the terms of the Securities and this Indenture.
Section 1002. Maintenance of Office or Agency.
The Company 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 of that series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities of that series and this Indenture
may be served. The Company will give prompt written notice to the Trustee of
the location, and any change in the location, of such office or agency. If at
any time the Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all 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 Company of its obligation to maintain an office
or agency in each Place of Payment for Securities of any series for such
purposes. The Company will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
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Unless otherwise provided in the Board Resolution or supplemental indenture
with respect to a series of Securities, the Company hereby initially designates
as the place of payment for each series of Securities the Borough of Manhattan,
The City of New York. The Company initially appoints the Trustee as Paying
Agent in such city.
Section 1003. Money for Securities Payments to Be Held in Trust.
If the Company 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) or interest on any of the Securities of that
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
action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any series
of Securities, it will, prior to each due date of the principal of (and
premium, if any) or interest on any Securities of that series, deposit with a
Paying Agent a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal, premium or interest, and (unless such
Paying Agent is the Trustee) the Company will promptly notify the Trustee of
its action or failure so to act.
The Company will cause each Paying Agent for any series of Securities
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 on Securities of that 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 Company (or any
other obligor upon the Securities of that series) in the making of any
payment of principal (and premium, if any) or interest on the Securities
of that series; and
(3) at any time during the continuance of any such default, upon
the written request of the Trustee, forthwith pay to the Trustee all
sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the
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same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any)
or interest on any Security of any series and remaining unclaimed for three
years after such principal (and premium, if any) or interest has become due and
payable shall be paid to the Company on Company Request, or (if then held by
the Company) shall be discharged from such trust; and the Holder of such
Security shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, or mailed to
each such Holder, or both, 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 or mailing, any unclaimed balance of such money then
remaining will be repaid to the Company.
Section 1004. Corporate Existence.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence, rights (charter and statutory) and franchises and the corporate
existence, rights (charter and statutory) and franchises of each Principal
Constituent Bank; provided, however, that the Company shall not be required
to preserve any such corporate existence, right or franchise if the Company
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and its Subsidiaries considered as a
whole and that the loss thereof is not disadvantageous in any material respect
to the Holders.
Section 1005. Limitation Upon Sale or Issuance of Capital Stock of
Certain Subsidiaries.
Except as set forth below, the Company will not sell, assign, pledge,
transfer or otherwise dispose of, or permit the issuance of, or permit a
Subsidiary to sell, assign, pledge, transfer or dispose of, any shares of
Capital Stock of any Subsidiary or any securities convertible into Capital
Stock of any Subsidiary which is:
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(a) a Principal Constituent Bank; or
(b) a Subsidiary which owns shares of Capital Stock or any
securities convertible into Capital Stock of a Principal Constituent
Bank;
provided, however, nothing in this Section shall prohibit (i) any dispositions
made by the Company or any Subsidiary (A) acting in a fiduciary capacity for
any person other than the Company or any Subsidiary or (B) to the Company or
any of its wholly-owned (except for directors' qualifying shares and except for
approximately 0.5% of the Voting Stock of The First National Bank of Ashland
owned by persons other than the Company) Subsidiaries or (ii) the merger or
consolidation of a Principal Constituent Bank with and into a Constituent
Bank or the merger or consolidation of any Principal Constituent Bank with and
into any other Principal Constituent Bank.
Notwithstanding the foregoing, sales, assignments, pledges, transfers,
issuances or other dispositions of shares of Capital Stock of a corporation
referred to in Clause (a) or (b) above may be made where:
(i) the sales, assignments, pledges, transfers, issuances or other
dispositions are made, in the minimum amount required by law, to any
Person for the purpose of the qualification of such Person to serve as a
director; or
(ii) the sales, assignments, pledges, transfers, issuances or other
dispositions are made in compliance with an order of a court or
regulatory authority of competent jurisdiction or as a condition
imposed by any such court or authority to the acquisition by the Company,
directly or indirectly, of any other corporation or entity; or
(iii) in the case of a disposition or issuance of shares of Capital
Stock or any securities convertible into Capital Stock of a Principal
Constituent Bank, or sales of Capital Stock or any securities convertible
into Capital Stock of any Subsidiary included in Clause (b) above, the
sales, assignments, pledges, transfers, issuances or other dispositions
are for fair market value (as determined by the Board of Directors of the
Company and the Subsidiary disposing of such shares or securities, such
determination being evidenced by a Board Resolution) and, after giving
effect to such disposition and to any potential dilution (if the shares
or securities are convertible into Capital Stock), the Company and its
wholly-owned (except for directors' qualifying shares) Subsidiaries, will
own directly not less than 80% of the Voting Stock of such Principal
Constituent Bank or Subsidiary; or
(iv) a Principal Constituent Bank sells additional shares of
Capital Stock to its stockholders at any price, so
long as immediately after such sale the Company owns, directly or
indirectly, at least as great a percentage of the Voting Stock of such
Principal Constituent Bank as it owned prior to such sale of additional
shares.
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Section 1006. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, and (2)
all lawful claims for labor, materials and supplies which, if unpaid, might by
law become a lien upon the property of the Company or any Subsidiary; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
Section 1007. Liens.
The Company will not pledge, mortgage or hypothecate, or permit to exist
any pledge, mortgage or hypothecation or other lien upon, any shares of Capital
Stock of a Constituent Bank to secure any indebtedness for borrowed money
without making effective provisions whereby the Securities shall be equally and
ratably secured with any and all such indebtedness.
In case the Company shall propose to pledge, mortgage or hypothecate any
such shares of Capital Stock at any time owned by it to secure any
indebtedness, the Company will prior thereto give written notice thereof to the
Trustee and will prior to or simultaneously with such pledge, mortgage or
hypothecation, by supplemental indenture delivered to the Trustee, in form
satisfactory to it, effectively secure all the Securities equally and ratably
with such indebtedness, by pledge, mortgage or hypothecation of such shares of
Capital Stock. Such supplemental indenture shall contain the provisions
concerning the possession, control, release and substitution of mortgaged and
pledged property and securities and other appropriate matters which are
required or are permitted by the Trust Indenture Act (as in effect at the date
of execution of such supplemental indenture) to be included in a secured
indenture qualified under said Act, and may also contain such additional and
amendatory provisions permitted by said Act as the Company and the Trustee
shall deem advisable or appropriate or as the Trustee shall deem necessary in
connection with such pledge, mortgage or hypothecation.
Section 1008. Limitation on Certain Acquisitions.
The Company will not (a) acquire Capital Stock of any corporation or (b)
acquire substantially all the assets and liabilities of any corporation, if,
immediately upon giving effect to such acquisition, the Company would not
then be in full compliance with all the terms, conditions and covenants
contained in this Indenture.
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Section 1009. Statement as to Compliance.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year (which on the date hereof ends on December 31), a written
statement, which need not comply with Section 102, signed by the Chairman of
the Board, the President, a Vice Chairman or a Vice President and by the Trea-
surer, an Assistant Treasurer, or the Controller or an Assistant Controller of
the Company, stating, as to each signer thereof, that
(1) a review of the activities of the Company during such year and
of performance under this Indenture has been made under his supervision,
and
(2) to the best of his knowledge, based on such review, (a) the
Company has fulfilled all its obligations under this Indenture
throughout such year, or, if there has been a default in the fulfillment
of any such obligation, specifying each such default known to him and
the nature and status thereof, and (b) no event has occurred and is
continuing which is, or after notice or lapse of time or both would
become, an Event of Default, or, if such an occurred and is continuing,
specifying each such event known to him and the nature and status
thereof.
Section 1010. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Sections 1004, 1005, 1006, 1007 and 1008
with respect to the Securities of any series if before the time for such
compliance the Holders of at least 50% in 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 term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until
such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition shall
remain in full force and effect.
ARTICLE ELEVEN
Redemption of Securities
Section 1101. Applicability or Article.
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for Securities of any
series) in accordance with this Article.
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Section 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced
by a Board Resolution. In case of any redemption at the election of the Company
of less than all the Securities of any series, the Company shall, at least 60
days prior to the Redemption Date fixed by the Company (unless a shorter notice
shall be satisfactory to the Trustee), notify the Trustee of such Redemption
Date and of the principal amount of Securities of such series to be redeemed
and deliver an Officers' Certificate stating that no default in payment and no
Event of Default has occurred or is continuing. 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 or elsewhere in this Indenture, the
Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with such restriction.
Section 1103. Selection by Trustee 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 portions (equal to the minimum authorized denominations for
Securities of that series or any integral multiple thereof) of the principal
amount of Securities of such series or a denomination larger than the minimum
authorized denomination for Securities of that series.
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption and, in the case of any Securities selected for partial
redemption, the principal amount thereof to be redeemed.
Securities shall be excluded from eligibility for selection for
redemption if they are identified by registration and certificate number in a
written statement signed by an authorized officer of the Company and delivered
to the Trustee on or prior to the date of notice to the Trustee of redemption
as being owned beneficially by and not pledged or hypothecated by either (a)
the Company or (b) an Affiliate of the Company specifically identified in such
written statement.
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 Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
Section 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
<PAGE> 87
68
each Holder of Securities to be redeemed, at his address appearing in the
Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price and the amount of any accrued interest to
the Redemption Date,
(3) if less than all the Outstanding Securities of any series are to
be redeemed, the identification (and, in the case of partial redemption,
the principal amounts) of the particular Securities to be redeemed,
(4) that on the Redemption Date, the Redemption Price will become
due and payable upon each such Security to be redeemed and, if
applicable, that interest thereon will cease to accrue on and after said
date,
(5) the place or places where such Securities are to be surrendered
for payment of the Redemption Price and any accrued interest to the
Redemption Date, and
(6) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
The Trustee shall not mail any notice of redemption through the sinking
fund or of any optional redemption in part as to any series during the
continuance of any default in the payment of interest or any Event of Default
with respect to the Securities of that series.
Section 1105. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.
Section 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such
<PAGE> 88
69
Securities shall cease to bear interest. Upon surrender of any such Security
for redemption in accordance with said notice, such Security shall be paid by
the Company at the Redemption Price, together with accrued interest to the
Redemption Date; provided, however, that instalments of interest whose Stated
Maturity is on or prior to the Redemption Date shall 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 Regular Record Dates according to
their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate prescribed therefor in the
Security.
Section 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at
a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities of the same Series, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
ARTICLE TWELVE
Sinking Funds
Section 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of a series except as otherwise specified as
contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms
of Securities of any series is herein referred to as a "mandatory sinking
fund payment", and any payment in excess of such minimum amount provided for
by the terms of Securities of any series is herein referred to as an
"optional sinking fund payment". If provided for by the terms of Securities
of any series, the cash amount of any sinking fund payment may be subject to
reduction as provided in Section 1202. Each sinking fund payment shall be
applied to the redemption of Securities of any series as provided for by the
terms of Securities of such series.
<PAGE> 89
70
Section 1202. Satisfaction of Sinking Fund Payments with Securities.
The Company (1) may deliver Outstanding Securities of a series (other
than any previously called for redemption) and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of such series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
Series; provided that such Securities have not been previously so credited.
Such Securities shall be received and credited for such purpose by the Trustee
at the Redemption Price specified in such Securities for redemption through
operation of the sinking fund and the amount of such sinking fund payment shall
be reduced accordingly.
Section 1203. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 1202 and will also deliver to the Trustee any Securities to
be so credited which have not theretofore been delivered. Not less than 30 days
before each such sinking fund payment date the Trustee shall select the
Securities to be redeemed upon such sinking fund payment date in the manner
specified in Section 1103 and cause notice of the redemption thereof to be
given in the name of and at the expense of the Company in the manner provided
in Section 1104. Such notice having been duly given, the redemption of such
Securities shall be made upon the terms and in the manner stated in Sections
1106 and 1107.
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.
<PAGE> 90
71
In Witness Whereof, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
National City Corporation
By /s/ Julien L. McCall
Chairman of the Board
[Seal]
Attest:
/s/ Thomas F. Harvey
Assistant Secretary
Morgan Guaranty Trust Company
of New York, as Trustee
By /s/ D. G. Hope
Vice President
[Seal]
Attest:
/s/ F. J. Gillhaus
Assistant Secretary
<PAGE> 91
72
State of Ohio SS.:
County of Cuyahoga
On the 18th day of March 1986, before me personally came Julien L.
McCall, to me known, who, being by me duly sworn, did depose and say that he is
Chairman of the Board of National City Corporation, one of the corporations
described in and which executed the foregoing instrument; that he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Executive Committee
of the Board of Directors of said corporation; and that he signed his name
thereto by like authority.
[Notarial Seal] /s/ Thomas Alan Plant
Notary Public
THOMAS ALAN PLANT, Attorney at Law
Notary Public-State of Ohio
My commission has no expiration date.
Section 147.03 R.C.
State of New York SS.:
County of New York
On the 19th day of March 1986, before me personally came D. G. Hope, to me
known, who, being by me duly sworn, did depose that he is a Vice President of
Morgan Guaranty Trust Company of New York, one of the corporations described in
and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal:
that it was so affixed by authority of the Board of Directors of said
corporation: and that he signed his name thereto by like authority.
[Notarial Seal] /s/ David J. May
Notary Public
DAVID J. MAY
Notary Public, State of New York
No. 31-4795798
Qualified in New York County
Commission Expires March 30, 1987
<PAGE> 1
PROSPECTUS
$75,000,000
NATIONAL CITY CORPORATION
FLOATING RATE SUBORDINATED NOTES DUE 1997
Interest on the Notes is payable quarterly on Interest Payment Dates in
January, April, July and October of each year, commencing April 30, 1985, at a
rate of 1/8 of 1% per annum above the arithmetic mean of London interbank
offered quotations for three-month Eurodollar deposits prevailing two New York
Business Days before the beginning of each Interest Period (subject to a
minimum rate of 5 1/4% per annum). See "Description of Notes --Interest".
The Notes may not be redeemed prior to the Interest Payment Date in January
1989 and will be redeemable on such date and thereafter at the option of
National City, in whole or in part, at their principal amount plus accrued
interest, and will mature on the Interest Payment Date in January 1997.
Payment of principal of the Notes may be accelerated only in case of the
bankruptcy, insolvency or reorganization of National City. There is no right of
acceleration in the case of a default in the payment of interest or the
performance of any other covenant of National City. The Notes are subordinated
to all present and future senior indebtedness of National City. See
"'Description of Notes".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Price to Underwriting Proceeds to
Public (1) Discount National City (1)(2)
<S> <C> <C> <C>
Per Note...................... 99.70% .50% 99.20%
Total ......................... $74,775,000 $375,000 $74,400,000
- ----------------------------------------------------------------------------------------------
<FN>
(1) Plus accrued interest, if any, from January 31, 1985 to date of delivery.
(2) Before deduction of expenses payable by National City estimated to be
$194,000.
</TABLE>
The Notes are offered subject to receipt and acceptance by the Underwriters, to
prior sale and to the Underwriters' right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice. It is expected
that the delivery of the Notes will be made at the office of Salomon Brothers
Inc, One New York Plaza, New York, New York, or through the facilities of The
Depository Trust Company, on or about January 31, 1985.
Salomon Brothers Inc Keefe, Bruyette & Woods, Inc.
The date of this Prospectus is January 22, 1985.
EXHIBIT 99.6
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT
OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE
OF THE NOTES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHER-
WISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
--------------------
AVAILABLE INFORMATION
National City Corporation ("National City") 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 Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other information can be
inspected and copied at the Public Reference Section of the Commission at 450
Fifth Street N.W., Washington, D.C. 20549, and at the Commission's New York
Regional Office, Room 1100, Federal Building, 26 Federal Plaza, New York, New
York 10278, Los Angeles Regional Office, Suite 500 East, 5757 Wilshire
Boulevard, Los Angeles, California 90036, and Chicago Regional Office, Room
1228, Everett McKinley Dirksen Building, 219 South Dearborn Street, Chicago,
Illinois 60604, and copies of such materials can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street N.W., Washington, D.C.
20549, at prescribed rates. National City has filed with the Commission a
Registration Statement on Form S-3 (the "Registration Statement") under the
Securities Act of 1933, as amended, with respect to the Notes offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. The Registration Statement and the
exhibits thereto may be inspected without charge at the office of the
Commission at 450 Fifth Street N.W., Washington, D.C. 20549, and copies thereof
may be obtained from the Commission upon payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by National City with the
Commission are incorporated herein by reference:
(a) Annual Report on Form 10-K for the year ended December 31, 1983
(as amended), filed pursuant to Section 13 of the Exchange Act;
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31,
1984, June 30, 1984, and September 30, 1984 (as amended), filed pursuant
to Section 13 of the Exchange Act; and
(c) Current Reports on Form 8-K dated February 14, 1984, April 10,
1984, June 25, 1984, August 13, 1984, August 20, 1984, November 21, 1984,
and December 12, 1984, filed pursuant to Section 13 of the Exchange Act.
All reports subsequently filed pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act prior to the termination of the offering of the Notes
offered hereby shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date of filing of such documents.
National City will provide without charge to each person to whom this
Prospectus is delivered, on the request of any such person, a copy of any or
all of the documents incorporated herein by reference (other than exhibits).
Written requests should be directed to: National City Corporation, 1900 East
Ninth Street, Cleveland, Ohio 44114, Attention: Thomas W. Owen, Senior Vice
President, Treasurer and Comptroller. Telephone requests may be directed to
(216) 575-2000.
2
<PAGE> 3
NATIONAL CITY CORPORATION
National City is the largest bank holding company in the State of Ohio and
ranks among the 30 largest in the United States on the basis of total assets.
National City operates 13 commercial banks (11 national and 2 state banks)
throughout Ohio, with over 350 banking offices in 53 of Ohio's 88 counties.
National City's two principal commercial banking subsidiaries are National City
Bank in Cleveland and Bancohio National Bank in Columbus. National City also
owns trust companies in Ohio and Florida and non-banking subsidiaries that
engage in venture capital, small business investment, insurance, mortgage
banking and other financial activities.
National City became Ohio's largest bank holding company on November 9,
1984, when it acquired, pursuant to a merger, Bancohio Corporation
("Bancohio"), then Ohio's third largest bank holding company. Under the terms
of the merger agreement, holders of Bancohio Common Stock received
approximately $120 million in cash and a combination of National City Common
Stock and Series A Convertible Preferred Stock valued in conjunction with the
merger at approximately $170 million. In addition, shares of Bancohio
Adjustable Rate Cumulative Preferred Stock were exchanged for similar shares
of National City Adjustable Rate Cumulative Preferred Stock.
Prior to the merger, at September 30, 1984, National City had total assets
of $6.5 billion, total deposits of $4.6 billion and shareholders' equity of
$450 million and Bancohio had total assets of $5.8 billion, total deposits of
$4.6 billion and shareholders' equity of $380 million. On a pro forma basis at
September 30, 1984, National City and Bancohio had total assets of $11.8
billion, total deposits of $8.9 billion and shareholders' equity of $649
million. See "Pro Forma Condensed Combined Financial Information" for certain
pro forma information concerning the merger, and "National City Corporation
Fourth Quarter And Year End Results" for certain capsule financial information
at December 31, 1984.
Since the consummation of the merger, National City has commenced the
reorganization and consolidation of Bancohio's facilities and operations to
eliminate overlapping presences in the same markets. Bancohio National Bank's
offices in and around Akron and Cleveland have already been merged into
National City banking subsidiaries; similar action will take place in Dayton
and Toledo. Bancohio National Bank will continue to be responsible for the
management of its branches in Columbus and throughout Ohio, except in those
cities referred to previously. Further consolidation, including the
centralization of support staff resources, is anticipated, based on cost and
other profitability considerations.
National City is a legal entity separate and distinct from its subsidiary
banks. The principal source of National City's income is dividends from its
subsidiary banks. Under Federal law, the total of all dividends declared by a
national bank in any calendar year may not, without the approval of the
Comptroller of the Currency, exceed the aggregate of such bank's net profits
(as defined) for that year and retained net profits (as defined) for the
preceding two years. National City's state-chartered banking subsidiaries are
likewise under limitations imposed by the state and/or the Board of Governors
of the Federal Reserve System ("Federal Reserve Board"). Under these
limitations, National City's subsidiary banks (including the subsidiary banks
acquired from Bancohio) will be able to declare aggregate dividends of
approximately $52 million, in addition to their 1985 net income, without the
prior approval of their respective regulatory authorities. The Comptroller of
the Currency also has authority under the Financial Institutions Supervisory
Act to prohibit a national bank from engaging in what, in his opinion,
constitutes an unsafe or unsound practice in conducting its business. The
payment of dividends could, depending upon the financial condition of the sub-
sidiary banks, be deemed to constitute such an unsafe or unsound practice. In
addition, the subsidiary banks are subject to the Federal Reserve Act on
extensions of credit to, investments in, and certain other transactions with,
National City and its other subsidiaries.
National City is incorporated in the State of Delaware. The executive
offices of National City are located at 1900 East Ninth Street, Cleveland, Ohio
44114, and its telephone number is (216) 575-2000.
3
<PAGE> 4
APPLICATION OF PROCEEDS
National City intends to apply the net proceeds from the sale of the Notes
to reduce by approximately $60 million the $85 million of outstanding
borrowings under its $200 million revolving credit facility, which bears a
floating rate of interest which is currently 10.37%, and to repay approximately
$15 million of short-term borrowings made or expected to be made in January
1985, at weighted average interest rates expected to be approximately 9.8%.
These borrowings were used partially in connection with the acquisition of
Bancohio, and partially to meet general corporate purposes. Pending ultimate
application, proceeds may be temporarily invested in marketable securities.
Under the terms of the facility, any outstanding balances on October 1, 1988
will be converted into a term loan with a final maturity date of October 1,
1992.
In December 1984, National City sold $50 million of its 9.50% Convertible
Subordinated Debentures Due 2010, and used the proceeds to repay borrowings
under the revolving credit facility which were also incurred in connection with
the acquisition of Bancohio.
It is the present policy of National City to provide additional capital
funds for its subsidiaries, if required, through the sale of securities by
National City, rather than through direct financings by the subsidiaries. Based
upon the anticipated growth of its subsidiaries and the financial needs of
National City, National City may, from time to time, engage in additional
financings of a character and in amounts to be determined.
NATIONAL CITY CORPORATION
FOURTH QUARTER AND YEAR END RESULTS
National City's net income for the fourth quarter of 1984 was $21,422,000,
up 50.1% from $14,271,000 in the fourth quarter of 1983. Primary net income was
$1.54 and fully diluted earnings per common share was $1.41, up 22.2% and
16.5%, from the corresponding $1.26 and $1.21 of a year earlier. These results
represented a return on average assets of.84% for the fourth quarter of 1984,
compared to .91% for the fourth quarter of 1983. Return on average equity was
14.44% for the period, up from 13.66% a year earlier.
For the full year 1984, net income of $65,895,000 was 37.1% higher than the
1983 amount of $48,061,000. Primary net income per common share was $5.45 for
1984 and $4.26 for 1983, up 27.9%. Assuming full dilution, the 1984 net income
of $5.17 per common share was up 25.8% from $4.11 in 1983. Return on average
assets was .90% for 1984, up from .77% for 1983. Return on average equity was
13.87% for 1984, compared to 11.84% in 1983.
The earnings increase for the quarter and year ended December 31, 1984,
reflected the continued success of National City's programs to control costs
and increase market share. Continued strong growth in commercial and consumer
loans, together with stable interest costs on National City's large consumer
deposit base, resulted in improvements in net interest income and margin.
Fourth quarter 1984 earnings also benefited from the inclusion of Bancohio
National Bank's earnings for November and December, following the acquisition
by merger of Bancohio on November 9 under the purchase method of accounting.
Total assets at December 31, 1984, were $12,400 million compared to $6,600
million a year earlier. Shareholders' equity was $663 million, or $38.90 per
share, compared to $421 million or $37.09 per share at December 31, 1983.
4
<PAGE> 5
<TABLE>
NATIONAL CITY CORPORATION
SELECTED FINANCIAL DATA
The following table sets forth, in summary form, certain consolidated
financial data for National City and its subsidiaries for each of the five
years in the period ended December 31, 1983 and for the nine-month periods
ended September 30, 1984 and 1983 and is qualified in its entirety by the
detailed information and financial statements included in the documents
incorporated herein by reference. See "Incorporation of Certain Documents by
Reference".
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30(A) YEAR ENDED DECEMBER 31
--------------- ---------------------------------------------------
1984 1983 1983 1982 1981 1980 1979
---- ---- ---- ---- ---- ---- ----
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Results
Net Interest Income................ $153.1 $133.8 $180.3 $156.2 $120.5 $129.5 $127.6
Tax Equivalent Adjustment.......... 27.5 29.8 39.3 40.6 44.1 43.7 35.3
------ ------ ------ ------ ------ ------ ------
Net Interest Income --
Fully Taxable Equivalent.......... 180.6 163.6 219.6 196.8 164.6 173.2 162.9
Provisions for Loan and
Other Credit Losses............... 13.4 14.5 28.7 15.8 11.5 7.9 3.8
Fees and Other Income.............. 57.2 50.4 68.1 55.7 46.6 36.9 29.9
Security Gains (Losses)............ .3 (3.1) (17.2) (5.5) (6.8) (9.5) (9.4)
Trading Account Profits (Losses)... .1 .4 .6 1.8 1.7 3.9 (.7)
Gain on Sale of Buildings.......... -- -- 18.2 -- -- -- --
Non-Interest Expense .............. 143.7 133.7 179.7 152.7 122.7 111.0 90.2
------ ------ ------ ------ ------ ------ ------
Income before Tax Equivalent Adjust-
ment and Federal Income Taxes..... 81.1 63.1 80.9 80.3 71.9 85.6 88.7
Tax Equivalent Adjustment.......... 27.5 29.8 39.3 40.6 44.1 43.7 35.3
------ ------ ------ ------ ------ ------ ------
Income before Federal Income Taxes. 53.6 33.3 41.6 39.7 27.8 41.9 53.4
Federal Income Taxes (Benefit) ... 9.1 (.5) (6.5) (3.9) (12.2) (4.9) 4.9
------ ------ ------ ------ ------ ------ ------
Net Income......................... $44.5 $33.8 $48.1 $43.6 $40.0 $46.8 $48.5
====== ====== ====== ====== ====== ====== ======
Per Share Data:(b)
Net Income --
Primary........................... $3.91 $3.00 $4.26 $3.75 $3.41 $3.98 $4.10
Assuming Full Dilution ........... 3.76 2.90 4.11 3.70 3.41 3.98 4.10
Dividends Declared................. 1.42 1/2 1.37 1/2 1.85 1.83 1/3 1.83 1/3 1.83 1/3 1.70 5/6
Book Value (at end of period)...... 39.49 36.35 37.09 34.62 32.28 30.71 28.51
Average Shares Outstanding(b)
(in thousands)..................... 11,372 11,261 11,279 11,633 11,745 11,765 11,842
Average Balances:
Assets............................. $6,369 $6,247 $6,247 $5,739 $5,109 $5,008 $4,175
Loans.............................. 3,359 3,061 3,107 2,527 2,216 2,145 1,907
Investment Securities.............. 1,118 1,289 1,252 1,106 1,154 1,099 921
Earning Assets .................... 5,516 5,345 5,331 4,835 4,270 4,160 3,484
Deposits........................... 4,507 4,300 4,315 3,874 3,316 3,135 2,780
Corporate Long-Term Obligations.... 115 153 143 85 54 35 6
Shareholders' Equity............... 436 402 406 385 369 349 324
Financial Ratios:(c)
Return on Average Equity........... 13.55% 11.20% 11.84% 11.31% 10.84% 13.41% 14.97%
Return on Average Assets........... .93 .72 .77 .76 .78 .93 1.16
Average Assets to Average Equity . 14.61x 15.54x 15.40x 14.89x 13.85x 14.35x 12.89x
Dividend Payout.................... 36.5% 45.9% 43.5% 48.7% 53.8% 46.0% 41.7%
Ratios at End of Period:
Reserve for Loan Losses to Loans . 1.22% 1.20% 1.24% 1.26% 1.27% 1.32% 1.30%
Underperforming Assets to Loans.... 1.4 2.6 1.6 2.9 1.4 .9 .7
Underperforming Assets to Total Assets .8 1.4 .8 1.3 .6 .3 .3
Primary Capital to Total Assets.... 7.55 7.11 6.99 6.31 7.54 7.06 7.33
Ratio of Earnings to Fixed Charges:(d)
Excluding Interest on Deposits..... 1.57x 1.38x 1.36x 1.30x 1.16x 1.25x 1.53x
Including Interest on Deposits..... 1.16 1.11 1.10 1.09 1.06 1.12 1.22
- ------------------
<FN>
(a) The financial information for the nine-month periods ended September 30,
1984 and 1983 is derived from interim financial statements which include
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation of the interim periods. The results of
operations for interim periods are not necessarily indicative of the
results that may be expected for the full year or any other interim period.
(b) Share data adjusted for three-for-two stock split effected in January 1984.
(c) Nine-month ratios are annualized.
(d) The ratio of earnings to fixed charges has been computed by dividing income
before Federal income taxes and fixed charges by fixed charges. Fixed
charges excluding interest on deposits consist of interest on indebtedness
and one-third of net rental expense (which is deemed representative of the
interest factor). Fixed charges including interest on deposits consist of
the foregoing items plus interest on deposits.
</TABLE>
5
<PAGE> 6
NATIONAL CITY CORPORATION
MANAGEMENT'S DISCUSSION OF INTERIM RESULTS
EARNINGS SUMMARY
Net income for the nine months ended September 30, 1984 was $44,473,000, an
increase of 31.6% from $33,790,000 in the corresponding period of 1983. Primary
earnings per share increased 30.3%, from $3.00 in 1983 to $3.91 in 1984,
Nine-month 1984 results included gains of $1,840,000 ($1,325,000 after tax)
on sales of equity securities held by National City's venture capital and small
business investment subsidiaries. Net losses of $1,495,000 ($807,000 after tax)
for the nine months were realized on sales of debt securities, principally U.S.
Treasury and Federal agency issues. By comparison, during the nine-month period
in 1983, National City had net security losses of 83,153,000 ($1,575,000 after
tax). In 1984, realized pre-tax losses on municipal securities of $10,997,000
were charged to the reserve for disposition of tax-exempt securities
established at the end of 1983. Exclusive of all security transactions, oper-
ating earnings rose 24.3% for the nine months.
The increase in operating earnings was due mainly to wider interest margins
and loan growth, which produced gains in net interest income that more than
offset increased net non-interest expenses.
NET INTEREST INCOME
Fully taxable net interest income increased 10.4% in the first nine months
of 1984. Total earning assets averaged $5,516 million compared to $5,345
million for the corresponding period of 1983. The growth in earning assets
occurred in loans, in particular domestic commercial and consumer installment
loans. Average loans increased 9.7% for the nine months, offsetting decreases
in the investment portfolio. At September 30, 1984, total loans were up 11.1%
from the prior year, reflecting some increased activity in money market loans
near the end of September. These loans are short-term fixed rate business loans
funded to maturity at an incremental spread to other investments.
Net interest margin (annualized fully taxable net interest income divided
by average earning assets) was 4.37% for the nine months compared to 4.10% in
the 1983 period. Margins in 1984 benefited from relatively stable interest
costs on National City's large consumer deposit base and from increased loan
volume.
FEES AND OTHER INCOME/NON-INTEREST EXPENSE
Fees and other income increased 13.5% for the first nine months of 1984,
due mainly to improvements in trust and service charge revenue. Non-interest
expenses were up 7.5%. The 1984 nine-month expenses included a credit of
$4,200,000 for state tax refunds while 1983 expenses included a credit of
$1,772,000 from the reversal of previously accrued but unpaid state taxes.
Exclusive of these credits, nine-month expenses were up 9.2% compared to 1983.
6
<PAGE> 7
BANCOHIO CORPORATION
AVAILABLE INFORMATION AND SELECTED FINANCIAL DATA
Bancohio was merged into National City on November 9, 1984, with the
merger accounted for as a purchase. Historical financial statements and
business and financial information with respect to BancOhio are included in
National City's Current Reports on Form 8-K dated November 21, 1984 and
December 12, 1984 incorporated herein by reference. See "Incorporation of
Certain Documents by Reference". The following table sets forth, in summary
form, certain consolidated financial data for Bancohio and its subsidiaries for
each of the five years during the period ended December 31, 1983 and the
nine-month periods ended September 30, 1984 and 1983 and is qualified in its
entirety by the historical financial statements and other data referred to
above.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30(A) YEAR ENDED DECEMBER 31
------------------ ----------------------------------------------
1984 1983 1983 1982 1981 1980 1979
------ ------ ------ ------ ------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Results:
Net Interest Income................ $166.7 $147.5 $200.1 $193.3 $182.1 $161.9 $157.2
Tax Equivalent Adjustment.......... 12.3 14.8 13.4 15.2 19.7 5.3 27.1
------ ------ ------ ------ ------ ------ ------
Net Interest Income -- Fully
Taxable Equivalent............. 179.0 162.3 213.5 208.5 201.8 167.2 184.3
Provision for Loan and Lease Losses. 30.0 22.2 38.7 22.4 22.4 23.4 12.3
Other Income....................... 54.2 46.7 64.4 49.4 44.5 28.5 31.0
Operating Expense.................. 167.4 157.2 207.3 199.1 177.9 162.9 147.4
------ ------ ------ ------ ------ ------ ------
Income Before Tax Equivalent Adjust-
ment and Federal Income Taxes.... 35.8 29.6 31.9 36.4 46.0 9.4 55.6
Tax Equivalent Adjustment.......... 12.3 14.8 13.4 15.2 19.7 5.3 27.1
Federal Income Taxes (Credit) ..... 3.1 -- -- (1.0) (1.1) (3.8) (1.2)
------ ------ ------ ------ ------ ------ ------
Income Before Extraordinary Item.... 20.4 14.8 18.5 22.2 27.4 7.9 29.7
Extraordinary Item(b)............... 3.0 -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------
Net Income......................... $23.4 $14.8 $18.5 $22.2 $27.4 $7.9 $29.7
====== ====== ====== ====== ====== ====== ======
Average Balances:
Assets.............................. $5,883 $5,753 $5,808 $5,675 $5,052 $4,881 $4,621
Loans and Leases.................... 3,443 3,197 3,241 2,974 2,755 2,714 2,558
Earning Assets...................... 5,097 4,843 4,913 4,750 4,273 4,156 3,991
Deposits............................ 4,652 4,391 4,449 4,258 3,918 3,758 3,625
Long-term Debt...................... 17 17 17 13 13 12 34
Shareholders' Equity................ 372 355 358 323 306 289 286
Financial Ratios:(c)
Return on Average Equity............ 8.38% 5.56% 5.18% 6.87% 8.96% 2.75% 10.40%
Return on Average Assets ........... .53 .34 .32 .39 .54 .16 .64
Ratios at End of Period:
Reserve for Losses to Loans....... 1.11 1.00 1.02 1.00 1.00 .93 .89
Problem Loans and Leases to Loans
and Leases...................... 4.65 4.83 4.39 4.80 4.78 3.68 3.22
Problem Loans and Leases to Assets 2.83 2.74 2.43 2.58 2.49 2.03 1.74
- -----------------
<FN>
(a) The financial information for the nine-month periods ended September 30,
1984 and 1983 is derived from interim financial statements which include
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation of the interim periods. The results of
operations for interim periods are not necessarily indicative of the
results that may be expected for the full year or any other interim
period.
(b) Realization of tax benefits from prior years tax losses.
(c) Nine-month ratios are annualized.
</TABLE>
7
<PAGE> 8
MANAGEMENT'S DISCUSSION OF INTERIM RESULTS
BancOhio's net income for the nine months ended September 30, 1984, was
$23,382,000, up 57.5% from $14,845,000 earned in the corresponding period of
1983. Net income for the period ended September 30, 1984 included an
extraordinary credit of $3,024,000, representing the realization of tax
benefits from prior years' tax losses.
BancOhio's increase in earnings over the corresponding period of 1983,
exclusive of the extraordinary credit, occurred despite a substantial
increase in the provision for loan and lease losses and was due primarily to
higher net interest income, improvements in fee income and control of non-
interest expenses.
Net interest income for BancOhio on a fully taxable equivalent basis was
up 10.3% for the nine months. The increase reflects growth in earning assets,
particularly consumer loans, and wider net interest margin. Average earning
assets were up 5.2% over the corresponding period of 1983. Net interest margin
was 4.68% for the first nine months of 1984, compared to 4.47% for the
corresponding 1983 period. Annualized net interest margin benefited from
relative stability of rates paid on consumer deposits during the period.
BancOhio's non-interest income increased 16.1% in the 1984 period.
Significant areas of increase included trust fees, credit card fees and
broker fees generated by BancOhio's mortgage broker subsidiary. Non-interest
expense was up 6.5% for the nine months. The 1984 amount includes a
substantially higher provision for Ohio taxes due to changes in state law. The
relatively low growth in non-interest expense was due to the effects of cost
control programs initiated in previous periods,
BancOhio's provision for loan and lease losses was increased over 1983
levels and over actual 1984 losses because of continued concern over the level
of problem loans. Non-accrual, renegotiated and past due loans aggregated $164
million at September 30, 1984, compared to $147 million at year end. At
September 30, 1984, the reserve for loan losses was equal to 1.11% of loans,
compared to 1.02% of loans at the end of 1983.
SUBSEQUENT EVENTS
Subsequent to September 30, 1984, but prior to the merger of BancOhio into
National City on November 9, 1984, certain transactions were undertaken by
BancOhio's principal subsidiary, BancOhio National Bank, in connection with
the merger. Twenty-five branch banking offices and related deposits and assets
in the Salem, Fulton County, Sandusky and Akron banking markets were divested
in accordance with the order of the Federal Reserve Board approving the merger.
See "Pro Forma Condensed Combined Financial Information". Additionally, in
conjunction with the planned reorganization of BancOhio and National City
branch facilities, principally in the Cleveland and Akron banking markets,
certain underperforming loans held by BancOhio National Bank were written down
by $14 million through a charge to the reserve for loan losses. These loans
were then sold to certain National City subsidiary banks at their reduced
values, which approximated fair market values. In respect of these
transactions, thereafter, but prior to November 9, 1984, BancOhio National Bank
charged its earnings $19 million to replenish its reserve for loan losses,
thereby adding a net $5 million to such reserve. These events occurred solely
in the context of the merger and do not reflect upon the historical financial
statements of BancOhio as an on-going, independent entity.
8
<PAGE> 9
<TABLE>
CAPITALIZATION
The following table sets forth the capitalization of National City at
December 31, 1984, and as adjusted to give effect to the sale of the Notes
offered hereby. The table should be read in conjunction with the financial
information incorporated herein by reference or appearing elsewhere herein.
<CAPTION>
OUTSTANDING AS ADJUSTED
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
LONG-TERM DEBT
Senior Debt
Borrowings under revolving credit facility........................ $85,000 $25,000(a)
14.25% Notes due 1992............................................. 20,130 20,130
Other............................................................. 5,470 5,470
-------- --------
110,600 50,600
Consolidated subsidiaries (b)
Banks........................................................... 24,573 24,573
Non-banks....................................................... 4,144 4,144
-------- --------
Total Senior Debt............................................... 139,317 79,317
Subordinated Debt
Notes offered hereby.............................................. --- 75,000(a)
9.50% Convertible Subordinated
Debentures due 2010 ............................................ 50,000 50,000
11.25% Convertible Subordinated Notes due 1997.................... 16,612 16,612
-------- --------
Total Subordinated Debt......................................... 66,612 141,612
-------- --------
Total Long-Term Debt............................................ 205,929 220,929
SHAREHOLDERS' EQUITY
Preferred Stock, without par value, authorized 5,000,000 shares
Outstanding:
12,000 shares Adjustable Rate Cumulative Preferred ............ 30,000 30,000
2,667,085 shares Series A Convertible Preferred ............... 93,348 93,348
Common Stock, $4 par value, authorized 50,000,000 shares
Outstanding:
13,863,153 shares.............................................. 55,453 55,453
Capital Surplus..................................................... 157,158 157,158
Retained Earnings .................................................. 326,655 326,655
-------- --------
Total Shareholders' Equity..................................... 662,614 662,614
-------- --------
Total Long-Term Debt and Shareholders' Equity.................. $868,543 $883,543(a)
- --------------- ======== ========
<FN>
(a) Issuance of $75,000,000 principal amount of Notes offered hereby and
application of proceeds to reduce approximately $60,000,000 of borrowings
under revolving credit facility, and to repay short-term borrowings of
approximately $15,000,000 made or expected to be made in January 1985.
(b) These are direct obligations of subsidiaries and, as such, constitute
claims against such subsidiaries prior to National City's equity interest
therein.
</TABLE>
9
<PAGE> 10
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(UNAUDITED)
The financial information on the following pages presents the Pro Forma
Condensed Combined Balance Sheet of National City and subsidiaries and BancOhio
and subsidiaries at September 30, 1984, giving effect to the acquisition as if
it had occurred on that date. Also presented are the Pro Forma Condensed
Combined Statements of Income for the year ended December 31, 1983, and the
nine months ended September 30, 1984, giving effect to the acquisition as if it
had occurred on January 1, 1983. The pro forma information is
based on the historical financial statements of National City and BancOhio,
giving effect to the transaction under the purchase method of accounting and
the assumptions and adjustments in the accompanying notes.
Purchase accounting adjustments to estimated fair values have been made
with respect to the assets and liabilities of BancOhio and its related income
and expense accounts based upon estimates and evaluations by National City
management as of September 30, 1984. These estimates and evaluations are
subject to change as new information is obtained and developed. The purchase
accounting adjustments include, where appropriate, related estimated Federal
income tax effects, based upon an analysis of the current and likely future
Federal income tax position of National City and subsidiaries both before and
after the acquisition of BancOhio.
The pro forma financial information has been prepared by National City
based upon its judgment and the financial statements of BancOhio. These pro
forma statements may not be indicative of the combined results that actually
would have occurred had the transaction been consummated on the dates
indicated, or which may be obtained in the future. National City believes that
these amounts fairly portray the pro forma combined results based on the
assumptions made. The pro forma adjustments, all made by National City, reflect
the appropriate purchase accounting values of BancOhio assets and liabilities.
The pro forma amounts are not intended to supplant the separate financial
statements of BancOhio or National City.
The pro forma financial information should be read in conjunction with the
notes thereto and the consolidated financial statements and notes of National
City and BancOhio incorporated herein by reference.
10
<PAGE> 11
<TABLE>
PRO FORMA CONDENSED COMBINED BALANCE SHEET (UNAUDITED)
SEPTEMBER 30, 1984
<CAPTION>
AS REPORTED
------------------------
NATIONAL PRO FORMA PRO FORMA
CITY BANCOHIO ADJUSTMENTS COMBINED
-------- -------- ----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Loans........................................... $3,694,104 $3,519,466 $(67,525)(a) $7,088,763
(30,291)(b)
(26,991)(c)
Less Reserve for Loan Losses.................... 45,012 39,110 15,606 (d) 99,728
---------- --------- -------- ----------
Loans Less Reserve.............................. 3,649,092 3,480,356 (140,413) 6,989,035
---------- --------- -------- ----------
Investment Securities ......................... 1,063,060 930,726 (81,345)(e) 1,894,933
(17,508)(b)
Trading Account Assets.......................... 28,582 5,492 34,074
Money Market Investments........................ 788,241 527,509 (184,541)(a) 1,089,232
(14,977)(b)
(27,000)(n)
Cash and Due from Banks......................... 499,373 405,255 (12,556)(a) 885,662
(2,510)(b)
(3,900)(x)
119,663 (n)
(119,663)(k)
Properties and Equipment ....................... 79,161 114,051 (4,587)(a) 231,877
(576)(b)
43,828 (f)
Customer Acceptance Liability................... 215,490 189,616 405,106
Accrued Income and Other Assets................. 123,892 111,514 (67)(a) 233,735
(1,604)(b)
Core Deposit Intangible......................... 3,732 -- 5,485 (g) 9,217
Goodwill........................................ 69,143 12,578 (12,578)(l) 71,274
(5,312)(b)
7,443 (m)
---------- --------- -------- ----------
Total Assets................... $6,519,766 $5,777,097 $(452,718) $11,844,145
========== ========= ======== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Total Deposits ................................ $4,602,601 $4,604,414 $(285,357)(a) $8,851,230
(70,428)(b)
Borrowed Funds.................................. 1,132,815 520,418 92,663 (n) 1,743,006
(2,350)(b)
(540)(h)
Acceptances Outstanding......................... 215,490 189,616 405,106
Accrued Expenses and Other Liabilities.......... 118,462 82,491 (1,919)(a) 195,826
6,412 (i)
(9,620)(j)
---------- --------- -------- ----------
Total Liabilities.............. 6,069,368 5,396,939 (271,139) 11,195,168
---------- --------- -------- ----------
Adjustable Rate Preferred Stock................. 300 29,700 (k) 30,000
Convertible Preferred Stock..................... 93,385 (k) 93,385
Common Stock.................................... 45,626 53,959 (44,257)(k) 55,328
Capital Surplus................................. 91,088 127,581 (62,089)(k) 156,580
Retained Earnings ............................. 313,684 198,657 (198,657)(k) 313,684
Common Treasury Shares.......................... (339) 339 (k)
---------- --------- -------- ----------
Total Shareholders' Equity..... 450,398 380,158 (181,579) 648,977
---------- --------- -------- ----------
Total Liabilities and Shareholders'
Equity....................... $6,519,766 $5,777,097 $(452,718) $11,844,145
========== ========= ======== ==========
</TABLE>
11
<PAGE> 12
<TABLE>
PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME (Unaudited)
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1984 YEAR ENDED DECEMBER 31, 1983
--------------------------------------- ----------------------------------
AS REPORTED AS REPORTED
------------------- PRO FORMA -------------------- PRO FORMA
NATIONAL ADJUST- PRO FORMA NATIONAL ADJUST- PRO FORMA
CITY BANCOHIO MENTS COMBINED CITY BANCOHIO MENTS COMBINED
-------- -------- -------- --------- -------- -------- -------- ---------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Income .............. $478,925 $447,712 $6,411 (o) $934,734 $579,878 $543,315 $8,553(o) $1,133,995
1,686 (p) 2,249 (p)
Interest Expense............. 325,875 281,027 39 (q) 616,813 399,605 343,235 54 (q) 756,057
9,872 (r) 13,163 (r)
-------- -------- ------- -------- -------- -------- ------ ---------
Net Interest Income.......... 153,050 166,685 (1,814) 317,921 180,273 200,080 (2,415) 377,938
Provision for Loan Losses..... 13,400 30,000 43,400 23,900 38,656 62,556
Provision for Other Credit
Losses..................... 4,776 4,776
-------- -------- ------- -------- -------- -------- ------ ---------
Net Interest Income after
Provision for Credit Losses.. 139,650 136,685 (1,814) 274,521 151,597 161,424 (2,415) 310,606
Non-Interest Income.......... 57,632 54,191 111,823 69,708 64,429 134,137
Non-Interest Expense......... 143,709 167,421 1,011 (s) 312,951 179,744 207,283 1,347 (s) 389,456
588 (t) 784 (t)
222 (u) 298 (u)
-------- -------- ------- -------- -------- -------- ------ ---------
Income before Federal Income
Taxes and Extraordinary
Item....................... 53,573 23,455 (3,635) 73,393 41,561 18,570 (4,844) 55,287
Federal Income Tax Expense
(Benefit).................. 9,100 3,097 (4,541)(r) 7,656 (6,500) 45 (6,055)(r) (12,510)
-------- -------- ------- -------- -------- -------- ------ ---------
Income before Extraordinary
Item....................... 44,473 20,358 906 65,737 48,061 18,525 1,211 67,797
Extraordinary Item --
Realization of tax loss
carryforwards.............. 3,024 (3,024)(v)
-------- -------- ------- -------- -------- -------- ------ ---------
Net Income.......... $44,473 $23,382 $(2,118) $65,737 $48,061 $18,525 $1,211 $67,797
======== ======== ======= ======== ======== ======== ====== =========
Preferred Dividends.......... $9,770 $12,920
Average Common Shares
Outstanding................ 11,371,881 11,279,349
Pro Forma Average Common
Shares Outstanding......... 13,797,475 13,704,943
Net Income Per Share of
Common Stock:
Primary................. $3.91 $4.26
Assuming Full Dilution.. 3.76 4.11
Pro Forma Net Income Per
Share of Common Stock (w):
Primary................. $4.06 $4.00
Assuming Full Dilution... 3.76 3.88
Pro Forma Ratio of Earnings
to Fixed Charges (y):
Excluding Interest on
Deposits............... 1.49x 1.29x
Including Interest on
Deposits............... 1.12 1.07
</TABLE>
12
<PAGE> 13
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(a) Adjustment for the divestiture of certain BancOhio branches, together with
related assets and deposit liabilities, in conjunction with the merger.
The effect of the operations of the divested branches on the statements of
income is not material.
(b) Adjustment for the divestiture of the net assets of The Fairfield National
Bank of Lancaster, a subsidiary of National City, in conjunction with the
merger and write-off of related goodwill previously recorded by National
City. The effect of the operations of Fairfield on the statements of
income is not material. Any gain or loss on the divestiture is not
expected to be material.
(c) Adjustment of mortgage loans to estimated market values, based upon
interest rates as of September 30, 1984, net of Federal income tax effect.
(d) Additional reserve for loan losses less Federal income tax effect of
$13,294,000, based upon National City's review and evaluation of
BancOhio's loan portfolio as of September 30, 1984. National City's
evaluation of the portfolio considered only the economic impairment of
BancOhio's underperforming assets resulting from their reduced, delayed
and uncertain cash flows. National City's analysis quantified the
estimated timing and extent of future cash flows of principal and interest
associated with underperforming assets acquired and reduced these cash
flows to a net present value at a market rate of interest. The difference
between the present value as calculated and the face amount of the loans,
net of existing reserves, has been added to the reserve for loan losses.
To the extent that actual collection experience is better than estimated,
goodwill will be reduced. Conversely, any deficiency in collection
experience will be charged to future earnings. This evaluation by National
City is premised upon the factors identified above in this note and was
made solely in the context of the merger. National City does not dispute
the adequacy of the reserve for loan and lease losses previously
established by BancOhio under the assumption that it was to remain an
on-going, independent entity.
(e) Adjustment of investment securities portfolio to market value, net of
Federal income tax effect, based upon market prices as of September 30,
1984.
(f) Adjustment of properties and equipment to estimated market value, net of
Federal income tax effect, based upon a preliminary analysis as of
September 30, 1984. The final amount of the adjustment will be determined
by reference to independent appraisals.
(g) Adjustment to recognize estimated amount of core deposit intangible, net
of Federal income tax effect, representing the fair value of estimated
benefits attributable to existing depositor relationships, based upon
preliminary analyses as of September 30, 1984. The final amount of the
adjustment will be determined through a detailed study and evaluation of
the value of the future income stream associated with the acquired core
deposits.
(h) Adjustment of long-term debt to estimated market values, based upon
interest rates as of September 30, 1984, for similar debt issues, net of
Federal income tax effect.
(i) Adjustment to accrue estimated personnel costs, net of Federal income tax
effect, principally associated with the planned termination of certain
identified redundant facilities, operations and functions as a result of
the merger, based upon preliminary analysis as of September 30, 1984. The
final amount of the adjustment is subject to refinements of plans and
further studies.
(j) Elimination of deferred tax liabilities recorded by Bancohio.
(k) Elimination of BancOhio equity accounts and issuance of 12,000 shares of
National City Adjustable Rate Cumulative Preferred Stock, 2,668,153
shares of National City Series A Convertible Preferred Stock at $35.00 per
share, 2,425,594 shares of National City Common Stock at $31.00 per share
and cash in exchange for all of the BancOhio Common Shares and BancOhio
Adjustable Rate Cumulative Preferred Shares.
(l) Elimination of goodwill recorded by BancOhio.
13
<PAGE> 14
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION---CONTINUED
(m) Goodwill resulting from excess of purchase price over the fair value of net
tangible and intangible assets acquired.
(n) Assumed proceeds from issuance of debt and liquidation of money market
assets held by BancOhio (parent company) to fund cash portion of purchase
price.
(o) Accretion of purchase discounts on investment portfolio.
(p) Accretion of purchase discounts on loan portfolio.
(q) Amortization of purchase discounts on long-term debt.
(r) Estimated interest expense, computed at 11%, associated with cash portion
of purchase price, and related Federal income tax effect.
(s) Amortization of write-up of bank premises.
(t) Amortization of core deposit intangible asset.
(u) Amortization of goodwill.
(v) Elimination of extraordinary item --- realization of tax loss carryforwards
recorded by BancOhio. Under generally accepted accounting principles, any
such realization subsequent to acquisition will be applied against
goodwill.
(w) Pro forma net income per share of Common Stock was calculated using net
income less preferred dividends divided by pro forma average common shares
outstanding. Pro forma net income per share of Common Stock assuming full
dilution assumes the conversion of 11.25% Convertible Subordinated Notes
and Series A Convertible Preferred Stock as of the beginning of the period.
(x) Estimated professional fees, printing and related merger costs.
(y) The pro forma ratio of earnings to fixed charges was computed by dividing
income before Federal income taxes and fixed charges by fixed charges.
Fixed charges excluding interest on deposits consist of interest on
indebtedness and one-third of net rental expense (which is deemed
representative of the interest factor). Fixed charges including
interest on deposits consist of the foregoing items plus interest on
deposits.
14
<PAGE> 15
<TABLE>
PRO FORMA ANALYSIS OF PROJECTED AGGREGATE PURCHASE ACCOUNTING ADJUSTMENTS
(UNAUDITED)
The following analysis is provided to show the expected effects on future
income and equity of the projected aggregate purchase accounting adjustments
reflected in the accompanying unaudited pro forma condensed combined
financial information on the basis that the merger was consummated at the
beginning of the fourth quarter of 1984.
<CAPTION>
FAIR VALUE
ADJUSTMENT
PREMIUM
(DISCOUNT) 1984 1985 1986 1987 1988 1989 THEREAFTER
---------- ---- ---- ---- ---- ---- ---- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Accretion (Amortization) of:
Investment securities portfolio discounts
to be accreted into income to increase yield
to market over remaining lives:
U.S. Treasury Securities (1.8 yrs)......... $(3,841) $ 533 $2,134 $1,174
U.S. Gov't. Agency Sec. (18.2 yrs) ........ (28,044) 385 1,541 1,541 $1,541 $1,541 $1,541 $19,954
Municipal Securities (10.1 yrs)............ (47,598) 1,178 4,713 4,713 4,713 4,713 4,713 22,855
Other Securities (11.2 yrs)................ (1,861) 41 165 165 165 165 165 995
Loans:
Net discount on mortgage loans accreted
into income to increase yield to market
rate over the estimated remaining lives
of the loans (12 years)...................... (26,991) 562 2,249 2,249 2,249 2,249 2,249 15,184
Write-up of bank premises to be amortized
over 25 years ............................... 33,664 (337) (1,347) (1,347) (1,347) (1,347) (1,347) (26,592)
Core deposit intangible to be amortized
over 7 years ................................ 5,485 (196) (784) (784) (784) (784) (784) (1,369)
Discount on long-term debt to be amortized
over 10 years ............................... 540 (13) (54) (54) (54) (54) (54) (257)
All other purchase accounting adjustments...... 1,087
------- ----- ----- ----- ----- ----- ----- ------
Net fair value adjustments..................... (67,559) 2,153 8,617 7,657 6,483 6,483 6,483 30,770
BancOhio net assets (as reported).............. 380,158
-------
Adjusted net assets............................ 312,599
Purchase price................................. 320,042
-------
Goodwill (excess of purchase price over
adjusted net assets) to be amortized
over 25 years ............................... $7,443 (74) (298) (298) (298) (298) (298) (5,879)
======= ----- ----- ----- ----- ----- ----- ------
Net impact of purchase accounting adjustments
on future net income ........................ $2,079 $8,319 $7,359 $6,185 $6,185 $6,185 $24,891
====== ====== ====== ====== ====== ====== =======
</TABLE>
15
<PAGE> 16
<TABLE>
PRO FORMA COMBINED INTERNATIONAL OUTSTANDINGS
A summary of international outstandings for National City and BancOhio on a
pro forma combined basis as of September 30, 1984 appears in the following
table:
<CAPTION>
FINANCIAL INSTITUTIONS GOVT. COMMERCIAL
-------------------------- ---- --------------- PERCENT TO LETTERS OF
EURODOLLAR ACCEPT- ACCEPT- FINANCIAL CREDIT AND
PLACEMENTS ANCES LOANS LOANS ANCES LOANS TOTAL INSTITUTIONS COMMITMENTS
---------- ----- ----- ----- ----- ----- ----- ------------ -----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Japan.................. $ 62 $ 74 $ 11 $ - $ - $ - $ 147 100% $ 56
United Kingdom ........ 142 3 - - - 9 154 94 16
Mexico ................ 37 18 63 16 - 20 154 77 7
France................. 66 - 50 - - - 116 100 15
Sweden................. - 91 - - - - 91 100 9
Brazil................. 5 35 29 1 - 17 87 79 1
Canada................. 72 - - 3 - - 75 96 13
Finland................ 3 46 - 3 - - 52 94 -
All Others:
Developed............ 77 52 2 10 - - 141 93 4
Newly Industrialized. 5 10 3 9 - 4 36 64 1
Oil Exporting........ 1 - 26 3 - 1 31 87 -
Eastern Europe ...... - - 3 1 - 1 5 60 1
Less Developed....... - - 15 8 - 6 29 52 1
---- ---- ---- ---- ---- ---- ------ ----
Direct Foreign
Outstandings ....... 470 329 207 54 - 58 1,118 90 124
United States.......... 299 - - 4 75 1 379 79 142
---- ---- ---- ---- ---- ---- ------ ----
Total......... $769 $329 $207 $58 $75 $59 $1,497 87% $266
==== ==== ==== ==== ==== ==== ====== ====
</TABLE>
United States outstandings consist principally of Eurodollar time deposits
at selected foreign money center branches of U.S. banks and foreign acceptances
of domestic corporations.
As of September 30, 1984, the banking subsidiaries of National City and
BancOhio had $161.8 million of total outstandings in Mexico (including letters
of credit and commitments) on a pro forma combined basis. At said date, such
subsidiaries had agreed to reschedule $47.1 million in loans to public and
private sector borrowers in that country. The maturities of these loans have
been extended for terms of up to 8 years. The banking subsidiaries of National
City had also previously agreed to make additional loans in the amount of $16.5
million for terms up to 10 years, $13.6 million of which was drawn as of
September 30, 1984. Principal repayments in the amount of $.4 million were
received with respect to Mexican loans during the nine months ended September
30, 1984. Interest income of $12.5 million was accrued on Mexican outstandings
for the nine months ended September 30, 1984, and $12.6 million of interest
income had been remitted to such subsidiaries at such date. At September 30,
1984, no Mexican debt was included in non-accrual loans. Mexican debt included
in past due loans totaled $1.0 million.
Negotiations have taken place between Mexico and representatives of
international lenders with a view toward reducing interest rates on, and
further adjusting repayment schedules with respect to, a portion of
cross-border outstandings in Mexico. Under the terms of the proposed
restructuring, the banking subsidiaries of National City and BancOhio on a pro
forma combined basis would reschedule $68.4 million in loans to public sector
(as defined in the restructuring proposal) borrowers in Mexico, which includes
$10.8 million to government and official institutions, $50.4 million to banks
and other financial institutions and $7.2 million to commercial and industrial
borrowers. The maturities of loans subject to the proposed restructuring would
be extended for terms of up to 14 years with principal amortizations to begin
in 1986. The weighted average interest rate on such loans approximates the base
rate plus 1.3125% at the present time and, after restructuring, would
approximate London interbank offered rate plus 1.25%. Management anticipates
that the interest rate margin on these loans would be an estimated 1.1875% less
as a result of such restructuring. The loans that would be restructured include
$35.4 million of the $47.1 million previously rescheduled loans (see above) and
$33.0 million of loans that were not previously rescheduled.
On a pro forma combined basis, the banking subsidiaries of National City
had $5.0 million of loans outstanding in Argentina, all of which were placed in
underperforming status in the first quarter of 1984. There have been no other
developments of significance in international exposure since December 31, 1983.
16
<PAGE> 17
<TABLE>
PRO FORMA COMBINED UNDERPERFORMING ASSETS
A summary of underperforming assets, including non-accrual
and reduced-rate loans, securities and other assets received in
settlement of loans for National City and BancOhio on a pro
forma combined basis appears in the following table:
<CAPTION>
September 30,
1984
--------------------
(Dollars in millions)
<S> <C>
Domestic commercial....................... $174.1
International............................. 6.4
Real estate...............,............... 16.7
------
Total loans....................... 197.2
Other real estate .....,.....,........... 19.1
Securities................................ .5
------
$216.8
======
Percent of pro forma combined loans ...... 3.1%
Percent of pro forma combined assets...... 1.8%
</TABLE>
Other loans past due 90 days or more as to principal and
interest amounted to $24.0 million at September 30, 1984 on a
pro forma combined basis.
DESCRIPTION OF NOTES
The Notes are to be issued under an Indenture, dated as of
January 15, 1985 (the "Indenture"), between National City and
Citibank, N.A., as Trustee (the "Trustee"). A copy of the
Indenture is filed as an exhibit to the Registration Statement
of which this Prospectus is a part. The following statements
relating to the Notes and the Indenture are summaries, do not
purport to be complete and are subject to and are qualified in
their entirety by reference to all of the provisions of the
Indenture, including the definitions therein of certain terms.
The section numbers appearing parenthetically below refer to
sections of the Indenture.
Because National City is a bank holding company, its rights
and the rights of its creditors, including the holders of the
Notes offered hereby, to participate in the assets of any
subsidiary upon the latter's liquidation or recapitalization
will generally be subject to the prior claims of the sub-
sidiary's creditors (including, in the case of banking
subsidiaries, their respective depositors), except to the extent
that National City may itself be a creditor with recognized
claims against the subsidiary.
GENERAL
The Notes will be limited to $75,000,000 aggregate
principal amount at any time outstanding, will be direct,
unsecured, subordinated obligations of National City and will
mature on the Interest Payment Date (as defined under
"Interest") in January 1997. (Section 301)
The Notes will bear interest at the rates per annum
determined as described under "Interest" from the Issue Date
referred to under "Interest", payable quarterly in arrears on
the Interest Payment Dates in January, April, July and October
of each year. The first Interest Payment Date will be April 30,
1985. The interest to be paid on each Note on each Interest
Payment Date will be paid to the person in whose name such Note
(or any Predecessor Note) is registered at the close of business
on the Record Date which is 15 days preceding such Interest
Payment Date. Principal of and interest on the Notes will be
payable and the Notes may be presented for exchange or transfer
at the office of the Trustee maintained for such purpose in the
Borough of Manhattan, The City of New York; provided, that
payment of interest may at the option of National City be made
by check mailed to the registered address of the person entitled
thereto. (Sections 305, 307 and 1002)
17
<PAGE> 18
The Notes will be issued in fully registered form only in denominations of
$1,000 and any integral multiple of $1,000, and may be transferred or
exchanged, without payment of any charge other than taxes or other governmental
charges. (Sections 302 and 305)
INTEREST
Interest Payment Dates. The Notes will bear interest from the Issue Date
(expected to be January 31, 1985) and such interest will be payable on each
date (an "Interest Payment Date") which, except as provided below, is three
calendar months after the preceding Interest Payment Date or, in the case of
the first Interest Payment Date, after the Issue Date; provided, that the first
Interest Payment Date shall be no later than April 30, 1985. If any Interest
Payment Date would otherwise be a day which is not a New York Business Day (as
defined below), the Interest Payment Date shall be postponed to the next day
which is a New York Business Day unless it would thereby be in the next
calendar month, in which event (i) such Interest Payment Date shall be brought
forward to the immediately preceding New York Business Day and (ii) thereafter,
each subsequent Interest Payment Date shall be the last New York Business Day
of the third month after the month in which the preceding Interest Payment Date
shall have occurred. The period beginning on the Issue Date and ending on and
including the first Interest Payment Date and each successive period beginning
on an Interest Payment Date and ending on and including the next succeeding
Interest Payment Date is herein called an "Interest Period". (Section 202)
Rate of Interest. For the purpose of calculating the rate of interest
payable on the Notes, National City will appoint as agent Citibank, N.A. (the
"Agent Bank"). The rate of interest from time to time payable in respect of the
Notes (the "Rate of Interest") shall be determined by the Agent Bank in
accordance with the following provisions:
(i) On the second New York Business Day prior to the commencement
of each Interest Period, or if such day is not a Business Day (as
defined below) then the Business Day immediately preceding such day
(the "Interest Determination Date"), the Agent Bank will request the
principal London office of each of Citibank, N.A., Morgan Guaranty Trust
Company of New York, Barclays Bank International Limited and Deutsche
Bank AG (the "Reference Banks") to provide the Agent Bank with its
offered quotation for United States dollar deposits for the Interest
Period concerned to leading banks in the London interbank market at
approximately 11:00 A.M. (London time) on the Interest Determination
Date in question. The Rate of Interest for such Interest Period shall,
subject to (iv) below, be 1/8 of 1% per annum above the arithmetic mean
(rounded upwards, if necessary, to the nearest multiple of 1/16 of 1%)
of such offered quotations, as determined by the Agent Bank.
(ii) If on any Interest Determination Date at least two but fewer
than all the Reference Banks provide the Agent Bank with such offered
quotations, the Rate of Interest for the relevant Interest Period shall,
subject to (iv) below, be determined in accordance with (i) above on the
basis of the offered quotations of those Reference Banks providing such
quotations.
(iii) If on any Interest Determination Date only one or none of the
Reference Banks provides the Agent Bank with such an offered quotation,
the Rate of Interest for the relevant Interest Period shall, subject to
(iv) below, be whichever is the higher of:
(a) the Rate of Interest in effect for the last preceding
Interest Period to which (i) or (ii) above shall have applied; and
(b) the Reserve Interest Rate. The "Reserve Interest Rate"
shall be the rate per annum which the Agent Bank determines to be
either (i) 1/8 of 1% per annum above the arithmetic mean (rounded
upwards as aforesaid) of the offered rates which leading banks in
The City of New York selected by the Agent Bank (after consultation
with National City) are quoting on the relevant Interest
Determination Date for United States dollar deposits for the next
Interest Period to the principal London office of each of the
Reference Banks or those of them (being at least two in number) to
which such offered quotations
18
<PAGE> 19
are, in the opinion of the Agent Bank, being so made, or (ii) in the
event that the Agent Bank can determine no such arithmetic mean, 1/8
of 1% per annum above the arithmetic mean (rounded upwards as
aforesaid) of the offered rates which leading banks in The City of
New York selected by the Agent Bank (after consultation with
National City) are quoting on such Interest Determination Date to
leading European banks for United States dollar deposits for the
next Interest Period; provided, that if the banks selected as
aforesaid by the Agent Bank are not quoting as mentioned above, the
Rate of Interest shall be the Rate of Interest specified in (a)
above.
(iv) In no event shall the Rate of Interest be less than 5 1/4% per
annum.
"Business Day" shall mean any day, other than a Saturday or Sunday, on which
banks in London and The City of New York are open for business and "New York
Business Day" shall mean any day, other than a Saturday or Sunday, on which
banks in The City of New York are open for business. (Sections 101 and 202)
Publication of Rate of Interest. The Agent Bank shall cause the Rate of
Interest for each Interest Period, together with the amount of interest payable
in respect of each $1,000 principal amount of Notes for such Interest Period
(the "Interest Amount") (rounded to the nearest cent; half a cent being rounded
upwards) and the related Interest Payment Date, to be published in an
Authorized Newspaper (as defined below) in The City of New York as soon as
possible after their determination but in no event later than the fourth New
York Business Day following the applicable Interest Determination Date. The
Interest Amount and Interest Payment Date so published may subsequently be
amended (or appropriate alternative arrangements made by way of adjustment)
without notice in the event of an extension or shortening of the Interest
Period. Interest will be calculated on the basis of the number of days for
which interest is payable in the applicable Interest Period divided by 360. An
"Authorized Newspaper" will be defined in the Indenture to mean a newspaper in
the English language published daily in The City of New York. (Sections 101 and
202)
Reference Banks and Agent Bank. National City will agree that, until all
the Notes are paid or payment thereof is provided for, there shall at all times
be at least three Reference Banks and an Agent Bank for the purpose of
determining the Rate of Interest on the Notes. In the event that any such
Reference Bank or Agent Bank shall be unwilling or unable to act as such a
Reference Bank or Agent Bank or that such Agent Bank shall fail duly to
determine the Rate of Interest and the Interest Amount for any Interest Period,
National City will promptly appoint another leading bank engaged in
transactions in Eurodollar deposits in the international Eurocurrency market to
act as such in its place. The Agent Bank may not resign its duties without a
successor having been appointed as aforesaid. (Section 202)
SUBORDINATION OF NOTES
Upon any distribution of assets of National City upon any dissolution,
winding up, liquidation or reorganization, the payment of the principal of and
interest on the Notes is to be subordinated to the extent provided in the
Indenture in right of payment to the prior payment in full of all Senior
Indebtedness. In addition, no payment of principal or interest may be made on
the Notes at any time when there is a default in the payment of principal of,
premium, if any, or interest on any Senior Indebtedness. Except as described
above, the obligation of National City to make payment of principal or interest
on the Notes will not be affected. The rights of the holders of the Notes will
be subrogated to the rights of the holders of the Senior Indebtedness to the
extent of payments made on Senior Indebtedness upon any distribution of assets
in any such proceedings out of the distributive share of the Notes. By reason
of such subordination, in the event of a distribution of assets upon any
dissolution, winding up, liquidation or reorganization, certain general
creditors of National City may recover more, ratably, than holders of the
Notes. (Sections 1202, 1203 and 1204)
Senior Indebtedness is defined in the Indenture as the principal of,
premium, if any, and unpaid interest on (a) indebtedness of National City
(including indebtedness of others guaranteed by
19
<PAGE> 20
National City), other than the Notes, and National City's 11.25% Convertible
Subordinated Notes Due 1997 and National City's 9.50% Convertible Subordinated
Debentures Due 2010, whether outstanding on the date of execution of the
Indenture or thereafter created, incurred, assumed or guaranteed (i) for money
borrowed or (ii) in connection with the acquisition by National City or a
subsidiary, other than in the ordinary course of business, of assets of any
kind, unless in the instrument creating or evidencing the same or pursuant to
which the same is outstanding it is provided that such indebtedness is not
superior in right of payment to the Notes, and (b) renewals, extensions,
modifications and refundings of any such indebtedness. (Section 101)
NOTE FUND; COVENANT TO SELL CAPITAL
The Indenture will provide for the creation of a segregated fund (the
"Note Fund") to be held by the Trustee or an agent thereof (which may be any
subsidiary of National City which is a bank). The Note Fund is being created
for certain United States bank regulatory purposes and, although it is expected
to provide a source of funds for the payment of the Notes, the Note Fund will
not constitute security for the Notes.
