<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 12, 1997
REGISTRATION NOS. 333-26585
333-26585-01
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
------------------------
NATIONAL PENN BANCSHARES, INC.
NPB CAPITAL TRUST
(EXACT NAME OF REGISTRANTS AS SPECIFIED IN THEIR CHARTERS)
<TABLE>
<S> <C>
PENNSYLVANIA 23-2215075
DELAWARE 23-2899761
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
------------------------
PHILADELPHIA AND READING AVENUES
BOYERTOWN, PENNSYLVANIA 19512
(610) 367-6001
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
LAWRENCE T. JILK, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
NATIONAL PENN BANCSHARES, INC.
PHILADELPHIA AND READING AVENUES
BOYERTOWN, PENNSYLVANIA 19512
(610) 367-6001
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
WITH COPIES TO:
<TABLE>
<S> <C>
H. ANDERSON ELLSWORTH, ESQ. STEVEN KAPLAN, ESQ.
ELLSWORTH, WILES & CHALPHIN, P.C. ARNOLD & PORTER
1150 BERKSHIRE BOULEVARD 555 12TH STREET, N.W.
WYOMISSING, PENNSYLVANIA 19610-1208 WASHINGTON, D.C. 20004
(610) 374-1135 (202) 942-5998
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of
this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==========================================================================================================================
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE(1) REGISTRATION FEE
- - - - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
% Preferred Securities of NPB Capital Trust............................... $40,250,000 $12,197(4)
% Junior Subordinated Debentures of National Penn Bancshares, Inc......... (2) --
Guarantee of National Penn Bancshares, Inc. of certain obligations under
the Preferred Securities................................................ (3) --
==========================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee,
exclusive of accrued interest and dividends, if any.
(2) The Junior Subordinated Debentures will be purchased by NPB Capital Trust
with the proceeds of the sale of the Preferred Securities. Such securities
may later be distributed for no additional consideration to the holders of
the Preferred Securities upon the dissolution of the Trust and the
distribution of its assets.
(3) This Registration Statement is deemed to cover the Guarantee. Pursuant to
Rule 457(n) under the Securities Act, no separate registration fee is
payable for the Guarantee.
(4) $350 was previously paid in connection with the filing of the original
Registration Statement on Form S-3 on May 6, 1997. $11,847 is paid herewith.
================================================================================
<PAGE> 2
EXPLANATORY NOTE
The prospectus contained in this Registration Statement will be used in
connection with the offering of the following securities: (1) % Preferred
Securities of NPB Capital Trust; (2) % Junior Subordinated Debentures of
National Penn Bancshares, Inc.; (3) a Guarantee of National Penn Bancshares,
Inc. of certain obligations under the Preferred Securities.
<PAGE> 3
SUBJECT TO COMPLETION
MAY 12, 1997
PROSPECTUS
NATIONAL PENN BANCSHARES INC. LOGO
$35,000,000
NPB Capital Trust
% PREFERRED SECURITIES
(Liquidation Amount $25 per Preferred Security)
fully and unconditionally guaranteed, as described herein, by
NATIONAL PENN BANCSHARES, INC.
------------------
The Preferred Securities offered hereby represent preferred undivided
beneficial interests in the assets of NPB Capital Trust, a statutory business
trust created under the laws of the State of Delaware (the "Issuer Trust").
National Penn Bancshares, Inc. (the "Company") will initially be the holder of
all of the beneficial interests represented by common securities of the Issuer
Trust (the "Common Securities" and together with
(Continued on next page)
------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 9 HEREOF FOR CERTAIN
INFORMATION RELEVANT TO AN INVESTMENT IN THE PREFERRED SECURITIES.
------------------
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
INSURER OR GOVERNMENT AGENCY.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
================================================================================
<TABLE>
<S> <C> <C> <C>
PRICE PROCEEDS TO
TO UNDERWRITING ISSUER
PUBLIC(1) DISCOUNT(2) TRUST(3)(4)
- - - - -------------------------------------------------------------------------------------------------------------------
Per Preferred Security.................................... $ (4) $
- - - - -------------------------------------------------------------------------------------------------------------------
Total(5).................................................. $35,000,000 (4) $35,000,000
</TABLE>
================================================================================
(1) Plus accrued Distributions, if any, from May , 1997.
(2) The Company and the Issuer Trust have each agreed to indemnify the
Underwriter against certain liabilities under the Securities Act of 1933.
See "Underwriting."
(3) Before deduction of expenses payable by the Company estimated at $ .
(4) In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures, the
Company has agreed to pay to the Underwriter, as compensation for its
arranging the investment therein of such proceeds, $ per Preferred
Security (or $ in the aggregate). See "Underwriting."
(5) The Company has granted the Underwriter an option, exercisable within 30
days after the date of this Prospectus, to purchase up to an additional
$5,250,000 aggregate liquidation amount of the Preferred Securities on the
same terms as set forth above, solely to cover over-allotments, if any. If
such over-allotment option is exercised in full, the total Price to Public
and Proceeds to Issuer Trust will be $ and $ , respectively.
See "Underwriting."
------------------
The Preferred Securities are offered by the Underwriter subject to receipt
and acceptance by it, prior sale and 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 Preferred Securities will be made in
book-entry form through the book-entry facilities of The Depository Trust
Company on or about , 1997 against payment therefor in immediately
available funds.
ALEX. BROWN & SONS
INCORPORATED
THE DATE OF THIS PROSPECTUS IS , 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO
BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE> 4
(cover page continued)
the Preferred Securities, the "Trust Securities"). The Issuer Trust exists for
the sole purpose of issuing the Trust Securities and investing the proceeds
thereof in % Junior Subordinated Deferrable Interest Debentures (the "Junior
Subordinated Debentures," and together with the Trust Securities, the
"Securities") to be issued by the Company. The Junior Subordinated Debentures
will mature on , 2027, which date may be shortened (such date, as it
may be shortened, the "Stated Maturity") to a date not earlier than , 2002 if
certain conditions are met (including the Company having received the prior
approval of the Board of Governors of the Federal Reserve System (the "Federal
Reserve") if then required under applicable capital guidelines or policies of
the Federal Reserve (such shortening of the maturity date, the "Maturity
Adjustment")). See "Description of Junior Subordinated Debentures -- General."
The Preferred Securities will have a preference under certain circumstances over
the Common Securities with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise. See "Description of Preferred
Securities -- Subordination of Common Securities."
The Preferred Securities will be represented by one or more global
securities registered in the name of a nominee of The Depository Trust Company,
as depositary ("DTC"). Beneficial interests in the global securities will be
shown on, and transfer thereof will be effected only through, records maintained
by DTC and its participants. Except as described under "Description of Preferred
Securities," Preferred Securities in definitive form will not be issued and
owners of beneficial interests in the global securities will not be considered
holders of the Preferred Securities. Application will be made to include the
Preferred Securities in NASDAQ's National Market. Settlement for the Preferred
Securities will be made in immediately available funds. The Preferred Securities
will trade in DTC's Same-Day Funds Settlement System, and secondary market
trading activity for the Preferred Securities will therefore settle in
immediately available funds.
Holders of the Preferred Securities will be entitled to receive
preferential cumulative cash distributions accumulating from , 1997
and payable quarterly in arrears on March 31, June 30, September 30, and
December 31 of each year, commencing , 1997, at the annual rate of
% of the Liquidation Amount of $25 per Preferred Security ("Distributions").
The Company has the right to defer payment of interest on the Junior
Subordinated Debentures at any time or from time to time for a period not
exceeding 20 consecutive quarterly periods with respect to each deferral period
(each, an "Extension Period"), provided that no Extension Period may extend
beyond the Stated Maturity of the Junior Subordinated Debentures. No interest
shall be due and payable during any Extension Period, except at the end thereof.
Upon the termination of any such Extension Period and the payment of all amounts
then due, the Company may elect to begin a new Extension Period subject to the
requirements set forth herein. If interest payments on the Junior Subordinated
Debentures are so deferred, Distributions on the Preferred Securities will also
be deferred and the Company will not be permitted, subject to certain exceptions
described herein, to declare or pay any cash distributions with respect to the
Company's capital stock or with respect to debt securities of the Company that
rank pari passu in all respects with or junior to the Junior Subordinated
Debentures. During an Extension Period, interest on the Junior Subordinated
Debentures will continue to accrue (and the amount of Distributions to which
holders of the Preferred Securities are entitled will accumulate) at the rate of
% per annum, compounded quarterly, and holders of Preferred Securities will be
required to accrue interest income for United States federal income tax
purposes. See "Description of Junior Subordinated Debentures -- Option to Extend
Interest Payment Period" and "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue Discount."
The Company has, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures and the Junior Subordinated Indenture (each as defined
herein), taken together, fully, irrevocably and unconditionally guaranteed all
the Issuer Trust's obligations under the Preferred Securities as described
below. See "Relationship Among the Preferred Securities, the Junior Subordinated
Debentures and the Guarantee -- Full and Unconditional Guarantee." The Guarantee
2
<PAGE> 5
of the Company guarantees the payment of Distributions and payments on
liquidation or redemption of the Preferred Securities, but only in each case to
the extent of funds held by the Issuer Trust, as described herein (the
"Guarantee"). See "Description of Guarantee." If the Company does not make
payments on the Junior Subordinated Debentures held by the Issuer Trust, the
Issuer Trust may have insufficient funds to pay Distributions on the Preferred
Securities. The Guarantee does not cover payment of Distributions when the
Issuer Trust does not have sufficient funds to pay such Distributions. In such
event, a holder of Preferred Securities may institute a legal proceeding
directly against the Company to enforce payment of such Distributions to such
holder. See "Description of Junior Subordinated Debentures -- Enforcement of
Certain Rights by Holders of Preferred Securities." The obligations of the
Company under the Guarantee and the Preferred Securities are subordinate and
junior in right of payment to all Senior Indebtedness (as defined in
"Description of Junior Subordinated Debentures -- Subordination") of the
Company.
The Preferred Securities are subject to mandatory redemption (i) in whole,
but not in part, upon repayment of the Junior Subordinated Debentures at Stated
Maturity or their earlier redemption in whole upon the occurrence of a Tax
Event, an Investment Company Event or a Capital Treatment Event (each as defined
herein) and (ii) in whole or in part at any time on or after ,
2002 contemporaneously with the optional redemption by the Company of the Junior
Subordinated Debentures in whole or in part. The Junior Subordinated Debentures
are redeemable prior to maturity at the option of the Company (i) on or
after , 2002, in whole at any time or in part from time to time, or
(ii) in whole, but not in part, at any time within 90 days following the
occurrence and continuation of a Tax Event, Investment Company Event or Capital
Treatment Event, in each case at a redemption price set forth herein, which
includes the accrued and unpaid interest on the Junior Subordinated Debentures
so redeemed to the date fixed for redemption. The ability of the Company to
exercise its rights to redeem the Junior Subordinated Debentures or to cause the
redemption of the Preferred Securities prior to the Stated Maturity may be
subject to prior regulatory approval by the Federal Reserve, if then required
under applicable Federal Reserve capital guidelines or policies. See
"Description of Junior Subordinated Debentures -- Redemption" and "Description
of Preferred Securities -- Liquidation Distribution Upon Dissolution."
The holders of the outstanding Common Securities have the right at any time
to dissolve the Issuer Trust and, after satisfaction of liabilities to creditors
of the Issuer Trust as provided by applicable law, to cause the Junior
Subordinated Debentures to be distributed to the holders of the Preferred
Securities and Common Securities in liquidation of the Issuer Trust. The ability
of the Company to dissolve the Issuer Trust may be subject to prior regulatory
approval of the Federal Reserve, if then required under applicable Federal
Reserve capital guidelines or policies. See "Description of Preferred
Securities -- Liquidation Distribution Upon Dissolution."
In the event of the dissolution of the Issuer Trust, after satisfaction of
liabilities to creditors of the Issuer Trust as provided by applicable law, the
holders of the Preferred Securities will be entitled to receive a Liquidation
Amount of $25 per Preferred Security plus accumulated and unpaid Distributions
thereon to the date of payment, subject to certain exceptions, which may be in
the form of a distribution of such amount in Junior Subordinated Debentures. See
"Description of Preferred Securities -- Liquidation Distribution Upon
Dissolution."
The Junior Subordinated Debentures are unsecured and subordinated to all
Senior Indebtedness of the Company. See "Description of Junior Subordinated
Debentures -- Subordination."
Prospective purchasers must carefully consider the information set forth in
"Certain ERISA Considerations."
THE JUNIOR SUBORDINATED DEBENTURES ARE DIRECT AND UNSECURED OBLIGATIONS OF
THE COMPANY, DO NOT EVIDENCE DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER INSURER OR GOVERNMENT AGENCY.
3
<PAGE> 6
AVAILABLE INFORMATION
The Company 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 facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional offices of the Commission located at
7 World Trade Center, 13th Floor, Suite 1300, New York, New York 10048 and Suite
1400, Citicorp Center, 14th Floor, 500 West Madison Street, Chicago, Illinois
60661. Copies of such material can also be obtained at prescribed rates by
writing to the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. Such material also may be accessed electronically
by means of the Commission's home page on the Internet at http://www.sec.gov.
This Prospectus does not contain all the information set forth in the
Registration Statement and exhibits thereto, which the Company has filed with
the Commission under the Securities Act of 1933, as amended (the "Securities
Act") and to which reference is hereby made.
No separate financial statements of the Issuer Trust have been included or
incorporated by reference herein. The Company and the Issuer Trust do not
consider that such financial statements would be material to holders of the
Preferred Securities because the Issuer Trust is a newly formed special purpose
entity, has no operating history or independent operations and is not engaged in
and does not propose to engage in any activity other than holding as trust
assets the Junior Subordinated Debentures and issuing the Trust Securities. See
"NPB Capital Trust," "Description of Preferred Securities," "Description of
Junior Subordinated Debentures" and "Description of Guarantee." In addition, the
Company does not expect that the Issuer Trust will be filing reports under the
Exchange Act with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this Prospectus the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996
and the Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
1997, previously filed by the Company with the Commission pursuant to Section 13
of the Exchange Act.
In addition, all reports and definitive proxy or information statements
filed pursuant to Sections 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 any
offering of securities made by this Prospectus shall be deemed to be
incorporated herein by reference and to be a part hereof from the date of filing
of such documents. Any statement contained herein, or in any document all or a
portion of which is incorporated or deemed to be incorporated herein by
reference shall be deemed to be modified or superseded for purposes of the
Registration Statement and this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of the Registration
Statement or this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of any such person, a copy of any or all of the foregoing documents
incorporated herein by reference (other than certain exhibits to such
documents). Written requests should be directed to the Office of the Secretary,
National Penn Bancshares, Inc., Philadelphia and Reading Avenues, Boyertown,
Pennsylvania 19512. Telephone requests may be directed to (610) 367-6001.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE PREFERRED
4
<PAGE> 7
SECURITIES OFFERED HEREBY, INCLUDING OVER-ALLOTING SHARES OF THE PREFERRED
SECURITIES AND BIDDING FOR AND PURCHASING SUCH SHARES AT A LEVEL ABOVE THAT
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING." SUCH STABILIZING TRANSACTIONS, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.
5
<PAGE> 8
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in
this Prospectus.
As used herein, (i) the "Junior Subordinated Indenture" means the Junior
Subordinated Indenture, as amended and supplemented from time to time, between
the Company and Bankers Trust Company, as trustee (the "Debenture Trustee"),
pursuant to which the Junior Subordinated Debentures are issued, (ii) the "Trust
Agreement" means the Amended and Restated Trust Agreement relating to the Issuer
Trust, as amended and supplemented from time to time, among the Company, as
Depositor, Bankers Trust Company, as Property Trustee (the "Property Trustee")
and Bankers Trust (Delaware), as Delaware Trustee (the "Delaware Trustee")
(collectively, the "Issuer Trustees") and (iii) the "Guarantee" means the
Guarantee Agreement relating to the Preferred Securities, as amended and
supplemented from time to time, between the Company and Bankers Trust Company,
as Guarantee Trustee.
NATIONAL PENN BANCSHARES, INC.
The Company is a Pennsylvania business corporation and bank holding company
headquartered in Boyertown, Pennsylvania. The Company's principal subsidiary is
National Penn Bank, Boyertown, Pennsylvania (the "Bank"), a national banking
association. The Company also controls three wholly-owned nonbank subsidiaries
engaged in activities related to the business of banking. Through its
subsidiaries, the Company engages in a broad array of community banking
activities. The Company's strategy is to provide its customers with a diverse
variety of financial products and services, convenient office locations, and
personalized attention.
As of March 31, 1997, the Bank and its divisions, Chestnut Hill National
Bank and 1st Main Line Bank, provide banking services through 49 branches
located in southeastern Pennsylvania. The Company considers its primary market
area to be the Pennsylvania counties of Berks and Montgomery. The Company's
market area comprises a diverse base of business and retail customers.
NPB CAPITAL TRUST
The Issuer Trust is a statutory business trust created under Delaware law
on May 2, 1997. The Issuer Trust will be governed by the Trust Agreement. The
Issuer Trust exists for the exclusive purposes of (i) issuing and selling the
Trust Securities, (ii) using the proceeds from the sale of the Trust Securities
to acquire the Junior Subordinated Debentures and (iii) engaging in only those
other activities necessary, convenient or incidental thereto (such as
registering the transfer of the Trust Securities). Accordingly, the Junior
Subordinated Debentures will be the sole assets of the Issuer Trust, and
payments under the Junior Subordinated Debentures will be the sole source of
revenue of the Issuer Trust.
THE OFFERING
Securities Offered......... $35,000,000 aggregate Liquidation Amount of %
Preferred Securities (Liquidation Amount $25 per
Preferred Security).
The Issuer Trust has granted the Underwriter an
option, exercisable within 30 days after the date
of this Prospectus, to purchase up to an additional
$5,250,000 aggregate Liquidation Amount of
Preferred Securities at the offering price, solely
to cover over-allotments, if any.
Offering Price............. $25 per Preferred Security (Liquidation Amount
$25), plus accumulated Distributions, if any, from
, 1997.
6
<PAGE> 9
Distribution Dates......... March 31, June 30, September 30, and December 31 of
each year, commencing , 1997.
Extension Periods.......... Distributions on Preferred Securities may be
deferred for the duration of any Extension Period
selected by the Company with respect to the payment
of interest on the Junior Subordinated Debentures.
No Extension Period will exceed 20 consecutive
quarterly periods or extend beyond the Stated
Maturity. See "Description of Junior Subordinated
Debentures -- Option to Extend Interest Payment
Period" and "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue
Discount."
Ranking.................... The Preferred Securities will rank pari passu, and
payments thereon will be made pro rata, with the
Common Securities except as described under
"Description of Preferred
Securities -- Subordination of Common Securities."
The Junior Subordinated Debentures will be
unsecured and subordinate and junior in right of
payment to the extent and in the manner set forth
in the Junior Subordinated Indenture to all Senior
Indebtedness (as defined herein). See "Description
of Junior Subordinated Debentures." The Guarantee
will constitute an unsecured obligation of the
Company and will rank subordinate and junior in
right of payment to the extent and in the manner
set forth in the Guarantee to all Senior
Indebtedness. See "Description of Guarantee."
Redemption................. The Trust Securities are subject to mandatory
redemption (i) in whole, but not in part, at the
Stated Maturity upon repayment of the Junior
Subordinated Debentures, (ii) in whole, but not in
part, contemporaneously with the optional
redemption at any time by the Company of the Junior
Subordinated Debentures upon the occurrence and
continuation of a Tax Event, Investment Company
Event or Capital Treatment Event and (iii) in whole
or in part, at any time on or after
, 2002, contemporaneously with the
optional redemption by the Company of the Junior
Subordinated Debentures in whole or in part, in
each case at the applicable Redemption Price. See
"Description of Preferred Securities --
Redemption."
ERISA Considerations....... Prospective purchasers must carefully consider the
information set forth under "Certain ERISA
Considerations."
Use of Proceeds............ All the proceeds to the Issuer Trust from the sale
of the Preferred Securities will be invested by the
Issuer Trust in the Junior Subordinated Debentures.
All the net proceeds to be received by the Company
from the sale of the Junior Subordinated Debentures
will be used for general corporate purposes. See
"Use of Proceeds." The Trust Securities will
qualify as Tier 1 or core capital of the Company,
subject to the 25% Capital Limitation (as defined
herein), under the risk-based capital guidelines of
the Federal Reserve. The portion of the Trust
Securities that exceeds the 25% Capital Limitation
will qualify as Tier 2 or supplementary capital of
the Company. See "Use of Proceeds."
Rating..................... The Preferred Securities are expected to be rated
"BBB" by Thomson BankWatch, Inc. A security rating
is not a recommenda-
7
<PAGE> 10
tion to buy, sell or hold securities and may be
subject to revision or withdrawal at any time by
the assigning rating organization.
NASDAQ National Market
Symbol................... Application has been made to have the Preferred
Securities approved for quotation on the NASDAQ
National Market under the symbol "NPBCP."
For additional information regarding the Preferred Securities, see
"Description of Preferred Securities," "Description of Junior Subordinated
Debentures," "Description of Guarantee," "Relationship Among the Preferred
Securities, the Junior Subordinated Debentures and the Guarantee" and "Certain
Federal Income Tax Consequences."
RISK FACTORS
Prospective investors should carefully consider the matters set forth under
"Risk Factors," beginning on page 9.
8
<PAGE> 11
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the
Preferred Securities offered by this Prospectus. Certain statements in this
Prospectus and documents incorporated herein by reference are forward-looking
and are identified by the use of forward-looking words or phrases such as
"intended," "will be positioned," "expects," is or are "expected,"
"anticipates," and "anticipated." These forward-looking statements are based on
the Company's current expectations. To the extent any of the information
contained or incorporated by reference in this Prospectus constitutes a
"forward-looking statement" as defined in Section 27A(i)(1) of the Securities
Act, the risk factors set forth below are cautionary statements identifying
important factors that could cause actual results to differ materially from
those in the forward-looking statement.
Ranking of Subordinated Obligations Under the Guarantee and the Junior
Subordinated Debentures. The obligations of the Company under the Guarantee
issued by the Company for the benefit of the holders of Preferred Securities and
under the Junior Subordinated Debentures are subordinate and junior in right of
payment to all Senior Indebtedness. At March 31, 1997, the Company had no Senior
Indebtedness. None of the Junior Subordinated Indenture, the Guarantee or the
Trust Agreement places any limitation on the amount of secured or unsecured
debt, including Senior Indebtedness, that may be incurred by the Company. See
"Description of Guarantee -- Status of the Guarantee" and "Description of Junior
Subordinated Debentures -- Subordination."
The ability of the Issuer Trust to pay amounts due on the Preferred
Securities is solely dependent upon the Company's making payments on the Junior
Subordinated Debentures as and when required.
Status of the Company as a Bank Holding Company. The Company is a legal
entity separate and distinct from the Bank, although the principal source of the
Company's cash revenues is dividends from the Bank. The right of the Company to
participate in the assets of any subsidiary upon the latter's liquidation,
reorganization or otherwise (and thus the ability of the holders of Preferred
Securities to benefit indirectly from any such distribution) will be subject to
the claims of the subsidiaries' creditors, which will take priority except to
the extent that the Company may itself be a creditor with a recognized claim. As
of March 31, 1997, the Company's subsidiaries had indebtedness and other
liabilities of approximately $1.27 billion.
Payment of dividends by the Bank is restricted by various legal and
regulatory limitations. At March 31, 1997, approximately $19 million was
available for payment of dividends to the Company from the Bank without prior
regulatory approval.
The Bank is also subject to restrictions under federal law which limit the
transfer of funds by the Bank to the Company, whether in the form of loans,
extensions of credit, investments, asset purchases or otherwise. Such transfers
by the Bank to the Company or any nonbanking subsidiary of the Company are
limited in amount to 10% of the Bank's capital and surplus and, with respect to
the Company and all such nonbanking subsidiaries, to an aggregate of 20% of the
Bank's capital and surplus. Furthermore, such loans and extensions of credit are
required to be secured in specified amounts.
Option to Extend Interest Payment Period; Tax Consequences. So long as no
Event of Default (as defined in the Junior Subordinated Indenture) has occurred
and is continuing with respect to the Junior Subordinated Debentures (a
"Debenture Event of Default"), the Company has the right under the Junior
Subordinated Indenture to defer the payment of interest on the Junior
Subordinated Debentures at any time or from time to time for a period not
exceeding 20 consecutive quarterly periods with respect to each Extension
Period, provided that no Extension Period may extend beyond the Stated Maturity
of the Junior Subordinated Debentures. See "Description of Junior Subordinated
Debentures -- Debenture Events of Default." As a consequence of any such
deferral, quarterly Distributions on the Preferred Securities by the Issuer
Trust will be deferred
9
<PAGE> 12
during any such Extension Period. Distributions to which holders of the
Preferred Securities are entitled will accumulate additional Distributions
thereon during any Extension Period at the rate of % per annum, compounded
quarterly from the relevant payment date for such Distributions, computed on the
basis of a 360-day year of twelve 30-day months and the actual days elapsed in a
partial month in such period. Additional Distributions payable for each full
Distribution period will be computed by dividing the rate per annum by four. The
term "Distribution" as used herein shall include any such additional
Distributions. During any such Extension Period, the Company may not (i) declare
or pay any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock or (ii)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu in
all respects with or junior in interest to the Junior Subordinated Debentures
(other than (a) repurchases, redemptions or other acquisitions of shares of
capital stock of the Company in connection with any employment contract, benefit
plan or other similar arrangement with or for the benefit of any one or more
employees, officers, directors or consultants, in connection with a dividend
reinvestment or stockholder stock purchase plan or in connection with the
issuance of capital stock of the Company (or securities convertible into or
exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of an exchange or conversion of any class or series of the Company's
capital stock (or any capital stock of a subsidiary of the Company) for any
class or series of the Company's capital stock or of any class or series of the
Company's indebtedness for any class or series of the Company's capital stock,
(c) the purchase of fractional interests in shares of the Company's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged, (d) any declaration of a dividend in
connection with any stockholder's rights plan, or the issuance of rights, stock
or other property under any stockholder's rights plan, or the redemption or
repurchase of rights pursuant thereto, or (e) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock issuable
upon exercise of such warrants, options or other rights is the same stock as
that on which the dividend is being paid or ranks pari passu with or junior to
such stock). Prior to the termination of any such Extension Period, the Company
may further defer the payment of interest, provided that no Extension Period may
exceed 20 consecutive quarterly periods or extend beyond the Stated Maturity of
the Junior Subordinated Debentures. Upon the termination of any Extension Period
and the payment of all interest then accrued and unpaid (together with interest
thereon at the annual rate of %, compounded quarterly, to the extent
permitted by applicable law), the Company may elect to begin a new Extension
Period subject to the above conditions. No interest shall be due and payable
during an Extension Period, except at the end thereof. The Company must give the
Issuer Trustees notice of its election to begin an Extension Period at least one
Business Day prior to the earlier of (i) the date the Distributions on the
Preferred Securities would have been payable but for the election to begin such
Extension Period and (ii) the date the Property Trustee is required to give
notice to holders of the Preferred Securities of the record date or the date
such Distributions are payable, but in any event not less than one Business Day
prior to such record date. The Property Trustee will give notice of the
Company's election to begin a new Extension Period to the holders of the
Preferred Securities. Subject to the foregoing, there is no limitation on the
number of times that the Company may elect to begin an Extension Period. See
"Description of Preferred Securities -- Distributions" and "Description of
Junior Subordinated Debentures -- Option to Extend Interest Payment Period."
Should an Extension Period occur, a holder of Preferred Securities will
continue to accrue income (in the form of original issue discount) in respect of
its pro rata share of the Junior Subordinated Debentures held by the Issuer
Trust for United States federal income tax purposes. As a result, a holder of
Preferred Securities will include such income in gross income for United States
federal income tax purposes in advance of the receipt of cash, and will not
receive the cash related to such income from the Issuer Trust if the holder
disposes of the Preferred Securities prior to the
10
<PAGE> 13
record date for the payment of Distributions. See "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue Discount" and "-- Sales of
Preferred Securities."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures. However, should the Company elect to exercise such
right in the future, the market price of the Preferred Securities is likely to
be affected. A holder that disposes of his or its Preferred Securities during an
Extension Period, therefore, might not receive the same return on his or its
investment as a holder that continues to hold its Preferred Securities. In
addition, as a result of the existence of the Company's right to defer interest
payments, the market price of the Preferred Securities (which represent
preferred undivided beneficial interests in the assets of the Issuer Trust) may
be more volatile than the market prices of other securities on which original
issue discount or interest accrues that are not subject to such deferrals.
Tax Event, Investment Company Event or Capital Treatment Event
Redemption. Upon the occurrence and during the continuation of a Tax Event,
Investment Company Event or Capital Treatment Event, the Company has the right
to redeem the Junior Subordinated Debentures in whole, but not in part, at any
time within 90 days following the occurrence of such Tax Event, Investment
Company Event or Capital Treatment Event and thereby cause a mandatory
redemption of the Preferred Securities. Any such redemption shall be at a price
equal to liquidation amount of the Preferred Securities, together with
accumulated Distributions to but excluding the date fixed for redemption. The
ability of the Company to exercise its rights to redeem the Junior Subordinated
Debentures prior to the stated maturity may be subject to prior regulatory
approval by the Federal Reserve, if then required under applicable Federal
Reserve capital guidelines or policies. See "Description of Junior Subordinated
Debentures -- Redemption" and "Description of Preferred
Securities -- Liquidation Distribution Upon Dissolution."
A "Tax Event" means the receipt by the Issuer Trust of an opinion of
counsel to the Company experienced in such matters to the effect that, as a
result of any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, or as a result of
any official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement or decision is announced on or after the date
of issuance of the Preferred Securities, there is more than an insubstantial
risk that (i) the Issuer Trust is, or will be within 90 days of the delivery of
such opinion, subject to United States federal income tax with respect to income
received or accrued on the Junior Subordinated Debentures, (ii) interest payable
by the Company on the Junior Subordinated Debentures is not, or within 90 days
of the delivery of such opinion will not be, deductible by the Company, in whole
or in part, for United States federal income tax purposes or (iii) the Issuer
Trust is, or will be within 90 days of the delivery of the opinion, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges.
See "Certain Federal Income Tax Consequences -- Possible Tax Law Changes"
for a discussion of certain legislative proposals that, if adopted, could give
rise to a Tax Event, which may permit the Company to cause a redemption of the
Preferred Securities prior to , 2002.
"Investment Company Event" means the receipt by the Issuer Trust of an
opinion of counsel to the Company experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or a
written change (including any announced prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more than an insubstantial risk that
the Issuer Trust is or will be considered an "investment company" that is
required to be registered under the Investment Company Act of 1940, as amended
(the "Investment Company Act"), which change or prospective change becomes
effective or would become effective, as the case may be, on or after the date of
the issuance of the Preferred Securities.
11
<PAGE> 14
A "Capital Treatment Event" means the reasonable determination by the
Company that, as a result of the occurrence of any amendment to, or change
(including any announced prospective change) in, the laws (or any rules or
regulations thereunder) of the United States or any political subdivision
thereof or therein, or as a result of any official or administrative
pronouncement or action or judicial decision interpreting or applying such laws
or regulations, which amendment or change is effective or such pronouncement,
action or decision is announced on or after the date of issuance of the
Preferred Securities, there is more than an insubstantial risk that the Company
will not be entitled to treat an amount equal to the Liquidation Amount of the
Preferred Securities as "Tier 1 Capital" (or the then equivalent thereof),
except as otherwise restricted under the 25% Capital Limitation (as defined
herein), for purposes of the risk-based capital adequacy guidelines of the
Federal Reserve, as then in effect and applicable to the Company.
Exchange of Preferred Securities for Junior Subordinated Debentures. The
holders of all the outstanding Common Securities have the right at any time to
dissolve the Issuer Trust and, after satisfaction of liabilities to creditors of
the Issuer Trust as provided by applicable law, cause the Junior Subordinated
Debentures to be distributed to the holders of the Preferred Securities and
Common Securities in liquidation of the Issuer Trust. The ability of the Company
to dissolve the Issuer Trust may be subject to prior regulatory approval of the
Federal Reserve, if then required under applicable Federal Reserve capital
guidelines or policies. See "Description of Preferred Securities -- Liquidation
Distribution Upon Dissolution."
Under current United States federal income tax law and interpretations and
assuming, as expected, that the Issuer Trust will not be taxable as a
corporation, a distribution of the Junior Subordinated Debentures upon a
liquidation of the Issuer Trust will not be a taxable event to holders of the
Preferred Securities. However, if a Tax Event were to occur that would cause the
Issuer Trust to be subject to United States federal income tax with respect to
income received or accrued on the Junior Subordinated Debentures, a distribution
of the Junior Subordinated Debentures by the Issuer Trust would be a taxable
event to the Issuer Trust and the holders of the Preferred Securities. See
"Certain Federal Income Tax Consequences -- Distribution of Junior Subordinated
Debentures to Securityholders."
Rights Under the Guarantee. Bankers Trust Company will act as the trustee
under the Guarantee and will hold the Guarantee for the benefit of the holders
of the Preferred Securities. Bankers Trust Company will also act as Debenture
Trustee for the Junior Subordinated Debentures and as Property Trustee under the
Trust Agreement. Bankers Trust (Delaware) will act as Delaware Trustee under the
Trust Agreement. The Guarantee guarantees to the holders of the Preferred
Securities the following payments, to the extent not paid by or on behalf of the
Issuer Trust: (i) any accumulated and unpaid Distributions required to be paid
on the Preferred Securities, to the extent that the Issuer Trust has funds on
hand available therefor at the payment date, (ii) the Redemption Price with
respect to any Preferred Securities called for redemption, to the extent that
the Issuer Trust has funds on hand available therefor at such time, and (iii)
upon a voluntary or involuntary dissolution, winding up or liquidation of the
Issuer Trust (unless the Junior Subordinated Debentures are distributed to
holders of the Preferred Securities), the lesser of (a) the aggregate of the
Liquidation Amount and all accumulated and unpaid Distributions to the date of
payment, to the extent that the Issuer Trust has funds on hand available
therefor at such time, and (b) the amount of assets of the Issuer Trust
remaining available for distribution to holders of the Preferred Securities on
liquidation of the Issuer Trust. The Guarantee is subordinated as described
under "-- Ranking of Subordinated Obligations Under the Guarantee and the Junior
Subordinated Debentures" and "Description of Guarantee -- Status of the
Guarantee." The holders of not less than a majority in aggregate Liquidation
Amount of the outstanding Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of the Guarantee or to direct the exercise of
any trust power conferred upon the Guarantee Trustee under the Guarantee. Any
holder of the Preferred Securities may institute a legal proceeding directly
against the Company to enforce its rights under the Guarantee without first
12
<PAGE> 15
instituting a legal proceeding against the Issuer Trust, the Guarantee Trustee
or any other person or entity.
If the Company were to default on its obligation to pay amounts payable
under the Junior Subordinated Debentures, the Issuer Trust may lack funds for
the payment of Distributions or amounts payable on redemption of the Preferred
Securities or otherwise, and, in such event, holders of the Preferred Securities
would not be able to rely upon the Guarantee for payment of such amounts.
Instead, if a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay any amounts payable
in respect of the Junior Subordinated Debentures on the payment date on which
such payment is due and payable, then a holder of Preferred Securities may
institute a legal proceeding directly against the Company for enforcement of
payment to such holder of any amounts payable in respect of such Junior
Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Preferred Securities of such holder (a "Direct
Action"). In connection with such Direct Action, the Company will have a right
of set-off under the Junior Subordinated Indenture to the extent of any payment
made by the Company to such holder of Preferred Securities in the Direct Action.
Except as described herein, holders of Preferred Securities will not be able to
exercise directly any other remedy available to the holders of the Junior
Subordinated Debentures or assert directly any other rights in respect of the
Junior Subordinated Debentures. See "Description of Junior Subordinated
Debentures -- Enforcement of Certain Rights by Holders of Preferred Securities,"
"-- Debenture Events of Default" and "Description of Guarantee." The Trust
Agreement provides that each holder of Preferred Securities by acceptance
thereof agrees to the provisions of the Guarantee and the Junior Subordinated
Indenture.
Limited Voting Rights. Holders of Preferred Securities will have limited
voting rights relating generally to the modification of the Preferred Securities
and the Guarantee and the exercise of the Issuer Trust's rights as holder of
Junior Subordinated Debentures. Holders of Preferred Securities will not be
entitled to appoint, remove or replace the Property Trustee or the Delaware
Trustee except upon the occurrence of certain events specified in the Trust
Agreement. The Property Trustee and the holders of all the Common Securities
may, subject to certain conditions, amend the Trust Agreement without the
consent of holders of Preferred Securities to cure any ambiguity or make other
provisions not inconsistent with the Trust Agreement or to ensure that the
Issuer Trust (i) will not be taxable as a corporation for United States federal
income tax purposes, or (ii) will not be required to register as an "investment
company" under the Investment Company Act. See "Description of Preferred
Securities -- Voting Rights; Amendment of Trust Agreement" and "-- Removal of
Issuer Trustees; Appointment of Successors."
Absence of Market. The Preferred Securities are a new issue of securities
with no established trading market. Application has been made to list the
Preferred Securities in the Nasdaq National Market, but one of the requirements
for listing and continued listing is the presence of two market makers for the
Preferred Securities. The Company and the Issuer Trust have been advised by the
Underwriter that it intends to make a market in the Preferred Securities.
However, the Underwriter is not obligated to do so and such market making may be
interrupted or discontinued at any time without notice at the sole discretion of
the Underwriter. Moreover, there can be no assurance of a second market maker
for the Preferred Securities. Accordingly, no assurance can be given as to the
development or liquidity of any market for the Preferred Securities.
Market Prices. There can be no assurance as to the market prices for
Preferred Securities, or the market prices for Junior Subordinated Debentures
that may be distributed in exchange for Preferred Securities if a liquidation of
the Issuer Trust occurs. Accordingly, the Preferred Securities or the Junior
Subordinated Debentures that a holder of Preferred Securities may receive on
liquidation of the Issuer Trust may trade at a discount to the price that the
investor paid to purchase the Preferred Securities offered hereby. Because
holders of Preferred Securities may receive Junior Subordinated Debentures on
termination of the Issuer Trust, prospective purchasers of Preferred Securities
are also making an investment decision with regard to the Junior Subordinated
Deben-
13
<PAGE> 16
tures and should carefully review all the information regarding the Junior
Subordinated Debentures contained herein. See "Description of Junior
Subordinated Debentures."
Possible Tax Law Changes Affecting the Preferred Securities. On February
6, 1997, President Clinton released his budget proposals for fiscal year 1998.
One of the tax proposals therein (the "Tax Proposal") would generally deny
corporate issuers a deduction for interest on certain debt obligations that have
a maximum term in excess of 15 years and are not shown as indebtedness on the
separate balance sheet of the issuer or, where the instrument is issued to a
related party (other than a corporation), where the holder or some other related
party issues a related instrument that is not shown as indebtedness on the
issuer's consolidated balance sheet. As currently drafted, the Tax Proposal
would be effective generally for instruments issued on or after the date of
first Congressional committee action. Although it is not clear from the
President's proposals as to what constitutes Congressional "committee action"
with respect to the Tax Proposal, it appears that, as drafted, the Tax Proposal
would not apply retroactively to the Junior Subordinated Debentures. However, if
the Tax Proposal (or similar legislation) is enacted with retroactive effect
with respect to the Junior Subordinated Debentures, the Company would not be
entitled to an interest deduction with respect to the Junior Subordinated
Debentures. There can be no assurance that the Tax Proposal, if enacted, will
not apply retroactively to the Junior Subordinated Debentures or that other
legislation enacted after the date hereof will not otherwise adversely affect
the ability of the Company to deduct the interest payable on the Junior
Subordinated Debentures. Accordingly, there can be no assurance that a Tax Event
will not occur. See "Description of the Preferred Securities -- Redemption" and
"Description of the Junior Subordinated Debentures -- Proposed Tax Law Changes."
Competition. The banking business is highly competitive. In its primary
market area, the Bank competes with other commercial banks, savings and loan
associations, credit unions, finance companies, mutual funds, insurance
companies, and brokerage and investment banking firms operating locally and
elsewhere. The Bank's primary competitors have substantially greater resources
and lending limits than the Bank and may offer certain services that the Bank
does not provide at this time. The profitability of the Company depends upon the
Bank's ability to compete in its primary market area.
Developments in Technology. The market for financial services, including
banking services, is increasingly affected by advances in technology, including
developments in telecommunications, data processing, computers, automation,
Internet-based banking, telebanking, debit cards and so-called "smart" cards.
The ability of the Company to compete successfully in its markets may depend on
the extent to which it is able to exploit such technological changes. However,
there can be no assurance that the development of these or any other new
technologies, or the Company's success or failure in anticipating or responding
to such developments, will materially affect the Company's business, financial
condition and operating results.
14
<PAGE> 17
NATIONAL PENN BANCSHARES, INC.
The Company is a Pennsylvania chartered, registered bank holding company
headquartered in Boyertown, Pennsylvania, with a wholly-owned banking
subsidiary, National Penn Bank (the "Bank"). The Bank also operates the Chestnut
Hill National Bank and 1st Main Line Bank divisions under the single bank
charter. Investors Trust Company ("ITC") is also a wholly-owned subsidiary of
the Company.
The Company operates principally through the Bank, which is engaged in the
commercial banking business in southeastern Pennsylvania, with its major
presence in Berks County and western Montgomery County. The Company currently
operates an executive office, 49 retail branch offices (including ten
supermarket branches) and a loan production office. The Company also operates a
telephone call center through which a substantial amount of the Company's
products and services are sold. As of March 31, 1997, the Company had
consolidated total assets of $1.39 billion, total deposits of $1.03 billion, and
total shareholders' equity of $114 million.
The Company's primary operating strategy is to maintain a reputation and
market presence as a "super community bank" where consumers and business
customers can obtain sophisticated products and services generally only
available from major financial institutions, while providing the personal
attention, service and responsiveness available from a community bank. The
Company believes that this strategy results in higher margins and greater growth
than a wholesale strategy.
Accordingly, the Company provides a wide range of banking services for both
individuals and businesses. For individuals, the Company provides deposit
services which include demand, NOW, money market, certificates of deposit, and
other savings accounts. The Company also offers consumer loan programs
(including installment loans for home repairs and for the purchase of consumer
goods), home equity loans, credit card plans with Visa and MasterCard, revolving
lines of credit, residential construction loans, permanent mortgages for
single-family and multi-family houses, telephone transfer services, automatic
teller services through the MAC inter-bank automated teller system, night
depository services, safe-deposit facilities, and on-line bill-paying services.
The Company endeavors to serve the full range of consumers, including high net
worth individuals.
For businesses, the Company additionally offers short-term loans for
seasonal and working capital purposes, term loans secured by real estate and
other assets, loans for construction and expansion needs, asset-based loans,
revolving credit plans, and other commercial loans. Business customers of the
Bank generally require relatively small amounts of credit (almost never in
excess of $5 million, and often less than $1 million), but often seek customized
solutions to their financial requirements, which the Bank endeavors to provide.
Trust services are offered through ITC which manages approximately $470
million for over 1,200 individual and corporate customers. The Company, through
Compulife Investor Services, Inc., a third-party vendor, also offers a full
range of investment products, including mutual funds, annuities and discount
brokerage.
The Company maintains its principal executive offices at Reading and
Philadelphia Avenues, Boyertown, Pennsylvania 19512.
NEITHER THE PREFERRED SECURITIES NOR THE JUNIOR SUBORDINATED DEBENTURES ARE
OBLIGATIONS OF OR GUARANTEED BY ANY BANK.
15
<PAGE> 18
SELECTED CONSOLIDATED FINANCIAL DATA AND OTHER INFORMATION
Presented below is selected unaudited consolidated financial information
for the Company for the periods specified. The consolidated financial
information is not necessarily indicative of the results for any future period
and is qualified in its entirety by the detailed information available in the
Company's reports as described under "Available Information":
<TABLE>
<CAPTION>
AS OF AND FOR THE
QUARTER ENDED
AS OF AND FOR THE YEARS ENDED DECEMBER 31, MARCH 31,
---------------------------------------------------------- -----------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Interest income...................... $ 69,073 $ 71,272 $ 84,259 $ 99,020 $ 106,558 $ 25,719 $ 28,168
Interest expense..................... 26,699 23,839 28,848 43,836 46,018 11,269 12,469
-------- -------- ---------- ---------- ---------- ---------- ----------
Net interest income.................. 42,374 47,433 55,411 55,184 60,540 14,450 15,699
Provision for credit losses.......... 6,225 5,145 3,200 3,200 3,900 975 1,200
-------- -------- ---------- ---------- ---------- ---------- ----------
Net interest income after provision
for credit losses.................. 36,149 42,288 52,211 51,984 56,640 13,475 14,499
Non-interest income.................. 4,494 4,931 5,409 7,608 9,088 1,945 3,295
Non-interest expense................. 23,846 28,629 36,914 37,542 41,258 9,449 11,218
-------- -------- ---------- ---------- ---------- ---------- ----------
Income before income taxes........... 16,797 18,590 20,706 22,050 24,470 5,971 6,576
Income taxes......................... 5,484 5,782 6,057 6,668 7,548 1,856 2,042
-------- -------- ---------- ---------- ---------- ---------- ----------
Net Income......................... $ 11,313 $ 12,808 $ 14,649 $ 15,382 $ 16,922 $ 4,115 $ 4,534
======== ======== ========== ========== ========== ========== ==========
BALANCE SHEET DATA:
Total assets......................... $775,888 $933,736 $1,137,174 $1,251,378 $1,358,013 $1,279,741 $1,385,140
Total loans.......................... 603,961 737,765 830,612 939,065 1,051,080 948,131 1,072,420
Allowance for credit losses.......... 12,448 17,909 19,310 20,366 22,746 20,723 23,340
Investment securities................ 129,794 144,488 238,102 240,902 236,814 239,063 222,961
Deposits............................. 631,186 748,229 864,640 914,890 980,808 937,809 1,031,746
Securities sold under repurchase
agreements......................... 13,735 30,240 50,274 138,550 164,996 154,142 113,745
Common shareholders' equity.......... 70,700 82,222 84,871 106,615 114,721 106,811 114,453
SELECTED OPERATING RATIOS:
Return on average assets............. 1.50% 1.60% 1.41% 1.30% 1.31% 1.31% 1.33%
Return on average common equity...... 17.1% 17.4% 17.3% 16.3% 15.6% 15.2% 15.6%
Return on average realized
shareholders' equity(1)............ n/a n/a n/a 16.3% 16.1% 16.2% 16.2%
Dividend payout ratio................ 33.1% 33.1% 36.5% 40.7% 41.5% 40.6% 42.3%
SELECTED CAPITAL AND ASSET QUALITY
RATIOS:
Average Equity/Average Assets........ 8.72% 9.22% 8.12% 7.93% 8.43% 8.62% 8.55%
Non-performing loans/total
loans(2)........................... 1.46% 1.18% 1.12% 0.77% 0.83% 0.85% 0.78%
Non-performing assets/total loans and
non-performing assets(3)........... 1.92% 1.60% 1.37% 0.85% 0.86% 0.92% 0.81%
Allowance for credit losses/total
loans.............................. 2.06% 2.43% 2.32% 2.17% 2.16% 2.19% 2.18%
Allowance for credit losses/non-
performing assets(3)............... 106.64% 151.51% 169.76% 254.04% 251.59% 237.57% 270.20%
Net charge-offs/average loans........ 0.77% 0.30% 0.23% 0.24% 0.15% 0.26% 0.23%
RATIO OF EARNINGS TO FIXED CHARGES:(4)
Including interest on deposits....... 1.63 1.77 1.71 1.50 1.53 1.53 1.52
Excluding interest on deposits....... 5.67 5.68 4.27 2.92 3.01 2.88 2.94
</TABLE>
- - - - ---------------
(1) Excludes unrealized gain (loss) on securities available for sale.
(2) Non-performing loans consist entirely of non-accrual loans and exclude loans
past due 90 days or more still accruing interest. Effective January 1, 1995,
the Company adopted SFAS No. 114, "Accounting for Impairment of a Loan," as
amended by SFAS No. 118, "Accounting for Impairment of a Loan -- Income
Recognition and Disclosures." The effect upon adoption was not material to
the Company's financial position or results of operations.
(3) Non-performing assets consist of non-accrual loans and other real estate
owned and exclude loans past due 90 days or more still accruing interest.
(4) The consolidated ratio of earnings to fixed charges has been computed by
dividing income before income taxes, cumulative effect of changes in
accounting principles and fixed charges, by fixed charges. Fixed charges
represent all interest expense (ratios are presented both excluding and
including interest on deposits), amortization of notes and debentures
expense and the portion of net rental expense which is deemed to be
equivalent to interest on debt. Interest expense (other than on deposits)
includes interest on notes and debentures, federal funds purchased and
securities sold under agreements to repurchase, mortgages, commercial paper
and other funds borrowed.
16
<PAGE> 19
RECENT DEVELOPMENTS
SUMMARY OF OPERATIONS
Net income for the quarter ended March 31, 1997 was $4.5 million, 10.2%
more than the $4.1 million reported for the same period in 1996. On a per share
basis, net income was $.57 for the quarter ended March 31, 1997, versus $.51 for
the quarter ended March 31, 1996, an 11.8% increase. Annualized return on assets
and return on realized equity were 1.33% and 16.2%, respectively, for the first
quarter 1997 compared with 1.31% and 16.2% for the first quarter 1996. The
Company's performance has been and will continue to be in part influenced by the
strength of the economy and conditions in the real estate market.
Net interest income increased $1.2 million or 8.6% to $15.7 million during
the first quarter of 1997 from $14.5 million in the first quarter 1996. The
increase in interest income is a result of growth in loan outstandings and
higher rates on loans that was partially offset by growth in deposits and higher
rates on deposits and borrowings. The Company's prime rate from January 1, 1997
to March 25, 1997 was 8.25%. On March 26, 1997, the prime rate changed to 8.50%.
Interest expense during the first three months of 1997 increased $1.2 million or
10.65% compared to the prior year's three months.
The provision for credit losses is determined by periodic reviews of the
loan quality, current economic conditions, loss experience and loan growth.
