<PAGE>
As filed with the Securities and Exchange Commission on August 13, 1998
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________ to ________.
Commission File Number: 33-41102
SILICON VALLEY BANCSHARES
(Exact name of registrant as specified in its charter)
California 94-2856336
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3003 Tasman Drive
Santa Clara, California 95054-1191
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 654-7282
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--- ---
At July 31, 1998, 20,578,979 shares of the registrant's common stock
(no par value) were outstanding.
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This report contains a total of 31 pages.
1
<PAGE>
TABLE OF CONTENTS
PAGE
PART I - FINANCIAL INFORMATION
ITEM 1. INTERIM CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS 3
CONSOLIDATED INCOME STATEMENTS 4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 5
CONSOLIDATED STATEMENTS OF CASH FLOWS 6
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 12
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 29
ITEM 2. CHANGES IN SECURITIES 29
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 29
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 29
ITEM 5. OTHER INFORMATION 29
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 30
SIGNATURES 31
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - INTERIM CONSOLIDATED FINANCIAL STATEMENTS
SILICON VALLEY BANCSHARES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
(Dollars in thousands) (Unaudited)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Cash and due from banks $ 143,022 $ 105,059
Federal funds sold and securities purchased under
agreement to resell 548,238 321,773
Investment securities, at fair value 1,066,464 1,013,904
Loans, net of unearned income 1,350,705 1,174,645
Allowance for loan losses (42,300) (37,700)
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Net loans 1,308,405 1,136,945
Premises and equipment 7,010 4,460
Other real estate owned 689 689
Accrued interest receivable and other assets 49,258 42,293
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Total assets $3,123,086 $2,625,123
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Liabilities and Shareholders' Equity:
Liabilities:
Noninterest-bearing demand deposits $ 774,649 $ 788,442
NOW deposits 42,785 21,348
Money market deposits 1,925,794 1,497,996
Time deposits 124,051 124,621
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Total deposits 2,867,279 2,432,407
Other liabilities 19,085 18,235
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Total liabilities 2,886,364 2,450,642
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Company obligated mandatorily redeemable trust preferred securities
of subsidiary trust holding solely junior subordinated debentures
(trust preferred securities) 38,459 -
Shareholders' Equity:
Preferred stock, no par value:
20,000,000 shares authorized; none outstanding
Common stock, no par value:
60,000,000 shares authorized; 20,572,086 and
19,940,474 shares outstanding at June 30, 1998
and December 31, 1997, respectively 90,805 83,009
Retained earnings 110,780 94,999
Unearned compensation (5,235) (5,946)
Accumulated other comprehensive income:
Net unrealized gain on available-for-sale investments 1,913 2,419
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Total shareholders' equity 198,263 174,481
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Total liabilities and shareholders' equity $3,123,086 $2,625,123
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</TABLE>
See notes to interim consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
SILICON VALLEY BANCSHARES AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the three months ended For the six months ended
-------------------------- -------------------------
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
(Dollars in thousands, except per share amounts) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income:
Loans, including fees $ 33,760 $ 26,589 $ 64,862 $ 49,525
Investment securities 16,205 9,402 30,202 18,123
Federal funds sold and securities
purchased under agreement to resell 4,765 3,729 9,208 6,965
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Total interest income 54,730 39,720 104,272 74,613
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Interest expense:
Deposits 19,331 12,638 36,931 23,674
Other borrowings - - 3 -
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Total interest expense 19,331 12,638 36,934 23,674
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Net interest income 35,399 27,082 67,338 50,939
Provision for loan losses 4,024 2,618 9,505 5,966
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Net interest income after provision
for loan losses 31,375 24,464 57,833 44,973
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Noninterest income:
Disposition of client warrants 1,834 1,082 4,274 4,245
Letter of credit and foreign
exchange income 1,631 1,110 3,342 2,090
Deposit service charges 473 407 846 772
Investment gains 3 44 477 45
Other 494 334 887 655
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Total noninterest income 4,435 2,977 9,826 7,807
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Noninterest expense:
Compensation and benefits 12,483 9,420 24,104 18,476
Professional services 2,602 1,695 4,029 3,131
Furniture and equipment 2,691 763 3,731 1,424
Business development and travel 1,407 1,026 2,962 1,986
Net occupancy expense 1,067 891 2,058 1,653
Telephone 597 330 1,119 634
Advertising and promotion 520 450 910 728
Postage and supplies 478 342 910 702
Trust preferred securities distributions 362 - 362 -
Cost of other real estate owned (1,274) 34 (1,248) 26
Other 840 803 1,741 1,660
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Total noninterest expense 21,773 15,754 40,678 30,420
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Income before income tax expense 14,037 11,687 26,981 22,360
Income tax expense 5,836 4,908 11,201 9,391
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Net income $ 8,201 $ 6,779 $ 15,780 $ 12,969
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Basic earnings per share $ 0.40 $ 0.35 $ 0.78 $ 0.68
Diluted earnings per share $ 0.39 $ 0.34 $ 0.75 $ 0.65
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</TABLE>
See notes to interim consolidated financial statements.
4
<PAGE>
SILICON VALLEY BANCSHARES AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
For the three months ended For the six months ended
-------------------------- ------------------------
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
(Dollars in thousands) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income $ 8,201 $ 6,779 $ 15,780 $ 12,969
Other comprehensive income, net of tax:
Unrealized gain/(loss) on available-for-
sale investments:
Unrealized holding gain arising
during period 422 2,571 2,250 259
Less: Reclassification adjustment for
gain included in net income (1,065) (653) (2,756) (2,488)
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Other comprehensive income (643) 1,918 (506) (2,229)
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Comprehensive income $ 7,558 $ 8,697 $ 15,274 $ 10,740
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</TABLE>
See notes to interim consolidated financial statements.
5
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SILICON VALLEY BANCSHARES AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the six months ended
-----------------------------
June 30, June 30,
1998 1997
(Dollars in thousands) (Unaudited) (Unaudited)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 15,780 $ 12,969
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 9,505 5,966
Depreciation and amortization 685 655
Net gain on sales of investment securities (477) (45)
Net gain on sales of other real estate owned (1,298) (45)
Increase in accrued interest receivable (4,125) (2,715)
Increase in prepaid expenses (855) (250)
Increase in unearned income 656 1,875
Increase (decrease) in accrued liabilities 546 (3,088)
Increase (decrease) in taxes payable 2,928 (1,389)
Other, net (492) (2,615)
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Net cash provided by operating activities 22,853 11,318
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Cash flows from investing activities:
Proceeds from maturities and paydowns of
investment securities 703,818 670,952
Proceeds from sales of investment securities 94,000 60,555
Purchases of investment securities (849,984) (799,572)
Net increase in loans (183,227) (179,798)
Proceeds from recoveries of charged off loans 1,606 1,837
Net proceeds from sales of other real estate owned 1,298 857
Purchases of premises and equipment (3,373) (222)
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Net cash applied to investing activities (235,862) (245,391)
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Cash flows from financing activities:
Net increase in deposits 434,872 280,712
Proceeds from issuance of trust preferred securities,
net of issuance costs 38,459 -
Proceeds from issuance of common stock,
net of issuance costs 4,106 2,384
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Net cash provided by financing activities 477,437 283,096
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Net increase in cash and cash equivalents 264,428 49,023
Cash and cash equivalents at January 1, 426,832 433,177
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Cash and cash equivalents at June 30, $ 691,260 $ 482,200
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Supplemental disclosures:
Interest paid $ 36,295 $ 23,508
Income taxes paid $ 9,401 $ 11,271
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</TABLE>
See notes to interim consolidated financial statements.
6
<PAGE>
SILICON VALLEY BANCSHARES AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Silicon Valley Bancshares (the
"Company") and its subsidiaries conform with generally accepted accounting
principles and prevailing practices within the banking industry. Certain
reclassifications have been made to the Company's 1997 consolidated financial
statements to conform to the 1998 presentations. Such reclassifications had
no effect on the results of operations or shareholders' equity. The following
is a summary of the significant accounting and reporting policies used in
preparing the interim consolidated financial statements.
NATURE OF OPERATIONS
The Company is a bank holding company whose principal subsidiary is Silicon
Valley Bank (the "Bank"), a California-chartered bank with headquarters in
Santa Clara, California. The Bank maintains regional banking offices in
Northern and Southern California, and additionally has loan offices in
Arizona, Colorado, Georgia, Illinois, Maryland, Massachusetts, Oregon, Texas,
and Washington. The Bank serves emerging growth and middle-market companies
in targeted niches, focusing on the technology and life sciences industries,
while also identifying and capitalizing on opportunities to serve companies
in other industries whose financial services needs are underserved.
Substantially all of the assets, liabilities and earnings of the Company
relate to its investment in the Bank.
CONSOLIDATION
The interim consolidated financial statements include the accounts of the
Company and those of its wholly owned subsidiaries, the Bank, SVB Capital I
and SVB Leasing Company (inactive). The revenues, expenses, assets, and
liabilities of the subsidiaries are included in the respective line items in
the interim consolidated financial statements after elimination of
intercompany accounts and transactions.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of Management, the interim consolidated financial statements
contain all adjustments (consisting of only normal, recurring adjustments)
necessary to present fairly the Company's consolidated financial position at
June 30, 1998, the results of its operations for the three and six month
periods ended June 30, 1998, and June 30, 1997, and the results of its cash
flows for the six month periods ended June 30, 1998, and June 30, 1997. The
December 31, 1997, consolidated financial statements were derived from
audited financial statements, and certain information and footnote
disclosures normally presented in annual financial statements prepared in
accordance with generally accepted accounting principles have been omitted.
The interim consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto included in the
Company's 1997 Annual Report on Form 10-K. The results of operations for the
three and six month periods ended June 30, 1998, may not necessarily be
indicative of the Company's operating results for the full year.
7
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BASIS OF FINANCIAL STATEMENT PRESENTATION
The preparation of financial statements in conformity with generally accepted
accounting principles requires Management to make estimates and judgments
that affect the reported amounts of assets and liabilities as of the balance
sheet date and the results of operations for the period. Actual results could
differ from those estimates. A material estimate that is particularly
susceptible to possible change in the near term relates to the determination
of the allowance for loan losses. An estimate of possible changes or range of
possible changes cannot be made.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents as reported in the consolidated statements of cash
flows includes cash on hand, cash balances due from banks, federal funds
sold, and securities purchased under agreement to resell. The cash
equivalents are readily convertible to known amounts of cash and are so near
their maturity that they present insignificant risk of changes in value.
FEDERAL FUNDS SOLD AND SECURITIES PURCHASED UNDER AGREEMENT TO RESELL
Federal funds sold and securities purchased under agreement to resell as
reported in the consolidated balance sheets includes interest-bearing
deposits in other financial institutions of $238,000 and $273,000 at June 30,
1998, and December 31, 1997, respectively.
NONACCRUAL LOANS
Loans are placed on nonaccrual status when they become 90 days past due as to
principal or interest payments (unless the principal and interest are well
secured and in the process of collection), when the Company has determined,
based upon currently known information, that the timely collection of
principal or interest is doubtful, or when the loans otherwise become
impaired under the provisions of Statement of Financial Accounting Standards
(SFAS) No. 114, "Accounting by Creditors for Impairment of a Loan."
When a loan is placed on nonaccrual status, the accrued interest is reversed
against interest income and the loan is accounted for on the cash or cost
recovery method thereafter until qualifying for return to accrual status.
Generally, a loan will be returned to accrual status when all delinquent
principal and interest become current in accordance with the terms of the
loan agreement and full collection of the principal appears probable.
RECENT ACCOUNTING PRONOUNCEMENTS
The Company has adopted SFAS No. 130, "Reporting Comprehensive Income." This
statement establishes standards for all entities for reporting comprehensive
income and its components in financial statements. This statement requires
that all items which are required to be recognized under accounting standards
as components of comprehensive income be reported in a financial statement
that is displayed with the same prominence as other financial statements.
Comprehensive income is equal to net income plus the change in "other
comprehensive income," as defined by SFAS No. 130. The only component of
other comprehensive income currently applicable to the Company is the net
unrealized gain or loss on available-for-sale investments. SFAS No. 130
requires that an entity: (a) classify items of other comprehensive income by
their
8
<PAGE>
nature in a financial statement, and (b) report the accumulated balance
of other comprehensive income separately from common stock and retained
earnings in the equity section of the balance sheet. This statement is
effective for financial statements issued for fiscal years beginning after
December 15, 1997.
In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information."
This statement establishes standards for publicly held entities to follow in
reporting information about operating segments in annual financial statements
and requires that those entities also report selected information about
operating segments in interim financial statements. This statement also
establishes standards for related disclosures about products and services,
geographic areas and major customers. This statement is effective for financial
statements issued for periods beginning after December 15, 1997.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement requires that an entity
recognize all derivatives as either assets or liabilities in the balance sheet
and measure those instruments at fair value. The statement is effective for
fiscal quarters of fiscal years beginning after June 15, 1999. The Company
expects to adopt this statement on January 1, 2000. The Company will begin
evaluating the impact of its adoption on the Company's consolidated financial
statements.
2. EARNINGS PER SHARE
The following is a reconciliation of basic earnings per share (EPS) to diluted
EPS for the three and six month periods ended June 30, 1998 and 1997. The
number of shares and earnings per share have been restated to reflect a two-for-
one stock split for common shares of record as of April 17, 1998.
9
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
(Unaudited) (Unaudited)
--------------------------------- ------------------------------
(Dollars and shares in thousands, Net Per Share Net Per Share
except per share amounts) Income Shares Amount Income Shares Amount
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1998:
Basic EPS:
Income available to common
shareholders $ 8,201 20,262 $ 0.40 $ 15,780 20,164 $ 0.78
Effect of Dilutive Securities:
Stock options and restricted stock - 738 - - 776 -
- --------------------------------------------------------------------------------------------------------------------------------
Diluted EPS:
Income available to common
shareholders plus assumed
conversions $ 8,201 21,000 $ 0.39 $ 15,780 20,940 $ 0.75
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- --------------------------------------------------------------------------------------------------------------------------------
1997:
Basic EPS:
Income available to common
shareholders $ 6,779 19,163 $ 0.35 $ 12,969 19,076 $ 0.68
Effect of Dilutive Securities:
Stock options and restricted stock - 1,000 - - 1,031 -
- --------------------------------------------------------------------------------------------------------------------------------
Diluted EPS:
Income available to common
shareholders plus assumed
conversions $ 6,779 20,163 $ 0.34 $ 12,969 20,107 $ 0.65
- --------------------------------------------------------------------------------------------------------------------------------
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</TABLE>
3. LOANS
The detailed composition of loans, net of unearned income of $8.7 million and
$8.0 million at June 30, 1998, and December 31, 1997, respectively, is
presented in the following table:
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
(Dollars in thousands) (Unaudited)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial $ 1,181,718 $ 1,051,218
Real estate construction 67,642 53,583
Real estate term 56,416 33,395
Consumer and other 44,929 36,449
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Total loans $ 1,350,705 $ 1,174,645
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- -------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
4. ALLOWANCE FOR LOAN LOSSES
The activity in the allowance for loan losses for the three and six month
periods ended June 30, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
(Unaudited) (Unaudited)
-------------------------- ---------------------------
(Dollars in thousands) 1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Beginning balance $40,400 $36,400 $37,700 $32,700
Provision for loan losses 4,024 2,618 9,505 5,966
Loans charged off (2,560) (2,663) (6,511) (3,203)
Recoveries 436 945 1,606 1,837
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Balance at June 30, $42,300 $37,300 $42,300 $37,300
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</TABLE>
The aggregate recorded investment in loans for which impairment has been
determined in accordance with SFAS No. 114 totaled $29.8 million and $15.2
million at June 30, 1998, and June 30, 1997, respectively. Allocations of the
allowance for loan losses related to impaired loans totaled $8.7 million at
June 30, 1998, and $5.6 million at June 30, 1997. Average impaired loans for
the second quarter of 1998 and 1997 totaled $24.3 million and $17.5 million,
respectively.
11
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and results of
operations should be read in conjunction with the Company's interim
consolidated financial statements as presented in Item 1 of this report. In
addition to historical information, this discussion and analysis includes
certain forward-looking statements regarding events and circumstances which
may affect the Company's future results. Such forward-looking statements are
subject to risks and uncertainties that could cause the Company's actual
results to differ materially. These risks and uncertainties include, but are
not limited to, those described in this discussion and analysis, as well as
those described in the Company's 1997 Annual Report on Form 10-K.
The Company wishes to caution readers not to place undue reliance on any
forward-looking statements included herein, which speak only as of the date
made. The Company does not undertake, and specifically disclaims any
obligation, to update any forward-looking statements to reflect unanticipated
events and circumstances occurring after the date of such statements.
Certain reclassifications have been made to the Company's 1997 consolidated
financial statements to conform to the 1998 presentations. Such
reclassifications had no effect on the results of operations or shareholders'
equity.
EARNINGS SUMMARY
The Company reported net income of $8.2 million, or $0.39 per diluted share,
for the second quarter of 1998, compared with net income of $6.8 million, or
$0.34 per diluted share, for the second quarter of 1997. Net income totaled
$15.8 million, or $0.75 per diluted share, for the six months ended June 30,
1998, versus $13.0 million, or $0.65 per diluted share, for the respective
1997 period. The annualized return on average assets (ROA) was 1.1% in the
second quarter of 1998 versus 1.3% in the second quarter of 1997. The
annualized return on average equity (ROE) for the second quarter of 1998 was
17.1%, compared to 18.7% in the 1997 second quarter. For the first six months
of 1998, ROA was 1.2% and ROE was 17.0% versus 1.3% and 18.4%, respectively,
for the comparable prior year period.
The increase in net income during the three and six month periods ended June
30, 1998, as compared with the prior year respective periods, resulted
primarily from growth in net interest income, partially offset by an increase
in both the provision for loan losses and noninterest expense. The major
components of net income and changes in these components are summarized in
the following table for the three and six month periods ended June 30, 1998
and 1997, and are discussed in more detail below.
12
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<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
(Unaudited) (Unaudited)
-------------------------- -------------------------
(Dollars in thousands) 1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net interest income $35,399 $27,082 $67,338 $50,939
Provision for loan losses 4,024 2,618 9,505 5,966
Noninterest income 4,435 2,977 9,826 7,807
Noninterest expense 21,773 15,754 40,678 30,420
- -----------------------------------------------------------------------------------------------------------
Income before income taxes 14,037 11,687 26,981 22,360
Income tax expense 5,836 4,908 11,201 9,391
- -----------------------------------------------------------------------------------------------------------
Net income $ 8,201 $ 6,779 $15,780 $12,969
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
</TABLE>
NET INTEREST INCOME AND MARGIN
Net interest income represents the difference between interest earned,
primarily on loans and investments, and interest paid on funding sources,
primarily deposits, and is the principal source of revenue for the Company.
Net interest margin is the amount of net interest income, on a fully
taxable-equivalent basis, expressed as a percentage of average
interest-earning assets. The average yield earned on interest-earning assets
is the amount of taxable-equivalent interest income expressed as a percentage
of average interest-earning assets. The average rate paid on funding sources
expresses interest expense as a percentage of average interest-earning assets.
The following tables set forth average assets, liabilities and shareholders'
equity, interest income and interest expense, average yields and rates, and
the composition of the Company's net interest margin for the three and six
months ended June 30, 1998 and 1997, respectively.
13
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE BALANCES, RATES AND YIELDS
- ---------------------------------------------------------------------------------------------------------------------------------
For the three months ended June 30,
---------------------------------------------------------------------------------------
1998 1997
(Unaudited) (Unaudited)
----------------------------------- -----------------------------------------
Average Average
Average Yield/ Average Yield/
(Dollars in thousands) Balance Interest Rate Balance Interest Rate
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Federal funds sold and
securities purchased under
agreement to resell (1) $ 344,935 $ 4,765 5.5% $ 267,789 $ 3,729 5.6%
Investment securities:
Taxable 1,042,159 15,529 6.0 609,413 9,206 6.1
Non-taxable (2) 64,066 1,040 6.5 15,208 302 8.0
Loans:
Commercial 1,104,631 29,575 10.7 858,789 23,831 11.1
Real estate construction and term 118,299 3,177 10.8 74,192 1,892 10.2
Consumer and other 44,396 1,008 9.1 39,193 866 8.9
- -------------------------------------- --------------------------------------- ---------------------------------------
Total loans 1,267,326 33,760 10.7 972,174 26,589 11.0
- -------------------------------------- --------------------------------------- ---------------------------------------
Total interest-earning assets 2,718,486 55,094 8.1 1,864,584 39,826 8.6
- -------------------------------------- --------------------------------------- ---------------------------------------
Cash and due from banks 132,498 158,247
Allowance for loan losses (41,390) (37,089)
Other real estate owned 689 1,249
Other assets 52,709 34,482
- -------------------------------------- --------------------------------------- ---------------------------------------
Total assets $2,862,992 $2,021,473
- -------------------------------------- --------------------------------------- ---------------------------------------
- -------------------------------------- --------------------------------------- ---------------------------------------
Funding sources:
Interest-bearing liabilities:
NOW deposits $ 21,447 106 2.0 $ 12,953 60 1.9
Regular money market deposits 338,467 2,295 2.7 357,781 2,411 2.7
Bonus money market deposits 1,403,672 15,491 4.4 812,674 9,081 4.5
Time deposits 127,727 1,439 4.5 104,651 1,086 4.2
- -------------------------------------------------------------------------------- ---------------------------------------
Total interest-bearing liabilities 1,891,313 19,331 4.1 1,288,059 12,638 3.9
Portion of noninterest-bearing
funding sources 827,173 576,525
- ------------------------------------- --------------------------------------- ---------------------------------------
Total funding sources 2,718,486 19,331 2.9 1,864,584 12,638 2.7
- ------------------------------------- --------------------------------------- ---------------------------------------
Noninterest-bearing funding sources:
Demand deposits 745,237 575,726
Other liabilities 16,808 11,903
Trust preferred securities 16,964 -
Shareholders' equity 192,670 145,785
Portion used to fund
interest-earning assets (827,173) (576,525)
- ------------------------------------- ------------- ----------
Total liabilities and shareholders'
equity $2,862,992 $2,021,473
- ------------------------------------- ------------- ----------
- ------------------------------------- ------------- ----------
Net interest income and margin $35,763 5.3% $27,188 5.9%
- ------------------------------------- ------- --- ------- ----
- ------------------------------------- ------- --- ------- ----
Memorandum: Total deposits $2,636,550 $1,863,785
- ------------------------------------- ------------- ----------
- ------------------------------------- ------------- ----------
</TABLE>
(1) Includes average interest-bearing deposits in other financial
institutions of $248 and $315 for the three months ended June 30,
1998 and 1997, respectively.
(2) Interest income on non-taxable investments is presented on a fully
taxable-equivalent basis using the federal statutory rate of 35% in
1998 and 1997. The tax equivalent adjustments were $364 and $106 for
the three months ended June 30, 1998 and 1997, respectively.
14
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AVERAGE BALANCES, RATES AND YIELDS
- -----------------------------------------------------------------------------------------------------------------------------------
For the six months ended June 30,
----------------------------------------------------------------------------
1998 1997
(Unaudited) (Unaudited)
-------------------------------------------- ----------------------------
Average Average
Average Yield/ Average Yield/
(Dollars in thousands) Balance Interest Rate Balance Interest Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Federal funds sold and
securities purchased under
agreement to resell (1) $ 334,672 $ 9,208 5.5% $ 257,119 $ 6,965 5.5%
Investment securities:
Taxable 972,197 28,864 6.0 597,801 17,747 6.0
Non-taxable (2) 62,598 2,059 6.6 14,519 579 8.0
Loans:
Commercial 1,071,831 57,264 10.8 806,457 44,210 11.1
Real estate construction and term 105,949 5,703 10.9 72,802 3,606 10.0
Consumer and other 41,688 1,895 9.2 38,396 1,709 9.0
- -------------------------------------- --------------------------------- ----------------------------------
Total loans 1,219,468 64,862 10.7 917,655 49,525 10.9
- -------------------------------------- --------------------------------- ----------------------------------
Total interest-earning assets 2,588,935 104,993 8.2 1,787,094 74,816 8.4
- -------------------------------------- --------------------------------- ----------------------------------
Cash and due from banks 130,256 159,735
Allowance for loan losses (40,382) (36,110)
Other real estate owned 689 1,544
Other assets 50,588 34,693
- -------------------------------------- --------------------------------- ----------------------------------
Total assets $2,730,086 $1,946,956
- -------------------------------------- --------------------------------- ----------------------------------
- -------------------------------------- --------------------------------- ----------------------------------
Funding sources:
Interest-bearing liabilities:
NOW deposits $ 18,306 180 2.0 $ 13,789 129 1.9
Regular money market deposits 331,846 4,466 2.7 337,786 4,519 2.7
Bonus money market deposits 1,311,119 29,408 4.5 766,875 17,042 4.5
Time deposits 128,847 2,877 4.5 98,074 1,984 4.1
Other borrowings 110 3 6.0 - - -
- -------------------------------------- --------------------------------- ----------------------------------
Total interest-bearing liabilities 1,790,228 36,934 4.2 1,216,524 23,674 3.9
Portion of noninterest-bearing
funding sources 798,707 570,570
- -------------------------------------- --------------------------------- ----------------------------------
Total funding sources 2,588,935 36,934 2.9 1,787,094 23,674 2.7
- -------------------------------------- --------------------------------- ----------------------------------
Noninterest-bearing funding sources:
Demand deposits 725,683 574,408
Other liabilities 18,135 13,658
Trust preferred securities 8,529 -
Shareholders' equity 187,511 142,366
Portion used to fund
interest-earning assets (798,707) (570,570)
- -------------------------------------- ----------- -----------
Total liabilities and shareholders'
equity $2,730,086 $1,946,956
- -------------------------------------- ----------- ----------
- -------------------------------------- ----------- ----------
Net interest income and margin $68,059 5.3% $51,142 5.8%
- -------------------------------------- -------- ---- -------- ----
- -------------------------------------- -------- ---- -------- ----
Memorandum: Total deposits $2,515,801 $1,790,932
- -------------------------------------- ----------- ----------
- -------------------------------------- ----------- ----------
</TABLE>
(1) Includes average interest-bearing deposits in other financial
institutions of $257 and $323 for the six months ended June 30,
1998 and 1997, respectively.
(2) Interest income on non-taxable investments is presented on a fully
taxable-equivalent basis using the federal statutory rate of 35% in
1998 and 1997. The tax equivalent adjustments were $721 and $203 for
the six months ended June 30, 1998 and 1997, respectively.
15
<PAGE>
Net interest income is affected by changes in the amount and mix of interest-
earning assets and interest-bearing liabilities, referred to as "volume
change." Net interest income is also affected by changes in yields earned on
interest-earning assets and rates paid on interest-bearing liabilities,
referred to as "rate change." The following table sets forth changes in
interest income and interest expense for each major category of interest-
earning assets and interest-bearing liabilities. The table also reflects the
amount of change attributable to both volume and rate changes for the periods
indicated. Changes relating to investments in non-taxable municipal securities
are presented on a fully taxable-equivalent basis using the federal statutory
rate of 35% in 1998 and 1997.
<TABLE>
<CAPTION>
1998 Compared to 1997
-------------------------------------------------------------------------------
Three Months Ended June 30, Six Months Ended June 30,
(Unaudited) (Unaudited)
---------------------------------------------------------------------------------
Increase (Decrease) Increase (Decrease)
Due to Change in Due to Change in
---------------------------------------------------------------------------------
(Dollars in thousands) Volume Rate Total Volume Rate Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest income:
Federal funds sold and securities
purchased under agreement to resell $ 1,066 $ (30) $ 1,036 $ 2,135 $ 108 $ 2,243
Investment securities 7,213 (152) 7,061 12,625 (28) 12,597
Loans 7,863 (692) 7,171 16,053 (716) 15,337
- --------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in interest income 16,142 (874) 15,268 30,813 (636) 30,177
- --------------------------------------------------------------------------------------------------------------------------
Interest expense:
NOW deposits 42 4 46 44 7 51
Regular money market deposits (131) 15 (116) (80) 27 (53)
Bonus money market deposits 6,522 (112) 6,410 12,207 159 12,366
Time deposits 260 93 353 687 206 893
Other borrowings - - - 3 - 3
- ----------------------------------------------------------------------------------------------------------------------------
Increase in interest expense 6,693 - 6,693 12,861 399 13,260
- ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net interest income $ 9,449 $(874) $ 8,575 $17,952 $(1,035) $16,917
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Net interest income, on a fully taxable-equivalent basis, totaled $35.8
million for the second quarter of 1998, an increase of $8.6 million, or
31.5%, from the $27.2 million total for the second quarter of 1997. The
increase in net interest income was the result of a $15.3 million, or 38.3%,
increase in interest income, offset by a $6.7 million, or 53.0%, increase in
interest expense over the comparable prior year period.
The $15.3 million increase in interest income for the second quarter of 1998,
as compared to the second quarter of 1997, was the result of a $16.1 million
favorable volume variance partially offset by a $0.9 million unfavorable rate
variance. The favorable volume variance resulted from a $853.9 million, or
45.8%, increase in average interest-earning assets over the comparable prior
year period. The increase in average interest-earning assets resulted from
strong growth in the Company's deposits, which increased $772.8 million, or
41.5%, compared to the second quarter of 1997. The increase in average
interest-earning assets consisted of loans, which were up $295.2 million,
plus a combination of highly liquid, lower-yielding federal funds sold,
securities purchased under agreement to resell and investment securities,
which collectively increased $558.8 million, accounting for 65.4% of the
total increase in average interest-earning assets.
Average loans increased $295.2 million, or 30.4%, in the second quarter of
1998 as compared to the 1997 second quarter, resulting in a $7.9 million
favorable volume variance. This growth was widely distributed throughout the
loan portfolio, as reflected by increased loan balances in most
16
<PAGE>
of the Company's technology, life sciences and special industry niche
practices, in specialized lending products, and throughout the Company's loan
offices located across the nation.
Average investment securities for the second quarter of 1998 increased $481.6
million, or 77.1%, as compared to the 1997 second quarter, resulting in a
$7.2 million favorable volume variance. The aforementioned strong growth in
average deposits exceeded the growth in average loans over the past year, and
generated excess funds that were largely invested in U.S. agency securities,
U.S. Treasury securities, mortgage-backed securities, and municipal
securities.
Average federal funds sold and securities purchased under agreement to resell
in the second quarter of 1998 increased a combined $77.1 million, or 28.8%,
over the prior year second quarter, resulting in a $1.1 million favorable
volume variance. This increase was also a result of the aforementioned strong
growth in average deposits during the past year.
The $16.1 million favorable volume variance associated with interest-earning
assets was partially offset by a $0.9 million unfavorable rate variance in
the second quarter of 1998 as compared to the respective prior year period.
This unfavorable rate variance was largely attributable to a $0.7 million
decrease in loan interest income that resulted from a 30 basis points decline
in the average yield on loans primarily due to increased competition.
The yield on average interest-earning assets decreased 40 basis points in the
second quarter of 1998 from the comparable prior year period. This decrease
resulted from a decline in the average yield on loans, largely due to increased
competition, and a shift in the composition of average interest-earning assets
towards a higher percentage of highly liquid, lower-yielding federal funds
sold, securities purchased under agreement to resell and investment securities.
This shift in the composition of average interest-earning assets resulted from
the aforementioned deposit growth having exceeded the growth in loans.
Total interest expense in the 1998 second quarter increased $6.7 million from
the second quarter of 1997 due to an unfavorable volume variance. The
unfavorable volume variance resulted from a $603.3 million, or 46.8%, increase
in average interest-bearing liabilities in the second quarter of 1998 as
compared with the second quarter of 1997. This increase was largely
concentrated in the Company's bonus money market deposit product, which
increased $591.0 million, or 72.7%, and was explained by high levels of client
liquidity attributable to a strong inflow of investment capital into the
venture capital community during the past year, and by growth in the number of
clients served by the Company.
The average cost of funds paid on interest-bearing liabilities increased 20
basis points in the second quarter of 1998 versus the comparable prior year
period. This increase primarily resulted from a shift in the composition of
average interest-bearing liabilities towards a higher percentage of the
Company's bonus money market deposit product. This shift in the composition
of average interest-bearing liabilities resulted from the aforementioned high
levels of client liquidity attributable to a strong inflow of investment
capital into the venture capital community during the past year, and by
growth in the number of clients served by the Company.
Net interest income, on a fully taxable-equivalent basis, totaled $68.1
million for the first half of 1998, an increase of $16.9 million, or 33.1%,
from the $51.1 million total for the first half of 1997. The increase in net
interest income was the result of a $30.2 million, or 40.3%, increase in
17
<PAGE>
interest income, offset by a $13.3 million, or 56.0%, increase in interest
expense over the comparable prior year period.
The $30.2 million increase in interest income for the first half of 1998, as
compared to the first half of 1997, was the result of a $30.8 million
favorable volume variance partially offset by a $0.6 million unfavorable rate
variance. The favorable volume variance was attributable to growth in average
interest-earning assets, which increased $801.8 million, or 44.9%, from the
prior year comparable period. The increase in average interest-earning assets
resulted from strong growth in the Company's deposits, which increased $724.9
million, or 40.5%, compared to the first half of 1997, and primarily
consisted of an increase in both average loans and investment securities. The
growth in average loans was widely distributed throughout the loan portfolio,
as reflected by increased loan balances in most of the Company's technology,
life sciences and special industry niche practices, in specialized lending
products, and throughout the Company's loan offices located across the
nation. The growth in average investment securities resulted from the
aforementioned strong growth in average deposits, which exceeded the growth
in average loans over the past year, and generated excess funds that were
largely invested in U.S. agency securities, U.S. Treasury securities,
mortgage-backed securities, and municipal securities.
The $30.8 million favorable volume variance associated with interest-earning
assets was partially offset by a $0.6 million unfavorable rate variance in
the first half of 1998 as compared to the respective prior year period. This
unfavorable rate variance was largely attributable to a $0.7 million decrease
in loan interest income that resulted from a 20 basis points decline in the
average yield on loans primarily due to increased competition.
Total interest expense in the first half of 1998 increased $13.3 million from
the first half of 1997 due to a $12.9 million unfavorable volume variance
combined with a $0.4 million unfavorable rate variance. The unfavorable
volume variance resulted from a $573.7 million, or 47.2%, increase in average
interest-bearing liabilities in the first half of 1998 as compared with the
first half of 1997. This increase was largely concentrated in the Company's
bonus money market deposit product, which increased $544.2 million, or 71.0%,
and was explained by high levels of client liquidity attributable to a strong
inflow of investment capital into the venture capital community during the
past year, and by growth in the number of clients served by the Company. The
$0.4 million unfavorable rate variance was largely attributable to slight
increases in the average rate paid on the Company's various interest-bearing
liabilities.
PROVISION FOR LOAN LOSSES
The provision for loan losses is based on Management's evaluation of the
adequacy of the existing allowance for loan losses in relation to total
loans, and on Management's periodic assessment of the inherent and identified
risk dynamics of the loan portfolio resulting from reviews of selected
individual loans and loan commitments.
The Company's provision for loan losses totaled $4.0 million for the second
quarter of 1998, a $1.4 million, or 53.7%, increase compared to the $2.6
million provision for the second quarter of 1997. The provision for loan
losses increased $3.5 million, or 59.3%, to a total of $9.5 million for the
first six months of 1998, versus $6.0 million for the comparable 1997 period.
See "Financial Condition - Credit Quality and the Allowance for Loan Losses"
for additional related discussion.
18
<PAGE>
NONINTEREST INCOME
The following table summarizes the components of noninterest income for the
three and six month periods ended June 30, 1998 and 1997:
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
(Unaudited) (Unaudited)
-------------------------- -------------------------
(Dollars in thousands) 1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Disposition of client warrants $1,834 $1,082 $4,274 $4,245
Letter of credit and foreign exchange income 1,631 1,110 3,342 2,090
Deposit service charges 473 407 846 772
Investment gains 3 44 477 45
Other 494 334 887 655
- ----------------------------------------------------------------------------------------------------------------------------
Total noninterest income $4,435 $2,977 $9,826 $7,807
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Noninterest income increased $1.5 million, or 49.0%, to a total of $4.4
million in the second quarter of 1998 versus $3.0 million in the prior year
second quarter. The increase in noninterest income was largely due to both a
$0.8 million increase from the disposition of client warrants and a $0.5
million increase in letter of credit fees, foreign exchange fees and other
trade finance income in the 1998 second quarter as compared to the respective
prior year period. Noninterest income totaled $9.8 million for the first six
months of 1998, an increase of $2.0 million, or 25.9%, from the $7.8 million
in the comparable 1997 period. This increase was largely due to a $1.3
million increase in letter of credit fees, foreign exchange fees and other
trade finance income and a $0.4 million increase in gains on sales of
investment securities.
The Company has historically obtained rights to acquire stock (in the form of
warrants) in certain clients as part of negotiated credit facilities. The
receipt of warrants does not change the loan covenants or other collateral
control techniques employed by the Company to mitigate the risk of a loan
becoming nonperforming, and collateral requirements on loans with warrants
are similar to lending arrangements where warrants are not obtained. The
timing and amount of income from the disposition of client warrants typically
depend upon factors beyond the control of the Company, including the general
condition of the public equity markets as well as the merger and acquisition
environment, and therefore cannot be predicted with any degree of accuracy
and are likely to vary materially from period to period. During the first six
months of 1998, as well as throughout 1997, a significant portion of the
income realized by the Company from the disposition of client warrants was
offset by expenses related to the Company's efforts to build an
infrastructure sufficient to support present and prospective business
activities, as well as evaluate and pursue new business opportunities, and
was also offset by increases to the provision for loan losses during those
periods. As opportunities present themselves in future periods, the Company
may continue to reinvest some or all of the income realized from the
disposition of client warrants in furthering its business strategies.
Letter of credit fees, foreign exchange fees and other trade finance income
totaled $1.6 million in the second quarter of 1998, an increase of $0.5
million, or 46.9%, from the $1.1 million earned in the second quarter of
1997. For the first six months of 1998, letter of credit fees, foreign
exchange fees and other trade finance income totaled $3.3 million, an
increase of $1.3 million, or 59.9%, compared to the $2.1 million in the first
six months of 1997. The growth in this category of noninterest income
reflects a concerted effort by Management to expand the penetration of trade
finance products and services among the Company's growing client base, a
large percentage of which provide products and services in international
markets.
19
<PAGE>
Deposit service charges totaled $0.5 million for the three month period ended
June 30, 1998, an increase of $0.1 million, or 16.2%, from the $0.4 million
reported in the second quarter of 1997. For the first six months of both 1998
and 1997 deposit service charges totaled $0.8 million. Clients compensate the
Company for depository services either through earnings credits computed on
their demand deposit balances, or via explicit payments recognized by the
Company as deposit service charges income.
The Company realized a $0.5 million gain on sales of investment securities
during the first six months of 1998, compared to a nominal gain on sales of
investment securities during the first half of the prior year. All investment
securities sold were classified as available-for-sale, and all sales were
conducted as a normal component of the Company's asset/liability and
liquidity management activities. For additional related discussion, see the
Item 2 section entitled "Liquidity."
Other noninterest income largely consists of service-based fee income, and
increased $0.2 million, or 47.9%, to $0.5 million in the second quarter of
1998 from $0.3 million in the second quarter of 1997. For the six month
period ended June 30, 1998, other noninterest income increased $0.2 million,
or 35.4%, to $0.9 million from $0.7 million in the comparable 1997 period.
The increase during 1998 was primarily due to a higher volume of cash
management and loan documentation services related to the Company's growing
client base.
NONINTEREST EXPENSE
Noninterest expense in the second quarter of 1998 totaled $21.8 million, a
$6.0 million, or 38.2%, increase from the $15.8 million incurred in the
comparable 1997 period. Noninterest expense totaled $40.7 million for the
first six months of 1998, an increase of $10.3 million, or 33.7%, over the
$30.4 million total for the comparable 1997 period. Management closely
monitors the level of noninterest expense using a variety of financial
ratios, including the efficiency ratio. The efficiency ratio is calculated by
dividing the amount of noninterest expense, excluding costs associated with
other real estate owned, by adjusted revenues, defined as the total of net
interest income and noninterest income, excluding income from the disposition
of client warrants and gains or losses related to sales of investment
securities. This ratio reflects the level of operating expense required to
generate $1 of operating revenue. The Company's efficiency ratio for the 1998
second quarter was 60.7% versus 54.3% for the second quarter of 1997. The
Company's efficiency ratio for the first six months of 1998 was 57.9%, versus
55.8% for the comparable 1997 period. The following table presents the detail
of noninterest expense and the incremental contribution of each line item to
the Company's efficiency ratio:
20
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended June 30,
------------------------------------------------------------------
1998 1997
-------------------------- --------------------------
Percent of Percent of
Adjusted Adjusted
(Dollars in thousands) Amount Revenues Amount Revenues
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Compensation and benefits $12,483 32.9% $ 9,420 32.6%
Furniture and equipment 2,691 7.1 763 2.6
Professional services 2,602 6.8 1,695 5.9
Business development and travel 1,407 3.7 1,026 3.5
Net occupancy expense 1,067 2.8 891 3.1
Telephone 597 1.6 330 1.1
Advertising and promotion 520 1.4 450 1.6
Postage and supplies 478 1.3 342 1.2
Trust preferred securities distributions 362 1.0 - -
Other 840 2.2 803 2.8
- -----------------------------------------------------------------------------------------------------------------------------
Total excluding cost of other
real estate owned 23,047 60.7% 15,720 54.3%
Cost of other real estate owned (1,274) 34
- -----------------------------------------------------------------------------------------------------------------------------
Total noninterest expense $21,773 $15,754
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended June 30,
------------------------------------------------------------------
1998 1997
-------------------------- --------------------------
Percent of Percent of
Adjusted Adjusted
(Dollars in thousands) Amount Revenues Amount Revenues
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Compensation and benefits $24,104 33.3% $18,476 33.9%
Professional services 4,029 5.6 3,131 5.7
Furniture and equipment 3,731 5.2 1,424 2.6
Business development and travel 2,962 4.1 1,986 3.6
Net occupancy expense 2,058 2.8 1,653 3.0
Telephone 1,119 1.5 634 1.2
Advertising and promotion 910 1.3 728 1.3
Postage and supplies 910 1.3 702 1.3
Trust preferred securities distributions 362 0.5 - -
Other 1,741 2.4 1,660 3.0
- -----------------------------------------------------------------------------------------------------------------------------
Total excluding cost of other
real estate owned 41,926 57.9% 30,394 55.8%
Cost of other real estate owned (1,248) 26
- -----------------------------------------------------------------------------------------------------------------------------
Total noninterest expense $40,678 $30,420
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
Compensation and benefits expenses totaled $12.5 million in the second
quarter of 1998, a $3.1 million, or 32.5%, increase over the $9.4 million
incurred in the second quarter of 1997. For the first six months of 1998,
compensation and benefits expenses totaled $24.1 million, an increase of $5.6
million, or 30.5%, compared to $18.5 million for the comparable 1997 period.
The increase in compensation and benefits expenses was largely the result of
an increase in the number of average full-time equivalent (FTE) personnel
employed by the Company. Average FTE were 501 and 488 for the three and six
month periods ended June 30, 1998 versus 402 and 397 for the respective prior
year periods. The increase in FTE was primarily due to a combination of the
Company's efforts to develop and support new markets through geographic
expansion, to develop and expand products, services and niches, and to build
an infrastructure sufficient to support present and prospective business
activities. Further growth in the Company's FTE is likely to occur during
future years as a result of the continued expansion of the Company's business
activities.
During the third and fourth quarters of 1997, the Company granted a total of
209,000 shares of its common stock (restated to reflect a two-for-one stock
split for common shares of record as of April 17, 1998) to numerous
employees, subject to certain vesting requirements and resale restrictions
(restricted stock). For these restricted stock grants, unearned compensation
equivalent to the aggregate $5.9 million market value of the Company's common
stock on the dates of grant was charged to shareholders' equity and will
subsequently be amortized into compensation and benefits expense over the
four-year vesting period.
Professional services expenses, which consist of costs associated with
corporate legal services, litigation settlements, accounting and auditing
services, consulting, and the Company's Board of Directors, totaled $2.6
million and $4.0 million for the three and six month periods ended June 30,
1998, an increase of $0.9 million, or 53.5%, and $0.9 million, or 28.7%,
compared to $1.7 million and $3.1 million in the comparable 1997 periods. The
level of professional services expenses during 1998 and 1997 reflects the
extensive efforts undertaken by the Company to continue to build and support
its infrastructure, as well as evaluate and pursue new business
opportunities, and also reflects the Company's efforts in outsourcing several
corporate functions, such as internal audit, facilities management and credit
review, where the Company believes it can achieve a combination of cost
savings and increased quality of service.
Occupancy, furniture and equipment expenses totaled $3.8 million and $5.8
million for the three and six month periods ended June 30, 1998, an increase
of $2.1 million, or 127.2%, and $2.7 million, or 88.1%, from the $1.7 million
and $3.1 million for the three and six month periods ended June 30, 1997,
respectively. The increase in occupancy, furniture and equipment expenses in
1998 as compared to 1997, was primarily the result of the Company incurring
certain non-recurring costs in connection with the expansion of its existing
headquarters facility during the second quarter of 1998. Occupancy, furniture
and equipment expenses were also impacted by costs related to furniture,
computer equipment and other related costs associated with the Company
opening new loan offices in West Los Angeles, California, and Rosemont,
Illinois, in early 1998. The Company intends to continue its geographic
expansion into other emerging technology market places across the U.S. during
future years.
Business development and travel expenses totaled $1.4 million and $3.0
million for the three and six month periods ended June 30, 1998, an increase
of $0.4 million, or 37.1%, and $1.0 million, or 49.1%, compared to the $1.0
million and $2.0 million totals for the comparable 1997 periods. The increase
in business development and travel expenses was largely attributable to
overall
22
<PAGE>
growth in the Company's business, including both an increase in the number of
FTE and expansion into new geographic markets.
Total telephone expenses were $0.6 million and $1.1 million for the three and
six month periods ended June 30, 1998, and increase of $0.3 million, or
80.9%, and $0.5 million, or 76.5%, compared to the $0.3 million and $0.6
million totals for the comparable 1997 periods. The increase in telephone
expenses in 1998, as compared to the prior year respective periods, was
largely the result of the aforementioned overall growth in the Company's
business, including both an increase in the number of FTE and expansion into
new geographic markets.
The Company incurred $0.4 million in trust preferred securities distributions
in connection with the sale of $40.0 million in cumulative trust preferred
securities during the second quarter of 1998. The trust preferred securities
pay a fixed rate quarterly distribution of 8.25% and have a maximum maturity
of 30 years. The future pre-tax expense associated with the trust preferred
securities distributions will be approximately $0.8 million per quarter. For
further discussion related to the trust preferred securities, see the Item 2
section entitled "Liquidity."
During the second quarter of 1998, the Company realized a net gain of $1.3
million in connection with a sale of an OREO property that consisted of
multiple undeveloped lots.
The Company and the Bank are aware of the "year 2000" issue and the related
potential risks. The Bank has engaged a third party vendor, a recognized
expert in assisting in all phases of year 2000 compliance, as part of a
multiphase project to assist the Bank with addressing the year 2000 issue.
The first two phases of the year 2000 compliance project, systems inventory
and risk assessment, were completed during the second quarter of 1998. The
expense and related impact on the Company's pre-tax earnings of the first two
phases of the year 2000 compliance project was approximately $250,000. Phase
three, renovation, consists of analysis, remediation and unit testing, began
during the second quarter of 1998 and is projected to be completed by the end
of 1998. The expense and related potential impact on the Company's pre-tax
earnings of phase three of the year 2000 compliance project is expected to
approximate $1,250,000. The fourth and final phase, validation and
implementation, is expected to begin in the first quarter of 1999. Management
has not yet assessed the potential financial impact of the last phase of the
project.
Certain lawsuits and claims arising in the ordinary course of business have
been filed or are pending against the Company and/or the Bank. Based upon
information available to the Company, its review of such claims to date and
consultation with its legal counsel, Management believes the liability
relating to these actions, if any, will not have a material adverse effect on
the Company's liquidity, consolidated financial position or results of
operations.
INCOME TAXES
The Company's effective tax rate was 41.6% and 41.5% for the second quarter
and first half of 1998, respectively, compared to 42.0% in both the three and
six month prior year periods. The slight decrease in the Company's effective
income tax rate was attributable to adjustments in the Company's estimate of
its tax liabilities.
23
<PAGE>
FINANCIAL CONDITION
The Company's total assets were $3.1 billion at June 30, 1998, an increase of
$498.0 million, or 19.0%, compared to $2.6 billion at December 31, 1997.
FEDERAL FUNDS SOLD AND SECURITIES PURCHASED UNDER AGREEMENT TO RESELL
Federal funds sold and securities purchased under agreement to resell totaled
a combined $548.2 million at June 30, 1998, an increase of $226.5 million, or
70.4%, compared to the $321.8 million outstanding at the prior year end. This
increase was attributable to the Company investing excess funds, resulting
from the strong growth in deposits during the first half of 1998 having
exceeded the growth in loans, in these types of short-term, liquid
investments.