Amounts in the Note Fund will consist solely of (i) the net proceeds of
the sale for cash (the "Cash Proceeds") from time to time of shares of Common
Stock or Perpetual Preferred Stock or Other Equity Securities of National City
(collectively, "Capital") and (ii) funds equal to the market value (as
determined by National City) of Capital sold from time to time in exchange for
other property (including, without limitation, Capital issued upon conversion
of convertible securities now or hereafter outstanding which do not constitute
Capital), less the expenses to effect any such exchange (the "Exchange
Proceeds"), in each case which National City from time to time shall elect to
deposit into the Note Fund. (Section 1302)
National City will covenant and agree in the Indenture that (i) by the
Interest Payment Date in January 1989, it will have sold Capital, either for
cash or in exchange for other property, in a sufficient amount so that the
aggregate of the Cash Proceeds and the Exchange Proceeds will equal at least
one-third of the original aggregate principal amount of the Notes (or such
lesser amount as the Federal Reserve Board may permit from time to time) and
will have deposited into the Note Fund funds equivalent to such amount, (ii) by
the Interest Payment Date in January 1993, it will have sold Capital, either
for cash or in exchange for other property, in a sufficient amount so that the
aggregate of the Cash Proceeds and the Exchange Proceeds will equal at least
two-thirds of the original aggregate principal amount of the Notes (or such
lesser amount as the Federal Reserve Board may permit from time to time) and
will have deposited into the Note Fund funds equivalent to such amount, and
(iii) by 60 days prior to the Interest Payment Date in January 1997, it will
have sold Capital, either for cash or in exchange for other property, in a
sufficient amount so that the aggregate of the Cash Proceeds and the Exchange
Proceeds will equal not less than the original aggregate principal amount of
the Notes (or such lesser amount as the Federal Reserve Board may permit from
time to time) and will have deposited into the Note Fund funds equivalent to
such amount. The Indenture will provide, however, that such covenant and
agreement of National City will be cancelled, and amounts theretofore deposited
into the Note Fund will, at the request of National City, be repaid to it, in
the event that the Federal Reserve Board shall determine that the indebtedness
represented by the Notes in excess of amounts theretofore deposited into the
Note Fund will not be treated for United States bank regulatory purposes as
"primary capital" of National City or in the event that the Notes shall cease
being treated as "primary capital" of National City or in the event that
National City shall have redeemed the Notes pursuant to the provisions
described in clause (ii) of the third sentence of the first paragraph under
"Redemption of Notes". (Section 1303)
Unless the Notes have been accelerated upon the occurrence of an Event of
Default or National City shall elect to redeem the Notes pursuant to the
provisions described in clause (ii) of the third sentence of the first
paragraph under "Redemption of Notes" or the Federal Reserve Board has made the
determination referred to in the final sentence of the immediately preceding
paragraph or the Notes shall cease being treated as "primary capital" of
National City, the principal of the Notes shall
20
<PAGE> 21
be payable prior to their final maturity in January 1997 solely from funds in
the Note Fund. Amounts in the Note Fund will not be available for the payment
of interest on the Notes. The obligation of National City to make payment of
all amounts of principal of the Notes upon redemption, at their final
maturity in January 1997 and in the event of acceleration of the Notes upon the
occurrence of an Event of Default and the indebtedness of National City for
such principal amounts will not be affected by whether or to what extent
amounts are in the Note Fund. (Section 202)
Amounts in the Note Fund will be invested as directed by National City in
(i) debt securities of or guaranteed by the United States of America or any
agency thereof, (ii) other debt securities (including debt securities of
National City, the Trustee, any subsidiary of National City or any affiliate of
the Trustee) which at the time are rated in any of the three highest categories
(including any subdivision thereof) by any securities rating agency nationally
recognized in the United States or (iii) time deposits with, including
certificates of deposit issued by, any bank or trust company (including the
Trustee or any subsidiary of National City) any debt security of which (or any
debt security of the parent of which) is so rated; provided that no such
securities or deposits shall have a maturity extending beyond the final
maturity date of the Notes. Income on investments of amounts in the Note Fund
will be paid to National City and will not be part of the Note Fund. (Sections
101 and 1304)
In the event that National City shall have redeemed any of the Notes
pursuant to the provisions described in clause (ii) of the third sentence of
the first paragraph under "Redemption of Notes", there will be repaid by the
Trustee to National City from the Note Fund an amount of funds not in excess of
the principal amount of Notes so redeemed. Any amounts remaining in the Note
Fund after redemption of all the Notes or after payment in full of the
principal of and interest on all the Notes (or provision for the payment
thereof is made as provided in the Indenture) will be repaid to National City.
(Section 1305)
REDEMPTION OF NOTES
The Notes may not be redeemed before the Interest Payment Date in January
1989. On the Interest Payment Date in January 1989 and on any day thereafter,
the Notes may be redeemed, as a whole or from time to time in part, at the
option of National City, on not less than 30 nor more than 60 days' prior
notice given as provided in the Indenture, at a redemption price equal to 100%
of the principal amount of the Notes to be redeemed plus interest accrued and
unpaid to the date of redemption. Any such redemption may be made (i) solely
out of funds in the Note Fund, provided that no notice of any such redemption
to be made solely out of funds in the Note Fund may be given unless there are
sufficient funds available in the Note Fund to pay the principal amount of the
Notes to be redeemed; or (ii) from any source, irrespective of the amount of
funds available in or theretofore deposited in the Note Fund (x) if the Federal
Reserve Board shall approve the redemption of Notes from a source other than
funds in the Note Fund or (y) if the Federal Reserve Board shall determine that
the indebtedness represented by the Notes in excess of amounts theretofore
deposited into the Note Fund will not be treated for United States bank
regulatory purposes as "primary capital" of National City or (z) if the Notes
shall cease being treated as "primary capital" of National City. The Notes will
not be entitled to the benefit of any sinking fund. (Section 202)
If less than all the Notes are to be redeemed, the Notes to be redeemed
shall be selected by the Trustee by such method as it shall deem fair and
appropriate. Notes may be selected for partial redemption, but the portions of
the principal of Notes selected for partial redemption in any case shall be
equal to $1,000 or any integral multiple thereof. (Section 1104)
LIMITED RIGHTS OF ACCELERATION
Payment of principal of the Notes may be accelerated only in case of the
bankruptcy, insolvency or reorganization of National City. There is no right of
acceleration in the case of a default in the payment of interest or the
performance of any other covenant of National City in the Indenture. (Sections
501 and 502)
21
<PAGE> 22
MERGER AND CONSOLIDATION
The Indenture will provide that National City may, without the consent of
the holders of Notes outstanding under the Indenture, consolidate with or merge
into or transfer its assets substantially as an entirety to any corporation
organized under the laws of any domestic jurisdiction, provided that the
successor corporation shall assume by a supplemental indenture National City's
obligations on the Notes and under the Indenture, and provided that after
giving effect thereto, no Default (as defined in the Indenture) shall have
occurred and be continuing, and that certain other conditions are met. Upon
compliance with these provisions by a successor corporation, National City
would be relieved of its obligations under the Indenture and the Notes.
(Sections 801 and 802)
LIMITATION UPON DISPOSITION OF VOTING STOCK OF A PRINCIPAL CONSTITUENT BANK
The Indenture will contain a covenant by National City that National City
will not, and will not permit any Subsidiary to, sell, assign, pledge, transfer
or otherwise dispose of, or permit the issuance of, any shares of Capital Stock
of, or any securities convertible into Capital Stock of, a Subsidiary which is
a Principal Constituent Bank or any Subsidiary which owns shares of, or
securities convertible into, Capital Stock of a Principal Constituent Bank.
Notwithstanding the limitation described above, the Indenture will provide that
National City may, and may permit its Subsidiaries to, sell, assign, pledge,
transfer or otherwise dispose of, or issue, such shares or securities (i) if
required by law for the qualification of directors, (ii) for purposes of
compliance with an order of a court or regulatory authority, (iii) if such
sale, assignment, pledge, transfer, disposition or issuance is for fair market
value (as determined by the Board of Directors of National City) and if after
giving effect to such disposition or issuance (and to potential dilution, if
any), National City and its wholly-owned Subsidiaries will own directly not
less than 80% of the Voting Stock of such Principal Constituent Bank or
Subsidiary. In addition, a Constituent Bank may sell additional shares of
Capital Stock to its stockholders at any price if, after such sale, National
City owns directly or indirectly at least the same percentage of Voting Stock
of such Constituent Bank as it owned prior to such sale. At the date hereof,
the only bank subsidiaries which are Principal Constituent Banks are National
City Bank and BancOhio National Bank. (Section 1006)
DEFAULTS, WAIVERS, ETC.
An Event of Default will be defined in the Indenture as certain events
involving the bankruptcy, insolvency or reorganization of National City. If an
Event of Default occurs and is continuing, either the Trustee or the holders of
not less than 25% in aggregate principal amount of the Notes outstanding
under the Indenture may accelerate the maturity of all such outstanding Notes.
The holders of a majority in aggregate principal amount of the Notes
outstanding under the Indenture may waive an Event of Default resulting in
acceleration of such Notes, but only if all Events of Default have been
remedied and all payments due (other than those due as a result of
acceleration) have been made. If an Event of Default occurs and is continuing,
the Trustee may in its discretion, and at the written request of holders of not
less than a majority in aggregate principal amount of Notes outstanding and
upon reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request shall, proceed to protect the rights
of the holders of Notes. Prior to acceleration of maturity of the Notes, the
holders of a majority in aggregate principal amount of such Notes may waive any
past default under the Indenture, except a default in the payment of principal
or interest. (Sections 501, 502 and 513)
The Indenture will provide that in the event of a Default by National
City in payment of principal of or interest on the Notes, National City will,
upon demand of the Trustee, pay to it, for the benefit of the holders of the
Notes, the whole amount then due and payable on the Notes for principal and
interest. The Indenture will further provide that if National City fails to pay
such amount forthwith upon such demand, the Trustee may, among other things,
institute a judicial proceeding for the collection thereof. (Section 503)
However, the Indenture will provide that notwithstanding any other
provision of the Indenture, the holder of any Note shall have the right to
institute suit for the enforcement of any payment of
22
<PAGE> 23
principal of and interest on such Note on the respective Stated
Maturities (as defined in the Indenture) expressed in such Note
and that such right shall not be impaired without the consent
of such holder. (Section 508)
National City is required to file annually with the Trustee
a written statement of officers as to the existence or
non-existence of defaults. (Section 1007)
MODIFICATION OF THE INDENTURE; WAIVER OF COVENANTS
The Indenture will provide that, with the consent of the
holders of not less than 66 2/3% in principal amount of the
outstanding Notes, modifications and alterations of the
Indenture may be made which affect the rights of the holders of
the Notes; but no such modification or alteration may be made
without the consent of the holder of each Note so affected
which would (i) change the maturity of the principal of, or of
any installment of interest on, any Note, or reduce the
principal amount thereof or change the method of calculation of
interest, or reduce the minimum rate of interest, thereon; or
(ii) reduce the above-stated percentage in principal amount of
outstanding Notes required to modify or alter the Indenture.
(Section 903)
The holders of a majority in principal amount of the
outstanding Notes may waive compliance with certain covenants
in the Indenture, including those described under "Limitation
Upon Disposition of Voting Stock of a Principal Constituent
Bank" above. (Section 513)
REGARDING THE TRUSTEE
Citibank, N.A., the Trustee, has its principal corporate
trust office at 111 Wall Street, New York, New York 10043.
National City and its subsidiary banks have normal banking
relationships with the Trustee.
UNDERWRITING
Subject to the terms and conditions set forth in the
Underwriting Agreement, National City has agreed to sell to
each of the Underwriters named below, and each of the
Underwriters, for whom Salomon Brothers Inc and Keefe, Bruyette
& Woods, Inc. are acting as Representatives, has severally
agreed to purchase from National City, the principal amount of
Notes set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
UNDERWRITER OF NOTES
----------- --------------
<S> <C>
Salomon Brothers Inc. ..................................................... $20,450,000
Keefe, Bruyette & Woods, Inc. ............................................ 20,450,000
Goldman, Sachs & Co. ...................................................... 2,400,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated ........................ 2,400,000
Morgan Stanley & Co. Incorporated ......................................... 2,400,000
Shearson Lehman/American Express Inc. .................................... 2,400,000
Bear, Stearns & Co. ....................................................... 1,750,000
Alex. Brown & Sons, Inc. ................................................. 1,750,000
Dillon, Read & Co. Inc. .................................................. 1,750,000
E. F. Hutton & Company Inc. ............................................... 1,750,000
Kidder, Peabody & Co. Incorporated ........................................ 1,750,000
McDonald & Company Securities, Inc. ....................................... 1,750,000
The Ohio Company .......................................................... 1,750,000
PaineWebber Incorporated .................................................. 1,750,000
Prescott, Ball & Turben, Inc. ............................................. 1,750,000
Prudential-Bache Securities Inc. .......................................... 1,750,000
L. F. Rothschild, Unterberg, Towbin ....................................... 1,750,000
M. A. Schapiro & Co., Inc. ................................................ 1,750,000
Smith Barney, Harris Upham & Co. Incorporated ............................. 1,750,000
Dean Witter Reynolds Inc. ................................................. 1,750,000
------------
Total ...........................................,................. $75,000,000
============
</TABLE>
23
<PAGE> 24
In the Underwriting Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all the
Notes offered hereby if any of the Notes are purchased. In the event of default
by an Underwriter, the Underwriting Agreement provides that, in certain
circumstances, purchase commitments of the nondefaulting Underwriters may be
increased or the Underwriting Agreement may be terminated. National City has
been advised by the Representatives that the several Underwriters propose
initially to offer the Notes to the public at the public offering price on the
cover page of this Prospectus, and to certain dealers at such price less a
concession not in excess of.30% of the principal amount of the Notes.
Underwriters may allow and such dealers may reallow a concession not in excess
of .25% of the principal amount of the Notes to certain other dealers. After
the initial public offering, the public offering price and such concessions may
be changed.
The Underwriting Agreement provides that National City will indemnify the
several Underwriters against certain civil liabilities, including liabilities
under the Securities Act of 1933, as amended, or to contribute to payments the
Underwriters may be required to make in respect thereof.
In connection with the merger of BancOhio into National City, Keefe,
Bruyette & Woods, Inc. acted as financial advisor to National City.
LEGAL OPINIONS
The legality of the Notes offered hereby will be passed upon for National
City by Jones, Day, Reavis & Pogue, 1700 Huntington Building, Cleveland, Ohio
44115 and for the Underwriters by Cravath, Swaine & Moore, One Chase Manhattan
Plaza, New York, New York 10005. Mr. Allen C. Holmes, a member of the firm of
Jones, Day, Reavis & Pogue, is a director of National City and National City
Bank. Mr. Holmes owns 810 shares of Common Stock of National City.
EXPERTS
The consolidated financial statements of National City Corporation
incorporated by reference in this Prospectus and the Registration Statement
have been examined by Ernst & Whinney, independent accountants, for the periods
indicated in their report thereon which is included in the Annual Report on
Form 10-K for the year ended December 31, 1983. The consolidated financial
statements examined by Ernst & Whinney have been incorporated herein by
reference in reliance on their report given on their authority as experts in
accounting and auditing.
The consolidated financial statements of BancOhio Corporation and its
subsidiaries, incorporated by reference in this Prospectus and the
Registration Statement, have been examined by Deloitte Haskins & Sells,
independent public accountants, for the periods indicated in their report, and
have been so incorporated herein by reference in reliance upon the report of
Deloitte Haskins & Sells given upon their authority as experts in accounting
and auditing.
24
<PAGE> 25
No dealer, salesman or any other person has
been authorized to give any information or to
make any representations, other than those
contained in this Prospectus, in connection
with the offer made by this Prospectus, and, if
given or made, such information or represen-
tations must not be relied upon as having
been authorized by National City or by any of
the Underwriters. Neither the delivery of this
Prospectus nor any sale made hereunder
shall under any circumstances create an im-
plication that there has been no change in the
affairs of National City since the date hereof.
This Prospectus does not constitute an offer
or solicitation by anyone in any state in which
such offer or solicitation is not authorized or
in which the person making such offer or so-
licitation is not qualified to do so or to anyone
to whom it is unlawful to make such offer or
solicitation.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
Available Information .................. 2
Incorporation of Certain Documents
by Reference.......................... 2
National City Corporation................ 3
Application of Proceeds.................. 4
National City Corporation Fourth
Quarter and Year End Results ......... 4
National City Corporation Selected
Financial Data ....................... 5
National City Corporation Management's
Discussion of Interim Results ........ 6
BancOhio Corporation ................... 7
Capitalization........................... 9
Pro Forma Condensed Combined
Financial Information (Unaudited) .... 10
Pro Forma Analysis of Projected Aggregate
Purchase Accounting Adjustments
(Unaudited)........................... 15
Pro Forma Combined International
Outstandings ......................... 16
Pro Forma Combined Underperforming
Assets................................ 17
Description of Notes..................... 17
Underwriting............................. 23
Legal Opinions........................... 24
Experts.................................. 24
</TABLE>
$75,000,000
National City Corporation
Floating Rate Subordinated
Notes Due 1997
NATIONAL CITY
CORPORATION
Salomon Brothers Inc
Keefe, Bruyette & Woods Inc.
Prospectus
Dated January 22, 1985
<PAGE> 26
=========================================================================
NATIONAL CITY CORPORATION
AND
CITIBANK, N.A., TRUSTEE
--------
INDENTURE
DATED AS OF JANUARY 15, 1985
--------
$75,000,000
FLOATING RATE SUBORDINATED NOTES DUE 1997
=========================================================================
<PAGE> 27
=========================================================================
NATIONAL CITY CORPORATION
AND
CITIBANK, N.A., TRUSTEE
--------
INDENTURE
DATED AS OF JANUARY 15, 1985
--------
$75,000,000
FLOATING RATE SUBORDINATED NOTES DUE 1997
=========================================================================
<PAGE> 28
<TABLE>
NATIONAL CITY CORPORATION
RECONCILIATION AND TIE BETWEEN INDENTURE
DATED AS OF JANUARY 15, 1985 AND
TRUST INDENTURE ACT OF 1939
<CAPTION>
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
--------------- -----------------
<S> <C>
Section 310 (a) (1) ............................ 609
(a) (2) ............................ 609
(a) (3) ............................ Not Applicable
(a) (4) ............................ Not Applicable
(b) ............................ 608
610
Section 311 (a) ............................ 613 (a)
(b) ............................ 613 (b)
(b) (2) ............................ 703 (a) (2)
703 (b)
Section 312 (a) ............................ 701
702 (a)
(b) ............................ 702 (b)
(c) ............................ 702 (c)
Section 313 (a) ............................ 703 (a)
(b) ............................ 703 (b)
(c) ............................ 703 (a), 703 (b)
(d) ............................ 703 (c)
Section 314 (a) ............................ 704
(b) ............................ Not Applicable
(c) (1) ............................ 102
(c) (2) ............................ 102
(c) (3) ............................ Not Applicable
(d) ............................ Not Applicable
(e) ............................ 102
Section 315 (a) ............................ 601 (a)
(b) ............................ 602
703 (a) (6)
(c) ............................ 601 (b)
(d) ............................ 601 (c)
(d) (1) ............................ 601 (a) (1)
(d) (2) ............................ 601 (c) (2)
(d) (3) ............................ 601 (c) (3)
(e) ............................ 514
Section 316 (a) ............................ 101
(a) (1) (A)............................ 502
512
(a) (1) (B)............................ 513
(a) (2) ............................ Not Applicable
(b) ............................ 508
Section 317 (a) (1) ............................ 503
(a) (2) ............................ 504
(b) ............................ 1003
Section 318 (a) ............................ 107
- ---------------
<FN>
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
</TABLE>
<PAGE> 29
ii
<TABLE>
<CAPTION>
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<S> <C> <C>
Perpetual Preferred Stock ....................... 5
Person .......................................... 5
Predecessor Notes................................ 5
Principal Constituent Bank....................... 5
Qualifying Investment ........................... 5
Ranking on a parity with the Notes............... 6
Redemption Date ................................ 6
Redemption Price ................................ 6
Regular Record Date ............................. 6
Responsible Officer.............................. 6
Senior Indebtedness ............................. 6
Special Record Date.............................. 7
Stated Maturity.................................. 7
Subordinated Notes .............................. 7
Subsidiary ...................................... 7
Trustee.......................................... 7
Trust Indenture Act, TIA ........................ 7
Vice President................................... 7
Voting Stock..................................... 7
Section 102. Compliance Certificates and Opinions ............ 7
Section 103. Form of Documents Delivered to Trustee .......... 8
Section 104. Acts of Noteholders ............................. 9
Section 105. Notices, etc., to Trustee and Company ........... 9
Section 106. Notice to Noteholders; Waiver ................... 10
Section 107. Conflict with Trust Indenture Act ............... 10
Section 108. Effect of Headings and Table of Contents ........ 11
Section 109. Successors and Assigns........................... 11
Section 110. Separability Clause ............................. 11
Section 111. Benefits of Indenture............................ 11
Section 112. Governing Law ................................... 11
Section 113. Legal Holidays................................... 11
ARTICLE TWO
Note Form
Section 201. Forms Generally.................................. 11
Section 202. Form of Note .................................... 12
Section 203. Form of Trustee's Certificate of Authentication.. 19
</TABLE>
<PAGE> 30
iii
<TABLE>
<CAPTION>
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<S> <C> <C>
ARTICLE THREE
The Notes
Section 301. Title and Terms.................................. 20
Section 302. Denominations.................................... 20
Section 303. Execution, Authentication and Delivery and Dating 20
Section 304. Temporary Notes ................................. 21
Section 305. Registration, Transfer and Exchange ............. 21
Section 306. Mutilated, Destroyed, Lost and Stolen Notes ..... 22
Section 307. Payment of Interest; Interest Rights Preserved .. 23
Section 308. Persons Deemed Owners............................ 24
Section 309. Cancellation..................................... 25
Section 310. Authentication and Delivery of Original Issue ... 25
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge of Indenture ........... 25
Section 402. Application of Trust Money....................... 26
ARTICLE FIVE
Remedies
Section 501. Events of Default................................ 26
Section 502. Acceleration of Maturity; Rescission and
Annulment ................................... 27
Section 503. Collection of Indebtedness and Suits for
Enforcement by Trustee ...................... 28
Section 504. Trustee May File Proofs of Claim ................. 28
Section 505. Trustee May Enforce Claims Without Possession
of Notes..................................... 29
Section 506. Application of Money Collected .................. 29
Section 507. Limitation on Suits ............................. 30
Section 508. Unconditional Right of Holders to Receive Principal
and Interest ................................ 31
Section 509. Restoration of Rights and Remedies .............. 31
Section 510. Rights and Remedies Cumulative .................. 31
Section 511. Delay or Omission Not Waiver..................... 31
</TABLE>
<PAGE> 31
iv
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
Section 512. Control by Noteholders........................... 32
Section 513. Waiver of Past Defaults ......................... 32
Section 514. Undertaking for Costs............................ 32
Section 515. Waiver of Stay or Extension Laws................. 33
ARTICLE SIX
The Trustee
Section 601. Certain Duties and Responsibilities ............. 33
Section 602. Notice of Defaults............................... 34
Section 603. Certain Rights of Trustee........................ 34
Section 604. Not Responsible for Recitals or
Issuance of Notes ............................ 35
Section 605. May Hold Notes .................................. 36
Section 606. Money Held in Trust.............................. 36
Section 607. Compensation and Reimbursement................... 36
Section 608. Disqualification; Conflicting Interests ......... 37
(a) Elimination of Conflicting Interest or
Resignation............................. 37
(b) Notice of Failure to Eliminate
Conflicting Interest or Resign.......... 37
(c) "Conflicting Interest" Defined ........... 37
(d) Definitions of Certain Terms Used
in This Section......................... 40
(e) Calculation of Percentages of Securities . 40
Section 609. Corporate Trustee Required; Eligibility.......... 41
Section 610. Resignation and Removal; Appointment
of Successor ................................. 42
Section 611. Acceptance of Appointment by Successor........... 43
Section 612. Merger, Conversion, Consolidation or Succession
to Business................................... 43
Section 613. Preferential Collection of Claims Against Company 44
(a) Segregation and Apportionment of Certain
Collections by Trustee, Certain Exceptions 44
(b) Certain Creditor Relationships Excluded from
Segregation and Apportionment........... 46
(c) Definitions of Certain Terms Used in This
Section................................. 47
Section 614. Appointment of Authenticating Agent ............. 47
</TABLE>
<PAGE> 32
v
<TABLE>
<CAPTION>
PAGE
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<S> <C>
ARTICLE SEVEN
Noteholders, Lists and Reports by Trustee and Company
Section 701. Company to Furnish Trustee Names and
Addresses of Noteholders ....................... 49
Section 702. Preservation of Information; Communications
to Noteholders.................................. 49
Section 703. Reports by Trustee................................. 51
Section 704. Reports by Company ................................ 52
ARTICLE EIGHT
Consolidation, Merger, Conveyance, or Transfer
Section 801. Company May Consolidate, Etc., only on
Certain Terms................................... 53
Section 802. Successor Corporation Substituted.................. 53
ARTICLE NINE
Supplemental Indentures
Section 901. Supplemental Indentures Without Consent
of Noteholders ................................. 54
Section 902. Supplemental Indentures with Consent
of Noteholders ................................. 54
Section 903. Execution of Supplemental Indentures............... 55
Section 904. Effect of Supplemental Indentures.................. 55
Section 905. Conformity with Trust Indenture Act................ 55
Section 906. Reference in Notes to Supplemental Indenture ...... 55
Section 907. Subordination Unimpaired........................... 55
ARTICLE TEN
Covenants
Section 1001. Payment of Principal and Interest ................ 56
Section 1002. Maintenance of Office or Agency................... 56
Section 1003. Money for Note Payments to be Held
in Trust ....................................... 56
Section 1004. Corporate Existence............................... 58
Section 1005. Payment of Taxes and Other Claims ................ 58
Section 1006. Limitation on Sale or Issuance of Capital Stock
of Certain Subsidiaries ........................ 58
Section 1007. Statement by Officers as to Default .............. 59
Section 1008. Waiver of Certain Covenants ...................... 59
</TABLE>
<PAGE> 33
vi
<TABLE>
PAGE
----
<S> <C> <C>
ARTICLE ELEVEN
Redemption of Notes
Section 1101. Right of Redemption ............................... 60
Section 1102. Applicability of Article........................... 60
Section 1103. Election to Redeem; Notice to Trustee.............. 60
Section 1104. Selection of Notes to be Redeemed ................. 60
Section 1105. Notice of Redemption .............................. 61
Section 1106. Deposit of Redemption Price ....................... 62
Section 1107. Notes Payable on Redemption Date .................. 62
Section 1108. Notes Redeemed in Part............................. 62
Section 1109. Redemption Suspended During Event of Default ...... 62
ARTICLE TWELVE
Subordination of Notes
Section 1201. Agreement to Subordinate........................... 63
Section 1202. Distribution on Dissolution, Liquidation and Reor-
ganization; Subrogation of Notes ............... 63
Section 1203. Payments on Notes Prohibited During Event of De-
fault Under Senior Indebtedness ................ 65
Section 1204. Payments on Notes Permitted ....................... 65
Section 1205. Authorization of Holders to Trustee to Effect Subor-
dination........................................ 65
Section 1206. Notice to Trustee ................................. 66
Section 1207. Right of Trustee to Hold Senior Indebtedness ...... 66
Section 1208. Article Twelve Not to Prevent Defaults or Events of
Default ........................................ 66
ARTICLE THIRTEEN
Note Fund
Section 1301. Creation of the Note Fund.......................... 66
Section 1302. Deposits into the Note Fund........................ 66
Section 1303. Covenant of the Company to Sell or Cause to be
Sold Common Stock or Perpetual Preferred Stock
or Other Equity Securities and Deposit Proceeds 67
Section 1304. Investment of Moneys in the Note Fund.............. 68
Section 1305. Repayment to the Company from the Fund............. 68
</TABLE>
<PAGE> 34
vii
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 1306. Payment to Paying Agent from the Note Fund..... 69
Acceptance of Trust by Trustee ............................... 69
Testimonium .................................................. 69
Signatures and Seals.......................................... 69
Acknowledgements ............................................. 70
</TABLE>
<PAGE> 35
INDENTURE dated as of January 15, 1985, between National City
Corporation, a Delaware corporation (hereinafter called the "Company")
having its principal office at 1900 East Ninth Street, Cleveland, Ohio 44114,
and Citibank, N.A., a national banking association duly incorporated and
existing under the laws of the United States of America (hereinafter called the
"Trustee").
Recitals of the Company
The Company has duly authorized the creation of an issue of its Floating
Rate Subordinated Notes Due 1997 (hereinafter called the "Notes") of substan-
tially the tenor and amount hereinafter set forth, and to provide therefor the
Company has duly authorized the execution and delivery of this Indenture.
All things necessary to make the Notes, when executed by the Company
and authenticated and delivered by the Trustee hereunder and duly issued by
the Company in accordance with the provisions of this Indenture, the valid
obligations of the Company, and to make this Indenture a valid agreement of
the Company, in accordance with their and its terms, have been done.
Now, Therefore, This Indenture Witnesseth:
For and in consideration of the premises and the purchase of the Notes by
the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Notes, as follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
Section 101. 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 which are defined in the Trust Inden-
ture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the mean-
ings assigned to them in accordance with generally accepted accounting
principles; and
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
Certain terms, used principally in Article Six, Article Thirteen and in the
form of Note set forth in Section 202, are defined in such Articles and form of
Note.
<PAGE> 36
2
"Act" when used with respect to any Holder has the meaning specified in
Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common con-
trol 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.
"Authenticating Agent" means any person authorized by the Trustee
pursuant to Section 614.
"Authorized Newspaper" means a newspaper of general circulation in the
relevant area, printed in the English language and customarily published on
each New York Business Day.
"Authorized Officer" means the Chairman of the Board, the President, any
Vice Chairman of the Board or any Executive, Senior or other Vice President,
or the Treasurer, the Secretary or any Assistant Secretary of the Company.
"Board of Directors" means either the board of directors of the Company or
any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such certifi-
cation, and delivered to the Trustee.
"Business Day" means any day, other than a Saturday or Sunday, on which
banking institutions in The City of New York and in London are open for
business.
"Capital Stock" means, as to shares of a particular corporation, out-
standing shares of stock of any class whether now or hereafter authorized,
irrespective of whether such class shall be limited to a fixed sum or
percentage in respect of the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the voluntary liquidation,
dissolution or winding up of such corporation.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, 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 Inden-
ture Act, then the body performing such duties on such date.
<PAGE> 37
3
"Common Stock" means the common stock, par value $4.00 per share, of
the Company as the same exists at the date of this Indenture or as such stock
shall be constituted from time to time.
"Company" means the Person named as the "Company" in the first para-
graph of this instrument until a successor corporation shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
"Company Request" and "Company Order" mean, respectively, a written
request or order signed in the name of the Company by its Chairman of the
Board, its President or a Vice President, and by its Treasurer, an Assistant
Treasurer, its Secretary, or an Assistant Secretary, and delivered to the
Trustee.
"Constituent Bank" means any Subsidiary which is a bank.
"Convertible Subordinated Debentures" shall mean the 9.50% Convertible
Subordinated Debentures Due 2010 issued by the Company pursuant to an
Indenture dated as of December 15, 1984 between the Company and Bankers
Trust Company, as Trustee.
"Corporate Trust Office" means the office of the Trustee in the Borough of
Manhattan, The City of New York, at which at any particular time its cor-
porate trust business shall be principally administered, which office, at the
date of the execution of this Indenture, is located at 111 Wall Street, New
York, New York 10043.
"Default" has the meaning specified in Article Five.
"Defaulted Interest" has the meaning specified in Section 307.
"Event of Default" has the meaning specified in Article Five.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System of the United States of America or any successor United States
governmental agency or instrumentality performing substantially the same
regulatory function with respect to the Company as said Board of Governors
performs at the date of execution of this Indenture.
"Holder" when used with respect to any Note means a Noteholder.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions
hereof.
"Interest Payment Date" means the Stated Maturity of an instalment of
interest on the Notes.
"Maturity" when used with respect to any Note means the date on which
the principal of such Note becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration,
call for redemption or otherwise.
<PAGE> 38
4
"New York Business Day" means any day, other than a Saturday or Sun-
day, on which banking institutions in The City of New York are open for
business.
"Noteholder" means the Person in whose name a Note is registered in the
Note Register.
"Note Fund" means the fund created pursuant to the provisions of Section
1301.
"Note Register" has the meaning specified in Section 305.
"Note Registrar" has the meaning specified in Section 305.
"Officers' Certificate" means a certificate signed by the 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 Company, and deliv-
ered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may (except
as otherwise expressly provided in this Indenture) be counsel for the Company
or other counsel acceptable to the Trustee.
"Other Equity Securities" means any class or series of capital stock
of the Company, any warrant, right or option to purchase any such class or
series of capital stock or any security convertible into or redeemable in
shares of (or with the proceeds of the sale of) any such class or series of
capital stock, if amounts representing the net proceeds of the sale thereof
would, when deposited in the Note Fund, be considered sufficient by the Federal
Reserve Board for purposes of satisfying the obligation of the Company to make
deposits in the Note Fund in order to preserve the treatment of such amounts
and of the indebtedness represented by the Notes (in excess of amounts in the
Note Fund) as "primary capital" of the Company for United States bank
regulatory purposes.
"Outstanding" when used with respect to Notes means, as of the date of
determination, all Notes theretofore authenticated and delivered under this
Indenture, except:
(i) Notes theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Notes for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying
Agent in trust for the Holders of such Notes, provided that, if such
Notes are to be redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made; and
(iii) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture;
provided, however, that in determining whether the Holders of the requisite
principal amount of Notes Outstanding have given any request, demand, au-
<PAGE> 39
5
thorization, direction, notice, consent, waiver or other action
hereunder, Notes owned by the Company or any other obligor upon the Notes or
any Affiliate of the Company 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, waiver or other action, only Notes which the
Trustee knows to be so owned shall be so disregarded. Notes so owned which 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 Notes and that the pledgee is not the Company or any other
obligor upon the Notes or any Affiliate of the Company or such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or interest on any Notes on behalf of the Company.
"Perpetual Preferred Stock" means any class or series of preferred stock of
the Company now existing or hereafter authorized, provided that such class or
series is not mandatorily redeemable in accordance with its terms otherwise
than in shares of Common Stock or with the proceeds of the sales of shares of
Common Stock or of Perpetual Preferred Stock.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or govern-
ment or any agency or political subdivision thereof.
"Predecessor Notes" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and for the purposes of this definition, any Note
authenticated and delivered under Section 306 in lieu of a lost, destroyed or
stolen Note shall be deemed to evidence the same debt as the lost, destroyed or
stolen Note.
"Principal Constituent Bank" means any Constituent Bank the total assets
of which as set forth in the most recent statement of conditions of such Bank
equal more than 15% of the total assets of all Constituent Banks as determined
from the most recent statement of conditions of the Constituent Banks.
"Qualifying Investment" means (i) any debt security of or guaranteed by
the United States of America or any agency thereof, (ii) any debt security
(including any security of the Company, the Trustee, any Subsidiary of the
Company or any affiliate of the Trustee) which at the time is rated in any of
the three highest categories (including any subdivision thereof) by any securi-
ties rating agency nationally recognized in the United States of America and
(iii) time deposits with, including certificates of deposit issued by, any bank
or trust company (including the Trustee or any Subsidiary of the Company) any
debt security of which (or any debt security of the parent of which) is at the
time rated in any of the three highest categories (including any subdivision
thereof) by any securities rating agency nationally recognized in the United
States, provided, in each case, that such security or deposit matures on or
before the Interest Payment Date in January 1997.
<PAGE> 40
6
"Ranking on a parity with the Notes" when used with respect to any obli-
gation of the Company shall mean the Convertible Subordinated Debentures,
the Subordinated Notes, and any other obligation of the Company which (a)
ranks equally with and not prior to the Notes in right of payment upon the
happening of any event of the kind specified in the first sentence of the first
paragraph of Section 1202, and (b) is specifically designated as ranking on a
parity with the Notes by express provision in the instrument creating or evi-
dencing such obligation. The securing of any obligations of the Company,
otherwise ranking on a parity with the Notes, shall not be deemed to prevent
such obligations from constituting obligations ranking on a parity with the
Notes.
"Redemption Date" when used with respect to any Note to be redeemed
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price" when used with respect to any Note to be redeemed
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the date specified in Section 307.
"Responsible Officer" when used with respect to the Trustee means the
chairman of the board of directors, the chairman or the vice chairman of the
executive committee of the board of directors, the president, any vice
chairman, the chairman of the trust committee, any executive vice president,
any senior vice president, any vice president, any assistant vice president,
the secretary, any assistant secretary, the cashier, any senior trust officer,
any trust officer, or any other authorized officer of the Trustee customarily
performing functions similar to those performed by the persons who at the time
shall be such officers, respectively, or to whom any corporate trust matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Senior Indebtedness" means the principal of, premium, if any, and unpaid
interest on (a) indebtedness of the Company (including indebtedness of others
guaranteed by the Company), other than the Notes, the Subordinated Notes,
and the Convertible Subordinated Debentures, whether outstanding on the
date hereof or hereafter created, incurred, assumed, or guaranteed (i) for
money borrowed or (ii) in connection with the acquisition by the Company or
a Subsidiary, other than in the ordinary course of business, of assets of any
kind, unless in the instrument creating or evidencing the same or pursuant to
which the same is outstanding it is provided that such indebtedness is not
superior in right of payment to the Notes, and (b) renewals, extensions, mod-
ifications and refundings of any such indebtedness.
<PAGE> 41
7
"Special Record Date" for the payment of any Defaulted Interest (as de-
fined in Section 307) means a date fixed by the Trustee pursuant to Section
307.
"Stated Maturity" when used with respect to any Note or any instalment
of interest thereon means the date specified in such Note as the fixed date on
which the principal of such Note or such instalment of interest is due and
payable.
"Subordinated Notes" shall mean the 11.25% Subordinated Notes Due
1997 issued by the Company.
"Subsidiary" or "subsidiary" means any corporation at least a majority of
whose outstanding voting stock shall at the time be owned by the Company or
by one or more Subsidiaries or by the Company and one or more Subsidiaries.
"Trustee" means the Person named as the "Trustee" in the first paragraph
of this instrument until a successor Trustee shall have become such pursuant
to the applicable provisions of this Indenture, and thereafter "Trustee" shall
mean such successor Trustee.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as
in force at the date as of which this instrument was executed, except as pro-
vided in Section 905.
"Vice President" when used with respect to the Company or the Trustee
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
"Voting Stock" means stock of the class or classes having general voting
power under ordinary circumstances to elect at least a majority of the board of
directors, managers or trustees of such corporation (irrespective of whether or
not at the time stock of any other class or classes shall have or might have
voting power by reason of the happening of any contingency).
Section 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been com-
plied with and an Opinion of Counsel stating that in the opinion of such counsel
all such conditions 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.
<PAGE> 42
8
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include
(1) a statement that each individual signing such certificate or opin-
ion 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 contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condi-
tion has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section 103. Form 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 Company may be based, in
so far 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 the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, in so far
as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
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.
<PAGE> 43
9
Section 104. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Noteholders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Noteholders 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 are
delivered to the Trustee, and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders 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 601) conclusive in
favor of the Trustee and the Company, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any Person of any such instru-
ment 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 the execution thereof. Where such
execution is other than in an individual capacity, such certificate or
affidavit shall also constitute sufficient proof of the authority of the
executing individual. The fact and date of the execution of any such
instrument or writing, or the authority of the Person executing the same, may
also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Note shall bind the Holder of every Note
issued upon the transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done or suffered to be done by the Trustee or the Company
in reliance thereon, whether or not notation of such action is made upon such
Note.
Section 105. Notices, etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Noteholders 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 Noteholder or by the Company shall be suf-
ficient for every purpose hereunder, except as provided in clause (d) of
the second paragraph of Section 507, if made, given, furnished or filed
in writing to or with the Trustee at 5 Hanover Square, New York, New
York 10043, attention of the Corporate Trust Department, or
<PAGE> 44
10
(2) the Company by the Trustee or by any Noteholder shall be suf-
ficient for every purpose hereunder, except as provided in clause (d) of
the second paragraph of Section 507, if in writing and mailed, first-class
mail, postage prepaid, to the Company addressed to it at the address of
its principal office specified in the first paragraph of this instrument
or at any other address previously furnished in writing to the Trustee by
the Company.
Section 106. Notices to Noteholders; Waiver.
Where this Indenture or the Notes provide for notice to Noteholders of any
event, such notice shall be sufficiently given (unless otherwise expressly pro-
vided herein or in the Notes) if in writing and mailed, first-class mail,
postage prepaid, to each Noteholder affected by such event, at his address as
it appears on the Note Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice. In
any case where notice to Noteholders is given by mail, neither the failure to
mail such notice, nor any defect in any notice so mailed, to any particular
Noteholder shall affect the sufficiency of such notice with respect to other
Noteholders. Where this Indenture or the Notes provide 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 Noteholders 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.
In case, by reason of the suspension of publication of any Authorized
Newspaper, or by reason of any other cause, it shall be impossible or imprac-
ticable to make publication of any notice in an Authorized Newspaper or
Authorized Newspapers as required by this Indenture or by the Notes, then
such method of publication or notification as shall be made with the approval
of the Trustee shall constitute a sufficient publication of such notice.
In case, by reason of the suspension of or irregularities in regular mail
service, 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 Notes, then any manner of giving such notice as shall
be with the approval of the Trustee shall be deemed to be a sufficient giving
of such notice.
Section 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Indenture by any of
the provisions of TIA, such required provision shall control.
<PAGE> 45
11
Section 108. 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 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 110. Separability Clause.
In case any provision in this Indenture or in the Notes 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 111. Benefits of Indenture.
Except as otherwise provided in Article Twelve, nothing in this Indenture
or in the Notes, express or implied, shall give to any Person, other than the
parties hereto any Authenticating Agent, any Paying Agent and their succes-
sors hereunder and the holders of Senior Indebtedness of the Company and the
Noteholders, any benefit or any legal or equitable right, remedy or claim under
this Indenture.
Section 112. Governing Law.
This Indenture shall be construed in accordance with and governed by the
laws of the State of New York.
Section 113. Legal Holidays.
In any case where any Redemption Date shall not be a New York Business
Day, then (notwithstanding any other provision of this Indenture) payment of
interest on or principal of each Note to be redeemed on such date need not be
made on such date, but may be made on the next succeeding New York Busi-
ness Day with the same force and effect as if made on such Redemption Date
and no interest shall accrue for the period from and after such Redemption
Date.
ARTICLE TWO
Note Form
Section 201. Forms Generally.
The Notes and the Trustee's certificate of authentication shall be in sub-
stantially the forms set forth in this Article, 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 the rules of any securities exchange or national
market, or as
<PAGE> 46
12
may, consistently herewith, be determined by the officers executing such
Notes, as evidenced by their execution of the Notes.
The definitive Notes shall be printed, lithographed or engraved or pro-
duced by any combination of these methods on steel engraved borders or may
be produced in any other manner permitted by the rules of any securities
exchange or national market, all as determined by the officers executing such
Notes, as evidenced by their execution of such Notes.
Section 202. Form of Note.
The form of the face and, to the extent necessary to accommodate the text,
the reverse of the definitive Notes shall be as follows:
No. . $
NATIONAL CITY CORPORATION
Floating Rate Subordinated Note Due 1997
National City Corporation, a Delaware corporation (hereinafter called the
"Company", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to ,
or registered assigns, the principal sum of Dollars on
the Interest Payment Date (as hereinafter defined) in January 1997, and to pay
interest on said principal sum quarterly on the Interest Payment Dates in
January, April, July and October in each year, commencing on the first Interest
Payment Date after the date hereof, at the rates per annum determined as
provided below, from January 31, 1985 (the "Issue Date"), or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, or, if the date hereof is an Interest Payment Date to which interest has
been paid or duly provided for, then from the date hereof, until payment of
said principal sum has been made or duly provided for. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment
Date, will, as provided in the Indenture (as hereinafter defined), be paid to
the person in whose name this Note (or one or more Predecessor Notes, as
defined in said Indenture) is registered at the close of business on the date
which is the l5th day (whether or not a Business Day or a New York Business Day
(as such terms are hereinafter defined)) immediately preceding such Interest
Payment Date (the "Regular Record Date"). Any such interest not so punctually
paid or duly provided for shall forthwith cease to be payable to the registered
holder on such Regular Record Date and may be paid to the person in whose name
this Note (or one or more Predecessor Notes) 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 Notes not
less than 10 days prior to such Special Record Date, or may be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange or national market on which the Notes may be listed, and
upon such notice as may be required by such exchange or market, all as more
fully provided in said Indenture. Payment of the principal of and interest on
this Note will be made at the office or agency of the
<PAGE> 47
13
Company maintained for such purpose in the Borough of Manhattan, The City
of New York, in such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public and private
debts; provided, however, that at the option of the Company payment of interest
may be made by check mailed to the address of the person entitled thereto as
such address shall appear in the Note Register.
This Note shall bear interest in respect of each Interest Period (as here-
inafter defined) at the rate per annum (the "Rate of Interest") calculated for
such Interest Period by Citibank, N.A., or its successor as agent bank (the
"Agent Bank"), on the basis of rates supplied to it by Citibank, N.A., Morgan
Guaranty Trust Company of New York, Barclays Bank International Limited
and Deutsche Bank AG (the "Reference Banks", which term shall include any
successor Reference Bank appointed by the Company as provided in the Notes),
in accordance with the following provisions:
(i) On the second New York Business Day prior to the commencement
of each Interest Period, or if such day is not a Business Day, then the
Business Day immediately preceding such day (the "Interest Deter-
mination Date"), the Agent Bank will request the principal London office
of each of the Reference Banks to provide the Agent Bank with its offered
quotation for United States dollar deposits for the Interest Period con-
cerned to leading banks in the London interbank market at approximately
11:00 A.M. (London time) on the Interest Determination Date in question.
The Rate of Interest for such Interest Period shall, subject to (iv)
below, be 1/8 of 1% per annum above the arithmetic mean (rounded upwards,
if necessary, to the nearest multiple of 1/16 of 1%) of such offered
quotations, as determined by the Agent Bank.
(ii) If on any Interest Determination Date at least two but fewer
than all the Reference Banks provide the Agent Bank with such offered
quotations, the Rate of Interest for the relevant Interest Period
shall, subject to (iv) below, be determined in accordance with (i) above
on the basis of the offered quotations of those Reference Banks providing
such quotations.
(iii) If on any Interest Determination Date only one or none of the
Reference Banks provides the Agent Bank with such offered quotations, the
Rate of Interest for the relevant Interest Period shall, subject to (iv)
below, be whichever is the higher of:
(a) the Rate of Interest in effect for the last preceding
Interest Period to which (i) or (ii) above shall have applied; and
(b) the Reserve Interest Rate. The "Reserve Interest Rate" shall
be the rate per annum which the Agent Bank determines to be either
(i) 1/8 of 1% per annum above the arithmetic mean (rounded upwards
as aforesaid) of the offered rates which leading banks in The City
of New York selected by the Agent Bank (after consultation with the
Company) are quoting on the relevant Interest Determination Date
<PAGE> 48
14
for United States dollar deposits for the next Interest Period to the
principal London office of each of the Reference Banks or those of
them (being at least two in number) to which such offered quotations
are, in the opinion of the Agent Bank, being so made, or (ii) in the
event that the Agent Bank can determine no such arithmetic mean,
1/8 of 1% per annum above the arithmetic mean (rounded upwards as
aforesaid) of the offered rates which leading banks in The City of
New York selected by the Agent Bank (after consultation with the
Company) are quoting on such Interest Determination Date to lead-
ing European banks for United States dollar deposits for the next
Interest Period; provided that if the banks selected as aforesaid by
the Agent Bank are not quoting as mentioned above, the Rate of
Interest shall be the Rate of Interest specified in (a) above.
(iv) In no event shall the Rate of Interest be less than 5 1/4% per
annum.
For the purpose of this paragraph, "Business Day" shall mean any day,
other than a Saturday or Sunday, on which banking institutions in London and
The City of New York are open for business, and "New York Business Day" shall
mean any day, other than a Saturday or Sunday, on which banking institutions in
The City of New York are open for business. Interest on the Notes in respect of
each Interest Period will accrue at the applicable Rate of Interest from and
including the first day of such Interest Period to but excluding the Interest
Payment Date that is the last day of such Interest Period. The Agent Bank shall
calculate the amount of interest payable in respect of each $1,000 principal
amount of Notes for such Interest Period (the "Interest Amount") by applying
the Rate of Interest to $1,000 and multiplying such amount by the actual number
of days for which interest is payable in the applicable Interest Period divided
by 360 and rounding the resultant figure to the nearest cent (half a cent being
rounded upwards). The Notes will bear interest from the Issue Date, and such
interest will be payable on each date (an "Interest Payment Date") which,
except as provided below, is three calendar months after the preceding Interest
Payment Date or, in the case of the first Interest Payment Date, after the
Issue Date; provided, that the first Interest Payment Date shall be no later
than April 30, 1985. If any Interest Payment Date would otherwise be a day
which is not a New York Business Day, the Interest Payment Date shall be
postponed to the next day which is a New York Business Day unless it would
thereby be in the next calendar month, in which event (i) such Interest Payment
Date shall be brought forward to the immediately preceding New York Business
Day and (ii) thereafter, each subsequent Interest Payment Date shall be the
last New York Business Day of the third month after the month in which the
preceding Interest Payment Date shall have occurred. The period beginning on
the Issue Date and ending on and including the first Interest Payment Date and
each successive period beginning on an Interest Payment Date and including
the next succeeding Interest Payment Date is herein called an "Interest
Period". As soon as possible after
<PAGE> 49
15
11:00 A.M. (London time) on each Interest Determination Date, but in no event
later than 3:00 P.M. (London time) on the New York Business Day immediately
following each such Interest Determination Date, the Agent Bank shall notify
the Company and the Trustee of the Interest Payment Date for the next Interest
Period and the Rate of Interest and the Interest Amount determined by it,
specifying to the Company the quotations upon which the Rate of Interest is
based, and in any event the Agent Bank shall notify the Trustee and the Company
before 5:00 P.M. (London time) on each Interest Determination Date that either:
(i) it has determined or is in the process of determining the Rate of Interest
and the Interest Amount or (ii) it has not determined and is not in the process
of determining the Rate of Interest and the Interest Amount, together with its
reasons therefor. The Company shall use its best efforts to cause the Agent
Bank to use its best efforts to cause such Rate of Interest, Interest Amount
and Interest Payment Date to be published in an Authorized Newspaper (as
defined in the Indenture) in The City of New York as soon as possible after
determination of the Rate of Interest and the Interest Amount but in no event
later than the fourth New York Business Day following the applicable Interest
Determination Date (except that no such publication need be made after the
Notes have been declared due and payable pursuant to Section 502 of the
Indenture). The Interest Amount and Interest Payment Date so published may
subsequently be amended (or appropriate alternative arrangements made by way
of adjustment) without notice in the event of an extension or shortening of the
Interest Period. The determination of the Rate of Interest by the Agent Bank
shall (in the absence of manifest error) be final and binding upon all parties.
The Company agrees that, until the Notes are paid or payment thereof is duly
provided for, there shall at all times be at least three Reference Banks and an
Agent Bank in respect of the Notes and that each such Reference Bank and Agent
Bank shall be a leading bank engaged in transactions in Eurodollar deposits in
the international Eurocurrency market, shall not control, be controlled by, or
be under common control with, the Company and shall have an established place
of business in London. In the event that any such Reference Bank or Agent Bank
shall be unwilling or unable to act as such Reference Bank or Agent Bank or
that such Agent Bank shall fail duly to determine the Rate of Interest and the
Interest Amount for any Interest Period, the Company shall promptly appoint a
Reference Bank or Agent Bank (qualified as aforesaid), as the case may be, to
act as such in its place.
The provisions of this Note are continued on the reverse side hereof and
such continued 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, directly or through an
authenticating agent, by the manual signature of an authorized signatory, this
Note shall not be entitled to any benefit under said Indenture or be valid or
obligatory for any purpose.
<PAGE> 50
16
In Witness Whereof, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: National City Corporation
[corporate seal] By..............................
Chairman of the Board
Attest:
..................................
Secretary
The form of the reverse of the definitive Notes shall be as follows:
This Note is one of a duly authorized issue of Notes of the Company
designated as its Floating Rate Subordinated Notes Due 1997 (the "Notes"),
limited in aggregate principal amount to $75,000,000, issued and to be issued
under an indenture dated as of January 15, 1985 (the "Indenture"), between
the Company and Citibank, N.A., Trustee (the "Trustee", which term includes
any successor trustee under the Indenture), to which Indenture and all inden-
tures supplemental thereto reference is hereby made for a statement of the
respective rights thereunder of the Company, the Trustee and the holders of
the Notes and the terms upon which the Notes are, and are to be, authenticated
and delivered. Unless otherwise herein defined, all terms used in this Note
which are defined in the Indenture shall have the meanings assigned to them
in the Indenture.
The Indenture provides for the creation of a segregated fund (the "Note
Fund") to be held by the Trustee or an agent thereof. The Note Fund is being
created for certain United States bank regulatory purposes and, although it is
expected to provide a source of funds for the payment of the Notes, the Note
Fund will not constitute security for the Notes. Amounts in the Note Fund will
consist solely of (i) the net proceeds of the sale for cash (the "Cash
Proceeds") from time to time of shares of Common Stock or Perpetual Preferred
Stock or Other Equity Securities of the Company (as such terms are defined in
the Indenture) (such "Common Stock", "Perpetual Preferred Stock" and" Other
Equity Securities" being hereinafter in this Note collectively referred to as
"Capital") and (ii) funds equal to the market value (as determined by the
Company) of Capital sold from time to time in exchange for other property
(including, without limitation, Capital issued upon conversion of convertible
securities now or hereafter outstanding which do not constitute Capital) less
the expenses to effect any such exchanges (the "Exchange Proceeds"), in each
case which the Company from time to time shall elect to deposit into the Note
Fund. The Company has covenanted and agreed that (i) by the Interest Payment
Date in January 1989, it will have sold Capital, either for cash or in exchange
for other property, in a sufficient amount so that the aggregate of the Cash
Proceeds and the Exchange Proceeds will equal at least one-third of the
original aggregate principal amount of the Notes (or such lesser amounts as the
Federal Reserve Board (as defined in the Indenture) may permit from time to
<PAGE> 51
17
time) and will have deposited into the Note Fund funds equivalent to such
amount, (ii) by the Interest Payment Date in January 1993, it will have sold
Capital, either for cash or in exchange for other property, in a sufficient
amount so that the aggregate of the Cash Proceeds and the Exchange Proceeds
will equal at least two-thirds of the original aggregate principal amount of
the Notes (or such lesser amount as the Federal Reserve Board may permit from
time to time) and will have deposited into the Note Fund funds equivalent to
such amount and (iii) by 60 days prior to the Interest Payment Date in January
1997, it will have sold Capital, either for cash or in exchange for other
property, in a sufficient amount so that the aggregate of the Cash Proceeds and
the Exchange Proceeds will equal not less than the original aggregate principal
amount of the Notes (or such lesser amount as the Federal Reserve Board may
permit from time to time) and will have deposited into the Note Fund funds
equivalent to such amount; provided, however, that such covenant and agree-
ment of the Company shall be cancelled, and amounts theretofore deposited into
the Note Fund will, at the request of the Company, be repaid to it, in the
event that the Federal Reserve Board shall determine that the indebtedness
represented by the Notes in excess of amounts theretofore deposited into the
Note Fund will not be treated for United States bank regulatory purposes as
"primary capital" of the Company or in the event that the Notes shall cease
being treated as "primary capital" of the Company or in the event that the
Company shall have redeemed the Notes pursuant to clause (ii) of the third
sentence of the second succeeding paragraph of this Note.
Unless the Notes shall have been accelerated upon the occurrence of an
Event of Default or the Company shall elect to redeem the Notes pursuant to
clause (ii) of the third sentence of the next paragraph of this Note or the
Federal Reserve Board shall have made the determination referred to in the
proviso to the final sentence of the immediately preceding paragraph, or the
Notes cease being treated as "primary capital" of the Company, the principal of
the Notes shall be payable prior to their final maturity in January 1997 solely
from funds in the Note Fund. Amounts in the Note Fund will not be available for
the payment of interest on the Notes. The obligation of the Company to make
payment of all amounts of principal of the Notes upon redemption, at their
final maturity in January 1997 and in the event of acceleration of the Notes
upon the occurrence of an Event of Default and the indebtedness of the Company
for such principal amounts, will not be affected by whether or to what extent
amounts are in the Note Fund. All interest or discount earned on investments of
amounts held in the Note Fund and any profit realized therefrom shall be
promptly paid to the Company and will not be deemed to be part of the Note
Fund.
The Notes may not be redeemed before the Interest Payment Date in
January 1989. On the Interest Payment Date in January 1989 and on any day
thereafter, the Notes may be redeemed, as a whole or from time to time in part,
at the option of the Company, on not less than 30 nor more than 60 days' prior
notice given as provided in the Indenture, at a redemption price equal to 100%
of the principal amount of the Notes to be redeemed plus interest accrued and
<PAGE> 52
18
unpaid to the date of redemption. Any such redemption may be made (i)
solely out of funds in the Note Fund, provided that no notice of any such
redemption to be made solely out of funds in the Note Fund may be given unless
there are sufficient funds available in the Note Fund to pay the principal
amount of the Notes to be redeemed; or (ii) from any source, irrespective of
the amount of funds available in or theretofore deposited in the Note Fund, if
(x) the Federal Reserve Board shall have approved such redemption from a source
other than funds in the Note Fund or (y) if the Federal Reserve Board shall
determine that the indebtedness represented by the Notes in excess of amounts
theretofore deposited into the Note Fund will not be treated for United States
bank regulatory purposes as "primary capital" of the Company or (z) if the
Notes shall cease being treated as "primary capital" of the Company.
Notes of a denomination larger than $1,000 may be redeemed in part in
principal amounts equal to $1,000 or any integral multiple thereof. Upon any
partial redemption of any such Notes the same shall be surrendered in ex-
change for one or more new Notes for the unredeemed portion of principal.
Notes (or portions thereof) for whose redemption and payment provision is
made in accordance with the Indenture shall cease to bear interest from and
after the date fixed for redemption.
The indebtedness of the Company evidenced by the Notes, including the
principal thereof and interest thereon, is, to the extent and in the manner set
forth in the Indenture, subordinate and junior in right of payment to its obli-
gations to holders of Senior Indebtedness of the Company (as defined in the
Indenture), and each holder of Notes, by the acceptance thereof, agrees to and
shall be bound by such provisions of the Indenture.
If an Event of Default (defined in the Indenture as certain events involving
the bankruptcy, insolvency or reorganization of the Company) shall occur and
be continuing, the principal of all the Notes may be declared due and payable
in the manner and with the effect provided in the Indenture. There is no right
of acceleration in the case of a default in the payment of interest on the
Notes or the performance of any other covenant of the Company.
No reference herein to the Indenture and no provision of this Note or of the
Indenture shall alter or impair the obligation of the Company, which is abso-
lute and unconditional, to pay the principal of and interest on this Note at
the time, place and rates, and in the coin or currency, herein prescribed.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the holders of the Notes under the Indenture at any
time by the Company with the consent of the holders of 66 2/3% in aggregate
principal amount of the Notes at the time Outstanding, as defined in the
Indenture. The Indenture also contains provisions permitting the holders of
specified percentages in aggregate principal amount of the Notes at the time
Outstanding, as defined in the Indenture, on behalf of the holders of all the
Notes, to waive compliance by the Company with certain provisions of the
<PAGE> 53
19
Indenture and certain past defaults under the Indenture and their con-
sequences. Any such consent or waiver by the holder of this Note shall be
conclusive and binding upon such holder and upon all future holders of this
Note and of any Note issued upon the transfer hereof or in exchange herefor or
in lieu hereof whether or not notation of such consent or waiver is made upon
this Note or any such other Note.
As provided in the Indenture and subject to certain limitations therein
set forth, this Note is transferable on the Note Register of the Company, upon
surrender of this Note for transfer at the office or agency of the Company in
any place where the principal of and interest on this Note are payable, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Note Registrar duly executed by the
registered holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Notes of authorized denominations and for the same
aggregate principal amount will be issued to the designated transferee or
transferees.
The Notes are issuable only as registered Notes without coupons in denom-
inations of $1,000 and any integral multiple of $1,000. As provided in the
Indenture, and subject to certain limitations therein set forth, Notes are
exchangeable for a like aggregate principal amount of Notes of different
authorized denominations, as requested by the holder surrendering the same.
No service charge will be made for any such transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Prior to due presentment for transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment as
herein provided and for all other purposes whether or not this Note be overdue,
and neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.
Section 203. Form of Trustee's Certificate of Authentication.
This is one of the Notes referred to in the within-mentioned Indenture.
Citibank, N.A., as Trustee
By..............................
Authorized Officer
<PAGE> 54
ARTICLE THREE
The Notes
Section 301. Title and Terms.
The aggregate principal amount of Notes which may be authenticated and
delivered under this Indenture is limited to $75,000,000, except for Notes
authenticated and delivered upon transfer of, or in exchange for, or in lieu of
other Notes pursuant to Section 304, 305, 306, 906 or 1108.
The Notes shall be known and designated as the Floating Rate Subordi-
nated Notes Due 1997" of the Company. Their Stated Maturity shall be the
Interest Payment Date in January 1997 and they shall bear interest at the rate
per annum for each quarterly period determined as provided in the form of Note
set forth in Section 202, from January 31, 1985, or from the most recent
Interest Payment Date to which interest has been paid or duly provided for, or,
if the date of authentication of a Note is an Interest Payment Date to which
interest has been paid or duly provided for, then from such Interest Payment
Date, payable quarterly on the Interest Payment Dates in January, April, July
and October in each year until the principal thereof is paid or duly provided
for.
The principal of and interest on the Notes shall be payable at the office or
agency of the Company in the Borough of Manhattan, The City of New York,
maintained for such purpose and at any other office or agency maintained by
the Company for such purpose; provided, however, that at the option of the
Company payment of interest may be made by check mailed to the address of
the Person entitled thereto as such address shall appear in the Note Register.
The Notes shall be redeemable as provided in Article Eleven.
The Notes shall be subordinate and junior in right of payment to the
obligations of the Company to holders of Senior Indebtedness of the Company
as provided in Article Twelve.
Section 302. Denominations.
The Notes may be issued in denominations of $1,000 and any integral
multiple of $1,000.
Section 303. Execution, Authentication and Delivery and Dating.
The Notes shall be executed on behalf of the Company by its Chairman of the
Board, its President, or one of its Vice Presidents, under its corporate seal
reproduced thereon and attested by its Secretary or one of its Assistant Secre-
taries. The signature of any of these officers on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signatures of individuals who were
at any time the proper officers of the Company shall bind the Company, not-
withstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
<PAGE> 55
21
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Notes executed by the Company to the
Trustee for authentication; and the Trustee shall authenticate and deliver such
Notes as in this Indenture provided and not otherwise.
All Notes shall be dated the date of their authentication.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Note a certificate
of authentication substantially in the form provided for herein executed by the
Trustee by manual signature, and such certificate upon any Note shall be
conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.
Section 304. Temporary Notes.
Pending the preparation of definitive Notes, the Company may execute. and
upon Company Order the Trustee shall authenticate and deliver, temporary
Notes which are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any denomination, substantially of the tenor of the definitive
Notes in lieu of which they are issued, with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such
Notes may determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Company will cause definitive Notes to
be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at any office or agency of the Company
designated pursuant to Section 1002 without charge to the Holder. Upon sur-
render for cancellation of any one or more temporary Notes the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like principal amount of definitive Notes of authorized denominations. Until so
exchanged the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as definitive Notes.
Section 305. Registration, Transfer and Exchange.
The Company shall cause to be kept at the office of the Note Registrar
designated pursuant to this Section 305 or Section 1002 a register (herein
sometimes referred to as the "Note Register") in which, subject to such reason-
able regulations as it may prescribe, the Company shall provide for the regis-
tration of Notes and of transfers of Notes. The Note Register shall be open to
inspection by the Trustee and the Company. The Trustee is hereby initially
appointed "Note Registrar" for the purpose of registering Notes and transfers
of Notes as herein provided.
<PAGE> 56
22
Upon surrender for transfer of any Note at an office or agency of the
Company designated pursuant to Section 1002 for such purpose, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Notes of any autho-
rized denominations of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of any
authorized denominations, of a like aggregate principal amount, upon surren-
der of the Notes to be exchanged at such office or agency. Whenever any Notes
are so surrendered for exchange, the Company shall execute, and the Trustee
shall authenticate and deliver, the Notes which the Noteholder making the
exchange is entitled to receive.
All Notes issued upon any transfer or exchange of Notes shall be the valid
obligations of the Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Notes surrendered upon such transfer or
exchange.
Every Note presented or surrendered for transfer or exchange shall (if so
required by the Company or the Trustee) be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Note Registrar duly executed, by the Holder thereof or his attorney duly autho-
rized in writing.
No service charge shall be made for any transfer or exchange of Notes but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of Notes, other than exchanges pursuant to Section 304, 906 or 1108
not involving any transfer.
Neither the Company nor the Note Registrar shall be required (i) to issue,
transfer or exchange any Note during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Notes selected for redemption under Section 1104 and ending at the close of
business on the day of such mailing or (ii) to transfer or exchange any Notes
so selected for redemption in whole or in part.
Section 306. Mutilated, Destroyed, Lost or Stolen Notes.
If (i) any mutilated Note is surrendered to the Trustee, or the Company and
the Trustee receive evidence to their satisfaction of the destruction, loss or
theft of any Note, and (ii) there is delivered to the Company and the Trustee
such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Company or the Trustee that
such Note has been acquired by a bona fide purchaser, the Company shall execute
and upon its request the Trustee shall authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Note, a new
Note of like tenor and principal amount, bearing a number not contemporaneously
outstanding.
<PAGE> 57
23
In case any such mutilated, destroyed, lost or stolen Note has become or is
about to become due and payable, the Company in its discretion may, instead
of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (includ-
ing the fees and expenses of the Trustee) connected therewith.
Every new Note issued pursuant to this Section in lieu of any mutilated,
destroyed, lost or stolen Note shall constitute an original additional con-
tractual obligation of the Company, whether or not the mutilated, destroyed,
lost or stolen Note 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 Notes 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 Notes.
Section 307. Payment of Interest; Interest Rights Preserved.
Interest on any Note which 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 Note (or one or more Predecessor Notes) is registered at the close of
business on the Regular Record Date for such interest, which shall be the date
which is the 15th day (whether or not a Business Day or a New York Business
Day) immediately preceding such Interest Payment Date.