Based on these factors, the provision for credit losses increased $225,000 for
the first quarter of 1997 compared to the same period in 1996. The allowance for
credit losses of $23.3 million at March 31, 1997 and $22.7 million at December
31, 1996, as a percentage of total loans, was 2.2% at both dates. The Company's
net charge-offs of $606,000 and $617,000 during the first three months of 1997
and 1996, respectively, continue to be comparable to those of the Company's
peers, as reported in the Bank Holding Company Performance Report.
Non-interest income increased $1.4 million or 69.4% during the first
quarter of 1997, as a result of increased gains on the sale of securities and
mortgages of $1.0 million, increased service charges on deposit accounts of
$171,000, increased other income of $155,000, and increased trust income of
$5,000. Non-interest expense increased $1.8 million or 18.7% during the quarter
ended March 31, 1997. Of this amount, salaries, wages and employee benefits
increased $1.4 million, other expenses increased $251,000 and premises and
equipment increased $136,000.
Income before income taxes increased by $605,000 or 10.1% compared to the
first quarter of 1996. Income taxes increased $186,000 or 10.0%, compared to the
first quarter of 1996.
FINANCIAL POSITION
Total assets increased to $1.385 billion at March 31, 1997, an increase of
$27.1 million or 2.0% over the $1.358 billion at December 31, 1996. This
increase is reflected primarily in the loan category and federal funds sold, the
result of the investment of deposits, the Company's primary source of funds.
Total cash and cash equivalents increased $17.1 million or 40.7% at March
31, 1997 when compared to December 31, 1996. This increase was primarily in
federal funds sold and cash and due from banks.
Loans increased to $1.049 billion at March 31, 1997. The increase of $20.7
million or 2.0% compared to December 31, 1996 was primarily the result of the
investment of deposits and long-term borrowings. Loans originated for immediate
resale during the first three months of the year amounted to $4.2 million.
Investments, the Company's secondary use of funds, decreased $13.9 million
or 5.8% to $223.0 million at March 31, 1997 when compared to December 31, 1996.
The decrease is due to investment
17
<PAGE> 20
sales and maturities and the amortization of mortgage-backed securities, which
was partially offered by investment purchases of $12.6 million.
As the primary source of funds, aggregate deposits of $1.032 billion at
March 31, 1997 increased $50.9 million or 5.2% compared to December 31, 1996.
The increase in deposits during the first three months of 1997 was primarily in
interest bearing deposits which increased $47.3 million while non-interest
bearing deposits increased $3.7 million. Certificates of deposit in excess of
$100,000 increased $15.0 million. In addition to deposits, earning assets are
funded to some extent through purchased funds and borrowings. These include
securities sold under repurchase agreements, federal funds purchased, short-term
borrowings and long-term debt obligations. In aggregate, these funds totaled
$221.8 million at March 31, 1997, and $248.0 million at December 31, 1996. The
decrease of $26.3 million represents a shift from short-term obligations,
primarily securities sold under repurchase agreement and federal funds purchased
to long-term obligations and federal funds sold.
Shareholders' equity decreased slightly through March 31, 1997. This
decrease was due to a decrease in the change in valuation adjustment for
securities available for sale, which represents the accounting treatment
required under Statement of Financial Accounting Standards 115, "Accounting for
Certain Investments in Debt and Equity Securities," applied to the decrease in
market value of the Company's investment portfolio. Cash dividends paid during
the first three months of 1997 increased $248,000 or 14.8% compared to the cash
dividends paid during the first three months of 1996. Earnings retained during
the first three months of 1997 were 57.7% compared to 59.4% during the first
three months of 1996. At March 31, 1997, the Company's Tier 1 leverage ratio,
Tier 1 and total risk-based capital ratios were 7.83%, 10.65%, and 11.91%,
respectively. The Company and the Bank are both classified as "well
capitalized."
CREDIT QUALITY
The Company's credit quality is reflected by the annualized ratio of net
charge-offs to total loans of .23% for the first quarter of 1997 versus .14% for
the year 1996, and the ratio of non-performing assets to total loans of 1.27% at
March 31, 1997 compared to 1.21% at December 31, 1996. Non-performing assets,
including non-accruals, loans 90 days past due, restructured loans and other
real estate owned, were $13.6 million at March 31, 1997 compared to $12.7
million at December 31, 1996. Of these amounts, non-accrual loans represented
$8.4 million and $8.7 million at March 31, 1997 and December 31, 1996,
respectively. Loans 90 days past due and still accruing interest were $4.9
million and $3.7 million at March 31, 1997 and December 31, 1996, respectively.
Other real estate owned was $231,000 and $319,000 at March 31, 1997 and December
31, 1996, respectively. The Company had no restructured loans at March 31, 1997
or December 31, 1996. The allowance for credit losses to total non-performing
assets was 171.8% and 179.2% at March 31, 1997 and December 31, 1996,
respectively. The Company has no significant exposure to energy and
agricultural-related loans.
18
<PAGE> 21
NPB CAPITAL TRUST
The Issuer Trust is a statutory business trust created under Delaware law
pursuant to the filing of a certificate of trust with the Delaware Secretary of
State on May 2, 1997. The Issuer Trust will be governed by an Amended and
Restated Trust Agreement among the Company, as Depositor, Bankers Trust
(Delaware), as Delaware Trustee, and Bankers Trust Company, as Property Trustee.
Two individuals will be selected by the holders of the Common Securities to act
as administrators with respect to the Issuer Trust (the "Administrators"). The
Company, while holder of the Common Securities, intends to select two
individuals who are employees or officers of or affiliated with the Company to
serve as the Administrators. See "Description of Preferred
Securities -- Miscellaneous." The Issuer Trust exists for the exclusive purposes
of (i) issuing and selling the Trust Securities, (ii) using the proceeds from
the sale of the Trust Securities to acquire the Junior Subordinated Debentures
and (iii) engaging in only those other activities necessary, convenient or
incidental thereto (such as registering the transfer of the Trust Securities).
Accordingly, the Junior Subordinated Debentures will be the sole assets of the
Issuer Trust, and payments under the Junior Subordinated Debentures will be the
sole source of revenue of the Issuer Trust.
All the Common Securities will initially be owned by the Company. The
Common Securities will rank pari passu, and payments will be made thereon pro
rata, with the Preferred Securities, except that upon the occurrence and during
the continuation of a Debenture Event of Default arising as a result of any
failure by the Company to pay any amounts in respect of the Junior Subordinated
Debentures when due, the rights of the holders of the Common Securities to
payment in respect of Distributions and payments upon liquidation, redemption or
otherwise will be subordinated to the rights of the holders of the Preferred
Securities. See "Description of Preferred Securities -- Subordination of Common
Securities." The Company will acquire Common Securities in an aggregate
liquidation amount equal to 3% of the total capital of the Issuer Trust. The
Issuer Trust has a term of 31 years, but may terminate earlier as provided in
the Trust Agreement. The address of the Delaware Trustee is Bankers Trust
(Delaware), 1001 Jefferson Street, Wilmington, Delaware 19801, telephone number
(302) 576-3301. The address of the Property Trustee, the Guarantee Trustee and
the Debenture Trustee is Bankers Trust Company, Four Albany Street, 4th Floor,
New York, New York 10006, telephone number (212) 250-2500.
USE OF PROCEEDS
All the proceeds to the Issuer Trust from the sale of the Preferred
Securities will be invested by the Issuer Trust in the Junior Subordinated
Debentures. The proceeds from the sale of the Preferred Securities are expected
to qualify as Tier 1 or core capital with respect to the Company under the
risk-based capital guidelines established by the Federal Reserve, however,
capital received from the proceeds of the sale of the Preferred Securities
cannot constitute more than 25% of the total Tier 1 capital of the Company (the
"25% Capital Limitation"). Amounts in excess of the 25% Capital Limitation will
constitute Tier 2 or supplementary capital of the Company. The net proceeds to
be received by the Company from the sale of the Junior Subordinated Debentures
will be used for general corporate purposes, which may include the repayment of
indebtedness of the Company or the Bank, investments in or extensions of credit
to its subsidiaries, the financing of possible acquisitions, and the repurchase
of shares of the Company's outstanding common stock. Pending such use, the net
proceeds may be temporarily invested in short-term obligations. The precise
amounts and timing of the application of proceeds will depend upon the funding
requirements of the Company and its subsidiaries and the availability of other
funds. In view of anticipated funding requirements, the Company may from time to
time engage in additional financings of a character and in amounts to be
determined.
19
<PAGE> 22
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
the Company as of March 31, 1997 and as adjusted to give effect to the
consummation of the offering of the Preferred Securities. The following data
should be read in conjunction with the Company's reports filed with the
Commission under the Exchange Act. See "Available Information":
<TABLE>
<CAPTION>
MARCH 31, 1997
------------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS,
EXCEPT RATIOS)
<S> <C> <C>
Long-term debt:..................................................... $ -0- $ -0-
-------- --------
-0- -0-
-------- --------
Guaranteed preferred beneficial interests in Company's Junior
Subordinated Debentures(1)........................................ 35,000(3)
--------
35,000(3)
--------
Shareholders' Equity:
Preferred stock, no stated par value; 1,000,000 authorized, none
issued......................................................... -0- -0-
Common stock, $2.50 par value; 20,000,000 authorized, 7,995,590
shares issued net of 38,262 shares in Treasury................. 20,085 20,085
Additional paid-in-capital........................................ 83,718 83,718
Retained earnings................................................. 9,975 9,975
Net unrealized gain on investment securities available-for-sale... 1,812 1,812
Treasury stock at cost.................................... (1,137) (1,137)
-------- --------
Total stockholder's equity................................ 114,453 114,453
-------- --------
Total Capitalization...................................... $114,453 $ 149,453
======== ========
Risk-based capital ratios:
Tier 1 capital to risk-weighted assets(2)......................... 10.65% 13.68%
Regulatory minimum................................................ 4.00 4.00
Total capital to risk-weighted assets(2).......................... 11.91 14.94
Regulatory minimum................................................ 8.00 8.00
Leverage ratio.................................................... 7.83 10.42
Regulatory minimum................................................ 3.00 3.00
</TABLE>
- - - - ---------------
(1) As described herein, the sole assets of the Trust will be $36,082,475
principal amount of Junior Subordinated Debentures issued by the Company to
the Trust (not including the $5,412,375 aggregate principal amount of Junior
Subordinated Debentures to be purchased in the event the Underwriter
exercises its over-allotment option). The Junior Subordinated Debentures
will bear interest at a fixed rate of % and will mature on
, 2027, subject to the Maturity Adjustment. The Company will own
all of the Common Securities of the Trust.
(2) Assumes net proceeds of the offering of the Preferred Securities are
invested in assets with a 100% risk weighting under the risk-based capital
rules of the Federal Reserve.
(3) Does not reflect the up to $5,250,000 aggregate liquidation amount of the
Preferred Securities subject to the Underwriter's over-allotment option. See
"Underwriting."
20
<PAGE> 23
ACCOUNTING TREATMENT
For financial reporting purposes, the Issuer Trust will be treated as a
subsidiary of the Company and, accordingly, the accounts of the Issuer Trust
will be included in the consolidated financial statements of the Company. The
Preferred Securities will be included in the consolidated balance sheets of the
Company and appropriate disclosures about the Preferred Securities, the
Guarantee and the Junior Subordinated Debentures will be included in the notes
to the consolidated financial statements of the Company. For financial reporting
purposes, Distributions on the Preferred Securities will be recorded in the
consolidated statements of income of the Company.
DESCRIPTION OF PREFERRED SECURITIES
Pursuant to the terms of the Trust Agreement for the Issuer Trust, the
Issuer Trustees on behalf of the Issuer Trust will issue the Preferred
Securities and the Common Securities. The Preferred Securities will represent
preferred undivided beneficial interests in the assets of the Issuer Trust and
the holders thereof will be entitled to a preference in certain circumstances
with respect to Distributions and amounts payable on redemption or liquidation
over the Common Securities, as well as other benefits as described in the Trust
Agreement. This summary of certain provisions of the Preferred Securities and
the Trust Agreement does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all the provisions of the Trust
Agreement, including the definitions therein of certain terms. Wherever
particular defined terms of the Trust Agreement are referred to herein, such
defined terms are incorporated herein by reference. A copy of the form of the
Trust Agreement is available upon request from the Issuer Trustees.
GENERAL
The Preferred Securities will be limited to $35,000,000 aggregate
Liquidation Amount outstanding (which amount may be increased by up to
$5,250,000 aggregate liquidation amount of Preferred Securities for exercise of
the Underwriter's over-allotment option). See "Underwriting." The Preferred
Securities will rank pari passu, and payments will be made thereon pro rata,
with the Common Securities except as described under " -- Subordination of
Common Securities." The Junior Subordinated Debentures will be registered in the
name of the Issuer Trust and held by the Property Trustee in trust for the
benefit of the holders of the Preferred Securities and Common Securities. The
Guarantee will be a guarantee on a subordinated basis with respect to the
Preferred Securities but will not guarantee payment of Distributions or amounts
payable on redemption or liquidation of such Preferred Securities when the
Issuer Trust does not have funds on hand available to make such payments. See
"Description of Guarantee."
DISTRIBUTIONS
The Preferred Securities represent preferred undivided beneficial interests
in the assets of the Issuer Trust, and Distributions on each Preferred Security
will be payable at the annual rate of % of the stated Liquidation Amount of
$25, payable quarterly in arrears on March 31, June 30, September 30, and
December 31 of each year (each a "Distribution Date"), to the holders of the
Preferred Securities at the close of business on March 15, June 15, September
15, or December 15 (whether or not a Business Day (as defined below)) next
preceding the relevant Distribution Date. Distributions on the Preferred
Securities will be cumulative. Distributions will accumulate from
, 1997. The first Distribution Date for the Preferred
Securities will be , 1997. The amount of Distributions
payable for any period less than a full Distribution period will be computed on
the basis of a 360-day year of twelve 30-day months and the actual days elapsed
in a partial month in such period. Distributions payable for each full
Distribution period will be computed by dividing the rate per annum by four. If
any date on which Distributions are payable on the Preferred Securities is not a
Business Day, then payment of the Distributions payable on such date will be
made on the next succeeding day that is a Business Day (without any
21
<PAGE> 24
additional Distributions or other payment in respect of any such delay), with
the same force and effect as if made on the date such payment was originally
payable.
So long as no Debenture Event of Default has occurred and is continuing,
the Company has the right under the Junior Subordinated Indenture to defer the
payment of interest on the Junior Subordinated Debentures at any time or from
time to time for a period not exceeding 20 consecutive quarterly periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the Junior Subordinated Debentures. As a
consequence of any such deferral, quarterly Distributions on the Preferred
Securities by the Issuer Trust will be deferred during any such Extension
Period. Distributions to which holders of the Preferred Securities are entitled
will accumulate additional Distributions thereon at the rate of % per
annum, compounded quarterly from the relevant payment date for such
Distributions, computed on the basis of a 360-day year of twelve 30-day months
and the actual days elapsed in a partial month in such period. Additional
Distributions payable for each full Distribution period will be computed by
dividing the rate per annum by four. The term "Distributions" as used herein
shall include any such additional Distributions. During any such Extension
Period, the Company may not (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire or make a liquidation payment with respect to,
any of the Company's capital stock or (ii) make any payment of principal of or
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank pari passu in all respects with or junior in
interest to the Junior Subordinated Debentures (other than (a) repurchases,
redemptions or other acquisitions of shares of capital stock of the Company in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of any one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
shareholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable Extension Period, (b) as a result of an exchange or conversion
of any class or series of the Company's capital stock (or any capital stock of a
subsidiary of the Company) for any class or series of the Company's capital
stock or of any class or series of the Company's indebtedness for any class or
series of the Company's capital stock, (c) the purchase of fractional interests
in shares of the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
(d) any declaration of a dividend in connection with any stockholder's rights
plan, or the issuance of rights, stock or other property under any stockholder's
rights plan, or the redemption or repurchase of rights pursuant thereto, or (e)
any dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock). Prior to the termination of any
such Extension Period, the Company may further defer the payment of interest,
provided that no Extension period may exceed 20 consecutive quarterly periods or
extend beyond the Stated Maturity of the Junior Subordinated Debentures. Upon
the termination of any such Extension Period and the payment of all amounts then
due, the Company may elect to begin a new Extension Period. No interest shall be
due and payable during an Extension Period, except at the end thereof. The
Company must give the Issuer Trustees notice of its election of such Extension
Period at least one Business Day prior to the earlier of (i) the date the
Distributions on the Preferred Securities would have been payable but for the
election to begin such Extension Period and (ii) the date the Property Trustee
is required to give notice to holders of the Preferred Securities of the record
date or the date such Distributions are payable, but in any event not less than
one Business Day prior to such record date. The Property Trustee will give
notice of the Company's election to begin a new Extension Period to the holders
of the Preferred Securities. Subject to the foregoing, there is no limitation on
the number of times that the Company may elect to begin an Extension Period. See
"Description of Junior Subordinated Debentures -- Option To Extend Interest
Payment Period" and "Certain Federal Income Tax Consequences -- Interest Income
and Original Issue Discount."
22
<PAGE> 25
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures.
The revenue of the Issuer Trust available for distribution to holders of
the Preferred Securities will be limited to payments under the Junior
Subordinated Debentures in which the Issuer Trust will invest the proceeds from
the issuance and sale of the Preferred Securities. See "Description of Junior
Subordinated Debentures." If the Company does not make payments on the Junior
Subordinated Debentures, the Issuer Trust may not have funds available to pay
Distributions or other amounts payable on the Preferred Securities. The payment
of Distributions and other amounts payable on the Preferred Securities (if and
to the extent the Issuer Trust has funds legally available for and cash
sufficient to make such payments) is guaranteed by the Company on a limited
basis as set forth herein under "Description of Guarantee."
REDEMPTION
Upon the repayment or redemption, in whole or in part, of the Junior
Subordinated Debentures, whether at maturity or upon earlier redemption as
provided in the Junior Subordinated Indenture, the proceeds from such repayment
or redemption shall be applied by the Property Trustee to redeem a Like Amount
(as defined below) of the Preferred Securities, upon not less than 30 nor more
than 60 days' notice, at a redemption price (the "Redemption Price") equal to
the aggregate Liquidation Amount of such Preferred Securities plus accumulated
but unpaid Distributions thereon to the date of redemption (the "Redemption
Date") and the related amount of the premium, if any, paid by the Company upon
the concurrent redemption of such Junior Subordinated Debentures. See
"Description of Junior Subordinated Debentures -- Redemption." If less than all
the Junior Subordinated Debentures are to be repaid or redeemed on a Redemption
Date, then the proceeds from such repayment or redemption shall be allocated to
the redemption pro rata of the Preferred Securities and the Common Securities.
The Company has the right to redeem the Junior Subordinated Debentures (i)
on or after , 2002, in whole at any time or in part from time to
time, or (ii) in whole, but not in part, at any time within 90 days following
the occurrence and during the continuation of a Tax Event, Investment Company
Event or Capital Treatment Event (each as defined below), in each case subject
to possible regulatory approval. See " -- Liquidation Distribution Upon
Dissolution." A redemption of the Junior Subordinated Debentures would cause a
mandatory redemption of a Like Amount of the Preferred Securities and Common
Securities at the Redemption Price.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a day
on which banking institutions in the City of New York or the Borough of
Boyertown, Pennsylvania are authorized or required by law or executive order to
remain closed, or (c) a day on which the Property Trustee's Corporate Trust
Office or the Corporate Trust Office of the Debenture Trustee is closed for
business.
"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount (as defined below) equal to that
portion of the principal amount of Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with the Junior Subordinated Indenture,
allocated to the Common Securities and to the Preferred Securities based upon
the relative Liquidation Amounts of such classes and (ii) with respect to a
distribution of Junior Subordinated Debentures to holders of Trust Securities in
connection with a dissolution or liquidation of the Issuer Trust, Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Trust Securities of the holder to whom such Junior Subordinated
Debentures are distributed.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
"Tax Event" means the receipt by the Issuer Trust of an opinion of counsel
to the Company experienced in such matters to the effect that, as a result of
any amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United
23
<PAGE> 26
States or any political subdivision or taxing authority thereof or therein, or
as a result of any official or administrative pronouncement or action or
judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or which pronouncement or decision is announced
on or after the date of issuance of the Preferred Securities, there is more than
an insubstantial risk that (i) the Issuer Trust is, or will be within 90 days of
the delivery of such opinion, subject to United States federal income tax with
respect to income received or accrued on the Junior Subordinated Debentures,
(ii) interest payable by the Company on the Junior Subordinated Debentures is
not, or within 90 days of the delivery of such opinion, will not be, deductible
by the Company, in whole or in part, for United States federal income tax
purposes or (iii) the Issuer Trust is, or will be within 90 days of the delivery
of such opinion, subject to more than a de minimis amount of other taxes, duties
or other governmental charges.
"Investment Company Event" means the receipt by the Issuer Trust of an
opinion of counsel to the Company experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or a
written change (including any announced prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more than an insubstantial risk that
the Issuer Trust is or will be considered an "investment company" that is
required to be registered under the Investment Company Act, which change or
prospective change becomes effective or would become effective, as the case may
be, on or after the date of the issuance of the Preferred Securities.
"Capital Treatment Event" means the reasonable determination by the Company
that, as a result of the occurrence of any amendment to, or change (including
any announced prospective change) in, the laws (or any rules or regulations
thereunder) of the United States or any political subdivision thereof or
therein, or as a result of any official or administrative pronouncement or
action or judicial decision interpreting or applying such laws or regulations,
which amendment or change is effective or such pronouncement, action or decision
is announced on or after the date of issuance of the Preferred Securities, there
is more than an insubstantial risk that the Company will not be entitled to
treat an amount equal to the Liquidation Amount of the Preferred Securities as
"Tier 1 Capital" (or the then equivalent thereof), except as otherwise
restricted under the 25% Capital Limitation, for purposes of the risk-based
capital adequacy guidelines of the Federal Reserve, as then in effect and
applicable to the Company.
PAYMENT OF ADDITIONAL SUMS
If a Tax Event described in clause (i) or (iii) of the definition of Tax
Event above has occurred and is continuing and the Issuer Trust is the holder of
all the Junior Subordinated Debentures, the Company will pay Additional Sums (as
defined below), if any, on the Junior Subordinated Debentures.
"Additional Sums" means the additional amounts as may be necessary in order
that the amount of Distributions then due and payable by the Issuer Trust on the
outstanding Preferred Securities and Common Securities of the Issuer Trust will
not be reduced as a result of any additional taxes, duties and other
governmental charges to which the Issuer Trust has become subject as a result of
a Tax Event.
REDEMPTION PROCEDURES
Preferred Securities redeemed on each Redemption Date shall be redeemed at
the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Junior Subordinated Debentures. Redemptions of the Preferred
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Issuer Trust has funds on hand
available for the payment of such Redemption Price. See also " -- Subordination
of Common Securities."
24
<PAGE> 27
If the Issuer Trust gives a notice of redemption in respect of the
Preferred Securities, then, by 12:00 noon, New York City time, on the Redemption
Date, to the extent funds are available, in the case of Preferred Securities
held in book-entry form, the Property Trustee will deposit irrevocably with DTC
funds sufficient to pay the applicable Redemption Price and will give DTC
irrevocable instructions and authority to pay the Redemption Price to the
holders of the Preferred Securities. With respect to Preferred Securities not
held in book-entry form, the Property Trustee, to the extent funds are
available, will irrevocably deposit with the paying agent for the Preferred
Securities funds sufficient to pay the applicable Redemption Price and will give
such paying agent irrevocable instructions and authority to pay the Redemption
Price to the holders thereof upon surrender of their certificates evidencing the
Preferred Securities. Notwithstanding the foregoing, Distributions payable on or
prior to the Redemption Date for any Preferred Securities called for redemption
shall be payable to the holders of the Preferred Securities on the relevant
record dates for the related Distribution Dates. If notice of redemption shall
have been given and funds deposited as required, then upon the date of such
deposit all rights of the holders of such Preferred Securities so called for
redemption will cease, except the right of the holders of such Preferred
Securities to receive the Redemption Price, but without interest on such
Redemption Price, and such Preferred Securities will cease to be outstanding. If
any date fixed for redemption of Preferred Securities is not a Business Day,
then payment of the Redemption Price payable on such date will be made on the
next succeeding day which is a Business Day (without any interest or other
payment in respect of any such delay), except that, if such Business Day falls
in the next calendar year, such payment will be made on the immediately
preceding Business Day. In the event that payment of the Redemption Price in
respect of Preferred Securities called for redemption is improperly withheld or
refused and not paid either by the Issuer Trust or by the Company pursuant to
the Guarantee as described under "Description of Guarantee," Distributions on
such Preferred Securities will continue to accumulate at the then applicable
rate, from the Redemption Date originally established by the Issuer Trust for
such Preferred Securities to the date such Redemption Price is actually paid, in
which case the actual payment date will be the date fixed for redemption for
purposes of calculating the Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities laws), the Company or its affiliates may at any time and from
time to time purchase outstanding Preferred Securities by tender, in the open
market or by private agreement, and may resell such securities.
If less than all the Preferred Securities and Common Securities are to be
redeemed on a Redemption Date, then the aggregate Liquidation Amount of such
Preferred Securities and Common Securities to be redeemed shall be allocated pro
rata to the Preferred Securities and the Common Securities based upon the
relative Liquidation Amounts of such classes. The particular Preferred
Securities to be redeemed shall be selected on a pro rata basis not more than 60
days prior to the Redemption Date by the Property Trustee from the outstanding
Preferred Securities not previously called for redemption, or if the Preferred
Securities are then held in the form of a Global Preferred Security (as defined
below), in accordance with DTC's customary procedures. The Property Trustee
shall promptly notify the securities registrar for the Trust Securities in
writing of the Preferred Securities selected for redemption and, in the case of
any Preferred Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed. For all purposes of the Trust Agreement, unless the
context otherwise requires, all provisions relating to the redemption of
Preferred Securities shall relate, in the case of any Preferred Securities
redeemed or to be redeemed only in part, to the portion of the aggregate
Liquidation Amount of Preferred Securities which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each registered holder of Preferred
Securities to be redeemed at its address appearing on the securities register
for the Trust Securities. Unless the Company defaults in payment of the
Redemption Price on the Junior Subordinated Debentures, on and after the
Redemption Date interest will cease to accrue on the Junior Subordinated
Debentures or portions thereof (and, unless
25
<PAGE> 28
payment of the Redemption Price in respect of the Preferred Securities is
withheld or refused and not paid either by the Issuer Trust or the Company
pursuant to the Guarantee, Distributions will cease to accumulate on the
Preferred Securities or portions thereof) called for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, and the
Liquidation Distribution in respect of, the Preferred Securities and Common
Securities, as applicable, shall be made pro rata based on the Liquidation
Amount of such Preferred Securities and Common Securities. However, if on any
Distribution Date or Redemption Date a Debenture Event of Default has occurred
and is continuing as a result of any failure by the Company to pay any amounts
in respect of the Junior Subordinated Debentures when due, no payment of any
Distribution on, or Redemption Price of, or Liquidation Distribution in respect
of, any of the Common Securities, and no other payment on account of the
redemption, liquidation or other acquisition of such Common Securities, shall be
made unless payment in full in cash of all accumulated and unpaid Distributions
on all the outstanding Preferred Securities for all Distribution periods
terminating on or prior thereto, or in the case of payment of the Redemption
Price the full amount of such Redemption Price on all the outstanding Preferred
Securities then called for redemption, shall have been made or provided for, and
all funds available to the Property Trustee shall first be applied to the
payment in full in cash of all Distributions on, or Redemption Price of, the
Preferred Securities then due and payable.
In the case of any Event of Default (as defined below) resulting from a
Debenture Event of Default, the holders of the Common Securities will be deemed
to have waived any right to act with respect to any such Event of Default under
the Trust Agreement until the effects of all such Events of Default with respect
to such Preferred Securities have been cured, waived or otherwise eliminated.
See "-- Events of Default; Notice" and "Description of Junior Subordinated
Debentures -- Debenture Events of Default." Until all such Events of Default
under the Trust Agreement with respect to the Preferred Securities have been so
cured, waived or otherwise eliminated, the Property Trustee will act solely on
behalf of the holders of the Preferred Securities and not on behalf of the
holders of the Common Securities, and only the holders of the Preferred
Securities will have the right to direct the Property Trustee to act on their
behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
The amount payable on the Preferred Securities in the event of any
liquidation of the Issuer Trust is $25 per Preferred Security plus accumulated
and unpaid Distributions, subject to certain exceptions, which may be in the
form of a distribution of such amount in Junior Subordinated Debentures.
The holders of all the outstanding Common Securities have the right at any
time to dissolve the Issuer Trust and, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, cause the Junior
Subordinated Debentures to be distributed to the holders of the Preferred
Securities and Common Securities in liquidation of the Issuer Trust.
The Federal Reserve's risk-based capital guidelines currently provide that
redemptions of permanent equity or other capital instruments before stated
maturity could have a significant impact on a bank holding company's overall
capital structure and that any organization considering such a redemption should
consult with the Federal Reserve before redeeming any equity or capital
instrument prior to maturity if such redemption could have a material effect on
the level or composition of the organization's capital base (unless the equity
or capital instrument were redeemed with the proceeds of, or replaced by, a like
amount of a similar or higher quality capital instrument and the Federal Reserve
considers the organization's capital position to be fully adequate after the
redemption).
In the event the Company, while a holder of Common Securities, dissolves
the Issuer Trust prior to the stated maturity of the Preferred Securities and
the dissolution of the Issuer Trust is deemed to
26
<PAGE> 29
constitute the redemption of capital instruments by the Federal Reserve under
its risk-based capital guidelines or policies, the dissolution of the Issuer
Trust by the Company may be subject to the prior approval of the Federal
Reserve. Moreover, any changes in applicable law or changes in the Federal
Reserve's risk-based capital guidelines or policies could impose a requirement
on the Company that it obtain the prior approval of the Federal Reserve to
dissolve the Issuer Trust.
Pursuant to the Trust Agreement, the Issuer Trust will automatically
dissolve upon expiration of its term or, if earlier, will dissolve on the first
to occur of: (i) certain events of bankruptcy, dissolution or liquidation of the
Company or the holder of the Common Securities, (ii) the distribution of a Like
Amount of the Junior Subordinated Debentures to the holders of the Trust
Securities, if the holders of Common Securities have given written direction to
the Property Trustee to dissolve the Issuer Trust (which direction, subject to
the foregoing restrictions, is optional and wholly within the discretion of the
holders of Common Securities), (iii) the repayment of all the Preferred
Securities in connection with the redemption of all the Trust Securities as
described under "-- Redemption" and (iv) the entry of an order for the
dissolution of the Issuer Trust by a court of competent jurisdiction.
If dissolution of the Issuer Trust occurs as described in clause (i), (ii)
or (iv) above, the Issuer Trust will be liquidated by the Property Trustee as
expeditiously as the Property Trustee determines to be possible by distributing,
after satisfaction of liabilities to creditors of the Issuer Trust as provided
by applicable law, to the holders of such Trust Securities a Like Amount of the
Junior Subordinated Debentures, unless such distribution is not practical, in
which event such holders will be entitled to receive out of the assets of the
Issuer Trust available for distribution to holders, after satisfaction of
liabilities to creditors of the Issuer Trust as provided by applicable law, an
amount equal to, in the case of holders of Preferred Securities, the aggregate
of the Liquidation Amount plus accumulated and unpaid Distributions thereon to
the date of payment (such amount being the "Liquidation Distribution"). If such
Liquidation Distribution can be paid only in part because the Issuer Trust has
insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by the Issuer Trust on its
Preferred Securities shall be paid on a pro rata basis. The holders of the
Common Securities will be entitled to receive distributions upon any such
liquidation pro rata with the holders of the Preferred Securities, except that
if a Debenture Event of Default has occurred and is continuing as a result of
any failure by the Company to pay any amounts in respect of the Junior
Subordinated Debentures when due, the Preferred Securities shall have a priority
over the Common Securities. See "-- Subordination of Common Securities."
After the liquidation date fixed for any distribution of Junior
Subordinated Debentures (i) the Preferred Securities will no longer be deemed to
be outstanding, (ii) DTC or its nominee, as the registered holder of Preferred
Securities, will receive a registered global certificate or certificates
representing the Junior Subordinated Debentures to be delivered upon such
distribution with respect to Preferred Securities held by DTC or its nominee and
(iii) any certificates representing the Preferred Securities not held by DTC or
its nominee will be deemed to represent the Junior Subordinated Debentures
having a principal amount equal to the stated Liquidation Amount of the
Preferred Securities and bearing accrued and unpaid interest in an amount equal
to the accumulated and unpaid Distributions on the Preferred Securities until
such certificates are presented to the security registrar for the Trust
Securities for transfer or reissuance.
If the Company does not redeem the Junior Subordinated Debentures prior to
maturity and the Issuer Trust is not liquidated and the Junior Subordinated
Debentures are not distributed to holders of the Preferred Securities, the
Preferred Securities will remain outstanding until the repayment of the Junior
Subordinated Debentures and the distribution of the Liquidation Distribution to
the holders of the Preferred Securities.
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Preferred Securities if a dissolution and liquidation of the Issuer
Trust were to occur. Accordingly, the Preferred Securities that an
27
<PAGE> 30
investor may purchase, or the Junior Subordinated Debentures that the investor
may receive on dissolution and liquidation of the Issuer Trust, may trade at a
discount to the price that the investor paid to purchase the Preferred
Securities offered hereby.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under the
Trust Agreement (an "Event of Default") with respect to the Preferred Securities
(whatever the reason for such Event of Default and whether it is voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court or any order, rule or regulation of any administrative or
governmental body):
(i) the occurrence of a Debenture Event of Default (see "Description
of Junior Subordinated Debentures -- Debenture Events of Default"); or
(ii) default by the Issuer Trust in the payment of any Distribution
when it becomes due and payable, and continuation of such default for a
period of 30 days; or
(iii) default by the Issuer Trust in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Issuer Trustees in the Trust Agreement
(other than a covenant or warranty a default in the performance of which or
the breach of which is dealt with in clause (ii) or (iii) above), and
continuation of such default or breach for a period of 60 days after there
has been given, by registered or certified mail, to the Issuer Trustees and
the Company by the holders of at least 25% in aggregate Liquidation Amount
of the outstanding Preferred Securities, a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee if a successor Property Trustee has not
been appointed within 90 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee will transmit
notice of such Event of Default to the holders of Trust Securities and the
Administrators, unless such Event of Default has been cured or waived. The
Company, as Depositor, and the Administrators are required to file annually with
the Property Trustee a certificate as to whether or not they are in compliance
with all the conditions and covenants applicable to them under the Trust
Agreement.
If a Debenture Event of Default has occurred and is continuing as a result
of any failure by the Company to pay any amounts in respect of the Junior
Subordinated Debentures when due, the Preferred Securities will have a
preference over the Common Securities with respect to payments of any amounts in
respect of the Preferred Securities as described above. See "-- Subordination of
Common Securities," "-- Liquidation Distribution Upon Dissolution" and
"Description of Junior Subordinated Debentures -- Debenture Events of Default."
REMOVAL OF ISSUER TRUSTEES; APPOINTMENT OF SUCCESSORS
The holders of at least a majority in aggregate Liquidation Amount of the
outstanding Preferred Securities may remove an Issuer Trustee for cause or, if a
Debenture Event of Default has occurred and is continuing, with or without
cause. If an Issuer Trustee is removed by the holders of the outstanding
Preferred Securities, the successor may be appointed by the holders of at least
25% in Liquidation Amount of Preferred Securities. If an Issuer Trustee resigns,
such Trustee will appoint its successor. If an Issuer Trustee fails to appoint a
successor, the holders of at least 25% in Liquidation Amount of the outstanding
Preferred Securities may appoint a successor. If a successor has not been
appointed by the holders, any holder of Preferred Securities or Common
Securities or the other
28
<PAGE> 31
Issuer Trustee may petition a court in the State of Delaware to appoint a
successor. Any Delaware Trustee must meet the applicable requirements of
Delaware law. Any Property Trustee must be a national or state-chartered bank,
and at the time of appointment have securities rated in one of the three highest
rating categories by a nationally recognized statistical rating organization and
have capital and surplus of at least $50,000,000. No resignation or removal of
an Issuer Trustee and no appointment of a successor trustee shall be effective
until the acceptance of appointment by the successor trustee in accordance with
the provisions of the Trust Agreement.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any entity into which the Property Trustee or the Delaware Trustee may be
merged or converted or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which such Issuer
Trustee is a party, or any entity succeeding to all or substantially all the
corporate trust business of such Issuer Trustee, will be the successor of such
Issuer Trustee under the Trust Agreement, provided such entity is otherwise
qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE ISSUER TRUST
The Issuer Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any entity, except as described below or as
otherwise set forth in the Trust Agreement. The Issuer Trust may, at the request
of the holders of the Common Securities and with the consent of the holders of
at least a majority in aggregate Liquidation Amount of the outstanding Preferred
Securities, merge with or into, consolidate, amalgamate, or be replaced by or
convey, transfer or lease its properties and assets substantially as an entirety
to a trust organized as such under the laws of any State, so long as (i) such
successor entity either (a) expressly assumes all the obligations of the Issuer
Trust with respect to the Preferred Securities or (b) substitutes for the
Preferred Securities other securities having substantially the same terms as the
Preferred Securities (the "Successor Securities") so long as the Successor
Securities have the same priority as the Preferred Securities with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii) a
trustee of such successor entity, possessing the same powers and duties as the
Property Trustee, is appointed to hold the Junior Subordinated Debentures, (iii)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization, if then rated, (iv) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the Preferred Securities (including
any Successor Securities) in any material respect, (v) such successor entity has
a purpose substantially identical to that of the Issuer Trust, (vi) prior to
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease, the Issuer Trust has received an opinion from independent counsel
experienced in such matters to the effect that (a) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Preferred
Securities (including any Successor Securities) in any material respect and (b)
following such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, neither the Issuer Trust nor such successor entity will be
required to register as an investment company under the Investment Company Act,
and (vii) the Company or any permitted successor or assignee owns all the common
securities of such successor entity and guarantees the obligations of such
successor entity under the Successor Securities at least to the extent provided
by the Guarantee. Notwithstanding the foregoing, the Issuer Trust may not,
except with the consent of holders of 100% in aggregate Liquidation Amount of
the Preferred Securities, consolidate, amalgamate, merge with or into, or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to, any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause
29
<PAGE> 32
the Issuer Trust or the successor entity to be taxable as a corporation for
United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT
Except as provided below and under "-- Removal of Issuer Trustees;
Appointment of Successors" and "Description of Guarantee -- Amendments and
Assignment" and as otherwise required by law and the Trust Agreement, the
holders of the Preferred Securities will have no voting rights.
The Trust Agreement may be amended from time to time by the holders of a
majority of the Common Securities and the Property Trustee, without the consent
of the holders of the Preferred Securities, (i) to cure any ambiguity, correct
or supplement any provisions in the Trust Agreement that may be inconsistent
with any other provision, or to make any other provisions with respect to
matters or questions arising under the Trust Agreement, provided that any such
amendment does not adversely affect in any material respect the interests of any
holder of Trust Securities, or (ii) to modify, eliminate or add to any
provisions of the Trust Agreement to such extent as may be necessary to ensure
that the Issuer Trust will not be taxable as a corporation for United States
federal income tax purposes at any time that any Trust Securities are
outstanding or to ensure that the Issuer Trust will not be required to register
as an "investment company" under the Investment Company Act, and any amendments
of the Trust Agreement will become effective when notice of such amendment is
given to the holders of Trust Securities. The Trust Agreement may be amended by
the holders of a majority of the Common Securities and the Property Trustee with
(i) the consent of holders representing not less than a majority in aggregate
Liquidation Amount of the outstanding Preferred Securities and (ii) receipt by
the Issuer Trustees of an opinion of counsel to the effect that such amendment
or the exercise of any power granted to the Issuer Trustees in accordance with
such amendment will not affect the Issuer Trust's not being taxable as a
corporation for United States federal income tax purposes or the Issuer Trust's
exemption from status as an "investment company" under the Investment Company
Act, except that, without the consent of each holder of Trust Securities
affected thereby, the Trust Agreement may not be amended to (i) change the
amount or timing of any Distribution on the Trust Securities or otherwise
adversely affect the amount of any Distribution required to be made in respect
of the Trust Securities as of a specified date or (ii) restrict the right of a
holder of Trust Securities to institute suit for the enforcement of any such
payment on or after such date.
So long as any Junior Subordinated Debentures are held by the Issuer Trust,
the Property Trustee will not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
execute any trust or power conferred on the Property Trustee with respect to the
Junior Subordinated Debentures, (ii) waive any past default that is waivable
under Section 5.13 of the Junior Subordinated Indenture, (iii) exercise any
right to rescind or annul a declaration that the Junior Subordinated Debentures
shall be due and payable or (iv) consent to any amendment, modification or
termination of the Junior Subordinated Indenture or the Junior Subordinated
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the holders of at least a majority in aggregate
Liquidation Amount of the outstanding Preferred Securities, except that, if a
consent under the Junior Subordinated Indenture would require the consent of
each holder of Junior Subordinated Debentures affected thereby, no such consent
will be given by the Property Trustee without the prior consent of each holder
of the Preferred Securities. The Property Trustee may not revoke any action
previously authorized or approved by a vote of the holders of the Preferred
Securities except by subsequent vote of the holders of the Preferred Securities.
The Property Trustee will notify each holder of Preferred Securities of any
notice of default with respect to the Junior Subordinated Debentures. In
addition to obtaining the foregoing approvals of the holders of the Preferred
Securities, before taking any of the foregoing actions, the Property Trustee
will obtain an opinion of counsel experienced in such matters to the effect that
the Issuer Trust will not be taxable as a corporation for United States federal
income tax purposes on account of such action.
30
<PAGE> 33
Any required approval of holders of Preferred Securities may be given at a
meeting of holders of Preferred Securities convened for such purpose or pursuant
to written consent. The Property Trustee will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be given
to each registered holder of Preferred Securities in the manner set forth in the
Trust Agreement.
No vote or consent of the holders of Preferred Securities will be required
to redeem and cancel Preferred Securities in accordance with the Trust
Agreement.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned by the Company, the Issuer Trustees or any affiliate
of the Company or any Issuer Trustees, will, for purposes of such vote or
consent, be treated as if they were not outstanding.
EXPENSES AND TAXES
In the Indenture, the Company, as borrower, has agreed to pay all debts and
other obligations (other than with respect to the Preferred Securities) and all
costs and expenses of the Issuer Trust (including costs and expenses relating to
the organization of the Issuer Trust, the fees and expenses of the Trustees and
the costs and expenses relating to the operation of the Issuer Trust) and to pay
any and all taxes and all costs and expenses with respect thereto (other than
United States withholding taxes) to which the Issuer Trust might become subject.
The foregoing obligations of the Company under the Indenture are for the benefit
of, and shall be enforceable by, any person to whom any such debts, obligations,
costs, expenses and taxes are owed (a "Creditor") whether or not such Creditor
has received notice thereof. Any such Creditor may enforce such obligations of
the Company directly against the Company, and the Company has irrevocably waived
any right or remedy to require that any such Creditor take any action against
the Issuer Trust or any other person before proceeding against the Company. The
Company has also agreed in the Indenture to execute such additional agreements
as may be necessary or desirable to give full effect to the foregoing.
BOOK ENTRY, DELIVERY AND FORM
The Preferred Securities will be issued in the form of one or more fully
registered global securities which will be deposited with, or on behalf of, DTC
and registered in the name of DTC's nominee. Unless and until it is exchangeable
in whole or in part for the Preferred Securities in definitive form, a global
security may not be transferred except as a whole by DTC to a nominee of DTC or
by a nominee of DTC to DTC or another nominee of DTC or by DTC or any such
nominee to a successor of such Depository or a nominee of such successor.
Ownership of beneficial interests in a global security will be limited to
persons that have accounts with DTC or its nominee ("Participants") or persons
that may hold interests through Participants. The Company expects that, upon the
issuance of a global security, DTC will credit, on its book-entry registration
and transfer system, the Participants' accounts with their respective principal
amounts of the Preferred Securities represented by such global security.
Ownership of beneficial interests in such global security will be shown on, and
the transfer of such ownership interests will be effected only through, records
maintained by DTC (with respect to interests of Participants) and on the records
of Participants (with respect to interests of Persons held through
Participants). Beneficial owners will not receive written confirmation from DTC
of their purchase, but are expected to receive written confirmations from the
Participants through which the beneficial owner entered into the transaction.
Transfers of ownership interests will be accomplished by entries on the books of
Participants acting on behalf of the beneficial owners.
So long as DTC, or its nominee, is the registered owner of a global
security, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Preferred Securities represented by such global security
for all purposes under the Junior Subordinated Indenture. Except as provided
below, owners of beneficial interests in a global security will not be entitled
to
31
<PAGE> 34
receive physical delivery of the Preferred Securities in definitive form and
will not be considered the owners or holders thereof under the Junior
Subordinated Indenture. Accordingly, each person owning a beneficial interest in
such a global security must rely on the procedures of DTC and, if such person is
not a Participant, on the procedures of the Participant through which such
person owns its interest, to exercise any rights of a holder of Preferred
Securities under the Junior Subordinated Indenture. The Company understands
that, under DTC's existing practices, in the event that the Company requests any
action of holders, or an owner of a beneficial interest in such a global
security desires to take any action which a holder is entitled to take under the
Junior Subordinated Indenture, DTC would authorize the Participants holding the
relevant beneficial interests to take such action, and such Participants would
authorize beneficial owners owning through such Participants to take such action
or would otherwise act upon the instructions of beneficial owners owning through
them. Redemption notices will also be sent to DTC. If less than all of the
Preferred Securities are being redeemed, the Company understands that it is
DTC's existing practice to determine by lot the amount of the interest of each
Participant to be redeemed.
Distributions on the Preferred Securities registered in the name of DTC or
its nominee will be made to DTC or its nominee, as the case may be, as the
registered owner of the global security representing such Preferred Securities.
None of the Company, the Trustees, the Administrators, any Paying Agent or any
other agent of the Company or the Trustees will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the global security for such Preferred
Securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests. Disbursements of Distributions to
Participants shall be the responsibility of DTC. DTC's practice is to credit
Participants' accounts on a payable date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payment on the payable date. Payments by Participants to beneficial
owners will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such Participant
and not of DTC, the Company, the Trustees, the Paying Agent or any other agent
of the Company, subject to any statutory or regulatory requirements as may be in
effect from time to time.
DTC may discontinue providing its services as securities depository with
respect to the Preferred Securities at any time by giving reasonable notice to
the Company or the Trustees. If DTC notifies the Company that it is unwilling to
continue as such, or if it is unable to continue or ceases to be a clearing
agency registered under the Exchange Act and a successor depository is not
appointed by the Company within ninety days after receiving such notice or
becoming aware that DTC is no longer so registered, the Company will issue the
Preferred Securities in definitive form upon registration of transfer of, or in
exchange for, such global security. In addition, the Company may at any time and
in its sole discretion determine not to have the Preferred Securities
represented by one or more global securities and, in such event, will issue
Preferred Securities in definitive form in exchange for all of the global
securities representing such Preferred Securities.
DTC has advised the Company and the Issuer Trust as follows: DTC is a
limited purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its Participants and to facilitate the clearance and
settlement of securities transactions between Participants through electronic
book entry changes to accounts of its Participants, thereby eliminating the need
for physical movement of certificates. Participants include securities brokers
and dealers (such as the Underwriter), banks, trust companies and clearing
corporations and may include certain other organizations. Certain of such
Participants (or their representatives), together with other entities, own DTC.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that clear through, or maintain a custodial
relationship with a Participant, either directly or indirectly.
32
<PAGE> 35
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Preferred Securities will be made by the Underwriter in
immediately available funds.
Secondary trading in Preferred Securities of corporate issuers is generally
settled in clearinghouse or next-day funds. In contrast, the Preferred
Securities will trade in DTC's Same-Day Funds Settlement System, and secondary
market trading activity in the Preferred Securities will therefore be required
by DTC to settle in immediately available funds. No assurance can be given as to
the effect, if any, of settlement in immediately available funds on trading
activity in the Preferred Securities.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities will be made to DTC, which
will credit the relevant accounts at DTC on the applicable Distribution Dates
or, if the Preferred Securities are not held by DTC, such payments will be made
by check mailed to the address of the holder entitled thereto as such address
appears on the securities register for the Trust Securities. The paying agent
(the "Paying Agent") will initially be the Property Trustee and any co-paying
agent chosen by the Property Trustee and acceptable to the Administrators. The
Paying Agent will be permitted to resign as Paying Agent upon 30 days' written
notice to the Property Trustee and the Administrators. If the Property Trustee
is no longer the Paying Agent, the Property Trustee will appoint a successor
(which must be a bank or trust company reasonably acceptable to the
Administrators) to act as Paying Agent.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as registrar and transfer agent for the
Preferred Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of the Issuer Trust, but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange. The Issuer Trust will not be required to register or cause to be
registered the transfer of the Preferred Securities after the Preferred
Securities have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of
an Event of Default, undertakes to perform only such duties as are specifically
set forth in the Trust Agreement and, after such Event of Default, must exercise
the same degree of care and skill as a prudent person would exercise or use in
the conduct of his or her own affairs. Subject to this provision, the Property
Trustee is under no obligation to exercise any of the powers vested in it by the
Trust Agreement at the request of any holder of Preferred Securities unless it
is offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby.
For information concerning the relationships between Bankers Trust Company,
the Property Trustee, and the Company, see "Description of Junior Subordinated
Debentures -- Information Concerning the Debenture Trustee."
MISCELLANEOUS
The Administrators and the Property Trustee are authorized and directed to
conduct the affairs of and to operate the Issuer Trust in such a way that the
Issuer Trust will not be deemed to be an "investment company" required to be
registered under the Investment Company Act or taxable as a corporation for
United States federal income tax purposes and so that the Junior Subordinated
Debentures will be treated as indebtedness of the Company for United States
federal income tax purposes. In this connection, the Property Trustee and the
holders of Common Securities are authorized to take any action, not inconsistent
with applicable law, the certificate of trust of the Issuer Trust or the Trust
Agreement, that the Property Trustee and the holders of Common Securities
33
<PAGE> 36
determine in their discretion to be necessary or desirable for such purposes, as
long as such action does not materially adversely affect the interests of the
holders of the Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar rights.