INVESTMENT SECURITIES
Investment securities totaled $1.1 billion at June 30, 1998, an increase of
$52.6 million, or 5.2%, from the December 31, 1997, balance of $1.0 billion.
This slight increase resulted from excess funds that were generated by strong
growth in the Company's deposits outpacing the growth in loans during the
first half of 1998, and primarily consisted of U.S. agency securities and
commercial paper investments.
LOANS
Total loans, net of unearned income, at June 30, 1998, were $1.4 billion, a
$176.1 million, or 15.0%, increase compared to the roughly $1.2 billion total
at December 31, 1997. The increase in loans from the 1997 year-end total was
widely distributed throughout the loan portfolio. This diversified growth was
evidenced by increased quarter-end loan balances in many of the Company's
market niches, specialized lending products and loan offices.
CREDIT QUALITY AND THE ALLOWANCE FOR LOAN LOSSES
Credit risk is defined as the possibility of sustaining a loss because other
parties to the financial instrument fail to perform in accordance with the
terms of the contract. While the Bank follows underwriting and credit
monitoring procedures which it believes are appropriate in growing and
managing the loan portfolio, in the event of nonperformance by these other
parties, the Bank's potential exposure to credit losses could significantly
affect the Company's consolidated financial position and earnings.
Lending money involves an inherent risk of nonpayment. Through the
administration of loan policies and monitoring of the portfolio, Management
seeks to reduce such risks. The allowance for loan losses is an estimate to
provide a financial buffer for losses, both identified and unidentified, in
the loan portfolio.
Management regularly reviews and monitors the loan portfolio to determine the
risk profile of each credit, and to identify credits whose risk profiles have
changed. This review includes, but is not limited to, such factors as payment
status, the financial condition of the borrower, borrower compliance with
loan covenants, underlying collateral values, potential loan concentrations,
and general economic conditions. Potential problem credits are identified
and, based upon known information, action plans are developed.
24
<PAGE>
The allowance for loan losses totaled $42.3 million at June 30, 1998, an
increase of $4.6 million, or 12.2%, compared to the $37.7 million balance at
December 31, 1997. This increase was due to $9.5 million in additional
provisions to the allowance for loan losses, offset by net charge-offs of
$4.9 million for the first half of 1998. Gross charge-offs for the first half
of 1998 totaled $6.5 million and included a charge-off totaling $3.0 million
related to one commercial credit in the Bank's Diversified Industries
practice.
In general, Management believes the allowance for loan losses is adequate as
of June 30, 1998. However, future changes in circumstances, economic
conditions or other factors could cause Management to increase or decrease
the allowance for loan losses as deemed necessary.
Nonperforming assets consist of loans that are past due 90 days or more but
still accruing interest, loans on nonaccrual status and OREO and other
foreclosed assets. The table below sets forth certain relationships between
nonperforming loans, nonperforming assets and the allowance for loan losses:
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
(Dollars in thousands) (Unaudited) (Unaudited)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Nonperforming assets:
Loans past due 90 days or more $ 1,573 $ 1,016
Nonaccrual loans 29,798 24,476
- -------------------------------------------------------------------------------------------------
Total nonperforming loans 31,371 25,492
OREO and other foreclosed assets 1,858 1,858
- -------------------------------------------------------------------------------------------------
Total nonperforming assets $ 33,229 $ 27,350
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
Nonperforming loans as a percentage of total loans 2.3% 2.2%
OREO and other foreclosed assets as a percentage of total assets 0.1% 0.1%
Nonperforming assets as a percentage of total assets 1.1% 1.0%
Allowance for loan losses: $42,300 $37,700
As a percentage of total loans 3.1% 3.2%
As a percentage of nonaccrual loans 142.0% 154.0%
As a percentage of nonperforming loans 134.8% 147.9%
</TABLE>
Nonperforming loans totaled $31.4 million, or 2.3% of total loans, at June
30, 1998, compared to $25.5 million, or 2.2% of total loans, at December 31,
1997. The increase in nonperforming loans from the prior year end was
primarily due to two credits, each in excess of $3.0 million, being placed on
nonaccrual status during the first six months of 1998.
In addition to the loans disclosed in the foregoing analysis, Management has
identified three loans with principal amounts aggregating approximately $16.5
million, that, on the basis of information known by Management, were judged
to have a higher than normal risk of becoming nonperforming. The Company is
not aware of any other loans where known information about possible problems
of the borrower casts serious doubts about the ability of the borrower to
comply with the loan repayment terms.
OREO and other foreclosed assets totaled a combined $1.9 million at both June
30, 1998, and December 31, 1997. The OREO and other foreclosed assets balance
at June 30, 1998, consisted
25
<PAGE>
of one OREO property and one other asset which was acquired through
foreclosure. The OREO property consists of multiple undeveloped lots and was
acquired by the Company prior to June 1993. The one other asset acquired
through foreclosure, which totaled $1.2 million at June 30, 1998, consists of
a favorable leasehold right under a master lease which the Company acquired
upon foreclosure of a loan during the third quarter of 1997.
DEPOSITS
Total deposits were $2.9 billion at June 30, 1998, an increase of $434.9
million, or 17.9%, from the prior year-end total of $2.4 billion. A
significant portion of the increase in deposits during the first half of 1998
was concentrated in the Company's highest-rate paying deposit product, the
bonus money market deposit product, which increased $388.1 million, or 33.9%,
to a total of $1.5 billion at the end of the June 30, 1998. This increase was
explained by high levels of client liquidity attributable to a strong inflow
of investment capital into the venture capital community, and by growth
during the first half of 1998 in the number of clients served by the Company.
MARKET RISK MANAGEMENT
Interest rate risk is the most significant market risk impacting the Company.
The Company's monitoring activities related to managing interest rate risk
include both interest rate sensitivity "gap" analysis and the use of a
simulation model to measure the impact of market interest rate changes on the
net present value of estimated cash flows from the Company's assets,
liabilities and off-balance sheet items, defined as the Company's market
value of portfolio equity (MVPE). See the Company's 1997 Annual Report on
Form 10-K for disclosure of the quantitative and qualitative information
regarding the interest rate risk inherent in interest rate risk sensitive
instruments as of December 31, 1997. There have been no changes in the
assumptions used by the Company in monitoring interest rate risk, and the
Company is in compliance with all interest rate risk policy guidelines as of
June 30, 1998. Other types of market risk affecting the Company in the normal
course of its business activities include foreign currency exchange risk and
equity price risk. The impact on the Company, resulting from these other two
types of market risks, is deemed immaterial. The Company does not maintain a
portfolio of trading securities and does not intend to engage in such
activities in the immediate future.
LIQUIDITY
The objective of liquidity management is to ensure that funds are available
in a timely manner to meet loan demand and depositors' needs, and to service
other liabilities as they come due, without causing an undue amount of cost
or risk, and without causing a disruption to normal operating conditions.
The Company regularly assesses the amount and likelihood of projected funding
requirements through a review of factors such as historical deposit
volatility and funding patterns, present and forecasted market and economic
conditions, individual client funding needs, and existing and planned Company
business activities. The asset/liability committee of the Bank provides
oversight to the liquidity management process and recommends policy
guidelines, subject to Board of Directors approval, and courses of action to
address the Company's actual and projected liquidity needs.
26
<PAGE>
The ability to attract a stable, low-cost base of deposits is the Company's
primary source of liquidity. Other sources of liquidity available to the
Company include short-term borrowings, which consist of federal funds
purchased, security repurchase agreements and other short-term borrowing
arrangements. The Company's liquidity requirements can also be met through
the use of its portfolio of liquid assets. Liquid assets, as defined, include
cash and cash equivalents in excess of the minimum levels necessary to carry
out normal business operations, federal funds sold, securities purchased
under resale agreements, investment securities maturing within six months,
investment securities eligible and available for pledging purposes with a
maturity in excess of six months, and anticipated near term cash flows from
investments.
Additionally, during the second quarter of 1998 the Company issued $40.0
million in cumulative trust preferred securities through a newly formed
special-purpose trust (SVB Capital I). The securities had an offering price
(liquidation amount) of $25 per security and distributions at a fixed rate of
8.25% will be paid by the Company quarterly. The securities have a maximum
maturity of 30 years. The Company received proceeds of $38.5 million related
to the sale of these securities, net of underwriting commissions and other
offering expenses. The proceeds will be used by the Company for general
corporate purposes, which may include, without limitation, investments in
liquid government and corporate debt securities, and investments in venture
capital funds.
Bank policy guidelines provide that liquid assets as a percentage of total
deposits should not fall below 20.0%. At June 30, 1998, the Bank's ratio of
liquid assets to total deposits was 53.4%. This ratio is well in excess of
the Bank's minimum policy guidelines and is slightly higher than the
comparable ratio of 52.1% as of December 31, 1997. In addition to monitoring
the level of liquid assets relative to total deposits, the Bank also utilizes
other policy measures in its liquidity management activities. As of June 30,
1998, the Bank was in compliance with all of these policy measures.
CAPITAL RESOURCES
Management seeks to maintain adequate capital to support anticipated asset
growth and credit risks, and to ensure that the Company and the Bank are in
compliance with all regulatory capital guidelines. The primary source of new
capital for the Company has been the retention of earnings. Aside from
current earnings, other sources of new capital for the Company have been the
issuance of common stock under the Company's employee benefit plans,
including the Company's stock option plans, defined contribution plans and
employee stock purchase plan.
Additionally, during the second quarter of 1998 the Company issued $40.0
million in cumulative trust preferred securities through a newly formed
special-purpose trust (SVB Capital I), which is a wholly owned subsidiary of
the Company. The trust preferred securities are presented as a separate line
item in the consolidated balance sheet of the Company under the caption
"Company obligated mandatorily redeemable trust preferred securities of
subsidiary trust holding solely junior subordinated debentures." The
securities have a maximum maturity of 30 years and qualify as Tier 1 capital
under the capital guidelines of the Federal Reserve Board.
Shareholders' equity totaled $198.3 million at June 30, 1998, an increase of
$23.8 million, or 13.6%, from the $174.5 million balance at December 31,
1997. This increase resulted from net income of $15.8 million combined with
capital generated primarily through the Company's
27
<PAGE>
employee benefit plans of $8.5 million, slightly offset by a decrease in the
after-tax net unrealized gain on available-for-sale investments of $0.5
million from the prior year end.
The Company and the Bank are subject to capital adequacy guidelines issued by
the Federal Reserve Board. Under these capital guidelines, the minimum total
risk-based capital and Tier 1 risk-based capital ratio requirements are 10.0%
and 6.0%, respectively, of risk-weighted assets and certain off-balance sheet
items for a "well capitalized" depository institution.
The Federal Reserve Board has also established minimum capital leverage ratio
guidelines for state member banks. The ratio is determined using Tier 1
capital divided by quarterly average total assets. The guidelines require a
minimum of 5.0% for a well capitalized depository institution.
The Company's and the Bank's risk-based capital ratios were in excess of
regulatory guidelines for a well capitalized depository institution as of
June 30, 1998, and December 31, 1997. Capital ratios for the Company are set
forth below:
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
(UNAUDITED)
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Total risk-based capital ratio 13.2% 11.5%
Tier 1 risk-based capital ratio 11.9% 10.2%
Tier 1 leverage ratio 8.2% 7.1%
- -------------------------------------------------------------------------------------------
</TABLE>
The improvement in the Company's total risk-based capital ratio and Tier 1
risk-based capital ratio from December 31, 1997, to June 30, 1998, was
attributable to an increase in Tier 1 capital, partially offset by an
increase in total assets. The increase in Tier 1 capital primarily resulted
from the aforementioned net income and the issuance of $40.0 million in trust
preferred securities during the first six months of 1998.
28
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
There were no legal proceedings requiring disclosure pursuant to this item
pending at June 30, 1998, or at the date of this report.
ITEM 2 - CHANGES IN SECURITIES
None.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders was held on April 16, 1998. Each of the
persons named in the Proxy Statement as a nominee for director was elected;
and the appointment of KPMG Peat Marwick LLP as the Company's independent
auditors for 1998 was ratified. The following are the voting results on each
of these matters:
ELECTION OF DIRECTORS IN FAVOR WITHHELD
Gary K. Barr 8,552,794 138,915
James F. Burns, Jr. 8,552,622 139,087
John C. Dean 8,550,305 141,404
David M. deWilde 8,552,794 138,915
Clarence J. Ferrari, Jr., Esq. 8,552,794 138,915
Daniel J. Kelleher 8,453,276 238,433
James R. Porter 8,552,622 139,087
Ann R. Wells 8,460,489 231,220
OTHER MATTERS IN FAVOR OPPOSED ABSTAINED
Ratification of the appointment of
KPMG Peat Marwick LLP as the
Company's independent auditors
for 1998 8,657,406 11,205 23,098
ITEM 5 - OTHER INFORMATION
None.
29
<PAGE>
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
4.2 Form of Subordinated Indenture
4.3 Form of Junior Subordinated Debenture
4.6 Form of Amended and Restated Trust Agreement of SVB Capital I
4.7 Form of Trust Preferred Certificate of SVB Capital I (included as an
exhibit to Exhibit 4.6)
4.8 Form of Guarantee Agreement
4.9 Form of Agreement as to Expenses and Liabilities (included as an
exhibit to Exhibit 4.6)
4.10 Form of Common Securities Certificate of SVB Capital I (included as
an exhibit to Exhibit 4.6)
4.11 Form of Officers' Certificate and Company Order
10.38 Promissory Note between Silicon Valley Bancshares and Christopher T.
Lutes, as of June 10, 1998
10.39 The 1998 Venture Capital Retention Program, Amended June 18, 1998
(b) REPORTS ON FORM 8-K:
No reports on Form 8-K were filed by the Company during the quarter ended
June 30, 1998.
30
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
SILICON VALLEY BANCSHARES
Date: August 13, 1998 /s/ Christopher T. Lutes
-------------------------------
Christopher T. Lutes
Executive Vice President and
Chief Financial Officer
(Principal Accounting Officer)
31
<PAGE>
EXHIBIT 4.2
- -------------------------------------------------------------------------------
SILICON VALLEY BANCSHARES
TO
WILMINGTON TRUST COMPANY
TRUSTEE
-----------------------------------------
JUNIOR SUBORDINATED INDENTURE
DATED AS OF MAY 22, 1998
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION............. 1
Section 1.1. DEFINITIONS..................................................... 1
Section 1.2. COMPLIANCE CERTIFICATE AND OPINIONS............................. 10
Section 1.3. FORMS OF DOCUMENTS DELIVERED TO TRUSTEE......................... 10
Section 1.4. ACTS OF HOLDERS................................................. 11
Section 1.5. NOTICES, ETC. TO TRUSTEE AND COMPANY............................ 13
Section 1.6. NOTICE TO HOLDERS; WAIVER....................................... 13
Section 1.7. CONFLICT WITH TRUST INDENTURE ACT............................... 14
Section 1.8. EFFECT OF HEADINGS AND TABLE OF CONTENTS........................ 14
Section 1.9. SUCCESSORS AND ASSIGNS.......................................... 14
Section 1.10. SEPARABILITY CLAUSE............................................. 14
Section 1.11. BENEFITS OF INDENTURE........................................... 14
Section 1.12. GOVERNING LAW................................................... 14
Section 1.13. NON-BUSINESS DAYS............................................... 14
ARTICLE II SECURITY FORMS...................................................... 15
Section 2.1. FORMS GENERALLY................................................. 15
Section 2.2. FORM OF FACE OF SECURITY........................................ 15
Section 2.3. FORM OF REVERSE OF SECURITY..................................... 19
Section 2.4. ADDITIONAL PROVISIONS REQUIRED IN GLOBAL SECURITY............... 22
Section 2.5. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION................. 22
ARTICLE III THE SECURITIES...................................................... 22
Section 3.1. TITLE AND TERMS................................................. 22
Section 3.2. DENOMINATIONS................................................... 25
Section 3.3. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.................. 25
Section 3.4. TEMPORARY SECURITIES............................................ 26
Section 3.5. REGISTRATION, TRANSFER AND EXCHANGE............................. 27
Section 3.6. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES................ 29
Section 3.7. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.................. 30
Section 3.8. PERSONS DEEMED OWNERS........................................... 31
Section 3.9. CANCELLATION.................................................... 31
Section 3.10. COMPUTATION OF INTEREST......................................... 31
Section 3.11. DEFERRALS OF INTEREST PAYMENT DATES............................. 32
Section 3.12. RIGHT OF SET-OFF................................................ 33
Section 3.13. AGREED TAX TREATMENT............................................ 33
Section 3.14. SHORTENING OF STATED MATURITY................................... 33
i
<PAGE>
Section 3.15. CUSIP NUMBERS................................................... 33
ARTICLE IV SATISFACTION AND DISCHARGE.......................................... 34
Section 4.1. SATISFACTION AND DISCHARGE OF INDENTURE......................... 34
Section 4.2. APPLICATION OF TRUST MONEY...................................... 35
ARTICLE V REMEDIES............................................................ 35
Section 5.1. EVENTS OF DEFAULT............................................... 35
Section 5.2. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.............. 36
Section 5.3. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY TRUSTEE..................................................... 38
Section 5.4. TRUSTEE MAY FILE PROOFS OF CLAIM................................ 38
Section 5.5. TRUSTEE MAY ENFORCE CLAIM WITHOUT POSSESSION OF SECURITIES...... 39
Section 5.6. APPLICATION OF MONEY COLLECTED.................................. 39
Section 5.7. LIMITATION ON SUITS............................................. 40
Section 5.8. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST; DIRECT ACTION BY HOLDERS OF
PREFERRED SECURITIES........................................... 40
Section 5.9. RESTORATION OF RIGHTS AND REMEDIES.............................. 41
Section 5.10. RIGHTS AND REMEDIES CUMULATIVE.................................. 41
Section 5.11. DELAY OR OMISSION NOT WAIVER.................................... 41
Section 5.12. CONTROL BY HOLDERS.............................................. 42
Section 5.13. WAIVER OF PAST DEFAULTS......................................... 42
Section 5.14. UNDERTAKING FOR COSTS........................................... 42
Section 5.15. WAIVER OF USURY, STAY OR EXTENSION LAWS......................... 43
ARTICLE VI THE TRUSTEE......................................................... 43
Section 6.1. CERTAIN DUTIES AND RESPONSIBILITIES............................. 43
Section 6.2. NOTICE OF DEFAULTS.............................................. 44
Section 6.3. CERTAIN RIGHTS OF TRUSTEE....................................... 45
Section 6.4. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.......... 46
Section 6.5. MAY HOLD SECURITIES............................................. 46
Section 6.6. MONEY HELD IN TRUST............................................. 46
Section 6.7. COMPENSATION AND REIMBURSEMENT.................................. 46
Section 6.8. DISQUALIFICATION; CONFLICTING INTERESTS......................... 47
Section 6.9. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY......................... 47
Section 6.10. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR............... 48
Section 6.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.......................... 49
Section 6.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS..... 50
Section 6.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY............... 50
Section 6.14. APPOINTMENT OF AUTHENTICATING AGENT............................. 51
ARTICLE VII HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY................... 52
Section 7.1. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS....... 52
Section 7.2. PRESERVATION OF INFORMATION, COMMUNICATIONS TO HOLDERS.......... 53
ii
<PAGE>
Section 7.3. REPORTS BY TRUSTEE.............................................. 53
Section 7.4. REPORTS BY COMPANY.............................................. 53
ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE................ 54
Section 8.1. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS............ 54
Section 8.2. SUCCESSOR CORPORATION SUBSTITUTED............................... 54
ARTICLE IX SUPPLEMENTAL INDENTURES............................................. 55
Section 9.1. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.............. 55
Section 9.2. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS................. 56
Section 9.3. EXECUTION OF SUPPLEMENTAL INDENTURES............................ 58
Section 9.4. EFFECT OF SUPPLEMENTAL INDENTURES............................... 58
Section 9.5. CONFORMITY WITH TRUST INDENTURE ACT............................. 58
Section 9.6. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.............. 58
ARTICLE X COVENANTS........................................................... 59
Section 10.1. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST...................... 59
Section 10.2. MAINTENANCE OF OFFICE OR AGENCY................................. 59
Section 10.3. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST................. 59
Section 10.4. STATEMENT AS TO COMPLIANCE...................................... 61
Section 10.5. WAIVER OF CERTAIN COVENANTS..................................... 61
Section 10.6. ADDITIONAL SUMS................................................. 61
Section 10.7. ADDITIONAL COVENANTS............................................ 62
ARTICLE XI REDEMPTION OF SECURITIES............................................ 63
Section 11.1. APPLICABILITY OF THIS ARTICLE................................... 63
Section 11.2. ELECTION TO REDEEM; NOTICE TO TRUSTEE........................... 63
Section 11.3. SELECTION OF SECURITIES TO BE REDEEMED.......................... 63
Section 11.4. NOTICE OF REDEMPTION............................................ 64
Section 11.5. DEPOSIT OF REDEMPTION PRICE..................................... 64
Section 11.6. PAYMENT OF SECURITIES CALLED FOR REDEMPTION..................... 65
Section 11.7. RIGHT OF REDEMPTION OF SECURITIES INITIALLY ISSUED TO A
SVB TRUST...................................................... 65
ARTICLE XII SINKING FUNDS....................................................... 66
Section 12.1. APPLICABILITY OF ARTICLE........................................ 66
Section 12.2. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES........... 66
Section 12.3. REDEMPTION OF SECURITIES FOR SINKING FUND....................... 66
ARTICLE XIII SUBORDINATION OF SECURITIES......................................... 68
Section 13.1. SECURITIES SUBORDINATE TO SENIOR AND SUBORDINATED DEBT.......... 68
Section 13.2. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.................. 68
Section 13.3. PRIOR PAYMENT TO SENIOR AND SUBORDINATED DEBT UPON
ACCELERATION OF SECURITIES..................................... 69
iii
<PAGE>
Section 13.4. NO PAYMENT WHEN SENIOR AND SUBORDINATED DEBT IN DEFAULT......... 70
Section 13.5. PAYMENT PERMITTED IF NO DEFAULT................................. 71
Section 13.6. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR AND
SUBORDINATED DEBT.............................................. 71
Section 13.7. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS..................... 71
Section 13.8. TRUSTEE TO EFFECTUATE SUBORDINATION............................. 72
Section 13.9. NO WAIVER OF SUBORDINATION PROVISIONS........................... 72
Section 13.10. NOTICE TO TRUSTEE............................................... 72
Section 13.11. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
LIQUIDATING AGENT.............................................. 73
Section 13.12. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR AND
SUBORDINATED DEBT.............................................. 73
Section 13.13. RIGHTS OF TRUSTEE AS HOLDER OF SENIOR AND SUBORDINATED
DEBT; PRESERVATION OF TRUSTEE'S RIGHTS......................... 74
Section 13.14. ARTICLE APPLICABLE TO PAYING AGENTS............................. 74
Section 13.15. CERTAIN CONVERSIONS OR EXCHANGES DEEMED PAYMENT................. 74
</TABLE>
iv
<PAGE>
SILICON VALLEY BANCSHARES
Reconciliation and tie between the Trust Indenture Act of 1939
(including cross-references to provisions of Sections 310 to and including
317 which, pursuant to Section 318(c) of the Trust Indenture Act of 1939, as
amended by the Trust Reform Act of 1990, are a part of and govern the
Indenture whether or not physically contained therein) and the Junior
Subordinated Indenture, dated as of May 22, 1998.
<TABLE>
<CAPTION>
TRUST INDENTURE
ACT SECTION SECTION INDENTURE
- --------------- ------- ---------
<S> <C> <C>
SECTION 310 (a) (1), (2) and (5)........................... Not Applicable
(a) (3)........................................ Not Applicable
(a) (4)........................................ Not Applicable
(b)............................................ 6.8
............................................... 6.10
(c)............................................ Not Applicable
SECTION 311 (a)............................................ 6.13(a)
(b)............................................ 6.13(b b) (2)
............................................... 7.3(a) (2)
............................................... 7.3(a) (2)
SECTION 312 (a)............................................ 7.1
............................................... 7.2(a)
(b)............................................ 7.2(b)
(c)............................................ 7.2(c)
SECTION 313 (a)............................................ 7.3(a)
(b)............................................ 7.3(b)
(c)............................................ 7.3(a), 7.3(b)
(d)............................................ 7.3(c)
SECTION 314 (a) (1), (2) and (3)........................... 7.4
(a) (4)........................................ 10.5
(b)............................................ Not Applicable
(c) (1)........................................ 1.2
(c) (2)........................................ 1.2
(c) (3)........................................ Not Applicable
(d)............................................ Not Applicable
(e)............................................ 1.2
(f)............................................ Not Applicable
SECTION 315 (a)............................................ 6.1(a)
(b)............................................ 6.2
<PAGE>
<CAPTION>
TRUST INDENTURE
ACT SECTION SECTION INDENTURE
- --------------- ------- ---------
<S> <C> <C>
............................................... 7.3(a) (6)
(c)............................................ 6.1(b)
(d)............................................ 6.1 (c)
(d) (1)........................................ 6.1(a) (1)
(d) (2)........................................ 6.1(c) (2)
(d) (3)........................................ 6.1(c) (3)
(e)............................................ 5.14
SECTION 316 (a)............................................ 1.1
(a) (1) (A).................................... 5.12
(a) (1) (B).................................... 5.13
(a) (2)........................................ Not Applicable
(b)............................................ 5.8
(c)............................................ 1.4(f)
SECTION 317 (a) (1)........................................ 5.3
(a) (2)........................................ 5.4
(b)............................................ 10.3
SECTION 318 (a)............................................ 1.7
</TABLE>
- ----------
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Junior Subordinated Indenture.
JUNIOR SUBORDINATED INDENTURE, dated as of May 22, 1998, between SILICON
VALLEY BANCSHARES, a California corporation (hereinafter called the
"Company") having its principal office at 3003 Tasman Drive, Santa Clara,
California 95054, and WILMINGTON TRUST COMPANY, a Delaware banking
corporation, as Trustee (hereinafter called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
junior subordinated debt securities in series (hereinafter called the
"Securities") of substantially the tenor hereinafter provided, including,
without limitation, Securities issued to evidence loans made to the Company
of the proceeds from the issuance from time to time by one or more business
trusts (each a "SVB Trust," and, collectively, the "SVB Trusts") of preferred
trust interests in such Trusts (the Preferred Securities") and common
interests in such Trusts (the "Common Securities" and, collectively with the
Preferred Securities, the Trust Securities), and to provide the terms and
conditions upon which the Securities are to be authenticated, issued and
delivered.
All things necessary to make the Securities, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company the valid obligations of
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the Company, and to make this Indenture a valid agreement of the Company, in
accordance with their and its terms, have been done.
NOW THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of
the premises and the purchase of the Securities by the Holders thereof, it is
mutually covenanted and agreed, for the equal and proportionate benefit of
all Holders of the Securities or of any series thereof, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section I.1. DEFINITIONS.
For all purposes of this Indenture, 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 which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) All accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and the term "generally accepted accounting principles" with respect to any
computation required or permitted hereunder shall mean such accounting
principles which are generally accepted at the date or time of such
computation; provided, that when two or more principles are so generally
accepted, it shall mean that set of principles consistent with those in use
by the Company; and
(d) The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"1940 ACT" means the Investment Company Act of 1940, as amended.
"ACT" when used with respect to any Holder has the meaning specified in
Section 1.4.
"ADDITIONAL INTEREST" means the interest, if any, that shall accrue on
any interest on the Securities of any series the payment of which has not
been made on the applicable Interest Payment Date and which shall accrue at
the rate per annum specified or determined as specified in such Security.
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"ADDITIONAL SUMS" has the meaning specified in Section 10.6.
"ADDITIONAL TAXES" means the sum of any additional taxes, duties and
other governmental charges to which a SVB Trust has become subject from time
to time as a result of a Tax Event.
"ADMINISTRATIVE TRUSTEE" means, in respect of any SVB Trust, each Person
identified as an "Administrative Trustee" or an "Administrative Agent" in the
related Amended and Restated Trust Agreement, solely in such Person's
capacity as Administrative Trustee or an Administrative Agent, as the case
may be, of such SVB Trust under such Amended and Restated Trust Agreement and
not in such Person's individual capacity, or any successor administrative
trustee or successor administrative agent, as the case may be, appointed as
therein provided.
"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; PROVIDED, HOWEVER, no SVB Trust to which
Securities have been issued shall be deemed to be an Affiliate of the
Company. 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.
"ALLOCABLE AMOUNTS," when used with respect to any Senior and
Subordinated Debt, means all amounts due or to become due on such Senior and
Subordinated Debt less, if applicable, any amount which would have been paid
to, and retained by, the holders of such Senior and Subordinated Debt
(whether as a result of the receipt of payments by the holders of such Senior
and Subordinated Debt from the Company or any other obligor thereon or from
any holders of, or trustee in respect of, other indebtedness that is
subordinate and junior in right of payment to such Senior and Subordinated
Debt pursuant to any provision of such indebtedness for the payment over of
amounts received on account of such indebtedness to the holders of such
Senior and Subordinated Debt or otherwise) but for the fact that such Senior
and Subordinated Debt is subordinate or junior in right of payment to (or
subject to a requirement that amounts received on such Senior and
Subordinated Debt be paid over to obligees on) trade accounts payable or
accrued liabilities arising in the ordinary course of business.
"AUTHENTICATING AGENT" means any Person authorized by the Trustee
pursuant to Section 6.14 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"BOARD OF DIRECTORS" means either the board of directors of the Company
or any committee of that board duly authorized to act hereunder.
"BOARD RESOLUTION" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors, or such committee of the Board of Directors or
officers of the Company to which authority to act on
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behalf of the Board of Directors has been delegated, and to be in full force
and effect on the date of such certification, and delivered to the Trustee.
"BUSINESS DAY" means any day other than (i) a Saturday or Sunday, (ii) a
day on which banking institutions in the State of California are authorized
or required by law or executive order to remain closed or (iii) a day on
which the Corporate Trust Office of the Trustee, or, with respect to the
Securities of a series initially issued to a SVB Trust, the principal office
of the Property Trustee under the related Trust Agreement, is closed for
business.
"CAPITAL TREATMENT EVENT" means the reasonable determination by the
Company that, as a result of any amendment to, or change (including any
prospective change) in, the laws (or any regulations thereunder) of the
United States or any political subdivision thereof or therein, or as a result
of any official or administrative pronouncement or action or judicial
decision interpreting or applying such laws or regulations, which amendment
or change is effective or such prospective change, pronouncement or decision
is announced on or after the original issuance of the Preferred Securities of
such SVB Trust, there is more than an insubstantial risk that the Company
will not be entitled to treat the Preferred Securities (or any substantial
portion thereof) as "Tier I Capital" (or the then equivalent thereof) for
purposes of the capital adequacy guidelines of the primary federal regulator
of the Company, as then in effect and applicable to the Company.
"COMMISSION" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act, or if at any time after
the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties on such date.
"COMMON SECURITIES" has the meaning specified in the first recital of
this Indenture.
"COMMON STOCK" means the common stock, no par value, of the Company.
"COMPANY" means the Person named as the "Company" in the first paragraph
of this instrument until a successor corporation shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
"COMPANY REQUEST" and "COMPANY ORDER" mean, respectively, the written
request or order signed in the name of the Company by the Chairman of the
Board of Directors, the Vice Chairman of the Board of Directors, its Chief
Executive Officer, its President or a Vice President, and by its Chief
Financial Officer, its Secretary or an Assistant Secretary of the Company,
and delivered to the Trustee.
"CORPORATE TRUST OFFICE" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be
administered.
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"CORPORATION" includes a corporation, association, company, joint-stock
company or business trust.
"DEBT" means, with respect to any Person, whether recourse is to all or
a portion of the assets of such Person and whether or not contingent, (i)
every obligation of such Person for money borrowed; (ii) every obligation of
such Person 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 such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person; (iv)
every obligation of such Person issued or assumed as the deferred purchase
price of property or services (but excluding trade accounts payable or
accrued liabilities arising in the ordinary course of business); (v) every
capital lease obligation of such Person; (vi) all indebtedness of such Person
whether incurred on or prior to the date of this Indenture or thereafter
incurred, for claims in respect of derivative products, including interest
rate, foreign exchange rate and commodity forward contracts, options and
swaps and similar arrangements; and (vii) every obligation of the type
referred to in clauses (i) through (vi) of another Person and all dividends
of another Person the payment of which, in either case, such Person has
guaranteed or is responsible or liable for, directly or indirectly, as
obligor or otherwise.
"DEFAULTED INTEREST" has the meaning specified in Section 3.7.
"DEPOSITARY" means, with respect to the Securities of any series
issuable or issued in whole or in part in the form of one or more Global
Securities, the Person designated as Depositary by the Company pursuant to
Section 3.1 with respect to such series (or any successor thereto).
"DISCOUNT SECURITY" means any security which provides for an amount less
than the principal amount thereof to be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 5.2.
"DISTRIBUTIONS," with respect to the Trust Securities issued by a SVB
Trust, means amounts payable in respect of such Trust Securities as provided
in the related Trust Agreement and referred to therein as "Distributions."
"DOLLAR" or "U.S. $" means the currency of the United States of America
that, as at the time of payment, is legal tender for the payment of public
and private debts.
"EVENT OF DEFAULT" has the meaning specified in Article V unless
otherwise specified in the supplemental indenture or the Officers'
Certificate delivered pursuant to Section 3.1 hereof creating a series of
Securities.
"EXCHANGE ACT" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
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"EXTENSION PERIOD" has the meaning specified in Section 3.11.
"GLOBAL SECURITY" means a Security in the form prescribed in Section 2.4
evidencing all or part of a series of Securities, issued to the Depositary or
its nominee for such series, and registered in the name of such Depositary or
its nominee.
"SVB GUARANTEE" means the guarantee by the Company of distributions on
the Preferred Securities of a SVB Trust to the extent provided in the related
Guarantee Agreement.
"SVB TRUST" has the meaning specified in the first recital of this
Indenture.
"GUARANTEE AGREEMENT" means the Guarantee Agreement substantially in the
form attached hereto as Annex C, or substantially in such form as may be
specified as contemplated by Section 3.1 with respect to the Securities of
any series, in each case as amended from time to time.
"HOLDER" means a Person in whose name a Security is registered in the
Securities Register.
"INDENTURE" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
or one or more Officers' Certificates delivered pursuant to Section 3.1 and
shall include the terms of each particular series of Securities established
as contemplated by Section 3.1.
"INTEREST PAYMENT DATE" means as to each series of Securities the Stated
Maturity of an installment of interest on such Securities.
"INVESTMENT COMPANY EVENT" means, in respect of a SVB Trust, the receipt
by the Company and an SVB Trust of an Opinion of Counsel, rendered by a law
firm experienced in such matters, to the effect that, as a result of change
in law or regulation or a written 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 such SVB
Trust is or will be considered an "investment company" that is required to be
registered under the 1940 Act, which change becomes effective on or after the
date of original issuance of the Preferred Securities of such SVB Trust.
"JUNIOR SUBORDINATED PAYMENT" has the meaning specified in Section 13.2.
"MATURITY" when used with respect to any Security means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
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"NOTICE OF DEFAULT" means a written notice of the kind specified in
Section 5.1(c).
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman of
the Board of Directors, a Vice Chairman of the Board of Directors, the Chief
Executive Officer, the President or a Vice President, and by the Chief
Financial Officer, the Secretary or an Assistant Secretary of the Company,
and delivered to the Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel, who may be
counsel for the Company, but not an employee thereof, and who shall be
reasonably acceptable to the Trustee.
"ORIGINAL ISSUE DATE" means the date of issuance specified as such in
each Security.
"OUTSTANDING" means, when used in reference to any Securities, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent in
trust for the Holders of such Securities; PROVIDED that, if such Securities
are to be redeemed, notice of such redemption has been duly given pursuant to
this Indenture; and
(iii) Securities in substitution for or in lieu of which other
Securities have been authenticated and delivered or which have been paid
pursuant to Section 3.6, unless proof satisfactory to the Trustee is
presented that any such Securities are held by Holders in whose hands such
Securities are valid, binding and legal obligations of the Company; PROVIDED,
HOWEVER, that in determining whether the Holders of the requisite principal
amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities
owned by the Company or any other obligor upon the Securities or, unless all
the Securities of a series shall then be held by an Affiliate of the Company,
any Affiliate of the Company or such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which the Trustee knows
to be so owned shall be so disregarded. Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or
any other obligor upon the Securities or any Affiliate of the Company or such
other obligor. Upon the written request of the Trustee, the Company shall
furnish to the Trustee promptly an Officers' Certificate listing and
identifying all Securities, if any, known by the Company to be owned or held
by or for the account of the Company, or any other obligor on the Securities
or any Affiliate of the Company or such obligor, and, subject to
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the provisions of Section 6.1, the Trustee shall be entitled to accept such
Officers' Certificate as conclusive evidence of the facts therein set forth
and of the fact that all Securities not listed therein are Outstanding for
the purpose of any such determination.
"PAYING AGENT" means the Trustee or any Person authorized by the Company
to pay the principal of or interest on any Securities on behalf of the
Company.
"PERSON" means any individual, corporation, partnership, joint venture,
trust, limited liability company or corporation, unincorporated organization
or government or any agency or political subdivision thereof.
"PLACE OF PAYMENT" means, with respect to the Securities of any series,
the place or places where the principal of (and premium, if any) and interest
on the Securities of such series are payable pursuant to Sections 3.1 and
3.11.
"PREDECESSOR SECURITY" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by
such particular Security; and, for the purposes of this definition, any
security authenticated and delivered under Section 3.6 in lieu of a lost,
destroyed or stolen Security shall be deemed to evidence the same debt as the
lost, destroyed or stolen Security.
"PREFERRED SECURITIES" has the meaning specified in the first recital of
this Indenture.
"PROCEEDING" has the meaning specified in Section 13.2.
"PROPERTY TRUSTEE" means, in respect of any SVB Trust, the commercial
bank or trust company identified as the "Property Trustee" in the related
Trust Agreement, solely in its capacity as Property Trustee of such SVB Trust
under such Trust Agreement and not in its individual capacity, or its
successor in interest in such capacity, or any successor property trustee
appointed as therein provided.
"REDEMPTION DATE," when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"REDEMPTION PRICE," when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"REGULAR RECORD DATE" for the interest payable on any Interest Payment
Date with respect to the Securities of a series means, unless otherwise
provided pursuant to Section 3.1 with respect to Securities of a series, (i)
in the case of Securities of a series represented by one or more Global
Securities, the Business Day next preceding such Interest Payment Date and
(ii) in the case of Securities of a series not represented by one or more
Global Securities, the date which is fifteen days next preceding such
Interest Payment Date (whether or not a Business Day).
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"RESPONSIBLE OFFICER" when used with respect to the Trustee means any
officer of the Trustee assigned by the Trustee from time to time to
administer its corporate trust matters.
"SECURITIES" or "SECURITY" means any debt securities or debt security,
as the case may be, authenticated and delivered under this Indenture.
"SECURITIES REGISTER" and "SECURITIES REGISTRAR" have the respective
meanings specified in Section 3.5.
"SENIOR AND SUBORDINATED DEBT" means the principal of (and premium, if
any) and interest, if any (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to the Company
whether or not such claim for post-petition interest is allowed in such
proceeding), on Debt of the Company, whether incurred on or prior to the date
of this Indenture or thereafter incurred, unless, in the instrument creating
or evidencing the same or pursuant to which the same is outstanding, it is
provided that such obligations are not superior in right of payment to the
Securities, or to other Debt which is PARI PASSU with, or subordinated to the
Securities, PROVIDED, HOWEVER, that Senior and Subordinated Debt shall not be
deemed to include (a) any Debt of the Company which, when incurred and
without respect to any election under Section 1111(b) of the Bankruptcy
Reform Act of 1978, as amended, was without recourse to the Company, (b) any
Debt of the Company to any of its Subsidiaries, (c) Debt to any employee of
the Company, and (d) any Securities.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.7.
"STATED MATURITY" when used with respect to any Security or any
installment of principal thereof or interest thereon means the date specified
pursuant to the terms of such Security as the date on which the principal of
such Security or such installment of interest is due and payable, in the case
of such principal, as such date may be shortened or extended as provided
pursuant to the terms of such Security and this Indenture.
"SUBSIDIARY" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For purposes of this definition, "voting stock" means stock
which ordinarily has voting power for the election of directors, whether at
all times or only so long as no senior class of stock has such voting power
by reason of any contingency.
"TAX EVENT" means the receipt by the Company and the SVB Trust of an
Opinion of Counsel (as defined in the relevant SVB Trust Agreement)
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
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subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such prospective change, pronouncement or decision is announced on or after
the original issuance of the Preferred Securities of such SVB Trust, there is
more than an insubstantial risk that (i) such SVB Trust is, or will be within
90 days of the date of such Opinion of Counsel, subject to United States
Federal income tax with respect to income received or accrued on the
corresponding series of Securities, (ii) interest payable by the Company on
such corresponding series of Securities is not, or within 90 days of the date
of such Opinion of Counsel will not be, deductible by the Company, in whole
or in part, for United States Federal income tax purposes or (iii) such SVB
Trust is, or will be within 90 days of the date of such Opinion of Counsel,
subject to more than a DE MINIMIS amount of other taxes, duties or other
governmental charges.
"TRUST" has the meaning specified in the first recital of this Indenture.
"TRUST AGREEMENT" means the Trust Agreement substantially in the form
attached hereto as Annex A, as amended by the form of Amended and Restated
Trust Agreement substantially in the form attached hereto as Annex B, or
substantially in such form as may be specified as contemplated by Section 3.1
with respect to the Securities of any series, in each case as amended from
time to time.
"TRUSTEE" means the Person named as the "Trustee" in the first paragraph
of this instrument until a successor Trustee shall have become such pursuant
to the applicable provisions of this Indenture, and thereafter "Trustee"
shall mean or include each Person who is then a Trustee hereunder and, if at
any time there is more than one such Person, "Trustee" as used with respect
to the Securities of any series shall mean the Trustee with respect to
Securities of that series.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 (15 U.S.C.
SECTIONS 77aaa-77bbb), as amended and as in effect on the date as of this
Indenture, except as provided in Section 9.5.
"TRUST SECURITIES" has the meaning specified in the first recital of
this Indenture.
"VICE PRESIDENT" when used with respect to the Company, means any duly
appointed vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
Section I.2. COMPLIANCE CERTIFICATE AND OPINIONS.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish
to the Trustee an Officers' Certificate stating that all conditions precedent
(including covenants, compliance with which constitutes a
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condition precedent), if any, provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent (including
covenants compliance with which constitute a condition precedent), if any,
have been complied with, except that in the case of any such application or
request as to which the furnishing of such documents is specifically required
by any provision of this Indenture relating to such particular application or
request, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than the certificates
provided pursuant to Section 10.4) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
Section I.3. FORMS OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or
representations with respect to matters upon which his certificate or opinion
is based are erroneous. Any such certificate or Opinion of Counsel may be
based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company
stating that the information with respect to such factual matters is in the
possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
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Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions, or
other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.
Section I.4. ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given to or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent
or proxy duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments is or are delivered to the Trustee, and, where it is hereby
expressly required, to the Company. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Holders signing such instrument or instruments. Proof
of execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Section
6.1) conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a Person acting in other than
his individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority.
(c) The fact and date of the execution by any Person of any such
instrument or writing, or the authority of the Person executing the same, may
also be proved in any other manner which the Trustee deems sufficient and in
accordance with such reasonable rules as the Trustee may determine.
(d) The ownership of Securities shall be proved by the Securities
Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
(f) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
give, make or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Indenture to be
given, made or taken by Holders of Securities of such series, PROVIDED that
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the Company may not set a record date for, and the provisions of this
paragraph shall not apply with respect to, the giving or making of any
notice, declaration, request or direction referred to in the next paragraph.
If any record date is set pursuant to this paragraph, the Holders of
Outstanding Securities of the relevant series on such record date, and no
other Holders, shall be entitled to take the relevant action, whether or not
such Holders remain Holders after such record date, PROVIDED that no such
action shall be effective hereunder unless taken on or prior to the
applicable Expiration Date (as defined below) by Holders of the requisite
principal amount of Outstanding Securities of such series on such record
date. Nothing in this paragraph shall be construed to prevent the Company
from setting a new record date for any action for which a record date has
previously been set pursuant to this paragraph (whereupon the record date
previously set shall automatically and with no action by any Person be
canceled and of no effect), and nothing in this paragraph shall be construed
to render ineffective any action taken by Holders of the requisite principal
amount of Outstanding Securities of the relevant series on the date such
action is taken. Promptly after any record date is set pursuant to this
paragraph, the Company, at its own expense, shall cause notice of such record
date, the proposed action by Holders and the applicable Expiration Date to be
given to the Trustee in writing and to each Holder of Securities of the
relevant series in the manner set forth in Section 1.6.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
join in the giving or making of (i) any Notice of Default, (ii) any
declaration of acceleration referred to in Section 5.2, (iii) any request to
institute proceedings referred to in Section 5.7(b) or (iv) any direction
referred to in Section 5.12, in each case with respect to Securities of such
series. If any record date is set pursuant to this paragraph, the Holders of
Outstanding Securities of such series on such record date, and no other
Holders, shall be entitled to join in such notice, declaration, request or
direction, whether or not such Holders remain Holders after such record date,
PROVIDED that no such action shall be effective hereunder unless taken on or
prior to the applicable Expiration Date by Holders of the requisite principal
amount of Outstanding Securities of such series on such record date. Nothing
in this paragraph shall be construed to prevent the Trustee from setting a
new record date for any action for which a record date has previously been
set pursuant to this paragraph (whereupon the record date previously set
shall automatically and with no action by any Person be canceled and of no
effect), and nothing in this paragraph shall be construed to render
ineffective any action taken by Holders of the requisite principal amount of
Outstanding Securities of the relevant series on the date such action is
taken. Promptly after any record date is set pursuant to this paragraph, the
Trustee, at the Company's expense, shall cause notice of such record date,
the proposed action by Holders and the applicable Expiration Date to be given
to the Company in writing and to each Holder of Securities of the relevant
series in the manner set forth in Section 1.6.
With respect to any record date set pursuant to this Section, the party
hereto which sets such record dates may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day, PROVIDED that no such change shall be effective unless notice of
the proposed new Expiration Date is given to the other party hereto in
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writing, and to each Holder of Securities of the relevant series in the
manner set forth in Section 10.6, on or prior to the existing Expiration
Date. If an Expiration Date is not designated with respect to any record date
set pursuant to this Section, the party hereto which set such record date
shall be deemed to have initially designated the 180th day after such record
date as the Expiration Date with respect thereto, subject to its right to
change the Expiration Date as provided in this paragraph. Notwithstanding the
foregoing, no Expiration Date shall be later than the 180th day after the
applicable record date.
(g) Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one
or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such principal amount.
Section I.5. NOTICES, ETC. TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture
to be made upon, given or furnished to, or filed with,
(a) the Trustee by any Holder, any holder of Preferred Securities or
the Company shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Trustee at its Corporate Trust
Office, or
(b) the Company by the Trustee, any Holder or any holder of Preferred
Securities shall be sufficient for every purpose (except as otherwise
provided in Section 5.1) hereunder if in writing and mailed, first class,
postage prepaid, to the Company, addressed to it at the address of its
principal office specified in the first paragraph of this instrument or at
any other address previously furnished in writing to the Trustee by the
Company.
Section I.6. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first class postage prepaid, to each
Holder affected by such event, at the address of such Holder as it appears in
the Securities Register, not later than the latest date, and not earlier than
the earliest date, prescribed for the giving of such notice. In any case
where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder
shall affect the sufficiency of such notice with respect to other Holders.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
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Section I.7. CONFLICT WITH TRUST INDENTURE ACT.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by any of Sections 310 to 317, inclusive, of the Trust
Indenture Act through operation of Section 318(c) thereof, such imposed
duties shall control.
Section I.8. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section I.9. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
Section I.10. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section I.11. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
and assigns, the Holders of Senior and Subordinated Debt, the Holders of the
Securities and, to the extent expressly provided in Sections 5.2, 5.8, 5.9,
5.11, 5.13, 9.1 and 9.2, the holders of Preferred Securities, any benefit or
any legal or equitable right, remedy or claim under this Indenture.
Section I.12. GOVERNING LAW.
This Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of California without regard to
conflicts of laws principles thereof, except that the immunities and standard
of care of the Trustee shall be governed by Delaware law.
Section I.13. NON-BUSINESS DAYS.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day, then (notwithstanding
any other provision of this Indenture or the Securities) payment of interest
or principal (and premium, if any) need not be made on such date, but may be
made on the next succeeding Business Day (and no interest shall accrue
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for the period from and after such Interest Payment Date, Redemption Date or
Stated Maturity, as the case may be, until such next succeeding Business Day)
with the same force and effect as if made on the Interest Payment Date or
Redemption Date or at the Stated Maturity.
ARTICLE II
SECURITY FORMS
Section II.1. FORMS GENERALLY.
The Securities of each series shall be in substantially the forms set
forth in this Article, or in such other form or forms as shall be established
by or pursuant to a Board Resolution or in one or more indentures
supplemental hereto, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with applicable tax laws or the rules of any securities
exchange or as may, consistently herewith, be determined by the officers
executing such securities, as evidenced by their execution of the Securities.
If the form of Securities of any series is established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Company Order contemplated by Section 3.3 with respect to the authentication
and delivery of such Securities.