Any interest on any Note which is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered Holder on the
relevant Regular Record Date by virtue of having been such Holder; and,
except as hereinafter provided, such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Notes (or their respective Prede-
cessor Notes) are registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee in writing of
the amount of Defaulted Interest proposed to be paid on each Note and the
date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such Defaulted Interest
as in this Clause provided. Thereupon the Trustee shall fix a Special
<PAGE> 58
24
Record Date for the payment of such Defaulted Interest which shall be not
more than 15 and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of the
notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the expense
of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class mail, postage prepaid, to each Noteholder at his address as it
appears in the Note Register not less than 10 days prior to such Special
Record Date. The Trustee may, in its discretion, in the name and at the
expense of the Company, cause a similar notice to be published at least
once in an Authorized Newspaper 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 Notes (or their respective Predecessor
Notes) are registered on such Special Record Date and shall no longer be
payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any
securities exchange or national market on which the Notes may be listed,
and upon such notice as may be required by such exchange or market, if;
after notice given by the Company to the Trustee of the proposed payment
pursuant to this Clause, such payment shall be deemed practicable by the
Trustee.
If any instalment of interest whose Stated Maturity is on or prior to the
Redemption Date for any Notes called for redemption pursuant to Article
Eleven is not paid or duly provided for on or prior to the Redemption Date in
accordance with the foregoing provisions of this Section, such interest shall
be
payable as part of the Redemption Price of such Notes.
Subject to the foregoing provisions of this Section, each Note delivered
under this Indenture upon transfer of or in exchange for or in lieu of any
other
Note shall carry the rights to interest accrued and unpaid, and to interest
which shall accrue, which were carried by such other Note.
Section 308. Persons Deemed Owners.
Prior to due presentment for transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in whose name any
Note is registered as the owner of such Note for the purpose of receiving
payment of principal of and (subject to Section 307) interest on such Note and
for all other purposes whatsoever whether or not such Note be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
<PAGE> 59
25
Section 309. Cancellation.
All Notes surrendered for payment, redemption, transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly cancelled by the Trustee. The Company may at
any time deliver to the Trustee for cancellation any Notes previously authen-
ticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly cancelled by
the Trustee. No Notes shall be authenticated in lieu of or in exchange for any
Notes cancelled as provided in this Section, except as expressly permitted by
this Indenture. In the absence of a Company Order, the Trustee may destroy
all cancelled Notes held by it and deliver a certificate of destruction to the
Company.
Section 310. Authentication and Delivery of Original Issue.
Forthwith upon the execution and delivery of this Indenture or from time
to time thereafter Notes up to the aggregate principal amount of $75,000,000
may be executed by the Company and delivered to the Trustee for authen-
tication, and shall thereupon be authenticated and delivered by the Trustee
upon Company Order, without any further action by the Company.
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as to rights of
transfer or exchange of Notes herein expressly provided for), and the Trustee,
on demand of and at the expense of the Company, shall execute proper instru-
ments acknowledging satisfaction and discharge of this Indenture, when
(1) either
(A) all Notes theretofore authenticated and delivered (other
than (i) Notes which have been mutilated, destroyed, lost or stolen
and which have been replaced or paid as provided in Section 306 and
(ii) Notes for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Company and there-
after repaid to the Company or discharged from such trust, as
provided in Section 1003) have been delivered to the Trustee for
cancellation; or
(B) all such Notes 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 the Interest Period (as defined in Article Two hereof)
ending in January 1997, or
<PAGE> 60
26
(iii) are to be called for redemption within the then cur-
rent Interest Period under arrangements satisfactory to the
Trustee for the giving of notice of redemption by the Trustee in
the name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for the purpose an amount sufficient to pay and discharge the
entire indebtedness on such Notes not theretofore delivered to the
Trustee for cancellation, for principal and interest to the date of
such deposit (in the case of Notes which have become due and payable),
or to the Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the obli-
gations of the Company to the Trustee under Section 607, and the obligations
of the Trustee to any Authenticating Agent under Section 614, shall survive,
and if money has been deposited with the Trustee pursuant to subclause (B) of
clause (1) of this Section, the obligations of the Trustee under Section 402
and
the last paragraph of 1003 shall survive.
Section 402. Application of Trust Money.
All money deposited with the Trustee pursuant to Section 401 shall be held
in trust and applied by it in accordance with the provisions of the Notes and
this Indenture to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent), as the Trustee may
determine, to the Persons entitled thereto, of the principal and interest for
whose payment such money has been deposited with the Trustee; but such
money need not be segregated from other funds except to the extent required
by law.
ARTICLE FIVE
Remedies
Section 501. Events of Default.
"Event of Default", wherever used herein, 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):
(1) the entry of a decree or order by a court having jurisdiction in
the premises in respect of the Company under the Federal Bankruptcy laws,
as now or hereafter constituted, or any other applicable Federal or State
<PAGE> 61
27
bankruptcy, insolvency or other similar law, or appointing a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of
the Company 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
(2) the commencement by the Company of a voluntary case under the
Federal Bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or State bankruptcy, insolvency or other similar law,
or the consent by it to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the Company
or of any substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the failure by the Company to
pay its debts generally as they become due.
Section 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default occurs and is continuing, then and in every such
case the Trustee or the Holders of not less than 25% in principal amount of the
Notes Outstanding may declare the principal of all the Notes to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by Holders), and upon any such declaration such principal shall
become immediately due and payable.
At any time after such a declaration of acceleration 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 principal amount of the Notes Outstanding, by written notice to the Com-
pany and the Trustee, may rescind and annul such declaration and its con-
sequences if
(1) the Company has paid or deposited with the Trustee a sum suf-
ficient to pay
(A) all overdue instalments of interest on all Notes,
(B) the principal of any Notes which have become due otherwise
than by such declaration of acceleration and interest thereon at the
rate at the time borne by the Notes,
(C) to the extent that payment of such interest is lawful, inter-
est upon overdue instalments of interest at the rate at the time borne
by the Notes, and
(D) all sums paid or advanced by the Trustee hereunder, the
Note Registrar and any Paying Agent and the reasonable compen-
sation, expenses, disbursements and advances of any one of them
and their agents and counsel; and
(2) all Events of Default have been cured or waived as provided in
Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
<PAGE> 62
28
Section 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if
(1) default is made in the payment of any instalment of interest on
any Note 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 any Note at the
Maturity thereof;
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Notes, the whole amount then due and payable on such Notes
for principal and interest, with interest upon the overdue principal and, to
the
extent that payment of such interest shall be legally enforceable, upon overdue
instalments of interest, at the rate at the time borne by the Notes; and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the
same against the Company or any other obligor upon the Notes and collect the
moneys adjudged or decreed to be payable in the manner provided by law out
of the property of the Company or any other obligor upon the Notes, wherever
situated.
If a Default occurs and is continuing, the Trustee may in its discretion
proceed to protect and enforce its rights and the rights of the Noteholders by
such appropriate judicial proceedings as the Trustee shall deem most effectual
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.
Section 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation, bank-
ruptcy, reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company or any other obligor upon the Notes or the
property of the Company or of such other obligor or their creditors, the
Trustee
(irrespective of whether the principal of the Notes shall then be due and pay-
able as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Company for the
payment of overdue principal or interest) shall be entitled and empowered, by
intervention in such proceeding or otherwise,
<PAGE> 63
29
(i) to file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Notes and to file such other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compen-
sation, expenses, disbursements and advances of the Trustee, its agents
and counsel) and of the Noteholders allowed in such judicial proceeding,
and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, liquidator, sequestrator (or other similar
official) in any such judicial proceeding is hereby authorized by each Note-
holder to make such payments to the Trustee, and in the event that the Trustee
shall consent to the making of such payments directly to the Noteholders, to
pay to the Trustee any amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Noteholder any plan
of reorganization, arrangement, adjustment or composition affecting the Notes
or the rights of any Holder thereof; or to authorize the Trustee to vote in
respect of the claim of any Noteholder in any such proceeding.
Section 505. Trustee May Enforce Claims Without Possession of Notes.
All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Trustee without the possession of any of the
Notes 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, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Notes in respect of which such judgment
has been recovered.
Section 506. Application of Money Collected.
Any money collected by the Trustee 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 on account of principal or interest,
upon presentation of the Notes 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 under Section 607;
Second: To the payment of the amounts then due and unpaid upon the Notes
for principal and interest, in respect of which or for the benefit of which
such money has been collected, ratably, without preference or priority of any
<PAGE> 64
30
kind, according to the amounts due and payable on such Notes, for principal
and interest, respectively.
Section 507. Limitation on Suits.
No Holder of any Note shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment
of
a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Default;
(2) the Holders of not less than 25% in principal amount of the Out-
standing Notes shall have made written request to the Trustee to insti-
tute proceedings in respect of such 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 major-
ity in principal amount of the Outstanding Notes;
it being understood and intended that no one or more Holders of Notes shall
have any right in any manner whatever by virtue of; or by availing of; any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Notes, or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this Indenture,
except in the manner herein provided and for the equal and ratable benefit of
all the Holders of Notes.
The following events shall be Defaults under this Indenture:
(a) an Event of Default specified in Section 501; or
(b) default in the payment of the principal of any Note at its
Maturity; or
(c) default in the payment of any interest upon any Note as and when
the same shall become due and payable, and continuance of such default
for a period of 30 days; or
(d) failure on the part of the Company duly to observe or perform any
of the other covenants or agreements on its part in the Notes or in this
Indenture and continuance of such failure for a period of ninety days after
the date on which written notice of such failure, requiring the Company
to remedy the same and stating that such notice is a "Notice of Default"
<PAGE> 65
31
hereunder, shall have been given by registered mail to the Company by
the Trustee, or to the Company and the Trustee by the holders of at least
25% in aggregate principal amount of the Notes at the time outstanding.
Section 508. Unconditional Right of Holders to Receive Principal and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Note shall have the right which is absolute and unconditional to receive pay-
ment of the principal of and (subject to Section 307) interest on such Note on
the respective Stated Maturities expressed in such Note (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.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Noteholder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been discon-
tinued or abandoned for any reason, or has been determined adversely to the
Trustee or to such Noteholder, then and in every such case the Company, the
Trustee and the Noteholders shall, subject to any determination in such pro-
ceeding, be restored severally and respectively to their former positions here-
under, and thereafter all rights and remedies of the Trustee and the Note-
holders shall continue as though no such proceeding had been instituted.
Section 510. Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved to the Trustee or to
the Noteholders 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 employ-
ment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Note to exercise
any right or remedy accruing upon any Default shall impair any such right or
remedy or constitute a waiver of any such Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or to the
Noteholders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Noteholders, as the case may be.
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Section 512. Control by Noteholders.
The Holders of a majority in principal amount of the Outstanding Notes
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture and shall not involve the Trustee in personal
liability, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Section 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the Out-
standing Notes may on behalf of the Holders of all the Notes waive any past
default hereunder and its consequences, except a default
(1) in the payment of the principal of or interest on any Note, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Note affected.
Upon any such waiver, such 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 Indenture; but no such waiver shall extend to any sub-
sequent or other default or impair any right consequent thereon.
Section 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Note 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 Noteholder, or group of Noteholders,
holding in the aggregate more than 10% of the principal amount of the
Outstanding Notes, or to any suit instituted by any Holder for the enforcement
of the payment of the principal of or interest on any Note on or after the
respective Stated Maturities expressed in such Note (or, in the case of
redemption, on or after the Redemption Date).
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Section 515. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of; any stay or extension law wherever en-
acted, now or at any time hereafter in force, which may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of
any
power herein granted to the Trustee, but will suffer and permit the execution
of every such power as though no such law had been enacted.
ARTICLE SIX
The Trustee
Section 601. 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 cor-
rectness of the opinions expressed therein, upon certificates or opin-
ions furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificates or opinions
which by any provision hereof are specifically required to be fur-
nished to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the require-
ments 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 man would exercise or use under the circumstances in the
conduct of his 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;
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34
(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 the Holders of a majority in principal amount of
the Outstanding Notes relating to the time, method and place of
conducting any proceedings for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee, under
this Indenture; and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liabil-
ity in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it 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.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or af-
fording protection to the Trustee shall be subject to the provisions of
this Section.
Section 602. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder, the Trustee
shall transmit by mail to all Noteholders, as their names and addresses appear
in the Note Register, notice of such default hereunder known to the Trustee,
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 interest
on any Note, 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
Noteholders; and provided, further, that in the case of any default of the
character specified in clause (d) of the second paragraph of Section 507 no
such notice to Noteholders shall be given until at least 30 days after the
occurrence thereof. For the purpose of this Section, the term "default" means
any event which is, or after notice or lapse of time or both would become, a
Default or an Event of Default.
Section 603. Certain Rights of Trustee.
Except as otherwise provided in Section 601:
(a) the Trustee may rely and shall be protected in acting or re-
fraining from acting upon any resolution, certificate, statement, instru-
ment, opinion, report, notice, request, direction, consent, order, bond,
debenture or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;
<PAGE> 69
35
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and
any resolution of the Board of Directors may be sufficiently evidenced by
a Board Resolution;
(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 written advice of
such counsel or any Opinion of Counsel shall be full and complete author-
ization 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 Noteholders pursuant to this Indenture, unless such Note-
holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which 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, instru-
ment, opinion, report, notice, request, direction, consent, order, bond,
debenture or other paper or document but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney;
(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; and
(h) the Trustee shall not be liable for any action taken or omitted to
be taken by it in good faith and without negligence and believed by it to
be authorized or within the discretion or rights or powers conferred upon
it by this Indenture.
Section 604. Not Responsible for Recitals or Issuance of Notes.
The recitals contained herein and in the Notes, except the Trustee's
certificate of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes responsibility for
their correctness. The Trustee makes no representations as to the validity or
<PAGE> 70
36
sufficiency of this Indenture or of the Notes. Neither the Trustee nor any
Authenticating Agent shall be accountable for the use or application by the
Company of Notes or the proceeds of the Notes.
Section 605. May Hold Notes.
The Trustee, any Authenticating Agent, any Paying Agent, any Note
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Notes and, subject to Sections 608
and 613, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Note Regis-
trar or such other agent.
Section 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under
no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
Section 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee, any Note Registrar and any Paying Agent,
as the case may be, from time to time reasonable compensation for all
services rendered by them hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee, any Note Registrer and any Paying Agent, as the case may be,
upon their request for all reasonable expenses, disbursements and ad-
vances incurred or made by any one of them in accordance with any
provision of this Indenture (including the reasonable compensation and
the expenses and disbursements of their agents and counsel), except any
such expense, disbursement or advance as may be attributable to their
negligence or bad faith; and
(3) to indemnify the Trustee any Note Registrar and any Paying
Agent, as the case may be, for, and to hold each of them harmless against,
any loss, liability or experee incurred without negligence or bad faith,
arising out of or in connection with the acceptance or administration of
this trust, including the costs and expenses of defending themselves
against any claim of liability in connection with the exercise or per-
formance or any of their powers or duties hereunder.
As security for the perfomance of the obligations of the Company under
this Section the Trustee shall have a lien prior to the Notes upon all property
<PAGE> 71
37
and funds held or collected by the Trustee as such, except funds held in trust
for the payment of principal of or interest on particular Notes. The class of
the Trustee under this Section shall not be subject to the provisions of
Article Twelve.
Section 608. Disqualification; Conflicting Interests.
(a) If the Trustee has or shall acquire any conflicting interest, as
defined in this Section, it shall, within 90 days after ascertaining that it
has such conflicting interest, either eliminate such conflicting interest or
resign in the manner and with the effect hereinafter specified in this Article.
(b) In the event that the Trustee shall fail to comply with the provisions
of Subsection (a) of this Section the Trustee shall, within 10 days after the
expiration of such 90-day period, transmit by mail to all Noteholders, as their
names and addresses appear in the Note Register, notice of such failure.
(c) For the purpose of this Section, the Trustee shall be deemed to have a
conflicting interest if
(1) the Trustee is trustee under another indenture under which any
other securities, or certificates of interest or participation in any
other securities, of the Company are outstanding unless such other
indenture is a collateral trust indenture under which the only collateral
consists of Notes issued under this Indenture, provided that there shall
be excluded from the operation of this paragraph any indenture or
indentures under which other securities, or certificates of interest or
participation in other securities, of the Company are outstanding, if (i)
this Indenture and such other indenture or indentures are wholly unsecured
and such other indenture or indentures are hereafter qualified under
TIA, unless the Commission shall have found and declared by order
pursuant to Section 305(b) or Section 307(c) of TIA that differences exist
between the provisions of this Indenture and the provisions of such other
indenture or indentures which are so likely to involve a material conflict
of interest as to make it necessary in the public interest or for the
protection of investors to disqualify the Trustee from acting as such
under this Indenture and such other indenture or indentures, or (ii) the
Company shall have sustained the burden of proving, on application to the
Commission and after opportunity for hearing thereon, that trusteeship
under this Indenture and such other indenture or indentures is not so
likely to involve a material conflict of interest as to make it necessary
in the public interest or for the protection of investors to disqualify
the Trustee from acting as such under one of such indentures;
(2) the Trustee or any of its directors or executive officers is an
obligor upon the Notes or an underwriter for the Company;
(3) the Trustee directly or indirectly controls or is directly or
indirectly controlled by or is under direct or indirect common control
with the Company or an underwriter for the Company;
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38
(4) the Trustee or any of its directors or executive officers is a
director, officer, partner, employee, appointee or representative of the
Company, or of an underwriter (other than the Trustee itself) for the
Company who is currently engaged in the business of underwriting, except
that (i) one individual may be a director or an executive officer, or
both, Trustee and a director or an executive officer, or both of the
Company but may not be at the same time an executive officer of both the
Trustee and the Company; (ii) if and so long as the number of directors
of the Trustee in office is more than nine, one additional individual may
be a director or an executive officer, or both of the Trustee and a
director of the Company; and (iii) the Trustee may be designated by the
Company or by any underwriter for the Company to act in the capacity of
transfer agent, registrar, custodian, paying agent, fiscal agent, escrow
agent, or depositary, or in any other similar capacity, or, subject to
the provisions of paragraph (1) of this Subsection, to act as Trustee,
whether under an indenture or otherwise;
(5) 10% or more of the voting securities of the Trustee is beneficially
owned either by the Company or by any director, partner, or executive
officer thereof; or 20% or more of such voting securities is beneficially
owned, collectively, by any two or more or such persons, or 10% or more
of the voting securities of the Trustee is beneficially owned either by an
underwriter for the Company or by any director, partner or executive
officer thereof; or is beneficially owned, collectively, by any two or more
such persons;
(6) the Trustee is the beneficial owner of; or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), (i) 5% or more of the voting securities, or 10% or
more of any other class of security, of the Company not including the
Notes issued under this Indenture and securities issued under any other
indenture under which the Trustee is also trustee, or (ii) 10% or more of
any class of security of an underwriter for the Company;
(7) the Trustee is the beneficial owner of; or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), 5% or more of the voting securities of any person
who, to the knowledge of the Trustee, owns 10% or more of the voting
securities of; or controls directly or indirectly or is under direct or
indirect common control with, the Company;
(8) the Trustee is the beneficial owner of; or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), 10% or more of any class of security of any person
who, to the knowledge of the Trustee, owns 50% or more of the voting
securities of the Company; or
(9) the Trustee owns, on May 15 in any calendar year, in the capacity
of executor, administrator, testamentary or inter vivos trustee, guardian,
<PAGE> 73
39
committee or conservator, or in any other similar capacity, an aggregate
of 25% or more of the voting securities, or of any class of security, of
any person, the beneficial ownership of a specified percentage of which
would have constituted a conflicting interest under paragraph (6), (7) or
(8) of this Subsection. As to any such securities of which the Trustee
acquired ownership through becoming executor, administrator, or
testamentary trustee of an estate which included them, the provisions of
the preceding sentence shall not apply, for a period of two years from the
date of such acquisition, to the extent that such securities included in
such estate do not exceed 25% of such voting securities or 25% of any such
class of security. Promptly after May 15 in each calendar year, the
Trustee shall make a check of its holdings of such securities in any of
the above- mentioned capacities as of such May 15. If the Company fails to
make payment in full of the principal of or interest on any of the Notes
when and as the same becomes due and payable, and such failure continues
for 30 days thereafter, the Trustee shall make a prompt check of its
holdings of such securities in any of the above-mentioned capacities as of
the date of the expiration of such 30-day period, and after such date,
notwithstanding the foregoing provisions of this paragraph, all such
securities so held by the Trustee, with sole or joint control over such
securities vested in it, shall, but only so long as such failure shall
continue, be considered as though beneficially owned by the Trustee for
the purposes of paragraphs (6), (7) and (8) of this Subsection.
The specification of percentages in paragraphs (5) to (9) inclusive, of
this Subsection, shall not be construed as indicating that the ownership of
such percentages of the securities of a person is or is not necessary or
sufficient to constitute direct or indirect control for the purposes of
paragraph (3) or (7) of this Subsection.
For the purposes of paragraphs (6), (7), (8) and (9) of this Subsection
only, (i) the terms "security" and "securities" shall include only such
securities as are generally known as corporate securities, but shall not
include any note or other evidence of indebtedness issued to evidence an
obligation to repay moneys lent to a person by one or more banks, trust
companies or banking firms, or any certificate of interest or participation in
any such note or evidence of indebtedness; (ii) an obligation shall be deemed
to be "in default" when a default in payment of principal shall have continued
for 30 days or more and shall not have been cured; and (iii) the Trustee shall
not be deemed to be the owner or holder of (A) any security which it holds as
collateral security, as trustee or otherwise, for an obligation which is not in
default as defined in clause (ii) above, or (B) any security which it holds as
collateral security under this Indenture, irrespective of any default
hereunder, or (C) any security which it holds as agent for collection, or as
custodian, escrow agent, or depositary, or in any similar representative
capacity.
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40
(d) For the purposes of this Section:
(1) The term "underwriter" when used with reference to the Com-
pany means every person who, within three years prior to the time as of
which the determination is made, has purchased from the Company with
a view to, or has offered or sold for the Company in connection with, the
distribution of any security of the Company outstanding at such time, or
has participated or has had a direct or indirect participation in any such
undertaking, or has participated or has had a participation in the direct
or indirect underwriting of any such undertaking, but such term shall not
include a person whose interest was limited to a commission from an
underwriter or dealer not in excess of the usual and customary distrib-
utors' or sellers' commission.
(2) The term "director" means any director of a corporation, or any
individual performing similar functions with respect to any organization
whether incorporated or unincorporated.
(3) The term "person" means an individual, a corporation, a partner-
ship, an association, a joint-stock company, a trust, an unincorporated
organization, or a government or political subdivision thereof. As used in
this paragraph, the term "trust" shall include only a trust where the
interest or interests of the beneficiary or beneficiaries are evidenced
by a security.
(4) The term "voting security" means any security presently entitling
the owner or holder thereof to vote in the direction or management of the
affairs of a person, or any security issued under or pursuant to any trust,
agreement or arrangement whereby a trustee or trustees or agent or
agents for the owner or holder of such security are presently entitled to
vote in the direction or management of the affairs of a person.
(5) The term "Company" means any obligor upon the Notes.
(6) The term "executive officer" means the president, every vice
president, every trust officer, the cashier, the secretary, and the
treasurer of a corporation, and any individual customarily performing
similar functions with respect to any organization whether incorporated
or unincorporated, but shall not include the chairman of the board of
directors.
(e) The percentages of voting securities and other securities specified in
this Section shall be calculated in accordance with the following provisions:
(1) A specified percentage of the voting securities of the Trustee,
the Company or any other person referred to in this Section (each of whom
is referred to as a "person" in this paragraph) means such amount of the
outstanding voting securities of such person as entitles the holder or
holders thereof to cast such specified percentage of the aggregate votes
which the holders of all the outstanding voting securities of such person
<PAGE> 75
41
are entitled to cast in the direction or management of the affairs of such
person.
(2) A specified percentage of a class of securities of a person means
such percentage of the aggregate amount of securities of the class out-
standing.
(3) The term "amount", when used in regard to securities, means the
principal amount if relating to evidences of indebtedness, the number of
shares if relating to capital shares, and the number of units if relating
to any other kind of security.
(4) The term "outstanding" means issued and not held by or for the
account of the issuer. The following securities shall not be deemed out-
standing within the meaning of this definition:
(i) securities of an issuer held in a sinking fund relating to
securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking fund relating to
another class of securities of the issuer, if the obligation evidenced
by such other class of securities is not in default as to principal or
interest or otherwise;
(iii) securities pledged by the issuer thereof as security for an
obligation of the issuer not in default as to principal or interest or
otherwise; and
(iv) securities held in escrow if placed in escrow by the issuer
thereof;
provided, however, that any voting securities of an issuer shall be deemed
outstanding if any person other than the issuer is entitled to exercise the
voting rights thereof.
(5) A security shall be deemed to be of the same class as another
security if both securities confer upon the holder or holders thereof sub-
stantially the same rights and privileges; provided, however, that, in the
case of secured evidences of indebtedness, all of which are issued under a
single indenture, differences in the interest rates or maturity dates of
various series thereof shall not be deemed sufficient to constitute such
series different classes and provided, further, that, in the case of un-
secured evidences of indebtedness, differences in the Interest rates or
maturity dates thereof shall not be deemed sufficient to constitute them
securities of different classes, whether or not they are issued under a
single indenture.
Section 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a cor-
poration organized and doing business under the laws of the United States of
<PAGE> 76
42
America or of any State, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $5,000,000, subject
to supervision or examination by Federal or State authority. If such cor-
poration 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 cor-
poration 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.
Section 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 611.
(b) The Trustee may resign at any time by giving written notice thereof
to the Company. If an instrument of acceptance by a successor Trustee shall not
have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of com-
petent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Notes, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608(a) after written
request therefor by the Company or by any Noteholder who has been a
bona fide Holder of a Note for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and shall
fail to resign after written request therefor by the Company or by any
such Noteholder, 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 Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 514, any Noteholder who has been a bona
fide
Holder of a Note for at least 6 months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
removal
of the Trustee and the appointment of a successor Trustee.
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43
(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, the
Company,
by a Board Resolution, shall promptly appoint a successor Trustee. If, within
one year after such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee shall be appointed by Act of the Holders of
a majority in principal amount of the Outstanding Notes delivered to the
Company and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor
Trustee and supersede the successor Trustee appointed by the Company. If no
successor Trustee shall have been so appointed by the Company or the Note-
holders and accepted appointment in the manner hereinafter provided, any
Noteholder who has been a bona fide Holder of a Note for at least 6 months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee by mailing written
notice of such event by first-class mail, postage prepaid, to the Holders of
Notes as their names and addresses appear in the Note Register. Each notice
shall include the name of the successor Trustee and the address of its
Corporate Trust Office.
Section 611. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retaining
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 request of the Company or
the successor Trustee, such retiring Trustee shall, upon payment of its
charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retaining Trustee, and shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder, subject nevertheless to its lien
if any, provided for in Section 607. Upon request of any such successor
Trustee, the Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
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 612. Merger, Conversion, Consolidation or Succession to Busi-
ness.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
<PAGE> 78
44
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 Notes 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 Notes so authenticated with the same effect
as if such successor Trustee had itself authenticated such Notes.
Section 613. Preferential Collection of Claims Against Company.
(a) Subject to Subsection (b) of this Section, if the Trustee shall be or
shall become a creditor, directly or indirectly, secured or unsecured, of the
Company within 4 months prior to a default, as defined in Subsection (c) of this
Section, or subsequent to such a default, then, unless and until such default
shall be cured, the Trustee shall set apart and hold in a special account for
the benefit of the Trustee individually, the Holders of the Notes and the
holders of other indenture securities (as defined in Subsection (c) of this
Section):
(1) an amount equal to any and all reductions in the amount due and
owing upon any claim as such creditor in respect of principal or interest,
effected after the beginning of such 4 months' period and valid as against
the Company and its other creditors, except any such reduction resulting
from the receipt or disposition of any property described in paragraph (2)
of this Subsection, or from the exercise of any right of set-off which the
Trustee could have exercised if a petition in bankruptcy had been filed by
or against the Company upon the date of such default; and
(2) all property received by the Trustee in respect of any claim as
such creditor, either as security therefor, or in satisfaction or
composition thereof; or otherwise, after the beginning of such 4 months'
period, or an amount equal to the proceeds of any such property, if
disposed of; subject, however, to the rights, if any, of the Company and
its other creditors in such property or such proceeds.
Nothing herein contained, however, shall affect the right of the Trustee
(A) to retain for its own account (i) payments made on account of any
such claim by any Person (other than the Company) who is liable thereon,
and (ii) the proceeds of the bonafide sale of any such claim by the
Trustee to a third Person, and (iii) distributions made in cash,
securities or other property in respect of claims filed against the
Company in bankruptcy or receivership or in proceedings for reorganization
pursuant to the Federal Bankruptcy Code or applicable State law;
(B) to realize, for its own account, upon any property held by it as
security for any such claim, if such property was so held prior to the
beginning of such 4 months' period;
<PAGE> 79
45
(C) to realize, for its own account, but only to the extent of the
claim hereinafter mentioned upon any property held by it as security for
any such claim, if such claim was created after the beginning of such 4
months' period and such property was received as security therefor simul-
tsneously with the creation thereof; and if the Trustee shall sustain the
burden of proving that at the time such property was so received the
Trustee had no reasonable cause to believe that a default as defined in
Subsection (c) of this Section would occur within 4 months; or
(D) to receive payment on any claim referred to in paragraph (B) or
(C), against the release of any property held as security for such claim as
provided in paragraph (B) or (C), as the case may be, to the extent of the
fair value of such property.
For the purposes of paragraphs (B), (C) and (D), property substituted after
the beginning of such 4 months' period for property held as security at the
time
of such substitution shall, to the extent of the fair value of the property re-
leased, have the same status as the property released, and, to the extent that
any claim referred to in any of such paragraphs is created in renewal of or in
substitution for or for the purpose of repaying or refunding any pre-existing
claim of the Trustee as such creditor, such claim shall have the same status as
such pre-existing claim.
If the Trustee shall be required to account, the funds and property held
in such special account and the proceeds thereof shall be apportioned between
the Trustee, the Noteholders and the holders of other indenture securities in
such manner that the Trustee, the Noteholders and the holders of other
indenture securities realize, as a result of payments from such special account
and payments of dividends on claims filed against the Company in bankruptcy
or receivership or in proceedings for reorganization pursuant to the Federal
Bankruptcy Code or applicable State law, the same percentage of their re-
spective claims, figured before crediting to the claim of the Trustee anything
on account of the receipt by it from the Company of the funds and property in
such special account and before crediting to the respective claims of the
Trustee and the Noteholders and the holders of other indenture securities
dividends on claims filed against the Company in bankruptcy or receivership or
in proceedings for reorganization pursuant to the Federal Bankruptcy Code or
applicable State law, but after crediting thereon receipts on account of the
indebtedness represented by their respective claims from all sources other than
from such dividends and from the funds and property so held in such special
account. As used in this paragraph, with respect to any claim, the term
"dividends" shall include any distribution with respect to such claim, in
bankruptcy or receivership or proceedings for reorganization pursuant to the
Federal Bankruptcy Code or applicable State law, whether such distribution is
made in cash, securities, or other property, but shall not include any such
distribution with respect to the secured portion, if any, of such claim. The
court in which such bankruptcy, receivership or proceedings for reorganization
is
<PAGE> 80
46
pending shall have jurisdiction (i) to apportion between the Trustee and the
Noteholders and the holders of other indenture securities, in accordance with
the provisions of this paragraph, the funds and property held in such special
account and proceeds thereof; or (ii) in lieu of such apportionment, in whole
or
in part, to give to the provisions of this paragraph due consideration in
deter-
mining the fairness of the distributions to be made to the Trustee and the
Noteholders and the holders of other indenture securities with respect to their
respective claims, in which event it shall not be necessary to liquidate or to
appraise the value of any securities or other property held in such special
account or as security for any such claim, or to make a specific allocation of
such distributions as between the secured and unsecured portion of such
claims, or otherwise to apply the provisions of this paragraph as a mathe-
matical formula.
Any Trustee which has resigned or been removed after the beginning of such
4 months' period shall be subject to the provisions of this Subsection as
though such resignation or removal had not occurred. If any Trustee has re-
signed or has been removed prior to the beginning of such 4 months' period, it
shall be subject to the provisions of this Subsection if and only if the
following conditions exist:
(i) the receipt of property or reduction of claim, which would have
given rise to the obligation to account, if such Trustee had continued as
Trustee, occurred after the beginning of such 4 months' period; and
(ii) such receipt of property or reduction of claim occurred within 4
months after such resignation or removal.
(b) There shall be excluded from the operation of Subsection (a) of this
Section a creditor relationship arising from
(1) the ownership or acquisition of securities issued under any inden-
ture, or any security or securities having a maturity of one year or more
at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court of
competent jurisdiction, or by this Indenture, for the purpose of preserving
any property which shall at any time be subject to the lien of this Inden-
ture or of discharging tax liens or other prior liens or encumbrances
thereon, if notice of such advances and of the circumstances surrounding
the making thereof is given to the Noteholders at the time and in the
manner provided in this Indenture;
(3) disbursements made in the ordinary course of business in the
capacity of trustee under an indenture, transfer agent, registrar, custo-
dian, paying agent, fiscal agent or depositary, or other similar capacity;
(4) an indebtedness created as a result of services rendered or prem-
ises rented; or an indebtedness created as a result of goods or securities
sold in a cash transaction as defined in Subsection (c) of this Section;
<PAGE> 81
47
(5) the ownership of stock or of other securities of a corporation
organized under the provisions of Section 25(a) of the Federal Reserve
Act, as amended, which is directly or indirectly a creditor of the Company;
or
(6) the acquisition, ownership, acceptance or negotiation of any
drafts, bills of exchange, acceptances or obligations which fall within the
classification of self-liquidating paper as defined in Subsection (c) of
this Section.
(c) For the purposes of this Section only:
(1) The term "default" means any failure to make payment in full of
the principal of or interest on any of the Notes or upon the other
indenture securities when and as such principal or interest becomes due and
payable.
(2) The term "other indenture securities" means securities upon
which the Company is an obligor outstanding under any other indenture
(i) under which the Trustee is also trustee, (ii) which contains provisions
substantially similar to the provisions of this Section, and (iii) under
which a de fault exists at the time of the apportionment of the funds and
property held in such special account.
(3) The term "cash transaction" means any transaction in which full
payment for goods or securities sold is made within 7 days after delivery
of the goods or securities in currency or in checks or other orders drawn
upon banks or bankers and payable upon demand.
(4) The term "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Company for the purpose of financing the purchase,
processing, manufacturing, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing title to,
possession of; or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or mer-
chandise previously constituting the security, provided the security is
received by the Trustee simultaneously with the creation of the creditor
relationship with the Company arising from the making, drawing, nego-
tiating or incurring of the draft, bill of exchange, acceptance or
obligation.
(5) The term "Company" means any obligor upon the Notes.
Section 614. Appointment of Authenticating Agent. At any time when
any of the Notes remain Outstanding the Trustee may appoint an
Authenticating Agent or Agents with respect to the Notes which shall be
authorized to act on behalf of the Trustee to authenticate Notes issued upon
exchange, registration of transfer or partial redemption thereof and Notes so
authenticated shall be entitled to the benefits of this Indenture and shall be
<PAGE> 82
48
valid and obligatory for all purposes as if authenticated by the Trustee here-
under. Wherever reference is made in this Indenture to the authentication and
delivery of Notes by the Trustee or the Trustee's certificate of
authentication,
such reference shall be deemed to include authentication and delivery on
behalf of the Trustee by an Authenticating Agent and a certificate of authen-
tication executed on behalf of the Trustee by an Authenticating Agent. Each
Authenticating Agent shall be acceptable to the Company snd shall at all
times be a corporation organized and doing business under the laws of the
United States of America, any State thereof or the District of Columbia,
authorized under such laws to act as Authenticating Agent, having a combined
capital and surplus as most recently reported or determined by it sufficient
under the laws of any jurisdiction under which it is organized or in which it
is
doing business to conduct a trust business, and which is otherwise authorized
under such laws to conduct such business and is subject to supervision or
examination by Federal or State authority. If at any time an Authenticating
Agent shall cease to be eligible in accordance with the provisions of this Sec-
tion, such Authenticating Agent shall resign immediately in the manner and
with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating
Agent shall be a party, or any corporation succeeding to the corporate agency
or corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time (and
upon request by the Company shall) terminate the agency of an Authenticating
Agent by giving written notice thereof to such Authenticating Agent and to the
Company. Upon receiving such a notice of resignation or upon such a termi-
nation, or in case at any time such Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, the Trustee may
appoint a successor Authenticating Agent which shall be acceptable to the
Company and shall mail written notice of such appointment by first-class mail,
postage prepaid, to all Holders of Notes as their names and addresses appear in
the Note Register. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and
duties of its predecessor hereunder, with like effect as if originally named as
an Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
<PAGE> 83
49
shall be entitled to be reimbursed for such payments by the Company, subject
to the provisions of Section 607.
The provisions of Sections 308, 604 and 605 shall be applicable to each
Authenticating Agent.
Pursuant to each appointment made under this Section, the Notes may
have endorsed thereon, in addition to the Trustee's certificate of authen-
tication, an alternative certificate of authentication in the following form:
This is one of the Notes referred to in the within-mentioned Indenture.
Citibank, N.A., as Trustee
By...................................
As Authenticating Agent
By...................................
Authorized Officer
ARTICLE SEVEN
Noteholders' Lists and Reports by Trustee and Company
Section 701. Company to Furnish Trustee Names and Addresses of
Noteholders.
The Company will furnish or cause to be furnished to the Trustee
(a) quarterly, not more than 15 days after each Regular Record Date,
a list, in such form as the Trustee may reasonably require, of the names
and addresses of the Holders of Notes as of such Regular Record Date, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished,
excluding from any such list, if the Trustee shall then be the Note Registrar,
names and addresses received by the Trustee in its capacity as Note Registrar.
Section 702. Preservation of Information; Communications to Note-
holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders of Notes contained in the most
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50
recent list furnished to the Trustee as provided in Section 701 and the names
and addresses received by the Trustee in its capacity as Note Registrar, if the
Trustee shall then be the Note Registrar. The Trustee may destroy any list
furnished to it as provided in Section 701 upon receipt of a new list so
furnished.
(b) If 3 or more Holders of Notes (hereinafter referred to as "applicants")
apply in writing to the Trustee, and furnish to the Trustee reasonable proof
that each such applicant has owned a Note for a period of at least 6 months
preceding the date of such application, and such application states that the
applicants desire to communicate with other Holders of Notes with respect to
their rights under this Indenture or under the Notes and is accompanied by a
copy of the form of proxy or other communication which such applicants pro-
pose to transmit, then the Trustee shall, within 5 New York Business Days
after the receipt of such application, at its election, either
(i) afford such applicants access to the information preserved at the
time by the Trustee in accordance with Section 702(a), or
(ii) inform such applicants as to the approximate number of Holders
of Notes whose names and addresses appear in the information preserved
at the time by the Trustee in accordance with Section 702(a), and as to the
approximate cost of mailing to such Noteholders the form of proxy or other
communication, if any, specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Noteholder whose name and address appear in the information
preserved at the time by the Trustee in accordance with Section 702(a), a copy
of the form of proxy or other communication which is specified in such request,
with reasonable promptness after a tender to the Trustee of the material to be
mailed and of payment, or provision for the payment, of the reasonable ex-
penses of mailing, unless within five days after such tender, the Trustee shall
mail to such applicants and file with the Commission together with a copy of
the material to be mailed a written statement to the effect that, in the
opinion
of the Trustee, such mailing would be contrary to the best interests of the
Holders of Notes or would be in violation of applicable law. Such written
statement shall specify the basis of such opinion. If the Commission, after
opportunity for a hearing upon the objections specified in the written
statement
so filed, shall enter an order refusing to sustain any of such objections or
if;
after the entry of an order sustaining one or more of such objections, the
Commission shall find, after notice and opportunity for hearing, that all the
objections so sustained have been met and shall enter an order so declaring,
the
Trustee shall mail copies of such material to all such Noteholders with reason-
able promptness after the entry of such order and the renewal of such tender;
otherwise the Trustee shall be relieved of any obligation or duty to such
appli-
cants respecting their application.
<PAGE> 85
51
(c) Every Holder of the Notes, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee
shall be held accountable by reason of the disclosure of any such information
as to the names and addresses of the Holders of Notes in accordance with
Section 702(b), regardless of the source from which such information was de-
rived, and that the Trustee shall not be held accountable by reason of mailing
any material pursuant to a request made under Section 702(b).
Section 703. Reports by Trustee.
(a) Within 60 days after January 15 of each year commencing with the
year 1986, the Trustee shall transmit by mail to all Noteholders, as their
names and addresses appear in the Note Register, a brief report dated as of
such January 15 with respect to:
(1) its eligibility under Section 609 and its qualifications under
Section 608, or in lieu thereof; if to the best of its knowledge it has
continued to be eligible and qualified under said Sections, a written
statement to such effect;
(2) the character and amount of any advances (and if the Trustee
elects so to state, the circumstances surrounding the making thereof)
made by the Trustee (as such) which remain unpaid on the date of such
report, and for the reimbursement of which it claims or may claim a lien
or charge, prior to that of the Notes, on any property or funds held or
collected by it as Trustee, except that the Trustee shall not be required
(but may elect) to report such advances if such advances so remaining
unpaid aggregate not more than 1/2 of 1% of the principal amount of the
Notes Outstanding on the date of such report;
(3) the amount, interest rate and maturity date of all other indebt-
edness owing by the Company (or by any other obligor on the Notes) to the
Trustee in its individual capacity, on the date of such report, with a
brief description of any property held as collateral security therefor,
except an indebtedness based upon a creditor relationship arising in any
manner described in Section 613(b)(2), (3), (4) or (6);
(4) the property and funds, if any, physically in the possession of the
Trustee as such on the date of such report;
(5) any additional issue of Notes which the Trustee has not pre-
viously reported; and
(6) any action taken by the Trustee in the performance of its duties
hereunder which it has not previously reported and which in its opinion
materially affects the Notes, except action in respect of a de fault,
notice of which has been or is to be withheld by the Trustee in accordance
with Section 602.
(b) The Trustee shall transmit by mail to all Noteholders, as their names
and addresses appear in the Note Register, a brief report with respect to the
character and amount of any advances (and if the Trustee elects so to state,
the
<PAGE> 86
52
circumstances surrounding the remaining thereof) made by the Trustee (as such)
since the date of the last report transmitted pursuant to Subsection (a) of
this
Section (or if no such report has yet been so transmitted, since the date of
execution of this instrument) for the reimbursement of which it claims or may
claim a lien or charge, prior to that of the Notes, on property or funds held
or
collected by it as Trustee, and which it has not previously reported pursuant
to
this Subsection, except that the Trustee shall not be required (but may elect)
to report such advances if such advances remaining unpaid at any time aggre-
gate 10% or less of the principal amount of the Notes Outstanding at such time,
such report to be transmitted within 90 days after such time.
(c) A copy of each such report shall, at the time of such transmission to
Noteholders, be filed by the Trustee with each stock exchange upon which the
Notes are listed and also with the Commission. The Company will notify the
Trustee when the Notes are listed on any stock exchange.
Section 704. Reports by Company.
The Company will
(1) file with the Trustee, within 15 days after the Company is required to
file the same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may from time to time by rules and regu-
lations prescribe) which the Company may be required to file with the Commis-
sion pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934; or, if the Company is not required to file information, documents or
reports pursuant to either of said Sections, then it will file with the Trustee
and the Commission, in accordance with rules and regulations prescribed from
time to time by the Commission, such of the supplementary and periodic informa-
tion, documents and reports which may be required pursuant to Section 13 of the
Securities Exchange Act of 1934 in respect of a security listed and regis-
tered on a national securities exchange as may be prescribed from time to time
in such rules and regulations;
(2) file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such additional
information, documents and reports with respect to compliance by the Com-
pany with the conditions and covenants of this Indenture as may be required
from time to time by such rules and regulations; and
(3) transmit by mail to all Noteholders, as their names and addresses
appear in the Note Register, within 30 days after the filing thereof with the
Trustee, such summaries of any information, documents and reports required
to be filed by the Company pursuant to paragraphs (1) and (2) of this Section
as may be required by rules and regulations prescribed from time to time by the
Commission.
<PAGE> 87
53
ARTICLE Eight
Consolidation, Merger, Conveyance or Transfer
Section 801. Company May Consolidate, etc., only on Certain Terms.
The Company shall not consolidate with or merge into any other cor-
poration or convey or transfer its properties and assets substantially as an
entirety to any Person, unless:
(1) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or trans-
fer the properties and assets of the Company substantially as an entirety
shall be a corporation organized and existing under the laws of the United
States of America, 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 interest on all the Notes and the
performance of every covenant of this Indenture on the part of the Com-
pany to be performed or observed;
(2) immediately after giving effect to such transaction, no Default,
and no event which, after notice or lapse of time, or both, would become
a De fault, shall have happened and be continuing; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel each stating that such consolidation, merger,
conveyance or transfer and such supplemental indenture comply with this
Article and that all conditions precedent herein provided for relating to
such transaction have been complied with.
Section 802. Successor Corporation Substituted.
Upon any consolidation or merger, or any conveyance or transfer of the
properties and assets of the Company substantially as an entirety in accord-
ance with Section 801, the successor corporation formed by such consolidation
or into which the Company is merged or to which such conveyance or transfer
is made shall succeed to, and be substituted for, and may exercise every right
and power of; the Company under this Indenture with the same effect as if such
successor corporation had been named as the Company herein; and in the event
of any such conveyance or transfer, the Company (which term shall for this
purpose mean the Person named as the "Company" in the first paragraph of
this Indenture or any successor corporation which shall theretofore have be-
come such in the manner prescribed in this Article) shall be discharged from
all liability under this Indenture and in respect of the Notes and may be
dissolved and liquidated.
<PAGE> 88
54
ARTICLE NINE
Supplemental Indentures
Section 901. Supplemental Indentures without Consent of Noteholders.
Without the consent of the Holders of any Notes, the Company, 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 corporation to the Company,
and the assumption by any such successor of the covenants of the Com-
pany herein and in the Notes contained; or
(2) to add to the covenants of the Company, for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company; or
(3) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture which shall not be inconsistent with the provisions
of this Indenture, provided such action shall not adversely affect the
interests of the Holders of the Notes.
Section 902. Supplemental Indentures with Consent of Noteholders.
With the consent of the Holders of not less than 66 2/3% in principal
amount of the Outstanding Notes, by Act of said Holders delivered to the
Company and the Trustee, the Company, when authorized by a Board Resolution,
and the Trustee may enter into an indenture or indentures supplemental hereto
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of the Holders of Notes under this Indenture; provided,
however, that no such supplemental indenture shall, without the consent of the
Holder of each Outstanding Note affected thereby,
(1) change the Stated Maturity of the principal of; or any instalment
of interest on, any Note, or reduce the principal amount thereof or change
the method of calculation of interest, or reduce the minimum rate of
interest, thereon, or change any place of payment where, or the coin or
currency in which, any Note or the 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 principal amount of the Outstanding
Notes, the consent of whose Holders is required for any such supplemental
indenture, or the consent of whose Holders is required for any waiver (of
<PAGE> 89
55
compliance with certain provisions of this Indenture or certain defaults
hereunder or their consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section or Section 513, 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 Note affected thereby.
It shall not be necessary for any Act of Noteholders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Section 903. Execution of Supplementary Indentures.
In executing, or accepting the additional trusts created by, any supple-
mental 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 601) shall be fully protected in relying upon, an Opinion
of
Counsel stating that the execution of such supplemental indenture is author-
ized or permitted by this Indenture. The Trustee may, but shall not be
obligated
to, enter into any such supplemental indenture which affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.
Section 904. 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 Notes theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.
Section 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of TIA as then in effect.
Section 906. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and shall if required by the Trustee,
bear a notation in form approved by the Trustee as to any matter provided for
in such supplemental indenture. If the Company shall so determines, new Notes
so modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any such supplemental indenture may be prepared and executed
by the Company and authenticated and delivered by the Trustee in exchange
for Outstanding Notes.
Section 907. Subordination Unimpaired.
No supplemental indenture executed pursuant to this Article shall directly
or indirectly modify the provisions of Article Twelve in any manner which
might alter the subordination of the Notes.
<PAGE> 90
56
ARTICLE TEN
Covenants
Section 1001. Payment of Principal and Interest.
The Company will duly and punctually pay or cause to be paid the prin-
cipal of and interest on the Notes in accordance with the terms of the Notes
and
this Indenture.
Section 1002. Maintenance of Office or Agency.
The Company will maintain an office or agency in the Borough of Man-
hattan, The City of New York, where the Notes may be presented or surren-
dered for payment, where Notes may be surrendered for registration of transfer
or exchange and where notices and demands to or upon the Company in respect
of the Notes and this Indenture may be served. The Company initially appoints
the Trustee, its office or agency in the Borough of Manhattan, The City of New
York, for the purpose of presentation or surrender of the Notes for payment,
registration of transfer, exchange or conversion and for service of notices or
demands to or upon it in respect of the Notes and this Indenture. The Company
will give prompt written notice to the Trustee of any change in the location of
any such office or agency. If at any time the Company shall fail to maintain
any
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 in such event the
Company hereby appoints the Trustee its agent to receive all such
presentations, surrenders, notices and demands.
In addition to such office or agency the Company may from time to time
designate one or more other offices or agencies (in or outside the Borough of
Manhattan, The City of New York) where the Notes may be presented or
surrendered for any or all of such purposes specified above in this Section and
may constitute and appoint one or more Paying Agents for the payment of such
Notes, in one or more other cities, and may from time to time rescind such
designations and appointments; provided, however, that no such designation,
appointment or rescission shall in any manner relieve the Company of its
obligation to maintain an office and agency in said Borough of Manhattan for
such purposes. The Company will give prompt written notice to the Trustee of
any such designation or rescission and of any change in the location of any
such
other office or agency.
Section 1003. Money for Note Payments to be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it will, on
or before each due date of the principal of or interest on any of the Notes,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein provided, and
will promptly notify the Trustee of its action or failure so to act.
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57
Subject to Article Thirteen, whenever the Company shall have one or more
Paying Agents, it will, on or prior to each due date of the principal of or
interest on any Notes, deposit or cause to be deposited with a Paying Agent a
sum sufficient to pay the principal or interest so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such principal or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will
(1) hold all sums held by it for the payment of the principal of or
interest on Notes 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 Company (or any
other obligor upon the Notes) in the making of any payment of principal
or interest; and
(3) at any time during the continuance of any such default upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satis-
faction and discharge of this Indenture or for any other purpose, pay, or by
Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent
to the Trustee, such Paying Agent shall be released from all further liability
with respect to such money.
Any money deposited with the Trustee or any Paying Agent or then held
by the Company in trust for the payment of the principal of or interest on any
Note and remaining unclaimed for 3 years after such principal or interest has
become due and payable, shall be paid to the Company on Company Request,
or (if then held by the Company) shall be discharged from such trust; and the
Holder of such Note shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof; and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof; shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such re-
payment, may at the expense of the Company cause to be published once, in an
Authorized Newspaper in the Borough of Manhattan, The City of New York,
notice that such money remains unclaimed and that, after a date specified
<PAGE> 92
58
therein, which shall not be less than 30 days from the date of such
publication,
any unclaimed balance of such money then remaining will be repaid to the
Company.
Section 1004. Corporate Existence.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence, rights (charter and statutory) and franchises; provided, however,
that the Company shall not be required to preserve any such right or
franchise if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company
and that the loss thereof is not disadvantageous in any material respect to the
Holders.
Section 1005. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (1) all taxes, assessments and governmental
charges levied or imposed upon the Company or any Subsidiary or upon the
income, profits or property of the Company or any Subsidiary, and (2) all
lawful claims for labor, materials and supplies which, if unpaid, might by law
become a lien upon the property of the Company or any Subsidiary; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
Section 1006. Limitation on Sale or Issuance of Capital Stock of Certain
Subsidiaries.
Except as set forth below the Company will not sell, assign, pledge, trans-
fer or otherwise dispose of; or permit the issuance of; or permit a Subsidiary
to sell assign, pledge, transfer or dispose of; any shares of Capital Stock of
any Subsidiary or any securities convertible into Capital Stock of any
Subsidiary which is:
(a) A Principal Constituent Bank; or
(b) A Subsidiary which owns shares of Capital Stock or any securi-
ties convertible into Capital Stock of a Principal Constituent Bank;
provided, however, nothing in this Section shall prohibit any dispositions made
by the Company or any Subsidiary (i) acting in a fiduciary capacity for any
person other than the Company or any Subsidiary or (ii) to the Company or any
of its wholly owned (except for directors' qualifying shares and except for
approximately 0.5% of the Voting Stock of The First National Bank of Ashland
owned by persons other than the Company) Subsidiaries.
<PAGE> 93
59
Notwithstanding the foregoing, sales, assignments, pledges, transfers, is-
suances or other dispositions of shares of Capital Stock of a corporation
referred to in Clause (a) or (b) above may be made where:
(i) the sales, assignments, pledges, transfers, issuances or other dis-
positions are made, in the minimum amount required by law, to any
Person for the purpose of the qualification of such Person to serve as a
director; or
(ii) the sales, assignments, pledges, transfers, issuances or other
dispositions are made in compliance with an order of a court or
regulatory authority of competent jurisdiction; or
(iii) in the case of a disposition of shares of Capital Stock or any
securities convertible into Capital Stock of a Principal Constituent Bank,
or sales of Capital Stock or any securities convertible into Capital Stock
of any Subsidiary included in Clause (b) above, the sales, assignments,
pledges, transfers, issuances or other dispositions are for fair market
value (as determined by the Board of Directors of the Company and the
Subsidiary disposing of such shares or securities, such determination
being evidenced by a Board Resolution) and, after giving effect to such
disposition and to any potential dilution (if the shares or securities are
convertible into Capital Stock), the Company and its wholly owned (ex-
cept for directors' qualifying shares) Subsidiaries, will own directly not
less than 80% of the Voting Stock of such Principal Constituent Bank or
Subsidiary; or
(iv) a Constituent Bank sells additional shares of Capital Stock to
its stockholders at any price, so long as immediately after such sale the
Company owns, directly or indirectly, at least as great a percentage of the
Voting Stock of such Constituent Bank as it owned prior to such sale of
additional shares.
Section 1007. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company ending after the date hereof; an Officers'
Certificate (which need not comply with Section 102), stating whether or not
to the best knowledge of the signers thereof the Company is in de fault in the
performance and observance of any of the terms, provisions and conditions of
this Indenture and if the Company shall be in default, specifying all such
defaults and the nature and status thereof of which they may have knowledge.
Section 1008. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in Sections 1004 to 1006, inclusive,
with
respect to the Notes if before the time for such compliance the Holders of at
least 50% in principal amount of the Notes shall, by Act of such Holders,
either
<PAGE> 94
60
waive such compliance in such instance or generally waive compliance with
such term, provision or condition, but no such waiver shall extend to or affect
such term, provision or condition except to the extent so expressly waived,
and,
until such waiver shall become effective, the obligations of the Company and
the duties of the Trustee in respect of any such term, provision or condition
shall remain in full force and effect.
ARTICLE ELEVEN
Redemption of Notes
Section 1101. Right of Redemption.
The Notes may be redeemed at the election of the Company, as a whole or
from time to time in part, at any time on or after the Interest Payment Date
in January 1989, subject to the conditions and limitations and at the Redemp-
tion Prices specified in the form of Note set forth in Section 202.
Section 1102. Applicability of Article.
Redemption of Notes at the election of the Company or otherwise, as
permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article.
Section 1103. Election to Redeem,; Notice to Trustee.
The election of the Company to redeem any Notes shall be evidenced by a
Board Resolution. In case of any redemption at the election of the Company of
less than all of the Notes, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be satis-
factory to the Trustee and the Authenticating Agent), notify the Trustee and
the Authenticating Agent of such Redemption Date and of the principal
amount of Notes to be redeemed.
Section 1104. Selection of Notes to be Redeemed.
If less than all the Notes are to be redeemed, the particular Notes to be
redeemed shall be selected not more than 60 days prior to the Redemption Date
by the Trustee from the Outstanding Notes not previously called for redemp-
tion by such method as it shall deem fair and appropriate. Notes of a denomi-
nation larger than $1,000 may be selected for partial redemption, but the
portions of the principal of Notes selected for partial redemption in any case
shall be equal to $1,000 or any integral multiple thereof.
The Trustee shall promptly notify the Company and the Note Registrar in
writing of the Notes selected by it for redemption and, in the case of any Note
so selected for partial redemption, the principal amount thereof to be
redeemed.
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61
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Notes shall relate, in the case of
any Note redeemed or to be redeemed only in part, to the portion of the
principal of such Note which has been or is to be redeemed.
Section 1105. Notice of Redemption.
Notice of redemption shall be given 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 Notes to be redeemed at his address appearing in the Note
Register, but failure to give such notice by mailing in the manner herein
provided to the Holder of any Note designated for redemption as a whole or in
part, or any defect in the notice to any Holder, shall not affect the validity
of the proceedings for the redemption of any other Note or portion thereof.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all Outstanding Notes are to be redeemed, the identi-
fication (and, in the case of partial redemption, the respective principal
amounts) of the Notes to be redeemed,
(4) that on the Redemption Date the Redemption Price will become
due and payable upon each such Note, and that interest thereon shall
cease to accrue from and after such said date, and
(5) the place where such Notes are to be surrendered for payment of
the Redemption Price.
Notice of redemption of Notes to be redeemed at the election of the Com-
pany shall be given by the Company or, at the Company's request, by the
Trustee in the name of and at the expense of the Company.
No notice of redemption pursuant to clause (i) of the paragraph providing
for redemption in the form of Note set forth in Section 202 may be given unless
there shall be on deposit with the Trustee in the Note Fund cash and/or Qual-
ifying Investments maturing as to principal in such amounts and at such times
as will ensure the availability of cash sufficient to pay the principal amount
of the Notes to be redeemed on such Redemption Date.
At least ten days prior to the date on which notice of redemption is to be
given, the Company shall deliver to the Trustee an Officers' Certificate
stating
that the conditions precedent to such redemption have occurred and shall
briefly describe the same.
<PAGE> 96
62
Section 1106. Deposit of Redemption Price.
In connection with any redemption pursuant to clause (i) of the paragraph
providing for redemption in the form of Note set forth in Section 202, prior to
the giving of any notice of redemption, the Company shall deposit in the Note
Fund cash and/or Qualifying Investments maturing as to principal in such
amounts and at such times as will ensure the availability of cash sufficient to
pay the principal amount of the Notes to be redeemed on such Redemption
Date. In connection with any redemption pursuant to clause (ii) of said para-
graph, on or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of all the Notes which are to be
redeemed on that date.
Section 1107. Notes Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Notes so to be
redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (useless the
Company shall default in the payment of the Redemption Price) such Notes
shall cease to bear interest. Upon surrender of such Notes for redemption in
accordance with said notice such Notes shall be paid by the Company (or the
Trustee or a Paying Agent, as the case may be, if sufficient funds therefor
have
been deposited with the Trustee or a Paying Agent, as the case may be, by the
Company pursuant to Section 1106) at the Redemption Price. Instalments of
interest whose Stated Maturity is on or prior to the Redemption Date shall,
except as otherwise provided in Section 307, be payable to the Holders of Notes
registered as such on the relevant Regular Record Dates according to their
terms and the provisions of Section 307.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid, bear interest from the
Redemption Date at the rate at the time borne by the Note.
Section 1108. Notes Redeemed in Part.
Any Note which is to be redeemed only in part shall be surrendered at the
office or agency of the Company designated for that purpose pursuant to
Section 1002 (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company and
the Note Registrar duly executed by, the Holder thereof or his attorney duly
authorized in writing) and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Note without service charge a
new Note or Notes, of any authorized denomination as requested by such
Holder in aggregate principal amount equal to the unredeemed portion of the
principal of the Note so surrendered.
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Section 1109. Redemption Suspended During Event of Default.
The Trustee shall not redeem any Notes (unless all Notes then outstanding
are to be redeemed) or commence the giving of any notice of redemption of Notes
during the continuance of any Event of De fault known to the Trustee, except
that where the giving of notice of redemption of any Notes shall theretofore
have been made, the Trustee shall, subject to the provisions of Section 1203,
redeem such Notes, provided funds are deposited with it for such purpose.
Subject to the rights of the holders of Senior Indebtedness of the Company,
except as aforesaid, any moneys theretofore or thereafter received by the
Trustee shall, during the continuance of such Event of De fault, be held in
trust for the benefit of the Noteholders and applied in the manner set forth in
Section 506; provided, however, that in case such Event of De fault shall have
been waived as provided herein or otherwise cured, such moneys shall thereafter
be held and applied in accordance with the provisions of this Article.
ARTICLE TWELVE
Subordination of Notes
Section 1201. Agreement to Subordinate.
The Company, for itself; its successors and assigns, covenants and agrees,
and each Holder of a Note by his acceptance thereof; likewise covenants and
agrees, that the payment of the principal of and interest on each and all of
the Notes is hereby expressly subordinated, to the extent and in the manner
hereinafter set forth, in right of payment to the prior payment in full of
all Senior Indebtedness.
Section 1202. Distribution on Dissolution, Liquidation and Re-
organization; Subrogation of Notes.
Upon any distribution of assets by the Company upon any dissolution,
winding up, liquidation or reorganization of the Company, whether in bank-
ruptcy, insolvency, reorganization or receivership proceedings or upon an as-
sigment for the benefit of creditors or any other marshalling of the assets and
liabilities of the Company or otherwise (subject to the power of a court of
competent jurisdiction to make other equitable provision reflecting the rights
conferred in this Indenture upon the Senior Indebtedness and the holders
thereof with respect to the Notes and the Holders thereof by a lawful plan of
reorganization under applicable bankruptcy law),
(a) the holders of all Senior Indebtedness shall first be entitled to
receive payment in full of the principal thereof; premium, if any, and
the interest due thereon before the Holders of the Notes are entitled to
receive any payment upon the principal of or interest on indebtedness
evidenced by the Notes;
(b) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to which the
Holders of the Notes or the Trustee would be entitled except for the
provisions of
<PAGE> 98
64
this Article Twelve shall be paid by the liquidating trustee or agent or
other person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise, direct to the
holders of Senior Indebtedness or their representative or representatives
or to the trustee or trustees under any indenture under which any instru-
ments evidencing any of such Senior Indebtedness may have been issued,
ratably according to the aggregate amounts remaining unpaid on account of
the principal of and premium, if any, and interest on the Senior Indebt-
edness held or represented by each, to the extent necessary to make
payment in full of all Senior Indebtedness remaining unpaid, after giving
effect to any concurrent payment or distribution to the holders of such
Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether
in cash, property or securities, shall be received by the Trustee or
Holders of the Notes before all Senior Indebtedness is paid in full, such
payment or distribution shall be paid over to the holders of such Senior
Indebtedness or their representative or representatives or to the trustee
or trustees under any indenture under which any instruments evidencing
any of such Senior Indebtedness may have been issued, ratably as afore-
said, for application to the payment of all Senior Indebtedness remaining
unpaid until all such Senior Indebtedness shall have been paid in full
after giving effect to any concurrent payment or distribution to the hold-
ers of such Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the Holders of the
Notes shall be subrogated to the rights of the holders of Senior Indebtedness
to receive payments or distributions of cash, property or securities of the
Company applicable to the Senior Indebtedness until the principal of and
interest on the Notes shall be paid in full and no such payments or
distributions to the Holders of the Notes of cash, property or securities
otherwise distributable to the Senior Indebtedness shall, as between the
Company, its creditors, other than the holders of Senior Indebtedness, and the
Holders of the Notes, be deemed to be a payment by the Company to or on account
of the Notes. It is understood that the provisions of this Article Twelve are
and are intended solely for the purpose of defining the relative rights of the
Holders of the Notes, on the one hand, and the holders of Senior Indebtedness,
on the other hand. Nothing contained in this Article Twelve or elsewhere in
this Indenture or in the Notes is intended to or shall impair, as between the
Company, its creditors, other than the holders of Senior Indebtedness, and the
Holders of the Notes, the obligation of the Company, which is unconditional and
absolute, to pay to the Holders of the Notes the principal of and interest on
the Notes as and when the same shall become due and payable in accordance with
their terms or to affect the relative rights of the Holders of the Notes and
creditors of the Company, other than the holders of the Senior Indebtedness,
nor shall anything herein or
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65
in the Notes prevent the Trustee or the Holder of any Note from exercising all
remedies otherwise permitted by applicable law upon default under this Inden-
ture, subject to the rights, if any, under this Article Twelve of the holders
of
Senior Indebtedness in respect of cash, property or securities of the Company
received upon the exercise of any such remedy. Upon any payment or distribu-
tion of assets of the Company referred to in this Article Twelve, the Trustee,
subject to the provisions of Section 601, and the Holders of the Notes shall be
entitled to rely upon a certificate of the liquidating trustee or agent or
other
person making any distribution to the Trustee or to the Holders of the Notes
for the purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Article Twelve.
The obligations of the Company in respect of the Notes shall rank on a
parity with the Convertible Subordinated Debentures, the Subordinated Notes,
and any other obligations of the Company ranking on a parity with the Notes.
The Trustee, however, 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 mistakenly pay over or distribute to or on behalf of Holders of Notes
or the Company moneys or assets to which any holders of Senior Indebtedness
shall be entitled by virtue of this Article Twelve.
Section 1203. Payments on Notes Prohibited During Event of Default
Under Senior Indebtedness.
In the event and during the continuation of any default in the payment of
principal of; or premium, if any, or interest on, any Senior Indebtedness
beyond
any applicable period of grace, no payment of principal or interest on the
Notes
shall be made by the Company.
Section 1204. Payments on Notes Permitted.
Nothing contained in this Indenture or in any of the Notes shall (a) affect
the obligation of the Company to make, or prevent the Company from making, at
any time except as provided in Sections 1202 and 1203, payments of principal
of or interest on the Notes, or (b) prevent the application by the Trustee of
any moneys deposited with it hereunder to the payment of or on account of the
principal of or interest on the Notes, if; at least two New York Business Days
prior to the time of such deposit, the Trustee shall not have written notice
conforming with Section 1206 of any event prohibiting the making of such
deposit by the Company.
Section 1205. Authorization of Holders to Trustee to Effect Subordi-
nation.
Each Holder of a Note by his acceptance thereof authorizes and directs the
Trustee in his behalf to take such action as may be necessary or appropriate to
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66
effectuate the subordination as provided in this Article Twelve and appoints
the Trustee his attorney-in-fact for any and all such purposes.
Section 1206. Notice to Trustee.
Notwithstanding the provisions of this Article or any other provisions of
the Indenture, neither the Trustee nor any Paying Agent shall be charged with
knowledge of the existence of any Senior Indebtedness or of any event which
would prohibit the making of any payment of moneys to or by the Trustee or
such Paying Agent, unless and until the Corporate Trust Department of the
Trustee or such Paying Agent shall have received written notice thereof from
the Company or from the holder of any Senior Indebtedness or from the repre-
sentative of any such holder.
Section 1207. Right of Trustee to Hold Senior Indebtedness.
The Trustee shall be entitled to all of the rights set forth in this
Article in respect of any Senior Indebtedness at any time held by it in its
individual capacity to the same extent as any other holder of such Senior
Indebtedness, and nothing in Section 613 or elsewhere in this Indenture shall
be construed to deprive the Trustee of any of its rights as such holder.
Section 1208. Article Twelve Not to Prevent Defaults or Events of
Default.
The failure to make a payment pursuant to the Notes by reason of any
provision in this Article shall not be construed as preventing the occurrence
of
a Default or an Event of Default.
ARTICLE THIRTEEN
Note Fund
Section 1301. Creation of the Note Fund.
There is hereby created and established with the Trustee or an agent
thereof (which may be a Constituent Bank) or other successor entity chosen by
the Company a segregated fund (the "Note Fund") to be designated "The Na-
tional City Corporation Floating Rate Subordinated Notes Due 1997 --- Note
Fund", into which funds shall be deposited by the Company as provided in
Section 1302, which funds shall be used to pay the principal of the Notes on
the terms and subject to the conditions set forth in this Indenture and in the
Notes. Notwithstanding any provision to the contrary contained in this
Indenture, neither funds deposited in the Note Fund, nor any other property
from time to time held in the Note Fund, shall be deemed to be for any purpose
property of the Holders of the Notes or trust funds and the Note Fund shall not
constitute security for the payment of the Notes.
Section 1302. Deposits into the Note Fund.
Amounts in the Note Fund will consist solely of (i) the net proceeds of the
sale for cash ("Cash Proceeds") from time to time of shares of Common Stock
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67
or Perpetual Preferred Stock or Other Equity Securities (such "Common Stock",
"Perpetual Preferred Stock", and "Other Equity Securities" being hereinafter
in this Article Thirteen collectively referred to as "Capital") and (ii) funds
equal to the market value, as determined by the Company, of Capital sold from
time to time in exchange for other property (including, without limitation,
Capital issued upon conversion of convertible securities now or hereafter out-
standing which do not constitute Capital), less the expenses to effect any such
exchanges ("Exchange Proceeds"), in each case which the Company shall from time
to time elect to deposit with the Trustee for deposit into the Note Fund. Any
amount deposited by the Company with the Trustee (or its agent) shall be
accompanied by an Officers' Certificate stating that such amount, together with
all amounts theretofore deposited into the Note Fund, do not exceed the
aggregate net proceeds from the sale of Capital after the date of initial
issuance of the Notes. All amounts received by the Trustee (or its agent) which
are accompanied by an Officers' Certificate to the foregoing effect (and no
other amounts) shall be deposited by the Trustee (or its agent) into the Note
Fund.