The Issuer Trust may not borrow money, issue debt or mortgage or pledge any
of its assets.
GOVERNING LAW
The Trust Agreement will be governed by and construed in accordance with
the laws of the State of Delaware.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued under the Junior
Subordinated Indenture, under which Bankers Trust Company is acting as Debenture
Trustee. This summary of certain terms and provisions of the Junior Subordinated
Debentures and the Junior Subordinated Indenture does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, all the
provisions of the Junior Subordinated Indenture, including the definitions
therein of certain terms. Whenever particular defined terms of the Junior
Subordinated Indenture (as amended or supplemented from time to time) are
referred to herein, such defined terms are incorporated herein by reference. A
copy of the form of Junior Subordinated Indenture is available from the
Debenture Trustee upon request.
GENERAL
Concurrently with the issuance of the Preferred Securities, the Issuer
Trust will invest the proceeds thereof, together with the consideration paid by
the Company for the Common Securities, in the Junior Subordinated Debentures
issued by the Company. The Junior Subordinated Debentures will bear interest,
accruing from , 1997, at the annual rate of % of the principal
amount thereof, payable quarterly in arrears on March 31, June 30, September 30
and December 31 of each year (each, an "Interest Payment Date"), commencing
, 1997, to the person in whose name each Junior Subordinated
Debenture is registered at the close of business on March 15, June 15, September
15, or December 15 (whether or not a Business Day) next preceding such Interest
Payment Date. It is anticipated that, until the liquidation, if any, of the
Issuer Trust, each Junior Subordinated Debenture will be registered in the name
of the Issuer Trust and held by the Property Trustee in trust for the benefit of
the holders of the Trust Securities. The amount of interest payable for any
period less than a full interest period will be computed on the basis of a
360-day year of twelve 30-day months and the actual days elapsed in a partial
month in such period. The amount of interest payable for any full interest
period will be computed by dividing the rate per annum by four. If any date on
which interest is payable on the Junior Subordinated Debentures is not a
Business Day, then payment of the interest payable on such date will be made on
the next succeeding day that is a Business Day (without any interest or other
payment in respect of any such delay), with the same force and effect as if made
on the date such payment was originally payable. Accrued interest that is not
paid on the applicable Interest Payment Date will bear additional interest on
the amount thereof (to the extent permitted by law) at the rate per annum of
%, compounded quarterly and computed on the basis of a 360-day year of twelve
30-day months and the actual days elapsed in a partial month in such period. The
amount of additional interest payable for any full interest period will be
computed by dividing the rate per annum by four. The term "interest" as used
herein includes quarterly interest payments, interest on quarterly interest
payments not paid on the applicable Interest Payment Date and Additional Sums
(as defined below), as applicable.
The Junior Subordinated Debentures will mature on , 2027,
subject to the Maturity Adjustment (such date, as it may be shortened by the
Maturity Adjustment is referred to herein as the
34
<PAGE> 37
Stated Maturity). The Maturity Adjustment represents the right of the Company to
shorten the maturity date once at any time to any date not earlier than
, 2002, subject to the Company having received prior approval of
the Federal Reserve if then required under applicable capital guidelines or
policies of the Federal Reserve. In the event the Company elects to shorten the
Stated Maturity of the Junior Subordinated Debentures, it will give notice to
the registered holders of the Junior Subordinated Debentures, the Property
Trustee and the Trust of such shortening no less than 90 days prior to the
effectiveness thereof. The Property Trustee must give notice to the holders of
the Trust Securities of the shortening of the Stated maturity at least 30 but
not more than 60 days before such date.
The Junior Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Senior Indebtedness of the
Company. The Junior Subordinated Debentures will not be subject to a sinking
fund. The Junior Subordinated Indenture does not limit the incurrence or
issuance of other secured or unsecured debt by the Company, including Senior
Indebtedness, whether under the Junior Subordinated Indenture or any existing or
other indenture that the Company may enter into in the future or otherwise. See
"-- Subordination."
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Debenture Event of Default has occurred and is continuing,
the Company has the right at any time during the term of the Junior Subordinated
Debentures to defer the payment of interest at any time or from time to time for
a period not exceeding 20 consecutive quarterly periods with respect to each
Extension Period, provided that no Extension Period may extend beyond the Stated
Maturity of the Junior Subordinated Debentures. During any such Extension Period
the Company shall have the right to make partial payments of interest on any
interest payment date. At the end of such Extension Period, the Company must pay
all interest then accrued and unpaid (together with interest thereon at the
annual rate of %, compounded quarterly and computed on the basis of a 360-day
year of twelve 30-day months and the actual days elapsed in a partial month in
such period, to the extent permitted by applicable law). The amount of
additional interest payable for any full interest period will be computed by
dividing the rate per annum by four. During an Extension Period, interest will
continue to accrue and holders of Junior Subordinated Debentures (or holders of
Preferred Securities while outstanding) will be required to accrue interest
income for United States federal income tax purposes. See "Certain Federal
Income Tax Consequences -- Interest Income and Original Issue Discount."
During any such Extension Period, the Company may not (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock or (ii)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu in
all respects with or junior in interest to the Junior Subordinated Debentures
(other than (a) repurchases, redemptions or other acquisitions of shares of
capital stock of the Company in connection with any employment contract, benefit
plan or other similar arrangement with or for the benefit of any one or more
employees, officers, directors or consultants, in connection with a dividend
reinvestment or stockholder stock purchase plan or in connection with the
issuance of capital stock of the Company (or securities convertible into or
exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of an exchange or conversion of any class or series of the Company's
capital stock (or any capital stock of a subsidiary of the Company) for any
class or series of the Company's capital stock or of any class or series of the
Company's indebtedness for any class or series of the Company's capital stock,
(c) the purchase of fractional interests in shares of the Company's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged, (d) any declaration of a dividend in
connection with any stockholder's rights plan, or the issuance of rights, stock
or other property under any stockholders rights plan, or the redemption or
repurchase of rights pursuant thereto, or (e) any dividend in the form of stock,
35
<PAGE> 38
warrants, options or other rights where the dividend stock or the stock issuable
upon exercise of such warrants, options or other rights is the same stock as
that on which the dividend is being paid or ranks pari passu with or junior to
such stock). Prior to the termination of any such Extension Period, the Company
may further defer the payment of interest, provided that no Extension Period may
exceed 20 consecutive quarterly periods or extend beyond the Stated Maturity of
the Junior Subordinated Debentures. Upon the termination of any such Extension
Period and the payment of all amounts then due, the Company may elect to begin a
new Extension Period subject to the above conditions. No interest shall be due
and payable during an Extension Period, except at the end thereof. The Company
must give the Issuer Trustees notice of its election of such Extension Period at
least one Business Day prior to the earlier of (i) the date the Distributions on
the Preferred Securities would have been payable but for the election to begin
such Extension Period and (ii) the date the Property Trustee is required to give
notice to holders of the Preferred Securities of the record date or the date
such Distributions are payable, but in any event not less than one Business Day
prior to such record date. The Property Trustee will give notice of the
Company's election to begin a new Extension Period to the holders of the
Preferred Securities. There is no limitation on the number of times that the
Company may elect to begin an Extension Period.
REDEMPTION
The Junior Subordinated Debentures are redeemable prior to maturity at the
option of the Company (i) on or after , 2002, in whole at any time or in part
from time to time, or (ii) in whole, but not in part, at any time within 90 days
following the occurrence and during the continuation of a Tax Event, Investment
Company Event or Capital Treatment Event (each as defined under "Description of
Preferred Securities -- Redemption"), in each case at the redemption price
described below. The proceeds of any such redemption will be used by the Issuer
Trust to redeem the Preferred Securities.
The Federal Reserve's risk-based capital guidelines, which are subject to
change, currently provide that redemptions of permanent equity or other capital
instruments before stated maturity could have a significant impact on a bank
holding company's overall capital structure and that any organization
considering such a redemption should consult with the Federal Reserve before
redeeming any equity or capital instrument prior to maturity if such redemption
could have a material effect on the level or composition of the organization's
capital base (unless the equity or capital instrument were redeemed with the
proceeds of, or replaced by, a like amount of a similar or higher quality
capital instrument and the Federal Reserve considers the organization's capital
position to be fully adequate after the redemption).
The redemption of the Junior Subordinated Debentures by the Company prior
to their Stated Maturity would constitute the redemption of capital instruments
under the Federal Reserve's current risk-based capital guidelines and may be
subject to the prior approval of the Federal Reserve. The redemption of the
Junior Subordinated Debentures also could be subject to the additional prior
approval of the Federal Reserve under its current risk-based capital guidelines.
The redemption price for Junior Subordinated Debentures is the outstanding
principal amount of the Junior Subordinated Debentures plus accrued interest
(including any Additional Interest or any Additional Sums) thereon to but
excluding the date fixed for redemption.
ADDITIONAL SUMS
The Company has covenanted in the Junior Subordinated Indenture that, if
and for so long as (i) the Issuer Trust is the holder of all Junior Subordinated
Debentures and (ii) the Issuer Trust is required to pay any additional taxes,
duties or other governmental charges as a result of a Tax Event, the Company
will pay as additional sums on the Junior Subordinated Debentures such amounts
as may be required so that the Distributions payable by the Issuer Trust will
not be reduced as a result
36
<PAGE> 39
of any such additional taxes, duties or other governmental charges. See
"Description of Preferred Securities -- Redemption."
REGISTRATION, DENOMINATION AND TRANSFER
The Junior Subordinated Debentures will initially be registered in the name
of the Issuer Trust. If the Junior Subordinated Debentures are distributed to
holders of Preferred Securities, it is anticipated that the depositary
arrangements for the Junior Subordinated Debentures will be substantially
identical to those in effect for the Preferred Securities. See "Description of
Preferred Securities -- Book Entry, Delivery and Form."
Although DTC has agreed to the procedures described above, it is under no
obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
the Company within 90 days of receipt of notice from DTC to such effect, the
Company will cause the Junior Subordinated Debentures to be issued in definitive
form.
Payments on Junior Subordinated Debentures represented by a global security
will be made to Cede & Co., the nominee for DTC, as the registered holder of the
Junior Subordinated Debentures, as described under "Description of the Preferred
Securities -- Book Entry, Delivery and Form." If Junior Subordinated Debentures
are issued in certificated form, principal and interest will be payable, the
transfer of the Junior Subordinated Debentures will be registrable, and Junior
Subordinated Debentures will be exchangeable for Junior Subordinated Debentures
of other authorized denominations of a like aggregate principal amount, at the
corporate trust office of the Debenture Trustee in New York, New York or at the
offices of any Paying Agent or transfer agent appointed by the Company, provided
that payment of interest may be made at the option of the Company by check
mailed to the address of the persons entitled thereto. However, a holder of $1
million or more in aggregate principal amount of Junior Subordinated Debentures
may receive payments of interest (other than interest payable at the Stated
Maturity) by wire transfer of immediately available funds upon written request
to the Debenture Trustee not later than 15 calendar days prior to the date on
which the interest is payable.
Junior Subordinated Debentures will be exchangeable for other Junior
Subordinated Debentures of like tenor, of any authorized denominations, and of a
like aggregate principal amount.
Junior Subordinated Debentures may be presented for exchange as provided
above, and may be presented for registration of transfer (with the form of
transfer endorsed thereon, or a satisfactory written instrument of transfer,
duly executed), at the office of the securities registrar appointed under the
Junior Subordinated Debenture or at the office of any transfer agent designated
by the Company for such purpose without service charge and upon payment of any
taxes and other governmental charges as described in the Junior Subordinated
Indenture. The Company will appoint the Debenture Trustee as securities
registrar under the Junior Subordinated Indenture. The Company may at any time
designate additional transfer agents with respect to the Junior Subordinated
Debentures.
In the event of any redemption, neither the Company nor the Debenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures during a period beginning at the opening of
business 15 days before the day of selection for redemption of the Junior
Subordinated Debentures to be redeemed and ending at the close of business on
the day of mailing of the relevant notice of redemption or (ii) transfer or
exchange any Junior Subordinated Debentures so selected for redemption, except,
in the case of any Junior Subordinated Debentures being redeemed in part, any
portion thereof not to be redeemed.
Any monies deposited with the Debenture 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 Junior Subordinated Debenture and remaining
unclaimed for two years after such principal (and premium,
37
<PAGE> 40
if any) or interest has become due and payable shall, at the request of the
Company, be repaid to the Company and the holder of such Junior Subordinated
Debenture shall thereafter look, as a general unsecured creditor, only to the
Company for payment thereof.
RESTRICTIONS ON CERTAIN PAYMENTS; CERTAIN COVENANTS OF THE COMPANY
The Company has covenanted that it will not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock or (ii)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu in
all respects with or junior in interest to the Junior Subordinated Debentures
(other than (a) repurchases, redemptions or other acquisitions of shares of
capital stock of the Company in connection with any employment contract, benefit
plan or other similar arrangement with or for the benefit of any one or more
employees, officers, directors or consultants, in connection with a dividend
reinvestment or shareholder stock purchase plan or in connection with the
issuance of capital stock of the Company (or securities convertible into or
exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period or other event
referred to below, (b) as a result of an exchange or conversion of any class or
series of the Company's capital stock (or any capital stock of a subsidiary of
the Company) for any class or series of the Company's capital stock or of any
class or series of the Company's indebtedness for any class or series of the
Company's capital stock, (c) the purchase of fractional interests in shares of
the Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any stockholder's rights plan, or
the issuance of rights, stock or other property under any stockholder's rights
plan, or the redemption or repurchase of rights pursuant thereto, or (e) any
dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock), if at such time (i) there has
occurred any event (a) of which the Company has actual knowledge that with the
giving of notice or the lapse of time, or both, would constitute a Debenture
Event of Default and (b) that the Company has not taken reasonable steps to
cure, (ii) if the Junior Subordinated Debentures are held by the Issuer Trust,
the Company is in default with respect to its payment of any obligations under
the Guarantee or (iii) the Company has given notice of its election of an
Extension Period as provided in the Junior Subordinated Indenture and has not
rescinded such notice, or such Extension Period, or any extension thereof, is
continuing.
The Company has covenanted in the Junior Subordinated Indenture (i) to
continue to hold, directly or indirectly, 100% of the Common Securities,
provided that certain successors that are permitted pursuant to the Junior
Subordinated Indenture may succeed to the Company's ownership of the Common
Securities, (ii) as holder of the Common Securities, not to voluntarily
terminate, windup or liquidate the Issuer Trust, other than (a) in connection
with a distribution of Junior Subordinated Debentures to the holders of the
Preferred Securities in liquidation of the Issuer Trust or (b) in connection
with certain mergers, consolidations or amalgamations permitted by the Trust
Agreement and (iii) to use its reasonable efforts, consistent with the terms and
provisions of the Trust Agreement, to cause the Issuer Trust to continue not to
be taxable as a corporation for United States federal income tax purposes.
MODIFICATION OF JUNIOR SUBORDINATED INDENTURE
From time to time, the Company and the Debenture Trustee may, without the
consent of any of the holders of the outstanding Junior Subordinated Debentures,
amend, waive or supplement the provisions of the Junior Subordinated Indenture
to: (1) evidence succession of another corporation or association to the Company
and the assumption by such person of the obligations of the Company under the
Junior Subordinated Debentures, (2) add further covenants, restrictions or
conditions for
38
<PAGE> 41
the protection of holders of the Junior Subordinated Debentures, (3) cure
ambiguities or correct the Junior Subordinated Debentures in the case of defects
or inconsistencies in the provisions thereof, so long as any such cure or
correction does not adversely affect the interest of the holders of the Junior
Subordinated Debentures in any material respect, (4) change the terms of the
Junior Subordinated Debentures to facilitate the issuance of the Junior
Subordinated Debentures in certificated or other definitive form, (5) evidence
or provide for the appointment of a successor Debenture Trustee, or (6) qualify,
or maintain the qualification of, the Junior Subordinated Indentures under the
Trust Indenture Act. The Junior Subordinated Indenture contains provisions
permitting the Company and the Debenture Trustee, with the consent of the
holders of not less than a majority in principal amount of the Junior
Subordinated Debentures, to modify the Junior Subordinated Indenture in a manner
affecting the rights of the holders of the Junior Subordinated Debentures,
except that no such modification may, without the consent of the holder of each
outstanding Junior Subordinated Debenture so affected, (i) change the Stated
Maturity of the Junior Subordinated Debentures, or reduce the principal amount
thereof, the rate of interest thereon or any premium payable upon the redemption
thereof, or change the place of payment where, or the currency in which, any
such amount is payable or impair the right to institute suit for the enforcement
of any Junior Subordinated Debenture or (ii) reduce the percentage of principal
amount of Junior Subordinated Debentures, the holders of which are required to
consent to any such modification of the Junior Subordinated Indenture.
Furthermore, so long as any of the Preferred Securities remain outstanding, no
such modification may be made that adversely affects the holders of such
Preferred Securities in any material respect, and no termination of the Junior
Subordinated Indenture may occur, and no waiver of any Debenture Event of
Default or compliance with any covenant under the Junior Subordinated Indenture
may be effective, without the prior consent of the holders of at least a
majority of the aggregate Liquidation Amount of the outstanding Preferred
Securities unless and until the principal of (and premium, if any, on) the
Junior Subordinated Debentures and all accrued and unpaid interest thereon have
been paid in full and certain other conditions are satisfied.
DEBENTURE EVENTS OF DEFAULT
The Junior Subordinated Indenture provides that any one or more of the
following described events with respect to the Junior Subordinated Debentures
that has occurred and is continuing constitutes an "Event of Default" with
respect to the Junior Subordinated Debentures:
(i) failure to pay any interest on the Junior Subordinated Debentures
when due (subject to the deferral of any due date in the case of an
Extension Period); or
(ii) failure to pay any principal of or premium, if any, on the
Junior Subordinated Debentures when due whether at maturity, upon
redemption, by declaration of acceleration or otherwise; or
(iii) failure to observe or perform in any material respect certain
other covenants contained in the Junior Subordinated Indenture for 90 days
after written notice to the Company from the Debenture Trustee or the
holders of at least 25% in aggregate outstanding principal amount of the
outstanding Junior Subordinated Debentures; or
(iv) the Company consents to the appointment of a receiver or other
similar official in any liquidation, insolvency or similar proceeding with
respect to the Company or all or substantially all its property.
For purposes of the Trust Agreement and this Prospectus, each such Event of
Default under the Junior Subordinated Debenture is referred to as a "Debenture
Event of Default." As described in "Description of Preferred
Securities -- Events of Default; Notice," the occurrence of a Debenture Event of
Default will also constitute an Event of Default in respect of the Trust
Securities.
39
<PAGE> 42
The holders of at least a majority in aggregate principal amount of
outstanding Junior Subordinated Debentures have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee. The Debenture Trustee or the holders of not less than 25% in
aggregate principal amount of outstanding Junior Subordinated Debentures may
declare the principal due and payable immediately upon a Debenture Event of
Default, and, should the Debenture Trustee or such holders of Junior
Subordinated Debentures fail to make such declaration, the holders of at least
25% in aggregate Liquidation Amount of the outstanding Preferred Securities
shall have such right. The holders of a majority in aggregate principal amount
of outstanding Junior Subordinated Debentures may annul such declaration and
waive the default if all defaults (other than the non-payment of the principal
of Junior Subordinated Debentures which has become due solely by such
acceleration) have been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee. Should the holders of Junior
Subordinated Debentures fail to annul such declaration and waive such default,
the holders of a majority in aggregate Liquidation Amount of the outstanding
Preferred Securities shall have such right.
The holders of at least a majority in aggregate principal amount of the
outstanding Junior Subordinated Debentures affected thereby may, on behalf of
the holders of all the Junior Subordinated Debentures, waive any past default,
except a default in the payment of principal (or premium, if any) or interest
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee) or a default in respect of a covenant
or provision which under the Junior Subordinated Indenture cannot be modified or
amended without the consent of the holder of each outstanding Junior
Subordinated Debenture affected thereby. See "-- Modification of Junior
Subordinated Indenture." The Company is required to file annually with the
Debenture Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it under the
Junior Subordinated Indenture.
If a Debenture Event of Default occurs and is continuing, the Property
Trustee will have the right to declare the principal of and the interest on the
Junior Subordinated Debentures, and any other amounts payable under the Junior
Subordinated Indenture, to be forthwith due and payable and to enforce its other
rights as a creditor with respect to the Junior Subordinated Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay any amounts payable
in respect of the Junior Subordinated Debentures on the date such amounts are
otherwise payable, a registered holder of Preferred Securities may institute a
Direct Action against the Company for enforcement of payment to such holder of
an amount equal to the amount payable in respect of Junior Subordinated
Debentures having a principal amount equal to the aggregate Liquidation Amount
of the Preferred Securities held by such holder. The Company may not amend the
Junior Subordinated Indenture to remove the foregoing right to bring a Direct
Action without the prior written consent of the holders of all the Preferred
Securities. The Company will have the right under the Junior Subordinated
Indenture to set-off any payment made to such holder of Preferred Securities by
the Company in connection with a Direct Action.
The holders of the Preferred Securities are not able to exercise directly
any remedies available to the holders of the Junior Subordinated Debentures
except under the circumstances described in the preceding paragraph. See
"Description of Preferred Securities -- Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Junior Subordinated Indenture provides that the Company may not
consolidate with or merge into any other Person or convey, transfer or lease its
properties and assets substantially as an
40
<PAGE> 43
entirety to any Person, and no Person may consolidate with or merge into the
Company or convey, transfer or lease its properties and assets substantially as
an entirety to the Company, unless (i) if the Company consolidates with or
merges into another Person or conveys or transfers its properties and assets
substantially as an entirety to any Person, the successor Person is organized
under the laws of the United States or any state or the District of Columbia,
and such successor Person expressly assumes the Company's obligations in respect
of the Junior Subordinated Debentures; (ii) immediately after giving effect
thereto, no Debenture Event of Default, and no event which, after notice or
lapse of time or both, would constitute a Debenture Event of Default, has
occurred and is continuing; and (iii) certain other conditions as prescribed in
the Junior Subordinated Indenture are satisfied.
The provisions of the Junior Subordinated Indenture do not afford holders
of the Junior Subordinated Debentures protection in the event of a highly
leveraged or other transaction involving the Company that may adversely affect
holders of the Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Junior Subordinated Indenture provides that when, among other things,
all Junior Subordinated Debentures not previously delivered to the Debenture
Trustee for cancellation (i) have become due and payable, (ii) will become due
and payable at the Stated Maturity within one year, or (iii) are to be called
for redemption within one year under arrangements satisfactory to the Debenture
Trustee for the giving of notice of redemption, and, in each case, the Company
deposits or causes to be deposited with the Debenture Trustee funds, in trust,
for the purpose and in an amount sufficient to pay and discharge the entire
indebtedness on the Junior Subordinated Debentures not previously delivered to
the Debenture Trustee for cancellation, for the principal (and premium, if any)
and interest to the date of the deposit or to the Stated Maturity, as the case
may be, then the Junior Subordinated Indenture will cease to be of further
effect (except as to the Company's obligations to pay all other sums due
pursuant to the Junior Subordinated Indenture and to provide the officers'
certificates and opinions of counsel described therein), and the Company will be
deemed to have satisfied and discharged the Junior Subordinated Indenture.
SUBORDINATION
The Junior Subordinated Debentures will be subordinate and junior in right
of payment, to the extent set forth in the Junior Subordinated Indenture, to all
Senior Indebtedness (as defined below) of the Company. If the Company defaults
in the payment of any principal, premium, if any, or interest, if any, or any
other amount payable on any Senior Indebtedness when the same becomes due and
payable, whether at maturity or at a date fixed for redemption or by declaration
of acceleration or otherwise, then, unless and until such default has been cured
or waived or has ceased to exist or all Senior Indebtedness has been paid, no
direct or indirect payment (in cash, property, securities, by setoff or
otherwise) may be made or agreed to be made on the Junior Subordinated
Debentures, or in respect of any redemption, repayment, retirement, purchase or
other acquisition of any of the Junior Subordinated Debentures.
As used herein, "Senior Indebtedness" means, whether recourse is to all or
a portion of the assets of the Company and whether or not contingent, (i) every
obligation of the Company for money borrowed; (ii) every obligation of the
Company evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of the Company with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of the Company; (iv) every obligation of the Company issued or
assumed as the deferred purchase price of property services (but excluding trade
accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of the Company; (vi) every
obligation of the Company for claims (as defined in Section 101(4) of the United
States Bankruptcy Code of 1978, as amended) in respect of derivative products
such as interest and foreign exchange rate contracts, commodity
41
<PAGE> 44
contracts and similar arrangements; and (vii) every obligation of the type
referred to in clauses (i) through (vi) of another person and all dividends of
another person the payment of which, in either case, the Company has guaranteed
or is responsible or liable, directly or indirectly, as obligor or otherwise;
provided that "Senior Indebtedness" shall not include (i) any obligations which,
by their terms, are expressly stated to rank pari passu in right of payment
with, or to not be superior in right of payment to, the Junior Subordinated
Debentures, (ii) any Senior Indebtedness of the Company which when incurred and
without respect to any election under Section 1111(b) of the United States
Bankruptcy Code of 1978, as amended, was without recourse to the Company, (iii)
any Indebtedness of the Company to any of its subsidiaries, (iv) Indebtedness to
any executive officer or director of the Company, or (v) any indebtedness in
respect of debt securities issued to any trust, or a trustee of such trust,
partnership or other entity affiliated with the Company that is a financing
entity of the Company in connection with the issuance of such financing entity
of securities that are similar to the Preferred Securities.
In the event of (i) certain events of bankruptcy, dissolution or
liquidation of the Company or the holder of the Common Securities, (ii) any
proceeding for the liquidation, dissolution or other winding up of the Company,
voluntary or involuntary, whether or not involving insolvency or bankruptcy
proceedings, (iii) any assignment by the Company for the benefit of creditors or
(iv) any other marshalling of the assets of the Company, all Senior Indebtedness
(including any interest thereon accruing after the commencement of any such
proceedings) shall first be paid in full before any payment or distribution,
whether in cash, securities or other property, shall be made on account of the
Junior Subordinated Debentures. In such event, any payment or distribution on
account of the Junior Subordinated Debentures, whether in cash, securities or
other property, that would otherwise (but for the subordination provisions) be
payable or deliverable in respect of the Junior Subordinated Debentures will be
paid or delivered directly to the holders of Senior Indebtedness in accordance
with the priorities then existing among such holders until all Senior
Indebtedness (including any interest thereon accruing after the commencement of
any such proceedings) has been paid in full.
In the event of any such proceeding, after payment in full of all sums
owing with respect to Senior Indebtedness, the holders of Junior Subordinated
Debentures, together with the holders of any obligations of the Company ranking
on a parity with the Junior Subordinated Debentures, will be entitled to be paid
from the remaining assets of the Company the amounts at the time due and owing
on the Junior Subordinated Debentures and such other obligations before any
payment or other distribution, whether in cash, property or otherwise, will be
made on account of any capital stock or obligations of the Company ranking
junior to the Junior Subordinated Debentures and such other obligations. If any
payment or distribution on account of the Junior Subordinated Debentures of any
character or any security, whether in cash, securities or other property is
received by any holder of any Junior Subordinated Debentures in contravention of
any of the terms hereof and before all the Senior Indebtedness has been paid in
full, such payment or distribution or security will be received in trust for the
benefit of, and must be paid over or delivered and transferred to, the holders
of the Senior Indebtedness at the time outstanding in accordance with the
priorities then existing among such holders for application to the payment of
all Senior Indebtedness remaining unpaid to the extent necessary to pay all such
Senior Indebtedness in full. By reason of such subordination, in the event of
the insolvency of the Company, holders of Senior Indebtedness may receive more,
ratably, and holders of the Junior Subordinated Debentures may receive less,
ratably, than the other creditors of the Company. Such subordination will not
prevent the occurrence of any Event of Default in respect of the Junior
Subordinated Debentures.
The Junior Subordinated Indenture places no limitation on the amount of
additional Senior Indebtedness that may be incurred by the Company. The Company
expects from time to time to incur additional indebtedness constituting Senior
Indebtedness.
42
<PAGE> 45
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee, other than during the occurrence and continuance of
a default by the Company in performance of its obligations under the Junior
Subordinated Debenture, is under no obligation to exercise any of the powers
vested in it by the Junior Subordinated Indenture at the request of any holder
of Junior Subordinated Debentures, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities that might be incurred
thereby. The Debenture Trustee is not required to expend or risk its own funds
or otherwise incur personal financial liability in the performance of its duties
if the Debenture Trustee reasonably believes that repayment or adequate
indemnity is not reasonably assured to it.
Bankers Trust Company, the Debenture Trustee, may serve from time to time
as trustee under other indentures or trust agreements with the Company or its
subsidiaries relating to other issues of their securities. In addition, the
Company and certain of its affiliates may have other banking relationships with
Bankers Trust Company and its affiliates.
GOVERNING LAW
The Junior Subordinated Indenture and the Junior Subordinated Debentures
will be governed by and construed in accordance with the laws of the State of
New York.
DESCRIPTION OF GUARANTEE
The Guarantee will be executed and delivered by the Company concurrently
with the issuance of Preferred Securities by the Issuer Trust for the benefit of
the holders from time to time of the Preferred Securities. Bankers Trust Company
will act as Guarantee Trustee under the Guarantee. This summary of certain
provisions of the Guarantee does not purport to be complete and is subject to,
and qualified in its entirety by reference to, all the provisions of the
Guarantee, including the definitions therein of certain terms. A copy of the
form of Guarantee is available upon request from the Guarantee Trustee. The
Guarantee Trustee will hold the Guarantee for the benefit of the holders of the
Preferred Securities.
GENERAL
The Company will irrevocably agree to pay in full on a subordinated basis,
to the extent set forth herein, the Guarantee Payments (as defined below) to the
holders of the Preferred Securities, as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer Trust may have or assert other
than the defense of payment. The following payments with respect to the
Preferred Securities, to the extent not paid by or on behalf of the Issuer Trust
(the "Guarantee Payments"), will be subject to the Guarantee: (i) any
accumulated and unpaid Distributions required to be paid on such Preferred
Securities, to the extent that the Issuer Trust has funds on hand available
therefor at such time, (ii) the Redemption Price with respect to any Preferred
Securities called for redemption, to the extent that the Issuer Trust has funds
on hand available therefor at such time, and (iii) upon a voluntary or
involuntary dissolution, of the Issuer Trust (unless the Junior Subordinated
Debentures are distributed to holders of the Preferred Securities), the lesser
of (a) the aggregate of the Liquidation Amount and all accumulated and unpaid
Distributions to the date of payment, to the extent that the Issuer Trust has
funds on hand available therefor at such time, and (b) the amount of assets of
the Issuer Trust remaining available for distribution to holders of the
Preferred Securities on liquidation of the Issuer Trust. The Company's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Company to the holders of the Preferred Securities or by
causing the Issuer Trust to pay such amounts to such holders.
The Guarantee will be an irrevocable guarantee on a subordinated basis of
the Issuer Trust's obligations under the Preferred Securities, but will apply
only to the extent that the Issuer Trust has funds sufficient to make such
payments, and is not a guarantee of collection.
43
<PAGE> 46
If the Company does not make payments on the Junior Subordinated Debentures
held by the Issuer Trust, the Issuer Trust will not be able to pay any amounts
payable in respect of the Preferred Securities and will not have funds legally
available therefor. The Guarantee will rank subordinate and junior in right of
payment to all Senior Indebtedness of the Company. See "-- Status of the
Guarantee." The Guarantee does not limit the incurrence or issuance of other
secured or unsecured debt of the Company, including Senior Indebtedness, whether
under the Junior Subordinated Indenture, any other indenture that the Company
may enter into in the future or otherwise.
The Company has, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures and the Junior Subordinated Indenture, taken together,
fully, irrevocably and unconditionally guaranteed all the Issuer Trust's
obligations under the Preferred Securities on a subordinated basis. No single
document standing alone or operating in conjunction with fewer than all the
other documents constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Issuer Trust's obligations in respect of the
Preferred Securities. See "Relationship Among the Preferred Securities, the
Junior Subordinated Debentures and the Guarantee."
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior Indebtedness
of the Company in the same manner as the Junior Subordinated Debentures.
The Guarantee will constitute a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). The
Guarantee will be held by the Guarantee Trustee for the benefit of the holders
of the Preferred Securities. The Guarantee will not be discharged except by
payment of the Guarantee Payments in full to the extent not paid by the Issuer
Trust or distribution to the holders of the Preferred Securities of the Junior
Subordinated Debentures.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the Preferred Securities (in which case no vote will be
required), the Guarantee may not be amended without the prior approval of the
holders of not less than a majority of the aggregate Liquidation Amount of the
outstanding Preferred Securities. The manner of obtaining any such approval will
be as set forth under "Description of Preferred Securities -- Voting Rights;
Amendment of Trust Agreement." All guarantees and agreements contained in the
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Company and shall inure to the benefit of the holders of
the Preferred Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder, or to
perform any non-payment obligation if such non-payment default remains
unremedied for 30 days. The holders of not less than a majority in aggregate
Liquidation Amount of the outstanding Preferred Securities have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee in respect of the Guarantee or to direct the
exercise of any trust or power conferred upon the Guarantee Trustee under the
Guarantee.
Any registered holder of Preferred Securities may institute a legal
proceeding directly against the Company to enforce its rights under the
Guarantee without first instituting a legal proceeding against the Issuer Trust,
the Guarantee Trustee or any other person or entity.
44
<PAGE> 47
The Company, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not the Company is in compliance with all
the conditions and covenants applicable to it under the Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Company in performance of the Guarantee, undertakes to perform
only such duties as are specifically set forth in the Guarantee and, after the
occurrence of an event of default with respect to the Guarantee, must exercise
the same degree of care and skill as a prudent person would exercise or use in
the conduct of his or her own affairs. Subject to this provision, the Guarantee
Trustee is under no obligation to exercise any of the powers vested in it by the
Guarantee at the request of any holder of the Preferred Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby.
For information concerning the relationship between Bankers Trust Company,
the Guarantee Trustee, and the Company, see "Description of Junior Subordinated
Debentures -- Information Concerning the Debenture Trustee."
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of the Preferred Securities, upon full
payment of the amounts payable with respect to the Preferred Securities upon
liquidation of the Issuer Trust or upon distribution of Junior Subordinated
Debentures to the holders of the Preferred Securities. The Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of the Preferred Securities must restore payment of any sums
paid under the Preferred Securities or the Guarantee.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE JUNIOR
SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred Securities
(to the extent the Issuer Trust has funds available for such payment) are
irrevocably guaranteed, on a subordinated basis, by the Company as and to the
extent set forth under "Description of Guarantee." Taken together, the Company's
obligations under the Junior Subordinated Debentures, the Junior Subordinated
Indenture, the Trust Agreement and the Guarantee provide, in the aggregate, a
full, irrevocable and unconditional guarantee of payments of Distributions and
other amounts due on the Preferred Securities. No single document standing alone
or operating in conjunction with fewer than all the other documents constitutes
such guarantee. It is only the combined operation of these documents that has
the effect of providing a full, irrevocable and unconditional guarantee of the
Issuer Trust's obligations in respect of the Preferred Securities. If and to the
extent that the Company does not make payments on the Junior Subordinated
Debentures, the Issuer Trust will not have sufficient funds to pay Distributions
or other amounts due on the Preferred Securities. The Guarantee does not cover
payment of amounts payable with respect to the Preferred Securities when the
Issuer Trust does not have sufficient funds to pay such amounts. In such event,
the remedy of a holder of the Preferred Securities is to institute a legal
proceeding directly against the Company for enforcement of payment of the
Company's obligations under Junior Subordinated Debentures
45
<PAGE> 48
having a principal amount equal to the Liquidation Amount of the Preferred
Securities held by such holder.
The obligations of the Company under the Junior Subordinated Debentures and
the Guarantee are subordinate and junior in right of payment to all Senior
Indebtedness.
SUFFICIENCY OF PAYMENTS
As long as payments are made when due on the Junior Subordinated
Debentures, such payments will be sufficient to cover Distributions and other
payments distributable on the Preferred Securities, primarily because (i) the
aggregate principal amount of the Junior Subordinated Debentures will be equal
to the sum of the aggregate stated Liquidation Amount of the Preferred
Securities and Common Securities; (ii) the interest rate and interest and other
payment dates on the Junior Subordinated Debentures will match the Distribution
rate, Distribution Dates and other payment dates for the Preferred Securities;
(iii) the Company will pay for any and all costs, expenses and liabilities of
the Issuer Trust except the Issuer Trust's obligations to holders of the Trust
Securities; and (iv) the Trust Agreement further provides that the Issuer Trust
will not engage in any activity that is not consistent with the limited purposes
of the Issuer Trust.
Notwithstanding anything to the contrary in the Junior Subordinated
Indenture, the Company has the right to set-off any payment it is otherwise
required to make thereunder against and to the extent the Company has
theretofore made, or is concurrently on the date of such payment making, a
payment under the Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any Preferred Security may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Guarantee Trustee, the Issuer
Trust or any other person or entity. See "Description of Guarantee."
A default or event of default under any Senior Indebtedness of the Company
would not constitute a default or Event of Default in respect of the Preferred
Securities. However, in the event of payment defaults under, or acceleration of,
Senior Indebtedness of the Company, the subordination provisions of the Junior
Subordinated Indenture provide that no payments may be made in respect of the
Junior Subordinated Debentures until such Senior Indebtedness has been paid in
full or any payment default thereunder has been cured or waived. See
"Description of Junior Subordinated Debentures -- Subordination."
LIMITED PURPOSE OF ISSUER TRUST
The Preferred Securities represent preferred undivided beneficial interests
in the assets of the Issuer Trust, and the Issuer Trust exists for the sole
purpose of issuing its Preferred Securities and Common Securities and investing
the proceeds thereof in Junior Subordinated Debentures. A principal difference
between the rights of a holder of a Preferred Security and a holder of a Junior
Subordinated Debenture is that a holder of a Junior Subordinated Debenture is
entitled to receive from the Company payments on Junior Subordinated Debentures
held, while a holder of Preferred Securities is entitled to receive
Distributions or other amounts distributable with respect to the Preferred
Securities from the Issuer Trust (or from the Company under the Guarantee) only
if and to the extent the Issuer Trust has funds available for the payment of
such Distributions.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution of the Issuer Trust, other
than any such dissolution involving the distribution of the Junior Subordinated
Debentures, after satisfaction of liabilities to creditors of the Issuer Trust
as required by applicable law, the holders of the Preferred Securities will be
entitled to receive, out of assets held by the Issuer Trust, the Liquidation
46
<PAGE> 49
Distribution in cash. See "Description of Preferred Securities -- Liquidation
Distribution Upon Dissolution." Upon any voluntary or involuntary liquidation or
bankruptcy of the Company, the Issuer Trust, as registered holder of the Junior
Subordinated Debentures, would be a subordinated creditor of the Company,
subordinated and junior in right of payment to all Senior Indebtedness as set
forth in the Junior Subordinated Indenture, but entitled to receive payment in
full of all amounts payable with respect to the Junior Subordinated Debentures
before any stockholders of the Company receive payments or distributions. Since
the Company is the guarantor under the Guarantee and has agreed under the Junior
Subordinated Indenture to pay for all costs, expenses and liabilities of the
Issuer Trust (other than the Issuer Trust's obligations to the holders of the
Trust Securities), the positions of a holder of the Preferred Securities and a
holder of such Junior Subordinated Debentures relative to other creditors and to
stockholders of the Company in the event of liquidation or bankruptcy of the
Company are expected to be substantially the same.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
In the opinion of Ellsworth, Wiles & Chalphin, P.C., Wyomissing,
Pennsylvania, in its capacity as special tax counsel to the Company ("Tax
Counsel"), the following discussion summarizes the material United States
federal income tax consequences of the purchase, ownership and disposition of
the Preferred Securities.
This summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury regulations thereunder, and administrative and judicial
interpretations thereof, each as of the date hereof, all of which are subject to
change, possibly on a retroactive basis. The authorities on which this summary
is based are subject to various interpretations, and the opinions of Tax Counsel
are not binding on the Internal Revenue Service (the "IRS") or the courts,
either of which could take a contrary position. Moreover, no rulings have been
or will be sought from the IRS with respect to the transactions described
herein. Accordingly, there can be no assurance that the IRS will not challenge
the opinions expressed herein or that a court would not sustain such a
challenge.
Except as otherwise stated, this summary deals only with the Preferred
Securities held as a capital asset by a holder who or which (i) purchased the
Preferred Securities upon original issuance (an "Initial Holder") at their
original offering price and (ii) is a US Holder (as defined below). This summary
does not address all the tax consequences that may be relevant to a US Holder,
nor does it address the tax consequences, except as stated below, to holders
that are not US Holders ("Non-US Holders") or to holders that may be subject to
special tax treatment (such as banks, thrift institutions, real estate
investment trusts, regulated investment companies, insurance companies, brokers
and dealers in securities or currencies, other financial institutions,
tax-exempt organizations, persons holding the Preferred Securities as a position
in a "straddle," as part of a "synthetic security," "hedging," "conversion" or
other integrated investment, persons having a functional currency other than the
U.S. Dollar and certain United States expatriates). Further, this summary does
not address (a) the income tax consequences to shareholders in, or partners or
beneficiaries of, a holder of the Preferred Securities, (b) the United States
federal alternative minimum tax consequences of the purchase, ownership or
disposition of the Preferred Securities, or (c) any state, local or foreign tax
consequences of the purchase, ownership and disposition of Preferred Securities.
A "US Holder" is a holder of the Preferred Securities who or which is (i) a
citizen or individual resident (or is treated as a citizen or individual
resident) of the United States for income tax purposes, (ii) a corporation or
partnership created or organized (or treated as created or organized for income
tax purposes) in or under the laws of the United States or any political
subdivision thereof, (iii) an estate the income of which is includible in its
gross income for United States federal income tax purposes without regard to its
source, or (iv) a trust if (a) a court within the United
47
<PAGE> 50
States is able to exercise primary supervision over the administration of the
trust and (b) one or more United States trustees have the authority to control
all substantial decisions of the trust.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE PREFERRED
SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER
TAX LAWS.
US HOLDERS
Characterization of the Issuer Trust. In connection with the issuance of
the Preferred Securities, Tax Counsel will render its opinion generally to
effect that, under then current law and based on the representations, facts and
assumptions set forth in this Prospectus, and assuming full compliance with the
terms of the Trust Agreement (and other relevant documents), and based on
certain assumptions and qualifications referenced in the opinion, the Issuer
Trust will be characterized for United States federal income tax purposes as a
grantor trust and will not be characterized as an association taxable as a
corporation. Accordingly, for United States federal income tax purposes, each
holder of the Preferred Securities generally will be considered the owner of an
undivided interest in the Junior Subordinated Debentures owned by the Issuer
Trust, and each US Holder will be required to include all income or gain
recognized for United States federal income tax purposes with respect to its
allocable share of the Junior Subordinated Debentures on its own income tax
return.
Characterization of the Junior Subordinated Debentures. The Company and
the Issuer Trust will agree to treat the Junior Subordinated Debentures as
indebtedness for all United States federal income tax purposes. In connection
with the issuance of the Junior Subordinated Debentures, Tax Counsel will render
its opinion generally to the effect that, under then current law and based on
the representations, facts and assumptions set forth in this Prospectus, and
assuming full compliance with the terms of the Junior Subordinated Indenture
(and other relevant documents), and based on certain assumptions and
qualifications referenced in the opinion, the Junior Subordinated Debentures
will be characterized for United States federal income tax purposes as debt of
the Company.
Interest Income and Original Issue Discount. Under the terms of the Junior
Subordinated Debentures, the Company has the ability to defer payments of
interest from time to time by extending the interest payment period for a period
not exceeding 20 consecutive quarterly periods, but not beyond the maturity of
the Junior Subordinated Debentures. Recently issued Treasury regulations under
Section 1273 of the Code provide that debt instruments like the Junior
Subordinated Debentures will not be considered issued with original issue
discount ("OID") by reason of the Company's ability to defer payments of
interest if the likelihood of such deferral is "remote."
The Company has concluded, and this discussion assumes, that, as of the
date of this Prospectus, the likelihood of deferring payments of interest under
the terms of the Junior Subordinated Debentures is "remote" within the meaning
of the applicable Treasury regulations, in part because exercising that option
would prevent the Company from declaring dividends on its stock and would
prevent the Company from making any payments with respect to debt securities
that rank pari passu with or junior to the Junior Subordinated Debentures.
Therefore, the Junior Subordinated Debentures should not be treated as issued
with OID by reason of the Company's deferral option. Rather, stated interest on
the Junior Subordinated Debentures will generally be taxable to a US Holder as
ordinary income when paid or accrued in accordance with that holder's method of
accounting for income tax purposes. It should be noted, however, that these
Treasury regulations have not yet been interpreted in any rulings or any other
published authorities of the IRS. Accordingly, it is possible that the IRS could
take a position contrary to the interpretation described herein.
In the event the Company exercises its option to defer payments of
interest, the Junior Subordinated Debentures would be treated as redeemed and
reissued for OID purposes and the sum
48
<PAGE> 51
of the remaining interest payments (and any de minimis OID) on the Junior
Subordinated Debentures would thereafter be treated as OID, which would accrue,
and be includible in a US Holder's taxable income, on an economic accrual basis
(regardless of the US Holder's method of accounting for income tax purposes)
over the remaining term of the Junior Subordinated Debentures (including any
period of interest deferral), without regard to the timing of payments under the
Junior Subordinated Debentures. (Subsequent distributions of interest on the
Junior Subordinated Debentures generally would not be taxable.) The amount of
OID that would accrue in any period would generally equal the amount of interest
that accrued on the Junior Subordinated Debentures in that period at the stated
interest rate. Consequently, during any period of interest deferral, US Holders
will include OID in gross income in advance of the receipt of cash, and a US
Holder which disposes of a Preferred Security prior to the record date for
payment of distributions on the Junior Subordinated Debentures following that
period will be subject to income tax on OID accrued through the date of
disposition (and not previously included in income), but will not receive cash
from the Issuer Trust with respect to the OID.
If the possibility of the Company's exercise of its option to defer
payments of interest is not treated as remote, the Junior Subordinated
Debentures would be treated as initially issued with OID in an amount equal to
the aggregate stated interest (plus any de minimum OID) over the term of the
Junior Subordinated Debentures. That OID would generally be includible in a US
Holder's taxable income, over the term of the Junior Subordinated Debentures, on
an economic accrual basis.
Characterization of Income. Because the income underlying the Preferred
Securities will not be characterized as dividends for income tax purposes,
corporate holders of the Preferred Securities will not be entitled to a
dividends-received deduction for any income recognized with respect to the
Preferred Securities.
Market Discount and Bond Premium. Holders of the Preferred Securities
other than Initial Holders may be considered to have acquired their undivided
interests in the Junior Subordinated Debentures with market discount or
acquisition premium (as each phrase is defined for United States federal income
tax purposes).
Receipt of Junior Subordinated Debentures or Cash Upon Liquidation of the
Issuer Trust. Under certain circumstances described herein (See "Description of
the Preferred Securities -- Liquidation Distribution Upon Dissolution"), the
Issuer Trust may distribute the Junior Subordinated Debentures to holders in
exchange for the Preferred Securities and in liquidation of the Issuer Trust.
Except as discussed below, such a distribution would not be a taxable event for
United States federal income tax purposes, and each US Holder would have an
aggregate adjusted basis in its Junior Subordinated Debentures for United States
federal income tax purposes equal to such holder's aggregate adjusted basis in
its Preferred Securities. For United States federal income tax purposes, a US
Holder's holding period in the Junior Subordinated Debentures received in such a
liquidation of the Issuer Trust would include the period during which the
Preferred Securities were held by the holder. If, however, the relevant event is
a Tax Event which results in the Issuer Trust being treated as an association
taxable as a corporation, the distribution would likely constitute a taxable
event to US Holders of the Preferred Securities for United States federal income
tax purposes.
Under certain circumstances described herein (see "Description of the
Preferred Securities"), the Junior Subordinated Debentures may be redeemed for
cash and the proceeds of such redemption distributed to holders in redemption of
their Preferred Securities. Such a redemption would be taxable for United States
federal income tax purposes, and a US Holder would recognize gain or loss as if
it had sold the Preferred Securities for cash. See "-- Sales of Preferred
Securities" below.
Sales of Preferred Securities. A US Holder that sells Preferred Securities
will recognize gain or loss equal to the difference between its adjusted basis
in the Preferred Securities and the amount realized on the sale of such
Preferred Securities. A US Holder's adjusted basis in the Preferred Securities
generally will be its initial purchase price, increased by OID previously
included (or
49
<PAGE> 52
currently includible) in such holder's gross income to the date of disposition,
and decreased by payments received on the Preferred Securities (other than any
interest received with respect to the period prior to the effective date of the
Company's first exercise of its option to defer payments of interest). Any such
gain or loss generally will be capital gain or loss, and generally will be a
long-term capital gain or loss if the Preferred Securities have been held for
more than one year prior to the date of disposition.
A holder who disposes of his Preferred Securities between record dates for
payments of distributions thereon will be required to include accrued but unpaid
interest (or OID) on the Junior Subordinated Debentures through the date of
disposition in its taxable income for United States federal income tax purposes
(notwithstanding that the holder may receive a separate payment from the
purchaser with respect to accrued interest), and to deduct that amount from the
sales proceeds received (including the separate payment, if any, with respect to
accrued interest) for the Preferred Securities (or as to OID only, to add such
amount to such holder's adjusted tax basis in its Preferred Securities). To the
extent the selling price is less than the holder's adjusted tax basis (which
will include accrued but unpaid OID, if any), a holder will recognize a capital
loss. Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes.
PROPOSED TAX LAW CHANGES
On February 6, 1997, President Clinton released his budget proposals for
fiscal year 1998. The Tax Proposal would generally deny corporate issuers a
deduction for interest on certain debt obligations that have a maximum term in
excess of 15 years and are not shown as indebtedness on the separate balance
sheet of the issuer or, where the instrument is issued to a related party (other
than a corporation), where the holder or some other related party issues a
related instrument that is not shown as indebtedness on the issuer's
consolidated balance sheet. As currently drafted, the Tax Proposal would be
effective generally for instruments issued on or after the date of first
Congressional committee action. Although it is not clear from the President's
proposals as to what constitutes Congressional "committee action" with respect
to the Tax Proposal, it appears that, as drafted, the Tax Proposal would not
apply retroactively to the Junior Subordinated Debentures. However, if the Tax
Proposal (or similar legislation) is enacted with retroactive effect with
respect to the Junior Subordinated Debentures, the Company would not be entitled
to an interest deduction with respect to the Junior Subordinated Debentures.