The Trustee's certificates of authentication shall be substantially in
the form set forth in this Article.
The definitive Securities shall be printed, lithographed or engraved or
produced by any combination of these methods, if required by any securities
exchange on which the Securities may be listed, on a steel engraved border or
steel engraved borders or may be produced in any other manner permitted by
the rules of any securities exchange on which the Securities may be listed,
all as determined by the officers executing such Securities, as evidenced by
their execution of such securities.
Section II.2. FORM OF FACE OF SECURITY.
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SILICON VALLEY BANCSHARES
__% JUNIOR SUBORDINATED DEBENTURE DUE ___________
Registered Principal Amount:
No. CUSIP No.:
SILICON VALLEY BANCSHARES, a corporation organized and existing under
the laws of California (hereinafter called the "Company", which term includes
any successor corporation under the Indenture hereinafter referred to), for
value received, hereby promises to pay to __________, or registered assigns,
the principal sum of $_______ Dollars on ________; provided that the Company
may shorten the Stated Maturity of the principal of this Security to a date
not earlier than ________. The Company further promises to pay interest on
said principal sum from ________ or from the most recent interest payment
date (each such date, an "Interest Payment Date") on which interest has been
paid or duly provided for, quarterly (subject to deferral as set forth
herein) in arrears on the _____ day of _____, _____, _____ and _____ of each
year commencing ________ at the rate of ____% per annum, until the principal
hereof shall have become due and payable, plus Additional Interest, if any,
until the principal hereof is paid or duly provided for or made available for
payment and on any overdue principal and (without duplication and to the
extent that payment of such interest is enforceable under applicable law) on
any overdue installment of interest at the rate of ____% per annum,
compounded quarterly. The amount of interest payable for any period shall be
computed on the basis of twelve 30-day months and a 360-day year. The amount
of interest payable for any partial period shall be computed on the basis of
the number of days elapsed in a 360-day year of twelve 30-day months. In the
event that any date on which interest is payable on this Security is not a
Business Day, then a payment of the interest payable on such date will be
made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), with the same force
and effect as if made on the date the payment was originally payable. A
"Business Day" shall mean any day other than a Saturday or Sunday a day on
which banking institutions in the State of California are authorized or
required by law or executive order to remain closed or on a day on which the
Corporate Trust Office of the Trustee, or the principal office of the
Property Trustee under the Amended and Restated Trust Agreement (hereinafter
referred to) for [NAME OF TRUST] is closed for business. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest installment, which shall be [INSERT RECORD DATE] next preceding
such Interest Payment Date. Any such interest installment not so punctually
paid or duly provided for shall forthwith cease to be payable to the Holder
on such Regular Record Date and may either be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at
the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given
to Holders of Securities of this series not less than ____
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days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities of this series may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in
said Indenture.
[IF APPLICABLE INSERT--So long as no Event of Default has occurred and is
continuing, the Company shall have the right at any time during the term of
this Security to defer payment of interest on this Security, at any time or
from time to time, for up to 20 consecutive quarterly interest payment periods
with respect to each deferral period (each an "EXTENSION PERIOD"), (during
which Extension Periods the Company shall have the right to make partial
payments of interest on any Interest Payment Date, and at the end of which
the Company shall pay all interest then accrued and unpaid (together with
Additional Interest thereon to the extent permitted by applicable law));
PROVIDED, HOWEVER, that no Extension Period shall extend beyond the Stated
Maturity of the principal of this Security; PROVIDED, FURTHER, that during
any such Extension Period, the Company shall not, and shall not permit any
Subsidiary of the Company to, (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 (which includes common and preferred stock),
or (ii) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt security of the Company (including
Securities issued by the Company pursuant to the Indenture other than the
Securities represented by this certificate) that ranks PARI PASSU with or
junior in interest to this Security, (iii) make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any
Subsidiaries of the Company (if such guarantee ranks PARI PASSU in all respects
with or junior in interest to this Security) (other than (a) dividends or
distributions in capital stock of the Company (which includes common and
preferred stock), (b) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of stock under
any such plan in the future or the redemption or repurchase of any such rights
pursuant thereto, (c) payments under the SVB Guarantee related to the Preferred
Securities issued by [NAME OF TRUST], and (d) purchases of Common Stock related
to the issuance of Common Stock or rights under any of the Company's benefit
plans for its directors, officers or employees) or (iv) redeem, purchase or
acquire less than all of the Securities of this series or any of the
Preferred Securities. Prior to the termination of any such Extension Period,
the Company may further extend such Extension Period, PROVIDED that such
extension does not cause such Extension Period to exceed ___ consecutive
interest payment periods or to extend beyond the Stated Maturity. Upon the
termination of any such Extension Period and upon the payment of all amounts
then due on any Interest Payment Date, and subject to the foregoing
limitation, 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 shall give the Trustee, the Property Trustee and the
Administrative Trustees of [NAME OF TRUST] notice of its election to begin
any Extension Period at least ___ Business Days prior to the earlier of (i)
the date on which Distributions on the Preferred Securities would be payable
except for the election to begin such Extension Period, or (ii) the date the
Administrative Trustees are required to give notice to the New York Stock
Exchange, the Nasdaq National Market or other applicable stock exchange or
automated quotation system
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on which the Preferred Securities are then listed or quoted or to holders of
such Preferred Securities of the record date or (iii) the date such
Distributions are payable, but in any event not less than ___ Business Days
prior to such record date. The Trustee shall 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.]
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Trustee or at the office
of such paying agent or paying agents as the Company may designate from time
to time, maintained for that purpose in the United States, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; PROVIDED, HOWEVER, that at
the option of the Company payment of interest may be made (i) by check mailed
to the address of the Person entitled thereto as such address shall appear in
the Securities Register or (ii) by transfer to an account maintained by the
person entitled thereto, in immediately available funds, at such place and to
such account as may be designated by the Person entitled thereto as specified
in the Securities Register.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, unsecured and will rank junior and subordinate and subject
in right of payments to the prior payment in full of all Senior and
Subordinated Debt, and this Security is issued subject to the provisions of
the Indenture with respect thereto. Each Holder of this Security, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such actions as may
be necessary or appropriate to effectuate the subordination so provided and
(c) appoints the Trustee his attorney-in-fact for any and all such purposes.
Each Holder hereof, by his acceptance hereof, waives all notice of the
acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior and Subordinated Debt, whether now
outstanding or hereafter incurred, and waives reliance by each such holder
upon said provisions.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
SILICON VALLEY BANCSHARES
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By:
--------------------------------
[PRESIDENT OR VICE PRESIDENT]
Attest:
- ----------------------------------
[SECRETARY OR ASSISTANT SECRETARY]
Section II.3. FORM OF REVERSE OF SECURITY.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or
more series under a Junior Subordinated Indenture, dated as of ________, 1998
(herein called the "INDENTURE"), between the Company and Wilmington Trust
Company, as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Trustee, the Company and the Holders of the Securities, and of the terms
upon which the Securities are, and are to be, authenticated and delivered.
This Security is one of the series designated on the face hereof, limited in
aggregate principal amount to $_________.
All terms used in this Security that are defined in the Indenture and in
the Amended and Restated Trust Agreement, dated as of _____________, 1998, as
amended (the "Amended and Restated Trust Agreement"), for
[INSERT NAME OF TRUST] among Silicon Valley Bancshares, as Depositor, and the
Trustees named therein, shall have the meanings assigned to them in the
Indenture or the Amended and Restated Trust Agreement, as the case may be.
[IF APPLICABLE, INSERT--The Company may at any time, at its option, on or
after ________, and subject to the terms and conditions of Article XI of the
Indenture], redeem this Security [in whole at any time] [or in part from time
to time], at a redemption price equal to [INSERT REDEMPTION PRICE] to the
Redemption Date.]
[IF APPLICABLE, INSERT--Upon the occurrence and during the continuation of
a Tax Event, Investment Company Event or Capital Treatment Event in respect
of a SVB Trust, the Company may, at its option, at any time within 90 days of
the occurrence of such Tax Event, Investment Company Event or Capital
Treatment Event redeem this Security, [IF APPLICABLE, INSERT--in whole
but not in part], subject to the provisions of Section 11.7 and the other
provisions of Article XI of the Indenture, at a redemption price equal to
[INSERT REDEMPTION PRICE] to the Redemption Date.]
[IF APPLICABLE, INSERT--In the event of redemption of this Security in
part only, a new Security or Securities of this series for the portion hereof
not redeemed will be issued in the name of the Holder hereof upon the
cancellation hereof.]
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The Indenture contains provisions for satisfaction and discharge of the
entire indebtedness of this Security upon compliance by the Company with
certain conditions set forth in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee at any time to enter into a supplemental indenture or
indentures for the purpose of modifying in any manner the rights and
obligations of the Company and of the Holders of the Securities, with the
consent of the Holders of not less than a majority in principal amount of the
Outstanding Securities of each series to be affected by such supplemental
indenture. The Indenture also contains provisions permitting Holders of
specified percentages in principal amount of the Securities of each series at
the time Outstanding, on behalf of the Holders of all Securities of such
series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future Holders
of this Security and of any Security issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Security.
[IF THE SECURITY IS NOT A DISCOUNT SECURITY,--As provided in and subject
to the provisions of the Indenture, if an Event of Default with respect to
the Securities of this series at the time Outstanding occurs and is
continuing, then and in every such case the Trustee or the Holders of not
less than 25% in principal amount of the Outstanding Securities of this
series may declare the principal amount of all the Securities of this series
to be due and payable immediately, by a notice in writing to the Company (and
to the Trustee if given by Holders), PROVIDED that, in the case of the
Securities of this series issued to a SVB Trust, if upon an Event of Default,
the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of this series fails to declare the principal of all
the Securities of this series to be immediately due and payable, the holders
of at least 25% in aggregate Liquidation Amount of the Preferred Securities
then outstanding shall have such right by a notice in writing to the Company
and the Trustee; and upon any such declaration the principal amount of and
the accrued interest (including any Additional Interest) on all the
Securities of this series shall become immediately due and payable, provided
that the payment of principal and interest (including any Additional
Interest) on such Securities shall remain subordinated to the extent provided
in Article XIII of the Indenture.]
[IF THE SECURITY IS A DISCOUNT SECURITY,--As provided in and subject to
the provisions of the Indenture, if an Event of Default with respect to the
Securities of this series at the time Outstanding occurs and is continuing,
then and in every such case the Trustee or the Holders of not less than such
portion of the principal amount as may be specified in the terms of this
series may declare an amount of principal of the Securities of this series to
be due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by Holders), provided that, in the case of the
Securities of this series issued to a SVB Trust, if upon an Event
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of Default, the Trustee or the Holders of not less than 25% in principal
amount of the Outstanding Securities of this series fails to declare the
principal of all the Securities of this series to be immediately due and
payable, the holders of at least 25% in aggregate Liquidation Amount of the
Preferred Securities then outstanding shall have such right by a notice in
writing to the Company and the Trustee. Such amount shall be equal to
[INSERT FORMULA FOR DETERMINING THE AMOUNT]. Upon any such declaration, such
amount of the principal of and the accrued interest (including any Additional
Interest) on all the Securities of this series shall become immediately due
and payable, provided that the payment of principal and interest (including
any Additional Interest) on such Securities shall remain subordinated to the
extent provided in Article XIII of the Indenture. Upon payment (i) of the
amount of principal so declared due and payable and (ii) of interest on any
overdue principal and overdue interest (in each case to the extent that the
payment of such interest shall be legally enforceable), all of the Company's
obligations in respect of the payment of the principal of and interest, if
any, on this Security shall terminate.]
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of (and premium, if
any) and interest on this Security at the times, place and rate, and in the
coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Securities
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained under Section 10.2 of the
Indenture duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Securities Registrar
duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Securities of this series, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees. No service charge shall
be made for any such registration of transfer or exchange, but the Company
may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to
the contrary.
The Securities of this series are issuable only in registered form
without coupons in denominations of minimum denominations of $25 and any
integral multiples of $25 in excess thereof. As provided in the Indenture
and subject to certain limitations therein set forth, Securities of this
series are exchangeable for a like aggregate principal amount of Securities
of such series of a different authorized denomination, as requested by the
Holder surrendering the same.
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The Company and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Security agree that for United States Federal, state and
local tax purposes it is intended that this Security constitute indebtedness.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES THEREOF.
Section II.4. ADDITIONAL PROVISIONS REQUIRED IN GLOBAL SECURITY.
Any Global Security issued hereunder shall, in addition to the
provisions contained in Sections 2.2 and 2.3, bear a legend in substantially
the following form:
"THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE
ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY."
Section II.5. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Securities referred to in the within mentioned
Indenture.
Dated:
[INSERT NAME OF TRUSTEE]
as Trustee
By:
------------------------------
Authorized Officer
ARTICLE III
THE SECURITIES
Section III.1. TITLE AND TERMS.
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The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution, and set forth in an
Officers' Certificate (such Officers' Certificate shall have the effect of a
supplemental indenture for all purposes hereunder), or established in one or
more indentures supplemental hereto, prior to the issuance of Securities of a
series:
(a) the title of the securities of such series, which shall distinguish
the Securities of the series from all other Securities;
(b) the limit, if any, upon the aggregate principal amount of the
Securities of such series which may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to Section 3.4, 3.5, 3.6, 9.6 or 11.6 and
except for any Securities which, pursuant to Section 3.3, are deemed never to
have been authenticated and delivered hereunder); PROVIDED, HOWEVER, that the
authorized aggregate principal amount of such series may be increased above
such amount by a Board Resolution to such effect;
(c) the Stated Maturity or Maturities on which the principal of the
Securities of such series is payable or the method of determination thereof;
(d) the rate or rates, if any, at which the Securities of such series
shall bear interest, if any, the rate or rates and extent to which Additional
Interest, if any, shall be payable in respect of any Securities of such
series, the Interest Payment Dates on which such interest shall be payable,
the right, pursuant to Section 3.11 or as otherwise set forth therein, of the
Company to defer or extend an Interest Payment Date, and the Regular Record
Date for the interest payable on any Interest Payment Date or the method by
which any of the foregoing shall be determined;
(e) the place or places where the principal of (and premium, if any)
and interest on the Securities of such series shall be payable, the place or
places where the Securities of such series may be presented for registration
of transfer or exchange, and the place or places where notices and demands to
or upon the Company in respect of the Securities of such series may be made;
(f) the period or periods within or the date or dates on which, if any,
the price or prices at which and the terms and conditions upon which the
Securities of such series may be redeemed, in whole or in part, at the option
of the Company;
(g) the obligation or the right, if any, of the Company to prepay,
repay or purchase the Securities of such series pursuant to any sinking fund,
amortization or analogous provisions, or at the option of a Holder thereof,
and the period or periods within which, the price or prices at
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which, the currency or currencies (including currency unit or units) in which
and the other terms and conditions upon which Securities of the series shall
be redeemed, repaid or purchased, in whole or in part, pursuant to such
obligation;
(h) the denominations in which any Securities of such series shall be
issuable, if other than denominations of $25 and any integral multiples of
$25 in excess thereof;
(i) if other than Dollars, the currency or currencies (including
currency unit or units) in which the principal of (and premium, if any) and
interest, if any, on the Securities of the series shall be payable, or in
which the Securities of the series shall be denominated;
(j) the additions, modifications or deletions, if any, in the Events of
Default or covenants of the Company set forth herein with respect to the
Securities of such series;
(k) if other than the principal amount thereof, the portion of the
principal amount of Securities of such series that shall be payable upon
declaration of acceleration of the Maturity thereof;
(l) the additions or changes, if any, to this Indenture with respect to
the Securities of such series as shall be necessary to permit or facilitate
the issuance of the Securities of such series in bearer form, registrable or
not registrable as to principal, and with or without interest coupons;
(m) any index or indices used to determine the amount of payments of
principal of and premium, if any, on the Securities of such series or the
manner in which such amounts will be determined;
(n) whether the Securities of the series, or any portion thereof, shall
initially be issuable in the form of a temporary Global Security representing
all or such portion of the Securities of such series and provisions for the
exchange of such temporary Global Security for definitive Securities of such
series;
(o) if applicable, that any Securities of the series shall be issuable
in whole or in part in the form of one or more Global Securities and, in such
case, the respective Depositaries for such Global Securities, the form of any
legend or legends which shall be borne by any such Global Security in
addition to or in lieu of that set forth in Section 2.4 and any circumstances
in addition to or in lieu of those set forth in Section 3.5 in which any such
Global Security may be exchanged in whole or in part for Securities
registered, and any transfer of such Global Security in whole or in part may
be registered, in the name or names of Persons other than the Depositary for
such Global Security or a nominee thereof;
(p) the appointment of any Paying Agent or Agents for the Securities of
such series;
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(q) the terms of any right to convert or exchange Securities of such
series into any other securities or property of the Company, and the
additions or changes, if any, to this Indenture with respect to the
Securities of such series to permit or facilitate such conversion or exchange;
(r) the form or forms of the Trust Agreement, Amended and Restated
Trust Agreement and Guarantee Agreement, if different from the forms attached
hereto as Annexes A, B and C, respectively;
(s) the relative degree, if any, to which the Securities of the series
shall be senior to or be subordinated to other series of Securities in right
of payment, whether such other series of Securities are Outstanding or not;
and
(t) any other terms of the Securities of such series (which terms shall
not be inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical except
as to denomination and except as may otherwise be provided herein or in or
pursuant to such Board Resolution and set forth in such Officers' Certificate
or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of the series.
The Securities shall be subordinated in right of payment to Senior and
Subordinated Debt as provided in Article XIII.
Section III.2. DENOMINATIONS.
The Securities of each series shall be in registered form without
coupons and shall be issuable in minimum denominations of $25 and integral
multiples of $25 in excess thereof, unless otherwise specified as
contemplated by Section 3.1.
Section III.3. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Securities shall be executed on behalf of the Company by its
President or one of its Vice Presidents under its corporate seal reproduced
or impressed thereon and attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Securities may be
manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such
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individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Securities or did not hold such offices
at the date of such Securities. At any time and from time to time after the
execution and delivery of this Indenture, the Company may deliver Securities
of any series executed by the Company to the Trustee for authentication,
together with a Company Order for the authentication and delivery of such
Securities, and the Trustee in accordance with the Company Order shall
authenticate and deliver such Securities. If the form or terms of the
Securities of the series have been established by or pursuant to one or more
Board Resolutions as permitted by Sections 2.1 and 3.1, in authenticating
such Securities, and accepting the additional responsibilities under this
Indenture in relation to such Securities, the Trustee shall be entitled to
receive, and (subject to Section 6.1) shall be fully protected in relying
upon, an Opinion of Counsel stating,
(1) if the form of such Securities has been established by or
pursuant to Board Resolution as permitted by Section 2.1, that such form
has been established in conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 3.1, that such
terms have been established in conformity with the provisions of this
Indenture; and
(3) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid
and legally binding obligations of the Company enforceable in accordance
with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 3.1 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at
one time, it shall not be necessary to deliver the Officers' Certificate
otherwise required pursuant to Section 3.1 or the Company Order and Opinion
of Counsel otherwise required pursuant to such preceding paragraph at or
prior to the authentication of each Security of such series if such documents
are delivered at or prior to the authentication upon original issuance of the
first Security of such series to be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Security a
certificate of authentication substantially
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in the form provided for herein executed by the Trustee by the manual
signature of one of its authorized officers, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder. Notwithstanding
the foregoing, if any Security shall have been authenticated and delivered
hereunder but never issued and sold by the Company, and the Company shall
deliver such Security to the Trustee for cancellation as provided in Section
3.9, for all purposes of this Indenture such Security shall be deemed never
to have been authenticated and delivered hereunder and shall never be
entitled to the benefits of this Indenture.
Section III.4. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate
and deliver, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any denomination,
substantially of the tenor of the definitive Securities of such series in
lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such
Securities may determine, as evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will cause
definitive Securities of such series to be prepared without unreasonable
delay. After the preparation of definitive Securities, the temporary
Securities shall be exchangeable for definitive Securities upon surrender of
the temporary Securities at the office or agency of the Company designated
for that purpose without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor
one or more definitive Securities of the same series of authorized
denominations having the same Original Issue Date and Stated Maturity and
having the same terms as such temporary Securities. Until so exchanged, the
temporary Securities of any series shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities of such series.
Section III.5. REGISTRATION, TRANSFER AND EXCHANGE.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Securities and
of transfers of Securities. Such register is herein sometimes referred to as
the "Securities Register." The Trustee is hereby appointed "Securities
Registrar" for the purpose of registering Securities and transfers of
Securities as herein provided.
Upon surrender for registration of transfer of any Security at the
office or agency of the Company designated for that purpose the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities of the same
series of any authorized denominations, of a like aggregate principal
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amount, of the same Original Issue Date and Stated Maturity and having the
same terms.
At the option of the Holder, Securities may be exchanged for other
Securities of the same series of any authorized denominations, of a like
aggregate principal amount, of the same Original Issue Date and Stated
Maturity and having the same terms, upon surrender of the Securities to be
exchanged at such office or agency. Whenever any securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the exchange
is entitled to receive.
All Securities issued upon any transfer or exchange of Securities shall
be the valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Securities
surrendered upon such transfer or exchange.
Every Security presented or surrendered for transfer or exchange shall
(if so required by the Company or the Securities Registrar) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and the Securities Registrar, duly executed by the Holder thereof
or his attorney duly authorized in writing.
No service charge shall be made to a Holder for any transfer or exchange
of Securities, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Securities.
No service charge shall be made to a Holder for any transfer or exchange
of Securities, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Securities.
The provisions of Clauses (a), (b), (c) and (d) below shall apply only
to Global Securities:
(a) Each Global Security authenticated under this Indenture shall
be registered in the name of the Depositary designated for such Global
Security or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such Global Security
shall constitute a single Security for all purposes of this Indenture.
(b) Notwithstanding any other provision in this Indenture, no
Global Security may be exchanged in whole or in part for Securities
registered, and no transfer of a Global Security in whole or in part may
be registered, in the name of any Person other than the Depositary for
such Global Security or a nominee thereof unless (i) such Depositary (A)
has notified the Company that it is unwilling or unable to continue as
Depositary for such Global Security or (B) has ceased to be a clearing
agency registered under the Exchange Act at a time when the Depositary
is required to be so registered to act as depositary, in each case
unless the Company has approved a successor Depositary
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within 90 days, (ii) there shall have occurred and be continuing an
Event of Default with respect to such Global Security, (iii) the Company
in its sole discretion determines that such Global Security will be so
exchangeable or transferable or (iv) there shall exist such
circumstances, if any, in addition to or in lieu of the foregoing as
have been specified for this purpose as contemplated by Section 3.1.
(c) Subject to Clause (b) above, any exchange of a Global Security
for other Securities may be made in whole or in part, and all Securities
issued in exchange for a Global Security or any portion thereof shall be
registered in such names as the Depositary for such Global Security
shall direct.
(d) Every Security authenticated and delivered upon registration
of transfer of, or in exchange for or in lieu of, a Global Security or
any portion thereof, whether pursuant to this Section, Section 3.4, 3.6,
9.6 or 11.6 or otherwise, shall be authenticated and delivered in the
form of, and shall be, a Global Security, unless such Security is
registered in the name of a Person other than the Depositary for such
Global Security or a nominee thereof.
Neither the Company nor the Trustee shall be required, pursuant to the
provisions of this Section, (i) to issue, transfer or exchange any Security
of any series during a period beginning at the opening of business 15 days
before the day of selection for redemption of Securities pursuant to Article
XI and ending at the close of business on the day of mailing of notice of
redemption or (ii) to transfer or exchange any Security so selected for
redemption in whole or in part, except, in the case of any Security to be
redeemed in part, any portion thereof not to be redeemed.
Section III.6. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
If any mutilated Security is surrendered to the Trustee together with
such security or indemnity as may be required by the Company or the Trustee
to save each of them harmless, the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a new Security of the
same issue and series of like tenor and principal amount, having the same
Original Issue Date and Stated Maturity, and bearing a number not
contemporaneously outstanding.
If there shall be delivered to the Company and to the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security, and (ii) such security or indemnity as may be required by them to
save each of them harmless, then, in the absence of notice to the Company or
the Trustee that such Security has been acquired by a bona fide purchaser,
the Company shall execute and upon its request the Trustee shall authenticate
and deliver, in lieu of any such destroyed, lost or stolen Security, a new
Security of the same issue and series of like tenor and principal amount,
having the same Original Issue Date and Stated Maturity as such destroyed,
lost or stolen Security, and bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to
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become due and payable, the Company in its discretion may, instead of issuing
a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately
with any and all other Securities duly issued hereunder.
The provisions of this Section 3.6 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section III.7. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Security of any series which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date, shall be
paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest in respect of Securities of such series, except that,
unless otherwise provided in the Securities of such series, interest payable
on the Stated Maturity of the principal of a Security shall be paid to the
Person to whom principal is paid. The initial payment of interest on any
Security of any series which is issued between a Regular Record Date and the
related Interest Payment Date shall be payable as provided in such Security
or in the Board Resolution pursuant to Section 3.1 with respect to the
related series of Securities.
Any interest on any Security which is payable, but is not timely paid or
duly provided for, on any Interest Payment Date for Securities of such series
(herein called "Defaulted Interest"), shall forthwith cease to be payable to
the registered Holder on the relevant Regular Record Date by virtue of having
been such Holder, and such Defaulted Interest may be paid by the Company, at
its election in each case, as provided in Clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities of such series in respect of which
interest is in default (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for the payment
of such Defaulted Interest, which shall be fixed in the following manner.
The Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security and the date of the proposed
payment, and at the same time the Company shall deposit with the Trustee an
amount of money equal to the aggregate amount
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proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date
of the proposed payment, such money when deposited to be held in trust for
the benefit of the Persons entitled to such Defaulted Interest as in this
Clause provided. Thereupon, the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company, shall
cause notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor to be mailed, first class, postage prepaid, to
each Holder of a Security of such series at the address of such Holder as it
appears in the Securities Register not less than 10 days prior to such
Special Record Date. The Trustee may, in its discretion, in the name and at
the expense of the Company, cause a similar notice to be published at least
once in a newspaper, customarily published in the English language on each
Business Day and of general circulation in the state of California, but such
publication shall not be a condition precedent to the establishment of such
Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been mailed as
aforesaid, such Defaulted Interest shall be paid to the Persons in whose
names the Securities of such series (or their respective Predecessor
Securities) are registered on such Special Record Date and shall no longer be
payable pursuant to the following Clause (b).
(b) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities of the series in respect of which interest
is in default may be listed and, upon such notice as may be required by such
exchange (or by the Trustee if the Securities are not listed), if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this Clause, such payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 3.7, each Security
delivered under this Indenture upon transfer of or in exchange for or in lieu
of any other Security shall carry the rights to interest accrued and unpaid,
and to accrue, which were carried by such other Security.
Section III.8. PERSONS DEEMED OWNERS.
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name any Security is registered as the owner of
such Security for the purpose of receiving payment of principal of and
(subject to Section 3.7) any interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
Section III.9. CANCELLATION.
All Securities surrendered for payment, redemption, transfer or exchange
shall, if
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surrendered to any Person other than the Trustee, be delivered to the
Trustee, and any such Securities and Securities surrendered directly to the
Trustee for any such purpose shall be promptly canceled by it. The Company
may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Securities so delivered shall be
promptly canceled by the Trustee. No Securities shall be authenticated in
lieu of or in exchange for any Securities canceled as provided in this
Section, except as expressly permitted by this Indenture. All canceled
Securities shall be destroyed by the Trustee and the Trustee shall deliver to
the Company a certificate of such destruction.
Section III.10. COMPUTATION OF INTEREST.
Except as otherwise specified as contemplated by Section 3.1 for
Securities of any series, interest on the Securities of each series for any
period shall be computed on the basis of a 360-day year of twelve 30-day
months and interest on the Securities of each series for any partial period
shall be computed on the basis of the number of days elapsed in a 360-day
year of twelve 30-day months.
Section III.11. DEFERRALS OF INTEREST PAYMENT DATES.
If specified as contemplated by Section 2.1 or Section 3.1 with respect
to the Securities of a particular series, so long as no Event of Default has
occurred and is continuing, the Company shall have the right, at any time
during the term of such series, from time to time to defer the payment of
interest on such Securities for such period or periods as may be specified as
contemplated by Section 3.1 (each, an "EXTENSION PERIOD"). During Extension
Periods the Company shall have the right to make partial payments of interest
on any Interest Payment Date. No Extension Period shall end on a date other
than an Interest Payment Date. At the end of any such Extension Period, the
Company shall pay all interest then accrued and unpaid on the Securities
(together with Additional Interest thereon, if any, at the rate specified for
the Securities of such series to the extent permitted by applicable law);
PROVIDED, HOWEVER, that no Extension Period shall extend beyond the Stated
Maturity of the principal of the Securities of such series; PROVIDED,
FURTHER, that during any such Extension Period, the Company shall not, and
shall not permit any Subsidiary to, (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 (which includes common
and preferred stock), (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 (including Securities other than the Securities of such series) that
ranks PARI PASSU in all respects with or junior in interest to the Securities
of such series or (iii) make any guarantee payments with respect to any
guarantee by the Company of the debt securities of any Subsidiary of the
Company if such guarantee ranks PARI PASSU with or junior in interest to the
Securities of such series (other than (a) dividends or distributions in
capital stock of the Company (which includes common and preferred stock), (b)
any declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in
the
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future, or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under the SVB Guarantee related to the Preferred Securities
issued by the SVB Trust holding Securities of such series, and (d) purchases
of Common Stock related to the issuance of Common Stock or rights under any
of the Company's benefit plans for its directors, officers or employees) or
(iii) redeem, purchase or acquire less than all of the Securities of such
series or any of the Preferred Securities. Prior to the termination of any
such Extension Period, the Company may further extend such Extension Period,
PROVIDED that such extension does not cause such Extension Period to extend
beyond the Stated Maturity of the principal of such Securities. Upon
termination of any Extension Period and upon the payment of all accrued and
unpaid interest and any Additional Interest then due on any Interest Payment
Date, the Company may elect to begin a new Extension Period, subject to the
above requirements. No interest shall be due and payable during an Extension
Period, except at the end thereof. The Company shall give the Trustee, the
Property Trustee and the Administrative Trustees of the SVB Trust holding
Securities of such series notice of its election of any Extension Period (or
an extension thereof) at least one Business Day prior to the earlier of (i)
the next succeeding date on which Distributions on the Preferred Securities
of such SVB Trust would be payable except for the election to begin or extend
such Extension Period or (ii) the date the Administrative Trustees are
required to give notice to the New York Stock Exchange, the Nasdaq National
Market or other applicable stock exchange or automated quotation system on
which the Preferred Securities are then listed or quoted or to holders of
such Preferred Securities of the record date or (iii) the date such
Distributions are payable, but in any event not less than one Business Day
prior to such record date. The Trustee shall give notice of the Company's
election to begin a new Extension Period to the holders of the Securities.
There is no limitation on the number of times that the Company may elect to
begin an Extension Period.
The Trustee shall promptly give notice of the Company's election to
begin any such Extension Period to the Holders of the Outstanding Securities
of such series.
Section III.12. RIGHT OF SET-OFF.
With respect to the Securities of a series issued to a SVB Trust,
notwithstanding anything to the contrary in the Indenture, the Company shall
have the right to set-off any payment it is otherwise required to make
thereunder in respect of any such Security to the extent the Company has
theretofore made, or is concurrently on the date of such payment making, a
payment under the Guarantee Agreement relating to such Security or under
Section 5.8 of the Indenture.
Section III.13. AGREED TAX TREATMENT.
Each Security issued hereunder shall provide that the Company and, by
its acceptance of a Security or a beneficial interest therein, the Holder of,
and any Person that acquires a beneficial interest in, such Security agree
that for United States Federal, state and local tax purposes it is intended
that such Security constitute indebtedness.
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Section III.14. SHORTENING OF STATED MATURITY.
If specified as contemplated by Section 2.1 or Section 3.1 with respect
to the Securities of a particular series, the Company shall have the right to
shorten the Stated Maturity of the principal of the Securities of such series
at any time to any date not earlier than the first date on which the Company
has the right to redeem the Securities of such series. In the event that the
Company elects to shorten the Stated Maturity of the Junior Subordinated
Debentures, it shall give notice to the Indenture Trustee, and the Indenture
Trustee shall give notice of such shortening to the holders of the Securities
no less than 60 days prior to the effectiveness thereof.
Section III.15. CUSIP NUMBERS.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption 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 Securities or as contained in any notice of
a redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be
affected by any defect in or omission of such numbers.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section IV.1. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall, upon Company Request, cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for and as otherwise
provided in this Section 4.1) and the Trustee, on demand of and at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(a) either
(i) all Securities theretofore authenticated and delivered (other
than (A) Securities which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 3.6 and (B) Securities for whose
payment money has theretofore been deposited in trust or segregated and held
in trust by the Company and thereafter repaid to the Company or discharged
from such trust, as provided in Section 10.3) have been delivered to the
Trustee for cancellation; or
(ii) all such Securities not theretofore delivered to the Trustee for
cancellation
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(A) have become due and payable, or
(B) will become due and payable at their Stated Maturity within
one year of the date of deposit, or
(C) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of Clause (ii) (A), (B) or (C) above, has
deposited or caused to be deposited with the Trustee as trust funds in trust
for such purpose an amount in the currency or currencies in which the
Securities of such series are payable sufficient to pay and discharge the
entire indebtedness on such Securities not theretofore delivered to the
Trustee for cancellation, for principal (and premium, if any) and interest
(including any Additional Interest) to the date of such deposit (in the case
of Securities which have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be;
(b) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture
have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, the obligations
of the Trustee to any Authenticating Agent under Section 6.14 and, if money
shall have been deposited with the Trustee pursuant to subclause (ii) of
clause (a) of this Section, the obligations of the Trustee under Section 4.2
and the last paragraph of Section 10.3 shall survive.
Section IV.2. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 10.3, all
money deposited with the Trustee pursuant to Section 4.1 shall be held in
trust and applied by the Trustee, in accordance with the provisions of the
Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal (and
premium, if any) and interest for the payment of which such money or
obligations have been deposited with or received by the Trustee.
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ARTICLE V
REMEDIES
Section V.1. EVENTS OF DEFAULT.
"Event of Default", wherever used herein with respect to the Securities
of any series, means any one of the following events (whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(a) default in the payment of any interest upon any Security of that
series, including any Additional Interest in respect thereof, when it becomes
due and payable, and continuance of such default for a period of 30 days
(subject to the deferral of any due date in the case of an Extension Period);
or
(b) default in the payment of the principal of (or premium, if any, on)
any Security of that series at its Stated Maturity, upon redemption by
declaration or otherwise; or
(c) default in the performance, or breach, in any material respect, of
any covenant of the Company in this Indenture (other than a covenant, a
default in the performance of which is elsewhere in this Section 5.1
specifically dealt with), and continuance of such default or breach for a
period of 90 days after there has been given, by registered or certified
mail, to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in principal amount of the Outstanding Securities of
that series a written notice specifying such default or breach and requiring
it to be remedied; or
(d) the entry of a decree or order by a court having jurisdiction in
the premises adjudging the Company a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company 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 the Company or of any substantial part of its property
or ordering the winding up or liquidation of its affairs, and the continuance
of any such decree or order unstayed and in effect for a period of 60
consecutive days; or
(e) the institution by the Company 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 other similar
official) of the Company or of any substantial part
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of its property, or the making by it of an assignment for the benefit for
creditors, or the admission by it in writing of its inability to pay its
debts generally as they become due and its willingness to be adjudicated a
bankrupt, or the taking of corporate action by the Company in furtherance of
any such action; or
(f) any other Event of Default provided with respect to Securities of
that series.
Section V.2. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default (other than an Event of Default specified in
Section 5.1(d) or 5.1(e)) with respect to Securities of any series at the
time Outstanding occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series may declare the principal amount (or,
if the Securities of that series are Discount Securities, such portion of the
principal amount as may be specified in the terms of that series) of all the
Securities of that series to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by Holders), PROVIDED
that, in the case of the Securities of a series issued to a SVB Trust, if,
upon an Event of Default, the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Securities of that series fail to declare
the principal of all the Securities of that series to be immediately due and
payable, the holders of at least 25% in aggregate liquidation amount of the
corresponding series of Preferred Securities then outstanding shall have such
right by a notice in writing to the Company and the Trustee; and upon any
such declaration such principal amount (or specified portion thereof) of and
the accrued interest (including any Additional Interest) on all the
Securities of such series shall become immediately due and payable. Payment
of principal and interest (including any Additional Interest) on such
Securities shall remain subordinated to the extent provided in Article XIII
notwithstanding that such amount shall become immediately due and payable as
herein provided. If an Event of Default specified in Section 5.1(d) or 5.1(e)
with respect to Securities of any series at the time Outstanding occurs, the
principal amount of all the Securities of that series (or, if the Securities
of that series are Discount Securities, such portion of the principal amount
of such Securities as may be specified by the terms of that series) shall
automatically, and without any declaration or other action on the part of the
Trustee or any Holder, become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in
this Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and
the Trustee, may rescind and annul such declaration and its consequences if:
(a) the Company has paid or deposited with the Trustee a sum sufficient
to pay:
(i) all overdue installments of interest (including any Additional
Interest) on all Securities of that series,
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(ii) the principal of (and premium, if any, on) any Securities of that
series which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Securities, and
(iii) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel; and
(b) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series
which has become due solely by such acceleration, have been cured or waived
as provided in Section 5.13.
In the case of Securities of a series issued to a SVB Trust, the holders
of a majority in aggregate Liquidation Amount (as defined in the Trust
Agreement under which such SVB Trust is formed) of the related series of
Preferred Securities issued by such SVB Trust shall also have the right to
rescind and annul such declaration and its consequences by written notice to
the Company and the Trustee subject to the satisfaction of the conditions set
forth in Clauses (a) and (b) above of this Section 5.2.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
Section V.3. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
The Company covenants that if:
(a) default is made in the payment of any installment of interest
(including any Additional Interest) on any Security when such interest
becomes due and payable and such default continues for a period of 30 days
(subject to the deferral of any due date in the case of an Extension Period),
or
(b) default is made in the payment of the principal of (and premium, if
any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities, the whole amount then due and
payable on such Securities for principal, including any sinking fund payment
or analogous obligations (and premium, if any) and interest (including any
Additional Interest); and, in addition thereto, all amounts owing the Trustee
under Section 6.7.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree,
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and may enforce the same against the Company or any other obligor upon the
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other
obligor upon the Securities, wherever situated.
If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Securities of such series
by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
Section V.4. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors,
(a) the Trustee (irrespective of whether the principal of the
Securities of any series shall then be due and payable as therein expressed
or by declaration or otherwise and irrespective of whether the Trustee shall
have made any demand on the Company for the payment of overdue principal (and
premium, if any) or interest (including any Additional Interest)) shall be
entitled and empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal
(and premium, if any) and interest (including any Additional Interest) owing
and unpaid in respect to the Securities and to file such other papers or
documents as may be necessary or advisable and to take any and all actions as
are authorized under the Trust Indenture Act in order to have the claims of
the Holders and any predecessor to the Trustee under Section 6.7 allowed in
any such judicial proceedings; and
(ii) in particular, the Trustee shall be authorized to collect
and receive any moneys or other property payable or deliverable on any such
claims and to distribute the same in accordance with Section 5.6; and
(b) any custodian, receiver, assignee, trustee, liquidator,
sequestrator (or other similar official) in any such judicial proceeding is
hereby authorized by each Holder to make such payments to the Trustee for
distribution in accordance with Section 5.6, and in the event that the
Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due to it and any predecessor Trustee under
Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof, or to
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authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding; provided, however, that the Trustee may, on behalf of the
Holders, vote for the election of a trustee in bankruptcy or similar official
and be a member of a creditors' or other similar committee.
Section V.5. TRUSTEE MAY ENFORCE CLAIM WITHOUT POSSESSION OF SECURITIES.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any
of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought
in its own name as trustee of an express trust, and any recovery of judgment
shall, after provision for the payment of all the amounts owing the Trustee
and any predecessor Trustee under Section 6.7, its agents and counsel, be for
the ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
Section V.6. APPLICATION OF MONEY COLLECTED.
Any money or property collected or to be applied by the Trustee with
respect to a series of Securities pursuant to this Article shall be applied
in the following order, at the date or dates fixed by the Trustee and, in
case of the distribution of such money or property on account of principal
(or premium, if any) or interest (including any Additional Interest), upon
presentation of the Securities and the notation thereon of the payment if
only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any
predecessor Trustee under Section 6.7;
SECOND: Subject to Article XIII, to the payment of the amounts then due
and unpaid upon such series of Securities for principal (and premium, if any)
and interest (including any Additional Interest), in respect of which or for
the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and payable
on such series of Securities for principal (and premium, if any) and interest
(including any Additional Interest), respectively; and
THIRD: The balance, if any, to the Person or Persons entitled thereto.
Section V.7. LIMITATION ON SUITS.
No Holder of any Securities of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this
Indenture or for the appointment of a receiver, assignee, trustee,
liquidator, sequestrator (or other similar official) or for any other remedy
hereunder, unless:
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(a) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that series;
(b) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its
own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request:
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall
have any right in any manner whatever by virtue of, or by availing itself of,
any provision of this Indenture to affect, disturb or prejudice the rights of
any other Holders of Securities, or to obtain or to seek to obtain priority
or preference over any other of such Holders or to enforce any right under
this Indenture, except in the manner herein provided and for the equal and
ratable benefit of all such Holders.
Section V.8. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM
AND INTEREST; DIRECT ACTION BY HOLDERS OF PREFERRED SECURITIES.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right which is absolute and unconditional to receive
payment of the principal of (and premium, if any) and (subject to Section
3.7) interest (including any Additional Interest) on such Security on the
respective Stated Maturities expressed in such Security (or, in the case of
redemption, on the Redemption Date) and to institute suit for the enforcement
of any such payment, and such right shall not be impaired without the consent
of such Holder. In the case of Securities of a series issued to a SVB Trust,
any holder of the corresponding series of Preferred Securities issued by such
SVB Trust shall have the right, upon the occurrence of an Event of Default
described in Section 5.1(a) or 5.1(b), to institute a suit directly against
the Company for enforcement of payment to such holder of principal of
(premium, if any) and (subject to Section 3.7) interest (including any
Additional Interest) on the Securities having a principal amount equal to the
aggregate Liquidation Amount (as defined in the Trust Agreement under which
such SVB Trust is formed) of such Preferred Securities of the corresponding
series held by such holder.
Section V.9. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee, any Holder or any holder of Preferred Securities has
instituted any
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proceeding to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee, such Holder or such holder of Preferred
Securities, then and in every such case the Company, the Trustee, the Holders
and such holder of Preferred Securities shall, subject to any determination
in such proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Trustee,
the Holders and the holders of Preferred Securities shall continue as though
no such proceeding had been instituted.
Section V.10. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided in the last paragraph of Section 3.6, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of
any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section V.11. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee, any Holder of any Security or any
holder of any Preferred Security to exercise any right or remedy accruing
upon any Event of Default shall impair any such right or remedy or constitute
a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or
to the Holders and the right and remedy given to the holders of Preferred
Securities by Section 5.8 may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee, the Holders or the holders of
Preferred Securities, as the case may be.
Section V.12. CONTROL BY HOLDERS.
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee, with respect to the
Securities of such series, PROVIDED that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture,
(b) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(c) subject to the provisions of Section 6.1, the Trustee shall have
the right to decline
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to follow such direction if a Responsible Officer or Officers of the Trustee
shall, in good faith, determine that the proceeding so directed would be
unjustly prejudicial to the Holders not joining in any such direction or
would involve the Trustee in personal liability.
Section V.13. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series and, in the case of any Securities of a
series issued to a SVB Trust, the holders of Preferred Securities issued by
such SVB Trust may waive any past default hereunder and its consequences with
respect to such series except a default:
(1) in the payment of the principal of (or premium, if any) or interest
(including any Additional Interest) on any Security of such series, or
(2) in respect of a covenant or provision hereof which under Article IX
cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected.
Any such waiver shall be deemed to be on behalf of the Holders of all
the Securities of such series or, in the case of a waiver by holders of
Preferred Securities issued by such SVB Trust, by all holders of Preferred
Securities issued by such SVB Trust.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent
or other default or impair any right consequent thereon.
Section V.14. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any
action taken or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such
court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard
to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal amount of the
Outstanding Securities of any series, or to any suit instituted by any Holder
for the enforcement of the payment of the principal of (or premium, if any)
or interest (including any Additional Interest) on any Security on or after
the respective Stated Maturities expressed in such Security.
Section V.15. WAIVER OF USURY, STAY OR EXTENSION LAWS.
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The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any usury, stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
ARTICLE VI
THE TRUSTEE
Section VI.1. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of Default;
(A) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(B) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; but in the
case of any such certificates or opinions which by any provisions hereof are
specifically required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not they conform to
the requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct
of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct except that
(A) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
(B) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts; and
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(C) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of Holders pursuant to Section 5.12 relating to the time, method
and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, under
this Indenture with respect to the Securities of such series.
(d) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
(e) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
this Section 6.1.
Section VI.2. NOTICE OF DEFAULTS.
Within 90 days after actual knowledge by a Responsible Officer of the
Trustee of the occurrence of any default hereunder with respect to the
Securities of any series, the Trustee shall transmit by mail to all Holders
of Securities of such series, as their names and addresses appear in the
Securities Register, notice of such default, unless such default shall have
been cured or waived; provided, however, that, except in the case of a
default in the payment of the principal of (or premium, if any) or interest
(including any Additional Interest) on any Security of such series, the
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders of Securities
of such series; and PROVIDED, FURTHER, that, in the case of any default of
the character specified in Section 5.13, no such notice to Holders of
Securities of such series shall be given until at least 30 days after the
occurrence thereof. For the purpose of this Section, the term "default"
means any event which is, or after notice or lapse of time or both would
become, an Event of Default with respect to Securities of such series.
Section VI.3. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 6.1:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, Security
or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
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(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith
on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the advice of such counsel
or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, indenture, Security or other paper or document, but the Trustee in its
discretion may make such inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such inquiry
or investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
Section VI.4. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations
as to the validity or sufficiency of this Indenture or of the Securities.
Neither the Trustee nor any Authenticating Agent shall be accountable for the
use or application by the Company of the Securities or the proceeds thereof.
Section VI.5. MAY HOLD SECURITIES.
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The Trustee, any Authenticating Agent, any Paying Agent, any Securities
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to
Sections 6.8 and 6.13, may otherwise deal with the Company with the same
rights it would have if it were not Trustee, Authenticating Agent, Paying
Agent, Securities Registrar or such other agent.
Section VI.6. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under
no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
Section VI.7. COMPENSATION AND REIMBURSEMENT.
The Company agrees
(a) to pay to the Trustee from time to time compensation for all
services rendered by it hereunder in such amounts as the Company and the
Trustee shall agree from time to time (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust);
(b) to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to
its negligence or bad faith; and
(c) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense (including the reasonable compensation and the
expenses and disbursements of its agents and counsel) incurred without
negligence or bad faith, arising out of or in connection with the acceptance
or administration of this trust or the performance of its duties hereunder,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder. This indemnification shall survive the termination of
this Agreement.
To secure the Company's payment obligations in this Section 6.7, the
Company and the Holders agree that the Trustee shall have a lien prior to the
Securities on all money or property held or collected by the Trustee. Such
lien shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 5.1(d) or (e) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under the Bankruptcy Reform Act of 1978 or any successor
statute.
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Section VI.8. DISQUALIFICATION; CONFLICTING INTERESTS.
The Trustee for the Securities of any series issued hereunder shall be
subject to the provisions of Section 310(b) of the Trust Indenture Act.
Nothing herein shall prevent the Trustee from filing with the Commission the
application referred to in the second to last paragraph of said Section
310(b).
Section VI.9. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be
(a) a corporation organized and doing business under the laws of the
United States of America or of any State or Territory or the District of
Columbia, authorized under such laws to exercise corporate trust powers and
subject to supervision or examination by Federal, State, Territorial or
District of Columbia authority, or
(b) a corporation or other Person organized and doing business under
the laws of a foreign government that is permitted to act as Trustee pursuant
to a rule, regulation or order of the Commission, authorized under such laws
to exercise corporate trust powers, and subject to supervision or examination
by authority of such foreign government or a political subdivision thereof
substantially equivalent to supervision or examination applicable to United
States institutional trustees,
in either case having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by Federal or State authority. If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then, for the purposes of this Section 6.9, the combined capital and surplus
of such corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any
time the Trustee shall cease to be eligible in accordance with the provisions
of this Section 6.9, it shall resign immediately in the manner and with the
effect hereinafter specified in this Article VI. Neither the Company nor any
Person directly or indirectly controlling, controlled by or under common
control with the Company shall serve as Trustee for the Securities of any
series issued hereunder.
Section VI.10. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article VI shall become effective until
the acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time with respect to the Securities
of one or more series by giving written notice thereof to the Company. If an
instrument of acceptance by a
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successor Trustee shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a
successor Trustee with respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal
amount of the Outstanding Securities of such series, delivered to the Trustee
and to the Company.