Section 1303. Covenant of the Company to Sell or Cause to be Sold Com-
mon Stock or Perpetual Preferred Stock or Other Equity Securities and Deposit
Proceeds.
Notwithstanding anything else contained herein, the Company hereby
covenants and agrees that (i) by the Interest Payment Date in January 1989, it
will have sold Capital, either for cash or in exchange for other property, in a
sufficient amount so that the aggregate of the Cash Proceeds and the Exchange
Proceeds will equal at least one-third of the original aggregate principal
amount of the Notes (or such lesser amount as the Federal Reserve Board may
permit from time to time), and will have deposited into the Note Fund funds
equivalent to such amount, (ii) by the Interest Payment Date in January 1993,
it will have sold Capital, either for cash or in exchange for other property,
in a sufficient amount so that the aggregate of the Cash Proceeds and the
Exchange Proceeds will equal at least two-thirds of the original aggregate
principal amount of the Notes (or such lesser amount as the Federal Reserve
Board may permit from time to time) and will have deposited into the Note Fund
funds equivalent to such amount; and (iii) by 60 days prior to the Interest
Payment Date in January 1997, it will have sold Capital, either for cash or in
exchange for other property, in a sufficient amount so that the aggregate of
the Cash Proceeds and the Exchange Proceeds will equal not less than the
original aggregate principal amount of the Notes (or such lesser amount as the
Federal Reserve Board may permit from time to time) and will have deposited
into the Note Fund funds equivalent to such amount; provided, however, that
such covenant and agreement of the Company shall be cancelled, and amounts
theretofore paid into the Note Fund will, at the request of the Company, be
repaid to it, in the event that the Federal Reserve Board shall determine that
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68
the indebtedness represented by the Notes in excess of amounts theretofore
deposited into the Note Fund will not be treated for United States bank regu-
latory purposes as "primary capital" of the Company or in the event that the
Notes shall cease being treated as "primary capital" of the Company, or in the
event that the Company shall have redeemed the Notes pursuant to clause (ii)
of the third sentence of the paragraph providing for the redemption of Notes in
the form of Note set forth in Section 202.
Section 1304. Investment of Moneys in the Note Fund.
Moneys held in the Note Fund shall be invested and reinvested by the
Trustee (or its agent) in specified Qualifying Investments, and such in-
vestments and reinvestments shall be liquidated or disposed of; all at the
direction of the Company, each such direction to be in a written instrument (or
oral if promptly confirmed in a written instrument) in each case, signed by an
Authorized Officer. All such investments shall be held by or under the control
of the Trustee and shall be deemed at all times to be a part of the Note Fund.
All interest or discount earned on such investments and any profit realized
therefrom shall be promptly paid to the Company and will not be deemed to be
part of the Note Fund. The Company shall not direct the Trustee (or its agent)
to make any investments or reinvestments other than those permitted by law and
this Indenture. In making, disposing of or liquidating any such investments
and reinvestments, the Trustee (or its agent) shall rely on directions
delivered to it pursuant to this Section, and the Trustee (or its agent) shall
be relieved of all liability with respect to making, disposing of or
liquidating such investments or reinvestments in accordance with such
directions and shall not be responsible for any losses incurred in connection
with such investments or reinvestments or the disposition or liquidation
thereof.
Section 1305. Repayment to the Company from the Note Fund.
In the event that the Company shall have redeemed any of the Notes as
provided in clause (ii) of the third sentence of the paragraph providing for
the
redemption of Notes in the form of Note set forth in Section 202, there shall
forthwith be repaid by the Trustee (or its agent) to the Company from the Note
Fund an amount of funds not in excess of the principal amount of Notes so
redeemed. Any amounts remaining in the Note Fund after redemption of all
the Notes or after payment in full of the principal of and interest on all the
Notes (or provision for the payment thereof as provided in Article Four of this
Indenture) and of the fees, charges and expenses of the Trustee shall be repaid
to the Company. Prior to any repayment by the Trustee (or its agent) to the
Company of amounts from the Note Fund as provided in this Section or Section
1303, the Trustee shall have been furnished with an Officers' Certificate
certi-
fying that the conditions precedent to any such repayment have been satisfied
and, in the case of a repayment based upon the redemption of Notes pursuant
to said clause (ii), certifying as to the principal amount of the Notes so
redeemed and an Opinion of Counsel stating that in the opinion of such counsel
all such conditions precedent have been complied with.
<PAGE> 103
69
Section 1306. Payment to Paying Agent from the Note Fund.
On the New York Business Day next preceding the Stated Maturity of the
Notes or any Redemption Date of the Notes, the Trustee shall, upon Company
Request, pay to the Paying Agent in the Borough of Manhattan, The City of
New York, such amount as is available in the Note Fund and necessary to pay
the principal of the Notes becoming due on such date. Upon declaration of
acceleration upon the occurrence of an Event of Default, the Trustee shall
apply such amount as is available in the Note Fund and necessary to pay the
principal of and interest on the Notes which have become due and payable.
The Trustee hereby accepts the trusts in this Indenture declared and
provided, upon the terms and conditions set forth herein.
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.
In Witness Whereof, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
<TABLE>
<S> <C>
National City Corporation
[Corporate Seal]
By..............................
Chairman of the Board
Attest:
..................................
Secretary
Citibank, N. A.
[Corporate Seal]
By..............................
Assistant Vice President
Attest:
..................................
Senior Trust Officer
</TABLE>
<PAGE> 104
70
State of Ohio
ss.:
County of Cuyahoga
On the day of January 1985, before me personally came Julian
L. McCall, to me known, who, being by me duly sworn, did depose and say that he
is the Chairman of the Board of National City Corporation, one of the parties
described in and which executed the above instrument; that he knows the
corporate seal of said corporation; that one of the seals affixed to said
instrument is such corporate seal; that it was so affixed pursuant to authority
of the Board of Directors of said corporation; and that he signed his name
thereto pursuant to like authority.
[Notarial Seal]
Notary Public
State of New York]
County of New York ss.:
On the day of January 1985, before me personally came P.
DeFelice, to me known, who, being by me duly sworn, did depose and say that he
is the Assistant Vice President of Citibank, N.A., one of the parties descnibed
in and which executed the above instrument; that he knows the corporate seal of
said corporation; that one of the seals affixed to said instrument is such
corporate seal; that it was so affixed pursuant to authority of the Board of
Directors of said corporation; and that he signed his name thereto pursuant to
like authority.
[Notarial Seal]
Notary Public
<PAGE> 1
PROSPECTUS
$50,000,000
First Kentucky National Corporation
Floating Rate Notes Due 1997
Interest on the Notes is payable quarterly on Interest Payment Dates in
January, April, July and October of each year, commencing January 17, 1986, at
a rate 1/8 of 1% per annum above the arithmetic mean of London interbank
offered quotations for three-month Eurodollar deposits prevailing two Business
Days before the beginning of each Interest Period.
The Notes will mature on October 31, 1997. The Notes may not be redeemed
prior to the Interest Payment Date in October, 1989. On and after such date,
the Notes are redeemable, in whole or in part, at any time at the opinion of
the Company at a redemption price of 100% of the principal amount thereof,
together with accrued interest to the redemption date.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions(2) Company(1)(3)
<S> <C> <C> <C>
Per Note 99.50% .55% 98.95%
Total $49,750,000 $275,000 $49,475,000
<FN>
(1) Plus accrued interest, if any, from the date of issuance to the date of
delivery.
(2) The Company has agreed to indemnify the Underwriters with respect to
certain liabilities, including liabilities under the Securities Act of
1933. See "Underwriting".
(3) Before deducting expenses payable by the Company estimated at $206,000.
</TABLE>
The Notes offered by this Prospectus are offered by the Underwriters
subject to prior sale, to withdrawal, cancellation or modification of the offer
without notice, to delivery to and acceptance by the Underwriters and to
certain other conditions. It is anticipated that delivery of the Notes will be
made at the office of Shearson Lehman Brothers Inc., New York, New York on or
about October 17, 1985.
Shearson Lehman Brothers Inc.
October 9, 1985
EXHIBIT 99.7
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
NOTES OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-
THE-COUNTER MARKET OR OTHERWISE, SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
First Kentucky National Corporation ("First Kentucky" or the "Company") is
subject to the informational requirements of the Securities Exchange Act of
1934 (the "Exchange Act"), and, in accordance therewith, files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other information can be
inspected and copied at the Commission's public reference room located at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the public reference facilities in the Commission's New York Regional Office,
Room 1102, Jacob K. Javits Federal Building, 26 Federal Plaza, New York, N.Y.
10278; Los Angeles Regional Office, Suite 500 East, 5757 Wilshire Boulevard,
Los Angeles, California 90036; and Chicago Regional Office, 1204 Everett
McKinley Dirksen Building, 219 South Dearborn Street, Chicago, Illinois 60604.
Copies of such material can be obtained at prescribed rates by writing to the
Securities and Exchange Commission, Public Reference Section, Washington, D.C.
20549.
The Company has filed with the Commission in Washington, D.C. a
registration statement (herein together with all amendments thereto called the
"Registration Statement") under the Securities Act of 1933, as amended, with
respect to the Company and the Notes. This Prospectus does not contain all of
the information set forth in the Registration Statement, certain items of which
are contained in exhibits to the Registration Statement as permitted by the
rules and regulations of the Commission. For further information, reference is
made to the Registration Statement, including the exhibits filed or
incorporated as a part thereof.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of the Company, which have been filed with the
Commission, are incorporated herein by reference:
(a) Annual Report on Form 10-K for the year ended December 31, 1984,
filed pursuant to Section 13(a) of the Exchange Act;
(b) Quarterly Report on Form 10-Q for the quarter ended March 31, 1985
and Quarterly Report on Form 10-Q for the quarter ended June 30, 1985, as
amended by Form 8 dated October 9, 1985, filed pursuant to Section 13(a) of
the Exchange Act; and
(c) Current Report on Form 8-K dated September 30, 1985, filed pursuant
to Section 13(a) of the Exchange Act.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Notes shall be deemed to be
incorporated herein by reference and such documents shall be deemed to be a
part hereof from the date of the filing of such documents.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of any such
person, a copy of any or all documents incorporated herein by reference (other
than exhibits to such documents which are not specifically incorporated by
reference into such documents). Requests should be directed to Gail W. Pohn,
Secretary, First Kentucky National Corporation, P. O. Box 36000, Louisville,
Kentucky 40233 (telephone (502) 581-4498).
2
<PAGE> 3
FIRST KENTUCKY NATIONAL CORPORATION
First Kentucky National Corporation, a multi-bank holding company
headquartered in Louisville, Kentucky, owns six bank subsidiaries and three
non-bank operating subsidiaries. The Company was formed in 1974 as a successor
to First National Bank Trustees, a common law business trust and bank holding
company which had been organized in 1925. At June 30, 1985, the Company had
total consolidated assets of $3.6 billion, total consolidated deposits of $2.6
billion and total stockholders' equity of $239 million. Based upon total assets
at June 30, 1985, First Kentucky was the largest bank holding company
headquartered in Kentucky.
Bank Subsidiaries.
First National Bank of Louisville ("First National Bank" or the "Bank"),
organized in 1863, is the Company's largest subsidiary and contributed
approximately 69% of the Company's after-tax income for the six months ended
June 30, 1985. The assets of First National Bank represented approximately 88%
of the Company's consolidated assets, excluding inter-company eliminations, at
June 30, 1985.
First National Bank is a full-service commercial bank with 55 offices
located primarily in and around Louisville. It provides a wide range of banking
services to corporations, other financial institutions, governmental units,
partnerships and individuals. First National Bank's wholesale credit and
non-credit services include a wide range of lending activities, letters of
credit, cash management services, correspondent banking services to other
financial institutions and international banking services to both domestic and
overseas customers. The Bank's retail services include a variety of deposit and
investment products, credit services, including credit cards, mortgages and
personal loans, discount brokerage services and convenient access to customer
funds through an automated teller machine network which includes 35 machines.
In addition, First National Bank operates loan production offices in
Indianapolis, Indiana, Lexington, Kentucky and Tampa, Florida, representative
offices in Richmond, Virginia, New York City, Chicago and Atlanta, an
International Banking Facility at its main headquarters and a foreign branch
office in the Cayman Islands. First National Bank also owns Churchill Leasing
Corporation, a company which leases personal property to corporate customers
and which began operations in 1980.
First Kentucky Trust Company (the "Trust Company"), a subsidiary of the
Company, was organized under Kentucky law in 1900. Although it has full banking
powers which it has exercised in the past, it presently engages primarily in
fiduciary related services for both individuals and corporations. At December
31, 1984, the Trust Company had assets valued at approximately $4.4 billion
under management, including $2.8 billion in discretionary accounts. At December
31, 1984, it was the 61st largest trust operation in the United States in terms
of discretionary assets under management. The Trust Company contributed
approximately 12% of the Company's after-tax income for the six months ended
June 30, 1985.
The Company organized a new bank subsidiary and acquired an additional
bank subsidiary in 1984. First National Bank, Louisville, located in Richmond,
Virginia, was chartered as a national bank in 1984 for the primary purpose of
engaging in a multi-state credit card business. On December 21, 1984, the
Company acquired The Third National Bank of Ashland, Ashland, Kentucky ("Third
National"), a full-service bank.
On February 11, 1985, the Company acquired The American National Bank &
Trust Company, Bowling Green, Kentucky ("American National"), and on July 22,
1985, the Company acquired The Bank of Commerce and Trust Company, Lexington,
Kentucky ("Bank of Commerce"), both full-service banks.
3
<PAGE> 4
The following table lists the Company's six bank subsidiaries, their
primary location, number of banking offices and total assets and total deposits
at June 30, 1985.
<TABLE>
<CAPTION>
Total Total
Assets Deposits
Primary Banking at at
Location Offices June 30, 1985(1) June 30, 1985(1)
(Dollars in thousands)
<S> <C> <C> <C> <C>
First National Bank of Louisville ............. Louisville 55 $3,227,513 $2,293,895
First Kentucky Trust Company(2) ........... Louisville 1 95,297 28,471
First National Bank, Louisville(3) ............ Richmond, 1 67,844 2,097
Virginia
The Third National Bank of Ashland.......... Ashland 6 179,095 138,741
The American National Bank & Trust Company Bowling Green 7 192,865 177,077
The Bank of Commerce and Trust Company(4). Lexington 6 170,019 152,677
<FN>
(1) Not adjusted to exclude inter-bank deposits or other inter-company items.
(2) First Kentucky Trust Company is primarily engaged in providing fiduciary related services.
(3) First National Bank, Louisville is primarily engaged in a multi-state credit card business.
(4) The Bank of Commerce and Trust Company was acquired on July 22, 1985.
</TABLE>
At June 30, 1985, the total assets of the Company's bank subsidiaries
represented approximately 99% of the Company's total assets, excluding
inter-company eliminations. Such subsidiaries contributed approximately 95% of
the Company's after-tax income for the six months ended June 30, 1985.
Non-Bank Operating Subsidiaries.
The Company also owns three non-bank operating subsidiaries.
National Processing Company, Inc. ("NPC"), originally a division of First
National Bank, became a wholly-owned subsidiary of the Company in 1984 and
presently has processing facilities in Phoenix, Arizona, Louisville, Kentucky
and Dallas, Texas. NPC is engaged in nationwide processing and settlement of
consumer-to-corporate financial transactions and offers three major product
lines: bank credit card, retail lock-box and airline ticket processing. NPC
processed approximately 371 million items in 1984 and the Company believes NPC
is among the nation's largest processors in these businesses.
Bank credit card activity consists of processing credit card sales slips
through the VISA+TM and Mastercard+TM interchange systems.
Retail lock-box processing involves receiving mailed remittances from
retail customers of national businesses and efficiently processing them, thus
accelerating funds availability for those businesses. The process involves the
entering of checks into banking collection systems and providing NPC's
corporate customers with updated information on payments from their retail
customers.
Airline ticket processing involves the calculation and settlement of
airline tickets sold by travel agents with the airline carrier named on the
ticket. The Company believes that NPC currently has approximately one-half of
the national market for this business.
At June 30, 1985, NPC had total assets of $24.1 million and net income
for the six months then ended of $1.9 million.
4
<PAGE> 5
Churchill Insurance Agency, Inc. commenced business in 1978 as an insurance
agent and broker offering credit life insurance and credit accident and health
insurance directly related to extensions of credit by the Company's bank
subsidiaries.
First Kentucky Company began its current operations in 1979 as an
investment advisory company and renders services partly to pension and
profit-sharing plans and institutional tax-exempt funds.
Recent Developments.
On August 22, 1985, the Company entered into an agreement in principle with
Second National Bancorp, Lexington, Kentucky, pursuant to which the Company
would acquire the stock of Second National Bank and Trust Company and all other
assets of Second National Bancorp for a total consideration of up to 875,650
shares of First Kentucky's common stock. As of the date of the agreement in
principle, the market value of such 875,650 shares was approximately $26.0
million. The acquisition is subject to various conditions, including execution
of a definitive agreement and receipt of all necessary regulatory and
shareholder approvals. At June 30, 1985, Second National Bancorp had total
assets of 5201.6 million, total deposits of $181.0 million and total
shareholder's equity of $13.8 million.
In September 1985, the Company entered into an agreement in principle
pursuant to which the Company would acquire the stock of a Kentucky bank for a
total consideration not to exceed $26 million. The acquisition is subject to
various conditions, including the satisfactory completion of a due diligence
investigation, the execution of a definitive agreement and receipt of all
necessary regulatory and shareholder approvals. At June 30, 1985, the bank to
be acquired had total assets in excess of $150 million, total deposit# in
excess of $115 million and total shareholder's equity in excess of $14 million.
See First Kentucky's Current Report on Form 8-K dated September 30, 1985
incorporated herein by reference for certain pro forma financial information
concerning certain of First Kentucky's bank subsidiary acquisitions.
Certain Regulator Considerations.
The Kentucky multi-bank holding company law, which became effective on July
13, 1984, permits the acquisition of one or more banks, subject to certain
limitations. A bank holding company may not acquire a bank if, following the
acquisition, the bank holding company would control banks in Kentucky holding
more than 15% of total bank deposits in Kentucky. Moreover, a bank holding
company may not acquire more than three banks during any twelve-month period.
The Kentucky multi-bank holding company law authorizes immediate expansion into
contiguous states on a reciprocal basis and expansion on a reciprocal
nationwide basis commencing on July 13, 1986. Kentucky banking law, however,
prohibits a bank located in Kentucky from establishing branch offices outside
of the county in which its main office is located. Subject to Kentucky banking
laws, the Company intends to make additional acquisitions from time to time if
its Board of Directors determines that an acquisition would be beneficial to
the Company and its shareholders.
The Company is a registered bank holding company under the Bank Holding
Company Act of 1956, as amended. The Company and its subsidiaries collectively
are subject to regulation by the Federal Deposit Insurance Corporation, the
Federal Reserve System, the Comptroller of the Currency and the Kentucky
Department of Financial Institutions.
The Company is a legal entity, separate and distinct from its bank and
non-bank subsidiaries. Because the Company is a holding company, its rights,
and the rights of its creditors, including the holders of the Notes, to
participate in the assets of any subsidiary upon the latter's liquidation or
recapitalization will be subject to the prior claims of the subsidiary's
creditors (including, in the case of bank subsidiaries, their depositors),
except to the extent that the Company may itself be a creditor with recognized
claims against the subsidiary.
5
<PAGE> 6
A principal source of the Company's revenue is dividends paid by its bank
subsidiaries. The ability of each bank subsidiary to pay dividends is subject
to limitations under various laws and regulations. Prior regulatory approval is
generally required if the total of all dividends declared by a bank subsidiary
in a year exceeds the bank's net profits for that year combined with its
undistributed net income for the preceding two years, less any required
transfers to surplus or to a fund for the retirement of preferred stock or
debt. In addition, if, in the opinion of the appropriate bank regulatory
authority, a bank is engaged in or about to engage in an unsafe or unsound
practice (which, depending on the financial condition of the bank, could
include the payment of dividends), such regulatory authority may require, after
notice and hearing, that the bank cease and desist from such practice. During
1984, the bank subsidiaries (including American National and Bank of Commerce,
which were acquired by the Company in 1985) could have declared dividends
without prior regulatory approval of approximately $70.3 million. In 1984, such
banks declared and paid aggregate dividends of approximately $16.6 million
(including approximately $606,000 by American National, Bank of Commerce and
Third National prior to their acquisition by First Kentucky).
Under federal law, no bank subsidiary may, subject to certain limited
exceptions, make loans or extensions of credit to, or investments in, the
securities of its holding company, or the holding company's subsidiaries, or
take their securities as collateral for loans to any borrower. Each bank
subsidiary is also subject to collateral security requirements for any loans or
extensions of credit permitted by such exceptions.
At June 30, 1985, the Company and its subsidiaries had approximately 4,000
employees, approximately 1,650 of which were employed by NPC. The Company's
executive offices are located at 3700 First National Tower, Louisville,
Kentucky 40202 (telephone (502) 581-4200).
USE OF PROCEEDS
The Company intends to use approximately $45.0 million of the net proceeds
from the sale of the Notes to repay $45.0 million principal amount of
short-term indebtedness currently outstanding under a revolving credit
agreement. The maturity dates of the outstanding notes range from November 20,
1985 to January 22, 1986 and interest rates average 8.02% per annum. The
proceeds of the outstanding notes were used to fund the Company's acquisitions
of Third National, American National and Bank of Commerce. The remaining net
proceeds of the Notes will be used for general corporate purposes, principally
to fund investments in, or extensions of credit to, the Company's subsidiaries.
The precise amount and timing of the application of such remaining proceeds
will depend upon actual funding requirements and the availability of other
funds.
6
<PAGE> 7
CAPITALIZATION
The following table sets forth the consolidated short-term borrowings and
capitalization of the Company at June 30, 1985, and as adjusted to reflect the
issuance and sale of the Notes offered hereby.
<TABLE>
<CAPTION>
June 30, 1985
Actual Adjusted
(Dollars in Thousands)
<S> <C> <C>
SHORT-TERM BORROWINGS $310,581(1) $265,581
LONG-TERM DEBT
12% Notes due through 1993 $ 775 $ 775
Floating Rate Notes Due 1997 50,000
6% Notes due through 1993 (2) 1,310 1,310
6.6% Notes due through 1994 (2) 1,073 1,073
8.5% Subordinated Debentures due 1987 (2) 500 500
Total Long-Term Debt 3,658 53,658
STOCKHOLDERS' EQUITY
Preferred stock, no par value; shares authorized-5,000,000; shares
issued--none
Common stock, stated value $.74 per share; shares authorized-
25,000,000; shares issued--13,675,023 10,130 10,130
Capital surplus 44,901 44,901
Retained earnings 185,745 185,745
Less treasury stock at cost-253,125 shares (2,194) (2,194)
Total stockholders' equity 238,582 238,582
TOTAL CAPITALIZATION $242,240 $292,240
<FN>
(1) The actual amount was increased by approximately $15.0 million in connection with the acquisition
of Bank of Commerce which was consummated on July 22, 1985.
(2) Represents obligations of subsidiaries.
</TABLE>
<PAGE> 8
CONSOLIDATED SELECTED FINANCIAL DATA
The following table sets forth, in summary form, certain consolidated
financial data of the its subsidiaries for the six-month periods ended
June 30, 1985 and 1984 and for each of the period ended December 31, 1984.
This summary is qualified in its entirety by the detailed financial statements
included in the documents incorporated herein by reference. See "I Certain
Documents by Reference". The summary for the interim periods is based on
unaudifinancial statements which include all adjustments (consisting only of
normal recurring accropinion of management, are necessary for a fair
presentation of the results of such period operations for the interim periods
ended June 30, 1985 and June 30, 1984 are not necessarily results to be
expected for a full year or any other interim period.
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
----------------------- --------------------------------------------------------------
1985 1984 1984 1983 1982 1981 1980
---------- ---------- ---------- ---------- ---------- ---------- ----------
(Unaudited)
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Income on earning assets................ $ 160,470 $ 142,576 $ 301,982 $ 258,656 $ 287,574 $ 261,432 $ 207,083
Interest on deposits and borrowings..... 103,650 93,579 198,405 165,765 197,932 183,997 134,753
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income..................... 56,820 48,997 103,577 92,891 89,642 77,435 72,330
Provision for loan and lease losses..... 5,550 4,100 11,100 10,100 9,905 7,800 7,600
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income after provision
for loan and lease losses............. 51,270 44,897 92,477 82,791 79,737 69,635 64,730
Non-interest income..................... 42,928 30,091 68,062 49,913 35,479 26,811 24,033
---------- ---------- ---------- ---------- ---------- ---------- ----------
Adjusted operating income............... 94,198 74,988 160,539 132,704 115,216 96,446 88,763
Operating expenses...................... 72,214 57,825 121,052 98,558 87,135 73,802 62,956
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before taxes..................... 21,984 17,163 39,487 34,146 28,081 22,644 25,807
Applicable taxes........................ 2,616 1,507 4,178 4,251 2,484 1,536 4,611
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income.............................. $ 19,368 $ 15,656 $ 35,309 $ 29,895 $ 25,597 $ 21,108 $ 21,196
========== ========== ========== ========== ========== ========== ==========
INCOME STATEMENT DATA
(FULLY TAXABLE EQUIVALENT):(1)
Income on earning assets................ $ 174,451 $ 153,714 $ 325,175 $ 277,940 $ 306,125 $ 276,981 N/A
Net interest income..................... 108,178 86,126 183,732 151,988 133,767 111,995 N/A
Adjusted operating income............... 108,178 86,126 183,732 151,988 133,767 111,995 N/A
Pre-tax income from operations.......... 35,964 28,301 62,679 53,430 46,632 38,193 N/A
PER SHARE OF COMMON STOCK:(2)
Net income.............................. $ 1.44 $ 1.17 $ 2.64 $ 2.23 $ 1.91 $ 1.58 $ 1.58
Book value (period-end)................. 17.78 15.89 16.86 15.17 13.75 12.56 11.63
Dividends declared...................... .50 .434 .89 .803 .717 .646 .575
Dividend payout ratio................... 35% 37% 34% 36% 38% 41% 36%
AVERAGE NUMBER OF SHARES OF COMMON
STOCK OUTSTANDING(2).................... 13,412,862 13,384,868 13,388,027 13,384,868 13,384,868 13,384,868 13,384,868
AVERAGE BALANCE SHEET DATA:
Total assets............................ $3,468,140 $2,933,457 $3,019,790 $2,726,047 $2,587,042 $2,151,122 $1,953,544
Securities.............................. 503,605 500,342 468,740 429,956 334,506 300,890 311,792
Loans and leases, net of unearned
interest.............................. 2,222,117 1,707,120 1,796,539 1,573,858 1,452,229 1,208,813 1,158,449
Total earning assets.................... 3,004,335 2,523,765 2,593,098 2,343,386 2,194,070 1,836,099 1,677,100
Total deposits.......................... 2,458,428 1,976,745 2,086,449 1,818,232 1,688,994 1,463,285 1,353,366
Stockholders' equity.................... 231,494 208,139 212,139 192,311 174,349 160,914 148,435
</TABLE>
8
<PAGE> 9
<TABLE>
<CAPTION>
Six Months
Ended
June 30, Year Ended December 31,
---------------- ----------------------------------------------
1985 1984 1984 1983 1982 1981 1980
------ ------ ------ ------ ------ ------ ------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL RATIOS:(3)
Net income to average stockholders' equity........ 16.87% 15.23% 16.64% 15.55% 14.68% 13.12% 14.28%
Net income to average total assets................ 1.13 1.07 1.17 1.10 .99 .98 1.09
Net income to average earning assets.............. 1.30 1.25 1.36 1.28 1.17 1.15 1.26
Net interest margin(4)............................ 4.73 4.78 4.89 4.79 4.93 5.06 5.03
Average stockholders' equity to average total
assets.......................................... 6.67 7.10 7.02 7.05 6.74 7.48 7.60
Average stockholders' equity to average total
loans and leases................................ 10.42 12.19 11.81 12.22 12.01 13.31 12.81
Average primary capital to average total assets
and allowance for possible loan and
lease losses(5)................................. 7.46 7.80 7.74 7.73 7.31 8.09 8.18
Primary capital to total assets and allowance
for possible loan and lease losses
(period-end)(5)................................. 7.33 7.41 7.10 6.74 7.00 6.69 7.70
Net charge-offs to average loans and leases....... .30 .33 .34 .32 .58 .39 .60
Allowance for possible loan and lease losses to
total loans and leases (period-end)............. 1.35 1.27 1.32 1.29 1.09 1.08 1.05
Non-performing loans and leases to total loans
and leases (period-end)(6)...................... 1.38 1.94 1.67 2.01 2.81 3.51 2.52
CONSOLIDATED RATIO OF EARNINGS
TO FIXED CHARGES:(7)
Excluding interest on deposits.................... 1.75x 1.55x 1.64x 1.62x 1.40x 1.32x 1.49x
Including interest on deposits.................... 1.21 1.18 1.20 1.20 1.14 1.12 1.19
- ----------
(1) Selected income statement data have been restated to include the
Federal tax benefit derived from income on obligations of state and local
governments, industrial revenue bonds and certain other securities, thus
facilitating the comparison between returns on alternative types of earning
assets and between totals which contain varying mixtures of fully taxable and
Federal tax-exempt income. The necessary information is not available for
periods prior to 1981.
(2) Adjusted to reflect three-for-two common stock splits effected on
January 20, 1983, October 6, 1983 and February 7, 1985.
(3) Ratios for the six months ended June 30,1985 and 1984 are stated on an
annualized basis where applicable. Such ratios are not necessarily indicative
of the ratios for any full year or any other interim period.
(4) Net interest income on a taxable equivalent basis divided by average
earning assets.
(5) Primary capital includes stockholders' equity and allowance for
possible loan and lease losses.
(6) Non-performing loans and leases consist of loans and leases on a
non-accrual basis, loans and leases which have been renegotiated as to interest
or yield terms to less than market rate at the date of renegotiation and
foreclosed real estate.
(7) The ratio of earnings to fixed charges (consolidated) has been computed
by dividing income before taxes plus fixed charges by fixed charges. Fixed
charges represent all interest expense (ratios are presented both excluding and
including interest on deposits) and the portion of rental expense which is
deemed to be equivalent to interest on long-term debt.
</TABLE>
9
<PAGE> 10
REVIEW OF FINANCIAL INFORMATION
First Half 1985 Compared to First Half 1984.
Net income for the first half of 1985 increased 23.7% to $19.4 million
compared to $15.7 million for the same period last year. Earnings per share
increased 23.1% to $1.44 compared to $1.17 for the first half of 1984. This
increase was largely the result of a significant increase in average earning
assets due primarily to two bank acquisitions and continued growth in other
operating revenues.
Interest Income, Interest Expenses and Net Interest Income
Total interest-related revenues on a tax equivalent basis increased 13.5%
to $174.5 million for the first six months of 1985 compared to $153.7 million
for the same period last year. The yield on earning assets declined by
approximately 55 basis points on a tax equivalent basis. The increase in total
interest-related revenue was due to a 19.0% increase in earning assets,
primarily loans. Total interest-related expenses increased 10.8% to $103.7
million for the six-month period. The average rate paid for interest bearing
liabilities declined by approximately 91 basis points. The increase in interest
expenses was due to a 23.0% increase in interest-bearing liabilities. As a
result of the above, net interest revenue on a tax equivalent basis increased
17.7% to $70.8 million.
Provision for Loan and Lease Losses
The provision for loan and lease losses increased $1.5 million, or 35.4%,
to $5.5 million. Net charge-offs, as an annualized percentage of average loans
and leases, decreased to .30% for the first half of 1985 compared to .33% for
the same period last year. Despite this improved loan loss experience, the
allowance for loan and lease losses was increased primarily in recognition of
the continued growth in the loan portfolio.
Non-Interest Income and Expenses
Other operating revenues increased $12.8 million, or 42.7%, to $42.9
million, due in particular to continued strong growth in item processing
revenues at NPC, which contributed 64.6% of the increase in non-interest
revenues. Non-interest expense increased by $14.4 million, or 24.9%, to $72.2
million, largely attributable to expenditures for supporting the continued
growth in item processing activity. Operations of the acquired banks also
contributed to the growth of non-interest revenues and expenses.
Pre-Tax Income, Taxes and Net Income
Income before taxes increased $4.8 million, or 28.1%, to $22.0 million
compared to $17.2 million for the same period last year. income taxes increased
$1.1 million to $2.6 million. As a result, net income for the first half of
1985 increased 23.7% to $19.4 million compared to the first half of 1984.
Asset Quality
While the loan and lease portfolio expanded considerably, the allowance for
loan and lease losses also increased to 1.35% at June 30, 1985 compared to
1.27% at June 30, 1984. Despite this loan growth, nonaccruing loans and
leases, renegotiated loans and other real estate amounted to $31.8 million at
June 30, 1985, compared to $35.5 million at June 30, 1984. Non-performing
assets to total loans, leases and other assets declined to l.38% at June 30,
1985 compared to 1.94% at June 30, 1984. First Kentucky's total international
exposure at June 30, 1985 was less than 6% of total assets.
Capital
At June 30, 1985, stockholders' equity was $238.6 million, up $25.9
million, or 12.2%, from a year ago. The Company's average total equity to
average total assets for the six months ended June 30, 1985 was
10
<PAGE> 11
6.67% compared to 7.10% for the corresponding period of 1984. The Company's
primary capital ratio at June 30, 1985 and 1984 was 7,33% and 7.41%,
respectively.
1984 Compared to 1983.
First Kentucky achieved record earnings in 1984 of $35.3 million, an 18.1%
increase over 1983's earnings of $29.9 million. Earnings per share increased
18.4% to $2.64 in 1984 compared to $2.23 in 1983. These results were achieved
through an increase in net interest revenue due to asset growth, a modest
increase in the net interest margin and a significant increase in non-interest
income. A continued emphasis on loan quality and control of expenses also
contributed to the improved earnings.
Interest Income, Interest Expenses and Net Interest Income
Total interest-related revenue increased 17.0% on a tax equivalent basis to
$325.2 million for 1984 compared to $277.9 million for 1983. This increase was
attributed to a 10.7% increase in earning assets (primarily loans which
increased 14.1%) and a 68 basis point increase in the rate earned on earning
assets. Total interest expense increased by 19.7% to $198.4 million compared
to $165.7 million in 1983. This increase was due to an 11.2% increase in
interest-bearing liabilities. Due to the above, First Kentucky's net interest
income on a tax equivalent basis for 1984 rose 13.0% to $126.8 million.
Provision for Loan and Lease Losses
The provision for loan and lease losses increased 9.9% to $ 11.1 million
for 1984. The provision for loan and lease losses was .62% of average loans and
leases compared to .64% in 1983. Net charge-offs increased to $6.1 million in
1984 compared to $5.1 million in 1983. However, due to the 14.1% increase in
average loans, net charge-offs to average loans and leases remained relatively
constant at 0.34%. Due primarily to the growth in the loan portfolio, the
Company increased the allowance for loan and lease losses.
Non-Interest Income and Expenses
Other operating revenues increased $18.2 million, or 36.5%, from 1983 to
1984. Results for 1983 are not directly comparable to those for 1984 because of
a one-time pre-tax gain of $6.7 million realized from the sale of the Company's
27% interest in its headquarters building and a $2.1 million increase in the
Company's contribution of securities to its charitable foundation in 1984. This
contribution is reflected as a reduction in trading account income.
Item processing revenues increased by $12.4 million, or 48%, in 1984 to
$38.0 million. These revenues account for 56% of other operating revenues (60%
when excluding the two non-recurring events noted above). Fees for trust
services, which are primarily based on the value of the assets under
management, grew 6.7% to $11.2 million. Service charges on checking accounts
increased 18.6%, while other service charges and fees grew over 42% and
together accounted for $13.2 million in total other income. The growth in the
latter category was primarily due to the initiation of annual cardholder fees
following the Company's move of its credit card operation to Virginia. Mortgage
servicing fees and standby letter of credit fees also contributed to the
increase in other service charges and fees.
Non-interest expenses in 1984 increased 22.7% with salaries and benefits up
23.3% over 1983. The primary cause of this increase was the 30% increase in the
number of employees at NPC. Other expenses in 1984 included a non-recurring
$1.8 million write-down of the capitalized portion of a computer information
system project begun in 1981, taken because of uncertainties related to the
project's ultimate implementation.
Pre-Tax Income, Taxes and Net Income.
Income before taxes in 1984 increased 15.6% to $39.5 million. Due primarily
to increased income from tax exempt securities, the Company's effective tax
rate declined to 10.6% compared to 12.5% in 1983. Total
11
<PAGE> 12
taxes also declined slightly to $4.2 million compared to $4.3 million in 1983.
Net income increased 18.1% in 1984 to $35.3 million.
Asset Quality.
Non-performing assets increased to $34.9 million at year-end 1984 compared
to $34.2 million at year- end 1983. This represented a decrease in
non-performing assets as a percentage of total loans, leases and other real
estate from 2.01% in 1983 to 1.67% in 1984. In addition, the year-end allowance
for loan and lease losses increased to 1.32% of total loans and leases
outstanding compared to 1.29% at year-end 1983. The Company's international
exposure at year-end 1984 was less than 6% of total assets.
Capital.
At December 31, l984, stockholders' equity was $226 million, up $22.9
million, or 11.3%, from December 31, 1983. The Company's average total equity
to average total assets for the years ended 1984 and 1983 was 7.02% and 7.05%,
respectively. The Company's primary capital ratio at December 31, 1984 and 1983
was 7.10% and 6.74%, respectively.
12
<PAGE> 13
DESCRIPTION OF NOTES
The Notes will be issued under an Indenture (the "Indenture"), to be dated
as of October 15, 1985, between the Company and Morgan Guaranty Trust Company
of New York, as trustee (the "Trustee"). A copy of the Indenture has been filed
as an exhibit to the Registration Statement of which this Prospectus is a part.
- - The following summaries of certain provisions of the Indenture do not purport
to be complete and are subject to, and are qualified in their entirety by
reference to, all the provisions of the Indenture, including the definitions
therein of certain terms. Section references below are to sections of the
Indenture. Wherever a defined term is indicated and no defined meaning is
contained herein, the definition thereof is contained in the Indenture.
General
The Notes will be limited to $50,000,000 aggregate principal amount and
will be issued only in fully registered form in denominations of $1,000 and
integral multiples thereof. The Notes will mature on October 31, 1997, and will
bear interest at the rates per annum determined as described below from October
17, 1985, payable quarterly in arrears on the Interest Payment Dates in
January, April, July and October of each year. The first Interest Payment Date
will be January 17, 1986. The interest to be paid on each Note on each Interest
Payment Date will be paid to the person in whose name such Note (or any
predecessor Note) is registered at the close of business on the Regular Record
Date, which is 15 days preceding such Interest Payment Date. Interest may, at
the option of the Company, be paid by checks mailed to such registered holders.
(Sections 301, 302 and 307) The Indenture will not limit the amount of other
indebtedness or securities which may be issued by the Company or any of its
subsidiaries. The Notes will be unsecured and will rank equally with all
present and future unsecured unsubordinated indebtedness of the Company.
Principal of and interest on the Notes will be payable, and the Notes will
be transferable and exchangeable, at the office or agency of the Company
maintained for such purposes, which initially will be the principal corporate
trust office of the Trustee in New York, New York. (Sections 301, 305 and 1002)
Notes will be exchangeable for other Notes of authorized denominations and
Notes may be surrendered for registration of transfer, each without service
charge, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. (Section 305)
Interest Payment Dates
The Notes will bear interest from October 17, 1985, and such interest will
be payable on each date (an "Interest Payment Date") which, except as provided
below, is three calendar months after the preceding Interest Payment Date or,
in the case of the first Interest Payment Date, January 17, 1986, and except,
further, that the final Interest Payment Date will be October 31, 1997. If any
Interest Payment Date would otherwise be a day which is not a Business Day (as
defined below), the Interest Payment Date shall be postponed to the next day
which is a Business Day unless it would thereby be in the next calendar month,
in which event (i) such Interest Payment Date shall be brought forward to the
immediately preceding Business Day and (ii) thereafter, each subsequent
Interest Payment Date shall be the last Business Day of the third month after
the month in which the preceding Interest Payment Date shall have occurred. The
period beginning on (and including) October 17, 1985 and ending on (but
excluding) the first Interest Payment Date and each successive period beginning
on (and including) an Interest Payment date and ending on (but excluding) the
next succeeding Interest Payment Date is herein called an "Interest Period."
Interest will accrue from and include the first day of each Interest Period to
and including the day preceding the next Interest Payment Date. (Section 203)
Rate of Interest
For the purpose of calculating the rate of interest payable on the Notes,
the Company will appoint Morgan Guaranty Trust Company of New York as agent
(the "Agent") under an Agent Agreement, to be dated as of October 15, 1985,
between the Company and the Agent. The rate of interest from time to time
13
<PAGE> 14
payable in respect of the Notes (the "Rate of Interest") shall be determined by
the Agent in accordance with the following provisions:
(i) On the second Business Day prior to the commencement of each
Interest Period (the "Interest Determination Date"), the Agent will request
the principal London office of each of the Reference Banks (as defined
below) to provide the Agent at its London office with its offered quotation
for three- month United States dollar deposits to leading banks in the
London interbank market at approximately 11:00 A.M. (London time) on the
Interest Determination Date in question. The Rate of Interest for such
Interest Period shall be at a rate 1/8 of 1% per annum above the arithmetic
mean of such offered quotations (rounded upward, if necessary, to the
nearest multiple of 1/16 of 1%), as determined by the Agent. The Company
will initially appoint Morgan Guaranty Trust Company of New York,
Manufacturers Hanover Trust Company, National Westminster Bank PLC and
Algemene Bank Nederland N.V. as Reference Banks.
(ii) If on any Interest Determination Date at least two but fewer than
all the Reference Banks provide the Agent with such offered quotations, the
Rate of Interest for the relevant Interest Period shall be determined in
accordance with paragraph (i) above on the basis of the offered quotations
of those Reference Banks providing such quotations.
(iii) If on any Interest Determination Date only one or none of the
Reference Banks provides the Agent with such an offered quotation, the Rate
of Interest for the relevant Interest Period shall be whichever is the
higher of:
(a) the Rate of Interest in effect for the last preceding
Interest Period to which the provisions of paragraph (i) or (ii)
above shall have applied; or
(b) the Reserve Interest Rate. The "Reserve Interest Rate" shall
be the rate per annum (rounded upward as aforesaid) which the Agent
determines to be either (I) the rate 1/8% of 1% per annum above the
arithmetic mean of the offered rates which leading banks in New York
City selected by the Agent (after consultation with the Company) are
quoting on the relevant Interest Determination Date for three-month
United States dollar deposits to the principal London office of each
of the Reference Banks or those of them (being at least two in
number) to which such offered quotations are, in the opinion of the
Agent, being so made, or (II) in the event that the Agent can deter-
mine no such arithmetic mean, the rate 1/8 of 1% per annum above the
arithmetic mean of the offered rates which leading banks in New York
City selected by the Agent (after consultation with the Company) are
quoting on such Interest Determination Date to leading European
banks for three-month United States dollar deposits; provided that
if the banks selected as aforesaid by the Agent are not quoting as
mentioned above, the Rate of Interest shall be the Rate of Interest
specified in clause (a) above.
The term "Business Day" for the purpose of computing the Rate of Interest
means each Monday, Tuesday, Wednesday, Thursday or Friday which is not a day on
which banking institutions in New York City or London are authorized or
obligated by law or executive order to close; for all other purposes, the term
"Business Day" means each Monday, Tuesday, Wednesday, Thursday or Friday which
is not a day on which banking institutions in New York City are authorized or
obligated by law or executive order to close. (Section 203)
Publication of Rate of Interest
The Agent will use its best efforts to cause the Rate of Interest for each
Interest Period, together with the amount of interest payable in respect of
each $1,000 principal amount of Notes for such Interest Period (the "Interest
Amount") (rounded to the nearest cent, with half a cent being rounded u ward)
and the related Interest Payment Date, to be published in a leading newspaper
in t e English language circulated on Business Days in New York City as soon as
possible after the determination of the Rate of Interest and the Interest
Amount but in no event later than the fourth Business Day following the
applicable Interest Determination Date. The Interest Amount and Interest
Payment Date so published may subsequently be amended without notice in the
event of an extension or shortening of the Interest Period. Interest will be
calculated on the basis
14
<PAGE> 15
of the actual number of days for which interest is payable in the applicable
Interest Period divided by 360. (Section 203) Reference Banks and Agent
The Company will agree that, until all of the Notes are paid or payment
thereof is provided for, there shall at all times be at least four Reference
Banks (one of which may be the Agent) and an Agent for the purpose of
determining the Rate of Interest on the Notes. In the event that any such
Reference Bank or Agent shall be unwilling or unable to act as such Reference
Bank or Agent or that such Agent shall fail duly to determine the Rate of
Interest and the Interest Amount for any Interest Period, the Company will
promptly appoint another leading bank engaged in transactions in Eurodollar
deposits in the international Eurocurrency market to act as such in its place.
The Agent may not resign its duties without a successor having been appointed
as aforesaid. (Section 203)
Redemption
The Notes may not be redeemed prior to the Interest Payment Date in October
1989. On and after such date, the Notes will be redeemable as a whole or in
part, at any time at the option of the Company, at a redemption price equal to
100% of the principal amount thereof, together with accrued interest to the
date fixed for redemption. If less than all the Notes are to be redeemed, the
particular Notes to be redeemed shall be selected by the Trustee by such method
as the Trustee shall deem fair and appropriate, which may provide for the
selection for redemption of portions (equal to $1,000 or any integral multiple
thereof) of the principal amount of Notes of a denomination larger than $1,000.
Notice of redemption will be mailed to holders of Notes to be redeemed not less
than 30 nor more than 60 days prior to the redemption date. (Sections 203,
1101, 1104 and 1105)
Modification and Waiver
Certain modifications and amendments of the Indenture may be made by the
Company and the Trustee with the consent of the holders of not less than a
majority in principal amount of the Notes then outstanding; provided, however,
that, without the consent of the holders of each outstanding Note affected
thereby, no such modification or amendment shall (i) change the stated maturity
of principal of, or any installment of interest on, any Note, or reduce the
principal amount thereof or the rate of interest thereon, or change any place
of payment where, or the coin or currency in which, any Note or any 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 (ii) reduce the percentage in
principal amount of outstanding Notes, the consent of the holders of which is
required for any such modification or amendment, or the consent of the holders
of which is required for any waiver provided for under the Indenture, or (iii)
modify any provisions of certain sections of the Indenture except to increase
any such percentage or to provide that certain other provisions of the
Indenture cannot be modified or waived without the consent of the holder of
each outstanding Note affected thereby. (Section 902)
The holders of at least a majority in principal amount of the outstanding
Notes may, on behalf of all holders of the Notes, waive any past default under
the Indenture, except a default in the payment of principal or interest or a
default with respect to a covenant or provision of the Indenture which may not
be modified or amended without the consent of the holder of each outstanding
Note affected. (Section 513)
Restrictions on Certain Dispositions
The Indenture contains a covenant that the Company will not (i) issue, sell
or otherwise dispose of any shares of, or securities convertible into, or
options, warrants or rights to subscribe for or purchase shares of, Voting
Stock of a Major Constituent Bank, (ii) permit the merger or consolidation of a
Major Constituent Bank with or into any other corporation other than a
Subsidiary (as defined below), or (iii) permit the sale
15
<PAGE> 16
or other disposition of all or substantially all of the assets of a Major
Constituent Bank if, after giving effect to any of the foregoing transactions
and the issuance of the maximum number of shares of Voting Stock issuable upon
the conversion or exercise of all such convertible securities, options,
warrants or rights, the Company would own, directly or indirectly, 80% or less
of the shares of Voting Stock of a Major Constituent Bank, provided, however,
that the foregoing shall not prohibit any such issuance, sale or disposition of
shares or securities, any such merger or consolidation or any such sale or
disposition of assets if required (a) by any law or any regulation or order of
any governmental authority or (b) as a condition imposed by any law or any
regulation or order of any governmental authority to the acquisition by the
Company, directly or indirectly, of any other corporation or entity, if
thereafter, (1) the Company would own more than 80% of the Voting Stock of such
other corporation or entity, and (2) the Consolidated Banking Assets of the
Company would be at least equal to the Consolidated Banking Assets of the
Company prior thereto. The Indenture will define "Major Constituent Bank" as
any bank the assets of which constitute 10% or more of the Company's
Consolidated Banking Assets. At June 30, 1985, the only Major Constituent Bank
was First National Bank of Louisville, the assets of which constituted more
than 89% of the Company's Consolidated Banking Assets. (Sections 1001 and 1005)
The holders of at least a majority in principal amount of the outstanding Notes
may, on behalf of all holders of the Notes, waive compliance by the Company
with this provision of the Indenture. (Section 1006)
The term "Subsidiary" means a corporation at least a majority of the
outstanding Voting Stock of which is at the time owned directly or indirectly
by the Company or by one or more other Subsidiaries or by the Company and one
or more other Subsidiaries. (Section 101)
Events of Default
The following events will be defined in the Indenture as "Events of
Default": (i) default in the payment when due of principal of any of the Notes;
(ii) default for 30 days in the payment of interest when due on any of the
Notes; (iii) default in respect of the covenant in the Indenture restricting
the disposition of a Major Constituent Bank; (iv) default in the performance of
any other covenant or warranty of the Company in the Indenture for a period of
60 days after notice; and (v) certain events of bankruptcy, insolvency or
reorganization of the Company or of a Major Constituent Bank. (Section 501) The
Indenture will provide that if an Event of Default shall have occurred and be
continuing either the Trustee or the holders of not less than 25% in principal
amount of the Notes then outstanding may declare the principal of all the Notes
to be immediately due and payable; but upon certain conditions, such
declaration may be annulled by the holders of a majority in principal amount of
the Notes then outstanding. (Section 502)
The holders of a majority in principal amount of the Notes then outstanding
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 under the Indenture, unless such direction is in
conflict with any rule of law or with the Indenture. (Section 512) The Trustee
shall not be obligated to exercise any of the rights or powers vested in it by
the Indenture at the request of any holders of the Notes unless the Trustee
shall have been offered reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred thereby, subject to the
Trustee's duty during default to act with the prescribed standard of care.
(Section 603)
Within 120 days after the end of each fiscal year, the Company must report
to the Trustee with respect to any default in the performance and observation
of certain Indenture covenants. (Section 1007)
Consolidation, Merger and Sale of Assets
The Company, without the consent of the holders of the outstanding Notes
under the Indenture, may consolidate with or merge into any other corporation
or convey, transfer or lease its assets substantially as an entirety to any
person or may permit any person to consolidate with or merge into the Company;
provided that (i) the surviving corporation (if other than the Company), the
corporation formed by such
16
<PAGE> 17
consolidation or the transferee corporation expressly assumes the Company's
obligations on the Notes under the Indenture, (ii) after giving effect to the
transaction, no Event of Default, and no event which a notice, the lapse of
time or both, would become an Event of Default, shall have occurred and be
continue and (iii) certain other conditions are met. (Section 801)
Regarding the Trustee
The Company and certain of its subsidiaries maintain normal banking
relationships with the Trustee
17
<PAGE> 18
UNDERWRITING
The Underwriters, for whom Shearson Lehman Brothers Inc. is acting as
representative (the "Representative"), have severally agreed, subject to the
terms and conditions contained in the Underwriting Agreement, a copy of which
is filed as an exhibit to the Registration Statement, to purchase from the
Company the Notes offered hereby. The principal amount of the Notes to be
purchased by each of the Underwriters is as follows:
<TABLE>
<CAPTION>
Principal
Underwriter Amount of Notes
<S> <C>
Shearson Lehman Brothers Inc............................................................... $19,800,000
The First Boston Corporation............................................................... 1,600,000
Goldman, Sachs & Co........................................................................ 1,600,000
Merrill Lynch, Pierce, Fenner & Smith...................................................... 1,600,000
Morgan Stanley & Co. Incorporated.......................................................... 1,600,000
Salomon Brothers Inc....................................................................... 1,600,000
Bear, Stearns & Co......................................................................... 1,200,000
Dillon, Read & Co. Inc..................................................................... 1,200,000
Donaldson, Lufkin & Jenrette Securities Corporation........................................ 1,200,000
Drexel Burnham Lambert Incorporated........................................................ 1,200,000
E. F. Hutton & Company Inc................................................................. 1,200,000
Keefe, Bruyette & Woods, Inc............................................................... 1,200,000
Kidder, Peabody & Co. Incorporated......................................................... 1,200,000
Lazard Freres & Co......................................................................... 1,200,000
PaineWebber Incorporated................................................................... 1,200,000
Prudential-Bache Securities Inc............................................................ 1,200,000
L. F. Rothschild, Unterberg, Towbin........................................................ 1,200,000
M. A. Schapiro & Co., Inc.................................................................. 1,200,000
Smith Barney, Harris Upham & Co. Incorporated.............................................. 1,200,000
Wertheim & Co., Inc........................................................................ 1,200,000
Dean Witter Reynolds Inc................................................................... 1,200,000
J. C. Bradford & Co........................................................................ 600,000
A. G. Edwards & Sons, Inc.................................................................. 600,000
J. J. B. HilIiard, W.L. Lyons, Inc......................................................... 600,000
Oppenheimer & Co., Inc..................................................................... 600,000
The Robinson-Humphrey Company, Inc......................................................... 600,000
Stifel, Nicolaus & Company, Incorporated................................................... 600,000
Thomson McKinnon Securities Inc. .......................................................... 600,000
Total......................................................................... $50,000,000
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all of the Notes to be purchased by
them pursuant to such Underwriting Agreement if any Notes are purchased.
The Company has been advised by the Representative that the Underwriters
propose to offer the Notes to the public initially at the offering price set
forth on the cover page of this Prospectus and to certain selected dealers at
such price less a concession not to exceed .30% of the principal amount of the
Notes. The Underwriters and such selected dealers may reallow a concession to
certain other dealers not to exceed .25% of the principal amount of the Notes.
After the initial public offering, the public offering price, the concession to
selected dealers and the reaIlowance to other dealers may be changed by the
Representative.
18
<PAGE> 19
Certain of the Underwriters may, from time to time, be customers of, engage
in transactions with and perform services for the Company in the ordinary
course of business.
In the Underwriting Agreement, the Company has agreed to indemnify the
Underwriters with respect to certain liabilities, including liabilities under
the Securities Act of 1933, as amended.
LEGAL OPINIONS
The validity of the Notes offered hereby will be passed upon for the
Company by Greenebaum Doll & McDonald, Louisville, Kentucky (a partnership
which includes professional corporations) and for the Underwriters by Willkie
Farr & Gallagher, New York, New York. As of September 30, 1935, members of
Greenebaum Doll & McDonald and attorneys employed thereby beneficially owned
7,414 shares of the Company's common stock.
EXPERTS
The consolidated financial statements of the Company at December 31, 1983
and 1984 and for each of the three years in the period ended December 31, 1984,
included or incorporated by reference in the Company's Annual Report on Form
10K for the year ended December 31, 1984 and incorporated by reference in this
Prospectus, have been examined by Coopers & Lybrand, independent accountants,
as set forth in their reports included therein and incorporated herein by
reference. The financial statements mentioned above are incorporated by
reference herein in reliance upon such reports and upon the authority of said
firm as experts in accounting and auditing.
19
<PAGE> 20
<TABLE>
<S> <C>
======================================================= =======================================================
No dealer, salesman or other person has been
authorized to give any information or to make
any representations not contained in or
incorporated by reference in this Prospectus
and, if given or made, such other information
and representation must not be relied upon as
having been authorized by the Company, the
Underwriters or any other person. Neither the
delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create
any implication that there has been no change in $50,000,000
the affairs of the Company since the date hereof.
This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy by anyone
in any jurisdiction in which such offer or
solicitation is not authorized or in which the
person making such offer or solicitaion is not First Kentucky
qualified to do so or to anyone to whome it is National Corporation
unlawful to make such offer or solicitation.
____________________
TABLE OF CONTENTS Floating Rate Notes Due 1997
Page
----
Available Information.................. 2
Incorporation of Certain Documents
by Reference........................ 2 ____________________
First Kentucky National Corporation.... 3 PROSPECTUS
Use of Proceeds........................ 6 October 9, 1985
Capitalization......................... 7 _____________________
Consolidated Selected Financial Data... 8
Review of Financial Information........ 10
Description of Notes................... 13
Underwriting........................... 18
Legal Opinions......................... 19
Experts................................ 19 Shearson Lehman Brothers Inc.
======================================================= =======================================================
</TABLE>
<PAGE> 21
Proof of October 2, 1985
================================================================================
FIRST KENTUCKY NATIONAL CORPORATION
TO
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
TRUSTEE
----------
INDENTURE
Dated as of October 15, 1985
----------
$50,000,000
Floating Rate Notes Due 1997
================================================================================
<PAGE> 22
Reconciliation and tie between Trust Indenture Act of 1939 and
Indenture, dated as of October 15, 1985
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C>
#310(a) (1) ............................................609
(a) (2) ............................................609
(a) (3) ............................................Not Applicable
(a) (4) ............................................Not Applicable
(b) ............................................608
............................................610
#311(a) ............................................613(a)
(b) ............................................613(b)
(b) (2) ............................................703(a) (2)
............................................703(b)
#312(a) ............................................701
............................................702(a)
(b) ............................................702(b)
(c) ............................................702(c)
#313(a) ............................................703(a)
(b) ............................................703(b)
(c) ............................................703(a)
............................................703(b)
(d) ............................................703(c)
#314(a) ............................................704
(b) ............................................Not Applicable
(c)(1) ............................................102
(c)(2) ............................................102
(c)(3) ............................................Not Applicable
(d) ............................................Not Applicable
(e) ............................................102
#315(a) ............................................601(a)
............................................601(c)
(b) ............................................602
............................................703(a) (6)
(c) ............................................601(b)
(d) ............................................601
(d) (1) ............................................601(a)
(d) (2) ............................................601(c) (2)
(d) (3) ............................................601(c) (3)
(e) ............................................514
#316(a) ............................................101
(a) (1)(A)............................................502
............................................512
(a) (1)(B)............................................513
(a) (2) ............................................Not Applicable
(b) ............................................508
#317(a) (1) ............................................503
(a) (2) ............................................504
(b) ............................................1003
#318(a) ............................................107
NOTE: This reconciliation and tie shall not, for any purpose, be deemed
to be a part of the Indenture.
</TABLE>
<PAGE> 23
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Parties.............................................................1
Recitals of the Company.............................................1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions.
Act................................................2
Affiliate; control.................................2
Agent..............................................2
Bank...............................................2
Board of Directors.................................2
Board Resolution...................................2
Business Day.......................................3
Capital Stock......................................3
Commission.........................................3
Company............................................3
Company Request; Company Order.....................3
Consolidated Banking Assets........................3
Corporate Trust Office.............................3
Corporation........................................4
Defaulted Interest.................................4
Event of Default...................................4
Holder.............................................4
Indenture..........................................4
Interest Amount....................................4
Interest Determination Date........................4
Interest Payment Date..............................4
Interest Period....................................4
Major Consutuent Bank..............................4
Maturity...........................................4
Note Register; Note Registrar......................4
Officers' Certificate..............................4
Opinion of Counsel.................................5
Outstanding........................................5
Paying Agent.......................................6
Person.............................................6
Place of Payment...................................6
Predecessor Note...................................6
Rate of Interest...................................6
Redemption Date....................................6
Redemption Price...................................6
Reference Banks....................................6
Regular Record Date................................6
NOTE This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
</TABLE>
<PAGE> 24
ii
<TABLE>
<CAPTION>
Page
<S> <C> <C> <C>
Responsible Officer .................................. 6
Special Record Date .................................. 7
Stated Maturity ...................................... 7
Subsidiary ........................................... 7
Trustee .............................................. 7
Trust Indenture Act .................................. 7
Voting Stock ......................................... 7
SECTION 102. Compliance Certificates and Opinions ................. 7
SECTION 103. Form of Documents Delivered to Trustee ............... 8
SECTION 104. Acts of Holders ...................................... 9
SECTION 105. Notices, Etc., to Trustee and Company ................ 10
SECTION 106. Notice to Holders; Waiver ............................ 10
SECTION 107. Conflict with Trust Indenture Act .................... 11
SECTION 108. Effect of Headings and Table of Contents ............. 11
SECTION 109. Successors and Assigns ............................... 11
SECTION 110. Separability Clause .................................. 11
SECTION 111. Benefits of Indenture ................................ 11
SECTION 112. Governing Law ........................................ 11
SECTION 113. Legal Holidays and Other Non-Business Days ........... 11
ARTICLE TWO
NOTE FORMS
SECTION 201. Forms Generally ...................................... 12
SECTION 202. Form of Face of Note ................................. 12
SECTION 203. Form of Reverse of Note .............................. 14
SECTION 204. Form of Trustee's Certificate of Authentication ...... 20
ARTICLE THREE
THE NOTES
SECTION 301. Title and Terms ...................................... 20
SECTION 302. Denominations ........................................ 21
SECTION 303. Execution, Authentication, Delivery and Dating ....... 21
SECTION 304. Temporary Notes ...................................... 22
SECTION 305. Registration; Registration of Transfer and Exchange .. 22
SECTION 306. Mutilated, Destroyed, Lost and Stolen Notes .......... 23
SECTION 307. Payment of Interest; Interest Rights Preserved ....... 24
SECTION 308. Persons Deemed Owners ................................ 26
SECTION 309. Cancellation ......................................... 26
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture .............. 26
SECTION 402. Application of Trust Money ........................... 28
</TABLE>
<PAGE> 25
iii
<TABLE>
<CAPTION>
Page
<S> <C> <C> <C>
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default .................................... 28
SECTION 502. Acceleration of Maturity; Rescission and Annulment ... 30
SECTION 503. Collection of Indebtedness and Suits for Enforce-
ment by Trustee ...................................... 31
SECTION 504. Trustee May File Proofs of Claim ..................... 32
SECTION 505. Trustee May Enforce Claims Without Possession of
Notes ................................................ 33
SECTION 506. Application of Money Collected ....................... 33
SECTION 507. Limitations on Suits ................................. 33
SECTION 508. Unconditional Right of Holders to Receive Principal
and Interest ......................................... 34
SECTION 509. Restoration of Rights and Remedies ................... 34
SECTION 510. Rights and Remedies Cumulative ....................... 35
SECTION 511. Delay or Omission Not Waiver ......................... 35
SECTION 512. Control by Holders ................................... 35
SECTION 513. Waiver of Past Defaults .............................. 36
SECTION 514. Undertaking for Costs ................................ 36
SECTION 515. Waiver of Stay or Extension Laws ..................... 36
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities .................. 37
SECTION 602. Notice of Defaults ................................... 38
SECTION 603. Certain Rights of the Trustee ........................ 39
SECTION 604. Not Responsible for Recitals or Issuance of Notes .... 40
SECTION 605. May Hold Notes ....................................... 40
SECTION 606. Money Held in Trust .................................. 41
SECTION 607. Compensation and Reimbursement ....................... 41
SECTION 608. Disqualification; Conflicting Interests .............. 41
(a) Elimination of Conflicting Interest or Resigna-
tion ............................................ 41
(b) Notice of Failure to Eliminate Conflicting Inter-
est or Resign ................................... 42
(c) "Conflicting Interest" Defined .................. 42
(d) Definitions of Certain Terms Used in this Section 45
(e) Calculation of Percentages of Notes ............. 46
(f) Securities of the Same Class .................... 47
SECTION 609. Corporate Trustee Required; Eligibility .............. 47
SECTION 610. Resignation and Removal; Appointment of Successor .... 48
SECTION 611. Acceptance of Appointment by Successor ............... 49
SECTION 612. Merger, Conversion, Consolidation or Succession to
Business ............................................. 50
SECTION 613. Preferential Collection of Claims Against Company .... 50
(a) Segregation and Apportionment of Certain Col-
lections by Trustee; Certain Exceptions ......... 50
(b) Certain Creditor Relationships Excluded from
Segregation and Apportionment ................... 53
(c) Definitions of Certain Terms Used in this Section 54
</TABLE>
<PAGE> 26
iv
<TABLE>
<CAPTION>
Page
<S> <C> <C> <C>
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses
of Holders ........................................... 55
SECTION 702. Preservation of Information; Communications to
Holders .............................................. 55
SECTION 703. Reports by Trustee ................................... 57
SECTION 704. Reports by Company ................................... 58
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc. Only on Certain
Terms ................................................ 59
SECTION 802. Successor Corporation Substituted .................... 60
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Hold-
ers .................................................. 61
SECTION 902. Supplemental Indentures with Consent of Holders ...... 61
SECTION 903. Execution of Supplemental Indentures ................. 62
SECTION 904. Effect of Supplemental Indentures .................... 62
SECTION 905. Conformity with Trust Indenture Act .................. 63
SECTION 906. Reference in Notes to Supplemental Indentures ........ 63
SECTION 907. Notice of Supplemental Indentures .................... 63
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal and Interest .................... 63
SECTION 1002. Maintenance of Office or Agency ...................... 63
SECTION 1003. Money for Note Payments to Be Held in Trust .......... 64
SECTION 1004. Corporate Existence .................................. 65
SECTION 1005. Restrictions on Certain Dispositions of Major Constit-
uent Banks ........................................... 66
SECTION 1006. Waiver of Covenants in Section 1005 .................. 66
SECTION 1007. Statement by Officers as to Default .................. 67
ARTICLE ELEVEN
REDEMPTION OF NOTES
SECTION 1101. Right of Redemption .................................. 67
SECTION 1102. Applicability of Article ............................. 67
SECTION 1103. Election to Redeem; Notice to Trustee ................ 67
</TABLE>
<PAGE> 27
v
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 1104. Selection by Trustee of Notes to Be Redeemed....... 68
SECTION 1105. Notice of Redemption............................... 68
SECTION 1106. Deposit of Redemption Price........................ 69
SECTION 1107. Notes Payable on Redemption Date................... 69
SECTION 1108. Notes Redeemed in Part............................. 70
ARTICLE TWELVE
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 1201 Indenture and Notes Solely Corporate Obligations... 70
TESTIMONIUM......................................................... 70
SIGNATURES AND SEALS................................................ 71
ACKNOWLEDGEMENTS.................................................... 72
</TABLE>
<PAGE> 28
INDENTURE, dated as of October 15,1985, between FIRST KEN-
TUCKY NATIONAL CORPORATION, a corporation duly organized
and existing under the laws of the Commonwealth of Kentucky (herein
called the "Company"), having its principal office at 3700 First National
Tower, Louisville, Kentucky 40202 and MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, a banking corporation duly organized and
existing under the laws of the State of New York (herein called the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance of its Floating Rate Notes Due
1997 (herein called the "Notes") of substantially the tenor and amount
hereinafter set forth.
All things necessary to make the Notes, when executed by the Com-
pany and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Inden-
ture a valid agreement of the Company, in accordance with their and its
terms, have been done.
Now, Therefore, This Indenture Witnesseth:
For and in consideration of the premises-and the purchase of the
Notes by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Notes as fol-
lows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. 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 as-
signed to them in this Article and include the plural as well as the
singular;
<PAGE> 29
2
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles, and except as otherwise herein expressly pro-
vided, the term "generally accepted accounting principles" with re-
spect to any computation required or permitted hereunder shall
mean such accounting principles as are generally accepted at the
date of such computation; and
(4) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
"Act", when used with respect to any Holder, has the meaning spec-
ified in Section 104.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect com-
mon control with such specified Person. For the purposes of this defini-
tion, "control" when used with respect to any specified Person means
the power to direct the management and policies of such Person, direct-
ly 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" has the meaning specified in Section 203.
"Bank" means (i) any institution which accepts deposits that the
depositor has a legal right to withdraw on demand and engages in the
business of making commercial loans and (ii) any trust company.
"Board of Directors" means either the board of directors of the
Company or any committee of that board duly authorized to act for it
hereunder.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly
<PAGE> 30
3
adopted by the Board of Directors and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment,
means each Monday, Tuesday, Wednesday, Thursday or Friday which is
not a day on which banking institutions in that Place of Payment' are
authorized or obligated by law or executive order to close and when
used with respect to the computation of the Rate of Interest, has the
meaning specified in Section 203.
"Capital Stock" means outstanding shares of capital stock of any
class of a corporation whether now or hereafter authorized regardless
of whether such capital stock shall be limited to a fixed sum or percent-
age in respect of the rights of the holders thereof to participate in divi-
dends and in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of such corporation.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange
Act of 1934, 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.
"Company" means the Person named as the "Company" 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 "Company" shall mean such successor corporation.
"Company Request" or "Company Order" means a written request
or order signed in the name of the Company by its Chairman of the
Board, a Vice Chairman of the Board, its President or a Vice President,
and by its Treasurer, an Assistant Treasurer, its Secretary or an Assist-
ant Secretary, and delivered to the Trustee.
"Consolidated Banking Assets" means the aggregate of the assets
of all Subsidiaries which are Banks (including Subsidiaries of such
Banks).