There can be no assurance that the Tax Proposal, if enacted, will not apply
retroactively to the Junior Subordinated Debentures or that other legislation
enacted after the date hereof will not otherwise adversely affect the ability of
the Company to deduct the interest payable on the Junior Subordinated
Debentures. Accordingly, there can be no assurance that a Tax Event will not
occur. See "Description of the Preferred Securities -- Redemption."
NON-US HOLDERS
The following discussion applies to a Non-US Holder.
Payments to a holder of a Preferred Security which is a Non-US Holder will
generally not be subject to withholding of income tax, provided that (a) the
beneficial owner of the Preferred Security does not (directly or indirectly,
actually or constructively) own 10% or more of the total combined voting power
of all classes of stock of the Company entitled to vote, (b) the beneficial
owner of the Preferred Security is not a controlled foreign corporation that is
related to the Company through stock ownership, and (c) either (i) the
beneficial owner of the Preferred Securities certifies to the Issuer Trust or
its agent, under penalties of perjury, that it is a Non-US Holder and provides
its name and address, or (ii) a securities clearing organization, bank or other
financial institution that holds customers' securities in the ordinary course of
its trade or business (a "Financial Institution"), and holds the Preferred
Security in such capacity, certifies to the Issuer Trust or its agent, under
penalties of perjury, that such a statement has been received from the
beneficial owner by it or
50
<PAGE> 53
by another Financial Institution between it and the beneficial owner in the
chain of ownership, and furnishes the Issuer Trust or its agent with a copy
thereof.
As discussed above (see "-- Proposed Tax Law Changes"), changes in
legislation affecting the income tax consequences of the Junior Subordinated
Debentures are possible, and could adversely affect the ability of the Company
to deduct the interest payable on the Junior Subordinated Debentures. Moreover,
any such legislation could adversely affect Non-US Holders by characterizing
income derived from the Junior Subordinated Debentures as dividends, generally
subject to a 30% income tax (on a withholding basis) when paid to a Non-US
Holder, rather than as interest which, as discussed above, is generally exempt
from income tax in the hands of a Non-US Holder.
A Non-US Holder of a Preferred Security will generally not be subject to
withholding of income tax on any gain realized upon the sale or other
disposition of a Preferred Security.
A Non-US Holder which holds the Preferred Securities in connection with the
active conduct of a United States trade or business will be subject to income
tax on all income and gains recognized with respect to its proportionate share
of the Junior Subordinated Debentures.
INFORMATION REPORTING
In general, information reporting requirements will apply to payments made
on, and proceeds from the sale of, the Preferred Securities held by a
noncorporate US Holder within the United States. In addition, payments made on,
and payments of the proceeds from the sale of, the Preferred Securities to or
through the United States office of a broker are subject to information
reporting unless the holder thereof certifies as to its Non-United States status
or otherwise establishes an exemption from information reporting and backup
withholding. See "-- Backup Withholding." Taxable income on the Preferred
Securities for a calendar year should be reported to US Holders on the
appropriate form by the following January 31st.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Preferred Securities
may be subject to a "backup" withholding tax of 31% unless the holder complies
with certain identification or exemption requirements. Any amounts so withheld
will be allowed as a credit against the holder's income tax liability, or
refunded, provided the required information is provided to the IRS.
THE PRECEDING DISCUSSION IS ONLY A SUMMARY AND DOES NOT ADDRESS THE
CONSEQUENCES TO A PARTICULAR HOLDER OF THE PURCHASE, OWNERSHIP AND DISPOSITION
OF THE PREFERRED SECURITIES. POTENTIAL HOLDERS OF THE PREFERRED SECURITIES ARE
URGED TO CONTACT THEIR OWN TAX ADVISORS TO DETERMINE THEIR PARTICULAR TAX
CONSEQUENCES.
CERTAIN ERISA CONSIDERATIONS
The Company and certain affiliates of the Company may each be considered a
"party in interest" within the meaning of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or a "disqualified person" within the
meaning of Section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code") with respect to many employee benefit plans ("Plans") that are subject
to ERISA. The purchase of the Preferred Securities by a Plan that is subject to
the fiduciary responsibility provisions of ERISA or the prohibited transaction
provisions of Section 4975(e)(1) of the Code) and with respect to which the
Company, or any affiliate of the Company is a service provider (or otherwise is
a party in interest or a disqualified person) may constitute or result in a
prohibited transaction under ERISA or Section 4975 of the Code, unless the
Preferred Securities are acquired pursuant to and in accordance with an
applicable exemption. Any pension or other employee benefit plan proposing to
acquire any Preferred Securities should consult with its counsel.
51
<PAGE> 54
SUPERVISION, REGULATION AND OTHER MATTERS
The following information is not intended to be an exhaustive description
of the statutes and regulations applicable to the Company. The discussion is
qualified in its entirety by reference to all particular statutory or regulatory
provisions. Additional information regarding supervision and regulation is
included in the documents incorporated herein by reference. See "Incorporation
of Certain Documents by Reference."
The business of the Company is influenced by prevailing economic conditions
and governmental policies, both foreign and domestic. The actions and policy
directives of the Federal Reserve determine to a significant degree the cost and
the availability of funds obtained from money market sources for lending and
investing. The Federal Reserve's policies and regulations also influence,
directly and indirectly, the rates of interest paid by commercial banks on their
time and savings deposits. The nature and impact on the Company of future
changes in economic conditions and monetary and fiscal policies, both foreign
and domestic, are not predictable.
The Company and the Bank are subject to supervision and examination by
federal bank regulatory authorities. The Company's primary bank regulatory
authority is the Federal Reserve. The Bank's primary bank regulatory authority
is the Office of the Comptroller of the Currency.
The federal bank regulatory authorities have each adopted risk-based
capital guidelines to which the Company is subject. These guidelines are based
on an international agreement developed by the Basle Committee on Banking
Regulations and Supervisory Practices, which consists of representatives of
central banks and supervisory authorities in 12 countries including the United
States of America. The guidelines establish a systematic analytical framework
that makes regulatory capital requirements more sensitive to differences in risk
profiles among banking organizations, takes off-balance sheet exposures into
explicit account in assessing capital adequacy and minimizes disincentives to
holding liquid, low-risk assets. Risk-based assets are determined by allocating
assets and specified off-balance sheet commitments and exposures into four
weighted categories, with higher levels of capital being required for the
categories perceived as representing greater risk.
The Bank is required to maintain minimum ratios of "qualifying total
capital" and Tier 1 capital to risk-weighted assets of 8% and 4% respectively.
In addition, the federal bank regulators have established leverage ratio (Tier 1
capital to total adjusted average assets) guidelines providing for a minimum
leverage ratio of 3% for banks meeting certain specified criteria, including
excellent asset quality, high liquidity, low interest rate exposure and the
highest regulatory rating. Institutions not meeting these criteria are expected
to maintain a ratio which exceeds the 3% minimum by at least 100 to 200 basis
points. The federal bank regulatory authorities may, however, set higher capital
requirements when a bank's particular circumstances warrant. Bank holding
companies are expected to serve as a source of strength to their subsidiary
banks under the Federal Reserve's regulations and policies.
Effective January 17, 1995, the federal bank regulatory agencies, including
the Federal Reserve, amended their respective agency risked-based capital
standards to include concentration of credit risk and the risks of
non-traditional activities. Those agencies, including the Federal Reserve, also
issued a joint policy statement, effective June 26, 1996, that provides guidance
on sound practices for interest rate risk management. The policy describes
critical factors affecting the agencies' evaluation of a bank's interest rate
risk when making a determination of capital adequacy.
The federal banking agencies possess broad powers to take corrective action
as deemed appropriate for an insured depository institution and its holding
companies. The extent of these powers depends upon whether the institution in
question is considered "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" or "critically
undercapitalized." Generally, as an institution is deemed to be less well
capitalized, the scope and severity of the agencies' powers increase. The
agencies' corrective powers can include, among other things, requiring an
insured financial institution to adopt a capital restoration plan which cannot
be
52
<PAGE> 55
approved unless guaranteed by the institution's parent holding company; placing
limits on asset growth and restrictions on activities; placing restrictions on
transactions with affiliates; restricting the interest rates the institution may
pay on deposits; prohibiting the institution from accepting deposits from
correspondent banks; prohibiting the payment of principal or interest on
subordinated debt; prohibiting the holding company from making capital
distributions without prior regulatory approval; and, ultimately, appointing a
receiver for the institution. Business activities may also be influenced by an
institution's capital classification. For instance, only a "well capitalized"
depository institution may accept brokered deposits without prior regulatory
approval and only an "adequately capitalized" depository institution may accept
brokered deposits with prior regulatory approval. At March 31, 1997, the
Company, on a consolidated basis, and the Bank exceeded the required capital
ratios for classification as a "well capitalized" organization or institution,
as the case may be.
The deposits of the Bank are insured by the Federal Deposit Insurance
Corporation (the "FDIC") and are subject to FDIC insurance assessments. The
amount of FDIC assessments paid by individual insured depository institutions is
based on their relative risk as measured by regulatory capital ratios and
certain other factors. During 1995, the FDIC's Board of Directors significantly
reduced premium rates assessed for deposits insured by the Bank Insurance Fund
(the "BIF"), resulting in the Company not currently being assessed a premium on
its BIF-insured deposits. With respect to deposits insured by the Savings
Association Insurance Fund ("SAIF"), on September 30, 1996, President Clinton
signed into law legislation that mandated a one-time assessment on SAIF-insured
deposits to recapitalize the SAIF. As a result, for the quarter ended September
30, 1996, the Company recorded a pre-tax charge of $1,175,000 for this SAIF
assessment. The legislation also mandates reductions in deposit premium rates on
SAIF-insured deposits.
Under federal law, a financial institution insured by the FDIC under common
ownership with a failed institution can be required to indemnify the FDIC for
its losses resulting from the insolvency of the failed institution, even if such
indemnification causes the affiliated institution also to become insolvent. As a
result, the Company could, under certain circumstances, be obligated for the
liabilities of any of its affiliates, such as the Bank, that are FDIC-insured
institutions. In addition, if any insured depository institution becomes
insolvent and the FDIC is appointed its conservator or receiver, the FDIC may
disaffirm or repudiate any contract or lease to which such institution is a
party, the performance of which is determined to be burdensome and the
disaffirmance or repudiation of which is determined to promote the orderly
administration of the institution's affairs. If Federal law were construed to
permit the FDIC to apply these provisions to debt obligations of an insured
depository institution, the result could be that such obligations would be
prepaid without premium. Federal law also accords the claims of a receiver of an
insured depository institution for administrative expenses and the claims of
holders of deposit liabilities of such an institution priority over the claims
of general unsecured creditors of such an institution in the event of a
liquidation or other resolution of such institution.
The Bank Holding Company Act of 1956, as amended, currently permits
adequately capitalized and adequately managed bank holding companies from any
state to acquire banks and bank holding companies located in any other state,
subject to certain conditions. Effective June 1, 1997, the Bank will have the
ability, subject to certain restrictions, including state opt-out provisions, to
acquire by acquisition or merger branches outside of its home state. States may
affirmatively opt-in earlier, which Pennsylvania (among other states) has done.
Competition may increase as banks branch across state lines and enter new
markets.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement (the
"Underwriting Agreement"), Alex. Brown & Sons Incorporated (the "Underwriter")
has agreed to purchase from the Issuer Trust $35,000,000 aggregate Liquidation
Amount of Preferred Securities at the public
53
<PAGE> 56
offering price less the underwriting discounts and commissions set forth on the
cover page of this Prospectus.
The Underwriting Agreement provides that the obligations of the Underwriter
are subject to certain conditions precedent and that the Underwriter will
purchase all of the Preferred Securities offered hereby if any of such Preferred
Securities are purchased.
The Company has been advised by the Underwriter that the Underwriter
proposes to offer the Preferred Securities 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 $ per share. The
Underwriter may allow, and such dealers may reallow, a concession not in excess
of $ per share to certain other dealers. After the public offering, the
offering price and other selling terms may be changed by the Underwriter.
The Company has granted to the Underwriter an option, exercisable not later
than the earlier of (i) 30 days after the date of this Prospectus, or (ii) prior
to the effective date of any Tax Proposal, to purchase up to an additional
$5,250,000 aggregate Liquidation Amount of the Preferred Securities at the
public offering price, less the underwriting discounts and commissions set forth
on the cover page of this Prospectus, plus accrued interest, if any, from
, 1997. To the extent that the Underwriter exercises such option,
the Company will be obligated, pursuant to the option, to sell such Preferred
Securities to the Underwriter. The Underwriter may exercise such option only to
cover over-allotments made in connection with the sale of the Preferred
Securities offered hereby. If purchased, the Underwriter will offer such
additional Preferred Securities on the same terms as those on which the
$35,000,000 aggregate Liquidation Amount of the Preferred Securities are being
offered.
In connection with the offering of the Preferred Securities, the
Underwriter and any selling group members and their respective affiliates may
engage in transactions effected in accordance with Rule 104 of the Securities
and Exchange Commission's Regulation M that are intended to stabilize, maintain
or otherwise affect the market price of the Preferred Securities. Such
transactions may include over-allotment transactions in which the Underwriter
creates a short position for its own account by selling more Preferred
Securities than it is committed to purchase from the Issuer Trust. In such a
case, to cover all or part of the short position, the Underwriter may exercise
the over-allotment option described above or may purchase Preferred Securities
in the open market following completion of the initial offering of the Preferred
Securities. The Underwriter also may engage in stabilizing transactions in which
it bids for, and purchases, shares of the Preferred Securities at a level above
that which might otherwise prevail in the open market for the purpose of
preventing or retarding a decline in the market price of the Preferred
Securities. The Underwriter also may reclaim any selling concessions allowed to
a dealer if the Underwriter repurchases shares distributed by that dealer. Any
of the foregoing transactions may result in the maintenance of a price for the
Preferred Securities at a level above that which might otherwise prevail in the
open market. Neither the Company nor the Underwriter makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Preferred Securities. The
Underwriter is not required to engage in any of the foregoing transactions and,
if commenced, such transactions may be discontinued at any time without notice.
In view of the fact that the proceeds from the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures issued by
the Company, the Underwriting Agreement provides that the Company will pay as
compensation for the Underwriter's arranging the investment therein of such
proceeds an amount of $ per Preferred Security (or $ in the
aggregate) for the account of the Underwriter.
Because the National Association of Securities Dealers, Inc. ("NASD") is
expected to view the Preferred Securities as interests in a direct participation
program, the offering of the Preferred
54
<PAGE> 57
Securities is being made in compliance with the applicable provisions of Rule
2810 of the NASD's Conduct Rules.
The Preferred Securities are a new issue of securities with no established
trading market. The Company and the Issuer Trust have been advised by the
Underwriter that it intends to make a market in the Preferred Securities.
However, the Underwriter is not obligated to do so and such market making may be
interrupted or discontinued at any time without notice at the sole discretion of
the Underwriter. Application has been made by the Company and the Issuer Trust
to list the Preferred Securities in the Nasdaq National Market, but one of the
requirements for listing and continuing listing is the presence of two market
makers for the Preferred Securities, and the presence of a second market maker
cannot be assured. Accordingly, no assurance can be given as to the development
or liquidity of any market for the Preferred Securities.
The Company and the Issuer Trust have agreed to indemnify the Underwriter
against certain liabilities, including liabilities under the Securities Act.
The Underwriter has in the past performed and may in the future perform
various services to the Company, including investment banking services, for
which it has or may receive customary fees for such services.
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the Preferred
Securities, the enforceability of the Trust Agreement and the creation of the
Issuer Trust will be passed upon by Richards, Layton & Finger, special Delaware
counsel to the Company and the Issuer Trust. The validity of the Guarantee and
the Junior Subordinated Debentures will be passed upon for the Company by
Ellsworth, Wiles & Chalphin, P.C., Wyomissing, Pennsylvania, counsel to the
Company, and for the Underwriter by Arnold & Porter, Washington, D.C. and New
York, New York. H. Anderson Ellsworth, a principal in Ellsworth, Wiles &
Chalphin, P.C., owns directly or indirectly 3,710 shares of the Company's common
stock.
EXPERTS
The consolidated financial statements of the Company as of and for the
years ended December 31, 1996 and 1995, appearing in the 1996 Annual Report of
the Company to its Shareholders and included in the Annual Report on Form 10-K
for the year ended December 31, 1996, are incorporated by reference in this
Prospectus or in the Registration Statement of which this Prospectus forms a
part, have been audited by Grant Thornton LLP, independent certified public
accountants, whose reports thereon appear therein, and in reliance upon such
reports of Grant Thornton LLP, given upon the authority of such firm as experts
in accounting and auditing.
55
<PAGE> 58
======================================================
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 4
Incorporation of Certain Documents by
Reference........................... 4
Prospectus Summary.................... 6
Risk Factors.......................... 9
National Penn Bancshares, Inc. ....... 15
Selected Consolidated Financial Data
and Other Information............... 16
Recent Developments................... 17
NPB Capital Trust..................... 19
Use of Proceeds....................... 19
Capitalization........................ 20
Accounting Treatment.................. 21
Description of Preferred Securities... 21
Description of Junior Subordinated
Debentures.......................... 34
Description of Guarantee.............. 43
Relationship Among the Preferred
Securities, the Junior Subordinated
Debentures and the Guarantee........ 45
Certain Federal Income Tax
Consequences........................ 47
Certain ERISA Considerations.......... 51
Supervision, Regulation and Other
Matters............................. 52
Underwriting.......................... 53
Validity of Securities................ 55
Experts............................... 55
</TABLE>
======================================================
======================================================
NATIONAL PENN BANCSHARES INC. LOGO
$35,000,000
NPB Capital Trust
% PREFERRED SECURITIES
(Liquidation Amount $25 per
Preferred Security)
Fully and Unconditionally Guaranteed,
to the Extent Described Herein, by
NATIONAL PENN
BANCSHARES, INC.
-------------------
PROSPECTUS
-------------------
ALEX. BROWN & SONS
INCORPORATED
, 1997
======================================================
<PAGE> 59
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following expenses will be incurred in connection with the issuance and
distribution of the Securities being registered, other than underwriting
discounts and commissions.
To be borne by the Company:
<TABLE>
<S> <C>
Registration Fee................................................. $ 12,197
Legal Services................................................... 75,000*
Printing and Engraving........................................... 60,000*
Accounting Fees.................................................. 20,000*
Trustee Fees and Expenses........................................ 20,000*
Blue Sky Fees and Expenses....................................... 10,000*
Miscellaneous.................................................... 2,803*
-------
Total.................................................. $200,000
=======
</TABLE>
- - - - ---------------
* Estimated.
ITEM 16. EXHIBITS
An Exhibit Index appears on page II-4 of this Registration Statement.
II-1
<PAGE> 60
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Pre-Effective
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Borough of Boyertown,
Pennsylvania, on this 12th day of May, 1997.
NATIONAL PENN BANCSHARES, INC.
By: /s/ LAWRENCE T. JILK, JR.
--------------------------------------
Lawrence T. Jilk, Jr.,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment No. 1 to the Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- - - - ------------------------------------------ ----------------------------------- -------------
<C> <S> <C>
/s/ LAWRENCE T. JILK, JR. President, Chief Executive Officer May 12, 1997
- - - - ------------------------------------------ and Director (Principal Executive
Lawrence T. Jilk, Jr. Officer)
/s/ GARY L. RHOADS Treasurer (Principal Financial and May 12, 1997
- - - - ------------------------------------------ Accounting Officer)
Gary L. Rhoads
JOHN H. BODY* Director May 12, 1997
- - - - ------------------------------------------
John H. Brody
J. RALPH BORNEMAN, JR.* Director May 12, 1997
- - - - ------------------------------------------
J. Ralph Borneman, Jr.
FREDERICK H. GAIGE* Director May 12, 1997
- - - - ------------------------------------------
Frederick H. Gaige
JOHN J. DAU* Director May 12, 1997
- - - - ------------------------------------------
John J. Dau
Director
- - - - ------------------------------------------
Patricia L. Langiotti
Director
- - - - ------------------------------------------
Kenneth A. Longacre
</TABLE>
II-2
<PAGE> 61
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- - - - ------------------------------------------ ----------------------------------- -------------
<C> <S> <C>
- - - - ------------------------------------------ Director
C. Robert Roth
Director
- - - - ------------------------------------------
Harold C. Wegman, D.D.S.
WAYNE R. WEIDNER* Director May 12, 1997
- - - - ------------------------------------------
Wayne R. Weidner
*By: /s/ LAWRENCE T. JILK, JR.
- - - - ------------------------------------------
Lawrence T. Jilk, Jr.
(Attorney-in-fact)
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, the Trust has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Borough of Boyertown,
Pennsylvania on May 12, 1997.
NPB CAPITAL TRUST
By NATIONAL PENN BANCSHARES, INC.,
as Depositor
By: /s/ LAWRENCE T. JILK, JR.
--------------------------------------
Lawrence T. Jilk, Jr.,
President and Chief Executive Officer
II-3
<PAGE> 62
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER: DESCRIPTION:
- - - - ------- ---------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement, filed herewith.
4.1 Form of Junior Subordinated Indenture, previously filed.
4.2 Form of Trust Agreement, previously filed.
4.3 Form of Amended and Restated Trust Agreement, filed herewith.
4.4 Form of Guarantee, filed herewith.
5.1 Opinion of Richards, Layton & Finger, to be filed by amendment.
5.2 Opinion of Ellsworth, Wiles & Chalphin, P.C., to be filed by amendment.
8.1 Tax opinion of Ellsworth, Wiles & Chalphin, P.C., to be filed by amendment.
23.1 Consent of Grant Thornton LLP, previously filed.
23.2 Consent of Richards, Layton & Finger, to be included in Exhibit 5.1.
23.4 Consent of Ellsworth, Wiles & Chalphin, P.C., to be included in Exhibits 5.2 and
8.1.
24.1 Powers of Attorney of certain directors and officers of National Penn Bancshares,
Inc., previously filed.
25.1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
Bankers Trust Company, as trustee under the Junior Subordinated Indenture, the
Amended and Restated Trust Agreement and the Guarantee Agreement relating to NPB
Capital Trust, previously filed.
</TABLE>
<PAGE> 1
EXHIBIT 1.1
NPB CAPITAL TRUST
$35,000,000
____% Preferred Securities
(Liquidation Amount $25 per Preferred Security)
by
ALEX. BROWN & SONS INCORPORATED
UNDERWRITING AGREEMENT
May __, 1997
ALEX. BROWN & SONS INCORPORATED
1 South Street
Baltimore, Maryland 21202
Dear Sirs:
NPB Capital Trust (the "Trust"), a statutory business trust organized
under the Business Trust Act (the "Delaware Act") of the State of Delaware
(Chapter 38, Title 12, of the Delaware Business Code, 12 Del. C. Section 3801 et
seq.), and National Penn Bancshares, Inc., a Pennsylvania corporation (the
"Company"), as depositor of the Trust and as guarantor, propose, upon the terms
and conditions set forth herein, to issue and sell to Alex. Brown & Sons
Incorporated (the "Underwriter") an aggregate liquidation amount of $35,000,000
(the "Firm Securities") of the Trust's ____% preferred securities (the
"Preferred Securities"). The Trust and the Company also propose to issue and
sell to the Underwriter, at the Underwriter's option, up to an additional
$5,250,000 aggregate liquidation amount of Preferred Securities (the "Option
Securities") as set forth herein. The term "Preferred Securities" as used
herein, unless indicated otherwise, shall mean the Firm Securities and the
Option Securities.
The Preferred Securities and Common Securities (as defined herein) are
to be issued pursuant to the terms of an Amended and Restated Trust Agreement
dated as of May __, 1997 (the "Trust Agreement"), among the Company, as
depositor, and, together with the Trust, the "Offerors," and Bankers Trust
Company ("Trust Company"), a New York banking corporation, as property trustee
<PAGE> 2
- 2 -
("Property Trustee") and Bankers Trust (Delaware) ("Trust Delaware"), a Delaware
banking corporation, as Delaware trustee ("Delaware Trustee") and the holders
from time to time of undivided interests in the assets of the Trust. The
Preferred Securities will be guaranteed by the Company on a subordinated basis
and subject to certain limitations with respect to distributions and payments
upon liquidation, redemption or otherwise (the "Guarantee") pursuant to the
Preferred Securities Guarantee Agreement dated as of May 5, 1997 (the "Guarantee
Agreement"), between the Company and the Trust Company, as Trustee (the
"Guarantee Trustee"). The assets of the Trust will consist of ____% junior
subordinated deferrable interest debentures, due June __, 2027, which date may
be shortened once at any time by the Company to any date not earlier than June
___, 2002, subject to the Company having received prior approval of the Federal
Reserve Board of Governors of the Federal Reserve System (the "Federal Reserve")
if then required under applicable capital guidelines or policies of the Federal
Reserve (the "Subordinated Debentures") of the Company which will be issued
under an indenture dated as of May __, 1997 (the "Indenture"), between the
Company and the Trust Company, as Trustee (the "Indenture Trustee"). Under
certain circumstances, the Subordinated Debentures will be distributable to the
holders of undivided beneficial interests in the assets of the Trust. The entire
proceeds from the sale of the Preferred Securities will be combined with the
entire proceeds from the sale by the Trust to the Company of the Trust's common
securities (the "Common Securities"), and will be used by the Trust to purchase
an equivalent amount of the Subordinated Debentures.
The Company and the Trust have filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (Nos.
333-_____, 333-_____-1) and a related preliminary prospectus for the
registration of the Preferred Securities and the Subordinated Debentures under
the Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations thereunder (the "Securities Act Regulations"). The Company and the
Trust have prepared and filed such amendments thereto, if any, and such amended
preliminary prospectuses, if any, as may have been required to the date hereof,
and will file such additional amendments thereto and such amended prospectuses
as may hereafter be required. The registration statement has been declared
effective under the Securities Act by the Commission. The registration statement
as amended at the time it became effective (including the Prospectus and the
documents incorporated by reference therein pursuant to the section therein
entitled "Incorporation of Certain Documents by Reference" and all information
deemed to be a part of the registration statement at the time it became
effective pursuant to Rule 430A(b) of the Securities Act Regulations) is
hereinafter called the "Registration Statement," except that, if the Company
files a post-effective amendment to such registration statement
<PAGE> 3
- 3 -
which becomes effective prior to the Closing Date (as defined below),
"Registration Statement" shall refer to such registration statement as so
amended. Each prospectus included in the registration statement, or amendments
thereof, before it became effective under the Securities Act and any prospectus
filed with the Commission by the Company with the consent of the Underwriter
pursuant to Rule 424(a) of the Securities Act Regulations (including the
documents incorporated by reference therein) is hereinafter called the
"Preliminary Prospectus." The term "Prospectus" means the final prospectus
(including the documents incorporated by reference therein), as first filed with
the Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the Securities
Act Regulations. The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus. The Company hereby agrees with
the Underwriter as follows:
SECTION 1. Representations and Warranties.
a. Each of the Offerors represents and warrants to the
Underwriter as follows:
(i) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements thereto will, when they
become effective or are filed with the Commission, as the case may be,
conform, in all material respects with the requirements of the
Securities Act, with respect to the documents incorporated by
reference, the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and the applicable rules and regulations under said
acts; the Trust Agreement, the Guarantee Agreement, and the Indenture
conform with the requirements of the Trust Indenture Act, and the
applicable rules and regulations thereunder; the Registration Statement
did not, and any amendment thereto will not, in each case as of the
applicable effective date, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements made, not misleading; and the Prospectus and any amendment
or supplement thereto will not, as of the applicable filing date and at
the Closing Date (as hereinafter defined), contain any untrue statement
of a material fact or omit to state a material fact necessary in order
to make the statements made, in the light of the circumstances under
which they were made, not misleading; provided, however, that the
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information
furnished to the Trust or the Company by or on behalf of any
Underwriter in
<PAGE> 4
- 4 -
writing expressly for use in the Registration Statement or Prospectus.
(ii) The documents incorporated by reference in the Prospectus
pursuant to the section therein entitled "Incorporation of Certain
Documents by Reference," at the time they were filed with the
Commission, complied in all material respects with the requirements of
the Securities Act, the Securities Act Regulations and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations of the Commission thereunder, and did not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading.
(iii) Neither the Company nor the Trust is an open-end
investment company, unit investment trust or face-amount certificate
company that is, or is required to be, registered under Section 8 of
the Investment Company Act of 1940, as amended (the "Investment Company
Act"), nor is either a closed-end investment company required to be
registered, but not registered, thereunder.
(iv) Each report filed by the Company with the Commission
under the Exchange Act, and the rules and regulations promulgated
thereunder, and incorporated by reference in the Registration
Statement, complied when filed with the Commission as to form in all
material respects with the requirements of the Exchange Act and the
applicable rules and regulations thereunder.
(v) The Trust and the Company meet the requirements for the
use of Form S-3 under the Securities Act.
(vi) The Company has been duly incorporated and remains a
subsisting corporation in good standing under the laws of the
Commonwealth of Pennsylvania with corporate power and authority to own
and lease its properties and to conduct its business as described in
the Prospectus and to enter into and perform its obligations under this
Agreement, the Trust Agreement, the Guarantee Agreement, the Indenture
and the Preferred Securities; the Company is duly qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction, if any, in which its ownership or leasing of
properties or the conduct of its business requires such qualification,
except where the failure to so qualify would not have a material
adverse effect on the conduct of the business, condition (financial or
otherwise), earnings, business affairs or
<PAGE> 5
- 5 -
business prospects of the Company and its subsidiaries considered as
one enterprise; and the Company is duly registered as a bank holding
company under the Bank Holding Company Act of 1956, as amended.
(vii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein, (A) there has been no material adverse change
in the condition, financial or otherwise, of the Company and its
subsidiaries considered as one enterprise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business, (B) there have been no material transactions
entered into by the Company or its subsidiaries other than those in the
ordinary course of business, and (C) the Company has not sustained any
material loss or interference with its assets, businesses or properties
(whether owned or leased) from fire, explosion, earthquake, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or any court or legislative or other governmental action, order
or decree.
(viii) The Preferred Securities have been duly and validly
authorized for issuance and sale to the Underwriter pursuant to this
Agreement and, when executed and authenticated in accordance with the
terms of the Trust Agreement and delivered to the Underwriter against
payment of the consideration set forth herein, will constitute valid
and legally binding obligations of the Trust enforceable in accordance
with their terms and entitled to the benefits provided by the Trust
Agreement. The Trust Agreement has been duly authorized and, when
executed by the proper officers of the Trust and delivered by the
Trust, will have been duly executed and delivered by the Trust and will
constitute the valid and legally binding instrument of the Trust,
enforceable in accordance with its terms, except as enforcement thereof
may be limited by bankruptcy, insolvency or other laws relating to or
affecting enforcement of creditors' rights generally or by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law). The Subordinated Debentures have been
duly and validly authorized for delivery by the Company and when duly
authenticated in accordance with the terms of the Indenture and
delivered to the Trust against payment of the consideration set forth
herein, will constitute valid and legally binding obligations of the
Company enforceable against the Company in accordance with their terms
(except as such enforceability may be limited by applicable
<PAGE> 6
- 6 -
bankruptcy, insolvency, reorganization, receivership, readjustment of
debt, moratorium, fraudulent conveyance or similar laws relating to or
affecting creditors' rights generally, general equity principles
(whether considered in a proceeding in equity or at law)) and entitled
to the benefits provided by the Indenture. The Indenture has been duly
authorized and, when executed by the proper officers of the Company and
delivered by the Company, will have been duly executed and delivered by
the Company and will constitute the valid and legally binding
instrument of the Company, enforceable in accordance with its terms,
except as enforcement thereof may be limited by bankruptcy, insolvency
or other laws relating to or affecting enforcement of creditors' rights
generally or by general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law). The Trust
Agreement, the Guarantee Agreement, and the Indenture have been duly
qualified under the Trust Indenture Act; and the Preferred Securities,
the Trust Agreement, the Guarantee Agreement, the Subordinated
Debentures and the Indenture conform in all material respects to the
descriptions thereof contained in the Registration Statement and the
Prospectus.
(ix) This Agreement has been duly authorized, executed and
delivered by the Trust and the Company and constitutes the valid and
binding agreement of the Trust and the Company enforceable against the
Trust and the Company in accordance with its terms except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, or by general equitable
principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(x) Neither the Trust, nor the Company or any of its
subsidiaries is in violation of its charter or in default in the
performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which it is a party
or by which it or any of its properties may be bound and which is
material to the either the Trust or the Company and its subsidiaries
considered as one enterprise and the execution and delivery of this
Agreement, the Trust Agreement, the Guarantee Agreement, and the
Indenture, the issue and sale of the Preferred Securities, the issue
and sale of the Subordinated Debentures, the compliance by the Trust
and the Company with the provisions of the Preferred Securities and the
Subordinated Debentures, this Agreement, the Trust
<PAGE> 7
- 7 -
Agreement, the Guarantee Agreement, and the Indenture, and the
consummation of the transactions herein and therein contemplated will
not conflict with or constitute a breach of, or default under, the
organization documents of the Trust or the articles of incorporation or
by-laws of the Company or a breach or default under any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to
which the Trust or the Company or any of its subsidiaries is a party or
by which it or any of its properties may be bound and which is material
to the Trust or the Company and its subsidiaries considered as one
enterprise, nor will such action result in any violation on the part of
the Trust or the Company or its subsidiaries of any applicable law or
regulation or of any applicable administrative, regulatory or court
decree.
(xi) There are no actions, suits, claims or proceedings
pending or, to the knowledge of the Trust or the Company, threatened
against the Trust or the Company or any of its subsidiaries before any
court or administrative agency or otherwise which are required to be
disclosed in the Registration Statement and are not so disclosed which,
if determined adversely to the Trust or the Company or any of its
subsidiaries would individually or in the aggregate have a material
adverse effect on the business, condition (financial and otherwise),
earnings, business affairs or business prospects of the Trust or the
Company and its subsidiaries, considered as one enterprise or prevent
the consummation of the transactions contemplated hereby.
(xii) The Commission has not issued an order preventing or
suspending the use of the Prospectus, nor instituted proceedings for
that purpose.
(xiii) The independent certified public accountants who
audited the consolidated financial statements included or incorporated
by reference in the Prospectus are independent public accountants as
required by the Securities Act and the Securities Act Regulations.
(xiv) The consolidated financial statements, including the
notes thereto and the supporting schedules, included or incorporated by
reference in the Prospectus present fairly, the financial position,
results of operations and cash flows of the Company and its
subsidiaries at the dates indicated, and the results of their
operations for the periods specified; such consolidated financial
statements have been prepared in conformity with generally accepted
accounting principles
<PAGE> 8
- 8 -
applied on a consistent basis except as otherwise stated therein.
(xv) The Company and it subsidiaries have good and marketable
title to all of the properties and assets owned by them reflected in
the consolidated financial statements (or as described in the
Prospectus), subject to no lien, mortgage, pledge, charge or
encumbrance of any kind except those reflected in such consolidated
financial statements (or as described in the Prospectus or which are
not material in amount).
(xvi) The Company and its subsidiaries have filed all federal,
state and local tax returns which have been required to be filed and
have paid all taxes indicated by said returns and all assessments
received by them or any of them to the extent that such taxes have
become due and are not being contested in good faith. All tax
liabilities have been adequately provided for in the consolidated
financial statements of the Company.
(xvii) No approval, authorization, consent, registration,
qualification or other order of any public board or body is required in
connection with the execution and delivery of this Agreement, the Trust
Agreement, the Guarantee Agreement, or the Indenture, or the issuance
and sale of the Preferred Securities, the issuance and sale of the
Subordinated Debentures, or the consummation by the Trust and the
Company of the other transactions contemplated by this Agreement, the
Trust Agreement, the Guarantee Agreement, or the Indenture, except such
as have been obtained, or will have been obtained at the Closing Date,
under the Securities Act, the Exchange Act and the Trust Indenture Act
and such as may be required under the blue sky or securities laws of
various states in connection with the offering of the Preferred
Securities.
(xviii) The Company and its subsidiaries possess all material
licenses, certificates, authorities or permits issued by the
appropriate State or Federal regulatory agencies or bodies necessary to
conduct their businesses as described in the Prospectus, and neither
the Company nor its subsidiaries have received any notice of
proceedings relating to the revocation or modification of any such
license, certificate, authority or permit which, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a material adverse effect on the conduct of the
business, condition (financial or otherwise), earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise. Neither the
<PAGE> 9
- 9 -
Company nor any of its subsidiaries is party to or otherwise the
subject to any consent decree, memorandum of understanding, written
commitment or other supervisory agreement with the Board of Governors
of the Federal Reserve System or any Federal Reserve Bank (the "Federal
Reserve"), the Federal Deposit Insurance Corporation ("FDIC"), the
Office of the Comptroller of the Currency, or any other federal or
state authority or agency responsible for the supervision, regulation
or insurance of depository institutions or their holding companies.
(xix) There are no contracts or other documents which are
required to be filed as exhibits to the Registration Statement by the
Securities Act or by the Securities Act Regulations which have not been
filed as exhibits to the Registration Statement.
(xx) The Company has applied for the listing of the Preferred
Securities on the Nasdaq National Market and shall use its best efforts
to have the Preferred Securities listed on the Nasdaq National Market
or a similar exchange.
(xxi) The Company is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and
published interpretations thereunder.
(xxii) The Company and its subsidiaries carry, or are covered
by, insurance in such amounts and covering such risks as is adequate
for the conduct of their respective businesses and the value of their
respective properties and as is customary for companies engaged in
similar businesses.
b. Any certificate signed by any officer of the Trust or the
Company and delivered to you or to your counsel shall be deemed a representation
and warranty by the Trust or the Company to you as to the matters covered
thereby.
SECTION 2. Sale and Delivery to Underwriter, Closing.
On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, the Trust and the Company,
as the case may be, agree that the Trust will sell to the Underwriter, and the
Underwriter agrees to purchase from the Trust, the Firm Securities, at a
purchase price of $25.00 per Firm Security.
Payment of the purchase price for, and delivery of, the Firm Securities
shall be made at the offices of Arnold & Porter,
<PAGE> 10
- 10 -
555 Twelfth Street, N.W., Washington, D.C. 20004, or at such other place as
shall be agreed upon by you, the Trust and the Company, at 10:00 A.M. Eastern
Standard Time, on the third business day (unless postponed in accordance with
the provisions of Section 9) following the date of this Agreement, or such other
time not later than ten business days after such date as shall be agreed upon by
the Underwriter, the Trust and the Company (such time and date of payment and
delivery being herein called the "Closing Date").
As compensation for the commitments of the Underwriter contained in
this Section 2, the Company hereby agrees to pay to the Underwriter an amount
equal to $___ per Firm Security times the total number of Firm Securities
purchased by the Underwriter on the Closing Date as commissions for the sale of
such Firm Securities under this Agreement. Such payment will be made on the
Closing Date with respect to the Firm Securities.
Payment for the Firm Securities shall be made to the Trust by wire
transfer of immediately available funds, against delivery to the Underwriter of
the Firm Securities to be purchased by it. The Firm Securities shall be issued
in the form of one or more fully registered global notes (the "Global Notes") in
book-entry form in such denominations and registered in the name of the nominee
of The Depository Trust Company (the "Depository") or in such names as the
Underwriter may request in writing at least two business days before the Closing
Date. The Global Notes representing the Firm Securities shall be made available
for examination by the Underwriter not later than 10:00 A.M. Eastern Standard
Time on the last business day prior to the Closing Date.
In addition, upon written notice from the Underwriter to the Trust from
time to time prior to 9:00 P.M., Eastern Standard Time, on the 30th day after
the date of the Prospectus (or, if such 30th day shall be a Saturday, Sunday or
a holiday, on the next business day thereafter), the Underwriter shall have the
right to purchase all or any portion of the Option Securities at the same
purchase price as the Firm Securities, plus accrued distributions, if any, from
the Closing Date to the Option Closing Date (as defined herein). No Option
Securities shall be sold or delivered unless the Firm Securities previously have
been, or simultaneously are, sold and delivered. Option Securities may be
purchased only for the purpose of covering over-allotments made in connection
with the offering of the Firm Securities.
Each time for the delivery of and payment for the Option Securities,
being herein referred to as an "Option Closing Date," which may be the Closing
Date, shall be determined by the Underwriter, but shall be issued not later than
five (5) full business days after written notice to the Trust of the
Underwriter's election to purchase Option Securities is given. Each payment of
the purchase price for, and delivery of, the
<PAGE> 11
- 11 -
Option Securities shall be made at each Option Closing Date at such offices as
is designated by the Underwriter.
As compensation for the commitments of the Underwriter contained in
this Section 2, the Company hereby agrees to pay to the Underwriter an amount
equal to $___ per Option Security times the total number of Option Securities
purchased by the Underwriter on the Option Closing Date as commissions for the
sale of such Option Securities under this Agreement. Such payment will be made
on the Option Closing Date with respect to the Option Securities.
Each payment for Option Securities shall be made to the Trust by wire
transfer of immediately available funds, against delivery to the Underwriter of
such Option Securities. The Option Securities shall be issued in the form of one
or more fully registered Global Notes in book-entry form in such denominations
and registered in the name of the nominee of the Depository or in such names as
the Underwriter may request in writing at least two days before the Option
Closing Date. The Global Notes representing the Option Securities shall be made
available for examination by the Underwriter not later than 10:00 A.M. Eastern
Standard Time on the last business day prior to the Option Closing Date.
SECTION 3. Offering by the Underwriter. The Trust and the Company are
advised that the Underwriter proposes to make a public offering of the Preferred
Securities, on the terms and conditions set forth in the Registration Statement
from time to time as and when the Underwriter deems advisable after the
Registration Statement becomes effective. Because the National Association of
Securities Dealers, Inc. ("NASD") is expected to view the Preferred Securities
as interests in a direct participation program, the offering of the Preferred
Securities is being made in compliance with the applicable provisions of Rule
2810 of the NASD's Conduct Rules.
SECTION 4. Covenants of the Offerors. Each of the Trust and the Company
covenants with the Underwriter as follows:
a. The Trust and the Company will prepare the Prospectus in a
form approved by the Underwriter and will file such Prospectus with the
Commission pursuant to subparagraph (1) or (4) of Rule 424(b) not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement. The Trust and the Company will notify
the Underwriter immediately, and confirm the notice in writing, (i) of the
effectiveness of the Registration Statement and any amendment thereto (including
any post-effective amendment), and of the filing of the Prospectus pursuant to
Rule 424(b), (ii) of the receipt of any comments from the Commission, (iii) of
any request by the Commission for any amendment to the Registration Statement
<PAGE> 12
- 12 -
or any amendment or supplement to the Prospectus or for additional information,
and (iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus, of the
suspension of the qualification of the securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceeding for such
purpose. The Trust and the Company will make every reasonable effort to prevent
the issuance of any stop order or of any order preventing or suspending the use
of any Preliminary Prospectus or the Prospectus or suspending any such
qualification and, if any such order is issued, to obtain the lifting thereof at
the earliest possible moment.
b. The Trust and the Company will deliver to the Underwriter
notice of their intention to prepare or file any amendment to the Registration
Statement relating to the Preferred Securities (including any post-effective
amendment) or any amendment or supplement to the Prospectus (including documents
deemed to be incorporated by reference into the Prospectus and including any
revised prospectus which the Trust and the Company propose for use by the
Underwriter in connection with the offering of the Preferred Securities which
differs from the prospectus on file at the Commission at the time the
Registration Statement becomes effective, whether or not such revised prospectus
is required to be filed pursuant to Rule 424(b) of the Securities Act
Regulations), will furnish the Underwriter and counsel for the Underwriter with
copies of any such amendment or supplement a reasonable amount of time prior to
such proposed filing or use, as the case may be, and will not file any such
amendment or supplement or use any such prospectus to which the Underwriter or
counsel for the Underwriter shall reasonably object.
c. The Trust and the Company will deliver to the Underwriter
one manually executed copy of the Registration Statement as originally filed and
of each amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated by reference into the Prospectus),
such number of conformed copies of the Registration Statement as originally
filed and of each amendment thereto (including documents incorporated by
reference into the Prospectus but without exhibits) as such Underwriter may
reasonably request and copies of each Preliminary Prospectus, the Prospectus and
any amended or supplemented Prospectus.
d. The Trust and the Company will furnish to the Underwriter,
from time to time during the period when the Prospectus is required to be
delivered under the Securities Act, such number of copies of the Prospectus (as
amended or supplemented, if applicable) as you may reasonably request for the
<PAGE> 13
- 13 -
purposes contemplated by the Securities Act or the Securities Act Regulations.
e. If any event shall occur as a result of which it is
necessary, in the reasonable opinion of counsel for the Underwriter, to amend or
supplement the Prospectus in order to make the Prospectus not misleading in the
light of the circumstances existing at the time it is delivered to a purchaser,
the Trust and the Company will forthwith amend or supplement the Prospectus by
preparing and furnishing to the Underwriter a reasonable number of copies of an
amendment of or supplement to the Prospectus (in form and substance satisfactory
to counsel for the Underwriter) so that, as so amended or supplemented, the
Prospectus will not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made, in the
light of the circumstances existing at the time it is delivered to a purchaser,
not misleading.
f. The Trust and the Company, during the period when the
Prospectus is required to be delivered under the Securities Act, will file
promptly all documents required to be filed with the Commission pursuant to
Section 13, 14 or 15 of the Exchange Act subsequent to the time the Registration
Statement becomes effective.
g. Both the Trust and the Company will endeavor, in
cooperation with the Underwriter, to qualify the Preferred Securities for
offering and sale under the applicable securities laws of such states and other
jurisdictions of the United States as the Underwriter may designate, and will
maintain such qualifications in effect for as long as may be required for the
distribution of the Preferred Securities, except that neither the Trust nor the
Company shall be required in connection therewith to qualify as a foreign
corporation or to execute a general consent to service of process in any state
or other jurisdiction. The Trust and the Company will file such statements and
reports as may be required by the laws of each jurisdiction in which the
Preferred Securities have been qualified as above provided.
h. The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later than
15 months after the effective date of the Registration Statement, an earnings
statement (which need not be audited) in reasonable detail, covering a period of
at least 12 consecutive months beginning on the first day of the first full
fiscal quarter after the effective date of the Registration Statement, which
earnings statement shall satisfy the requirements of Section 11(a) of the
Securities Act and Rule 158 of the Securities Act Regulations and will advise
you in writing when such statement has been so made available. If such fiscal
quarter is the last fiscal quarter of the Trust's fiscal year, such
<PAGE> 14
- 14 -
earnings statement shall be made available not later than 90 days after the
close of the period covered thereby and in all other cases shall be made
available not later than 45 days after the close of the period covered thereby.
i. The Trust and the Company will take such action as may be
necessary to comply with the rules and regulations of the Nasdaq National Market
in respect of the offering of the Preferred Securities.
j. The Trust and the Company, from the date hereof until the
Closing Date (including any Option Closing Date), will not offer, sell, contract
to sell or otherwise dispose of any securities issued or guaranteed by the Trust
or the Company that in the reasonable judgment of the Underwriter are
substantially similar to the Preferred Securities, without the prior written
consent of the Underwriter.
k. For a period of five years (but not beyond any such date on
which no Securities shall be outstanding) after the Closing Date, the Trust and
the Company will furnish to the Underwriter copies of all reports and
communications delivered to the Trust's shareholders or to holders of the
Preferred Securities and will also furnish copies of all reports (excluding
exhibits) filed with the Commission on Forms 8-K, 10-Q and 10-K, and all other
reports and information furnished to its shareholders generally, not later than
the time such reports are first furnished to its shareholders generally.
l. The Trust shall apply the net proceeds of its sale of the
Preferred Securities, combined with the entire proceeds from the sale by the
Trust to the Company of the Trust's Common Securities, to purchase an equivalent
amount of the Subordinated Debentures. All the net proceeds to be received by
the Company from the sale of the Subordinated Debentures will be used for
general corporate purposes, as described more fully in the Prospectus.
m. Neither the Company nor the Trust shall enter into any
contractual agreement with respect to the distribution of the Preferred
Securities except for the arrangements with the Underwriter.
SECTION 5. Costs and Expenses. The Company will pay all costs, expenses
and fees incident to the performance of its obligations under this Agreement
(except for the fees and disbursements of counsel for the Underwriter other than
pursuant to item (vi) of this Section 5), including: (i) the printing and filing
of the Registration Statement as originally filed and any amendments and
exhibits thereto, (ii) the filing fee of the National Association of Securities
Dealers, Inc. and expenses
<PAGE> 15
- 15 -
relating to any review of the offering and listing of the Preferred Securities
on the Nasdaq National Market, (iii) all expenses (including reasonable fees and
disbursements of counsel to the Company and the Trust) payable pursuant to
Section 4 of this Agreement, (iv) all costs and expenses incurred in connection
with the preparation, issuance and delivery of the Preferred Securities to the
Underwriter, (v) the fees and disbursements of the Trust's and the Company's
counsel and accountants, (vi) the expenses in connection with the qualification
of the Preferred Securities under state securities laws in accordance with the
provisions of Section 4(g), including filing fees and the reasonable fees and
disbursements of counsel to the Underwriter in connection therewith and in
connection with the preparation of the preliminary and final Blue Sky memoranda
and Legal Investment Surveys, (vii) the printing and delivery to the Underwriter
of copies of the preliminary and final Blue sky memoranda and Legal Investment
surveys, (viii) all costs and expenses incurred in the preparation and the
printing (including word processing and duplication costs) of the Preferred
Securities, the Indenture, the Guarantee Agreement, the Trust Agreement and all
other documents relating to the issuance, purchase and initial resale of the
Preferred Securities, and (ix) the fees and expenses of the Property Trustee,
the Delaware Trustee, the Indenture Trustee, and the Guarantee Trustee, and any
agent of the Property Trustee, the Delaware Trustee, the Indenture Trustee, and
the Guarantee Trustee, and the fees and disbursements of the Property Trustee's
counsel, in connection with the Trust Agreement and the Preferred Securities.