(d) If at any time:
(i) the Trustee shall fail to comply with Section 6.8 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(ii) the Trustee shall cease to be eligible under Section 6.9 and
shall fail to resign after written request therefor by the Company or by any
such Holder, or
(iii) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property shall
be appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (i) the Company, acting pursuant to the authority of
a Board Resolution, may remove the Trustee with respect to all Securities, or
(ii) subject to Section 5.14, any Holder who has been a bona fide Holder of a
Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee with respect to all Securities and the appointment of
a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause
with respect to the Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee with respect to the
Securities of that or those series. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company and the
retiring Trustee, the successor Trustee so appointed shall, forthwith upon
its acceptance of such appointment, become the successor Trustee with respect
to the Securities of such series and supersede the successor Trustee
appointed by the Company. If no successor Trustee with respect to the
Securities of any series shall have been so appointed by the Company or the
Holders and accepted appointment in the manner hereinafter provided, any
Holder who has been a bona fide Holder of a Security for at least six months
may, subject to Section 5.14, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the appointment of
a successor Trustee with respect to the Securities of such series.
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(f) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any
series by mailing written notice of such event by first-class mail, postage
prepaid, to the Holders of Securities of such series as their names and
addresses appear in the Securities Register. Each notice shall include the
name of the successor Trustee with respect to the Securities of such series
and the address of its Corporate Trust Office.
Section VI.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee
an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested
with all the rights, powers, trusts and duties of the retiring Trustee; but,
on the request of the Company or the successor Trustee, such retiring Trustee
shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of
the retiring Trustee and shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee
hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company,
the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such
appointment and which (1) shall contain such provisions as shall be necessary
or desirable to transfer and confirm to, and to vest in, each successor
Trustee all the rights, powers, trusts and duties of the retiring Trustee
with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the retiring Trustee is
not retiring with respect to all Securities, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee, and (3) shall
add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein
or in such supplemental indenture shall constitute such Trustees co-trustees
of the same trust and that each such Trustee shall be trustee of a trust or
trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee and upon the execution and delivery of
such supplemental indenture the resignation or removal of the retiring
Trustee shall become effective to the extent provided therein and each such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts, and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates; but, on request of the Company
or any successor Trustee, such retiring Trustee shall duly assign, transfer
and deliver to such successor Trustee all property and money held by such
retiring
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Trustee hereunder with respect to the Securities of that or those series to
which the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all rights, powers and trusts referred
to in paragraph (a) or (b) of this Section 6.11, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and
eligible under this Article VI.
Section VI.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under
this Article VI, without the execution or filing of any paper or any further
act on the part of any of the parties hereto. In case any Securities shall
have been authenticated, but not delivered, by the Trustee then in office,
any successor by merger, conversion or consolidation to such authenticating
Trustee may adopt such authentication and deliver the Securities so
authenticated, and in case any Securities shall not have been authenticated,
any successor to the Trustee may authenticate such Securities either in the
name of any predecessor Trustee or in the name of such successor Trustee, and
in all cases the certificate of authentication shall have the full force
which it is provided anywhere in the Securities or in this Indenture that the
certificate of the Trustee shall have.
Section VI.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
Section VI.14. APPOINTMENT OF AUTHENTICATING AGENT.
The Trustee may appoint an Authenticating Agent or Agents with respect
to one or more series of Securities which shall be authorized to act on
behalf of the Trustee to authenticate Securities of such series issued upon
original issue and upon exchange, registration of transfer or partial
redemption thereof or pursuant to Section 3.6, and Securities so
authenticated shall be entitled to the benefits of this Indenture and shall
be valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating
Agent. Each Authenticating Agent shall be acceptable to the
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Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, or of any State or Territory
or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less than
$50,000,000 and subject to supervision or examination by Federal or State
authority. If such Authenticating Agent publishes reports of condition at
least annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section 6.14 the combined
capital and surplus of such Authenticating Agent shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease
to be eligible in accordance with the provisions of this Section 6.14, such
Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section 6.14.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating
Agent shall be a party, or any corporation succeeding to all or substantially
all of the corporate trust business of an Authenticating Agent shall be the
successor Authenticating Agent hereunder, provided such corporation shall be
otherwise eligible under this Section, without the execution or filing of any
paper or any further act on the part of the Trustee or the Authenticating
Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time
such Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.14, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall give
notice of such appointment in the manner provided in Section 1.6 to all
Holders of Securities of the series with respect to which such Authenticating
Agent will serve. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and
duties of its predecessor hereunder, with like effect as if originally named
as an Authenticating Agent. No successor Authenticating Agent shall be
appointed unless eligible under the provision of this Section 6.14.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section 6.14, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 6.7.
If an appointment with respect to one or more series is made pursuant to
this Section 6.14, the Securities of such series may have endorsed thereon,
in addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities referred to in the within mentioned
Indenture.
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Dated:
[INSERT NAME OF TRUSTEE]
As Trustee
By:
----------------------------------
As Authenticating Agent
By:
----------------------------------
Authorized Officer
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section VII.1. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 15 days after January 15 and July 15
in each year, a list, in such form as the Trustee may reasonably require, of
the names and addresses of the Holders as of January 1 and July 1 of such
year, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the time
such list is furnished, excluding from any such list names and addresses
received by the Trustee in its capacity as Securities Registrar.
Section VII.2. PRESERVATION OF INFORMATION, COMMUNICATIONS TO HOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as Securities
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of
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the Trustee, shall be as provided in the Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason
of the disclosure of information as to the names and addresses of the Holders
made pursuant to the Trust Indenture Act.
Section VII.3. REPORTS BY TRUSTEE.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to
the Trust Indenture Act, at the times and in the manner provided pursuant
thereto.
(b) Reports so required to be transmitted at stated intervals of not
more than 12 months shall be transmitted no later than July 15 in each
calendar year, commencing with the first July 15 after the first issuance of
Securities under this Indenture.
(c) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed and also with the Commission. The Company will notify
the Trustee when any Securities are listed on any stock exchange.
Section VII.4. REPORTS BY COMPANY.
The Company shall file with the Trustee and with the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at
the times and in the manner provided in the Trust Indenture Act; provided
that any such information, documents or reports required to be filed with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act shall
be filed with the Trustee within 15 days after the same is required to be
filed with the Commission. Notwithstanding that the Company may not be
required to remain subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, the Company shall continue to file with the
Commission and provide the Trustee with the annual reports and the
information, documents and other reports which are specified in Sections 13
and 15(d) of the Exchange Act. The Company also shall comply with the other
provisions of Trust Indenture Act Section 314(a).
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section VIII.1. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an
entirety to any Person, and no Person
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shall consolidate with or merge into the Company or convey, transfer or lease
its properties and assets substantially as an entirety to the Company, unless:
(a) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, the corporation formed by such consolidation or
into which the Company is merged or the Person which acquires by conveyance
or transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a corporation, partnership or trust
organized and existing under the laws of the United States of America or any
State or the District of Columbia, and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the principal of
(and premium, if any) and interest (including any Additional Interest) on all
the Securities and the performance of every covenant of this Indenture on the
part of the Company to be performed or observed;
(b) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have happened and be continuing;
(c) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and any such supplemental indenture comply with
this Article and that all conditions precedent herein provided for relating
to such transaction have been complied with; and the Trustee, subject to
Section 6.1, may rely upon such Officers' Certificate and Opinion of Counsel
as conclusive evidence that such transaction complies with this Section 8.1.
Section VIII.2. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger by the Company with or into any other
Person, or any conveyance, transfer or lease by the Company of its properties
and assets substantially as an entirety to any Person in accordance with
Section 8.1, the successor corporation formed by such consolidation or into
which the Company is merged or to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under this Indenture with the same effect as if
such successor Person had been named as the Company herein; and in the event
of any such conveyance, transfer or lease the Company shall be discharged
from all obligations and covenants under the Indenture and the Securities and
may be dissolved and liquidated.
Such successor Person may cause to be signed, and may issue either in
its own name or in the name of the Company, any or all of the Securities
issuable hereunder which theretofore shall not have been signed by the
Company and delivered to the Trustee; and, upon the order of such successor
Person instead of the Company and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver any Securities which previously shall have been signed and
delivered by the officers of the Company to the Trustee for
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authentication pursuant to such provisions and any Securities which such
successor Person thereafter shall cause to be signed and delivered to the
Trustee on its behalf for the purpose pursuant to such provisions. All the
Securities so issued shall in all respects have the same legal rank and
benefit under this Indenture as the Securities theretofore or thereafter
issued in accordance with the terms of this Indenture as though all of such
Securities had been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, conveyance or lease,
such changes in phraseology and form may be made in the Securities thereafter
to be issued as may be appropriate.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section IX.1. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory
to the Trustee, PROVIDED, HOWEVER, that the form and terms of Securities of
any series may be established by a Board Resolution, as set forth in the
Officers' Certificate delivered to the Trustee pursuant to Section 3.1,
without entering into a supplemental indenture for all purposes hereunder,
for any of the following purposes:
(a) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company herein
and in the Securities contained; or
(b) to convey, transfer, assign, mortgage or pledge any property to or
with the Trustee or to surrender any right or power herein conferred upon the
Company; or
(c) to establish the form or terms of Securities of any series as
permitted by Sections 2.1 or 3.1; or
(d) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be
for the benefit of less than all series of Securities, stating that such
covenants are expressly being included solely for the benefit of such series)
or to surrender any right or power herein conferred upon the Company; or
(e) to add any additional Events of Default for the benefit of the
Holders of all or any series of Securities (and if such additional Events of
Default are to be for the benefit of less than all series of Securities,
stating that such additional Events of Default are expressly being included
solely for the benefit of such series); or
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(f) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective only when
there is no Security Outstanding of any series created prior to the execution
of such supplemental indenture which is entitled to the benefit of such
provision; or
(g) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or questions
arising under this Indenture, provided that such action pursuant to this
clause (g) shall not adversely affect the interest of the Holders of
Securities of any series in any material respect or, in the case of the
Securities of a series issued to a SVB Trust and for so long as any of the
corresponding series of Preferred Securities issued by such SVB Trust shall
remain outstanding, the holders of such Preferred Securities; or
(h) to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee with respect to the Securities of one or more series
and to add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of Section
6.11(b); or
(i) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act.
Section IX.2. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and
the Trustee, the Company, when authorized by a Board Resolution, and the
Trustee may enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of modifying in any manner the
rights of the Holders of Securities of such series under this Indenture;
PROVIDED, HOWEVER, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby,
(a) except to the extent permitted by Sections 3.11 or 3.14 or as
otherwise specified as contemplated by Section 2.1 or Section 3.1 with
respect to the deferral of the payment of interest on the Securities of any
series or the shortening of the Stated Maturity of the Securities of any
series, change the Stated Maturity of the principal of, or any installment of
interest (including any Additional Interest) on, any Security, or reduce the
principal amount thereof or the rate of interest thereon or reduce any
premium payable upon the redemption thereof, or reduce the amount of
principal of a Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 5.2,
or change the place of payment where, or the coin or currency in which, any
Security or interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption Date), or
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(b) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required for
any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or
(c) modify any of the provisions of this Section, Section 5.13 or
Section 10.5, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Security affected thereby; or
(d) modify the provisions in Article XIII of this Indenture with
respect to the subordination of Outstanding Securities of any series in a
manner adverse to the Holders thereof; PROVIDED, FURTHER, that, in the case
of the Securities of a series issued to a SVB Trust, so long as any of the
corresponding series of Preferred Securities issued by such SVB Trust remains
outstanding, (i) no such amendment shall be made that adversely affects the
holders of such Preferred Securities in any material respect, and no
termination of this Indenture shall occur, and no waiver of any Event of
Default or compliance with any covenant under this Indenture shall be
effective, without the prior consent of the holders of at least a majority of
the aggregate liquidation preference of such Preferred Securities then
outstanding unless and until the principal (and premium, if any) of the
Securities of such series and all accrued and, subject to Section 3.7, unpaid
interest (including any Additional Interest) thereon have been paid in full
and (ii) no amendment shall be made to Section 5.8 of this Indenture that
would impair the rights of the holders of Preferred Securities provided
therein without the prior consent of the holders of each Preferred Security
then outstanding unless and until the principal (and premium, if any) of the
Securities of such series and all accrued and (subject to Section 3.7) unpaid
interest (including any Additional Interest) thereon have been paid in full.
A supplemental indenture that changes or eliminates any covenant or
other provision of this Indenture that has expressly been included solely for
the benefit of one or more particular series of Securities or Preferred
Securities, or which modifies the rights of the Holders of Securities or
holders of Preferred Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities or holders of Preferred Securities of
any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Section IX.3. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing or accepting the additional series of Securities created by
any supplemental
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indenture permitted by this Article or the modifications thereby of any
series of Securities previously created by this Indenture, the Trustee shall
be entitled to receive, and (subject to Section 6.1) shall be fully protected
in relying upon, an Officers' Certificate and an Opinion of Counsel stating
that the execution of such supplemental indenture is authorized or permitted
by this Indenture, and that all conditions precedent have been complied with.
The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section IX.4. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article IX
or delivery to the Trustee of the Officers' Certificate pursuant to Section
3.1 hereof (which Officers' Certificate shall have the effect of a
supplemental indenture for all purposes hereunder), this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form
a part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be
bound thereby.
Section IX.5. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article IX and
every Officers' Certificate delivered to the trustee pursuant to Section 3.1
hereof shall conform to the requirements of the Trust Indenture Act as then
in effect.
Section IX.6. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article IX or delivery to the Trustee
of the Officers' Certificate pursuant to Section 3.1 hereof (which Officers'
Certificate shall have the effect of a supplemental indenture for all
purposes hereunder) may, and shall if required by the Company, bear a
notation in form approved by the Company as to any matter provided for in
such supplemental indenture or such Officers' Certificate. If the Company
shall so determine, new Securities of any series so modified as to conform,
in the opinion of the Company, to any such supplemental indenture or such
Officers's Certificate may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities of such series.
ARTICLE X
COVENANTS
Section X.1. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of (and
premium, if any) and interest on the Securities of
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that series in accordance with the terms of such Securities and this
Indenture.
Section X.2. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in each Place of Payment for any series of
Securities, an office or agency where Securities of that series may be
presented or surrendered for payment and an office or agency where Securities
of that series may be surrendered for transfer or exchange and where notices
and demands to or upon the Company in respect of the Securities of that
series and this Indenture may be served. The Company initially appoints the
Trustee, acting through its Corporate Trust Office, as its agent for said
purposes. The Company will give prompt written notice to the Trustee of any
change in the location of any such office or agency. If at any time the
Company shall fail to maintain such office or agency or shall fail to furnish
the Trustee with the address thereof, such presentations, surrenders, notices
and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent to receive
all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for
any or all of such purposes, and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall
in any manner relieve the Company of its obligation to maintain an office or
agency in each Place of Payment for Securities of any series for such
purposes. The Company will give prompt written notice to the Trustee of any
such designation and any change in the location of any such office or agency.
Section X.3. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of
the principal of (and premium, if any) or interest on any of the Securities
of such series, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal (and premium, if any)
or interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided, and will promptly notify the
Trustee of its failure so to act.
Whenever the Company shall have one or more Paying Agents, it will,
prior to 10:00 a.m. New York time on each due date of the principal of or
interest on any Securities, deposit with a Paying Agent a sum sufficient to
pay the principal (and premium, if any) or interest so becoming due, such sum
to be held in trust for the benefit of the Persons entitled to such principal
and premium (if any) or interest, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its failure so to
act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section 10.3,
that such Paying Agent will:
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(a) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or any other
obligor upon the Securities) in the making of any payment of principal (and
premium, if any) or interest:
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held
in trust by such Paying Agent; and
(d) comply with the provisions of the Trust Indenture Act applicable to
it as a Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay,
or by Company Order direct any Paying Agent to pay, to the Trustee all sums
held in trust by the Company or such Paying Agent, such sums to be held by
the Trustee upon the same trusts as those upon which such sums were held by
the Company or such Paying Agent; and, upon such payment by any Paying Agent
to the Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of (and premium, if
any) or interest on any Security and remaining unclaimed for two years after
such principal (and premium, if any) or interest has become due and payable
shall (unless otherwise required by mandatory provision of applicable escheat
or abandoned or unclaimed property law) be paid on Company Request to the
Company, or (if then held by the Company) shall (unless otherwise required by
mandatory provision of applicable escheat or abandoned or unclaimed property
law) be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published
in the English language, customarily published on each Business Day and of
general circulation in the state of California, notice that such money
remains unclaimed and that, after a date specified therein, which shall not
be less than 30 days from the date of such publication, any unclaimed balance
of such money then remaining will be repaid to the Company.
Section X.4. STATEMENT AS TO COMPLIANCE.
The Company shall deliver to the Trustee, within 120 days after the end
of each calendar
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year of the Company ending after the date hereof, an Officers' Certificate
covering the preceding calendar year, stating whether or not to the best
knowledge of the signers thereof the Company is in default in the
performance, observance or fulfillment of or compliance with any of the
terms, provisions, covenants and conditions of this Indenture, and if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge. For the purpose of this
Section 10.4, compliance shall be determined without regard to any grace
period or requirement of notice provided pursuant to the terms of this
Indenture.
Section X.5. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with any
covenant or condition provided pursuant to Sections 3.1, 9.1(c), or 9.1(d)
with respect to the Securities of any series, if before or after the time for
such compliance the Holders of at least a majority in principal amount of the
Outstanding Securities of such series shall, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with
such covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until
such waiver shall become effective, the obligations of the Company in respect
of any such covenant or condition shall remain in full force and effect.
Section X.6. ADDITIONAL SUMS.
In the case of the Securities of a series issued to a SVB Trust, so long
as no Event of Default has occurred and is continuing and except as otherwise
specified as contemplated by Section 2.1 or Section 3.1, in the event that
(i) such SVB Trust is the Holder of all of the Outstanding Securities of such
series, (ii) a Tax Event in respect of such SVB Trust shall have occurred and
be continuing and (iii) the Company shall not have (A) redeemed the
Securities of such series pursuant to Section 11.7 or (B) terminated such SVB
Trust pursuant to Section 9.2(b) of the related Trust Agreement, the Company
shall pay to such SVB Trust (and its permitted successors or assigns under
the related Trust Agreement) for so long as such SVB Trust (or its permitted
successor or assignee) is the registered holder of any Securities of such
series, such additional amounts as may be necessary in order that the amount
of Distributions (including any Additional Amounts (as defined in such Trust
Agreement)) then due and payable by such SVB Trust on the related Preferred
Securities and Common Securities that at any time remain outstanding in
accordance with the terms thereof shall not be reduced as a result of any
Additional Taxes (the "ADDITIONAL SUMS"). Whenever in this Indenture or the
Securities there is a reference in any context to the payment of principal of
or interest on the Securities, such mention shall be deemed to include
mention of the payments of the Additional Sums provided for in this paragraph
to the extent that, in such context, Additional Sums are, were or would be
payable in respect thereof pursuant to the provisions of this paragraph and
express mention of the payment of Additional Sums (if applicable) in any
provisions hereof shall not be construed as excluding Additional Sums in
those provisions hereof where such express mention is not made; PROVIDED,
HOWEVER, that the deferral of the payment of interest pursuant to Section
3.11 or the Securities shall not defer the payment of any Additional Sums
that may be due and payable.
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Section X.7. ADDITIONAL COVENANTS.
The Company covenants and agrees with each Holder of Securities of any
series that it shall not, and it shall not permit any Subsidiary of the
Company to, (a) declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any shares
of the Company's capital stock (which includes common and preferred stock),
(b) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company (including
Securities other than the Securities of such series) that rank PARI PASSU in
all respects with or junior in interest to the Securities of such series or
(c) make any guarantee payments with respect to any guarantee by the Company
of debt securities of any Subsidiary of the Company if such guarantee ranks
PARI PASSU with or junior in interest to the Securities (other than (i)
dividends or distributions in capital stock of the Company (which includes
common and preferred stock), (ii) any declaration of a dividend in connection
with the implementation of a rights plan, or the issuance of stock under any
such plan in the future, or the redemption or repurchase of any such rights
pursuant thereto, (iii) payments under the SVB Guarantee related to the
Preferred Securities issued by the SVB Trust holding Securities of such
series, and (iv) purchases of Common Stock related to the issuance of Common
Stock or rights under any of the Company's benefit plans for its directors,
officers consultants or employees or (c) redeem, purchase or acquire less
than all of the Securities of such series or any of the Preferred Securities
if at such time (i) there shall have occurred an Event of Default with
respect to the Securities of such series, (ii) if the Securities of such
series are held by a SVB Trust, the Company shall be in default with respect
to its payment of any obligations under the SVB Guarantee relating to the
Preferred Securities issued by such SVB Trust, or (iii) the Company shall
have given notice of its election to begin an Extension Period with respect
to the Securities of such series as provided herein and shall not have
rescinded such notice, or such Extension Period, or any extension thereof,
shall be continuing.
The Company also covenants with each Holder of Securities of a series
issued to a SVB Trust (i) to maintain, directly or indirectly, 100% ownership
of the Common Securities of such SVB Trust; PROVIDED, HOWEVER, that any
permitted successor of the Company hereunder may succeed to the Company's
ownership of such Common Securities, (ii) not to voluntarily terminate,
wind-up or liquidate such SVB Trust, except (a) in connection with a
distribution of the Securities of such series to the holders of Trust
Securities in liquidation of such SVB Trust or (b) in connection with certain
mergers, consolidations or amalgamations permitted by the related Trust
Agreement and (iii) to use its reasonable efforts, consistent with the terms
and provisions of such Trust Agreement, to cause such SVB Trust to remain
classified as a grantor trust and not an association taxable as a corporation
for United States federal income tax purposes.
ARTICLE XI
REDEMPTION OF SECURITIES
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Section XI.1. APPLICABILITY OF THIS ARTICLE.
Redemption of Securities of any series (whether by operation of a
sinking fund or otherwise) as permitted or required by any form of Security
issued pursuant to this Indenture shall be made in accordance with such form
of Security and this Article; provided, however, that if any provision of any
such form of Security shall conflict with any provision of this Article, the
provision of such form of Security shall govern. Except as otherwise set
forth in the form of Security for such series, each Security of such series
shall be subject to partial redemption only in the amount of $25 or, in the
case of the Securities of a series issued to a SVB Trust, $25, or integral
multiples of $25 in excess thereof.
Section XI.2. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Securities shall be evidenced
by or pursuant to a Board Resolution. In case of any redemption at the
election of the Company of less than all of the Securities of any particular
series and having the same terms, the Company shall, not less than 30 nor
more than 60 days prior to the Redemption Date (unless a shorter notice shall
be satisfactory to the Trustee), notify the Trustee of such date and of the
principal amount of Securities of that series to be redeemed. In the case of
any redemption of Securities prior to the expiration of any restriction on
such redemption provided in the terms of such Securities, the Company shall
furnish the Trustee with an Officers' Certificate and an Opinion of Counsel
evidencing compliance with such restriction.
Section XI.3. SELECTION OF SECURITIES TO BE REDEEMED.
If less than all the Securities of any series are to be redeemed (unless
all the Securities of such series and of a specified tenor are to be redeemed
or unless such redemption affects only a single Security), the particular
Securities to be redeemed shall be selected not more than 60 days prior to
the Redemption Date by the Trustee, from the Outstanding Securities of such
series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of a portion of the principal amount of any Security of such
series, provided that the portion of the principal amount of any Security not
redeemed shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security. If less than all the
Securities of such series and of a specified tenor are to be redeemed (unless
such redemption affects only a single Security), the particular Securities to
be redeemed shall be selected not more than 60 days prior to the Redemption
Date by the Trustee, from the Outstanding Securities of such series and
specified tenor not previously called for redemption in accordance with the
preceding sentence.
The Trustee shall promptly notify the Company in writing of the
Securities selected for partial redemption and the principal amount thereof
to be redeemed. For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
shall relate, in the case of any Security redeemed or to be redeemed only in
part, to the
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portion of the principal amount of such Security which has been or is to be
redeemed. If the Company shall so direct, Securities registered in the name
of the Company, any Affiliate or any Subsidiary thereof shall not be included
in the Securities selected for redemption.
Section XI.4. NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not later than the thirtieth day, and not earlier than the
sixtieth day, prior to the Redemption Date, to each Holder of Securities to
be redeemed, at the address of such Holder as it appears in the Securities
Register.
With respect to Securities of each series to be redeemed, each notice of
redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all Outstanding Securities of such particular series
and having the same terms are to be redeemed, the identification (and, in the
case of partial redemption, the respective principal amounts) of the
particular Securities to be redeemed;
(d) that on the Redemption Date, the Redemption Price will become due
and payable upon each such Security or portion thereof, and that interest
thereon, if any, shall cease to accrue on and after said date;
(e) the place or places where such Securities are to be surrendered for
payment of the Redemption Price; and
(f) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall not be
irrevocable. The notice if mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the Holder
receives such notice. In any case, a failure to give such notice by mail or
any defect in the notice to the Holder of any Security designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Security.
Section XI.5. DEPOSIT OF REDEMPTION PRICE.
Prior to 12:00 noon, Eastern time on the Redemption Date specified in
the notice of redemption given as provided in Section 11.4, the Company will
deposit with the Trustee or with
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one or more Paying Agents (or if the Company is acting as its own Paying
Agent, the Company will segregate and hold in trust as provided in Section
10.3) an amount of money sufficient to pay the Redemption Price of, and any
accrued interest (including Additional Interest) on, all the Securities which
are to be redeemed on that date.
Section XI.6. PAYMENT OF SECURITIES CALLED FOR REDEMPTION.
If any notice of redemption has been given as provided in Section 11.4,
the Securities or portion of Securities with respect to which such notice has
been given shall become due and payable on the date and at the place or
places stated in such notice at the applicable Redemption Price. On
presentation and surrender of such Securities at a Place of Payment in said
notice specified, the said securities or the specified portions thereof shall
be paid and redeemed by the Company at the applicable Redemption Price,
together with accrued interest (including any Additional Interest) to the
Redemption Date; PROVIDED, HOWEVER, that, unless otherwise specified as
contemplated by Section 3.1, installments of interest whose Stated Maturity
is on or prior to the Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and
the provisions of Section 3.7.
Upon presentation of any Security redeemed in part only, the Company
shall execute and the Trustee shall authenticate and deliver to the Holder
thereof, at the expense of the Company, a new Security or Securities of the
same series, of authorized denominations, in aggregate principal amount equal
to the portion of the Security not redeemed so presented and having the same
Original Issue Date, Stated Maturity and terms. If a Global Security is so
surrendered, such new Security will also be a new Global Security.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal of and premium, if any, on
such Security shall, until paid, bear interest from the Redemption Date at
the rate prescribed therefor in the Security.
Section XI.7. RIGHT OF REDEMPTION OF SECURITIES INITIALLY ISSUED TO A SVB
TRUST.
In the case of the Securities of a series initially issued to a SVB
Trust, except as otherwise specified as contemplated by Section 3.1, the
Company, at its option, may redeem such Securities (i) on or after the date
five years after the Original Issue Date of such Securities, in whole at any
time or in part from time to time, or (ii) upon the occurrence and during the
continuation of a Tax Event, Investment Company Event, or Capital Treatment
Event, at any time within 90 days following the occurrence of such Tax Event,
Investment Company Event or Capital Treatment Event in respect of such SVB
Trust, in whole (but not in part), in each case at a Redemption Price equal
to 100% of the principal amount thereof.
ARTICLE XII
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SINKING FUNDS
Section XII.1. APPLICABILITY OF ARTICLE.
The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of any series except as otherwise specified
as contemplated by Section 3.1 for such Securities.
The minimum amount of any sinking fund payment provided for by the terms
of any Securities of any series is herein referred to as a "mandatory sinking
fund payment", and any sinking fund payment in excess of such minimum amount
which is permitted to be made by the terms of such Securities of any series
is herein referred to as an "optional sinking fund payment". If provided for
by the terms of any Securities of any series, the cash amount of any sinking
fund payment may be subject to reduction as provided in Section 12.2. Each
sinking fund payment shall be applied to the redemption of Securities of any
series as provided for by the terms of such Securities.
Section XII.2. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.
In lieu of making all or any part of a mandatory sinking fund payment
with respect to any Securities of a series in cash, the Company may at its
option, at any time no more than 16 months and no less than 30 days prior to
the date on which such sinking fund payment is due, deliver to the Trustee
Securities of such series (together with the unmatured coupons, if any,
appertaining thereto) theretofore purchased or otherwise acquired by the
Company, except Securities of such series that have been redeemed through the
application of mandatory or optional sinking fund payments pursuant to the
terms of the Securities of such series, accompanied by a Company Order
instructing the Trustee to credit such obligations and stating that the
Securities of such series were originally issued by the Company by way of
bona fide sale or other negotiation for value; provided that the Securities
to be so credited have not been previously so credited. The Securities to be
so credited shall be received and credited for such purpose by the Trustee at
the redemption price for such Securities, as specified in the Securities so
to be redeemed, for redemption through operation of the sinking fund and the
amount of such sinking fund payment shall be reduced accordingly.
Section XII.3. REDEMPTION OF SECURITIES FOR SINKING FUND.
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment
for such Securities pursuant to the terms of such Securities, the portion
thereof, if any, which is to be satisfied by payment of cash in the currency
in which the Securities of such series are payable (except as provided
pursuant to Section 3.1) and the portion thereof, if any, which is to be
satisfied by delivering and crediting Securities pursuant to Section 12.2 and
will also deliver to the Trustee any Securities to be so delivered. Such
Officers'
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Certificate shall be irrevocable and upon its delivery the Company shall be
obligated to make the cash payment or payments therein referred to, if any,
on or before the succeeding sinking fund payment date. In the case of the
failure of the Company to deliver such Officers' Certificate (or, as required
by this Indenture, the Securities and coupons, if any, specified in such
Officers' Certificate), the sinking fund payment due on the succeeding
sinking fund payment date for such series shall be paid entirely in cash and
shall be sufficient to redeem the principal amount of the Securities of such
series subject to a mandatory sinking fund payment without the right to
deliver or credit securities as provided in Section 12.2 and without the
right to make the optional sinking fund payment with respect to such series
at such time.
Any sinking fund payment or payments (mandatory or optional) made in
cash plus any unused balance of any preceding sinking fund payments made with
respect to the Securities of any particular series shall be applied by the
Trustee (or by the Company if the Company is acting as its own Paying Agent)
on the sinking fund payment date on which such payment is made (or, if such
payment is made before a sinking fund payment date, on the sinking fund
payment date immediately following the date of such payment) to the
redemption of Securities of such series at the Redemption Price specified in
such Securities with respect to the sinking fund. Any sinking fund moneys not
so applied or allocated by the Trustee (or, if the Company is acting as its
own Paying Agent, segregated and held in trust by the Company as provided in
Section 10.3) for such series and together with such payment (or such amount
so segregated) shall be applied in accordance with the provisions of this
Section 12.3. Any and all sinking fund moneys with respect to the Securities
of any particular series held by the Trustee (or if the Company is acting as
its own Paying Agent, segregated and held in trust as provided in Section
10.3) on the last sinking fund payment date with respect to Securities of
such series and not held for the payment or redemption of particular
Securities of such series shall be applied by the Trustee (or by the Company
if the Company is acting as its own Paying Agent), together with other
moneys, if necessary, to be deposited (or segregated) sufficient for the
purpose, to the payment of the principal of the Securities of such series at
Maturity. The Trustee shall select the Securities to be redeemed upon such
sinking fund payment date in the manner specified in Section 11.3 and cause
notice of the redemption thereof to be given in the name of and at the
expense of the Company in the manner provided in Section 11.4. Such notice
having been duly given, the redemption of such Securities shall be made upon
the terms and in the manner stated in Section 11.6. On or before each
sinking fund payment date, the Company shall pay to the Trustee (or, if the
Company is acting as its own Paying Agent, the Company shall segregate and
hold in trust as provided in Section 10.3) in cash a sum in the currency in
which Securities of such series are payable (except as provided pursuant to
Section 3.1) equal to the principal and any interest accrued to the
Redemption Date for Securities or portions thereof to be redeemed on such
sinking fund payment date pursuant to this Section 12.3.
Neither the Trustee nor the Company shall redeem any Securities of a
series with sinking fund moneys or mail any notice of redemption of
Securities of such series by operation of the sinking fund for such series
during the continuance of a default in payment of interest, if any, on any
Securities of such series or of any Event of Default (other than an Event of
Default occurring
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as a consequence of this paragraph) with respect to the Securities of such
series, except that if the notice of redemption shall have been provided in
accordance with the provisions hereof, the Trustee (or the Company, if the
Company is then acting as its own Paying Agent) shall redeem such Securities
if cash sufficient for that purpose shall be deposited with the Trustee (or
segregated by the Company) for that purpose in accordance with the terms of
this Article XII. Except as aforesaid, any moneys in the sinking fund for
such series at the time when any such default or Event of Default shall occur
and any moneys thereafter paid into such sinking fund shall, during the
continuance of such default or Event of Default, be held as security for the
payment of the Securities and coupons, if any, of such series; provided,
however, that in case such default or Event of Default shall have been cured
or waived herein, such moneys shall thereafter be applied on the next sinking
fund payment date for the Securities of such series on which such moneys may
be applied pursuant to the provisions of this Section 12.3.
ARTICLE XIII
SUBORDINATION OF SECURITIES
Section XIII.1. SECURITIES SUBORDINATE TO SENIOR AND SUBORDINATED DEBT.
The Company covenants and agrees, and each Holder of a Security, by its
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article XIII, the payment of the
principal of (and premium, if any) and interest (including any Additional
Interest) on each and all of the Securities are hereby expressly made
subordinate and subject in right of payment to the prior payment in full of
all amounts then due and payable in respect of all Senior and Subordinated
Debt.
Section XIII.2. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
In the event of any liquidation, dissolution, winding up, receivership,
insolvency, bankruptcy, reorganization, arrangement, adjustment, composition,
assignment for the benefit of creditors, marshaling of assets, debt
restructuring or other similar proceedings relative to the Company (each such
event, if any, herein sometimes referred to as a "Proceeding"), then the
holders of Senior and Subordinated Debt shall be entitled to receive payment
in full of Allocable Amounts of such Senior and Subordinated Debt, or
provision shall be made for such payment in cash or cash equivalents or
otherwise in a manner satisfactory to the holders of Senior and Subordinated
Debt, before the Holders of the Securities are entitled to receive or retain
any payment or distribution of any kind or character, whether in cash,
property or securities (including any payment or distribution which may be
payable or deliverable by reason of the payment of any other Debt of the
Company subordinated to the payment of the Securities, such payment or
distribution being hereinafter referred to as a "Junior Subordinated
Payment"), on account of principal of (or premium, if any) or interest
(including any Additional Interest) on the Securities or on account of the
purchase or other acquisition of Securities by the Company or any Subsidiary
and to that end the holders of Senior and Subordinated Debt shall be entitled
to
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receive, for application to the payment thereof, any payment or distribution
of any kind or character, whether in cash, property or securities, including
any Junior Subordinated Payment, which may be payable or deliverable in
respect of the Securities in any such Proceeding.
In the event that, notwithstanding the foregoing provisions of this
Section 13.2, the Trustee or the Holder of any Security shall have received
any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, including any Junior
Subordinated Payment, before all Allocable Amounts of all Senior and
Subordinated Debt are paid in full or payment thereof is provided for in cash
or cash equivalents or otherwise in a manner satisfactory to the holders of
Senior and Subordinated Debt, and if such fact shall, at or prior to the time
of such payment or distribution, have been made known to the Trustee or, as
the case may be, such Holder, then and in such event such payment or
distribution shall be paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or
other Person making payment or distribution of assets of the Company for
application to the payment of all Allocable Amounts of all Senior and
Subordinated Debt remaining unpaid, to the extent necessary to pay all
Allocable Amounts of all Senior and Subordinated Debt in full, after giving
effect to any concurrent payment or distribution to or for the holders of
Senior and Subordinated Debt.
For purposes of this Article XIII only, the words "any payment or
distribution of any kind or character, whether in cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment which
securities are subordinated in right of payment to all then outstanding
Senior and Subordinated Debt to substantially the same extent as the
Securities are so subordinated as provided in this Article XIII. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the sale of
all or substantially all of its properties and assets as an entirety to
another Person upon the terms and conditions set forth in Article VIII shall
not be deemed a Proceeding for the purposes of this Section 13.2 if the
Person formed by such consolidation or into which the Company is merged or
the Person which acquires by sale such properties and assets as an entirety,
as the case may be, shall, as a part of such consolidation, merger, or sale
comply with the conditions set forth in Article VIII.
Section XIII.3. PRIOR PAYMENT TO SENIOR AND SUBORDINATED DEBT UPON
ACCELERATION OF SECURITIES.
In the event that any Securities are declared due and payable before
their Stated Maturity, then and in such event the holders of the Senior and
Subordinated Debt outstanding at the time such Securities so become due and
payable shall be entitled to receive payment in full of all Allocable Amounts
due on or in respect of such Senior and Subordinated Debt (including any
amounts due upon acceleration), or provision shall be made for such payment
in cash or cash equivalents or otherwise in a manner satisfactory to the
holders of Senior and Subordinated Debt, before the Holders of the Securities
are entitled to receive any payment or distribution of any kind or character,
whether in cash, properties or securities (including any Junior Subordinated
73
<PAGE>
Payment) by the Company on account of the principal of (or premium, if any)
or interest (including any Additional Interest) on the Securities or on
account of the purchase or other acquisition of Securities by the Company or
any Subsidiary; PROVIDED, HOWEVER, that nothing in this Section 13.3 shall
prevent the satisfaction of any sinking fund payment in accordance with this
Indenture or as otherwise specified as contemplated by Section 3.1 for the
Securities of any series by delivering and crediting pursuant to Section 12.2
or as otherwise specified as contemplated by Section 3.1 for the Securities
of any series Securities which have been acquired (upon redemption or
otherwise) prior to such declaration of acceleration.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section 13.3, and if such fact shall, at or
prior to the time of such payment, have been made known to the Trustee or, as
the case may be, such Holder, then and in such event such payment shall be
paid over and delivered forthwith to the Company.
The provisions of this Section 13.3 shall not apply to any payment with
respect to which Section 13.2 would be applicable.
Section XIII.4. NO PAYMENT WHEN SENIOR AND SUBORDINATED DEBT IN DEFAULT.
(a) In the event and during the continuation of any default in the
payment of principal of (or premium, if any) or interest on any Senior and
Subordinated Debt, or in the event that any event of default with respect to
any Senior and Subordinated Debt shall have occurred and be continuing and
shall have resulted in such Senior and Subordinated Debt becoming or being
declared due and payable prior to the date on which it would otherwise have
become due and payable, unless and until such event of default shall have
been cured or waived or shall have ceased to exist and such acceleration
shall have been rescinded or annulled, or (b) in the event any judicial
proceeding shall be pending with respect to any such default in payment or
such event or default, then no payment or distribution of any kind or
character, whether in cash, properties or securities (including any Junior
Subordinated Payment) shall be made by the Company on account of principal of
(or premium, if any) or interest (including any Additional Interest), if any,
on the Securities or on account of the purchase or other acquisition of
Securities by the Company or any Subsidiary, in each case unless and until
all Allocable Amounts of such Senior and Subordinated Debt are paid in full;
PROVIDED, HOWEVER, that nothing in this Section 13.4 shall prevent the
satisfaction of any sinking fund payment in accordance with this Indenture or
as otherwise specified as contemplated by Section 3.1 for the Securities of
any series by delivering and crediting pursuant to Section 12.2 or as
otherwise specified as contemplated by Section 3.1 for the Securities of any
series Securities which have been acquired (upon redemption or otherwise)
prior to such default in payment or event of default.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section 13.4, and if such fact shall, at or
prior to the time of such payment, have been made known to the
74
<PAGE>
Trustee or, as the case may be, such Holder, then and in such event such
payment shall be paid over and delivered forthwith to the Company.
The provisions of this Section 13.4 shall not apply to any payment with
respect to which Section 13.2 would be applicable.
Section XIII.5. PAYMENT PERMITTED IF NO DEFAULT.
Nothing contained in this Article XIII or elsewhere in this Indenture or
in any of the Securities shall prevent (a) the Company, at any time except
during the pendency of any Proceeding referred to in Section 13.2 or under
the conditions described in Sections 13.3 and 13.4, from making payments at
any time of principal of (and premium, if any) or interest (including
Additional Interest) on the Securities, or (b) the application by the Trustee
of any money deposited with it hereunder to the payment of or on account of
the principal of (and premium, if any) or interest (including any Additional
Interest) on the Securities or the retention of such payment by the Holders,
if, at the time of such application by the Trustee, it did not have knowledge
that such payment would have been prohibited by the provisions of this
Article XIII.
Section XIII.6. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR AND SUBORDINATED
DEBT.
Subject to the payment in full of all amounts due or to become due on
all Senior and Subordinated Debt, or the provision for such payment in cash
or cash equivalents or otherwise in a manner satisfactory to the holders of
Senior and Subordinated Debt, the Holders of the Securities shall be
subrogated to the extent of the payments or distributions made to the holders
of such Senior and Subordinated Debt pursuant to the provisions of this
Article XIII (equally and ratably with the holders of all indebtedness of the
Company which by its express terms is subordinated to Senior and Subordinated
Debt of the Company to substantially the same extent as the Securities are
subordinated to the Senior and Subordinated Debt and is entitled to like
rights of subrogation by reason of any payments or distributions made to
holders of such Senior and Subordinated Debt) to the rights of the holders of
such Senior and Subordinated Debt to receive payments and distributions of
cash, property and securities applicable to the Senior and Subordinated Debt
until the principal of (and premium, if any) and interest on the Securities
shall be paid in full. For purposes of such subrogation, no payments or
distributions to the holders of the Senior and Subordinated Debt of any cash,
property or securities to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article, and no payments
pursuant to the provisions of this Article XIII to the holders of Senior and
Subordinated Debt by Holders of the Securities or the Trustee shall, as among
the Company, its creditors other than holders of Senior and Subordinated
Debt, and the Holders of the Securities, be deemed to be a payment or
distribution by the Company to or on account of the Senior and Subordinated
Debt.
Section XIII.7. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.
The provisions of this Article XIII are and are intended solely for the
purpose of defining
75
<PAGE>
the relative rights of the Holders of the Securities on the one hand and the
holders of Senior and Subordinated Debt on the other hand. Nothing contained
in this Article XIII or elsewhere in this Indenture or in the Securities is
intended to or shall (a) impair, as between the Company and the Holders of
the Securities, the obligations of the Company, which are absolute and
unconditional, to pay to the Holders of the Securities the principal of (and
premium, if any) and interest (including any Additional Interest) on the
Securities as and when the same shall become due and payable in accordance
with their terms; or (b) affect the relative rights against the Company of
the Holders of the Securities and creditors of the Company other than their
rights in relation to the holders of Senior and Subordinated Debt; or (c)
prevent the Trustee or the Holder of any Security from exercising all
remedies otherwise permitted by applicable law upon default under this
Indenture including, without limitation, filing and voting claims in any
Proceeding, subject to the rights, if any, under this Article XIII of the
holders of Senior and Subordinated Debt to receive cash, property and
securities otherwise payable or deliverable to the Trustee or such Holder.
Section XIII.8. TRUSTEE TO EFFECTUATE SUBORDINATION.
Each Holder of a Security by his or her acceptance thereof authorizes
and directs the Trustee on his or her behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination
provided in this Article XIII and appoints the Trustee his or her
attorney-in-fact for any and all such purposes.
Section XIII.9. NO WAIVER OF SUBORDINATION PROVISIONS.
No right of any present or future holder of any Senior and Subordinated
Debt to enforce subordination as herein provided shall at any time in any way
be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof that any
such holder may have or be otherwise charged with.
Without in any way limiting the generality of the immediately preceding
paragraph, the holders of Senior and Subordinated Debt may, at any time and
from to time, without the consent of or notice to the Trustee or the Holders
of the Securities, without incurring responsibility to the Holders of the
Securities and without impairing or releasing the subordination provided in
this Article or the obligations hereunder of the Holders of the Securities to
the holders of Senior and Subordinated Debt, do any one or more of the
following: (i) change the manner, place or terms of payment or extend the
time of payment of, or renew or alter, Senior and Subordinated Debt, or
otherwise amend or supplement in any manner Senior and Subordinated Debt or
any instrument evidencing the same or any agreement under which Senior and
Subordinated Debt is outstanding; (ii) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior and
Subordinated Debt; (iii) release any Person liable in any manner for the
collection of Senior and Subordinated Debt; and (iv) exercise or refrain from
exercising any
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<PAGE>
rights against the Company and any other Person.
Section XIII.10. NOTICE TO TRUSTEE.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by
the Trustee in respect of the Securities. Notwithstanding the provisions of
this Article XIII or any other provision of this Indenture, the Trustee shall
not be charged with knowledge of the existence of any facts which would
prohibit the making of any payment to or by the Trustee in respect of the
Securities, unless and until the Trustee shall have received written notice
thereof from the Company or a holder of Senior and Subordinated Debt or from
any trustee, agent or representative therefor; provided, however, that if the
Trustee shall not have received the notice provided for in this Section 13.10
at least two Business Days prior to the date upon which by the terms hereof
any monies may become payable for any purpose (including, without limitation,
the payment of the principal of (and premium, if any) or interest (including
any Additional Interest) on any Security), then, anything herein contained to
the contrary notwithstanding, the Trustee shall have full power and authority
to receive such monies and to apply the same to the purpose for which they
were received and shall not be affected by any notice to the contrary which
may be received by it within two Business Days prior to such date.
Subject to the provisions of Section 6.1, the Trustee shall be entitled
to rely on the delivery to it of a written notice by a Person representing
himself to be a holder of Senior and Subordinated Debt (or a trustee
therefor) to establish that such notice has been given by a holder of Senior
and Subordinated Debt (or a trustee therefor). In the event that the Trustee
determines in good faith that further evidence is required with respect to
the right of any Person as a holder of Senior and Subordinated Debt to
participate in any payment or distribution pursuant to this Article, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior and Subordinated Debt
held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to
the rights of such Person under this Article, and if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
Section XIII.11. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT.
Upon any payment or distribution of assets of the Company referred to in
this Article XIII, the Trustee, subject to the provisions of Section 6.1, and
the Holders of the Securities shall be entitled to rely upon any order or
decree entered by any court of competent jurisdiction in which such
Proceeding is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of
creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior and Subordinated Debt and other
indebtedness of the Company, the amount
77
<PAGE>
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article XIII.
Section XIII.12. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR AND
SUBORDINATED DEBT.
The Trustee, in its capacity as trustee under this Indenture, shall not
be deemed to owe any fiduciary duty to the holders of Senior and Subordinated
Debt and shall not be liable to any such holders if it shall in good faith
mistakenly pay over or distribute to Holders of Securities or to the Company
or to any other Person cash, property or securities to which any holders of
Senior and Subordinated Debt shall be entitled by virtue of this Article or
otherwise.
Section XIII.13. RIGHTS OF TRUSTEE AS HOLDER OF SENIOR AND SUBORDINATED
DEBT; PRESERVATION OF TRUSTEE'S RIGHTS.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article XIII with respect to any Senior and
Subordinated Debt which may at any time be held by it, to the same extent as
any other holder of Senior and Subordinated Debt, and nothing in this
Indenture shall deprive the Trustee of any of its rights as such holder.
Section XIII.14. ARTICLE APPLICABLE TO PAYING AGENTS.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article XIII shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying
Agent within its meaning as fully for all intents and purposes as if such
Paying Agent were named in this Article XIII in addition to or in place of
the Trustee.
Section XIII.15. CERTAIN CONVERSIONS OR EXCHANGES DEEMED PAYMENT.
For the purposes of this Article XIII only, (a) the issuance and
delivery of junior securities upon conversion or exchange of Securities shall
not be deemed to constitute a payment or distribution on account of the
principal of (or premium, if any) or interest (including any Additional
Interest) on Securities or on account of the purchase or other acquisition of
Securities, and (b) the payment, issuance or delivery of cash, property or
securities (other than junior securities) upon conversion or exchange of a
Security shall be deemed to constitute payment on account of the principal of
such security. For the purposes of this Section 13.15, the term "junior
securities" means (i) shares of any stock of any class of the Company and
(ii) securities of the Company which are subordinated in right of payment to
all Senior and Subordinated Debt which may be outstanding at the time of
issuance or delivery of such securities to substantially the same extent as,
or to a greater extent than, the Securities are so subordinated as provided
in this Article XIII.
* * * *
78
<PAGE>
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.
79
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
SILICON VALLEY BANCSHARES
By: /s/ John C. Dean
---------------------------------
Name: John C. Dean
Title: President and Chief Executive
Officer
Attest:
By: /s/ A. Catherine Ngo
----------------------------
Name: A. Catherine Ngo
Title: Executive Vice President
and Secretary
WILMINGTON TRUST COMPANY,
as Trustee
By: /s/ Denise M. Geran
---------------------------------
Its: Financial Services Officer
Attest:
By: /s/ Joseph B. Feil
----------------------------
Its: Assistant Secretary
80
<PAGE>
EXHIBIT 4.3
[Face of Security]
THIS JUNIOR SUBORDINATED DEBENTURE IS A GLOBAL CERTIFICATE WITHIN THE MEANING
OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") OR A NOMINEE OF THE DEPOSITARY.