"Corporate Trust Office" means the office of the Trustee in New
York, New York, at which at any particular time its corporate trust
business shall be principally administered, which office at the date here-
of is located at 30 West Broadway, New York, New York 10015.
<PAGE> 31
4
"corporation" includes corporations, associations, companies and
business trusts.
"Defaulted Interest" has the meaning specified in Section 307.
"Event of Default" has the meaning specified in Section 501.
"Holder" means a Person in whose name a Note is registered in the
Note Register.
"Indenture" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more
indentures supplemental hereto entered into pursuant to the applicable
provisions hereof.
"Interest Amount" has the meaning specified in Section 203.
"Interest Determination Date" has the meaning specified in Section
203.
"Interest Payment Date" has the meaning specified in Section 203.
"Interest Period" has the meaning specified in Section 203.
"Major Constituent Bank" means any Bank the assets of which
constitute 10% or more of the Consolidated Banking Assets and any
owner Subsidiary designated as a Major Constituent Bank pursuant to
Section 1005 and their respective successors (whether by consolidation,
merger, conversion, transfer of substantially all their assets and busi-
ness or otherwise), so long as any such Bank or its successor is a Sub-
sidiary.
"Maturity", when used with respect to any Note, means the date on
which the principal of such Note becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Note Register" and "Note Registrar" have the respective mean-
ings specified in Section 305.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman of the Board, the President or a Vice Presi-
dent, and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary of the Company, and delivered to the Trustee.
<PAGE> 32
5
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for or an employee of the Company, or other counsel accept-
able to the Trustee.
"Outstanding", when used with respect to Notes, means, as of the
date of determination, all Notes theretofore authenticated and delivered
under this Indenture, except:
(i) Notes theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Notes for whose payment or redemption money in the nec-
essary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company) in trust or set aside
and segregated in trust by the Company (if the Company shall act
as its own Paying Agent) for the Holders of such Notes; provided
that, if such Notes are to be redeemed, notice of such redemption
has been duly given pursuant to this Indenture or provision there-
for satisfactory to the Trustee has been made; and
(iii) Notes which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Notes have been authenticat-
ed and delivered pursuant to this Indenture, other than any such
Notes in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Notes are held by a bona
fide purchaser in whose hands such Notes are valid obligations of
the Company;
provided, however, that in determining whether the Holders of the req-
uisite principal amount of the Outstanding Notes have given any re-
quest, demand, authorization, direction, notice, consent or waiver here
under, Notes owned by the Company or any other obligor upon the
Notes or any Affiliate of the Company or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determin-
ing whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver,
only Notes which the Trustee knows to be so owned shall be so disre-
garded. Notes so owned which 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 Notes and
that the pledgee is not the Company or any other obligor upon the Notes
or any Affiliate of the Company or of such other obligor.
<PAGE> 33
6
"Paying Agent" means any Person authorized by the Company to
pay the principal of or interest on any Notes on behalf of the Company.
"Person" means any individual, corporation, partnership, joint ven-
ture, association, joint-stock company, trust, unincorporated organiza-
tion or government or any agency or political subdivision thereof.
"Place of Payment" means the place or places where the principal
of and interest on the Notes are payable specified as contemplated by
Section 301.
"Predecessor Note" of any particular Note means every previous
Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 306 in exchange for or in lieu
of a mutilated, destroyed, lost or stolen Note shall be deemed to evi-
dence the same debt as the mutilated, destroyed, lost or stolen Note.
"Rate of Interest" has the meaning specified in Section 203.
"Redemption Date", when used with respect to any Note to be re-
deemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Note to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Reference Banks" has the meaning specified in Section 203.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the 15th day (whether or not a Business Day),
next preceding such Interest Payment Date.
"Reserve Interest Rate" has the meaning specified in Section 203.
"Responsible Officer", when used with respect to the Trustee,
means the chairman of the board of directors, the president, the secre-
tary, the treasurer, any vice president, any assistant vice president, any
trust officer or any other officer of the Trustee customarily performing
corporate trust functions and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is re-
ferred because of his knowledge of and familiarity with the particular
subject.
<PAGE> 34
7
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Note or any in-
stallment of interest thereon, means the date specified in such Note as
the fixed date on which the principal of such Note or such installment of
interest is due and payable.
"Subsidiary" means a corporation at least a majority of the out-
standing Voting Stock of which is at the time owned, directly or indirect-
ly, by the Company or by one or more other Subsidiaries, or by the
Company and one or more other Subsidiaries.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have be
come such pursuant to the applicable provisions of this Indenture, and
thereafter "Trustee" shall mean such successor Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed, except as
provided in Section 905.
"Voting Stock" with respect to a corporation means that Capital
Stock of a corporation which has the voting power for the election of
directors at any annual meeting of shareholders of such corporation,
excluding any such Capital Stock which has any such voting power by
reason of the failure to pay a dividend or other amount or to satisfy any
condition or by reason of the occurrence of any other contingency.
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company
shall furnish to the Trustee an Officers' Certificate stating that all condi-
tions 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,
if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such Officers' Certif-
icate or Opinion of Counsel is specifically required by any provision of
this Indenture relating to such particular application or request, no addi-
tional certificate or opinion need be furnished.
<PAGE> 35
8
Every certificate or opinion with respect to compliance with a condi-
tion or covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions here-
in relating thereto;
(b) a brief statement as to the nature and scope of the exami-
nation or investigation upon which the statements or opinions con-
tained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to en-
able him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such indi-
vidual, such condition or covenant has been complied with.
SECTION 103. Form 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 docu-
ment, 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 Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion
or representations with respect to the matter upon which his certificate
or opinion is based are erroneous. Any such certificate or Opinion of
Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of
the Company stating that the information with respect to such factual
matters is in the possession of the Company, unless such counsel knows,
or in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to such matters are erroneous.
<PAGE> 36
9
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 con-
solidated and form one instrument.
SECTION 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instru-
ments of substantially similar tenor signed by such Holders in person or
by agent duly appointed in writing; and, except as herein otherwise ex-
pressly provided, such action shall become effective when such instru-
ment or instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or instruments
(and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instru-
ment 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 601) conclusive in favor of the
Trustee and the Company, if made in the manner provided in this Sec-
tion.
(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 to
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 capac-
ity other than his individual capacity, such certificate or affidavit shall
also constitute sufficient proof of his authority. The fact and date of the
execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other manner
which the Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Note shall bind every future
Holder of the same Note and the Holder of every Note issued upon the
registration of transfer thereof or in exchange therefor or in lieu there-
of in respect of anything done, omitted or suffered to be done by the
<PAGE> 37
10
Trustee or the Company in reliance thereon, whether or not notation of
such action is made upon such Note.
SECTION 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with:
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished,
mailed (first-class postage prepaid) or filed in writing to or with the
Trustee at its Corporate Trust Office, Attention: or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein ex-
pressly provided) if in writing and mailed (first-class postage pre-
paid) to the Company addressed to it at the address of its principal
office specified in the first paragraph of this instrument or at any
other address previously furnished in writing to the Trustee by the
Company.
SECTION 106. 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 his address as it appears in the Note
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice
to Holders is given by mail, neither the failure to mail such notice, nor
any defect in any notice so mailed, to any particular Holder shall affect
the sufficiency of such notice with respect to other Holders. Any notice
which is mailed in the manner herein provided shall be conclusively pre-
sumed to have been duly given to a Holder, whether or not such Holder
receives such notice. 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 prece-
dent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
<PAGE> 38
11
mail, then such notification as shall be acceptable to the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Indenture by
any of the provisions of the Trust Indenture Act, such required provi-
sion shall control.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents
hereto are for convenience only and shall not affect the construction
hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Notes 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 111. Benefits of Indenture.
Nothing in this Indenture or in the Notes, express or implied, shall
give to any Person, other than the parties hereto, their successors here-
under and the Holders of Notes any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 112. Governing Law.
This Indenture and the Notes shall be governed by and construed in
accordance with the laws of the State of New York.
SECTION 113. Legal Holidays and Other Non-Business Days.
In any case where any Redemption Date or the Stated Maturity of
any Note shall not be a Business Day at any Place of Payment, then
(notwithstanding any other provision of this Indenture or of the Notes)
payment of the principal of the Notes need not be made on such date,
<PAGE> 39
12
but may be made on the next succeeding Business Day at such Place of
Payment with the same force and effect as if made on the Redemption
Date or at the Stated Maturity, as the case may be, provided that no
interest shall accrue for the period from and after such Redemption
Date or Stated Maturity, as the case may be. The provisions of Section
203 shall govern in respect of the payment of interest on the Stated
Maturity of any installment of interest in any case where an Interest
Payment Date is not a Business Day at any Place of Payment.
ARTICLE TWO
NOTE FORMS
SECTION 201. Forms Generally.
The Notes shall be in substantially the form set forth in this Article,
with such appropriate insertions, omissions, substitutions and other var-
iations 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 the
rules of any securities exchange or national market or as may, consis-
tently herewith, be determined by the officers executing such Notes, as
evidenced by their execution of the Notes. The Trustee's certificate of
authentication shall be in substantially the form set forth in this Article.
The definitive Notes shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Notes, as evidenced by their
execution of such Notes.
SECTION 202. Form of Face of Note.
FIRST KENTUCKY NATIONAL CORPORATION
FLOATING RATE No~E DUE 1997
No $
FIRST KENTUCKY NATIONAL CORPORATION, a corporation
duly organized and existing under the laws of the Commonwealth of
Kentucky (herein called the "Company", which term includes any suc-
cessor corporation under the Indenture hereinafter referred to), for val-
ue received. hereby promises to pay to
<PAGE> 40
13
, or registered assigns, the principal sum of
Dollars on October 31,1997, and to pay interest on said principal sum
quarterly in arrears on the Interest Payment Dates (as defined on the
reverse hereof) in January, April, July and October in each year, com-
mencing January ,1986, at the rates per annum determined as provid-
ed on the reverse hereof, from October ,1985, or, if later, from the
most recent Interest Payment Date to which interest has been paid or
duly provided for, or, if the date hereof is an Interest Payment Date to
which interest has been paid or duly provided for, then from the date
hereof, until the principal hereof is paid or made available for payment.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture, be paid to
the Person in whose name this Note (or one or more Predecessor Notes)
is registered at the close of business on the Regular Record Date for
such interest, which shall be the 15th day (whether or not a Business
Day) next preceding such Interest Payment Date. Any such interest not
so punctually paid or duly provided for will forthwith cease to be pay-
able to the Holder on such Regular Record Date and may either be paid
to the Person in whose name this Note (or one or more Predecessor
Notes) 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 Notes 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 or national market on which the Notes may be listed, and upon
such notice as may be required by such exchange or market, all as more
fully provided in said Indenture.
Payment of the principal of and interest on this Note will be made
at the office or agency of the Company maintained for that purpose
provided for in said Indenture, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment
of public and private debts; provided, however, that at the option of the
Company payment of interest may be made by check mailed to the ad-
dress of the Person entitled thereto as such address shall appear in the
Note Register.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all pur-
poses have the same effect as if set forth at this place.
<PAGE> 41
14
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this
Note shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instru-
ment to be duly executed under its corporate seal.
<TABLE>
<S> <C>
FIRST KENTUCKY NATIONAL
CORPORATION
Dated:
By: ___________________________
Attest:
___________________________
</TABLE>
SECTION 203. Form of Reverse of Note.
FIRST KENTUCKY NATIONAL CORPORATION
FLOATING RATE NOTE DUE 1997
This Note is one of a duly authorized issue of Notes of the Company
(herein called the "Notes"), limited in aggregate principal amount to
$50,000,000, issued under an Indenture, dated as of October 15, 1985
(herein called the "Indenture"), between the Company and Morgan
Guaranty Trust Company of New York, Trustee (herein called the
"Trustee", which term includes any successor trustee under the Inden-
ture), to which Indenture and all indentures supplemental thereto refer-
ence is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trust-
ee and Holders of the Notes and of the terms upon which the Notes are,
and are to be, authenticated and delivered.
This Note shall bear interest in respect of each Interest Period (as
defined below) at the rate per annum (the "Rate of Interest") calculat-
ed for such Interest Period by Morgan Guaranty Trust Company of
New York or its successor as agent (the "Agent"), on the basis of rates
<PAGE> 42
15
supplied to it by Morgan Guaranty Trust Company of New York,
Manufacturers Hanover Trust Company, National Westminster
Bank PLC and Algemene Bank Nederlands N.V. (the "Reference
Banks", which term shall include any successor Reference Bank
appointed by the Company as herein provided), in accordance
with the following provisions:
(i) On the second Business Day prior to the
commencement of each Interest Period (the "Interest
Determination Date"), the Agent will request the principal
London office of each of the Reference Banks to provide
the Agent with its offered quotation for three-month United
States dollar deposits to leading banks in the London
interbank market at approximately 11:00 A.M. (London time)
on the Interest Determination Date in question. The Rate of
Interest for such Interest Period shall be at a rate 1/8 of
1% per annum above the arithmetic mean of such offered
quotations (rounded upward, if necessary, to the nearest
multiple of V16 of 1%), as determined by the Agent.
(ii) If on any Interest Determination Date at least two
but fewer than all the Reference Banks provide the Agent
with such offered quotations, the Rate of Interest for the
relevant Interest Period shall be determined in accordance
with paragraph (i) above on the basis of the offered
quotations of those Reference Banks providing such
quotations.
(iii) If on any Interest Determination Date only one or
none of the Reference Banks provides the Agent with such an
offered quotation, the Rate of Interest for the relevant
Interest Period shall be whichever is the higher of:
(a) the Rate of Interest in effect for the last
preceding Interest Period to which the provisions of
paragraph (i) or (ii) above shall have applied; and
(b) the Reserve Interest Rate. The "Reserve
Interest Rate" shall be the rate per annum (rounded
upward as aforesaid) which the Agent determines to be
either (x) the rate v% of 1% per annum above the
arithmetic mean of the offered rates which leading
banks in New York City selected by the Agent (after
consultation with the Company) are quoting on the rele-
vant Interest Determination Date for three-month United
States dollar deposits to the principal London office
of each of the Reference Banks or those of them (being
at least two in number) to which such offered
quotations are, in the opinion of
<PAGE> 43
16
the Agent, being so made, or (y) in the event that the Agent
can determine no such arithmetic mean, the rate V8 of 1% per
annum above the arithmetic mean of the offered rates which
leading banks in New York City selected by the Agent (after
consultation with the Company) are quoting on such Interest
Determination Date to leading European banks for three-
month United States dollar deposits; provided that if the banks
selected as aforesaid by the Agent are not quoting as men-
tioned above, the Rate of Interest shall be the Rate of Interest
specified in (a) above.
For the purpose of determining the Rate of Interest, the term
"Business Day" shall mean each Monday, Tuesday, Wednesday, Thurs-
day or Friday which is not a day on which banking institutions in London
or New York City are authorized or obligated by law or executive order
to close; for all other purposes of this Note, the term "Business Day"
shall mean each Monday, Tuesday, Wednesday, Thursday or Friday
which is not a day on which banking institutions in New York City are
authorized or obligated by law or executive order to close. Interest on
the Notes in respect of each Interest Period will accrue at the Rate of
Interest established on the Interest Determination Date immediately
preceding the commencement of such Interest Period from and includ-
ing the first day of such Interest Period to and including the day preced-
ing the next Interest Payment Date. The Agent shall calculate the
amount of interest payable in respect of each $1,000 principal amount of
Notes for such Interest Period (the "Interest Amount") by applying the
Rate of Interest to $1,000 and multiplying such amount by the actual
number of days for which interest is payable on the next Interest Pay-
ment Date with respect to the applicable Interest Period divided by 360
and rounding the resultant figure to the nearest cent (half a cent being
rounded upward). Interest will be payable on each date (the ``Interest
Payment Date") which, except as provided below, is three calendar
months after the preceding Interest Payment Date or, in the case of the
first Interest Payment Date, January , 1986 and in the case of the final
Interest Payment Date, October 31, 1997. If any Interest Payment Date
would otherwise be a day which is not a Business Day, the Interest
Payment Date shall be postponed to the next day which is a Business
Day unless it would thereby be in the next calendar month, in which
event (i) such Interest Payment Date shall be brought forward to the
immediately preceding Business Day and (ii) thereafter, each subse-
quent Interest Payment Date shall be the last Business Day of the third
month after the month in which the preceding Interest Payment Date
<PAGE> 44
17
shall have occurred. The period beginning on (and including) October
,1985 and ending on (but excluding) the first Interest Payment Date
and each successive period beginning on (and including) an Interest
Payment Date and ending on (but excluding) the next succeeding Inter-
est Payment Date is herein called an "Interest Period". As soon as pos-
sible after 11:00 A.M. (London time) on each Interest Determination
Date, but in no event later than 11:00 A.M. (London time) on the Busi-
ness Day immediately following each such Interest Determination Date,
the Agent shall notify the Company and the Trustee of the Interest
Payment Date for the next Interest Period and the Rate of Interest and
the Interest Amount determined by it, specifying to the Company the
quotations upon which the Rate of Interest is based, and in any event
the Agent shall notify the Trustee and the Company before 2:00 P.M.
(London time) on each Interest Determination Date that either: (i) it
has determined or is in the process of determining the Rate of Interest
and the Interest Amount or (ii) it has not determined and is not in the
process of determining the Rate of Interest and the Interest Amount,
together with its reasons therefor. The Agent shall use its best efforts to
cause such Rate of Interest, Interest Amount and Interest Payment
Date to be published in a leading newspaper in the English language
circulated on Business Days in New York City as soon as possible after
determination of the Rate of Interest and the Interest Amount but in no
event later than the fourth Business Day following the applicable Inter-
est Determination Date. The Interest Amount and Interest Payment
Date so published may subsequently be amended without notice in the
event of an extension or shortening of the Interest Period. The determi-
nation of the Rate of Interest by the Agent shall (in the absence of
manifest error) be final and binding upon all parties. The Company
agrees that, until the Notes are paid or payment thereof is duly provided
for, there shall at all times be at least four Reference Banks (one of
which may be the Agent) and an Agent in respect of the Notes and that
each such Reference Bank shall be a leading bank engaged in transac-
tions in Eurodollar deposits in the international Eurocurrency market,
and that each Reference Bank and Agent shall not control, be controlled
by or be under common control with, the Company and shall have an
established place of business in London. Subject to the foregoing sen-
tence, the Company may from time to time terminate the appointment of
the Agent or any Reference Bank and appoint a replacement therefor.
In the event that any such Reference Bank or Agent shall be unwilling
or unable to act as such Reference Bank or Agent or that such Agent
shall fail duly to determine the Rate of Interest and the Interest
<PAGE> 45
18
Amount for any Interest Period, the Company shall promptly appoint a
Reference Bank or Agent (qualified as aforesaid), as the case may be,
to act as such in its place. The Company and the Agent will agree that
the Agent will not resign until a successor has been appointed. The
Company will further agree that each successor Agent shall be a lead-
ing bank engaged in transactions in Eurodollar deposits in the interna-
tional Eurocurrency market, shall not control, be controlled by, or be
under common control with, the Company and shall have an established
place of business in London.
The Notes are subject to redemption at any time on and after the
Interest Payment Date in October 1989, upon not less than 30 days' nor
more than 60 days' notice by mail, as a whole or in part, at the election
of the Company, at a Redemption Price equal to 100% of the principal
amount thereof, together with accrued interest to the Redemption Date;
provided that interest installments whose Stated Maturity is on or prior
to such Redemption Date will be payable to the Holders of such Notes,
or one or more Predecessor Notes, of record at the close of business on
the relevant Record Dates referred to on the face hereof, all as provided
in the Indenture.
In the event of the redemption of this Note in part only, a new Note
or Notes for the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation of this Note.
If an Event of Default shall occur and be continuing, the principal
of all the Notes may be declared due and payable in the manner and
with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obliga-
tions of the Company and the rights of the Holders of the Notes under
the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in aggregate principal amount of
the Notes at the time Outstanding. The Indenture also contains provi-
sions permitting the Holders of specified percentages in aggregate prin-
cipal amount of the Notes at the time Outstanding, on behalf of the
Holders of all the Notes, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the
Holder of this Note shall be conclusive and binding upon such Holder
and upon all future Holders of this Note and of any Note issued upon
the registration of transfer hereof or in exchange herefor or in lieu
<PAGE> 46
19
hereof, whether or not notation of such consent or waiver is made upon
this Note.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and interest
on this Note 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 Note is registrable in the Note
Register, upon surrender of this Note for registration of transfer at the
office or agency of the Company in any place where the principal of and
interest on this Note are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and
the Note Registrar duly executed by, the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Notes, of
authorized denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided
in the Indenture and subject to certain limitations therein set forth,
Notes are exchangeable for a like aggregate principal amount of Notes
of different authorized denominations, as requested by the Holder sur-
rendering the same.
No service charge shall be made for any such registration of trans-
fer or exchange, but the Company may require payment of a sum suffi-
cient to cover any tax or other governmental charge payable in connec-
tion therewith.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Note is registered as
the owner hereof for all purposes, whether or not this Note be overdue,
and neither the Company, the Trustee nor any such agent shall be affect-
ed by notice to the contrary.
No recourse shall be had for the payment of the principal of or
interest on this Note, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture or any inden-
ture supplemental thereto, against any incorporator, stockholder, officer
or director, as such, past, present or future, of the Company or any
<PAGE> 47
20
successor corporation, whether by virtue of any constitution, statute or
rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part
of the consideration for the issue hereof, expressly waived and released.
All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
SECTION 204. Form of Trustee's Certificate of Authentication.
This is one of the Notes referred to in the within-mentioned Inden-
ture.
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Trustee
By __________________________
Authorized Officer
ARTICLE THREE
THE NOTES
SECTION 301. Title and Terms.
The aggregate principal amount of Notes which may be authenti-
cated and delivered under this Indenture is limited to $50,000,000, except
for Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Notes pursuant to Section 304,
305, 306, 906 or 1108.
The Notes shall be known and designated as the "Floating Rate
Notes Due 1997" of the Company. Their Stated Maturity shall be Octo-
ber 31, 1997. Interest on the Notes shall be payable quarterly in arrears
on the Interest Payment Dates in January, April, July and October in
each year, commencing January , 1986, at the rates per annum deter-
mined as provided in the form of Note, from October , 1985 or, if later,
from the most recent Interest Payment Date to which interest has been
paid or duly provided for, or, if the date of the Note is an Interest
Payment Date to which interest has been paid or duly provided for, then
<PAGE> 48
21
from the date of the Note, until the principal of the Note is paid or made
available for payment.
The principal of and interest on the Notes shall be payable at the
office or agency of the Company in New York, New York maintained for
such purpose and at any other office or agency maintained by the Com-
pany for such purpose if notice thereof is given to the Trustee; provid-
ed, however, that at the option of the Company payment of interest may
be made by check mailed to the address of the Person entitled thereto as
such address shall appear in the Note Register.
The Notes shall be redeemable as provided in Article Eleven.
SECTION 302. Denominations.
The Notes shall be issuable only in registered form without coupons
and only in denominations of $1,000 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Notes shall be executed on behalf of the Company by its Chair-
man of the Board, a Vice Chairman of the Board, its President or one of
its Vice Presidents, under its corporate seal reproduced thereon attested
by its Secretary or an Assistant Secretary. The signature of any of these
officers on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the
Company, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of
such Notes or did not hold such offices at the date of such Notes.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Notes executed by the Com-
pany to the Trustee for authentication, together with a Company Order
for the authentication and delivery of such Notes; and the Trustee in
accordance with such Company Order shall authenticate and deliver
such Notes as in this Indenture provided and not otherwise.
Each Note shall be dated the date of its authentication.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Note a
<PAGE> 49
22
certificate of authentication substantially in the form provided for here-
in executed by the Trustee by manual signature, and such certificate
upon any Note shall be conclusive evidence, and the only evidence, that
such Note has been duly authenticated and delivered hereunder and is
entitled to the benefits of this Indenture.
SECTION 304. Temporary Notes.
Pending the preparation of definitive Notes, the Company may exe-
cute, and upon Company Order the Trustee shall authenticate and deliv-
er, temporary Notes which are printed, lithographed, typewritten, mim-
eographed or otherwise produced, in any authorized denomination, sub-
stantially of the tenor of the definitive Notes in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions
and other variations as the officers executing such Notes may deter-
mine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Company will cause definitive
Notes to be prepared without unreasonable delay. After the preparation
of definitive Notes, the temporary Notes shall be exchangeable for de-
finitive Notes upon surrender of the temporary Notes at the office or
agency of the Company in a Place of Payment, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Notes, the Company shall execute and the Trustee shall authenticate
and deliver in exchange therefor a like principal amount of definitive
Notes of authorized denominations. Until so exchanged the temporary
Notes shall in all respects be entitled to the same benefits under this
Indenture as definitive Notes.
SECTION 305. Registration; Registration of Transfer and Exchange.
The Company shall cause to be kept a register (herein referred to
as the "Note Register") in which, subject to such reasonable regula-
tions as it may prescribe, the Company shall provide for the registration
of Notes and of transfers of Notes. The Trustee is hereby appointed
"Note Registrar" for the purpose of registering Notes and transfers of
Notes as herein provided.
Upon surrender for registration of transfer of any Note at the office
or agency in a Place of Payment, the Company shall execute, and the
Trustee shall authenticate and deliver, in the name of the designated
<PAGE> 50
23
transferee or transferees, one or more new Notes of any authorized
denominations and of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other
Notes, of any authorized denominations and of a like aggregate princi-
pal amount, upon surrender of the Notes to be exchanged at such office
or agency. Whenever any Notes are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver,
the Notes which the Holder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Notes surrendered upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Trustee or the
Note Registrar) be duly endorsed, or be accompanied by a written in-
strument of transfer in form satisfactory to the Company, the Trustee
and the Note Registrar duly executed, by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Notes, other than exchanges pursuant to Section 304, 906 or 1108 not
involving any transfer.
The Company shall not be required (i) to issue, register the trans-
fer of or exchange any Note during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption
of Notes selected for redemption under Section 1104 and ending at the
close of business on the day of such mailing, or (ii) to register the
transfer of or exchange any Note so selected for redemption in whole or
in part, except the unredeemed portion of any Note being redeemed in
part.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Notes.
If any mutilated Note is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Note of like principal amount and bearing a number not
contemporaneously outstanding.
<PAGE> 51
24
If there shall be delivered to the Company and the Trustee (i) evi-
dence to their satisfaction of the destruction, loss or theft of any Note
and (ii) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Note has
been acquired by a bona fide purchaser, the Company shall execute and
upon its request the Trustee shall authenticate and deliver, in lieu of any
such destroyed, lost or stolen Note, a new Note of like principal amount
and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has be-
come or is about to become due and payable, the Company in its discre-
tion may, instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the Compa-
ny 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) con-
nected therewith.
Every new Note issued pursuant to this Section in lieu of any de-
stroyed, lost or stolen Note shall constitute an original additional con-
tractual obligation of the Company, whether or not the destroyed, lost
or stolen Note 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 Notes 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, conversion or payment of mutilated, destroyed, lost or sto-
len Notes.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Interest on any Note which 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 Note (or one or more Predecessor Notes) is
registered at the close of business on the Regular Record Date for such
interest.
Any interest on any Note which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
<PAGE> 52
25
"Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such
Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Default-
ed Interest to the Persons in whose names the Notes (or their re-
spective Predecessor Notes) are registered at the close of business
on a Special Record Date for the payment of such Defaulted Inter-
est, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Defaulted Inter-
est proposed to be paid on each Note and the date of the proposed
payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount pro-
posed 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 Default-
ed Interest as in this clause provided. Thereupon the Trustee shall
fix a Special Record Date for the payment of such Defaulted Inter-
est 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 pay-
ment. The Trustee shall promptly notify the Company of such Spe-
cial Record Date and, in the name and at the expense of the Compa-
ny, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-
class postage prepaid, to each Holder of Notes at his address as it
appears in the Note Register, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such De-
faulted Interest and the Special Record Date therefor having been
so mailed, such Defaulted Interest shall be paid to the Persons in
whose names the Notes (or their respective Predecessor Notes) are
registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Inter-
est in any other lawful manner not inconsistent with the require-
ments of any securities exchange on which the Notes may be listed,
and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed pay-
<PAGE> 53
26
ment pursuant to this clause, such manner of payment shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Note deliv-
ered under this Indenture upon registration of transfer of or in ex-
change for or in lieu of any other Note shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other
Note.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Note is registered as the
owner of such Note for the purpose of receiving payment of principal of
and (subject to Section 307) interest on such Note and for all other
purposes whatsoever, whether or not such Note be overdue, and neither
the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
SECTION 309. Cancellation.
All Notes surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly cancelled by
it. The Company may at any time deliver to the Trustee for cancellation
any Notes previously authenticated and delivered hereunder which the
Company may have acquired in any manner whatsoever, and all Notes
so delivered shall be promptly cancelled by the Trustee. No Notes shall
be authenticated in lieu of or in exchange for any Notes cancelled as
provided in this Section, except as expressly permitted by this Inden-
ture. All cancelled Notes held by the Trustee shall be destroyed by the
Trustee and the Trustee shall deliver to the Company certificates of
destruction with respect thereto.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Indenture.
This Indenture shall, but only upon Company Request, cease to be
of further effect (except as to any surviving rights of payment, registra-
tion of transfer or exchange of Notes and rights of the Trustee herein
<PAGE> 54
27
expressly provided for), and the Trustee, at the expense of the Compa-
ny, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Notes theretofore authenticated and delivered
(other than (i) Notes which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 306
and (ii) Notes for the payment of which money has theretofore
been deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged
from such trust as provided in Section 1003) have been deliv-
ered to the Trustee for cancellation; or
(B) all such Notes not theretofore delivered to the Trust-
ee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Matu-
rity within one year, 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 Company,
and the Company, in the case of (i), (ii) or (iii) above, has deposited
or caused to be deposited with the Trustee as trust funds in trust
for the purpose an amount sufficient to pay and discharge the entire
indebtedness on such Notes not theretofore delivered to the Trustee
for cancellation, for principal and interest to the date of such depos-
it (in the case of Notes which have become due and payable) or to
the Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Cer-
tificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and dis-
charge of this Indenture have been complied with.
<PAGE> 55
28
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee and any predecessor
Trustee under Section 607 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 402 and the last paragraph of
Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held
in trust and applied by it, in accordance with the provisions of the Notes
and this Indenture, to the payment, either directly or through such Pay-
ing Agent (including the Company acting as its own Paying Agent), if
any, as the Trustee may select, to the Persons entitled thereto, of the
principal and interest for the payment of which such money has been
deposited with the Trustee.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default" means any one of the following events (whatev-
er the reason for such Event of Default and whether it shall be volun-
tary 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):
(1) default in the payment of any interest upon any Note when
it becomes due and payable, and continuance of such default for a
period of 30 days; or
(2) default in the payment of the principal of any Note at its
Maturity; or
(3) default in the performance of any covenant of the Compa-
ny set forth in Section 1005; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant
or warranty a default in the performance of which or the breach of
which is elsewhere in this Section specifically dealt with), and con-
<PAGE> 56
29
tinuance of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, to the Compa-
ny by the Trustee or to the Company and the Trustee by the Hold-
ers of at least 25% in aggregate principal amount of the Outstand-
ing Notes 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
(5) the entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of the Company or a
Major Constituent Bank in an involuntary case or proceeding under
any applicable Federal or State bankruptcy, insolvency, reorganiza-
tion or other similar law or (B) a decree or order adjudging the
Company or a Major Constituent Bank a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization, ar-
rangement, adjustment or composition of or in respect of the Com-
pany or a Major Constituent Bank under any applicable Federal or
State law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or a
Major Constituent Bank or of any substantial part of its property,
or ordering the winding up or liquidation of its affairs, and the con-
tinuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 90 consecutive
days; or
(6) the commencement by the Company or a Major Constitu-
ent Bank of a voluntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated a
bankrupt, or insolvent, or the consent by it to the entry of a decree
or order for relief in respect of the Company or a Major Constituent
Bank in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolven-
cy case or proceeding against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under any appli-
cable Federal or State law, or the consent by it to the filing of such
petition or to the appointment of or taking possession by a custodi-
an, receiver, liquidator, assignee, trustee, sequestrator or similar
official of the Company or a Major Constituent Bank or of any sub-
stantial 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
<PAGE> 57
30
inability to pay its debts generally as they become due, or the tak-
ing of corporate action by the Company or a Major Constituent
Bank in furtherance of any such action;
provided, however, that, in the case of paragraph (5) or (6) of this
Section 501, the references to a Major Constituent Bank shall be deemed
to be only to a Major Constituent Bank the assets of which constitute
10% or more of the Company's Consolidated Banking Assets at the time
of any event described in such paragraph.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default occurs and is continuing, then in every such
case the Trustee or the Holders of not less than 25% in principal amount
of the Outstanding Notes may declare the principal of all the Notes to
be due and payable immediately, by a notice in writing to the Company
(and to the Trustee if given by Holders), and upon any such declaration
such principal shall become immediately due and payable.
At any time after such a declaration of acceleration 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 Hold-
ers of a majority in principal amount of the Outstanding Notes, by writ-
ten notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Notes,
(B) the principal of any Notes which have become due
otherwise than by such declaration of acceleration and interest
thereon at the rate borne by the Notes,
(C) to the extent that payment of such interest is lawful
interest upon overdue installments of interest at the rate borne
by the Notes, 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
<PAGE> 58
31
(2) all Events of Default, other than the non-payment of the
principal of Notes which have become due solely by such declara-
tion of acceleration, have been cured or waived as provided in Sec-
tion 513.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement
by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any Note
when such interest becomes due and payable and such default con-
tinues for a period of 30 days, or
(2) default is made in the payment of the principal of any Note
at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit
of the Holders of such Notes, the whole amount then due and payable on
such Notes for principal and interest, with interest on any overdue prin-
cipal and, to the extent that payment of such interest should be enforce-
able, upon overdue installments of interest at the rate borne by the
Notes; and, in addition thereto, such further amount as shall be suffi-
cient to cover the costs and expenses of collection, including the reason-
able compensation, expenses, disbursements and advances of the Trust-
ee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust,
may institute a judicial proceeding for the collection of the sums so due
and unpaid, may prosecute such proceeding to judgment or final decree
and may enforce the same against the Company or any other obligor
upon the Notes and collect the moneys adjudged or decreed to be pay-
able in the manner provided by law out of the property of the Company
or any other obligor upon the Notes, wherever situated.
<PAGE> 59
32
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of
the Holders by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any such rights, wheth-
er 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 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor or
their creditors, the Trustee (irrespective of whether the principal of the
Notes shall then be due and payable as therein expressed or by declara-
tion or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of overdue principal
or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(a) to file and prove a claim for the whole amount of principal
and interest owing and unpaid in respect of the Notes and to file
such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and of the Holders allowed in
such judicial proceeding, and
(b) to collect and receive any moneys or other property pay-
able 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 autho-
rized by each Holder to make such payments to the Trustee 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 it for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 607.
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 or reorganization, arrangement, adjustment or composition affect-
<PAGE> 60
33
ing the Notes 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 pro-
ceeding.
SECTION 505. Trustee May Enforce Claims Without Possession of
Notes.
All rights of action and claims under this Indenture or the Notes
may be prosecuted and enforced by the Trustee without the possession
of any of the Notes 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 recov-
ery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, be for the ratable benefit of the Holders of the
Notes in respect of which such judgment has been recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee 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 on account of principal or
interest, upon presentation of the Notes 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 607; and
Second: To the payment of the amounts then due and unpaid
for principal of and interest on the Notes 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 Notes for principal and interest, respectively.
SECTION 507. Limitations on Suits.
No Holder of any Note shall have any right to institute any proceed-
ing, judicial or otherwise, with respect to this Indenture, or for the ap-
pointment of a receiver or trustee, or for any other remedy hereunder,
unless
<PAGE> 61
34
(a) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% in principal amount of the
Outstanding Notes shall have made written request to the Trustee
to institute proceedings in respect of such Event of Default in its
own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reason-
able indemnity against the costs, expenses and liabilities to be in-
curred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such pro-
ceeding; and
(e) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders
of a majority in principal amount of the Outstanding Notes;
it being understood and intended that no one or more Holders shall have
any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of
any other Holders, or to obtain or to seek to obtain priority or prefer-
ence over any other Holders or to enforce any right under this Inden-
ture, except in the manner herein provided and for the equal and ratable
benefit of all the Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal
and Interest.
Notwithstanding any other provision in this Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and (subject to Section 307) interest
on such Note on the respective Stated Maturities expressed in such Note
(or, in the case of redemption, on the Redemption Date), and to institute
suit for the enforcement of any such payment, and such rights shall not
be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to en-
force any right or remedy under this Indenture and such proceeding has
<PAGE> 62
35
been discontinued or abandoned for any reason, or has been determined
adversely to the Trustee or to such Holder, then and in every such case,
subject to any determination in such proceeding, the Company, the
Trustee and the Holders shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies
of the Trustee and the Holders shall continue as though no such pro-
ceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes in the last para-
graph of Section 306, no right or remedy herein conferred upon or re-
served to the Trustee or to 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 here-
under, or otherwise, shall not prevent the concurrent assertion or em-
ployment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Note to
exercise any right or remedy accruing upon any Event of Default 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 may be
exercised from time to time and as often as may be deemed expedient,
by the Trustee or by the Holders, as the case may be.
SECTION 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Notes shall have the right to direct the time, method and place of con-
ducting any proceeding for any remedy available to the Trustee, or exer-
cising any trust or power conferred on the Trustee under this Indenture,
provided that
(a) such direction shall not be in conflict with any rule of law
or with this Indenture, and
(b) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction.
<PAGE> 63
36
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Notes may on behalf of the Holders of all the Notes waive
any past default hereunder and its consequences, except a default
(a) in the payment of the principal of or interest on any Note,
or
(b) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of
the Holder of each Outstanding Note affected.
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 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Note 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, suffered 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 Company, to any suit insti-
tuted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal amount of
the Outstanding Notes, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of or interest on any Note
on or after the respective Stated Maturities expressed in such Note (or,
in the case of redemption, on or after the Redemption Date).
SECTION 5.15 Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner what-
soever claim or take the benefit or advantage of, any stay or extension
law whenever enacted, now or at any time hereafter in force, which may
<PAGE> 64
37
affect the covenants or the performance of this Indenture; and the Com-
pany (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 pow-
er as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. 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 correct-
ness 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 which
by any provision hereof are specifically required to be furnished to
the Trustee, the Trustee shall be under a duty to examine the same
to 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 man would exercise or use under the circumstances in the
conduct of his 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;
<PAGE> 65
38
(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;
(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 the Holders of a majority in principal amount of the
Outstanding Notes, determined as provided in Section 512, relating
to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Indenture; and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liabili-
ty in the performance of any of its duties hereunder, or in the exer-
cise of any of its rights or powers, if it 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.
(d) Whether or not therein expressly so provided, every provision
of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
this Section.
SECTION 602. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder, the
Trustee shall transmit by mail to all Holders, as their names and ad-
dresses appear in the Note Register (and to such other Persons as have,
within the two years preceding such transmission, filed their names and
addresses with the Trustee for that purpose), notice of such default
hereunder known to the Trustee, 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 interest on any Note, 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
or Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interest of the Holders; and provid-
ed, further, that in the case of any default of the character specified in
Section 501(3), no such notice to Holders shall be given until at least 30
days after the occurrence thereof. The Trustee shall only be deemed to
<PAGE> 66
39
have knowledge of a default hereunder when a Responsible Officer of
the Trustee has actual knowledge of such default or the Trustee has
received written notice from the Company of such default. For the pur-
pose of this Section, the term "default" means any event which is, or
after notice or lapse of time or both would become, an Event of Default.
SECTION 603. Certain Rights of the Trustee.
Subject to the provisions of Section 601:
(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, or-
der, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company
Order and any resolution of the Board of Directors may be suffi-
ciently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trust-
ee 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 written ad-
vice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action tak-
en, 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 which might
be incurred by it in compliance with such request or direction;
<PAGE> 67
40
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, state-
ment, instrument, opinion, report, notice, request, direction, con-
sent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or mat-
ters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine
the books, records and premises of the Company, personally or by
agent or attorney;
(g) the Trustee may execute any of the trusts or powers here-
under or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsi-
ble for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder; and
(h) the Trustee shall not be liable for any action taken, suf-
fered or omitted by it in good faith and believed by it to be autho-
rized or within the discretion or rights or powers conferred upon it
by this Indenture.
SECTION 604. Not Responsible for Recitals or Issuance of Notes.
The recitals contained herein and in the Notes, except the Trustee's
certificates of authentication, shall be taken as the statements of the
Company, and the Trustee assumes no responsibility for their correct-
ness. The Trustee makes no representations as to the validity or suffi-
ciency of this Indenture or of the Notes. The Trustee shall not be ac-
countable for the use or application by the Company of Notes or the
proceeds thereof.
SECTION 605. May Hold Notes.
The Trustee, any Paying Agent, any Note Registrar or any other
agent of the Company, in its individual or any other capacity, may be-
come the owner or pledgee of Notes and, subject to Sections 608 and 613,
may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Paying Agent, Note Registrar or such other
agent.
<PAGE> 68
41
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregat-
ed 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 here-
under except as otherwise agreed with the Company.
SECTION 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable compen-
sation for all service rendered by it hereunder (which compensation
shall not be limited by any provision of law in regard to the compen-
sation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reim-
burse the Trustee upon its request for all reasonable expenses, dis-
bursements and advances incurred or made by the Trustee in ac-
cordance with any provision of this Indenture (including the reason-
able compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or ad-
vance 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 incurred without negligence
or bad faith on its part, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder or the
performance of its duties hereunder, including the costs and ex-
penses of defending itself against any claim or liability in connec-
tion with the exercise or performance of any of its powers or duties
hereunder.
To ensure the performance of the obligations of the Company under
this Section, the Trustee shall have a claim prior to that of the Notes
upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the payment of principal of or interest on
the Notes.
SECTION 608. Disqualification; Conflicting Interests.
(a) If the Trustee has or shall acquire any conflicting interest, as
defined in this Section, it shall, within 90 days after ascertaining that it
has such conflicting interest, either eliminate such conflicting interest or
<PAGE> 69
42
resign in the manner and with the effect hereinafter specified in this
Article.
(b) In the event that the Trustee shall fail to comply with the provi-
sions of Subsection (a) of this Section, the Trustee shall, within 10 days
after the expiration of such 90-day period, transmit by mail to all Hold-
ers, as their names and addresses appear in the Note Register, notice of
such failure.
(c) For purposes of this Section, the Trustee shall be deemed to
have a conflicting interest if
(1) the Trustee is trustee under another indenture under
which any other securities, or certificates of interest or participation
in any other securities, of the Company are outstanding, unless
such other indenture is a collateral trust indenture under which the
only collateral consists of Notes issued under the Indenture, provid-
ed that there shall be excluded from the operation of this paragraph
any indenture or indentures under which other securities, or certifi-
cates of interest or participation in other securities, of the Company
are outstanding, if
(i) this Indenture and such other indenture or indentures
are wholly unsecured and such other indenture or indentures
are hereafter qualified under the Trust Indenture Act, unless
the Commission shall have found and declared by order pursu-
ant to Section 305(b) or Section 307(c) of the Trust Indenture
Act that differences exist between the provisions of this Inden-
ture and the provisions of such other indenture or indentures
which are so likely to involve a material conflict of interest as to
make it necessary in the public interest or for the protection of
investors to disqualify the Trustee from acting as such under
this Indenture and such other indenture or indentures, or
(ii) the Company shall have sustained the burden of prov-
ing, on application to the Commission and after opportunity for
hearing thereon, that trusteeship under this Indenture and
such other indenture or indentures is not so likely to involve a
material conflict of interest as to make it necessary in the pub-
lic interest or for the protection of investors to disqualify the
Trustee from acting as such under one of such indentures;
<PAGE> 70
43
(2) the Trustee or any of its directors or executive officers is
an obligor upon the Notes or an underwriter for the Company;
(3) the Trustee directly or indirectly controls or is directly or
indirectly controlled by or is under direct or indirect common con-
trol with the Company or an underwriter for the Company;
(4) the Trustee or any of its directors or executive officers is a
director, officer, partner, employee, appointee or representative of
the Company, or of an underwriter (other than the Trustee itself)
for the Company who is currently engaged in the business of under-
writing, except that (i) one individual may be a director or an exec-
utive officer, or both, of the Trustee and a director or an executive
officer, or both, of the Company but may not be at the same time an
executive officer of both the Trustee and the Company, (ii) if and so
long as the number of directors of the Trustee in office is more than
nine, one additional individual may be a director or an executive
officer, or both, of the Trustee and a director of the Company, and
(iii) the Trustee may be designated by the Company or by any
underwriter for the Company to act in the capacity of transfer
agent, registrar, custodian, paying agent, fiscal agent, escrow
agent or depositary, or in any other similar capacity, or, subject to
the provisions of paragraph (1) of this Subsection, to act as trustee,
whether under an indenture or otherwise;
(5) 10% or more of the voting securities of the Trustee is bene-
ficially owned either by the Company or by any director, partner or
executive officer thereof, or 20% or more of such voting securities is
beneficially owned, collectively, by any two or more of such persons;
or 10% or more of the voting securities of the Trustee is beneficially
owned either by an underwriter for the Company or by any director,
partner or executive officer thereof, or is beneficially owned, collec-
tively, by any two or more such persons;
(6) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), (i) 5% or more of the voting securities, or 10%
or more of any other class of security, of the Company not including
the Notes issued under this Indenture and securities issued under
any other Indenture under which the Trustee is also trustee, or (ii)
10% or more of any class of security of an underwriter for the
Company;
<PAGE> 71
44
(7) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), 5% or more of the voting securities of any
person who, to the knowledge of the Trustee, owns 10% or more of
the voting securities of, or controls directly or indirectly or is under
direct or indirect common control with, the Company;
(8) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), 10% or more of any class of security of any
person who, to the knowledge of the Trustee, owns 50% or more of
the voting securities of the Company; or
(9) the Trustee owns, on May 15 in any calendar year, in the
capacity of executor, administrator, testamentary or inter vivos
trustee, guardian, committee or conservator, or in any other similar
capacity, an aggregate of 25% or more of the voting securities, or
of any class of security, of any person, the beneficial ownership of a
specified percentage of which would have constituted a conflicting
interest under paragraph (6), (7) or (8) of this Subsection. As to
any such securities of which the Trustee acquired ownership
through becoming executor, administrator or testamentary trustee
of an estate which included them, the provisions of the preceding
sentence shall not apply, for a period of two years from the date of
such acquisition, to the extent that such securities included in such
estate do not exceed 25% of such voting securities or 25% of any
such class of security. Promptly after May 15 in each calendar year,
the Trustee shall make a check of its holdings of such securities in
any of the above-mentioned capacities as of such May 15. If the
Company fails to make payment in full of the principal of or interest
on any of the Notes when and as the same becomes due and pay-
able, and such failure continues for 30 days thereafter, the Trustee
shall make a prompt check of its holdings of such securities in any
of the above-mentioned capacities as of the date of the expiration of
such 30-day period, and after such date, notwithstanding the fore-
going provisions of this paragraph, all such securities so held by the
Trustee, with sole or joint control over such securities vested in it,
shall, but only so long as such failure shall continue, be considered
as though beneficially owned by the Trustee for the purposes of
paragraphs (6), (7) and (8) of this Subsection.
<PAGE> 72
45
The specification of percentages in paragraphs (5) to (9), inclusive,
of this Subsection shall not be construed as indicating that the owner-
ship of such percentages of the securities of a person is or is not neces-
sary or sufficient to constitute direct or indirect control for the purposes
of paragraph (3) or (7) of this Subsection.
For the purposes of paragraphs (6), (7), (8) and (9) of this Subsec-
tion only, (i) the terms "security" and "securities" shall include only
such securities as are generally known as corporate securities, but shall
not include any note or other evidence of indebtedness issued to evi-
dence an obligation to repay moneys lent to a person by one or more
banks, trust companies or banking firms, or any certificate of interest or
participation in any such note or evidence of indebtedness, (ii) an obliga-
tion shall be deemed to be "in default" when a default in payment of
principal shall have continued for 30 days or more and shall not have
been cured, and (iii) the Trustee shall not be deemed to be the owner or
holder of (A) any security which it holds as collateral security, as trust-
ee or otherwise, for an obligation which is not in default as defined in
clause (ii) above, or (B) any security which it holds as collateral securi-
ty under this Indenture, irrespective of any default hereunder, or (C)
any security which it holds as agent for collection, or as custodian, es-
crow agent or depositary, or in any similar representative capacity.
(d) For the purposes of this Section:
(1) The term "underwriter", when used with reference to the
Company, means every person who, within three years prior to the
time as of which the determination is made, has purchased from the
Company with a view to, or has offered or sold for the Company in
connection with, the distribution of any security of the Company
outstanding at such time, or has participated or has had a direct or
indirect participation in any such undertaking, but such term shall
not include a person whose interest was limited to a commission
from an underwriter or dealer not in excess of the usual and cus-
tomary distributors' or sellers' commission.
(2) The term "director" means any director of a corporation or
any individual performing similar functions with respect to any or-
ganization, whether incorporated or unincorporated.
(3) The term "person" means an individual, a corporation, a
partnership, an association, a joint-stock company, a trust, an unin-
corporated organization or a government or political subdivision
<PAGE> 73
46
thereof. As used in this paragraph, the term "trust" shall include
only a trust where the interest or interests of the beneficiary or
beneficiaries are evidenced by a security.
(4) The term "voting security" means any security presently
entitling the owner or holder thereof to vote in the direction or
management of the affairs of a person, or any security issued under
or pursuant to any trust, agreement or arrangement whereby a
trustee or trustees or agent or agents for the owner or holder of
such security are presently entitled to vote in the direction or man-
agement of the affairs of a person.
(5) The term "Company" means any obligor upon the Notes.
(6) The term "executive officer" means the president, every
vice president, every trust officer, the cashier, the secretary and the
treasurer of a corporation, and any individual customarily perform-
ing similar functions with respect to any organization whether in-
corporated or unincorporated, but shall not include the chairman of
the board of directors.
(e) The percentages of voting securities and other securities speci-
fied in this Section shall be calculated in accordance with the following
provisions:
(1) A specified percentage of the voting securities of the
Trustee, the Company or any other person referred to in this Sec-
tion (each of whom is referred to as a "person" in this paragraph)
means such amount of the outstanding voting securities of such
person as entitles the holder or holders thereof to cast such speci-
fied percentage of the aggregate votes which the holders of all the
outstanding voting securities of such person are entitled to cast in
the direction or management of the affairs of such person.
(2) A specified percentage of a class of securities of a person
means such percentage of the aggregate amount of securities of
the class outstanding.
(3) The term "amount", when used in regard to securities,
means the principal amount if relating to evidences of indebtedness,
the number of shares if relating to capital shares and the number of
units if relating to any other kind of security.
<PAGE> 74
47
(4) The term "outstanding" means issued and not held by or
for the account of the issuer. The following securities shall not be
deemed outstanding within the meaning of this definition:
(i) securities of an issuer held in a sinking fund relating to
securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking fund relating
to another class of securities of the issuer, if the obligation
evidenced by such other class of securities is not in default as
to principal or interest or otherwise;
(iii) securities pledged by the issuer thereof as security
for an obligation of the issuer not in default as to principal or
interest or otherwise; and
(iv) securities held in escrow if placed in escrow by the
issuer thereof;
provided, however, that any voting securities of an issuer shall be
deemed outstanding if any person other than the issuer is entitled
to exercise the voting rights thereof.
(f) A security shall be deemed to be of the same class as another
security if both securities confer upon the holder or holders thereof
substantially the same rights and privileges; provided, however, that, in
the case of secured evidences of indebtedness, all of which are issued
under a single indenture, differences in the interest rates or maturity
dates of various series thereof shall not be deemed sufficient to consti-
tute such series different classes and, provided, further, that, in the
case of unsecured evidences of indebtedness, differences in the interest
rates or maturity dates thereof shall not be deemed sufficient to consti-
tute them securities of different classes, whether or not they are issued
under a single indenture.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia, autho-
rized under such laws to exercise corporate trust powers, having a com-
bined capital and surplus of at least $50,000,000, and subject to supervi-
sion or examination by Federal or State authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to
<PAGE> 75
48
the requirements of said 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.
SECTION 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment
of a successor Trustee pursuant to this Article shall become effective
until the acceptance of appointment by the successor Trustee in accord-
ance with the applicable requirements of Section 611.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If the instrument of acceptance by a successor
Trustee required by Section 611 shall not have been delivered to the
Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for
the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders
of a majority in principal amount of the Outstanding Notes, delivered to
the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608(a) after
written request therefor by the Company or by any Holder who has
been a bona fide Holder of a Note for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company
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 case, (i) the Company by a Board Resolution may remove
the Trustee, or (ii) subject to Section 514, any Holder who has been a
<PAGE> 76
49
bona fide Holder of a Note for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
(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,
the Company, by a Board of Resolution, shall promptly appoint a succes-
sor Trustee and shall comply with the applicable requirements of Sec-
tion 611. If, within one year after such resignation, removal or incapabil-
ity, or the occurrence of such vacancy, a successor Trustee shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Notes delivered to the Company and the retiring Trustee,
the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment in accordance with the applicable requirements of
Section 611, become the successor Trustee and supersede the successor
Trustee appointed by the Company. If no successor Trustee shall have
been so appointed by the Company or the Holders and accepted appoint-
ment in the manner required by Section 611, any Holder who has been a
bona fide Holder of a Note 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 Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee by
mailing written notice of such event by first-class mail, postage prepaid,
to all Holders as their names and addresses appear in the Note Register.
Each notice shall include the name of the successor Trustee and the
address of its corporate trust office.
SECTION 611. Acceptance of Appointment by Successor.
Every such successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation
or removal of the retiring Trustee shall become effective and such suc-
cessor Trustee, without any further act, deed or conveyance, shall be-
come vested with all the rights, powers, trusts and duties of the retiring
Trustee; but, on the request of the Company or the successor Trustee,
such retiring Trustee shall, upon payment of its charges, execute and
deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money
<PAGE> 77
50
held by such retiring Trustee hereunder, subject nevertheless to its
claim, if any, provided for in Section 607. Upon request of any such
successor Trustee, the Company shall execute any and all instruments
for more fully and certainly vesting in and confirming to such successor
Trustee all such rights, powers and trusts.
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 612. Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Trustee may be merged or convert-
ed 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 the
corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be otherwise quali-
fied 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 Notes shall have been authenticated, but not delivered, by the
Trustee then in office, any successor by merger, conversion or consolida-
tion to such authenticating Trustee may adopt such authentication and
deliver the Notes so authenticated with the same effect as if such suc-
cessor Trustee had itself authenticated such Notes.
SECTION 613. Preferential Collection of Claims Against Company.
(a) Subject to Subsection (b) of this Section, if the Trustee shall be
or shall become a creditor, directly or indirectly, secured or unsecured,
of the Company within four months prior to a default, as defined in
Subsection (c) of this Section, or subsequent to such a default, then
unless and until such default shall be cured, the Trustee shall set apart
and hold in a special account for the benefit of the Trustee individually,
the Holders of the Notes and the holders of other indenture securities,
as defined in Subsection (c) of this Section:
(1) an amount equal to any and all reductions in the amount
due and owing upon any claim as such creditor in respect of princi-
pal or interest, effected after the beginning of such four months'
period and valid as against the Company and its other creditors,
except any such reduction resulting from the receipt or disposition
<PAGE> 78
51
of any property described in paragraph (2) of this Subsection, or
from the exercise of any right of set-off which the Trustee could
have exercised if a petition in bankruptcy had been filed by or
against the Company upon the date of such default; and
(2) all property received by the Trustee in respect of any
claims as such creditor, either as security therefor, or in satisfac-
tion or composition thereof, or otherwise, after the beginning of
such four months' period, or an amount equal to the proceeds of any
such property, if disposed of, subject, however, to the rights, if any,
of the Company and its other creditors in such property or such
proceeds.
Nothing herein contained, however, shall affect the right of the Trustee:
(A) to retain for its own account (i) payments made on ac-
count of any such claim by any Person (other than the Company)
who is liable thereon, and (ii) the proceeds of the bona fide sale of
any such claim by the Trustee to a third Person, and (iii) distribu-
tions made in cash, securities or other property in respect of claims
filed against the Company in bankruptcy or receivership or in pro-
ceedings for reorganization pursuant to the Federal Bankruptcy
Code or applicable State law;
(B) to realize, for its own account, upon any property held by
it as security for any such claim, if such property was so held prior
to the beginning of such four months' period;
(C) to realize, for its own account, but only to the extent of the
claim hereinafter mentioned, upon any property held by it as securi-
ty for any such claim, if such claim was created after the beginning
of such four months' period and such property was received as se-
curity therefor simultaneously with the creation thereof, and if the
Trustee shall sustain the burden of proving that at the time such
property was so received the Trustee had no reasonable cause to
believe that a default, as defined in Subsection (c) of this Section,
would occur within four months; or
(D) to receive payment on any claim referred to in paragraph
(B) or (C), against the release of any property held as security for
such claim as provided in paragraph (B) or (C), as the case may be,
to the extent of the fair value of such property.
<PAGE> 79
52
For the purposes of paragraphs (B), (C) and (D), property substi-
tuted after the beginning of such four months' period for property held
as security at the time of such substitution shall, to the extent of the fair
value of the property released, have the same status as the property
released, and, to the extent that any claim referred to in any such para-
graphs is created in renewal of or in substitution for or for the purpose
of repaying or refunding any pre-existing claim of the Trustee as such
creditor, such claim shall have the same status as such pre-existing
claim.
If the Trustee shall be required to establish a special account, the
funds and property held in such special account and the proceeds there-
of shall be apportioned among the Trustee, the Holders and the holders
of other indenture securities in such manner that the Trustee, the Hold-
ers and the holders of other indenture securities realize, as a result of
payments from such special account and payments of dividends on
claims filed against the Company in bankruptcy or receivership or in
proceedings for reorganization pursuant to the Federal Bankruptcy
Code or applicable State law, the same percentage of their respective
claims, figured before crediting to the claim of the Trustee anything on
account of the receipt by it from the Company of the funds and property
in such special account and before crediting to the respective claims of
the Trustee and the Holders and the holders of other indenture securi-
ties dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Feder-
al Bankruptcy Code or applicable State law, but after crediting thereon
receipts on account of the indebtedness represented by their respective
claims from all sources other than from such dividends and from the
funds and property so held in such special account. As used in this
paragraph with respect to any claim, the term "dividends" shall include
any distribution with respect to such claim, in bankruptcy or receiver-
ship or proceedings for reorganization pursuant to the Federal Bank-
ruptcy Code or applicable State law, whether such distribution is made
in cash, securities or other property, but shall not include any such dis-
tribution with respect to the secured portion, if any, of such claim. The
court in which such bankruptcy, receivership or proceedings for reorga-
nization is pending shall have jurisdiction (i) to apportion among the
Trustee, the Holders and the holders of other indenture securities in
accordance with the provisions of this paragraph, the funds and proper-
ty held in such special account and proceeds thereof, or (ii) in lieu of
such apportionment, in whole or in part, to give to the provisions of this
paragraph due consideration in determining the fairness of the distribu-
<PAGE> 80
53
tions to be made to the Trustee and the Holders and the holders of other
indenture securities with respect to their respective claims in which
event it shall not be necessary to liquidate or to appraise the value of
any securities or other property held in such special account or as securi-
ty for any such claim, or to make a specific allocation of such distribu-
tions as between the secured and unsecured portions of such claims, or
otherwise to apply the provisions of this paragraph as a mathematical
formula.
Any Trustee which has resigned or been removed after the begin-
ning of such four months' period shall be subject to the provisions of
this Subsection as though such resignation or removal had not occurred.
If any Trustee has resigned or been removed prior to the beginning of
such four months' period, it shall be subject to the provisions of this
Subsection if and only if the following conditions exist:
(i) the receipt of property or reduction of claim, which would
have given rise to the obligation to account, if such Trustee had
continued as Trustee, occurred after the beginning of such four
months' period; and
(ii) such receipt of property or reduction of claim occurred
within four months after such resignation or removal.
(b) There shall be excluded from the operation of Subsection (a) of
this Section a creditor relationship arising from:
(1) the ownership or acquisition of securities issued under any
indenture, or any security or securities having a maturity of one
year or more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court
of competent jurisdiction or by this Indenture, for the purpose of
preserving any property which shall at any time be subject to the
lien of this Indenture or of discharging tax liens or other prior liens
or encumbrances thereon, if notice of such advances and of the
circumstances surrounding the making thereof is given to the Hold-
ers at the time and in the manner provided in this Indenture;
(3) disbursements made in the ordinary course of business in
the capacity of trustee under an indenture, transfer agent, regis-
trar, custodian, paying agent, fiscal agent or depositary, or other
similar capacity;
<PAGE> 81
54
(4) an indebtedness created as a result of services rendered or
premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction, as defined in Subsection (c) of
this Section;
(5) the ownership of stock or of other securities of a corpora-
tion organized under the provisions of Section 25(a) of the Federal
Reserve Act, as amended, which is directly or indirectly a creditor
of the Company; and
(6) the acquisition, ownership, acceptance or negotiation of
any drafts, bills of exchange, acceptances or obligations which fall
within the classification of self-liquidating paper as defined in Sub-
section (c) of this Section.
(c) For the purposes of this Section only:
(1) the term "default" means any failure to make payment in
full of the principal of or interest on any of the Notes or upon the
other indenture securities when and as such principal or interest
becomes due and payable;
(2) the term "other indenture securities" means securities
upon which the Company is an obligor outstanding under any other
indenture (i) under which the Trustee is also trustee, (ii) which
contains provisions substantially similar to the provisions of this
Section, and (iii) under which a default exists at the time of the
apportionment of the funds and property held in such special ac-
count;
(3) the term "cash transaction" means any transaction in
which full payment for goods or securities sold is made within sev-
en days after delivery of the goods or securities in currency or in
checks or other orders drawn upon banks or bankers and payable
upon demand;
(4) the term "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiat-
ed or incurred by the Company for the purpose of financing the
purchase, processing, manufacturing, shipment, storage or sale of
goods, wares or merchandise and which is secured by documents
evidencing title to, possession of, or a lien upon, the goods, wares or
merchandise or the receivables or proceeds arising from the sale of
the goods, wares or merchandise previously constituting the securi-
<PAGE> 82
55
ty, provided the security is received by the Trustee simultaneously
with the creation of the creditor relationship with the Company aris-
ing from the making, drawing, negotiating or incurring of the draft,
bill of exchange, acceptance or obligation;
(5) the term "Company" means any obligor upon the Notes;
and
(6) the term "Federal Bankruptcy Code" means the Bankrupt-
cy Code or Title 11 of the United States Code.
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of
Holders.
The Company will furnish or cause to be furnished to the Trustee
(a) not more than 15 days after each Regular Record Date, a
list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record
Date, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such re-
quest, a list of similar form and content as of a date not more than
15 days prior to the time such list is furnished,
excluding from any such list names and addresses received by the Trust-
ee if it is Note Registrar.
SECTION 702. Preservation of Information; Communications to
Holders.
(a) The Trustee shall preserve, in as current a form as is reason-
ably practicable, the names and addresses of Holders contained in the
most recent list furnished to the Trustee as provided in Section 701 and
the names and addresses of Holders received by the Trustee in its capac-
ity as Note Registrar, if so acting. The Trustee may destroy any list
furnished to it as provided in Section 701 upon receipt of a new list so
furnished.
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56
(b) If three or more Holders (herein referred to as "applicants")
apply in writing to the Trustee, and furnish to the Trustee reasonable
proof that each such applicant has owned a Note for a period of at least
six months preceding the date of such application, and such application
states that the applicants desire to communicate with other Holders
with respect to their rights under this Indenture or under the Notes and
is accompanied by a copy of the form of proxy or other communication
which such applicants propose to transmit, then the Trustee shall, within
five business days after the receipt of such application, at its election,
either
(i) afford such applicants access to the information preserved
at the time by the Trustee in accordance with Section 702(a), or
(ii) inform such applicants as to the approximate number of
Holders whose names and addresses appear in the information pre-
served at the time by the Trustee in accordance with Section 702(a),
and as to the approximate cost of mailing to such Holders the form
of proxy or other communication, if any, specified in such applica-
tion.
If the Trustee shall elect not to afford such applicants access to
such information, the Trustee shall, upon the written request of such
applicants, mail to each Holder whose name and address appears in the
information preserved at the time by the Trustee in accordance with
Section 702(a) a copy of the form of proxy or other communication
which is specified in such request, with reasonable promptness after a
tender to the Trustee of the material to be mailed and of payment, or
provision for the payment, of the reasonable expenses of mailing, unless
within five days after such tender the Trustee shall mail to such appli-
cants and file with the Commission, together with a copy of the material
to be mailed, a written statement to the effect that, in the opinion of the
Trustee, such mailing would be contrary to the best interest of the Hold-
ers or would be in violation of applicable law. Such written statement
shall specify the basis of such opinion. If the Commission, after opportu-
nity for a hearing upon the objections specified in the written statement
so filed, shall enter an order refusing to sustain any of such objections
or if, after the entry of an order sustaining one or more of such objec-
tions, the Commission shall find, after notice and opportunity for hear-
ing, that all the objections so sustained have been met and shall enter an
order so declaring, the Trustee shall mail copies of such material to all
such Holders with reasonable promptness after the entry of such order
<PAGE> 84
57
and the renewal of such tender; otherwise the Trustee shall be relieved
of any obligation or duty to such applicants respecting their application.
(c) Every Holder of Notes, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor
the Trustee nor any agent of either of them shall be held accountable by
reason of the disclosure of any such information as to the names and
addresses of the Holders in accordance with Section 702(b), regardless
of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any material
pursuant to a request made under Section 702(b).
SECTION 703. Reports by Trustee.
(a) Within 60 days after August 15 of each year commencing with
the year 1986, the Trustee shall transmit by mail to all Holders, as their
names and addresses appear in the Note Register (and to such other
Persons as have, within the two years preceding such transmission, filed
their names and addresses with the Trustee for that purpose), a brief
report dated as of such August 15 with respect to:
(1) its eligibility under Section 609 and its qualifications under
Section 608, or in lieu thereof, if to the best of its knowledge it has
continued to be eligible and qualified under said Sections, a written
statement to such effect;
(2) the character and amount of any advances (and if the
Trustee elects so to state, the circumstances surrounding the mak-
ing thereof) made by the Trustee (as such) which remain unpaid on
the date of such report, and for the reimbursement of which it
claims or may claim a lien or charge, prior to that of the Notes, on
any property or funds held or collected by it as Trustee, except that
the Trustee shall not be required (but may elect) to report such
advances if such advances so remaining unpaid aggregate not more
than 1/2 of 1% of the principal amount of the Notes Outstanding on
the date of such report;
(3) the amount, interest rate and maturity date of all other
indebtedness owing by the Company (or by any other obligor on the
Notes) to the Trustee in its individual capacity, on the date of such
report, with a brief description of any property held as collateral
security therefor, except an indebtedness based upon a creditor re-
<PAGE> 85
58
lationship arising in any manner described in Section 613(b) (2),
(3), (4) and (6);
(4) the property and funds, if any, physically in the possession
of the Trustee as such on the date of such report;
(5) any additional issue of Notes which the Trustee has not
previously reported; and
(6) any action taken by the Trustee in the performance of its
duties hereunder which it has not previously reported and which in
its opinion materially affects the Notes, except action in respect of a
default, notice of which has been or is to be withheld by the Trustee
in accordance with Section 602.
(b) The Trustee shall transmit by mail to all Holders, as their
names and addresses appear in the Note Register, a brief report with
respect to the character and amount of any advances (and if the Trustee
elects so to state, the circumstances surrounding the making thereof)
made by the Trustee (as such) since the date of the last report transmit-
ted pursuant to Subsection (a) of this Section (or if no such report has
yet been so transmitted, since the date of execution of this instrument)
for the reimbursement of which it claims or may claim a lien or charge,
prior to that of the Notes, on property or funds held or collected by it as
Trustee and which it has not previously reported pursuant to this Sub-
section, except that the Trustee shall not be required (but may elect) to
report such advances if such advances remaining unpaid at any time
aggregate 10% or less of the principal amount of the Notes Outstanding
at such time, such report to be transmitted within 90 days after such
time.
(c) A copy of each such report shall, at the time of such transmis-
sion to Holders, be filed by the Trustee with each stock exchange upon
which the Notes are listed, with the Commission and with the Company.
The Company will notify the Trustee when the Notes are listed on any
stock exchange.
SECTION 704. Reports by Company.