If this Agreement is terminated by the Underwriter in accordance with
the provisions of Section 6 or Section 9, the Company shall reimburse the
Underwriter for all of their reasonable out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the Underwriter, incurred in
connection with investigating, marketing and proposing to market the Preferred
Securities.
SECTION 6. Conditions of Underwriter's Obligations. The obligations of
the Underwriter to purchase and pay for the Firm Securities at the Closing Date
and the Option Securities at each Option Closing Date are subject to the
accuracy of the representations and warranties of the Trust and the Company
herein contained at and as of the date hereof and the Closing Date and at each
Option Closing Date, to the performance by the Trust and the Company of their
respective obligations hereunder, and to the following further conditions:
a. The Prospectus shall have been timely filed with the
Commission in accordance with Section 4(a); and at the Closing Date and each
Option Closing Date, no stop order suspending the effectiveness of the
Registration Statement or any part thereof
<PAGE> 16
- 16 -
shall have been issued under the Securities Act or proceedings therefor
initiated or threatened by the Commission; and any request of the Commission for
inclusion of additional information in the Registration Statement or the
Prospectus shall have been complied with and there shall not have come to the
attention of the Underwriter any facts that would cause the Underwriter to
believe that the Prospectus, at the time it was required to be delivered to a
purchaser of the Preferred Securities, contained any untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements made, in light of the circumstances existing at such time, not
misleading.
b. On the Closing Date you shall have received:
(i) The favorable opinion, dated as of the Closing Date and
any Option Closing Date, of _______________, counsel for the Company,
in form and substance substantially in the form attached hereto as
Exhibit A.
In rendering such opinion, counsel may state that they are
passing only on matters of Pennsylvania and United States Federal law.
In rendering such opinion, counsel may rely upon an opinion or
opinions, each dated the Closing Date, of other counsel retained by
them or the Company as to laws of any jurisdiction other than the
United States or the Commonwealth of Pennsylvania, provided that (A)
such reliance is expressly authorized by each opinion so relied upon
and a copy of each such opinion is delivered to the Underwriter, and
(B) counsel shall state in their opinion that they and the Underwriter
is justified in relying thereon. Insofar as such opinions involve
factual matters, such counsel may rely, to the extent such counsel
deems proper, upon certificates of officers of the Company, its
subsidiaries and the Trust and certificates of public officials.
(ii) The favorable opinion, dated the Closing Date, of White &
Case, counsel to the Trust Company and Trust Delaware, substantially in
the form attached hereto as Exhibit B.
(iii) The favorable opinion, dated the Closing Date, of
Richards, Layton & Finger, special Delaware counsel to the Company and
the Trust, substantially to the effect and in the form attached hereto
as Exhibit C.
(iv) The favorable opinion, dated the Closing Date, Arnold &
Porter, counsel to the Underwriter as to such matters as the
Underwriter shall reasonably request.
<PAGE> 17
- 17 -
In rendering such opinion, counsel may rely upon an opinion or
opinions, each dated the Closing Date, of other counsel retained by
them or the Company as to laws of any jurisdiction other than the
United States or the State of New York, provided that (A) such reliance
is expressly authorized by each opinion so relied upon and a copy of
each such opinion is delivered to the Underwriter, and (B) counsel
shall state in their opinion that they believe that they and the
Underwriter are justified in relying thereon. Insofar as such opinions
involve factual matters, such counsel may rely, to the extent such
counsel deems proper, upon certificates of officers of the Company, its
subsidiaries and the Trust and certificates of public officials.
c. At the time of the execution of this Agreement, the
Underwriter shall have received from Grant Thornton, LLP a letter dated such
date, in form and substance satisfactory to the Underwriter, to the effect that
(i) they are independent public accountants as required by the Securities Act
and the Securities Act Regulations; (ii) it is their opinion that the financial
statements included or incorporated by reference in the Registration Statement
and covered by their opinion therein comply as to form in all material respects
with the applicable accounting requirements of the Securities Act and the
Exchange Act and the applicable rules and regulations thereunder; (iii) based
upon limited procedures set forth in detail in such letter, nothing has come to
their attention which causes them to believe that during the period from
December 31, 1996 to a specified date not more than five days prior to the date
of this Agreement, there has been any change in the capital stock or long-term
debt of the Company or its subsidiaries or any decrease in consolidated total
assets of the Company and its subsidiaries as compared with the amounts shown in
the December 31, 1996 consolidated balance sheet incorporated by reference in
the Registration Statement, or any decrease, as compared with the corresponding
period in the preceding year, in net income or net interest income of the
Company and its subsidiaries on a consolidated basis, except in each case as set
forth or contemplated in the Registration Statement; (iv) they have read in the
Registration Statement and certain dollar amounts, percentages and other
financial information specified by the Underwriter which is included or
incorporated by reference in the Registration Statement and have performed the
procedures set forth in detail in such letter and have found such amounts,
percentages or other financial information to be in agreement with the relevant
accounting and financial records of the Company and its subsidiaries.
d. On the Closing Date and any Option Closing Date, the
Underwriter shall have received from Grant Thornton, LLP a letter, dated as of
the Closing Date or such Option Closing Date,
<PAGE> 18
- 18 -
to the effect that they reaffirm the statements made in the letter furnished
pursuant to paragraph (c) of this Section, except that the "specified date"
referred to shall be a date not more than five days prior to the Closing Date or
Option Closing Date, as the case may be.
e. On the Closing Date, a certificate signed by the Chairman
of the Board, the President, a Vice Chairman of the Board or any Executive or
Senior Vice President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement and this
Agreement and that:
(i) The representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
and the Company has complied in all material respects with all the
agreements and satisfied in all material respects all the conditions on
its part to be performed or satisfied at or prior to the Closing Date;
and
(ii) Since the date of the most recent financial statements
included in the Registration Statement (exclusive of any supplement
thereto), there has been no material adverse change in the condition
(financial or other), earnings, business or properties of the Company
and its subsidiaries taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Registration Statement (exclusive of any
supplement thereto).
f. On the Closing Date or any Option Closing Date, there shall
not have been, since the respective dates as of which information is given in
the Registration Statement, any material adverse change in the condition,
financial or otherwise, of the Company and its subsidiaries considered as one
enterprise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and you shall have received a
certificate of the Chairman of the Board, the President or a Senior Vice
President of the Company and the principal financial or accounting officer of
the Company, dated as of the Closing Date, to the effect that there has been no
such material adverse change and to the effect that the other representations
and warranties of the Company contained in Section I are true and correct with
the same force and effect as though expressly made at and as of the Closing Date
or any Option Closing Date, and that the Company has complied with all its
<PAGE> 19
- 19 -
agreements contained herein and the condition set forth in Section (a) has been
fulfilled.
g. Prior to the Closing Date, the Company shall have furnished
to the Underwriter such further information, certificates and documents as the
Underwriter may reasonably request in connection with the offering of the
Preferred Securities.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Underwriter by notice to the Company at any time at or prior to the
Closing Date or, with respect to Option Securities, the Option Closing Date, and
such termination shall be without liability of any party to any other party
except as provided in Section 5 and except that Sections 7 and 8 hereof shall
survive such termination.
SECTION 7. Indemnification.
a. The Company agrees to indemnify and hold harmless the
Underwriter and each person, if any, who controls the Underwriter within the
meaning of the Securities Act against any losses, claims, damages or liabilities
to which the Underwriter or such controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and subject to
Section 7(c) hereof, will reimburse the Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating or defending any
such loss, claim, damage, liability, action or proceeding; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement, or omission or alleged omission made in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by the Underwriter specifically for use in
the preparation thereof. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
b. The Underwriter will indemnify and hold harmless the
Company, each of its directors, each of its officers who have
<PAGE> 20
- 20 -
signed the Registration Statement and each person, if any, who controls the
Company, against any losses, claims, damages or liabilities to which the Company
or any such director, officer, or controlling person may become subject under
the Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances under which they were made, and will reimburse any legal or
other expenses reasonably incurred by the Company or any such director, officer
or controlling person in connection with investigating or defending any such
loss, claim, damage, liability, action or proceeding; provided, however, that
the Underwriter will be liable in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission has been made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or such amendment or supplement, in reliance upon and
in conformity with written information furnished to the Company by or through
the Underwriter specifically for use in the preparation thereof. For purposes of
this Section 7, the only written information furnished by the Underwriters for
use in the Registration Statement and the Prospectus is the information in the
last paragraph of the cover page of the Prospectus and the third and sixth
paragraphs under the caption "Underwriting" in the Prospectus. This indemnity
agreement will be in addition to any liability which the Underwriter may
otherwise have.
c. In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section 6, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 7(a) or (b) shall be available to any
party who shall fail to give notice as provided in this Section 7(c) if the
party to whom notice was not given was unaware of the proceeding to which such
notice would have related and was materially prejudiced by the failure to give
such notice, but the failure to give such notice shall not relieve the
indemnifying party or parties from any liability which it or they may have to
the indemnified party for contribution under Section 7(d) hereof or otherwise
than on account of the provisions of Section 7(a) or (b). In case any such
proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
retain counsel reasonably satisfactory to the indemnified party to defend the
indemnified
<PAGE> 21
- 21 -
party and shall pay as incurred the fees and disbursements of such counsel
related to such proceeding. The indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party. In any such
proceeding, any indemnified party shall have the right to retain its own counsel
at its own expense. Notwithstanding the foregoing, the indemnifying party shall
pay as incurred the fees and expenses of the counsel retained by the indemnified
party in the event (i) the indemnifying party and the indemnified party shall
have mutually agreed to the retention of such counsel, (ii) the indemnifying
party has failed to assume the defense of such proceeding or shall have failed
to retain counsel reasonably satisfactory to the indemnified party, or (iii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel under applicable rules of professional conduct,
would be inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees and expenses of more than one separate firm (and appropriate
local counsel) for all such indemnified parties. Such firm shall be designated
in writing by the Underwriter in the case of parties indemnified pursuant to
Section 7(a) and by the Company in the case of parties indemnified pursuant to
Section 7(b). The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment.
d. If the indemnification provided for in this Section 7 is
unavailable (other than by reason of the exception contained in the second
sentence of Section 7(c) hereof) to or insufficient to hold harmless an
indemnified party under Section 7(a) or (b) above in respect of any losses,
claims, damages or liabilities (or actions or proceedings in respect thereof
referred to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriter on the other from the offering of
the Preferred Securities. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under Section 7(c) above,
then each indemnifying party shall contribute to such amount paid or payable by
such
<PAGE> 22
- 22 -
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
the Underwriter on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriter on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses) received by
the Company bears to the total underwriting discounts and commissions received
by the Underwriter, in each case as set forth in the table on the cover page of
the Prospectus. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the Underwriter on the
other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Underwriter agree that it would not be just and
equitable if contributions pursuant to this Section 7(d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 7(d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
referred to above in this Section 7(d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), (i) except with respect to information
contained or omitted from the Registration Statement, any Preliminary Prospectus
or the Prospectus or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by or through the
Underwriter specifically for use in the preparation thereof, the Underwriter
shall not be required to contribute any amount in excess of the underwriting
discounts and commissions applicable to the Preferred Securities purchased by
the Underwriter and (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
e. In any proceeding relating to the Registration Statement,
any Preliminary Prospectus, the Prospectus or any supplement or amendment
thereto, each party against whom contribution may be sought under this Section 7
hereby consents to the jurisdiction of any court having jurisdiction over any
other contributing party, agrees that process issuing from such court
<PAGE> 23
- 23 -
may be served upon him or it by any other contributing party and consents to the
service of such process and agrees that any other contributing party may join
him or it as an additional defendant in any such proceeding in which such other
contributing party is a party.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants
contained in this Agreement shall remain in full force and effect, regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of the Underwriter or by or on behalf of any person controlling the
Underwriter, or by or on behalf of the Company, and (c) delivery of and payment
for the Preferred Securities to the Underwriter.
SECTION 9. Termination of Agreement. The Underwriter may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing Date
or any Option Closing Date (i) if there has been, since the respective dates as
of which information is given in the Registration Statement, any material
adverse change in the condition, financial or otherwise, of the Company and its
subsidiaries considered as one enterprise, or in the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any new outbreak of hostilities or escalation of any
existing hostilities or other calamity or crisis the effect of which on the
financial markets of the United States is such as to make it, in the reasonable
professional judgment of the Underwriter, impracticable to market the Preferred
Securities or to enforce contracts for the sale of the Preferred Securities, or
(iii) if trading in the securities of the Company has been suspended by the
Commission or if trading or quotation generally on the Nasdaq National Market
has been suspended, or minimum or maximum prices for trading have been fixed, or
maximum ranges of prices for securities have been required by the Nasdaq
National Market or by order of the Commission or any other governmental
authority, or (iv) if a banking moratorium has been declared by either federal
or Pennsylvania authorities.
If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party, except
as provided in Section 7, and provided further that Sections 7 and 8 hereof
shall survive such termination.
SECTION 10. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunications. Notices to the
Underwriter shall be directed
<PAGE> 24
- 24 -
to it at Alex. Brown & Sons Incorporated, 1 South Street, Baltimore, Maryland
21202, Attention of Donald W. Delson; and notice to the Company and the Trust
shall be directed to it at [________________], _______, Pennsylvania [_____],
Attention of ______________.
SECTION 11. Parties. This Agreement shall inure to the benefit of and
be binding upon the Underwriter and the Company and their respective successors.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the parties hereto
and their respective successors and the controlling persons and officers and
directors referred to in Sections 7 and 8 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the parties hereto and their respective successors, and
said controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from an Underwriter shall be deemed to be a successor by
reason merely of such purchase.
SECTION 12. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE. SPECIFIED TIMES
OF DAY REFER TO EASTERN DAYLIGHT SAVINGS TIME.
<PAGE> 25
- 25 -
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
the Underwriter and the Company in accordance with its terms.
Very truly yours,
NPB CAPITAL TRUST
By: National Penn Bancshares,
Inc., on behalf of NPB Capital Trust
By:
-----------------------------------
Name:
Title:
NATIONAL PENN BANCSHARES, INC.
By:
-----------------------------------
Name:
Title:
Confirmed and accepted, as of the date first above written.
ALEX. BROWN & SONS INCORPORATED
By:
---------------------------------
Name:
Title:
<PAGE> 26
- 26 -
EXHIBIT A
The opinion of special counsel to the Company to be delivered pursuant to
Section 6(b)(i) of the Underwriting Agreement shall be substantially to the
effect that:
1. The Company is a corporation validly organized and presently subsisting under
the laws of the Commonwealth of Pennsylvania, with requisite corporate power and
authority to own its properties and conduct its business as described in the
Registration Statement, except for such power and authority the absence of which
would not have a material adverse effect on the Company, and is duly registered
as bank holding company under the Bank Holding Company Act of 1956, as amended.
2. The Underwriting Agreement has been duly authorized, executed and delivered
by the Company.
3. The Trust Agreement has been duly authorized, executed and delivered by the
Company, and is a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
receivership, readjustment of debt, moratorium, fraudulent conveyance or similar
laws relating to or affecting creditors' rights generally, general equity
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
4. The Guarantee Agreement has been duly authorized, executed and delivered by
the Company and is a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
receivership, readjustment of debt, moratorium, fraudulent conveyance or similar
laws relating to or affecting creditors' rights generally, general equity
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
5. The Indenture has been duly authorized, executed and delivered by the
Company, has been duly qualified under the Trust Indenture Act, and is a valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership, readjustment of
debt, moratorium, fraudulent conveyance or similar laws relating to or affecting
creditors' rights generally, general equity principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
<PAGE> 27
- 27 -
6. The Subordinated Debentures have been duly authorized, executed and delivered
by the Company and when duly authenticated in accordance with the Indenture and
delivered and paid for in accordance with the Underwriting Agreement, will be
valid and binding obligations of the Company, entitled to the benefits of the
Indenture and enforceable against the Company in accordance with their terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, readjustment of debt, moratorium,
fraudulent conveyance or similar laws relating to or affecting creditors' rights
generally, general equity principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
7. The Trust is not an "investment company" or an entity "controlled" by an
"investment company," as such terms are defined in Investment Company Act of
1940, as amended.
8. The statements set forth in the Registration Statement under the captions
"Supervision, Regulation and Other Matters," "Description of Preferred
Securities," "Description of the Debentures," "Description of Guarantee" and
"Relationship Among the Preferred Securities, the Junior Subordinated Debentures
and the Guarantee," insofar as they purport to describe the provisions of the
laws and documents referred to therein, fairly summarize the matters described
therein; and the Preferred Securities, the Debentures and the Guarantee conform
to the descriptions contained in the Registration Statement in all material
respects.
9. The statements of law or legal conclusions and opinions set forth in the
Registration Statement under the caption "Certain Federal Income Tax
Consequences," subject to the assumptions and conditions described therein,
constitute such counsel's opinion.
10. The Registration Statement was declared effective under the Securities Act
as of the date and time specified in such opinion and, to the best of such
counsel's knowledge and information, no stop order suspending the effectiveness
of the Registration Statement has been issued under the Securities Act and no
proceedings therefor have been initiated or threatened by the Commission.
11. The Registration Statement and the Prospectus and any amendment or
supplement thereto made by the Company prior to the Closing Date or any Option
Closing Date (other than the financial statements and financial and statistical
data included therein, as to which no opinion need be rendered), when it or they
became effective or were filed with the Commission, as the case may be, and in
each case at the Closing Date or any Option Closing Date, complied as to form in
all material respects with the requirements of the Securities Act, the Trust
Indenture Act and the applicable rules and regulations under said acts and the
documents
<PAGE> 28
- 28 -
incorporated by reference into the Prospectus (other than the financial
statements and financial and statistical data included therein, as to which no
opinion need be rendered) complied as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder, and such counsel have no reason to believe that the Registration
Statement, at the time it became effective, contained any untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements contained therein, not misleading, or that the Prospectus, at the
time it was mailed to the Commission for filing or at the Closing Date or any
Option Closing Date, contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
contained therein, in the light of the circumstances under which they were made,
not misleading.
12. Such counsel knows of no material legal or governmental proceedings pending
to which the Company or any of its subsidiaries is a party or of which any
property of the Company or any of its subsidiaries is the subject which are
required to be disclosed in the Registration Statement or which would affect the
consummation of the transactions contemplated in this Agreement, the Indenture
or the Preferred Securities; and such counsel knows of no such proceedings which
are threatened or contemplated by governmental authorities or threatened by
others.
13. Such counsel knows of no contracts, indentures, mortgages, loan agreements,
notes, leases or other instruments required to be described in the Registration
Statement or to be filed as exhibits thereto other than those described therein
or filed or incorporated by reference as exhibits thereto, and such instruments
as are summarized in the Registration Statement are fairly summarized in all
material respects.
14. No approval, authorization, consent, registration, qualification or other
order of any public board or body is required in connection with the execution
and delivery of this Agreement, the Trust Agreement, the Guarantee Agreement,
and the Indenture or the issuance and sale of the Preferred Securities or the
consummation by the Company of the other transactions contemplated by this
Agreement, the Trust Agreement, the Guarantee Agreement, or the Indenture,
except such as have been obtained under the Securities Act, the Exchange Act and
the Trust Indenture Act or such as may be required under the blue sky or
securities laws of various states in connection with the offering and sale of
the Preferred Securities (as to which such counsel need express no opinion).
15. The execution and delivery of this Agreement, the Trust Agreement, the
Guarantee Agreement, and the Indenture, the issue and sale of the Preferred
Securities and the Subordinated
<PAGE> 29
- 29 -
Debentures, the compliance by the Company with the provisions of the Preferred
Securities, the Subordinated Debentures, the Indenture and this Agreement and
the consummation of the transactions herein and therein contemplated will not
conflict with or constitute a breach of, or default under, the articles of
incorporation or by-laws of the Company or a breach or default under any
contract, indenture, mortgage, loan agreement, note, lease or other instrument
known to such counsel to which either the Company or any of its subsidiaries is
a party or by which either of them or any of their respective properties may be
bound except for such breaches as would not have a material adverse effect on
the Company and its subsidiaries considered as one enterprise, nor will such
action result in a violation on the part of the Company or any of its
subsidiaries of any applicable law or regulation or of any administrative,
regulatory or court decree known to such counsel.
<PAGE> 30
- 30 -
EXHIBIT B
The opinion of counsel to the Trust Company and Trust Delaware to be delivered
pursuant to Section 6(b)(iii) of the Underwriting Agreement shall be
substantially to the effect that:
1. The Trust Company is duly incorporated and is validly existing in good
standing as a banking corporation with trust powers under the laws of the State
of New York.
2. The Indenture Trustee has the requisite power and authority to execute,
deliver and perform its obligations under the Indenture, and has taken all
necessary corporate action to authorize the execution, delivery and performance
by it of the Indenture.
3. The Guarantee Trustee has the requisite power and authority to execute,
deliver and perform its obligations under the Guarantee Agreement, and has taken
all necessary corporate action to authorize the execution, delivery and
performance by it of the Guarantee Agreement.
4. The Property Trustee has the requisite power and authority to execute and
deliver the Trust Agreement, and has taken all necessary corporate action to
authorize the execution and delivery of the Trust Agreement.
5. Each of the Indenture and the Guarantee Agreement has been duly executed and
delivered by the Indenture Trustee and the Guarantee Trustee, respectively, and
constitutes a legal, valid and binding obligation of the Indenture Trustee and
the Guarantee Trustee, respectively, enforceable against the Indenture Trustee
and the Guarantee Trustee, respectively in accordance with its respective terms,
except that certain payment obligations may be enforceable solely against the
assets of the Trust and except that such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, liquidation, fraudulent
conveyance and transfer or other similar laws applicable to Delaware banking
corporations affecting the enforcement of creditors' rights generally, and by
general principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
6. The Subordinated Debentures delivered on the date hereof have been duly
authenticated by the Indenture Trustee in accordance with the terms of the
Indenture.
<PAGE> 31
- 31 -
EXHIBIT C
The opinion of counsel, as special Delaware counsel to the Company and the Trust
to be delivered pursuant to Section 6(b)(iv) of the Underwriting Agreement shall
be substantially to the effect that:
1. The Trust has been duly created and is validly existing in good standing as a
business trust under the Delaware Business Trust Act, 12 Del. C. Section 3801 et
seq. (the "Delaware Act"), and all filings required under the laws of the State
of Delaware with respect to the creation and valid existence of the Trust as a
business trust have been made.
2. Under the Delaware Act and the Trust Agreement the Trust has the trust power
and authority to own its property and to its conduct its business, all as
described in the Prospectus.
3. The Trust Agreement constitutes a valid and binding obligation of the Company
and the Property Trustee and the Delaware Trustee, and is enforceable against
the Company and the Trustees, in accordance with its terms.
4. Under the Delaware Act and the Trust Agreement, the Trust has the trust power
and authority to execute and deliver, and to perform its obligations under, the
Underwriting Agreement and (ii) to issue and perform its obligations under the
Preferred Securities and the Common Securities.
5. Under the Delaware Act and the Trust Agreement, the execution and delivery by
the Trust of the Underwriting Agreement, and the performance by the Trust of its
obligations thereunder, have been duly authorized by all necessary trust action
on the part of the Trust.
6. The Preferred Securities have been duly authorized by the Trust Agreement and
are duly and validly issued and, subject to the qualifications set forth herein,
fully paid and nonassessable undivided beneficial interests in the assets of the
Trust and are entitled to the benefits of the Trust Agreement. The Holders, as
beneficial owners of the Trust, will be entitled to the same limitations of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware. We note
that the Holders may be obligated pursuant to the Trust Agreement, (i) to
provide indemnity and/or security in connection with and pay taxes or
governmental charges arising from transfers or exchanges of Preferred Securities
Certificates and the issuance of replacement Preferred Securities Certificates,
and (ii) to provide security or indemnity in connection with requests of or
directions to the
<PAGE> 32
- 32 -
Property Trustee to exercise its rights and powers under the Trust Agreement.
7. The Common Securities have been duly authorized by the Trust Agreement and
are duly and validly issued and, subject to the qualifications set forth herein,
fully paid and nonassessable undivided beneficial interests in the assets of the
Trust and are entitled to the benefits of the Trust Agreement. The Holders, as
beneficial owners of the Trust, will be entitled to the same limitations of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware. We note
that the Holders may be obligated pursuant to the Trust Agreement, (i) to
provide indemnity and/or security in connection with and pay taxes or
governmental charges arising from transfers or exchanges of Common Securities
Certificates and the issuance of replacement Common Securities Certificates, and
(ii) to provide security or indemnity in connection with requests of or
directions to the Property Trustee to exercise its rights and powers under the
Trust Agreement.
8. Under the Delaware Act and the Trust Agreement, the issuance of the Preferred
Securities and Common Securities is not subject to preemptive rights.
9. The issuance and sale by the Trust of the Preferred Securities and Common
Securities, the purchase by the Trust of the Subordinated Debentures, the
execution, delivery and performance by the Trust of the Underwriting Agreement,
the consummation by the Trust of the transactions contemplated by the
Underwriting Agreement and the compliance by the Trust with its obligations
thereunder will not violate (i) any of the provisions of the Certificate of
Trust or the Trust Agreement or (ii) any applicable Delaware law or
administrative regulation.
10. Trust Delaware is duly incorporated and is validly existing in good standing
as a banking corporation with trust powers under the laws of the State of
Delaware.
11. The Delaware Trustee has the requisite power and authority to execute and
deliver the Trust Agreement, and has taken all necessary corporate action to
authorize the execution and delivery of the Trust Agreement.
<PAGE> 1
EXHIBIT 4.3
AMENDED AND RESTATED
TRUST AGREEMENT
among
NATIONAL PENN BANCSHARES, INC., as Depositor,
BANKERS TRUST COMPANY
as Property Trustee,
and
BANKERS TRUST (DELAWARE),
as Delaware Trustee
Dated as of May __, 1997
NPB CAPITAL TRUST
<PAGE> 2
NPB CAPITAL TRUST
Certain Sections of this Trust Agreement relating, to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
Trust Indenture Trust Agreement Act Section
Section ---------------------------
---------------
Section 310 (a)(1).................. 8.7
(a)(2).................. 8.7
(a)(3).................. 8.9
(a)(4).................. 2.7(a)(ii)
(b)..................... 8.8, 10.10(b)
Section 311 (a)..................... 8.13, 10.10(b)
(b)..................... 8.13, 10.10(b)
Section 312 (a)..................... 10.10(b)
(b)..................... 10.10(b), (f)
(c)..................... 5.7
Section 313 (a)..................... 8.15(a)
(a)(4).................. 10.10(c)
(b)..................... 8.15(c), 10.10(c)
(c)..................... 10.8, 10.10(c)
(d)..................... 10.10(c)
Section 314 (a)..................... 8.16, 10.10(d)
(b)..................... Not Applicable
(c)(1).................. 8.17, 10.10(d), (e)
(c)(2).................. 8.17, 10.10(d), (e)
(c)(3).................. 8.17, 10.10(d), (e)
(e)..................... 8.17, 10.10(e)
Section 315 (a)..................... 8.1(d)
(b)..................... 8.2
(c)..................... 8.1(c)
(d)..................... 8.1(d)
(e)..................... Not Applicable
Section 316 (a)..................... Not Applicable
(a)(1)(A)............... Not Applicable
(a)(1)(B)............... Not Applicable
(a)(2).................. Not Applicable
(b)..................... 5.13
(c)..................... 6.7
Section 317 (a)(1).................. Not Applicable
(a)(2).................. 8.14
(b)..................... 5.10
Section 318 (a)..................... 10.10(a)
Note: This reconciliation and tie shall not, for any purpose, be
deemed to be a part of the Trust Agreement.
<PAGE> 3
TABLE OF CONTENTS
Page
----
ARTICLE I. DEFINED TERMS
SECTION 1.1. Definitions............................ 2
ARTICLE II. CONTINUATION OF THE ISSUER TRUST
SECTION 2.1. Name................................... 14
SECTION 2.2. Office of the Delaware Trustee;
Principal Place of Business.......... 14
SECTION 2.3. Initial Contribution of Trust Property,
Organizational Expenses.............. 14
SECTION 2.4. Issuance of Preferred Securities....... 15
SECTION 2.5. Issuance of the Common Securities;
Subscription and Purchase of Junior
Subordinated Debentures.............. 15
SECTION 2.6. Declaration of Trust................... 16
SECTION 2.7. Authorization to Enter into Certain
Transactions......................... 16
SECTION 2.8. Assets of Trust........................ 20
SECTION 2.9. Title to Trust Property................ 20
ARTICLE III. PAYMENT ACCOUNT
SECTION 3.1. Payment Account........................ 20
ARTICLE IV. DISTRIBUTIONS; REDEMPTION
SECTION 4.1. Distributions.......................... 21
SECTION 4.2. Redemption............................. 22
SECTION 4.3. Subordination of Common Securities..... 25
SECTION 4.4. Payment Procedures..................... 26
SECTION 4.5. Tax Returns and Reports................ 26
SECTION 4.6. Payment of Taxes, Duties, Etc.
of the Issuer Trust.................. 27
SECTION 4.7. Payments under Indenture or Pursuant
to Direct Actions.................... 27
SECTION 4.8. Liability of the Holder of Common
Securities........................... 27
ARTICLE V. TRUST SECURITIES CERTIFICATES
SECTION 5.1. Initial Ownership...................... 27
SECTION 5.2. The Trust Securities Certificates...... 27
SECTION 5.3. Execution and Delivery of Trust
Securities Certificates.............. 28
SECTION 5.4. Global Preferred Security.............. 28
SECTION 5.5. Registration of Transfer and Exchange
Generally; Certain Transfers and
Exchanges; Preferred Securities
Certificates......................... 30
- i -
<PAGE> 4
Page
----
SECTION 5.6. Mutilated, Destroyed, Lost or Stolen
Trust Securities Certificates........ 32
SECTION 5.7. Persons Deemed Holders................. 32
SECTION 5.8. Access to List of Holders'
Names and Addresses.................... 32
SECTION 5.9. Maintenance of Office or Agency........ 33
SECTION 5.10. Appointment of Paying Agent............ 33
SECTION 5.11. Ownership of Common Securities
by Depositor......................... 34
SECTION 5.12. Notices to Clearing Agency............. 34
SECTION 5.13. Rights of Holders...................... 34
ARTICLE VI. ACTS OF HOLDERS; MEETINGS; VOTING
SECTION 6.1. Limitations on Holder's Voting
Rights.............................. 37
SECTION 6.2. Notice of Meetings..................... 38
SECTION 6.3. Meetings of Holders.................... 38
SECTION 6.4. Voting Rights.......................... 39
SECTION 6.5. Proxies, etc........................... 39
SECTION 6.6. Holder Action by Written Consent....... 39
SECTION 6.7 Record Date for Voting and Other
Purposes............................. 40
SECTION 6.8. Acts of Holders........................ 40
SECTION 6.9. Inspection of Records.................. 41
ARTICLE VII. REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties
of the Property Trustee and
the Delaware Trustee................. 41
SECTION 7.2. Representations and Warranties of
Depositor............................ 43
ARTICLE VIII. THE ISSUER TRUSTEES; THE ADMINISTRATORS
SECTION 8.1. Certain Duties and Responsibilities.... 44
SECTION 8.2. Certain Notices........................ 47
SECTION 8.3. Certain Rights of Property Trustee..... 47
SECTION 8.4. Not Responsible for Recitals
or Issuance of Securities............ 49
SECTION 8.5. May Hold Securities.................... 49
SECTION 8.6. Compensation; Indemnity; Fees.......... 49
SECTION 8.7. Corporate Property Trustee Required;
Eligibility of Trustees and
Administrators....................... 51
SECTION 8.8. Conflicting Interests.................. 51
SECTION 8.9. Co-Trustees and Separate Trustee....... 52
SECTION 8.10. Resignation and Removal; Appointment
of Successor......................... 53
SECTION 8.11. Acceptance of Appointment by
Successor.............................. 55
- ii -
<PAGE> 5
Page
----
SECTION 8.12. Merger, Conversion, Consolidation or
Succession to Business............... 55
SECTION 8.13. Preferential Collection of Claims
Against Depositor or Issuer Trust.... 56
SECTION 8.14. Trustee May File Proofs of Claims...... 56
SECTION 8.15. Reports by Property Trustee............ 57
SECTION 8.16. Reports to the Property Trustee........ 57
SECTION 8.17. Evidence of Compliance with Conditions
Precedent............................ 58
SECTION 8.18. Number of Issuer Trustees.............. 58
SECTION 8.19. Delegation of Power.................... 58
SECTION 8.20. Appointment of Administrators.......... 58
ARTICLE IX. DISSOLUTION, LIQUIDATION AND MERGER
SECTION 9.1. Dissolution Upon Expiration Date....... 59
SECTION 9.2. Early Termination...................... 59
SECTION 9.3. Dissolution............................ 60
SECTION 9.4. Liquidation............................ 60
SECTION 9.5. Mergers, Consolidations, Amalgamations
or Replacements of the Issuer Trust.. 62
ARTICLE X. MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Holders........ 63
SECTION 10.2. Amendment.............................. 64
SECTION 10.3. Separability........................... 65
SECTION 10.4. Governing Law.......................... 65
SECTION 10.5. Payments Due on Non-Business Day....... 65
SECTION 10.6. Successors............................. 66
SECTION 10.7. Headings............................... 66
SECTION 10.8. Reports, Notices and Demands........... 66
SECTION 10.9. Agreement Not to Petition.............. 67
SECTION 10.10. Trust Indenture Act; Conflict with
Trust Indenture Act.................. 67
SECTION 10.11. Acceptance of Terms of Trust Agreement,
Guarantee and Indenture.............. 69
Exhibit A Certificate of Trust
Exhibit B Form of Certificate Depositary Agreement
Exhibit C Form of Common Securities Certificate
Exhibit D Form of Preferred Securities Certificate
- iii -
<PAGE> 6
AGREEMENT
Amended and Restated Trust Agreement, dated as of May __,
1997, among (i) National Penn Bancshares, Inc., a Pennsylvania
corporation (including any successors or assigns, the "Depositor"),
(ii) Bankers Trust Company, a New York banking corporation, as property
trustee, (in such capacity, the "Property Trustee" and, in its separate
corporate capacity and not in its capacity as Property Trustee, the
"Bank"), and (iii) Bankers Trust (Delaware), a Delaware banking
corporation, as Delaware trustee (the "Delaware Trustee") (the Property
Trustee and the Delaware Trustee are referred to collectively herein as
the "Issuer Trustees") and (iv) the several Holders, as hereinafter
defined.
WITNESSETH
WHEREAS, the Depositor, the Property Trustee, and the Delaware
Trustee have heretofore duly declared and established a business trust
pursuant to the Delaware Business Trust Act by the entering into a
certain Trust Agreement, dated as of May ___, 1997 (the "Original Trust
Agreement"), and by the execution and filing by the Delaware Trustee
with the Secretary of State of the State of Delaware of the Certificate
of Trust, filed on May __, 1997 (the "Certificate of Trust"), attached
as Exhibit A; and
WHEREAS, the Depositor and the Delaware Trustee desire to
amend and restate the Original Trust Agreement in its entirety as set
forth herein to provide for, among other things, (i) the issuance of
the Common Securities by the Issuer Trust to the Depositor, (ii) the
issuance and sale of the Preferred Securities by the Issuer Trust
pursuant to the Underwriting Agreement, (iii) the acquisition by the
Issuer Trust from the Depositor of all of the right, title and interest
in the Junior Subordinated Debentures, and (iv) the appointment of the
Administrators.
NOW THEREFORE, in consideration of the agreements and
obligations set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, each party, for the benefit of the other parties and for
the benefit of the Holders, hereby amends and restates the Original
Trust Agreement in its entirety and agrees, intending to be legally
bound, as follows:
<PAGE> 7
- 2 -
ARTICLE I
DEFINED TERMS
SECTION 1.1. Definitions.
For all purposes of this Trust Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(a) The terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(b) All other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(c) The words "include," "includes" and "including" shall be
deemed to be followed by the phrase "without limitation";
(d) All accounting terms used but not defined herein have the
meanings assigned to them in accordance with United States generally
accepted accounting principles as in effect at the time of computation;
(e) Unless the context otherwise requires, any reference to
an "Article" or a "Section " refers to an Article or a Section, as the
case may be, of this Trust Agreement;
(f) The words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Trust Agreement as a whole and
not to any particular Article, Section or other subdivision; and
(g) all references to the date the Preferred Securities were
originally issued shall refer to the date the Preferred Securities were
originally issued.
"Act" has the meaning specified in Section 6.8.
"Additional Amount" means, with respect to Trust Securities of
a given Liquidation Amount and/or a given period, the amount of
Additional Interest (as defined in the Indenture) paid by the Depositor
on a Like Amount of Debentures for such period.
"Additional Sums" has the meaning specified in Section 10.6 of
the Indenture.
<PAGE> 8
- 3 -
"Administrators" means each Person appointed in accordance
with Section 8.20 solely in such Person's capacity as Administrator of
the Issuer Trust heretofore formed and continued hereunder and not in
such Person's individual capacity, or any successor Administrator
appointed as herein provided; with the initial Administrators being
Gary L. Rhoads and Sandra L. Spayd.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of
this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Preferred Security or beneficial
interest therein, the rules and procedures of the Depositary for such
Preferred Security, in each case to the extent applicable to such
transaction and as in effect from time to time.
"Bank" has the meaning specified in the preamble to this Trust
Agreement.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having
jurisdiction in the premises judging such Person a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjudication or composition of or in
respect of such Person under any applicable federal or State
bankruptcy, insolvency, reorganization or other similar law, or
appointing a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of such Person or of any substantial part of
its property or ordering the winding up or liquidation of its affairs,
and the continuance of any such decree or order unstayed and in effect
for a period of 60 consecutive days; or
(b) the institution by such Person of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by it to the
institution of bankruptcy or insolvency proceedings against it, or the
filing by it of a petition or answer or consent seeking reorganization
or relief under any applicable federal or State bankruptcy, insolvency,
reorganization or other similar law, or the consent by it to the filing
of any such petition or to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or similar official) of such Person or
of any substantial part of its property or the making by it of an
assignment for the benefit of creditors, or the admission by it in
<PAGE> 9
- 4 -
writing of its inability to pay its debts generally as they become due
and its willingness to be adjudicated a bankrupt, or the taking of
corporate action by such Person in furtherance of any such action.
"Bankruptcy Laws" has the meaning specified in Section 10.9.
"Board of Directors" means the board of directors of the
Depositor or the Executive Committee of the board of directors of the
Depositor (or any other committee of the board of directors of the
Depositor performing similar functions) or a committee designated by
the board of directors of the Depositor (or any such committee),
comprised of two or more members of the board of directors of the
Depositor or officers of the Depositor, or both.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Depositor to have been duly
adopted by the Depositor's Board of Directors, or such committee of the
Board of Directors or officers of the Depositor to which authority to
act on behalf of the Board of Directors has been delegated, and to be
in full force and effect on the date of such certification, and
delivered to the Issuer Trustees.
"Business Day" means a day other than (a) a Saturday or Sunday,
(b) a day on which banking institutions in the City of New York, New
York or in the City of _______, Pennsylvania are authorized or required
by law or executive order to remain closed or (c) a day on which the
Property Trustee's Corporate Trust Office or the Delaware Trustee's
Corporate Trust Office or the Corporate Trust Office of the Debenture
Trustee is closed for business.
"Capital Treatment Event" means, in respect of any Issuer Trust,
the reasonable determination by the Depositor that, as a result of the
occurrence of any amendment to, or change (including any announced
prospective change) in, the laws (or any rules or regulations
thereunder) of the United States or any political subdivision thereof
or therein, or as a result of any official or administrative
pronouncement or action or judicial decision interpreting or applying
such laws or regulations, which amendment or change is effective or
such pronouncement, action or decision is announced on or after the
date of the issuance of the Preferred Securities of such Issuer Trust,
there is more than an insubstantial risk that the Depositor will not be
entitled to treat an amount equal to the Liquidation Amount of such
Preferred Securities as "Tier 1 Capital" (or the then equivalent
thereof) for purposes of the risk-based capital adequacy guidelines of
the Board of Governors of the Federal Reserve System, as then in effect
and applicable to the Depositor, provided, however, that it
<PAGE> 10
- 5 -
shall not be deemed to be a Capital Treatment Event if the Company is
not entitled to treat the aggregate amount of the Liquidation Amount of
such Preferred Securities as "Tier 1 Capital" due to the restriction
imposed by the Federal Reserve that no more than 25% of Tier 1 Capital
can consist of perpetual preferred stock.
"Certificate Depositary Agreement" means the agreement among the
Issuer Trust, the Depositor and the Depository Trust Company ("DTC"),
as the initial Clearing Agency, dated as of the Closing Date,
substantially in the form attached as Exhibit B, as the same may be
amended and supplemented from time to time.
"Certificate of Trust" has the meaning specified in the
preamble to this Trust Agreement.
"Clearing Agency" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange
Act of 1934, as amended. DTC shall be the initial Clearing Agency.
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time
a Clearing Agency effects book-entry transfers and pledges of
securities deposited with the Clearing Agency.
"Closing Date" means the Time of Delivery for the Firm
Securities, which date is also the date of execution and delivery of
this Trust Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act or, if at
any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
"Common Securities Certificate" means a certificate evidencing
ownership of Common Securities, substantially in the form attached as
Exhibit C.
"Common Security" means an undivided beneficial interest in the
assets of the Issuer Trust, having a Liquidation Amount of $25 and
having the rights provided therefor in this Trust Agreement, including
the right to receive Distributions and a Liquidation Distribution as
provided herein.
"Corporate Trust Office" means the principal office of the
Property Trustee located in the City of New York, New York, which at
the time of the execution of this Trust Agreement is located at
<PAGE> 11
- 6 -
Four Albany Street, New York, New York 10006; Attention: Corporate
Trust and Agency Group - Corporate Market Services.
"Debenture Event of Default" means an "Event of Default" as
defined in the Indenture.
"Debenture Redemption Date" means, with respect to any
Debentures to be redeemed under the Indenture, the date fixed for
redemption of such Debentures under the Indenture.
"Debenture Trustee" means Bankers Trust Company, a New York
banking corporation and any successor.
"Delaware Business Trust Act" means Chapter 38 of Title 12
of the Delaware Code, 12 Del. C. 3801, et seq., as it may be
amended from time to time.
"Delaware Trustee" means the corporation identified as the
"Delaware Trustee" in the preamble to this Trust Agreement solely in
its capacity as Delaware Trustee of the Issuer Trust continued
hereunder and not in its individual capacity, or its successor in
interest in such capacity, or any successor trustee appointed as herein
provided.
"Depositary" means the Depository Trust Company or any
successor thereto.
"Depositor" has the meaning specified in the preamble to
this Trust Agreement.
"Distribution Date" has the meaning specified in
Section 4.1(a).
"Distributions" means amounts payable in respect of the Trust
Securities as provided in Section 4.1.
"DTC" means the Depository Trust Company.
"Early Termination Event" has the meaning specified in
Section 9.2.
"Event of Default" means any one of the following events
(whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) the occurrence of a Debenture Event of Default; or
<PAGE> 12
- 7 -
(b) default by the Issuer Trust in the payment of any
Distribution when it becomes due and payable, and continuation of such
default for a period of 30 days; or
(c) default by the Issuer Trust in the payment of any
Redemption Price of any Trust Security when it becomes due and
payable; or
(d) default in the performance, or breach, in any material
respect, of any covenant or warranty of the Issuer Trustees in this
Trust Agreement (other than a covenant or warranty a default in the
performance of which or the breach of which is dealt with in clause (b)
or (c) above) and continuation of such default or breach for a period
of 60 days after there has been given, by registered or certified mail,
to the Issuer Trustees and the Depositor by the Holders of at least 25%
in aggregate Liquidation Amount of the Outstanding Preferred
Securities, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(e) the occurrence of any Bankruptcy Event with respect to the
Property Trustee or all or substantially all of its property if a
successor Property Trustee has not been appointed within a period of 90
days thereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and any successor statute thereto, in each case as amended
from time to time.
"Expiration Date" has the meaning specified in Section 9.1.
"Firm Securities" means an aggregate Liquidation Amount of
$35,000,000 of the Issuer Trust's ____% preferred securities.
"Global Preferred Securities Certificate" means a Preferred
Securities Certificate evidencing ownership of Global Preferred
Securities.
"Global Preferred Security" means a Preferred Security, the
ownership and transfers of which shall be made through book entries by
a Clearing Agency as described in Section 5.4.
"Guarantee Agreement" means the Guarantee Agreement executed and
delivered by the Depositor and Bankers Trust Company, as trustee,
contemporaneously with the execution and delivery of this Trust
Agreement, for the benefit of the holders of the Preferred Securities,
as amended from time to time.
<PAGE> 13
- 8 -
"Holder" means a Person in whose name a Trust Security or Trust
Securities is registered in the Securities Register; any such Person
shall be deemed to be a beneficial owner within the meaning of the
Delaware Business Trust Act.
"Indenture" means the Junior Subordinated Indenture, dated as of
May __, 1997, between the Depositor and the Debenture Trustee (as
amended or supplemented from time to time) relating to the issuance of
the Junior Subordinated Debentures.
"Investment Company Act" means the Investment Company Act
of 1940, as amended.
"Investment Company Event" means the receipt by the Issuer Trust
of an Opinion of Counsel experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or
a written change (including any announced prospective change) in
interpretation or application of law or regulation by any legislative
body, court, governmental agency or regulatory authority, there is more
than an insubstantial risk that the Issuer Trust is or will be
considered an "investment company" that is required to be registered
under the Investment Company Act, which change or prospective change
becomes effective or would become effective, as the case may be, on or
after the date of the issuance of the Preferred Securities.
"Issuer Trust" means NPB Capital Trust.
"Issuer Trustees" means, collectively, the Property Trustee
and the Delaware Trustee.
"Junior Subordinated Debentures" means the aggregate principal
amount of the Depositor's ____% junior subordinated deferrable interest
debentures issued pursuant to the Indenture, due June __, 2027, which
date may be shortened once at any time by the Company to any date not
earlier than June ___, 2002, subject to the Company having received
prior approval of the Federal Reserve Board of Governors of the Federal
Reserve System (the "Federal Reserve") if then required under
applicable capital guidelines or policies of the Federal Reserve.
"Lien" means any lien, pledge, charge, encumbrance, mortgage,
deed of trust, adverse ownership interest, hypothecation, assignment,
security interest or preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of Trust
Securities, Trust Securities having a Liquidation Amount equal to that
portion of the principal amount of Junior Subordinated Debentures to be
contemporaneously redeemed in
<PAGE> 14
- 9 -
accordance with the Indenture, allocated to the Common Securities and
to the Preferred Securities based upon the relative Liquidation Amounts
of such classes and (b) with respect to a distribution of Junior
Subordinated Debentures to Holders of Trust Securities in connection
with a dissolution or liquidation of the Issuer Trust, Junior
Subordinated Debentures having a principal amount equal to the
Liquidation Amount of the Trust Securities of the Holder to whom such
Junior Subordinated Debentures are distributed.
"Liquidation Amount" means the stated amount of $25 per
Trust Security.
"Liquidation Date" means the date on which Junior Subordinated
Debentures are to be distributed to Holders of Trust Securities in
connection with a dissolution and liquidation of the Issuer Trust
pursuant to Section 9.4.
"Liquidation Distribution" has the meaning specified in
Section 9.4(d).
"Majority in Liquidation Amount of the Preferred Securities" or
"Majority in Liquidation Amount of the Common Securities" means, except
as provided by the Trust Indenture Act, Preferred Securities or Common
Securities, as the case may be, representing more than 50% of the
aggregate Liquidation Amount of all then Outstanding Preferred
Securities or Common Securities, as the case may be.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board and Chief Executive Officer, President or a Vice
President, and by the Chief Financial Officer, the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary, of the
Depositor, and delivered to the party provided herein. Any Officers'
Certificate delivered with respect to compliance with a condition or
covenant provided for in this Trust Agreement shall include:
(a) a statement by each officer signing the Officers'
Certificate that such officer has read the covenant or condition and
the definitions relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by such officer in
rendering the Officers' Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
<PAGE> 15
- 10 -
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for or an employee of the Depositor or any Affiliate of the
Depositor.
"Option Closing Date" shall have the meaning provided in
the Underwriting Agreement.
"Option Securities" means an aggregate Liquidation Amount of
$5,250,000 of the Issuer Trust's ____% preferred securities, issuable
to the Underwriter, at its option, exercisable within 30 days after the
date of the Prospectus, solely to cover over-allotments, if any.
"Original Trust Agreement" has the meaning specified in the
preamble to this Trust Agreement.
"Outstanding," with respect to Trust Securities, means, as of
the date of determination, all Trust Securities theretofore executed
and delivered under this Trust Agreement, except:
(a) Trust Securities theretofore canceled by the Property
Trustee or delivered to the Property Trustee for cancellation;
(b) Trust Securities for whose payment or redemption money in
the necessary amount has been theretofore deposited with the Property
Trustee or any Paying Agent for the Holders of such Preferred
Securities, provided that if such Trust Securities are to be redeemed,
notice of such redemption has been duly given pursuant to this Trust
Agreement; and
(c) Trust Securities which have been paid or in exchange for or
in lieu of which other Trust Securities have been executed and
delivered pursuant to Sections 5.4, 5.5, 5.6 and 5.13; provided,
however, that in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Preferred Securities have given
any request, demand, authorization, direction, notice, consent or
waiver hereunder, Preferred Securities owned by the Depositor, any
Issuer Trustee, any Administrator or any Affiliate of the Depositor
shall be disregarded and deemed not to be Outstanding, except that (a)
in determining whether any Issuer Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice,
consent or waiver, only Preferred Securities that such Issuer Trustee
or such Administrator, as the case may be, knows to be so owned shall
be so disregarded and (b) the foregoing shall not apply at any time
when all of the outstanding Preferred Securities are owned by the
Depositor, one or more of the Issuer
<PAGE> 16
- 11 -
Trustees, one or more of the Administrators and/or any such Affiliate.
Preferred Securities so owned which have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Administrators the pledgee's right so to act with
respect to such Preferred Securities and that the pledgee is not the
Depositor or any Affiliate of the Depositor.