THIS JUNIOR SUBORDINATED DEBENTURE IS EXCHANGEABLE FOR JUNIOR SUBORDINATED
DEBENTURES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR
ITS NOMINEE ONLY IN THE CIRCUMSTANCES DESCRIBED IN THE JUNIOR SUBORDINATED
INDENTURE AND NO TRANSFER OF THIS JUNIOR SUBORDINATED DEBENTURE (OTHER THAN A
TRANSFER OF THIS JUNIOR SUBORDINATED DEBENTURE AS A WHOLE BY THE DEPOSITARY
TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN
LIMITED CIRCUMSTANCES.
UNLESS THIS JUNIOR SUBORDINATED DEBENTURE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY (55 WATER STREET, NEW YORK) TO SILICON
VALLEY BANCSHARES OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY JUNIOR SUBORDINATED DEBENTURE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT HEREON IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
SILICON VALLEY BANCSHARES
8.25% JUNIOR SUBORDINATED DEFERRABLE
INTEREST DEBENTURE DUE JUNE 15, 2028
CUSIP NO.: 827064 AA 4
REGISTERED NO. 1 PRINCIPAL AMOUNT: $41,237,125
Silicon Valley Bancshares, a corporation organized and existing under
the laws of California (hereinafter called the "Company", which term includes
any successor corporation under the Indenture hereinafter referred to), for
value received, hereby promises to pay to Wilmington Trust Company, as
Property Trustee, for the benefit of Cede & Co., as the nominee of the
Depositary Trust Company and the registered owner of this Debenture, the
principal sum of $41,237,125 on June 15, 2028; provided that the Company may
shorten the Stated Maturity of the principal of this Security to a date not
earlier than June 15, 2003. The Company further promises to pay interest on
said principal sum from the date of original issuance or from the most recent
interest payment date (each such date, an "Interest Payment Date") on which
interest has been paid or duly provided for, quarterly (subject to deferral
as set forth herein) in arrears on the
<PAGE>
15th day of March, June, September and December of each year commencing
September 15, 1998 at the rate of 8.25% per annum, until the principal hereof
shall have become due and payable, plus Additional Interest, if any, until
the principal hereof is paid or duly provided for or made available for
payment and on any overdue principal and (without duplication and to the
extent that payment of such interest is enforceable under applicable law) on
any overdue installment of interest at the rate of 8.25% per annum,
compounded quarterly. The amount of interest payable for any period shall be
computed on the basis of twelve 30-day months and a 360-day year. The amount
of interest payable for any partial period shall be computed on the basis of
the number of days elapsed in a 360-day year of twelve 30-day months. In the
event that any date on which interest is payable on this Security is not a
Business Day, then a payment of the interest payable on such date will be
made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), with the same force
and effect as if made on the date the payment was originally payable. A
"Business Day" shall mean any day other than a Saturday or Sunday or a day on
which banking institutions in the State of California are authorized or
required by law or executive order to remain closed or on a day on which the
Corporate Trust Office of the Trustee, or the principal office of the
Property Trustee under the Trust Agreement (hereinafter referred to) is
closed for business. The interest installment so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
the Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest installment, which shall be the next
Business Day preceding such Interest Payment Date. Any such interest
installment not so punctually paid or duly provided for shall forthwith cease
to be payable to the Holder on such Regular Record Date and may either be
paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities of this series not less than
10 days prior to such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities of this series may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in
said Indenture.
So long as no Event of Default has occurred and is continuing, the
Company shall have the right at any time during the term of this Security to
defer payment of interest on this Security, at any time or from time to time,
for up to 20 consecutive quarterly interest payment periods with respect to
each deferral period (each an "Extension Period"), (during which Extension
Periods the Company shall have the right to make partial payments of interest
on any Interest Payment Date, and at the end of which the Company shall pay
all interest then accrued and unpaid (together with Additional Interest
thereon to the extent permitted by applicable law)); provided, however, that
no Extension Period shall extend beyond the Stated Maturity of the principal
of this Security; provided, further, that during any such Extension Period,
the Company shall not, and shall not permit any Subsidiary of the Company to,
(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 (which includes common and preferred stock), (ii) make any
payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt security of the Company (including Securities
issued by the Company pursuant to the
<PAGE>
Indenture other than the Securities represented by this certificate) that
ranks PARI PASSU with or junior in interest to this Security, (iii) make any
guarantee payments with respect to any guarantee by the Company of the debt
securities of any Subsidiaries of the Company (if such guarantee ranks PARI
PASSU in all respects with or junior in interest to this Security) (other
than (a) dividends or distributions in capital stock of the Company (which
includes common and preferred stock), (b) any declaration of a dividend in
connection with the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the
Silicon Valley Bancshares Guarantee related to the Trust Preferred Securities
issued by SVB Capital I, and (d) purchases of Common Stock related to the
issuance of Common Stock or rights under any of the Company's benefit plans
for its directors, officers or employees) or (iv) redeem, purchase or acquire
less than all of the Securities represented by this certificate or any of the
Preferred Securities. Prior to the termination of any such Extension Period,
the Company may further extend such Extension Period, provided that such
extension does not cause such Extension Period to exceed 20 consecutive
interest payment periods or to extend beyond the Stated Maturity. Upon the
termination of any such Extension Period and upon the payment of all amounts
then due on any Interest Payment Date, and subject to the foregoing
limitation, 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 shall give the Trustee, the Property Trustee and
the Administrative Trustees of SVB Capital I notice of its election to begin
any Extension Period at least one Business Day prior to the earlier of (i)
the date on which Distributions on the Trust Preferred Securities would be
payable except for the election to begin such Extension Period, (ii) the date
the Administrative Trustees are required to give notice to the New York Stock
Exchange, the Nasdaq National Market or other applicable stock exchange or
automated quotation system on which the Preferred Securities are then listed
or quoted or to holders of such Preferred Securities of the record date, or
(iii) the date such Distributions are payable, but in any event not less than
one Business Day prior to such record date. The Trustee shall 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.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Trustee or at the office
of such paying agent or paying agents as the Company may designate from time
to time, maintained for that purpose in the United States, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that at
the option of the Company payment of interest may be made (i) by check mailed
to the address of the person entitled thereto as such address shall appear in
the Securities Register of (ii) by transfer to an account maintained by the
person entitled thereto, in immediately available funds, at such place and to
such account as may be designated by the Person entitled thereto as specified
in the Securities Register.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, unsecured and will rank junior and subordinate and subject
in right of payments to the prior payment in full of all Senior and
Subordinated Debt, and this Security is issued subject to
<PAGE>
the provisions of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
actions as may be necessary or appropriate to effectuate the subordination so
provided, and (c) appoints the Trustee his attorney-in-fact for any and all
such purposes. Each Holder hereof, by his acceptance hereof, waives all
notice of the acceptance of the subordination provisions contained herein and
in the Indenture by each holder of Senior and Subordinated Debt, whether now
outstanding or hereafter incurred, and waives reliance by each such holder
upon said provisions.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
SILICON VALLEY BANCSHARES
By: /s/ John C. Dean
------------------------------
Name: John C. Dean
Title: President and Chief Executive
Officer
Attest:
By: A. Catherine Ngo
------------------------------
Name: A. Catherine Ngo
Title: Executive Vice President
and Secretary
<PAGE>
This is one of the Securities referred to in the within mentioned
Indenture.
Dated: May 22, 1998
WILMINGTON TRUST COMPANY
as Trustee
By: /s/ Denise M. Geran
------------------------------
Authorized Officer
<PAGE>
[Reverse of Security]
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or
more series under a Junior Subordinated Indenture, dated as of May 22, 1998
(herein called the "Indenture"), between the Company and Wilmington Trust
Company, as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Trustee, the Company and the Holders of the Securities, and of the terms
upon which the Securities are, and are to be, authenticated and delivered.
This Security is one of the series designated on the face hereof, limited in
aggregate principal amount to $41,237,125.
All terms used in this Security that are defined in the Indenture and in
the Amended and Restated Trust Agreement, dated as of May 22, 1998, as
amended (the "Trust Agreement"), for SVB Capital I among Silicon Valley
Bancshares, as Depositor, and the Trustees named therein, shall have the
meanings assigned to them in the Indenture or the Trust Agreement, as the
case may be.
The Company may at any time, at its option, on or after June 15, 2003,
and subject to the terms and conditions of Article XI of the Indenture, and
subject to the Company having received any necessary regulatory approval to
do so if then required under applicable capital guidelines or policies,
redeem this Security in whole at any time or in part from time to time,
without premium or penalty, at a redemption price equal to the accrued and
unpaid interest on the Security so redeemed to the Redemption Date, plus 100%
of the principal amount thereof.
Upon the occurrence and during the continuation of a Tax Event,
Investment Company Event or Capital Treatment Event, the Company may, at its
option, at any time within 90 days of the occurrence of such Tax Event,
Investment Company Event or Capital Treatment Event redeem this Security, in
whole but not in part, subject to the provisions of Section 11.7 and the
other provisions of Article XI of the Indenture, at a redemption price equal
to the accrued and unpaid interest on the Security so redeemed to the
Redemption Date, plus 100% of the principal amount thereof.
In the event of redemption of this Security in part only, a new Security
or Securities of this series for the portion hereof not redeemed will be
issued in the name of the Holder hereof upon the cancellation hereof.
The Indenture contains provisions for satisfaction and discharge of the
entire indebtedness of this Security upon compliance by the Company with
certain conditions set forth in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee at any time to enter into a supplemental indenture or
indentures for the purpose
<PAGE>
of modifying in any manner the rights and obligations of the Company and of
the Holders of the Securities, with the consent of the Holders of not less
than a majority in principal amount of the Outstanding Securities of each
series to be affected by such supplemental indenture. The Indenture also
contains provisions permitting Holders of specified percentages in principal
amount of the Securities of each series at the time Outstanding, on behalf of
the Holders of all Securities of such series, to waive compliance by the
Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by
the Holder of this Security shall be conclusive and binding upon such Holder
and upon all future Holders of this Security and of any Security issued upon
the registration of transfer hereof or in exchange therefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Security.
As provided in and subject to the provisions of the Indenture, if an
Event of Default with respect to the Securities of this series at the time
Outstanding occurs and is continuing, then and in every such case the Trustee
or the Holders of not less than 25% in principal amount of the Outstanding
Securities of this series may declare the principal amount of all the
Securities of this series to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by Holders), provided
that, in the case of the Securities of this series issued to Cede & Co. for
the benefit of SVB Capital I, if upon an Event of Default, the Trustee or the
Holders of not less than 25% in principal amount of the Outstanding
Securities of this series fails to declare the principal of all the
Securities of this series to be immediately due and payable, the holders of
at least 25% in aggregate Liquidation Amount of the Trust Preferred
Securities then outstanding shall have such right by a notice in writing to
the Company and the Trustee; and upon any such declaration the principal
amount of and the accrued interest (including any Additional Interest) on all
the Securities of this series shall become immediately due and payable,
provided that the payment of principal and interest (including any Additional
Interest) on such Securities shall remain subordinated to the extent provided
in Article XIII of the Indenture.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of (and premium, if
any) and interest on this Security at the times, place and rate, and in the
coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Securities
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained under Section 10.2 of the
Indenture duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Securities Registrar
duly executed by, the Holder hereof or his attorney duly authorized in
writing and thereupon one or more new Securities of this series, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees. No service charge shall
be made for any such registration of transfer or exchange, but the Company
may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
<PAGE>
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to
the contrary.
The Securities of this series are issuable only in registered form
without coupons in denominations of minimum denominations of $25 and any
integral multiples of $25 in excess thereof. As provided in the Indenture
and subject to certain limitations therein set forth, Securities of this
series are exchangeable for a like aggregate principal amount of Securities
of such series of a different authorized denomination, as requested by the
Holder surrendering the same.
The Company and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Security agree that for United States Federal, state and
local tax purposes it is intended that this Security constitute indebtedness.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES THEREOF.
<PAGE>
EXHIBIT 4.6
AMENDED AND RESTATED TRUST AGREEMENT
among
Silicon Valley Bancshares, as Depositor,
Wilmington Trust Company,
as Property Trustee,
Wilmington Trust Company,
as Delaware Trustee,
and
The Administrative Trustees Named Herein
Dated as of May 22, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I. DEFINED TERMS......................................................... 1
Section 1.1. DEFINITIONS...................................................... 1
ARTICLE II. ESTABLISHMENT OF THE TRUST............................................ 10
Section 2.1. NAME............................................................. 10
Section 2.2. OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE OF BUSINESS...... 11
Section 2.3. INITIAL CONTRIBUTION OF TRUST PROPERTY; ORGANIZATIONAL EXPENSES.. 11
Section 2.4. ISSUANCE OF THE PREFERRED SECURITIES............................. 11
Section 2.5. ISSUANCE OF THE COMMON SECURITIES; SUBSCRIPTION AND PURCHASE OF
DEBENTURES....................................................... 11
Section 2.6. DECLARATION OF TRUST............................................. 12
Section 2.7. AUTHORIZATION TO ENTER INTO CERTAIN TRANSACTIONS................. 12
Section 2.8. ASSETS OF TRUST.................................................. 15
Section 2.9. TITLE TO TRUST PROPERTY.......................................... 16
ARTICLE III. PAYMENT ACCOUNT....................................................... 16
Section 3.1. PAYMENT ACCOUNT.................................................. 16
ARTICLE IV. DISTRIBUTIONS; REDEMPTION............................................. 16
Section 4.1. DISTRIBUTIONS.................................................... 16
Section 4.2. REDEMPTION....................................................... 17
Section 4.3. SUBORDINATION OF COMMON SECURITIES............................... 19
Section 4.4. PAYMENT PROCEDURES............................................... 20
Section 4.5. TAX RETURNS AND REPORTS.......................................... 20
Section 4.6. PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST...................... 20
Section 4.7. PAYMENTS UNDER INDENTURE OR PURSUANT TO DIRECT ACTIONS........... 20
ARTICLE V. TRUST SECURITIES CERTIFICATES......................................... 21
Section 5.1. INITIAL OWNERSHIP................................................ 21
Section 5.2. THE TRUST SECURITIES CERTIFICATES................................ 21
Section 5.3. EXECUTION AND DELIVERY OF TRUST SECURITIES CERTIFICATES.......... 21
Section 5.4. REGISTRATION OF TRANSFER AND EXCHANGE OF PREFERRED SECURITIES
CERTIFICATES..................................................... 21
Section 5.5. MUTILATED, DESTROYED, LOST OR STOLEN TRUST SECURITIES
CERTIFICATES..................................................... 22
Section 5.6. PERSONS DEEMED SECURITYHOLDERS................................... 23
Section 5.7. ACCESS TO LIST OF SECURITYHOLDERS' NAMES AND ADDRESSES........... 23
Section 5.8. MAINTENANCE OF OFFICE OR AGENCY.................................. 23
Section 5.9. APPOINTMENT OF PAYING AGENT...................................... 23
Section 5.10. OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR...................... 24
lxxii
<PAGE>
PAGE
----
Section 5.11. BOOK-ENTRY PREFERRED SECURITIES CERTIFICATES; COMMON SECURITIES
CERTIFICATE..................................................... 24
Section 5.12. NOTICES TO CLEARING AGENCY...................................... 25
Section 5.13. DEFINITIVE PREFERRED SECURITIES CERTIFICATES.................... 25
Section 5.14. RIGHTS OF SECURITYHOLDERS....................................... 26
ARTICLE VI. ACTS OF SECURITYHOLDERS; MEETINGS; VOTING............................. 28
Section 6.1. LIMITATIONS ON VOTING RIGHTS..................................... 28
Section 6.2. NOTICE OF MEETINGS............................................... 29
Section 6.3. MEETINGS OF PREFERRED SECURITYHOLDERS............................ 29
Section 6.4. VOTING RIGHTS.................................................... 29
Section 6.5. PROXIES, ETC..................................................... 29
Section 6.6. SECURITYHOLDER ACTION BY WRITTEN CONSENT......................... 30
Section 6.7. RECORD DATE FOR VOTING AND OTHER PURPOSES........................ 30
Section 6.8. ACTS OF SECURITYHOLDERS.......................................... 30
Section 6.9. INSPECTION OF RECORDS............................................ 31
ARTICLE VII. REPRESENTATIONS AND WARRANTIES........................................ 31
Section 7.1. REPRESENTATIONS AND WARRANTIES OF THE BANK....................... 31
Section 7.2. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR...................... 32
ARTICLE VIII. THE TRUSTEES.......................................................... 33
Section 8.1. CERTAIN DUTIES AND RESPONSIBILITIES.............................. 33
Section 8.2. CERTAIN NOTICES.................................................. 34
Section 8.3. CERTAIN RIGHTS OF PROPERTY TRUSTEE............................... 35
Section 8.4. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES........... 36
Section 8.5. MAY HOLD SECURITIES.............................................. 37
Section 8.6. COMPENSATION; INDEMNITY; FEES.................................... 37
Section 8.7. CORPORATE PROPERTY TRUSTEE REQUIRED; ELIGIBILITY OF TRUSTEES..... 38
Section 8.8. CONFLICTING INTERESTS............................................ 38
Section 8.9. CO-TRUSTEES AND SEPARATE TRUSTEE................................. 39
Section 8.10. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR................ 40
Section 8.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR........................... 41
Section 8.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS...... 42
Section 8.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR OR TRUST..... 42
Section 8.14. REPORTS BY PROPERTY TRUSTEE...................................... 43
Section 8.15. REPORTS TO THE PROPERTY TRUSTEE.................................. 43
Section 8.16. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT................. 44
Section 8.17. NUMBER OF TRUSTEES............................................... 44
Section 8.18. DELEGATION OF POWER.............................................. 44
Section 8.19. VOTING........................................................... 44
ARTICLE IX. DISSOLUTION, LIQUIDATION AND MERGER.................................... 45
Section 9.1. DISSOLUTION UPON EXPIRATION DATE................................. 45
lxxiii
<PAGE>
Section 9.2. EARLY DISSOLUTION............................................... 45
Section 9.3. DISSOLUTION..................................................... 45
Section 9.4. LIQUIDATION..................................................... 45
Section 9.5. MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE
TRUST........................................................... 47
ARTICLE X. MISCELLANEOUS PROVISIONS............................................... 48
Section 10.1. LIMITATION OF RIGHTS OF SECURITYHOLDERS........................ 48
Section 10.2. AMENDMENT...................................................... 48
Section 10.3. COUNTERPARTS................................................... 49
Section 10.4. SEPARABILITY................................................... 49
Section 10.5. GOVERNING LAW.................................................. 49
Section 10.6. PAYMENTS DUE ON NON-BUSINESS DAY............................... 50
Section 10.7. SUCCESSORS..................................................... 50
Section 10.8. HEADINGS....................................................... 50
Section 10.9. REPORTS, NOTICES AND DEMANDS................................... 50
Section 10.10. AGREEMENT NOT TO PETITION...................................... 51
Section 10.11. TRUST INDENTURE ACT; CONFLICT WITH TRUST INDENTURE ACT......... 51
Section 10.12. ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE AND
INDENTURE...................................................... 51
EXHIBIT A.......................................................................... 53
EXHIBIT B.......................................................................... 55
EXHIBIT C.......................................................................... 60
EXHIBIT D.......................................................................... 61
EXHIBIT E.......................................................................... 65
</TABLE>
lxxiv
<PAGE>
SVB CAPITAL I
SVB CAPITAL I
Certain Sections of this Trust Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Trust Agreement
Act Section Section
--------------- ---------------
<S> <C> <C>
(SECTION) 310 (a) (1) 8.7
(a) (2) 8.7
(a) (3) 8.7
(a) (4) 2.7 (a) (ii)
(b)
(SECTION) 311 (a) 8.13
(b) 8.13
(SECTION) 312 (a) 5.7
(b) 5.7
(c) 5.7
(SECTION) 313 (a) 8.14 (a)
(a) (4) 8.14 (b)
(b) 8.14 (b)
(c) 10.8
(d) 8.14 (c)
(SECTION) 314 (a) 8.15
(b) Not Applicable
(c) (1) 8.16
(c) (2) 8.16
(c) (3) Not Applicable
(d) Not Applicable
(e) 1.1, 8.16
(SECTION) 315 (a) 8.1 (a), 8.3 (a)
(b) 8.2, 10.8
(c) 8.1 (a)
(d) 8.1, 8.3
(e) Not Applicable
(SECTION) 316 (a) Not Applicable
(a) (1) (A) Not Applicable
(a) (1) (B) Not Applicable
(a) (2) Not Applicable
(b) 5.14
(c) 6.7
(SECTION) 317 (a) (1) Not Applicable
(a) (2) Not Applicable
(b) 5.9
(SECTION) 318 (a) 10.10
- ----------
</TABLE>
Note: This reconciliation and tie sheet shall not, for any purpose, be deemed
to be a part of the Trust Agreement.
AMENDED AND RESTATED TRUST AGREEMENT (this "Trust Agreement"), dated as
of May 22, 1998, among (i) Silicon Valley Bancshares, a California
corporation (including
<PAGE>
any successors or assigns, the "Depositor"), (ii) Wilmington Trust Company, a
Delaware banking corporation duly organized and existing under the laws of
the State of Delaware, as property trustee, (in such capacity, the "Property
Trustee" and, in its separate corporate capacity and not in its capacity as
Property Trustee, the "Bank"), (iii) Wilmington Trust Company, a Delaware
banking corporation organized under the laws of the State of Delaware, as
Delaware trustee (the "Delaware Trustee"), (iv) Barbara B. Kamm, an
individual, Christopher T. Lutes, an individual, and David Jaques, an
individual, each of whose address is c/o Silicon Valley Bancshares, 3003
Tasman Drive, Santa Clara, California, 95054 (each an "Administrative
Trustee" and collectively the "Administrative Trustees") (the Property
Trustee, the Delaware Trustee and the Administrative Trustees are referred to
collectively herein as the "Trustees") and (v) the several Holders, as
hereinafter defined.
WITNESSETH
WHEREAS, the Depositor, the Delaware Trustee and each of the
Administrative Trustees, have heretofore duly declared and established a
business trust pursuant to the Delaware Business Trust Act by the entering
into this certain Trust Agreement, dated as of April 28, 1998 (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 April 29, 1998, attached as Exhibit A; and
WHEREAS, the parties 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 Trust to the
Depositor, (ii) the issuance and sale of the Preferred Securities by the
Trust pursuant to the Underwriting Agreement, (iii) the acquisition by the
Trust from the Depositor of all of the right, title and interest in the
Debentures and (iv) the appointment of the Property Trustee;
NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the sufficiency
of which is hereby acknowledged, each party, for the benefit of the other
parties and for the benefit of the Securityholders, hereby agrees as follows:
ARTICLE I.
DEFINED TERMS
SECTION I.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;
3
<PAGE>
(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) 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; and
(d) 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.
"ACT" has the meaning specified in Section 6.8.
"ADDITIONAL AMOUNT" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, the amount of Additional Interest
(as defined in the Indenture) paid by the Depositor on a Like Amount of
Debentures for such period.
"ADDITIONAL SUMS" has the meaning specified in Section 10.6 of the
Indenture.
"ADMINISTRATIVE TRUSTEE" means each of the Persons identified as an
"Administrative Trustee" in the preamble to this Trust Agreement solely in
such Person's capacity as Administrative Trustee of the Trust created and
continued hereunder and not in such Person's individual capacity, or such
Administrative Trustee's successor in interest in such capacity, or any
successor trustee appointed as herein provided.
"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.
"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
Bankruptcy 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
4
<PAGE>
(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
Bankruptcy Law, or the consent by it to the filing of any such petition or to
the appointment of a receiver, liquidator, assignee, trustee, sequestrator
(or similar official) of such Person or of any substantial part of its
property, or the making by it of an assignment for the benefit of creditors,
or the admission by it in writing of its inability to pay its debts generally
as they become due and its willingness to be adjudicated a bankrupt, or the
taking of corporate action by such Person in furtherance of any such action.
"BANKRUPTCY LAW" means any Federal or state bankruptcy, insolvency,
reorganization or similar law.
"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 appropriate
Trustees.
"BOOK-ENTRY PREFERRED SECURITIES CERTIFICATES" means a beneficial
interest in the Preferred Securities Certificates, ownership and transfers of
which shall be made through book entries by a Clearing Agency as described in
Section 5.11.
"BUSINESS DAY" means a day other than (a) a Saturday or Sunday, (b) a
day on which banking institutions in the State of California are authorized
or required by law or executive order to remain closed, or (c) a day on which
the Property Trustee's Corporate Trust Office or the Corporate Trust Office
of the Debenture Trustee is closed for business.
"CAPITAL TREATMENT EVENT" means, the reasonable determination by the
Depositor that, as a result of any amendment to, or change (including any
prospective change) in, the laws (or any regulations thereunder) of the
United States or any political subdivision thereof or therein, or as a result
of any official or administrative pronouncement or action or judicial
decision interpreting or applying such laws or regulations, which amendment
or change is effective or such prospective change, pronouncement or decision
is announced on or after the original issuance of the Preferred Securities,
there is more than an insubstantial risk that the Depositor will not be
entitled to treat the Preferred Securities (or any substantial portion
thereof) as "Tier I Capital" (or the then equivalent thereof) for purposes of
the capital adequacy guidelines of the primary federal regulator of the
Depositor, as then in effect and applicable to the Depositor.
"CERTIFICATE DEPOSITORY AGREEMENT" means the agreement among the Trust,
the Depositor and The Depository Trust Company, as the initial Clearing
Agency, dated as of the Closing Date, relating to the Preferred Securities
Certificates, substantially in the form attached as Exhibit B, as the same
may be amended and supplemented from time to time.
5
<PAGE>
"CERTIFICATE OF TRUST" means the certificate of trust filed with the
Secretary of State of the State of Delaware with respect to the Trust, as
amended or restated from time to time.
"CLEARING AGENCY" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act. The Depository Trust
Company will act as the initial Clearing Agency hereunder.
"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 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, as amended, or, if at
any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
"COMMON SECURITY" means an undivided beneficial interest in the assets
of the 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.
"COMMON SECURITIES CERTIFICATE" means a certificate evidencing ownership
of Common Securities, substantially in the form attached as Exhibit C.
"CORPORATE TRUST OFFICE" means (i) when used with respect to the
Property Trustee, the principal office of the Property Trustee located at
Rodney Square North, 1100 North Market Street, Wilmington, Delaware
19890-0001, Attention: Corporate Trust Administration, and (ii) when used
with respect to the Debenture Trustee, the principal office of the Debenture
Trustee located at Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890-0001, Attention: Corporate Trust Administration.
"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 under the
Indenture.
"DEBENTURE TAX EVENT" means a "TAX EVENT" as defined in the Indenture.
"DEBENTURE TRUSTEE" means Wilmington Trust Company, a Delaware banking
corporation organized under the laws of the State of Delaware and any
successor thereto, as trustee under the Indenture.
6
<PAGE>
"DEBENTURES" means the aggregate principal amount of the Depositor's
8.25% Junior Subordinated Deferrable Interest Debentures, issued pursuant to
the Indenture.
"DEFINITIVE PREFERRED SECURITIES CERTIFICATES" means either or both (as
the context requires) of (a) Preferred Securities Certificates issued as
Book-Entry Preferred Securities Certificate as provided in Section 5.11(a)
and (b) Preferred Securities Certificates issued in certificated, fully
registered form as provided in Section 5.13.
"DELAWARE BUSINESS TRUST ACT" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. (SECTION) 3801, ET SEQ., as it may be amended from
time to time.
"DELAWARE TRUSTEE" means the Person identified as the "Delaware Trustee"
in the preamble to this Trust Agreement solely in its capacity as Delaware
Trustee of the Trust created and continued hereunder and not in its
individual capacity, or its successor in interest in such capacity, or any
successor trustee appointed as herein provided.
"DEPOSITOR" has the meaning specified in the preamble to this Trust
Agreement.
"DISTRIBUTION DATE" has the meaning specified in Section 4.1(a).
"DISTRIBUTIONS" means amounts payable in respect of the Trust Securities
as provided in Section 4.1.
"EARLY DISSOLUTION 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
(b) default by the 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 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 Property Trustee in this Trust Agreement
(other than a covenant or warranty a default in the performance or 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 defaulting Property Trustee and the
Trust by the Holders of at least 25% in aggregate liquidation preference of
the Outstanding Preferred Securities a written
7
<PAGE>
notice specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
(e) the occurrence of a Bankruptcy Event with respect to the Property
Trustee and the failure by the Depositor to appoint a successor Property
Trustee within 60 days thereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXPENSE AGREEMENT" means the Agreement as to Expenses and Liabilities
between the Depositor and the Trust, substantially in the form attached as
Exhibit D, as amended from time to time.
"EXPIRATION DATE" has the meaning specified in Section 9.1.
"GUARANTEE" means the Guarantee Agreement executed and delivered by the
Depositor and Wilmington 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.
"HOLDER" means a Securityholder.
"INDENTURE" means the Junior Subordinated Indenture, dated as of May 22,
1998, between the Depositor and the Debenture Trustee, as trustee, as amended
or supplemented from time to time.
"INVESTMENT COMPANY EVENT" means the receipt by the Depositor and the
Trust of an Opinion of Counsel experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or a
written change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority (a
"Change in Investment Company Act Law"), there is more than an insubstantial
risk that the Trust is or will be considered an "investment company" that is
required to be registered under the Investment Company Act, which Change in
Investment Company Act Law becomes effective on or after the date or original
issuance of the Preferred Securities under this Trust Agreement.
"LIEN" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, adverse claim, 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 the
principal amount of Debentures to be contemporaneously redeemed in accordance
with the Indenture, allocated to the Common Securities and the Preferred
Securities based upon the relative Liquidation Amounts of such classes and
the proceeds of which will be used to pay the Redemption Price of such Trust
Securities, and (b) with respect to a distribution of Debentures to Holders
of Trust Securities in connection with a dissolution or liquidation of the
Trust, Debentures having a principal amount
8
<PAGE>
equal to the Liquidation Amount of the Trust Securities of the Holder to whom
such Debentures are distributed.
"LIQUIDATION AMOUNT" means the stated amount of $25 per Trust Security.
"LIQUIDATION DATE" means the date on which Debentures are to be
distributed to Holders of Trust Securities in connection with a dissolution
and liquidation of the Trust pursuant to Section 9.4(a).
"LIQUIDATION DISTRIBUTION" has the meaning specified in Section 9.4(d).
"1940 ACT" means the Investment Company Act of 1940, as amended.
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman of
the Board of Directors, a Vice Chairman of the Board of Directors, the Chief
Executive Officer, the President or a Vice President, and by the Chief
Financial Officer, the Secretary or an Assistant Secretary of the Depositor,
and delivered to the appropriate Trustee. One of the officers signing an
Officers' Certificate given pursuant to Section 8.16 shall be the principal
executive, financial or accounting officer of the Depositor. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Trust Agreement shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"OPINION OF COUNSEL" means a written opinion of counsel, who may be
counsel for the Trust, the Property Trustee, the Delaware Trustee or the
Depositor, but not an employee of any thereof, and who shall be reasonably
acceptable to the Property Trustee.
"ORIGINAL TRUST AGREEMENT" has the meaning specified in the recitals to
this Trust Agreement.
"OUTSTANDING," when used with respect to Trust Securities, means, as of
the date of determination, all Trust Securities theretofore executed and
delivered under this Trust Agreement, EXCEPT:
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(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 Trust 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, 5.11 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 Trustee or any Affiliate of the Depositor or any Trustee
shall be disregarded and deemed not to be Outstanding, except that (a) in
determining whether any Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Preferred Securities that such Trustee knows to be so owned shall be so
disregarded and (b) the foregoing shall not apply at any time when all of the
outstanding Preferred Securities are owned by the Depositor, one or more of
the Trustees 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 Administrative Trustees 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. Upon the
written request of any Trustee, the Depositor shall furnish to such Trustee
promptly an Officers' Certificate listing and identifying all Trust
Securities, if any, known by the Depositor to be owned or held by or for the
account of the Depositor, any Trustee or any Affiliate of the Depositor or
any Trustee, and, subject to the provisions of Section 8.1, such Trustee
shall be entitled to accept such Officers' Certificate as conclusive evidence
of the facts therein set forth and of the fact that all Trust Securities not
listed therein are Outstanding for the purpose of any such determination.
"OWNER" means each Person who is the beneficial owner of a Book-Entry
Preferred Securities Certificate 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 5.9 and shall initially be the Bank.
"PAYMENT ACCOUNT" means a segregated non-interest-bearing corporate
trust account maintained by the Property Trustee with the Bank in its trust
department for the benefit of the Securityholders in which all amounts paid
in respect of the Debentures will be held and from which the Property
Trustee, through the Paying Agent, shall make payments to the Securityholders
in accordance with Sections 4.1 and 4.2.
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"PERSON" means any individual, corporation, partnership, joint venture,
trust, limited liability company or corporation, unincorporated organization
or government or any agency or political subdivision thereof.
"PREFERRED SECURITY" means an undivided beneficial interest in the
assets of the Trust designated as "8.25% Cumulative Trust Preferred
Securities," having a Liquidation Amount of $25 per security and having the
rights provided therefor in this Trust Agreement, including the right to
receive Distributions and a Liquidation Distribution as provided herein.
"PREFERRED SECURITIES CERTIFICATE" means a certificate evidencing
ownership of Preferred Securities, substantially in the form attached as
Exhibit E.
"PROPERTY TRUSTEE" means the Person identified as the "Property Trustee"
in the preamble to this Trust Agreement solely in its capacity as Property
Trustee of the Trust heretofore created 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.
"REDEMPTION DATE" means, with respect to any Trust Security to be
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; PROVIDED that each Debenture Redemption Date and the stated
maturity of the Debentures shall be a Redemption Date for a Like Amount of
Preferred Securities.
"REDEMPTION PRICE" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, plus the allocated on a pro rata basis
(based on Liquidation Amounts) among the Preferred Securities.
"RELEVANT TRUSTEE" shall have the meaning specified in Section 8.10.
"SECURITIES REGISTER" and "SECURITIES REGISTRAR" have the respective
meanings specified in Section 5.4.
"SECURITYHOLDER" means a Person in whose name a Trust Security 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.
"TAX EVENT" means the receipt by the Depositor and the Trust of an
Opinion of Counsel experienced in such matters to the effect that, as a
result of any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or
any political subdivision or taxing authority thereof or therein, or as a
result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change
is effective or which pronouncement or decision is announced on or after the
original issuance of the Preferred Securities under this Trust Agreement,
there is more than an insubstantial risk that (i) the Trust is, or will be
within 90 days after the date of such Opinion of Counsel, subject to United
States Federal income tax with respect to income received or accrued on the
Debentures, (ii) interest payable by the Depositor
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on the Debentures is not, or within 90 days after the date 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 Trust is, or will be
within 90 days after the date of such Opinion of Counsel subject to more than
a DE MINIMIS amount of other taxes, duties or other governmental charges.
"TRUST" means the Delaware business trust created and continued hereby
and identified on the cover page to this Trust Agreement.
"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 and any such
modification, amendment or supplement, the provisions of the Trust Indenture
Act that are deemed to be a part of and govern this Trust Agreement and any
such modification, amendment or supplement, respectively.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 as amended
and as in force at the date as of which this instrument was executed;
PROVIDED, HOWEVER, that in the event the Trust Indenture Act of 1939 is
amended after such date, "Trust Indenture Act" means, to the extent required
by any such amendment, the Trust Indenture Act of 1939 as so amended.
"TRUST PROPERTY" means (a) the Debentures, (b) any cash on deposit in,
or owing to, the Payment Account and (c) all proceeds and rights in respect
of the foregoing and any other property and assets for the time being held or
deemed to be held by the Property Trustee pursuant to the trusts of this
Trust Agreement.
"TRUST SECURITY" means any one of the Common Securities or the Preferred
Securities.
"TRUST SECURITIES CERTIFICATE" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.
"TRUSTEES" means, collectively, the Property Trustee, the Delaware
Trustee and the Administrative Trustees.
"UNDERWRITERS" means each of the Underwriters named in the Underwriting
Agreement.
"UNDERWRITING AGREEMENT" means that certain Underwriting Agreement dated
as of May 19, 1998, among the Trust, the Depositor, and BT Alex. Brown
Incorporated, Keefe, Bruyette & Woods, Inc. and Hoefer & Arnett Incorporated,
as the Underwriters.
ARTICLE II.
ESTABLISHMENT OF THE TRUST
SECTION II.1. NAME.
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The Trust continued hereby shall be known as "SVB Capital I," as such
name may be modified from time to time by the Administrative Trustees
following written notice to the Holders of Trust Securities and the other
Trustees, in which name the Trustees may engage in the transactions
contemplated hereby, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
SECTION II.2. OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE OF BUSINESS.
The address of the Delaware Trustee in the State of Delaware is c/o
Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration,
or such other address in the State of Delaware as the Delaware Trustee may
designate by written notice to the Securityholders and the Depositor. The
principal executive office of the Trust is c/o Silicon Valley Bancshares,
3003 Tasman Drive, Santa Clara, California, 95054.
SECTION II.3. INITIAL CONTRIBUTION OF TRUST PROPERTY; ORGANIZATIONAL
EXPENSES.
The Trustees acknowledges receipt in trust from the Depositor in
connection with the Trust Agreement of the sum of $10, which constituted the
initial Trust Property. The Depositor shall pay organizational expenses of
the Trust as they arise or shall, upon request of any Trustee, promptly
reimburse such Trustee for any such expenses paid by such Trustee. The
Depositor shall make no claim upon the Trust Property for the payment of such
expenses.
SECTION II.4. ISSUANCE OF THE PREFERRED SECURITIES.
The Depositor and an Administrative Trustee, on behalf of the Trust and
pursuant to the Trust Agreement, have executed and delivered the
Underwriting Agreement. Contemporaneously with the execution and delivery of
this Trust Agreement, an Administrative Trustee, on behalf of the Trust,
shall execute in accordance with Section 5.2 and deliver to the Underwriters
named in the Underwriting Agreement, Preferred Securities Certificates,
registered in the name of the nominee of the initial Clearing Agency, as
instructed by BT Alex. Brown Incorporated, as a representative of the
Underwriters, in an aggregate amount of 1,600,000 Preferred Securities having
an aggregate Liquidation Amount of $40,000,000, against receipt of such
aggregate purchase price of such Preferred Securities of $40,000,000 which
amount the Administrative Trustee shall promptly deliver to the Property
Trustee.
SECTION II.5. ISSUANCE OF THE COMMON SECURITIES; SUBSCRIPTION AND PURCHASE
OF DEBENTURES.
Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrative Trustee, on behalf of the Trust, shall execute
in accordance with Section 5.2 and deliver to the Depositor Common Securities
Certificates, registered in the name of the Depositor, in an aggregate amount
of 49,485 Common Securities having an aggregate Liquidation Amount of
$1,237,125, against payment by the Depositor of such amount, which amount
such
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Administrative Trustee shall promptly deliver to the Property Trustee. An
Administrative Trustee, on behalf of the Trust, shall subscribe to and
purchase from the Depositor Debentures, registered in the name of Cede & Co.,
as nominee of The Depository Trust Company, and having an aggregate principal
amount equal to $41,237,125 and, in satisfaction of the purchase price for
such Debentures, the Property Trustee, on behalf of the Trust, shall deliver
to the Depositor the sum of $41,237,125, such 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 sentence of this Section 2.5.
SECTION II.6. DECLARATION OF TRUST.
The exclusive purposes and functions of the Trust are (a) to issue and
sell Trust Securities and use the proceeds from such sale to acquire the
Debentures, and (b) to engage in those activities necessary, advisable or
incidental thereto. The Depositor hereby appoints the Trustees as trustees
of the Trust, to have all the rights, powers and duties to the extent set
forth herein, and the 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 Trust
and the Securityholders. The Administrative Trustees shall have all rights,
powers and duties set forth herein and in accordance with applicable law with
respect to accomplishing the purposes of the Trust. The Delaware Trustee
shall not be entitled to exercise any powers, nor shall the Delaware Trustee
have any of the duties and responsibilities, of the Property Trustee or the
Administrative Trustees set forth herein. The Delaware Trustee shall be one
of the Trustees of the Trust for the sole and limited purpose of fulfilling
the requirements of Section 3807 of the Delaware Business Trust Act.
SECTION II.7. AUTHORIZATION TO ENTER INTO CERTAIN TRANSACTIONS.
(a) The Trustees shall conduct the affairs of the Trust in accordance
with the terms of this Trust Agreement. Subject to the limitations set forth
in paragraph (b) of this Section and Section 2.6, and in accordance with the
following provisions (i) and (ii), the Trustees shall have the authority to
enter into all transactions and agreements determined by the Trustees to be
appropriate in exercising the authority, express or implied, otherwise
granted to the Trustees under this Trust Agreement, and to perform all acts
in furtherance thereof, including without limitation, the following:
(i) As among the Trustees, each Administrative Trustee shall have the
power and authority to act on behalf of the Trust with respect to the
following matters:
(A) the issuance and sale of the Trust Securities;
(B) to cause the Trust to enter into, and to execute, deliver and
perform on behalf of the Trust, the Expense Agreement and the Certificate
Depository Agreement and such other agreements as may be necessary or
desirable in connection with the purposes and function of the Trust;
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(C) assisting in the registration (including the execution of a
registration statement on the appropriate form) of the Preferred Securities
under the Securities Act of 1933, as amended, and under state securities or
blue sky laws, and the qualification of this Trust Agreement as a trust
indenture under the Trust Indenture Act;
(D) assisting in the listing of the Preferred Securities upon such
securities exchange or exchanges as shall be determined by the Depositor and
the registration of the Preferred Securities under the Exchange Act, and the
preparation and filing of all periodic and other reports and other documents
pursuant to the foregoing;
(E) the sending of notices (other than notices of default) and other
information regarding the Trust Securities and the Debentures to the
Securityholders in accordance with this Trust Agreement;
(F) the appointment of a Paying Agent, authenticating agent and
Securities Registrar in accordance with this Trust Agreement;
(G) registering transfer of the Trust Securities in accordance with
this Trust Agreement;
(H) to the extent provided in this Trust Agreement, the winding up of
the affairs of and liquidation of the Trust and the preparation, execution
and filing of the certificate of cancellation with the Secretary of State of
the State of Delaware;
(I) unless otherwise determined by the Depositor, the Property Trustee
or the Administrative Trustees, or as otherwise required by the Delaware
Business Trust Act or the Trust Indenture Act, to execute on behalf of the
Trust (either acting alone or together with any or all of the Administrative
Trustees) any documents that the Administrative Trustees have the power to
execute pursuant to this Trust Agreement; and
(J) the taking of any action incidental to the foregoing as the
Trustees may from time to time determine is necessary or advisable to give
effect to the terms of this Trust Agreement for the benefit of the
Securityholders (without consideration of the effect of any such action on
any particular Securityholder).
(ii) As among the Trustees, the Property Trustee shall have the power,
duty and authority to act on behalf of the Trust with respect to the
following matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal and any other payments
made in respect of the Debentures in the Payment Account;
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(D) the distribution through the Paying Agent of amounts owed to the
Securityholders in respect of the Trust Securities;
(E) the exercise of all of the rights, powers and privileges of a
holder of the Debentures;
(F) the sending of notices of default and other information
regarding the Trust Securities and the Debentures to the Securityholders 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 Trust and the preparation,
execution and filing of the certificate of cancellation with the Secretary
of State of the State of Delaware;
(I) after an Event of Default (other than under paragraph (b), (c),
(d) or (e) of the definition of such term if such Event of Default is by or
with respect to the Property Trustee) the taking of any action incidental
to the foregoing as the Property Trustee may from time to time determine is
necessary or advisable to give effect to the terms of this Trust Agreement
and protect and conserve the Trust Property for the benefit of the
Securityholders (without consideration of the effect of any such action on
any particular Securityholder);
(J) so long as the Property Trustee is the Securities Registrar,
registering transfers of the Trust Securities in accordance with this Trust
Agreement; and
(K) except as otherwise provided in this Section 2.7(a)(ii), the
Property Trustee shall have none of the duties, liabilities, powers or the
authority of the Administrative Trustees set forth in Section 2.7(a)(i).
(b) So long as this Trust Agreement remains in effect, the Trust (or
the Trustees acting on behalf of the Trust) shall not undertake any business,
activities or transaction except as expressly provided herein or contemplated
hereby. In particular, the Trustees shall not (i) acquire any investments or
engage in any activities not authorized by this Trust Agreement, (ii) sell,
assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose of
any of the Trust Property or interests therein, including to Securityholders,
except as expressly provided herein, (iii) take any action that would cause
the Trust to fail or cease to qualify as a "grantor trust" for United States
federal income tax purposes, (iv) incur any indebtedness for borrowed money
or issue any other debt or (v) take or consent to any action that would
result in the placement of a Lien on any of the Trust Property. The
Administrative Trustees 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 Trust or the Securityholders in their capacity as
Securityholders.
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(c) In connection with the issue and sale of the Preferred Securities,
the Depositor shall have the right and responsibility to assist the Trust
with respect to, or effect on behalf of the Trust, the following (and any
actions taken by the 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 and filing by the Trust with the Commission and
the execution by the Trust of a registration statement on the appropriate
form in relation to the Preferred Securities, including any amendments
thereto;
(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 which must be taken by or on behalf of the Trust, and the advice to
the Trustees of actions they must take on behalf of the Trust, and the
preparation for execution and filing of any documents to be executed and
filed by the Trust or on behalf of the Trust, as the Depositor deems
necessary or advisable in order to comply with the applicable laws of any
such States;
(iii) the preparation for filing by the Trust and execution on behalf
of the Trust of an application to the New York Stock Exchange or any other
national stock exchange or the Nasdaq National Market for listing upon
notice of issuance of any Preferred Securities;
(iv) the preparation for filing by the Trust with the Commission and
the execution on behalf of the Trust of a registration statement on Form
8-A relating to the registration of the Preferred Securities under Section
12(b) or 12(g) of the Exchange Act, including any amendments thereto;
(v) the negotiation of the terms of, and the execution and delivery
of, the Underwriting Agreement providing for the sale of the Preferred
Securities; and
(vi) the taking of any other actions necessary or desirable to carry
out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the Administrative
Trustees are authorized and directed to conduct the affairs of the Trust and
to operate the Trust so that the Trust will not be deemed to be an
"investment company" required to be registered under the 1940 Act, or fail to
be classified as a grantor trust for United States federal income tax
purposes and so that the Debentures will be treated as indebtedness of the
Depositor for United States federal income tax purposes. In this connection,
the Depositor and the Administrative Trustees are authorized to take any
action, not inconsistent with applicable law, the Certificate of Trust or
this Trust Agreement, that each of the Depositor and any Administrative
Trustee determines in its 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 Preferred Securities.
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SECTION II.8. ASSETS OF TRUST.
The assets of the Trust shall consist of the Trust Property.
SECTION II.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 Trust and the Securityholders
in accordance with this Trust Agreement.
ARTICLE III.
PAYMENT ACCOUNT
SECTION III.1. PAYMENT ACCOUNT.
(a) On or prior to the Closing Date, the Property Trustee shall
establish the Payment Account. The Property Trustee and any agent of the
Property Trustee 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 Securityholders and for distribution as
herein provided, including (and subject to) any priority of payments provided
for herein.
(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments or proceeds with respect to, the Debentures. Amounts held in the
Payment Account shall not be invested by the Property Trustee pending
distribution thereof.
ARTICLE IV.
DISTRIBUTIONS; REDEMPTION
SECTION IV.1. DISTRIBUTIONS.
(a) The Trust Securities represent undivided beneficial interests in
the Trust Property, and Distributions (including of Additional Amounts) will
be made on the Trust Securities at the rate and on the dates that payments of
interest (including of Additional Interest, as defined in the Indenture) are
made on the Debentures. Accordingly:
(i) Distributions on the Trust Securities shall be cumulative, and
will accumulate whether or not there are funds of the Trust available for
the payment of
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Distributions. Distributions shall accrue from the date of original
issuance of the Trust Securities, 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 the 15th day of March, June, September and December
of each year, commencing on September 15, 1998. If any date on which a
Distribution is otherwise payable on the Trust Securities is not a Business
Day, then the payment of such Distribution shall be made on the next
succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) with the same force and effect as if
made on such date (each date on which distributions are payable in
accordance with this Section 4.1(a), a "Distribution Date").
(ii) Assuming payments of interest on the Debentures are made when
due (and before giving effect to Additional Amounts, if applicable),
Distributions on the Trust Securities shall be payable at a rate of 8.25%
per annum of the Liquidation Amount of the Trust Securities. The amount of
Distributions payable for any full period shall be computed on the basis of
a 360-day year of twelve 30-day months. The amount of Distributions for
any partial period shall be computed on the basis of the number of days
elapsed in a 360-day year of twelve 30-day months. The amount of
Distributions payable for any period shall include the Additional Amounts,
if any.
(iii) Distributions on the Trust Securities shall be made by the
Property Trustee from the Payment Account and shall be payable on each
Distribution Date only to the extent that the 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 on the relevant record date,
which shall be the date 15 days prior to the relevant Distribution Date (or
if such date is not a Business Day, the next Business Day following such date).
SECTION IV.2. REDEMPTION.