The Company shall:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information documents and other reports (or
<PAGE> 86
59
copies of such portions of any of the foregoing as the Commission
may from time to time by rules and regulations prescribe) which
the Company may be required to file with the Commission pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of
1934; or, if the Company is not required to file information, docu-
ments or reports pursuant to either of said Sections, then it shall file
with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such
of the supplementary and periodic information, documents and re-
ports which may be required pursuant to Section 13 of the Securi-
ties Exchange Act of 1934 in respect of a security listed and regis-
tered on a national securities exchange as may be prescribed from
time to time in such rules and regulations;
(2) file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the Com-
mission, such additional information, documents and reports with
respect to compliance by the Company with the conditions and cove-
nants of this Indenture as may be required from time to time by
such rules and regulations; and
(3) transmit by mail to all Holders, as their names and ad-
dresses appear in the Note Register, within 30 days after the filing
thereof with the Trustee, such summaries of any information, docu-
ments and reports required to be filed by the Company pursuant to
paragraphs (1) and (2) of this Section as may be required by rules
and regulations prescribed from time to time by the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain
Terms.
The Company shall not consolidate with or merge into any other
corporation or convey, transfer or lease its properties and assets sub-
stantially as an entirety to any Person, and the Company shall not per-
mit any Person to consolidate with or merge into the Company, unless:
(1) in case the Company shall consolidate with or merge into
another corporation or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, the corporation
<PAGE> 87
60
formed by such consolidation or into which the Company is merged
or the Person which acquires by conveyance or transfer, or which
leases, the properties and assets of the Company substantially as an
entirety shall expressly assume, by an indenture supplemental here-
to, executed and delivered to the Trustee, in form satisfactory to
the Trustee, the due and punctual payment of the principal of and
interest on all the Notes and the performance of every covenant of
this Indenture on the part of the Company to be performed or ob-
served;
(2) immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of time
or both, would become an Event of Default, shall have happened
and be continuing; and
(3) the Company has delivered to the Trustee an Officers' Cer-
tificate and an Opinion of Counsel, each stating that such consolida-
tion, merger, conveyance, transfer or lease and, if a supplemental
indenture is required in connection with such transaction, such sup-
plemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transaction have
been complied with.
SECTION 802. Successor Corporation Substituted.
Upon any consolidation by the Company with or merger by the
Company into any other corporation or any conveyance, transfer or
lease of the properties and assets of the Company substantially as an
entirety in accordance with Section 801, the successor corporation
formed by such consolidation or into which the Company is merged or to
which such conveyance, transfer or lease is made shall succeed to, and
be substituted for, and may exercise every right and power of, the Com-
pany under this Indenture with the same effect as if such successor
corporation had been named as the Company herein, and thereafter,
except in the case of a lease, the predecessor corporation shall be re-
lieved of all obligations and covenants under this Indenture and the
Notes.
<PAGE> 88
61
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of
Holders.
Without the consent of any Holders, the Company, when authorized
by a Board Resolution, and the Trustee, at any time and from time to
time, may 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 corporation to the
Company and the assumption by any such successor of the cove-
nants of the Company herein and in the Notes; or
(2) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred
upon the Company; or
(3) to cure any ambiguity, to correct or supplement any provi-
sion herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions with respect to
matters or questions arising under or changes to this Indenture,
provided such action shall not materially adversely affect the inter-
ests of the Holders.
SECTION 902. Supplemental Indentures With Consent of Holders.
With the consent of the Holders of not less than a majority in princi-
pal amount of the Outstanding Notes, by Act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by a
Board Resolution, and the Trustee may enter into an indenture or inden-
tures 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 un-
der this Indenture; provided, however, that no such supplemental inden-
ture shall, without the consent of the Holder of each Outstanding Note
affected thereby,
(1) change the Stated Maturity of, or any installment of inter-
est on, any Note, or reduce the principal amount thereof or the rate
of interest thereon or change any Place of Payment where, or the
coin or currency in which, any Note or the interest thereon is pay-
<PAGE> 89
62
able 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 principal amount of the Outstand-
ing Notes, the consent of the Holders of which is required for any
such supplemental indenture, or the consent of the Holders of
which is required for any waiver (of compliance with certain provi-
sions of this Indenture or certain defaults hereunder and their con-
sequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section or Section 513
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 Outstanding Note affect-
ed thereby.
It shall not be necessary for any Act of Holders under this Section
to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any sup-
plemental indenture permitted by this Article or the modifications there-
by of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and (subject to Section 601) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supple-
mental indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such supple-
mental indenture which affects the Trustee's own rights, duties or im-
munities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Arti-
cle, this Indenture shall be modified in accordance therewith, and such
supplemental indentures shall form a part of this Indenture for all pur-
poses; and every Holder of Notes theretofore or thereafter authenticat-
ed and delivered hereunder shall be bound thereby.
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63
SECTION 905. 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 906. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any sup-
plemental indenture pursuant to this Article may, and shall, if required
by the Trustee, bear a notation in form acceptable to the Trustee as to
any matter provided for in such supplemental indenture. If the Compa-
ny shall so determine, new Notes so modified as to conform, in the opin-
ion of the Trustee and the Company, to any such supplemental inden-
ture may be prepared and executed by the Company and authenticated
and delivered by the Trustee in exchange for Outstanding Notes.
SECTION 907. Notice of Supplemental Indentures.
Upon the execution of any supplemental indenture the Company
shall transmit by mail to each Holder a notice setting forth the general
terms of such supplemental indenture.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal and Interest.
The Company will duly and punctually pay the principal of and in-
terest on the Notes in accordance with the terms of the Notes and this
Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment an office or
agency where Notes may be presented or surrendered for payment,
where Notes may be surrendered for registration of transfer or ex-
change, and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company
will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Com-
pany shall fail to maintain any such required office or agency or shall
fail to furnish the Trustee with the address thereof, such presentations,
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64
surrenders, notices and demands may be made or served at the Corpo-
rate Trust Office of the Trustee. Unless otherwise designated by the
Company in a written notice to the Trustee, the office or agency for all
such purposes shall be the Corporate Trust Office of the Trustee in New
York, New York.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surren-
dered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or re-
scission shall in any manner relieve the Company of its obligation to
maintain an office or agency in each Place of Payment for Notes for
such purposes. The Company will give prompt written notice to the
Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
SECTION 1003. Money for Note Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it
will, on or before each due date of the principal of or interest on any of
the Notes, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal or interest so be-
coming 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 action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it
will, prior to each due date of the principal of or interest on any Notes,
deposit with a Paying Agent a sum sufficient to pay the principal or
interest so becoming due, such sum to be held in trust for the benefit of
the Persons entitled to such principal or interest, and (unless such Pay-
ing Agent is the Trustee) the Company will promptly notify the Trustee
of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee
to execute and deliver to the Trustee an instrument in which such Pay-
ing 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
or interest on Notes 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;
<PAGE> 92
65
(2) give the Trustee notice of any default by the Company (or
any other obligor upon the Notes) in the making of any payment of
principal of or interest on the Notes; and
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trust-
ee all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose,
pay, or by Company Order direct any Paying Agent to pay, to the Trust-
ee all sums held in trust by the Company 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 Company or such Paying Agent; and,
upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of or
interest on any note and remaining unclaimed for three years after such
principal or interest has become due and payable shall be paid to the
Company on Company Request (subject to any applicable escheat
laws), or (if then held by the Company) shall be discharged from such
trust; and the Holder of such Note shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall there-
upon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense
of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and
of general circulation in the Borough of Manhattan, City of New York,
State of New York, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then
remaining will be repaid to the Company.
SECTION 1004. Corporate Existence.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corpo-
rate existence, rights (charter and statutory) and franchises; provided,
<PAGE> 93
66
however, that the Company shall not be required to preserve any such
right or franchise if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the busi-
ness of the Company and that the loss thereof is not disadvantageous in
any material respect to the Holders.
SECTION 1005. Restrictions on Certain Dispositions of Major Con-
stituent Banks.
The Company will not (a) issue, sell or otherwise dispose of any
shares of, or securities convertible into, or options, warrants or rights to
subscribe for or purchase shares of, Voting Stock of any Major Constit-
uent Bank, (b) permit the merger or consolidation of any Major Constit-
uent Bank with or into any other corporation other than another Major
Constituent Bank or a Subsidiary which, by a Board Resolution, shall
have been designated as a Major Constituent Bank for all purposes of
this indenture, or (c) permit the sale or other disposition of all or sub-
stantially all of the assets of any Major Constituent Bank, if, after giv-
ing effect to any such transaction specified in clauses (a), (b) or (c)
above and the issuance of the maximum number of shares of Voting
Stock issuable upon the conversion or exercise of all such convertible
securities, options, warrants or rights, the Company would own, directly
or indirectly, 80% or less of the shares of Voting Stock of such Major
Constituent Bank; provided, however, that the foregoing shall not pro-
hibit any such issuance, sale or disposition of shares or securities, any
such merger or consolidation or any such sale or disposition of assets if
required (i) by any law or any regulation or order of any governmental
authority or (ii) as a condition imposed by any law or any regulation or
order of any governmental authority to the acquisition by the Company,
directly or indirectly, of any other corporation or entity, if thereafter,
(A) the Company would own more than 80% of the Voting Stock of
such other corporation or entity, and (B) the Consolidated Banking As-
sets of the Company would be at least equal to the Consolidated Bank-
ing Assets of the Company prior thereto, and (C) by a Board Resolu-
tion, such other corporation or entity shall have been designated a Major
Constituent Bank for all purposes of this Indenture.
SECTION 1006. Waiver of Covenants in Section 1005.
The Company may omit in any particular instance to comply with
any covenant or condition set forth in Section 1005 if before the time for
such compliance the Holders of at least a majority in principal amount of
the Outstanding Notes shall, by Act of such Holders, either waive such
<PAGE> 94
67
compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company
and the duties of the Trustee in respect of any such covenant or condi-
tion shall remain in full force and effect.
SECTION 1007. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the
end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate, stating whether or not to the best knowledge of the
signers thereof the Company is in default in the performance and ob-
servance of any of the terms, provisions and conditions of Sections 1001
to 1005, inclusive, and if the Company shall be in default, specifying all
such defaults and the nature and status thereof of which they may have
knowledge. Such Officers' Certificate shall comply with the require-
ments of Section 102.
ARTICLE ELEVEN
REDEMPTION OF NOTES
SECTION 1101. Right of Redemption.
The Notes may be redeemed at the election of the Company, as a
whole or from time to time in part, at any time on and after the Interest
Payment Date in October 1989, under the conditions specified in the
form of Note hereinbefore set forth, at a Redemption Price equal to
100% of the principal amount thereof, together with accrued interest to
the Redemption Date.
SECTION 1102. Applicability of Article.
Redemption of Notes at the election of the Company, as permitted
by any provision of this Indenture, shall be made in accordance with
such provision and this Article.
SECTION 1103. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Notes shall be evi-
denced by a Board Resolution. In case of any redemption at the election
of the Company of less than all the Notes, the Company shall, at least 60
days prior to the Redemption Date fixed by the Company (unless a
<PAGE> 95
68
shorter notice shall be satisfactory to the Trustee), notify the Trustee of
such Redemption Date and of the principal amount of Notes to be re-
deemed.
SECTION 1104. Selection by Trustee of Notes to be Redeemed.
If less than all the Notes are to be redeemed, the particular Notes
to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Notes not previ-
ously called for redemption, by such method as the Trustee shall deem
fair and appropriate and which may provide for the selection for re-
demption of portions (equal to $1,000 or any integral multiple thereof)
of the principal amount of Notes of a denomination larger than $1,000.
The Trustee shall promptly notify the Company in writing of the
Notes selected for redemption and, in the case of any Notes selected for
partial redemption, 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 Notes shall relate,
in the case of any Note redeemed or to be redeemed only in part, to the
portion of the principal amount of such Note which has been or is to be
redeemed.
SECTION 1105. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage pre-
paid, mailed no less than 30 nor more than 60 days prior to the Redemp-
tion Date, to each Holder of Notes to be redeemed, at his address ap-
pearing in the Note Register.
All notices of redemption shall include:
(1) the Redemption Date,
(2) the Redemption Price and the amount of accrued interest
to the Redemption Date,
(3) if less than all the Outstanding Notes are to be redeemed,
the identification (and, in the case of partial redemption, the respec-
tive principal amounts) of the particular Notes to be redeemed,
(4) a statement to the effect that on the Redemption Date the
Redemption Price and accrued interest to the Redemption Date will
<PAGE> 96
69
become due and payable upon each such Note to be redeemed and
that interest thereon will cease to accrue on and after said date, and
(5) the place or places where such Notes are to be surrendered
for payment of the Redemption Price and accrued interest.
Notice of redemption of Notes to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request,
by the Trustee in the name and at the expense of the Company. Failure
to give such notice to the Holder of any Note to be redeemed as a whole
or in part, or any defect therein, shall not affect the validity of the
proceedings for the redemption of any other Note.
SECTION 1106. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 1003)
an amount of money sufficient to pay the Redemption Price of, and (ex-
cept if the Redemption Date shall be an Interest Payment Date) accrued
interest on, all the Notes which are to be redeemed on that date.
SECTION 1107. Notes Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Notes so
to be redeemed shall, on the Redemption Date, become due and payable
at the Redemption Price therein specified, and from and after such date
(unless the Company shall default in the payment of the Redemption
Price and accrued interest) such Notes shall cease to bear interest.
Upon surrender of any such Note for redemption in accordance with
said notice, such Note shall be paid by the Company at the Redemption
Price, together with accrued interest to the Redemption Date; provided,
however, that installments of interest the Stated Maturity of which is on
or prior to the Redemption Date shall be payable to the Holders of such
Notes, or one or more Predecessor Notes, registered as such at the close
of business on the relevant Record Dates according to their terms and
the provisions of Section 307.
If any Note called for redemption shall not be so paid upon surren-
der thereof for redemption, the principal thereof shall, until paid, bear
interest from the Redemption Date at the rate borne by the Note.
<PAGE> 97
70
SECTION 1108. Notes Redeemed in Part.
Any Note which is to be redeemed only in part shall be surrendered
at a Place of Payment therefor (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or his attorney duly authorized in writing), and the Com-
pany shall execute, and the Trustee shall authenticate and deliver to the
Holder of such Note or to the Person in whose name the Holder has
directed that such Note be issued and delivered without service charge,
a new Note or Notes, of any authorized denomination as requested by
such Holder, in aggregate principal amount equal to and in exchange for
the unredeemed portion of the principal amount of the Note so surren-
dered.
ARTICLE TWELVE
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND
DIRECTORS
SECTION 1201. Indenture and Notes Solely Corporate Obligations.
No recourse for the payment of the principal of or interest on any
Note, or for any claim based thereon or otherwise in respect thereof,
and no recourse under or upon any obligation, covenant or agreement of
the Company in this Indenture or in any supplemental indenture, or in
any Note, or because of the creation of any indebtedness represented
thereby, shall be had against any incorporator, stockholder, officer or
director, as such, past, present or future, of the Company or of any
successor corporation, either directly or through the Company or any
successor corporation, whether by virtue of any constitution, statute or
rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that all such liability is hereby
expressly waived and released as a condition of, and as a consideration
for, the execution of this Indenture and the issue of the Notes.
* * *
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.
<PAGE> 98
71
IN WITNESS WHEREOF, the parties hereto have caused this Inden-
ture to be duly executed, and their respective corporate seals to be here-
unto affixed and attested, all as of the day and year first above written.
<TABLE>
<S> <C>
FIRST KENTUCKY NATIONAL
CORPORATION
By _____________________________
Title:
ATTEST:
________________________________
Title:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Trustee
By _____________________________
Title:
ATTEST:
________________________________
Title:
</TABLE>
<PAGE> 99
72
STATE OF NEW YORK ) SS:
COUNTY OF NEW YORK )
On the day of October, 1985, before me personally came
, to me known, who, being by me duly sworn, did depose and
say that he is of FIRST KENTUCKY NATIONAL CORPORA-
TION, one of the corporations described in and which executed the fore-
going instrument; that he knows the seal of said corporation; that the
seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation, and
that he signed his name thereto by like authority.
__________________________________
STATE OF NEW YORK ) SS:
COUNTY OF NEW YORK )
On the day of October, 1985, before me personally came
, to me known, who, being by me duly sworn, did depose and
say that he is of MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, one of the corporations described in and which execut-
ed the foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was
so affixed by authority of the Board of Directors of said corporation, and
that he signed his name thereto by like authority.
__________________________________
<PAGE> 1
PROSPECTUS
$65,000,000
MERCHANTS NATIONAL CORPORATION
9 7/8% SUBORDINATED NOTES DUE 1999
The Notes will mature on October 1, 1999. Interest on the Notes is payable
semiannually on April 1 and October 1 of each year, commencing April 1, 1990.
The Notes are not redeemable prior to maturity. The Notes are unsecured
obligations of the Corporation and are subordinated to all existing and future
Senior Indebtedness (as defined) of the Corporation. See "Description of
Notes--Subordination of Notes." The Notes will not be deposits or other
obligations of a bank and will not be insured by the Federal Deposit Insurance
Corporation.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT CORPORATION(1)(2)
<S> <C> <C> <C>
Per Note......................... 99.282% .675% 98.607%
Total............................ $64,533,300 $438,750 $64,094,550
- ---------------------------------------------------------------------------------------------
<FN>
(1) Plus accrued interest from October 1, 1989 to the date of delivery.
(2) Before deducting expenses payable by the Corporation estimated to be
$184,000.
</TABLE>
The Notes are offered subject to receipt and acceptance by the Underwriter, to
prior sale and to the Underwriter's right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice. It is expected
that delivery of the Notes will be made at the office of Salomon Brothers Inc,
One New York Plaza, New York, New York, or through the facilities of The
Depository Trust Company, on or about October 4, 1989.
- ---------------------
SALOMON BROTHERS INC
- -------------------------------------------------------------------------------
The date of this Prospectus is September 27, 1989.
EXHIBIT 99.8
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
Merchants National Corporation (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 Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements, and other information can
be inspected and copied at Room 1024 of the Commission's office at 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's Regional Offices
in New York (75 Park Place, 14th Floor, New York, New York 10007) and Chicago
(Room 3190, Kluczynski Federal Building, 230 South Dearborn Street, Chicago,
Illinois 60604), and copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. Additional information regarding the Corporation
and the 9 7/8% Subordinated Notes Due 1999 offered hereby (the "Notes") is
contained in the Registration Statement and exhibits relating thereto in
respect of the Notes filed with the Commission under the Securities Act of
1933, as amended (the "Securities Act").
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Commission are
hereby incorporated by reference in this Prospectus:
1. The Corporation's Annual Report on Form 10-K for the year ended December
31, 1988;
2. The Corporation's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1989 and June 30, 1989; and
3. The Corporation's Current Reports on Form 8-K dated June 16,1989, August
14, 1989, August 23, 1989 and August 28, 1989.
All documents filed by the Corporation pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of the offering of the Notes shall be deemed to be incorporated by
reference in this Prospectus and shall be deemed a part hereof from the date of
filing of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that the statement
contained herein or in any other subsequently filed document which also is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
The Corporation will provide without charge to each person to whom a copy
of this Prospectus has been delivered, upon the written or oral request of such
person, a copy of any or all of the documents incorporated by reference herein,
other than unincorporated exhibits to such documents. Requests for such copies
should be directed to David J. Lebedeff, Investor Relations Director, Merchants
National Corporation, One Merchants Plaza, Suite 415 East, Indianapolis,
Indiana 46255; telephone (317) 267-3701.
2
<PAGE> 3
MERCHANTS NATIONAL CORPORATION
Merchants National Corporation (the "Corporation") is a multi-bank holding
company incorporated in the State of Indiana in 1971. Its 16 bank
subsidiaries provide a broad range of commercial and retail banking services,
as well as trust and investment services, through 131 banking offices located
in the State of Indiana. The Corporation also offers investment advisory,
mortgage banking, discount securities brokerage, and export trading services
through its nonbank subsidiaries. At June 30, 1989, the Corporation and its
subsidiaries had total assets of $5.2 billion, total deposits of $3.7 billion
and total shareholders' equity of $361 million. Based on total assets at that
date, the Corporation is the second largest publicly held bank holding company
based in Indiana.
Merchants National Bank & Trust Company of Indianapolis ("MNB"), a national
banking association, is the Corporation's largest subsidiary, and had total
assets of $3.4 billion, total deposits of $2.0 billion and total shareholder's
equity of $190.4 million at June 30, 1989. MNB accounted for approximately 66%
of the Corporation's consolidated assets at June 30, 1989, and 74% of its
consolidated net income for the six months ended June 30, 1989.
In May 1988, MNB assumed management of military banking facilities in West
Germany, The Netherlands and Greece pursuant to a contract entered into with
the U.S. Department of Defense, which is renewable, subject to renegotiation of
certain terms and conditions, on an annual basis through September 30, 1992.
Under this contract MNB provides retail banking services to U.S. military
personnel and their families and other related parties through a 135-branch
network. On June 16, 1989, MNB was selected to manage 46 additional military
banking facilities in the United Kingdom, Iceland, The Philippine Islands,
Diego Garcia, and The Republic of Korea under a three-year contract which
expires on September 30, 1992.
Since 1985, when the Indiana legislature authorized expansion by banks and
bank holding companies within Indiana and contiguous states, the Corporation
has acquired 16 banks throughout the State of Indiana. The following table sets
forth information concerning banks acquired by the Corporation since January
1986 and other banks that, as of the date of this Prospectus, the Corporation
has entered into definitive agreements to acquire. All of these banks are
located in Indiana.
<TABLE>
<CAPTION>
NUMBER
OF
MONTH OF TOTAL TOTAL BANKING
ACQUISITION BANK ACQUIRED ASSETS(1) DEPOSITS(1) OFFICES(1)
- ----------- ------------- --------- ----------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
January, 1986 The Farmers National Bank of Shelbyville $133,255 $116,243 5
January, 1986 The Central National Bank of Greencastle 78,844 70,655 2
April, 1986 Hancock Bank and Trust, Greenfield 79,826 72,378 6
November, 1986 Union State Bank, Carmel 181,284 167,184 6
November, 1986 Mid State Bank of Hendricks County, Danville 94,949 84,862 8
November, 1986 Mid State Bank, Zionsville 87,635 77,767 9
December, 1986 Anderson Banking Company 283,228 241,501 11
December, 1986 The National Bank of Greenwood 144,462 139,841 5
December, 1986 Seymour National Bank 64,034 58,193 5
December, 1986 The Citizens National Bank of Tipton 74,670 68,203 2
May, 1987 Fayette Bank and Trust Company, Connersville 81,115 70,129 5
August, 1987 The Madison Bank and Trust Company 153,645 136,600 5
February, 1988 Elston Bank & Trust Company, Crawfordsville 131,288 115,704 6
November, 1988 Batesville State Bank 74,094 66,071 1
November, 1988 First National Bank of East Chicago 239,990 210,462 6
August, 1989 The First National Bank of North Vernon 67,343 60,942 4
Pending Rising Sun State Bank 26,282 23,066 1
Pending Commercial Bank & Trust Company, Alexandria 36,385 31,895 1
Pending The First National Bank of Logansport 216,309 179,595 4
Pending First National Bank of Indiana, Monticello 19,300 17,788 2
<FN>
- ---------------
(1) At the date of acquisition or, if a pending acquisition, as of June 30,
1989.
</TABLE>
3
<PAGE> 4
As indicated on the preceding page, the Corporation has entered into
definitive agreements to acquire four banks (the "Pending Acquisitions")
located in Indiana with aggregate assets of approximately $298 million,
aggregate deposits of approximately $252 million and 8 banking offices. The
Pending Acquisitions are all presently expected to close by the end of 1989.
The aggregate consideration to be paid by the Corporation in the Pending
Acquisitions is anticipated to be approximately $28 million in cash and $2
million in notes. See "Use of Proceeds." Upon consummation of the Pending
Acquisitions and the consolidation of certain banks, the Corporation's banking
network will consist of 18 banks in 19 Indiana counties with 139 banking
locations statewide.
Currently, Indiana banking law permits interstate regional banking within
contiguous and bicontiguous states that have reciprocal interstate banking
provisions. Eight contiguous and bicontiguous states have reciprocal interstate
banking provisions. In 1992, a nationwide banking feature in Indiana's law
becomes effective, and Indiana banks will thereafter have reciprocity with at
least 33 states. The Corporation plans to continue increasing its midwest
market share by adding to its Indiana franchise through additional acquisitions
both within and outside Indiana. Other than the Pending Acquisitions, the
Corporation at this time has no understandings or binding commitments for
future acquisitions of banks, and there can be no assurance that any other
acquisition will be consummated.
The Corporation is a legal entity separate and distinct from its
subsidiaries. Accordingly, the right of the Corporation, and thus the right of
the Corporation's creditors and shareholders, to participate in any
distribution of the assets or income of any subsidiary is necessarily subject
to the prior claims of creditors of the subsidiary, except to the extent that
claims of the Corporation itself as a creditor may be recognized. There are
also legal limitations on the extent to which the Corporation's subsidiary
banks can lend or otherwise supply funds to the Corporation. In addition,
payment of dividends to the Corporation by subsidiary banks is subject to
Indiana and Federal regulatory limitations. Indiana banking laws limit the
dividends payable by each of the Indiana bank subsidiaries of the Corporation
in any calendar year to the undivided profits then on hand after deducting
losses, bad debts, depreciation, and all other expenses (provided that certain
minimum capital requirements have been met). Under Federal law, which applies
to national banks and state banks which are members of the Federal Reserve
System, regulatory approval is required for the payment of dividends by any
bank in any calendar year in excess of that bank's net income for that year
combined with the retained net income of the two preceding years, less any
required transfers to surplus. At June 30, 1989, under applicable Federal and
state regulations, the Corporation's subsidiary banks would have been permitted
to pay dividends to the Corporation of approximately $76.7 million without
prior regulatory approval. The Federal and state bank regulatory authorities
also have the authority to prohibit a bank from engaging in what, in their
opinion, constitutes an unsafe or unsound practice in conducting its business.
Depending upon the financial condition of a bank subsidiary, the payment of
dividends by that subsidiary could be deemed by such authorities to constitute
an unsafe or unsound practice.
The Corporation's principal executive offices are located at One Merchants
Plaza, Suite 400-E, Indianapolis, Indiana 46255, and its telephone number is
(317) 267-7000.
USE OF PROCEEDS
The Corporation will utilize approximately $37 million of the net proceeds
from the sale of the Notes to repay two advances totaling $37 million made to
the Corporation under a revolving line of credit. The $37 million loan bears
interest at the rate of the lender's applicable certificate of deposit rate
plus .5% and reprices for periods of up to 90 days (currently the rate equals
9.73%). The advances under the revolving line of credit were obtained to repay
$37 million of commercial paper issued to fund the Corporation's last four
consummated bank acquisitions. The Corporation will use the remaining balance
of the net proceeds (approximately $28 million) to fund the cash portion of the
purchase price of the Pending Acquisitions. See "Merchants National
Corporation." If any of
4
<PAGE> 5
the Pending Acquisitions is not consummated, the net proceeds available to the
Corporation will be used for general corporate purposes including possible
future acquisitions. Pending their ultimate application, the net proceeds may
be temporarily invested in marketable securities or applied to the reduction of
short-term indebtedness.
Based on the expected future growth of the Corporation and its
subsidiaries, the Corporation also anticipates that it may from time to time
engage in additional financings of a character and in amounts to be determined.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Corporation at June 30, 1989, and as adjusted to reflect the issuance of the
Notes.
<TABLE>
<CAPTION>
JUNE 30, 1889
------------------------
TITLE OF CLASS OUTSTANDING ADJUSTED
-------------- ----------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-Term Debt (including current maturities):
The Corporation
9.875% Subordinated Notes due 1999 offered hereby .. $ -- $ 65,000
Subsidiaries(1)
9.40%--9.75% Capital Notes due through 1993 ......... 3,550 3,550
8.00% Obligations under Capital Leases ............. 219 219
13.25% Bond Payable due 2003 ....................... 617 617
8.00% Note Payable due 1991 ........................ 9 9
-------- --------
Total Long-Term Debt ............................. 4,395 69,395
-------- --------
Shareholders' Equity:
Preferred Stock, without par value, authorized shares:
3,000,000; issued: none............................... -- --
Common Stock, stated value $1.67 per share, authorized shares:
25,000,000; issued and outstanding: 14,676,983 shares. 24,510 24,510
Capital surplus ........................................ 99,355 99,355
Retained earnings ...................................... 236,962 236,962
-------- --------
Total Shareholders' Equity ....................... 360,827 360,827
-------- --------
Total Long-Term Debt and
Shareholders' Equity ......................... $365,222 $430,222
======== ========
<FN>
- ---------------
(1) These obligations are direct obligations of the Corporation's
subsidiaries and, as such, constitute claims against such subsidiaries prior to
the Corporation's equity interest therein.
</TABLE>
At June 30, 1989, the Corporation had $142 million of commercial paper
outstanding, with an average maturity of 11 days and an average interest rate
of 8.95%. For the first six months of 1989, the amount of commercial paper
outstanding averaged $144 million, and ranged, at any month-end, from a high of
$155 million to a low of $127 million. At June 30, 1989, the Corporation had
$60 million available under its $90 million lines of credit.
5
<PAGE> 6
SUMMARY CONSOLIDATED FINANCIAL DATA
The following summary consolidated financial data of the Corporation is
qualified in its entirety by, and should be read in conjunction with, the
consolidated financial statements, including notes thereto, and other detailed
financial information included in the documents incorporated by reference in
this Prospectus. See "Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, (1) YEAR ENDED DECEMBER 31,
---------------------- ----------------------------------------------------------
1989 1988 1988 1987(2)(3) 1986(2) 1985(2) 1984(2)
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Summary of Income:
Total interest income.................... $ 229,218 $ 181,775 $ 384,922 $ 331,395 $ 331,031 $ 322,111 $ 326,258
Total interest expense................... 139,074 104,421 224,011 190,807 203,066 210,780 227,758
Net interest income...................... 90,144 77,354 160,911 140,588 127,965 111,331 98,500
Provision for credit losses.............. 8,522 6,962 23,927 39,460 22,095 14,153 11,328
Net interest income after provision...... 81,622 70,392 136,984 101,128 105,870 97,178 87,172
Total other operating income............. 33,889 28,199 66,819 55,397 59,729 44,496 34,623
Total other operating expenses........... 83,070 73,011 152,226 145,896 132,235 106,896 96,429
Net income............................... 25,249 21,690 44,051 14,571 31,784 27,925 20,522
Consolidated Per Share Data:
Net income............................... $ 1.72 $ 1.50 $ 3.05 $ 1.00 $ 2.21 $ 2.21 $ 1.75
Book value (end of period)............... 24.58 22.27 23.36 21.17 20.84 18.58 16.92
Dividends................................ .50 .40 .85 .71 .60 .45 .33
Average shares outstanding................ 14,676,983 14,458,880 14,442,699 14,629,123 14,395,753 12,661,825 11,730,505
Consolidated Average Balance Sheet Data:
Investment securities.................... $1,043,298 $1,133,104 $1,120,581 $1,059,222 $ 851,175 $ 573,159 $ 640,983
Loans, net of unearned income............ 3,066,336 2,535,161 2,655,476 2,315,725 2,189,067 1,924,162 1,700,857
Total earning assets..................... 4,303,020 3,846,805 3,942,485 3,625,001 3,480,017 3,033,650 2,780,474
Total assets............................. 5,078,558 4,352,827 4,565,089 4,012,056 3,886,072 3,383,550 3,113,780
Deposits................................. 3,622,602 3,174,824 3,276,081 2,989,132 2,932,922 2,472,145 2,224,238
Borrowed funds........................... 756,158 704,305 718,170 658,690 598,401 625,797 634,513
Long-term debt........................... 5,437 8,826 7,839 10,518 10,991 14,439 17,195
Shareholders' equity..................... 351,421 314,025 321,730 304,875 287,631 224,095 190,201
Selected Financial Ratios:
Return on average assets................. 1.00% 1.00% .96% .36% .82% .83% .66%
Return on average equity................. 14.49 13.89 13.69 4.78 11.05 12.46 10.79
Average equity to average assets......... 6.92 7.21 7.05 7.60 7.40 6.62 6.11
Period-end primary capital(4)............ 7.81 7.52 7.36 8.38 7.90 7.46 6.47
Net interest margin...................... 4.48 4.34 4.36 4.31 4.35 4.21 3.94
Allowance for credit losses to total loans 1.86 1.80 1.98 2.25 1.35 1.29 1.26
Net credit losses to average loans....... .59 1.13 .85 .67 .92 .57 .56
Nonperforming assets to total loans(5)... 1.63 1.31 1.22 1.99 2.01 2.16 2.14
Dividend payout ratio.................... 29.07 26.67 27.87 71.00 27.15 20.36 18.86
Ratio of Earnings to Fixed Charges(6):
Excluding interest on deposits........... 1.85x 1.96x 1.88x 1.22x 1.76x 1.64x 1.37x
Including interest on deposits........... 1.23 1.24 1.23 1.05 1.16 1.16 1.11
<FN>
(1) The results of operations for the six months ended June 30, 1989 and 1988
are not audited but, in the opinion of management, all adjustments,
consisting of normal recurring adjustments, necessary for a fair
presentation of the results of operations for such periods have been
included. Results of operations for the six months ended June 30, 1989,
including ratios which are stated on an annualized basis, are not
necessarily indicative of the results that may be expected for the full
year or any other interim period.
(2) All consolidated financial data has, where applicable, been restated for
the effect of acquisitions during 1987 and 1986 accounted for as poolings
of interest. In 1988 the Corporation changed its method of accounting for
loan and commitment fees to comply with Statement of Financial Accounting
Standards No. 91, "Accounting for Nonrefundable Fees and Costs Associated
with Originating or Acquiring Loans and Initial Direct Costs of Leases."
Also in 1988, the Corporation adopted Statement of Financial Accounting
Standards No. 96, "Accounting for Income Taxes." These changes in
accounting methods were adopted on a retroactive basis; therefore, all
financial data presented, where applicable, has been restated.
(3) During 1987, the Corporation made a special $30 million provision for
credit losses as a result of uncertainties surrounding its lesser developed
countries debt portfolio.
(4) Calculated by dividing shareholders' equity plus the allowance for credit
losses less goodwill by total assets plus the allowance for credit losses
less goodwill.
(5) Nonperforming assets include loans on a nonaccrual basis, restructured
loans, and other real estate owned.
(6) The ratio of earnings to fixed charges has been computed by dividing
earnings before income taxes plus fixed charged by fixed charges. Fixed
charges, excluding interest on deposits, consist of interest on
indebtedness and the portion of rental expense deemed representative of
the interest factor. Fixed charges, including interest on deposits,
consist of both the foregoing items plus interest on deposits.
</TABLE>
6
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS
1988 COMPARED WITH 1987
The Corporation's net income was $44.1 million, or $3.05 per share, in
1988, compared to net income of $14.6 million, or $1.00 per share, in 1987. Net
income reported in 1987 included a special provision for credit losses
associated with the Corporation's lesser developed countries ("LDC") debt
portfolio. Net income for 1987, without this provision, would have been $32.6
million, or $2.23 per share. The return on average assets increased from .36%
in 1987 to .96% in 1988, and the return on average equity increased from 4.78%
in 1987 to 13.69% in 1988. Excluding the effects of the special provision for
credit losses, return on average assets and return on average equity would have
been .81% and 10.68%, respectively, in 1987.
Net interest income on a fully taxable equivalent basis totaled $172.0
million in 1988, an increase of $15.6 million, or 10%, from 1987. The increase
in net interest income resulted principally from an increase in the
Corporation's domestic loan portfolio. Average earning assets for 1988 were
$3.9 billion, an increase of 9% from $3.6 billion in 1987. Excluding
acquisitions consummated in 1988, average earning assets increased $293.0
million, or 8.0%, over 1987 average earning assets. The net interest margin
(taxable equivalent net interest income as a percentage of average earning
assets) increased to 4.36% in 1988 compared to 4.31% in 1987.
The provision for credit losses was $23.9 million in 1988 compared to $39.5
million in 1987. During 1987 the Corporation made a special provision of $30.0
million for credit losses as a result of uncertainties related to its LDC debt
portfolio. Net charge-offs in 1988 totaled $22.5 million, or .85% of average
loans outstanding, as compared to $15.5 million, or .67% of average loans
outstanding in 1987. In 1988 the Corporation sold all of its Brazilian loans,
which accounted for 27% of its LDC debt holdings. As a result of this sale,
$7.2 million was recorded in 1988 as a charge-off against the special allowance
established in 1987. At December 31, 1988, the Corporation's allowance for
credit losses as a percentage of total loans was 1.98% as compared to 2.25% at
year-end 1987. At December 31, 1988, the Corporation's allowance for credit
losses allocated to its foreign loan portfolio was $23.0 million, providing a
coverage ratio of 47%.
At December 31, 1988, nonperforming assets, which include nonaccrual loans,
renegotiated loans plus other real estate owned, decreased to $36.5 million
from $48.0 million in 1987. Nonperforming assets as a percent of total loans
outstanding decreased to 1.22% in 1988 from 1.99% in 1987.
Total other operating income was $66.8 million in 1988, an increase of
$11.4 million over the amount recorded in 1987. Service charges on deposit
accounts were $19.3 million in 1988, an increase of $2.7 million from 1987.
This increase occurred principally from growth in commercial banking
fee-related services and deposit charges associated with MNB's military banking
contract. In the third quarter of 1988, $230 million of mortgage loan
servicing rights were sold at a $3.5 million gain. In the fourth quarter of
1988, the Corporation terminated its subsidiary bank pension plans. The excess
assets of these plans reverted to the Corporation and a $3.2 million gain was
realized. Also contributing to the 1988 increase in other operating income was
the recognition of fee income associated with MNB's military banking contract
that began in the second quarter of 1988.
Total other operating expenses were $152.2 million in 1988 compared to
$145.9 million in 1987. Included in the 1987 expenses was an $8.4 million
provision for other real estate losses to reduce the carrying value of the
related assets. Salaries and employee benefits increased to $75.7 million in
1988, an increase of $9.5 million from 1987. The increase in salaries and
employee benefits resulted from staff additions and normal merit increases.
Also contributing to the 1988 increase in other operating expenses were costs
associated with merging subsidiary bank employee benefit programs into the
Corporation's existing plans, and increased expenses for supplies, communica-
tions, and professional fees.
The Corporation recorded an income tax expense of $7.5 million in 1988 as
compared to an income tax benefit of $3.9 million in 1987. The 1987 tax benefit
was primarily due to the special provision for LDC debt made in 1987. In 1988
the Corporation elected to adopt Statement of Financial
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Accounting Standards No. 96, "Accounting for Income Taxes." As a result of
adopting this change, the Corporation's income tax expense in 1987 increased
$2.3 million, while 1988 income tax expense decreased $2.0 million.
Shareholders' equity was $342.9 million at December 31, 1988, an increase
of $36.9 million from 1987 due to a $31.7 million increase in retained earnings
and $5.2 million from the net issuance of common stock. At December 31, 1988,
the Corporation's primary and total capital ratios were 7.36% and 7.46%,
respectively, as compared to 8.38% and 8.56%, respectively, at December 31,
1987. The decrease in the Corporation's primary and total capital ratios in
1988 was principally due to cash acquisitions consummated in 1988.
SIX MONTHS ENDED JUNE 30, 1989 COMPARED
WITH SIX MONTHS ENDED JUNE 30, 1988
Net income for the first six months of 1989 was $25.2 million, or $1.72 per
share, representing an increase of 16% compared to $21.7 million, or $1.50 per
share, for the same period in 1988. The annualized return on average assets and
the annualized return on average shareholders' equity for the first six months
of 1989 were 1.00% and 14.49%, respectively, compared with 1.00% and 13.89%,
respectively, for the comparable period in 1988.
Net interest income on a fully taxable equivalent basis for the first six
months of 1989 was $95.5 million, an increase of $12.4 million, or 15%, over
the comparable period in 1988. Average earning assets increased to $4.3
billion, an increase of 12% from $3.8 billion in the first six months of 1988.
This increase was due to increased loan volume. Acquisitions accounted for
approximately $216.3 million of the growth in average earning assets for the
first six months of 1989 over the comparable six-month period, increasing
average earning assets 6%. The net interest margin increased to 4.48% for the
first six months of 1989 from 4.34% for the same period in 1988.
The provision for credit losses for the first six months of 1989 was $8.5
million compared to $7.0 million for the same period in 1988. The increase in
the provision reflects loan growth experienced by the Corporation from the
prior year. At June 30, 1989, the allowance for credit losses as a percentage
of total loans was 1.86% compared to 1.80% at June 30, 1988. Net loan
charge-offs for the first six months of 1989 declined $5.2 million to .59% of
average loans outstanding compared with 1.13% for the comparable period in
1988. Net charge-offs in the first six months of 1988 include $7.2 million of
charge-offs associated with the Corporation's sale of Brazilian debt.
At June 30, 1989, the Corporation had total LDC debt of $46.7 million of
which $30.2 million was to Mexico. The Corporation's allowance for credit
losses allocated to LDC debt was 47% of its total LDC debt at June 30, 1989.
Total LDC debt on nonaccrual status was $6.9 million at June 30, 1989.
Interest and principal payments are current for the Corporation's principal LDC
debtor, Mexico.
At June 30, 1989, nonperforming assets totaled $51.6 million, or 1.63% of
total loans outstanding, as compared to $35.0 million, or 1.31% of total loans
outstanding, at June 30, 1988. The increase in nonperforming assets was due to
a domestic commercial credit amounting to $16.0 million being placed on
nonaccrual status in the first quarter of 1989.
Total other operating income for the first six months of 1989 was $33.9
million, an increase of 20% from $28.2 million for the same period in 1988.
Service charges on deposits of $10.4 million increased $1.5 million, which was
principally due to deposit growth and deposit charges associated with MNB's
military banking contract. Other customer fees were $9.6 million, an increase
of $.9 million, which was principally due to fees associated with the
Corporation's credit card portfolio. For the first six months of 1989,
securities losses were $1.0 million versus securities gains of $.3 million for
the first six months of 1988. Other operating income for the first six months
of 1989 increased $3.4 million principally as a result of a $1.2 million gain
on the sale of $73 million of mortgage servicing rights and increased fees
pertaining to MNB's military banking contract.
Total other operating expenses for the first six months of 1989 were $83.1
million, an increase of 14% from $73.0 million for the same period in 1988.
Excluding the effects of bank acquisitions in
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1988, total operating expenses increased $6.1 million, or 8%, from the
comparable period in 1988. Of this increase, salaries and employee benefits
increased $2.7 million resulting from normal staff additions and merit
increases. The remaining increase was principally due to expenses for
professional fees, state taxes, supplies, and communications.
Income tax expense for the first six months of 1989 was $7.2 million
compared to $3.9 million for the comparable six-month period in 1988. The
increase in income tax expense primarily resulted from higher levels of taxable
earnings generated for the first six months of 1989 compared to a year ago.
At June 30, 1989, the Corporation's shareholders' equity was $360.8 million
compared to $322.0 million at June 30, 1988. The primary and total capital
ratios of the Corporation at June 30, 1989, were 7.81% and 7.88%, respectively,
compared to 7.52% and 7.64%, respectively, at June 30, 1988. Based on the
Federal Reserve Board's risk-based capital standards which are being phased-in
through 1992, the Corporation's Tier 1 and total capital ratios (based on 1992
capital guidelines) were 8.17% and 9.63%, respectively, at June 30, 1989.
HIGHLY LEVERAGED TRANSACTIONS
The Corporation has been involved to a limited extent with the financing of
highly leveraged transactions ("HLTs") for several years. HLTs include
leveraged buyouts, recapitalizations, mergers, acquisitions, significant stock
buybacks and extraordinary cash dividends. The Corporation uses a benchmark of
total debt to assets in excess of 75% as an indicator of high leverage,
although other circumstances and facts relating to the transaction may affect
that judgment. The Corporation limits its HLT activity to senior debt positions
and does not participate in any subordinated debt financings or take equity
positions. The Corporation engages in HLT activity for its own portfolio,
rather than for the purpose of generating fee income that would result from
selling HLT loan participations to others. The Corporation's HLT loans are made
primarily by its lead bank, MNB.
The Corporation has policies providing aggregate and individual limits on
the amount of HLT loans, as a percentage of total capital funds, as well as
further limitations on the amounts of participations in HLT loans in which the
Corporation has a limited role. As of June 30, 1989, the Corporation's HLT loan
portfolio consisted of 30 credits in 28 separate industry groups. At June 30,
1989, the Corporation had HLT loans outstanding totaling $80.8 million (2.55%
of total loans) and unfunded HLT loan commitments of $37.4 million. At June 30,
1989, there was one non-performing HLT loan in the amount of $293,000.
HLTs generally provide higher fees and/or higher interest rates than most
other loans. Transaction fees recognized in the first six months of 1989 and
for the year ended December 31,1988, for lending activities relating to HLTs
were not material. A reduction in the Corporation's HLT lending activities
would be insignificant to the Corporation's results of operations.
PENDING LITIGATION
The Corporation and its subsidiaries are parties to a number of lawsuits
incidental to their businesses, some of which seek relief or damages in amounts
which are substantial. A description of these lawsuits is set forth in the
Corporation's Current Report on Form 8-K dated August 14, 1989. Due to the
complex nature of some of these actions and proceedings, it may be a number of
years before such matters are ultimately resolved. In the opinion of
management, the ultimate outcome of these matters, to the extent such outcome
is predictable with any degree of certainty, should not have a material effect
on the Corporation's financial condition or results of operations.
For a discussion of a recently threatened legal proceeding and a grand jury
investigation concerning the acquisition of property with the proceeds of a
$1.2 million loan made by MNB in July 1988 and matters relating thereto, see
the Corporation's Current Report on Form 8-K dated August 23, 1989.
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DESCRIPTION OF NOTES
The Notes are to be issued under an Indenture (the "Indenture") to be dated
as of October 1, 1989 between the Corporation and Manufacturers Hanover Trust
Company, as Trustee (the "Trustee"), substantially in the form filed as an
exhibit to the Registration Statement of which this Prospectus is a part. The
following summaries do not purport to be complete. Capitalized terms used but
not defined in these summaries have the meanings given in the Indenture.
Section references appearing below are to the Indenture.
The Notes are to be issued under the Indenture and will represent unsecured
general obligations of the Corporation, subordinate in right of payment to
certain other obligations of the Corporation, as described below under
"Subordination of Notes." The Notes will bear interest from October 1, 1989 at
the rate shown by their title, payable on April 1 and October 1 in each year
commencing April 1, 1990, to holders of record at the close of business on the
preceding March 15 or September 15, as the case may be (unless such March 15 or
September 15 is not a Business Day, in which case on the next preceding
Business Day), subject to certain exceptions applicable to late payments of
interest. (Section 2.03) The Notes mature on October 1, 1999. The Notes are not
redeemable prior to their maturity and do not benefit from a sinking fund.
Because the Corporation is a holding company, its right to participate in the
assets distributed upon any liquidation or recapitalization of a Subsidiary
will be subject to the prior claims of the Subsidiary's creditors (including
depositors in the case of banking Subsidiaries), except to the extent the
Corporation may itself be a creditor with recognized claims against the
Subsidiary.
Principal of and interest on the Notes are payable, and the Notes may be
presented for transfer and exchange, at an office or agency maintained by the
Corporation in New York City, except, at the option of the Corporation,
interest may be paid by check mailed to the registered holders of Notes.
(Sections 2.03, 2.05, 4.01 and 4.02) Notes will be issued in denominations of
$1,000 and integral multiples of $1,000. (Section 2.03) No service charge will
be made for any exchange or registration of transfer of Notes, although the
Corporation may require payment of an amount to cover any tax or governmental
charge imposed in connection with the exchange or transfer. (Section 2.05)
SUBORDINATION OF NOTES
The payment of principal of and interest on the Notes will, to the extent
set forth in the Indenture, be subordinated in right of payment to the prior
payment in full of all Senior Indebtedness (as defined below). Upon any
distribution of assets of the Corporation in any dissolution, winding up,
liquidation, or reorganization of the Corporation, the holders of Senior
Indebtedness are entitled to receive payment in full of principal, premium, if
any, and interest before the holders of the Notes are entitled to receive any
payment on account of the principal of or interest on the Notes, except,
subject to payment of amounts due the Trustee, holders of the Notes may receive
in a reorganization or readjustment of the Corporation securities of the
Corporation or any other corporation subordinated to both the Senior
Indebtedness and any securities received in the reorganization or readjustment
by holders of Senior Indebtedness. (Section 3.03) The dissolution, winding up,
liquidation or reorganization of the Corporation following a conveyance,
transfer or lease of its properties and assets in compliance with the terms
described below under "Consolidation, Merger and Sale of Assets" will not be
deemed to be a dissolution, winding up, liquidation or reorganization for this
purpose. After the occurrence of an event of default under any Senior
Indebtedness arising out of a default in the payment of principal of or
interest on the Senior Indebtedness, no payments may be made by the Corporation
with respect to principal of or interest on the Notes until the event of
default is cured or waived or ceases to exist. (Section 3.02) In addition, upon
any other event of default under Senior Indebtedness permitting its
acceleration by its holders and after certain notice to the Corporation and the
Trustee, then the Corporation may not make any payments with respect to
principal of or interest on the Notes for a period (a "payment blockage
period") commencing on the date of receipt by the Trustee of the notice and
ending on the earlier of (a) the date on which the default is cured or waived
or ceases to exist or such Senior Indebtedness is discharged and (b) the 120th
following day. (Section 3.02) In any event, no more than one payment blockage
period may be commenced during any 360-day period. (Section 3.02)
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By reason of this subordination, holders of Senior Indebtedness may receive
more, ratably, and holders of the Notes may receive less, ratably, than other
creditors of the Corporation in the event of the Corporation's insolvency.
However, such subordination will not prevent the occurrence of any Event of
Default. (Section 3.12) As of June 30, 1989, Senior Indebtedness in an
aggregate principal amount of $172.3 million was outstanding.
The Indenture does not restrict the incurrence of additional Senior
Indebtedness. Although management considers from time to time the possibility
of issuing Senior Indebtedness, and the Corporation may require additional
Senior Indebtedness to finance possible future acquisitions or for other
general corporate purposes, the Corporation has no specific plans to incur
additional Senior Indebtedness at this time except for approximately $2 million
in notes expected to be issued in connection with the pending acquisition of
Commercial Bank & Trust Company, Alexandria, Indiana. See "Merchants National
Corporation."
"Senior Indebtedness" means the principal of and premium (if any) and
interest on the following, whenever incurred: (a) indebtedness of the
Corporation for money borrowed by the Corporation (including purchase money
obligations with an original maturity of in excess of one year) or evidenced by
debentures, notes (other than the Notes) or other corporate debt securities or
similar instruments issued by the Corporation; (b) indebtedness or obligations
of the Corporation as lessee under any leases of real or personal property
required to be capitalized under generally accepted accounting principles
generally accepted at the time; (c) indebtedness or obligations incurred or
assumed by the Corporation in connection with the acquisition by the
Corporation or any Subsidiary of any property, including any business; (d)
obligations under any agreement in respect of any interest rate or currency
swap, interest rate cap, floor or collar, interest rate future, currency
exchange or forward currency transaction that relates to Senior Indebtedness;
(e) indebtedness or obligations of the Corporation constituting a guarantee of
indebtedness or of obligations of others of the type referred to in the
preceding clauses; or (f) renewals, extensions or refundings of any of the
indebtedness or obligations referred to in the preceding clauses; except Senior
Indebtedness does not include any particular indebtedness or obligation,
renewal, extension or refunding if the express provisions of the instrument
creating or evidencing the same, or pursuant to which the same is outstanding,
provide that it is not superior in right of payment to the Notes. (Section
1.01)
EVENTS OF DEFAULT
The following are Events of Default under the Indenture: (a) default in
payment of any principal of any of the Notes when due; (b) default for 30 days
in payment of any interest on the Notes; (c) a default or an event of default
under any instrument by which any indebtedness of the Corporation or any
Subsidiary is issued, or under the instrument securing or evidencing any such
indebtedness, where not less than $1,000,000 of such indebtedness shall be due,
including by acceleration, and such default or acceleration is not discharged
or cured within 15 days after written notice by the Trustee or the holders of
at least 25% in aggregate principal amount of the outstanding Notes; (d) a
final judgment(s) or order(s) for the payment of money in excess of $1,000,000
is entered against the Corporation or a Principal Constituent Bank and, within
90 days of entry, is not discharged or the execution thereof is not stayed
pending appeal or within 90 days after the expiration of the stay, the
judgment(s) or order(s) is not discharged; (e) default in the observance or
performance of any other covenant in the Indenture for 90 days after notice by
the Trustee or holders of at least 25% in aggregate principal amount of the
outstanding Notes; or (f) certain events of bankruptcy, insolvency or
reorganization of the Corporation or a Principal Constituent Bank. (Section
6.01)
In case an Event of Default shall occur and be continuing, the Trustee or
the holders of not less than 25% in aggregate principal amount of the
outstanding Notes may declare the principal of all the Notes to be due and
payable. (Section 6.01) The Indenture provides that the Trustee shall within 90
days after the occurrence of a default under the Indenture, mail to the holders
of the Notes notice of all uncured defaults known to it that have not been
waived (the term defaults to include events specified above which after notice
or lapse of time or both would become an Event of Default);
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provided that, except in the case of default in the payment of principal of or
interest on any of the Notes, the Trustee may withhold the notice if it in good
faith determines that withholding the notice is in the interest of the holders
of the Notes. (Section 6.08)
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
is under no obligation to exercise any of the rights or powers under the
Indenture at the request, order or direction of any of the Noteholders, unless
such Noteholders offer to the Trustee reasonable security or indemnity.
(Section 7.02) Subject to certain limitations contained in the Indenture
(including, among other limitations, that the Trustee will not be exposed to
personal liability), the holders of a majority in aggregate principal amount of
the outstanding Notes 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. (Section 6.07)
The Corporation is obligated to furnish to the Trustee annually a statement
as to the performance by the Corporation of its obligations under the Indenture
and as to any default in such obligations. (Section 4.05)
CERTAIN COVENANTS OF THE CORPORATION
Restrictions on Certain Dispositions of Voting Stock and Assets. Except as
described below under "Consolidation, Merger and Sale of Assets," the Indenture
prohibits the sale or other disposition of shares of, or securities convertible
into or options, warrants or rights to subscribe for or purchase shares of,
Voting Stock of a Principal Constituent Bank, the merger or consolidation of
any Principal Constituent Bank with any other corporation, and the lease, sale
or other disposition of all or substantially all the assets of any Principal
Constituent Bank if, after giving effect to the transaction and to the issuance
of Voting Stock issuable to Persons other than the Corporation or any
Controlled Subsidiary upon the conversion or exercise of all such convertible
securities, options, warrants or rights, the Corporation would no longer own
(directly or indirectly) more than 80% of the shares of Voting Stock of such
Principal Constituent Bank or its successor. The Indenture does not, however,
prohibit any such sale or disposition of shares or securities, any such merger
or consolidation or any such lease, sale or disposition of assets (i) if
required by law or (ii) as a condition imposed by law to the acquisition by the
Corporation, directly or indirectly, of any other corporation or entity if,
thereafter, (a) the Corporation and its Controlled Subsidiaries would own more
than 80% of the Voting Stock of such other corporation or entity (after giving
effect to any potential dilution from exercise or conversion of securities
owned by parties other than the Corporation and its Controlled Subsidiaries),
(b) the Consolidated Net Banking Assets of the Corporation would not be
decreased, and (c) the Corporation would still own more than 80% of the Voting
Stock of MNB (after giving effect to such potential dilution). (Section 4.07)
"Principal Constituent Bank" means a Subsidiary of the Corporation that is a
Bank, the total assets of which equal more than 15% of the total assets of all
Subsidiaries of the Corporation that are Banks. (Section 1.01) As of the date
of this Prospectus, the Corporation's only Principal Constituent Bank is MNB.
Restrictions on Liens. The Indenture provides that the Corporation will not
create, assume, incur or suffer to exist any pledge, encumbrance or lien, as
security for indebtedness for borrowed money, upon any shares of, or securities
convertible into, or options, warrants or rights to subscribe for or purchase
shares of, Voting Stock of any Principal Constituent Bank owned by the
Corporation, directly or indirectly, if, treating the pledge, encumbrance or
lien as a transfer to the secured party, and after giving effect to any
potential dilution referred to above, the Corporation would no longer own
(directly or indirectly) more than 80% of the shares of Voting Stock of such
Principal Constituent Bank. (Section 4.08)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Corporation may not consolidate with or merge into, or convey, transfer
or lease its properties and assets substantially as an entirety to, any Person
unless: (a) the successor is
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organized under the laws of any domestic jurisdiction and assumes the
Corporation's obligations on the Notes and under the Indenture; (b) after
giving effect to the transaction, no Event of Default, and no event which,
after notice or lapse of time, would become an Event of Default, has occurred
and is continuing; and (c) certain other conditions are met. (Section 11.01)
In that event, the successor will be substituted for the Corporation and,
except in the case of a lease, the Corporation will be relieved of its
obligations under the Indenture and the Notes. (Section 11.02)
MODIFICATIONS AND WAIVERS
The Indenture contains provisions permitting the Corporation and the
Trustee to modify the Indenture, with the consent of the holders of not less
than 66 2/3% in aggregate principal amount of the outstanding Notes, except
that, (a) without the consent of the holder of each Note affected thereby, no
such modification may, among other things, change the maturity of the principal
of or any installment of interest on any Note, or reduce the principal amount
of or interest on any Note or change any place of payment on any Note, or make
any change in the subordination provisions of the Indenture that adversely
affects the rights of any holder of a Note or (b) without the consent of the
holder of each outstanding Note, no such modification may, among other things,
reduce the percentage of holders of Notes required for certain consents from,
or waivers by, holders of Notes or modify certain provisions relating to
waivers by holders of Notes. (Section 10.02)
Prior to any acceleration of the Notes, the holders of a majority in
aggregate principal amount of the outstanding Notes may waive any past default
or Event of Default under the Indenture except a default under a covenant that
cannot be modified without the consent of each holder of a Note affected
thereby. (Section 6.07) In addition, the holders of a majority in aggregate
principal amount of the outstanding Notes may rescind a declaration of
acceleration of the Notes before any judgment has been obtained if (i) the
Corporation pays the Trustee certain amounts due the Trustee plus all matured
installments of principal of and interest on the Notes (other than installments
due by acceleration) and interest on the overdue installments to the extent
provided in the Indenture and (ii) all other defaults under the Indenture have
been cured or waived. (Section 6.01)
GOVERNING LAW
The Indenture and each Note will be governed by the laws of the State of
New York.
THE TRUSTEE
Manufacturers Hanover Trust Company will be the Trustee under the
Indenture. The Corporation has no other material relationship with the Trustee.
The Indenture contains certain limitations on the right of the Trustee, as
a creditor of the Corporation, to obtain payment of claims in certain cases or
to realize on certain property received in respect of any such claim, as
security or otherwise. (Section 7.13) The Trustee will be permitted to engage
in transactions with the Corporation; except, if it acquires any conflicting
interest set forth in the Indenture, it must eliminate the conflict or resign.
(Section 7.08) The obligations of the Corporation to pay compensation to, and
reimburse the expenses of, the Trustee are secured by a lien prior to that of
the Notes on all funds held or collected by the Trustee as such, except funds
held in Trust for the benefit of the holders of particular Notes. (Section
7.06)
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, Salomon Brothers Inc (the "Underwriter") has agreed to purchase, and
the Corporation has agreed to sell, the Notes offered hereby.
The Corporation has been advised by the Underwriter that it proposes
initially to offer the Notes to the public at the public offering price set
forth on the cover page of this Prospectus and to certain
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dealers at such price less a concession not in excess of .40% of the principal
amount of the Notes. The Underwriter may allow and such dealers may reallow a
concession not in excess of .25% of such principal amount. After the initial
public offering, the public offering price and such concessions may be changed.
The Corporation has been advised by the Underwriter that it intends to make
a market in the Notes, but that the Underwriter is not obligated to do so and
may discontinue making a market at any time without notice. No assurance can be
given as to the liquidity of the trading market for the Notes.
The Underwriting Agreement provides that the Corporation will indemnify the
Underwriter against certain liabilities, including liabilities under the
Securities Act, or contribute to payments the Underwriter may be required to
make in respect thereof.
LEGAL OPINIONS
The legality of the Notes offered hereby will be passed upon for the
Corporation by Barnes & Thornburg, 1313 Merchants Bank Building, 11 South
Meridian Street, Indianapolis, Indiana 46204, special counsel for the
Corporation. Certain legal matters will be passed upon for the Underwriter by
Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New York, New York
10019.
EXPERTS
The consolidated balance sheets of Merchants National Corporation and
subsidiaries as of December 31, 1988 and 1987, and the related consolidated
statements of income, changes in shareholders' equity, and cash flows for the
years ended December 31, 1988, 1987, 1986, incorporated by reference into
this Prospectus, have been audited by Deloitte Haskins & Sells, independent
public accountants, as stated in their report, which is incorporated herein by
reference, and has been so incorporated in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
With respect to the Corporation's unaudited interim financial information
for the periods ended March 31, 1989 and 1988 and June 30, 1989 and 1988,
incorporated by reference into this Prospectus, Deloitte Haskins & Sells have
reported that they have applied limited procedures in accordance with
professional standards for a review of such information. However, their
separate report included in each of the Corporation's Quarterly Reports on Form
10-Q for the quarters ended March 31, 1989 and June 30, 1989, and incorporated
by reference herein, states that they did not audit and they do not express an
opinion on that interim financial information. Accordingly, the degree of
reliance on their reports on such information should be restricted in light of
the limited nature of the review procedures applied. The accountants, Deloitte
Haskins & Sells, are not subject to the liability provisions of Section 11 of
the Securities Act for their reports on the unaudited interim financial
information because those reports are not "reports" or "parts" of the
registration statement of which this Prospectus is a part prepared or certified
by the accountants within the meaning of Sections 7 and 11 of the Securities
Act.
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN $65,000,000
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS OTHER THAN THOSE CON-
TAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE CORPORATION OR BY THE UNDER- MERCHANTS NATIONAL
WRITER. NEITHER THE DELIVERY OF THIS PROSPECTUS CORPORATION
NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CORPO-
RATION SINCE THE DATE HEREOF. THIS PROSPECTUS
DOES NOT CONSTITUTE ANY OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER
OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS 9 7/8% SUBORDINATED NOTES
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. DUE 1999
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................. 2
Incorporation of Certain Documents
by Reference......................... 2
Merchants National Corporation......... 3
Use of Proceeds........................ 4
Capitalization......................... 5
---------------------------
Summary Consolidated Financial Data.... 6 SALOMON BROTHERS INC
----------------------------------------------------------
Management's Discussion and Analysis... 7
Description of Notes................... 10
Underwriting........................... 13
Legal Opinions......................... 14 PROSPECTUS
Experts................................ 14 DATED SEPTEMBER 27, 1989
</TABLE>
<PAGE> 16
SECOND SUPPLEMENTAL INDENTURE
SECOND SUPPLEMENTAL INDENTURE, dated as of December 31, 1992,
among MERCHANTS NATIONAL CORPORATION, a Delaware corporation (the
"Corporation"), NATIONAL CITY CORPORATION, a Delaware corporation
(the "Surviving Corporation"), and CHEMICAL BANK, as Trustee
(successor by merger to MANUFACTURERS HANOVER TRUST COMPANY), a
corporation duly organized and existing under the laws of the State
of New York (the "Trustee").
WITNESSETH:
WHEREAS, Merchants National Corporation, an Indiana corporation
(predecessor in interest to the Corporation) and the Trustee have
heretofore executed that certain Indenture (herein so called), dated
as of October 1, 1989, pursuant to which 9 7/8% Subordinated Notes
Due 1999 of Merchants National Corporation, an Indiana corporation
(the "Securities") were issued; and
WHEREAS, the Corporation, Merchants National Corporation, an
Indiana corporation, and the Trustee have heretofore executed a
First Supplemental Indenture dated as of April 29, 1992 pursuant to
which the Corporation assumed all of the obligations of Merchants
National Corporation, an Indiana corporation, under the Indenture
and the Securities; and
WHEREAS, the Corporation is a wholly-owned subsidiary of the
Surviving Corporation, a multi-bank holding company with principal
offices in Cleveland, Ohio; and
WHEREAS, pursuant to the terms of a Plan of Merger by and
between the Corporation and the Surviving Corporation dated as of
December 21, 1992, the Corporation will merge (the "Merger") with
and into the Surviving Corporation, which will be the surviving
corporation in the Merger; and
WHEREAS, Section 11.01 of the Indenture provides that the
Corporation may not merge with or into another corporation unless,
among other things, the surviving corporation (if not the
Corporation) shall assume by supplemental indenture the due and
punctual payment of the principal of and interest on the Securities
and the performance of every covenant of the Indenture on the part
of the Corporation to be performed or observed; and
WHEREAS, the Corporation desires and has requested the Trustee
to join with it in the execution and delivery of this Second
Supplemental Indenture for the purpose of having the Surviving
Corporation assume all of the foregoing obligations of the
Corporation under the Securities and the Indenture; and
<PAGE> 17
WHEREAS, the Corporation has furnished the Trustee with an
Officers' Certificate complying with the requirements of Section
11.01 of the Indenture and stating that, among other things, the
Merger and this Second Supplemental Indenture comply with Article
Eleven of the Indenture; and
WHEREAS, the Corporation has furnished the Trustee with an
Opinion of Counsel complying with the requirements of Section 11.01
of the Indenture; and
WHEREAS, all things necessary to make this Second Supplemental
Indenture a valid agreement of the Corporation, the Surviving
Corporation and the Trustee and a valid amendment of and supplement
to the Indenture have been done;
NOW, THEREFORE, the Corporation, the Surviving Corporation and
the Trustee hereby agree as follows:
ARTICLE ONE
Section 1.01 Assumption of Obligations. Upon the Merger, the
Surviving Corporation, as the surviving corporation of the Merger,
hereby agrees to assume the due and punctual payment of the
principal of and interest on the Securities and the performance of
every covenant of the Indenture on the part of the Corporation to be
performed or observed. The Surviving Corporation shall execute and
deliver such further instruments and documents and shall do such
other things as the Trustee may reasonably require so as to more
fully and certainly confirm that the Surviving Corporation has
assumed all the foregoing obligations of the Corporation under the
Securities and the Indenture.
Section 1.02. Vesting of Rights. By virtue of the Merger, the
Surviving Corporation shall be vested with all of the rights, powers
and benefits of the Corporation under the Securities and the
Indenture.
Section 1.03. Successor. After the Merger, all references in
the Indenture and/or the Securities to the "Corporation" or the
"Company" shall mean the Surviving Corporation, a Delaware
corporation, the successor corporation by merger to the Corporation,
a Delaware corporation.
Section 1.04. No Event of Default. Immediately after giving
effect to the Merger, no Event of Default and no event which, after
notice or lapse of time, or both, would become an Event of Default
has happened and is continuing.
-2-
<PAGE> 18
ARTICLE TWO
Section 2.01. Defined Terms. All terms used in this Second
Supplemental Indenture not otherwise defined herein shall have the
meanings ascribed thereto in the Indenture.
Section 2.02. Execution in Counterparts. This Second
Supplemental Indenture may be executed in any number of
counterparts. Each such counterpart shall be an original, but such
counterparts shall together constitute one and the same instrument.
Section 2.03. Confirmation of Indenture. Except as amended and
supplemented hereby, all of the provisions of the Indenture shall
remain and continue in full force and effect and are hereby
confirmed in all respects. The recitals contained herein shall be
taken as the statements of the Corporation and the Surviving
Corporation, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the
validity or sufficiency of this Second Supplemental Indenture or any
notice to Holders given in connection herewith.
Section 2.04. Governing Law. THE LAWS OF THE STATE OF NEW YORK
SHALL GOVERN THIS SECOND SUPPLEMENTAL INDENTURE.
Section 2.05 Notices. Any notice or communication under the
Indenture shall be sufficiently given to the Surviving Corporation
if in writing and delivered in person or mailed by first-class mail
addressed as follows:
National City Corporation
1900 East 9th Street
Cleveland, Ohio 44114-3484
Attention: Chief Financial Officer
IN WITNESS WHEREOF, the parties hereby have caused this Second
Supplemental Indenture to be duly executed and duly attested, all as
of the day and year first above written.
<TABLE>
<S> <C>
MERCHANTS NATIONAL CORPORATION,
a Delaware corporation
By: _____________________________________
Vincent A. DiGirolamo, President
and Chief Executive Officer
ATTEST:
________________________________
Debra S. Easterday, Secretary
</TABLE>
-3-
<PAGE> 19
<TABLE>
<S> <C>
NATIONAL CITY CORPORATION,
a Delaware corporation
By: _____________________________________
Name: David A. Daberko
Title: Deputy Chairman
ATTEST:
________________________________
Name: David L. Zoeller
Title: Secretary
CHEMICAL BANK
By: _____________________________________
Name: Glenn M. Booth
Title: Assistant Vice President
ATTEST:
________________________________
Name: Sal Lunetta
Title: Trust Officer
MFS/938
</TABLE>
-4-
<PAGE> 20
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE, dated as of April 29,
1992, among MERCHANTS NATIONAL CORPORATION, an Indiana corporation
(the "Corporation"), NC ACQUISITION CORP., a Delaware corporation
(the "Surviving Corporation"), and MANUFACTURERS HANOVER TRUST
COMPANY, a corporation duly organized and existing under the laws of
the State of New York (the "Trustee").
WITNESSETH:
WHEREAS, the Corporation and the Trustee have heretofore
executed that certain Indenture (herein so called), dated as of
October 1, 1989, pursuant to which 9 7/8% Subordinated Notes Due
1999 of the Corporation (the "Securities") were issued; and
WHEREAS, pursuant to the terms of an Agreement and Plan of
Reorganization by and among the Corporation, the Surviving
Corporation, a wholly-owned subsidiary of National City Corporation
("NCC"), and NCC dated as of October 30, 1991 and a related Plan of
Merger by and among the Corporation, the Surviving Corporation, and
NCC dated as of October 30, 1991, the Corporation will merge (the
"Merger") with and into the Surviving Corporation, which will be the
surviving corporation in the Merger, and such surviving corporation
will be a wholly-owned subsidiary of NCC; and
WHEREAS, upon the effective date of the Merger, the Certificate
of Incorporation and By-laws of the Surviving Corporation, as the
surviving corporation in the Merger, shall be amended to provide
that its name shall be "Merchants National Corporation;" and
WHEREAS, Section 11.01 of the Indenture provides that the
Corporation may not merge with or into another corporation unless,
among other things, the surviving corporation (if not the
Corporation) shall assume by supplemental indenture the due and
punctual payment of the principal of and interest on the Securities
and the performance of every covenant of the Indenture on the part
of the Corporation to be performed or observed; and
WHEREAS, the Corporation desires and has requested the Trustee
to join with it in the execution and delivery of this First
Supplemental Indenture for the purpose of having the Surviving
Corporation assume all of the foregoing obligations of the
Corporation under the Securities and the Indenture; and
WHEREAS, the Corporation has furnished the Trustee with an
Officers' Certificate complying with the requirements of Section
11.01 of the Indenture and stating that, among other things, the
Merger and this First Supplemental Indenture comply with Article
Eleven of the Indenture; and
<PAGE> 21
WHEREAS, the Corporation has furnished the Trustee with an
Opinion of Counsel complying with the requirements of Section 11.01
of the Indenture; and
WHEREAS, all things necessary to make this First Supplemental
Indenture a valid agreement of the Corporation, the Surviving
Corporation and the Trustee and a valid amendment of and supplement
to the Indenture have been done;
NOW, THEREFORE, the Corporation, the Surviving Corporation and
the Trustee hereby agree as follows:
ARTICLE ONE
Section 1.01 Assumption of Obligations. Upon the Merger, the
Surviving Corporation, as the surviving corporation of the Merger,
hereby agrees to assume the due and punctual payment of the
principal of and interest on the Securities and the performance of
every covenant of the Indenture on the part of the Corporation to be
performed or observed. The Surviving Corporation shall execute and
deliver such further instruments and documents and shall do such
other things as the Trustee may reasonably require so as to more
fully and certainly confirm that the Surviving Corporation has
assumed all the foregoing obligations of the Corporation under the
Securities and the Indenture.
Section 1.02. Vesting of Rights. By virtue of the Merger, the
Surviving Corporation shall be vested with all of the rights, powers
and benefits of the Corporation under the Securities and the
Indenture.
Section 1.03. Successor. After the Merger, all references in
the Indenture and/or the securities to the "Corporation" or the
"Company" shall mean the Surviving Corporation, a Delaware
corporation, the successor corporation by merger to the Corporation,
an Indiana corporation.
Section 1.04. No Event of Default. Immediately after giving
effect to the Merger, no Event of Default and no event which, after
notice or lapse of time, or both, would become an Event of Default
has happened and is continuing.
ARTICLE TWO
Section 2.01. Defined Terms. All terms used in this First
Supplemental Indenture not otherwise defined herein shall have the
meanings ascribed thereto in the Indenture.
Section 2.02. Execution in Counterparts. This First
Supplemental Indenture may be executed in any number of
counterparts. Each such counterpart shall be an original, but such
counterparts shall together constitute one and the same instrument.
-2-
<PAGE> 22
Section 2.03. Confirmation of Indenture. Except as amended and
supplemented hereby, all of the provisions of the Indenture shall
remain and continue in full force and effect and are hereby
confirmed in all respects. The recitals contained herein shall be
taken as the statements of the Corporation and the Surviving
Corporation and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the
validity or sufficiency of this First Supplemental Indenture or any
notice to Holders given in connection herewith.
Section 2.04. Governing Law. THE LAWS OF THE STATE OF NEW YORK
SHALL GOVERN THIS FIRST SUPPLEMENTAL INDENTURE.
IN WITNESS WHEREOF, the parties hereby have caused this First
Supplemental Indenture to be duly executed and duly attested, all as
of the day and year first above written.
<TABLE>
<S> <C>
MERCHANTS NATIONAL CORPORATION,
an Indiana corporation
By: _____________________________________
Name: Otto N. Frenzel III
Title: Chairman of the Board
ATTEST:
________________________________
Name: David L. Zoeller
Title: Secretary
NC ACQUISITION CORP.,
a Delaware corporation
By: _____________________________________
Name: Robert G. Siefers
Title: Executive Vice President
ATTEST:
________________________________
Name: Robert T. Williams
Title: Secretary
</TABLE>
-3-
<PAGE> 23
<TABLE>
<S> <C>
MANUFACTURERS HANOVER TRUST COMPANY
By: _____________________________________
Name: Glenn M. Booth
Title: Assistant Vice President
ATTEST:
________________________________
Name: James M. Foley
Title: Assistant Vice President
[4812K]
</TABLE>
-4-
<PAGE> 24
_____________________________________________________________________________
_____________________________________________________________________________
MERCHANTS NATIONAL CORPORATION
and
MANUFACTURERS HANOVER TRUST COMPANY,
as Trustee
_____________
Indenture
Dated as of October 1, 1989
_____________
9 7/8% Subordinated Notes Due 1999
_____________________________________________________________________________
_____________________________________________________________________________
<PAGE> 25
TIE-SHEET
of provisions of Trust Indenture Act of 1939 with Indenture dated as of October
1, 1989, between Merchants National Corporation and Manufacturers Hanover Trust
Company, as Trustee:
<TABLE>
<CAPTION>
Section of Act Section of Indenture
- -------------- --------------------
<S> <C>
310(a)(1) and (2) ......................... 7.09
310(a)(3) and (4) ......................... Not applicable
310(b) .................................... 7.08 and 7.10(b)
310(c) .................................... Not applicable
311(a) and (b) ............................ 7.13
311(c) .................................... Not applicable
312(a) .................................... 5.01 and 5.02(a)
312(b) and (c) ............................ 5.02(b) and (c)
313(a) .................................... 5.04(a)
313(b)(1) ................................. Not applicable
313(b)(2) ................................. 5.04(b)
313(c) .................................... 5.04(c)
313(d) .................................... 5.04(d)
314(a) .................................... 5.03
314(b) .................................... Not applicable
314(c)(1) and (2) ......................... 14.05
314(c)(3) ................................. Not applicable
314(d) .................................... Not applicable
314(e) .................................... 14.05
314(f) .................................... Not applicable
315(a),(c) and (d) ........................ 7.01
315(b) .................................... 6.08
315(e) .................................... 6.09
316(a)(1) ................................. 6.01 and 6.07
316(a)(2) ................................. Omitted
316(a) last sentence ...................... 8.04
316(b) .................................... 6.04
317(a) .................................... 6.02
317(b) .................................... 4.04(a)
318(a) .................................... 14.07
</TABLE>
__________
This tie-sheet is not part of the Indenture as executed.
<PAGE> 26
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
Page
----
<S> <C>
Parties ............................................................. 1
Recitals ............................................................ 1
Purpose of Indenture ............................................ 1
Form of Face of Note ............................................ 1
Form of Trustee's Certificate of Authentication ................. 3
Form of Reverse of Note ......................................... 3
ARTICLE ONE
DEFINITIONS
SECTION 1.01. Definitions ....................................... 6
ARTICLE TWO
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES
SECTION 2.01. Designation, Amount and Issue of Notes ............ 10
SECTION 2.02. Form of Notes ..................................... 11
SECTION 2.03. Date and Denomination of Notes; Payment of
Interest ........................................ 11
SECTION 2.04. Execution of Notes ................................ 12
SECTION 2.05. Exchange and Registration of Transfer of Notes .... 12
SECTION 2.06. Mutilated, Destroyed, Lost or Stolen Notes ........ 13
SECTION 2.07. Temporary Notes ................................... 14
SECTION 2.08. Cancelation of Notes Paid, etc. ................... 14
ARTICLE THREE
SUBORDINATION OF NOTES
SECTION 3.01. Agreement of Noteholders that Notes
Subordinated to Extent Provided.................. 15
SECTION 3.02. Company Not to Make Payments with Respect to
Notes in Certain Circumstances .................. 15
</TABLE>
___________
* This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
<PAGE> 27
Contents p. 2
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 3.03. Notes Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or
Reorganization of Company ....................... 17
SECTION 3.04. Noteholders to Be Subrogated to Rights of Holders
of Senior Indebtedness .......................... 18
SECTION 3.05. Obligation of the Company Unconditional, etc. ..... 18
SECTION 3.06. Trustee Entitled to Assume Payments Not
Prohibited in Absence of Notice ................. 19
SECTION 3.07. Application by Trustee of Monies Deposited With It. 20
SECTION 3.08. Article Applicable to Paying Agents ............... 20
SECTION 3.09. Subordination Rights Not Impaired by Acts or
Omissions of Company or Holders of Senior
Indebtedness .................................... 20
SECTION 3.10. Noteholders Authorize Trustee to Effectuate
Subordination of Notes .......................... 21
SECTION 3.11. Right of Trustee to Hold Senior Indebtedness ...... 21
SECTION 3.12. Article Three Not to Prevent Events of Default .... 21
SECTION 3.13. Trustee Not Fiduciary for Holders of Senior
Indebtedness .................................... 21
ARTICLE FOUR
PARTICULAR COVENANTS OF THE COMPANY
SECTION 4.01. Payment of Principal and Interest ................. 21
SECTION 4.02. Offices for Notices and Payments, etc. ............ 22
SECTION 4.03. Appointments to Fill Vacancies in Trustee's Office. 22
SECTION 4.04. Provision as to Paying Agent ...................... 22
SECTION 4.05. Statement as to Compliance ........................ 23
SECTION 4.06. Notice of Certain Defaults ........................ 23
SECTION 4.07. Limitation on Certain Dispositions and on Merger
and Sale of Assets .............................. 23
SECTION 4.08. Limitation on Creation of Liens ................... 24
SECTION 4.09. Corporate Existence ............................... 25
</TABLE>
<PAGE> 28
Contents p. 3
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE FIVE
NOTEHOLDERS LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
SECTION 5.01. Noteholders Lists ................................. 25
SECTION 5.02. Preservation and Disclosure of Lists .............. 25
SECTION 5.03. Reports by the Company ............................ 26
SECTION 5.04. Reports by the Trustee ............................ 27
ARTICLE SIX
REMEDIES OF THE TRUSTEE AND NOTEHOLDERS ON EVENT OF DEFAULT
SECTION 6.01. Events of Default ................................. 29
SECTION 6.02. Payment of Notes on Default; Suit Therefor ........ 31
SECTION 6.03. Application of Monies Collected by Trustee......... 33
SECTION 6.04. Proceedings by Noteholders ........................ 33
SECTION 6.05. Proceedings by Trustee ............................ 34
SECTION 6.06. Remedies Cumulative and Continuing; Delay or
Omission Not Waiver ............................. 34
SECTION 6.07. Direction of Proceedings and Waiver of Defaults by
Majority of Noteholders ......................... 35
SECTION 6.08. Notice of Defaults ................................ 35
SECTION 6.09. Undertaking to Pay Costs .......................... 36
ARTICLE SEVEN
CONCERNING THE TRUSTEE
SECTION 7.01. Duties and Responsibilities of the Trustee ........ 36
SECTION 7.02. Reliance on Documents, Opinions, etc. ............. 37
SECTION 7.03. No Responsibility for Recitals, etc. .............. 38
SECTION 7.04. Trustee, Paying Agents or Registrar May Own
Notes ........................................... 38
SECTION 7.05. Monies to Be Held in Trust ........................ 38
SECTION 7.06. Compensation and Expenses of Trustee .............. 39
SECTION 7.07. Officers' Certificate as Evidence .................. 39
</TABLE>
<PAGE> 29
Contents p. 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 7.08. Conflicting Interest of Trustee ................... 40
SECTION 7.09. Eligibility of Trustee ............................ 45
SECTION 7.10. Resignation or Removal of Trustee ................. 45
SECTION 7.11. Acceptance by Successor Trustee ................... 47
SECTION 7.12. Succession by Merger, etc. ........................ 47
SECTION 7.13. Limitation of Rights of Trustee as a Creditor ..... 48
ARTICLE EIGHT
CONCERNING THE NOTEHOLDERS
SECTION 8.01. Action by Noteholders ............................. 52
SECTION 8.02. Proof of Execution by Noteholders ................. 52
SECTION 8.03. Who Are Deemed Absolute Owners .................... 52
SECTION 8.04. Company Owned Notes Disregarded ................... 53
SECTION 8.05. Revocation of Consents; Future Holders Bound ...... 53
ARTICLE NINE
NOTEHOLDERS' MEETINGS
SECTION 9.01. Purposes of Meetings .............................. 53
SECTION 9.02. Call of Meetings by Trustee ....................... 54
SECTION 9.03. Call of Meetings by Company or Noteholders ........ 54
SECTION 9.04. Qualifications for Voting ......................... 54
SECTION 9.05. Regulations ....................................... 55
SECTION 9.06. Voting ............................................ 55
SECTION 9.07. No Delay of Rights by Meeting ..................... 56
ARTICLE TEN
SUPPLEMENTAL INDENTURES
SECTION 10.01. Supplemental Indentures Without Consent of
Noteholders ..................................... 56
SECTION 10.02. Supplemental Indentures with Consent of
Noteholders ..................................... 57
</TABLE>
<PAGE> 30
Contents p. 5
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 10.03. Compliance with Trust Indenture Act; Effect of
Supplemental Indentures ......................... 58
SECTION 10.04. Notation on Notes ................................. 59
SECTION 10.05. Evidence of Compliance of Supplemental
Indenture to Be Furnished Trustee ............... 58
ARTICLE ELEVEN
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 11.01. Company May Consolidate, etc., on Certain Terms ... 59
SECTION 11.02. Successor Corporation Substituted ................. 59
ARTICLE TWELVE
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 12.01. Discharge of Indenture ............................ 60
SECTION 12.02. Deposited Monies to Be Held in Trust by Trustee ... 61
SECTION 12.03. Paying Agent to Repay Monies Held ................. 61
SECTION 12.04. Return of Unclaimed Monies ........................ 61
ARTICLE THIRTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
SECTION 13.01. Indenture and Notes Solely Corporate Obligations .. 62
ARTICLE FOURTEEN
MISCELLANEOUS PROVISIONS
SECTION 14.01. Provisions Binding on Company's Successors ........ 62
SECTION 14.02. Official Acts by Successor Corporation ............ 62
SECTION 14.03. Addresses for Notices, etc. ....................... 62
SECTION 14.04. Governing Law ..................................... 63
SECTION 14.05. Evidence of Compliance with Conditions Precedent .. 63
SECTION 14.06. Legal Holidays .................................... 63
SECTION 14.07. Trust Indenture Act to Control .................... 63
SECTION 14.08. No Security Interest Created ...................... 63
</TABLE>
<PAGE> 31
Contents p. 6
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 14.09. Benefits of Indenture ............................. 64
SECTION 14.10. Table of Contents, Headings, etc. ................. 64
SECTION 14.11. Execution in Counterparts ......................... 64
Signatures .......................................................... 65
Acknowledgments ..................................................... 66
</TABLE>
<PAGE> 32
INDENTURE dated as of October 1, 1989, between MERCHANTS NATIONAL
CORPORATION, an Indiana corporation (such corporation and, subject to
Article Eleven, its successors and assigns, the "Company"), and
MANUFACTURERS HANOVER TRUST COMPANY, a corporation duly organized
and existing under the laws of the State of New York (such corporation
and, subject to Article Seven, its successors and assigns as Trustee
under this Indenture, the "Trustee").
WITNESSETH:
WHEREAS for its lawful corporate purposes, the Company has duly authorized
the issue of its 9 7/8% Subordinated Notes Due 1999 (the "Notes"), in an
aggregate principal amount not to exceed $65,000,000 and, to provide the terms
and conditions upon which the Notes are to be authenticated, issued and
delivered, the Company has duly authorized the execution of this Indenture; and
WHEREAS the Notes and the certificate of authentication to be borne by the
Notes are to be substantially in the following forms:
[FORM OF FACE OF NOTE]
THIS NOTE IS NOT A DEPOSIT AND
IS NOT INSURED BY A FEDERAL AGENCY.
No. $
MERCHANTS NATIONAL CORPORATION
9 7/8% SUBORDINATED NOTE DUE 1999
MERCHANTS NATIONAL CORPORATION, a corporation duly organized and existing
under the laws of the State of Indiana (herein called the "Company"), for value
received, hereby promises to pay to , or registered assigns, the principal
sum of Dollars on October 1, 1999, at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, The City of New York,
in such coin or currency of the United States of America as at the time of
payment shall be legal tender for the payment of public and private debts, and
to pay interest, semiannually on April 1 and October 1 of each year commencing
April 1, 1990, on said principal sum at such office or agency, in like coin or
currency. at the rate per annum specified in the title of this Note. Interest
on this Note will accrue from the most recent date to which interest has been
paid or duly provided for, unless no interest has been paid or duly provided
for on this Note, in which case from October 1, 1989, until payment of the
principal has been made or duly
<PAGE> 33
2
provided for. Notwithstanding the foregoing, when there is no existing default
in the payment of interest on the Notes, if the date of this Note is after the
close of business on the record date (as defined below), and before the
following April 1 or October 1, as the case may be, this Note shall bear
interest from such April 1 or October 1; provided, however, that if the Company
shall default in the payment of interest due on such April 1 or October 1 and a
record date for such payment in default after such April 1 or October 1, as the
case may be, is established pursuant to the Indenture, then this Note shall
bear interest from the next preceding April 1 or October 1 to which interest
has been paid or duly provided for or, if no interest has been paid or duly
provided for on the Notes, from October 1, 1989. The interest so payable on any
April 1 or October 1 will, subject to certain exceptions provided in the
Indenture referred to on the reverse of this Note, be paid to the person in
whose name this Note (or one or more Predecessor Notes, as such term is defined
in the Indenture) is registered at the close of business on the March 15 or
September 15 next preceding such April 1 or October 1 or, if such March 15 or
September 15 is not a Business Day, the next preceding day which is a Business
Day (a "record date") and may, at the option of the Company, be paid by check
mailed to the registered address of such person. As used in this Note, the term
"Business Day" shall mean any day other than a Saturday or Sunday or a day on
which banking organizations in the Borough of Manhattan, The City of New York,
are authorized or obligated by law, regulation or executive order to close.
Interest on this Note shall be calculated on the basis of a 360-day year
consisting of twelve 30-day months.
Reference is made to the further provisions of this Note set forth on the
reverse of this Note, including, without limitation, provisions subordinating
the payment if principal and interest on this Note to the prior payment in full
of all Senior Indebtedness (as defined in the Indenture). Such further
provisions shall for all purposes have the same effect as though fully set
forth at this place.
This Note shall not be valid or become obligatory for any purpose until the
certificate of authentication on this Note shall have been duly signed by the
Trustee under the Indenture referred to on the reverse of this Note.
IN WITNESS WHEREOF, Merchants National Corporation has caused this
instrument to be duly executed under its corporate seal.
Dated: MERCHANTS NATIONAL CORPORATION,
By _________________________________
<PAGE> 34
3
[SEAL]
Attest:
________________________________
Secretary
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Notes described in the within-mentioned Indenture.
MANUFACTURERS HANOVER
TRUST COMPANY, As Trustee
By _________________________________
Authorized Officer
[FORM OF REVERSE OF NOTE]
MERCHANTS NATIONAL CORPORATION
9 7/8% SUBORDINATED NOTE DUE 1999
This Note is one of a duly authorized issue of Notes of the Company,
designated as its 9 7/8% Subordinated Notes Due 1999 (herein called the
"Notes"), limited (except as otherwise provided in the Indenture mentioned
below) to the aggregate principal amount of $65,000,000, all issued or to be
issued under and pursuant to an indenture dated as of October 1, 1989, as it
may be amended or supplemented from time to time (herein called the
"Indenture"), duly executed and delivered by the Company to Manufacturers
Hanover Trust Company, as Trustee (herein called the "Trustee"), to which
Indenture reference is hereby made for a description of the rights, limitations
of rights, obligations, duties and immunities under the Indenture of the
Trustee, the Company and the holders of Notes.
The payment of principal of and interest on this Note is expressly
subordinated and subject in right of payment, as provided in the Indenture, to
the prior payment of any and all Senior Indebtedness of the Company, as defined
in the Indenture, and this Note is issued subject to such provisions, and each
holder of this Note, by accepting the same, (a) agrees, expressly for the
benefit of the present and future holders of Senior Indebtedness, whether now
or hereafter outstanding, to and will be bound by such provisions and (b)
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination so provided and
appoints the Trustee his attorney-in-fact for any such purpose.
<PAGE> 35
4
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of this Note may be declared, and
upon such declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than 66 2/3 percent in aggregate
principal amount of the Notes at the time outstanding, evidenced in the manner
provided in the Indenture, to execute supplemental indentures adding any
provision to or changing in any manner or eliminating any of the provisions of
the Indenture or of any supplemental indenture or modifying in any manner the
rights of the holders of the Notes; provided, however, that no such
supplemental indenture shall (a) without the consent of the holder of each Note
affected thereby, change the stated maturity of the principal of, or any
instalment of interest on, any Note, or reduce the principal amount of any Note
or the interest on any Note, or change any place of payment where, or the coin
or currency in which, any Note or the interest on any Note is payable, or
impair the right to institute suit for the enforcement of any such payment on
or after its stated maturity, or modify certain other provisions of the
Indenture, or (b) without the consent of the holders of all Notes then
outstanding, reduce the percentage in principal amount of the Notes, 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 the Indenture or certain defaults under the Indenture and
their consequences) provided for in the Indenture. It is also provided in the
Indenture that, prior to any declaration that the principal of the Notes
outstanding is due and payable, the holders of a majority in aggregate
principal amount of the Notes at the time outstanding may on behalf of the
holders of all the Notes waive any past default or Event of Default under the
Indenture and its consequences except a default under a covenant in the
Indenture that cannot be modified without the consent of each holder of a Note
affected thereby. Any such consent or waiver by the holder of this Note (unless
revoked as provided in the Indenture) shall be conclusive and binding upon such
holder and upon all future holders and owners of this Note and any Notes which
may be issued in exchange or substitution for this Note, irrespective of
whether or not any notation of such consent or waiver is made upon this Note or
such other Notes.
No reference in this Note to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note
at the place, at the respective times, at the rate and in the coin or currency
prescribed in this Note.
The Notes are issuable in registered form without coupons in denominations
of $1,000 and any integral multiple of $1,000. At the office or agency of the
Company in the Borough of Manhattan, The City of New York, and in the manner
and subject
<PAGE> 36
5
to the limitations provided in the Indenture, but without payment of any
service charge, Notes may be exchanged for a like aggregate principal
amount of Notes of other authorized denominations.
Upon due presentment for registration of transfer of this Note at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, a new Note or Notes of authorized denominations for an equal aggregate
principal amount will be issued to the transferee in exchange for this Note,
subject to the limitations provided in the Indenture, without charge except for
any tax or other governmental charge imposed in connection with such transfer.
Prior to due presentment for registration of transfer of this Note, the
Company, the Trustee, any paying agent and any Note registrar may deem and
treat the registered holder of this Note as the absolute owner of this Note
(whether or not payment on this Note shall be overdue and notwithstanding any
notation of ownership or other writing on this Note made by anyone other than
the Company or any Note registrar), for the purpose of receiving payment of
this Note, or on account of this Note, and for all other purposes, and neither
the Company nor the Trustee nor any paying agent nor any Note registrar shall
be affected by any notice to the contrary. All payments made to or upon the
order of such registered holder shall, to the extent of the sum or sums paid,
satisfy and discharge liability for monies payable on this Note.
No recourse for the payment of the principal of or interest on this Note,
or for any claim based on this Note or otherwise in respect of this Note, and
no recourse under or upon any obligation, covenant or agreement of the Company
in the Indenture or any indenture supplemental to the Indenture or in this
Note, or because of the creation of any indebtedness represented by this Note,
shall be had against any incorporator, stockholder, officer or director, as
such, past, present or future, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise, all such liability being, by the
acceptance of this Note and as part of the consideration for the issue of this
Note, expressly waived and released.
This Note shall be deemed to be a contract made under the laws of the State
of New York, and for all purposes shall be construed in accordance with and
governed by the laws of the State of New York.
<PAGE> 37
6
ASSIGNMENT FORM
If you the holder want to assign this Note, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Note to
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax ID number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint
_______________________________________________________________ agent to
transfer this Note on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date: __________________ Your Signature:_______________________________________
(Sign exactly as your name appears
Signature on the other side of this Note)
Guarantee:
____________________________________________________________________________
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Notes are,
and are to be, authenticated, issued and delivered, and in consideration of the
premises and the purchase and acceptance of the Notes by the holders thereof,
the Company covenants and agrees with the Trustee, for the equal and
proportionate benefit of the respective holders from time to time of the Notes,
as follows:
ARTICLE ONE
Definitions
SECTION 1.01. Definitions. The terms defined in this Section 1.01 (except as
otherwise expressly provided in this Indenture or unless the context otherwise
requires) for all purposes of this Indenture shall have the respective meanings
specified in this Section 1.01. Except as otherwise expressly provided in this
Indenture or unless the context otherwise requires, all other terms used in
this
<PAGE> 38
7
Indenture which are defined in the Trust Indenture Act of 1939 or which the
Trust Indenture Act of 1939 defines by reference to the Securities Act of 1933,
as amended, shall have the meanings assigned to such terms in such Trust
Indenture Act and in such Securities Act as in force at the date of the
execution of this Indenture.
Bank: The term "Bank" means (i) any institution organized under the laws of
the United States, any State, the District of Columbia, Puerto Rico or any
territory of the United States which (a) accepts deposits that the depositor
has a legal right to withdraw on demand and (b) engages in the business of
making commercial loans and (ii) any trust company organized under any of the
foregoing laws.
Board of Directors: The term "Board of Directors" shall mean the board of
directors of the Company or the executive committee of such board.
Business Day: The term "Business Day" shall mean any day other than a
Saturday or Sunday or a day on which banking organizations in the Borough of
Manhattan, The City of New York, are authorized or obligated by law, regulation
or executive order to close.
Company Request or Order: The terms "Company Request" and "Company Order"
mean a written request or order signed in the name of the Company by its
Chairman of the Board, its President or any of its Vice Presidents and its
Treasurer or its Secretary, and delivered to the Trustee.
Consolidated Net Banking Assets: The term "Consolidated Net Banking
Assets" means all net assets owned directly or indirectly by a Subsidiary that
is a Bank as such net assets would be reflected on a consolidated balance sheet
of the Company prepared in accordance with generally accepted accounting
principles generally accepted at the time.
Constituent Bank: The term "Constituent Bank" means any Subsidiary that is
a Bank.
Controlled Subsidiary: The term "Controlled Subsidiary" means any
Subsidiary of which more than 80 percent of the aggregate voting power of the
outstanding shares of the Voting Stock is at the time owned directly or
indirectly by the Company or by one or more Controlled Subsidiaries or by the
Company and one or more Controlled Subsidiaries, after giving effect to the
issuance to any Person other than the Company or any Controlled Subsidiary of
Voting Stock of the Subsidiary issuable on exercise of options, warrants or
rights to subscribe for such Voting Stock or on conversion of securities
convertible into such Voting Stock.
<PAGE> 39
8
Event of Default: The term "Event of Default" shall mean any event
specified in Section 6.01, continued for the period of time, if any, and after
the giving of the notice, if any, designated in such Section.
Indenture: The term "Indenture" shall mean this instrument as originally
executed or, if amended or supplemented as provided in this Indenture, as so
amended or supplemented.
Note or Notes; Outstanding: The term "Note" or "Notes" shall mean any Note
or Notes, as the case may be, authenticated and delivered under this Indenture.
The term "outstanding", when used with reference to Notes, shall, subject to
the provisions of Section 8.04, mean, as of any particular time, all Notes
authenticated and delivered by the Trustee under this Indenture, except
(a) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancelation;
(b) Notes, or portions thereof, for the payment of which monies in the
necessary amount shall have been deposited in trust with the Trustee or
with any paying agent (other than the Company) or shall have been set aside
and segregated in trust by the Company (if the Company shall act as its own
paying agent); and
(c) Notes in lieu of or in substitution for which other Notes shall
have been authenticated and delivered, or which have been paid, pursuant to
the terms of Section 2.06 unless proof satisfactory to the Trustee is
presented that any such Notes are held by bona fide holders in due course.
Noteholder: The term "Noteholder", "holder of Notes" or other similar
terms, shall mean any person in whose name at the time a particular Note is
registered on the books of the Company kept for that purpose in accordance with
the terms of this Indenture.
Officers' Certificate: The term "Officers' Certificate", when used with
respect to the Company, shall mean a certificate signed by the Chairman of the
Board, the President or any Vice President and by the Controller, any Assistant
Controller, the Treasurer or the Secretary of the Company. Each such
certificate shall include the statements provided for in section 14.05.
Opinion of Counsel: The term "Opinion of Counsel" shall mean an opinion in
writing signed by legal counsel, who may be an employee of or counsel to the
Company, and who shall be acceptable to the Trustee. Each such opinion shall
include the statements provided for in Section 14.05.
<PAGE> 40
9
Person: The term "Person" shall mean a corporation, an association, a
partnership, an organization, a trust, an individual, a government or a
political subdivision thereof or a governmental agency.
Predecessor Note: The term "Predecessor Note" of any particular Note means
every previous Note evidencing all or a portion of the same debt that was
evidenced by such particular Note, and, for the purposes of this definition,
any Note authenticated and delivered under Section 2.06 in lieu of a mutilated,
destroyed, lost or stolen Note shall be deemed to evidence the same debt as the
mutilated, destroyed, lost or stolen Note.
Principal Constituent Bank: The term "Principal Constituent Bank" means any
Constituent Bank the total assets of which as set forth in the most recent
statement of condition of such Constituent Bank equal more than 15 percent of
the total assets of all Constituent Banks as determined from the most recent
statements of condition of the Constituent Banks.
Principal Office of the Trustee: The term "principal office of the Trustee"
or any other similar term shall mean the principal office of the Trustee at
which at any particular time its corporate trust business shall be
administered, which office is, at the date of this Indenture, located at 450
West 33rd Street, 15th Floor, New York, N.Y. 10001.
Responsible Officer: The term "Responsible Officer", when used with respect
to the Trustee, shall mean the Chairman or Vice Chairman of its board of
directors, the Chairman or Vice Chairman of the executive committee of the
board of directors, the President, any Vice President, the Cashier, any
Assistant Cashier, any senior trust officer, any trust officer, any assistant
trust officer or any other officer or assistant officer of the Trustee
customarily performing functions similar to those performed by the persons who
at the time shall be the above-named officers, respectively, or to whom any
corporate trust matter is referred because of his knowledge of and familiarity
with the particular subject.
Senior Indebtedness: The term "Senior Indebtedness" shall mean the
principal of and premium (if any) and interest on the following, whether
outstanding on the date of execution of this Indenture or thereafter incurred
or created: (a) indebtedness of the Company for money borrowed by the Company
(including purchase money obligations with an original maturity of in excess of
one year) or evidenced by debentures, notes (other than the Notes) or other
corporate debt securities or similar instruments issued by the Company; (b)
indebtedness or obligations of the Company as lessee under any leases of real
or personal property required to be capitalized under generally accepted
accounting principles generally accepted at the time; (c) indebtedness or
obligations incurred or assumed by the
<PAGE> 41
10
Company in connection with the acquisition by the Company or any Subsidiary of
any property, including any business; (d) obligations under any agreement in
respect of any interest rate or currency swap, interest rate cap, floor or
collar, interest rate future, currency exchange or forward currency transaction
that relates to Senior Indebtedness; (e) indebtedness or obligations of the
Company constituting a guarantee of indebtedness or of obligations of others of
the type referred to in the preceding clauses (a), (b), (c) and (d); or (f)
renewals, extensions or refundings of any of the indebtedness or obligations
referred to in the preceding clauses (a), (b), (c), (d) and (e); provided,
however, that Senior Indebtedness shall not include any particular indebtedness
or obligation, renewal, extension or refunding referred to in clause (a), (b),
(c), (d), (e) or (f) if the express provisions of the instrument creating or
evidencing the same, or pursuant to which the same is outstanding, provide that
such indebtedness or other obligation or such renewal, extension or refunding
is not superior in right of payment to the Notes.
Subsidiary: The term "Subsidiary" shall mean any corporation of which a
majority of the aggregate voting power of the outstanding Voting Stock shall at
the time be owned by the Company or by the Company and one or more Subsidiaries
or by one or more Subsidiaries.
Trust Indenture Act of 1939: The term "Trust Indenture Act of 1939" shall
mean the Trust Indenture Act of 1939 as it was in force at the date of
execution of this Indenture, except as provided in Section 10.03.
Vice President: The term "vice president" or "Vice President", when used
with respect to the Company or the Trustee, means any such officer whether or
not designated by a number or a word or words added before or after such title.
Voting Stock: The term "Voting Stock" of a corporation or other entity
means stock of the class or classes having general voting power in an election
of the board of directors, managers or trustees of such corporation or other
entity (irrespective of whether or not, at the time, stock of any other class
or classes shall have or might have voting power by reason of the happening of
any contingency).
ARTICLE TWO
Issue, Description, Execution, Registration and
Exchange of Notes
SECTION 2.01. Designation, Amount and Issue of Notes. The Notes shall be
designated as set forth in the title of the form of Note set forth above. Notes
not to exceed the aggregate principal amount of $65,000,000 (except as provided
in Sections 2.05, 2.06 and 10.04) upon the execution of this Indenture, or from
time to time thereafter, may be executed by the Company and delivered to the
Trustee for
<PAGE> 42
11
authentication, and the Trustee shall thereupon authenticate and deliver such
Notes to the Company or upon the order of the Company set forth in a Company
Order without any further action by the Company under this Indenture.
SECTION 2.02. Form of Notes. The Notes and the Trustee's certificate of
authentication shall be substantially in the form as set forth above. There may
be imprinted on any of the Notes such notations, legends or endorsements as the
officers executing the same may approve (execution of the Notes to be
conclusive evidence of such approval) and as are not inconsistent with the
provisions of this Indenture, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Notes may be listed.
SECTION 2.03. Date and Denomination of Notes; Payment of Interest. The
Notes shall be issuable in registered form without coupons in denominations of
$1,000 and any integral multiple of $1,000 and shall be numbered, lettered or
otherwise distinguished in such manner or in accordance with such plan as the
officers of the Company executing the same may determine with the approval of
the Trustee. Each Note shall be dated the date of its authentication and,
except as provided in this Section 2.03, shall bear interest, payable
semiannually on April 1 and October 1 of each year commencing April 1, 1990,
from the April 1 or October 1, as the case may be, next preceding the date of
such Note to which interest has been paid or duly provided for, unless no
interest has been paid or duly provided for on the Notes, in which case from
October 1, 1989, until payment of the principal sum has been made or duly
provided for. Notwithstanding the foregoing, when there is no existing default
in the payment of interest on the Notes, all Notes authenticated by the Trustee
after the close of business on the record date (as defined below in this
Section 2.03) for any interest payment date (April 1 or October 1, as the case
may be) and prior to such interest payment date shall be dated the date of
authentication but shall bear interest from such interest payment date;
provided, however, that if and to the extent that the Company shall default in
the interest due on such interest payment date and a record date for such
payment in default after such April 1 or October 1, as the case may be, is
established pursuant to the second following paragraph, then any such Note
shall bear interest from the April 1 or October 1, as the case may be, next
preceding the date of such Note to which interest has been paid or duly
provided for, unless no interest has been paid or duly provided for on the
Notes, in which case from October 1, 1989. At the option of the Company,
interest on the Notes may be paid by check mailed to the registered address of
the holders thereof.
Interest shall be calculated on the basis of a 360-day year consisting of
twelve 30-day months.
<PAGE> 43
12
The person in whose name any Note is registered at the close of business on
any record date with respect to any interest payment date shall be entitled to
receive the interest payable on such interest payment date notwithstanding the
cancelation of such Note upon any transfer or exchange subsequent to the record
date and prior to such interest payment date; provided, however, that if and to
the extent the Company shall default in the payment of the interest due on such
interest payment date, such defaulted interest shall be paid to the persons in
whose names outstanding Notes are registered on a subsequent record date
established by notice given by mail by or on behalf of the Company to the
holders of Notes not less than 15 days preceding such subsequent record date or
the Trustee may, in its discretion and with the consent of the Company, pay
such interest in any other manner not inconsistent with applicable law. The
term "record date" as used in this Section 2.03 with respect to any interest
payment date shall mean the March 15 or September 15, as the case may be, next
preceding such interest payment date or, if such day is not a Business Day, the
next preceding day which is a Business Day.
SECTION 2.04. Execution of Notes. The Notes shall be signed in the name and
on behalf of the Company by the facsimile signature of its Chairman of the
Board, its President or, in lieu thereof, of any of its Vice Presidents or its
Treasurer and attested by its Secretary, under its corporate seal (which may be
printed, engraved or otherwise reproduced thereon, by facsimile or otherwise).
For that purpose the Company may adopt and use the facsimile signature of any
person who has been or is or shall be such officer. Only such Notes as shall
bear thereon a certificate of authentication substantially in the form set
forth above, executed by the Trustee, shall be entitled to the benefits of this
Indenture or be valid or obligatory for any purpose. Such certificate by the
Trustee upon any Note executed by the Company shall be conclusive evidence that
the Note so authenticated has been duly authenticated and delivered under this
Indenture.
In case any officer of the Company who shall have signed any of the Notes
shall cease to be such officer before the Notes so signed shall have been
authenticated and delivered by the Trustee, or disposed of by the Company, such
Notes nevertheless may be authenticated and delivered or disposed of as though
the person who signed such Notes had not ceased to be such officer of the
Company; and any Note may be signed on behalf of the Company by such persons
as, at the actual date of the execution of such Note, shall be the proper
officers of the Company, although at the date of the execution of this
Indenture any such person was not such an officer.
SECTION 2.05. Exchange and Registration of Transfer of Notes. Notes may be
exchanged for a like aggregate principal amount of Notes of other authorized
denominations. Notes to be exchanged shall be surrendered at the office or
agency to be maintained by the Company in the Borough of Manhattan, The City of
New
<PAGE> 44
13
York, pursuant to Section 4.02 and the Company shall execute and register and
the Trustee shall authenticate and deliver in exchange therefor the Note or
Notes which the Noteholder making the exchange shall be entitled to receive.
The Company shall cause to be kept at such office or agency a Note register
in which, subject to such reasonable regulations as it may prescribe, the
Company shall provide for registration of Notes and of transfer of Notes as in
accordance with this Article Two. Each such register shall be in written form
or in any other form capable of being converted into written form within a
reasonable time. At all reasonable times such registers shall be open for
inspection by the Trustee. Upon due presentment for registration of transfer of
any Note at any such office or agency, the Company shall execute and register
and the Trustee shall authenticate and deliver in the name of the transferee or
transferees a new Note or Notes for an equal aggregate principal amount.
All Notes presented for registration of transfer or for exchange or payment
shall (if so required by the Company or the Trustee) be duly endorsed by, or be
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company and the Trustee duly executed by, the holder or his
attorney duly authorized in writing.
No service charge shall be made for any exchange or registration of
transfer of Notes, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any such exchange or transfer.
SECTION 2.06. Mutilated, Destroyed, Lost or Stolen Notes. In case any
temporary or definitive Note shall become mutilated or be destroyed, lost or
stolen, the Company in its discretion may execute, and upon its request and in
the absence of notice to the Company and the Trustee that such Note has been
acquired by a bona fide purchaser, the Trustee shall authenticate and deliver a
new Note, bearing a number not contemporaneously outstanding, in exchange and
substitution for the mutilated Note, or in lieu of and in substitution for the
Note so destroyed, lost or stolen. In every case the applicant for a
substituted Note shall furnish to the Company and to the Trustee such security
or indemnity as may be required by them to save each of them harmless, and, in
every case of destruction, loss or theft, the applicant shall also furnish to
the Company and to the Trustee evidence to their satisfaction of the
destruction, loss or theft of such Note and of the ownership thereof.
The Trustee may authenticate any such substituted Note and deliver the same
upon the written request or authorization of any officer of the Company. Upon
the issuance of any substituted Note, the Company may require the payment of a
sum
<PAGE> 45
14
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses (including the fees and
expenses of the Trustee) connected therewith. In case any Note which has
matured or is about to mature shall become mutilated or be destroyed, lost or
stolen, the Company may, instead of issuing a substitute Note, pay or authorize
the payment of the same (without surrender thereof except in the case of a
mutilated Note) if the applicant for such payment shall furnish to the Company
and to the Trustee such security or indemnity as may be required by them to
save each of them harmless and, in case of destruction, loss or theft, evidence
satisfactory to the Company and the Trustee of the destruction, loss or theft
of such Note and of the ownership of such Note.
Every substituted Note issued pursuant to the provisions of this Section
2.06 by virtue of the fact that any Note is destroyed, lost or stolen shall
constitute an additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Note shall be found at any time, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Notes duly issued under this Indenture. All Notes shall be
held and owned upon the express condition that the foregoing provisions are
exclusive with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Notes and shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment of negotiable instruments
or other securities without their surrender.
SECTION 2.07. Temporary Notes. Pending the preparation of definitive Notes,
the Company may execute and the Trustee shall authenticate and deliver
temporary Notes (printed or lithographed). Temporary Notes shall be issuable in
any authorized denomination, and substantially in the form of the definitive
Notes but with such omissions, insertions and variations as may be appropriate
for temporary Notes, all as may be determined by the Company. Every such
temporary Note shall be authenticated by the Trustee in substantially the same
manner, and with the same effect, as the definitive Notes. Without unreasonable
delay the Company will execute and deliver to the Trustee definitive Notes and
thereupon any or all temporary Notes may be surrendered in exchange therefor at
the principal office of the Trustee, and the Trustee shall authenticate and
deliver in exchange for such temporary Notes an equal aggregate principal
amount of definitive Notes of authorized denominations. Such exchange shall be
made at the Company's expense and without any charge. Until so exchanged, the
temporary Notes shall in all respects be entitled to the same benefits under
this Indenture as definitive Notes authenticated and delivered under this
Indenture.
SECTION 2.08. Cancelation of Notes Paid, etc. All Notes surrendered for the
purpose of payment, exchange or registration of transfer shall, if surrendered
to the Company or any paying agent or any Note registrar, be delivered to the
Trustee and
<PAGE> 46
15
promptly canceled by it, or, if surrendered to the Trustee, shall be promptly
canceled by it, and no Notes shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture. The Trustee may
destroy canceled Notes and, upon receipt of a Company Request, deliver a
certificate of such destruction to the Company. If the Company shall acquire
any of the Notes, however, such acquisition shall not operate as a redemption
or satisfaction of the indebtedness represented by such Notes unless and until
the same are delivered to the Trustee for cancelation.
ARTICLE THREE
Subordination of Notes
SECTION 3.01. Agreement of Noteholders that Notes Subordinated to Extent
Provided. The Company, for itself and its successors and assigns, covenants and
agrees and each holder of the Notes by his acceptance of a Note likewise
covenants and agrees that, subject to the provisions of Article Twelve, the
payment of the principal of and interest on each of and all Notes is hereby
expressly subordinated, to the extent and in the manner set forth in this
Article Three, to the prior payment in full of all Senior Indebtedness. The
provisions of this Article Three shall constitute a continuing offer to all
persons who, in reliance upon such provisions, become holders of, or continue
to hold, Senior Indebtedness, and such provisions are made for the benefit of
the holders of Senior Indebtedness, and such holders are hereby made obligees
under this Article Three the same as if their names were written in this
Article Three as such, and they and/or each of them may proceed to enforce the
provisions of this Article Three.
SECTION 3.02. Company Not to Make Payments with Respect to Notes in Certain
Circumstances. (a) Upon the maturity of any Senior Indebtedness by lapse of
time, acceleration or otherwise, all principal of and premium, if any, and
interest then due and payable on such Senior Indebtedness, shall first be paid
in full, or such payment duly provided for in cash or in a manner satisfactory
to the holder or holders of such Senior Indebtedness, before any payment is
made on account of the principal of or interest on the Notes or to acquire any
of the Notes.
(b) Upon the happening of an event of default with respect to any Senior
Indebtedness, as such event of default is defined in such Senior Indebtedness
or in the instrument under which it is outstanding, arising out of a default in
the payment of principal of or interest on such Senior Indebtedness - then,
unless and until such event of default shall have been cured or waived or shall
have ceased to exist, no payment shall be made by the Company with respect to
the principal of or interest on the Notes or to acquire any of the Notes.
<PAGE> 47
16
(c) Upon (i) the happening of an event of default with respect to any class
or series of Senior Indebtedness, as such event of default is so defined,
permitting the holders to accelerate the maturity of such Senior Indebtedness
and not arising out of a default in payment of principal of or interest on such
Senior Indebtedness and (ii) after receipt by the Company and the Trustee of
written notice of the event of default referred to in clause (i) by a
representative of all the holders of such class or series - then no payment
shall be made by the Company with respect to principal of or interest on the
Notes or to acquire any of the Notes for a period commencing on the date of
such receipt by the Trustee and ending on the earlier of (x) the date on which
such event of default shall have been cured or waived or shall have ceased to
exist or the Senior Indebtedness to which such event of default relates shall
have been paid in full in cash or cash equivalent, or such period otherwise
shall have been terminated by the holders of Senior Indebtedness and (y) the
120th day after the date of such receipt of such written notice (each such
period, if any, hereinafter referred to as a "Payment Blockage Period");
provided, however, that no more than one Payment Blockage Period may be
commenced during any 360-day period. For all purposes of this subsection (c),
no such event of default that occurred and was continuing or otherwise existed
on the date of commencement of any Payment Blockage Period shall be, or be
made, the basis for the commencement of a subsequent Payment Blockage Period by
any Person, whether or not there would be more than one Payment Blockage Period
during any 360-day period, unless such event of default shall have been cured,
or shall have ceased to exist, in either case for a period of not less than 100
consecutive days. Each of the Company and the Trustee shall promptly give
notice of the date of its receipt of any notice referred to in clause (ii),
above, to the Trustee and the Company, respectively.
(d) Subject to the last sentence of Section 7.06, in the event that
notwithstanding the provisions of this Section 3.02 the Company shall make any
payment to the Trustee on account of the principal of or interest on the Notes
prohibited by subsection (a), (b) or (c) of this Section 3.02 and if such fact
shall have been made known to the Trustee prior to such payment - then, unless
and until such payment is thereafter permitted under subsections (a), (b) and
(c) of this Section 3.02, such payment (subject to the provisions of Sections
3.06 and 3.07) shall be held by the Trustee in trust for the benefit of, and
shall be paid forthwith over and delivered to, the holders of Senior
Indebtedness (pro rata as to each of such holders on the basis of the
respective amounts of Senior Indebtedness held by them) or their representative
or the trustee under the indenture or other agreement (if any) pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, for application to the payment of all
Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full in accordance with the terms of such Senior
<PAGE> 48
17
Indebtedness, after giving effect to any concurrent payment or distribution to
or for the holders of Senior Indebtedness.
(e) The provisions of this Section 3.02 shall not apply to any payment with
respect to which Section 3.03 shall apply.
SECTION 3.03. Notes Subordinated to Prior Payment of All Senior Indebtedness
on Dissolution, Liquidation or Reorganization of Company. Upon any distribution
of assets of the Company Upon any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or
receivership proceedings or upon an assignment for the benefit of creditors
or otherwise):
(a) The holders of all Senior Indebtedness shall first be entitled to
receive payment in full of the principal thereof, premium, if any, and interest
due on Senior Indebtedness before the holders of the Notes are entitled to
receive any payment on account of the principal of or interest on the Notes
(other than payment in shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment, which stock and securities are
subordinated to the payment of all Senior Indebtedness and securities received
in lieu thereof which may at the time be outstanding).
(b) Any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (other than shares of stock
of the Company as reorganized or readjusted, or securities of the Company or
any other corporation provided for by a plan of reorganization or readjustment,
which stock and securities are subordinated to the payment of all Senior
Indebtedness and securities received in lieu thereof which may at the time be
outstanding), to which the holders of the Notes would be entitled except for
the provisions of this Section 3.03, shall be paid by the liquidating trustee
or agent or other person making such payment or distribution, whether a trustee
in bankruptcy, a receiver or liquidating trustee or other trustee or agent,
directly to the holders of Senior Indebtedness or their representative or
representatives, or to the trustee or trustees under any indenture under which
any instruments evidencing any of such Senior Indebtedness may have been
issued. to the extent necessary to make payment in full of all Senior
Indebtedness remaining unpaid, after giving effect to any concurrent payment or
distribution or provision for such Senior Indebtedness to the holders of such
Senior Indebtedness.
(c) Subject to the last sentence of Section 7.06, in the event that
notwithstanding the foregoing provisions of this Section 3.03, any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities (other than shares of stock of the Company as
reorganized
<PAGE> 49
18
or readjusted, or securities of the Company or any other corporation provided
for by a plan of reorganization or readjustment, which stock and securities are
subordinated to the payment of all Senior Indebtedness and securities received
in lieu thereof which may at the time be outstanding), shall be received by the
Trustee or the holders of the Notes on account of principal or interest on the
Notes before all Senior Indebtedness is paid in full, or effective provision
made for its payment, such payment or distribution (subject to the provisions
of Sections 3.06 and 3.07) shall be received and held in trust for and shall be
paid over to the holders of the Senior Indebtedness remaining unpaid or
unprovided for or their representative or representatives, or to the trustee or
trustees under any indenture under which any instruments evidencing any of such
Senior Indebtedness may have been issued, for application to the payment of
such Senior Indebtedness until all such Senior Indebtedness shall have been
paid in full, after giving effect to any concurrent payment or distribution or
provision for such Senior Indebtedness to the holders of such Senior
Indebtedness.
(d) The consolidation of the Company with, or the merger of the Company
into, another Person or the dissolution, winding up, liquidation or
reorganization of the Company following the conveyance, transfer or lease of
its properties and assets substantially as an entirety to another Person upon
the terms and conditions set forth in Article Eleven shall not be deemed a
dissolution, winding up, liquidation or reorganization of the Company for the
purposes of this Section 3.03 if the Person formed by such consolidation or
into which the Company is merged or the Person which acquires by conveyance,
transfer or lease such properties and assets substantially as an entirety, as
the case may be, shall, as a part of such consolidation. merger, conveyance,
transfer or lease, comply with the conditions set forth in Article Eleven.
SECTION 3.04. Noteholders to Be Subrogated to Rights of Holders of Senior
Indebtedness. Subject to the payment in full of all Senior Indebtedness, the
holders of the Notes shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of assets of the Company
applicable to the Senior Indebtedness until all amounts owing on the Notes
shall be paid in full, and for the purpose of such subrogation no payments or
distributions to the holders of the Senior Indebtedness by or on behalf of the
Company or by or on behalf of the holders of the Notes by virtue of this
Article Three which otherwise would have been made to the holders of the Notes
shall, as between the Company and the holders of the Notes, be deemed to be
payment by the Company to or on account of the Senior Indebtedness.
SECTION 3.05. Obligation of the Company Unconditional, etc. The provisions
of this Article Three are and are intended solely for the purpose of defining
the relative rights of the holders of the Notes, on the one hand, and the
holders of the
<PAGE> 50
19
Senior Indebtedness, on the other hand. Nothing contained in this Article Three
or elsewhere in this Indenture or in the Notes is intended to or shall impair
as between the Company and the holders of the Notes, the obligation of the
Company, which is absolute and unconditional, to pay to the holders of the
Notes the principal of and interest on the Notes as and when the same shall
become due and payable in accordance with their terms, or is intended to or
shall affect the relative rights of the holders of the Notes and creditors of
the Company other than the holders of the Senior Indebtedness, nor shall
anything in this Article Three or elsewhere in this Indenture prevent the
Trustee or the holder of any Note from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article Three of the holders of Senior Indebtedness
in respect of cash, property or securities of the Company received upon the
exercise of any such remedy. Nothing contained in this Article Three is
intended to alter the rights between the holders of the Notes and the Company's
creditors other than the holders of the Notes and the holders of Senior
Indebtedness. Upon any payment or distribution of assets of the Company
referred to in this Article Three, the Trustee, subject to the provisions of
Section 7.01, and the holders of the Notes shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which any
dissolution, winding up, liquidation or reorganization proceedings are pending,
or a certificate of the liquidating trustee or agent or other person making any
distribution to the Trustee or to the holders of the Notes, for the purpose of
ascertaining the persons entitled to participate in such distribution, the
holders of, the amounts of, the amounts payable on, the amount or amounts paid
or distributed on and all other facts pertinent to the Senior Indebtedness and
other indebtedness of the Company and all other facts pertinent to this Article
Three.
SECTION 3.06. Trustee Entitled to Assume Payments Not Prohibited in Absence
of Notice. The Company shall give prompt written notice to a Responsible
Officer of the Trustee located at its principal office of any fact known to the
Company which would prohibit the making of any payment to or by the Trustee
with respect to the Notes. Notwithstanding the provisions of Section 3.01 or
3.02 or any other provision of this Indenture, the Trustee shall not at any
time be charged with knowledge of the existence of any facts which would
prohibit the making of any payment of monies to or by the Trustee, unless and
until the Trustee shall have received at the principal office of the Trustee,
Attention: Corporate Trust Administration, written notice of such facts from
the Company or from one or more holders of Senior Indebtedness or from any
trustee for such holders; and, prior to the receipt of any such written notice,
the Trustee, subject to the provisions of Section 7.01, shall be entitled to
assume conclusively that no such facts exist.
<PAGE> 51
20
The Trustee shall not be required to rely on the delivery to it of a
written notice by a Person representing himself to be a holder of Senior
Indebtedness (or a trustee or other representative on behalf of such holder)
unless such written notice is accompanied by an Officer's Certificate
certifying 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 Three, and, if such Officer's Certificate 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.
SECTION 3.07. Application by Trustee of Monies Deposited with It. Anything
in this Indenture (except Section 6.03) to the contrary notwithstanding, any
deposit of monies by the Company with the Trustee (whether or not in trust) for
the payment of the principal of or interest on any Notes shall be subject to
the provisions of Sections 3.01, 3.02, 3.03 and 3.04 except that, if not less
than three Business Days prior to the date on which by the terms of this
Indenture any such monies may become payable for any purpose (including,
without limitation, the payment of either the principal of or the interest on
any Note and any amounts immediately due and payable upon the execution of any
instrument acknowledging satisfaction and discharge of this Indenture, as
provided in Article Twelve) the Trustee shall not have received with respect to
such monies the notice provided for in Section 3.06, then, anything contained
in this Article Three 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 which may be received by it during or after such three Business
Day period.
SECTION 3.08. Article Applicable to Paying Agents. In case at any time any
paying agent other than the Trustee shall have been appointed by the Company
and be then acting under this Indenture, the term "Trustee" as used in this
Article Three shall (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
Three in addition to or in place of the Trustee; provided, however, that
Section 3.10 shall not apply to any paying agent.
SECTION 3.09. Subordination Rights Not Impaired by Acts or Omissions of
Company or Holders of Senior Indebtedness. No right of any present or future
holders of any Senior Indebtedness to enforce subordination as provided in this
Article Three shall at any time in any way be prejudiced or impaired by any act
or failure to act on the part of the Company or by any act or failure to act,
in good faith, by any such holder, or by any noncompliance by the Company with
the terms, provisions and covenants of this Indenture, regardless of any
knowledge of such act,
<PAGE> 52
21
failure to act or noncompliance which any such holder may have or be otherwise
charged with.
SECTION 3.10. Noteholders Authorize Trustee to Effectuate Subordination of
Notes. Each holder of the Notes by his acceptance of a Note authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article Three and appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or
receivership proceedings or upon an assignment for the benefit of creditors or
otherwise) tending towards liquidation of the business and assets of the
Company, the immediate filing of a claim for the unpaid balance of its or his
Notes in the form required in such proceedings and cause such claim to be
approved. If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holder or holders of Senior
Indebtedness are hereby authorized to and have the right to file and are hereby
authorized to file an appropriate claim for and on behalf of the holders of
such Notes.
SECTION 3.11. Right of Trustee to Hold Senior Indebtedness. The Trustee
shall be entitled to all the rights set forth in this Article Three in respect
of any Senior Indebtedness at any time held by it to the same extent as any
other holder of Senior Indebtedness, and nothing in Section 7.13 or elsewhere
in this Indenture shall be construed to deprive the Trustee of any of its
rights as such holder.
SECTION 3.12. Article Three Not to Prevent Events of Default. The failure
to make a payment on account of principal or interest by reason of any
provision in this Article Three shall not be construed as preventing the
occurrence of an Event of Default under Section 6.01.
SECTION 3.13. Trustee Not Fiduciary for Holders of Senior Indebtedness. The
Trustee 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 Notes or to the Company
or to any other Person cash, property or securities to which any holders of
Senior Indebtedness shall be entitled by virtue of this Article Three or
otherwise.
ARTICLE FOUR
Particular Covenants of the Company
SECTION 4.01. Payment of Principal and Interest. The Company covenants and
agrees that it will duly and punctually pay or cause to be paid the principal
of
<PAGE> 53
22
and interest on each of the Notes at the places, at the respective times and in
the manner provided in this Indenture and in the Notes.
SECTION 4.02. Offices for Notices and Payments, etc. So long as any of the
Notes remain outstanding, the Company will maintain in the Borough of
Manhattan, The City of New York, an office or agency where the Notes may be
presented for payment, an office or agency where the Notes may be presented for
registration of transfer and for exchange as in this Indenture provided and an
office or agency where notices and demands to or upon the Company in respect of
the Notes or of this Indenture may be served. The Company will give to the
Trustee prompt written notice of the location of each such office or agency and
of any change of location thereof. In case the Company shall fail to maintain
any such office or agency or shall fail to give such notice of the location or
of any change in the location thereof, presentations and demands may be made
and notices may be served at the principal office of the Trustee, and the
Company hereby initially appoints the Trustee its agent to receive all such
presentations and demands.
SECTION 4.03. Appointments to Fill Vacancies in Trustee's Office. The
Company, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 7.10, a Trustee, so
that there shall at all times be a Trustee under this Indenture.
SECTION 4.04. Provision as to Paying Agent. (a) If the Company shall
appoint a paying agent other than the Trustee, it will prior to each due date
of principal or interest deposit with such paying agent a sum sufficient to pay
the principal or interest so becoming due, such sum to be held in trust for the
benefit of the persons entitled to such principal or interest and the Company
will notify the Trustee of its making of, or failure to make, any such payment.
The Company shall also cause such paying agent to execute and deliver to the
Trustee an instrument in which such agent shall agree with the Trustee, subject
to the provisions of this Section 4.04.
(1) that it will hold all sums held by it as such agent for the payment
of the principal of or interest on the Notes (whether such sums have been
paid to it by the Company or by any other obligor on the Notes) in trust
for the benefit of the Persons entitled thereto;
(2) that it will give the Trustee notice of any failure by the Company
(or by any other obligor on the Notes) to make any payment of the principal
of or interest on the Notes when the same shall be due and payable; and
(3) that it will at any time during the continuance of an Event of
Default, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held by it as such agent.
<PAGE> 54
23
(b) If the Company shall act as its own paying agent, it will, on or before
each due date of the principal of or interest on the Notes, set aside,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay such principal or interest so becoming due and will
notify the Trustee of any failure to take such action and of any failure by the
Company (or by any other obligor under the Notes) to make any payment of the
principal of or interest on the Notes when the same shall become due and
payable.
(c) Anything in this Section 4.04 to the contrary notwithstanding, the
Company may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or by Company Order
direct any paying agent to pay to the Trustee all sums held in trust by the
Company or any paying agent under this Indenture, such sums to be held by the
Trustee upon the trusts contained in this Indenture.
(d) Anything in this Section 4.04 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 4.04 is subject to
Sections 12.03 and 12.04.
SECTION 4.05. Statement as to Compliance. The Company will deliver to the
Trustee, within 120 days after the end of each calendar year, a written
statement signed by the Chairman of the Board, the President or a Vice
President of the Company and by the Treasurer of the Company, stating, as to
each signer of such statement, that:
(1) a review of the activities of the Company during the year and of
performance under this Indenture has been made under his supervision;
(2) to the best of his knowledge, based on such review, the Company has
fulfilled all its obligations under this Indenture throughout such year,
or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to him and the nature and status of such
default; and
(3) such certificate sets forth as of the end of such year a list of
all Principal Constituent Banks.
SECTION 4.06. Notice of Certain Defaults. The Company will deliver to the
Trustee within five days after the occurrence thereof written notice of any
event which with the giving of notice or the lapse of time or both would be an
Event of Default under clause (c) or clause (d) of Section 6.01.
SECTION 4.07. Limitation on Certain Dispositions and on Merger and Sale of
Assets. Except as otherwise provided in Article Eleven, the Company will not:
<PAGE> 55
24
(a) sell, assign, transfer or otherwise dispose of any shares of, or
securities convertible into or options, warrants or rights to subscribe for
or purchase shares of, Voting Stock of a Principal Constituent Bank, and
will not permit a Principal Constituent Bank to issue any shares of, or
securities convertible into or options, warrants or rights to subscribe for
or purchase shares of, such Voting Stock if, in each case, after giving
effect to any such transaction, the Principal Constituent Bank would cease
to be a Controlled Subsidiary, or
(b) permit a Principal Constituent Bank to
(i) merge or consolidate with any other corporation, unless the
surviving corporation is, or upon consummation of the merger or
consolidation will become, a Controlled Subsidiary; or
(ii) lease, sell or transfer all or substantially all its
properties and assets to any corporation or other Person, except to a
Controlled Subsidiary or a Person that, upon such lease, sale or
transfer, will become a Controlled Subsidiary.
Notwithstanding the foregoing, any such sale, assignment, transfer or other
disposition of securities, any such merger or consolidation or any such lease,
sale or transfer of properties and assets shall not be prohibited if required
(i) by any law or any rule, regulation or order of any governmental agency or
authority or (ii) as a condition imposed by any law or any rule, regulation or
order of any governmental agency or authority to the acquisition by the
Company, directly or indirectly, through purchase of stock or assets, merger,
consolidation or otherwise, of any Person; provided that, after giving effect
to such acquisition, (A) such Person will be a Controlled Subsidiary, (B) the
Consolidated Net Banking Assets of the Company will be at least equal to the
Consolidated Net Banking Assets of the Company prior thereto, and (C) Merchants
National Bank & Trust Company of Indianapolis, a national banking association,
and any successor or successors thereto, will be a Controlled Subsidiary.
SECTION 4.08. Limitation on Creation of Liens. So long as any of the Notes
shall be outstanding, the Company will not create, assume, incur or suffer to
be created, assumed or incurred or to exist any pledge, encumbrance or lien, as
security for indebtedness for borrowed money, upon any shares of, or securities
convertible into or options, warrants or rights to subscribe for or purchase
shares of, Voting Stock of a Principal Constituent Bank now or hereafter owned
by the Company, directly or indirectly, if, treating such pledge, encumbrance
or lien as a transfer of the shares of, or securities convertible into or
options, warrants or rights to subscribe for or purchase shares of, Voting
Stock subject thereto to the secured party, the Principal Constituent Bank
would not be a Controlled Subsidiary.
<PAGE> 56
25
SECTION 4.09. Corporate Existence. Except as otherwise provided in Article
Eleven, the Company will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence, rights
(charter and statutory) and franchises; provided, however, that the Company
shall not be required to preserve any right or franchise if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and that the loss thereof is not
disadvantageous in any material respect to the Noteholders.
ARTICLE FIVE
Noteholders Lists and Reports by the Company
and the Trustee
SECTION 5.01. Noteholders Lists. The Company covenants and agrees that it
will furnish or cause to be furnished to the Trustee, semiannually, within five
Business Days after each record date in each year beginning with March 15,
1990, and at such other times as the Trustee may request in writing, within 30
days after receipt by the Company of any such request, a list in such form as
the Trustee may reasonably require of the names and addresses of the holders of
Notes as of a date not more than 15 days prior to the time such information is
furnished, except that no such list need be furnished so long as the Trustee is
acting as Note registrar.
SECTION 5.02. Preservation and Disclosure of Lists. (a) The Trustee shall
preserve, in as current a form as is reasonably practicable, all information as
to the names and addresses of the holders of Notes contained in the most recent
list furnished to it as provided in Section 5.01. The Trustee may destroy any
list furnished to it as provided in Section 5.01 upon receipt of a new list so
furnished.
(b) In case three or more holders of Notes (hereinafter referred to as
"applicants") apply in writing to the Trustee and furnish to the Trustee
reasonable proof that each such applicant has owned a Note for a period of at
least six months preceding the date of such application, and such application
states that the applicants desire to communicate with other holders of Notes
with respect to their rights under this Indenture or under the Notes and is
accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, then the Trustee shall, within five business
days after the receipt of such application, at its election, either
(1) afford such applicants access to the information preserved at the
time by the Trustee in accordance with the provisions of subsection (a) of
this Section 5.02 or
<PAGE> 57
26
(2) inform such applicants as to the approximate number of holders of
Notes whose names and addresses appear in the information preserved at
the time by the Trustee in accordance with the provisions of subsection (a)
of this Section 5.02, and as to the approximate cost of mailing to such
Noteholders the form of proxy or other communication, if any, specified in
such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Noteholder whose name and address appear in the information
preserved at the time by the Trustee in accordance with the provisions of
subsection (a) of this Section 5.02 a copy of the form of proxy or other
communication which is specified in such request, with reasonable promptness
after a tender to the Trustee of the material to be mailed and of payment, or
provision for the payment, of the reasonable expenses of mailing unless within
five days after such tender, the Trustee shall mail to such applicants and file
with the Securities and Exchange Commission, together with a copy of the
material to be mailed, a written statement to the effect that, in the opinion
of the Trustee, such mailing would be contrary to the best interests of the
holders of Notes or would be in violation of applicable law. Such written
statement shall specify the basis of such opinion. If said Commission, after
opportunity for a hearing upon the objections specified in the written
statement so filed, shall enter an order refusing to sustain any of such
objections or if, after the entry of an order sustaining one or more of such
objections, said Commission shall find, after notice and opportunity for
hearing, that all objections so sustained have been met and shall enter an
order so declaring, the Trustee shall mail copies of such material to all such
Noteholders with reasonable promptness after the entry of such order and the
renewal of such tender; otherwise the Trustee shall be relieved of any
obligation or duty to such applicants respecting their application.
(c) Each and every holder of the Notes, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any paying agent nor the Note registrar shall be held accountable
by reason of the disclosure of any such information as to the names and
addresses of the holders of Notes in accordance with the provisions of
subsection (b) of this Section 5.02, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under subsection (b)
of this Section 5.02.
SECTION 5.03. Reports by the Company. (a) The Company covenants and agrees
to file with the Trustee, within 15 days after the Company is required to file
the same with the Securities and Exchange Commission, copies of the annual
reports and of the information, documents and other reports (or copies of such
<PAGE> 58
27
portions of any of the foregoing as said Commission may from time to time by
rules and regulations prescribe) which the Company may be required to file with
said Commission pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934; or, if the Company is not required to file information,
documents or reports pursuant to either of such sections, then to file with the
Trustee and said Commission, in accordance with rules and regulations
prescribed from time to time by said Commission, such of the supplementary and
periodic information, documents and reports which may be required pursuant to
Section 13 of the Securities Exchange Act of 1934 in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations.
(b) The Company covenants and agrees to file with the Trustee and the
Securities and Exchange Commission, in accordance with the rules and
regulations prescribed from time to time by said Commission, such additional
information, documents and reports with respect to compliance by the Company
with the conditions and covenants provided for in this Indenture as may
be required from time to time by such rules and regulations.
(c) The Company covenants and agrees to transmit by mail to all holders of
Notes, within 30 days after the filing thereof with the Trustee, in the manner
provided in subsection (c) of Section 5.04 with respect to reports pursuant to
subsections (a) and (b) thereof, respectively, such summaries of any
information, documents and reports required to be filed by the Company pursuant
to subsections (a) and (b) of this Section 5.03 as may be required by rules and
regulations prescribed from time to time by the Securities and Exchange
Commission.
SECTION 5.04. Reports by the Trustee. (a) On or before July 15, 1990, and
on or before July 15 in every year thereafter, so long as any Notes are
outstanding under this Indenture, the Trustee shall transmit to the Noteholders
a brief report dated as of the preceding May 15 with respect to:
(1) its eligibility under Section 7.09, and its qualification under
Section 7.08, or in lieu thereof, if to the best of its knowledge it has
continued to be eligible and qualified under such Sections, a written
statement to such effect;
(2) the character and amount of any advances (and if the Trustee elects
so to state, the circumstances surrounding the making thereof) made by the
Trustee (as such) which remain unpaid on the date of such report, and for
the reimbursement of which it claims or may claim a lien or charge, prior
to that of the Notes, on any property or funds held or collected by it as
Trustee, except
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that the Trustee shall not be required (but may elect) to state such
advances if such advances so remaining unpaid aggregate not more than
one-half of one percent of the principal amount of the Notes outstanding on
the date of such report;
(3) the amount, interest rate and maturity date of all other
indebtedness owing by the Company (or by any other obligor on the Notes) to
the Trustee in its individual capacity, as of the date of such report, with
a brief description of any property held as collateral security therefor,
except any indebtedness based upon a creditor relationship arising in any
manner described in paragraph (2), (3), (4) or (6) of subsection (b) of
Section 7.13;
(4) the property and funds, if any, physically in the possession of the
Trustee, as such, on the date of such report;
(5) any additional issue of Notes which the Trustee has not previously
reported; and
(6) any action taken by the Trustee in the performance of its duties
under this Indenture which it has not previously reported and which in its
opinion materially affects the Notes, except action in respect of a
default, notice of which has been or is to be withheld by it in accordance
with the provisions of Section 6.08.
(b) The Trustee shall transmit to the Noteholders a brief report with
respect to the character and amount of any advances (and, if the Trustee elects
so to state, the circumstances surrounding the making thereof) made by the
Trustee (as such) since the date of the last report transmitted pursuant to the
provisions of subsection (a) of this Section 5.04 (or, if no such report has
yet been so transmitted, since the date of execution of this Indenture), for
the reimbursement of which it claims or may claim a lien or charge prior to
that of the Notes on property or funds held or collected by it as Trustee, and
which it has not previously reported pursuant to this subsection (b), except
that the Trustee shall not be required (but may elect) to report such advances
if such advances remaining unpaid at any time aggregate ten percent or less of
the principal amount of Notes outstanding at such time, such report to be
transmitted within 90 days after such time.
(c) Reports pursuant to this Section 5.04 shall be transmitted by mail (i)
to all holders of Notes as the names and addresses of such holders appear upon
the Note register; (ii) to such holders of Notes as have, within the two years
preceding such transmission, filed their names and addresses with the Trustee
for that purpose; and (iii) except in the case of reports pursuant to
subsection (b) of this Section 5.04, to each Noteholder whose name and address
is preserved at the time by the Trustee, as provided in Section 5.02(a).
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(d) A copy of each such report shall, at the time of such transmission to
Noteholders, be filed by the Trustee with each stock exchange upon which the
Notes are listed and also with the Securities and Exchange Commission. The
Company will notify the Trustee when and as the Notes become listed on any
stock exchange.
ARTICLE SIX
Remedies of the Trustee and Noteholders
on Event of Default
SECTION 6.01. Events of Default. In case one or more of the following Events
of Default shall have occurred and be continuing:
(a) default in the payment of any instalment of interest upon any of the
Notes as and when the same shall become due and payable, and continuance of
such default for a period of 30 days; or
(b) default in the payment of the principal of any of the Notes as and
when the same shall become due and payable at maturity, by declaration or
otherwise: or
(c) a default or event of default as defined or designated in any
mortgage, indenture, loan agreement or instrument under which there may be
issued or borrowed, or by which there may be secured or evidenced, any
indebtedness of the Company or any Subsidiary (other than the Notes),
whether such indebtedness now exists or shall hereafter be created, shall
happen and not less than $1,000,000 of such indebtedness shall be due under
such mortgages, indenture, loan agreement or instrument or such default
shall result in not less than $1,000,000 of such indebtedness becoming or
being declared due and payable, and such indebtedness or such declaration,
as the case may be, shall not have been discharged or rescinded or annulled
within 15 days after the date on which written notice thereof is given to
the Company by the Trustee or to the Company and the Trustee by the holders
of at least 25 percent in aggregate principal amount of the Notes then
outstanding; or
(d) a final judgment or judgments or order or orders for the payment of
money in excess of $1,000,000 shall be entered against the Company or one
or more Principal Constituent Banks and within 90 days after entry thereof
such judgment or judgments or order or orders shall not have been
discharged or the execution thereof stayed pending appeal or within 90 days
after the expiration of any such stay such judgment or judgments or order
or orders shall not have been discharged; or
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(e) failure on the part of the Company duly to observe or perform any
other of the covenants or agreements on the part of the Company in the
Notes or in this Indenture continued for a period of 90 days after the date
on which written notice of such failure, requiring the Company to remedy
the same, shall have been given to the Company by the Trustee, or to the
Company and the Trustee by the holders of at least 25 percent in aggregate
principal amount of the Notes at the time outstanding; or
(f) a court having jurisdiction in the premises shall enter a decree or
order for relief in respect of the Company or a Principal Constituent Bank
in an involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of the Company or a Principal Constituent Bank or for any
substantial part of its property, or ordering the winding up or liquidation
of its affairs and such decree or order shall remain unstayed and in effect
for a period of 60 consecutive days; or
(g) the Company or a Principal Constituent Bank shall commence a
voluntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or shall consent to the entry of an order
for relief in an involuntary case under any such law, or shall consent to
the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or similar official) of the
Company or a Principal Constituent Bank or for any substantial part of its
property, or shall make any general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due or
shall take any corporate action in furtherance of any of the foregoing;
then and in each and every such case, unless the principal of all the Notes
shall have already become due and payable, either the Trustee or the holders of
not less than 25 percent in aggregate principal amount of the Notes then
outstanding under this Indenture, by notice in writing to the Company (and to
the Trustee if given by Noteholders), may declare the principal of all the
Notes to be due and payable immediately, and upon any such declaration the same
shall become and shall be immediately due and payable, anything in this
Indenture or in the Notes contained to the contrary notwithstanding. This
provision, however, is subject to the condition that if, at any time after the
principal of the Notes shall have been so declared due and payable, and before
any judgment or decree for the payment of the monies due shall have been
obtained or entered as hereinafter provided, the Company shall pay or shall
deposit with the Trustee a sum sufficient to pay all matured instalments of
interest on all the Notes and the principal of any and all Notes which shall
have become due otherwise than by acceleration (with interest on overdue
instalments of interest (to the extent that payment of such interest is
enforceable under
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applicable law) and on such principal at the rate borne by the Notes, to the
date of such payment or deposit) and 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 any and all defaults under this
Indenture, other than the nonpayment of principal of and accrued interest on
Notes which shall have become due by acceleration, shall have been cured or
waived as provided in Section 6.07 -- then and in every such case the holders of
a majority in aggregate principal amount of the Notes then outstanding, by
written notice to the Company and to the Trustee, may waive all defaults and
rescind and annul such declaration and its consequences; but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent
default, or shall impair any right consequent thereon.
In case the Trustee or any Noteholder shall have proceeded to enforce any
right under this Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Trustee or any Noteholder, then and
in every such case the Company, the Trustee and such Noteholders shall, subject
to any determination in such proceeding, be restored respectively to their
several positions and rights under this Indenture, and all rights, remedies and
powers of the Company, the Trustee and such Noteholders shall continue as
though no such proceeding had been taken.
SECTION 6.02. Payment of Notes on Default; Suit Therefor. The Company
covenants that (a) in case default shall be made in the payment of any
instalment of interest upon any of the Notes as and when the same shall become
due and payable, and such default shall have continued for a period of 30 days,
or (b) in case default shall be made in the payment of the principal of any of
the Notes as and when the same shall have become due and payable whether at
maturity of the Notes, by declaration or otherwise, then, upon demand of the
Trustee, the Company will pay to the Trustee, for the benefit of the holders of
the Notes, the whole amount that then shall have become due and payable on all
such Notes for principal or interest, or both, as the case may be, with
interest upon the overdue principal and (to the extent that payment of such
interest is enforceable under applicable law) upon the overdue instalments of
interest at the rate borne by the Notes; and, in addition, such further amount
as shall be sufficient to cover the costs and expenses of collection, including
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents, attorneys and counsel.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action
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or proceeding to judgment or final decree, and may enforce any such judgment or
final decree against the Company or any other obligor on the Notes and collect
in the manner provided by law out of the property of the Company or any other
obligor on the Notes wherever situated the monies adjudged or decreed to be
payable.
In case there shall be pending proceedings for the bankruptcy or for the
reorganization of the Company or any other obligor on the Notes under Title 11
of the United States Code or any other applicable law, or in case a receiver or
trustee shall have been appointed for the property of the Company or such other
obligor, or in the case of any other similar judicial proceedings relative to
the Company or other obligor upon the Notes, or to the creditors or property of
the Company or such other obligor, the Trustee, irrespective of whether the
principal of the Notes shall then be due and payable as expressed in the Notes
or by declaration or otherwise and irrespective of whether the Trustee shall
have made any demand pursuant to the provisions of this Section 6.02, shall be
entitled and empowered, by intervention in such proceedings or otherwise, to
file and prove a claim or claims for the whole amount of principal and interest
owing and unpaid in respect of the Notes, and, in case of any judicial
proceedings, (i) to file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and of the Noteholders
allowed in such judicial proceedings relative to the Company or any other
obligor on the Notes, its or their creditors, or its or their property, and
(ii) to collect and receive any monies or other property payable or deliverable
on any such claims, and to distribute the same after the deduction of its
charges and expenses; and any receiver, assignee or trustee in bankruptcy or
reorganization is hereby authorized by each of the Noteholders to make such
payments to the Trustee, and, in the event that the Trustee shall consent to
the making of such payments directly to the Noteholders, to pay to the Trustee
any amount due it for reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel and any other amounts due
the Trustee under Section 7.06. To the extent that such payment of reasonable
compensation, expenses and counsel fees out of the trust estate in any such
proceedings shall be denied for any reason, payment of the same shall be
secured by a lien on, and shall be paid out of, any and all distributions,
dividends, monies, securities and other property which the holders of the Notes
may be entitled to receive in such proceedings, whether in liquidation or under
any plan of reorganization or arrangement or otherwise.
Nothing contained in this Section 6.02 shall be deemed to authorize the
Trustee to authorize or consent to or adopt on behalf of any Noteholder any
plan of reorganization or arrangement, affecting the Notes or the rights of any
Noteholder,
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or to authorize the Trustee to vote in respect of the claim of any Noteholder
in any such proceeding.
All rights of action and of asserting claims under this Indenture, or under
any of the Notes, may be enforced by the Trustee without the possession of any
of the Notes, or the production thereof in any trial or other proceeding
relative thereto, and any such suit or proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the holders of the Notes.
SECTION 6.03. Application of Monies Collected by Trustee. Any monies
collected by the Trustee pursuant to Section 6.02 shall be applied in the
following order, at the date or dates fixed by the Trustee for the distribution
of such monies, upon presentation of the several Notes, and stamping thereon
the payment, if only partially paid, and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts then due the Trustee under
Section 7.06;
SECOND: Subject to the provisions of Article Three, in case the
principal of the outstanding Notes shall not have become due and be unpaid,
to the payment of interest on the Notes in the order of the maturity of the
instalments of such interest, with interest (to the extent enforceable
under applicable law) upon the overdue instalments of interest at the rate
borne by the Notes, such payments to be made ratably to the persons
entitled thereto; and
THIRD: In case the principal of the outstanding Notes shall have
become due, by declaration or otherwise, to the payment of the whole amount
then owing and unpaid upon the Notes for principal and interest, with
interest on the overdue principal and (to the extent enforceable under
applicable law) upon overdue instalments of interest at the rate borne by
the Notes; and in case such monies shall be insufficient to pay in full the
whole amounts so due and unpaid upon the Notes, then to the payment of such
principal and interest without preference or priority of principal over
interest, or of interest over principal or of any instalment of interest
over any other instalment of interest, or of any Note over any other Note,
ratably to the aggregate of such principal and accrued and unpaid interest.
SECTION 6.04. Proceedings by Noteholders. No holder of any Note shall have
any right to institute any suit, action or proceeding in equity or at law upon
or under or with respect to this Indenture or for the appointment of a receiver
or trustee, or for any other remedy under this Indenture, unless such holder
previously shall have
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34
given to the Trustee written notice of default and of the continuance thereof,
as provided in Section 6.01, and unless also the holders of not less than 25
percent in aggregate principal amount of the Notes then outstanding shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee under this Indenture and shall have
offered to the Trustee such reasonable indemnity as the Trustee may require
against the costs, expenses and liabilities to be incurred in compliance with
such request, the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity, shall have neglected or refused to institute any such
action, suit or proceeding and 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 principal amount of the outstanding Notes, it being understood
and intended, and being expressly covenanted by each Person who acquires and
holds a Note with every other such Person, that no one or more holders of Notes
shall have any right in any manner whatever by virtue of or by availing of any
provision of this Indenture to affect, disturb or prejudice the rights of any
other holder of such Notes, or to obtain or seek to obtain priority over or
preference to any other such holder, or to enforce any right under this
Indenture, except in the manner provided in this Section 6.04 and for the
equal, ratable and common benefit of all holders of Notes.
Notwithstanding any other provision in this Indenture, however, the right
of any holder of any Note to receive payment of the principal of and (subject
to Section 2.03) interest on such Note, on or after the respective due dates
expressed in such Note, or to institute suit for the enforcement of any such
payment on or after such respective dates against the Company shall not be
impaired or affected without the consent of such holder.
SECTION 6.05. Proceedings by Trustee. In case of an Event of Default under
this Indenture the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Noteholders by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
of such rights, either by suit in equity or by action at law or by proceeding
in bankruptcy or otherwise, whether for the specific enforcement of any
covenant or agreement contained in this Indenture or in aid of the exercise of
any power granted in this Indenture, or to enforce any other proper remedy or
legal or equitable right vested in the Trustee by this Indenture or by law.
SECTION 6.06. Remedies Cumulative and Continuing; Delay or Omission Not
Waiver. All rights, powers and remedies conferred upon or reserved to the
Trustee or to the Noteholders shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any thereof or of any other rights, powers and
remedies available to the Trustee or the holders of the Notes, now or hereafter
existing, by judicial proceedings or otherwise, to enforce the performance or
observance of the
<PAGE> 66
35
covenants and agreements contained in this Indenture, and no delay or omission
of the Trustee or of any holder of any of the Notes to exercise any such right,
power or remedy shall impair any such right, power or remedy, or shall be
construed to be a waiver of any default or an acquiescence in such default;
and, subject to the provisions of Section 6.04, every power and remedy
conferred upon or reserved to the Trustee or to the Noteholders may be
exercised from time to time, and as often as shall be deemed expedient, by the
Trustee or by the Noteholders. The assertion of any right, power or remedy
shall not prevent the concurrent assertion of any other right, power or remedy.
SECTION 6.07. Direction of Proceedings and Waiver of Defaults by Majority
of Noteholders. (a) The holders of a majority in aggregate principal amount of
the Notes at the time outstanding determined in accordance with Section 8.04
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee; provided, however, that such direction may not
be in conflict with law or this Indenture or expose the Trustee to personal
liability or be unduly prejudicial to the holders of the Notes not joining in
the direction, and the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with this Indenture and such direction.
(b) Prior to any declaration that the principal of the Notes outstanding is
due and payable, the holders of a majority in aggregate principal amount of the
Notes at the time outstanding may on behalf of the holders of all the Notes
waive any past default or Event of Default under this Indenture and its
consequences except a default under a covenant in this Indenture that, pursuant
to Section 10.02, cannot be modified without the consent of each holder of a
Note affected thereby. Upon any such waiver the Company, the Trustee and the
holders of the Notes shall be restored to their former positions and rights
under this Indenture, respectively; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon. Whenever any default or Event of Default under this Indenture shall
have been waived as permitted by this Section 6.07, such default or Event of
Default shall for all purposes of the Notes and this Indenture be deemed to
have been cured and to be not continuing.
SECTION 6.08. Notice of Defaults. The Trustee shall, within 90 days after
the occurrence of a default, mail to all Noteholders, in the manner provided in
subsection (c) of Section 5.04 with respect to reports pursuant to subsections
(a) and (b) thereof, respectively, notice of all defaults known to the Trustee,
unless such defaults shall have been cured or waived before the giving of such
notice (the term "defaults" for the purpose of this Section 6.08 being hereby
defined to be the events which after notice or lapse of time or both would
become an Event of Default); and provided that, except in the case of default
in the payment of the principal of or
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interest on any of the Notes, 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 interest of
the Noteholders.
SECTION 6.09. Undertaking to Pay Costs. All parties to this Indenture
agree, and each holder of any Note by his acceptance of a Note 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; provided, however, that the provisions of this Section
6.09 shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Noteholder, or group of Noteholders, holding in the aggregate
more than ten percent in principal amount of the Notes outstanding, or to any
suit instituted by any Noteholder for the enforcement of the payment of the
principal of or interest on any Note on or after the due date expressed in such
Note.
ARTICLE SEVEN
Concerning the Trustee
SECTION 7.01. Duties and Responsibilities of the Trustee. In case an Event
of Default has occurred (which has not been cured or waived) the Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
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 wilful misconduct, except that:
(a) except during the continuance of an Event of Default;
(1) the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Indenture, and the Trustee
shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness
<PAGE> 68
37
of the opinions expressed therein, upon any certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture; but, in the case of any such certificates or opinions which
by any provisions of this Indenture 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) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Officers of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(c) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of
the holders of not less than a majority in principal amount of the Notes at
the time outstanding (determined as provided in Section 8.04) 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.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing that
the repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
Whether or not 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 7.01.
SECTION 7.02. Reliance on Documents, Opinions, etc. Except as otherwise
provided in Section 7.01,
(a) the Trustee may rely and shall be protected in acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties:
(b) any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officers' Certificate (unless
other evidence in respect thereof be herein specifically prescribed); and
any resolution of the Board of Directors may be evidenced to the Trustee by
a copy thereof certified by the Secretary or an Assistant Secretary of the
Company;
(c) the Trustee may consult with counsel and any advice or Opinion of
Counsel shall be full and complete authorization and protection in respect
of
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38
any action taken or omitted by it under this Indenture in good faith and in
accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Noteholders, pursuant to the provisions of this
Indenture, unless such Noteholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted by
it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond, debenture, coupon or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books and records of the Company to the extent reasonably necessary to
verify such facts or matters; and
(g) the Trustee may execute any of the trusts or powers under this
Indenture or perform any duties under this Indenture 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
by it with due care under this Indenture.
SECTION 7.03. No Responsibility for Recitals, etc. The recitals contained
in this Indenture and in the Notes (except in the Trustee's certificate of
authentication) shall be taken as the statements of the Company, and the
Trustee assumes no responsibility for the correctness of the same. The Trustee
makes no representations as to the validity or sufficiency of this Indenture or
of the Notes. The Trustee shall not be accountable for the use or application
by the Company of any Notes or the proceeds of any Notes authenticated and
delivered by the Trustee.
SECTION 7.04. Trustee, Paying Agents or Registrar May Own Notes. Subject to
Sections 7.08 and 7.13, the Trustee or any paying agent or Note registrar, in
its individual or any other capacity, may become the owner or pledgee of Notes
with the same rights it would have if it were not Trustee, paying agent or Note
registrar.
SECTION 7.05. Monies to Be Held in Trust. Subject to the provisions of
Sections 12.03 and 12.04, all monies received by the Trustee shall, until used
or
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39
applied as herein provided, be held in trust for the purposes for which they
were received. Monies held by the Trustee need not be segregated from other
funds except as provided by law. The Trustee shall be under no liability for
interest on any money received by it under this Indenture provided the Trustee
shall pay to the Persons entitled thereto all such monies when due and payable.
SECTION 7.06. Compensation and Expenses of Trustee. The Company covenants
and agrees to pay to the Trustee from time to time, and the Trustee shall be
entitled to, reasonable compensation for all services rendered by it under this
Indenture (which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust), and the Company will pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Indenture (including the reasonable compensation
and the reasonable expenses and disbursements of its counsel and of all persons
not regularly in its employ) except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith. The Company also
covenants to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on the part
of the Trustee and arising out of or in connection with the acceptance or
administration of this trust, including the reasonable costs and expenses of
defending itself against any claim of liability in connection with the exercise
or performance of any of its powers under this Indenture. The obligations of
the Company under this Section 7.06 shall constitute additional indebtedness
under this Indenture. Such additional indebtedness shall be secured by a lien
prior to that of the Notes upon all property and funds held or collected by the
Trustee as such, except funds held in trust for the benefit of the holders of
particular Notes. The obligations of the Company under this Section 7.06 and
such lien for additional indebtedness shall not be subordinated to the payment
of Senior Indebtedness pursuant to Article Three.
SECTION 7.07. Officers' Certificate as Evidence. Except as otherwise
provided in Section 7.01, whenever in the administration of the provisions of
this Indenture the Trustee shall deem it necessary or desirable that a matter
be proved or established prior to taking or omitting any action under this
Indenture, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence or bad faith on the
part of the Trustee, be deemed to be conclusively proved and established by an
Officers' Certificate delivered to the Trustee, and such Certificate, in the
absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken or omitted by it under the
provisions of this Indenture upon the faith of such Officers' Certificate.
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SECTION 7.08. Conflicting Interest of Trustee. (a) If the Trustee has or
shall acquire any conflicting interest, as defined in this Section 7.08, it
shall, within 90 days after ascertaining that it has such conflicting interest,
either eliminate such conflicting interest or resign in the manner and with the
effect specified in Section 7.10.
(b) In the event that the Trustee shall fail to comply with the provisions
of subsection (a) of this Section 7.08, the Trustee shall, within ten days
after the expiration of such 90-day period, transmit notice of such failure to
the holders of Notes in the manner provided in subsection (c) of Section 5.04
with respect to reports pursuant to subsections (a) and (b) thereof,
respectively.
(c) For the purpose of this Section 7.08, the Trustee shall be deemed to
have a conflicting interest if:
(1) the Trustee is trustee under another indenture under which any
other securities, or certificates of interest or participation in any other
securities, of the Company are outstanding, unless such other indenture is
a collateral trust indenture under which the only collateral consists of
Notes issued under this Indenture; provided that there shall be excluded
from the operation of this paragraph any other indenture or indentures
under which other securities, or certificates of interest or participation
in other securities of the Company, are outstanding if (i) this Indenture
and such other indenture or indentures are wholly unsecured and such other
indenture or indentures are hereafter qualified under the Trust Indenture
Act of 1939, unless the Securities and Exchange Commission shall have found
and declared by order pursuant to subsection (b) of Section 305 or
subsection (c) of Section 307 of the Trust Indenture Act of 1939 that
differences exist between the provisions of this Indenture and the
provisions of such other indenture or indentures which are so likely to
involve a material conflict of interest as to make it necessary in the
public interest or for the protection of investors to disqualify the
Trustee from acting as such under this Indenture and such other indenture
or indentures or (ii) the Company shall have sustained the burden of
proving, on application to the Securities and Exchange Commission and after
opportunity for hearing thereon, that trusteeship under this Indenture and
such other indenture is not so likely to involve a material conflict of
interest as to make it necessary in the public interest or for the
protection of investors to disqualify the Trustee from acting as such under
one of such indentures;
(2) the Trustee or any of its directors or executive officers is an
obligor upon the Notes issued under this Indenture or an underwriter for
the Company;
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(3) the Trustee directly or indirectly controls or is directly or
indirectly controlled by or is under direct or indirect common control with
the Company or an underwriter for the Company;
(4) the Trustee or any of its directors or executive officers is a
director, officer, partner, employee, appointee or representative of the
Company, or of an underwriter (other than the Trustee itself) for the
Company who is currently engaged in the business of underwriting, except
that (A) one individual may be a director and/or an executive officer of
the Trustee and a director and/or an executive officer of the Company, but
may not be at the same time an executive officer of both the Trustee and
the Company; (B) if and so long as the number of directors of the Trustee
in office is more than nine, one additional individual may be a director
and/or an executive officer of the Trustee and a director of the Company;
and (C) the Trustee may be designated by the Company or by an underwriter
for the Company to act in the capacity of transfer agent, registrar,
custodian, paying agent, fiscal agent, escrow agent or depositary, or in
any other similar capacity, or, subject to the provisions of paragraph (1)
of this subsection (c), to act as trustee whether under an indenture or
otherwise;
(5) ten percent or more of the voting securities of the Trustee is
beneficially owned by the Company or by any director, partner or executive
officer thereof, or 20 percent or more of such voting securities is
beneficially owned, collectively, by any two or more of such persons; or
ten percent or more of the voting securities of the Trustee is beneficially
owned either by an underwriter for the Company or by any director, partner
or executive officer thereof, or is beneficially owned, collectively, by
any two or more such persons;
(6) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default, (A) five percent or more of
the voting securities, or ten percent or more of any other class of
security, of the Company, not including the Notes issued under this
Indenture and securities issued under any other indenture under which the
Trustee is also trustee or (B) ten percent or more of any class of security
of an underwriter for the Company;
(7) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default, five percent or more of the
voting securities of any person who, to the knowledge of the Trustee, owns
ten percent or more of the voting securities of, or controls directly or
indirectly or is under direct or indirect common control with, the Company;
(8) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default, ten percent or more of any
class of security of
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any person who, to the knowledge of the Trustee, owns 50 percent or more of
the voting securities of the Company; or
(9) the Trustee owns on May 15 in any calendar year, in the capacity of
executor, administrator, testamentary or inter vivos trustee, guardian,
committee or conservator, or in any other similar capacity, an aggregate of
25 percent or more of the voting securities, or of any class of security,
of any person, the beneficial ownership of a specified percentage of which
would have constituted a conflicting interest under paragraph (6), (7) or
(8) of this subsection (c). As to any such securities of which the Trustee
acquired ownership through becoming executor, administrator or testamentary
trustee of an estate which included them, the provisions of the preceding
sentence shall not apply, for a period of two years from the date of such
acquisition, to the extent that such securities included in such estate do
not exceed 25 percent of such voting securities or 25 percent of any such
class of security. Promptly after May 15 in each calendar year, the Trustee
shall make a check of its holdings of such securities in any of the
above-mentioned capacities as of such May 15. If the Company fails to make
payment in full of principal of or interest on any of the Notes when and as
the same become due and payable, and such failure continues for 30 days
thereafter, the Trustee shall make a prompt check of its holdings of such
securities in any of the above-mentioned capacities as of the date of the
expiration of such 30-day period and, after such date, notwithstanding the
foregoing provisions of this paragraph (9), all such securities so held by
the Trustee, with sole or joint control over such securities vested in it,
shall, but only so long as such failure shall continue, be considered as
though beneficially owned by the Trustee for the purposes of paragraphs
(6), (7) and (8) of this subsection (c).
The specifications of percentages in paragraphs (5) to (9), inclusive, of
this subsection (c) shall not be construed as indicating that the ownership of
such percentages of the securities of a person is or is not necessary or
sufficient to constitute direct or indirect control for the purposes of
paragraph (3) or (7) of this subsection (c).
For the purposes of paragraphs (6), (7), (8) and (9) of this subsection (c)
only, (A) the terms "security" and "securities" shall include only such
securities as are generally known as corporate securities, but shall not
include any note or other evidence of indebtedness issued to evidence an
obligation to repay monies lent to a person by one or more banks, trust
companies or banking firms, or any certificate of interest or participation in
any such note or evidence of indebtedness; (B) an obligation shall be deemed to
be in default when a default in payment of principal shall have continued for
30 days or more and shall not have been cured; and (C) the Trustee shall not be
deemed to be the owner or holder of (i) any security which it
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holds as collateral security (as trustee or otherwise) for an obligation which
is not in default as defined in clause (B) above, or (ii) any security which it
holds as collateral security under this Indenture, irrespective of any default
under this Indenture, or (iii) any security which it holds as agent for
collection, or as custodian, escrow agent or depositary, or in any similar
representative capacity.
Except as provided in the next preceding paragraph, the word "security" or
"securities" as used in this Indenture shall mean any note, stock, treasury
stock, bond, debenture, evidence of indebtedness, certificate of interest or
participation in any profit-sharing agreement, collateral-trust certificate,
pre-organization certificate or subscription, transferable share, investment
contract, voting-trust certificate, certificate of deposit for a security,
fractional undivided interest in oil, gas or other mineral rights, or, in
general, any interest or instrument commonly known as a "security" or any
certificate of interest or participation in, temporary or interim certificate
for, receipt for, guarantee of, or warrant or right to subscribe to or
purchase, any of the foregoing.
(d) For the purposes of this Section 7.08:
(1) The term "underwriter" when used with reference to the Company
shall mean every person who, within three years prior to the time as of
which the determination is made, has purchased from the Company with a view
to, or has offered or sold for the Company in connection with, the
distribution of any security of the Company outstanding at such time, or
has participated or has had a direct or indirect participation in any such
undertaking, or has participated or has had a participation in the direct or
indirect underwriting of any such undertaking, but such term shall not
include a person whose interest was limited to a commission from an
underwriter or dealer not in excess of the usual and customary
distributors' or sellers' commission.
(2) The term "director" shall mean any director of a corporation or any
individual performing similar functions with respect to any organization
whether incorporated or unincorporated.
(3) The term "person" shall mean an individual, a corporation, a
partnership, an association, a joint-stock company, a trust, an
unincorporated organization or a government or political subdivision
thereof. As used in this paragraph, the term "trust" shall include only a
trust where the interest or interests of the beneficiary or beneficiaries
are evidenced by a security.
(4) The term "voting security" shall mean any security presently
entitling the owner or holder thereof to vote in the direction or
management of the affairs of a person, or any security issued under or
pursuant to any trust, agreement or arrangement whereby a trustee or
trustees or agent or agents for the owner or
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holder of such security are presently entitled to vote in the direction or
management of the affairs of a person.
(5) The term "Company" shall mean any obligor upon the Notes.
(6) The term "executive officer" shall mean the president, every vice
president, every trust officer, the cashier, the secretary and the
treasurer of a corporation, and any individual customarily performing
similar functions with respect to any organization whether incorporated or
unincorporated, but shall not include the chairman of the board of
directors.
The percentages of voting securities and other securities specified in this
Section 7.08 shall be calculated in accordance with the following provisions:
(A) A specified percentage of the voting securities of the Trustee, the
Company or any other person referred to in this Section 7.08 (each of whom
is referred to as a "person" in this paragraph) means such amount of the
outstanding voting securities of such person as entitles the holder or
holders thereof to cast such specified percentage of the aggregate votes
which the holders of all the outstanding voting securities of such person
are entitled to cast in the direction or management of the affairs of such
person.
(B) A specified percentage of a class of securities of a person means
such percentage of the aggregate amount of securities of the class
outstanding.
(C) The term "amount", when used in regard to securities, means the
principal amount if relating to evidences of indebtedness, the number of
shares if relating to capital shares and the number of units if relating to
any other kind of security.
(D) The term "outstanding" means issued and not held by or for the
account of the issuer. The following securities shall not be deemed
outstanding within the meaning of this definition:
(i) Securities of an issuer held in a sinking fund relating to
securities of the issuer of the same class;
(ii) Securities of an issuer held in a sinking fund relating to
another class of securities of the issuer, if the obligation evidenced
by such other class of securities is not in default as to principal or
interest or otherwise;
(iii) Securities pledged by the issuer thereof as security for an
obligation of the issuer not in default as to principal or interest or
otherwise; and
(iv) Securities held in escrow if placed in escrow by the issuer
thereof;
<PAGE> 76
45
provided, however, that any voting securities of an issuer shall be
deemed outstanding if any person other than the issuer is entitled to
exercise the voting rights thereof.
(E) A security shall be deemed to be of the same class as another
security if both securities confer upon the holder or holders thereof
substantially the same rights and privileges; provided, however, that, in
the case of secured evidences of indebtedness, all of which are issued
under a single indenture, differences in the interest rates or maturity
dates of various series thereof shall not be deemed sufficient to
constitute such series different classes; and provided further, that, in
the case of unsecured evidences of indebtedness, differences in the
interest rates or maturity dates thereof shall not be deemed sufficient to
constitute them securities of different classes, whether or not they are
issued under a single indenture.
SECTION 7.09. Eligibility of Trustee. The Trustee under this Indenture
shall at all times be a corporation organized and doing business under the laws
of the United States or any State thereof or of the District of Columbia
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000 and subject to supervision
or examination by Federal, State or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section 7.09, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. In case at any time
the Trustee shall cease to be eligible in accordance with the provisions of
this Section 7.09, the Trustee shall resign immediately in the manner and with
the effect specified in Section 7.10.
SECTION 7.10. Resignation or Removal of Trustee. (a) The Trustee may at any
time resign by giving written notice of such resignation to the Company and by
mailing notice of such resignation to the holders of Notes at their addresses
as they shall appear on the registry books of the Company.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with the provision of subsection
(a) of Section 7.08 after written request therefor by the Company or by any
Noteholder who has been a bona fide holder of a Note or Notes for at least
six months, or
(2) the Trustee shall cease to be eligible in accordance with the
provisions of Section 7.09 and shall fail to resign after written request
therefor by the Company or by any such Noteholder, or
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(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, the Company may remove the Trustee by written
instrument, executed by order of the Board of Directors, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor trustee (with written notice of such removal mailed to the holders of
Notes at their addresses as they shall appear on the registry books of the
Company), or, subject to the provisions of Section 6.09, any Noteholder who has
been a bona fide holder of a Note or Notes for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor trustee.
(c) 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, the Company
shall promptly appoint a successor trustee by written instrument, in duplicate,
executed by order of the Board of Directors, one copy of which instrument shall
be delivered to the retiring Trustee and one copy to the successor Trustee. If,
within one year after such resignation, removal or incapability or the
occurrence of such vacancy, a successor trustee shall be appointed by the
holders of a majority in principal amount of the Notes at the time outstanding
by instrument or instruments delivered to the Company and the retiring Trustee,
the successor trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Trustee and supersede the successor Trustee
appointed by the Company. If no successor trustee shall have been so appointed
by the Company or the Noteholders and accepted appointment in the manner
provided in Section 7.11 within 60 days after notice of the resignation or
removal of the Trustee is mailed to the Noteholders, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee, or any Noteholder who has been a bona fide holder of a Note or Notes
for at least six months may, subject to the provisions of Section 6.09, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor trustee.
(d) The holders of a majority in aggregate principal amount of the Notes at
the time outstanding may at any time remove the Trustee.
(e) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 7.10 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 7.11.
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SECTION 7.11. Acceptance by Successor Trustee. Any successor trustee
appointed as provided in Section 7.10 shall execute, acknowledge and deliver to
the Company and to its predecessor Trustee an instrument accepting such
appointment under this Indenture, and thereupon the resignation or removal of
the predecessor Trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, duties and obligations of its predecessor under this Indenture,
with like effect as if originally named as trustee in this Indenture; but,
nevertheless, on the written request of the Company or of the successor
Trustee, the trustee ceasing to act shall, upon payment of any amounts then due
it pursuant to the provisions of Section 7.06, execute and deliver an
instrument transferring to such successor Trustee all the rights and powers of
the trustee so ceasing to act and shall transfer, assign and deliver to such
successor all property and money held by such retiring trustee under this
Indenture. Upon request of any such successor Trustee, the Company shall
execute any and all instruments in writing for more fully and certainly vesting
in and confirming to such successor Trustee all such rights and powers. Any
trustee ceasing to act shall, nevertheless, retain a lien upon all property or
funds held or collected by such trustee to secure any amounts then due it
pursuant to the provisions of Section 7.06.
No successor trustee shall accept appointment as provided in this Section
7.11 unless at the time of such acceptance such successor trustee shall be
qualified under the provisions of Section 7.08 and eligible under the
provisions of Section 7.09.
Upon acceptance of appointment by a successor trustee as provided in this
Section 7.11, the Company shall mail notice of the succession of such Trustee
under this Indenture to the holders of Notes at their addresses as they shall
appear on the registry books of the Company. If the Company fails to mail such
notice within ten days after acceptance of appointment by the successor
Trustee, the successor Trustee shall cause such notice to be mailed at the
expense of the Company.
SECTION 7.12. Succession by Merger, etc. 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 the corporate trust business of the Trustee, shall be the successor to the
Trustee under this Indenture without the execution or filing of any paper or
any further act on the part of any of the parties to this Indenture provided
such corporation shall be otherwise eligible under this Article Seven.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Notes shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor trustee, and deliver such Notes so
authenticated;
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and in case at that time any of the Notes shall not have been authenticated,
any successor to the Trustee may authenticate such Notes either in the name of
any predecessor trustee under this Indenture or in the name of the successor
Trustee; and in all such cases such certificates shall have the full force
which it is anywhere in the Notes or in this Indenture provided that the
certificate of the Trustee shall have; provided, however, that the right to
adopt the certificate of authentication of any predecessor Trustee or
authenticate Notes in the name of any predecessor Trustee shall apply only to
its successor or successors by mergers, conversion or consolidation.
SECTION 7.13. Limitation of Rights of Trustee as a Creditor. (a) Subject to
the provisions of subsection (b) of this Section 7.13, if the Trustee shall be
or shall become a creditor, directly or indirectly, secured or unsecured, of
the Company within four months prior to a default, as defined in subsection (c)
of this Section 7.13, or subsequent to such a default, then, unless and until
such default shall be cured, the Trustee shall set apart and hold in a special
account for the benefit of the Trustee individually, the holders of the Notes
and the holders of other indenture securities (as defined in paragraph (2) of
subsection (c) of this Section 7.13):
(1) an amount equal to any and all reductions in the amount due and
owing upon any claim as such creditor in respect of principal or interest,
effected after the beginning of such four-month period and valid as against
the Company and its other creditors, except any such reduction resulting
from the receipt or disposition of any property described in paragraph (2)
of this subsection, or from the exercise of any right of set-off which the
Trustee could have exercised if a petition in bankruptcy had been filed by
or against the Company upon the date of such default; and
(2) all property received by the Trustee in respect of any claim as
such creditor, either as security therefor, or in satisfaction or
composition thereof, or otherwise, after the beginning of such four-month
period, or an amount equal to the proceeds of any such property, if
disposed of, subject, however, to the rights, if any, of the Company and
its other creditors in such property or such proceeds.
Nothing herein contained, however, shall affect the right of Trustee
(A) to retain for its own account (i) payments made on account of any
such claim by any person (other than the Company) who is liable thereon,
and (ii) the proceeds of the bona fide sale of any such claim by the
Trustee to a third person, and (iii) distributions made in cash, securities
or other property in respect of claims filed against the Company in
bankruptcy or receivership or in
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49
proceedings for reorganization pursuant to Title 11 of the United States
Code or applicable State law;
(B) to realize, for its own account, upon any property held by it as
security for any such claim, if such property was so held prior to the
beginning of such four-month period;
(C) to realize, for its own account, but only to the extent of the
claim mentioned in this paragraph (C), upon any property held by it as
security for any such claim, if such claim was created after the beginning
of such four-month period and such property was received as security
therefor simultaneously with the creation thereof, and if the Trustee shall
sustain the burden of proving that at the time such property was so
received the Trustee had no reasonable cause to believe that a default, as
defined in subsection (c) of this Section 7.13, would occur within four
months; or
(D) to receive payment on any claim referred to in paragraph (B) or
(C), against the release of any property held as security for such claim as
provided in paragraph (B) or (C), as the case may be, to the extent of the
fair value of such property.
For the purposes of paragraphs (B), (C) and (D), property substituted after
the beginning of such four-month period for property held as security at the
time of such substitution shall, to the extent of the fair value of the
property released, have the same status as the property released, and, to the
extent that any claim referred to in any of such paragraphs is created in
renewal of or in substitution for or for the purpose of repaying or refunding
any pre-existing claim of the Trustee as such creditor, such claim shall have
the same status as such pre-existing claim.
If the Trustee shall be required to account, the funds and property held in
such special account and the proceeds thereof shall be apportioned between the
Trustee, the Noteholders and the holders of other indenture securities in such
manner that the Trustee, the Noteholders and the holders of other indenture
securities realize, as a result of payments from such special account and
payments of dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to Title 11 of the
United States Code or applicable State law, the same percentage of their
respective claims, figured before crediting to the claim of the Trustee
anything on account of the receipt by it from the Company of the funds and
property in such special account and before crediting to the respective claims
of the Trustee, the Noteholders and the holders of other indenture securities
dividends on claims filed against the Company in bankruptcy or receivership or
in proceedings for reorganization pursuant to Title 11 of the United States
Code or applicable State law, but after crediting thereon receipts on account
of the
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indebtedness represented by their respective claims from all sources other than
from such dividends and from the funds and property so held in such special
account. As used in this paragraph, with respect to any claim, the term
"dividends" shall include any distribution with respect to such claim, in
bankruptcy or receivership or in proceedings for reorganization pursuant to
Title 11 of the United States Code or applicable State law, whether such
distribution is made in cash, securities or other property, but shall not
include any such distribution with respect to the secured portion, if any, of
such claim. The court in which such bankruptcy, receivership or proceeding for
reorganization is pending shall have jurisdiction (i) to apportion between the
Trustee, the Noteholders and the holders of other indenture securities, in
accordance with the provisions of this paragraph, the funds and property held
in such special account and the proceeds thereof, or (ii) in lieu of such
apportionment, in whole or in part, to give to the provisions of this paragraph
due consideration in determining the fairness of the distributions to be made
to the Trustee, the Noteholders and the holders of other indenture securities
with respect to their respective claims, in which event it shall not be
necessary to liquidate or to appraise the value of any securities or other
property held in such special account or as security for any such claim, or to
make a specific allocation of such distributions as between the secured and
unsecured portions of such claims, or otherwise to apply the provisions of this
paragraph as a mathematical formula.
Any Trustee who has resigned or been removed after the beginning of such
four-month period shall be subject to the provisions of this subsection (a) as
though such resignation or removal had not occurred. If any Trustee has
resigned or been removed prior to the beginning of such four-month period, it
shall be subject to the provisions of this subsection (a) if and only if the
following conditions exist:
(i) the receipt of property or reduction of claim which would have given
rise to the obligation to account, if such Trustee had continued as
trustee, occurred after the beginning of such four-month period; and
(ii) such receipt of property or reduction of claim occurred within four
months after such resignation or removal.
(b) There shall be excluded from the operation of subsection (a) of this
Section 7.13 a creditor relationship arising from:
(1) the ownership or acquisition of securities issued under any
indenture, or any security or securities having a maturity of one year or
more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court of
competent jurisdiction, or by this Indenture, for the purpose of preserving
any property which shall at any time be subject to the lien of this
Indenture or of discharging
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51
tax liens or other prior liens or encumbrances thereon, if notice of such
advances and of the circumstances surrounding the making thereof is given
to the Noteholders at the time and in the manner provided in Section 5.04
with respect to reports pursuant to subsections (a) and (b) thereof,
respectively;
(3) disbursements made in the ordinary course of business in the
capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, fiscal agent or depositary, or other similar
capacity;
(4) an indebtedness created as a result of services rendered or
premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction as defined in subsection (c) of this
Section 7.13;
(5) the ownership of stock or of other securities of a corporation
organized under the provisions of Section 25(a) of the Federal Reserve Act,
as amended, which is directly or indirectly a creditor of the Company; or
(6) the acquisition, ownership, acceptance or negotiation of any
drafts, bills of exchange, acceptances or obligations which fall within the
classification of self-liquidating paper as defined in subsection (c) of
this Section 7.13.
(c) As used in this Section 7.13:
(1) The term "default" shall mean any failure to make payment in full
of the principal of or interest upon any of the Notes or upon the other
indenture securities when and as such principal or interest becomes due and
payable;
(2) The term "other indenture securities" shall mean securities upon
which the Company is an obligor (as defined in the Trust Indenture Act of
1939) outstanding under any other indenture (A) under which the Trustee is
also trustee, (B) which contains provisions substantially similar to the
provisions of subsection (a) of this Section 7.13, and (C) under which a
default exists at the time of the apportionment of the funds and property
held in such special account;
(3) The term "cash transaction" shall mean any transaction in which
full payment for goods or securities sold is made within seven days after
delivery of the goods or securities in currency or in checks or other
orders drawn upon banks or bankers and payable upon demand;
(4) The term "self-liquidating paper" shall mean any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Company for the purpose of financing the purchase,
processing, manufacture, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing title to,
possession of or a lien upon, the goods, wares
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or merchandise or the receivables or proceeds arising from the sale of the
goods, wares or merchandise previously constituting the security; provided
that the security is received by the Trustee simultaneously with the
creation of the creditor relationship with the Company arising from the
making, drawing, negotiating or incurring of the draft, bill of exchange,
acceptance or obligation; and
(5) The term "Company" shall mean any obligor upon the Notes.
ARTICLE EIGHT
Concerning the Noteholders
SECTION 8.01. Action by Noteholders. Whenever in this Indenture it is
provided that the holders of a specified percentage in aggregate principal
amount of the Notes may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any other
action) the fact that at the time of taking any such action the holders of such
specified percentage have joined in such action may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed by
Noteholders in person or by agent or proxy appointed in writing, or (b) by the
record of the holders of Notes voting in favor of such action at any meeting of
Noteholders duly called and held in accordance with the provisions of this
Article Eight, or (c) by a combination of such instrument or instruments and
any such record of such a meeting of Noteholders.
SECTION 8.02. Proof of Execution by Noteholders. Subject to the provisions
of Sections 7.01, 7.02 and 9.05, proof of the execution of any instrument by a
Noteholder or his agent or proxy shall be sufficient if made in accordance with
such reasonable rules and regulations as may be prescribed by the Trustee or in
such manner as shall be satisfactory to the Trustee. The ownership of Notes
shall be proved by the registers of such Notes or by a certificate of the Note
registrar.
The record of any Noteholders' meeting shall be proved in the manner
provided in Section 9.06.
SECTION 8.03. Who Are Deemed Absolute Owners. Prior to due presentment for
registration of transfer of a Note, the Company, the Trustee, any paying agent
and any Note registrar may deem the person in whose name such Note shall be
registered upon the books of the Company to be, and may treat him as, the
absolute owner of such Note (whether or not such Note shall be overdue and
notwithstanding any notation of ownership or other writing on such Note made by
anyone other than the Company or any Note registrar) for the purpose of
receiving payment of or on account of the principal of and interest on such
Note and for all other purposes; and neither the Company nor the Trustee nor
any paying agent nor any Note
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registrar shall be affected by any notice to the contrary. All such payments so
made to any holder for the time being, or upon his order, shall be valid, and,
to the extent of the sum or sums so paid, effectual to satisfy and discharge
the liability for monies payable upon any such Note.
SECTION 8.04. Company Owned Notes Disregarded. In determining whether the
holders of the requisite aggregate principal amount of Notes have concurred in
any direction, consent, waiver or other action under this Indenture, Notes
which are owned by the Company or any other obligor on the Notes or by any
person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company or any other obligor on the Notes
shall be disregarded and deemed not to be outstanding for the purpose of any
such determination; provided that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, consent, waiver or
other action, only Notes which the Trustee knows are so owned shall be so
disregarded.
SECTION 8.05. Revocation of Consents; Future Holders Bound. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
8.01, of the taking of any action by the holders of the percentage in aggregate
principal amount of the Notes specified in this Indenture in connection with
such action, any holder of a Note the serial number of which is shown by the
evidence to be included in the Notes, the holders of which have consented to
such action may, by filing written notice with the Trustee at its principal
office and upon proof of holding as provided in Section 8.02, revoke such
action so far as concerns such Note. Except as provided in this Section 8.05,
any such action taken by the holder of any Note shall be conclusive and binding
upon such holder and upon all future holders and owners of such Note,
irrespective of whether or not any notation in regard thereto is made upon such
Note or any Note issued in exchange or substitution for such Note.
ARTICLE NINE
Noteholders' Meetings
SECTION 9.01. Purposes of Meetings. A meeting of Noteholders may be called
at any time and from time to time pursuant to the provisions of this Article
Nine for any of the following purposes:
(1) to give any notice to the Company or to the Trustee, or to give any
directions to the Trustee, or to consent to the waiving of any default
under this Indenture and its consequences, or to take any other action
authorized to be taken by Noteholders pursuant to any of the provisions of
Article Six;
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(2) to remove the Trustee and nominate a successor trustee pursuant to
the provisions of Article Seven;
(3) to consent to the execution of an indenture or indentures
supplemental to this Indenture pursuant to the provisions of Section 10.02;
or
(4) to take any other action authorized to be taken by or on behalf of
the holders of any specified aggregate principal amount of the Notes under
any other provision of this Indenture or under applicable law.
SECTION 9.02. Call of Meetings by Trustee. The Trustee may at any time call
a meeting of Noteholders to take any action specified in Section 9.01, to be
held at such time and at such place in the Borough of Manhattan, The City of
New York, as the Trustee shall determine. Notice of every meeting of the
Noteholders, setting forth the time and the place of such meeting and in
general terms the action proposed to be taken at such meeting, shall be mailed
to holders of Notes at their addresses as they shall appear on the registry
books of the Company. Such notice shall be mailed not less than 20 nor more
than 90 days prior to the date fixed for the meeting.
Any meeting of Noteholders shall be valid without notice if the holders of
all Notes then outstanding are present in person or by proxy or if notice is
waived before or after the meeting by the holders of all Notes outstanding, and
if the Company and the Trustee are either present by duly authorized
representatives or have, before or after the meeting, waived notice.
SECTION 9.03. Call of Meetings by Company or Noteholders. In case at any
time the Company, pursuant to a resolution of its Board of Directors, or the
holders of at least ten percent in aggregate principal amount of the Notes then
outstanding, shall have requested the Trustee to call a meeting of
Noteholders, by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have mailed the
notice of such meeting within 20 days after receipt of such request, then the
Company or such Noteholders may determine the time and the place in the Borough
of Manhattan, The City of New York, for such meeting and may call such meeting
to take any action authorized in Section 9.01, by mailing notice of such
meeting as provided in Section 9.02.
SECTION 9.04. Qualifications for Voting. To be entitled to vote at any
meeting of Noteholders a person shall (a) be a holder of one or more Notes as
set forth in the Note register or (b) be a person appointed by an instrument in
writing as proxy by a holder of one or more Notes as set forth in the Note
register. The only persons who shall be entitled to be present or to speak at
any meeting of Noteholders shall be the persons entitled to vote at such
meeting and their counsel and any
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representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.
SECTION 9.05. Regulations. Notwithstanding any other provisions of this
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Noteholders, in regard to proof of the holding of
Notes and of the appointment of proxies, and in regard to the appointment and
duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Noteholders as provided in Section 9.03, in which case the
Company or the Noteholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the holders of a majority
in principal amount of the Notes represented at the meeting and entitled to
vote.
Subject to the provisions of Section 8.04, at any meeting each Noteholder
or proxy shall be entitled to one vote for each $1,000 principal amount of
Notes held or represented by him; provided, however, that no vote shall be cast
or counted at any meeting in respect of any Note challenged as not outstanding
and ruled by the chairman of the meeting to be not outstanding. The chairman of
the meeting shall have no right to vote other than by virtue of Notes held by
him or instruments in writing duly designating him as the person to vote on
behalf of other Noteholders. Any meeting of Noteholders duly called pursuant
to the provisions of Section 9.02 or 9.03 may be adjourned from time to time by
a majority of those present and the meeting may be held as so adjourned without
further notice.
SECTION 9.06. Voting. The vote upon any resolution submitted to any meeting
of Noteholders shall be by written ballots on which shall be subscribed the
signatures of the holders of Notes or of their representatives by proxy and the
principal amount of the Notes held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Noteholders shall be prepared by the secretary
of the meeting and there shall be attached to such record the original reports
of the inspectors of votes on any vote by ballot taken at such meeting and
affidavits by one or more persons having knowledge of the facts setting forth a
copy of the notice of the meeting and showing that such notice was mailed as
provided in Section 9.02 or 9.03. The record shall
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show the principal amount of the Notes voting in favor of or against any
resolution. The record shall be signed and verified by the affidavits of the
permanent chairman and the permanent secretary of the meeting and one of the
duplicates shall be delivered to the Company and the other to the Trustee to be
preserved by the Trustee.
Any record so signed and verified shall be conclusive evidence of the
matters stated in such record.
SECTION 9.07. No Delay of Rights by Meeting. Nothing in this Article Nine
shall be deemed or construed to authorize or permit, by reason of any call of a
meeting of Noteholders or any rights expressly or impliedly conferred under
this Article Nine to make such call, any hindrance or delay in the exercise of
any right or rights conferred upon or reserved to the Trustee or to the
Noteholders under any of the provisions of this Indenture or of the Notes.
ARTICLE TEN
Supplemental Indentures
SECTION 10.01. Supplemental Indentures Without Consent of Noteholders.
The Company, when authorized by the resolutions of the Board of Directors, and
the Trustee may from time to time and at any time enter into an indenture or
indentures supplemental to this Indenture for one or more of the following
purposes:
(a) to evidence the succession of another corporation to the Company or
successive successions, and the assumption by the successor corporation of
the covenants, agreements and obligations of the Company pursuant to
Article Eleven;
(b) to add to the covenants of the Company such further covenants,
restrictions or conditions for the protection of the holders of the Notes
as the Board of Directors and the Trustee shall consider to be for the
protection of the holders of Notes, and to make the occurrence, or the
occurrence and continuance, of a default in any such additional covenants,
restrictions or conditions a default or an Event of Default permitting the
enforcement of all or any of the several remedies set forth in this
Indenture; provided, however, that in respect of any such additional
covenant, restriction or condition such supplemental indenture may provide
for a particular period of grace after default (which period may be shorter
or longer than that allowed in the case of other defaults) or may provide
for an immediate enforcement upon such default or may limit the remedies
available to the Trustee upon such default; or
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57
(c) to cure any ambiguity or to correct or supplement any provision
contained in this Indenture or in any supplemental indenture which may be
defective or inconsistent with any other provision contained in this
Indenture or in any supplemental indenture, or to make such other
provisions in regard to matters or questions arising under this Indenture
which shall not adversely affect the interests of the holders of the Notes.
The Trustee is hereby authorized to join with the Company in the execution
of any such supplemental indenture, to make any further appropriate agreements
and stipulations which may be contained in such supplemental indenture and to
accept the conveyance, transfer and assignment of any property under such
supplemental indenture, but the Trustee shall not be obligated to, but may in
its discretion, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section
10.01 may be executed by the Company and the Trustee without the consent of the
holders of any of the Notes at the time outstanding, notwithstanding any of the
provisions of Section 10.02.
SECTION 10.02. Supplemental Indentures with Consent of Noteholders. With
the consent (evidenced as provided in Section 8.01) of the holders of not less
than 66 2/3 percent in aggregate principal amount of the Notes at the time
outstanding, the Company, when authorized by the resolutions of the Board of
Directors, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental to this Indenture for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying
in any manner the rights of the holders of the Notes; provided, however, that
no such supplemental indenture shall (a) without the consent of the holder of
each Note affected thereby, change the stated maturity of the principal of, or
any instalment of interest on, any Note, or reduce the principal amount of any
Note or the interest on any Note, or change any place of payment where, or the
coin or currency in which, any Note or the interest on any Note is payable, or
impair the right to institute suit for the enforcement of any such payment on
or after its stated maturity, or make any change in Article III that adversely
affects the rights of any Noteholder, or (b) without the consent of the holders
of all Notes then outstanding, reduce the percentage in principal amount of the
Notes, 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 under
this Indenture and their consequences) provided for in this Indenture, or (c)
without the consent of the holders of all Notes then outstanding, modify the
penultimate sentence of Section 6.01 or any of the provisions of this Section
10.02 or subsection (b) of
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Section 6.07, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived.
Upon the request of the Company, accompanied by a copy of the resolutions
of the Board of Directors certified by its Secretary or Assistant Secretary
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Noteholders as aforesaid,
the Trustee shall join with the Company in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
supplemental indenture.
It shall not be necessary for the consent of the Noteholders under this
Section 10.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
SECTION 10.03. Compliance with Trust Indenture Act; Effect of Supplemental
Indentures. Any supplemental indenture executed pursuant to the provisions of
this Article Ten shall comply with the Trust Indenture Act of 1939 as then in
effect. Upon the execution of any supplemental indenture pursuant to the
provisions of this Article Ten, this Indenture shall be and be deemed to be
modified and amended in accordance with such supplemental indenture and the
respective rights, limitation of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Company and the holders of Notes shall
thereafter be determined, exercised and enforced under this Indenture subject
in all respects to such modifications and amendments and all the terms and
conditions of any such supplemental indenture shall be and be deemed to be part
of the terms and conditions of this Indenture for any and all purposes.
SECTION 10.04. Notation on Notes. Notes authenticated and delivered after
the execution of any supplemental indenture pursuant to the provisions of this
Article Ten may bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Company or the
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Trustee and the Board of Directors, to any modification of this
Indenture contained in any such supplemental indenture may be prepared and
executed by the Company, authenticated by the Trustee and delivered in exchange
for the Notes then outstanding, upon surrender of such Notes then outstanding.
SECTION 10.05. Evidence of Compliance of Supplemental Indenture to Be
Furnished Trustee. The Trustee, subject to the provisions of Sections 7.01 and
7.02, may receive an Officers' Certificate and an Opinion of Counsel as
conclusive
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evidence that any supplemental indenture executed pursuant to this Article Ten
complies with the requirements of this Article Ten.
ARTICLE ELEVEN
Consolidation, Merger, Sale, Conveyance and Lease
SECTION 11.01. Company May Consolidate, etc., on Certain Terms. The Company
shall not consolidate with or merge into any other corporation or convey,
transfer or lease its properties and assets substantially as an entirety to any
Person, unless:
(1) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or transfer or
which leases the properties and assets of the Company substantially as an
entirety shall be a corporation organized and existing under the laws of
the United States of America, any State thereof or the District of Columbia
and shall expressly assume, by a supplemental indenture executed and
delivered to the Trustee in form satisfactory to the Trustee, the due and
punctual payment of the principal of and interest on the Notes and the
performance of every covenant of this Indenture on the part of the Company
to be performed or observed;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing; and
(3) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and supplemental
indenture comply with this Article Eleven and that all conditions precedent
provided for in this Indenture relating to such transaction have been
complied with.
SECTION 11.02. Successor Corporation Substituted. Upon any consolidation by
the Company with or merger by the Company into any other corporation or any
conveyance, transfer or lease of the properties and assets of the Company
substantially as an entirety in accordance with Section 11.01, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor corporation had been
named as the Company in this Indenture, and thereafter, except in the case of a
lease, the predecessor corporation shall be relieved of all obligations and
covenants under this Indenture and the Notes.
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Such successor corporation may cause to be signed, and may issue either in
its own name or in the name of the Company prior to such succession, any of or
all the Notes issuable under this Indenture which theretofore shall not have
been signed by the Company and delivered to the Trustee; and, upon the order of
such successor corporation instead of upon the order of the Company, and
subject to all the terms, conditions and limitations in this Indenture, the
Trustee shall authenticate and shall deliver any Notes which previously shall
have been signed and delivered by the officers of the Company to the Trustee
for authentication and any Notes which such successor corporation thereafter
shall cause to be signed and delivered to the Trustee on its behalf for that
purpose. All the Notes so issued shall in all respects have the same legal rank
and benefit under this Indenture as the Notes theretofore or thereafter issued
in accordance with the terms of this Indenture as though all such Notes had
been issued at the date of the execution of this Indenture.
ARTICLE TWELVE
Satisfaction and Discharge of Indenture
SECTION 12.01. Discharge of Indenture. When (a) the Company shall deliver
to the Trustee for cancelation all Notes theretofore authenticated (other than
any Notes which shall have been destroyed, lost or stolen and in lieu of or in
substitution for which other Notes shall have been authenticated and delivered)
and not theretofore canceled, or (b) all the Notes not theretofore canceled or
delivered to the Trustee for cancelation shall have become due and payable, or
are by their terms to become due and payable within one year, and the Company
shall deposit with the Trustee, in trust, funds (which thereupon shall become
immediately due and payable to the holders of Notes) sufficient to pay at
maturity all the Notes (other than any Notes which shall have been mutilated,
destroyed, lost or stolen which have been replaced or paid as provided in
Section 2.06) not theretofore canceled or delivered to the Trustee for
cancelation, including principal and interest due or to become due to such date
of maturity but excluding, however, the amount of any monies for the payment of
principal of or interest on the Notes (1) theretofore deposited with the
Trustee and repaid by the Trustee to the Company in accordance with the
provisions of Section 12.04, or (2) paid to any State or the District of
Columbia pursuant to its unclaimed property or similar laws, and if in either
case the Company shall also pay or cause to be paid all other sums payable
under this Indenture by the Company - then this Indenture shall cease to be of
further effect, and the Trustee, on demand of the Company accompanied by an
Officers' Certificate and an Opinion of Counsel as required by Section 14.05
and at the cost and expense of the Company, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture. The obligations
of the Company to the Trustee under Section 7.06 shall survive the termination
of this Indenture.
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The Trustee shall notify the Noteholders, at the expense of the Company, of
the immediate availability of the amount referred to in clause (b) of this
Section 12.01 by mailing a notice, first class postage prepaid, to the holders
of Notes at their addresses as they appear on the Note register.
SECTION 12.02. Deposited Monies to Be Held in Trust by Trustee. Subject to
Article Three and to Section 12.04, all monies deposited with the Trustee
pursuant to Section 12.01 shall be held in trust and applied by it to the
payment, either directly or through any paying agent (including the Company if
acting as its own paying agent), to the holders of the particular Notes for the
payment of which such monies have been deposited with the Trustee, of all sums
due and to become due thereon for principal and interest.
SECTION 12.03. Paying Agent to Repay Monies Held. Upon the satisfaction and
discharge of this Indenture all monies then held by any paying agent of the
Notes (other than the Trustee) shall, upon demand of the Company, be repaid to
it or paid to the Trustee, and thereupon such paying agent shall be released
from all further liability with respect to such monies.
SECTION 12.04. Return of Unclaimed Monies. Any monies deposited with or
paid to the Trustee or any paying agent for payment of the principal of or
interest on Notes, or then held by the Company in trust for the payment of the
principal of or interest on Notes, and not applied but remaining unclaimed by
the holders of Notes for two years after the date upon which the principal of
or interest on such Notes, as the case may be, shall have become due and
payable, shall be repaid to the Company by the Trustee on demand or, if then
held by the Company, shall be discharged from such trust, and all liability of
the Trustee shall thereupon cease: and the holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Company for
payment of such Note, and all liability of the Trustee or such paying agent
with respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
paying agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper of general
circulation in The City of New York customarily published on each Business Day
(whether or not published on Saturdays, Sundays or holidays), or mail to each
such holder, or both, notice that such money remains unclaimed and that, after
a date specified in such notice, which shall not be less than 30 days from the
date of such publication or mailing, any unclaimed balance of such money then
remaining will be repaid to the Company.
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ARTICLE THIRTEEN
Immunity of Incorporators, Stockholders, Officers and Directors
SECTION 13.01. Indenture and Notes Solely Corporate Obligations. No
recourse for the payment of the principal of or interest on any Note, or for
any claim based on any Note or otherwise in respect of any Note, and no
recourse under or upon any obligation, covenant or agreement of the Company in
this Indenture or in any supplemental indenture or in any Note, or because of
the creation of an) indebtedness represented by any Note, shall be had against
any incorporator, stockholder, officer or director, as such, past, present or
future, of the Company or of any successor corporation, either directly or
through the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment
or penalty or otherwise; it being expressly understood that all such liability
is hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issue of the Notes.
ARTICLE FOURTEEN
Miscellaneous Provisions
SECTION 14.01. Provisions Binding on Company's Successors. All the
covenants, stipulations, promises and agreements in this Indenture contained by
the Company shall bind its successors and assigns whether so expressed or not.
SECTION 14.02. Official Acts by Successor Corporation. Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any corporation that shall at the time be the lawful sole successor
of the Company.
SECTION 14.03. Addresses for Notices, etc. Any notice or demand which by
any provision of this Indenture is required or permitted to be given or served
by the Trustee or by the holders of Notes on the Company may be given or served
by being deposited postage prepaid by registered or certified mail in a post
office letter box addressed (until another address is filed by the Company with
the Trustee) to Merchants National Corporation, Attention: Senior Executive
Vice President. One Merchants Plaza, Suite 415-E, Indianapolis, Indiana 46255,
with a copy to it at One Merchants Plaza, Suite 845-E, Indianapolis, Indiana
46255, Attention: Legal Department. Any notice, direction, request or demand
by any Noteholder to or upon the Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or made in writing at
the principal office of the Trustee, Attention: Corporate Trust Administration.
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SECTION 14.04. Governing Law. THIS INDENTURE AND EACH NOTE
SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE
STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 14.05. Evidence of Compliance with Conditions Precedent. Upon any
application or request by the Company to the Trustee to take any action under
any of the provisions of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Each certificate or opinion provided for in this Indenture and delivered to
the Trustee with respect to compliance with a condition or covenant provided
for in this Indenture shall include (1) a statement that the person making such
certificate or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinion contained in such certificate or opinion is
based; (3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
SECTION 14.06. Legal Holidays. In any case where the date of maturity of
interest on or principal of the Notes will not be a Business Day, payment of
such interest on or principal of the Notes need not be made on such date but
may be made on the next following Business Day with the same force and effect
as if made on the date of maturity and, if such interest or principal is duly
paid on such next following Business Day, no interest shall accrue for the
period from and after such date of maturity to such next following Business
Day.
SECTION 14.07. Trust Indenture Act to Control. If and to the extent that
any provision of this Indenture limits, qualifies or conflicts with another
provision included in this Indenture which is required to be included in this
Indenture by any of Sections 310 to 317, inclusive, of the Trust Indenture Act
of 1939, such required provision shall control.
SECTION 14.08. No Security Interest Created. Nothing in this Indenture or
in the Notes, expressed or implied, shall be construed to constitute a security
interest under the Uniform Commercial Code or similar legislation, as now or
hereafter
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64
enacted and in effect, in any jurisdiction where property of the Company or its
Subsidiaries is located.
SECTION 14.09. Benefits of Indenture. Nothing in this Indenture or in the
Notes, express or implied, shall give to any person, other than the parties to
this Indenture, any paying agent, any Note registrar and their successors under
this Indenture, the holders of Notes and, to the extent provided in this
Indenture, the holders of Senior Indebtedness, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 14.10. Table of Contents, Headings, etc. The table of contents and
the titles and headings of the articles and sections of this Indenture have
been inserted for convenience of reference only, are not to be considered a
part hereof and shall in no way modify or restrict any of the terms or
provisions of this Indenture.
SECTION 14.11. Execution in Counterparts. This Indenture may be executed
in any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
<PAGE> 96
65
Manufacturers Hanover Trust Company hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions set forth above
in this Indenture.
IN WITNESS WHEREOF, MERCHANTS NATIONAL CORPORATION has caused this
Indenture to be signed and acknowledged by its Senior Executive Vice President,
Chief Financial Officer and Treasurer, and its corporate seal to be affixed
hereunto, and the same to be attested by its Secretary, and MANUFACTURERS
HANOVER TRUST COMPANY has caused this Indenture to be signed and acknowledged
by J. M. Foley, and has caused its corporate seal to be affixed hereunto and
the same to be attested by Glenn Booth, as of the day and year first written
above.
<TABLE>
<S> <C>
MERCHANTS NATIONAL CORPORATION,
by /s/ Robert L. Fesler
---------------------------------
Senior Executive Vice President,
Chief Financial Officer and Treasurer
[SEAL]
Attest:
/s/
________________________________
Secretary
MANUFACTURERS HANOVER TRUST
COMPANY,
by /s/
---------------------------------
Title: Assistant Vice President
[SEAL]
Attest:
/s/
________________________________
Title: Assistant Vice President
</TABLE>
<PAGE> 97
66
STATE OF INDIANA )
)ss.:
COUNTY OF MARION )
On the 3rday of October, 1989, before me personally came Robert L. Fesler,
to me known, who, being by me duly sworn did depose and say that he resides at
7602 Candlewood Lane, Indianapolis, Indiana 46250; that be is the Senior
Executive Vice President, Chief Financial Officer and Treasurer of Merchants
National Corporation, one of the corporations described in and which executed
the above instrument; that he knows the corporate seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by the authority of the Board of Directors of said corporation; and
that he signed his name thereto by like authority.
/s/ Debra K. Klopsch
____________________________________
Notary Public
[NOTARIAL SEAL]
STATE OF NEW YORK )
)ss.:
COUNTY OF NEW YORK )
On the 4 day of October, 1989, before me personally came J. M. Foley, to me
known, who, being by me duly sworn did depose and say that he resides at
10 Stuyvesant Oval, New York, New York, that he is a Assistant Vice President
of Manufacturers Hanover Trust Company, one of the corporations described in
and which executed the above instrument; that he knows the corporate seal of
said corporation; that the seal affixed to the said instrument is such
corporate seal; that it was so affixed by the authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
/s/ Gloria G. Stillman
____________________________________
Notary Public
<TABLE>
<S> <C>
[NOTARIAL SEAL] GLORIA G. STILLMAN, NOTARY PUBLIC
State of New York, No. 4712617
Qualified in Bronx County
Cert. Filed in New York County
Commission Expires August 31, 1990
</TABLE>