"Owner" means each Person who is the beneficial owner of Global
Preferred Securities as reflected in the records of the Clearing Agency
or, if a Clearing Agency Participant is not the Owner, then as
reflected in the records of a Person maintaining an account with such
Clearing Agency (directly or indirectly, in accordance with the rules
of such Clearing Agency.
"Paying Agent" means any paying agent or co-paying agent
appointed pursuant to Section 5.10 and shall initially be the Property
Trustee.
"Payment Account" means a segregated non-interest-bearing
corporate trust account maintained by the Property Trustee with the
Property Trustee in its trust department for the benefit of the Holders
in which all amounts paid in respect of the Junior Subordinated
Debentures will be held and from which the Property Trustee, through
the Paying Agent, shall make payments to the Holders in accordance with
Sections 4.1 and 4.2.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint
stock company, company, limited liability company, trust,
unincorporated organization or government or any agency or political
subdivision thereof, or any other entity of whatever nature.
"Preferred Securities Certificate" means a certificate
evidencing ownership of Preferred Securities, substantially in the form
attached as Exhibit D.
"Preferred Security" means a Firm Security or an Option
Security, each constituting a preferred undivided beneficial interest
in the assets of the Issuer Trust, having a Liquidation Amount of $25
and having the rights provided therefor in this Trust Agreement,
including the right to receive Distributions and a Liquidation
Distribution as provided herein.
"Property Trustee" means the Person identified as the "Property
Trustee" in the preamble to this Trust Agreement solely in its capacity
as Property Trustee of the Issuer Trust formed and continued hereunder
and not in its individual capacity, or its successor in interest in
such capacity, or any successor property trustee appointed as herein
provided.
<PAGE> 17
- 12 -
"Redemption Date" means, with respect to any Trust Security to
be redeemed, the date fixed for such redemption by or pursuant to this
Trust Agreement; provided that each Junior Subordinated Debenture
Redemption Date and the stated maturity of the Junior Subordinated
Debentures shall be a Redemption Date for a Like Amount of Trust
Securities, including but not limited to any date of redemption
pursuant to the occurrence of any Special Event.
"Redemption Price" means with respect to a redemption of any
Trust Security, the Liquidation Amount of such Trust Security, together
with accumulated but unpaid Distributions to but excluding the date
fixed for redemption, plus the related amount of the premium, if any,
paid by the Depositor upon the concurrent redemption of a Like Amount
of Junior Subordinated Debentures.
"Relevant Trustee" has the meaning specified in Section
8.10.
"Responsible Officer" when used with respect to the Property
Trustee means any officer assigned to the Corporate Trust Office,
including any managing director, vice president, assistant vice
president, assistant treasurer, assistant secretary or any other
officer of the Property Trustee customarily performing functions
similar to those performed by any of the above designated officers and
having direct responsibility for the administration of the Indenture,
and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Securities Act" means the Securities Act of 1933, as amended,
and any successor statute thereto, in each case as amended from time to
time.
"Securities Register" and "Securities Registrar" have the
respective meanings specified in Section 5.5.
"Special Event" means any Tax Event, Capital Treatment
Event or Investment Company Event.
"Successor Preferred Securities" of any particular Preferred
Securities Certificate means every Preferred Securities Certificate
issued after, and evidencing all or a portion of the same beneficial
interest in the Issuer Trust as that evidenced by, such particular
Preferred Securities Certificate; and, for the purposes of this
definition, any Preferred Securities Certificate executed and delivered
under Section 5.6 in exchange for or in lieu of a mutilated, destroyed,
lost or stolen Preferred Securities Certificate shall be deemed to
evidence the same
<PAGE> 18
- 13 -
beneficial interest in the Issuer Trust as the mutilated, destroyed,
lost or stolen Preferred Securities Certificate.
"Tax Event" means the receipt by the Issuer Trust of an Opinion
of Counsel experienced in such matters to the effect that, as a result
of any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or
therein, or as a result of any official or administrative pronouncement
or action or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or which
pronouncement, action or decision is announced on or after the date of
issuance of the Preferred Securities, there is more than an
insubstantial risk that (i) the Issuer Trust is, or will be within 90
days of the delivery of such Opinion of Counsel, subject to United
States Federal income tax with respect to income received or accrued on
the Junior Subordinated Debentures, (ii) interest payable by the
Depositor on the Junior Subordinated Debentures is not, or within 90
days of the delivery of such Opinion of Counsel will not be, deductible
by the Depositor, in whole or in part, for United States federal income
tax purposes, or (iii) the Issuer Trust is, or will be within 90 days
of the delivery of such Opinion of Counsel, subject to more than a de
minimis amount of other taxes, duties or other governmental changes.
"Time of Delivery" means 10:00 a.m. Eastern Standard Time,
either (i) with respect to the Firm Securities or Common Securities, on
the third Business Day (unless postponed in accordance with the
provisions of Section 9 of the Underwriting Agreement) following the
date of execution of the Underwriting Agreement, or such other time not
later than ten Business Days after such date as shall be agreed upon by
the Underwriters, the Issuer Trust and the Company, or (ii) with
respect to the Option Securities, the Option Closing Date.
"Trust Agreement" means this Amended and Restated Trust
Agreement, as the same may be modified, amended or supplemented in
accordance with the applicable provisions hereof, including (i) all
Exhibits hereto, and (ii) for all purposes of this Amended and Restated
Trust Agreement any such modification, amendment or supplement, the
provisions of the Trust Indenture Act that are deemed to be a part of
and govern this Amended and Restated Trust Agreement and any
modification, amendment or supplement, respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939 or
any successor statute, in each case as amended from time to time.
<PAGE> 19
- 14 -
"Trust Property" means (a) the Junior Subordinated Debentures,
(b) any cash on deposit in, or owing to, the Payment Account, and (c)
all proceeds and rights in respect of the foregoing and any other
property and assets for the time being held or deemed to be held by the
Property Trustee pursuant to the trusts of this Trust Agreement.
"Trust Securities Certificate" means any one of the Common
Securities Certificates or the Preferred Securities Certificates.
"Trust Security" means any one of the Common Securities or
the Preferred Securities.
"Underwriter" has the meaning specified in the Underwriting
Agreement.
"Underwriting Agreement" means the Underwriting Agreement, dated
as of May __, 1997, among the Issuer Trust, the Depositor and the
Underwriter, as the same may be amended from time to time.
ARTICLE II
CONTINUATION OF THE ISSUER TRUST
SECTION 2.1. Name.
The Issuer Trust continued hereby shall be known as "NPB Capital
Trust", as such name may be modified from time to time by the
Administrators following written notice to the Holders of Trust
Securities and the other Issuer Trustees, in which name the
Administrators and the Issuer Trustees may engage in the transactions
contemplated hereby, make and execute contracts and other instruments
on behalf of the Issuer Trust and sue and be sued.
SECTION 2.2. Office of the Delaware Trustee; Principal
Place of Business.
The address of the Delaware Trustee in the State of Delaware is
Bankers Trust (Delaware), 1001 Jefferson Street, Suite 550, Wilmington,
DE 19801, Attention: Lisa Wilkins, or such other address in the State
of Delaware as the Delaware Trustee may designate by written notice to
the Holders and the Depositor. The principal executive office of the
Issuer Trust is in care of National Penn Bancshares, Inc.,
[________________], _______, Pennsylvania [_____], Attention: Office of
the Secretary.
<PAGE> 20
- 15 -
SECTION 2.3. Initial Contribution of Trust Property,
Organizational Expenses.
The Property Trustee acknowledges receipt in trust from the
Depositor in connection with this Trust Agreement of the sum of $10,
which constitutes the initial Trust Property. The Depositor shall pay
all organizational expenses of the Issuer Trust as they arise or shall,
upon request of any Issuer Trustee, promptly reimburse such Issuer
Trustee for any such expenses paid by such reasonable Issuer Trustee.
The Depositor shall make no claim upon the Trust Property for the
payment of such expenses.
SECTION 2.4. Issuance of the Preferred Securities.
On May 2, 1997, the Depositor, both on its own behalf and on
behalf of the Issuer Trust pursuant to the Original Trust Agreement,
executed and delivered the Underwriting Agreement. Contemporaneously
with the execution and delivery of this Trust Agreement, an
Administrator, on behalf of the Issuer Trust, shall manually execute in
accordance with Section 5.3 and the Property Trustee shall authenticate
in accordance with Section 5.3 and deliver to the Underwriter, Firm
Securities Certificates, registered in the names requested by the
Underwriter, in an aggregate amount of 1,400,000 Firm Securities having
an aggregate Liquidation Amount of $35,000,000, against receipt of the
aggregate purchase price of such Preferred Securities of $35,000,000,
by the Property Trustee. At the option of the Underwriter, within 30
days of the date of the Prospectus, and solely for the purpose of
covering an over-allotment, if any, an Administrator, on behalf of the
Issuer Trust, shall manually execute in accordance with Section 5.3 and
the Property Trustee shall authenticate in accordance with Section 5.4
and deliver to the Underwriter, Option Securities Certificates,
registered in the names requested by the Underwriter, up to 210,000
Option Securities having an aggregate Liquidation Amount of $5,250,000,
against receipt of the aggregate purchase price of such Option
Securities of $5,250,000, by the Property Trustee.
SECTION 2.5. Issuance of the Common Securities;
Subscription and Purchase of Junior Subordinated Debentures.
Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrator, on behalf of the Issuer Trust, shall
execute or cause to be executed in accordance with Section 5.2 and the
Property Trustee shall deliver to the Depositor Common Securities
Certificates, registered in the name of the Depositor, in an aggregate
amount of 43,299 Common Securities having an aggregate Liquidation
Amount of $1,082,475 against receipt of the aggregate purchase price of
such Common Securities of $1,082,475 by the Property Trustee. In the
event of any exercise of an over-allotment option requiring issuance of
additional Preferred
<PAGE> 21
- 16 -
Securities Certificates, as described in Section 2.4 above, a
proportionate number of additional Common Securities Certificates, with
corresponding aggregate Liquidation Amount, shall be delivered to the
Depositor. Contemporaneously with the executions, and deliveries of
Common Securities Certificates and any Preferred Securities
Certificates, an Administrator, on behalf of the Issuer Trust, shall
subscribe for and purchase from the Depositor corresponding amounts of
Junior Subordinated Debentures, registered in the name of the Property
Trustee and having an aggregate principal amount equal to $36,082,475
plus, in the event of any exercise of the over-allotment option (i) a
corresponding additional number of Junior Subordinated Debentures not
exceeding an aggregate principal amount of $5,412,375 and (ii) a
corresponding number of Junior Subordinated Debentures not exceeding an
aggregate principal amount equal to the aggregate Liquidation Amount of
Common Securities issued pursuant to such exercise of an over-allotment
option; and, in satisfaction of the purchase price for such Junior
Subordinated Debentures, the Property Trustee, on behalf of the Issuer
Trust, shall deliver to the Depositor the sum of $36,082,475 plus any
corresponding over-allotment option amount (being the sum of the
amounts delivered to the Property Trustee pursuant to (i) the second
sentence of Section 2.4, and (ii) the first and second sentences of
this Section 2.5) and receive on behalf of the Issuer Trust the Junior
Subordinated Debentures.
SECTION 2.6. Declaration of Trust.
The exclusive purposes and functions of the Issuer Trust are to
(a) issue and sell Trust Securities and use the proceeds from such sale
to acquire the Junior Subordinated Debentures, and (b) engage in only
those other activities necessary or incidental thereto. The Depositor
hereby appoints the Issuer Trustees as trustees of the Issuer Trust, to
have all the rights, powers and duties to the extent set forth herein,
and the Issuer Trustees hereby accept such appointment. The Property
Trustee hereby declares that it will hold the Trust Property in trust
upon and subject to the conditions set forth herein for the benefit of
the Issuer Trust and the Holders. The Depositor hereby appoints the
Administrators, with such Administrators having all rights, powers and
duties set forth herein with respect to accomplishing the purposes of
the Issuer Trust, and the Administrators hereby accept such
appointment, provided, however, that it is the intent of the parties
hereto that such Administrators shall not be trustees or fiduciaries
with respect to the Issuer Trust and this Agreement shall be construed
in a manner consistent with such intent. The Property Trustee shall
have the right and power to perform those duties assigned to the
Administrators. The Delaware Trustee shall not be entitled to exercise
any powers, nor shall the Delaware Trustee have any of the duties and
responsibilities, of the Property Trustee or the Administrators set
forth herein. The
<PAGE> 22
- 17 -
Delaware Trustee shall be one of the trustees of the Issuer Trust for
the sole and limited purpose of fulfilling the requirements of Section
3807 of the Delaware Business Trust Act and for taking such actions as
are required to be taken by a Delaware trustee under the Delaware
Business Trust Act.
SECTION 2.7. Authorization to Enter into Certain
Transactions.
(a) The Issuer Trustees and the Administrators shall conduct the
affairs of the Issuer Trust in accordance with the terms of this Trust
Agreement. Subject to the limitations set forth in paragraph (b) of
this Section and in accordance with the following provisions (i), (ii)
and (iii), the Issuer Trustees and the Administrators shall act as
follows:
(i) Each Administrator shall:
(A) comply with the Underwriting Agreement regarding
the issuance and sale of the Trust Securities;
(B) assist in compliance with the Securities Act,
applicable state securities or blue sky laws, and the Trust
Indenture Act;
(C) assist in the listing of the Preferred Securities upon
such securities exchange or exchanges or upon the Nasdaq
National Market as shall be determined by the Depositor, with
the registration of the Preferred Securities under the Exchange
Act, if required, and the preparation and filing of all periodic
and other reports and other documents pursuant to the foregoing;
(D) execute and deliver an application for a taxpayer
identification number for the Issuer Trust; and
(E) assist with the preparation of a registration statement
and a prospectus in relation to the Preferred Securities,
including any amendments thereto and the taking of any action
necessary or desirable to sell the Preferred Securities in a
transaction or series of transactions subject to the
registration requirements of the Securities Act.
(F) take any action incidental to the foregoing as
necessary or advisable to give effect to the terms of this Trust
Agreement.
(ii) The Property Trustee shall have the power and authority to
act on behalf of the Issuer Trust with respect to the following
matters:
<PAGE> 23
- 18 -
(A) the establishment of the Payment Account;
(B) the receipt of the Junior Subordinated
Debentures;
(C) the receipt and collection of interest, principal and
any other payments made in respect of the Junior Subordinated
Debentures in the Payment Account;
(D) the distribution of amounts owed to the Holders
in respect of the Trust Securities;
(E) the exercise of all of the rights, powers and
privileges of a holder of the Junior Subordinated
Debentures;
(F) the sending of notices of default and other information
regarding the Trust Securities and the Junior Subordinated
Debentures to the Holders in accordance with this Trust
Agreement;
(G) the distribution of the Trust Property in
accordance with the terms of this Trust Agreement;
(H) to the extent provided in this Trust Agreement, the
winding up of the affairs of and liquidation of the Issuer Trust
and the preparation, execution and filing of the certificate of
cancellation with the Secretary of State of the State of
Delaware; and
(I) after an Event of Default (other than under paragraph
(b), (c), (d), or (f) of the definition of such term if such
Event of Default is by or with respect to the Property Trustee),
comply with the provisions of this Trust Agreement and take any
action to give effect to the terms of this Trust Agreement and
protect and conserve the Trust Property for the benefit of the
Holders (without consideration of the effect of any such action
on any particular Holder); provided, however, that nothing in
this Section 2.7(a)(ii) shall require the Property Trustee to
take any action that is not otherwise required in this Trust
Agreement.
(b) So long as this Trust Agreement remains in effect, the
Issuer Trust (or the Issuer Trustees or Administrators acting on behalf
of the Issuer Trust) shall not undertake any business, activities or
transaction except as expressly provided herein or contemplated hereby.
In particular, neither the Issuer Trustees nor the Administrators shall
(i) acquire any investments or engage in any activities not authorized
by this Trust Agreement, (ii)
<PAGE> 24
- 19 -
sell, assign, transfer, exchange, mortgage, pledge, set-off or
otherwise dispose of any of the Trust Property or interests therein,
including to Holders, except as expressly provided herein, (iii) take
any action that would reasonably be expected to cause the Issuer Trust
to become taxable as a corporation for United States Federal income tax
purposes, (iv) incur any indebtedness for borrowed money or issue any
other debt, or (v) take or consent to any action that would result in
the placement of a Lien on any of the Trust Property. The Property
Trustee shall defend all claims and demands of all Persons at any time
claiming any Lien on any of the Trust Property adverse to the interest
of the Issuer Trust or the Holders in their capacity as Holders.
(c) In connection with the issue and sale of the Preferred
Securities, the Depositor shall have the right and responsibility to
assist the Issuer Trust with respect to, or effect on behalf of the
Issuer Trust, the following (and any actions taken by the Depositor in
furtherance of the following prior to the date of this Trust Agreement
are hereby ratified and confirmed in all respects):
(i) the preparation by the Issuer Trust of, and the
execution and delivery of, a registration statement, and a
prospectus in relation to the Preferred Securities, including
any amendments thereto and the taking of any action necessary or
desirable to sell the Preferred Securities in a transaction or a
series of transactions subject to the registration requirements
of the Securities Act;
(ii) the determination of the States in which to take
appropriate action to qualify or register for sale all or part
of the Preferred Securities and the determination of any and all
such acts, other than actions that must be taken by or on behalf
of the Issuer Trust, and the advice to the Issuer Trustees of
actions they must take on behalf of the Issuer Trust, and the
preparation for execution and filing of any documents to be
executed and filed by the Issuer Trust or on behalf of the
Issuer Trust, as the Depositor deems necessary or advisable in
order to comply with the applicable laws of any such States in
connection with the sale of the Preferred Securities;
(iii) the negotiation of the terms of, and the
execution and delivery of, the Underwriting Agreement
providing for the sale of the Preferred Securities;
(iv) the taking of any other actions necessary or
desirable to carry out any of the foregoing activities; and
<PAGE> 25
- 20 -
(v) compliance with the listing requirements of the
Preferred Securities upon such securities exchange or exchanges,
or upon the Nasdaq National Market, as shall be determined by
the Depositor, the registration of the Preferred Securities
under the Exchange Act, if required, and the preparation and
filing of all periodic and other reports and other documents
pursuant to the foregoing.
(d) Notwithstanding anything herein to the contrary, the
Administrators and the Property Trustee are authorized and directed to
conduct the affairs of the Issuer Trust and to operate the Issuer Trust
so that the Issuer Trust will not be deemed to be an "investment
company" required to be registered under the Investment Company Act,
and will not be taxable as a corporation for the United States Federal
income tax purposes and so that the Junior Subordinated Debentures will
be treated as indebtedness of the Depositor for United States income
tax purposes. In this connection, the Property Trustee and the Holders
of Common Securities are authorized to take any action, not
inconsistent with applicable law, the Certificate of Trust or this
Trust Agreement, that the Property Trustee and Holders of Common
Securities determine in their discretion to be necessary or desirable
for such purposes, as long as such action does not adversely affect in
any material respect the interests of the holders of the Outstanding
Preferred Securities. In no event shall the Administrators or the
Issuer Trustees be liable to the Issuer Trust or the Holders for any
failure to comply with this section that results from a change in law
or regulations or in the interpretation thereof.
SECTION 2.8. Assets of Trust.
The assets of the Issuer Trust shall consist solely of the Trust
Property.
SECTION 2.9. Title to Trust Property.
Legal title to all Trust Property shall be vested at all times
in the Property Trustee (in its capacity as such) and shall be held and
administered by the Property Trustee for the benefit of the Issuer
Trust and the Holders in accordance with this Trust Agreement.
ARTICLE III
PAYMENT ACCOUNT
SECTION 3.1. Payment Account.
(a) On or prior to the Closing Date, the Property Trustee
shall establish the Payment Account. The Property Trustee and its
<PAGE> 26
- 21 -
agents shall have exclusive control and sole right of withdrawal with
respect to the Payment Account for the purpose of making deposits in
and withdrawals from the Payment Account in accordance with this Trust
Agreement. All monies and other property deposited or held from time to
time in the Payment Account shall be held by the Property Trustee in
the Payment Account for the exclusive benefit of the Holders and for
distribution as herein provided, including (and subject to) any
priority of payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account,
promptly upon receipt, all payments of principal of or interest on, and
any other payments or proceeds with respect to, the Junior Subordinated
Debentures. Amounts held in the Payment Account shall not be invested
by the Property Trustee pending distribution thereof.
ARTICLE IV
DISTRIBUTIONS; REDEMPTION
SECTION 4.1. Distributions.
(a) The Trust Securities represent undivided beneficial
interests in the Trust Property, and Distributions (including
Distributions of Additional Amounts) will be made on the Trust
Securities at the rate and on the dates that payments of interest
(including payments of Additional Interest, as defined in the
Indenture) are made on the Junior Subordinated Debentures.
Accordingly:
(i) Distributions on the Trust Securities shall be
cumulative and will accumulate whether or not there are funds of
the Issuer Trust available for the payment of Distributions.
Distributions shall accumulate from May __, 1997, and, except in
the event (and to the extent) that the Depositor exercises its
right to defer the payment of interest on the Debentures
pursuant to the Indenture, shall be payable quarterly in arrears
on March 31, June 30, September 30 and December 31 of each year,
commencing on September 30, 1997. If any date on which a
Distribution is otherwise payable on the Trust Securities is not
a Business Day, then the payment of such Distribution shall be
made on the next succeeding day that is a Business Day (without
any interest or other payment in respect of any such delay),
with the same force and effect as if made on the date on which
such payment was originally payable (each date on which
distributions are payable in accordance with this Section
4.1(a), a "Distribution Date").
<PAGE> 27
- 22 -
(ii) The Trust Securities shall be entitled to
Distributions payable at a rate of ____% per annum of the
Liquidation Amount of the Trust Securities. The amount of
Distributions payable for any period less than a full
Distribution period shall be computed on the basis of a 360-day
year of twelve 30-day months and the actual number of days
elapsed in a partial month in a period. Distributions payable
for each full Distribution period will be computed by dividing
the rate per annum by four. The amount of Distributions payable
for any period shall include any Additional Amounts in respect
of such period.
(iii) So long as no Debenture Event of Default has occurred
and is continuing, the Depositor has the right under the
Indenture to defer the payment of interest on the Junior
Subordinated Debentures at any time and from time to time for a
period not exceeding 20 consecutive quarterly periods (an
"Extension Period"), provided that no Extension Period may
extend beyond June __, 2027. As a consequence of any such
deferral, quarterly Distributions on the Trust Securities by the
Trust will also be deferred (and the amount of Distributions to
which Holders of the Trust Securities are entitled will
accumulate additional Distributions thereon at the rate per
annum of ____% per annum, compounded quarterly) from the
relevant payment date for such Distributions, computed on the
basis of a 360- day year of twelve 30-day months and the actual
days elapsed in a partial month in such period. Additional
Distributions payable for each full Distribution period will be
computed by dividing the rate per annum by four (4). The term
"Distributions" as used in Section 4.1 shall include any such
additional Distributions provided pursuant to this Section
4.1(a)(iii).
(iv) Distributions on the Trust Securities shall be made by
the Property Trustee from the Payment Account and shall be
payable on each Distribution Date only to the extent that the
Issuer Trust has funds then on hand and available in the Payment
Account for the payment of such Distributions.
(b) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they
appear on the Securities Register for the Trust Securities at the close
of business on the relevant record date, which shall be at the close of
business on the 15th day of March, June, September or December (whether
or not a Business Day).
<PAGE> 28
- 23 -
SECTION 4.2. Redemption.
(a) On each Junior Subordinated Debenture Redemption Date and on
the stated maturity of the Junior Subordinated Debentures, the Issuer
Trust will be required to redeem a Like Amount of Trust Securities at
the Redemption Price.
(b) Notice of redemption shall be given by the Property Trustee
by first-class mail, postage prepaid, mailed not less than 30 nor more
than 60 days prior to the Redemption Date to each Holder of Trust
Securities to be redeemed, at such Holder's address appearing in the
Security Register. All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price, or if the Redemption Price
cannot be calculated prior to the time the notice is required to
be sent, the estimate of the Redemption Price provided pursuant
to the Indenture together with a statement that it is an
estimate and that the actual Redemption Price will be calculated
on the third Business Day prior to the Redemption Date (and if
an estimate is provided, a further notice shall be sent of the
actual Redemption Price on the date, or as soon as practicable
thereafter, that notice of such actual Redemption Price is
received pursuant to the Indenture);
(iii) the CUSIP number or CUSIP numbers of the
Preferred Securities affected;
(iv) if less than all the Outstanding Trust Securities are
to be redeemed, the identification and the total Liquidation
Amount of the particular Trust Securities to be redeemed;
(v) that on the Redemption Date the Redemption Price will
become due and payable upon each such Trust Security to be
redeemed and that Distributions thereon will cease to accumulate
on and after said date, except as provided in Section 4.2(d)
below; and
(vi) the place or places where Trust Securities are to be
surrendered for the payment of the Redemption Price.
The Issuer Trust in issuing the Trust Securities shall use
"CUSIP" numbers, and the Property Trustee shall indicate the "CUSIP"
numbers of the Trust Securities in notices of redemption and related
materials as a convenience to Holders; provided that any such notice
may state that no representation is made as to the correctness of such
numbers either as printed on the Trust
<PAGE> 29
- 24 -
Securities or as contained in any notice of redemption and related
material.
(c) The Trust Securities redeemed on each Redemption Date shall
be redeemed at the Redemption Price with the applicable proceeds from
the contemporaneous redemption of Junior Subordinated Debentures.
Redemptions of the Trust Securities shall be made and the Redemption
Price shall be payable on each Redemption Date only to the extent that
the Issuer Trust has funds then on hand and available in the Payment
Account for the payment of such Redemption Price.
(d) If the Property Trustee gives a notice of redemption in
respect of any Preferred Securities, then, by 12:00 noon, New York City
time, on the Redemption Date, subject to Section 4.2(c), the Property
Trustee will, with respect to Preferred Securities held in global form,
irrevocably deposit with the Clearing Agency for such Preferred
Securities, to the extent available therefor, funds sufficient to pay
the applicable Redemption Price and will give such Clearing Agency
irrevocable instructions and authority to pay the Redemption Price to
the Holders of the Preferred Securities. With respect to Preferred
Securities that are not held in global form, the Property Trustee,
subject to Section 4.2(c), will irrevocably deposit with the Paying
Agent, to the extent available therefor, funds sufficient to pay the
applicable Redemption Price and will give the Paying Agent irrevocable
instructions and authority to pay the Redemption Price to the Holder of
the Preferred Securities upon surrender of their Preferred Securities
Certificates. Notwithstanding the foregoing, Distributions payable on
or prior to the Redemption Date for any Trust Securities called for
redemption shall be payable to the Holders of such Trust Securities as
they appear on the Register for the Trust Securities on the relevant
record dates for the related Distribution Dates. If notice of
redemption shall have been given and funds deposited as required, then,
upon the date of such deposit, all rights of Holders holding Trust
Securities so called for redemption will cease, except the right of
such Holders to receive the Redemption Price and any Distribution
payable in respect of the Trust Securities on or prior to the
Redemption Date, but without interest, and such Securities will cease
to be Outstanding. In the event that any date on which any applicable
Redemption Price is payable is not a Business Day, then payment of the
applicable Redemption Price payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such
Business Day falls in the next calendar year, such payment will be made
on the immediately preceding Business Day, in each case, with the same
force and effect as if made on such date. In the event that payment of
the Redemption Price in respect of any Trust Securities called for
redemption is improperly withheld or refused and not paid either by the
Issuer Trust or by the
<PAGE> 30
- 25 -
Depositor pursuant to the Guarantee Agreement, Distributions on such
Trust Securities will continue to accumulate, as set forth in Section
4.1, from the Redemption Date originally established by the Issuer
Trust for such Trust Securities to the date such applicable Redemption
Price is actually paid, in which case the actual payment date will be
the date fixed for redemption for purposes of calculating the
applicable Redemption Price.
(e) Subject to Section 4.3(a), if less than all the Outstanding
Trust Securities are to be redeemed on a Redemption Date, then the
particular Preferred Securities to be redeemed shall be selected not
more than 60 days prior to the Redemption Date by the Property Trustee
from the Outstanding Preferred Securities not previously called for
redemption in such a manner as the Property Trustee shall deem fair and
appropriate.
SECTION 4.3. Subordination of Common Securities.
(a) Payment of Distributions (including Additional Amounts, if
applicable) on, the Redemption Price of, and the Liquidation
Distribution in respect of, the Trust Securities, as applicable, shall
be made, subject to Section 4.2(e), pro rata among the Common
Securities and the Preferred Securities based on the Liquidation Amount
of such Trust Securities; provided, however, that if on any
Distribution Date or Redemption Date any Event of Default resulting
from a Debenture Event of Default in Section 5.1(1) or 5.1(2) of the
Indenture shall have occurred and be continuing, no payment of any
Distribution (including any Additional Amounts) on, Redemption Price
of, or Liquidation Distribution in respect of, any Common Security, and
no other payment on account of the redemption, liquidation or other
acquisition of Common Securities, shall be made unless payment in full
in cash of all accumulated and unpaid Distributions (including any
Additional Amounts) on all Outstanding Preferred Securities for all
Distribution periods terminating on or prior thereto, or, in the case
of payment of the Redemption Price, the full amount of such Redemption
Price on all Outstanding Preferred Securities then called for
redemption, or in the case of payment of the Liquidation Distribution
the full amount of such Liquidation Distribution on all Outstanding
Preferred Securities, shall have been made or provided for, and all
funds immediately available to the Property Trustee shall first be
applied to the payment in full in cash of all Distributions (including
any Additional Amounts) on, or the Redemption Price of, Preferred
Securities then due and payable. The existence of an Event of Default
does not entitle the Holders of Preferred Securities to accelerate the
maturity thereof.
(b) In the case of the occurrence of any Event of Default
resulting from any Debenture Event of Default, the Holder of the Common
Securities shall have no right to act with respect to any
<PAGE> 31
- 26 -
such Event of Default under this Trust Agreement until the effects of
all such Events of Default with respect to the Preferred Securities
have been cured, waived or otherwise eliminated. Until all such Events
of Default under this Trust Agreement with respect to the Preferred
Securities have been so cured, waived or otherwise eliminated, the
Property Trustee shall act solely on behalf of the Holders of the
Preferred Securities and not on behalf of the Holder of the Common
Securities, and only the Holders of the Preferred Securities will have
the right to direct the Property Trustee to act on their behalf.
SECTION 4.4. Payment Procedures.
Payments of Distributions (including any Additional Amounts) in
respect of the Preferred Securities shall be made by check mailed to
the address of the Person entitled thereto as such address shall appear
on the Securities Register or, if the Preferred Securities are held by
a Clearing Agency, such Distributions shall be made to the Clearing
Agency in immediately available funds, which will credit the relevant
accounts on the applicable Distribution Dates. Payments of
Distributions to Holders of $1,000,000 or more in aggregate Liquidation
Amount of Preferred Securities may be made by wire transfer of
immediately available funds upon written request of such Holder of
Preferred Securities to the Securities Registrar not later than 15
calendar days prior to the date on which the Distribution is payable.
Payments in respect of the Common Securities shall be made in such
manner as shall be mutually agreed between the Property Trustee and the
Holder of the Common Securities.
SECTION 4.5. Tax Returns and Reports.
The Administrators shall prepare (or cause to be prepared), at
the Depositor's expense, and file all United States Federal, state and
local tax and information returns and reports required to be filed by
or in respect of the Issuer Trust. In this regard, the Administrators
shall (a) prepare and file (or cause to be prepared and filed) all
Internal Revenue Service forms required to be filed in respect of the
Issuer Trust in each taxable year of the Issuer Trust and (b) prepare
and furnish (or cause to be prepared and furnished) to each Holder all
Internal Revenue Service forms required to be provided by the Issuer
Trust. The Administrators shall provide the Depositor and the Property
Trustee with a copy of all such returns and reports promptly after such
filing or furnishing. The Issuer Trustees shall comply with United
States Federal withholding and backup withholding tax laws and
information reporting requirements with respect to any payments to
Holders under the Trust Securities.
On or before December 15 of each year during which any Preferred
Securities are outstanding, the Administrators shall
<PAGE> 32
- 27 -
furnish to the Paying Agent such information as may be reasonably
requested by the Property Trustee in order that the Property Trustee
may prepare the information which it is required to report for such
year on Internal Revenue Service Forms 1096 and 1099 pursuant to
Section 6049 of the Internal Revenue Code of 1986, as amended. Such
information shall include the amount of original issue discount
includible in income for each outstanding Preferred Security during
such year.
SECTION 4.6. Payment of Taxes; Duties, Etc. of the Issuer
Trust.
Upon receipt under the Junior Subordinated Debentures of
Additional Sums, the Property Trustee shall promptly pay any taxes,
duties or governmental charges of whatsoever nature (other than
withholding taxes) imposed on the Issuer Trust by the United States or
any other taxing authority.
SECTION 4.7. Payments under Indenture or Pursuant to
Direct Actions.
Any amount payable hereunder to any Holder of Preferred
Securities shall be reduced by the amount of any corresponding payment
such Holder has directly received pursuant to Section 5.8 of the
Indenture or Section 5.13 of this Trust Agreement.
SECTION 4.8. Liability of the Holder of Common Securities.
The Holder of Common Securities shall be liable for the debts
and obligations of the Issuer Trust as set forth in Section 6.7 of the
Indenture regarding allocation of expenses.
ARTICLE V
TRUST SECURITIES CERTIFICATES
SECTION 5.1. Initial Ownership.
Upon the formation of the Issuer Trust and the contribution by
the Depositor pursuant to Section 2.3 and until the issuance of the
Trust Securities, and at any time during which no Trust Securities are
outstanding, the Depositor shall be the sole beneficial owner of the
Issuer Trust.
SECTION 5.2. The Trust Securities Certificates.
(a) The Trust Securities Certificates shall be executed on
behalf of the Issuer Trust by manual or facsimile signature of at least
one Administrator except as provided in Section 5.3. Trust Securities
Certificates bearing the manual signatures of
<PAGE> 33
- 28 -
individuals who were, at the time when such signatures shall have been
affixed, authorized to sign on behalf of the Issuer Trust, shall be
validly issued and entitled to the benefits of this Trust Agreement,
notwithstanding that such individuals or any of them shall have ceased
to be so authorized prior to the delivery of such Trust Securities
Certificates or did not hold such offices at the date of delivery of
such Trust Securities Certificates. A transferee of a Trust Securities
Certificate shall become a Holder, and shall be entitled to the rights
and subject to the obligations of a Holder hereunder, upon due
registration of such Trust Securities Certificate in such transferee's
name pursuant to Section 5.5.
(b) Upon their original issuance, Preferred Securities
Certificates shall be issued in the form of one or more fully
registered Global Preferred Securities Certificates which will be
deposited with or on behalf of the Depositary and registered in the
name of the Depositary's nominee. Unless and until it is exchangeable
in whole or in part for the Preferred Securities in definitive form, a
global security may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by
the Depositary or any such nominee to a successor of such Depositary or
a nominee of such successor.
(c) A single Common Securities Certificate representing the
Common Securities shall be issued to the Depositor in the form of a
definitive Common Securities Certificate.
SECTION 5.3. Execution and Delivery of Trust Securities
Certificates.
At the Time of Delivery, the Administrators shall cause Trust
Securities Certificates, in an aggregate Liquidation Amount as provided
in Sections 2.4 and 2.5, to be executed on behalf of the Issuer Trust
and delivered to the Property Trustee and upon such delivery the
Property Trustee shall authenticate such Trust Securities Certificates
and deliver such Trust Securities Certificates upon the written order
of the Trust, executed by the Administrators thereof, without further
corporate action by the Trust, in authorized denominations.
SECTION 5.4. Global Preferred Security.
(a) Any Global Preferred Security issued under this Trust
Agreement shall be registered in the name of the nominee of the
Clearing Agency and delivered to such custodian therefor, and such
Global Preferred Security shall constitute a single Preferred Security
for all purposes of this Trust Agreement.
<PAGE> 34
- 29 -
(b) Notwithstanding any other provision in this Trust Agreement,
a Global Preferred Security may not be exchanged in whole or in part
for Preferred Securities registered, and no transfer of the Global
Preferred Security in whole or in part may be registered, in the name
of any Person other than the Clearing Agency for such Global Preferred
Security, or its nominee thereof unless (i) such Clearing Agency
advises the Property Trustee in writing that such Clearing Agency is no
longer willing or able to properly discharge its responsibilities as
Clearing Agency with respect to such Global Preferred Security, and the
Depositor is unable to locate a qualified successor, (ii) the Issuer
Trust at its option advises the Depositary in writing that it elects to
terminate the book-entry system through the Clearing Agency, or (iii)
there shall have occurred and be continuing an Event of Default.
(c) If a Preferred Security is to be exchanged in whole or in
part for a beneficial interest in a Global Preferred Security, then
either (i) such Global Preferred Security shall be so surrendered for
exchange or cancellation as provided in this Article V or (ii) the
Liquidation Amount thereof shall be reduced or increased by an amount
equal to the portion thereof to be so exchanged or cancelled, or equal
to the Liquidation Amount of such other Preferred Security to be so
exchanged for a beneficial interest therein, as the case may be, by
means of an appropriate adjustment made on the records of the Security
Registrar, whereupon the Property Trustee, in accordance with the
Applicable Procedures, shall instruct the Clearing Agency or its
authorized representative to make a corresponding adjustment to its
records. Upon any such surrender or adjustment of a Global Preferred
Security by the Clearing Agency, accompanied by registration
instructions, the Property Trustee shall, subject to Section 5.4(b) and
as otherwise provided in this Article V, authenticate and deliver any
Preferred Securities issuable in exchange for such Global Preferred
Security (or any portion thereof) in accordance with the instructions
of the Clearing Agency. The Property Trustee shall not be liable for
any delay in delivery of such instructions and may conclusively rely
on, and shall be fully protected in relying on, such instructions.
(d) Every Preferred Security authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Global
Preferred Security or any portion thereof, whether pursuant to this
Article V or Article IV or otherwise, shall be authenticated and
delivered in the form of, and shall be, a Global Preferred Security,
unless such Global Preferred Security is registered in the name of a
Person other than the Clearing Agency for such Global Preferred
Security or a nominee thereof.
(e) The Clearing Agency or its nominee, as the registered
owner of a Global Preferred Security, shall be considered the
<PAGE> 35
- 30 -
Holder of the Preferred Securities represented by such Global Preferred
Security for all purposes under this Trust Agreement and the Preferred
Securities, and owners of beneficial interests in such Global Preferred
Security shall hold such interests pursuant to the Applicable
Procedures and, except as otherwise provided herein, shall not be
entitled to receive physical delivery of any such Preferred Securities
in definitive form and shall not be considered the Holders thereof
under this Trust Agreement. Accordingly, any such owner's beneficial
interest in the Global Preferred Security shall be shown only on, and
the transfer of such interest shall be effected only through, records
maintained by the Clearing Agency or its nominee. Neither the Property
Trustee, the Securities Registrar nor the Depositor shall have any
liability in respect of any transfers effected by the Clearing Agency.
(f) The rights of owners of beneficial interests in a Global
Preferred Security shall be exercised only through the Clearing Agency
and shall be limited to those established by law and agreements between
such owners and the Clearing Agency.
SECTION 5.5. Registration of Transfer and Exchange
Generally; Certain Transfers and Exchanges; Preferred Securities
Certificates.
(a) The Property Trustee shall keep or cause to be kept at its
Corporate Trust Office a register or registers for the purpose of
registering Preferred Securities Certificates and transfers and
exchanges of Preferred Securities Certificates in which the registrar
and transfer agent with respect to the Preferred Securities (the
"Securities Registrar"), subject to such reasonable regulations as it
may prescribe, shall provide for the registration of Preferred
Securities Certificates and Common Securities Certificates (subject to
Section 5.11 in the case of Common Securities Certificates) and
registration of transfers and exchanges of Preferred Securities
Certificates as herein provided. Such register is herein sometimes
referred to as the "Securities Register." The Property Trustee is
hereby appointed "Securities Registrar" for the purpose of registering
Preferred Securities and transfers of Preferred Securities as herein
provided.
Upon surrender for registration of transfer of any Preferred
Security at the offices or agencies of the Property Trustee designated
for that purpose, the Depositor shall execute, and authenticate and
deliver, in the name of the designated transferee or transferees, one
or more new Preferred Securities of the same series of any authorized
denominations of like tenor and aggregate principal amount and bearing
such legends as may be required by this Trust Agreement.
<PAGE> 36
- 31 -
At the option of the Holder, Preferred Securities may be
exchanged for other Preferred Securities of any authorized
denominations, of like tenor and aggregate Liquidation Amount and
bearing such legends as may be required by this Trust Agreement, upon
surrender of the Preferred Securities to be exchanged at such office or
agency. Whenever any securities are so surrendered for exchange, the
Property Trustee shall execute and authenticate and deliver the
Preferred Securities that the Holder making the exchange is entitled to
receive.
All Preferred Securities issued upon any transfer or exchange of
Preferred Securities shall be the valid obligations of the Issuer
Trust, evidencing the same debt, and entitled to the same benefits
under this Trust Agreement, as the Preferred Securities surrendered
upon such transfer or exchange.
Every Preferred Security presented or surrendered for transfer
or exchange shall (if so required by the Property Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Property Trustee and the Securities Registrar, duly
executed by the Holder thereof or such Holder's attorney duly
authorized in writing.
No service charge shall be made to a Holder for any transfer or
exchange of Preferred Securities, but the Property Trustee 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 Preferred Securities.
Neither the Issuer Trust nor the Property Trustee shall be
required, pursuant to the provisions of this Section, (i) to issue,
register the transfer of or exchange any Preferred Security during a
period beginning at the opening of business 15 days before the day of
selection for redemption of Preferred Securities pursuant to Article IV
and ending at the close of business on the day of mailing of the notice
of redemption, or (ii) to register the transfer of or exchange any
Preferred Security so selected for redemption in whole or in part,
except, in the case of any such Preferred Security to be redeemed in
part, any portion thereof not to be redeemed.
(b) Certain Transfers and Exchanges. Trust Securities may only
be transferred, in whole or in part, in accordance with the terms and
conditions set forth in this Trust Agreement. Any transfer or purported
transfer of any Trust Security not made in accordance with this Trust
Agreement shall be null and void.
(i) Non Global Security to Non Global Security. A
Trust Security that is not a Global Preferred Security may
be transferred, in whole or in part, to a Person who takes
<PAGE> 37
- 32 -
delivery in the form of another Trust Security that is not a
Global Security as provided in Section 5.5(a).
(ii) Free Transferability. Subject to this Section
5.5, Preferred Securities shall be freely transferable.
(iii) Exchanges Between Global Preferred Security and
Non-Global Preferred Security. A beneficial interest in a Global
Preferred Security may be exchanged for a Preferred Security
that is not a Global Preferred Security as provided in Section
5.4.
SECTION 5.6. Mutilated, Destroyed, Lost or Stolen Trust
Securities Certificates.
If (a) any mutilated Trust Securities Certificate shall be
surrendered to the Securities Registrar, or if the Securities Registrar
shall receive evidence to its satisfaction of the destruction, loss or
theft of any Trust Securities Certificate and (b) there shall be
delivered to the Securities Registrar and the Administrators such
security or indemnity as may be required by them to save each of them
harmless, then in the absence of notice that such Trust Securities
Certificate shall have been acquired by a bona fide purchaser, the
Administrators, or any one of them, on behalf of the Issuer Trust shall
execute and make available for delivery, and the Property Trustee shall
authenticate, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Trust Securities Certificate, a new Trust
Securities Certificate of like class, tenor and denomination. In
connection with the issuance of any new Trust Securities Certificate
under this Section, the Administrators or the Securities Registrar may
require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any
duplicate Trust Securities Certificate issued pursuant to this Section
shall constitute conclusive evidence of an undivided beneficial
interest in the assets of the Issuer Trust corresponding to that
evidenced by the lost, stolen or destroyed Trust Certificate, as if
originally issued, whether or not the lost, stolen or destroyed Trust
Securities Certificate shall be found at any time.
SECTION 5.7. Persons Deemed Holders.
The Issuer Trustees, the Securities Registrar or the Depositor
shall treat the Person in whose name any Trust Securities are issued as
the owner of such Trust Securities for the purpose of receiving
Distributions and for all other purposes whatsoever, and none of the
Issuer Trustees, the Administrators, the Securities Registrar nor the
Depositor shall be bound by any notice to the contrary.
<PAGE> 38
- 33 -
SECTION 5.8. Access to List of Holders' Names and
Addresses.
Each Holder and each Owner shall be deemed to have agreed not to
hold the Depositor, the Property Trustee, or the Administrators
accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
SECTION 5.9. Maintenance of Office or Agency.
The Property Trustee shall designate, with the consent of the
Administrators, which consent shall not be unreasonably withheld, an
office or offices or agency or agencies where Preferred Securities
Certificates may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Issuer Trustees
in respect of the Trust Securities Certificates may be served. The
Property Trustee initially designates its Corporate Trust Office at
Four Albany Street, New York, NY 10006, Attention: Corporate Trust and
Agency Group Corporate Market Services, as its corporate trust office
for such purposes. The Property Trustee shall give prompt written
notice to the Depositor, the Administrators and to the Holders of any
change in the location of the Securities Register or any such office or
agency.
SECTION 5.10. Appointment of Paying Agent.
The Paying Agent shall make Distributions to Holders from the
Payment Account and shall report the amounts of such Distributions to
the Property Trustee and the Administrators. Any Paying Agent shall
have the revocable power to withdraw funds from the Payment Account
solely for the purpose of making the Distributions referred to above.
The Property Trustee may revoke such power and remove any Paying Agent
in its sole discretion. The Paying Agent shall initially be the
Property Trustee. Any Person acting as Paying Agent shall be permitted
to resign as Paying Agent upon 30 days' written notice to the
Administrators, and the Property Trustee. In the event that the
Property Trustee shall no longer be the Paying Agent or a successor
Paying Agent shall resign or its authority to act be revoked, the
Property Trustee shall appoint a successor (which shall be a bank or
trust company) that is reasonably acceptable to the Administrators to
act as Paying Agent. Such successor Paying Agent or any additional
Paying Agent appointed by the Administrators shall execute and deliver
to the Issuer Trustees an instrument in which such successor Paying
Agent or additional Paying Agent shall agree with the Issuer Trustees
that as Paying Agent, such successor Paying Agent or additional Paying
Agent will hold all sums, if any, held by it for payment to the Holders
in trust for the benefit of the Holders entitled thereto until such
sums shall be
<PAGE> 39
- 34 -
paid to such Holders. The Paying Agent shall return all unclaimed funds
to the Property Trustee and upon removal of a Paying Agent such Paying
Agent shall also return all funds in its possession to the Property
Trustee. The provisions of Sections 8.1, 8.3 and 8.6 herein shall apply
to the Bank also in its role as Paying Agent, for so long as the Bank
shall act as Paying Agent and, to the extent applicable, to any other
paying agent appointed hereunder. Any reference in this Trust Agreement
to the Paying Agent shall include any co-paying agent chosen by the
Property Trustee unless the context requires otherwise.
SECTION 5.11. Ownership of Common Securities by Depositor.
At each Time of Delivery, the Depositor shall acquire and retain
beneficial and record ownership of the Common Securities except (i) in
connection with a consolidation or merger of the Depositor into another
corporation or any conveyance, transfer or lease by the Depositor of
its properties and assets substantially as an entirety to any Person,
pursuant to Section 8.1 of the Indenture, or (ii) a transfer to an
Affiliate of the Depositor in compliance with applicable law (including
the Securities Act and applicable state securities and blue sky laws).
To the fullest extent permitted by law, any attempted transfer of the
Common Securities shall be void. The Administrators shall cause each
Common Securities Certificate issued to the Depositor to contain a
legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO A
SUCCESSOR IN INTEREST TO THE DEPOSITOR OR AN AFFILIATE OF THE DEPOSITOR
IN COMPLIANCE WITH APPLICABLE LAW AND SECTION 5.11 OF THE TRUST
AGREEMENT."
SECTION 5.12. Notices to Clearing Agency.
To the extent that a notice or other communication to the
Holders is required under this Trust Agreement, for so long as
Preferred Securities are represented by a Global Preferred Securities
Certificate, the Administrators and the Issuer Trustees shall give all
such notices and communications specified herein to be given to the
Clearing Agency, and shall have no obligations to the Owners.
SECTION 5.13. Rights of Holders.
(a) The legal title to the Trust Property is vested exclusively
in the Property Trustee (in its capacity as such) in accordance with
Section 2.9, and the Holders shall not have any right or title therein
other than the undivided beneficial ownership interest in the assets of
the Issuer Trust conferred by their Trust Securities and they shall
have no right to call for any partition or division of property,
profits or rights of the Issuer Trust except as described below. The
Trust Securities shall be personal property giving only the rights
specifically set
<PAGE> 40
- 35 -
forth therein and in this Trust Agreement. The Trust Securities shall
have no preemptive or similar rights and when issued and delivered to
Holders against payment of the purchase price therefor will be fully
paid and nonassessable by the Issuer Trust. The Holders of the Trust
Securities, in their capacities as such, shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of
the State of Delaware.
(b) For so long as any Preferred Securities remain Outstanding,
if, upon a Debenture Event of Default, the Debenture Trustee fails or
the holders of not less than 25% in principal amount of the outstanding
Junior Subordinated Debentures fail to declare the principal of all of
the Junior Subordinated Debentures to be immediately due and payable,
the Holders of at least 25% in Liquidation Amount of the Preferred
Securities then Outstanding shall have such right to make such
declaration by a notice in writing to the Property Trustee, the
Depositor and the Debenture Trustee.
At any time after such a declaration of acceleration with
respect to the Junior Subordinated Debentures has been made and before
a judgment or decree for payment of the money due has been obtained by
the Debenture Trustee as provided in the Indenture, the Holders of a
majority in Liquidation Amount of the Preferred Securities, by written
notice to the Property Trustee, the Depositor and the Debenture
Trustee, may rescind and annul such declaration and its consequences
if:
(i) the Depositor has paid or deposited with the
Debenture Trustee a sum sufficient to pay
(A) all overdue installments of interest on all
of the Junior Subordinated Debentures,
(B) any accrued Additional Interest on all of
the Junior Subordinated Debentures,
(C) the principal of (and premium, if any, on) any
Junior Subordinated Debentures which have become due
otherwise than by such declaration of acceleration and
interest and Additional Interest thereon at the rate borne
by the Junior Subordinated Debentures, and
(D) all sums paid or advanced by the Debenture Trustee
under the Indenture and the reasonable compensation,
expenses, disbursements and advances of the Debenture
Trustee and the Property Trustee, their agents and counsel;
and
<PAGE> 41
- 36 -
(ii) all Events of Default with respect to the Junior
Subordinated Debentures, other than the non-payment of the
principal of the Junior Subordinated Debentures which has
become due solely by such acceleration, have been cured or
waived as provided in Section 5.13 of the Indenture.