(a) On each Debenture Redemption Date and on the stated maturity of the
Debentures, the Trust will be required to redeem, subject to Section 4.3, 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;
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(iii) the CUSIP number;
(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; and
(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 accrue on and after said date.
(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the proceeds from the contemporaneous
redemption of Debentures. Redemptions of the Trust Securities shall be made
and the Redemption Price shall be payable on each Redemption Date only to the
extent that the 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, Eastern time, on the
Redemption Date, subject to Section 4.2(c), with respect to Preferred
Securities held in book-entry form, the Property Trustee will irrevocably
deposit with the Clearing Agency for the Preferred Securities, to the extent
funds are available, 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 thereof. With respect to Preferred
Securities held in certificated form, the Property Trustee, subject to
Section 4.2(c), will irrevocably deposit with the Paying Agent, to the extent
funds are available, funds sufficient to pay the applicable Redemption Price
and will give the Paying Agent irrevocable instructions and authority to pay
the Redemption Price to the Holders thereof 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 Securityholders holding Trust Securities so called for
redemption will cease, except the right of such Securityholders to receive
the Redemption Price and any Distribution payable on or prior to the
Redemption Date, but without interest, on such Redemption Date and such
Securities will cease to be outstanding. In the event that any date on which
any Redemption Price is payable is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect
of any such delay), 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 Trust or by the Depositor pursuant to the Guarantee,
Distributions on such Trust Securities will continue to accrue, at the then
applicable rate, from the Redemption Date originally established by the Trust
for such Trust Securities to the date such Redemption Price is actually paid,
in which case the actual payment date will be the date fixed for redemption
for purposes of calculating the Redemption Price.
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(e) Payment of the Redemption Price on the Trust Securities shall be
made to the recordholders thereof as they appear on the Securities Register
for the Trust Securities.
(f) Subject to Section 4.3(a), if less than all the Outstanding Trust
Securities are to be redeemed on a Redemption Date, then the aggregate
Redemption Price of Trust Securities to be redeemed shall be allocated on a
pro rata basis (based on Liquidation Amounts) among the Common Securities and
the Preferred Securities. The particular Preferred Securities to be redeemed
shall be selected on a pro rata basis (based upon Liquidation Amounts) not
more than 60 days prior to the Redemption Date by the Property Trustee from
the Outstanding Preferred Securities not previously called for redemption, by
such method (including, without limitation, by lot) as the Property Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of portions (equal to $25 or an integral multiple of $25 in excess
thereof) of the Liquidation Amount of Preferred Securities of a denomination
larger than $25. The Property Trustee shall promptly notify the Security
Registrar 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 this 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 Liquidation Amount of Preferred Securities that has been or is to be
redeemed.
SECTION IV.3. SUBORDINATION OF COMMON SECURITIES.
(a) Payment of Distributions (including Additional Amounts, if
applicable) on, and the Redemption Price of, the Trust Securities, as
applicable, shall be made, subject to Section 4.2(f), pro rata among the
Common Securities and the Preferred Securities based on the Liquidation
Amount of the Trust Securities; PROVIDED, HOWEVER, that if on any
Distribution Date or Redemption Date any Event of Default resulting from a
Debenture Event of Default shall have occurred and be continuing, no payment
of any Distribution (including Additional Amounts, if applicable) on, or
Redemption Price 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 Additional Amounts, if applicable) 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, 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 Additional Amounts,
if applicable) on, or the Redemption Price of, Preferred Securities then due
and payable.
(b) In the case of the occurrence of any Event of Default resulting
from any Debenture Event of Default, the Holder of Common Securities will be
deemed to have waived any right to act with respect to any such Event of
Default under this Trust Agreement until the effect of all such Events of
Default with respect to the Preferred Securities have been cured, waived or
otherwise eliminated. Until any such Event of Default under this Trust
Agreement
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with respect to the Preferred Securities has been so cured, waived or
otherwise eliminated, the Property Trustee shall act solely on behalf of the
Holders of the Preferred Securities and not 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 IV.4. PAYMENT PROCEDURES.
Payments of Distributions (including Additional Amounts, if applicable)
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 shall credit the relevant Persons'
accounts at such Clearing Agency on the applicable Distribution Dates.
Payments in respect of the Common Securities shall be made in such manner as
shall be mutually agreed between the Property Trustee and the Common
Securityholder.
SECTION IV.5. TAX RETURNS AND REPORTS.
The Administrative Trustees shall prepare (or cause to be prepared), at
the Depositor's expense, and file all United States federal, state and local
tax and information returns and reports required to be filed by or in respect
of the Trust. In this regard, the Administrative Trustees shall (a) prepare
and file (or cause to be prepared and filed) the appropriate Internal Revenue
Service form required to be filed in respect of the Trust in each taxable
year of the Trust and (b) prepare and furnish (or cause to be prepared and
furnished) to each Securityholder the appropriate Internal Revenue Service
form required to be provided on such form. The Administrative Trustees shall
provide the Depositor and the Property Trustee with a copy of all such
returns and reports promptly after such filing or furnishing. The Trustees
shall comply with United States federal withholding and backup withholding
tax laws and information reporting requirements with respect to any payments
to Securityholders under the Trust Securities.
SECTION IV.6. PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST.
Upon receipt under the Debentures of Additional Sums, the Property
Trustee shall promptly pay any taxes, duties or governmental charges of
whatsoever nature (other than withholding taxes) imposed on the Trust by the
United States or any other taxing authority.
SECTION IV.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 that such Holder (and
any Owner with respect thereto) has directly received pursuant to Section 5.8
of the Indenture or Section 5.14 of this Trust Agreement.
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ARTICLE V0
TRUST SECURITIES CERTIFICATES
SECTION V.1. INITIAL OWNERSHIP.
Upon the formation of the 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 Trust.
SECTION V.2. THE TRUST SECURITIES CERTIFICATES.
The Preferred Securities Certificates shall be issued in minimum
denominations of $25 Liquidation Amount and integral multiples of $25 in
excess thereof, and the Common Securities Certificates shall be issued in
denominations of $25 Liquidation Amount and integral multiples thereof. The
Trust Securities Certificates shall be executed on behalf of the Trust by
manual signature of at least one Administrative Trustee. Trust Securities
Certificates bearing the manual signatures of individuals who were, at the
time when such signatures shall have been affixed, authorized to sign on
behalf of the 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 Securityholder, and shall be entitled to the
rights and subject to the obligations of a Securityholder hereunder, upon due
registration of such Trust Securities Certificate in such transferee's name
pursuant to Sections 5.4, 5.11 and 5.13.
SECTION V.3. EXECUTION AND DELIVERY OF TRUST SECURITIES CERTIFICATES.
On the Closing Date, the Administrative Trustees shall cause Trust
Securities Certificates, in an aggregate Liquidation Amount as provided in
Section 2.4, to be executed on behalf of the Trust and delivered to or upon
the written order of the Depositor, signed by its chief executive officer,
its president, any executive vice president or any vice president, treasurer
or assistant treasurer or controller without further corporate action by the
Depositor, in authorized denominations.
SECTION V.4. REGISTRATION OF TRANSFER AND EXCHANGE OF PREFERRED SECURITIES
CERTIFICATES.
The Depositor shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 5.8, a register or registers for the purpose
of registering Trust Securities Certificates and transfers and exchanges of
Preferred Securities Certificates (the "Securities Register") in which, the
registrar designated by the Depositor (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 5.10 in the case of the Common Securities
Certificates) and registration of transfers and exchanges of Preferred
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Securities Certificates as herein provided. The Property Trustee shall be
the initial Securities Registrar.
Upon surrender for registration of transfer of any Preferred Securities
Certificate at the office or agency maintained pursuant to Section 5.8, the
Administrative Trustees or any one of them shall execute and deliver, in the
name of the designated transferee or transferees, one or more new Preferred
Securities Certificates in authorized denominations of a like aggregate
Liquidation Amount dated the date of execution by such Administrative Trustee
or Trustees.
The Securities Registrar shall not be required to register the transfer
of any Preferred Securities that have been called for redemption. At the
option of a Holder, Preferred Securities Certificates may be exchanged for
other Preferred Securities Certificates in authorized denominations of the
same class and of a like aggregate Liquidation Amount upon surrender of the
Preferred Securities Certificates to be exchanged at the office or agency
maintained pursuant to Section 5.8.
Every Preferred Securities Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to an Administrative Trustee and
the Securities Registrar duly executed by the Holder or his attorney duly
authorized in writing. Each Preferred Securities Certificate surrendered for
registration of transfer or exchange shall be canceled and subsequently
disposed of by an Administrative Trustee in accordance with such Person's
customary practice. The Trust shall not be required to (i) issue, register
the transfer of, or exchange any Preferred Securities during a period
beginning at the opening of business 15 calendar days before the date of
mailing of a notice of redemption of any Preferred Securities called for
redemption and ending at the close business on the day of such mailing or
(ii) register the transfer of or exchange any Preferred Securities so
selected for redemption, in whole or in part, except the unredeemed portion
of any such Preferred Securities being redeemed in part.
No service charge shall be made for any registration of transfer or
exchange of Preferred Securities Certificates, but the Securities Registrar
may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer or exchange of
Preferred Securities Certificates.
SECTION V.5. MUTILATED, DESTROYED, LOST OR STOLEN TRUST SECURITIES
CERTIFICATES.
If (a) any mutilated Trust Securities Certificate shall be surrendered
to the Securities Registrar, or if the Securities Registrar shall receive
evidence to its satisfaction of the destruction, loss or theft of any Trust
Securities Certificate and (b) there shall be delivered to the Securities
Registrar and the Administrative Trustees such security or indemnity as may
be required by them to save each of them harmless, then in the absence of
notice that such Trust Securities Certificate shall have been acquired by a
bona fide purchaser, the Administrative Trustees, or any one of them, on
behalf of the Trust shall execute and make available for delivery, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Trust Securities Certificate, a new Trust Securities Certificate of like
class, tenor and denomination. In connection with the issuance of
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any new Trust Securities Certificate under this Section, the Administrative
Trustees or the Securities Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection therewith. Any duplicate Trust Securities Certificate issued
pursuant to this Section shall constitute conclusive evidence of an undivided
beneficial interest in the assets of the Trust, as if originally issued,
whether or not the lost, stolen or destroyed Trust Securities Certificate
shall be found at any time.
SECTION V.6. PERSONS DEEMED SECURITYHOLDERS.
The Trustees or the Securities Registrar shall treat the Person in whose
name any Trust Securities Certificate shall be registered in the Securities
Register as the owner of such Trust Securities Certificate for the purpose of
receiving Distributions and for all other purposes whatsoever, and neither
the Trustees nor the Securities Registrar shall be bound by any notice to the
contrary.
SECTION V.7. ACCESS TO LIST OF SECURITYHOLDERS' NAMES AND ADDRESSES.
At any time when the Property Trustee is not also acting as the
Securities Registrar, the Administrative Trustees or the Depositor shall
furnish or cause to be furnished to the Property Trustee (a) semi-annually on
or before January 1 and July 1 in each year, a list, in such form as the
Property Trustee may reasonably require, of the names and addresses of the
Securityholders as of the most recent Record Date and (b) promptly after
receipt by any Administrative Trustee or the Depositor of a request therefor
from the Property Trustee, such other information as the Property Trustee may
reasonably require in order to enable the Property Trustee to discharge its
obligations under this Trust Agreement, in each case to the extent such
information is in the possession or control of the Administrative Trustees or
the Depositor and is not identical to a previously supplied list or has not
otherwise been received by the Property Trustee in its capacity as Securities
Registrar. The rights of Securityholders to communicate with other
Securityholders with respect to their rights under this Trust Agreement or
under the Trust Securities, and the corresponding rights of the Trustee shall
be as provided in the Trust Indenture Act. Each Securityholder, by receiving
and holding a Trust Securities Certificate, and each Owner shall be deemed to
have agreed not to hold the Depositor, the Property Trustee or the
Administrative Trustees accountable by reason of the disclosure of its name
and address, regardless of the source from which such information was derived.
SECTION V.8. MAINTENANCE OF OFFICE OR AGENCY.
The Administrative Trustees shall maintain 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 Trustees in respect of the Trust Securities Certificates may be
served. The Administrative Trustees initially designate the principal
corporate trust office of the Property Trustee, Rodney Square North, 1100
North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate
Trust Administration, as the principal corporate trust office for such
purposes. The Administrative Trustees shall give
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prompt written notice to the Depositor and to the Securityholders of any
change in the location of the Securities Register or any such office or
agency.
SECTION V.9. APPOINTMENT OF PAYING AGENT.
The Paying Agent shall make Distributions to Securityholders from the
Payment Account and shall report the amounts of such Distributions to the
Property Trustee and the Administrative Trustees. Any Paying Agent shall
have the revocable power to withdraw funds from the Payment Account for the
purpose of making the Distributions referred to above. The Administrative
Trustees may revoke such power and remove the Paying Agent if such Trustees
determine in their sole discretion that the Paying Agent shall have failed to
perform its obligations under this Trust Agreement in any material respect.
The Paying Agent shall initially be the Property Trustee, and any co-paying
agent chosen by the Property Trustee, and acceptable to the Administrative
Trustees and the Depositor. Any Person acting as Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' written notice to the
Administrative Trustees, the Property Trustee and the Depositor. 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
Administrative Trustees shall appoint a successor that is acceptable to the
Property Trustee and the Depositor to act as Paying Agent (which shall be a
bank or trust company). The Administrative Trustees shall cause such
successor Paying Agent or any additional Paying Agent appointed by the
Administrative Trustees to execute and deliver to the Trustees an instrument
in which such successor Paying Agent or additional Paying Agent shall agree
with the 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 Securityholders in trust for the benefit of the Securityholders entitled
thereto until such sums shall be paid to such Securityholders. 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 Property Trustee also in its role as Paying
Agent, for so long as the Property Trustee 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 unless the context requires otherwise.
SECTION V.10. OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR.
At the Closing Date, the Depositor shall acquire and retain beneficial
and record ownership of the Common Securities. To the fullest extent
permitted by law, other than a transfer in connection with a consolidation or
merger of the Depositor into another Person, 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, any
attempted transfer of the Common Securities shall be void. The
Administrative Trustees shall cause each Common Securities Certificate issued
to the Depositor to contain a legend stating "THIS CERTIFICATE IS NOT
TRANSFERABLE".
SECTION V.11. BOOK-ENTRY PREFERRED SECURITIES CERTIFICATES; COMMON
SECURITIES CERTIFICATE.
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(a) The Preferred Securities Certificates, upon original issuance, will
be issued in the form of a typewritten Preferred Securities Certificate or
Certificates representing Book-Entry Preferred Securities Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by,
or on behalf of, the Trust. Such Preferred Securities Certificate or
Certificates shall initially be registered on the Securities Register in the
name of Cede & Co., the nominee of the initial Clearing Agency, and no Owner
will receive a Definitive Preferred Securities Certificate representing such
Owner's interest in such Preferred Securities, except as provided in Section
5.13. Unless and until Definitive Preferred Securities Certificates have been
issued to Owners pursuant to Section 5.13:
(i) the provisions of this Section 5.11(a) shall be in full force and
effect;
(ii) the Securities Registrar, the Paying Agent and the Trustees
shall be entitled to deal with the Clearing Agency for all purposes of this
Trust Agreement relating to the Book-Entry Preferred Securities
Certificates (including the payment of the Liquidation Amount of and
Distributions on the Preferred Securities evidenced by Book-Entry Preferred
Securities Certificates) and shall have no obligations to the Owners
thereof;
(iii) to the extent that the provisions of this Section 5.11 conflict
with any other provisions of this Trust Agreement, the provisions of this
Section 5.11 shall control; and
(iv) the rights of the Owners of the Book-Entry Preferred Securities
Certificates 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 and/or the Clearing Agency Participants. Pursuant
to the Certificate Depository Agreement, unless and until Definitive
Preferred Securities Certificates are issued pursuant to Section 5.13, the
initial Clearing Agency will make book-entry transfers among the Clearing
Agency Participants and receive and transmit payments on the Preferred
Securities to such Clearing Agency Participants. Any Clearing Agency
designated pursuant hereto will not be deemed an agent of the Trustee for
any purpose.
(b) 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 V.12. NOTICES TO CLEARING AGENCY.
To the extent that a notice or other communication to the Owners is
required under this Trust Agreement, unless and until Definitive Preferred
Securities Certificates shall have been issued to Owners pursuant to Section
5.13, the Trustees shall give all such notices and communications specified
herein to be given to Owners to the Clearing Agency, and shall have no
obligations to the Owners.
SECTION V.13. DEFINITIVE PREFERRED SECURITIES CERTIFICATES.
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If (a) the Depositor advises the Trustees in writing that the Clearing
Agency is no longer willing or able to properly discharge its
responsibilities with respect to the Preferred Securities Certificates, and
the Depositor is unable to locate a qualified successor or (b) the Depositor
at its option advises the Trustees in writing that it elects to terminate the
book-entry system through the Clearing Agency, then the Property Trustee
shall notify the Clearing Agency and the Clearing Agency shall notify all
Owners of Preferred Securities Certificates and the other Trustees of the
occurrence of any such event and of the availability of the Definitive
Preferred Securities Certificates to Owners of such class or classes, as
applicable, requesting the same. Upon surrender to the Property Trustee of
the typewritten Preferred Securities Certificate or Certificates representing
the Book Entry Preferred Securities Certificates by the Clearing Agency,
accompanied by registration instructions, the Administrative Trustees, or any
one of them, shall execute the Definitive Preferred Securities Certificates
in accordance with the instructions of the Clearing Agency. Neither the
Securities Registrar nor the Trustees shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Preferred Securities Certificates, the Trustees shall recognize the Holders
of the Definitive Preferred Securities Certificates as Securityholders. The
Definitive Preferred Securities Certificates shall be engraved and executed
in accordance with the applicable rules of the Nasdaq National Market or such
other national exchange or over-the-counter market on which the Preferred
Securities are then listed for trading.
SECTION V.14. RIGHTS OF SECURITYHOLDERS.
(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 Securityholders shall not have any right or title therein other than
the undivided beneficial interest in the assets of the 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 Trust except as described
below. The Trust Securities shall be personal property giving only the
rights specifically set forth therein and in this Trust Agreement. The Trust
Securities shall have no preemptive or similar rights and when issued and
delivered to Securityholders against payment of the purchase price therefor
will be fully paid and nonassessable by the 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 Debentures fail
to declare the principal of all of the Debentures to be immediately due and
payable, the Holders of at least 25% in Liquidation Amount of the Preferred
Securities then Outstanding shall have such right by a notice in writing to
the Depositor and the Debenture Trustee; and upon any such declaration such
principal amount of and the accrued interest on all of the Debentures shall
become immediately due and payable, provided
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that the payment of principal and interest on such Debentures shall remain
subordinated to the extent provided in the Indenture.
At any time after such a declaration of acceleration with respect to the
Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Debenture Trustee as in the Indenture
provided, 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 (including any
Additional Interest (as defined in the Indenture)) on all of the
Debentures,
(B) the principal of (and premium, if any, on) any Debentures
which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Debentures,
and
(C) all sums paid or advanced by the Debenture Trustee under the
Indenture and the reasonable compensation, expenses, disbursements and
advances of the Debenture Trustee and the Property Trustee, their
agents and counsel; and
(ii) all Events of Default with respect to the Debentures, other than
the non-payment of the principal of the Debentures which has become due
solely by such acceleration, have been cured or waived as provided in
Section 5.13 of the Indenture.
The Holders of a majority in aggregate 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 Debenture. No such rescission shall affect any subsequent
default or impair any right consequent thereon.
Upon receipt by the Property Trustee of written notice declaring such an
acceleration, or rescission and annulment thereof, by Holders of the
Preferred Securities all or part of which is represented by Book-Entry
Preferred Securities Certificates, 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
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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 sentence, in which event a new
record date shall be established pursuant to the provisions of this Section
5.14(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 Debentures
having a principal amount equal to the Liquidation Amount of the Preferred
Securities of such Holder (a "Direct Action"). Except as set forth in
Section 5.14(b) and this Section 5.14(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 Debentures.
ARTICLE VI0
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING
SECTION VI.1. LIMITATIONS ON VOTING RIGHTS.
(a) Except as provided in this Section, in Sections 5.14, 8.10 and 10.2
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 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 Securityholders from time to time as partners or members of an
association.
(b) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or execute any
trust or power conferred on the Property Trustee with respect to such
Debentures, (ii) waive any past default which is waivable under Section 5.13
of the Indenture, (iii) exercise any right to rescind or annul a declaration
that the principal of all the Debentures shall be due and payable or (iv)
consent to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of at least a majority in
Liquidation Amount of all Outstanding Preferred Securities, PROVIDED,
HOWEVER, that where a consent under the Indenture would require the consent
of each Holder of Debentures affected thereby, no such consent shall be given
by the Property Trustee without the prior written consent of each Holder
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of Preferred Securities. The Trustees 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 from the Debenture Trustee with respect to the
Debentures. In addition to obtaining the foregoing approvals of the Holders
of the Preferred Securities, prior to taking any of the foregoing actions,
the Trustees shall, at the expense of the Depositor, obtain an Opinion of
Counsel experienced in such matters to the effect that such action shall not
cause the Trust to fail to be classified as a grantor trust for United States
federal income tax purposes.
(c) If any proposed amendment to the Trust Agreement provides for, or
the Trustees otherwise propose to effect, (i) any action that would adversely
affect in any material respect the powers, preferences or special rights of
the Preferred Securities, whether by way of amendment to the Trust Agreement
or otherwise, or (ii) the dissolution, winding-up or termination of the
Trust, other than pursuant to the terms of this Trust Agreement, then the
Holders of Outstanding Preferred 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 Outstanding 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 Trust to fail to be classified as a grantor trust for United States
federal income tax purposes.
SECTION VI.2. NOTICE OF MEETINGS.
Notice of all meetings of the Preferred Securityholders, stating the
time, place and purpose of the meeting, shall be given by the Property
Trustee pursuant to Section 10.9 to each Preferred Securityholder 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 VI.3. MEETINGS OF PREFERRED SECURITYHOLDERS.
No annual meeting of Securityholders is required to be held. The
Administrative Trustees, however, shall call a meeting of Preferred
Securityholders to vote on any matter upon the written request of Holders of
record of 25% of the Outstanding Preferred Securities (based upon their
Liquidation Amount) and the Administrative Trustees or the Property Trustee
may, at any time in their discretion, call a meeting of Preferred
Securityholders to vote on any matters as to which Preferred Securityholders
are entitled to vote.
Holders of record of 50% of the Outstanding Preferred Securities (based
upon their Liquidation Amount), present in person or by proxy, shall
constitute a quorum at any meeting of Securityholders.
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If a quorum is present at a meeting, an affirmative vote by the
Preferred Securityholders of record present, in person or by proxy, holding
more than a majority of the Preferred Securities (based upon their
Liquidation Amount) held by the Preferred Securityholders of record present,
either in person or by proxy, at such meeting shall constitute the action of
the Preferred Securityholders, unless this Trust Agreement requires a greater
number of affirmative votes.
SECTION VI.4. VOTING RIGHTS.
Securityholders shall be entitled to one vote for each $25 of
Liquidation Amount represented by their Trust Securities in respect of any
matter as to which such Securityholders are entitled to vote.
SECTION VI.5. PROXIES, ETC.
At any meeting of Securityholders, any Securityholder 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 Administrative
Trustees, or with such other officer or agent of the Trust as the
Administrative Trustees 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 Securityholders 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 Securityholder shall be deemed valid unless
challenged at or prior to its exercise, and the burden of proving invalidity
shall rest on the challenger. No proxy shall be valid more than three years
after its date of execution.
SECTION VI.6. SECURITYHOLDER ACTION BY WRITTEN CONSENT.
Any action which may be taken by Securityholders at a meeting may be
taken without a meeting if Securityholders holding a majority of all
Outstanding Trust Securities (based upon their aggregate Liquidation Amount)
entitled to vote in respect of such action (or such larger proportion thereof
as shall be required by any express provision of this Trust Agreement) shall
consent to the action in writing (based upon their aggregate Liquidation
Amount).
SECTION VI.7. RECORD DATE FOR VOTING AND OTHER PURPOSES.
For the purposes of determining the Securityholders who are entitled to
notice of and to vote at any meeting or by written consent, or to participate
in any Distribution on the Trust Securities in respect of which a record date
is not otherwise provided for in this Trust Agreement, or for the purpose of
any other action, the Administrative Trustees may from time to time fix a
date, not more than 90 days prior to the date of any meeting of
Securityholders or the
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payment of a Distribution or other action, as the case may be, as a record
date for the determination of the identity of the Securityholders of record
for such purposes.
SECTION VI.8. ACTS OF SECURITYHOLDERS.
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 Securityholders or Owners may be embodied in and evidenced
by one or more instruments of substantially similar tenor signed by such
Securityholders or Owners 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 an
Administrative Trustee. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as
the "Act" of the Securityholders or Owners 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 Trustees,
if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or
by a certificate of a notary public or other officer authorized by law to
take acknowledgments of deeds, certifying that the individual signing such
instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient
proof of his authority. The fact and date of the execution of any such
instrument or writing, or the authority of the Person executing the same, may
also be proved in any other manner which any Trustee receiving the same deems
sufficient.
The ownership of Preferred Securities shall be proved by the Securities
Register.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Securityholder of any Trust Security shall bind every
future Securityholder of the same Trust Security and the Securityholder 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 Trustees or the Trust in reliance thereon, whether
or not notation of such action is made upon such Trust Security.
Without limiting the foregoing, a Securityholder 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 between the Securityholders and the
Administrative Trustees or among such Securityholders or Trustees with
respect to the authenticity, validity or binding nature of any request,
demand, authorization, direction, consent, waiver or other Act of such
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Securityholder or Trustee under this Article VI, then the determination of
such matter by the Property Trustee shall be conclusive with respect to such
matter.
A Securityholder may institute a legal proceeding directly against the
Depositor under the Guarantee to enforce its rights under the Guarantee
without first instituting a legal proceeding against the Guarantee Trustee
(as defined in the Guarantee), the Trust or any Person.
SECTION VI.9. INSPECTION OF RECORDS.
Upon reasonable notice to the Administrative Trustees and the Property
Trustee, the records of the Trust shall be open to inspection by
Securityholders during normal business hours for any purpose reasonably
related to such Securityholder's interest as a Securityholder.
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES
SECTION VII.1. REPRESENTATIONS AND WARRANTIES OF THE BANK.
The Bank hereby represents and warrants for the benefit of the Depositor
and the Securityholders that:
(a) the Bank is a Delaware banking corporation duly
organized, validly existing and in good standing under the laws
of the State of Delaware;
(b) the Bank has full corporate power, authority and legal right to
execute, deliver and perform its obligations under this Trust Agreement and
has taken all necessary action to authorize the execution, delivery and
performance by it of this Trust Agreement;
(c) this Trust Agreement has been duly authorized, executed and
delivered by the Bank and, assuming due authorization, execution and delivery
by the other parties thereto, constitutes the valid and legally binding
agreement of the Bank enforceable against it in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
(d) the execution, delivery and performance of this Trust Agreement has
been duly authorized by all necessary corporate or other action on the part
of the Bank and does not require any approval of stockholders of the Bank and
such execution, delivery and performance will not (i) violate the charter or
bylaws of the Bank, (ii) violate any provision of, or constitute, with or
without notice or lapse of time, a default under, or result in the creation
or imposition of, any Lien on any properties included in the Trust Property
pursuant to the provisions of, any indenture, mortgage, credit agreement,
license or other agreement or instrument to which the Bank is a party or by
which it is bound, or (iii) violate any law, governmental rule or regulation
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of the United States governing the banking or trust powers of the Bank or of
the State of Delaware or any order, judgment or decree applicable to the
Bank;
(e) neither the authorization, execution or delivery by the Bank of
this Trust Agreement nor the consummation of any of the transactions by the
Property Trustee or the Delaware Trustee (as appropriate in context)
contemplated herein or therein requires the consent or approval of, the
giving of notice to, the registration with or the taking of any other action
with respect to any governmental authority or agency under any existing
federal law governing the banking, or trust powers of the Bank, as the case
may be, under the laws of the United States or the State of Delaware;
(f) there are no proceedings pending or, to the best the Bank's
knowledge, threatened against or affecting the Property Trustee or the
Delaware Trustee in any court or before any governmental authority, agency or
arbitration board or tribunal which, individually or in the aggregate, would
materially and adversely affect the Trust or would question the right, power
and authority of the Bank to enter into or perform its obligations as one of
the Trustees under this Trust Agreement.
SECTION VII.2. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR.
The Depositor hereby represents and warrants for the benefit of the
Securityholders that:
(a) the Trust Securities Certificates issued at the Closing Date on
behalf of the Trust have been duly authorized and will have been, duly and
validly executed, issued and delivered by the Trustees pursuant to the terms
and provisions of, and in accordance with the requirements of, this Trust
Agreement and the Securityholders 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 Trust (or the Trustees on behalf of the Trust) under the laws of the
State of Delaware or any political subdivision thereof in connection with the
execution, delivery and performance by the Bank, the Property Trustee or the
Delaware Trustee, as the case may be, of Bank, this Trust Agreement.
ARTICLE VIII.
THE TRUSTEES
SECTION VIII.1. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) The duties and responsibilities of the Trustees 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 Trustees 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, unless
they are afforded reasonable
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indemnity against such risk or liability. 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 Trustees shall
be subject to the provisions of this Section. No Administrative Trustee or
the Delaware Trustee shall be subject to any liability under this Trust
Agreement except for its own grossly negligent action, its own grossly
negligent failure to act, or its own willful misconduct. To the extent that,
at law or in equity, a Trustee has duties (including fiduciary duties) and
liabilities relating thereto to the Trust or to the Securityholders, such
Trustee shall not be liable to the Trust or to any Securityholder for such
Trustee's good faith reliance on the provisions of this Trust Agreement. The
provisions of this Trust Agreement, to the extent that they restrict the
duties and liabilities of the Trustees otherwise existing at law or in
equity, are agreed by the Depositor and the Securityholders to replace such
other duties and liabilities of the Trustees.
(b) All payments made by the Property Trustee or a Paying Agent in
respect of the Trust Securities shall be made only from the revenue and
proceeds from the Trust Property and only to the extent that there shall be
sufficient revenue or proceeds from the Trust Property to enable the Property
Trustee or a Paying Agent to make payments in accordance with the terms
hereof. Each Securityholder, by its acceptance of a Trust Security, agrees
that it will look solely to the revenue and proceeds from the Trust Property
to the extent legally available for distribution to it as herein provided and
that the Trustees are not personally liable to it for any amount
distributable in respect of any Trust Security or for any other liability in
respect of any Trust Security. This Section 8.1(b) does not limit the
liability of the Trustees expressly set forth elsewhere in this Trust
Agreement or, in the case of the Property Trustee, in the Trust Indenture Act.
(c) 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) 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)C 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 the Trust Securities given in accordance
with this Trust Agreement 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)C the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Debentures and the Payment
Account shall be to deal with such Property in a similar manner as the
Property Trustee deals with similar property for its own account, subject
to the protections and limitations on liability afforded to the Property
Trustee under this Trust Agreement and the Trust Indenture Act;
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(v)C 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; and
(vi)C the Property Trustee shall not be responsible for monitoring
the compliance by the Administrative Trustees or the Depositor with their
respective duties under this Trust Agreement, nor shall the Property
Trustee be liable for the default or misconduct of the Administrative
Trustees or the Depositor.
SECTION VIII.2. CERTAIN NOTICES.
(a) 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 10.9, notice of such Event of Default to the Securityholders, the
Administrative Trustees and the Depositor, unless the Event of Default shall
have been cured or waived. For purposes of this Section the term "Event of
Default" means any event that is, or after notice or lapse of time or both
would become, and Event of Default.
(b)vi The Administrative Trustees shall transmit, to the Securityholders
in the manner and to the extent provided in Section 10.9, notice of the
Depositor's election to begin or further extend an Extension Period on the
Debentures (unless such election shall have been revoked) within the time
specified for transmitting such notice to the holders of the Debentures
pursuant to the Indenture as originally executed.
SECTION VIII.3. Certain Rights of Property Trustee.
Subject to the provisions of Section 8.1:
(a)vi the Property Trustee may rely and shall be protected in
acting or refraining from acting in good faith upon any resolution,
Opinion of Counsel, certificate, written representation of a Holder or
transferee, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b)vi if (i) in performing its duties under this Trust Agreement the
Property Trustee is required to decide between alternative courses of action
or (ii) in construing any of the provisions of this Trust Agreement the
Property Trustee finds the same ambiguous or inconsistent with any other
provisions contained herein or (iii) the Property Trustee is unsure of the
application of any provision of this Trust Agreement, then, except as to any
matter as to which the Preferred Securityholders are entitled to vote under
the terms of this Trust Agreement, the Property Trustee shall deliver a
notice to the Depositor requesting written instructions of the Depositor as
to the course of action to be taken and the Property
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Trustee shall take such action, or refrain from taking such action, as the
Property Trustee shall be instructed in writing to take, or to refrain from
taking, by the Depositor; PROVIDED, HOWEVER, that if the Property Trustee
does not receive such instructions of the Depositor within ten Business Days
after it has delivered such notice, or such reasonably shorter period of time
set forth in such notice (which to the extent practicable shall not be less
than two Business Days), it may, but shall be under no duty to, take or
refrain from taking such action not inconsistent with this Trust Agreement as
it shall deem advisable and in the best interests of the Securityholders, in
which event the Property Trustee shall have no liability except for its own
bad faith, negligence or willful misconduct;
(c)vi any direction or act of the Depositor or the Administrative
Trustees contemplated by this Trust Agreement shall be sufficiently evidenced
by an Officers' Certificate;
(d)vi whenever in the administration of this Trust Agreement, the
Property Trustee shall deem it desirable that a matter be established before
undertaking, suffering or omitting any action hereunder, the Property Trustee
(unless other evidence is herein specifically prescribed) may, in the absence
of bad faith on its part, request and rely upon an Officers' Certificate
which, upon receipt of such request, shall be promptly delivered by the
Depositor or the Administrative Trustees;
(e) the Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or registration thereof;
(f)vi the Property Trustee may consult with counsel 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, such
counsel may be counsel to the Depositor or any of its Affiliates, but not an
employee thereof; the Property Trustee shall have the right at any time to
seek instructions concerning the administration of this Trust Agreement from
any court of competent jurisdiction;
(g)vi 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 Securityholders pursuant to this Trust Agreement,
unless such Securityholders shall have offered to the Property Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or direction;
(h)vi 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 Securityholders, but the
Property Trustee may make such further inquiry or investigation into such
facts or matters as it may see fit;
(i)vi the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
its agents or attorneys, PROVIDED that the Property Trustee shall be
responsible for its own negligence or recklessness with respect to selection
of any agent or attorney appointed by it hereunder;
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(j)vi 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 of the Trust
Securities which instructions may only be given by the Holders of the same
proportion in Liquidation Amount of the Trust Securities as would be entitled
to direct the Property Trustee under the terms of the Trust Securities in
respect of such remedy, right or action, (ii) may refrain from enforcing such
remedy or right or taking such other action until such instructions are
received, and (iii) shall be protected in acting in accordance with such
instructions; and
(k)vi 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 the Property Trustee to perform any act or acts or exercise
any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property
Trustee shall be construed to be a duty.
SECTION VIII.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 Trust, and the Trustees do not assume
any responsibility for their correctness. The Trustees shall not be
accountable for the use or application by the Depositor of the proceeds of
the Debentures.
SECTION VIII.5. MAY HOLD SECURITIES.
Any Trustee or any other agent of any Trustee or the Trust, in its
individual or any other capacity, may become the owner or pledgee of Trust
Securities and, except as provided in the definition of the term
"Outstanding" in Article I and subject to Sections 8.8 and 8.13, may
otherwise deal with the Trust with the same rights it would have if it were
not a Trustee or such other agent.
SECTION VIII.6. COMPENSATION; INDEMNITY; FEES.
The Depositor agrees:
(a)vi to pay to the 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) as specified in a separate agreement between any of the
Trustees and the Depositor;
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(b)vi except as otherwise expressly provided herein, to reimburse the
Trustees upon request for all reasonable expenses, disbursements and advances
incurred or made by the Trustees in accordance with any provision of this
Trust Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence, bad faith
or willfulness; and
(c)vi to the fullest extent permitted by applicable law, to indemnify
and hold harmless (i) each Trustee, (ii) any Affiliate of any Trustee, (iii)
any officer, director, shareholder, employee, representative or agent of any
Trustee, and (iv) any employee or agent of the Trust or its Affiliates,
(referred to herein as an "Indemnified Person") from and against any loss,
damage, liability, tax, penalty, expense or claim of any kind or nature
whatsoever incurred by such Indemnified Person by reason of the creation,
operation or dissolution of the Trust or any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and
in a manner such Indemnified Person reasonably believed to be within the
scope of authority conferred on such Indemnified Person by this 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 gross negligence (or ordinary negligence in
the case of the Property Trustee), bad faith 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 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 and any Trustee may (subject to Section 8.8) engage in or
possess an interest in other business ventures of any nature or description,
independently or with others, similar or dissimilar to the business of the
Trust, and the Trust and the Holders of 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 Trust, shall not be deemed
wrongful or improper. Neither the Depositor, nor any Trustee, shall be
obligated to present any particular investment or other opportunity to the
Trust even if such opportunity is of a character that, if presented to the
Trust, could be taken by the Trust, and the Depositor or any 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 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 VIII.7. CORPORATE PROPERTY TRUSTEE REQUIRED; ELIGIBILITY OF
TRUSTEES.
(a)vi 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 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
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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.
(b)vi There shall at all times be one or more Administrative
Trustees hereunder with respect to the Trust Securities. Each Administrative
Trustee shall be either a natural person who is at least 21 years of age or a
legal entity that shall act through one or more persons authorized to bind
that entity.
(c)vi There shall at all times be a Delaware Trustee with respect to the
Trust Securities. The Delaware Trustee shall either be (i) a natural person
who is at least 21 years of age and a resident of the State of Delaware or
(ii) a legal entity with its principal place of business in the State of
Delaware and that otherwise meets the requirements of applicable Delaware law
that shall act through one or more persons authorized to bind such entity.
SECTION VIII.8. CONFLICTING INTERESTS.
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.
SECTION VIII.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 Depositor and the Administrative Trustees, by
agreed action of the majority of such Trustees, shall have power to appoint,
and upon the written request of the Administrative Trustees, the Depositor
shall for such purpose join with the Administrative Trustees 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. If the Depositor does not join in such appointment within 15 days
after the receipt by it of a request so to do, or in case a Debenture Event
of Default has occurred and is continuing, the Property Trustee alone shall
have power to make such appointment. 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.
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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)vi 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 Trustees specified hereunder shall be
exercised solely by such Trustees and not by such co-trustee or separate
trustee.
(b)vi The rights, powers, duties, and obligations hereby conferred or
imposed upon the Property Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed by
the Property Trustee or by the Property Trustee and such co-trustee or
separate trustee jointly, as shall be provided in the instrument appointing
such co-trustee or separate trustee, except to the extent that under any law
of any jurisdiction in which any particular act is to be performed, the
Property Trustee shall be incompetent or unqualified to perform such act, in
which event such rights, powers, duties and obligations shall be exercised
and performed by such co-trustee or separate trustee.
(c)vi 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)vi 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)vi The Property Trustee shall not be liable by reason of any act of a
co-trustee or separate trustee.
(f)vi Any Act of Holders delivered to the Property Trustee shall be
deemed to have been delivered to each such co-trustee and separate trustee.
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SECTION VIII.10. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
No resignation or removal of any Trustee (the "Relevant Trustee") and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 8.11.
Subject to the immediately preceding paragraph, the Relevant Trustee may
resign at any time by giving written notice thereof to the Common
Securityholder. If the instrument of acceptance by the successor Trustee
required by Section 8.11 shall not have been delivered to the Relevant
Trustee within 30 days after the giving of such notice of resignation, the
Relevant Trustee may petition, at the expense of the Trust, any court of
competent jurisdiction for the appointment of a successor Relevant Trustee.
Unless a Debenture Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by Act of the Common
Securityholder. If a Debenture Event of Default shall have occurred and be
continuing, the Property Trustee or the Delaware Trustee, or both of them,
may be removed at such time by Act of the Holders of a majority in
Liquidation Amount of the Preferred Securities, delivered to the Relevant
Trustee (in its individual capacity and on behalf of the Trust). In no
event will the Holders of the Preferred Securities have the right to vote to
appoint, remove or replace the Administrative Trustee. An Administrative
Trustee may be removed by the Common Securityholder at any time.
If any Trustee shall resign, be removed or become incapable of acting as
Trustee, or if a vacancy shall occur in the office of any Trustee for any
cause, at a time when no Debenture Event of Default shall have occurred and
be continuing, the Common Securityholder, by Act of the Common Securityholder
delivered to the retiring Trustee, shall promptly appoint a successor Trustee
or Trustees, and the retiring Trustee shall comply with the applicable
requirements of Section 8.11. If the Property Trustee or the Delaware Trustee
shall resign, be removed or become incapable of continuing to act as the
Property Trustee or the Delaware Trustee, as the case may be, at a time when
a Debenture Event of Default shall have occurred and be continuing, the
Preferred Securityholders, by Act of the Securityholders of a majority in
Liquidation Amount of the Preferred Securities then Outstanding delivered to
the retiring Relevant Trustee, shall promptly appoint a successor Relevant
Trustee or Trustees, and such successor Trustee shall comply with the
applicable requirements of Section 8.11. If an Administrative Trustee shall
resign, be removed or become incapable of acting as Administrative Trustee,
at a time when a Debenture Event of Default shall have occurred and be
continuing, the Common Securityholder by Act of the Common Securityholder
delivered to the Administrative Trustee shall promptly appoint a successor
Administrative Trustee or Administrative Trustees and such successor
Administrative Trustee or Trustees shall comply with the applicable
requirements of Section 8.11. If no successor Relevant Trustee shall have
been so appointed by the Common Securityholder or the Preferred
Securityholders and accepted appointment in the manner required by Section
8.11, any Securityholder who has been a Securityholder of Trust Securities
for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the appointment of
a successor Relevant Trustee.
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The Property Trustee shall give notice of each resignation and each
removal of a Trustee and each appointment of a successor Trustee to all
Securityholders in the manner provided in Section 10.9 and shall give notice
to the Depositor. Each notice shall include the name of the successor
Relevant Trustee and the address of its Corporate Trust Office if it is the
Property Trustee.
Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or a Delaware Trustee who
is a natural person dies or becomes, in the opinion of the Depositor,
incompetent or incapacitated, the vacancy created by such death, incompetence
or incapacity may be filled by (a) the unanimous act of the remaining
Administrative Trustees if there are at least two of them or (b) otherwise by
the Depositor (with the successor in each case being a Person who satisfies
the eligibility requirement for Administrative Trustees or Delaware Trustee,
as the case may be, set forth in Section 8.7).
SECTION VIII.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
In case of the appointment hereunder of a successor Relevant Trustee,
the retiring Relevant Trustee and each successor Relevant Trustee with
respect to the Trust Securities shall execute and deliver an amendment hereto
wherein each successor Relevant Trustee shall accept such appointment and
which (a) shall contain such provisions as shall be necessary or desirable to
transfer and confirm to, and to vest in, each successor Relevant Trustee all
the rights, powers, trusts and duties of the retiring Relevant Trustee with
respect to the Trust Securities and the 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 Trust by more than one
Relevant Trustee, it being understood that nothing herein or in such
amendment shall constitute such Relevant Trustees co-trustees and upon the
execution and delivery of such amendment the resignation or removal of the
retiring Relevant Trustee shall become effective to the extent provided
therein and each such successor Relevant Trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Relevant Trustee; but, on request of the Trust or
any successor Relevant Trustee such retiring Relevant Trustee shall duly
assign, transfer and deliver to such successor Relevant Trustee all Trust
Property, all proceeds thereof and money held by such retiring Relevant
Trustee hereunder with respect to the Trust Securities and the Trust.
Upon request of any such successor Relevant Trustee, the Trust shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Relevant Trustee all such rights, powers and
trusts referred to in the first or second preceding paragraph, as the case
may be.
No successor Relevant Trustee shall accept its appointment unless at the
time of such acceptance such successor Relevant Trustee shall be qualified
and eligible under this Article.
SECTION VIII.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS.
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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
corporation resulting from any merger, conversion or consolidation to which
such Relevant Trustee shall be a party, or any corporation succeeding to all
or substantially all the corporate trust business of such Relevant Trustee,
shall be the successor of such Relevant Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part
of any of the parties hereto.
SECTION VIII.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR OR
TRUST.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
similar judicial proceeding relative to the Trust or any other obligor upon
the Trust Securities or the property of the Trust or of such other obligor or
their creditors, the Property Trustee (irrespective of whether any
Distributions on the Trust Securities shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of whether
the Property Trustee shall have made any demand on the 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)vi to file and prove a claim for the whole amount of any
Distributions owing and unpaid in respect of the Trust Securities and to file
such other papers or documents as may be necessary or advisable in order to
have the claims of the Property Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Property
Trustee, its agents and counsel) and of the Holders allowed in such judicial
proceeding, and
(b)vi to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar
official in any such judicial proceeding is hereby authorized by each Holder
to make such payments to the Property Trustee and, in the event the Property
Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee,
its agents and counsel, and any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement adjustment or compensation affecting
the Trust Securities or the rights of any Holder thereof or to authorize the
Property Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION VIII.14. REPORTS BY PROPERTY TRUSTEE.
(a)vi Not later than March 31 of each year commencing with the year
commencing January 1, 1999, the Property Trustee shall transmit to all
Securityholders in accordance with
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Section 10.9, and to the Depositor, a brief report dated as of the
immediately preceding December 31 with respect to:
(vii)C 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;
(viii)C a statement that the Property Trustee has complied with all
of its obligations under this Trust Agreement during the twelve-month
period (or, in the case of the initial report, the period since the
Closing Date) ending with such December 31 or, if the Property Trustee
has not complied in any material respect with such obligations, a
description of such noncompliance; and
(ix)C 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 Securityholders
such reports concerning the Property Trustee and its actions under this Trust
Agreement as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto.
(c) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Property Trustee with each national stock
exchange, the Nasdaq National Market or such other interdealer quotation
system or self-regulatory organization upon which the Trust Securities are
listed or traded, with the Commission and with the Depositor.
SECTION VIII.15. REPORTS TO THE PROPERTY TRUSTEE.
The Depositor and the Administrative Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information
as required by Section 314 of the Trust Indenture Act (if any) and the
compliance certificate required by Section 314(a) of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act.
SECTION VIII.16. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
Each of the Depositor and the Administrative Trustees on behalf of the
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. 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 VIII.17. NUMBER OF TRUSTEES.
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(a) The number of Trustees shall be five (5) provided that the Holder
of all of the Common Securities by written instrument may increase or
decrease the number of Administrative Trustees. The Property Trustee and the
Delaware Trustee may be the same Person.
(b) If a Trustee ceases to hold office for any reason and the number of
Administrative Trustees is not reduced pursuant to Section 8.17(a), or if the
number of Trustees is increased pursuant to Section 8.17(a), a vacancy shall
occur. The vacancy shall be filled with a Trustee appointed in accordance
with Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of a Trustee shall not
operate to dissolve, terminate or annul the Trust. Whenever a vacancy in the
number of Administrative Trustees shall occur, until such vacancy is filled
by the appointment of an Administrative Trustee in accordance with Section
8.10, the Administrative Trustees in office, regardless of their number (and
notwithstanding any other provision of this Trust Agreement), shall have all
the powers granted to the Administrative Trustees and shall discharge all the
duties imposed upon the Administrative Trustees by this Trust Agreement.
SECTION VIII.18. DELEGATION OF POWER.
(a Any Administrative Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his
or her power for the purpose of executing any documents contemplated in
Section 2.7(a), including any registration statement or amendment thereto
filed with the Commission, or making any other governmental filing; and
(b The Administrative Trustees shall have power to delegate from time
to time to such of their number or to the Depositor the doing of such things
and the execution of such instruments either in the name of the Trust or the
names of the Administrative Trustees or otherwise as the Administrative
Trustees may deem expedient, to the extent such delegation is not prohibited
by applicable law or contrary to the provisions of this Trust Agreement, as
set forth herein.
SECTION VIII.19. VOTING.
Except as otherwise provided in this Trust Agreement, the consent or
approval of the Administrative Trustees shall require consent or approval by
not less than a majority of the Administrative Trustees, unless there are
only two, in which case both must consent.
ARTICLE IX.
DISSOLUTION, LIQUIDATION AND MERGER
SECTION IX.1. DISSOLUTION UPON EXPIRATION DATE.
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Unless dissolved earlier, the Trust shall automatically dissolve on June
16, 2029 (the "Expiration Date"), following the distribution of the Trust
Property in accordance with Section 9.4.
SECTION IX.2. EARLY DISSOLUTION.
The first to occur of any of the following events is an
"Early Dissolution Event," upon the occurrence of which the
Trust shall dissolve:
(a) the occurrence of a Bankruptcy Event in respect of, or the
dissolution or liquidation of, the Depositor;
(b) the written direction to the Property Trustee from the Depositor at
any time to dissolve the Trust and distribute Debentures to Securityholders
in exchange for a Like Amount of the Preferred Securities (which direction is
optional and wholly within the discretion of the Depositor);
(c) the redemption of all of the Preferred Securities in connection
with the redemption of all the Debentures; and
(d) the entry of an order for dissolution of the Trust by a court of
competent jurisdiction.
SECTION IX.3. DISSOLUTION.
The respective obligations and responsibilities of the Trustees and the
Trust created and continued hereby shall dissolve upon the latest to occur of
the following: (a) the distribution by the Property Trustee to
Securityholders upon the liquidation of the Trust pursuant to Section 9.4, or
upon the redemption of all of the Trust Securities pursuant to Section 4.2,
of all amounts required to be distributed hereunder upon the final payment of
the Trust Securities; (b) the payment of any expenses owed by the Trust; and
(c) the discharge of all administrative duties of the Administrative
Trustees, including the performance of any tax reporting obligations with
respect to the Trust or the Securityholders, and (d) the filing of a
Certificate of Cancellation by the Administrative Trustee under the Business
Trust Act.
SECTION IX.4. LIQUIDATION.
(a) If an Early Dissolution Event specified in clause (a), (b) or (d)
of Section 9.2 occurs or upon the Expiration Date, the Trust shall be
liquidated by the Trustees as expeditiously as the Trustees determine to be
possible by distributing, after satisfaction of liabilities to creditors of
the Trust as provided by applicable law, to each Securityholder a Like Amount
of Debentures, subject to Section 9.4(d). Notice of liquidation shall be
given by the Property Trustee by first-class mail, postage prepaid mailed not
later than 30 nor more than 60 days prior to the
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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 Debentures; and
(iii) provide such information with respect to the mechanics by which
Holders may exchange Trust Securities Certificates for certificates
representing the Like Amount of the Debentures, or if Section 9.4(d)
applies receive a Liquidation Distribution, as the Administrative Trustees
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 Trust and distribution of the Debentures to
Securityholders, the Administrative Trustees shall establish a record date
for such distribution (which shall be not more than 45 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 Debentures in
exchange for the Outstanding Trust Securities Certificates.
(c) Except where Section 9.2(c) or 9.4(d) applies, after the
Liquidation Date, (i) the Trust Securities will no longer be deemed to be
Outstanding, (ii) certificates representing a Like Amount of Debentures will
be issued to holders of Trust Securities Certificates, upon surrender of such
certificates to the Administrative Trustees or their agent for exchange,
(iii) the Depositor shall use its best efforts to have the Debentures listed
on the Nasdaq National Market or on such other exchange, interdealer
quotation system or self-regulatory organization as the Preferred Securities
are then listed, (iv) any Trust Securities Certificates not so surrendered
for exchange will be deemed to represent a Like Amount of Debentures,
accruing interest at the rate provided for in the Debentures from the last
Distribution Date on which a Distribution was made on such Trust Securities
Certificates until such certificates are so surrendered (and until such
certificates are so surrendered, no payments of interest or principal will be
made to Holders of Debentures represented by such certificates) and (v) all
rights of Securityholders holding Trust Securities will cease, except the
right of such Securityholders to receive a Like Amount of Debentures upon
surrender of Trust Securities Certificates.
(d) In the event that, 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 Debentures in the
manner provided herein is determined by the Property Trustee not to be
practical, the Trust Property shall be liquidated, and the Trust shall be
wound-up or terminated, by the Property Trustee in such manner as the
Property Trustee determines. In such event, on the date of the dissolution
of the Trust, Securityholders will be entitled to receive out of the assets
of the Trust available for distribution to Securityholders, after
satisfaction of liabilities to creditors of the Trust as provided by
applicable law, an amount equal to the Liquidation Amount per Trust Security
plus accumulated and unpaid Distributions thereon
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to the date of payment (such amount being the "Liquidation Distribution").
If, upon any such winding up or termination, the Liquidation Distribution can
be paid only in part because the Trust has insufficient assets available to
pay in full the aggregate Liquidation Distribution, then, subject to the next
succeeding sentence, the amounts payable by the Trust on the Trust Securities
shall be paid on a pro rata basis (based upon Liquidation Amounts). The
Holder of the Common Securities will be entitled to receive Liquidation
Distributions upon any such winding-up or termination pro rata (determined as
aforesaid) with Holders of Preferred Securities, except that, if a Debenture
Event of Default has occurred and is continuing, Holders of the Preferred
Securities shall have a priority over the Holders of Common Securities.
SECTION IX.5. MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF
THE TRUST.
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except
pursuant to this Section 9.5 or Section 9.4. At the request of the
Depositor, with the consent of the Administrative Trustees and without the
consent of the Holders of the Preferred Securities, the Property Trustee or
the Delaware Trustee, the Trust may merge with or into, consolidate,
amalgamate, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to a trust organized as such under the
laws of any State; PROVIDED, that (i) such successor entity either (a)
expressly assumes all of the obligations of the 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 rank the
same as the Preferred Securities rank in priority with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii)
the Depositor expressly appoints a trustee of such successor entity
possessing the same powers and duties as the Property Trustee as the holder
of the Debentures, (iii) the Successor Securities are listed or traded, or
any Successor Securities will be listed upon notification of issuance, on any
national securities exchange or other organization on which the Preferred
Securities are then listed or traded, if any, (iv) 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, (v)
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, (vi) such successor entity has a purpose
substantially identical to that of the Trust, (vii) prior to such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, the
Depositor has received an Opinion of Counsel to the effect that (a) such
merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not adversely affect the rights, preferences and privileges of the
holders of the Preferred Securities (including any Successor Securities) in
any material respect, and (b) following such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, neither the Trust
nor such successor entity will be required to register as an investment
company under the 1940 Act and (viii) the Depositor owns all of the Common
Securities of such successor entity and guarantees the obligations of such
successor entity under the Successor Securities at least to the extent
provided by the Guarantee. Notwithstanding the foregoing, the Trust shall
not, except with the consent of holders of 100% in
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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 Trust or the successor entity
to be classified as other than a grantor trust for United States federal
income tax purposes.
ARTICLE X.
MISCELLANEOUS PROVISIONS
SECTION X.1. LIMITATION OF RIGHTS OF SECURITYHOLDERS.
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 Securityholder for such person, to claim an accounting, take any action
or bring any proceeding in any court for a partition or winding up of the
arrangements contemplated hereby, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
SECTION X.2. AMENDMENT.
(a) This Trust Agreement may be amended from time to time by the
Property Trustee, the Administrative Trustees and the Depositor, without the
consent of any Securityholders, (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, which shall not be inconsistent
with the other provisions of this Trust Agreement, 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 Trust will be classified for United
States federal income tax purposes as a grantor trust at all times that any
Trust Securities are outstanding or to ensure that the Trust will not be
required to register as an investment company under the 1940 Act; PROVIDED,
HOWEVER, that in the case of clause (i), such action shall not adversely
affect in any material respect the interests of any Securityholder, and any
such amendments of this Trust Agreement shall become effective when notice
thereof is given to the Securityholders.
(b) Except as provided in Section 10.2(c) hereof, any provision of this
Trust Agreement may be amended by the Administrative Trustees and the
Property Trustee with (i) the consent of Trust Securityholders representing
not less than a majority (based upon Liquidation Amounts) of the Trust
Securities then Outstanding and (ii) receipt by the Trustees of an Opinion of
Counsel to the effect that such amendment or the exercise of any power
granted to the Trustees in accordance with such amendment will not affect the
Trust's status as a grantor trust for United States federal income tax
purposes or the Trust's exemption from status of an investment company under
the 1940 Act.
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(c) In addition to and notwithstanding any other provision in this
Trust Agreement, without the consent of each affected Securityholder (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 Securityholder to
institute suit for the enforcement of any such payment on or after such date;
notwithstanding any other provision herein, without the unanimous consent of
the Securityholders (such consent being obtained in accordance with Section
6.3 or 6.6 hereof), this paragraph (c) of this Section 10.2 may not be
amended.
(d) Notwithstanding any other provisions of this Trust Agreement, no
Administrative Trustee shall enter into or consent to any amendment to this
Trust Agreement which would (i) cause the Trust to fail or cease to qualify
for the exemption from status of an investment company under the 1940 Act,
(ii) cause the Trust to fail or cease to be classified as a grantor trust for
United States federal income tax purposes, or (iii) cause the Preferred
Securities to be delisted by the Nasdaq National Market or such other
national exchange or over-the-counter market on which the Preferred
Securities are then listed for trading.
(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Delaware Trustee or the Depositor, as the case may
be, this Trust Agreement may not be amended in a manner which imposes any
additional obligation on the Depositor or the Delaware Trustee.
(f) In the event that any amendment to this Trust Agreement is made,
the Administrative Trustees 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.
SECTION X.3. COUNTERPARTS.
This Trust Agreement may be executed in one or more counterparts, each
of which shall be an original and all of which shall constitute one and the
same instrument.
SECTION X.4. SEPARABILITY.
In case any provision in this Trust Agreement or in the Trust Securities
Certificates shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
SECTION X.5. GOVERNING LAW.
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THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH RESPECT TO THIS TRUST
AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES).
SECTION X.6. 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, with the
same force and effect as though made on the date fixed for such payment, and
no interest shall accrue thereon for the period after such date.
SECTION X.7. SUCCESSORS.
This Trust Agreement shall be binding upon and shall inure to the
benefit of any successor to the Depositor, the Trust or the Relevant Trustee,
including any successor by operation of law. Except in connection with a
consolidation, merger or sale involving the Depositor that is permitted under
Article Eight of the Indenture and pursuant to which the assignee agrees in
writing to perform the Depositor's obligations hereunder, the Depositor shall
not assign its obligations hereunder.
SECTION X.8. HEADINGS.
The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement.
SECTION X.9. REPORTS, NOTICES AND DEMANDS.
Any report, 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 any Securityholder 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 Preferred Securityholder, to such Preferred Securityholder as such
Securityholder's name and address may appear on the Securities Register; and
(b) in the case of the Common Securityholder or the Depositor, to Silicon
Valley Bancshares, 3003 Tasman Drive, Santa Clara, California, 95054,
Attention: Christopher T. Lutes, facsimile number: (408) 496-2405. Such
notice, demand or other communication to or upon a Securityholder shall be
deemed to have been sufficiently given or made, for all purposes, upon hand
delivery, mailing or transmission.
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
Trust, the Property Trustee, the Delaware Trustee or the Administrative
Trustees shall be given in writing addressed (until another address is
published by the Trust) as follows: (a) with respect to the Property Trustee
to Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
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Wilmington, Delaware 19890-0001; (b) with respect to the Delaware Trustee,
to Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration;
and (c) with respect to the Administrative Trustees, to them at the address
above for notices to the Depositor, marked "Attention Administrative Trustees
of SVB Capital I." Such notice, demand or other communication to or upon the
Trust or the Property Trustee shall be deemed to have been sufficiently given
or made only upon actual receipt of the writing by the Trust or the Property
Trustee.
SECTION X.10. AGREEMENT NOT TO PETITION.
Each of the Trustees and the Depositor agree for the benefit of the
Securityholders that, until at least one year and one day after the Trust has
been terminated in accordance with Article IX, they shall not file, or join
in the filing of, a petition against the Trust under any Bankruptcy Laws or
otherwise join in the commencement of any proceeding against the Trust under
any Bankruptcy Law. In the event the Depositor takes action in violation of
this Section 10.10, the Property Trustee agrees, for the benefit of
Securityholders, 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 Trust or the commencement of such
action and raise the defense that the Depositor has agreed in writing not to
take such action and should be stopped and precluded therefrom and such other
defenses, if any, as counsel for the Trustee or the Trust may assert. The
provisions of this Section 10.10 shall survive the termination of this Trust
Agreement.
SECTION X.11. TRUST INDENTURE ACT; CONFLICT WITH TRUST INDENTURE ACT.
(a) This Trust Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Trust Agreement and shall,
to the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a trustee
for the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Trust Agreement by
any of the provisions of the Trust Indenture Act, such required provision
shall control. If any provision of this Trust Agreement modifies or excludes
any provision of the Trust Indenture Act which may be so modified or
excluded, the latter provision shall be deemed to apply to this Trust
Agreement as so modified or excluded, as the case may be.
(d) The application of the Trust Indenture Act to this Trust Agreement
shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION X.12. ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE AND
INDENTURE.
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THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN
BY OR ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY
SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE
UNCONDITIONAL ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A
BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF
THIS TRUST AGREEMENT AND AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER
TERMS OF THE GUARANTEE AND THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT
OF THE TRUST, SUCH SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS AND
PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE
AS BETWEEN THE TRUST AND SUCH SECURITYHOLDER AND SUCH OTHERS.
IN WITNESS WHEREOF, the undersigned have executed this Amended and
Restated Trust Agreement this 22nd day of May, 1998.
55
<PAGE>
SILICON VALLEY BANCSHARES
By: /s/ Barbara B. Kamm
----------------------
Name: Barbara B. Kamm
Title: Executive Vice President
WILMINGTON TRUST COMPANY,
as Property Trustee
By: /s/ Denise M. Geran
----------------------
Name: Denise M. Geran
Title: Financial Services Officer
WILMINGTON TRUST COMPANY,
as Delaware Trustee
By: /s/ Denise M. Geran
---------------------
Name: Denise M. Geran
Title: Financial Services Officer
56
<PAGE>
SVB CAPITAL I
/s/ Barbara B. Kamm
- -------------------
Barbara B. Kamm,
as Administrative Trustee
/s/ Christopher T. Lutes
- ------------------------
Christopher T. Lutes,
as Administrative Trustee
/s/ David Jaques
- ----------------
David Jaques,
as Administrative Trustee
57
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EXHIBIT A
CERTIFICATE OF TRUST
OF
SVB CAPITAL I
THIS CERTIFICATE OF TRUST of SVB CAPITAL I (the "Trust"), dated
__________, 1998, is being duly executed and filed by the undersigned, as
trustees, to form a business trust under the Delaware Business Trust Act (12
Del. C. (SECTION) 3801 et seq.).
1. NAME. The name of the business trust being formed hereby
is SVB CAPITAL I.
2. DELAWARE TRUSTEE. The name and business address of the trustee of
the Trust in the State of Delaware are Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890,
Attention: Corporate Trust Administration.
3. EFFECTIVE DATE. This Certificate of Trust shall be
effective upon its filing.
IN WITNESS WHEREOF, the undersigned, being the trustees of
the Trust, have executed this Certificate of Trust as of the date
first above written.
WILMINGTON TRUST COMPANY,
as Trustee
By:
------------------------
Name:
Title:
---------------------------
Barbara B. Kamm,
Administrative Trustee
---------------------------
Christopher T. Lutes,
Administrative Trustee
---------------------------
David Jaques,
Administrative Trustee
58
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EXHIBIT B
The Depository Trust Company,
55 Water Street, 49th Floor,
New York, New York 10041-0099
__________, 1998
Attention: _______________
General Counsel's Office
Re: SVB CAPITAL I ____% CUMULATIVE TRUST PREFERRED SECURITIES
Ladies and Gentlemen:
The purpose of this letter is to set forth certain matters relating to
the issuance and deposit with The Depository Trust Company ("DTC") of the SVB
CAPITAL I ____% Cumulative Trust Preferred Securities, (the "Trust Preferred
Securities"), of SVB CAPITAL I, a Delaware business trust (the "Issuer"),
formed pursuant to an Amended and Restated Trust Agreement between Silicon
Valley Bancshares ("Silicon") and Wilmington Trust Company, as Property
Trustee, Wilmington Trust Company, as Delaware Trustee, and the
Administrative Trustees named therein. The payment of distributions on the
Trust Preferred Securities, and payments due upon liquidation of the Issuer
or redemption of the Trust Preferred Securities, to the extent the Issuer has
funds available for the payment thereof are guaranteed by Silicon to the
extent set forth in a Guarantee Agreement dated ____________, 1998 by Silicon
with respect to the Trust Preferred Securities. Silicon and the Issuer
propose to sell the Trust Preferred Securities to certain Underwriters (the
"Underwriters") pursuant to a Underwriting Agreement dated ____________, 1998
by and among the Underwriters, the Issuer and Silicon, and the Underwriters
wish to take delivery of the Trust Preferred Securities through DTC.
Wilmington Trust Company is acting as transfer agent and registrar with
respect to the Trust Preferred Securities (the "Transfer Agent and
Registrar").
To induce DTC to accept the Trust Preferred Securities as eligible for
deposit at DTC, and to act in accordance with DTC's rules with respect to the
Trust Preferred Securities, the Issuer, the Transfer Agent and Registrar and
DTC agree among each other as follows:
1. Prior to the closing of the sale of the Trust Preferred Securities to
the Underwriters, which is expected to occur on or about ____________, 1998,
there shall be deposited with DTC one or more global certificates
(individually and collectively, the "Global Certificate") registered in the
name of DTC's Trust Preferred Securities nominee, Cede & Co., representing an
aggregate of ____________ Trust Preferred Securities and bearing the
following legend:
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to
the Issuer or its agent for registration of transfer, exchange, or
payment, and any certificate issued
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is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an interest herein.
2. The Amended and Restated Trust Agreement of the Issuer provides for
the voting by holders of the Trust Preferred Securities under certain limited
circumstances. The Issuer shall establish a record date for such purposes
and shall, to the extent possible, give DTC notice of such record date not
less than 15 calendar days in advance of such record date.
3. In the event of a stock split, conversion, recapitalization,
reorganization or any other similar transaction resulting in the cancellation
of all or any part of the Trust Preferred Securities outstanding, the Issuer
or the Transfer Agent and Registrar shall send DTC a notice of such event at
least 5 business days prior to the effective date of such event.
4. In the event of distribution on, or an offering or issuance of rights
with respect to, the Trust Preferred Securities outstanding, the Issuer or
the Transfer Agent and Registrar shall send DTC a notice specifying: (a) the
amount of and conditions, if any, applicable to the payment of any such
distribution or any such offering or issuance of rights; (b) any applicable
expiration or deadline date, or any date by which any action on the part of
the holders of Trust Preferred Securities is required; and (c) the date any
required notice is to be mailed by or on behalf of the Issuer to holders of
Trust Preferred Securities or published by or on behalf of the Issuer
(whether by mail or publication, the "Publication Date"). Such notice shall
be sent to DTC by a secure means (e.g., legible telecopy, registered or
certified mail, overnight delivery) in a timely manner designed to assure
that such notice is in DTC's possession no later than the close of business
on the business day before the Publication Date. The Issuer or the Transfer
Agent and Registrar will forward such notice either in a separate secure
transmission for each CUSIP number or in a secure transmission of multiple
CUSIP numbers (if applicable) that includes a manifest or list of each CUSIP
number submitted in that transmission. (The party sending such notice shall
have a method to verify subsequently the use of such means and the timeliness
of such notice.) The Publication Date shall be not less than 30 calendar days
nor more than 60 calendar days prior to the payment of any such distribution
or any such offering or issuance of rights with respect to the Trust
Preferred Securities. After establishing the amount of payment to be made on
the Trust Preferred Securities, the Issuer or the Transfer Agent and
Registrar will notify DTC's Dividend Department of such payment 5 business
days prior to payment date. Notices to DTC's Dividend Department by telecopy
shall be sent to (212) 709-1723. Such notices by mail or by any other means
shall be sent to:
Manager, Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
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The Issuer or the Transfer Agent and Registrar shall confirm DTC's
receipt of such telecopy by telephoning the Dividend Department at (212)
709-1270.
5. In the event of a redemption by the Issuer of the Trust Preferred
Securities, notice specifying the terms of the redemption and the Publication
Date of such notice shall be sent by the Issuer or the Transfer Agent and
Registrar to DTC not less than 30 calendar days prior to such event by a
secure means in the manner set forth in paragraph 4. Such redemption notice
shall be sent to DTC's Call Notification Department at (516) 227-4164 or
(516) 227-4190, and receipt of such notice shall be confirmed by telephoning
(516) 227-4070. Notice by mail or by any other means shall be sent to:
Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, New York 11530-4719
6. In the event of any invitation to tender the Trust Preferred
Securities, notice specifying the terms of the tender and the Publication
Date of such notice shall be sent by the Issuer or the Transfer Agent and
Registrar to DTC by a secure means and in a timely manner as described in
paragraph 4. Notices to DTC pursuant to this paragraph and notices of other
corporate actions (including mandatory tenders, exchanges and capital
changes) shall be sent, unless notification to another department is
expressly provided for herein, by telecopy to DTC's Reorganization Department
at (212) 709-1093 or (212) 709-1094 and receipt of such notice shall be
confirmed by telephoning (212) 709-6884, or by mail or any other means to:
Manager, Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
7. All notices and payment advices sent to DTC shall contain the CUSIP
number or numbers of the Trust Preferred Securities and the accompanying
designation of the Trust Preferred Securities, which, as of the date of this
letter, is "SVB CAPITAL I ____% Cumulative Trust Preferred Securities.
8. Distribution payments or other cash payments with respect to the
Trust Preferred Securities evidenced by the Global Certificate shall be
received by Cede & Co., as nominee of DTC, or its registered assigns in next
day funds on each payment date (or in accordance with existing arrangements
between the Issuer or the Transfer Agent and Registrar and DTC). Such
payments shall be made payable to the order of Cede & Co., and shall be
addressed as follows:
NDFS Redemption Department
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
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9. DTC may by prior written notice direct the Issuer and the Transfer
Agent and Registrar to use any other telecopy number or address of DTC as the
number or address to which notices or payments may be sent.
10. In the event of a conversion, redemption, or any other similar
transaction (e.g., tender made and accepted in response to the Issuer's or
the Transfer Agent and Registrar's invitation) necessitating a reduction in
the aggregate number of Trust Preferred Securities outstanding evidenced by
Global Certificates, DTC, in its discretion: (a) may request the Issuer or
the Transfer Agent and Registrar to issue and countersign a new Global
Certificate; or (b) may make an appropriate notation on the Global
Certificate indicating the date and amount of such reduction.
11. DTC may discontinue its services as a securities depositary with
respect to the Trust Preferred Securities at any time by giving at least 90
days' prior written notice to the Issuer and the Transfer Agent and Registrar
(at which time DTC will confirm with the Issuer or the Transfer Agent and
Registrar the aggregate number of Trust Preferred Securities deposited with
it) and discharging its responsibilities with respect thereto under
applicable law. Under such circumstances, the Issuer may determine to make
alternative arrangements for book-entry settlement for the Trust Preferred
Securities, make available one or more separate global certificates
evidencing Trust Preferred Securities to any Participant having Trust
Preferred Securities credited to its DTC account, or issue definitive Trust
Preferred Securities to the beneficial holders thereof, and in any such case,
DTC agrees to cooperate fully with the Issuer and the Transfer Agent and
Registrar, and to return the Global Certificate, duly endorsed for transfer
as directed by the Issuer or the Transfer Agent and Registrar, together with
any other documents of transfer reasonably requested by the Issuer or the
Transfer Agent and Registrar.
12. In the event that the Issuer determines that beneficial owners of
Trust Preferred Securities shall be able to obtain definitive Trust Preferred
Securities, the Issuer or the Transfer Agent and Registrar shall notify DTC
of the availability of certificates. In such event, the Issuer or the
Transfer Agent and Registrar shall issue, transfer and exchange certificates
in appropriate amounts, as required by DTC and others, and DTC agrees to
cooperate fully with the Issuer and the Transfer Agent and Registrar and to
return the Global Certificate, duly endorsed for transfer as directed by the
Issuer or the Transfer Agent and Registrar, together with any other documents
of transfer reasonably requested by the Issuer or the Transfer Agent and
Registrar.
13. This letter may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
Nothing herein shall be deemed to require the Transfer Agent and
Registrar to advance funds on behalf of SVB CAPITAL I.
Very truly yours,
SVB CAPITAL I
(as Issuer)
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<PAGE>
By:
-------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as Trustee, Paying Agent and Registrar
By:
-------------------------
Name:
Title:
RECEIVED AND ACCEPTED:
THE DEPOSITORY TRUST COMPANY
By:
---------------------
AUTHORIZED OFFICER
63
<PAGE>
EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE
CERTIFICATE NUMBER C-1 NUMBER OF COMMON SECURITIES 49,485
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
SVB CAPITAL I
____% Common Securities
(liquidation amount $25 per Common Security)
SVB CAPITAL I, a statutory business trust formed under the laws of the
State of Delaware (the "Trust"), hereby certifies that SILICON VALLEY
BANCSHARES (the "Holder") is the registered owner of 49,485 common securities
of the Trust representing undivided beneficial interests of the Trust and
designated the ____% Common Securities (liquidation amount $25 per Common
Security) (the "Common Securities"). In accordance with Section 5.10 of the
Trust Agreement (as defined below) the Common Securities are not transferable
and any attempted transfer hereof 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 Trust dated as of __________, 1998, as the same may be amended from time
to time (the "Trust Agreement") including the designation of the terms of the
Common Securities as set forth therein. The Trust will furnish a copy of the
Trust Agreement to the Holder without charge upon written request to the
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.
IN WITNESS WHEREOF, an Administrative Trustee of the Trust has executed
this certificate this _____ day of ______, 1998.
SVB CAPITAL I
By:
----------------------
Name:
Title:
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<PAGE>
EXHIBIT D
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT AS TO EXPENSES AND LIABILITIES (this "Agreement"), dated as of
____________, 1998, between SILICON VALLEY BANCSHARES, a California corporation
(the "Company") and SVB CAPITAL I, a Delaware business trust (the "Trust").
WHEREAS, the Trust intends to issue its Common Securities (the "Common
Securities") to and receive Debentures from the Company and to issue and sell
____% Cumulative Trust Preferred Securities (the "Trust Preferred
Securities") with such powers, preferences and special rights and
restrictions as are set forth in the Amended and Restated Trust Agreement of
the Trust dated as of _________, 1998 as the same may be amended from time to
time (the "Trust Agreement");
WHEREAS, the Company will directly or indirectly own all of the Common
Securities of the Trust and will issue the Debentures;
NOW, THEREFORE, in consideration of the purchase by each holder of the
Trust Preferred Securities, which purchase the Company hereby agrees shall
benefit the Company and which purchase the Company acknowledges will be made
in reliance upon the execution and delivery of this Agreement, the Company
and the Trust hereby agree as follows:
ARTICLE I
SECTION 1.1. Guarantee by the Company.
Subject to the terms and conditions hereof, the Company hereby
irrevocably and unconditionally guarantees to each person or entity to whom
the Trust is now or hereafter becomes indebted or liable (the "Beneficiaries")
the full payment, when and as due, of any and all Obligations (as hereinafter
defined) to such Beneficiaries. As used herein, "Obligations" means any costs,
expenses or liabilities of the Trust, other than obligations of the Trust to pay
to holders of any Trust Preferred Securities or other similar interests in the
Trust the amounts due such holders pursuant to the terms of the Trust Preferred
Securities or such other similar interests, as the case may be. This Agreement
is intended to be for the benefit of, and to be enforceable by, all such
Beneficiaries, whether or not such Beneficiaries have received notice hereof.
SECTION 1.2. TERM OF AGREEMENT.
This Agreement shall terminate and be of no further force and effect
upon the later of (a) the date on which full payment has been made of all
amounts payable to all holders of all the Trust Preferred Securities (whether
upon redemption, liquidation, exchange or otherwise) and (b) the date on
which there are no Beneficiaries remaining; PROVIDED, HOWEVER, that this
Agreement shall continue to be effective or shall be reinstated, as the case
may be, if at any time any holder of Trust Preferred Securities or any
Beneficiary must restore payment of any sums paid under the
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Trust Preferred Securities, under any Obligation, under the Guarantee
Agreement dated the date hereof by the Company and Wilmington Trust Company,
a Delaware banking corporation, as guarantee trustee or under this Agreement
for any reason whatsoever. This Agreement is continuing, irrevocable,
unconditional and absolute.
SECTION 1.3. WAIVER OF NOTICE.
The Company hereby waives notice of acceptance of this
Agreement and of any Obligation to which it applies or may apply,
and the Company hereby waives presentment, demand for payment,
protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 1.4. NO IMPAIRMENT.
The obligations, covenants, agreements and duties of the Company under
this Agreement shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:
(a) the extension of time for the payment by the Trust of all or any
portion of the Obligations or for the performance of any other obligation
under, arising out of, or in connection with, the obligations;
(b) any failure, omission, delay or lack of diligence on the part of the
Beneficiaries to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Beneficiaries with respect to the Obligations or any
action on the part of the Trust granting indulgence or extension of any kind;
or
(c) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of
debt of, or other similar proceedings affecting, the Trust or any of the
assets of the Trust.
There shall be no obligation of the Beneficiaries to give notice to, or
obtain the consent of, the Company with respect to the happening of any of
the foregoing.
SECTION 1.5. ENFORCEMENT.
A Beneficiary may enforce this Agreement directly against the Company
and the Company waives any right or remedy to require that any action be
brought against the Trust or any other person or entity before proceeding
against the Company.
SECTION 1.6. SUBROGATION.
The Company shall be subrogated to all (if any) rights of
the Trust in respect of any amounts paid to the Beneficiaries by
the Company under this Agreement; PROVIDED, HOWEVER, that the
Company 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
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indemnity, reimbursement or other agreement, in all cases as a result of
payment under this Agreement, if, at the time of any such payment, any
amounts are due and unpaid under this Agreement.
ARTICLE II
SECTION 2.1. BINDING EFFECT.
All guarantees and agreements contained in this Agreement shall bind the
successors, assigns, receivers, trustees and representatives of the Company
and shall inure to the benefit of the Beneficiaries.
SECTION 2.2. AMENDMENT.
So long as there remains any Beneficiary or any Trust Preferred
Securities of any series are outstanding, this Agreement shall not be
modified or amended in any manner adverse to such Beneficiary or to the
holders of the Trust Preferred Securities.
SECTION 2.3. NOTICES.
Any notice, request or other communication required or permitted to be
given hereunder shall be given in writing by delivering the same against
receipt therefor by facsimile transmission (confirmed by mail), telex or by
registered or certified mail, addressed as follows (and if so given, shall be
deemed given when mailed or upon receipt of an answer-back, if sent by
telex):
SVB CAPITAL I
c/o SILICON VALLEY BANCSHARES
3003 Tasman Drive
Santa Clara, California 95054
Facsimile No.: (408) ___-____
Attention: ______________
SILICON VALLEY BANCSHARES
3003 Tasman Drive
Santa Clara, California 95054
Facsimile No.: (408) ___-____
Attention: ______________
SECTION 2.4. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA (WITHOUT
REGARD TO CONFLICT OF LAW PRINCIPLES).
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THIS AGREEMENT is executed as of the day and year first above written.
SILICON VALLEY BANCSHARES
By:
--------------------------
Name:
Title:
SVB CAPITAL I
By:
--------------------------
Name:
ADMINISTRATIVE TRUSTEE
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EXHIBIT E
This Preferred Security is a Global Certificate within the meaning of the
Trust Agreement hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depository") or a nominee of the Depository.
This Preferred Security is exchangeable for Trust Preferred Securities
registered in the name of a person other than the Depository or its nominee
only in the limited circumstances described in the Trust Agreement and no
transfer of this Preferred Security (other than a transfer of this Preferred
Security as a whole by the Depository to a nominee of the Depository or by a
nominee of the Depository to the Depository or another nominee of the
Depository) may be registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York) to SVB CAPITAL I
or its agent for registration of transfer, exchange or payment, and any
Preferred Security issued is registered in the name of Cede & Co. or such
other name as requested by an authorized representative of The Depository
Trust Company and any payment hereon is made to Cede & Co., ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
CERTIFICATE NUMBER P-1 NUMBER OF TRUST PREFERRED SECURITIES _______
CUSIP NO.
_________
CERTIFICATE EVIDENCING TRUST PREFERRED SECURITIES
OF
SVB CAPITAL I
____% CUMULATIVE TRUST PREFERRED SECURITIES,
(LIQUIDATION AMOUNT $__ PER PREFERRED SECURITY)
SVB CAPITAL I, a statutory business trust formed under the laws of the
State of Delaware (the "Trust"), hereby certifies that ________________ (the
"Holder") is the registered owner of ________ ( ) Trust Preferred
Securities of the Trust representing an undivided beneficial interest in the
assets of the Trust and designated the SVB CAPITAL I ____% Cumulative Trust
Preferred Securities, (liquidation amount $__ per Preferred Security) (the
"Trust Preferred Securities"). The Trust Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer as provided in Section 5.4 of the Trust Agreement
(as defined below). The designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Trust Preferred Securities
are set forth in, and this certificate and the Trust 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
Trust dated as of
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__________, 1998, as the same may be amended from time to time (the "Trust
Agreement") including the designation of the terms of Trust Preferred
Securities as set forth therein. The Holder is entitled to the benefits of
the Guarantee Agreement entered into by Silicon Valley Bancshares, a
California corporation, and [insert name of Guarantee Trustee], as guarantee
trustee, dated as of ___________, 1998, (the "Guarantee"), to the extent
provided therein. The Trust will furnish a copy of the Trust Agreement and
the Guarantee to the Holder without charge upon written request to the 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.
IN WITNESS WHEREOF, an Administrative Trustee of the Trust has executed
this certificate this ___ day of ___________, 1998.
SVB CAPITAL I
By:
-------------------
Name:
ADMINISTRATIVE TRUSTEE
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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
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
SEC Rule 17Ad-15.
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EXHIBIT 4.7
THIS TRUST PREFERRED SECURITY IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF
THE TRUST AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF
THE DEPOSITORY TRUST COMPANY (THE "DEPOSITARY") OR A NOMINEE OF THE
DEPOSITARY. THIS TRUST PREFERRED SECURITY IS EXCHANGEABLE FOR TRUST PREFERRED
SECURITIES 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 NO TRANSFER OF THIS TRUST PREFERRED SECURITY (OTHER THAN A
TRANSFER OF THIS TRUST PREFERRED SECURITY AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.
UNLESS THIS TRUST PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY (55 WATER STREET, NEW YORK) TO SVB CAPITAL I
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY TRUST
PREFERRED SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND
ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
CERTIFICATE NUMBER P-1 NUMBER OF TRUST PREFERRED SECURITIES: 1,600,000
CUSIP NO. 784868 20 0
_____________
CERTIFICATE EVIDENCING TRUST PREFERRED SECURITIES
OF
SVB CAPITAL I
8.25% CUMULATIVE TRUST PREFERRED SECURITIES,
(LIQUIDATION AMOUNT $25 PER TRUST PREFERRED SECURITY)
SVB CAPITAL I, a statutory business trust formed under the laws of the State
of Delaware (the "Trust"), hereby certifies that Cede & Co. (the "Holder") is
the registered owner of One Million Six Hundred Thousand (1,600,000) Trust
Preferred Securities of the Trust representing an undivided beneficial
interest in the assets of the Trust and designated the SVB CAPITAL I 8.25%
Cumulative Trust Preferred Securities, (liquidation amount $25 per Trust
Preferred Security) (the "Trust Preferred Securities"). The Trust Preferred
Securities are transferable on the books and records of the Trust, in person
or by a duly authorized attorney, upon surrender of this certificate duly
endorsed and in proper form for transfer as provided in Section 5.4 of the
Trust Agreement (as defined below). The designations, rights, privileges,
restrictions, preferences and other terms and provisions of the Trust
Preferred Securities are set forth in, and this certificate
<PAGE>
and the Trust 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 Trust dated as of May 22, 1998, as the same
may be amended from time to time (the "Trust Agreement"), including the
designation of the terms of Trust Preferred Securities as set forth therein.
The Holder is entitled to the benefits of the Guarantee Agreement entered
into by Silicon Valley Bancshares, a California corporation, and Wilmington
Trust Company, a Delaware banking corporation, as guarantee trustee, dated as
of May 22, 1998 (the "Guarantee"), to the extent provided therein. The Trust
will furnish a copy of the Trust Agreement and the Guarantee to the Holder
without charge upon written request to the 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.
IN WITNESS WHEREOF, an Administrative Trustee of the Trust has executed
this certificate this 22nd day of May, 1998.
SVB CAPITAL I
By: /s/ Barbara Kamm
------------------------------
Name: Barbara B. Kamm
Title: Administrative Trustee
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Trust
Preferred Security to:
----------------------------------
(Insert assignee's social security or tax identification number)
----------------------------------
----------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- ----------------------------------------------------------
- -----------------------------------------------------------------
,
- --------------
as agent to transfer this Trust Preferred Security Certificate on the books
of the Trust. The agent may substitute another to act for him or her.
Date:
----------------
Signature:
- -----------------------------------------------------------------------------
(Sign exactly as your name appears on the other side of this Trust 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
Rule 17Ad-15 of the regulations promulgated under the Securities Exchange Act
of 1934, as amended.
<PAGE>
EXHIBIT 4.8
- -----------------------------------------------------------------------------
GUARANTEE AGREEMENT
BETWEEN
SILICON VALLEY BANCSHARES
(AS GUARANTOR)
AND
WILMINGTON TRUST COMPANY
(AS TRUSTEE)
DATED AS OF
MAY 22, 1998
- -----------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I. DEFINITIONS........................................... 1
SECTION 1.1 DEFINITIONS........................................ 1
ARTICLE II. TRUST INDENTURE ACT................................... 4
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION................... 4
SECTION 2.2 LIST OF HOLDERS.................................... 4
SECTION 2.3 REPORTS BY THE GUARANTEE TRUSTEE................... 4
SECTION 2.4 PERIODIC REPORTS TO THE GUARANTEE TRUSTEE.......... 5
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT... 5
SECTION 2.6 EVENTS OF DEFAULT; WAIVER.......................... 5
SECTION 2.7 EVENT OF DEFAULT; NOTICE........................... 5
SECTION 2.8 CONFLICTING INTERESTS.............................. 6
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE.... 6
SECTION 3.1 POWERS AND DUTIES OF THE GUARANTEE TRUSTEE......... 6
SECTION 3.2 CERTAIN RIGHTS OF GUARANTEE TRUSTEE................ 7
SECTION 3.3 INDEMNITY.......................................... 9
ARTICLE IV. GUARANTEE TRUSTEE..................................... 9
SECTION 4.1 GUARANTEE TRUSTEE: ELIGIBILITY..................... 9
SECTION 4.2 APPOINTMENT, REMOVAL AND RESIGNATION OF THE
GUARANTEE TRUSTEE................................. 10
ARTICLE V. GUARANTEE............................................. 10
SECTION 5.1 GUARANTEE.......................................... 10
SECTION 5.2 WAIVER OF NOTICE AND DEMAND........................ 10
SECTION 5.3 OBLIGATIONS NOT AFFECTED........................... 11
SECTION 5.4 RIGHTS OF HOLDERS.................................. 12
SECTION 5.5 GUARANTEE OF PAYMENT............................... 12
SECTION 5.6 SUBROGATION........................................ 12
SECTION 5.7 INDEPENDENT OBLIGATIONS............................ 12
i
<PAGE>
ARTICLE VI. COVENANTS AND SUBORDINATION........................... 13
SECTION 6.1 SUBORDINATION...................................... 13
SECTION 6.2 PARI PASSU GUARANTEES.............................. 13
ARTICLE VII. CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE.. 13
SECTION 7.1 GUARANTOR MAY CONSOLIDATE, ETC., ONLY ON
CERTAIN TERMS..................................... 13
SECTION 7.2 SUCCESSOR GUARANTOR SUBSTITUTED.................... 14
ARTICLE VIII. TERMINATION........................................... 14
SECTION 8.1 TERMINATION........................................ 14
ARTICLE IX. MISCELLANEOUS......................................... 14
SECTION 9.1 SUCCESSORS AND ASSIGNS............................. 14
SECTION 9.2 AMENDMENTS......................................... 14
SECTION 9.3 NOTICES............................................ 15
SECTION 9.4 BENEFIT............................................ 16
SECTION 9.5 INTERPRETATION..................................... 16
SECTION 9.6 GOVERNING LAW...................................... 16
</TABLE>
ii
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Section of Trust Section of
Indenture Act of 1939, as amended Guarantee Agreement
- --------------------------------- -------------------
<S> <C>
310(a). 4.1(a)
310(b). 4.1(c), 2.8
310(c). Inapplicable
311(a). 2.2(b)
311(b). 2.2(b)
311(c). Inapplicable
312(a). 2.2(a)
312(b). 2.2(b)
313. 2.3
314(a). 2.4
314(b). Inapplicable
314(c). 2.5
314(d). Inapplicable
314(e). 1.1, 2.5, 3.2
314(f). 2.1, 3.2
315(a). 3.1(d)
315(b). 2.7
315(c). 3.1
315(d). 3.1(d)
316(a). 1.1, 2.6, 5.4
316(b). 5.3
316(c). 9.2
317(a). Inapplicable
317(b). Inapplicable
318(a). 2.1(b)
318(b). 2.1
318(c). 2.1(a)
</TABLE>
- ----------
* This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms
or provisions.
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of May 22, 1998, is executed and
delivered by SILICON VALLEY BANCSHARES, a California corporation (the
"Guarantor") having its
<PAGE>
principal office at 3003 Tasman Drive, Santa Clara, California, 95054, and
WILMINGTON TRUST COMPANY, a Delaware banking corporation, as trustee (the
"Guarantee Trustee"), for the benefit of the Holders from time to time of the
Preferred Securities (as defined herein) of SVB CAPITAL I, a Delaware
statutory business trust (the "Trust").
WHEREAS, pursuant to an Amended and Restated Trust Agreement, dated as
of May 22, 1998 (the "Trust Agreement"), among the Guarantor, as Depositor,
Wilmington Trust Company as Property Trustee, Wilmington Trust Company, as
Delaware Trustee, the Administrative Trustees named therein and the Holders
from time to time of undivided beneficial interests in the assets of the
Trust, the Trust issued $40,000,000 aggregate Liquidation Amount (as defined
in the Trust Agreement) of its 8.25% Cumulative Trust Preferred Securities,
Liquidation Amount $25 per Trust Preferred Security (the "Preferred
Securities");
WHEREAS, the Preferred Securities will be issued by the Trust and the
proceeds thereof, together with the proceeds from the issuance of the Trust's
Common Securities (as defined below), will be used to purchase the Debentures
(as defined in the Trust Agreement) of the Guarantor which were deposited
with Wilmington Trust Company, as Property Trustee under the Trust Agreement,
as trust assets;
WHEREAS, as an incentive for the Holders to purchase the 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 by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Guarantee
Agreement and pursuant to Section 5.1 hereof extends the Guarantee for the
benefit of the Holders from time to time of the Preferred Securities.
ARTICLE I. DEFINITIONS
SECTION I.1 DEFINITIONS.
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings.
Capitalized or otherwise defined terms used but not otherwise defined herein
shall have the meanings assigned to such terms in the Trust Agreement and the
Indenture (as defined herein), each as in effect on the date hereof.
"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; PROVIDED, HOWEVER, that an Affiliate of
the Guarantor shall not be deemed to be an Affiliate of the Trust. 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,
2
<PAGE>
directly or indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "CONTROLLING" and "CONTROLLED" have
meanings correlative to the foregoing.
"BOARD OF DIRECTORS" means either the board of directors of the
Guarantor or any committee of that board duly authorized to act hereunder.
"COMMON SECURITIES" means the securities representing common
undivided beneficial interests in the assets of the Trust.
"EVENT OF DEFAULT" means a default by the Guarantor on any of its
payment or other obligations under this Guarantee Agreement; provided,
however, that, except with respect to a default in payment of any Guarantee
Payments, the Guarantor shall have received notice of default and shall not
have cured such default within 90 days after receipt of such notice.
"GUARANTEE" has the meaning set forth in Section 5.1.
"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 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 Trust shall have funds on hand
available therefor at such time, (ii) the applicable Redemption Price (as
defined in the Trust Agreement), to the extent the Trust shall have funds on
hand available therefor at such time, and (iii) upon a voluntary or
involuntary termination, winding up or liquidation of the Trust, unless
Debentures are distributed to the Holders, the lesser of (a) the aggregate of
the Liquidation Distribution (as defined in the Trust Agreement) and (b) the
amount of assets of the Trust remaining available for distribution to Holders
of Preferred Securities after satisfaction of liabilities to creditors of the
Trust as required by applicable law.
"GUARANTEE TRUSTEE" means Wilmington 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.
"HOLDER" means any holder, as registered on the books and records of the
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 22,
1998, as supplemented and amended between the Guarantor and Wilmington Trust
Company, as trustee.
"LIST OF HOLDERS" has the meaning specified in Section 2.2(a).
3
<PAGE>
"MAJORITY IN LIQUIDATION AMOUNT OF THE PREFERRED SECURITIES" means,
except as provided by the Trust Indenture Act, a vote by the Holder(s),
voting separately as a class, of more than 50% of the Liquidation Amount of
all then outstanding Preferred Securities issued by the Trust.
"OFFICERS' CERTIFICATE" means, with respect to any Person, a certificate
signed by the Chairman or a Vice Chairman of the Board of Directors of such
Person or the President or a Vice President of such Person, and by the Chief
Financial Officer, 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:
(1) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions relating
thereto;
(2) a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the Officers'
Certificate;
(3) a statement that each 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
(4) a statement as to whether, in the opinion of each officer,
such condition or covenant has been complied with.
"OTHER GUARANTEES" means any guarantees similar to the Guarantee issued,
from time to time, by the Guarantor on behalf of holders of one or more
series of Preferred Securities issued by any SVB Trust (as defined in the
Indenture) other than the Trust.
"PERSON" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever
nature.
"RESPONSIBLE OFFICER" means, with respect to the Guarantee Trustee, any
officer of the Corporate Trust Department of the Guarantee Trustee and also
means, with respect to a particular corporate trust matter, any other officer
to whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SUCCESSOR GUARANTEE TRUSTEE" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
4
<PAGE>
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as amended.
ARTICLE II. TRUST INDENTURE ACT
SECTION II.1 TRUST INDENTURE ACT; APPLICATION.
(1) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions.
(2) If and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by Sections 310 to
317, inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION II.2 LIST OF HOLDERS.
(1) The Guarantor shall furnish or cause to be furnished to the
Guarantee Trustee (a) semiannually, on or before January 15 and July 15 of
each year, a list, in such form as the Guarantee Trustee may reasonably
require, of the names and addresses of the Holders ("List of Holders") as of
a date not more than 15 days prior to the delivery thereof, and (b) at such
other times as the Guarantee Trustee may request in writing, within 30 days
after the receipt by the Guarantor of any such request, a List of Holders as
of a date not more than 15 days prior to the time such list is furnished, in
each case to the extent such information is in the possession or control of
the Guarantor and is not identical to a previously supplied list of Holders
or has not otherwise been received by the Guarantee Trustee in its capacity
as such. The Guarantee Trustee may destroy any List of Holders previously
given to it on receipt of a new List of Holders.
(2) The Guarantee Trustee shall comply with its obligations under
Section 311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION II.3 REPORTS BY THE GUARANTEE TRUSTEE.
Not later than March 31 of each year, commencing on the year beginning
January 1, 1999, the Guarantee Trustee shall provide to the Holders such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture
Act. The Guarantee Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.
SECTION II.4 PERIODIC REPORTS TO THE GUARANTEE TRUSTEE.
The Guarantor shall provide to the Guarantee Trustee, the Securities and
Exchange Commission and the Holders such documents, reports and information,
if any, as required by
5
<PAGE>
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 II.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
The Guarantor shall provide to the Guarantee Trustee, on an annual
basis, 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.
SECTION II.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 II.7 EVENT OF DEFAULT; NOTICE.
(1) The Guarantee Trustee shall, within 90 days after the occurrence of
a default which with notice or the passage of time, or both, could become an
Event of Default, transmit by mail, first class postage prepaid, to the
Holders, notices of all such defaults known to the Guarantee Trustee, unless
such defaults 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.
(2) The Guarantee Trustee shall not be deemed to have knowledge of any
such default unless the Guarantee Trustee shall have received written notice,
or a Responsible Officer charged with the administration of this Guarantee
Agreement shall have obtained written notice, of such default.
SECTION II.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.
6
<PAGE>
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION III.1 POWERS AND DUTIES OF THE GUARANTEE TRUSTEE.
(1) This Guarantee shall be held by the Guarantee Trustee for the
benefit of the Holders, and the Guarantee Trustee shall not transfer this
Guarantee to any Person except to 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. The right, title and interest of the Guarantee Trustee
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.
(2) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee for the benefit of the Holders.
(3) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Guarantee Trustee. In case 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.
(4) 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:
(1) 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:
(1) the duties and obligations of the Guarantee Trustee shall
be determined solely by the express provisions of this Guarantee
Agreement, 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; and
(2) 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
7
<PAGE>
Guarantee Agreement; but in the case of any such certificates or
opinions that by any provision hereof or of the Trust Indenture Act
are specifically required to be furnished to the Guarantee Trustee,
the Guarantee Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Guarantee Agreement;
(2) 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;
(3) 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
(4) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if the Guarantee Trustee
shall have reasonable grounds for believing that the repayment of such
funds or liability is not reasonably assured to it under the terms of
this Guarantee Agreement or adequate indemnity against such risk or
liability is not reasonably assured to it.
SECTION III.2 CERTAIN RIGHTS OF GUARANTEE TRUSTEE.
(1) Subject to the provisions of Section 3.1:
(1) The Guarantee Trustee may rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document reasonably believed by it to be genuine and to
have been signed, sent or presented by the proper party or parties.
(2) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by an Officers'
Certificate unless otherwise prescribed herein.
(3) 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
8
<PAGE>
other evidence is herein specifically prescribed) may, in the absence of
bad faith on its part, request and rely upon an Officers' Certificate
which, upon receipt of such request from the Guarantee Trustee, shall be
promptly delivered by the Guarantor.
(4) The Guarantee Trustee may consult with legal counsel, and the
written advice or opinion of such legal counsel with respect to legal
matters shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or opinion.
Such legal counsel may be legal counsel to the Guarantor or any of its
Affiliates and may be one of its employees. The Guarantee Trustee shall
have the right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of competent
jurisdiction.
(5) The Guarantee Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Guarantee Agreement at
the request or direction of any Holder, unless such Holder shall have
provided to the Guarantee Trustee such adequate security and indemnity
as would satisfy a reasonable person in the position of the Guarantee
Trustee, against the costs, expenses (including attorneys' fees and
expenses) and liabilities that might be incurred by it in complying with
such request or direction, including such reasonable advances as may be
requested by the Guarantee Trustee; provided that, nothing contained in
this Section 3.2(a)(v) shall be taken to relieve the Guarantee Trustee,
upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Guarantee Agreement.
(6) 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.
(7) The Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through its agents or attorneys, and the Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any such
agent or attorney appointed with due care by it hereunder.
(8) Whenever in the administration of this Guarantee Agreement the
Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Guarantee Trustee (A) may request instructions from the
Holders, (B) may refrain from enforcing such remedy or right or taking
such other action until such instructions are received, and (C) shall be
protected in acting in accordance with such instructions.
9
<PAGE>
(2) 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 III.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 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.
ARTICLE IV. GUARANTEE TRUSTEE
SECTION IV.1 GUARANTEE TRUSTEE: ELIGIBILITY.
(1) There shall at all times be a Guarantee Trustee which shall:
(1) not be an Affiliate of the Guarantor; and
(2) 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 4.1(a)(ii) and to the extent permitted by
the Trust Indenture Act, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published.
(2) If at any time the Guarantee Trustee shall cease to be eligible to
so act under Section 4.1(a), the Guarantee Trustee shall immediately resign
in the manner and with the effect set out in Section 4.2(c).
(3) 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 IV.2 APPOINTMENT, REMOVAL AND RESIGNATION OF THE GUARANTEE
TRUSTEE.
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(1) Subject to Section 4.2(b), the Guarantee Trustee may be appointed
or removed without cause at any time by the Guarantor.
(2) The Guarantee Trustee shall not be removed until a Successor
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Guarantee Trustee and delivered
to the Guarantor.
(3) The Guarantee Trustee appointed hereunder shall hold office until a
Successor Guarantee Trustee shall have been appointed or until its removal or
resignation. The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing executed by the
Guarantee Trustee and delivered to the Guarantor, which resignation shall not
take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
(4) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition, at the expense of the Guarantor, any court of
competent jurisdiction for appointment of a Successor Guarantee Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may
deem proper, appoint a Successor Guarantee Trustee.
ARTICLE V. GUARANTEE
SECTION V.1 GUARANTEE.
The Guarantor irrevocably and unconditionally agrees to pay in full on a
subordinated basis to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid by or on behalf of the Trust), as and when due,
regardless of any defense, right of set-off or counterclaim which the Trust
may have or assert other than the defense of payment (the "Guarantee"). The
Guarantee is a continuing guarantee, and the Guarantor fully, knowingly and
unconditionally waives any right the Guarantor may have to revoke the
Guarantee as to any future transactions under Section 2815 of the California
Civil Code or otherwise. The Guarantor's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Guarantor to the Holders or by causing the Trust to pay such amounts to the
Holders.
SECTION V.2 WAIVER OF NOTICE AND DEMAND.
The Guarantor hereby waives notice of acceptance of the Guarantee and of
any liability to which it applies or may apply, presentment, demand for
payment, any right to require a proceeding first against the Guarantee
Trustee, Trust or any other Person before proceeding
11
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against the Guarantor, protest, notice of nonpayment, notice of dishonor,
notice of redemption and all other notices and demands.
SECTION V.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:
(1) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Trust of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be
performed or observed by the Trust;
(2) the extension of time for the payment by the Trust of all or any
portion of the Distributions (other than an extension of time for payment of
Distributions that results from the extension of any interest payment period
on the Debentures as provided in the Indenture), Redemption Price,
Liquidation Distribution or any other sums payable under the terms of the
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;
(3) 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 Trust granting indulgence or
extension of any kind;
(4) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of
debt of, or other similar proceedings affecting, the Trust or any of the
assets of the Trust;
(5) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(6) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
(7) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent
of this Section 5.3 that the obligations of the Guarantor 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. In addition to the foregoing provisions of this Section 5.3 and
Section 5.2, Guarantor waives all rights and defenses arising out
12
<PAGE>
of an election of remedies by Guarantee Trustee or Holders, even though that
election of remedies has destroyed the Guarantor's rights of subrogation and
reimbursement against the principal by operation of Section 580d of the
California Code of Civil Procedure or otherwise.
SECTION V.4 RIGHTS OF HOLDERS.
The Guarantor expressly acknowledges that: (i) this Guarantee 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
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 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 Trust or any other Person.
SECTION V.5 GUARANTEE OF PAYMENT.
This Guarantee creates a guarantee of payment and not of collection.
This Guarantee will not be discharged except by payment of the Guarantee
Payments in full (without duplication of amounts theretofore paid by the
Trust) or upon distribution of Debentures to Holders as provided in the Trust
Agreement.
SECTION V.6 SUBROGATION.
The Guarantor shall be subrogated to all (if any) rights of the Holders
against the Trust in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement and shall have the right to waive
payment by the Trust pursuant to Section 5.1; 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, if, at the time of any
such payment, any amounts are due and unpaid under this Guarantee. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.
SECTION V.7 INDEPENDENT OBLIGATIONS.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the 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.
13
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ARTICLE VI. COVENANTS AND SUBORDINATION
SECTION VI.1 SUBORDINATION.
The obligations of the Guarantor under this Guarantee will constitute
unsecured obligations of the Guarantor and will rank subordinate and junior
in right of payment to all Senior and Subordinated Debt in the same manner as
Debentures.
SECTION VI.2 PARI PASSU GUARANTEES.
The obligations of the Guarantor under this Guarantee shall rank PARI
PASSU with the obligations of the Guarantor under all Other Guarantees.
ARTICLE VII. CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
SECTION VII.1 GUARANTOR MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Guarantor shall not consolidate with or merge into any other Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, and no Person shall consolidate with or merge into
the Guarantor or convey, transfer or lease its properties and assets
substantially as an entirety to the Guarantor, unless:
(1) in case the Guarantor shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, the Person formed by such consolidation or into
which the Guarantor is merged or the Person which acquires by conveyance or
transfer, or which leases, the properties and assets of the Guarantor
substantially as an entirety shall be a corporation, partnership or trust
organized and existing under the laws of the United States of America or any
State or the District of Columbia, and shall expressly assume the Guarantor's
obligations under this Guarantee;
(2) immediately after giving effect thereto, no Event of Default, and
no event which, after notice or lapse of time, or both, would become an Event
of Default, shall have happened and be continuing;
(3) such consolidation, merger, conveyance, transfer or lease is
permitted under the Trust Agreement and the Indenture and does not give rise
to any breach or violation of the Trust Agreement or the Indenture; and
(4) the Guarantor has delivered to the Guarantee Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and assumption of the Guarantor's
obligations under this Guarantee Agreement comply
14
<PAGE>
with this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with; and the Guarantee
Trustee, subject to Section 3.1 hereof, may rely upon such Officers'
Certificate and Opinion of Counsel as conclusive evidence that such
transaction complies with this Section 7.1.
SECTION VII.2 SUCCESSOR GUARANTOR SUBSTITUTED.
Upon any consolidation or merger by the Guarantor with or into any other
Person, or any conveyance, transfer or lease by the Guarantor of its
properties and assets substantially as an entirety to any Person in
accordance with Section 7.1, the successor Person formed by such
consolidation or into which the Guarantor is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Guarantor under this
Guarantee Agreement with the same effect as if such successor Person had been
named as the Guarantor herein; and in the event of any such conveyance,
transfer or lease the Guarantor shall be discharged from all obligations and
covenants under this Guarantee Agreement.
ARTICLE VIII. TERMINATION
SECTION VIII.1 TERMINATION.
This Guarantee Agreement shall terminate and be of no further force and
effect upon the earliest of (i) full payment of the applicable Redemption
Price of all Preferred Securities, (ii) the distribution of Debentures to the
Holders in exchange for all of the Preferred Securities or (iii) full payment
of the amounts payable in accordance with the Trust Agreement upon
liquidation of the Trust. Notwithstanding the foregoing clauses (i) through
(iii), this Guarantee Agreement will continue to be effective or will be
reinstated if it has been terminated pursuant to one of such clauses (i)
through (iii), as the case may be, if at any time any Holder must restore
payment of any sums paid with respect to Preferred Securities or this
Guarantee Agreement.
ARTICLE IX. MISCELLANEOUS
SECTION IX.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 VII hereof and Article VIII of the Indenture, the Guarantor shall not
assign its obligations hereunder.
15
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SECTION IX.2 AMENDMENTS.
Except with respect to any changes which do not adversely affect the
rights of the Holders in any material respect (in which case no vote will be
required), this Guarantee Agreement may not be amended without 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 IX.3 NOTICES.
Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied or mailed by first class mail as follows:
(1) if given to the Guarantor, to the address set forth below or such
other address, facsimile number or to the attention of such other Person as
the Guarantor may give notice to the Holders:
Silicon Valley Bancshares
3003 Tasman Drive
Santa Clara, California 95054
Facsimile No.: (408) 496-2405
Attention: Christopher T. Lutes
(2) if given to the Trust, in care of the Guarantee
Trustee, at the Trust's (and the Guarantee Trustee's) address set
forth below or such other address as the Guarantee Trustee on
behalf of the Trust may give notice to the Holders:
SVB Capital I
c/o Silicon Valley Bancshares
3003 Tasman Drive
Santa Clara, California, 95054
Facsimile No.: (408) 496-2405
Attention: Christopher T. Lutes
with a copy to:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
16
<PAGE>
Wilmington, Delaware 19890-0001
Facsimile No.: (302) 651-1576
Attention: Corporate Trust Administration
(3) if given to any Holder, at the address set forth on the books and
records of the 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 IX.4 BENEFIT.
This Guarantee is solely for the benefit of the Holders and is not
separately transferable from the Preferred Securities.
SECTION IX.5 INTERPRETATION.
In this Guarantee Agreement, unless the context otherwise requires:
(1) 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;
(2) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(3) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or
amended from time to time;
(4) all references in this Guarantee Agreement to Articles and Sections
are to Articles and Sections of this Guarantee Agreement unless otherwise
specified;
(5) 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;
(6) a reference to the singular includes the plural and vice versa; and
(7) the masculine, feminine or neuter genders used herein shall include
the masculine, feminine and neuter genders.
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SECTION IX.6 GOVERNING LAW.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT
REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
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.
THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
Silicon Valley Bancshares
By: /s/ John C. Dean
--------------------------------
Name: John C. Dean
Title: President and Chief Executive
Officer
Wilmington Trust Company
as Guarantee Trustee
By: /s/ Denise M. Geran
--------------------------------
Name: Denise M. Geran
Title: Financial Services Officer
18
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EXHIBIT 4.9
AGREEMENT AS TO EXPENSES AND LIABILITIES
THIS AGREEMENT AS TO EXPENSES AND LIABILITIES (this "Agreement"), dated
as of May 22, 1998, between Silicon Valley Bancshares, a California
corporation (the "Company"), and SVB Capital I, a Delaware business trust
(the "Trust").
WHEREAS, the Trust intends to issue its Common Securities (the "Common
Securities") to and receive Junior Subordinated Deferrable Interest
Debentures (the "Debentures") from the Company and to issue and sell 8.25%
Cumulative Trust Preferred Securities (the "Trust Preferred Securities") with
such powers, preferences and special rights and restrictions as are set forth
in the Amended and Restated Trust Agreement of the Trust dated as of May 22,
1998 as the same may be amended from time to time (the "Trust Agreement");
WHEREAS, the Company will directly or indirectly own all of the Common
Securities of the Trust and will issue the Debentures;
NOW, THEREFORE, in consideration of the purchase by each holder of the
Trust Preferred Securities, which purchase the Company hereby agrees shall
benefit the Company and which purchase the Company acknowledges will be made
in reliance upon the execution and delivery of this Agreement, the Company
and the Trust hereby agree as follows:
ARTICLE I
SECTION 1.1. GUARANTEE BY THE COMPANY.
Subject to the terms and conditions hereof, the Company hereby
irrevocably and unconditionally guarantees to each person or entity to whom
the Trust is now or hereafter becomes indebted or liable (the
"Beneficiaries") the full payment, when and as due, of any and all
Obligations (as hereinafter defined) to such Beneficiaries. As used herein,
"Obligations" means any costs, expenses or liabilities of the Trust, other
than obligations of the Trust to pay to holders of any Trust Preferred
Securities or other similar interests in the Trust the amounts due such
holders pursuant to the terms of the Trust Preferred Securities or such other
similar interests, as the case may be. This Agreement is intended to be for
the benefit of, and to be enforceable by, all such Beneficiaries, whether or
not such Beneficiaries have received notice hereof.
SECTION 1.2. TERM OF AGREEMENT.
This Agreement shall terminate and be of no further force and effect on
the date on which full payment has been made of all amounts payable to all
holders of all the Trust Preferred Securities (whether upon redemption,
liquidation, exchange or otherwise); PROVIDED, HOWEVER,
<PAGE>
that this Agreement shall continue to be effective or shall be reinstated, as
the case may be, if at any time any holder of Trust Preferred Securities or
any Beneficiary must restore payment of any sums paid under the Trust
Preferred Securities, under any Obligation, under the Guarantee Agreement
dated the date hereof by the Company and Wilmington Trust Company, a Delaware
banking corporation, as guarantee trustee or under this Agreement for any
reason whatsoever. This Agreement is continuing, irrevocable, unconditional
and absolute and the Company fully, knowingly and unconditionally waives any
right to revoke the guarantee under Section 2895 of the California Civil Code
or otherwise.
SECTION 1.3. WAIVER OF NOTICE.
The Company hereby waives notice of acceptance of this Agreement and of
any Obligation to which it applies or may apply, and the Company hereby
waives presentment, demand for payment, protest, notice of nonpayment, notice
of dishonor, notice of redemption and all other notices and demands.
SECTION 1.4. NO IMPAIRMENT.
The obligations, covenants, agreements and duties of the Company under
this Agreement shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:
(a) the extension of time for the payment by the Trust of all or any
portion of the Obligations or for the performance of any other obligation
under, arising out of, or in connection with, the Obligations;
(b) any failure, omission, delay or lack of diligence on the part of the
Beneficiaries to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Beneficiaries with respect to the Obligations or any
action on the part of the Trust granting indulgence or extension of any kind;
or
(c) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of
debt of, or other similar proceedings affecting, the Trust or any of the
assets of the Trust.
There shall be no obligation of the Beneficiaries to give notice to, or
obtain the consent of, the Company with respect to the happening of any of
the foregoing.
SECTION 1.5. ENFORCEMENT.
A Beneficiary may enforce this Agreement directly against the Company
and the Company waives any right or remedy to require that any action be
brought against the Trust or any other person or entity before proceeding
against the Company.
<PAGE>
SECTION 1.6. SUBROGATION.
The Company shall be subrogated to all (if any) rights of the Trust in
respect of any amounts paid to the Beneficiaries by the Company under this
Agreement; PROVIDED, HOWEVER, that the Company shall not (except to the
extent required by mandatory provisions of law) be entitled to enforce or
exercise any rights which it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of
payment under this Agreement, if, at the time of any such payment, any
amounts are due and unpaid under this Agreement.
ARTICLE II
SECTION 2.1. BINDING EFFECT.
All guarantees and agreements contained in this Agreement shall bind the
successors, assigns, receivers, trustees and representatives of the Company
and shall inure to the benefit of the Beneficiaries.
SECTION 2.2. AMENDMENT.
So long as there remains any Beneficiary or any Trust Preferred
Securities are outstanding, this Agreement shall not be modified or amended
in any manner adverse to such Beneficiary or to the holders of the Trust
Preferred Securities.
SECTION 2.3. NOTICES.
Any notice, request or other communication required or permitted to be
given hereunder shall be given in writing by delivering the same against
receipt therefor by facsimile transmission (confirmed by mail), telex or by
registered or certified mail, addressed as follows (and if so given, shall be
deemed given when mailed or upon receipt of an answer-back, if sent by
telex):
SVB CAPITAL I:
c/o Silicon Valley Bancshares
3003 Tasman Drive
Santa Clara, California 95054
Facsimile No.: (408) 496-2405
Attention: Christopher T. Lutes
SILICON VALLEY BANCSHARES
3003 Tasman Drive
Santa Clara, California 95054
<PAGE>
Facsimile No.: (408) 496-2405
Attention: Christopher T. Lutes
SECTION 2.4. CHOICE OF LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA (WITHOUT REGARD TO
CONFLICT OF LAW PRINCIPLES).
THIS AGREEMENT is executed as of the day and year first above written.
SILICON VALLEY BANCSHARES
By: /s/ John C. Dean
--------------------------------
Name: John C. Dean
Title: President and Chief
Executive Officer
SVB CAPITAL I
By: /s/ Barbara B. Kamm
--------------------------------
Name: Barbara B. Kamm
Title: Administrative Trustee
<PAGE>
EXHIBIT 4.10
THIS CERTIFICATE IS NOT TRANSFERABLE
CERTIFICATE NUMBER C-1 NUMBER OF COMMON SECURITIES: 49,485
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
SVB CAPITAL I
8.25% COMMON SECURITIES
(LIQUIDATION AMOUNT $25 PER COMMON SECURITY)
SVB CAPITAL I, a statutory business trust formed under the laws of the
State of Delaware (the "Trust"), hereby certifies that SILICON VALLEY
BANCSHARES (the "Holder") is the registered owner of Forty-Nine Thousand Four
Hundred and Eighty-Five (49,485) common securities of the Trust representing
an undivided beneficial interest in the assets of the Trust and designated
the 8.25% Common Securities (liquidation amount $25 per Common Security) (the
"Common Securities"). In accordance with Section 5.10 of the Trust Agreement
(as defined below) the Common Securities are not transferable and any
attempted transfer hereof 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 Trust dated as of May 22, 1998, as the same may be amended from time to
time (the "Trust Agreement") including the designation of the terms of the
Common Securities as set forth therein. The Trust will furnish a copy of the
Trust Agreement to the Holder without charge upon written request to the
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.
IN WITNESS WHEREOF, an Administrative Trustee of the Trust has executed
this certificate this 22nd day of May, 1998.
SVB CAPITAL I
By: /s/ Christopher T. Lutes
-----------------------------------
Name: Christopher T. Lutes
Title: Administrative Trustee
<PAGE>
EXHIBIT 4.11
SILICON VALLEY BANCSHARES
OFFICERS' CERTIFICATE AND COMPANY ORDER
RELATING TO THE
8.25% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES DUE JUNE 15, 2028
OF SILICON VALLEY BANCSHARES
Pursuant to the Indenture dated as of May 22, 1998 (the "Indenture"),
between Silicon Valley Bancshares, a California corporation (the "Company")
and Wilmington Trust Company, as Debenture Trustee (the "Debenture Trustee")
and resolutions adopted by the Pricing Committee of the Company's Board of
Directors on May 19, 1998; this Officers' Certificate is being delivered to
the Debenture Trustee to establish the terms of one series of securities (the
"Securities") in accordance with Section 3.1 of the Indenture, to establish
the form of the Securities of such series in accordance with Section 2.1 of
the Indenture, to request the authentication and delivery of the Securities
of such series pursuant to Section 3.3 of the Indenture and to comply with
the provisions of Section 1.2 of the Indenture. This Officers' Certificate
shall be treated for all purposes under the Indenture as a supplemental
indenture thereto.
All conditions precedent provided for in the Indenture relating to the
establishment of (i) a series of Securities, (ii) the form of Securities of
such series, and (iii) authentication of such series of Securities, have been
complied with.
Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to them in the Indenture.
1. ESTABLISHMENT OF SERIES OF SECURITIES PURSUANT TO SECTION 3.1 OF THE
INDENTURE.
There are hereby established pursuant to Section 3.1 of the Indenture a
series of Securities which shall have the following terms:
A The Securities of such series shall bear the title "8.25% Junior
Subordinated Deferrable Interest Debentures Due June 15, 2028."
B. The aggregate principal amount of such series of Securities to
be issued pursuant to this Officers' Certificate and Company Order shall be
limited to $41,237,125 (except for Securities authenticated and delivered
upon registration of, transfer of, or in exchange for, or in lieu of, other
Securities of such series pursuant to Section 3.4, 3.5, 3.6, 9.6 or 11.7 of
the Indenture and except for any Securities which, pursuant to Section 3.3 of
the Indenture, are deemed never to have been authenticated and delivered
thereunder).
<PAGE>
C. The date on which the principal of the Securities is due and
payable shall be June 15, 2028.
D. The Securities shall bear interest at the rate of 8.25% per
annum (based upon a 360-day year of twelve 30-day months), from and including
the date of original issuance or from and including the most recent Interest
Payment Date to which interest has been paid or duly provided for, as the
case may be, payable quarterly in arrears on the 15th day of March, June,
September and December in each year (each, an "Interest Payment Date"),
commencing September 15, 1998, until the principal thereof is paid or made
available for payment. The Business Day next preceding an Interest Payment
Date shall be the "Regular Record Date" for the interest payable on such
Interest Payment Date. Accrued interest that is not paid on such applicable
Interest Payment Date will bear additional interest on the amount thereof (to
the extent permitted by law) at a rate per annum of 8.25% thereof compounded
quarterly.
In addition, so long as no Event of Default with respect to the
Securities has occurred or is continuing, the Company has the right under the
Indenture at any time during the term of such Securities 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. 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 8.25%,
compounded quarterly, to the extent permitted by applicable law).
E. Principal of and interest on the Securities will be payable,
and, except as provided in Section 3.5 of the Indenture with respect to a
Global Security (as defined below), the transfer of the Securities will be
registrable and Securities will be exchangeable for Securities bearing
identical terms and provisions at the corporate trust office of Wilmington
Trust Company in the City of Wilmington, Delaware.
F. The Securities will be redeemable in whole at any time and in
part from time to time, at the option of the Company at any time on or after
June 15, 2003, subject to the Company having received prior regulatory
approval if then so required, at a redemption price equal to the accrued and
unpaid interest on the Securities so redeemed to the date fixed for
redemption, plus 100% of the principal amount thereof.
In addition, upon the occurrence of a Tax Event, an Investment
Company Event or a Capital Treatment Event, the Company may, at its option
and subject to receipt of prior regulatory approval if then required under
applicable capital guidelines or policies, prepay the Securities in whole
(but not in part) at any time within 90 days of the occurrence of such Tax
Event, Investment Company Event or a Capital Treatment Event, at a redemption
price equal to the accrued and unpaid interest on the Securities so redeemed
to the date fixed for redemption, plus 100% of the principal amount thereof.
G. The Company shall not be obligated to redeem or purchase any
Securities pursuant to any sinking fund or analogous provisions or at the
option of the Holder.
<PAGE>
H. The Securities will be issued only in fully registered form and
the authorized minimum denomination of the Securities shall be $25.00 and any
integral multiple of $25.00 in excess thereof.
I. The Securities shall be denominated, and payments of principal
of (and premium, if any) and interest on the Securities of such series will
be made, in United States dollars.
J. The Securities shall be subject to the Events of Default
specified in Section 5.1, paragraphs (a) through (e), of the Indenture.
K. The portion of the principal amount of the Securities which
shall be payable upon declaration of acceleration of maturity thereof shall
not be other than the principal amount thereof.
L. The Securities will be issued in fully registered form, without
coupons. The Securities will not be issued in bearer form.
M. The amount of payments of principal of and any premium or
interest on the Securities will not be determined with reference to an index.
N. The Securities shall not be issued in the form of a temporary
Global Security (as defined below).
O. The Securities will initially be deposited with, and on behalf
of, The Depository Trust Company, New York, New York, as Depositary, and will
be represented by a global security (a "Global Security") registered in the
name of a nominee of the Depositary. If, and so long as the Depositary or
its nominee is the registered holder of any Global Security, the Depositary
or its nominee, as the case may be, will be considered the sole Holder of the
Securities of such series represented by such Global Security for all
purposes under the Indenture and the Securities.
P. The Trustee shall be Paying Agent.
Q. The Securities will not be convertible into any other securities
or property of the Company. The Securities of any series may not be
exchanged for Securities of any other series.
R. The Trust Agreement, the Amended and Restated Trust Agreement
and the Guarantee Agreement are in the forms attached hereto as Exhibits A,
B, and C respectively.
S. The Securities are subordinate and subject in right of payment to
<PAGE>
the prior payment in full of all amounts then due and payable in respect of
all Senior and Subordinated Debt, as provided in the Indenture.
II. ESTABLISHMENT OF FORMS OF SECURITIES PURSUANT TO SECTION 2.1 OF
INDENTURE.
It is hereby established pursuant to Section 2.1 of the Indenture that
the Securities shall be substantially in the form attached as Exhibit D
hereto.
III. ORDER FOR THE AUTHENTICATION AND DELIVERY OF SECURITIES PURSUANT
TO SECTION 3.3 OF THE INDENTURE.
It is hereby ordered pursuant to Section 3.3 of the Indenture that the
Trustee authenticate, in the manner provided by the Indenture, Securities in
the aggregate principal amount of $41,237,125 registered in the name of Cede
& Co., as the nominee of The Depository Trust Company, which Securities have
been heretofore duly executed by the proper officers of the Company and
delivered to you as provided in the Indenture, and to deliver said
authenticated Securities to Wilmington Trust Company or its custodian on May
22, 1998.
IV. OTHER MATTERS.
Attached as Exhibit E hereto are true and correct copies of resolutions
adopted by the Pricing Committee of the Board of Directors of the Company at
a meeting on May 19, 1998. Attached as Exhibit F hereto are true and correct
copies of resolutions adopted by the Board of Directors of the Company at a
meeting on April 16, 1998. Such resolutions have not been further amended,
modified or rescinded and remain in full force and effect; and such
resolutions (together with this Officers' Certificate) are the only
resolutions or other action adopted by the Company's Board of Directors or
any committee thereof or by any Authorized Officers relating to the offering
and sale of the Securities.
The undersigned have read the pertinent sections of the Indenture
including the related definitions contained therein. The undersigned have
examined the resolutions adopted by the Board of Directors and the Pricing
Committee of the Board of Directors of the Company. In the opinion of the
undersigned, the undersigned have made such examination or investigation as
is necessary to enable the undersigned to express an informed opinion as to
whether or not the conditions precedent to the establishment of (i) a series
of Securities, (ii) the forms of such Securities and (iii) authentication of
such series of Securities, contained in the Indenture have been complied
with. In the opinion of the undersigned, such conditions have been complied
with.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Certificate this
22nd day of May, 1998.
SILICON VALLEY BANCSHARES
By: /s/ John C. Dean
------------------------------
Name: John C. Dean
Title: President and Chief Executive
Officer
By: /s/ Barbara B. Kamm
------------------------------
Name: Barbara B. Kamm
Title: Executive Vice President and
Acting Chief Financial Officer
<PAGE>
EXHIBIT 10.38
PROMISSORY NOTE
BORROWER: CHRISTOPHER T. LUTES LENDER: SILICON VALLEY BANCSHARES
3003 TASMAN DRIVE
SANTA CLARA, CA 95054
- -------------------------------------------------------------------------------
PRINCIPAL AMOUNT: $75,000.00 INTEREST RATE: 5.50% DATE OF NOTE: JUNE 10, 1998
PROMISE TO PAY. Christopher T. Lutes ("Borrower") promises to pay to Silicon
Valley Bancshares ("Lender"), or order, in lawful money of the United States of
America, the principal amount of Seventy Five Thousand & 00/100 Dollars
($75,000.00), plus all accrued unpaid interest in accordance with the terms of
this Promissory Note.
PAYMENT. Borrower will pay this Promissory Note in three (3) annual principal
payments each in the amount of $25,000.00. Such payments are due on March 1,
1999, March 1, 2000 and March 1, 2001, respectively. In addition, Borrower
will pay three (3) annual payments of all accrued unpaid interest, together
with such principal payments. Payments hereunder are principal plus interest.
INTEREST RATE. The interest rate on this Promissory Note is fixed at a rate of
5.50% per annum. Interest on this Promissory Note is computed on a 365/365
simple interest basis; that is, by applying the ratio of the annual interest
rate over the number of days in a year, multiplied by the outstanding principal
balance, multiplied by the actual number of days the principal balance is
outstanding.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount
owed earlier than it is due.
TERMINATION. THIS PROMISSORY NOTE SHALL BE DUE AND PAYABLE IN FULL UPON
EARLIEST TO OCCUR OF THE FOLLOWING EVENTS: (a) Borrower leaves his employment
with Silicon Valley Bank (the "Bank") for any reason (whether by resignation or
involuntary termination), (b) Borrower's employment terminates by Borrower's
death before this loan is repaid, or (c) March 1, 2001.
CHOICE OF LAW. This Promissory shall be governed by, and construed in
accordance with, the laws of the State of California, without regard to
principles of conflicts of law.
BORROWER UNDERSTANDS AND AGREES THAT THIS AGREEMENT IS A PROMISSORY NOTE, NOT
AN EMPLOYMENT AGREEMENT OR CONTRACT. BORROWER ALSO UNDERSTANDS THAT BY VIRTUE
OF BORROWER'S PROMOTION TO CHIEF FINANCIAL OFFICER OF THE BANK AND LENDER,
LENDER HAS AGREED TO MAKE THIS LOAN TO BORROWER ON TERMS THAT MAY DEEMED
PREFERENTIAL IN NATURE.
BORROWER:
/s/ Christopher T. Lutes Date: 6/10/98
- ------------------------ -------
Christopher T. Lutes
LENDER:
SILICON VALLEY BANCSHARES
By: /s/ Barbara B. Kamm Date: 6/10/98
------------------- -------
Name: Barbara B. Kamm
---------------
Title: EVP & CAO
---------
<PAGE>
EXHIBIT 10.39
THE 1998 VENTURE CAPITAL RETENTION PROGRAM
ADOPTED FEBRUARY 19, 1998
AMENDED JUNE 18, 1998
Silicon Valley Bank ("Bank") recognizes the valuable contributions made by
certain key employees of the Bank and wishes to retain these employees who are
critical to the Bank's long-term success. In that regard, the Bank has
established a retention program (the "Retention Program") where these employees
can share in distributions on Silicon Valley Bancshares' (the "Company")
investments in certain venture capital funds ("VC Funds"). These investments
have been made by the Company under its existing venture capital investment
program (the "VC Program"). Employees' continued participation in
distributions from VC Funds generally will be subject to such employees'
continued employment with the Bank.
- - DEFINITIONS
- DESIGNATED COMMITMENTS. $4.25 million of the Company's existing
commitments under the VC Program, whether funded or unfunded, which the
Company has earmarked for the Retention Program.
- DISTRIBUTIONS. Payments made by a VC Fund (under Designated Commitments)
to the Company as an investor in the VC Fund.
- PARTICIPANTS. Those employees designated by the Bank's Executive
Committee to participate in the Retention Program.
- VC PARTICIPANT DISTRIBUTIONS. Those Distributions made to Participants
under the Retention Program.
- - HOW THE RETENTION PROGRAM WORKS
- PARTICIPANTS' POTENTIAL INTEREST IN VC PROGRAM AGGREGATES $850,000 (20% OF
DESIGNATED COMMITMENTS). For the 1998 Retention Program, the Company will
establish a "book entry" account for Participants, covering 20% of the
Designated Commitments ($850,000 in the aggregate).
- PARTICIPANTS SHARE IN $850,000 PROGRAM PRO RATA AS DETERMINED BY BANK'S
EXECUTIVE COMMITTEE. The Bank's Executive Committee shall determine the
Participants' respective interests in the 1998 $850,000 Retention Program,
and in turn, respective interests in the VC Participant Distributions.
Each such Participant's "book entry" interest shall be deemed his or her
"VC Participant Amount," and each such Participant's pro rata share in VC
Participant Distributions shall be referred to as such Participant's "Pro
Rata" share. For example, a Participant allocated a $15,000 "book entry"
interest in the $850,000 Retention Program would have been granted a
$15,000
1
<PAGE>
Participant Amount (1.8% Pro Rata share of the 1998 Retention Program),
and would be entitled to 1.8% of VC Participant Distributions made in any
calendar year during the term of the Retention Program (which VC
Participant Distributions to Participants aggregate to 20% of Distributions
to the Company). (See discussion below regarding how VC Participant
Distributions are made.)
- PARTICIPANTS' 20% INTEREST IN DISTRIBUTIONS WILL BE RESERVED FOR
PARTICIPANTS AND PAID IN JANUARY OF THE FOLLOWING YEAR. Upon receipt of
Distributions to the Company, the Company will set aside the VC
Participant Distributions allocable to all Participants (e.g., 20% of the
total Distributions to the Company made during the applicable calendar
year). (See discussion below regarding VC Participant Distributions being
paid the following January.)
- ANNUAL VC PARTICIPANT DISTRIBUTIONS WILL BE MADE TO PARTICIPANTS IN
JANUARY (FOR DISTRIBUTIONS MADE IN THE PRECEDING YEAR). All Distributions
reserved for Participants in a given calendar year will be paid to the
Participants in January following the year of distribution, provided,
however, that any Distributions which the Company may receive in the form
of stock shall be retained by the Company until such time as the Company,
in its sole discretion, liquidates the stock. The Participants' Pro Rata
share in proceeds realized from liquidation of such stock will then be
paid to the Participants in January following the year of liquidation.
- PARTICIPANTS RECEIVE DISTRIBUTIONS ONLY TO THE EXTENT RECEIVED BY THE
COMPANY. VC Participant Distributions will be paid to the Participants
only to the extent they are received by the Company (subject to discussion
below under "Changes That Could Affect the Award"). Therefore, if no
Distributions are paid to the Company in a given year, the Participants
will not receive any VC Participant Distributions in January of the
following year.
- PARTICIPANTS HAVE A 20% INTEREST IN UNFUNDED DESIGNATED COMMITMENTS. Upon
the expiration of the Company's commitment to fund a VC Fund classified as
a Designated Commitment (the "Commitment Termination Date"--in most cases,
this will be the expiration of the term of the VC Fund), 20% of unfunded
commitments made to that VC Fund, will be paid to Participants (Pro Rata)
as Distributions in January following the year in which the Commitment
Termination Date occurs.
- 1998 RETENTION PROGRAM (INCLUDING BANK'S OBLIGATION TO PAY DISTRIBUTIONS
ON FUNDED DESIGNATED COMMITMENTS) TERMINATES IN 2010. In 2010, the Bank's
obligation to distribute to the Participants any Distributions, or
unfunded commitments pertaining to Designated Commitments, will terminate.
Final VC Participant Distributions, and Pro Rata interests in unfunded
commitments, will be paid to Participants in January, 2011.
- NO ASSURANCE OF ANY DISTRIBUTIONS. In light of the speculative nature of
investments in the VC Funds, the Company and the Bank make no assurances
whatsoever as to payment of any VC Participant Distributions to
Participants and Participants shall have no claim on the Company or on the
assets of the Company in the event of a failure of a Participant to
receive any payment of amounts under the Retention Program for which the
Company
2
<PAGE>
did not receive a Distribution (subject to discussion below under "Changes
That Could Affect the Award").
- DISTRIBUTIONS SHOULD BE TAXABLE AS ORDINARY INCOME. For income tax
purposes, VC Participant Distributions are taxable as ordinary income to
Participants and are subject to withholding of income and employment taxes
at the time of payment. Participants should consult with their own
personal tax advisors to confirm the tax treatment of VC Participant
Distributions.
- - ELIGIBILITY
- CONTINUED EMPLOYMENT REQUIRED. To be eligible to receive VC Participant
Distributions, Participants must be employed by the Bank on the date VC
Participant Distributions are paid to Participants. A Participant who
terminates employment with the Bank forfeits such Participant's Pro Rata
interest in future VC Participant Distributions and any further interest
in such Participant's VC Participant Amount. (Any such forfeited
interests will remain the property of the Company, and specifically, will
not be allocated among remaining Participants in the Retention Program.)
Also, a Participant who terminates employment with the Bank prior to the
date on which VC Participant Distributions are paid to Participants
forfeits any accrued VC Participant Distributions set aside for the
Participant's benefit. The terms in this paragraph are subject to
discussion below under "Changes in Employment Status."
- - CHANGES THAT COULD AFFECT THE AWARD
- PERFORMANCE STANDARDS. Awards are payable only to active employees who
maintain performance ratings of 3 or higher. A Participant whose
performance rating is sub-standard (rating below 3) forfeits any accrued
VC Participant Distributions set aside for the Participant's benefit,
which the Participant otherwise would have received in January following
the sub-standard performance year, except in the sole discretion of the
Bank's Executive Committee. Any forfeitures arising from a Participant's
sub-standard performance will remain the property of the Company. If and
as the Participant's performance improves to a rating of 3 or above in a
subsequent year, the Participant will again become eligible to receive VC
Participant Distributions for such subsequent year or years.
- CHANGES IN EMPLOYMENT STATUS. A Participant must be employed by the Bank
at the time VC Participant Distributions are paid (January of each year)
in order to receive such Participant's Pro Rata share in the VC
Participant Distributions. Notwithstanding the foregoing:
- DISABILITY. For the first eighteen (18) months following the adoption
of this Retention Program (e.g., February 19, 1998), any Participant
whose employment terminates due to the Participant's disability shall be
entitled to the Cashout Amount.
"Cashout Amount" shall mean an amount equal to the aggregate of such
Participant's (1) VC Participant Amount (less (a) VC Participant
Distributions then to-date made on such Designated Commitments, (b) VC
Participant Distributions made pursuant to
3
<PAGE>
subsection (2) immediately below, and (c) any payments then-to-date made
on unfunded Designated Commitments) and (2) then-accrued VC Participant
Distribution (prior to the regular January VC Participant Distribution
date).
A Participant whose employment terminates due do the Participant's
disability after eighteen (18) months following the adoption of this
Retention Program shall be entitled to receive the Present Value of the
Participant's VC Participant Amount.
"Present Value" shall be determined by conducting an appraisal of the
Designated Commitments and determining the fair market value of the
Designated Commitments discounted to present value. The appraisal shall
be prepared by an independent business valuation appraiser ("Independent
Appraiser"). The appraisal shall be dated within three (3) months prior
to the termination of the Participant pursuant to this section or three
(3) months after such termination. The Present Value established by the
Independent Appraiser is conclusive and binding upon the parties. The
Company will pay the fees and expenses charged by the Independent
Appraiser.
- DEATH. In the event of death of a Participant within eighteen (18)
months following the adoption of this Retention Program, the
Participant's estate or beneficiary shall be entitled to receive the
Cashout Amount.
In the event of death of a Participant after eighteen (18) months
following the adoption of this Retention Program, the Participant's
estate or beneficiary shall be entitled to receive the Present Value of
the Participant's VC Participant Amount.
- RETIREMENT. If within the first eighteen (18) months following the
adoption of this Retention Program, a Participant retires from
employment with the Bank following the Participant's 55th birthday, the
Participant shall be entitled to receive the Cashout Amount.
If a Participant retires after eighteen (18) months following the
adoption of this Retention Program, the Bank's President and Chief
Executive Officer ("CEO"), in such CEO's sole discretion, shall
determine if the Participant shall: (1) be entitled to receive the
Present Value of the Participant's VC Participant Amount; or (2) be
permitted to receive future VC Participant Distributions ("Continued
Participation").
- CHANGE TO CONSULTANT STATUS OR OTHER SPECIAL CIRCUMSTANCES. If
within the first eighteen (18) months following the adoption of this
Retention Program, a Participant leaves the Bank's employment, including
where such Participant becomes a consultant to the Bank, the Participant
may be entitled to the Cashout Amount if the CEO, in such CEO's sole
discretion, determines that the Participant continues to add value to
the Bank ("Adding Value"). Factors to be considered in determining
Adding Value include, but are not limited to: (1) the Participant
promoting and supporting the Bank in the marketplace and community; (2)
the Participant promoting and supporting the interests of the Bank with
clients, venture capitalists, and prospects; (3) the Participant
promoting and supporting the interests of the Bank through civic
activities; (4) the Participant continuing to provide a service to the
Bank (e.g., as a consultant); (5) the Participant continuing to add
value to a Bank-related project; or (6) the Participant providing
referrals to the Bank. The CEO shall make this
4
<PAGE>
determination one-time only, within three (3) months after the
termination of the Participant pursuant to this section. In the absence
of the CEO's determination to provide the special benefits provided in
this section, a Participant who leaves the Bank's employment forfeits
such Participant's accrued and future Pro Rata interest in VC Participant
Distributions and any further interest in such Participant's VC
Participant Amount, in accordance with the discussion above under
"Eligibility."
If a Participant leaves the Bank's employment after eighteen (18) months
following the adoption of this Retention Program, the Participant may be
entitled to either: (1) receive the Present Value of the Participant's
VC Participant Amount; or (2) Continued Participation (with it being in
the CEO's sole discretion as to which alternative) IF the CEO, in such
CEO's sole discretion, determines that the Participant is Adding Value.
The CEO shall make this determination one-time only, within three (3)
months after the termination of the Participant pursuant to this section.
In the absence of the CEO's determination to provide the special benefits
provided in this section, a Participant who leaves the Bank's employment
forfeits such Participant's accrued and future Pro Rata interest in VC
Participant Distributions and any further interest in such Participant's
VC Participant Amount, in accordance with the discussion above under
"Eligibility."
- CHANGE IN CONTROL. If within eighteen (18) months following the
adoption of this Retention Program, there is a change in control of the
Bank, a Participant who undergoes a "Covered Termination" (as such term,
"Covered Termination", is defined under the Bank's change in control
program), such Participant shall be entitled to receive the Cashout
Amount.
If a change in control of the Bank occurs after eighteen months
following the adoption of this Retention Program and a Participant
undergoes a "Covered Termination" (as such term, "Covered Termination,"
is defined under the Bank's change in control program), the CEO, in such
CEO's sole discretion, shall determine if the Participant shall be
entitled to: (1) receive the Present Value of the Participant's VC
Participant Amount; or (2) Continued Participation.
- REGULATORY LIMITATIONS. Payment of any VC Participant Distributions may
be postponed, reduced and/or eliminated in certain circumstances pursuant
to applicable law or regulation or as otherwise determined by the Bank's
federal and state regulators.
- CAPITAL LIMITATIONS. Payment of any VC Participant Distributions shall be
deferred during such time periods when any of the Bank's capital ratios
(total capital ratio, Tier1 capital ratio or Tier 1 leverage ratio) is
below the trigger threshold levels set forth in the Bank's Capital Policy
(as such policy may be amended from time to time). Additionally, such
payments shall be deferred if after giving effect to then-payable VC
Participant Distributions, the Bank's capital ratios will be below the
trigger threshold levels. In such cases of deferral, payment of the VC
Participant Distributions will be deferred until all of the Bank's capital
ratios are restored to the trigger threshold levels (with such deferred
payments being made once the ratios have been restored [unless otherwise
prohibited or restricted as specified in the subsection headed "Regulatory
Limitations"], and
5
<PAGE>
specifically, even where payments then would be made prior to the regular
January VC Participant Distribution date).
- VIOLATION OF FIREWALLS REQUIREMENTS. Any violation of the firewalls
requirements set forth in the Company's Venture Capital Fund Investment
Policies and Procedures ("VC Policies and Procedures") (by any
Participant), in the Executive Committee's sole discretion, shall cause a
forfeiture of such Participant's then-accrued and future VC Participant
Distributions.
- - ADMINISTRATION
- ADMINISTRATION BY FUNDS MANAGEMENT GROUP AND COMPENSATION AND BENEFITS
DEPARTMENT. The Retention Program will be administered by the Company's
Funds Management Group and the Bank's Compensation and Benefits
Department.
- INVESTMENT DECISIONS MADE BY FUNDS MANAGEMENT GROUP. The Company's
Funds Management Group shall be solely responsible for all investment
decisions relating to the VC Program in accordance with the Company's VC
Policies and Procedures.
- - COMPLIANCE WITH FIREWALLS REQUIREMENTS IN VENTURE CAPITAL FUND INVESTMENT
POLICIES AND PROCEDURES
- COMPLIANCE BY BANK OFFICERS. As noted in the Bank's Code of Ethics (the
"Code"), Bank officers should be circumspect regarding behavior that even
may appear that such officers are benefiting from their relationship with
the Bank, even where such behavior does not constitute a violation of the
Code. A violation of the Code shall have occurred if a Bank officer, in
making a credit decision, is deemed to have compromised the Bank's
interest by putting such officer's personal investment interest (in
potential VC Participant Distributions or otherwise) ahead of the Bank's
interest. Any such violation may result in disciplinary actions up to and
including termination of employment.
- COMPLIANCE BY FMG MEMBERS (COMPANY OFFICERS). As noted in the Code,
Company officers should be circumspect regarding behavior that even may
appear that such officers are benefiting from their relationship with the
Company and the Bank, even where such behavior does not constitute a
violation of the Code. A violation of the Code shall have occurred if a
Company officer is deemed to have compromised the Bank's interest by
influencing a credit decision in a manner that places such officer's
personal investment interest (in potential VC Participant Distributions or
otherwise) ahead of the Bank's or the Company's interest. Such violation
shall give rise to such disciplinary actions noted in the immediately-
preceding section.
- PERIODIC AUDITS TO CONFIRM COMPLIANCE. Compliance with the above-
described provision of the Code will be confirmed in the periodic
compliance audits performed pursuant to Section 6.0 (regarding firewalls)
of the VC Policies and Procedures. The
6
<PAGE>
compliance auditors will bring any violation of the firewalls requirements
to the attention of management (or the Board) of the Company or the Bank,
as appropriate.
- VIOLATION OF FIREWALLS REQUIREMENTS. Any violation of the firewalls
requirements, in addition to giving rise to disciplinary action, may
result in the Participant's forfeiting any then-accrued VC Participant
Distributions, as well as all future VC Participant Distributions (in
accordance with the section above headed "Violation of Firewalls
Requirements").
- - SEVERABILITY
- TERMS AND PROVISIONS ARE SEVERABLE. If any term or provision of this
Program is held invalid or unenforceable to any extent, the remainder of
this Program shall not be affected and each term and provision of this
Program shall be valid and enforceable to the fullest extent permitted by
law.
- - ARBITRATION
- DISPUTES TO BE SETTLED BY ARBITRATION. Any and all disputes or
controversies, arising from or regarding the interpretation, performance,
enforcement or termination of the Retention Program will be resolved by
final and binding arbitration under the procedures set forth in the
Arbitration Procedure and the then existing Rules of Practice and
Procedure of the Judicial Arbitration and Mediation Services, Inc.
("JAMS") or the rules of practice and procedure of any successor entity to
JAMS.
THE COMPANY AND THE BANK EACH RESERVES THE RIGHT TO CHANGE, AMEND,
SUSPEND, OR TERMINATE THE RETENTION PROGRAM AT ANY TIME. THIS
PROGRAM DOES NOT CREATE A CONTRACT OF EMPLOYMENT BETWEEN SILICON
VALLEY BANK AND ANY EMPLOYEE OR BETWEEN SILICON VALLEY BANCSHARES
AND ANY EMPLOYEE.
7
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited interim consolidated financial statements, related notes and
management's discussion and analysis contained in the report on form 10Q filed
by Silicon Valley Bancshares for the six months ended June 30, 1998.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 143,022
<INT-BEARING-DEPOSITS> 238
<FED-FUNDS-SOLD> 548,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,066,464
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 1,350,705
<ALLOWANCE> 42,300
<TOTAL-ASSETS> 3,123,086
<DEPOSITS> 2,867,279
<SHORT-TERM> 0
<LIABILITIES-OTHER> 19,085
<LONG-TERM> 0
0
0
<COMMON> 85,570
<OTHER-SE> 112,693
<TOTAL-LIABILITIES-AND-EQUITY> 3,123,086
<INTEREST-LOAN> 64,862
<INTEREST-INVEST> 30,202
<INTEREST-OTHER> 9,208
<INTEREST-TOTAL> 104,272
<INTEREST-DEPOSIT> 36,931
<INTEREST-EXPENSE> 36,934
<INTEREST-INCOME-NET> 67,338
<LOAN-LOSSES> 9,505
<SECURITIES-GAINS> 477
<EXPENSE-OTHER> 40,678
<INCOME-PRETAX> 26,981
<INCOME-PRE-EXTRAORDINARY> 15,780
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,780
<EPS-PRIMARY> 0.78
<EPS-DILUTED> 0.75
<YIELD-ACTUAL> 5.3
<LOANS-NON> 29,798
<LOANS-PAST> 1,573
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 16,470
<ALLOWANCE-OPEN> 37,700
<CHARGE-OFFS> 6,511
<RECOVERIES> 1,606
<ALLOWANCE-CLOSE> 42,300
<ALLOWANCE-DOMESTIC> 28,188
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 14,112
</TABLE>