If the Property Trustee fails to annul any such declaration and
waive such default, the Holders of at least a Majority in Liquidation
Amount of the Preferred Securities shall also have the right to rescind
and annul such declaration and its consequences by written notice to
the Depositor, the Property Trustee and the Debenture Trustee, subject
to the satisfaction of the conditions set forth in Clause (i) and (ii)
of this Section 5.13.
The Holders of at least a Majority in Liquidation Amount of the
Preferred Securities may, on behalf of the Holders of all the Preferred
Securities, waive any past default under the Indenture, except a
default in the payment of principal or interest (unless such default
has been cured and a sum sufficient to pay all matured installments of
interest and principal due otherwise than by acceleration has been
deposited with the Debenture Trustee) or a default in respect of a
covenant or provision which under the Indenture cannot be modified or
amended without the consent of the holder of each outstanding Junior
Subordinated Debentures. No such rescission shall affect any subsequent
default or impair any right consequent thereon.
Upon receipt by the Property Trustee of written notice declaring
such an acceleration, or rescission and annulment thereof, by Holders
of the Preferred Securities all or part of which is represented by
Global Preferred Securities, a record date shall be established for
determining Holders of Outstanding Preferred Securities entitled to
join in such notice, which record date shall be at the close of
business on the day the Property Trustee receives such notice. The
Holders on such record date, or their duly designated proxies, and only
such Persons, shall be entitled to join in such notice, whether or not
such Holders remain Holders after such record date; provided, that,
unless such declaration of acceleration, or rescission and annulment,
as the case may be, shall have become effective by virtue of the
requisite percentage having joined in such notice prior to the day
which is 90 days after such record date, such notice of declaration of
acceleration, or rescission and annulment, as the case may be, shall
automatically and without further action by any Holder be canceled and
of no further effect. Nothing in this paragraph shall prevent a Holder,
or a proxy of a Holder, from giving, after expiration of such 90-day
period, a new written notice of declaration of acceleration, or
rescission and annulment thereof, as the case may be, that is identical
to a written notice which has been canceled pursuant to the proviso to
the preceding
<PAGE> 42
- 37 -
sentence, in which event a new record date shall be established
pursuant to the provisions of this Section 5.13(b).
(c) For so long as any Preferred Securities remain Outstanding,
to the fullest extent permitted by law and subject to the terms of this
Trust Agreement and the Indenture, upon a Debenture Event of Default
specified in Section 5.1(1) or 5.1(2) of the Indenture, any Holder of
Preferred Securities shall have the right to institute a proceeding
directly against the Depositor, pursuant to Section 5.8 of the
Indenture, for enforcement of payment to such Holder of the principal
amount of or interest on Junior Subordinated Debentures having an
aggregate principal amount equal to the aggregate Liquidation Amount of
the Preferred Securities of such Holder (a "Direct Action"). Except as
set forth in Sections 5.13(b) and 5.13 (c), the Holders of Preferred
Securities shall have no right to exercise directly any right or remedy
available to the holders of, or in respect of, the Junior Subordinated
Debentures.
ARTICLE VI
ACTS OF HOLDERS; MEETINGS; VOTING
SECTION 6.1. Limitations on Holder's Voting Rights.
(a) Except as provided in this Trust Agreement and in the
Indenture and as otherwise required by law, no Holder of Preferred
Securities shall have any right to vote or in any manner otherwise
control the administration, operation and management of the Issuer
Trust or the obligations of the parties hereto, nor shall anything
herein set forth or contained in the terms of the Trust Securities
Certificates be construed so as to constitute the Holders from time to
time as members of an association.
(b) So long as any Junior Subordinated Debentures are held by
the Property Trustee on behalf of the Issuer Trust, the Property
Trustee shall not (i) direct the time, method and place of conducting
any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on the Property Trustee with
respect to such Junior Subordinated Debentures, (ii) waive any past
default that may be waived under Section 5.13 of the Indenture, (iii)
exercise any right to rescind or annul a declaration that the principal
of all the Junior Subordinated Debentures shall be due and payable or
(iv) consent to any amendment, modification or termination of the
Indenture or the Junior Subordinated Debentures, where such consent
shall be required, without, in each case, obtaining the prior approval
of the Holders of at least a Majority in Liquidation Amount of the
Preferred Securities, provided, however, that where a consent under the
Indenture would require the consent of each Holder of
<PAGE> 43
- 38 -
Junior Subordinated Debentures affected thereby, no such consent shall
be given by the Property Trustee without the prior written consent of
each Holder of Preferred Securities. The Property Trustee shall not
revoke any action previously authorized or approved by a vote of the
Holders of Preferred Securities, except by a subsequent vote of the
Holders of Preferred Securities. The Property Trustee shall notify all
Holders of the Preferred Securities of any notice of default received
with respect to the Junior Subordinated Debentures. In addition to
obtaining the foregoing approvals of the Holders of the Preferred
Securities, prior to taking any of the foregoing actions, the Issuer
Trustees shall, at the expense of the Depositor, obtain an Opinion of
Counsel experienced in such matters to the effect that such action will
not cause the Issuer Trust to be taxable as a corporation for United
States Federal income tax purposes.
(c) If any proposed amendment to the Trust Agreement provides
for, or the Issuer Trust otherwise proposes to effect, (i) any action
that would adversely affect in any material respect the interests,
powers, preferences or special rights of the Preferred Securities,
whether by way of amendment to the Trust Agreement or otherwise, or
(ii) the dissolution of the Issuer Trust, other than pursuant to the
terms of this Trust Agreement, then the Holders of Outstanding Trust
Securities as a class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except
with the approval of the Holders of at least a Majority in Liquidation
Amount of the Preferred Securities. Notwithstanding any other provision
of this Trust Agreement, no amendment to this Trust Agreement may be
made if, as a result of such amendment, it would cause the Issuer Trust
to be taxable as a corporation for United States Federal income tax
purposes.
SECTION 6.2. Notice of Meetings.
Notice of all meetings of the Holders, stating the time, place
and purpose of the meeting, shall be given by the Property Trustee
pursuant to Section 10.8 to each Holder of record, at his registered
address, at least 15 days and not more than 90 days before the meeting.
At any such meeting, any business properly before the meeting may be so
considered whether or not stated in the notice of the meeting. Any
adjourned meeting may be held as adjourned without further notice.
SECTION 6.3. Meetings of Holders.
No annual meeting of Holders is required to be held. The
Property Trustee, however, shall call a meeting of Holders to vote on
any matter upon the written request of the Holders of record of 25% of
the aggregate Liquidation Amount of the Preferred Securities and the
Administrators or the Property Trustee may, at
<PAGE> 44
- 39 -
any time in their discretion, call a meeting of Holders of Preferred
Securities to vote on any matters as to which Holders are entitled to
vote.
Holders of at least a Majority in Liquidation Amount of the
Preferred Securities, present in person or represented by proxy, shall
constitute a quorum at any meeting of Holders of the Preferred
Securities.
If a quorum is present at a meeting, an affirmative vote by the
Holders of record present, in person or by proxy, holding Preferred
Securities representing at least a Majority in Liquidation Amount of
the Preferred Securities held by the Holders present, either in person
or by proxy, at such meeting shall constitute the action of the Holders
of Preferred Securities, unless this Trust Agreement requires a greater
number of affirmative votes.
SECTION 6.4. Voting Rights.
Holders shall be entitled to one vote for each $25 of
Liquidation Amount represented by their Outstanding Trust Securities in
respect of any matter as to which such Holders are entitled to vote.
SECTION 6.5. Proxies, etc.
At any meeting of Holders, any Holder entitled to vote thereat
may vote by proxy, provided that no proxy shall be voted at any meeting
unless it shall have been placed on file with the Property Trustee, or
with such other officer or agent of the Issuer Trust as the Property
Trustee may direct, for verification prior to the time at which such
vote shall be taken. Pursuant to a resolution of the Property Trustee,
proxies may be solicited in the name of the Property Trustee or one or
more officers of the Property Trustee. Only Holders of record shall be
entitled to vote. When Trust Securities are held jointly by several
persons, any one of them may vote at any meeting in person or by proxy
in respect of such Trust Securities, but if more than one of them shall
be present at such meeting in person or by proxy, and such joint owners
or their proxies so present disagree as to any vote to be cast, such
vote shall not be received in respect of such Trust Securities. A proxy
purporting to be executed by or on behalf of a Holder shall be deemed
valid unless challenged at or prior to its exercise, and the burden of
proving invalidity shall rest on the challenger. No proxy shall be
valid more than three years after its date of execution.
<PAGE> 45
- 40 -
SECTION 6.6. Holder Action by Written Consent.
Any action which may be taken by Holders at a meeting may be
taken without a meeting if Holders holding at least a Majority in
Liquidation Amount of all Trust Securities entitled to vote in respect
of such action (or such larger proportion thereof as shall be required
by any other provision of this Trust Agreement) shall consent to the
action in writing.
SECTION 6.7. Record Date for Voting and Other Purposes.
For the purposes of determining the Holders who are entitled to
notice of and to vote at any meeting or by written consent, or to
participate in any distribution on the Trust Securities in respect of
which a record date is not otherwise provided for in this Trust
Agreement, or for the purpose of any other action, the Administrators
or Property Trustee may from time to time fix a date, not more than 90
days prior to the date of any meeting of Holders or the payment of a
distribution or other action, as the case may be, as a record date for
the determination of the identity of the Holders of record for such
purposes.
SECTION 6.8. Acts of Holders.
Any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Trust Agreement to
be given, made or taken by Holders may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by such
Holders in person or by an agent duly appointed in writing; and, except
as otherwise expressly provided herein, such action shall become
effective when such instrument or instruments are delivered to the
Property Trustee. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Holders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing
any such agent shall be sufficient for any purpose of this Trust
Agreement and (subject to Section 8.1) conclusive in favor of the
Issuer Trustees, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of
such execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting in a
capacity other than his individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his authority. The
fact and date of the execution of any such instrument or writing, or
the
<PAGE> 46
- 41 -
authority of the Person executing the same, may also be proved in any
other manner which any Issuer Trustee or Administrator receiving the
same deems sufficient.
The ownership of Trust Securities shall be proved by the
Securities Register.
Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Trust Security shall bind
every future Holder of the same Trust Security and the Holder of every
Trust Security issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Issuer Trustees, the
Administrators or the Issuer Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.
Without limiting the foregoing, a Holder entitled hereunder to
take any action hereunder with regard to any particular Trust Security
may do so with regard to all or any part of the Liquidation Amount of
such Trust Security or by one or more duly appointed agents each of
which may do so pursuant to such appointment with regard to all or any
part of such Liquidation Amount.
If any dispute shall arise among the Holders, the Administrators
or the Issuer Trustees with respect to the authenticity, validity or
binding nature of any request, demand, authorization, direction,
consent, waiver or other Act of such Holder or Issuer Trustee under
this Article VI, then the determination of such matter by the Property
Trustee shall be conclusive with respect to such matter.
A Holder may institute a legal proceeding directly against the
Depositor under the Guarantee Agreement to enforce its rights under the
Guarantee Agreement without first instituting a legal proceeding
against the Guarantee Trustee (as defined in the Guarantee Agreement),
the Issuer Trust, any Issuer Trustee, any Administrator or any person
or entity.
SECTION 6.9. Inspection of Records.
Upon reasonable notice to the Administrators and the Property
Trustee, the records of the Issuer Trust shall be open to inspection by
Holders during normal business hours for any purpose reasonably related
to such Holder's interest as a Holder.
<PAGE> 47
- 42 -
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties of the
Property Trustee and the Delaware Trustee.
The Property Trustee and the Delaware Trustee, each severally on
behalf of and as to itself, hereby represents and warrants for the
benefit of the Depositor and the Holders that:
(a) The Property Trustee is a banking corporation with trust
powers, duly organized, validly existing and in good standing under the
laws of New York, with trust power and authority to execute and
deliver, and to carry out and perform its obligations under the terms
of this Trust Agreement.
(b) The execution, delivery and performance by the Property
Trustee of this Trust Agreement has been duly authorized by all
necessary corporate action on the part of the Property Trustee; and
this Trust Agreement has been duly executed and delivered by the
Property Trustee, and constitutes a legal, valid and binding obligation
of the Property Trustee, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the
court (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law).
(c) The execution, delivery and performance of this Trust
Agreement by the Property Trustee does not conflict with or constitute
a breach of the certificate of incorporation or by-laws of the Property
Trustee.
(d) At the Time of Delivery, the Property Trustee has not
knowingly created any liens or encumbrances on the Trust Securities.
(e) No consent, approval or authorization of, or registration
with or notice to, any New York State or federal banking authority is
required for the execution, delivery or performance by the Property
Trustee, of this Trust Agreement.
(f) The Delaware Trustee is duly organized, validly existing and
in good standing under the laws of the State of Delaware, with trust
power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, the Trust Agreement.
<PAGE> 48
- 43 -
(g) The execution, delivery and performance by the Delaware
Trustee of this Trust Agreement has been duly authorized by all
necessary corporate action on the part of the Delaware Trustee; and
this Trust Agreement has been duly executed and delivered by the
Delaware Trustee, and constitutes a legal, valid and binding obligation
of the Delaware Trustee, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' right generally
and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered
in a proceeding in equity or at law).
(h) The execution, delivery and performance of this Trust
Agreement by the Delaware Trustee does not conflict with or constitute
a breach of the certificate of incorporation or by-laws of the Delaware
Trustee.
(i) No consent, approval or authorization of, or registration
with or notice to any state or Federal banking authority is required
for the execution, delivery or performance by the Delaware Trustee, of
this Trust Agreement.
(j) The Delaware Trustee is an entity which has its principal
place of business in the State of Delaware.
SECTION 7.2. Representations and Warranties of Depositor.
The Depositor hereby represents and warrants for the benefit of
the Holders that:
(a) the Trust Securities Certificates issued at the Time of
Delivery on behalf of the Issuer Trust have been duly authorized and
will have been duly and validly executed, and, subject to payment
therefor, issued and delivered by the Issuer Trustees pursuant to the
terms and provisions of, and in accordance with the requirements of,
this Trust Agreement, and the Holders will be, as of each such date,
entitled to the benefits of this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges
payable by the Issuer Trust (or the Issuer Trustees on behalf of the
Issuer Trust) under the laws of the State of Delaware or any political
subdivision thereof in connection with the execution, delivery and
performance by either the Property Trustee or the Delaware Trustee, as
the case may be, of this Trust Agreement.
<PAGE> 49
- 44 -
ARTICLE VIII
THE ISSUER TRUSTEES; THE ADMINISTRATORS
SECTION 8.1. Certain Duties and Responsibilities.
(a) The duties and responsibilities of the Issuer Trustees and
the Administrators shall be as provided by this Trust Agreement and, in
the case of the Property Trustee, by the Trust Indenture Act.
Notwithstanding the foregoing, no provision of this Trust Agreement
shall require the Issuer Trustees or the Administrators to expend or
risk their own funds or otherwise incur any financial liability in the
performance of any of their duties hereunder, or in the exercise of any
of their rights or powers, if they shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it or them. Whether
or not therein expressly so provided, every provision of this Trust
Agreement relating to the conduct or affecting the liability of or
affording protection to the Issuer Trustees or the Administrators shall
be subject to the provisions of this Section. Nothing in this Trust
Agreement shall be construed to release an Administrator from liability
for his or its own negligent action, his or its own negligent failure
to act, or his or its own willful misconduct. To the extent that, at
law or in equity, an Issuer Trustee or Administrator has duties and
liabilities relating to the Issuer Trust or to the Holders, such Issuer
Trustee or Administrator shall not be liable to the Issuer Trust or to
any Holder for such Issuer Trustee's or Administrator's good faith
reliance on the provisions of this Trust Agreement. The provisions of
this Trust Agreement, to the extent that they restrict the duties and
liabilities of the Issuer Trustees and Administrators otherwise
existing at law or in equity, are agreed by the Depositor and the
Holders to replace his or such other duties and liabilities of the
Issuer Trustees and Administrators.
(b) All payments made by the Property Trustee or a Paying Agent
in respect of the Trust Securities shall be made only from the revenue
and proceeds from the Trust Property and only to the extent that there
shall be sufficient revenue or proceeds from the Trust Property to
enable the Property Trustee or a Paying Agent to make payments in
accordance with the terms hereof. Each Holder, by his or its acceptance
of a Trust Security, agrees that he or it will look solely to the
revenue and proceeds from the Trust Property to the extent legally
available for distribution to it or him as herein provided and that
neither the Issuer Trustees nor the Administrators are personally
liable to it or him for any amount distributable in respect of any
Trust Security or for any other liability in respect of any Trust
Security. This Section 8.1(b) does not limit the liability of the
Issuer Trustees
<PAGE> 50
- 45 -
expressly set forth elsewhere in this Trust Agreement or, in the case
of the Property Trustee, in the Trust Indenture Act.
(c) The Property Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are
specifically set forth in this Trust Agreement (including pursuant to
Section 10.10), and no implied covenants shall be read into this Trust
Agreement against the Property Trustee. If an Event of Default has
occurred (that has not been cured or waived pursuant to Section 5.13 of
the Indenture), the Property Trustee shall enforce this Trust Agreement
for the benefit of the Holders and shall exercise such of the rights
and powers vested in it by this Trust Agreement, and use the same
degree of care and skill in its exercise thereof, as a prudent person
would exercise or use under the circumstances in the conduct of his or
her own affairs.
(d) No provision of this Trust Agreement shall be construed to
relieve the Property Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of Default that
may have occurred:
(A) the duties and obligations of the Property Trustee
shall be determined solely by the express provisions of
this Trust Agreement (including pursuant to Section 10.10),
and the Property Trustee shall not be liable except for the
performance of such duties and obligations as are
specifically set forth in this Trust Agreement (including
pursuant to Section 10.10); and
(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may conclusively
rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon any certificates or
opinions furnished to the Property Trustee and conforming
to the requirements of this Trust Agreement; but in the
case of any such certificates or opinions that by any
provision hereof or of the Trust Indenture Act are
specifically required to be furnished to the Property
Trustee, the Property Trustee shall be under a duty to
examine the same to determine whether or not they conform
to the requirements of this Trust Agreement;
<PAGE> 51
- 46 -
(ii) the Property Trustee shall not be liable for any
error of judgment made in good faith by an authorized
officer of the Property Trustee, unless it shall be proved
that the Property Trustee was negligent in ascertaining the
pertinent facts;
(iii) the Property Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in
good faith in accordance with the direction of the Holders
of at least a Majority in Liquidation Amount of the
Preferred Securities relating to the time, method and place
of conducting any proceeding for any remedy available to
the Property Trustee, or exercising any trust or power
conferred upon the Property Trustee under this Trust
Agreement;
(iv) the Property Trustee's sole duty with respect to
the custody, safe keeping and physical preservation of the
Junior Subordinated Debentures and the Payment Account
shall be to deal with such Property in a similar manner as
the Property Trustee deals with similar property for its
own account, subject to the protections and limitations on
liability afforded to the Property Trustee under this Trust
Agreement and the Trust Indenture Act;
(v) the Property Trustee shall not be liable for any
interest on any money received by it except as it may
otherwise agree with the Depositor; and money held by the
Property Trustee need not be segregated from other funds
held by it except in relation to the Payment Account
maintained by the Property Trustee pursuant to Section 3.1
and except to the extent otherwise required by law;
(vi) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrators or the
Depositor with their respective duties under this Trust
Agreement, nor shall the Property Trustee be liable for the
default or misconduct of any other Issuer Trustee, the
Administrators or the Depositor; and
(vii) no provision of this Trust Agreement shall
require the Property Trustee to expend or risk its own
funds or otherwise incur personal financial liability in
the performance of any of its duties or in the exercise of
any of its rights or powers, if the Property Trustee shall
have reasonable grounds for believing that the repayment of
such funds or
<PAGE> 52
- 47 -
liability is not reasonably assured to it under the terms
of this Trust Agreement or adequate indemnity against such
risk or liability is not reasonably assured to it.
(e) The Administrators shall not be responsible for monitoring
the compliance by the Issuer Trustee or the Depositor with their
respective duties under this Trust Agreement, nor shall either
Administrator be liable for the default or misconduct of any other
Administrator, the Issuer Trustees or the Depositor.
SECTION 8.2. Certain Notices.
Within five Business Days after the occurrence of any Event of
Default actually known to a Responsible Officer of the Property
Trustee, the Property Trustee shall transmit, in the manner and to the
extent provided in Section 10.8, notice of such Event of Default to the
Holders and the Administrators, unless such Event of Default shall have
been cured or waived.
Within five Business Days after the receipt of notice of the
Depositor's exercise of its right to defer the payment of interest on
the Junior Subordinated Debentures pursuant to the Indenture, the
Property Trustee shall transmit, in the manner and to the extent
provided in Section 10.8, notice of such exercise to the Holders and
the Administrators, unless such exercise shall have been revoked.
SECTION 8.3. Certain Rights of Property Trustee.
Subject to the provisions of Section 8.1:
(a) the Property Trustee may rely and shall be fully protected
in acting or refraining from acting in good faith upon any resolution,
Opinion of Counsel, certificate, written representation of a Holder or
transferee, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond, debenture, note, other evidence of indebtedness
or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(b) any direction or act of the Depositor contemplated by
this Trust Agreement shall be sufficiently evidenced by an
Officers' Certificate;
(c) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or
securities laws) or any re-recording, refiling or reregistration
thereof;
<PAGE> 53
- 48 -
(d) the Property Trustee may consult with counsel of its own
choosing (which counsel may be counsel to the Depositor or any of its
Affiliates, and may include any of its employees) and the advice of
such counsel shall be full and complete authorization and protection in
respect of any action taken suffered or omitted by it hereunder in good
faith and in reliance thereon and in accordance with such advice; the
Property Trustee shall have the right at any time to seek instructions
concerning the administration of this Trust Agreement from any court of
competent jurisdiction;
(e) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Trust
Agreement at the request or direction of any of the Holders pursuant to
this Trust Agreement, unless such Holders shall have offered to the
Property Trustee security or indemnity satisfactory to it against the
costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction; provided that, nothing
contained in this Section 8.3(e) shall be taken to relieve the Property
Trustee, upon the occurrence of an Event of Default, of its obligation
to exercise the rights and powers vested in it by this Trust Agreement;
(f) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond, debenture, note or other evidence of
indebtedness or other paper or document, unless requested in writing to
do so by one or more Holders, but the Property Trustee may make such
further inquiry or investigation into such facts or matters as it may
see fit;
(g) the Property Trustee may execute any of the trusts or powers
hereunder or perform any of its duties hereunder either directly or by
or through its agents or attorneys, provided that the Property Trustee
shall not be responsible for any misconduct or negligence on the part
of any agent or attorney appointed with due care by it hereunder;
(h) whenever in the administration of this Trust Agreement the
Property Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Property Trustee (i) may request instructions from the
Holders (which instructions may only be given by the Holders of the
same proportion in Liquidation Amount of the Trust Securities as would
be entitled to direct the Property Trustee under the terms of the Trust
Securities in respect of such remedy, right or action), (ii) may
refrain from enforcing such remedy or right or taking such other action
until
<PAGE> 54
- 49 -
such instructions are received, and (iii) shall be fully protected
in acting in accordance with such instructions; and
(i) except as otherwise expressly provided by this Trust
Agreement, the Property Trustee shall not be under any obligation to
take any action that is discretionary under the provisions of this
Trust Agreement.
No provision of this Trust Agreement shall be deemed to impose
any duty or obligation on any Issuer Trustee or Administrator to
perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it, in any jurisdiction in which it
shall be illegal, or in which the Property Trustee shall be unqualified
or incompetent in accordance with applicable law, to perform any such
act or acts, or to exercise any such right, power, duty or obligation.
No permissive power or authority available to any Issuer Trustee or
Administrator shall be construed to be a duty.
SECTION 8.4. Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Trust Securities
Certificates shall be taken as the statements of the Issuer Trust, and
the Issuer Trustees and the Administrators do not assume any
responsibility for their correctness. The Issuer Trustees and the
Administrators shall not be accountable for the use or application by
the Depositor of the proceeds of the Junior Subordinated Debentures.
SECTION 8.5. May Hold Securities.
Except as provided in the definition of the term "Outstanding"
in Article I, the Administrators, any Issuer Trustee or any other agent
of any Issuer Trustee or the Issuer Trust, in its individual or any
other capacity, may become the owner or pledgee of Trust Securities
and, subject to Sections 8.8 and 8.13, may otherwise deal with the
Issuer Trust with the same rights it would have if it were not an
Administrator, Issuer Trustee or such other agent.
SECTION 8.6. Compensation; Indemnity; Fees.
The Depositor, as borrower, agrees:
(a) to pay to the Issuer Trustees from time to time reasonable
compensation for all services rendered by them hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
<PAGE> 55
- 50 -
(b) to reimburse the Issuer Trustees upon request for all
reasonable expenses, disbursements and advances incurred or made by the
Issuer Trustees in accordance with any provision of this Trust
Agreement (including the reasonable compensation, expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to their negligence or
willful misconduct; and
(c) to the fullest extent permitted by applicable law, to
indemnify and hold harmless (i) each Issuer Trustee, (ii) each
Administrator, (iii) any Affiliate of any Issuer Trustee, (iv) any
officer, director, shareholder, employee, representative or agent of
any Issuer Trustee, and (v) any employee or agent of the Issuer Trust,
(referred to herein as an "Indemnified Person") from and against any
loss, damage, liability, tax, penalty, expense or claim of any kind or
nature whatsoever incurred by such Indemnified Person arising out of or
in connection with the creation, operation or dissolution of the Issuer
Trust or any act or omission performed or omitted by such Indemnified
Person in good faith on behalf of the Issuer Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of
authority conferred on such Indemnified Person by this Trust Agreement,
except that no Indemnified Person shall be entitled to be indemnified
in respect of any loss, damage or claim incurred by such Indemnified
Person by reason of negligence or willful misconduct with respect to
such acts or omissions.
The provisions of this Section 8.6 shall survive the termination
of this Trust Agreement.
No Issuer Trustee may claim any lien or charge on any Trust
Property as a result of any amount due pursuant to this Section 8.6.
The Depositor, any Administrator and any Issuer Trustee may
engage in or possess an interest in other business ventures of any
nature or description, independently or with others, similar or
dissimilar to the business of the Issuer Trust, and the Issuer Trust
and the Holders of Trust Securities shall have no rights by virtue of
this Trust Agreement in and to such independent ventures or the income
or profits derived therefrom, and the pursuit of any such venture, even
if competitive with the business of the Issuer Trust, shall not be
deemed wrongful or improper. Neither the Depositor, any Administrator,
nor any Issuer Trustee shall be obligated to present any particular
investment or other opportunity to the Issuer Trust even if such
opportunity is of a character that, if presented to the Issuer Trust,
could be taken by the Issuer Trust, and the Depositor, any
Administrator or any Issuer Trustee shall have the right to take for
its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other
opportunity. Any
<PAGE> 56
- 51 -
Issuer Trustee may engage or be interested in any financial or other
transaction with the Depositor or any Affiliate of the Depositor, or
may act as depository for, trustee or agent for, or act on any
committee or body of holders of, securities or other obligations of the
Depositor or its Affiliates.
SECTION 8.7. Corporate Property Trustee Required;
Eligibility of Trustees and Administrators.
(a) There shall at all times be a Property Trustee hereunder
with respect to the Trust Securities. The Property Trustee shall be a
Person that is a national or state chartered bank and eligible pursuant
to the Trust Indenture Act to act as such and has a combined capital
and surplus of at least $50,000,000. If any such Person publishes
reports of condition at least annually, pursuant to law or to the
requirements of its supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such
Person shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any
time the Property Trustee with respect to the Trust Securities shall
cease to be eligible in accordance with the provisions of this Section,
it shall resign immediately in the manner and with the effect
hereinafter specified in this Article. At the time of appointment, the
Property Trustee must have securities rated in one of the three highest
rating categories by a nationally recognized statistical rating
organization.
(b) There shall at all times be one or more Administrators
hereunder. Each Administrator shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one
or more persons authorized to bind that entity. An employee, officer or
Affiliate of the Depositor may serve as an Administrator.
(c) There shall at all times be a Delaware Trustee. The Delaware
Trustee shall either be (i) a natural person who is at least 21 years
of age and a resident of the State of Delaware or (ii) a legal entity
with its principal place of business in the State of Delaware and that
otherwise meets the requirements of applicable Delaware law that shall
act through one or more persons authorized to bind such entity.
SECTION 8.8. Conflicting Interests.
(a) If the Property Trustee has or shall acquire a conflicting
interest within the meaning of the Trust Indenture Act, the Property
Trustee shall either eliminate such interest or resign, to the extent
and in the manner provided by, and subject to the provisions of, the
Trust Indenture Act and this Trust Agreement.
<PAGE> 57
- 52 -
(b) The Guarantee Agreement and the Indenture shall be deemed to
be sufficiently described in this Trust Agreement for the purposes of
clause (i) of the first proviso contained in Section 310(b) of the
Trust Indenture Act.
SECTION 8.9. Co-Trustees and Separate Trustee.
Unless an Event of Default shall have occurred and be
continuing, at any time or times, for the purpose of meeting the legal
requirements of the Trust Indenture Act or of any jurisdiction in which
any part of the Trust Property may at the time be located, the Property
Trustee shall have power to appoint, and upon the written request of
the Property Trustee, the Depositor and the Administrators shall for
such purpose join with the Property Trustee in the execution, delivery,
and performance of all instruments and agreements necessary or proper
to appoint, one or more Persons approved by the Property Trustee either
to act as co-trustee, jointly with the Property Trustee, of all or any
part of such Trust Property, or to the extent required by law to act as
separate trustee of any such property, in either case with such powers
as may be provided in the instrument of appointment, and to vest in
such Person or Persons in the capacity aforesaid, any property, title,
right or power deemed necessary or desirable, subject to the other
provisions of this Section . Any co-trustee or separate trustee
appointed pursuant to this Section shall either be (i) a natural person
who is at least 21 years of age and a resident of the United States or
(ii) a legal entity with its principal place of business in the United
States that shall act through one or more persons authorized to bind
such entity.
Should any written instrument from the Depositor be required by
any co-trustee or separate trustee so appointed for more fully
confirming to such co-trustee or separate trustee such property, title,
right, or power, any and all such instruments shall, on request, be
executed, acknowledged and delivered by the Depositor.
Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the
following terms, namely:
(a) The Trust Securities shall be executed by one or more
Administrators, and the Trust Securities shall be executed and
delivered and all rights, powers, duties, and obligations hereunder in
respect of the custody of securities, cash and other personal property
held by, or required to be deposited or pledged with, the Property
Trustees specified hereunder, shall be exercised, solely by the
Property Trustee and not by such co-trustee or separate trustee.
<PAGE> 58
- 53 -
(b) The rights, powers, duties, and obligations hereby conferred
or imposed upon the Property Trustee in respect of any property covered
by such appointment shall be conferred or imposed upon and exercised or
performed by the Property Trustee and such co-trustee or separate
trustee jointly, as shall be provided in the instrument appointing such
co-trustee or separate trustee, except to the extent that under any law
of any jurisdiction in which any particular act is to be performed, the
Property Trustee shall be incompetent or unqualified to perform such
act, in which event such rights, powers, duties and obligations shall
be exercised and performed by such co-trustee or separate trustee.
(c) The Property Trustee at any time, by an instrument in
writing executed by it, with the written concurrence of the Depositor,
may accept the resignation of or remove any co-trustee or separate
trustee appointed under this Section, and, in case a Debenture Event of
Default has occurred and is continuing, the Property Trustee shall have
power to accept the resignation of, or remove, any such co-trustee or
separate trustee without the concurrence of the Depositor. Upon the
written request of the Property Trustee, the Depositor shall join with
the Property Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee or separate
trustee so resigned or removed may be appointed in the manner provided
in this Section .
(d) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Property
Trustee or any other trustee hereunder.
(e) The Property Trustee shall not be liable by reason of
any act of a co-trustee or separate trustee.
(f) Any Act of Holders delivered to the Property Trustee shall
be deemed to have been delivered to each such co-trustee and separate
trustee.
SECTION 8.10. Resignation and Removal; Appointment of
Successor.
No resignation or removal of any Issuer Trustee (the "Relevant
Trustee") and no appointment of a successor Trustee pursuant to this
Article shall become effective until the acceptance of appointment by
the successor Trustee in accordance with the applicable requirements of
Section 8.11.
Subject to the immediately preceding paragraph, a Relevant
Trustee may resign at any time by giving written notice thereof to the
Holders. The Relevant Trustee shall appoint a successor by requesting
from at least three Persons meeting the eligibility
<PAGE> 59
- 54 -
requirements its expenses and charges to serve as the successor Trustee
on a form provided by the Administrators, and selecting the Person who
agrees to the lowest expenses and charges. If the instrument of
acceptance by the successor Trustee required by Section 8.11 shall not
have been delivered to the Relevant Trustee within 60 days after the
giving of such notice of resignation, the Relevant Trustee may
petition, at the expense of the Issuer Trust, any court of competent
jurisdiction for the appointment of a successor Trustee.
The Property Trustee or the Delaware Trustee may be removed at
any time by Act of the Holders of at least a Majority in Liquidation
Amount of the Preferred Securities, delivered to the Relevant Trustee
(in its individual capacity and on behalf of the Issuer Trust) (i) for
cause (including upon the occurrence of an Event of Default described
in subparagraph (f) of the definition thereof with respect to the
Relevant Trustee), or (ii) if a Debenture Event of Default shall have
occurred and be continuing at any time.
If any Relevant Trustee shall resign, it shall appoint its
successor. If a resigning Relevant Trustee shall fail to appoint a
successor, or if a Relevant Trustee shall be removed or become
incapable of acting as Issuer Trustee, or if any vacancy shall occur in
the office of any Issuer Trustee for any cause, the Holders of the
Preferred Securities, by Act of the Holders of record of not less than
25% in aggregate Liquidation Amount of the Preferred Securities then
Outstanding delivered to such Relevant Trustee, shall promptly appoint
a successor Trustee or Trustees, and such successor Issuer Trustee
shall comply with the applicable requirements of Section 8.11. If no
successor Trustee shall have been so appointed by the Holders of the
Preferred Securities and accepted appointment in the manner required by
Section 8.11, any Holder, on behalf of himself and all others similarly
situated, or any other Issuer Trustee, may petition any court in the
State of Delaware for the appointment of a successor Trustee.
The Property Trustee shall give notice of each resignation and
each removal of an a Relevant Trustee and each appointment of a
successor Trustee to all Holders in the manner provided in Section 10.8
and shall give notice to the Depositor and to the Administrators. Each
notice shall include the name of the Relevant Trustee and the address
of its Corporate Trust Office if it is the Property Trustee.
Notwithstanding the foregoing or any other provision of this
Trust Agreement, in the event any Delaware Trustee who is a natural
person dies or becomes, in the opinion of the Holders of the Common
Securities, incompetent or incapacitated, the vacancy created by such
death, incompetence or incapacity may be filled by the Property Trustee
following the procedures regarding expenses
<PAGE> 60
- 55 -
and charges set forth above (with the successor in each case being a
Person who satisfies the eligibility requirement for Administrators or
Delaware Trustee, as the case may be, set forth in Section 8.7).
SECTION 8.11. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Trustee, the
retiring Relevant Trustee and each such successor Trustee with respect
to the Trust Securities shall execute, acknowledge and deliver an
amendment hereto wherein each successor Trustee shall accept such
appointment and which (a) shall contain such provisions as shall be
necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Trust Securities and the Issuer
Trust, and (b) shall add to or change any of the provisions of this
Trust Agreement as shall be necessary to provide for or facilitate the
administration of the Issuer Trust by more than one Relevant Trustee,
it being understood that nothing herein or in such amendment shall
constitute such Relevant co-trustees and upon the execution and
delivery of such amendment the resignation or removal of the retiring
Relevant Trustee shall become effective to the extent provided therein
and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and
duties of the Relevant Trustee; but, on request of the Issuer Trust or
any successor Trustee such Relevant Trustee shall duly assign, transfer
and deliver to such successor Trustee all Trust Property, all proceeds
thereof and money held by such Relevant Trustee hereunder with respect
to the Trust Securities and the Trust.
Upon request of any such successor Trustee, the Issuer Trust
shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights,
powers and trusts referred to in the first or second preceding
paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 8.12. Merger, Conversion, Consolidation or
Succession to Business.
Any Person into which the Property Trustee or the Delaware
Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which such Relevant Trustee shall be a party, or any
Person succeeding to all or substantially all the corporate
<PAGE> 61
- 56 -
trust business of such Relevant Trustee, shall be the successor of such
Relevant Trustee hereunder, provided that such Person shall be
otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any
of the parties hereto.
SECTION 8.13. Preferential Collection of Claims Against
Depositor or Issuer Trust.
If and when the Property Trustee shall be or become a creditor
of the Depositor (or any other obligor upon the Trust Securities), the
Property Trustee shall be subject to the provisions of the Trust
Indenture Act regarding the collection of claims against the Depositor
(or any such other obligor) as is required by the Trust Indenture Act.
SECTION 8.14. Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or
other similar judicial proceeding relative to the Issuer Trust or any
other obligor upon the Trust Securities or the property of the Issuer
Trust or of such other obligor, the Property Trustee (irrespective of
whether any Distributions on the Trust Securities shall then be due and
payable and irrespective of whether the Property Trustee shall have
made any demand on the Issuer Trust for the payment of any past due
Distributions) shall be entitled and empowered, to the fullest extent
permitted by law, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of any
Distributions owning and unpaid in respect of the Trust Securities and
to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Property Trustee (including any
claim for the reasonable compensation, expenses, disbursements and
advances of the Property Trustee, its agents and counsel) and of the
Holders allowed in such judicial proceeding, and
(b) to collect and receive any monies or other property payable
or deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Property Trustee
and, in the event the Property Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Property Trustee
any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Property Trustee, its agents and
counsel, and any other amounts due the Property Trustee.
<PAGE> 62
- 57 -
Nothing herein contained shall be deemed to authorize the
Property Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement,
adjustment or compensation affecting the Trust Securities or the rights
of any Holder thereof or to authorize the Property Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 8.15. Reports by Property Trustee.
(a) Not later than January 31 of each year commencing with
January 31, 1998, the Property Trustee shall transmit to all Holders in
accordance with Section 10.8, and to the Depositor, a brief report
dated as of the immediately preceding December 31 with respect to:
(i) its eligibility under Section 8.7 or, in lieu thereof,
if to the best of its knowledge it has continued to be eligible
under said Section , a written statement to such effect; and
(ii) any change in the property and funds in its possession
as Property Trustee since the date of its last report and any
action taken by the Property Trustee in the performance of its
duties hereunder which it has not previously reported and which
in its opinion materially affects the Trust Securities.
(b) In addition the Property Trustee shall transmit to Holders
such reports concerning the Property Trustee and its actions under this
Trust Agreement as may be required pursuant to the Trust Indenture Act
at the times and in the manner provided pursuant thereto as set forth
in Section 10.10 of this Trust Agreement.
(c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Property Trustee with the
Depositor.
SECTION 8.16. Reports to the Property Trustee.
The Depositor and the Administrators on behalf of the Issuer
Trust shall provide to the Property Trustee such documents, reports and
information as required by Section 314 of the Trust Indenture Act and
the compliance certificate required by Section 314(a) of the Trust
Indenture Act in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act, as set forth in Section 10.10
of this Trust Agreement. The Depositor and the Administrators shall
annually file with the Property Trustee a certificate specifying
whether such Person is
<PAGE> 63
- 58 -
in compliance with all the terms and covenants applicable to such
Person hereunder.
SECTION 8.17. Evidence of Compliance with Conditions
Precedent.
Each of the Depositor and the Administrators on behalf of the
Issuer Trust shall provide to the Property Trustee such evidence of
compliance with any conditions precedent, if any, provided for in this
Trust Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act as set forth in Section 10.10 of this
Trust Agreement. Any certificate or opinion required to be given by an
officer pursuant to Section 314(c)(1) of the Trust Indenture Act shall
be given in the form of an Officers' Certificate.
SECTION 8.18. Number of Issuer Trustees.
(a) The number of Issuer Trustees shall be two. The
Property Trustee and the Delaware Trustee may be the same Person.
(b) If an Issuer Trustee ceases to hold office for any reason, a
vacancy shall occur. The vacancy shall be filled with an Issuer Trustee
appointed in accordance with Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of an Issuer Trustee
shall not operate to annul the Issuer Trust.
SECTION 8.19. Delegation of Power.
(a) Any Administrator may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21
his or her power for the purpose of executing any documents
contemplated in Section 2.7(a) or making any governmental filing; and
(b) The Administrators shall have power to delegate from time to
time to such of their number the doing of such things and the execution
of such instruments either in the name of the Issuer Trust or the names
of the Administrators or otherwise as the Administrators may deem
expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of this Trust Agreement.
SECTION 8.20. Appointment of Administrators.
(a) The Administrators (other than the initial Administrators)
shall be appointed by the Holders of a Majority in Liquidation Amount
of the Common Securities and all Administrators (including the initial
Administrators) may be removed by the
<PAGE> 64
- 59 -
Holders of a Majority in Liquidation Amount of the Common Securities or
may resign at any time. Each Administrator shall sign an agreement
agreeing to comply with the terms of this Trust Agreement. If at any
time there is no Administrator, the Property Trustee or any Holder who
has been a Holder of Trust Securities for at least six months may
petition any court of competent jurisdiction for the appointment of one
or more Administrators.
(b) Whenever a vacancy in the number of Administrators shall
occur, until such vacancy is filled by the appointment of an
Administrator in accordance with this Section 8.20, the Administrators
in office, regardless of their number (and notwithstanding any other
provision of this Agreement), shall have all the powers granted to the
Administrators and shall discharge all the duties imposed upon the
Administrators by this Trust Agreement.
(c) Notwithstanding the foregoing, or any other provision of
this Trust Agreement, in the event any Administrator or a Delaware
Trustee who is a natural person dies or becomes, in the opinion of the
Holders of a Majority in Liquidation Amount of the Common Securities,
incompetent, or incapacitated, the vacancy created by such death,
incompetence or incapacity may be filled by the remaining
Administrators, if there were at least two of them prior to such
vacancy, and by the Depositor, if there were not two such
Administrators immediately prior to such vacancy (with the successor in
each case being a Person who satisfies the eligibility requirement for
Administrators or Delaware Trustee, as the case may be, set forth in
Section 8.7).
(d) Except as otherwise provided in this Trust Agreement, or by
applicable law, any one Administrator may execute any document or
otherwise take any action which the Administrators are authorized to
take under this Trust Agreement.
ARTICLE IX
DISSOLUTION, LIQUIDATION AND MERGER
SECTION 9.1. Dissolution Upon Expiration Date.
Unless earlier dissolved, the Issuer Trust shall automatically
dissolve on June __, 2028 (the "Expiration Date"), following the
distribution of the Trust Property in accordance with Section 9.4.
<PAGE> 65
- 60 -
SECTION 9.2. Early Termination.
The first to occur of any of the following events is an "Early
Termination Event":
(a) the occurrence of the appointment of a receiver or other
similar official in any liquidation, insolvency or similar proceeding
with respect to the Depositor or all or substantially all of its
property, or a court or other governmental agency shall enter a decree
or order and such decree or order shall remain unstayed and
undischarged for a period of 60 days, unless the Depositor shall
transfer the Common Securities as provided by Section 5.11, in which
case this provision shall refer instead to any such successor Holder of
the Common Securities;
(b) the written direction to the Property Trustee from the
Holder of the Common Securities at any time to dissolve the Issuer
Trust and to distribute the Junior Subordinated Debentures to Holders
in exchange for the Preferred Securities (which direction, subject to
Section 9.4(a), is optional and wholly within the discretion of the
Holders of the Common Securities);
(c) the redemption of all of the Preferred Securities in
connection with the redemption of all the Junior Subordinated
Debentures; and
(d) the entry of an order for dissolution of the Issuer
Trust by a court of competent jurisdiction.
SECTION 9.3. Dissolution.
The respective obligations and responsibilities of the Issuer
Trustees, the Administrators and the Issuer Trust created and continued
hereby shall terminate upon the latest to occur of the following: (a)
the distribution by the Property Trustee to Holders of all amounts
required to be distributed hereunder upon the liquidation of the Issuer
Trust pursuant to Section 9.4, or upon the redemption of all of the
Trust Securities pursuant to Section 4.2, (b) the payment of any
expenses owed by the Issuer Trust, (c) the discharge of all
administrative duties of the Administrators, including the performance
of any tax reporting obligations with respect to the Issuer Trust or
the Holders and (d) the filing of a certificate of cancellation with
the Delaware Secretary of State pursuant to section 3810 of the
Delaware Business Trust Act.
SECTION 9.4. Liquidation.
(a) If an Early Termination Event specified in clause (a), (b)
or (d) of Section 9.2 occurs or upon the Expiration Date, the Issuer
Trust shall be liquidated by the Property Trustee as expeditiously as
the Property Trustee determines to be possible by distributing, after
satisfaction of liabilities to creditors of the Issuer Trust as
provided by applicable law, to each Holder a
<PAGE> 66
- 61 -
Like Amount of Junior Subordinated Debentures, subject to Section
9.4(d). Notice of liquidation shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not later than 15 nor more
than 45 days prior to the Liquidation Date to each Holder of Trust
Securities at such Holder's address appearing in the Securities
Register. All notices of liquidation shall:
(i) state the Liquidation Date;
(ii) state that, from and after the Liquidation Date, the
Trust Securities will no longer be deemed to be Outstanding and any
Trust Securities Certificates not surrendered for exchange will be
deemed to represent a Like Amount of Junior Subordinated Debentures;
and
(iii) provide such information with respect to the
mechanics by which Holders may exchange Trust Securities Certificates
for Junior Subordinated Debentures, or if Section 9.4(d) applies
receive a Liquidation Distribution, as the Administrators or the
Property Trustee shall deem appropriate.
(b) Except where Section 9.2(c) or 9.4(d) applies, in order to
effect the liquidation of the Issuer Trust and distribution of the
Junior Subordinated Debentures to Holders, the Property Trustee shall
establish a record date for such distribution (which shall be not more
than 30 days prior to the Liquidation Date) and, either itself acting
as exchange agent or through the appointment of a separate exchange
agent, shall establish such procedures as it shall deem appropriate to
effect the distribution of Junior Subordinated Debentures in exchange
for the Outstanding Trust Securities Certificates.
(c) Except where Section 9.2(c) or 9.4(d) applies, after the
Liquidation Date, (i) the Trust Securities will no longer be deemed to
be Outstanding, (ii) the Clearing Agency for the Preferred Securities
or its nominee, as the registered holder of the Global Preferred
Securities Certificate, shall receive a registered global certificate
or certificates representing the Junior Subordinated Debentures to be
delivered upon such distribution with respect to Preferred Securities
held by the Clearing Agency or its nominee, and, (iii) any Trust
Securities Certificates not held by the Clearing Agency for the
Preferred Securities or its nominee as specified in clause (ii) above
will be deemed to represent Junior Subordinated Debentures having a
principal amount equal to the stated Liquidation Amount of the Trust
Securities represented thereby and bearing accrued and unpaid interest
in an amount equal to the accumulated and unpaid Distributions on such
Trust Securities until such certificates are presented to the
Securities Registrar for transfer or reissuance.
<PAGE> 67
- 62 -
(d) If, notwithstanding the other provisions of this Section
9.4, whether because of an order for dissolution entered by a court of
competent jurisdiction or otherwise, distribution of the Junior
Subordinated Debentures is not practical, or if any Early Termination
Event specified in clause (c) of Section 9 occurs, the Trust Property
shall be liquidated, and the Issuer Trust shall be dissolved by the
Property Trustee in such manner as the Property Trustee determines. In
such event, on the date of the dissolution of the Issuer Trust, Holders
will be entitled to receive out of the assets of the Issuer Trust
available for distribution to Holders, after satisfaction of
liabilities to creditors of the Issuer Trust as provided by applicable
law, an amount equal to the aggregate of Liquidation Amount per Trust
Security plus accumulated and unpaid Distributions thereon to the date
of payment (such amount being the "Liquidation Distribution"). If, upon
any such dissolution, the Liquidation Distribution can be paid only in
part because the Issuer Trust has insufficient assets available to pay
in full the aggregate Liquidation Distribution, then, subject to the
next succeeding sentence, the amounts payable by the Issuer Trust on
the Trust Securities shall be paid on a pro rata basis (based upon
Liquidation Amounts). The Holders of the Common Securities will be
entitled to receive Liquidation Distributions upon any such dissolution
pro rata (determined as aforesaid) with Holders of Preferred
Securities, except that, if a Debenture Event of Default has occurred
and is continuing, the Preferred Securities shall have a priority over
the Common Securities as provided in Section 4.3.
SECTION 9.5. Mergers, Consolidations, Amalgamations or
Replacements of the Issuer Trust.
The Issuer Trust may not merge with or into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to, any entity,
except pursuant to this Section 9.5. At the request of the Holders of
the Common Securities, and with the consent of the Holders of at least
a Majority in Liquidation Amount of the Preferred Securities, the
Issuer Trust may merge with or into, consolidate, amalgamate, or be
replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to a trust organized as such under the
laws of any State; provided, however, that (i) such successor entity
either (a) expressly assumes all of the obligations of the Issuer Trust
with respect to the Preferred Securities or (b) substitutes for the
Preferred Securities other securities having substantially the same
terms as the Preferred Securities (the "Successor Securities") so long
as the Successor Securities have the same priority as the Preferred
Securities with respect to distributions and payments upon liquidation,
redemption and otherwise, (ii) a trustee of such successor entity
possessing the same powers and duties as the
<PAGE> 68
- 63 -
Property Trustee is appointed to hold the Junior Subordinated
Debentures, (iii) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not cause the Preferred
Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization if the Preferred
Securities were rated by any nationally recognized statistical rating
organization immediately prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, (iv) such
merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not adversely affect the rights, preferences and
privileges of the holders of the Preferred Securities (including any
Successor Securities) in any material respect, (v) such successor
entity has a purpose substantially identical to that of the Issuer
Trust, (vi) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Issuer Trustee has
received an Opinion of Counsel from independent counsel experienced in
such matters to the effect that (a) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights preferences and privileges of the holders
of the Preferred Securities (including any Successor Securities) in any
material respect, and (b) following such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, neither the
Issuer Trust nor such successor entity will be required to register as
an "investment company" under the Investment Company Act and (vii) the
Depositor or any permitted transferee to whom it has transferred the
Common Securities hereunder own all of the Common Securities of such
successor entity and guarantees the obligations of such successor
entity under the Successor Securities at least to the extent provided
by the Guarantee Agreement. Notwithstanding the foregoing, the Issuer
Trust shall not, except with the consent of holders of 100% in
Liquidation Amount of the Preferred Securities, consolidate,
amalgamate, merge with or into, or be replaced by or convey, transfer
or lease its properties and assets substantially as an entirety to any
other entity or permit any other entity to consolidate, amalgamate,
merge with or into, or replace it if such consolidation, amalgamation,
merger, replacement, conveyance, transfer or lease would cause the
Issuer Trust or the successor entity to be taxable as a corporation for
United States Federal income tax purposes.
<PAGE> 69
- 64 -
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Holders.
Except as set forth in Section 9.2, the death or incapacity of
any person having an interest, beneficial or otherwise, in Trust
Securities shall not operate to terminate this Trust Agreement, nor
entitle the legal representatives or heirs of such person or any Holder
for such person, to claim an accounting, take any action or bring any
proceeding in any court for a partition or winding-up of the
arrangements contemplated hereby, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them. Any
merger or similar agreement shall be executed by the Administrators on
behalf of the Trust.
SECTION 10.2. Amendment.
(a) This Trust Agreement may be amended from time to time by the
Property Trustee and the Holders of a Majority in Liquidation Amount of
the Common Securities, without the consent of any Holder of the
Preferred Securities (i) to cure any ambiguity, 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 Trust Agreement, provided, however, that
such amendment shall not adversely affect in any material respect the
interests of any Holder or (ii) to modify, eliminate or add to any
provisions of this Trust Agreement to such extent as shall be necessary
to ensure that the Issuer Trust will not be taxable as a corporation
for United States Federal income tax purposes at any time that any
Trust Securities are Outstanding or to ensure that the Issuer Trust
will not be required to register as an investment company under the
Investment Company Act.
(b) Except as provided in Section 10.2(c) hereof, any provision
of this Trust Agreement may be amended by the Property Trustee and the
Holders of a Majority in Liquidation Amount of the Common Securities
with (i) the consent of Holders of at least a Majority in Liquidation
Amount of the Preferred Securities and (ii) receipt by the Issuer
Trustees of an Opinion of Counsel to the effect that such amendment or
the exercise of any power granted to the Issuer Trustees in accordance
with such amendment will not cause the Issuer Trust to be taxable as a
corporation for United States federal income tax purposes or affect the
Issuer Trust's exemption from status of an "investment company" under
the Investment Company Act.
<PAGE> 70
- 65 -
(c) In addition to and notwithstanding any other provision in
this Trust Agreement, without the consent of each affected Holder (such
consent being obtained in accordance with Section 6.3 or 6.6 hereof),
this Trust Agreement may not be amended to (i) change the amount or
timing of any Distribution on the Trust Securities or otherwise
adversely affect the amount of any Distribution required to be made in
respect of the Trust Securities as of a specified date or (ii) restrict
the right of a Holder to institute suit for the enforcement of any such
payment on or after such date.
(d) Notwithstanding any other provisions of this Trust
Agreement, no Issuer Trustee shall enter into or consent to any
amendment to this Trust Agreement which would cause the Issuer Trust to
fail or cease to qualify for the exemption from status as an
"investment company" under the Investment Company Act or be taxable as
a corporation for United States Federal income tax purposes.
(e) Notwithstanding anything in this Trust Agreement to the
contrary, without the consent of the Depositor and the Administrators,
this Trust Agreement may not be amended in a manner which imposes any
additional obligation on the Depositor or the Administrators.
(f) In the event that any amendment to this Trust Agreement is
made, the Administrators or the Property Trustee shall promptly provide
to the Depositor a copy of such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall
be required to enter into any amendment to this Trust Agreement which
affects its own rights, duties or immunities under this Trust
Agreement. The Property Trustee shall be entitled to receive an Opinion
of Counsel and an Officers' Certificate stating that any amendment to
this Trust Agreement is in compliance with this Trust Agreement.
(h) Any amendments to this Trust Agreement shall become
effective when notice of such amendment is given to the holders of the
Trust Securities.
SECTION 10.3. Separability.
In case any provision in this Trust Agreement or in the Trust
Securities Certificates shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby.
<PAGE> 71
- 66 -
SECTION 10.4. Governing Law.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF
THE HOLDERS, THE ISSUER TRUST, THE DEPOSITOR, THE ISSUER TRUSTEES AND
THE ADMINISTRATORS WITH RESPECT TO THIS TRUST AGREEMENT AND THE TRUST
SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF DELAWARE.
SECTION 10.5. Payments Due on Non-Business Day.
If the date fixed for any payment on any Trust Security shall be
a day that is not a Business Day, then such payment need not be made on
such date but may be made on the next succeeding day that is a Business
Day (except as otherwise provided in Sections 4.2(d)), with the same
force and effect as though made on the date fixed for such payment, and
no Distributions shall accumulate on such unpaid amount for the period
after such date.
SECTION 10.6. Successors.
This Trust Agreement shall be binding upon and shall inure to
the benefit of any successor to the Depositor, the Issuer Trust, the
Administrators and any Issuer Trustee, including any successor by
operation of law. Except in connection with a consolidation, merger or
sale involving the Depositor that is permitted under Article VIII of
the Indenture and pursuant to which the assignee agrees in writing to
perform the Depositor's obligations hereunder, the Depositor shall not
assign its obligations hereunder.
SECTION 10.7. Headings.
The Article and Section headings are for convenience only and
shall not affect the construction of this Trust Agreement.
SECTION 10.8. Reports, Notices and Demands.
Any report, notice, demand or other communication that by any
provision of this Trust Agreement is required or permitted to be given
or served to or upon any Holder or the Depositor may be given or served
in writing by deposit thereof, first class postage prepaid, in the
United States mail, hand delivery or facsimile transmission, in each
case, addressed, (a) in the case of a Holder of Preferred Securities,
to such Holder as such Holder's name and address may appear on the
Securities Register; and (b) in the case of the Holder of Common
Securities or the Depositor, to National Penn Bancshares, Inc.,
[________________], _______, Pennsylvania [______], Attention: Office
of the Secretary, facsimile no.: (215) [___-____] or to such other
address as may be specified in a written notice by the Depositor to the
Property Trustee. Such notice, demand or other communication to or upon
a Holder shall be
<PAGE> 72
- 67 -
deemed to have been sufficiently given or made, for all purposes, upon
hand delivery, mailing or transmission. Such notice, demand or other
communication to or upon the Depositor shall be deemed to have been
sufficiently given or made only upon actual receipt of the writing by
the Depositor.
Any notice, demand or other communication which by any provision
of this Trust Agreement is required or permitted to be given or served
to or upon the Issuer Trust, the Property Trustee, the Delaware
Trustee, the Administrators, or the Issuer Trust shall be given in
writing addressed (until another address is published by the Issuer
Trust) as follows: (a) with respect to the Property Trustee to Bankers
Trust Company, Four Albany Street, 4th Floor, New York, NY 10006,
Attention: Corporate Trust and Agency Group Corporate Market Services;
(b) with respect to the Delaware Trustee to Bankers Trust (Delaware),
1001 Jefferson Street, Suite 550, Wilmington, Delaware 19801,
Attention: Ms. Lisa Wilkins; and (c) with respect to the
Administrators, to them at the address above for notices to the
Depositor, marked "Attention: Office of the Secretary". Such notice,
demand or other communication to or upon the Issuer Trust or the
Property Trustee shall be deemed to have been sufficiently given or
made only upon actual receipt of the writing by the Issuer Trust, the
Property Trustee, or such Administrator.
SECTION 10.9. Agreement Not to Petition.
Each of the Issuer Trustees, the Administrators and the
Depositor agree for the benefit of the Holders that, until at least one
year and one day after the Issuer Trust has been dissolved in
accordance with Article IX, they shall not file, or join in the filing
of, a petition against the Issuer Trust under any bankruptcy,
insolvency, reorganization or other similar law (including, without
limitation, the United States Bankruptcy Code) (collectively,
"Bankruptcy Laws") or otherwise join in the commencement of any
proceeding against the Issuer Trust under any Bankruptcy Law. In the
event the Depositor takes action in violation of this Section 10.9, the
Property Trustee agrees, for the benefit of Holders, that at the
expense of the Depositor, it shall file an answer with the bankruptcy
court or otherwise properly contest the filing of such petition by the
Depositor against the Issuer Trust or the commencement of such action
and raise the defense that the Depositor has agreed in writing not to
take such action and should be estopped and precluded therefrom and
such other defenses, if any, as counsel for the Issuer Trustee or the
Issuer Trust may assert. If any Issuer Trustee or Administrator takes
action in violation of this Section 10.9, the Depositor agrees, for the
benefit of the Holders, that at the expense of the Depositor, it shall
file an answer with the bankruptcy court or otherwise properly contest
the filing of such petition by such Person against the Depositor or the
commencement
<PAGE> 73
- 68 -
of such action and raise the defense that such Person has agreed in
writing not to take such action and should be estopped and precluded
therefrom and such other defenses, if any, as counsel for the Issuer
Trustee or the Issuer Trust may assert. The provisions of this Section
10.9 shall survive the termination of this Trust Agreement.
SECTION 10.10. Trust Indenture Act; Conflict with Trust
Indenture Act.
(a) Trust Indenture Act; Application. (i) This Trust Agreement
is subject to the provisions of the Trust Indenture Act that are
required to be a part of this Trust Agreement and shall, to the extent
applicable, be governed by such provisions; (ii) if and to the extent
that any provision of this Trust Agreement limits, qualifies or
conflicts with the duties imposed by Sections 310 to 317, inclusive, of
the Trust Indenture Act, such imposed duties shall control; (iii) for
purposes of this Trust Agreement, the Property Trustee, to the extent
permitted by applicable law and/or the rules and regulations of the
Commission, shall be the only Issuer Trustee which is a trustee for the
purposes of the Trust Indenture Act; and (iv) the application of the
Trust Indenture Act to this Trust Agreement shall not affect the nature
of the Preferred Securities and the Common Securities as equity
securities representing undivided beneficial interests in the assets of
the Issuer Trust.
(b) Lists of Holders of Preferred Securities. (i) Each of the
Depositor and the Administrators on behalf of the Trust shall provide
the Property Trustee with such information as is required under Section
312(a) of the Trust Indenture Act at the times and in the manner
provided in Section 312(a) and (ii) the Property Trustee shall comply
with its obligations under Sections 310(b), 311 and 312(b) of the Trust
Indenture Act.
(c) Reports by the Property Trustee. Within 60 days after May 15
of each year, the Property Trustee shall provide to the Holders of the
Trust Securities such reports as are required by Section 313 of the
Trust Indenture Act, if any, in the form, in the manner and at the
times provided by Section 313 of the Trust Indenture Act. The Property
Trustee shall also comply with the requirements of Section 313(d) of
the Trust Indenture Act.
(d) Periodic Reports to Property Trustee. Each of the Depositor
and the Administrators on behalf of the Issuer Trust shall provide to
the Property Trustee, the Commission and the Holders of the Trust
Securities, as applicable, such documents, reports and information as
required by Section 314(a)(1) -(3) (if any) of the Trust Indenture Act
and the compliance certificates required by Section 314(a)(4) and (c)
of the Trust Indenture Act (provided that any certificate to be
provided pursuant to Section
<PAGE> 74
- 69 -
314(a)(4) of the Trust Indenture Act shall be provided within 120 days
of the end of each fiscal year of the Issuer Trust.
(e) Evidence of Compliance with Conditions Precedent. Each of
the Depositor and the Administrators on behalf of the Issuer Trust
shall provide to the Property Trustee such evidence of compliance with
any conditions precedent, if any, provided for in this Trust Agreement
which relate to any of the matters set forth in Section 314(c) of the
Trust Indenture Act. Any certificate or opinion required to be given
pursuant to Section 314(c) shall comply with Section 314(e) of the
Trust Indenture Act.
(f) Disclosure of Information. The disclosure of information as
to the names and addresses of the Holders of Trust Securities in
accordance with Section 312 of the Trust Indenture Act, regardless of
the source from which such information was derived, shall not be deemed
to be a violation of any existing law or any law hereafter enacted
which does not specifically refer to Section 312 of the Trust Indenture
Act, nor shall the Property Trustee be held accountable by reason of
mailing any material pursuant to a request made under Section 312(b) of
the Trust Indenture Act.
SECTION 10.11. Acceptance of Terms of Trust Agreement,
Guarantee and Indenture.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST
THEREIN BY OR ON BEHALF OF A HOLDER OR ANY BENEFICIAL OWNER, WITHOUT
ANY SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE
UNCONDITIONAL ACCEPTANCE BY THE HOLDER AND ALL OTHERS HAVING A
BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND
PROVISIONS OF THIS TRUST AGREEMENT, THE GUARANTEE AGREEMENT AND THE
INDENTURE, AND THE AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER
TERMS OF THE GUARANTEE AGREEMENT AND THE INDENTURE, AND SHALL
CONSTITUTE THE AGREEMENT OF THE ISSUER TRUST, SUCH HOLDER AND SUCH
OTHERS THAT THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT SHALL BE
BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE ISSUER TRUST AND SUCH
HOLDER AND SUCH OTHERS.
<PAGE> 75
- 70 -
NATIONAL PENN BANCSHARES, INC.
as Depositor
By:__________________________________
Name:
Title:
BANKERS TRUST COMPANY,
as Property Trustee
By:__________________________________
Name:
Title:
BANKERS TRUST (DELAWARE),
as Delaware Trustee and not
in its individual capacity
By:__________________________________
Name:
Title:
Subscribed to and Accepted by, as the Initial Administrators:
_________________________________
Gary L. Rhoads
_________________________________
Sandra L. Spayd
<PAGE> 76
EXHIBIT A
[INSERT CERTIFICATE OF TRUST FILED WITH DELAWARE]
<PAGE> 77
EXHIBIT B
[INSERT FORM OF CERTIFICATE DEPOSITARY AGREEMENT]
<PAGE> 78
EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO THE
DEPOSITOR OR AN AFFILIATE OF THE DEPOSITOR
IN COMPLIANCE WITH APPLICABLE LAW AND
SECTION 5.11 OF THE TRUST AGREEMENT
Certificate Number Number of Common Securities
C-__ 31,299
Certificate Evidencing Common Securities
of
NPB Capital Trust
____% Common Securities
(liquidation amount $25 per Common Security)
NPB Capital Trust, a statutory business trust formed under
the laws of the State of Delaware (the "Issuer Trust"), hereby
certifies that National Penn Bancshares, Inc. (the "Holder") is the
registered owner of _________ (_____) common securities of the Issuer
Trust representing undivided beneficial interests in the Issuer Trust
and has designated the ____% Common Securities (liquidation amount $25
per Common Security) (the "Common Securities"). Except in accordance
with Section 5.11 of the Trust Agreement (as defined below) the Common
Securities are not transferable and any attempted transfer hereof other
than in accordance therewith shall be void. The designations, rights,
privileges, restrictions, preferences and other terms and provisions of
the Common Securities are set forth in, and this certificate and the
Common Securities represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Amended and
Restated Trust Agreement of the Issuer Trust, dated as of May __, 1997,
as the same may be amended from time to time (the "Trust Agreement")
among National Penn Bancshares, Inc, as Depositor, Bankers Trust
Company, as Property Trustee, Bankers Trust (Delaware), as Delaware
Trustee, and the Holders of Trust Securities, including the designation
of the terms of the Common Securities as set forth therein. The Issuer
Trust will furnish a copy of the Trust Agreement to the Holder without
charge upon written request to the Issuer Trust at its principal place
of business or registered office.
Upon receipt of this certificate, the Holder is bound by
the Trust Agreement and is entitled to the benefits thereunder.
<PAGE> 79
Terms used but not defined herein have the meanings set
forth in the Trust Agreement.
IN WITNESS WHEREOF, one of the Administrators of the
Issuer Trust has executed this certificate this ___ day of
______________, ____.
NPB CAPITAL TRUST
By:______________________________
Name:
Administrator
COUNTERSIGNED AND REGISTERED:
BANKERS TRUST COMPANY,
as Securities Registrar
By: ________________________
Name:
Signatory Officer
<PAGE> 80
EXHIBIT D
[IF THE PREFERRED SECURITIES CERTIFICATE IS TO BE A GLOBAL
PREFERRED SECURITIES CERTIFICATE, INSERT -- This Preferred Securities
Certificate is a Global Preferred Securities Certificate within the
meaning of the Trust Agreement hereinafter referred to and is
registered in the name of a Depositary or a nominee of a Depositary.
This Preferred Security Certificate is exchangeable for Preferred
Securities Certificates registered in the name of a person other than
the Depositary or its nominee only in the limited circumstances
described in the Trust Agreement and may not be transferred except as a
whole by the Depositary to a nominee of the Depositary or by a nominee
of the Depositary to the Depositary or another nominee of the
Depositary, except in the limited circumstances described in the Trust
Agreement.
Unless this Preferred Security Certificate is presented by
an authorized representative of The Depository Trust Company, a New
York Corporation ("DTC"), to NPB Capital Trust or its agent for
registration of transfer, exchange or payment, and any Preferred
Security Certificate issued is registered in the name of such nominee
as is requested by an authorized representative of DTC (and any payment
is made to such entity as is requested by an authorized representative
of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO A PERSON IS WRONGFUL inasmuch as the registered
owner hereof, has an interest herein.]
CERTIFICATE NUMBER NUMBER OF PREFERRED SECURITIES
P-__
CUSIP NO. ________________________
CERTIFICATE EVIDENCING PREFERRED SECURITIES
OF
NPB CAPITAL TRUST
____% PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
NPB Capital Trust, a statutory business trust formed under
the laws of the State of Delaware (the "Issuer Trust"), hereby
certifies that (the "Holder") is the registered owner of) ( ) preferred
securities of the Trust representing a preferred undivided beneficial
interest in the assets of the Issuer Trust
<PAGE> 81
and has designated the NPB Capital Trust ____% Preferred Securities
(liquidation amount $25 per Preferred Security) (the "Preferred
Securities"). The Preferred Securities are transferable on the books
and records of the Issuer Trust, in person or by a duly authorized
attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer as provided in Section 5.5 of the Trust
Agreement (as defined below). The designations, rights, privileges,
restrictions, preferences and other terms and provisions of the
Preferred Securities are set forth in, and this certificate and the
Preferred Securities represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Amended and
Restated Trust Agreement of the Issuer Trust, dated as of May __, 1997,
as the same may be amended from time to time (the "Trust Agreement"),
among National Penn Bancshares, Inc., as Depositor, Bankers Trust
Company, as Property Trustee, Bankers Trust (Delaware), as Delaware
Trustee, and the Holders of Trust Securities, including the designation
of the terms of the Preferred Securities as set forth therein. The
Holder is entitled to the benefits of the Guarantee Agreement entered
into by National Penn Bancshares, Inc., a Pennsylvania corporation, and
Bankers Trust Company, as guarantee trustee, dated as of May __, 1997
(the "Guarantee Agreement"), to the extent provided therein. The Issuer
Trust will furnish a copy of the Issuer Trust Agreement and the
Guarantee Agreement to the Holder without charge upon written request
to the Issuer Trust at its principal place of business or registered
office.
Upon receipt of this certificate, the Holder is bound by
the Trust Agreement and is entitled to the benefits thereunder.
<PAGE> 82
IN WITNESS WHEREOF, one of the Administrators of the Issuer
Trust has executed this certificate this day of , .
NPB CAPITAL TRUST
By:____________________________________
Name:
Administrator
COUNTERSIGNED AND REGISTERED:
BANKERS TRUST COMPANY,
as Securities Registrar
By:________________________________
Name:
Authorized Signatory
<PAGE> 83
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers
this Preferred Security to:
______________________________________________________________________________
(Insert assignee's social security or tax
identification number)
______________________________________________________________________________
______________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints______________________________________________________
______________________________________________________________________________
agent to transfer this Preferred Security Certificate on the books of
the Issuer Trust. The agent may substitute another to act for him or her.
Date:__________________________
Signature:____________________________________________________________________
(Sign exactly as your name appears on
the other side of this Preferred Security
Certificate)
The signature(s) should be guaranteed by an eligible guarantor
institution (banks, stockbrokers, savings and loan associations and
credit unions with membership in an approved signature guarantee
medallion program), pursuant to S.E.C. Rule 17Ad-15.
<PAGE> 1
EXHIBIT 4.4
GUARANTEE AGREEMENT
Between
NATIONAL PENN BANCSHARES, INC.
(as Guarantor)
and
BANKERS TRUST COMPANY
(as Trustee)
dated as of
May __, 1997
<PAGE> 2
NPB CAPITAL TRUST
Certain Sections of this Guarantee Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Guarantee Agreement
Act Section Section
--------------- -------------------
<S> <C> <C>
Section 310 (a) (1)........................ 4.1 (a)
(a) (2)........................ 4.1 (a)
(a) (3)........................ Not Applicable
(a) (4)........................ Not Applicable
(b)............................ 2.8, 4.1 (c)
Section 311 (a)............................ Not Applicable
(b)............................ Not Applicable
Section 312 (a)............................ 2.2 (a)
(b)............................ 2.2 (b)
(c)............................ Not Applicable
Section 313 (a)............................ 2.3
(a) (4)........................ 2.3
(b)............................ 2.3
(c)............................ 2.3
(d)............................ 2.3
Section 314 (a)............................ 2.4
(b)............................ 2.4
(c) (1)........................ 2.5
(c) (2)........................ 2.5
(c) (3)........................ 2.5
(e)............................ 1.1, 2.5, 3.2
Section 315 (a)............................ 3.1 (d)
(b)............................ 2.7
(c)............................ 3.1 (c)
(d)............................ 3.1 (d)
(e)............................ Not Applicable
Section 316 (a)............................ 1.1, 2.6, 5.4
(a) (1) (A).................... 5.4
(a) (1) (B).................... 5.4
(a) (2)........................ Not Applicable
(b)............................ 5.3
(c)............................ Not Applicable
Section 317 (a) (1)........................ Not Applicable
(a) (2)........................ Not Applicable
(b)............................ Not Applicable
Section 318 (a)............................ 2.1
</TABLE>
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Guarantee Agreement.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. DEFINITIONS
Section 1.1. Definitions........................... 2
ARTICLE II. TRUST INDENTURE ACT
Section 2.1. Trust Indenture Act; Application...... 5
Section 2.2. List of Holders....................... 6
Section 2.3. Reports by the Guarantee Trustee...... 6
Section 2.4. Periodic Reports to Guarantee
Trustee............................... 6
Section 2.5. Evidence of Compliance with
Conditions Precedent.................. 6
Section 2.6. Events of Default; Waiver............. 7
Section 2.7. Event of Default; Notice.............. 7
Section 2.8. Conflicting Interests................. 7
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE
TRUSTEE
Section 3.1. Powers and Duties of the Guarantee
Trustee............................... 7
Section 3.2. Certain Rights of Guarantee Trustee... 9
Section 3.3. Indemnity............................. 11
Section 3.4. Expenses.............................. 11
ARTICLE IV. GUARANTEE TRUSTEE
Section 4.1. Guarantee Trustee; Eligibility........ 11
Section 4.2. Appointment, Removal and Resignation
of the Guarantee Trustee.............. 12
ARTICLE V. GUARANTEE
Section 5.1. Guarantee............................. 13
Section 5.2. Waiver of Notice and Demand........... 13
Section 5.3. Obligations Not Affected.............. 13
Section 5.4. Rights of Holders..................... 14
Section 5.5. Guarantee of Payment.................. 15
Section 5.6. Subrogation........................... 15
Section 5.7. Independent Obligations............... 15
ARTICLE VI. COVENANTS AND SUBORDINATION
Section 6.1. Subordination......................... 16
Section 6.2. Pari Passu Guarantees................. 16
ARTICLE VII. TERMINATION
Section 7.1. Termination........................... 16
</TABLE>
- i -
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
ARTICLE VIII. MISCELLANEOUS
<S> <C> <C>
Section 8.1. Successors and Assigns................ 16
Section 8.2. Amendments............................ 17
Section 8.3. Notices............................... 17
Section 8.4. Benefit............................... 18
Section 8.5. Interpretation........................ 18
Section 8.6. Governing Law......................... 19
Section 8.7. Counterparts.......................... 19
</TABLE>
- ii -
<PAGE> 5
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of May __, 1997 is executed and
delivered by NATIONAL PENN BANCSHARES, INC., a Pennsylvania corporation (the
"Guarantor"), having its principal office at [________________], _______,
Pennsylvania [____], and BANKERS TRUST COMPANY, a New York banking corporation,
as trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Preferred Securities (as defined herein) of NPB
Capital Trust, a Delaware statutory business trust (the "Issuer Trust").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the
"Trust Agreement"), dated as of May __, 1997, among National Penn Bancshares,
Inc., as Depositor, Bankers Trust Company, as Property Trustee (the "Property
Trustee"), Bankers Trust (Delaware), as Delaware Trustee (the "Delaware
Trustee") (collectively, the "Issuer Trustees") and the Holders from time to
time of preferred undivided beneficial ownership interests in the assets of the
Issuer Trust, the Issuer Trust is issuing up to $36,082,475 aggregate
Liquidation Amount (as defined herein) of its ____% Preferred Securities,
Liquidation Amount $25 per capital security (the "Preferred Securities"),
representing preferred undivided beneficial ownership interests in the assets
of the Issuer Trust and having the terms set forth in the Trust Agreement;
WHEREAS, the Preferred Securities will be issued by the Issuer Trust
and the proceeds thereof, together with the proceeds from the issuance of the
Issuer Trust's Common Securities (as defined herein), will be used to purchase
the Junior Subordinated Debentures due June __, 2027 or such shorter period (as
defined in the Trust Agreement) (the "Junior Subordinated Debentures") of the
Guarantor which will be deposited with Bankers Trust Company, as Property
Trustee under the Trust Agreement, as trust assets; and
WHEREAS, as incentive for the Holders to purchase Preferred Securities
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth herein, to pay to the Holders of the Preferred Securities the
Guarantee Payments (as defined herein) and to make certain other payments on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase of Preferred
Securities by each Holder, which purchase the Guarantor hereby acknowledges
shall benefit the Guarantor, and intending to be legally bound hereby, the
Guarantor executes and delivers this Guarantee Agreement for the benefit of the
Holders from time to time of the Preferred Securities.
<PAGE> 6
- 2 -
ARTICLE I. DEFINITIONS
SECTION 1.1. Definitions.
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings. Capitalized
terms used but not otherwise defined herein shall have the meanings assigned to
such terms in the Trust Agreement as in effect on the date hereof.
"Additional Amounts" has the meaning specified in the Trust Agreement.
"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.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer Trust.
"Distributions" means preferential cumulative cash distributions
accumulating from May __, 1997 and payable quarterly in arrears on March 31,
June 30, September 30, and December 31 of each year, commencing September 30,
1997, at the annual rate of ____% of the Liquidation Amount.
"Event of Default" means (i) a default by the Guarantor in any of its
payment obligations under this Guarantee Agreement, or (ii) a default by the
Guarantor in any other obligation hereunder that remains unremedied for 30 days.
"Guarantee Agreement" means this Guarantee Agreement, as modified,
amended or supplemented from time to time.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by or on behalf of the Issuer Trust: (i) any accrued and unpaid
Distributions (as defined in the Trust Agreement) required to be paid on the
Preferred Securities, to the extent the Issuer Trust shall have funds on hand
available therefor at such time, (ii) the Redemption Price, with respect to the
Preferred Securities called for redemption by the Issuer Trust to the extent
that the Issuer Trust shall have
<PAGE> 7
- 3 -
funds on hand available therefor at such time, and (iii) upon a voluntary or
involuntary termination, winding-up or liquidation of the Issuer Trust, unless
Junior Subordinated Debentures are distributed to the Holders, the lesser of (a)
the aggregate of the Liquidation Amount and all accumulated and unpaid
Distributions to the date of payment to the extent the Issuer Trust shall have
funds on hand available to make such payment at such time and (b) the amount of
assets of the Issuer Trust remaining available for distribution to Holders in
liquidation of the Issuer Trust (in either case, the "Liquidation
Distribution").
"Guarantee Trustee" means Bankers Trust Company, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee Agreement and thereafter means each such
Successor Guarantee Trustee.
"Guarantor" shall have the meaning specified in the first paragraph of
this Guarantee Agreement.
"Holder" means any holder, as registered on the books and records of
the Issuer Trust, of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor, the Guarantee Trustee, or any Affiliate of the
Guarantor or the Guarantee Trustee.
"Indenture" means the Junior Subordinated Indenture dated as of May __,
1997, between National Penn Bancshares, Inc. and Bankers Trust Company, as
trustee, as may be modified, amended or supplemented from time to time.
"Issuer Trust" shall have the meaning specified in the first paragraph
of this Guarantee Agreement.
"Liquidation Amount" means the stated amount of $25 per Capital
Security.
"Majority in Liquidation Amount of the Preferred Securities" means,
except as provided by the Trust Indenture Act, Preferred Securities representing
more than 50% of the aggregate Liquidation Amount of all then outstanding
Preferred Securities issued by the Issuer Trust.
"Like Amount" means (a) with respect to a redemption of Preferred
Securities, Preferred Securities having a Liquidation Amount equal to the
principal amount of Junior Subordinated Debentures to be contemporaneously
redeemed in accordance with the Indenture, the proceeds of which will be used to
pay the Redemption Price of such Preferred Securities, (b) with respect to a
distribution of Junior Subordinated Debentures to Holders of
<PAGE> 8
- 4 -
Preferred Securities in connection with a dissolution or liquidation of the
Issuer Trust, Junior Subordinated Debentures having a principal amount equal to
the Liquidation Amount of the Preferred Securities of the Holder to whom such
Junior Subordinated Debentures are distributed, and (c) with respect to any
distribution of Additional Amounts to Holders of Preferred Securities, Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Preferred Securities in respect of which such distribution is
made.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman and Chief Executive Officer, President or a
Vice President, and by the Treasurer, an Associate Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of such Person, and delivered
to the Guarantee Trustee. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Guarantee Agreement
shall include:
(a) a statement by each officer signing the Officers'
Certificate that such officer has read the covenant or condition and the
definitions relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by such officer in rendering the
Officers' Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of such officer,
such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Securities" shall have the meaning specified in the first
recital of this Guarantee Agreement.
"Redemption Date" means, with respect to any Preferred Security to be
redeemed, the date fixed for such redemption by or pursuant to the Trust
Agreement; provided that each Junior Subordinated Debenture Redemption Date (as
such term is defined in the Indenture) and the stated maturity of the Junior
Subordinated
<PAGE> 9
- 5 -
Debentures shall be a Redemption Date for a Like Amount of Preferred Securities.
"Redemption Price" shall have the meaning specified in the Trust
Agreement.
"Responsible Officer" means, when used with respect to the Guarantee
Trustee, any officer assigned to the Corporate Trust Office, including any
managing director, vice president, assistant vice president, assistant
treasurer, assistant secretary or any other officer of the Guarantee Trustee
customarily performing functions similar to those performed by any of the above
designated officers and having direct responsibility for the administration of
this Indenture, and also, with respect to a particular matter, any other officer
to whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Senior Indebtedness" shall have the meaning specified in the
Indenture.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Agreement" means the Amended and Restated Trust Agreement, dated
May __, 1997, executed by National Penn Bancshares, Inc., as Depositor, Bankers
Trust (Delaware), as Delaware Trustee, and Bankers Trust Company, as Property
Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb), as amended.
ARTICLE II. TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application.
If any provision hereof limits, qualifies or conflicts with a provision
of the Trust Indenture Act that is required under such Act to be a part of and
govern this Guarantee Agreement, the provision of the Trust Indenture Act shall
control. If any provision of this Guarantee Agreement modifies or excludes any
provision of the Trust Indenture Act that may be so modified or excluded, the
latter provision shall be deemed to apply to this Guarantee Agreement as so
modified or excluded, as the case may be.
<PAGE> 10
- 6 -
SECTION 2.2. List of Holders.
(a) The Guarantor will furnish or cause to be furnished to the
Guarantee Trustee:
(i) semi-annually, not more than 15 days after June
15 and December 15 in each year, a list, in such form as the Guarantee Trustee
may reasonably require, of the names and addresses of the Holders as of such
date; and
(ii) at such other times as the Guarantee Trustee may
request in writing, within 30 days after the receipt by the Guarantor of any
such request, a list of similar form and content as of a date not more than 15
days prior to the time such list is furnished.
(b) The Guarantee Trustee shall comply with the requirements
of Section 312(b) of the Trust Indenture Act.
SECTION 2.3. Reports by the Guarantee Trustee.
Not later than January 31 of each year, commencing January 31, 1998,
the Guarantee Trustee shall provide to the Holders such reports, if any, as are
required by Section 313 of the Trust Indenture Act in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The Guarantee Trustee shall
also comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4. Periodic Reports to the Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee, and the Holders
such documents, reports and information, if any, as required by Section 314 of
the Trust Indenture Act and the compliance certificate required by Section 314
of the Trust Indenture Act, in the form, in the manner and at the times required
by Section 314 of the Trust Indenture Act.
SECTION 2.5. Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this
Guarantee Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of an
Officers' Certificate.
<PAGE> 11
- 7 -
SECTION 2.6. Events of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Preferred
Securities may, by vote, on behalf of the Holders, waive any past Event of
Default and its consequences. Upon such waiver, any such Event of Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Guarantee Agreement, but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent therefrom.
SECTION 2.7. Event of Default; Notice.
(a) The Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders, notices of all Events of Default known to the Guarantee
Trustee, unless such Events of Default have been cured before the giving of such
notice; provided that, except in the case of a default in the payment of a
Guarantee Payment, the Guarantee Trustee shall be protected in withholding such
notice if and so long as the Board of Directors, the executive committee or a
trust committee of directors and/or Responsible Officers of the Guarantee
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless a Responsible Officer charged with the
administration of this Guarantee Agreement shall have received written notice of
such Event of Default.
SECTION 2.8. Conflicting Interests.
The Trust Agreement shall be deemed to be specifically described in
this Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee
Trustee for the benefit of the Holders, and the Guarantee Trustee shall not
transfer this Guarantee Agreement to any Person except a Holder exercising his
or her rights pursuant to Section 5.4(iv) or to a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act as
Successor Guarantee Trustee hereunder. The right, title
<PAGE> 12
- 8 -
and interest of the Guarantee Trustee, as such, hereunder shall automatically
vest in any Successor Guarantee Trustee, upon acceptance by such Successor
Guarantee Trustee of its appointment hereunder, and such vesting and cessation
of title shall be effective whether or not conveyancing documents have been
executed and delivered pursuant to the appointment of such Successor Guarantee
Trustee.
(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the
Holders.
(c) The Guarantee Trustee, before the occurrence of any Event
of Default and after the curing of all Events of Default that may have occurred,
shall be obligated to perform only such duties as are specifically set forth in
this Guarantee Agreement (including pursuant to Section 2.1), and no implied
covenants shall be read into this Guarantee Agreement against the Guarantee
Trustee. If an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6), the Guarantee Trustee shall exercise such of the
rights and powers vested in it by this Guarantee Agreement, and use the same
degree of care and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(d) No provision of this Guarantee Agreement shall be
construed to relieve the Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(i) Prior to the occurrence of any Event of Default
and after the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the
Guarantee Trustee shall be determined solely by the express provisions of this
Guarantee Agreement (including pursuant to Section 2.1), and the Guarantee
Trustee shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Guarantee Agreement (including
pursuant to Section 2.1); and
(B) in the absence of bad faith on the part
of the Guarantee Trustee, the Guarantee Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Guarantee Trustee and
conforming to the requirements of this Guarantee Agreement; but in the case of
any such certificates or opinions that by any provision hereof or of the Trust
Indenture Act are specifically required to be furnished to the Guarantee
Trustee, the Guarantee Trustee shall be under a
<PAGE> 13
- 9 -
duty to examine the same to determine whether or not they conform to the
requirements of this Guarantee Agreement;
(ii) The Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer of the
Guarantee Trustee, unless it shall be proved that the Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such judgment was made;
(iii) The Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a Majority in
Liquidation Amount of the Preferred Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee, or exercising any trust or power conferred upon the Guarantee Trustee
under this Guarantee Agreement; and
(iv) No provision of this Guarantee Agreement shall
require the Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers if the Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds or liability
is not assured to it under the terms of this Guarantee Agreement or adequate
indemnity against such risk or liability is not reasonably assured to it.
SECTION 3.2. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may conclusively rely and
shall be fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document reasonably believed by it to be genuine
and to have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor
contemplated by this Guarantee Agreement shall be sufficiently evidenced by an
Officers' Certificate unless otherwise prescribed herein.
(iii) Whenever, in the administration of this
Guarantee Agreement, the Guarantee Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting to take any action
hereunder, the Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively
<PAGE> 14
- 10 -
rely upon an Officers' Certificate which, upon receipt of such request from the
Guarantee Trustee, shall be promptly delivered by the Guarantor.
(iv) The Guarantee Trustee may consult with legal
counsel, and the advice or written opinion of such legal counsel with respect to
legal matters shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted to be taken by it hereunder in good
faith and in accordance with such advice or opinion. Such legal counsel may be
legal counsel to the Guarantor or any of its Affiliates and may be one of its
employees. The Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Guarantee Agreement from any
court of competent jurisdiction.
(v) The Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Guarantee Agreement at the request or direction of any Holder, unless such
Holder shall have provided to the Guarantee Trustee such security and indemnity
as would satisfy a reasonable person in the position of the Guarantee Trustee,
against the costs, expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Guarantee Trustee.
(vi) The Guarantee Trustee shall not be bound to make
any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or other
paper or document, but the Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either directly or by
or through its agents or attorneys, and the Guarantee Trustee shall not be
responsible for any negligence or wilful misconduct on the part of any such
agent or attorney appointed with due care by it hereunder.
(viii) Whenever in the administration of this
Guarantee Agreement the Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking any other
action hereunder, the Guarantee Trustee (A) may request instructions from the
Holders, (B) may refrain from enforcing such remedy or right or taking such
other action until such instructions are received and (C) shall be fully
protected in acting in accordance with such instructions.
<PAGE> 15
- 11 -
(b) No provision of this Guarantee Agreement shall be deemed
to impose any duty or obligation on the Guarantee Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on it
in any jurisdiction in which it shall be illegal, or in which the Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty to act in accordance with such power and
authority.
SECTION 3.3. Indemnity.
The Guarantor agrees to indemnify the Guarantee Trustee for, and to
hold it harmless against, any loss, liability or expense incurred without
negligence, wilful misconduct or bad faith on the part of the Guarantee Trustee,
arising out of or in connection with the acceptance or administration of this
Guarantee Agreement, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder. The Guarantee Trustee will not claim or
exact any lien or charge on any Guarantee Payments as a result of any amount due
to it under this Guarantee Agreement.
SECTION 3.4. Expenses.
The Guarantor shall from time to time reimburse the Guarantee Trustee
for its reasonable expenses and costs (including reasonable attorneys' or
agents' fees) incurred in connection with the performance of its duties
hereunder.
ARTICLE IV. GUARANTEE TRUSTEE
SECTION 4.1. Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee
which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the
Trust Indenture Act to act as such and has a combined capital and surplus of at
least $50,000,000, and shall be a corporation meeting the requirements of
Section 310(a) of the Trust Indenture Act. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements of the
supervising or examining authority, then, for the purposes of this Section and
to the extent permitted by the Trust Indenture Act,
<PAGE> 16
- 12 -
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published.
(b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Guarantee Trustee shall immediately
resign in the manner and with the effect set out in Section 4.2(b).
(c) If the Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Guarantee Trustee and Guarantor shall in all respects comply
with the provisions of Section 310(b) of the Trust Indenture Act.
SECTION 4.2. Appointment, Removal and Resignation of the
Guarantee Trustee.
(a) No resignation or removal of the Guarantee Trustee and no
appointment of a Successor Guarantee Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the Successor Guarantee
Trustee by written instrument executed by the Successor Guarantee Trustee and
delivered to the Holders and the Guarantee Trustee.
(b) Subject to the immediately preceding paragraph, a
Guarantee Trustee may resign at any time by giving written notice thereof to the
Holders. The Guarantee Trustee shall appoint a successor by requesting from at
least three Persons meeting the eligibility requirements such Person's expenses
and charges to serve as the Guarantee Trustee, and selecting the Person who
agrees to the lowest expenses and charges. If the instrument of acceptance by
the Successor Guarantee Trustee shall not have been delivered to the Guarantee
Trustee within 60 days after the giving of such notice of resignation, the
Guarantee Trustee may petition, at the expense of the Guarantor, any court of
competent jurisdiction for the appointment of a Successor Guarantee Trustee.
(c) The Guarantee Trustee may be removed for cause at any time
by Act (within the meaning of Section 6.8 of the Trust Agreement) of the Holders
of at least a Majority in Liquidation Amount of the Preferred Securities,
delivered to the Guarantee Trustee.
(d) If a resigning Guarantee Trustee shall fail to appoint a
successor, or if a Guarantee Trustee shall be removed or become incapable of
acting as Guarantee Trustee, or if any vacancy shall occur in the office of any
Guarantee Trustee for any cause, the Holders of the Preferred Securities, by Act
of the Holders of record of not less than 25% in aggregate Liquidation Amount of
the Preferred Securities then outstanding delivered to such Guarantee
<PAGE> 17
- 13 -
Trustee, shall promptly appoint a successor Guarantee Trustee. If no Successor
Guarantee Trustee shall have been so appointed by the Holders of the Preferred
Securities and such appointment accepted by the Successor Guarantee Trustee, any
Holder, on behalf of himself and all others similarly situated, may petition any
court of competent jurisdiction for the appointment of a Successor Guarantee
Trustee.
ARTICLE V. GUARANTEE
SECTION 5.1. Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full on
a subordinated basis as set forth in Section 6.1 hereof to the Holders the
Guarantee Payments (without duplication of amounts theretofore paid by or on
behalf of the Issuer Trust), as and when due, regardless of any defense, right
of set-off or counterclaim which the Issuer Trust may have or assert, except the
defense of payment. The Guarantor's obligation to make a Guarantee Payment may
be satisfied by direct payment of the required amounts by the Guarantor to the
Holders or by causing the Issuer Trust to pay such amounts to the Holders. The
Guarantor shall give prompt written notice to the Guarantee Trustee in the event
it makes any direct payment hereunder.
SECTION 5.2. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of the Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the
Guarantee Trustee, the Issuer Trust or any other Person before proceeding
against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice
of redemption and all other notices and demands.
SECTION 5.3. Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee Agreement shall in no way be affected or impaired by reason
of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer Trust of any express or implied
agreement, covenant, term or condition relating to the Preferred Securities to
be performed or observed by the Issuer Trust;
(b) the extension of time for the payment by the Issuer Trust
of all or any portion of the Distributions (other
<PAGE> 18
- 14 -
than an extension of time for payment of Distributions that results from the
extension of any interest payment period on the Junior Subordinated Debentures
as so provided in the Indenture), Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Preferred Securities or the
extension of time for the performance of any other obligation under, arising out
of, or in connection with, the Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right, privilege, power
or remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer Trust granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Issuer Trust or any of
the assets of the Issuer Trust;
(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor (other than
payment of the underlying obligation), it being the intent of this Section 5.3
that the obligations of the Guarantor hereunder shall be absolute and
unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain the consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4. Rights of Holders.
The Guarantor expressly acknowledges that: (i) this Guarantee Agreement
will be deposited with the Guarantee Trustee to be held for the benefit of the
Holders; (ii) the Guarantee Trustee has the right to enforce this Guarantee
Agreement on behalf of the Holders; (iii) the Holders of a Majority in
Liquidation Amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of this Guarantee Agreement or exercising any
trust or power conferred
<PAGE> 19
- 15 -
upon the Guarantee Trustee under this Guarantee Agreement; and (iv) any Holder
may institute a legal proceeding directly against the Guarantor to enforce its
rights under this Guarantee Agreement, without first instituting a legal
proceeding against the Guarantee Trustee, the Issuer Trust or any other Person.
SECTION 5.5. Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment of
the Guarantee Payments in full (without duplication of amounts theretofore paid
by the Issuer Trust) or upon the distribution of Junior Subordinated Debentures
to Holders as provided in the Trust Agreement.
SECTION 5.6. Subrogation.
The Guarantor shall be subrogated to all rights (if any) of the Holders
against the Issuer Trust in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement; provided, however, that the Guarantor
shall not (except to the extent required by mandatory provisions of law) be
entitled to enforce or exercise any rights which it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Guarantee Agreement, at the time of any such
payment, any amounts are due and unpaid under this Guarantee Agreement. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.
SECTION 5.7. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer Trust with respect to the Preferred
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
Agreement notwithstanding the occurrence of any event referred to in subsections
(a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI. COVENANTS AND SUBORDINATION
SECTION 6.1. Subordination.
This Guarantee Agreement will constitute an unsecured obligation of the
Guarantor and will rank subordinate and junior in right of payment to all Senior
Indebtedness of the Guarantor to the extent and in the manner set forth in the
Indenture with respect to the Junior Subordinated Debentures, and the provisions
<PAGE> 20
- 16 -
of Article XIII of the Indenture will apply, mutatis mutandis, to the
obligations of the Guarantor hereunder. The obligations of the Guarantor
hereunder do not constitute Senior Indebtedness of the Guarantor.
SECTION 6.2. Pari Passu Guarantees.
The obligations of the Guarantor under this Guarantee Agreement shall
rank pari passu with any similar guarantee agreements issued by the Guarantor on
behalf of the holders of preferred or capital securities issued by the Issuer
Trust and with any other security, guarantee or other obligation that is
expressly stated to rank pari passu with the obligations of the Guarantor under
this Guarantee Agreement.
ARTICLE VII. TERMINATION
SECTION 7.1. Termination.
This Guarantee Agreement shall terminate and be of no further force and
effect upon (i) full payment of the Redemption Price of all Preferred
Securities, (ii) the distribution of Junior Subordinated Debentures to the
Holders in exchange for all of the Preferred Securities or (iii) full payment of
the amounts payable in accordance with Article IX of the Trust Agreement upon
liquidation of the Issuer Trust. Notwithstanding the foregoing, this Guarantee
Agreement will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder is required to repay any sums paid with respect to
Preferred Securities or this Guarantee Agreement.
ARTICLE VIII. MISCELLANEOUS
SECTION 8.1. Successors and Assigns.
All guarantees and agreements contained in this Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding. Except in connection with a consolidation, merger
or sale involving the Guarantor that is permitted under Article VIII of the
Indenture and pursuant to which the assignee agrees in writing to perform the
Guarantor's obligations hereunder, the Guarantor shall not assign its
obligations hereunder, and any purported assignment that is not in accordance
with these provisions shall be void.
<PAGE> 21
- 17 -
SECTION 8.2. Amendments.
Except with respect to any changes that do not materially adversely
affect the rights of the Holders (in which case no consent of the Holders will
be required), this Guarantee Agreement may only be amended with the prior
approval of the Holders of not less than a Majority in Liquidation Amount of the
Preferred Securities. The provisions of Article VI of the Trust Agreement
concerning meetings of the Holders shall apply to the giving of such approval.
SECTION 8.3. Notices.
Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied (confirmed by delivery of the original) or
mailed by first class mail as follows:
(a) if given to the Guarantor, to the address or telecopy
number set forth below or such other address or telecopy number or to the
attention of such other Person as the Guarantor may give notice to the Holders:
National Penn Bancshares, Inc.
[________________]
_______, Pennsylvania [_____]
Facsimile No.: (215) [___-____]
Attention: Office of the Secretary
(b) if given to the Issuer Trust, in care of the Guarantee
Trustee, at the Issuer Trust's (and the Guarantee Trustee's) address set forth
below or such other address or telecopy number or to the attention of such other
Person as the Guarantee Trustee on behalf of the Issuer Trust may give notice to
the Holders:
c/o National Penn Bancshares, Inc.
[________________]
_______, Pennsylvania [_____]
Facsimile No.: (215) [___-____]
Attention: Office of the Secretary
<PAGE> 22
- 18 -
with a copy to:
Bankers Trust Company
Four Albany Street - 4th Floor
New York, New York 10006
Facsimile No.: (212) 250-6961
Attention: Corporate Trust and Agency Group;
Corporate Market Services
(c) if given to the Guarantee Trustee:
Bankers Trust Company
Four Albany Street - 4th Floor
New York, New York 10006
Facsimile No.: (212) 250-6961
Attention: Corporate Trust and Agency Group
Corporate Market Services
(d) if given to any Holder, at the address set forth on the
books and records of the Issuer Trust.
All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 8.4. Benefit.
This Guarantee Agreement is solely for the benefit of the Holders and
is not separately transferable from the Preferred Securities.
SECTION 8.5. Interpretation.
In this Guarantee Agreement, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not
defined in the preamble hereto have the respective meanings assigned to them in
Section 1.1;
(b) a term defined anywhere in this Guarantee Agreement has
the same meaning throughout;
(c) all references to "the Guarantee Agreement" or "this
Guarantee Agreement" are to this Guarantee Agreement as modified, supplemented
or amended from time to time;
<PAGE> 23
- 19 -
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice
versa; and
(g) the masculine, feminine or neuter genders used herein
shall include the masculine, feminine and neuter genders.
SECTION 8.6. Governing Law.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
SECTION 8.7. Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
<PAGE> 24
- 20 -
THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
NATIONAL PENN BANCSHARES, INC.
By:
---------------------------------
Name:
Title:
BANKERS TRUST COMPANY,
as Guarantee Trustee
and not in its individual
capacity
By:
---------------------------------
Name:
Title:
