AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 25, 1997
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-----------------------------------------------
COMMUNITY BANK SYSTEM, INC. COMMUNITY CAPITAL TRUST I
(Exact name of Registrant as specified (Exact name of Registrant as
in its charter) specified
in its trust agreement)
DELAWARE DELAWARE
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
_________ _________
6712 6719
(Primary Standard Industrial (Primary Standard Industrial
Classification Code Number) Classification Code Number)
16-1213679 16-6453481
(I.R.S. Employer (I.R.S. Employer
Identification No.) Identification No.)
5790 WIDEWATERS PARKWAY
DEWITT, NEW YORK 13214
(315) 445-2282
(Address, including zip code, and telephone number, including area code,
of Registrants' principal executive offices)
SANFORD A. BELDEN
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
COMMUNITY BANK SYSTEM, INC.
5790 WIDEWATERS PARKWAY
DEWITT, NEW YORK 13214
(315) 445-2282
(Name, address, including zip code, and telephone number, including area
code, of agents for service)
COPIES TO:
GEORGE J. GETMAN, ESQ. CRAIG E. CHAPMAN, ESQ.
BOND, SCHOENECK & KING, LLP BROWN & WOOD LLP
ONE LINCOLN CENTER ONE WORLD TRADE CENTER
SYRACUSE, NEW YORK 13202 NEW YORK, NEW YORK 10048
Approximate Date of Commencement of Proposed Sale to the Public:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered
in connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each Class of Securities Amount Proposed Proposed Amount of
<S> <C> <C> <C> <C>
Series B Capital Securities of
Community Capital $30,000,000 100% $30,000,000 $9,090.90
Trust I . . . . . . . . . . . . . .
Series B Junior Subordinated
Deferrable Interest Debentures of
Community Bank System, Inc. (2)
Community Bank System, Inc. Series
B Guarantee with respect to Series
B Capital Securities(3)
Total . . . . . . . . . . . . . $30,000,000(4) 100% $30,000,000(5) $9,090.90
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee.
(2) No separate consideration will be received for the Series B Junior
Subordinated Deferrable Interest Debentures of Community Bank System,
Inc. (the "Junior Subordinated Debentures") distributed upon any
liquidation of Community Capital Trust I.
(3) No separate consideration will be received for the Community Bank
System, Inc. Series B Guarantee.
(4) This Registration Statement is deemed to cover rights of holders of
Junior Subordinated Debentures under the Indenture, the rights of
holders of Series B Capital Securities of Community Capital Trust I
under a Trust Agreement, the rights of holders of such Capital
Securities under the Series B Guarantee and certain backup undertakings
as described herein.
(5) Such amount represents the liquidation amount of the Community Capital
Trust I Series B Capital Securities (the "New Capital Securities") to be
exchanged hereunder and the principal amount of Junior Subordinated
Debentures that may be distributed to holders of New Capital Securities
upon any liquidation of Community Capital Trust I.
---------------------------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
Information contained herein is subject to completion or amendment. A
Registration Statement relating to these Securities has been filed with the
Securities and Exchange Commission. These Securities may not be sold nor may
offers to buy be accepted prior to the time the Registration Statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
Securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
SUBJECT TO COMPLETION, DATED JUNE 25, 1997
PROSPECTUS
- ----------
COMMUNITY CAPITAL TRUST I
OFFER TO EXCHANGE ITS
9.75% CAPITAL SECURITIES, SERIES B
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
9.75% CAPITAL SECURITIES, SERIES A
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
COMMUNITY BANK SYSTEM, INC.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED.
____________________
Community Capital Trust I, a trust formed under the laws of the State of
Delaware (the "Trust"), hereby offers, upon the terms and subject to the
conditions set forth in this Prospectus (as the same may be amended or
supplemented from time to time, the "Prospectus") and in the accompanying
Letter of Transmittal (which together constitute the "Exchange Offer"), to
exchange up to $30,000,000 aggregate Liquidation Amount of its 9.75% Capital
Securities, Series B (the "New Capital Securities") which have been
registered under the Securities Act of 1933, as amended (the "Securities
Act"), pursuant to a Registration Statement (as defined herein) of which this
Prospectus constitutes a part, for a like Liquidation Amount of its
outstanding 9.75% Capital Securities, Series A (the "Old Capital
Securities"), of which $30,000,000 aggregate Liquidation Amount is
outstanding. Pursuant to the Exchange Offer, Community Bank System, Inc., a
Delaware corporation (the "Corporation"), is also offering to exchange (i)
its guarantee of payments of cash distributions and payments on liquidation
of the Trust or redemption of the Old Capital Securities (the "Old
Guarantee") for a like guarantee in respect of the New Capital Securities
(the "New Guarantee") and (ii) all of its 9.75% Junior Subordinated
Deferrable Interest Debentures, Series B, due January 31, 2027 (the "New
Junior Subordinated Debentures") for a like aggregate principal amount of its
9.75% Junior Subordinated Deferrable Interest Debentures, Series A, due
January 31, 2027 (the "Old Junior Subordinated Debentures"), which New
Guarantee and New Junior Subordinated Debentures also have been registered
under the Securities Act. The Old Capital Securities, the Old Guarantee and
the Old Junior Subordinated Debentures are collectively referred to herein as
the "Old Securities" and the New Capital Securities, the New Guarantee and
the New Junior Subordinated Debentures are collectively referred to herein as
the "New Securities."
The terms of the New Securities are identical in all material respects
to the respective terms of the Old Securities, except that (a) the New
Securities have been registered under the Securities Act and therefore will
not be subject to certain restrictions on transfer applicable to the Old
Securities, (b) the New Capital Securities will not contain the $100,000
minimum Liquidation Amount transfer restriction, (c) the New Capital
Securities will not provide for any increase in the Distribution rate
thereon, (d) the New Junior Subordinated Debentures will not contain the
$100,000 minimum principal amount transfer restriction and (v) the New Junior
Subordinated Debentures will not provide for any increase in the interest
rate thereon. See "Description of New Securities" and "Description of Old
Securities." The New Capital Securities are being offered for exchange in
order to satisfy certain obligations of the Corporation and the Trust under
the Registration Rights Agreement dated as of February 3, 1997 (the
"Registration Rights Agreement") among the Corporation, the Trust and the
Initial Purchaser (as defined herein). In the event that the Exchange Offer
is consummated, any Old Capital Securities which remain outstanding after
consummation of the Exchange Offer and the New Capital Securities issued in
the Exchange Offer will vote together as a single class for purposes of
determining whether holders of the requisite percentage in outstanding
Liquidation Amount thereof have taken certain actions or exercised certain
rights under the Trust Agreement.
(Continued on the following page)
THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL ARE FIRST BEING MAILED TO
ALL HOLDERS OF OLD CAPITAL SECURITIES ON _________, 1997.
SEE "RISK FACTORS" COMMENCING ON PAGE FOR CERTAIN INFORMATION THAT
SHOULD BE CONSIDERED BY HOLDERS IN DECIDING WHETHER TO TENDER OLD CAPITAL
SECURITIES IN THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is _______, 1997.
The New Capital Securities and the Old Capital Securities (collectively,
the "Capital Securities") represent beneficial interests in the assets of the
Trust. The Corporation is the owner of all of the beneficial interests
represented by common securities of the Trust (the "Common Securities," and
together with the Capital Securities, the "Trust Securities"). The Chase
Manhattan Bank is the Property Trustee of the Trust. The Trust exists for
the sole purpose of issuing the Trust Securities and investing the proceeds
thereof in the Junior Subordinated Debentures (as defined herein), and
engaging in only those activities necessary, advisable or incidental thereto.
The Junior Subordinated Debentures will mature on January 31, 2027 (the
"Stated Maturity Date"). The Capital Securities will have a preference over
the Common Securities under certain circumstances with respect to cash
distributions and amounts payable on liquidation, redemption or otherwise.
See "Description of New Securities--Description of New Capital Securities--
Subordination of Common Securities."
As used herein, (i) the "Indenture" means the Indenture, dated as of
February 3, 1997, as amended and supplemented from time to time, between the
Corporation and The Chase Manhattan Bank, as Debenture Trustee (the
"Debenture Trustee"), (ii) the "Trust Agreement" means the Amended and
Restated Declaration of Trust relating to the Trust among the Corporation, as
Sponsor, The Chase Manhattan Bank as Property Trustee (the "Property
Trustee"), Chase Manhattan Bank Delaware, as Delaware Trustee, (the "Delaware
Trustee"), and the Administrative Trustees named therein (collectively, with
the Property Trustee and the Delaware Trustee, the "Issuer Trustees"). In
addition, as the context may require, unless otherwise expressly stated, (i)
the term "Capital Securities" includes the Old Capital Securities and the New
Capital Securities, (ii) the term "Trust Securities" includes the Capital
Securities and the Common Securities, (iii) the term "Junior Subordinated
Debentures" includes the Old Junior Subordinated Debentures and the New
Junior Subordinated Debentures and (iv) the term "Guarantee" includes the Old
Guarantee and the New Guarantee.
Except as provided below, the New Capital Securities will be represented
by global Capital Securities in fully registered form, deposited with a
custodian for and registered in the name of a nominee of The Depository Trust
Company ("DTC"). Beneficial interests in the New Capital Securities will be
shown on, and transfers thereof will be effected through, records maintained
by DTC and its participants. Beneficial interests in the New Capital
Securities will trade in DTC's Same-Day Funds Settlement System and secondary
market trading activity in such interests will therefore settle in
immediately available funds.
Holders of the New Capital Securities will be entitled to receive
cumulative cash distributions arising from the payment of interest on the
Junior Subordinated Debentures, accumulating from February 3, 1997, and
payable semi-annually in arrears on January 31 and July 31 of each year,
commencing July 31, 1997, at the annual rate of 9.75% of the Liquidation
Amount of $1,000 per New Capital Security ("Distributions"). So long as no
Debenture Event of Default (as defined herein) has occurred and is
continuing, the Corporation will have the right to defer payments of interest
on the Junior Subordinated Debentures at any time and from time to time for a
period not exceeding 10 consecutive semi-annual periods with respect to each
deferral period (each, an "Extension Period"), provided that no Extension
Period may extend beyond the Stated Maturity Date. Upon the termination of
any such Extension Period and the payment of all amounts then due, the
Corporation may elect to begin a new Extension Period, subject to the
requirements set forth in the Indenture. If and for so long as interest
payments on the Junior Subordinated Debentures are so deferred, Distributions
on the Trust Securities will also be deferred and the Corporation will not be
permitted, subject to certain exceptions described herein, to declare or pay
any cash distributions with respect to the Corporation's capital stock (which
includes common and preferred stock) or to make any payment with respect to
debt securities of the Corporation that rank pari passu with or junior to the
Junior Subordinated Debentures. During an Extension Period, interest on the
Junior Subordinated Debentures will continue to accrue (and the amount of
Distributions to which holders of the Trust Securities are entitled will
accumulate) at the rate of 9.75% per annum, compounded semi-annually, and
holders of Trust Securities will be required to accrue such deferred interest
income for United States federal income tax purposes prior to the receipt of
cash payments attributable to such interest income. See "Description of New
Securities--Description of New Junior Subordinated Debentures--Option to
Extend Interest Payment Date" and "Certain United States Federal Income Tax
Considerations--Interest Income and Original Issue Discount."
Through the Guarantee, the guarantee agreement of the Corporation
relating to the Common Securities (the "Common Guarantee"), the Trust
Agreement, the Junior Subordinated Debentures and the Indenture, taken
together, the Corporation has guaranteed or will guarantee, as the case may
be, fully, irrevocably and unconditionally, all of the Trust's obligations
under the Trust Securities. See "Relationship Among the New Capital
Securities, the New Junior Subordinated Debentures and the New Guarantee--
Full and Unconditional Guarantee." The Old Guarantee and the Common
Guarantee currently guarantee, and the New Guarantee will guarantee, payments
of Distributions and payments on liquidation of the Trust or redemption of
the Trust Securities, but in each case only to the extent that the Trust
holds funds on hand legally available therefor and has failed to make such
payments, as described herein. See "Description of New Securities--
Description of New Guarantee." If the Corporation fails to make a required
payment on the Junior Subordinated Debentures, the Trust will not have
sufficient funds to make the related payments, including Distributions, on
the Trust Securities. The Guarantee and the Common Guarantee will not cover
any such payment when the Trust does not have sufficient funds on hand
legally available therefor. In such event, a holder of Capital Securities
may institute a legal proceeding directly against the Corporation to enforce
its rights in respect of such payment. See "Description of New Securities--
Description of New Junior Subordinated Debentures--Enforcement of Certain
Rights By Holders of New Capital Securities." The obligations of the
Corporation under the Guarantee, the Common Guarantee and the Junior
Subordinated Debentures will be unsecured and subordinate and rank junior
in right of payment to all Senior Indebtedness (as defined in
"Description of New Securities--Description of New Junior Subordinated
Debentures--Subordination"). At March 31, 1997, the Corporation had no
outstanding Senior Indebtedness. See "Risk Factors--Ranking of
Subordinated Obligations under the Guarantee and the Junior
Subordinated Debentures."
The Trust Securities will be subject to mandatory redemption in a Like
Amount (as defined herein), (i) in whole but not in part, on the Stated
Maturity Date upon repayment of the Junior Subordinated Debentures at a
redemption price equal to the principal amount of, plus accrued and unpaid
interest on, the Junior Subordinated Debentures (the "Maturity Redemption
Price"), (ii) in whole but not in part, at any time prior to January 31,
2007, contemporaneously with the optional prepayment of the Junior
Subordinated Debentures, upon the occurrence and continuation of a Special
Event (as defined herein) at a redemption price equal to the Special Event
Prepayment Price (as defined below) (the "Special Event Redemption Price"),
and (iii) in whole or in part, on or after January 31, 2007,
contemporaneously with the optional prepayment by the Corporation of the
Junior Subordinated Debentures, at a redemption price equal to the Optional
Prepayment Price (as defined below) (the "Optional Redemption Price"). Any
of the Maturity Redemption Price, the Special Event Redemption Price and the
Optional Redemption Price may be referred to herein as the "Redemption
Price." See "Description of New Securities--Description of New Capital
Securities--Redemption."
Subject to the Corporation having received any required regulatory
approval, the Junior Subordinated Debentures will be prepayable prior to the
Stated Maturity Date at the option of the Corporation (i) on or after January
31, 2007, in whole or in part, at a prepayment price (the "Optional
Prepayment Price") equal to 104.54% of the principal amount thereof on
January 31, 2007, declining ratably on each January 31 thereafter to 100% on
or after January 31, 2017 and (ii) prior to January 31, 2007, in whole but
not in part, upon the occurrence and continuation of a Special Event, at a
prepayment price (the "Special Event Prepayment Price") equal to the greater
of (a) 100% of the principal amount thereof and (b) the sum, as determined by
a Quotation Agent (as defined herein), of the present value of 104.54% of the
principal amount thereof plus the scheduled payments of interest thereon from
the prepayment date to and including January 31, 2007, discounted to the
prepayment date on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate (as defined herein) plus,
in the case of a redemption under clause (i) or clause (ii), accrued and
unpaid interest thereon to the date of prepayment. Either of the Optional
Prepayment Price or the Special Event Prepayment Price may be referred to
herein as the "Prepayment Price." See "Description of New Securities--
Description of New Junior Subordinated Debentures--Optional Prepayment" and
"--Special Event Prepayment."
The Corporation will have the right at any time to terminate the Trust
and cause a Like Amount of the Junior Subordinated Debentures to be
distributed to the holders of the Trust Securities in liquidation of the
Trust, subject to (i) the Corporation having received an opinion of counsel
to the effect that such distribution will not be a taxable event to holders
of Capital Securities and (ii) the prior approval of the Board of Governors
of the Federal Reserve System (the "Federal Reserve") to do so if then
required under applicable capital guidelines or policies of the Federal
Reserve. Unless the Junior Subordinated Debentures are distributed to the
holders of the Trust Securities, in the event of a liquidation of the Trust
as described herein, after satisfaction of liabilities to creditors of the
Trust as required by applicable law, the holders of the Trust Securities
generally will be entitled to receive a Liquidation Amount of $1,000 per
Trust Security plus accumulated Distributions thereon to the date of payment.
See "Description of New Securities--Description of New Capital Securities--
Liquidation of the Trust and Distribution of Junior Subordinated Debentures."
-----------------
The Trust is making the Exchange Offer of the New Capital Securities in
reliance on the position of the staff of the Division of Corporation Finance
of the Securities and Exchange Commission (the "Commission") as set forth in
certain interpretive letters addressed to third parties in other
transactions. However, neither the Corporation nor the Trust has sought its
own interpretive letter and there can be no assurance that the staff of the
Division of Corporation Finance of the Commission would make a similar
determination with respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based on these interpretations by the
staff of the Division of Corporation Finance of the Commission, and subject
to the two immediately following sentences, the Corporation and the Trust
believe that New Capital Securities issued pursuant to this Exchange Offer in
exchange for Old Capital Securities may be offered for resale, resold and
otherwise transferred by a holder thereof (other than a holder who is a
broker-dealer) without further compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that such
New Capital Securities are acquired in the ordinary course of such holder's
business and that such holder is not participating, and has no arrangement or
understanding with any person to participate, in a distribution (within the
meaning of the Securities Act) of such New Capital Securities. However, any
holder of Old Capital Securities who is an "affiliate", as such term is
defined in Rule 405 under the Securities Act (an "Affiliate") of the
Corporation or the Trust or who intends to participate in the Exchange Offer
for the purpose of distributing New Capital Securities, or any broker-dealer
who purchased Old Capital Securities from the Trust for resale pursuant to
Rule 144A under the Securities Act ("Rule 144A") or any other available
exemption under the Securities Act, (a) will not be able to rely on the
interpretations of the staff of the Division of Corporation Finance of the
Commission set forth in the above-mentioned interpretive letters, (b) will
not be permitted or entitled to tender such Old Capital Securities in the
Exchange Offer and (c) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any sale or
other transfer of such Old Capital Securities unless such sale is made
pursuant to an exemption from such requirements. In addition, as described
below, if any broker-dealer holds Old Capital Securities acquired for its own
account as a result of market-making or other trading activities and
exchanges such Old Capital Securities for New Capital Securities, then such
broker-dealer must deliver a prospectus meeting the requirements of the
Securities Act in connection with any resales of such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required
to represent that (i) it is not an Affiliate of the Corporation or the Trust,
(ii) any New Capital Securities to be received by it are being acquired in
the ordinary course of its business, (iii) it has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such New Capital Securities, and (iv) if
such holder is not a broker-dealer, such holder is not engaged in, and does
not intend to engage in, a distribution (within the meaning of the Securities
Act) of such New Capital Securities. In addition, the Corporation and the
Trust may require such holder, as a condition to such holder's eligibility to
participate in the Exchange Offer, to furnish to the Corporation and the
Trust (or an agent thereof) in writing information as to the number of
"beneficial owners" (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) on behalf of whom such holder holds the
Capital Securities to be exchanged in the Exchange Offer. Each broker-dealer
that receives New Capital Securities for its own account pursuant to the
Exchange Offer must acknowledge that it acquired the Old Capital Securities
for its own account as the result of market-making activities or other
trading activities and must agree that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such
New Capital Securities. The Letter of Transmittal states that, by so
acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. Based on the position taken by the staff of the Division of
Corporation Finance of the Commission in the interpretive letters referred to
above, the Corporation and the Trust believe that broker-dealers who acquired
Old Capital Securities for their own accounts, as a result of market-making
activities or other trading activities ("Participating Broker-Dealers"), may
fulfill their prospectus delivery requirements with respect to the New
Capital Securities received upon exchange of such Old Capital Securities
(other than Old Capital Securities which represent an unsold allotment from
the original sale of the Old Capital Securities) with a prospectus meeting
the requirements of the Securities Act, which may be the prospectus prepared
for an exchange offer so long as it contains a description of the plan of
distribution with respect to the resale of such New Capital Securities.
Accordingly, this Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer during the period
referred to below in connection with resales of New Capital Securities
received in exchange for Old Capital Securities where such Old Capital
Securities were acquired by such Participating Broker-Dealer for its own
account as a result of market-making or other trading activities. Subject to
certain provisions set forth in the Registration Rights Agreement, the
Corporation and the Trust have agreed that this Prospectus, as it may be
amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of such New Capital Securities for a
period ending 90 days after the Expiration Date (as defined herein) (subject
to extension under certain limited circumstances described below) or, if
earlier, when all such New Capital Securities have been disposed of by such
Participating Broker-Dealer. See "Plan of Distribution." However, a
Participating Broker-Dealer who intends to use this Prospectus in connection
with the resale of New Capital Securities received in exchange for Old
Capital Securities pursuant to the Exchange Offer must notify the Corporation
or the Trust, or cause the Corporation or the Trust to be notified, on or
prior to the Expiration Date, that it is a Participating Broker-Dealer. Such
notice may be given in the space provided for that purpose in the Letter of
Transmittal or may be delivered to the Exchange Agent at one of the addresses
set forth herein under "The Exchange Offer--Exchange Agent." Any
Participating Broker-Dealer who is an Affiliate of the Corporation or the
Trust may not rely on such interpretive letters and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. See "The Exchange Offer--Resales of
New Capital Securities."
In that regard, each Participating Broker-Dealer who surrenders Old
Capital Securities pursuant to the Exchange Offer will be deemed to have
agreed, by execution of the Letter of Transmittal, that, upon receipt of
notice from the Corporation or the Trust of the occurrence of any event or
the discovery of any fact which makes any statement contained or incorporated
by reference in this Prospectus untrue in any material respect or which
causes this Prospectus to omit to state a material fact necessary in order to
make the statements contained or incorporated by reference herein, in light
of the circumstances under which they were made, not misleading or of the
occurrence of certain other events specified in the Registration Rights
Agreement, such Participating Broker-Dealer will suspend the sale of New
Capital Securities (or the New Guarantee or the New Junior Subordinated
Debentures, as applicable) pursuant to this Prospectus until the Corporation
or the Trust has amended or supplemented this Prospectus to correct such
misstatement or omission and has furnished copies of the amended or
supplemented Prospectus to such Participating Broker-Dealer or the
Corporation or the Trust has given notice that the sale of the New Capital
Securities (or the New Guarantee or the New Junior Subordinated Debentures,
as applicable) may be resumed, as the case may be. If the Corporation or the
Trust gives such notice to suspend the sale of the New Capital Securities (or
the New Guarantee or the New Junior Subordinated Debentures, as applicable),
it shall extend the 90-day period referred to above during which
Participating Broker-Dealers are entitled to use this Prospectus in
connection with the resale of New Capital Securities by the number of days
during the period from and including the date of the giving of such notice to
and including the date when Participating Broker-Dealers shall have received
copies of the amended or supplemented Prospectus necessary to permit resales
of the New Capital Securities or to and including the date on which the
Corporation or the Trust has given notice that the sale of New Capital
Securities (or the New Guarantee or the New Junior Subordinated Debentures,
as applicable) may be resumed, as the case may be.
-----------------
Prior to the Exchange Offer, there has been only a limited secondary
market and no public market for the Old Capital Securities. The New Capital
Securities will be a new issue of securities for which there currently is no
market. Although the Initial Purchaser has informed the Corporation and the
Trust that it currently intends to make a market in the New Capital
Securities, it is not obligated to do so, and any such market making may be
discontinued at any time without notice. Accordingly, there can be no
assurance as to the development or liquidity of any market for the New
Capital Securities. The Corporation and the Trust currently do not intend to
apply for listing of the New Capital Securities on any securities exchange or
for quotation through the National Association of Securities Dealers
Automated Quotation ("NASDAQ") System.
Any Old Capital Securities not tendered and accepted in the Exchange
Offer will remain outstanding and will be entitled to all of the same rights
and will be subject to the same limitations applicable thereto under the
Trust Agreement (except for those rights which terminate upon consummation of
the Exchange Offer). Following consummation of the Exchange Offer, the
holders of Old Capital Securities will continue to be subject to all of the
existing restrictions upon transfer thereof and neither the Corporation nor
the Trust will have any further obligation to such holders (other than under
certain limited circumstances) to provide for registration under the
Securities Act of the Old Capital Securities held by them. To the extent
that Old Capital Securities are tendered and accepted in the Exchange Offer,
a holder's ability to sell untendered Old Capital Securities could be
adversely affected. See "Risk Factors--Consequences of a Failure to Exchange
Old Capital Securities."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS
PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING
WHETHER TO TENDER THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE
OFFER.
Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on , 1997 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is
extended by the Corporation or the Trust (in which case the term "Expiration
Date" shall mean the latest date and time to which the Exchange Offer is
extended). Tenders of Old Capital Securities may be withdrawn at any time on
or prior to the Expiration Date. The Exchange Offer is not conditioned upon
any minimum Liquidation Amount of Old Capital Securities being tendered for
exchange. However, the Exchange Offer is subject to certain events and
conditions which may be waived by the Corporation or the Trust and to the
terms and provisions of the Registration Rights Agreement. Old Capital
Securities may be tendered in whole or in part having an aggregate
Liquidation Amount of not less than $100,000 (100 Capital Securities) or any
integral multiple of $1,000 Liquidation Amount (one Capital Security) in
excess thereof, provided that, if any Old Capital Securities are tendered for
exchange in part, the untendered Liquidation Amount thereof must be $100,000
(100 Capital Securities) or any integral multiple of $1,000 in excess
thereof. The Corporation has agreed to pay all expenses of the Exchange
Offer. See "The Exchange Offer--Fees and Expenses." Holders of the Old
Capital Securities whose Old Capital Securities are accepted for exchange
will not receive Distributions on such Old Capital Securities and will be
deemed to have waived the right to receive any Distributions on such Old
Capital Securities accumulated from and including February 3, 1997.
Accordingly, holders of New Capital Securities as of the record date for the
payment of Distributions on July 31, 1997 will be entitled to receive
Distributions accumulated from and including February 3, 1997. See "The
Exchange Offer--Distributions on New Capital Securities."
Neither the Corporation nor the Trust will receive any cash proceeds
from the issuance of the New Capital Securities offered hereby. No dealer-
manager is being used in connection with this Exchange Offer. See "Use of
Proceeds" and "Plan of Distribution."
-------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THIS EXCHANGE
OFFER AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE CORPORATION OR THE TRUST.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY EXCHANGE MADE PURSUANT HERETO
SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE CORPORATION OR THE TRUST SINCE THE DATE HEREOF.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO
OR ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
-------------------
TABLE OF CONTENTS
Page
----
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . .
Incorporation of Certain Documents by Reference . . . . . . . . . . . . . .
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ratios of Earnings to Fixed Charges . . . . . . . . . . . . . . . . . . .
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selected Consolidated Financial Information . . . . . . . . . . . . . . .
Community Capital Trust I . . . . . . . . . . . . . . . . . . . . . . . .
Community Bank System, Inc. . . . . . . . . . . . . . . . . . . . . . . .
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Exchange Offer . . . . . . . . . . . . . . . . . . . . . . . . . . .
Description of New Securities . . . . . . . . . . . . . . . . . . . . . .
Description of Old Securities . . . . . . . . . . . . . . . . . . . . . .
Relationship Among the New Capital Securities, the
New Junior Subordinated Debentures and the New Guarantee . . . . . . . .
Certain United States Federal Income Tax Considerations . . . . . . . . .
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . . . .
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information
with the Commission. Such reports, proxy statements and other information
can be inspected and copied at the public reference facilities of the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and
at the regional offices of the Commission located at 7 World Trade Center,
13th Floor, Suite 1300, New York, New York 10048 and Suite 1400, Citicorp
Center, 14th Floor, 500 West Madison Street, Chicago, Illinois 60661. Copies
of such material can also be obtained at prescribed rates by writing to the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such information may also be accessed by means of
the Commission's home page on the Internet (http://www.sec.gov.) through the
Commission's electronic data gathering, analysis and retrieval system
("EDGAR"). The Corporation's common stock (the "Common Stock") is traded on
the NASDAQ National Market System. In addition, such reports, proxy
statements and other information concerning the Corporation can be inspected
at the offices of the National Association of Securities Dealers, Inc., 1735
K Street, N.W., Washington, D.C. 20006.
No separate financial statements of the Trust have been included herein.
The Corporation and the Trust do not consider that such financial statements
would be material to holders of the Capital Securities because the Trust is a
newly formed special purpose entity, has no operating history or independent
operations and is not engaged in and does not propose to engage in any
activity other than holding as trust assets the Junior Subordinated
Debentures and issuing the Trust Securities. See "Community Capital Trust I"
and "Description of New Securities." In addition, the Corporation does not
expect that the Trust will file reports under the Exchange Act with the
Commission.
This Prospectus constitutes a part of a registration statement on Form
S-4 (the "Registration Statement") filed by the Corporation and the Trust
with the Commission under the Securities Act. This Prospectus does not
contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and
regulations of the Commission, and reference is hereby made to the
Registration Statement and to the exhibits relating thereto for further
information with respect to the Corporation, the Trust and the New
Securities. Any statements contained herein concerning the provisions of any
document are not necessarily complete, and, in each instance, reference is
made to the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such statement is
qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Corporation with the Commission
pursuant to Section 13 of the Exchange Act are incorporated into this
Prospectus by reference:
1. The Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996;
2. The Corporation's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1997; and
3. The Corporation's Current Report on Form 8-K, as filed on March 6,
1997.
All documents subsequently filed by the Corporation pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior
to the termination of the Exchange Offer shall be deemed to be incorporated
by reference into this Prospectus and to be a part of this Prospectus from
the date of filing of such document. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this Prospectus
including the documents incorporated or deemed to be incorporated herein by
reference, as the same may be amended, supplemented or otherwise modified
from time to time. Statements contained in this Prospectus as to the contents
of any contract or other document referred to herein do not purport to be
complete, and where reference is made to the particular provisions of such
contract or other document, such provisions are qualified in all respects by
reference to all of the provisions of such contract or other document. The
Corporation will provide without charge to any person to whom this Prospectus
is delivered, on the written or oral request of such person, a copy of any or
all of the foregoing documents incorporated by reference herein (other than
exhibits not specifically incorporated by reference into the texts of such
documents). Requests for such documents should be directed to: Loretta L.
Marx, Secretary of the Corporation, 5790 Widewaters Parkway, DeWitt, New York
13214. Telephone requests may be directed to Loretta L. Marx at (315) 445-
2282.
SUMMARY
The following is a summary of certain information contained
elsewhere in this Prospectus. Reference is made to, and this summary is
qualified in its entirety by, the more detailed information contained
elsewhere in this Prospectus.
COMMUNITY BANK SYSTEM, INC.
Community Bank System, Inc., a Delaware corporation (the
"Corporation), is a bank holding company headquartered in DeWitt, New York,
which owns all of the outstanding stock of its principal operating
subsidiary, Community Bank, National Association ("Community Bank").
Community Bank is a full service commercial bank providing a range of banking
services through its two regional offices in Canton, New York and Olean, New
York, and through a total of 49 customer facilities in the counties of St.
Lawrence, Jefferson, Lewis, Cayuga, Seneca, Ontario, Oswego, Oneida, Wayne,
Yates, Onondaga, Allegany, Cattaraugus, Tioga and Steuben. These counties are
grouped by Community Bank into three distinct banking markets: Northern New
York, Finger Lakes Region, and the Southern Tier (which is further divided
into the Olean and Corning submarkets).
As of December 31, 1996, the Corporation had consolidated assets of
$1.3 billion, deposits of $1.0 billion and shareholders' equity of $109.4
million. The Corporation's net income for the year ended December 31, 1996
was $14.1 million, or $1.83 per share.
On February 10, 1997, Community Bank entered into a Purchase and
Assumption Agreement with KeyBank National Association (New York) ("KeyBank")
relating to the acquisition of certain assets and assumption of certain
liabilities associated with eight KeyBank branch locations in upstate New
York. The transactions contemplated by the Purchase and Assumption Agreement
were consummated effective June 16, 1997. In addition, Community Bank has
entered into a Purchase and Assumption Agreement with Fleet Bank dated March
21, 1997. Pursuant to this Purchase and Assumption Agreement, Community Bank
intends to acquire certain assets and assume certain liabilities relating to
twelve Fleet Bank branch locations in upstate New York during the third
quarter of 1997. See "Recent Developments--Acquisitions."
COMMUNITY CAPITAL TRUST I
The Trust is a statutory business trust created under Delaware law
pursuant to the filing of a certificate of trust with the Delaware Secretary
of State on January 29, 1997. The Trust's business and affairs are conducted
by the Issuer Trustees: the Property Trustee, the Delaware Trustee, and the
three individual Administrative Trustees who are employees or officers of or
affiliated with the Corporation. The Trust exists for the exclusive purposes
of (i) issuing and selling the Trust Securities, (ii) using the proceeds from
the sale of the Trust Securities to acquire the Junior Subordinated
Debentures issued by the Corporation and (iii) engaging in only those other
activities necessary, advisable or incidental thereto (such as registering
the transfer of the Trust Securities). The Junior Subordinated Debentures
will be the sole assets of the Trust, and payments under the Junior
Subordinated Debentures will be the sole revenue of the Trust. All of the
Common Securities are owned by the Corporation.
THE EXCHANGE OFFER
The Exchange Offer . . . . . . . Up to $30,000,000 aggregate
Liquidation Amount of New Capital
Securities are being offered in
exchange for a like aggregate
Liquidation Amount of Old Capital
Securities. Old Capital
Securities may be tendered for
exchange in whole or in part in a
Liquidation Amount of $100,000
(100 Capital Securities) or any
integral multiple of $1,000 (one
Capital Security) in excess
thereof, provided that, if any Old
Capital Securities are tendered
for exchange in part, the
untendered Liquidation Amount
thereof must be $100,000 (100
Capital Securities) or any
integral multiple of 1,000 in
excess thereof. The Corporation
and the Trust are making the
Exchange Offer in order to satisfy
their obligations under the
Registration Rights Agreement
relating to the Old Capital
Securities. For a description of
the procedures for tendering Old
Capital Securities, see "The
Exchange Offer--Procedures for
Tendering Old Capital Securities."
Expiration Date . . . . . . . . . 5:00 p.m., New York City time, on
, 1997, unless the
Exchange Offer is extended by the
Corporation or the Trust (in which
case the Expiration Date will be
the latest date and time to which
the Exchange Offer is extended).
See "The Exchange Offer--Terms of
the Exchange Offer."
Conditions to the Exchange Offer The Exchange Offer is subject to
certain conditions, which may be
waived by the Corporation and the
Trust in their sole discretion.
The Exchange Offer is not
conditioned upon any minimum
Liquidation Amount of Old Capital
Securities being tendered. See
"The Exchange Offer--Conditions to
the Exchange Offer."
Terms of the Exchange Offer . . . The Corporation and the Trust
reserve the right in their sole
and absolute discretion, subject
to applicable law, at any time and
from time to time, (i) to delay
the acceptance of the Old Capital
Securities for exchange, (ii) to
terminate the Exchange Offer if
certain specified conditions have
not been satisfied, (iii) to
extend the Expiration Date of the
Exchange Offer and retain all Old
Capital Securities tendered
pursuant to the Exchange Offer,
subject, however, to the right of
holders of Old Capital Securities
to withdraw their tendered Old
Capital Securities, or (iv) to
waive any condition or otherwise
amend the terms of the Exchange
Offer in any respect. See "The
Exchange Offer--Terms of the
Exchange Offer."
Withdrawal Rights . . . . . . . . Tenders of Old Capital Securities
may be withdrawn at any time on or
prior to the Expiration Date by
delivering a written notice of
such withdrawal to the Exchange
Agent in conformity with certain
procedures set forth below under
"The Exchange Offer--Withdrawal
Rights."
Procedures for Tendering Old Tendering holders of Old Capital
Capital Securities . . . . . . . Securities must complete and sign
a Letter of Transmittal in
accordance with the instructions
contained therein and forward the
same by mail, facsimile or hand
delivery, together with any other
required documents, to the
Exchange Agent, either with the
Old Capital Securities to be
tendered or in compliance with the
specified procedures for
guaranteed delivery of Old Capital
Securities. Certain brokers,
dealers, commercial banks, trust
companies and other nominees may
also effect tenders by book-entry
transfer. Holders of Old Capital
Securities registered in the name
of a broker, dealer, commercial
bank, trust company or other
nominee are urged to contact such
person promptly if they wish to
tender Old Capital Securities
pursuant to the Exchange Offer.
See "The Exchange Offer--
Procedures for Tendering Old
Capital Securities."
Letters of Transmittal and
certificates representing Old
Capital Securities should not be
sent to the Corporation or the
Trust. Such documents should only
be sent to the Exchange Agent.
Resales of New Capital Securities The Corporation and the Trust are
making the Exchange Offer in
reliance on the position of the
staff of the Division of
Corporation Finance of the
Commission as set forth in certain
interpretive letters addressed to
third parties in other
transactions. However, neither
the Corporation nor the Trust has
sought its own interpretive letter
and there can be no assurance that
the staff of the Division of
Corporation Finance of the
Commission would make a similar
determination with respect to the
Exchange Offer as it has in such
interpretive letters to third
parties. Based on these
interpretations by the staff of
the Division of Corporation
Finance of the Commission, and
subject to the two immediately
following sentences, the
Corporation and the Trust believe
that New Capital Securities issued
pursuant to this Exchange Offer in
exchange for Old Capital
Securities may be offered for
resale, resold and otherwise
transferred by a holder thereof
(other than a holder who is a
broker-dealer) without further
compliance with the registration
and prospectus delivery
requirements of the Securities
Act, provided that such New
Capital Securities are acquired in
the ordinary course of such
holder's business and that such
holder is not participating, and
has no arrangement or
understanding with any person to
participate, in a distribution
(within the meaning of the
Securities Act) of such New
Capital Securities. However, any
holder of Old Capital Securities
who is an Affiliate of the
Corporation or the Trust or who
intends to participate in the
Exchange Offer for the purpose of
distributing the New Capital
Securities, or any broker-dealer
who purchased the Old Capital
Securities from the Trust for
resale pursuant to Rule 144A or
any other available exemption
under the Securities Act, (a) will
not be able to rely on the
interpretations of the staff of
the Division of Corporation
Finance of the Commission set
forth in the above-mentioned
interpretive letters, (b) will not
be permitted or entitled to tender
such Old Capital Securities in the
Exchange Offer and (c) must comply
with the registration and
prospectus delivery requirements
of the Securities Act in
connection with any sale or other
transfer of such Old Capital
Securities unless such sale is
made pursuant to an exemption from
such requirements. In addition,
as described below, if any broker-
dealer holds Old Capital
Securities acquired for its own
account as a result of market-
making or other trading activities
and exchanges such Old Capital
Securities for New Capital
Securities, then such broker-
dealer must deliver a prospectus
meeting the requirements of the
Securities Act in connection with
any resales of such New Capital
Securities.
Each holder of Old Capital
Securities who wishes to exchange
Old Capital Securities for New
Capital Securities in the Exchange
Offer will be required to
represent that (i) it is not an
Affiliate of the Corporation or
the Trust, (ii) any New Capital
Securities to be received by it
are being acquired in the ordinary
course of its business, (iii) it
has no arrangement or
understanding with any person to
participate in a distribution
(within the meaning of the
Securities Act) of such New
Capital Securities, and (iv)
if such holder is not a broker-
dealer, such holder is not engaged
in, and does not intend to engage
in, a distribution (within the
meaning of the Securities Act) of
such New Capital Securities. Each
broker-dealer that receives New
Capital Securities for its own
account pursuant to the Exchange
Offer must acknowledge that it
acquired the Old Capital
Securities for its own account as
the result of market-making
activities or other trading
activities and must agree that it
will deliver a prospectus meeting
the requirements of the Securities
Act in connection with any resale
of such New Capital Securities.
The Letter of Transmittal states
that, by so acknowledging and by
delivering a prospectus, a broker-
dealer will not be deemed to admit
that it is an "underwriter" within
the meaning of the Securities Act.
Based on the position taken by the
staff of the Division of
Corporation Finance of the
Commission in the interpretive
letters referred to above, the
Corporation and the Trust believe
that Participating Broker-Dealers
who acquired Old Capital
Securities for their own accounts
as a result of market-making
activities or other trading
activities may fulfill their
prospectus delivery requirements
with respect to the New Capital
Securities received upon exchange
of such Old Capital Securities
(other than Old Capital Securities
which represent an unsold
allotment from the original sale
of the Old Capital Securities)
with a prospectus meeting the
requirements of the Securities
Act, which may be the prospectus
prepared for an exchange offer so
long as it contains a description
of the plan of distribution with
respect to the resale of such New
Capital Securities. Accordingly,
this Prospectus, as it may be
amended or supplemented from time
to time, may be used by a
Participating Broker-Dealer in
connection with resales of New
Capital Securities received in
exchange for Old Capital
Securities where such Old Capital
Securities were acquired by such
Participating Broker-Dealer for
its own account as a result of
market-making or other trading
activities. Subject to certain
provisions set forth in the
Registration Rights Agreement and
to the limitations described below
under "The Exchange Offer--Resales
of New Capital Securities," the
Corporation and the Trust have
agreed that this Prospectus, as it
may be amended or supplemented
from time to time, may be used by
a Participating Broker-Dealer in
connection with resales of such
New Capital Securities for a
period ending 90 days after the
Expiration Date (subject to
extension under certain limited
circumstances) or, if earlier,
when all such New Capital
Securities have been disposed of
by such Participating Broker-
Dealer. See "Plan of
Distribution." Any Participating
Broker-Dealer who is an Affiliate
of the Corporation or the Trust
may not rely on such interpretive
letters and must comply with the
registration and prospectus
delivery requirements of the
Securities Act in connection with
any resale transaction. See "The
Exchange Offer--Resales of New
Capital Securities."
Exchange Agent . . . . . . . . . The exchange agent with respect to
the Exchange Offer is The Chase
Manhattan Bank (the "Exchange
Agent"). The addresses, and
telephone and facsimile numbers,
of the Exchange Agent are set
forth in "The Exchange Offer--
Exchange Agent" and in the Letter
of Transmittal.
Use of Proceeds . . . . . . . . . Neither the Corporation nor the
Trust will receive any cash
proceeds from the issuance of the
New Capital Securities offered
hereby. See "Use of Proceeds."
Certain United States Federal
Income Holders of Old Capital Securities
Tax Considerations . . . . . . . should review the information set
forth under "Certain United States
Federal Income Tax Considerations"
and "ERISA Considerations" prior
to tendering Old Capital
Securities in the Exchange Offer.
Certain ERISA Considerations . . Prospective holders of the New
Capital Securities should review
the information set forth under
"ERISA Considerations" prior to
acquiring an interest in the New
Capital Securities.
THE NEW CAPITAL SECURITIES
Securities Offered . . . . . . . Up to $30,000,000 aggregate
Liquidation Amount of the Trust's
New Capital Securities which have
been registered under the
Securities Act (Liquidation Amount
$1,000 per New Capital Security).
The New Capital Securities will be
issued, and the Old Capital
Securities were issued, under the
Trust Agreement. The New Capital
Securities and any Old Capital
Securities which remain
outstanding after consummation of
the Exchange Offer will vote
together as a single class for
purposes of determining whether
holders of the requisite
percentage in outstanding
Liquidation Amount thereof have
taken certain actions or exercised
certain rights under the Trust
Agreement. See "Description of
New Securities--Description of New
Capital Securities--Voting Rights;
Amendment of the Trust Agreement."
The terms of the New Capital
Securities are identical in all
material respects to the terms of
the Old Capital Securities, except
that the New Capital Securities
have been registered under the
Securities Act and will not be
subject to the $100,000 minimum
Liquidation Amount transfer
restriction and certain other
restrictions on transfer
applicable to the Old Capital
Securities and will not provide
for any increase in the
Distribution rate thereon. See
"The Exchange Offer--Purpose of
the Exchange Offer," "Description
of New Securities" and
"Description of Old Securities."
Distribution Dates . . . . . . . January 31 and July 31 of each
year, commencing July 31, 1997.
Extension Periods . . . . . . . . So long as no Debenture Event of
Default (as defined herein) has
occurred and is continuing,
Distributions on the New Capital
Securities will be deferred for
the duration of any Extension
Period elected by the Corporation
with respect to the payment of
interest on the New Junior
Subordinated Debentures. No
Extension Period will exceed 10
consecutive semi-annual periods or
extend beyond the Stated Maturity
Date. See "Description of New
Securities--Description of New
Junior Subordinated Debentures--
Option to Extend Interest Payment
Date" and "Certain United States
Federal Income Tax Considerations-
-Interest Income and Original
Issue Discount."
Ranking . . . . . . . . . . . . . The New Capital Securities will
rank pari passu, and payments
thereon will be made pro rata,
with the Old Capital Securities
and the Common Securities except
as described under "Description of
New Securities-- Description of
New Capital Securities--
Subordination of Common
Securities." The New Junior
Subordinated Debentures will rank
pari passu with the Old Junior
Subordinated Debentures and all
other junior subordinated
debentures (if any) issued by the
Corporation (collectively, the
"Other Debentures") and sold (if
at all) to other trusts (if any)
established by the Corporation, in
each case similar to the Trust
(the "Other Trusts"), and will be
unsecured and subordinate and rank
junior in right of payment to all
Senior Indebtedness to the extent
and in the manner set forth in the
Indenture. See "Description of
New Securities--Description of New
Junior Subordinated Debentures."
The New Guarantee will rank pari
passu with the Old Guarantee and
all other guarantees (if any)
issued by the Corporation with
respect to capital securities (if
any) issued by Other Trusts
(collectively, the "Other
Guarantees") and will be unsecured
and subordinate and rank junior in
right of payment to all Senior
Indebtedness to the extent and in
the manner set forth in the New
Guarantee. See "Description of
New Securities--Description of New
Guarantee."
Redemption . . . . . . . . . . . The Trust Securities are subject
to mandatory redemption in a Like
Amount, (i) in whole but not in
part, on the Stated Maturity Date
upon repayment of the Junior
Subordinated Debentures, (ii) in
whole but not in part, at any time
prior to January 31, 2007,
contemporaneously with the
optional prepayment of the Junior
Subordinated Debentures by the
Corporation upon the occurrence
and continuation of a Special
Event and (iii) in whole or in
part, at any time on or after
J a n u a r y 3 1 , 2 0 0 7 ,
contemporaneously with the
optional prepayment by the
Corporation of the Junior
Subordinated Debentures, in each
case at the applicable Redemption
Price. See "Description of New
Securities--Description of New
Capital Securities-- Redemption."
Rating . . . . . . . . . . . . . The New Capital Securities are
expected to be rated "BBB-" by
Thomson BankWatch, Inc.
Voting Rights . . . . . . . . . . Holders of New Capital Securities
will have limited voting rights
relating generally to the
modification of the New Capital
Securities and the New Guarantee
and the exercise of the Trust's
rights as the holder of the New
Junior Subordinated Debentures.
Holders of New Capital Securities
will not be entitled to appoint,
remove or replace the
Administrative Trustees at any
time or the Property Trustee or
the Delaware Trustee except upon
the occurrence of certain events
described herein. See
"Description of New Securities--
Description of New Capital
Securities--Voting Rights;
Amendment of the Trust Agreement"
and "--Removal of Issuer
Trustees."
Absence of Market for the New The New Capital Securities will be
Capital Securities . . . . . . . a new issue of securities for
which there currently is no
market. Although M.A. Schapiro &
Co., Inc. (the "Initial
Purchaser") has informed the
Corporation and the Trust that it
currently intends to make a market
in the New Capital Securities, it
is not obligated to do so, and any
such market making may be
discontinued at any time without
notice. Accordingly, there can be
no assurance as to the development
or liquidity of any market for the
New Capital Securities. The Trust
and the Corporation do not intend
to apply for listing of the New
Capital Securities on any
securities exchange or for
quotation through NASDAQ. See
"Plan of Distribution."
RISK FACTORS
Prospective investors should consider carefully, in addition to the
other information contained in this Prospectus, and incorporated by reference
herein, the following factors in connection with the Exchange Offer and the
New Capital Securities offered hereby.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR
SUBORDINATED DEBENTURES
The obligations of the Corporation under the Guarantee and the Junior
Subordinated Debentures will be unsecured and subordinate and rank junior in
right of payment to all Senior Indebtedness. In addition, in the case of a
bankruptcy or insolvency proceeding involving the Corporation, the
Corporation's obligations under the Guarantee will also be subordinate and
rank junior in right of payment to all liabilities (other than Other
Guarantees) of the Corporation. At March 31, 1997, the Corporation had no
outstanding Senior Indebtedness. Because the Corporation is a bank holding
company, the right of the Corporation to participate in any distribution of
assets of any subsidiary upon such subsidiary's liquidation or reorganization
or otherwise (and thus the ability of holders of the Capital Securities to
benefit indirectly from such distribution) is subject to the prior claims of
creditors of that subsidiary, except to the extent that the Corporation may
itself be recognized as a creditor of that subsidiary. At March 31, 1997,
Community Bank had an aggregate (excluding deposits and liabilities owed to
the Corporation) of approximately $1,108 million of interest-bearing deposits
and other borrowings outstanding. Accordingly, the Junior Subordinated
Debentures will be effectively subordinated to all existing and future
liabilities of Community Bank, and holders of Junior Subordinated Debentures
should look only to the assets of the Corporation for payments on the Junior
Subordinated Debentures. In addition, Community Bank is subject to certain
restrictions imposed by state and federal law on any loans or extensions of
credit to, investments in or asset purchases from, the Corporation or its
non-banking affiliates. Such transactions by Community Bank are generally
limited in amount as to the Corporation and as to each of such other
affiliates to 10% of Community Bank's capital and surplus and as to the
Corporation and all of such other affiliates to an aggregate of 20% of
Community Bank's capital and surplus. Such restrictions also prevent the
Corporation and such other affiliates from borrowing from Community Bank
unless the loans are secured in specific amounts. In addition, there are
state and federal regulatory limitations on the payment of dividends directly
or indirectly to the Corporation from Community Bank. Federal and state
regulatory agencies also have the authority to limit payment of dividends by
Community Bank based on the capital adequacy of Community Bank and the safety
and soundness of Community Bank following payment of the proposed dividend.
None of the Indenture, the Guarantee or the Trust Agreement places any
limitation on the amount of indebtedness, including Senior Indebtedness, that
may be incurred by the Corporation. See "Description of New Securities--
Description of New Guarantee--Status of New Guarantee" and "--Description of
New Junior Subordinated Debentures--Subordination."
The ability of the Trust to pay amounts due on the Capital Securities is
solely dependent upon the Corporation making payments on the Junior
Subordinated Debentures as and when required.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSIDERATIONS
So long as no Debenture Event of Default shall have occurred and be
continuing, the Corporation will have the right under the Indenture to defer
payments of interest on the Junior Subordinated Debentures at any time or
from time to time for a period not exceeding 10 consecutive semi-annual
periods with respect to each Extension Period, provided that no Extension
Period may extend beyond the Stated Maturity Date. As a consequence of any
such deferral, semi-annual Distributions on the Trust Securities by the Trust
will be deferred (and the amount of Distributions to which holders of the
Trust Securities are entitled will accumulate additional Distributions
thereon at the rate of 9.75% per annum, compounded semi-annually, but not
exceeding the interest rate then accruing on the Junior Subordinated
Debentures) from the respective payment dates for such Distributions during
the relevant Extension Period.
The Corporation may extend any existing Extension Period, provided that
such extension does not cause such Extension Period to exceed 10 consecutive
semi-annual periods or to extend beyond the Stated Maturity Date. Upon the
expiration of any Extension Period and the payment of all interest then
accrued and unpaid on the Junior Subordinated Debentures (together with
interest thereon at the annual rate of 9.75%, compounded semi-annually, to
the extent permitted by applicable law), the Corporation may elect to begin a
new Extension Period, subject to the above requirements. There is no
limitation on the number of times that the Corporation may elect to begin an
Extension Period. See "Description of New Securities--Description of New
Capital Securities--Distributions" and "--Description of New Junior
Subordinated Debentures--Option to Extend Interest Payment Date."
Should the Corporation exercise its right to defer payments of interest
on the Junior Subordinated Debentures, each holder of Trust Securities will
be required to accrue income (as original issue discount ("OID")) in respect
of the deferred stated interest allocable to its Trust Securities for United
States federal income tax purposes, which will be allocated but not
distributed to holders of Trust Securities. As a result, each such holder of
Capital Securities will recognize income for United States federal income tax
purposes in advance of the receipt of cash and will not receive the cash
related to such income from the Trust if the holder disposes of the Capital
Securities prior to the record date for the payment of Distributions
thereafter. See "Certain United States Federal Income Tax Considerations--
Interest Income and Original Issue Discount" and "--Sales of Capital
Securities."
Should the Corporation elect to exercise its right to defer payments of
interest on the Junior Subordinated Debentures in the future, the market
price of the Capital Securities is likely to be affected. A holder that
disposes of its Capital Securities during an Extension Period, therefore,
might not receive the same return on its investment as a holder that
continues to hold its Capital Securities. In addition, merely as a result of
the existence of the Corporation's right to defer payments of interest on the
Junior Subordinated Debentures, the market price of the Capital Securities
may be more volatile than the market prices of other securities on which OID
accrues and that are not subject to such deferrals.
SPECIAL EVENT REDEMPTION
Upon the occurrence and continuation of a Special Event (as defined
under "Description of New Securities--Description of New Junior Subordinated
Debentures--Special Event Prepayment"), the Corporation will have the right
to prepay the Junior Subordinated Debentures in whole (but not in part) prior
to January 31, 2007, at the Special Event Prepayment Price within 90 days
following the occurrence of such Special Event and therefore cause a
mandatory redemption of the Trust Securities at the Special Event Redemption
Price. The exercise of such right is subject to the Corporation having
received the prior approval of the Federal Reserve, if then required under
applicable guidelines or policies thereof. See "Description of New
Securities--Description of New Capital Securities--Redemption."
POSSIBLE TAX LAW CHANGES AFFECTING THE CAPITAL SECURITIES
On February 6, 1997, as part of the Clinton Administration's fiscal 1998
Budget Proposal, the Treasury Department proposed legislation (the "Proposed
Legislation") which would, among other things, generally deny corporate
issuers a deduction for interest in respect of the debt obligations, such as
the New Junior Subordinated Debentures, issued on or after the date "of first
committee action," if such debt obligations have a maximum term in excess of
15 years and are not shown as indebtedness on the issuer's applicable
consolidated balance sheet. On June 9, 1997, Representative William Archer,
Chairman of the House Ways and Means Committee (the "House Committee"),
released the House Committee Chairman's proposed tax provisions (the "House
Committee Chairman's Proposals") to be included in the 1997 budget
reconciliation bill. In addition, on June 17, 1997, Senator William Roth,
Chairman of the Senate Finance Committee (the "Senate Committee"), released the
Senate Committee Chairman's proposed tax provisions (the "Senate Committee
Chairman's Proposals") to be included in the 1997 budget reconciliation bill.
The Proposed Legislation was not included in either the House Committee
Chairman's Proposals or the Senate Committee Chairman's Proposals. If
legislation similar to the Proposed Legislation were enacted, there can be no
assurance that it will not adversely affect the ability of the Corporation
to deduct the interest payable on the Junior Subordinated Debentures. Such
a change could give rise to a Tax Event, which would permit the Corporation to
cause a redemption of the Trust Securities at the Special Event Redemption
Price by electing to prepay the Junior Subordinated Debentures at the Special
Event Prepayment Price. See "Certain United States Federal Income Tax
Considerations--Proposed Tax Legislation."
POSSIBLE ADVERSE EFFECT ON MARKET PRICES
There can be no assurance as to the market prices for New Capital
Securities or New Junior Subordinated Debentures distributed to the holders
of New Capital Securities if a termination of the Trust were to occur.
Accordingly, the New Capital Securities or the New Junior Subordinated
Debentures may trade at a discount from the price that the investor paid to
purchase the Old Capital Securities. Because holders of Capital Securities
may receive Junior Subordinated Debentures in liquidation of the Trust and
because Distributions are otherwise limited to payments on the Junior
Subordinated Debentures, prospective purchasers of New Capital Securities are
also making an investment decision with regard to the New Junior Subordinated
Debentures and should carefully review all of the information regarding the
New Junior Subordinated Debentures contained herein. See "Description of New
Securities--Description of New Junior Subordinated Debentures."
RIGHTS UNDER THE GUARANTEE
The Chase Manhattan Bank will act as Guarantee Trustee and will hold the
Guarantee for the benefit of the holders of the Capital Securities. The
Chase Manhattan Bank will also act as Property Trustee and as Debenture
Trustee under the Indenture. The Chase Manhattan Bank Delaware will act as
Delaware Trustee under the Trust Agreement. The Old Guarantee guarantees,
and the New Guarantee will guarantee, as the case may be, to the holders of
the Capital Securities the following payments, to the extent not paid by the
Trust: (i) any accumulated and unpaid Distributions required to be paid on
the Capital Securities, to the extent that the Trust has funds on hand
legally available therefor at such time, (ii) the applicable Redemption Price
with respect to any Capital Securities called for redemption, to the extent
that the Trust has funds on hand legally available therefor at such time, and
(iii) upon a voluntary or involuntary termination and liquidation of the
Trust (unless the Junior Subordinated Debentures are distributed to holders
of the Capital Securities), the lesser of (a) the aggregate of the
Liquidation Amount and all accumulated and unpaid Distributions to the date
of payment, to the extent that the Trust has funds on hand legally available
therefor at such time and (b) the amount of assets of the Trust remaining
available for distribution to holders of the Capital Securities upon a
termination and liquidation of the Trust. The holders of a majority in
Liquidation Amount of the Capital Securities will have the right to direct
the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee in respect of the Guarantee or to direct
the exercise of any trust power conferred upon the Guarantee Trustee. Any
holder of the Capital Securities may institute a legal proceeding directly
against the Corporation to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Trust, the Guarantee Trustee
or any other person or entity. If the Corporation defaults on its obligation
to pay amounts payable under the Junior Subordinated Debentures, the Trust
will not have sufficient funds for the payment of Distributions or amounts
payable on liquidation of the Trust or redemption of the Capital Securities
or otherwise, and, in such event, holders of the Capital Securities will not
be able to rely upon the Guarantee for payment of such amounts. Instead, in
the event a Debenture Event of Default shall have occurred and be continuing
and such event is attributable to the failure of the Corporation to pay
principal of (or premium, if any) or interest on the Junior Subordinated
Debentures on the payment date on which such payment is due and payable, then
a holder of Capital Securities may institute a legal proceeding directly
against the Corporation for enforcement of payment to such holder of the
principal of (or premium, if any) or interest on such Junior Subordinated
Debentures having a principal amount equal to the Liquidation Amount of the
Capital Securities of such holder (a "Direct Action"). Notwithstanding any
payments made to a holder of Capital Securities by the Corporation in
connection with a Direct Action, the Corporation shall remain obligated to
pay the principal of (and premium, if any) and interest on the Junior
Subordinated Debentures, and the Corporation shall be subrogated to the
rights of the holder of such Capital Securities with respect to payments on
the Capital Securities to the extent of any payments made by the Corporation
to such holder in any Direct Action. Except as described herein, holders of
Capital Securities will not be able to exercise directly any other remedy
available to the holders of the Junior Subordinated Debentures or to assert
directly any other rights in respect of the Junior Subordinated Debentures.
See "Description of New Securities--Description of New Junior Subordinated
Debentures--Enforcement of Certain Rights by Holders of New Capital
Securities," "--Description of New Junior Subordinated Debentures--Debenture
Events of Default" and "--Description of New Guarantee." The Trust Agreement
provides that each holder of Capital Securities by acceptance thereof agrees
to the provisions of the Indenture.
LIMITED VOTING RIGHTS
Holders of Capital Securities will generally have limited voting rights
relating only to the modification of the Capital Securities, the termination
or liquidation of the Trust, and the exercise of the Trust's rights as holder
of Junior Subordinated Debentures. Holders of Capital Securities will not be
entitled to vote to appoint, remove or replace the Administrative Trustees at
any time or the Property Trustee or the Delaware Trustee, except upon the
occurrence of certain events described herein, and such voting rights are
vested exclusively in the holder of the Common Securities. The Property
Trustee, the Administrative Trustees and the Corporation may amend the Trust
Agreement without the consent of holders of Capital Securities to ensure that
the Trust will be classified for United States federal income tax purposes as
a grantor trust even if such action adversely affects the interests of such
holders. See "Description of New Securities--Description of New Capital
Securities--Voting Rights; Amendment of the Trust Agreement" and "--Removal
of Issuer Trustees."
CONSEQUENCES OF A FAILURE TO EXCHANGE OLD CAPITAL SECURITIES
The Old Capital Securities have not been registered under the Securities
Act or any state securities laws and therefore may not be offered, sold or
otherwise transferred except in compliance with the registration requirements
of the Securities Act and any other applicable securities laws, or pursuant
to an exemption therefrom or in a transaction not subject thereto, and in
each case in compliance with certain other conditions and restrictions. Old
Capital Securities which remain outstanding after consummation of the
Exchange Offer will continue to bear a legend reflecting such restrictions on
transfer. In addition, upon consummation of the Exchange Offer, holders of
Old Capital Securities which remain outstanding will not be entitled to any
rights to have such Old Capital Securities registered under the Securities
Act or to any similar rights under the Registration Rights Agreement (subject
to certain limited exceptions). The Corporation and the Trust do not intend
to register under the Securities Act any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer (subject to such limited
exceptions, if applicable). To the extent that Old Capital Securities are
tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered Old Capital Securities could be adversely affected.
The New Capital Securities and any Old Capital Securities which remain
outstanding after consummation of the Exchange Offer will vote together as a
single class for purposes of determining whether holders of the requisite
percentage in outstanding Liquidation Amount thereof have taken certain
actions or exercised certain rights under the Trust Agreement. See
"Description of New Securities--Description of New Capital Securities--Voting
Rights; Amendment of the Trust Agreement."
The Old Capital Securities provide, among other things, that, if a
registration statement relating to the Exchange Offer has not been filed by
June 28, 1997 and declared effective by July 28, 1997, the Distribution rate
borne by the Old Capital Securities, currently 9.75% per annum, commencing on
July 29, 1997 will increase by 0.25% per annum until the Exchange Offer is
consummated. Upon consummation of the Exchange Offer, holders of Old Capital
Securities will not be entitled to any increase in the Distribution rate
thereon or any further registration rights under the Registration Rights
Agreement, except under limited circumstances. See "Description of Old
Securities."
ABSENCE OF PUBLIC MARKET
The Old Capital Securities were issued to, and the Corporation believes
the Old Capital Securities are currently owned by, a relatively small number
of beneficial owners. The Old Capital Securities have not been registered
under the Securities Act and will be subject to restrictions on
transferability if they are not exchanged for the New Capital Securities.
Although the New Capital Securities generally may be resold or otherwise
transferred by the holders (who are not affiliates of the Corporation or the
Trust) without compliance with the registration requirements under the
Securities Act, they will constitute a new issue of securities with no
established trading market. Old Capital Securities may be transferred by the
holders thereof only in blocks having a Liquidation Amount of not less than
$100,000 (100 Old Capital Securities). New Capital Securities may be
transferred by the holders thereof in blocks having a Liquidation Amount of
$1,000 (one New Capital Security) or integral multiples thereof. The
Corporation and the Trust have been advised by the Initial Purchaser that the
Initial Purchaser presently intends to make a market in the New Capital
Securities. However, the Initial Purchaser is not obligated to do so and any
market-making activity with respect to the New Capital Securities may be
discontinued at any time without notice. In addition, such market-making
activity will be subject to the limits imposed by the Securities Act and the
Exchange Act and may be limited during the Exchange Offer. Accordingly, no
assurance can be given that an active public or other market will develop for
the New Capital Securities or the Old Capital Securities or as to the
liquidity of or the trading market for the New Capital Securities or the Old
Capital Securities. If an active public market does not develop, the market
price and liquidity of the New Capital Securities may be adversely affected.
If a public trading market develops for the New Capital Securities,
future trading prices will depend on many factors, including, among other
things, prevailing interest rates, the Corporation's results and the market
for similar securities. Depending on prevailing interest rates, the market
for similar securities and other factors, including the financial condition
of the Corporation, the New Capital Securities may trade at a discount.
Notwithstanding the registration of the New Capital Securities in the
Exchange Offer, holders who are Affiliates of the Corporation or the Trust
may publicly offer for sale or resell the New Capital Securities only in
compliance with the provisions of Rule 144 under the Securities Act.
Each broker-dealer that receives New Capital Securities for its own
account in exchange for Old Capital Securities, where such Old Capital
Securities were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver
a prospectus in connection with any resale of such New Capital Securities.
See "Plan of Distribution."
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges
of the Corporation for the respective periods indicated.
<TABLE>
<CAPTION>
Three Months
Ended
March 31,
1997 Years Ended December 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges . . 2.71x 4.79x 4.28x 5.01x 17.53x 22.33x
</TABLE>
For purposes of computing the ratios of earnings to fixed charges,
earnings represent net income before extraordinary items plus applicable
income taxes and fixed charges. Fixed charges include gross interest expense
(other than on deposits) and the proportion deemed representative of the
interest factor of rent expense.
USE OF PROCEEDS
Neither the Corporation nor the Trust will receive any cash proceeds
from the issuance of the New Capital Securities offered hereby. In
consideration for issuing the New Capital Securities in exchange for Old
Capital Securities as described in this Prospectus, the Trust will receive
Old Capital Securities in like Liquidation Amount. The Old Capital
Securities surrendered in exchange for the New Capital Securities will be
retired and cancelled.
The proceeds to the Trust (without giving effect to expenses of the
offering payable by the Corporation) from the offering of the Old Capital
Securities was $29,797,500. All of the proceeds from the sale of Old Capital
Securities were invested by the Trust in the Junior Subordinated Debentures.
The Corporation used a portion of the net proceeds from the sale of the Old
Junior Subordinated Debentures to redeem all 45,000 shares of its 9.00%
Cumulative Perpetual Preferred Stock, Series A at $104 per share plus $4.00
per share in accrued dividends, effective March 10, 1997. The Corporation
intends to use the remaining net proceeds for general corporate purposes,
including the making of advances to its subsidiaries, principally Community
Bank. A portion of such proceeds has been (and may be) used in connection
with the Fleet and KeyBank acquisitions. See "Recent Developments--
Acquisitions." Pending such applications by the Corporation, such net
proceeds may be advanced to Community Bank to be used to pay down existing
short-term borrowings or invested in interest-bearing securities.
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization
of the Corporation as of December 31, 1996, as adjusted to give effect to the
issuance of the Old Securities and to the application of the proceeds
thereof. The following data should be read in conjunction with the financial
information incorporated herein by reference. See "Incorporation of Certain
Documents by Reference." The issuance of the New Securities in the Exchange
Offer will have no effect on the capitalization of the Corporation.
<TABLE>
<CAPTION>
December 31, 1996
Actual As Adjusted
(in thousands)
<S> <C> <C>
Term borrowings . . . . . . . . . . . . . . . . . . . . . . . $100,000 $100,000
Corporation obligated mandatorily redeemable preferred
securities of subsidiary trust holding solely subordinated
debentures of the Corporation (net of issuance discount)(1) . -- 29,798
Shareholders' equity:(2)
Preferred stock, $100 stated value, 45,000 shares
authorized, issued and outstanding(3) . . . . . . . . . 4,500 --
Common stock, $1.00 stated value, 20,000,000 shares
authorized, 7,474,406 shares issued and outstanding . . 7,474 7,474
Surplus . . . . . . . . . . . . . . . . . . . . . . . . 30,782 30,602
Undivided profits . . . . . . . . . . . . . . . . . . . 65,691 65,691
Unrealized gains (losses) on available for sale 948 948
securities . . . . . . . . . . . . . . . . . . . . . . .
Shares issued under employee stock plan--unearned . . . (43) (43)
Total stockholders' equity . . . . . . . . . . . . . . 109,352 104,672
Total capitalization . . . . . . . . . . . . . . . . . $209,352 $234,470
</TABLE>
__________________
(1) Reflects the Old Capital Securities. The Trust is a subsidiary of the
Corporation and holds the Old Junior Subordinated Debentures as its sole
asset.
(2) The common stock and surplus accounts have been adjusted to reflect a
two-for-one stock split, effected as a stock dividend on March 12, 1997
to shareholders of record on February 10, 1997. In conjunction with the
stock split, the $1.25 par value common stock was changed to no par with
a $1.00 stated value, and the number of authorized shares increased from
5,000,000 to 20,000,000.
(3) Reflects the Corporation's March 10, 1997 redemption of the 45,000
shares of preferred stock at $104 per share, plus $4.00 per share in
accrued dividends, utilizing a portion of the proceeds from the Old
Junior Subordinated Debentures.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table set forth selected consolidated historical financial
data of the Corporation as of and for each of the years in the five-year
period ended December 31, 1996 (the "Year End Data") and the three months
ended March 31, 1997 and March 31, 1996, (the "Quarterly Data"). The
historical "Income Statement Data", "End of Period Balance Sheet Data", "Per
Share Data", "Outstanding Shares", and certain "Selected Ratios" contained in
the Year End Data are derived from financial statements which have been
audited by Coopers & Lybrand L.L.P., independent public accountants. All
other information contained in the Year End Data and all Quarterly Data are
unaudited.
<TABLE>
<CAPTION> Three Months ended
March 31, Year ended December
1997 1996 1996 1995 1994 1993 1992
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Interest income . . . . . $ 27,048 $ 22,677 $ 97,688 $83,387 $61,575 $ 54,642 $ 56,345
Interest expense . . . . 12,678 9,472 42,422 36,307 22,130 17,733 21,608
Net interest income 14,370 13,205 55,266 47,080 39,445 36,909 34,737
Provision for possible
loan losses . . . . . . . 730 588 2,897 1,765 1,702 1,506 2,727
Net interest income
after provision for 13,640 12,617 52,369 45,315 37,743 35,403 32,010
possible loan losses
Non-interest income . . . 2,326 1,953 8,874 6,558 5,120 4,764 5,082
Non-interest expense . . 10,179 9,252 37,450 33,019 26,498 24,827 26,447
Income before income 5,787 5,318 23,793 18,854 16,365 15,340 10,645
taxes . . . . . . .
Provision for income taxes 2,122 2,180 9,660 7,384 6,256 5,765 3,139
Net income . . . . . $ 3,665 $ 3,138$ 14,133$ 11,470 $ 10,109 $ 9,575 $ 7,506
END OF PERIOD BALANCE
SHEET DATA:
Total Assets . . . . . . $1,395,284 $1,208,127$1,343,865$1,152,045 $ 915,501 $ 713,053 $ 669,274
Net Loans . . . . . . . . 674,178 576,495 652,474 560,151 483,079 417,871 362,356
Earning Assets . . . . . 1,283,340 1,078,762 1,231,0581,034,183 861,599 671,415 625,342
Total Deposits . . . . . 1,061,061 1,059,508 1,027,2131,016,946 679,638 588,315 557,915
Long-term debt and capital 100,000 25,550 100,000 25,550 550 592 139
lease . . . .
Shareholders' equity . . 106,244 101,488 109,352 100,060 66,290 61,986 53,417
AVERAGE BALANCE SHEET
DATA:
Total Assets . . . . . . $1,373,667 $1,173,828$1,251,826$1,054,610$ 808,948 $ 684,863 $ 650,804
Net Loans . . . . . . . . 661,724 569,267 602,717 519,762 446,135 382,680 351,241
Earning Assets . . . . . 1,269,910 1,063,977 1,147,455 975,257 756,871 640,070 601,636
Total Deposits . . . . . 1,038,433 1,035,593 1,032,169 871,050 651,479 598,860 585,571
Long-term debt and capital 100,000 25,550 57,006 3,399 557 256 379
lease . . . .
Shareholders' equity . . 108,887 100,223 103,398 84,229 64,033 57,298 50,868
COMMON PER SHARE DATA:(2)
Net Income . . . . . . . $ 0.47 $ 0.41$ 1.83 $ 1.70 $ 1.80 $ 1.72 $ 1.38
Cash dividend declared . 0.18 0.17 0.69 0.62 0.57 0.52 0.45
Period-end book value . . 14.13 13.17 14.03 12.99 11.89 11.28 9.91
Period-end tangible book 10.07 8.65 9.85 8.37 10.80 11.20 9.79
value . . . . . . . . . .
OUTSTANDING COMMON
SHARES:
Average during period . . 7,620,333 7,427,433 7,482,518 6,522,410 5,629,420 5,576,660 5,444,186
End of period . . . . . . 7,518,262 7,364,630 7,474,406 7,359,250 5,576,300 5,496,636 5,393,520
SELECTED RATIOS:
Return on average total 1.08% 1.08% 1.13% 1.09% 1.25% 1.40% 1.15%
assets(1) . . . . . . . .
Return on average 13.79% 12.76% 13.88% 13.85% 15.79% 16.71% 14.76%
shareholders' equity(1) .
Common dividend payout 36.93% 38.72% 37.27% 34.79% 31.24% 29.67% 32.26%
ratio . . . . . . . . . .
Net interest margin
(taxable equivalent 4.62% 5.04% 4.88% 4.88% 5.30% 5.90% 5.82%
basis)(1) . . . . . . . .
Non-interest income to
average assets (excluding 0.69% 0.67% 0.71% 0.64% 0.69% 0.70% 0.75%
security gains and
losses)(1) . . . . . . .
Efficiency ratio . . . . 60.60% 60.60% 58.00% 60.82% 57.94% 58.45% 65.48%
Non-performing assets to
period-end total loans and 0.60% 0.54% 0.55% 0.47% 0.72% 0.73% 0.67%
other real estate owned .
Allowance for loan losses
to period-end loans . . . 1.25% 1.25% 1.25% 1.25% 1.30% 1.37% 1.37%
Allowance for loan losses
to period-end non- 255.00% 273.00% 285.58% 349.69% 192.79% 238.67% 310.05%
performing loans . . . .
Allowance for loan losses
to period-end non- 208.85% 228.56% 224.33% 267.40% 179.67% 186.06% 205.72%
performing assets . . . .
Net charge-offs
(recoveries) to average 0.28% 0.27% 0.29% 0.21% 0.25% 0.20% 0.59%
total loans . . . . .
Average net loans to 63.72% 54.97% 58.39% 59.67% 68.48% 63.90% 59.98%
average total deposits .
Period-end total
shareholders' equity to 7.61% 8.40% 8.14% 8.69% 7.24% 8.69% 7.98%
period end assets . . . .
Tier I capital to risk- 13.95% 10.67% 10.70% 10.62% 12.43% 14.87% 13.13%
adjusted assets . . . . .
Total risk-based capital
to risk-adjusted assets . 15.06% 11.81% 11.83% 11.76% 13.68% 16.12% 14.37%
Tier I leverage ratio . . 7.86% 5.75% 5.88% 5.83% 6.80% 8.46% 7.90%
Ratio of earnings to fixed
charges:
Including interest on 145.42% 155.82% 155.77% 151.63% 173.40% 185.75% 148.72%
deposits . . . . . . . .
Excluding interest on 271.37% 1338.81% 478.68% 428.30% 500.78% 1,753.02% 2,233.27%
deposits . . . . . . . .
</TABLE>
____________________
(1) Annualized for the three months ended March 31, 1997 and 1996.
(2) Adjusted to reflect two-for-one stock split. See "Capitalization."
COMMUNITY CAPITAL TRUST I
The Trust is a statutory business trust created under Delaware law
pursuant to the filing of a certificate of trust with the Delaware Secretary
of State on January 29, 1997. The Trust exists for the exclusive purposes of
(i) issuing and selling the Trust Securities, (ii) using the proceeds from
the sale of Trust Securities to acquire the Junior Subordinated Debentures
and, (iii) engaging in only those other activities necessary, advisable or
incidental thereto (such as registering the transfer of the Trust
Securities). The Junior Subordinated Debentures will be the sole assets of
the Trust, and payments under the Junior Subordinated Debentures will be the
sole revenues of the Trust. All of the Common Securities are owned by the
Corporation. The Common Securities will rank pari passu, and payments will be
made thereon pro rata, with the Capital Securities, except that upon the
occurrence and continuance of an event of default under the Trust Agreement
resulting from a Debenture Event of Default, the rights of the Corporation as
holder of the Common Securities to payments in respect of Distributions and
payments upon liquidation, redemption or otherwise will be subordinated to
the rights of the holders of the Capital Securities. See "Description of New
Capital Securities--Subordination of Common Securities." The Corporation has
acquired Common Securities in a Liquidation Amount equal to at least 3% of
the total capital of the Trust. The Trust has a term of 31 years, but may
terminate earlier as provided in the Trust Agreement. The Trust's business
and affairs are conducted by its trustees, each appointed by the Corporation
as holder of the Common Securities. The trustees for the Trust are The Chase
Manhattan Bank, as the Property Trustee (the "Property Trustee"), The Chase
Manhattan Bank Delaware, as the Delaware Trustee (the "Delaware Trustee"),
and three individual trustees (the "Administrative Trustees") who are
employees or officers of or affiliated with the Corporation (collectively,
the "Issuer Trustees"). The Chase Manhattan Bank, as Property Trustee, will
act as sole indenture trustee under the Trust Agreement. The Chase Manhattan
Bank will also act as indenture trustee under the Guarantee and the
Indenture. See "Description of New Securities--Description of New Guarantee"
and "--Description of New Junior Subordinated Debentures." The holder of the
Common Securities or, if an Event of Default under the Trust Agreement has
occurred and is continuing, the holders of a majority in Liquidation Amount
of the Capital Securities will be entitled to appoint, remove or replace the
Property Trustee and/or the Delaware Trustee. In no event will the holders of
the Capital Securities have the right to vote to appoint, remove or replace
the Administrative Trustees; such voting rights will be vested exclusively in
the holder of the Common Securities. The duties and obligations of each
Issuer Trustee are governed by the Trust Agreement. The Corporation, as
issuer of the Junior Subordinated Debentures, will pay all fees, expenses,
debts and obligations (other than the Trust's obligations to holders of Trust
Securities with respect to payments of principal, interest and premium, if
any) related to the Trust and the offering and exchange of the Capital
Securities and will pay, directly or indirectly, all ongoing costs, expenses
and liabilities of the Trust. The principal executive office of the Trust is
5790 Widewaters Parkway, DeWitt, New York 13214.
COMMUNITY BANK SYSTEM, INC.
Community Bank System, Inc., a Delaware corporation (the
"Corporation), is a bank holding company headquartered in DeWitt, New York
which owns all of the outstanding stock of its principal operating subsidiary
Community Bank, National Association ("Community Bank"). Community Bank is a
full service commercial bank providing a range of banking services through
its two regional offices in Canton, New York and Olean, New York, and through
a total of 49 customer facilities in the counties of St. Lawrence, Jefferson,
Lewis, Cayuga, Seneca, Ontario, Oswego, Oneida, Wayne, Yates, Onondaga,
Allegany, Cattaraugus, Tioga and Steuben. These counties are grouped by
Community Bank into three distinct banking markets: Northern New York, Finger
Lakes Region, and the Southern Tier (which is further divided into the Olean
and Corning submarkets).
Community Bank has expanded its market area and customer base
through a series of branch acquisitions over the past several years. Most
notably, in July 1995, Community Bank acquired fifteen branches from The
Chase Manhattan Bank, N.A. ("Chase") having $383 million in deposits. Three
of these branches, having $43 million in deposits, which were outside of
Community Bank's core market areas, were subsequently sold to another
financial institution in December 1995. In addition, the Corporation acquired
Benefit Plans Administrators ("BPA"), a pension administration and consulting
firm located in Utica, New York, in July 1996 to help expand its product
offerings. Effective June 16, 1997, Community Bank acquired certain assets
and assumed certain liabilities in connection with eight KeyBank branch
locations in upstate New York. In addition, Community Bank has entered into
a Purchase and Assumption Agreement with Fleet Bank for the acquisition of
certain assets and the assumption of certain liabilities relating to twelve
Fleet Bank branch locations in upstate New York. See "Recent Developments--
Acquisitions."
As of December 31, 1996, the Corporation had consolidated assets of
$1.3 billion, deposits of $1.0 billion and shareholders' equity of $109.4
million. The Corporation's net income for the year ended December 31, 1996
was $14.1 million, or $1.83 per share.
Community Bank offers a broad range of financial services to both
commercial and retail customers located in its market area, including
accepting time, demand and savings deposits, and making secured and unsecured
commercial, real estate and consumer loans. Related financial services
provided include a range of trust services and the offering of annuities,
mutual funds and other non-deposit investment products. Community Bank's
lending activities primarily take the form of commercial, agricultural,
consumer and real estate loans and indirect consumer financing. Community
Bank's lending and investment activities are funded principally by deposits
gathered through its retail branch office network.
Consistent with its commitment to serving the financial needs of
customers in the local communities where its offices are located, Community
Bank's marketing efforts are directed primarily toward individuals and small-
to medium-sized businesses. Community Bank's strategy for growth focuses
primarily on the further development of its community-based retail branch
network. As a community-oriented bank, Community Bank's emphasis is on
development of long-term customer relationships, personalized service,
convenient locations, and responding to the specific needs of individuals and
businesses in its market area. The Corporation believes that the local
character of the business environment, knowledge of the customer and customer
needs, and comprehensive retail and small business products, together with
rapid decision-making at the branch and regional level, enable Community Bank
to compete effectively in its market area.
The Corporation is a legal entity separate and distinct from its
subsidiaries. The ability of holders of debt and equity securities of the
Corporation to benefit from the distribution of assets of any subsidiary upon
the liquidation or reorganization of such subsidiary is subordinate to prior
claims of creditors of the subsidiary (including depositors in the case of
banking subsidiaries) except to the extent that a claim of the Corporation as
a creditor may be recognized.
There are various statutory and regulatory limitations of the
extent to which present and future banking subsidiaries of the Corporation
can finance or otherwise transfer funds to the Corporation or its nonbanking
subsidiaries, whether in the form of loans, extensions of credit, investments
or asset purchases.
In addition, there are regulatory limitations on the payment of
dividends directly or indirectly to the Corporation from its bank subsidiary.
Under applicable banking statutes, at December 31, 1996, Community Bank could
have declared additional dividends of approximately $18.3 million. However,
federal and state regulatory agencies also have the authority to limit
further Community Bank's payment of dividends based on other factors, such as
the maintenance of adequate capital for Community Bank, which would reduce
the amount of dividends otherwise payable.
Under the policy of the Federal Reserve, the Corporation is
expected to act as a source of financial strength to Community Bank and to
commit resources to support Community Bank in circumstances where the
Corporation might not do so absent such policy. In addition, any subordinated
loans by the Corporation to Community Bank would also be subordinate in right
of payment to depositors and obligations to general creditors of Community
Bank.
RECENT DEVELOPMENTS
Acquisitions
- ------------
KeyBank Acquisition. On February 10, 1997, Community Bank entered
into a Purchase and Assumption Agreement (the "Key Agreement") with KeyBank.
The Key Agreement provided for the acquisition of certain assets and the
assumption of certain liabilities (the "Key Acquisition") by Community Bank
relating to eight KeyBank branches located in Alfred, Cuba, Wellsville,
Gowanda, Cassadaga, Clymer, Ripley and Sherman, New York (the "Key
Branches").
The Key Acquisition was consummated effective June 16, 1997. At
the closing, and subject to the terms of the Key Agreement: (i) Community
Bank assumed deposit liabilities booked at the Key Branches of approximately
$149.9 million; (ii) Community Bank acquired certain commercial and consumer
loans associated with the Key Branches of approximately $25.0 million; and
(iii) Community Bank acquired real property owned or leased by KeyBank for
operation of the Key Branches and related furniture, equipment and other
fixed operating assets worth, in the aggregate, approximately $1.8 million.
Community Bank did not acquire any nonconforming assets, and did not assume
any material contingent liabilities, in connection with the Key Acquisition.
The Key Acquisition will be accounted for as a purchase and assumption.
Following the Key Acquisition, Community Bank will retain
approximately 50 full-time equivalent KeyBank employees currently associated
with the Key Branches. All such personnel are administrative, clerical,
customer service representatives, or branch managers.
Pursuant to the Key Agreement, neither KeyBank nor any of its
affiliates may solicit any customer of the Key Branches or any middle-market
loan designated in the Key Agreement, except as may occur as a result of
solicitations to the general public. In addition, for two years following
the closing, KeyBank may not open any branch office or install any automatic
teller machine in any city, town or village in which the former Key Branches
are located. Finally, for two years following the closing, KeyBank may not
solicit the employment of any employees of the former Key Branches without
the written consent of Community Bank.
Fleet Bank Acquisition. On March 21, 1997, Community Bank entered
into a Purchase and Assumption Agreement (the "Fleet Agreement") with Fleet
Bank. The Fleet Agreement provides for the acquisition of certain assets and
the assumption of certain liabilities (the "Fleet Acquisition") by Community
Bank relating to twelve Fleet Bank branches located in St. Regis Falls, Old
Forge, Clayton, Watertown (two branches), Lowville, Boonville, Ogdensburg
(two branches), Gouverneur, and Massena (two branches), New York (the "Fleet
Branches").
The closing of the Fleet Acquisition is contingent upon receipt by
the parties of all necessary regulatory approvals, including the approval of
the Office of the Comptroller of the Currency (the "OCC"). It is currently
anticipated that the Fleet Acquisition will close during the third quarter of
1997. At the closing, and subject to the terms of the Fleet Agreement: (i)
Community Bank will assume deposit liabilities booked at the Fleet Branches
which totaled approximately $181.7 million as of December 31, 1996; (ii)
Community Bank will acquire certain commercial, consumer and home equity
loans associated with the Fleet Branches and estimated to be approximately
$71 million as of December 31, 1996; and (iii) Community Bank will acquire
real property and fixed assets related to the Fleet Branches worth, in the
aggregate, approximately $2 million as of December 31, 1996. A loan loss
reserve in the amount of $1 million will be established at the closing date,
equal to approximately 1.42% of the loans to be acquired from Fleet Bank. At
closing, approximately $129,000 worth of acquired loans that are considered
substandard and doubtful will be charged off against the reserve. Community
Bank will not assume any material contingent liabilities in connection with
the Fleet Acquisition. The Fleet Acquisition will be accounted for as a
purchase and assumption.
Following the Fleet Acquisition, Community Bank will retain
approximately 68 full-time equivalent Fleet Bank employees currently
associated with the Fleet Branches. All such personnel are administrative,
clerical, customer service representatives or branch managers.
Pursuant to the Fleet Agreement, for a period of two years
following the closing, Fleet Bank may not directly and actively solicit
deposit or lending customers of the Fleet Branches.
Results of Operations
- ---------------------
For the Year Ended December 31, 1997
As of December 31, 1996, total assets were $1.3 billion, total
deposits were $1.0 billion and shareholders' equity was $109.4 million. Total
assets were up 16.7% from December 31, 1995 due primarily to increases in
investment securities from $468.0 million to $578.6 million and in loans from
$560.2 million to $652.5 million. These earning-asset increases were funded
primarily through increased borrowings. Borrowed funds increased from
$25.6 million at December 31, 1995 to $196.8 million at December 31, 1996,
while deposits increased only $10.3 million or 1.0%. Total shareholders'
equity increased to $109.4 million from $100.1 million, primarily as a result
of retained earnings.
Net income for the year ending December 31, 1996 was $14.1 million,
up 23.2% from the prior year's $11.5 million. Earnings per share rose 7.6% to
$1.83 per share in 1996 from $1.70 in 1995. Greater average shares
outstanding during 1996 is the reason earnings per share showed a smaller
increase over 1995 than net income. For the three months ended December 31,
1996, net income was $3.7 million and earnings per share was $0.48. These
results reflected increases of 18% over the $3.1 million in net income and
20% over the $0.40 per share earned during the three months ended December
31, 1995.
Net interest income for the year ended December 31, 1996 increased
17.4% over 1995 to $55.3 million, primarily due to the increased level of
average earning-assets. Net interest margin for 1996 was 4.86% versus 4.88%
in 1995. For the three-month period ended December 31, 1996, net interest
income rose 6.6% over the comparable period in 1995 to $14.2 million. The
higher level of earning-assets was partially offset by higher funding costs,
largely as a result of increased borrowings, which resulted in a net interest
margin of 4.70% for the three-month period in 1996 versus 5.05% during the
comparable period in 1995.
The provision for possible loan losses was increased to $2.9
million in 1996, up 64.1% from $1.8 million in 1995. This increase was a
result of increased loans outstanding during the year and higher levels of
charge-offs during 1996, especially in the fourth quarter as the Corporation
undertook an intensive review of its nonperforming loans in light of
management's concerns and views about potential economic uncertainties
associated with the latter stages of the current expansionary business cycle.
Net charge-offs for 1996 increased to 0.29% of average loans from 0.21% in
1995. Nonperforming loans were $2.8 million or 0.44% of total loans
outstanding at December 31, 1996, up from $2.0 million and 0.36% at December
31, 1995.
Noninterest income (excluding security gains and losses) rose to
$8.8 million in 1996, up 31.8% over the $6.7 million earned in 1995. The
increase is largely a result of revenues associated with the July 1996
acquisition of BPA, increased commission income from the sale of mutual funds
and a full year impact of an increased customer base gained from the mid-1995
Chase branch purchase. For the three month period ended December 31, 1996,
noninterest income was $2.4 million, up 23.6% from the comparable period in
1995. Higher personal trust fees, in addition to the three major factors
noted above for the full year, contributed to this improvement.
Noninterest expense rose to $37.4 million in 1996, up 13.4% over
1995. The increase is almost entirely due to a full year of expenses related
to the Chase branch purchase and six months of expenses related to the
acquisition of BPA, offset somewhat by reductions in office supply and FDIC
deposit insurance costs and the absence of one-time expenses related to the
Chase branch purchase in 1995. For the three-month period ended December 31,
1996, noninterest expenses were $9.5 million or 1.6% below that during the
comparable period in 1995. The impact of the expense reductions noted above,
plus reduced foreclosure expenses and lower medical costs in the 1996 three-
month period, more than offset the increases due to the acquisition of BPA.
For the First Quarter Ended March 31, 1997
Net income for the first quarter ended March 31, 1997 was $3.7
million, up 16.8% from $3.1 million in the same period in 1996. Earnings per
share rose 14.6% to $0.47 per share in the first quarter of 1997, from $0.41
per share in the first quarter of 1996.
Net interest income for the first quarter ended March 31, 1997
increased 8.8% over the first quarter of 1996 to $14.4 million, primarily due
to the continued increase in average earning assets. Net interest margin for
the first quarter of 1997 was 4.62% versus 5.04% for the first quarter of
1996. Higher borrowing costs during the first quarter of 1997 versus the
first quarter of 1996 contributed to the decrease in the net interest margin.
The provision for possible loan losses was increased to $730,000
during the first quarter of 1997, up 24.1% from $588,000 during the first
quarter of 1996. This increase reflects coverage of a higher level of net
charge-offs and the Corporation's practice of increasing the loan loss
reserve consistent with loan growth, so that the reserve to loans outstanding
ratio is maintained at 1.25%. Net charge-offs for the first quarter of 1997
were $457,000 or 0.28% of average loans outstanding, compared to $378,000 or
0.27% during the first quarter of 1996. Nonperforming loans were $3.3
million or 0.49% of total loans outstanding at March 31, 1997, up from $2.6
million or 0.44% of total loans outstanding at March 31, 1996.
Noninterest income (excluding security gains and losses) rose to
$2.3 million in the first quarter of 1997, up 19.1% over the $2.0 million
earned in the first quarter of 1996. The increase is largely the result of
revenues associated with the Corporation's July 1996 acquisition of BPA, and
increased commission income from the sale of mutual funds.
Noninterest expense rose to $10.2 million in the first quarter of
1997, up 10.0% over the first quarter of 1996. This increase reflects the
operating costs of BPA, annual personnel increases, higher consulting fees,
and higher advertising expense.
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
In connection with the sale of the Old Capital Securities, the
Corporation and the Trust entered into the Registration Rights Agreement with
the Initial Purchaser, pursuant to which the Corporation and the Trust agreed
to file and to use their reasonable efforts to cause to become effective with
the Commission a registration statement with respect to the exchange of the
Old Capital Securities for the New Capital Securities. A copy of the
Registration Rights Agreement has been filed as an Exhibit to the
Registration Statement of which this Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual obligations
of the Corporation and the Trust under the Registration Rights Agreement.
The form and terms of the New Capital Securities are the same as the form and
terms of the Old Capital Securities except that the New Capital Securities
have been registered under the Securities Act and will not be subject to the
$100,000 minimum Liquidation Amount transfer restriction and certain other
restrictions on transfer applicable to the Old Capital Securities and will
not provide for any increase in the Distribution rate thereon. In that
regard, the Old Capital Securities provide, among other things, that, if a
registration statement relating to the Exchange Offer has not been filed by
June 28, 1997 and declared effective by July 28, 1997, the Distribution rate
borne by the Old Capital Securities, commencing on July 29, 1997, will
increase by 0.25% per annum until the Exchange Offer is consummated. Upon
consummation of the Exchange Offer, holders of Old Capital Securities will
not be entitled to any increase in the Distribution rate thereon or any
further registration rights under the Registration Rights Agreement, except
under limited circumstances. See "Risk Factors--Consequences of a Failure to
Exchange Old Capital Securities" and "Description of Old Securities."
The Exchange Offer is not being made to, nor will the Trust accept
tenders for exchange from, holders of Old Capital Securities in any
jurisdiction in which the Exchange Offer or the acceptance thereof would not
be in compliance with the securities or "blue sky" laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to
the Exchange Offer means any person in whose name the Old Capital Securities
are registered on the books of the Trust or any other person who has obtained
a properly completed bond power from such holder, or any person whose Old
Capital Securities are held of record by The Depository Trust Company ("DTC")
who desires to deliver such Old Capital Securities by book-entry transfer at
DTC.
Pursuant to the Exchange Offer, the Corporation will exchange promptly
after the Expiration Date the Old Guarantee for the New Guarantee and the Old
Junior Subordinated Debentures, in an amount corresponding to the aggregate
Liquidation Amount of Old Capital Securities accepted for exchange, for a
like aggregate principal amount of the New Junior Subordinated Debentures.
The New Guarantee and New Junior Subordinated Debentures have been registered
under the Securities Act.
TERMS OF THE EXCHANGE OFFER
The Trust hereby offers, upon the terms and subject to the conditions
set forth in this Prospectus and in the accompanying Letter of Transmittal,
to exchange up to $30,000,000 aggregate Liquidation Amount of New Capital
Securities for a like aggregate Liquidation Amount of Old Capital Securities
properly tendered on or prior to the Expiration Date and not properly
withdrawn in accordance with the procedures described below. The Trust will
issue, promptly after the Expiration Date, an aggregate Liquidation Amount of
up to $30,000,000 of New Capital Securities in exchange for a like principal
amount of outstanding Old Capital Securities tendered and accepted in
connection with the Exchange Offer. Holders may tender their Old Capital
Securities in whole or in part in a Liquidation Amount of not less than
$100,000 (100 Capital Securities) or any integral multiple of $1,000
Liquidation Amount (one Capital Security) in excess thereof, provided that if
any Old Capital Securities are tendered for exchange in part the untendered
Liquidation Amount thereof must be $100,000 (100 Capital Securities) or any
integral multiple of $1,000 in excess thereof.
The Exchange Offer is not conditioned upon any minimum Liquidation
Amount of Old Capital Securities being tendered. As of the date of this
Prospectus, $30,000,000 aggregate Liquidation Amount of the Old Capital
Securities is outstanding.
Holders of Old Capital Securities do not have any appraisal or
dissenters' rights in connection with the Exchange Offer. Old Capital
Securities which are not tendered for or are tendered but not accepted in
connection with the Exchange Offer will remain outstanding and be entitled to
the benefits of the Trust Agreement, but will not be entitled to any further
registration rights under the Registration Rights Agreement, except under
limited circumstances. See "Risk Factors--Consequences of a Failure to
Exchange Old Capital Securities" and "Description of Old Securities."
If any tendered Old Capital Securities are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set
forth herein or otherwise, certificates for any such unaccepted Old Capital
Securities will be returned, without expense, to the tendering holder thereof
promptly after the Expiration Date.
Holders who tender Old Capital Securities in connection with the
Exchange Offer will not be required to pay brokerage commissions or fees or,
subject to the instructions in the Letter of Transmittal, transfer taxes with
respect to the exchange of Old Capital Securities in connection with the
Exchange Offer. The Corporation will pay all charges and expenses, other
than certain applicable taxes described below, in connection with the
Exchange Offer. See "--Fees and Expenses."
NEITHER THE CORPORATION, THE BOARD OF DIRECTORS OF THE CORPORATION NOR
ANY ISSUER TRUSTEE OF THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF OLD
CAPITAL SECURITIES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR
ANY PORTION OF THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION.
EACH HOLDER OF OLD CAPITAL SECURITIES MUST MAKE ITS OWN DECISION WHETHER TO
TENDER PURSUANT TO THE EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF OLD
CAPITAL SECURITIES TO TENDER BASED ON SUCH HOLDER'S OWN FINANCIAL POSITION
AND REQUIREMENTS.
The term "Expiration Date" means 5:00 p.m., New York City time, on
, 1997 unless the Exchange Offer is extended by the Corporation or the Trust
(in which case the term "Expiration Date" shall mean the latest date and time
to which the Exchange Offer is extended).
The Corporation and the Trust expressly reserve the right in their sole
and absolute discretion, subject to applicable law, at any time and from time
to time, (i) to delay the acceptance of the Old Capital Securities for
exchange, (ii) to terminate the Exchange Offer (whether or not any Old
Capital Securities have theretofore been accepted for exchange) if the Trust
determines, in its sole and absolute discretion, that any of the events or
conditions referred to under "--Conditions to the Exchange Offer" have
occurred or exist or have not been satisfied, (iii) to extend the Expiration
Date of the Exchange Offer and retain all Old Capital Securities tendered
pursuant to the Exchange Offer, subject, however, to the right of holders of
Old Capital Securities to withdraw their tendered Old Capital Securities as
described under "--Withdrawal Rights," and (iv) to waive any condition or
otherwise amend the terms of the Exchange Offer in any respect. If the
Exchange Offer is amended in a manner determined by the Corporation and the
Trust to constitute a material change, or if the Corporation and the Trust
waive a material condition of the Exchange Offer, the Corporation and the
Trust will promptly disclose such amendment by means of a prospectus
supplement that will be distributed to the holders of the Old Capital
Securities, and the Corporation and the Trust will extend the Exchange Offer
to the extent required by Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will
be followed promptly by oral or written notice thereof to the Exchange Agent
and by making a public announcement thereof, and such announcement in the
case of an extension will be made no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration
Date. Without limiting the manner in which the Corporation and the Trust may
choose to make any public announcement and subject to applicable law, the
Corporation and the Trust shall have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by issuing a
release to an appropriate news agency.
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF NEW CAPITAL SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, the
Trust will exchange, and will issue to the Exchange Agent, New Capital
Securities for Old Capital Securities validly tendered and not withdrawn
promptly after the Expiration Date.
In all cases, delivery of New Capital Securities in exchange for Old
Capital Securities tendered and accepted for exchange pursuant to the
Exchange Offer will be made only after timely receipt by the Exchange Agent
of (i) Old Capital Securities or a book-entry confirmation of a book-entry
transfer of Old Capital Securities into the Exchange Agent's account at DTC,
(ii) the Letter of Transmittal (or facsimile thereof), properly completed and
duly executed, with any required signature guarantees, and (iii) any other
documents required by the Letter of Transmittal.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Old Capital Securities into the Exchange Agent's
account at DTC.
Subject to the terms and conditions of the Exchange Offer, the Trust
will be deemed to have accepted for exchange, and thereby exchanged, Old
Capital Securities validly tendered and not withdrawn as, if and when the
Trust gives oral or written notice to the Exchange Agent of the Trust's
acceptance of such Old Capital Securities for exchange pursuant to the
Exchange Offer. The Exchange Agent will act as agent for the Trust for the
purpose of receiving tenders of Old Capital Securities, Letters of
Transmittal and related documents, and as agent for tendering holders for the
purpose of receiving Old Capital Securities, Letters of Transmittal and
related documents and transmitting New Capital Securities to validly
tendering holders. Such exchange will be made promptly after the Expiration
Date. If for any reason whatsoever, acceptance for exchange or the exchange
of any Old Capital Securities tendered pursuant to the Exchange Offer is
delayed (whether before or after the Trust's acceptance for exchange of Old
Capital Securities) or the Trust extends the Exchange Offer or is unable to
accept for exchange or exchange Old Capital Securities tendered pursuant to
the Exchange Offer, then, without prejudice to the Trust's rights set forth
herein, the Exchange Agent may, nevertheless, on behalf of the Trust and
subject to Rule 14e-1(c) under the Exchange Act, retain tendered Old Capital
Securities and such Old Capital Securities may not be withdrawn except to the
extent tendering holders are entitled to withdrawal rights as described under
"--Withdrawal Rights."
Pursuant to the Letter of Transmittal, a holder of Old Capital
Securities will warrant and agree in the Letter of Transmittal that it has
full power and authority to tender, exchange, sell, assign and transfer Old
Capital Securities, that the Trust will acquire good, marketable and
unencumbered title to the tendered Old Capital Securities, free and clear of
all liens, restrictions, charges and encumbrances, and that the Old Capital
Securities tendered for exchange are not subject to any adverse claims or
proxies. The holder also will warrant and agree that it will, upon request,
execute and deliver any additional documents deemed by the Trust or the
Exchange Agent to be necessary or desirable to complete the exchange, sale,
assignment, and transfer of the Old Capital Securities tendered pursuant to
the Exchange Offer.
PROCEDURES FOR TENDERING OLD CAPITAL SECURITIES
VALID TENDER. Except as set forth below, in order for Old Capital
Securities to be validly tendered pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
with any required signature guarantees and any other required documents, must
be received by the Exchange Agent at one of its addresses set forth under "--
Exchange Agent," and either (i) tendered Old Capital Securities must be
received by the Exchange Agent, or (ii) such Old Capital Securities must be
tendered pursuant to the procedures for book-entry transfer set forth below
and a book-entry confirmation must be received by the Exchange Agent, in each
case on or prior to the Expiration Date, or (iii) the guaranteed delivery
procedures set forth below must be complied with.
If a holder of Old Capital Securities is tendering less than all of the
Old Capital Securities held by such holder, the tendering holder should fill
in the amount of Old Capital Securities being tendered in the appropriate box
on the Letter of Transmittal. The entire amount of Old Capital Securities
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
BOOK-ENTRY TRANSFER. The Exchange Agent will establish an account with
respect to the Old Capital Securities at DTC for purposes of the Exchange
Offer within two business days after the date of this Prospectus. Any
financial institution that is a participant in DTC's book-entry transfer
facility system may make a book-entry delivery of the Old Capital Securities
by causing DTC to transfer such Old Capital Securities into the Exchange
Agent's account at DTC in accordance with DTC's procedures for transfers.
However, although delivery of Old Capital Securities may be effected through
book-entry transfer into the Exchange Agent's account at DTC, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed,
with any required signature guarantees and any other required documents, must
in any case be delivered to and received by the Exchange Agent at its address
set forth under "--Exchange Agent" on or prior to the Expiration Date, or the
guaranteed delivery procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES
NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
SIGNATURE GUARANTEES. Certificates for the Old Capital Securities need
not be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (a) a certificate for the Old Capital Securities is
registered in a name other than that of the person surrendering the
certificate or (b) such holder completes the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" in the Letter of
Transmittal. In the case of (a) or (b) above, such certificates for Old
Capital Securities must be duly endorsed or accompanied by a properly
executed bond power, with the endorsement or signature on the bond power and
on the Letter of Transmittal guaranteed by a firm or other entity identified
in Rule 17Ad-15 under the Exchange Act as an "eligible guarantor
institution," including (as such terms are defined therein): (i) a bank; (ii)
a broker, dealer, municipal securities broker or dealer or government
securities broker or dealer; (iii) a credit union; (iv) a national securities
exchange, registered securities association or clearing agency; or (v) a
savings association that is a participant in a Securities Transfer
Association (each of the foregoing, an "Eligible Institution"), unless
surrendered on behalf of such Eligible Institution. See Instruction 1 to the
Letter of Transmittal.
GUARANTEED DELIVERY. If a holder desires to tender Old Capital
Securities pursuant to the Exchange Offer and the certificates for such Old
Capital Securities are not immediately available or time will not permit all
required documents to reach the Exchange Agent on or prior to the Expiration
Date, or the procedure for book-entry transfer cannot be completed on a
timely basis, such Old Capital Securities may nevertheless be tendered,
provided that all of the following guaranteed delivery procedures are
complied with:
(a)such tenders are made by or through an Eligible Institution;
(b)a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form accompanying the Letter of Transmittal, is received
by the Exchange Agent, as provided below, on or prior to the Expiration Date;
and
(c)the certificates (or a book-entry confirmation) representing all
tendered Old Capital Securities, in proper form for transfer, together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees and any other documents
required by the Letter of Transmittal, are received by the Exchange Agent
within three New York Stock Exchange trading days after the date of execution
of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or
transmitted by facsimile or mail to the Exchange Agent and must include a
guarantee by an Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of New Capital
Securities in exchange for Old Capital Securities tendered and accepted for
exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Old Capital Securities, or of a book-
entry confirmation with respect to such Old Capital Securities, and a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), together with any required signature guarantees and any other
documents required by the Letter of Transmittal. Accordingly, the delivery
of New Capital Securities might not be made to all tendering holders at the
same time, and will depend upon when Old Capital Securities, book-entry
confirmations with respect to Old Capital Securities and other required
documents are received by the Exchange Agent.
The Trust's acceptance for exchange of Old Capital Securities tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the tendering holder and the Trust upon the terms and
subject to the conditions of the Exchange Offer.
DETERMINATION OF VALIDITY. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange
of any tendered Old Capital Securities will be determined by the Corporation
and the Trust, in their sole discretion, whose determination shall be final
and binding on all parties. The Corporation and the Trust reserve the
absolute right, in their sole and absolute discretion, to reject any and all
tenders determined by them not to be in proper form or the acceptance of
which, or exchange for which, may, in the opinion of counsel to the
Corporation and the Trust, be unlawful. No alternative, conditional or
contingent tenders will be accepted. The Corporation and the Trust also
reserve the absolute right, subject to applicable law, to waive any of the
conditions of the Exchange Offer as set forth under "--Conditions to the
Exchange Offer" or any condition or irregularity in any tender of Old Capital
Securities of any particular holder whether or not similar conditions or
irregularities are waived in the case of other holders.
The interpretation by the Corporation and the Trust of the terms and
conditions of the Exchange Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding. No tender of Old Capital
Securities will be deemed to have been validly made until all irregularities
with respect to such tender have been cured or waived. Neither the
Corporation, the Trust, any affiliates or assigns of the Corporation or the
Trust, the Exchange Agent nor any other person shall be under any duty to
give any notification of any irregularities in tenders or incur any liability
for failure to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of
attorney, or any other document required by the Letter of Transmittal is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
unless waived by the Corporation and the Trust, proper evidence satisfactory
to the Corporation and the Trust, in their sole discretion, of such person's
authority to so act must be submitted.
A beneficial owner of Old Capital Securities that are held by or
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee or custodian is urged to contact such entity promptly if such
beneficial holder wishes to participate in the Exchange Offer.
RESALES OF NEW CAPITAL SECURITIES
The Trust is making the Exchange Offer for the New Capital Securities in
reliance on the position of the staff of the Division of Corporation Finance
of the Commission as set forth in certain interpretive letters addressed to
third parties in other transactions. However, neither the Corporation nor
the Trust sought its own interpretive letter and there can be no assurance
that the staff of the Division of Corporation Finance of the Commission would
make a similar determination with respect to the Exchange Offer as it has in
such interpretive letters to third parties. Based on these interpretations
by the staff of the Division of Corporation Finance of the Commission, and
subject to the two immediately following sentences, the Corporation and the
Trust believe that New Capital Securities issued pursuant to this Exchange
Offer in exchange for Old Capital Securities may be offered for resale,
resold and otherwise transferred by a holder thereof (other than a holder who
is a broker-dealer) without further compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that such
New Capital Securities are acquired in the ordinary course of such holder's
business and that such holder is not participating, and has no arrangement or
understanding with any person to participate, in a distribution (within the
meaning of the Securities Act) of such New Capital Securities. However, any
holder of Old Capital Securities who is an Affiliate of the Corporation or the
Trust or who intends to participate in the Exchange Offer for the purpose of
distributing New Capital Securities, or any broker-dealer who purchased
Old Capital Securities from the Trust for resale pursuant to Rule 144A
or any other available exemption under the Securities Act, (a) will not be
able to rely on the interpretations of the staff of the Division of
Corporation Finance of the Commission set forth in the above-mentioned
interpretive letters, (b) will not be permitted or entitled to tender
such Old Capital Securities in the Exchange Offer and (c) must comply
with the registration and prospectus delivery requirements of the Securities
Act in connection with any sale or other transfer of such Old Capital
Securities unless such sale is made pursuant to an exemption from such
requirements. In addition, as described below, if any broker-dealer holds
Old Capital Securities acquired for its own account as a result of market-
making or other trading activities and exchanges such Old Capital Securities
for New Capital Securities, then such broker-dealer must deliver a prospectus
meeting the requirements of the Securities Act in connection with any resales
of such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required
to represent that (i) it is not an Affiliate of the Corporation or the Trust,
(ii) any New Capital Securities to be received by it are being acquired in
the ordinary course of its business, (iii) it has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such New Capital Securities, and (iv)
if such holder is not a broker-dealer, such holder is not engaged in,
and does not intend to engage in, a distribution (within the meaning of
the Securities Act) of such New Capital Securities. In addition, the
Corporation and the Trust may require such holder, as a condition to such
holder's eligibility to participate in the Exchange Offer, to furnish to
the Corporation and the Trust (or an agent thereof) in writing information
as to the number of "beneficial owners" (within the meaning of Rule 13d-3
under the Exchange Act) on behalf of whom such holder holds the
Capital Securities to be exchanged in the Exchange Offer. Each broker-dealer
that receives New Capital Securities for its own account pursuant to the
Exchange Offer must acknowledge that it acquired the Old Capital Securities
for its own account as the result of market-making activities or other
trading activities and must agree that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such
New Capital Securities. The Letter of Transmittal states that, by so
acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. Based on the position taken by the staff of the Division of
Corporation Finance of the Commission in the interpretive letters referred to
above, the Corporation and the Trust believe that Participating Broker-
Dealers who acquired Old Capital Securities for their own accounts as a
result of market-making activities or other trading activities may fulfill
their prospectus delivery requirements with respect to the New Capital
Securities received upon exchange of such Old Capital Securities (other than
Old Capital Securities which represent an unsold allotment from the original
sale of the Old Capital Securities) with a prospectus meeting the
requirements of the Securities Act, which may be the prospectus prepared for
an exchange offer so long as it contains a description of the plan of
distribution with respect to the resale of such New Capital Securities.
Accordingly, this Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer during the period
referred to below in connection with resales of New Capital Securities
received in exchange for Old Capital Securities where such Old Capital
Securities were acquired by such Participating Broker-Dealer for its own
account as a result of market-making or other trading activities. Subject to
certain provisions set forth in the Registration Rights Agreement, the
Corporation and the Trust have agreed that this Prospectus, as it may be
amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of such New Capital Securities for a
period ending 90 days after the Expiration Date (subject to extension under
certain limited circumstances described below) or, if earlier, when all such
New Capital Securities have been disposed of by such Participating Broker-
Dealer. See "Plan of Distribution." However, a Participating Broker-Dealer
who intends to use this Prospectus in connection with the resale of New
Capital Securities received in exchange for Old Capital Securities pursuant
to the Exchange Offer must notify the Corporation or the Trust, or cause the
Corporation or the Trust to be notified, on or prior to the Expiration Date,
that it is a Participating Broker-Dealer. Such notice may be given in the
space provided for that purpose in the Letter of Transmittal or may be
delivered to the Exchange Agent at one of the addresses set forth herein
under "--Exchange Agent." Any Participating Broker-Dealer who is an
"affiliate" of the Corporation or the Trust may not rely on such interpretive
letters and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
In that regard, each Participating Broker-Dealer who surrenders Old
Capital Securities pursuant to the Exchange Offer will be deemed to have
agreed, by execution of the Letter of Transmittal, that, upon receipt of
notice from the Corporation or the Trust of the occurrence of any event or
the discovery of any fact which makes any statement contained or incorporated
by reference in this Prospectus untrue in any material respect or which
causes this Prospectus to omit to state a material fact necessary in order
to make the statements contained or incorporated by reference herein, in
light of the circumstances under which they were made, not misleading or of
the occurrence of certain other events specified in the Registration Rights
Agreement, such Participating Broker-Dealer will suspend the sale of New
Capital Securities (or the New Guarantee or the New Junior Subordinated
Debentures, as applicable) pursuant to this Prospectus until the Corporation
or the Trust has amended or supplemented this Prospectus to
correct such misstatement or omission and has furnished copies of the amended
or supplemented Prospectus to such Participating Broker-Dealer or the
Corporation or the Trust has given notice that the sale of the New Capital
Securities (or the New Guarantee or the New Junior Subordinated Debentures,
as applicable) may be resumed, as the case may be. If the Corporation or the
Trust gives such notice to suspend the sale of the New Capital Securities (or
the New Guarantee or the New Junior Subordinated Debentures, as applicable),
it shall extend the 90-day period referred to above during which
Participating Broker-Dealers are entitled to use this Prospectus in
connection with the resale of New Capital Securities by the number of days
during the period from and including the date of the giving of such notice to
and including the date when Participating Broker-Dealers shall have received
copies of the amended or supplemented Prospectus necessary to permit resales
of the New Capital Securities or to and including the date on which the
Corporation or the Trust has given notice that the sale of New Capital
Securities (or the New Guarantee or the New Junior Subordinated Debentures,
as applicable) may be resumed, as the case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Capital Securities
may be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective, a written, telegraphic, telex
or facsimile transmission of such notice of withdrawal must be timely
received by the Exchange Agent at one of its addresses set forth under "--
Exchange Agent" on or prior to the Expiration Date. Any such notice of
withdrawal must specify the name of the person who tendered the Old Capital
Securities to be withdrawn, the aggregate principal amount of Old Capital
Securities to be withdrawn, and (if certificates for such Old Capital
Securities have been tendered) the name of the registered holder of the Old
Capital Securities as set forth on the Old Capital Securities, if different
from that of the person who tendered such Old Capital Securities. If Old
Capital Securities have been delivered or otherwise identified to the
Exchange Agent, then prior to the physical release of such Old Capital
Securities, the tendering holder must submit the serial numbers shown on the
particular Old Capital Securities to be withdrawn and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution, except in
the case of Old Capital Securities tendered for the account of an Eligible
Institution. If Old Capital Securities have been tendered pursuant to the
procedures for book-entry transfer set forth in "--Procedures for Tendering
Old Capital Securities," the notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawal of Old
Capital Securities, in which case a notice of withdrawal will be effective if
delivered to the Exchange Agent by written, telegraphic, telex or facsimile
transmission. Withdrawals of tenders of Old Capital Securities may not be
rescinded. Old Capital Securities properly withdrawn will not be deemed
validly tendered for purposes of the Exchange Offer, but may be retendered at
any subsequent time on or prior to the Expiration Date by following any of
the procedures described above under "--Procedures for Tendering Old Capital
Securities."
All questions as to the validity, form and eligibility (including time
of receipt) of such withdrawal notices will be determined by the Corporation
and the Trust, in their sole discretion, whose determination shall be final
and binding on all parties. Neither the Corporation, the Trust, any
affiliates or assigns of the Corporation or the Trust, the Exchange Agent nor
any other person shall be under any duty to give any notification of any
irregularities in any notice of withdrawal or incur any liability for failure
to give any such notification. Any Old Capital Securities which have been
tendered but which are withdrawn will be returned to the holder thereof
promptly after withdrawal.
DISTRIBUTIONS ON NEW CAPITAL SECURITIES
Holders of Old Capital Securities whose Old Capital Securities are
accepted for exchange will not receive Distributions on such Old Capital
Securities and will be deemed to have waived the right to receive any
Distributions on such Old Capital Securities accumulated from and including
February 3, 1997. Accordingly, holders of New Capital Securities as of the
record date for the payment of Distributions on July 31, 1997 will be
entitled to receive Distributions accumulated from and including February 3,
1997.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Corporation and the Trust will not be
required to accept for exchange, or to exchange, any Old Capital Securities
for any New Capital Securities, and, as described below, may terminate the
Exchange Offer (whether or not any Old Capital Securities have theretofore
been accepted for exchange) or may waive any conditions to or amend the
Exchange Offer, if any of the following conditions have occurred or exists or
have not been satisfied:
(a) there shall occur a change in the current interpretation by the
staff of the Commission which permits the New Capital Securities issued
pursuant to the Exchange Offer in exchange for Old Capital Securities to be
offered for resale, resold and otherwise transferred by holders thereof
(other than broker-dealers and any such holder which is an Affiliate of the
Corporation or the Trust without compliance with the registration and
prospectus delivery provisions of the Securities Act provided that such New
Capital Securities are acquired in the ordinary course of such holders'
business and such holders have no arrangement or understanding with any
person to participate in the distribution of such New Capital Securities); or
(b) any law, statute, rule or regulation shall have been adopted or
enacted which, in the judgment of the Corporation or the Trust, would
reasonably be expected to impair its ability to proceed with the Exchange
Offer; or
(c) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration
Statement or proceedings shall have been initiated or, to the knowledge of
the Corporation or the Trust, threatened for that purpose; or
(d) any governmental approval has not been obtained, which approval the
Corporation or the Trust shall, in its sole discretion, deem necessary for
the consummation of the Exchange Offer as contemplated hereby.
If the Corporation or the Trust determines in its sole and absolute
discretion that any of the foregoing events or conditions has occurred or
exists or has not been satisfied, it may, subject to applicable law,
terminate the Exchange Offer (whether or not any Old Capital Securities have
theretofore been accepted for exchange) or may waive any such condition or
otherwise amend the terms of the Exchange Offer in any respect. If such
waiver or amendment constitutes a material change to the Exchange Offer, the
Corporation or the Trust will promptly disclose such waiver or amendment by
means of a prospectus supplement that will be distributed to the registered
holders of the Old Capital Securities and will extend the Exchange Offer to
the extent required by Rule 14e-1 under the Exchange Act.
EXCHANGE AGENT
The Chase Manhattan Bank has been appointed as Exchange Agent for the
Exchange Offer. Delivery of the Letters of Transmittal and any other
required documents, questions, requests for assistance, and requests for
additional copies of this Prospectus or of the Letter of Transmittal should
be directed to the Exchange Agent as follows:
<TABLE>
<CAPTION>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL: BY HAND OR OVERNIGHT DELIVERY:
The Chase Manhattan Bank The Chase Manhattan Bank
Attention: _________________________ Attention: _________________________
____________ _____________
</TABLE>
Confirm By Telephone:
(212) ___-____
Facsimile Transmissions:
(ELIGIBLE INSTITUTIONS ONLY)
(212) ___-____
Delivery to other than the above addresses or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
The Corporation has agreed to pay the Exchange Agent reasonable and
customary fees for its services and will reimburse it for its reasonable out-
of-pocket expenses in connection therewith. The Corporation will also pay
brokerage houses and other custodians, nominees and fiduciaries the
reasonable out-of-pocket expenses incurred by them in forwarding copies of
this Prospectus and related documents to the beneficial owners of Old Capital
Securities, and in handling or tendering for their customers.
Holders who tender their Old Capital Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however,
New Capital Securities are to be delivered to, or are to be issued in the
name of, any person other than the registered holder of the Old Capital
Securities tendered, or if a transfer tax is imposed for any reason other
than the exchange of Old Capital Securities in connection with the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
Neither the Corporation nor the Trust will make any payment to brokers,
dealers or other nominees soliciting acceptances of the Exchange Offer.
DESCRIPTION OF NEW SECURITIES
DESCRIPTION OF NEW CAPITAL SECURITIES
Pursuant to the terms of the Trust Agreement, the Trust has issued the
Old Capital Securities and the Common Securities and will issue the New
Capital Securities pursuant to the Exchange Offer. The New Capital
Securities will represent preferred beneficial interests in the Trust and the
holders of the New Capital Securities and the Old Capital Securities will be
entitled to a preference over the Common Securities in certain circumstances
with respect to Distributions and amounts payable on redemption of the Trust
Securities or liquidation of the Trust. See "--Subordination of Common
Securities." The Trust Agreement has been qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). This summary
of certain provisions of the New Capital Securities and the Trust Agreement
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the Trust Agreement,
including the definitions therein of certain terms.
GENERAL. The Capital Securities (including the Old Capital Securities
and the New Capital Securities) are limited to $30,000,000 aggregate
Liquidation Amount at any one time outstanding. The New Capital Securities
will rank pari passu, and payments will be made thereon pro rata, with the
Old Capital Securities and the Common Securities except as described under "-
- -Subordination of Common Securities." Legal title to the Junior Subordinated
Debentures will be held by the Property Trustee in trust for the benefit of
the holders of the Capital Securities and Common Securities. The New
Guarantee will be a guarantee on a subordinated basis but will not guarantee
payment of Distributions or amounts payable on redemption of the New Capital
Securities or on liquidation of the Trust when the Trust does not have funds
on hand legally available for such payments. See "--Description of New
Guarantee."
DISTRIBUTIONS. Distributions on the New Capital Securities will be
cumulative, will accumulate from February 3, 1997 and will be payable
semi-annually in arrears on January 31 and July 31 of each year, commencing
July 31, 1997, at the annual rate of 9.75% of the Liquidation Amount to the
holders of the New Capital Securities on the relevant record date. The record
date will be the fifteenth day prior to the relevant Distribution Date (as
defined below). The amount of Distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months and, for any
period of less than a full calendar month, the number of days elapsed in such
month. In the event that any date on which Distributions are payable on the
New Capital Securities is not a Business Day (as defined below), payment of
the Distribution payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect
to any such delay), in each case with the same force and effect as if made on
such date (each date on which Distributions are payable in accordance with
the foregoing, a "Distribution Date"). A "Business Day" shall mean any day
other than a Saturday or a Sunday, or a day on which banking institutions in
The City of New York or Wilmington, Delaware are authorized or required
by law or executive order to remain closed.
So long as no Debenture Event of Default shall have occurred and be
continuing, the Corporation will have the right under the Indenture to defer
the payment of interest on the New Junior Subordinated Debentures at any time
or from time to time for a period not exceeding 10 consecutive semi-annual
periods with respect to each Extension Period, provided that no Extension
Period may extend beyond the Stated Maturity Date. Upon any such election,
semi-annual Distributions on the New Capital Securities will be deferred by
the Trust during any such Extension Period. Distributions to which holders of
the New Capital Securities are entitled during any such Extension Period will
accumulate additional Distributions thereon at the rate per annum of 9.75%
thereof, compounded semi-annually from the relevant Distribution Date, but
not exceeding the interest rate then accruing on the New Junior Subordinated
Debentures. The term "Distributions," as used herein, shall include any such
additional Distributions.
During any Extension Period, the Corporation may further extend such
Extension Period, provided that such extension does not cause such Extension
Period to exceed 10 consecutive semi-annual periods or to extend beyond the
Stated Maturity Date. Upon the expiration of any Extension Period and the
payment of all amounts then due, and subject to the foregoing limitations,
the Corporation may elect to begin a new Extension Period. The Corporation
must give the Property Trustee, the Administrative Trustees and the Debenture
Trustee notice of its election of any Extension Period at least five Business
Days prior to the earlier of (i) the date the Distributions on the New
Capital Securities would have been payable except for the election to begin
such Extension Period or (ii) the date the Administrative Trustees are
required to give notice to any securities exchange or to holders of such New
Capital Securities of the record date or the date such Distributions are
payable but in any event not less than five Business Days prior to such
record date. There is no limitation on the number of times that the
Corporation may elect to begin an Extension Period. See "--Description of New
Junior Subordinated Debentures--Option to Extend Interest Payment Date" and
"Certain United States Federal Income Tax Considerations--Interest Income and
Original Issue Discount."
During any Extension Period, the Corporation may not (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Corporation's capital stock
or (ii) make any payment of principal of or premium, if any, or interest on
or repay, repurchase or redeem any debt securities of the Corporation
(including Other Debentures) that rank pari passu with or junior in right of
payment to the Junior Subordinated Debentures or (iii) make any guarantee
payments with respect to any guarantee by the Corporation of the debt
securities of any subsidiary of the Corporation (including Other Guarantees)
if such guarantee ranks pari passu with or junior in right of payment to the
Junior Subordinated Debentures (other than (a) dividends or distributions in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, common stock of the Corporation, (b) any declaration of a dividend in
connection with the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the
Guarantee, (d) as a result of a reclassification of the Corporation's capital
stock or the exchange or conversion of one class or series of the
Corporation's capital stock for another class or series of the Corporation's
capital stock, (e) the purchase of fractional interests in shares of the
Corporation's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged, and (f)
purchases of common stock related to the issuance of common stock or rights
under any of the Corporation's benefit plans for its directors, officers or
employees or any of the Corporation's dividend reinvestment plans).
The revenue of the Trust available for distribution to holders of the
Capital Securities will be limited to payments under the New Junior
Subordinated Debentures. See "--Description of New Junior Subordinated
Debentures--General." If the Corporation does not make interest payments on
the New Junior Subordinated Debentures, the Property Trustee will not have
funds available to pay Distributions on the New Capital Securities. The
payment of Distributions on the New Capital Securities (if and to the extent
the Trust has funds on hand legally available for the payment of such
Distributions) will be guaranteed by the Corporation on a limited basis as
set forth herein under "--Description of New Guarantee."
REDEMPTION. Upon the repayment on the Stated Maturity Date or
prepayment prior to the Stated Maturity Date of the New Junior Subordinated
Debentures, the proceeds from such repayment or prepayment shall be applied
by the Property Trustee to redeem a Like Amount (as defined below) of the
Trust Securities, upon not less than 30 nor more than 60 days notice of a
date of redemption (the "Redemption Date"), at the applicable Redemption
Price, which shall be equal to (i) in the case of the repayment of the New
Junior Subordinated Debentures on the Stated Maturity Date, the Maturity
Redemption Price (equal to the principal of, and accrued interest on, the
New Junior Subordinated Debentures), (ii) in the case of the optional
prepayment of the New Junior Subordinated Debentures prior to January 31,
2007, upon the occurrence and continuation of a Special Event, the Special
Event Redemption Price (equal to the Special Event Prepayment Price in
respect of the New Junior Subordinated Debentures) and (iii) in the case
of the optional prepayment of the New Junior Subordinated Debentures on or
after January 31, 2007, the Optional Redemption Price (equal to the
Optional Prepayment Price in respect of the New Junior Subordinated
Debentures). See "--Description of New Junior Subordinated Debentures--Optional
Prepayment" and "--Special Event Prepayment."
"Like Amount" means (i) with respect to a redemption of the Trust
Securities, Trust Securities having a Liquidation Amount equal to the
principal amount of Junior Subordinated Debentures to be paid in accordance
with their terms and (ii) with respect to a distribution of Junior
Subordinated Debentures upon the liquidation of the Trust, Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Trust Securities of the holder to whom such Junior Subordinated
Debentures are distributed.
The Corporation will have the option to prepay the New Junior
Subordinated Debentures, (i) in whole or in part, on or after January 31,
2007, at the applicable Optional Prepayment Price and (ii) in whole but not
in part, at any time prior to January 31, 2007, upon the occurrence of a
Special Event, at the Special Event Prepayment Price, in each case subject to
receipt of prior approval by the Federal Reserve if then required under
applicable capital guidelines or policies of the Federal Reserve.
LIQUIDATION OF THE TRUST AND DISTRIBUTION OF NEW JUNIOR SUBORDINATED
DEBENTURES. The Corporation will have the right at any time to dissolve the
Trust and cause the New Junior Subordinated Debentures to be distributed to
the holders of the Trust Securities in liquidation of the Trust. Such right
is subject to (i) the Corporation having received an opinion of counsel to
the effect that such distribution will not be a taxable event to holders of
New Capital Securities and (ii) receipt of approval of the Federal Reserve if
then required under applicable capital guidelines or policies of the Federal
Reserve.
The Trust shall automatically dissolve and its affairs shall be wound up
upon the first to occur of: (i) certain events of bankruptcy, dissolution or
liquidation of the Corporation; (ii) the distribution of a Like Amount of the
Junior Subordinated Debentures to the holders of the Trust Securities, if the
Corporation, as Sponsor, has given written direction to the Property Trustee
to terminate the Trust (which direction is optional and, except as described
above, wholly within the discretion of the Corporation, as Sponsor); (iii)
redemption of all of the Trust Securities; (iv) expiration of the term of the
Trust; and (v) the entry of an order for the dissolution of the Trust by a
court of competent jurisdiction.
If a dissolution occurs as described in clause (i), (ii), (iv), or (v)
of the preceding paragraph, the Trust shall be liquidated by the Issuer
Trustees as expeditiously as the Issuer Trustees determine to be possible by
distributing, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, to the holders of the Trust Securities a Like
Amount of the New Junior Subordinated Debentures, unless such distribution is
determined by the Property Trustee not to be practicable, in which event such
holders will be entitled to receive out of the assets of the Trust legally
available for distribution to holders, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, an amount equal to the
aggregate of the Liquidation Amount plus accumulated and unpaid Distributions
thereon to the date of payment (such amount being the "Liquidation
Distribution"). If such Liquidation Distribution can be paid only in part
because the Trust has insufficient assets on hand legally available to pay in
full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Trust Securities shall be paid on a pro rata
basis, except that if a Debenture Event of Default has occurred and is
continuing, the Capital Securities shall have a priority over the Common
Securities. See "--Subordination of Common Securities."
If the Corporation elects not to prepay the Junior Subordinated
Debentures prior to maturity in accordance with their terms and either elects
not to or is unable to liquidate the Trust and distribute the Junior
Subordinated Debentures to holders of the Trust Securities, the Trust
Securities will remain outstanding until the repayment of the Junior
Subordinated Debentures on the Stated Maturity Date.
After the liquidation date is fixed for any distribution of Junior
Subordinated Debentures to holders of the Trust
Securities, (i) the Trust Securities will no longer be deemed to be
outstanding, (ii) each holder of Trust Securities will receive a registered
global certificate or certificates representing the Junior Subordinated
Debentures to be delivered upon such distribution and (iii) Trust Securities
will be deemed to represent New Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of such Trust Securities,
and bearing accrued and unpaid interest in an amount equal to the accumulated
and unpaid Distributions on such Trust Securities until such certificates are
presented to the Administrative Trustees or their agent for cancellation,
whereupon the Corporation will issue to such holder, and the Debenture
Trustee will authenticate, a certificate representing such Junior
Subordinated Debentures.
There can be no assurance as to the market prices for the New Capital
Securities or the New Junior Subordinated Debentures that may be distributed
in exchange for the Trust Securities if a dissolution and liquidation of the
Trust were to occur. Accordingly, the New Capital Securities that an investor
may purchase, or the New Junior Subordinated Debentures that the investor may
receive on dissolution and liquidation of the Trust, may trade at a discount
to the price that the investor paid to purchase the New Capital Securities
offered hereby.
REDEMPTION PROCEDURES. If applicable, Trust Securities shall be
redeemed at the applicable Redemption Price with the proceeds from the
contemporaneous repayment or prepayment of the New Junior Subordinated
Debentures. Any redemption of Trust Securities shall be made and the
applicable Redemption Price shall be payable on the Redemption Date only to
the extent that the Trust has funds legally available for the payment of such
applicable Redemption Price. See also "--Subordination of Common Securities."
If the Trust gives a notice of redemption in respect of the New Capital
Securities, then, by 12:00 noon, New York City time, on the Redemption Date,
to the extent funds are legally available, with respect to the New Capital
Securities held by DTC or its nominee, the Property Trustee or the Paying
Agent will pay the applicable Redemption Price to DTC. See "--Form,
Denomination, Book--Entry Procedures and Transfer." With respect to the New
Capital Securities held in certificated form, the Property Trustee, to the
extent funds are legally available, will pay the applicable Redemption Price
to the holders thereof upon surrender of their certificates evidencing the
Trust Securities. See "--Payment and Paying Agency." Distributions payable
on or prior to the Redemption Date shall be payable to the holders of such
New Capital Securities on the relevant record dates from the related
Distribution Dates. If notice of redemption shall have been given and funds
deposited with the Property Trustee to pay the Redemption Price for the New
Capital Securities called for redemption, then upon the date of such deposit,
all rights of the holders of the New Capital Securities will cease, except
the right of the holders of the New Capital Securities to receive the
applicable Redemption Price, but without interest on such Redemption Price,
and the New Capital Securities will cease to be outstanding. In the event
that any Redemption Date of New Capital Securities is not a Business Day,
then the applicable Redemption Price payable on such date will be paid on the
next succeeding day that is a Business Day ( and without any interest or
other payment in respect of any such delay), in each case with the same force
and effect as if made on such date. In the event that payment of the
applicable Redemption Price is improperly withheld or refused and not paid
either by the Trust or by the Corporation pursuant to the Guarantee as
described under "Description of New Guarantee," (i) Distributions on New
Capital Securities will continue to accumulate at the then applicable rate,
from the Redemption Date originally established by the Trust to the date such
applicable Redemption Price is actually paid, and (ii) the actual payment
date will be the Redemption Date for purposes of calculating the applicable
Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law), the Corporation or its subsidiaries may at any time
and from time to time purchase outstanding Capital Securities by tender, in
the open market or by private agreement.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days prior to the Redemption Date to each holder of Trust Securities
at its registered address. Unless the Corporation defaults in payment of the
applicable Prepayment Price on, or in the repayment of, the Junior
Subordinated Debentures, Distributions will cease to accrue on the Trust
Securities called for redemption on and after the Redemption Date.
SUBORDINATION OF COMMON SECURITIES. Payment of Distributions on, and
the Redemption Price of, the Capital Securities and Common Securities, as
applicable, shall be made pro rata based on the Liquidation Amount of the
Capital Securities and Common Securities; provided, however, that if on any
Distribution Date or Redemption Date a Debenture Event of Default shall have
occurred and be continuing, no payment of any Distribution on, or applicable
Redemption Price of, any of the Common Securities, and no other payment on
account of the redemption, liquidation or other acquisition of the Common
Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions on all of the outstanding Capital
Securities for all Distribution periods terminating on or prior thereto, or
in the case of payment of the applicable Redemption Price the full amount of
such Redemption Price, shall have been made or provided for, and all funds
available to the Property Trustee shall first be applied to the payment in
full in cash of all Distributions on, or Redemption Price of, the Capital
Securities then due and payable.
In the case of any Event of Default, the Corporation as holder of the
Common Securities will be deemed to have waived any right to act with respect
to such Event of Default until the effect of such Event of Default shall have
been cured, waived or otherwise eliminated. Until any such Event of Default
has been so cured, waived or otherwise eliminated, the Property Trustee shall
act solely on behalf of the holders of the Capital Securities and not on
behalf of the Corporation as holder of the Common Securities, and only the
holders of the Capital Securities will have the right to direct the Property
Trustee to act on their behalf.
EVENTS OF DEFAULT; NOTICE. The occurrence of a Debenture Event of
Default (see "Description of New Junior Subordinated Debentures--Debenture
Events of Default") constitutes an "Event of Default" under the Trust
Agreement.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of the Capital Securities, the
Administrative Trustees and the Corporation, as Sponsor, unless such Event of
Default shall have been cured or waived. The Corporation, as Sponsor, and the
Administrative Trustees are required to file annually with the Property
Trustee a certificate as to whether or not they are in compliance with all of
the conditions and covenants applicable to them under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing, the
Capital Securities shall have a preference over the Common Securities as
described under "--Liquidation of the Trust and Distribution of New Junior
Subordinated Debentures" and "--Subordination of Common Securities."
REMOVAL OF ISSUER TRUSTEES. Unless a Debenture Event of Default shall
have occurred and be continuing, any Issuer Trustee may be removed at any
time by the holder of the Common Securities. If a Debenture Event of Default
has occurred and is continuing, the Property Trustee and the Delaware Trustee
may be removed at such time by the holders of a majority in Liquidation
Amount of the outstanding Capital Securities. In no event will the holders of
the Capital Securities have the right to vote to appoint, remove or replace
the Administrative Trustees, which voting rights are vested exclusively in
the Corporation as the holder of the Common Securities. No resignation or
removal of an Issuer Trustee and no appointment of a successor trustee shall
be effective until the acceptance of appointment by the successor trustee in
accordance with the provisions of the Trust Agreement.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES. Any corporation into which
the Property Trustee, the Delaware Trustee or any Administrative Trustee that
is not a natural person may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which such Issuer Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust
business of such Issuer Trustee, shall be the successor of such Issuer
Trustee under the Trust Agreement, provided such corporation shall be
otherwise qualified and eligible.
MERGERS, CONVERSIONS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF
THE TRUST. The Trust may not merge or convert with or into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its properties
and assets as an entirety or substantially as an entirety to any corporation
or other Person, except as described below. The Trust may, at the request of
the Corporation, as Sponsor, with the consent of the Administrative Trustees
but without the consent of the holders of the Capital Securities, merge or
convert with or into, consolidate, amalgamate, or be replaced by or convey,
transfer or lease its properties and assets as an entirety or substantially
as an entirety to a trust organized as such under the laws of any State;
provided, that (i) such successor entity either (a) expressly assumes all of
the obligations of the Trust with respect to the Capital Securities or (b)
substitutes for the Capital Securities other securities having substantially
the same terms as the Capital Securities (the "Successor Securities") so long
as the Successor Securities rank the same as the Capital Securities rank in
priority with respect to distributions and payments upon liquidation,
redemption and otherwise, (ii) the Corporation expressly appoints a
trustee of such successor entity possessing the same powers and duties
as the Property Trustee with respect to the Junior Subordinated
Debentures, (iii) the Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any
national securities exchange or other organization on which Capital
Securities are then listed, if any, (iv) such merger, consolidation,
conversion, amalgamation, replacement, conveyance, transfer or lease does not
cause the Capital Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization then
rating the Capital Securities or any Successor Securities, (v) such merger,
consolidation, conversion, amalgamation, replacement, conveyance, transfer or
lease does not adversely affect the rights, preferences and privileges of the
holders of the Capital Securities (including any Successor Securities) in any
material respect (other than dilution of such holders' interests in the new
entity, if any), (vi) such successor entity has a purpose substantially
identical to that of the Trust, (vii) prior to such merger, consolidation,
conversion, amalgamation, replacement, conveyance, transfer or lease, the
Corporation has received an opinion from independent counsel to the Trust
experienced in such matters to the effect that (a) such merger,
consolidation, conversion, amalgamation, replacement, conveyance, transfer or
lease does not adversely affect the rights, preferences and privileges of the
holders of the Capital Securities (including any Successor Securities) in any
material respect (other than dilution of such holders' interests in the new
entity, if any), and (b) following such merger, consolidation, conversion,
amalgamation, replacement, conveyance, transfer or lease, neither the Trust
nor such successor entity will be required to register as an investment
company under the Investment Company Act of 1940, as amended (the "Investment
Company Act"), and (viii) the Corporation or any permitted successor or
assignee owns all of the common securities of such successor entity and
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee. Notwithstanding
the foregoing, the Trust shall not, except with the consent of holders of
100% in Liquidation Amount of the Trust Securities, consolidate, amalgamate,
merge or convert with or into, or be replaced by or convey, transfer or lease
its properties and assets as an entirety or substantially as an entirety to
any other entity or permit any other entity to consolidate, amalgamate, merge
or convert with or into, or replace it if such consolidation, conversion,
amalgamation, merger, replacement, conveyance, transfer or lease would cause
the Trust or the successor entity not to be classified as a grantor trust for
United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT. Except as provided
below and under "--Mergers, Conversions, Consolidations, Amalgamations or
Replacements of the Trust" and "--Description of New Guarantee--Amendments
and Assignment" and as otherwise required by law and the Trust Agreement, the
holders of the New Capital Securities will have no voting rights.
The Trust Agreement may be amended from time to time by the Corporation,
the Property Trustee and the Administrative Trustees, without the consent of
the holders of the Trust Securities (i) to cure any ambiguity, correct or
supplement any provisions in the Trust Agreement that may be inconsistent
with any other provision, or to make any other provisions with respect to
matters or questions arising under the Trust Agreement, which shall not be
inconsistent with the other provisions of the Trust Agreement, or (ii) to
modify, eliminate or add to any provisions of the Trust Agreement to such
extent as shall be necessary to ensure that the Trust will be classified for
United States federal income tax purposes as a grantor trust at all times
that any Trust Securities are outstanding or to ensure that the Trust will
not be required to register as an "investment company" under the Investment
Company Act; provided, however, that in the case of clause (i), such action
shall not adversely affect in any material respect the interests of the
holders of the Trust Securities, and any amendments of the Trust Agreement
shall become effective when notice thereof is given to the holders of the
Trust Securities. The Trust Agreement may be amended by the Issuer Trustees
and the Corporation (i) with the consent of holders representing a majority
(based upon Liquidation Amount) of the outstanding Trust Securities, and (ii)
upon receipt by the Issuer Trustees of an opinion of counsel to the effect
that such amendment or the exercise of any power granted to the Issuer
Trustees in accordance with such amendment will not affect the Trust's status
as a grantor trust for United States federal income tax purposes or the
Trust's exemption from status as an "investment company" under the Investment
Company Act, provided that, without the consent of each holder of Trust
Securities, the Trust Agreement may not be amended to (i) change the amount
or timing of any Distribution on the Trust Securities or otherwise adversely
affect the amount of any Distribution required to be made in respect of the
Trust Securities as of a specified date or (ii) restrict the right of a
holder of Trust Securities to institute suit for the enforcement of any such
payment on or after such date.
So long as any Junior Subordinated Debentures are held by the Property
Trustee, the Issuer Trustees shall not (i) direct the time, method and place
of conducting any proceeding for any remedy available to the Debenture
Trustee, or executing any trust or power conferred on such Property Trustee
with respect to the Junior Subordinated Debentures, (ii) waive certain past
defaults under the Indenture, (iii) exercise any right to rescind or annul a
declaration of acceleration of the maturity of the principal of the Junior
Subordinated Debentures or (iv) consent to any amendment, modification or
termination of the Indenture or the Junior Subordinated Debentures, where
such consent shall be required, without, in each case, obtaining the prior
approval of the holders of a majority in Liquidation Amount of all
outstanding Capital Securities; provided, however, that where a consent under
the Indenture would require the consent of each holder of Junior Subordinated
Debentures affected thereby, no such consent shall be given by the Property
Trustee without the prior approval of each holder of the Capital Securities.
The Issuer Trustees shall not revoke any action previously authorized or
approved by a vote of the holders of the Capital Securities except by
subsequent vote of such holders. The Property Trustee shall notify each
holder of Capital Securities of any notice of default with respect to the
Junior Subordinated Debentures. In addition to obtaining the foregoing
approvals of such holders of the Capital Securities, prior to taking any of
the foregoing actions, the Issuer Trustees shall obtain an opinion of counsel
experienced in such matters to the effect that the Trust will not be
classified as an association taxable as a corporation for United States
federal income tax purposes on account of such action.
Any required approval of holders of New Capital Securities may be given
at a meeting of such holders convened for such purpose or pursuant to written
consent. The Property Trustee will cause a notice of any meeting at which
holders of New Capital Securities are entitled to vote, or of any matter upon
which action by written consent of such holders is to be taken, to be given
to each holder of record of New Capital Securities in the manner set forth in
the Trust Agreement.
No vote or consent of the holders of New Capital Securities will be
required for the Trust to redeem and cancel the New Capital Securities in
accordance with the Trust Agreement.
Notwithstanding that holders of the Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned by the Corporation, the Issuer Trustees or
any affiliate of the Corporation or any Issuer Trustees, shall, for purposes
of such vote or consent, be treated as if they were not outstanding.
FORM, DENOMINATION, BOOK-ENTRY PROCEDURES AND TRANSFER. The New Capital
Securities initially will be represented by one or more Capital Securities in
registered, global form (collectively, the "Global Capital Securities"). The
Global Capital Securities will be deposited upon issuance with the Property
Trustee as custodian for DTC, in New York, New York, and registered in the
name of DTC or its nominee, in each case for credit to an account of a direct
or indirect participant in DTC as described below.
Except as set forth below, the Global Capital Securities may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee. Beneficial interests in the Global Capital
Securities may not be exchanged for Capital Securities in certificated form
except in the limited circumstances described below.
DEPOSITORY PROCEDURES. DTC has advised the Trust and the Corporation
that DTC is a limited purpose trust company created to hold securities for
its participating organizations (collectively, the "Participants") and to
facilitate the clearance and settlement of transactions in those securities
between Participants through electronic book-entry changes in accounts of its
Participants. The Participants include securities brokers and dealers
(including the Initial Purchaser), banks, trust companies, clearing
corporations and certain other organizations. Access to DTC's system is also
available to other entities such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own
securities held by or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interest and transfer of ownership
interest of each actual purchaser of each security held by or on behalf of
DTC are recorded on the records of the Participants and Indirect
Participants.
DTC has also advised the Trust and the Corporation that, pursuant to
procedures established by it, (i) upon deposit of the Global Capital
Securities, DTC will credit the accounts of Participants with portions of the
Liquidation Amount of the Global Capital Securities and (ii) ownership of
such interests in the Global Capital Securities will be shown on, and the
transfer of ownership thereof will be effected only through, records
maintained by DTC (with respect to the Participants) or by the Participants
and the Indirect Participants (with respect to other owners of beneficial
interests in the Global Capital Securities).
Except as described below, owners of beneficial interests in the Global
Capital Securities will not have Capital Securities registered in their name,
will not receive physical delivery of Capital Securities in certificated form
and will not be considered the registered owners or holders thereof under the
Trust Agreement for any purpose.
Payments in respect of the Global Capital Securities registered in the
name of DTC or its nominee will be payable by the Property Trustee to DTC in
its capacity as the registered holder under the Trust Agreement. Under the
terms of the Trust Agreement, the Property Trustee will treat the persons in
whose names the Capital Securities, including the Global Capital Securities,
are registered as the owners thereof for the purpose of receiving such
payments and for any and all other purposes whatsoever. Consequently, neither
the Property Trustee nor any agent thereof has or will have any
responsibility or liability for (i) any aspect of DTC's records or any
Participant's or Indirect Participant's records relating to or payments made
on account of beneficial interests in the Global Capital Securities, or for
maintaining, supervising or reviewing any of DTC's records or any
Participant's or Indirect Participant's records relating to the beneficial
interests in the Global Capital Securities or (ii) any other matter relating
to the actions and practices of DTC or any of its Participants or Indirect
Participants. DTC has advised the Trust and the Corporation that its current
practice, upon receipt of any payment in respect of securities such as the
Capital Securities, is to credit the accounts of the relevant Participants
with the payment on the payment date, in amounts proportionate to their
respective holdings in Liquidation Amount of beneficial interests in the
relevant security as shown on the records of DTC unless DTC has reason to
believe it will not receive payment on such payment date. Payments by the
Participants and the Indirect Participants to the beneficial owners of New
Capital Securities will be governed by standing instructions and customary
practices and will be the responsibility of the Participants or the Indirect
Participants and will not be the responsibility of DTC, the Property Trustee,
the Trust or the Corporation. Neither the Trust or the Corporation nor the
Property Trustee will be liable for any delay by DTC or any of its
Participants in identifying the beneficial owners of the New Capital
Securities, and the Trust, the Corporation and the Property Trustee may
conclusively rely on and will be protected in relying on instructions from
DTC or its nominee for all purposes.
Beneficial interests in the Global Capital Securities will trade in
DTC's Same-Day Funds Settlement System and secondary market trading activity
in such interests will therefore settle in immediately available funds,
subject in all cases to the rules and procedures of DTC and its Participants.
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds.
DTC has advised the Trust and the Corporation that it will take any
action permitted to be taken by a holder of New Capital Securities only at
the direction of one or more Participants to whose account with DTC interests
in the Global Capital Securities are credited and only in respect of such
portion of the Liquidation Amount of the New Capital Securities as to which
such Participant or Participants has or have given such direction. However,
if there is an Event of Default under the Trust Agreement, DTC reserves the
right to exchange the Global Capital Securities for New Capital Securities in
certificated form and to distribute such New Capital Securities to its
Participants.
THE INFORMATION IN THIS SECTION CONCERNING DTC AND ITS BOOK-ENTRY SYSTEM
HAS BEEN OBTAINED FROM SOURCES THAT THE TRUST AND THE CORPORATION BELIEVE TO
BE RELIABLE, BUT NEITHER THE TRUST NOR THE CORPORATION TAKES RESPONSIBILITY
FOR THE ACCURACY THEREOF. ALTHOUGH DTC HAS AGREED TO THE FOREGOING
PROCEDURES TO FACILITATE TRANSFERS IN INTERESTS IN THE GLOBAL CAPITAL
SECURITIES AMONG PARTICIPANTS IN DTC, IT IS UNDER NO OBLIGATION TO PERFORM OR
TO CONTINUE TO PERFORM SUCH PROCEDURES, AND SUCH PROCEDURES MAY BE
DISCONTINUED AT ANY TIME. NEITHER THE TRUST NOR THE CORPORATION OR THE
PROPERTY TRUSTEE WILL HAVE ANY RESPONSIBILITY FOR THE PERFORMANCE BY DTC OR
ITS PARTICIPANTS OR INDIRECT PARTICIPANTS OF ITS OBLIGATIONS UNDER THE RULES
AND PROCEDURES GOVERNING ITS OPERATIONS.
EXCHANGE OF BOOK-ENTRY CAPITAL SECURITIES FOR CERTIFICATED CAPITAL
SECURITIES. A Global Capital Security is exchangeable for New Capital
Securities in registered certificated form if (i) DTC (x) notifies the Trust
that it is unwilling or unable to continue as Depositary for the Global
Capital Security and the Trust thereupon fails to appoint a successor
Depositary within 90 days or (y) has ceased to be a clearing agency
registered under the Exchange Act, (ii) the Corporation in its sole
discretion elects to cause the issuance of the New Capital Securities in
certificated form or (iii) there shall have occurred and be continuing an
Event of Default or any event which after notice or lapse of time or both
would be an Event of Default under the Trust Agreement. In addition,
beneficial interests in a Global Capital Security may be exchanged
for certificated New Capital Securities upon request but only upon at least
20 days prior written notice given to the Property Trustee by or on behalf
of DTC in accordance with customary procedures. In all cases,
certificated New Capital Securities delivered in exchange for any Global
Capital Security or beneficial interests therein will be registered in
the names, and issued in any approved denominations, requested by or
on behalf of the Depositary (in accordance with its customary procedures),
unless the Property Trustee determines otherwise in compliance with
applicable law.
PAYMENT AND PAYING AGENCY. Payments in respect of the New Capital
Securities held in global form shall be made to the Depositary, which shall
credit the relevant accounts at the Depositary on the applicable Distribution
Dates or in respect of the New Capital Securities that are not held by the
Depositary, such payments shall be made by check mailed to the address of the
holder entitled thereto as such address shall appear on the register. The
paying agent (the "Paying Agent") shall initially be the Property Trustee and
any co-paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and the Corporation. The Paying Agent shall be
permitted to resign as Paying Agent upon 30 days written notice to the
Property Trustee and the Corporation. In the event that the Property Trustee
shall no longer be the Paying Agent, the Administrative Trustees shall
appoint a successor (which shall be a bank or trust company acceptable to the
Administrative Trustees and the Corporation) to act as Paying Agent.
REGISTRAR AND TRANSFER AGENT. The Property Trustee will act as
registrar and transfer agent for the New Capital Securities.
Registration of transfers of the New Capital Securities will be effected
without charge by or on behalf of the Trust, but upon payment of any tax or
other governmental charges that may be imposed in connection with any
transfer or exchange. The Trust will not be required to register or cause to
be registered the transfer of the New Capital Securities after they have been
called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE. The Property Trustee,
other than during the occurrence and continuance of an Event of Default,
undertakes to perform only such duties as are specifically set forth in the
Trust Agreement and, after such Event of Default, must exercise the same
degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the Property
Trustee is under no obligation to exercise any of the powers vested in it by
the Trust Agreement at the request of any holder of Trust Securities unless
it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred thereby. If no Event of Default has
occurred and is continuing and the Property Trustee is required to decide
between alternative courses of action, construe ambiguous provisions in the
Trust Agreement or is unsure of the application of any provision of the Trust
Agreement, and the matter is not one on which holders of the Capital
Securities or the Common Securities are entitled under the Trust Agreement to
vote, then the Property Trustee shall take such action as is directed by the
Corporation and if not so directed, shall take such action as it deems
advisable and in the best interests of the holders of the Trust Securities
and will have no liability except for its own bad faith, negligence or
willful misconduct.
MISCELLANEOUS. The Administrative Trustees are authorized and directed
to conduct the affairs of and to operate the Trust in such a way that the
Trust will not be deemed to be an "investment company" required to be
registered under the Investment Company Act or classified as an association
taxable as a corporation for United States federal income tax purposes and so
that the Junior Subordinated Debentures will be treated as indebtedness of
the Corporation for United States federal income tax purposes. In this
connection, the Corporation and the Administrative Trustees are authorized to
take any action, not inconsistent with applicable law, the certificate of
trust of the Trust or the Trust Agreement, that the Corporation and the
Administrative Trustees determine in their discretion to be necessary or
desirable for such purposes, as long as such action does not materially
adversely affect the interests of the holders of the Trust Securities.
Holders of the Trust Securities have no preemptive or similar rights.
The Trust may not borrow money, issue debt, execute mortgages or pledge
any of its assets.
DESCRIPTION OF NEW JUNIOR SUBORDINATED DEBENTURES
The Old Junior Subordinated Debentures were issued, and the New Junior
Subordinated Debentures will be issued, as a separate series under the
Indenture. The Indenture has been qualified under the Trust Indenture Act.
This summary of certain terms and provisions of the Junior Subordinated
Debentures and the Indenture does not purport to be complete, and where
reference is made to particular provisions of the Indenture, such provisions,
including the definitions of certain terms, some of which are not otherwise
defined herein, are qualified in their entirety by reference to all of the
provisions of the Indenture and those terms made a part of the Indenture by
the Trust Indenture Act.
GENERAL. Concurrently with the issuance of the Old Capital Securities,
the Trust invested the proceeds thereof, together with the consideration paid
by the Corporation for the Common Securities, in Old Junior Subordinated
Debentures issued by the Corporation. Pursuant to the Exchange Offer, the
Corporation will exchange the Old Junior Subordinated Debentures, in an
amount corresponding to the Old Capital Securities accepted for exchange, for
a like aggregate principal amount of the New Junior Subordinated Debentures
promptly after the Expiration Date.
The New Junior Subordinated Debentures will bear interest at the annual
rate of 9.75% of the principal amount thereof, payable semi-annually in
arrears on January 31 and July 31 of each year (each, an "Interest Payment
Date"), commencing July 31, 1997, to the person in whose name each Junior
Subordinated Debenture is registered, subject to certain exceptions, at the
close of business on the fifteenth day prior to the relevant payment date.
It is anticipated that, until the liquidation, if any, of the Trust, each New
Junior Subordinated Debenture will be held in the name of the Property
Trustee in trust for the benefit of the holders of the Trust Securities. The
amount of interest payable for any period will be computed on the basis of a
360-day year of twelve 30-day months and for any period of less than one full
calendar month, the number of days elapsing in such month. In the event that
any date on which interest is payable on the New Junior Subordinated
Debentures is not a Business Day, then payment of the interest payable on
such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay), in each
case with the same force and effect as if made on such date. Accrued interest
that is not paid on the applicable Interest Payment Date will bear additional
interest on the amount thereof (to the extent permitted by law) at the rate
per annum of 9.75% thereof, compounded semi-annually. The term "interest," as
used herein, shall include semi-annual interest payments, interest on
semi-annual interest payments not paid on the applicable Interest Payment
Date and Additional Sums (as defined below), as applicable.
The New Junior Subordinated Debentures will be issued in denominations
of $1,000 and integral multiples thereof. The New Junior Subordinated
Debentures will mature on January 31, 2027 (the "Stated Maturity Date"). The
New Junior Subordinated Debentures will rank pari passu with the Old Junior
Subordinated Debentures and with all Other Debentures and will be unsecured
and subordinate and junior in right of payment to the extent and in the
manner set forth in the Indenture to all Senior Indebtedness. See "--
Subordination." The Corporation is a non-operating holding company and
substantially all of the operating assets of the Corporation and its
consolidated subsidiaries are owned by Community Bank. The Corporation
relies primarily on dividends from such subsidiaries to meet its obligations.
The Corporation is a legal entity separate and distinct from its
subsidiaries. The principal sources of the Corporation's income are
dividends and interest from its banking and non-banking affiliates. Community
Bank is subject to certain restrictions imposed by federal law on any loans
or extensions of credit to, and other transactions with, the Corporation and
certain other affiliates, and on investments in stock or other securities
thereof. Such restrictions prevent the Corporation and its non-banking
affiliates from borrowing from Community Bank unless the loans are secured by
various types of collateral and in specified amounts. Further, such secured
loans, other transactions and investments by any of Community Bank are
generally limited in amount as to the Corporation and as to each of such
other affiliates to 10% of Community Bank's capital and surplus and as to the
Corporation and all of such other affiliates to an aggregate of 20% of
Community Bank's capital and surplus. In addition, payment of dividends to
the Corporation by Community Bank is subject to various statutory limitations
and in certain circumstances requires approval by banking regulatory
authorities. Among other things, federal and state regulatory agencies have
the authority to limit payments of dividends by Community Bank based upon the
capital adequacy of Community Bank and the safety and soundness of Community
Bank following payment of the proposed dividend. Because the Corporation is
a holding company, the right of the Corporation to participate in any
distribution of assets of any subsidiary, upon such subsidiary's liquidation
or reorganization or otherwise, is subject to the prior claims of creditors
of the subsidiary, except to the extent the Corporation may itself be
recognized as a creditor of that subsidiary. Accordingly, the New Junior
Subordinated Debentures will be effectively subordinated to all existing and
future liabilities of the Corporation's subsidiaries, and holders of New
Junior Subordinated Debentures should not rely upon the assets of the
Corporation's subsidiaries for repayment of the New Junior
Subordinated Debentures. The Indenture does not limit the incurrence or
issuance of other indebtedness of the Corporation, including Senior
Indebtedness. See "--Subordination."
FORM, REGISTRATION AND TRANSFER. If the Junior Subordinated Debentures
are distributed to holders of the Trust Securities, such Junior Subordinated
Debentures may be represented by one or more global certificates registered
in the name of Cede & Co. as the nominee of DTC. The depositary arrangements
for such Junior Subordinated Debentures are expected to be substantially
similar to those in effect for the New Capital Securities. For a description
of DTC and the terms of the depositary arrangements relating to payments,
transfers, voting rights, redemptions and other notices and other matters,
see "--Description of New Capital Securities--Form, Denomination, Book-Entry
Procedures and Transfer."
PAYMENT AND PAYING AGENTS. Payment of principal of (and premium, if
any) and any interest on New Junior Subordinated Debentures will be made at
the office of the Debenture Trustee in The City of New York or at the office
of such Paying Agent or Paying Agents as the Corporation may designate from
time to time, except that at the option of the Corporation payment of any
interest may be made except in the case of New Junior Subordinated Debentures
in global form, (i) by check mailed to the address of the Person entitled
thereto as such address shall appear in the register for New Junior
Subordinated Debentures or (ii) by transfer to an account maintained by the
Person entitled thereto as specified in such register, provided that proper
transfer instructions have been received by the relevant Record Date. Payment
of any interest on any New Junior Subordinated Debenture will be made to the
Person in whose name such New Junior Subordinated Debenture is registered at
the close of business on the Record Date for such interest, except in the
case of defaulted interest. The Corporation may at any time designate
additional Paying Agents or rescind the designation of any Paying Agent;
however the Corporation will at all times be required to maintain a Paying
Agent in each place of payment for the New Junior Subordinated Debentures.
Any moneys deposited with the Debenture Trustee or any Paying Agent, or
then held by the Corporation in trust, for the payment of the principal of
(and premium, if any) or interest on any New Junior Subordinated Debenture
and remaining unclaimed for two years after such principal (and premium, if
any) or interest has become due and payable shall, at the request of the
Corporation, be repaid to the Corporation and the holder of such New Junior
Subordinated Debenture shall thereafter look, as a general unsecured
creditor, only to the Corporation for payment thereof.
OPTION TO EXTEND INTEREST PAYMENT DATE. So long as no Debenture Event
of Default has occurred and is continuing, the Corporation will have the
right under the Indenture at any time during the term of the New Junior
Subordinated Debentures to defer the payment of interest for a period not
exceeding 10 consecutive semi-annual periods with respect to each Extension
Period, provided that no Extension Period may extend beyond the Stated
Maturity Date. At the end of such Extension Period, the Corporation must pay
all interest then accrued and unpaid (together with interest thereon at the
annual rate of 9.75%, compounded semi-annually, to the extent permitted by
applicable law). During an Extension Period, interest will continue to accrue
and holders of New Junior Subordinated Debentures (and holders of the Trust
Securities while Trust Securities are outstanding) will be required to accrue
interest income for United States federal income tax purposes prior to the
receipt of cash attributable to such income. See "Certain United States
Federal Income Tax Considerations--Interest Income and Original Issue
Discount."
During any such Extension Period, the Corporation may not (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire, or make
a liquidation payment with respect to, any of the Corporation's capital stock
(which includes common and preferred stock), (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Corporation (including any Other Debentures) that rank
pari passu with or junior in right of payment to the New Junior Subordinated
Debentures or (iii) make any guarantee payments with respect to any guarantee
by the Corporation of the debt securities of any subsidiary of the
Corporation (including any Other Guarantees) if such guarantee ranks pari
passu with or junior in right of payment to the New Junior Subordinated
Debentures (other than (a) dividends or distributions in shares of or
options, warrants or rights to subscribe for or purchase shares of, common
stock of the Corporation, (b) any declaration of a dividend in connection
with the implementation of a stockholders' rights plan, or the issuance of
stock under any such plan in the future, or the redemption or repurchase of
any such rights pursuant thereto, (c) payments under the Guarantee, (d) as a
result of a reclassification of the Corporation's capital stock or the
exchange or conversion of one class or series of the Corporation's capital
stock for another class or series of the Corporation's capital stock, (e) the
purchase of fractional interests in shares of the Corporation's capital stock
pursuant to the conversion or exchange provisions of such capital stock
or the security being converted or exchanged, and (f) purchases of
common stock related to the issuance of common stock or rights under
any of the Corporation's benefit plans for its directors, officers or
employees or any of the Corporation's dividend reinvestment plans).
Prior to the expiration of any Extension Period, the Corporation may
further extend such Extension Period, provided that such extension does not
cause such Extension Period to exceed 10 consecutive semi-annual periods or
to extend beyond the Stated Maturity Date. Upon the expiration of any
Extension Period and the payment of all amounts then due on any Interest
Payment Date, the Corporation may elect to begin a new Extension Period,
subject to the above requirements. No interest shall be due and payable
during an Extension Period, except at the end thereof. The Corporation must
give the Property Trustee, the Administrative Trustees and the Debenture
Trustee notice of its election of any Extension Period (or an extension
thereof) at least five Business Days prior to the earlier of (i) the date the
Distributions on the Trust Securities would have been payable except for the
election to begin or extend such Extension Period or (ii) the date the
Administrative Trustees are required to give notice to any securities
exchange or to holders of New Capital Securities of the record date or the
date such Distributions are payable, but in any event not less than five
Business Days prior to such record date. The Debenture Trustee shall give
notice of the Corporation's election to begin or extend a new Extension
Period to the holders of the Capital Securities in accordance with the terms
of the Indenture. There is no limitation on the number of times that the
Corporation may elect to begin an Extension Period.
OPTIONAL PREPAYMENT. The New Junior Subordinated Debentures will be
prepayable, in whole or in part, at the option of the Corporation on or after
January 31, 2007, subject to the Corporation having received any required
regulatory approval, at a prepayment price (the "Optional Prepayment Price")
equal to the percentage of the outstanding principal amount of the New Junior
Subordinated Debentures specified below, plus, in each case, accrued interest
thereon to the date of prepayment if redeemed during the 12-month period
beginning January 31 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
<S> <C>
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.54%
2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.08%
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.63%
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.18%
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.72%
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.27%
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.82%
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.36%
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.91%
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.45%
2017 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.00%
</TABLE>
SPECIAL EVENT PREPAYMENT. If a Special Event occurs and is continuing,
the Corporation may, at its option and subject to receipt of any required
regulatory approval, prepay the New Junior Subordinated Debentures in whole
(but not in part) at any time prior to January 31, 2007 within 90 days of the
occurrence of such Special Event, at a prepayment price (the "Special Event
Prepayment Price") equal to the greater of (i) 100% of the principal amount
of such Junior Subordinated Debentures or (ii) the sum, as determined by a
Quotation Agent, of the present values of 104.54% of the principal amount
thereof plus the scheduled payments of interest thereon from the repayment
date to and including the Initial Optional Prepayment Date (the "Remaining
Life"), discounted to the prepayment date on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months) at the Adjusted Treasury
Rate, plus, in the case of a redemption under clause (i) or clause (ii),
accrued interest thereon to the date of prepayment.
A "Special Event" means a Tax Event or a Regulatory Capital Event (as
defined below), as the case may be.
A "Tax Event" means the receipt by the Corporation and the Trust of an
opinion of a nationally recognized tax counsel experienced in such matters to
the effect that, as a result of (a) 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 (b) 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 February 3, 1997, there is more than an insubstantial
risk that (i) the Trust is, or will be within 90 days of the date of such
opinion, subject to United States federal income tax with respect to
income received or accrued on the Junior Subordinated Debentures,
(ii) interest payable by the Corporation on the Junior Subordinated
Debentures is not, or within 90 days of the date of such opinion will not be,
deductible by the Corporation, in whole or in part, for United States
federal income tax purposes, or (iii) the Trust is, or will be within
90 days of the date of such opinion, subject to more than a de minimis amount
of other taxes, duties or other governmental charges.
A "Regulatory Capital Event" means that the Corporation shall have
received an opinion of independent bank regulatory counsel experienced in
such matters to the effect that, as a result of (a) any amendment to, or
change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any rules, guidelines or
policies of the Federal Reserve or (b) any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such pronouncement or
decision is announced on or after February 3, 1997, the Capital Securities do
not constitute, or within 90 days of the date of such opinion, will not
constitute, Tier I Capital (or its then equivalent); provided, however, that
the distribution of the Junior Subordinated Debentures in connection with the
liquidation of the Trust by the Corporation shall not in and of itself
constitute a Regulatory Capital Event unless such liquidation shall have
occurred in connection with a Tax Event.
"Adjusted Treasury Rate" means, with respect to any prepayment date, the
rate per annum equal to (i) the yield, under the heading which represents the
average for the immediately prior week, appearing in the most recently
published statistical release designated "H.15 (519)" or any successor
publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities
adjusted to constant maturity under the caption "Treasury Constant
Maturities," for the maturity corresponding to the Remaining Life (if no
maturity is within three months before or after the maturity corresponding to
the Remaining Life, yields for the two published maturities most closely
corresponding to the Remaining Life shall be interpolated, and the Adjusted
Treasury Rate shall be interpolated or extrapolated from such yields on a
straight-line basis, rounding to the nearest month) or (ii) if such release
(or any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury
Issue, calculated using a price for the Comparable Treasury Issue (expressed
as a percentage of its principal amount) equal to the Comparable Treasury
Price for such prepayment date, in each case calculated on the third Business
Day preceding the prepayment date, plus in each case (a) 1.00% if such
prepayment date occurs on or prior to January 31, 1998, and (b) 0.50% in all
other cases.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the
Remaining Life of the New Junior Subordinated Debentures that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the Remaining Life of the New Junior Subordinated Debentures. If
no United States Treasury security has a maturity which is within a period
from three months before to three months after the Initial Optional
Prepayment Date, the two most closely corresponding United States Treasury
securities shall be used as the Comparable Treasury Issue, and the Adjusted
Treasury Rate shall be interpolated or extrapolated on a straight-line basis,
rounding to the nearest month, using such securities.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Corporation or, if the Corporation fails to do so, by the Property Trustee.
"Reference Treasury Dealer" means a primary U.S. Government securities dealer
in New York City (a "Primary Treasury Dealer").
"Comparable Treasury Price" means, with respect to any prepayment date,
(i) the average of five Reference Treasury Dealer Quotations for such
prepayment date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations, or (ii) if the Debenture Trustee obtains fewer
than three such Reference Treasury Dealer Quotations, the average of all such
Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any prepayment date, the average, as determined
by the Debenture Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal
amount) quoted in writing to the Debenture Trustee by such Reference
Treasury Dealer at 5:00 p.m., New York City time, on the third Business
Day preceding such prepayment date.
"Additional Sums" means such additional amounts as may be necessary in
order that the amount of Distributions then due and payable by the Trust on
the outstanding Trust Securities shall not be reduced as a result of any
additional taxes, duties or other governmental charges to which the Trust has
become subject as a result of a Tax Event.
Notice of any prepayment will be mailed at least 30 days but not more
than 60 days before the redemption date to each holder of New Junior
Subordinated Debentures to be prepaid at its registered address. Unless the
Corporation defaults in payment of the prepayment price, on and after the
prepayment date interest ceases to accrue on such New Junior Subordinated
Debentures called for prepayment.
If the Trust is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, the Corporation will pay as
additional amounts on the New Junior Subordinated Debentures the Additional
Sums.
RESTRICTIONS ON CERTAIN PAYMENTS. The Corporation will also covenant
that it will not, (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any
of the Corporation's capital stock (which includes common and preferred
stock), (ii) make any payment of principal, interest or premium, if any, on
or repay or repurchase or redeem any debt securities of the Corporation
(including Other Debentures) that rank pari passu with or junior in right of
payment to the New Junior Subordinated Debentures or (iii) make any guarantee
payments with respect to any guarantee by the Corporation of the debt
securities of any subsidiary of the Corporation (including any Other
Guarantees) if such guarantee ranks pari passu or junior in right of payment
to the New Junior Subordinated Debentures (other than (a) dividends or
distributions in shares of, or options, warrants or rights to subscribe for
or purchase shares of, common stock of the Corporation, (b) any declaration
of a dividend in connection with the implementation of a stockholder's rights
plan, or the issuance of stock under any such plan in the future, or the
redemption or repurchase of any such rights pursuant thereto, (c) payments
under the Guarantee, (d) as a result of a reclassification of the
Corporation's capital stock or the exchange or conversion of one class or
series of the Corporation's capital stock for another class or series of the
Corporation's capital stock, (e) the purchase of fractional interests in
shares of the Corporation's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, and (f) purchases of common stock related to the issuance of
common stock or rights under any of the Corporation's benefit plans for its
directors, officers or employees or any of the Corporation's dividend
reinvestment plans) if at such time (1) there shall have occurred any event
of which the Corporation has actual knowledge that (a) is, or with the giving
of notice or the lapse of time, or both, would be, a Debenture Event of
Default and (b) in respect of which the Corporation shall not have taken
reasonable steps to cure, (2) if such New Junior Subordinated Debentures are
held by the Trust, the Corporation shall be in default with respect to its
payment of any obligations under the New Guarantee or (3) the Corporation
shall have given notice of its election of an Extension Period as provided in
the Indenture and shall not have rescinded such notice, and such Extension
Period, or any extension thereof, shall have commenced.
MODIFICATION OF INDENTURE. From time to time, the Corporation and the
Debenture Trustee may, without the consent of the holders of Junior
Subordinated Debentures, amend, waive or supplement the Indenture for
specified purposes, including, among other things, curing ambiguities,
defects or inconsistencies (provided that any such action does not materially
adversely affect the interest of the holders of Junior Subordinated
Debentures) and qualifying, or maintaining the qualification of, the
Indenture under the Trust Indenture Act. The Indenture contains provisions
permitting the Corporation and the Debenture Trustee, with the consent of the
holders of a majority in principal amount of Junior Subordinated Debentures,
to modify the Indenture in a manner affecting the rights of the holders of
Junior Subordinated Debentures; provided, that no such modification may,
without the consent of the holders of each outstanding Junior Subordinated
Debenture so affected, (i) change the Stated Maturity, or reduce the
principal amount of the Junior Subordinated Debentures or amount payable upon
prepayment thereof, or reduce the rate or extend the time of payment of
interest thereon, or make the principal of or interest or premium on, the
Junior Subordinated Debentures payable in any coin or currency other than
that provided in the Junior Subordinated Debentures, or impair or affect the
right of any holder of the Junior Subordinated Debentures to institute suit
for the payment thereof, or (ii) reduce the percentage of principal amount of
Junior Subordinated Debentures, the holders of which are required to consent
to any such modification of the Indenture.
DEBENTURE EVENTS OF DEFAULT. The Indenture provides that any one or
more of the following described events with respect to the New Junior
Subordinated Debentures constitutes a "Debenture Event of Default" (whatever
the reason for such Debenture Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(i) failure for 30 days to pay any interest on the New Junior
Subordinated Debentures or any Other Debentures when due (subject to the
deferral of any due date in the case of an Extension Period); or
(ii) failure to pay any principal or premium, if any, on the New Junior
Subordinated Debentures or any Other Debentures when due whether at maturity,
upon redemption, by declaration of acceleration of maturity or otherwise; or
(iii) failure to observe or perform in any material respect certain
other covenants contained in the Indenture for 90 days after written notice
to the Corporation from the Debenture Trustee or the holders of at least 25%
in aggregate outstanding principal amount of Junior Subordinated Debentures;
or
(iv) certain events in bankruptcy, insolvency or reorganization of the
Corporation.
The holders of a majority in aggregate outstanding principal amount of
the Junior Subordinated Debentures have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the
Debenture Trustee. The Debenture Trustee or the holders of not less than 25%
in aggregate outstanding principal amount of the Junior Subordinated
Debentures may declare the principal due and payable immediately upon a
Debenture Event of Default. The holders of a majority in aggregate
outstanding principal amount of the Junior Subordinated Debentures may annul
such declaration and waive the default if the default (other than the
non-payment of the principal of the Junior Subordinated Debentures which has
become due solely by such acceleration) has been cured and a sum sufficient
to pay all matured installments of interest and principal due otherwise than
by acceleration has been deposited with the Debenture Trustee.
The holders of a majority in aggregate outstanding principal amount of
the Junior Subordinated Debentures affected thereby may, on behalf of the
holders of all the Junior Subordinated Debentures, waive any past default,
except a default in the payment of principal (or premium, if any) or interest
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest (and premium, if any) and principal due otherwise
than by acceleration has been deposited with the Debenture Trustee) or a
default in respect of a covenant or provision which under the Indenture
cannot be modified or amended without the consent of the holder of each
outstanding Junior Subordinated Debenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF NEW CAPITAL SECURITIES. If
a Debenture Event of Default shall have occurred and be continuing and shall
be attributable to the failure of the Corporation to pay interest (or
premium, if any) on or principal of the New Junior Subordinated Debentures on
the due date, a holder of New Capital Securities may institute a Direct
Action. The Corporation may not amend the Indenture to remove the foregoing
right to bring a Direct Action without the prior written consent of the
holders of all of the New Capital Securities. Notwithstanding any payments
made to a holder of New Capital Securities by the Corporation in connection
with a Direct Action, the Corporation shall remain obligated to pay the
principal of (or premium, if any) or interest on the New Junior Subordinated
Debentures, and the Corporation shall be subrogated to the rights of the
holder of such New Capital Securities with respect to payments on the New
Capital Securities to the extent of any payments made by the Corporation to
such holder in any Direct Action.
The holders of the New Capital Securities will not be able to exercise
directly any remedies, other than those set forth in the preceding paragraph,
available to the holders of the New Junior Subordinated Debentures unless
there shall have been an Event of Default under the Trust Agreement. See "--
Description of New Capital Securities--Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS. The
Indenture provides that the Corporation shall not consolidate with or merge
or convert into any other Person or convey, transfer or lease its properties
and assets as an entirety or substantially as an entirety to any Person, and
no Person shall consolidate with or merge or convert into the Corporation or
convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to the Corporation, unless: (i) in case the
Corporation consolidates with or merges or converts into another Person or
conveys or transfers its properties and assets substantially as an entirety
to any Person, the successor Person is organized under the laws of the United
States or any State or the District of Columbia, and such successor Person
expressly assumes the Corporation's obligations on the Junior Subordinated
Debentures; (ii) immediately after giving effect thereto, no Debenture Event
of Default, and no event which, after notice or lapse of time or both, would
become a Debenture Event of Default, shall have occurred and be continuing;
and (iii) certain other conditions as prescribed in the Indenture are met.
The general provisions of the Indenture do not afford holders of the
Junior Subordinated Debentures protection in the event of a highly leveraged
or other transaction involving the Corporation that may adversely affect
holders of the New Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE. The Indenture provides that when, among
other things, all New Junior Subordinated Debentures not previously delivered
to the Debenture Trustee for cancellation (i) have become due and payable or
(ii) will become due and payable at maturity within one year, and the
Corporation deposits or causes to be deposited with the Debenture Trustee
funds, in trust, for the purpose and in an amount sufficient to pay and
discharge the entire indebtedness on the New Junior Subordinated Debentures
not previously delivered to the Debenture Trustee for cancellation, for the
principal (and premium, if any) and interest to the date of the deposit or to
the Stated Maturity Date, as the case may be, then the Indenture will cease
to be of further effect (except as to the Corporation's obligations to pay
all other sums due pursuant to the Indenture and to provide the officers'
certificates and opinions of counsel described therein), and the Corporation
will be deemed to have satisfied and discharged the Indenture.
SUBORDINATION. The Indenture provides that the Junior Subordinated
Debentures issued thereunder will be subordinate and rank junior in right of
payment to all Senior Indebtedness. No payment of principal (including
redemption payments), premium, if any, or interest on the Junior Subordinated
Debentures may be made at any time when (i) any Senior Indebtedness is not
paid when due, (ii) any applicable grace period with respect to such default
has ended and such default has not been cured or waived or ceased to exist,
or (iii) the maturity of any Senior Indebtedness has been accelerated because
of a default.
Upon any distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Corporation, all Senior Indebtedness must be
paid in full before the holders of Junior Subordinated Debentures are
entitled to receive or retain any payment in respect thereof.
In the event of the acceleration of the maturity of Junior Subordinated
Debentures, the holders of all Senior Indebtedness outstanding at the time of
such acceleration will first be entitled to receive payment in full before
the holders of Junior Subordinated Debentures will be entitled to receive or
retain any payment in respect of the Junior Subordinated Debentures.
"Senior Indebtedness" shall mean all Indebtedness for Money Borrowed,
whether outstanding on the date of execution of the Indenture or thereafter
created, assumed or incurred, unless the terms thereof specifically provide
that it is not superior in right of payment to the Junior Subordinated
Debentures, and any deferrals, renewals or extensions of such Senior
Indebtedness.
"Indebtedness for Money Borrowed" shall mean any obligation of, or any
obligation guaranteed by, the Corporation for the repayment of borrowed
money, whether or not evidenced by bonds, debentures, notes or other written
instruments, but shall not include (i) any trade accounts payable in the
ordinary course of business, (ii) any such indebtedness that by its terms
ranks pari passu with or junior in right of payment to the Junior
Subordinated Debentures, (iii) all other debt securities, and guarantees in
respect of those debt securities, issued to any other trust, or a trustee of
such trust, partnership or other entity affiliated with the Corporation that
is a financing vehicle of the Corporation (a "financing entity") in
connection with the issuance by such financing entity of equity securities or
other securities guaranteed by the Corporation pursuant to an instrument that
ranks pari passu with or junior in right of payment to the Guarantee, and
(iv) any other indebtedness that would otherwise qualify as "Indebtedness for
Money Borrowed" to the extent that such indebtedness by its terms ranks pari
passu with or junior in right of payment to any of the indebtedness described
in clause (i), (ii) or (iii) above.
The Indenture places no limitation on the amount of additional Senior
Indebtedness that may be incurred by the Corporation. The Corporation expects
from time to time to incur additional indebtedness constituting Senior
Indebtedness.
GOVERNING LAW. The Indenture and the New Junior Subordinated Debentures
will be governed by and construed in accordance with the laws of the State of
New York.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE. Following the Exchange
Offer and the qualification of the Indenture under the Trust Indenture Act,
the Debenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the
Trust Indenture Act. Subject to such provisions, the Debenture Trustee is
under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of New Junior Subordinated Debentures,
unless offered reasonable indemnity by such holder against the costs,
expenses and liabilities which might be incurred thereby. The Debenture
Trustee is not required to expend or risk its own funds or otherwise incur
personal financial liability in the performance of its duties if the
Debenture Trustee reasonably believes that repayment or adequate indemnity is
not reasonably assured to it.
DESCRIPTION OF NEW GUARANTEE
The Old Guarantee was executed and delivered by the Corporation
concurrently with the issuance by the Trust of the Old Capital Securities for
the benefit of the holders from time to time of the Old Capital Securities.
Promptly after the Expiration Date, the New Guarantee will be issued by the
Corporation for the benefit of the holders from time to time of the New
Capital Securities. The Guarantee has been qualified under the Trust
Indenture Act. This summary of certain provisions of the Guarantee does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, all of the provisions of the Guarantee, including the
definitions therein of certain terms, and the Trust Indenture Act.
GENERAL. The Corporation will irrevocably agree to pay in full on a
subordinated basis, to the extent set forth herein, the Guarantee Payments
(as defined below) to the holders of the New Capital Securities, as and when
due, regardless of any defense, right of set-off or counterclaim that the
Trust may have or assert other than the defense of payment. The following
payments with respect to the New Capital Securities, to the extent not paid
by or on behalf of the Trust (the "Guarantee Payments"), will be subject to
the New Guarantee: (i) any accumulated and unpaid Distributions required to
be paid on New Capital Securities, to the extent that the Trust has funds on
hand legally available therefor, (ii) the applicable Redemption Price with
respect to New Capital Securities called for redemption, to the extent that
the Trust has funds on hand legally available therefor, or (iii) upon a
voluntary or involuntary termination and liquidation of the Trust, the lesser
of (a) the Liquidation Distribution and (b) the amount of assets of the Trust
remaining available for distribution to holders of New Capital Securities.
The Corporation's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Corporation to the holders of
the New Capital Securities or by causing the Trust to pay such amounts to
such holders.
The New Guarantee will rank subordinate and junior in right of payment
to all Senior Indebtedness to the extent provided therein. See "--Status of
New Guarantee". Because the Corporation is a holding company, the right of
the Corporation to participate in any distribution of assets of any
subsidiary upon such subsidiary's liquidation or reorganization or otherwise,
is subject to the prior claims of creditors of that subsidiary, except to the
extent the Corporation may itself be recognized as a creditor of that
subsidiary. Accordingly, the Corporation's obligations under the New
Guarantee will be effectively subordinated to all existing and future
liabilities of the Corporation's subsidiaries, and claimants should look only
to the assets of the Corporation for payments thereunder. See "--Description
of New Junior Subordinated Debentures--General." The New Guarantee does not
limit the incurrence or issuance of other indebtedness of the Corporation,
including Senior Indebtedness, whether under the Indenture, any other
indenture that the Corporation may enter into in the future or otherwise.
The Corporation will, through the New Guarantee, the Trust Agreement,
the New Junior Subordinated Debentures and the Indenture, taken together,
fully, irrevocably and unconditionally guarantee all of the Trust's
obligations under the New Capital Securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these
documents that has the effect of providing a full, irrevocable and
unconditional subordinated guarantee of the Trust's obligations under the New
Capital Securities. See "Relationship Among the New Capital Securities, the
New Junior Subordinated Debentures and the New Guarantee."
STATUS OF NEW GUARANTEE. The New Guarantee will constitute an unsecured
obligation of the Corporation and will rank subordinate and junior in right
of payment to all Senior Indebtedness in the same manner as New Junior
Subordinated Debentures, except in the case of a bankruptcy or insolvency
proceeding in respect of the Corporation, in which case the New Guarantee
will rank subordinate and junior in right of payment to all liabilities
(other than Other Guarantees) of the Corporation.
The New Guarantee will rank pari passu with the Old Guarantee and with
all Other Guarantees issued by the Corporation. The New Guarantee will
constitute a guarantee of payment and not of collection (i.e., the guaranteed
party may institute a legal proceeding directly against the Corporation to
enforce its rights under the New Guarantee without first instituting a legal
proceeding against any other person or entity). The New Guarantee will be
held for the benefit of the holders of the New Capital Securities. The New
Guarantee will not be discharged except by payment of the Guarantee Payments
in full to the extent not paid by the Trust or upon distribution to the
holders of the New Capital Securities of the New Junior Subordinated
Debentures. The Guarantee does not place a limitation on the amount of
additional Senior Indebtedness that may be incurred by the Corporation. The
Corporation expects from time to time to incur additional indebtedness
constituting Senior Indebtedness.
RESTRICTIONS ON CERTAIN PAYMENTS. In the New Guarantee, the Corporation
will covenant that, so long as any Capital Securities remain outstanding, if
there shall have occurred any event that would constitute an event of default
under the New Guarantee or the Trust Agreement, then the Corporation will not
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the
Corporation's capital stock (which includes common and preferred stock), (ii)
make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Corporation (including any
Other Debentures) that rank pari passu with or junior in right of payment to
the Junior Subordinated Debentures or (iii) make any guarantee payments with
respect to any guarantee by the Corporation of the debt securities of any
subsidiary of the Corporation (including any Other Guarantees) if such
guarantee ranks pari passu with or junior in right of payment to the Junior
Subordinated Debentures (other than (a) dividends or distributions in shares
of or options, warrants or rights to subscribe for or purchase shares of,
common stock of the Corporation, (b) any declaration of a dividend in
connection with the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the New
Guarantee, (d) as a result of a reclassification of the Corporation's capital
stock or the exchange or conversion of one class or series of the
Corporation's capital stock for another class or series of the Corporation's
capital stock, (e) the purchase of fractional interests in shares of the
Corporation's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged, and (f)
purchases of common stock related to the issuance of common stock or rights
under any of the Corporation's benefit plans for its directors, officers or
employees or any of the Corporation's dividend reinvestment plans).
AMENDMENTS AND ASSIGNMENT. Except with respect to any changes that do
not materially adversely affect the rights of holders of the New Capital
Securities (in which case no consent will be required), the New Guarantee may
not be amended without the prior approval of the holders of a majority of the
Liquidation Amount of such outstanding New Capital Securities. The manner of
obtaining any such approval will be as set forth under "--Description of New
Capital Securities--Voting Rights; Amendment of the Trust Agreement." All
guarantees and agreements contained in the New Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the
Corporation and shall inure to the benefit of the holders of the New Capital
Securities then outstanding.
EVENTS OF DEFAULT. An event of default under the New Guarantee will
occur upon the failure of the Corporation to perform any of its payment or
other obligations thereunder. The holders of a majority in Liquidation Amount
of the New Capital Securities will have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of the New Guarantee or to direct the exercise
of any trust or power conferred upon the Guarantee Trustee under the New
Guarantee.
Any holder of the New Capital Securities may institute a legal
proceeding directly against the Corporation to enforce its rights under the
New Guarantee without first instituting a legal proceeding against the Trust,
the Guarantee Trustee or any other person or entity.
The Corporation, as guarantor, will be required to file annually with
the Guarantee Trustee a certificate as to whether or not the Corporation is
in compliance with all the conditions and covenants applicable to it under
the New Guarantee.
TERMINATION OF THE NEW GUARANTEE. The New Guarantee will terminate and
be of no further force and effect upon full payment of the applicable
Redemption Price of the New Capital Securities, upon full payment of the
Liquidation Amount payable upon liquidation of the Trust or upon distribution
of New Junior Subordinated Debentures to the holders of the New Capital
Securities. The New Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of the New Capital
Securities must restore payment of any sums paid under the New Capital
Securities or the New Guarantee.
GOVERNING LAW. The New Guarantee will be governed by and construed in
accordance with the laws of the State of New York.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE. The Guarantee Trustee,
other than during the occurrence and continuance of a default by the
Corporation in performance of the New Guarantee, will undertake to perform
only such duties as are specifically set forth in the New Guarantee and,
after default with respect to the New Guarantee, must exercise the same
degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the Guarantee
Trustee will be under no obligation to exercise any of the powers vested in
it by the New Guarantee at the request of any holder of the New Capital
Securities unless it is offered reasonable indemnity against the costs,
expenses and liabilities that might be incurred thereby.
DESCRIPTION OF OLD SECURITIES
The terms of the Old Securities are identical in all material respects
to the New Securities, except that (i) the Old Securities have not been
registered under the Securities Act, are subject to certain restrictions on
transfer and are entitled to certain rights under the applicable Registration
Rights Agreement (which rights will terminate upon consummation of the
Exchange Offer, except under limited circumstances), (ii) the New Capital
Securities will not contain the $100,000 minimum Liquidation Amount transfer
restriction and certain other restrictions on transfer applicable to Old
Capital Securities, and (iii) the New Junior Subordinated Debentures will not
contain the $100,000 minimum principal amount transfer restriction. In
addition, the Old Securities provide that, in the event that a registration
statement relating to the Exchange Offer has not been filed by June 28, 1997
and been declared effective by July 28, 1997 or, in certain limited
circumstances, in the event a shelf registration statement (the "Shelf
Registration Statement") with respect to the resale of the Old Capital
Securities is not declared effective by July 29, 1997, then interest will
accumulate (in addition to the stated interest rate on the Old Junior
Subordinated Debentures) at the rate of 0.25% per annum on the principal
amount of the Old Junior Subordinated Debentures and Distributions will
accumulate (in addition to the stated Distribution rate on the Old Capital
Securities) at the rate of 0.25% per annum on the Liquidation Amount of the
Old Capital Securities, for the period from the occurrence of such event
until such time as such required Exchange Offer is consummated or any
required Shelf Registration Statement is effective. The New Securities are
not, and upon consummation of the Exchange Offer the Old Securities will not
be, entitled to any such additional interest or Distributions. Accordingly,
holders of Old Capital Securities should review the information set forth
under "Risk Factors--Certain Consequences of a Failure to Exchange Old
Capital Securities" and "Description of New Securities."
RELATIONSHIP AMONG THE NEW CAPITAL SECURITIES, THE
NEW JUNIOR SUBORDINATED DEBENTURES AND THE NEW GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the New Capital
Securities (to the extent the Trust has funds on hand legally available for
the payment of such Distributions) will be irrevocably guaranteed by the
Corporation as and to the extent set forth under "Description of New
Securities--Description of New Guarantee." Taken together, the Corporation's
obligations under the New Junior Subordinated Debentures, the Indenture, the
Trust Agreement and the New Guarantee will provide, in the aggregate, a full,
irrevocable and unconditional guarantee of payments of Distributions and
other amounts due on the New Capital Securities. No single document standing
alone or operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these
documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Trust's obligations under the New Capital
Securities. If and to the extent that the Corporation does not make the
required payments on the New Junior Subordinated Debentures, the Trust will
not have sufficient funds to make the related payments, including
Distributions, on the New Capital Securities. The New Guarantee will not
cover any such payment when the Trust does not have sufficient funds on hand
legally available therefor. In such event, the remedy of a holder of New
Capital Securities is to institute a Direct Action. The obligations of the
Corporation under the New Guarantee will be subordinate and junior in right
of payment to all Senior Indebtedness.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on
the New Junior Subordinated Debentures, such payments will be sufficient to
cover Distributions and other payments due on the New Capital Securities,
primarily because: (i) the aggregate principal amount or Prepayment Price of
the New Junior Subordinated Debentures will be equal to the sum of the
Liquidation Amount or Redemption Price, as applicable, of the New Capital
Securities and Common Securities; (ii) the interest rate and interest and
other payment dates on the New Junior Subordinated Debentures will match the
Distribution rate and Distribution and other payment dates for the New
Capital Securities; (iii) the Corporation shall pay for all and any costs,
expenses and liabilities of the Trust except the Trust's obligations to
holders of Trust Securities under the Trust Agreement; and (iv) the Trust
Agreement provides that the Trust is not authorized to engage in any activity
that is not consistent with the limited purposes thereof.
ENFORCEMENT RIGHTS OF HOLDERS OF NEW CAPITAL SECURITIES
A holder of any New Capital Security may institute a legal proceeding
directly against the Corporation to enforce its rights under the New
Guarantee without first instituting a legal proceeding against the Guarantee
Trustee, the Trust or any other person or entity. A default or event of
default under any Senior Indebtedness would not constitute a default or Event
of Default under the Trust Agreement. However, in the event of payment
defaults under, or acceleration of, Senior Indebtedness, the subordination
provisions of the Indenture provide that no payments may be made in respect
of the New Junior Subordinated Debentures until such Senior Indebtedness has
been paid in full or any payment default thereunder has been cured or waived.
Failure to make required payments on New Junior Subordinated Debentures would
constitute an Event of Default under the Trust Agreement.
LIMITED PURPOSE OF THE TRUST
The Trust exists for the sole purpose of issuing and selling the Trust
Securities, using the proceeds from the sale of the Trust Securities to
acquire the Junior Subordinated Debentures and engaging in only those other
activities necessary, advisable or incidental thereto. The New Capital
Securities will represent preferred beneficial interests in the Trust. A
principal difference between the rights of a holder of a New Capital Security
and a holder of a New Junior Subordinated Debenture is that a holder of a New
Junior Subordinated Debenture will be entitled to receive from the
Corporation the principal amount of (and premium, if any) and interest on New
Junior Subordinated Debentures held, while a holder of New Capital Securities
is entitled to receive Distributions from the Trust (or, in certain
circumstances, from the Corporation under the New Guarantee) if and to the
extent the Trust has funds on hand legally available for the payment of such
Distributions.
RIGHTS UPON TERMINATION
Unless the Junior Subordinated Debentures are distributed to holders of
the Trust Securities, upon any voluntary or involuntary termination and
liquidation of the Trust, the holders of the Trust Securities will be
entitled to receive, out of assets held by the Trust, the Liquidation
Distribution in cash. See "Description of New Securities--Description of New
Capital Securities--Liquidation of the Trust and Distribution of New Junior
Subordinated Debentures." Upon any voluntary or involuntary liquidation or
bankruptcy of the Corporation, the Property Trustee, as holder of the New
Junior Subordinated Debentures, would be a subordinated creditor of the
Corporation, subordinated in right of payment to all Senior Indebtedness as
set forth in the Indenture, but entitled to receive payment in full of
principal (and premium, if any) and interest, before any stockholders of the
Corporation receive payments or distributions. Since the Corporation will be
the guarantor under the New Guarantee and will agree to pay for all costs,
expenses and liabilities of the Trust (other than the Trust's obligations to
the holders of its Trust Securities), the positions of a holder of New
Capital Securities and a holder of New Junior Subordinated Debentures
relative to stockholders of the Corporation in the event of liquidation or
bankruptcy of the Corporation are expected to be substantially the same.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
In the opinion of Brown & Wood LLP, tax counsel to the Corporation and
the Trust ("Tax Counsel"), the following is a summary of certain of the
material United States federal income tax consequences of the purchase,
ownership and disposition of Capital Securities held as capital assets by a
holder. This summary only addresses the tax consequences to a holder that
acquired the Old Capital Securities upon initial issuance at their original
offering price. It does not deal with special classes of holders such as
banks, thrifts, real estate investment trusts, regulated investment
companies, insurance companies, dealers in securities or currencies,
tax-exempt investors, or persons that will hold the Capital Securities as a
position in a "straddle," as part of a "synthetic security" or "hedge," as
part of a "conversion transaction" or other integrated investment, or as
other than a capital asset. This summary also does not address the tax
consequences to persons that have a functional currency other than the U.S.
dollar or the tax consequences to shareholders, partners or beneficiaries of
a holder of Capital Securities. Further, it does not include any description
of any alternative minimum tax consequences or the tax laws of any state or
local government or of any foreign government that may be applicable to the
Capital Securities. This summary is based on the Internal Revenue Code of
1986, as amended (the "Code"), Treasury regulations thereunder, the
administrative and judicial interpretations thereof, as of the date hereof,
all of which are subject to change, possibly on a retroactive basis.
EXCHANGE OF CAPITAL SECURITIES
The exchange of Old Capital Securities for New Capital Securities should
not be a taxable event to holders for United States federal income tax
purposes. The exchange of Old Capital Securities for New Capital Securities
pursuant to the Exchange Offer should not be treated as an "exchange" for
United States federal income tax purposes because the New Capital Securities
should not be considered to differ materially in kind or extent from the Old
Capital Securities and because the exchange will occur by operation of the
terms of the Old Capital Securities. If, however, the exchange of the Old
Capital Securities for the New Capital Securities were treated as an exchange
for federal income tax purposes, such exchange should constitute a
recapitalization for United States federal income tax purposes. Accordingly,
the New Capital Securities should have the same issue price as the Old
Capital Securities, and a holder should have the same adjusted tax basis and
holding period in the New Capital Securities as the holder had in the Old
Capital Securities immediately before the exchange.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
In connection with the issuance of the Old Junior Subordinated
Debentures, Tax Counsel has rendered its opinion generally to the effect
that, under then current law and assuming full compliance with the terms of
the Indenture (and certain other documents), and based on certain facts and
assumptions contained in such opinion, the Old Junior Subordinated Debentures
will be classified for United States federal income tax purposes as
indebtedness of the Corporation. An opinion of Tax Counsel, however, is not
binding on the Internal Revenue Service (the "IRS") or the courts.
Prospective investors should note that no rulings have been or are expected
to be sought from the IRS with respect to any of these issues and no
assurance can be given that the IRS will not take contrary positions.
Moreover, no assurance can be given that any of the opinions expressed herein
will not be challenged by the IRS or, if challenged, that such a challenge
would not be successful.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Old Capital Securities, Tax
Counsel has rendered its opinion generally to the effect that, under then
current law and assuming full compliance with the terms of the Trust
Agreement and the Indenture (and certain other documents), and based on
certain facts and assumptions contained in such opinion, the Trust will be
classified for United States federal income tax purposes as a grantor trust
and not as an association taxable as a corporation. Accordingly, for United
States federal income tax purposes, each holder of Capital Securities
generally will be considered the owner of an undivided interest in the Junior
Subordinated Debentures, and each holder will be required to include in its
gross income any interest (or OID accrued) with respect to its allocable
share of those Junior Subordinated Debentures.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under recently issued Treasury regulations (the "Regulations")
applicable to debt instruments issued on or after August 13, 1996, a "remote"
contingency that stated interest will not be timely paid will be ignored in
determining whether a debt instrument is issued with OID. The Corporation
believes that the likelihood of its exercising its option to defer payments
of interest is "remote" since exercising that option would prevent the
Corporation from declaring dividends on any class of its equity securities.
Accordingly, the Corporation intends to take the position, based on the
advice of Tax Counsel, that the Junior Subordinated Debentures will not be
considered to be issued with OID and, accordingly, stated interest on the
Junior Subordinated Debentures generally will be taxable to a holder as
ordinary income at the time it is paid or accrued in accordance with such
holder's method of accounting.
Under the Regulations, if the Corporation were to exercise its option to
defer payments of interest, the Junior Subordinated Debentures would at that
time be treated as issued with OID, and all stated interest on the Junior
Subordinated Debentures would thereafter be treated as OID as long as the
Junior Subordinated Debentures remain outstanding. In such event, all of a
holder's taxable interest income with respect to the Junior Subordinated
Debentures would thereafter be accounted for on an economic accrual basis
regardless of such holder's method of tax accounting, and actual
distributions of stated interest would not be reported as taxable income.
Consequently, a holder of Capital Securities would be required to include in
gross income OID even though the Corporation would not make actual cash
payments during an Extension Period. Moreover, under the Regulations, if the
option to defer the payment of interest was determined not to be "remote",
the Junior Subordinated Debentures would be treated as having been originally
issued with OID. In such event, all of a holder's taxable interest income
with respect to the Junior Subordinated Debentures would be accounted for on
an economic accrual basis regardless of such holder's method of tax
accounting, and actual distributions of stated interest would not be reported
as taxable income.
The Regulations have not yet been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take a
position contrary to Tax Counsel's interpretation herein.
Because income on the Capital Securities will constitute interest or
OID, corporate holders of the Capital Securities will not be entitled to a
dividends-received deduction with respect to any income recognized with
respect to the Capital Securities.
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE
TRUST
The Corporation will have the right at any time to liquidate the Trust
and cause the Junior Subordinated Debentures to be distributed to the holders
of the Trust Securities. Under current law, such a distribution, for United
States federal income tax purposes, would be treated as a nontaxable event to
each holder, and each holder would receive an aggregate tax basis in the
Junior Subordinated Debentures equal to such holder's aggregate tax basis in
its Capital Securities. A holder's holding period in the Junior Subordinated
Debentures so received in liquidation of the Trust would include the period
during which the Capital Securities were held by such holder. If, however,
the Trust is characterized for United States federal income tax purposes as
an association taxable as a corporation at the time of its dissolution, the
distribution of the Junior Subordinated Debentures may constitute a taxable
event to holders of Capital Securities and a holder's holding period in
Junior Subordinated Debentures would begin on the date such Junior
Subordinated Debentures were received.
Under certain circumstances described herein (see "Description of New
Securities--Description of New Capital Securities"), the Junior Subordinated
Debentures may be redeemed for cash and the proceeds of such redemption
distributed to holders in redemption of their Capital Securities. Under
current law, such a redemption would, for United States federal income tax
purposes, constitute a taxable disposition of the redeemed Capital
Securities, and a holder could recognize gain or loss as if it sold such
redeemed Capital Securities for cash. See "--Sales of Capital Securities."
SALES OF CAPITAL SECURITIES
A holder that sells Capital Securities will recognize gain or loss equal
to the difference between its adjusted tax basis in the Capital Securities
and the amount realized on the sale of such Capital Securities (other than
with respect to accrued and unpaid interest which has not yet been included
in income, which will be treated as ordinary income).
A holder's adjusted tax basis in the Capital Securities generally will be its
initial purchase price increased by OID (if any) previously includable in
such holder's gross income to the date of disposition and decreased by
payments (if any) received on the Capital Securities in respect of OID. Such
gain or loss generally will be a capital gain or loss and generally will be a
long-term capital gain or loss if the Capital Securities have been held for
more than one year.
The Capital Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the
underlying Junior Subordinated Debentures. A holder who uses the accrual
method of accounting for tax purposes (and a cash method holder, if the
Junior Subordinated Debentures are deemed to have been issued with OID) who
disposes of his Capital Securities between record dates for payments of
distributions thereon will be required to include accrued but unpaid interest
on the Junior Subordinated Debentures through the date of disposition in
income as ordinary income (i.e., interest or, possibly, OID), and to add such
amount to his adjusted tax basis in his pro rata share of the underlying
Junior Subordinated Debentures deemed disposed of. To the extent the selling
price is less than the holder's adjusted tax basis (which will include all
accrued but unpaid interest) a holder will recognize a capital loss. Subject
to certain limited exceptions, capital losses cannot be applied to offset
ordinary income for United States federal income tax purposes.
PROPOSED TAX LEGISLATION
On February 6, 1997, as part of the Clinton Administration's Fiscal 1998
Budget Proposal, the Treasury Department proposed legislation (the "Proposed
Legislation") which would, among other things, generally deny corporate
issuers a deduction for interest in respect of debt obligations, such as the
New Junior Subordinated Debentures, issued on or after the date "of first
committee action," if such debt obligations have a maximum term in excess of
15 years and are not shown as indebtedness on the issuer's applicable
consolidated balance sheet. On June 9, 1997, Representative William Archer,
Chairman of the House Committee, released the House Committee Chairman's
Proposals to be included in the 1997 budget reconciliation bill. In addition,
on June 17, 1997, Senator William Roth, Chairman of the Senate Committee,
released the Senate Committee Chairman's Proposals to be included in the 1997
budget reconciliation bill. The Proposed Legislation was not included in
either the House Committee Chairman's Proposals or the Senate Committee
Chairman's Proposals. If legislation similar to the Proposed Legislation
were enacted, there can be no assurance that it will not adversely
affect the ability of the Company to deduct the interest payable on the Junior
Subordinated Debentures. Such a change could give rise to a Tax Event, which
would permit the Company to cause a redemption of the Trust Securities at
the Special Event Redemption Price by electing to prepay the Junior
Subordinated Debentures at the Special Event Prepayment Price. See
"Description of New Securities--Description of New Junior Subordinated
Debentures."
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is not a U.S.
Holder for United States federal income tax purposes. A "U.S. Holder" is a
holder of Capital Securities who or which is a citizen or individual resident
(or is treated as a citizen or individual resident) of the United States for
federal income tax purposes, a corporation or partnership created or
organized (or treated as created or organized for federal income tax
purposes) in or under the laws of the United States or any political
subdivision thereof, or a trust or estate the income of which is includable
in its gross income for federal income tax purposes without regard to its
source. (For taxable years beginning after December 31, 1996 (or for the
immediately preceding taxable year, if the trustee of a trust so elects), a
trust is a U.S. Holder for federal income tax purposes if, and only if, (i) a
court within the United States is able to exercise primary supervision over
the administration of the trust and (ii) one or more United States trustees
have the authority to control all substantial decisions of the trust.)
Under present United States federal income tax laws: (i) payments by the
Trust or any of its paying agents to any holder of a Capital Security who or
which is a United States Alien Holder will not be subject to United States
federal withholding tax; provided that, (a) the beneficial owner of the
Capital Security does not actually or constructively own 10 percent or more
of the total combined voting power of all classes of stock of the Corporation
entitled to vote, (b) the beneficial owner of the Capital Security is not a
controlled foreign corporation that is related to the Corporation through
stock ownership, and (c) either (A) the beneficial owner of the Capital
Security certifies to the Trust or its agent, under penalties of perjury,
that it is not a United States holder and provides its name and address or
(B) a securities clearing organization, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or
business (a "Financial Institution"), and holds the Capital Security in such
capacity, certifies to the Trust or its agent, under penalties of perjury,
that such statement has been received from the beneficial owner by it or by a
Financial Institution between it and the beneficial owner and furnishes the
Trust or its agent with a copy thereof; and (ii) a United States Alien Holder
of a Capital Security will not be subject to United States federal
withholding tax on any gain realized upon the sale or other disposition of a
Capital Security.
INFORMATION REPORTING TO HOLDERS
Generally, income on the Capital Securities will be reported to holders
on Forms 1099, which forms should be mailed to holders of Capital Securities
by January 31 following each calendar year.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Capital Securities
may be subject to a "backup" withholding tax of 31 percent unless the holder
complies with certain identification requirements. Any withheld amounts will
be allowed as a credit against the holder's United States federal income tax,
provided the required information is provided to the IRS.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS
INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING
UPON A HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX
ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF THE CAPITAL SECURITIES, INCLUDING THE TAX
CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE
EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
The Corporation, the obligor with respect to the New Junior Subordinated
Debentures held by the Trust, and its affiliates and the Property Trustee may
be considered a "party in interest" (within the meaning of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) or a
"disqualified person" (within the meaning of Section 4975 of the Code) with
respect to many employee benefit plans ("Plans") that are subject to ERISA.
Any purchaser proposing to acquire New Capital Securities with assets of any
Plan should consult with its counsel. The purchase and/or holding of New
Capital Securities by a Plan that is subject to the fiduciary responsibility
provisions of ERISA or the prohibited transaction provisions of Section 4975
of the Code (including individual retirement arrangements and other plans
described in Section 4975(e)(1) of the Code) and with respect to which the
Corporation, the Property Trustee or any affiliate is a service provider (or
otherwise is a party in interest or a disqualified person) may constitute or
result in a prohibited transaction under ERISA or Section 4975 of the Code,
unless such New Capital Securities are acquired pursuant to and in accordance
with an applicable exemption, such as Prohibited Transaction Class Exemption
("PTCE") 84-14 (an exemption for certain transactions determined by an
independent qualified professional asset manager), PTCE 91-38 (an exemption
for certain transactions involving bank collective investment funds), PTCE
90-1 (an exemption for certain transactions involving insurance company
pooled separate accounts), PTCE 95-60 (an exemption for transactions
involving certain insurance company general accounts) or PTCE 95-23 (an
exemption for certain transactions determined by an in-house manager). In
addition, as described below, a Plan fiduciary considering the acquisition of
New Capital Securities should be aware that the assets of the Trust may be
considered "plan assets" for ERISA purposes. Therefore, a Plan fiduciary
should consider whether the acquisition of Capital Securities could result in
a delegation of fiduciary authority to the Property Trustee, and, if so,
whether such a delegation of authority is permissible under the Plan's
governing instrument or any investment management agreement with the Plan. In
making such determination, a Plan fiduciary should note that the Property
Trustee is a U.S. bank qualified to be an investment manager (within the
meaning of section 3(38) of ERISA) to which such a delegation of authority
generally would be permissible under ERISA. Further, prior to an Event of
Default with respect to the New Junior Subordinated Debentures, the Property
Trustee will have only limited custodial and ministerial authority with
respect to Trust assets.
Under the U.S. Department of Labor regulations defining "plan assets"
for ERISA purposes (the "Plan Assets Regulations"), the assets of the Trust
will be considered plan assets of Plans owning New Capital Securities unless
the aggregate investment in New Capital Securities by "benefit plan
investors" is not deemed "significant" or the New Capital Securities qualify
as "publicly offered securities" as defined in such Regulations. For this
purpose, equity participation by benefit plan investors will not be
considered "significant" on any date only if, immediately after the most
recent acquisition of Capital Securities, the aggregate interest in the New
Capital Securities held by benefit plan investors will be less than 25% of
the value of the New Capital Securities. Although it is possible that the
equity participation by benefit plan investors in New Capital Securities on
any date will not be "significant" for purposes of the Plan Assets
Regulations, such result cannot be assured.
The New Capital Securities may qualify as "publicly offered securities"
under the Plan Assets Regulations if at the time of the Exchange Offer they
are also "widely held" and "freely transferable." Under the Regulations, a
class of securities is "widely held" only if it is a class of securities that
is owned by 100 or more investors independent of the issuer and of one
another. Although it is possible that at the time of the Exchange Offer the
New Capital Securities will be "widely held," such result cannot be assured.
Whether a security is "freely transferable" for purposes of the Regulations
is a factual question to be determined on the basis of all relevant facts and
circumstances. If at the time of the Exchange Offer the New Capital
Securities qualify as "publicly offered securities," the assets of the Trust
should not be "plan assets" with respect to Plans acquiring New Capital
Securities. If at the time of the Exchange Offer the New Capital Securities
do not qualify as "publicly offered securities," the "plan asset"
considerations discussed in the preceding paragraphs could be applicable in
connection with the investment by Plans in the New Capital Securities.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Capital Securities for its own
account in connection with the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such New Capital
Securities. This Prospectus, as it may be amended or supplemented from time
to time, may be used by Participating Broker-Dealers during the period
referred to below in connection with resales of New Capital Securities
received in exchange for Old Capital Securities if such Old Capital
Securities were acquired by such Participating Broker-Dealers for their
own accounts as a result of market-making activities or other trading
activities. The Corporation and the Trust have agreed that this
Prospectus, as it may be amended or supplemented from time to time, may
be used by a Participating Broker-Dealer in connection with resales of such
New Capital Securities for a period ending 90 days after the Expiration Date
(subject to extension under certain limited circumstances described herein)
or, if earlier, when all such New Capital Securities have been disposed of by
such Participating Broker-Dealer. However, a Participating Broker-Dealer who
intends to use this Prospectus in connection with the resale of New Capital
Securities received in exchange for Old Capital Securities pursuant to the
Exchange Offer must notify the Corporation or the Trust, or cause the
Corporation or the Trust to be notified, on or prior to the Expiration Date,
that it is a Participating Broker-Dealer. Such notice may be given in the
space provided for that purpose in the Letter of Transmittal or may be
delivered to the Exchange Agent at one of the addresses set forth herein
under "The Exchange Offer--Exchange Agent." See "The Exchange Offer--Resales
of New Capital Securities."
The Corporation or the Trust will not receive any cash proceeds from the
issuance of the New Capital Securities offered hereby. New Capital
Securities received by broker-dealers for their own accounts in connection
with the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Capital Securities or a combination
of such methods of resale, at market prices prevailing at the time of resale,
at prices related to such prevailing market prices or at negotiated prices.
Any such resale may be made directly to purchasers or to or through brokers
or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such New
Capital Securities.
Any broker-dealer that resells New Capital Securities that were received
by it for its own account in connection with the Exchange Offer and any
broker or dealer that participates in a distribution of such New Capital
Securities may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any such resale of New Capital Securities
and any commissions or concessions received by any such persons may be deemed
to be underwriting compensation under the Securities Act. The Letter of
Transmittal states that, by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
LEGAL MATTERS
The validity of the New Guarantee and the New Junior Subordinated
Debentures will be passed upon for the Corporation by Bond, Schoeneck & King,
LLP, Syracuse, New York. Certain matters relating to United States federal
income tax considerations will be passed upon by Brown & Wood LLP, New York,
New York. Certain matters of Delaware law relating to the validity of the
New Capital Securities will be passed upon on behalf of the Trust by
Richards, Layton & Finger, special Delaware counsel to the Trust.
EXPERTS
The consolidated financial statements of the Corporation and
subsidiaries incorporated by reference in the Corporation's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996, have been incorporated
herein by reference in reliance upon the reports set forth therein of Coopers
& Lybrand L.L.P., independent auditors, and upon the authority of such firm
as experts in accounting and auditing.
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law authorizes a
corporation to indemnify any director, officer, employee or other agent of
the corporation.
The Corporation's By-laws provide indemnity to the Corporation's
directors and officers in such capacity or as directors or officers of a
wholly-owned subsidiary of the Corporation for liability resulting from
judgments, fines, expenses or settlement amounts actually and reasonably
incurred in connection with any action brought against such person in such
capacity to the fullest extent and in the manner set forth in and permitted
by the Delaware General Corporation Law, and any other applicable law, as
from time to time in effect. Under Delaware law and the By-laws, no
indemnification may be provided for any person with respect to any matter as
to which he or she shall have been adjudicated in any proceeding not to have
acted in good faith in the reasonable belief that his or her action was in
the best interests of the Corporation or of such subsidiary.
In addition, as permitted under Delaware law, the Corporation maintains
liability insurance covering directors and officers of the Corporation and
its subsidiaries.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBIT
4.1 Indenture of Community Bank System, Inc. relating to the
Junior Subordinated Debentures
4.2 Form of Certificate of New Junior Subordinated Debenture
(included as Exhibit A to Exhibit 4.1)*
4.3 Certificate of Trust of Community Capital Trust I
4.4 Declaration of Trust of Community Capital Trust I
4.5 Amended and Restated Declaration of Trust of Community Capital
Trust I
4.6 Form of New Capital Security Certificate of Community Capital
Trust I (included as Exhibit D to Exhibit 4.5)*
4.7 Form of New Guarantee of Community Bank System, Inc. relating
to the New Capital Securities*
4.8 Registration Rights Agreement
5.1 Opinion and consent of Bond, Schoeneck & King, LLP to
Community Bank System, Inc. as to legality of the New Junior
Subordinated Debentures and the New Guarantee to be issued by
Community Bank System, Inc.*
5.2 Opinion of Richards, Layton & Finger, special Delaware
counsel, as to legality of the New Capital Securities to be
issued by Community Capital Trust I*
8 Opinion of Brown & Wood LLP, special tax counsel, as to
certain federal income tax matters*
12.1 Computation of ratio of earnings to fixed charges
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Bond, Schoeneck & King, LLP (included in Exhibit 5.1)*
23.3 Consent of Richards, Layton & Finger (included in Exhibit 5.2)*
23.4 Consent of Brown & Wood LLP (included in Exhibit 8)*
24 Power of Attorney of certain officers and directors of
Community Bank System, Inc.
25.1 Form T-1 Statement of Eligibility of The Chase Manhattan Bank
to act as trustee under the Indenture
25.2 Form T-1 Statement of Eligibility of The Chase Manhattan Bank
to act as trustee under the Amended and Restated Declaration
of Trust of Commnity Capital Trust 1
25.3 Form T-1 Statement of Eligibility of The Chase Manhattan Bank
under the New Guarantee for the benefit of the holders of New
Capital Securities of Community Capital Trust I
99.1 Form of Letter of Transmittal*
99.2 Form of Notice of Guaranteed Delivery*
99.3 Form of Exchange Agent Agreement*
- --------
* To be filed by amendment.
ITEM 22. UNDERTAKINGS
Each of the undersigned Registrants hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, as amended
(the "Securities Act"), each filing of a Registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that
is incorporated by reference in this Registration Statement shall be deemed
to be a new registration statement relating to the securities offered herein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of each
undersigned Registrant pursuant to the provisions, or otherwise, each
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by each undersigned Registrant of expenses incurred or paid by a
director, officer of controlling person of each Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, each Registrant will, unless in the opinion of its counsel the
matter has been settled by the controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
The undersigned Registrants hereby undertake to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
The undersigned Registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired or involved therein, that was not the subject of and
included in the registration statement when it became effective.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Community
Bank System, Inc. certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-4 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of DeWitt, and State of New York, on
the 24th day of June, 1997.
COMMUNITY BANK SYSTEM, INC.
By /s/Sanford A. Belden
--------------------------------------
Sanford A. Belden
President, Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----
President, Chief
/s/Sanford A. Belden Executive Officer June 24, 1997
--------------------- and Director
(Sanford A. Belden)
/s/Earl W. MacArthur
--------------------- Chairman of the
(Dr. Earl W. MacArthur) Board of Directors June 24, 1997
Directors and Director
/s/David G. Wallace
---------------------
(David G. Wallace) Treasurer June 24, 1997
/s/John M. Burgess Director June 24, 1997
---------------------
(John M. Burgess)
/s/William M. Dempsey Director June 24, 1997
---------------------
(William M. Dempsey)
/s/Lee T. Hirschey Director June 24, 1997
_____________________
(Lee T. Hirschey)
/s/William N. Sloan Director June 24, 1997
---------------------
(William N. Sloan)
/s/Hugh G. Zimmer Director June 24, 1997
---------------------
(Hugh G. Zimmer)
/s/Richard C. Cummings
--------------------- Director June 24, 1997
(Richard C. Cummings)
/s/Nicholas A. DiCerbo
--------------------- Director June 24, 1997
(Nicholas A. DiCerbo)
/s/James A. Gabriel
--------------------- Director June 24, 1997
(James A. Gabriel)
/s/David C. Patterson
--------------------- Director June 24, 1997
(David C. Patterson)
Pursuant to the requirements of the Securities Act of 1933, Community
Capital Trust I certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-4 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of DeWitt, and State of New York, on
the 24th day of June, 1997.
COMMUNITY CAPITAL TRUST I
By:/s/Sanford A. Belden
-----------------------------------
Sanford A. Belden,
as Administrative Trustee
By:/s/David G. Wallace
-----------------------------------
David G. Wallace,
as Administrative Trustee
By:/s/Joseph J. Lemchak
-----------------------------------
Joseph J. Lemchak,
as Administrative Trustee
EXHIBIT INDEX
PAGE EXHIBIT NO. DESCRIPTION
4.1 Indenture of Community Bank System, Inc. relating to the
Junior Subordinated Debentures
4.3 Certificate of Trust of Community Capital Trust I
4.4 Declaration of Trust of Community Capital Trust I
4.5 Amended and Restated Declaration of Trust of Community Capital
Trust I
4.8 Registration Rights Agreement
12.1 Computation of ratio of earnings to fixed charges
23.1 Consent of Coopers & Lybrand L.L.P.
24 Power of Attorney of certain officers and directors of
Community Bank System, Inc.
25.1 Form T-1 Statement of Eligibility of The Chase Manhattan Bank
to act as trustee under the Indenture
25.2 Form T-1 Statement of Eligibility of The Chase Manhattan Bank
to act as trustee under the Amended and Restated Declaration
of Trust of Community Capital Trust 1
25.3 Form T-1 Statement of Eligibility of The Chase Manhattan Bank
under the New Guarantee for the benefit of the holders of New
Capital Securities of Community Capital Trust I
EXHIBIT 4.1
COMMUNITY BANK SYSTEM, INC.
______________________________
______________________________
INDENTURE
DATED AS OF FEBRUARY 3, 1997
______________________________
THE CHASE MANHATTAN BANK
AS TRUSTEE
______________________________
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
TIE-SHEET
of provisions of Trust Indenture Act of 1939 with Indenture dated as
of February 3, 1997 between Community Bank System, Inc. and The Chase
Manhattan Bank, Trustee:
ACT SECTION INDENTURE SECTION
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
310(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
310(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10, 6.11
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13
311(a) and (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.01, 4.02(a)
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.02
312(b) and (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04
313(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04
313(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04
313(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04
313(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.03
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
314(c)(1) and (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
314(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
315(a)(c) and (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.08
315(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.09
316(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.07
316(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
316(a) last sentence . . . . . . . . . . . . . . . . . . . . . . . . . 2.09
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.02
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.05
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.08
- -------------------------------
THIS TIE-SHEET IS NOT PART OF THE INDENTURE AS EXECUTED.
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . 1
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
Additional Interest . . . . . . . . . . . . . . . . . . . . . . . . 1
Adjusted Treasury Rate . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . 2
Bankruptcy Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Capital Securities . . . . . . . . . . . . . . . . . . . . . . . . . 3
Capital Securities Guarantee . . . . . . . . . . . . . . . . . . . . 3
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Common Securities . . . . . . . . . . . . . . . . . . . . . . . . . 3
Common Securities Guarantee . . . . . . . . . . . . . . . . . . . . 4
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Community Capital Trust . . . . . . . . . . . . . . . . . . . . . . 4
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Company Request . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Comparable Treasury Issue . . . . . . . . . . . . . . . . . . . . . 4
Comparable Treasury Price . . . . . . . . . . . . . . . . . . . . . 4
Compounded Interest . . . . . . . . . . . . . . . . . . . . . . . . 4
Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Deferred Interest . . . . . . . . . . . . . . . . . . . . . . . . . 5
Definitive Securities . . . . . . . . . . . . . . . . . . . . . . . 5
Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Dissolution Event . . . . . . . . . . . . . . . . . . . . . . . . . 5
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Exchange Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Extended Interest Payment Period . . . . . . . . . . . . . . . . . . 5
Federal Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Global Security . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Indebtedness for Money Borrowed . . . . . . . . . . . . . . . . . . 6
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Initial Optional Prepayment Date . . . . . . . . . . . . . . . . . . 6
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . 6
Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . . . . 6
Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Non Book-Entry Capital Securities . . . . . . . . . . . . . . . . . 6
Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . 7
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . 7
Optional Prepayment Price . . . . . . . . . . . . . . . . . . . . . 7
Other Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Other Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . 7
outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Predecessor Security . . . . . . . . . . . . . . . . . . . . . . . . 8
Prepayment Price . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Principal Office of the Trustee . . . . . . . . . . . . . . . . . . 8
Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 8
Quotation Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Reference Treasury Dealer . . . . . . . . . . . . . . . . . . . . . 8
Reference Treasury Dealer Quotations . . . . . . . . . . . . . . . . 8
Registration Rights Agreement . . . . . . . . . . . . . . . . . . . 9
Regulatory Capital Event . . . . . . . . . . . . . . . . . . . . . . 9
Remaining Life . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . 9
Restricted Security . . . . . . . . . . . . . . . . . . . . . . . . 9
Rule 144A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Securityholder; holder of Securities; Holder . . . . . . . . . . . . 10
Security Register . . . . . . . . . . . . . . . . . . . . . . . . . 10
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 10
Series A Securities . . . . . . . . . . . . . . . . . . . . . . . . 10
Series B Securities . . . . . . . . . . . . . . . . . . . . . . . . 10
Special Event . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Special Event Prepayment Price . . . . . . . . . . . . . . . . . . . 10
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Tax Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Trust Indenture Act of 1939 . . . . . . . . . . . . . . . . . . . . 11
Trust Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 12
U.S. Government Obligations . . . . . . . . . . . . . . . . . . . . 12
ARTICLE II
SECURITIES . . . . . . . . . . . . . . 12
SECTION 2.01. Forms Generally . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.02. Execution and Authentication . . . . . . . . . . . . . . . 12
SECTION 2.03. Form and Payment . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.04. Legends. . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.05. Global Security . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.06 Interest . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.07. Transfer and Exchange . . . . . . . . . . . . . . . . . . 16
SECTION 2.08. Replacement Securities . . . . . . . . . . . . . . . . . . 18
SECTION 2.09. Treasury Securities . . . . . . . . . . . . . . . . . . . 19
SECTION 2.10. Temporary Securities. . . . . . . . . . . . . . . . . . . 19
SECTION 2.11. Cancellation . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.12. Defaulted Interest . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.13. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY . . . . . . . . 21
SECTION 3.01. Payment of Principal, Premium and Interest . . . . . . . . 21
SECTION 3.02. Offices for Notices and Payments, etc. . . . . . . . . . . 21
SECTION 3.03. Appointments to Fill Vacancies in Trustee's Office . . . . 22
SECTION 3.04. Provision as to Paying Agent . . . . . . . . . . . . . . . 22
SECTION 3.05. Certificate to Trustee . . . . . . . . . . . . . . . . . . 23
SECTION 3.06. Compliance with Consolidation Provisions . . . . . . . . . 24
SECTION 3.07. Limitation on Dividends . . . . . . . . . . . . . . . . . 24
SECTION 3.08. Covenants as to Community Capital Trust . . . . . . . . . 25
SECTION 3.09. Payment of Expenses . . . . . . . . . . . . . . . . . . . 25
SECTION 3.10. Payment Upon Resignation or Removal . . . . . . . . . . . 26
ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE . . . . . . . . . . . 26
SECTION 4.01. Securityholders' Lists . . . . . . . . . . . . . . . . . . 26
SECTION 4.02. Preservation and Disclosure of Lists . . . . . . . . . . . 27
SECTION 4.03. Reports by the Company . . . . . . . . . . . . . . . . . . 28
SECTION 4.04. Reports by the Trustee . . . . . . . . . . . . . . . . . . 29
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT . . . . . . . . . . . . 30
SECTION 5.01. Events of Default . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.02. Payment of Securities on Default; Suit Therefor . . . . . 32
SECTION 5.03. Application of Moneys Collected by Trustee . . . . . . . . 34
SECTION 5.04. Proceedings by Securityholders . . . . . . . . . . . . . . 35
SECTION 5.05. Proceedings by Trustee . . . . . . . . . . . . . . . . . . 36
SECTION 5.06. Remedies Cumulative and Continuing . . . . . . . . . . . . 36
SECTION 5.07. Direction of Proceedings and Waiver of Defaults by
Majority of Securityholders . . . . . . . . . . . . . . . 36
SECTION 5.08. Notice of Defaults . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.09. Undertaking to Pay Costs . . . . . . . . . . . . . . . . . 38
ARTICLE VI
CONCERNING THE TRUSTEE . . . . . . . . . . . 38
SECTION 6.01. Duties and Responsibilities of Trustee . . . . . . . . . . 38
SECTION 6.02. Reliance on Documents, Opinions, etc. . . . . . . . . . . 40
SECTION 6.03. No Responsibility for Recitals, etc. . . . . . . . . . . . 41
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents, Transfer
Agents or Registrar May Own Securities . . . . . . . . . 42
SECTION 6.05. Moneys to be Held in Trust . . . . . . . . . . . . . . . . 42
SECTION 6.06. Compensation and Expenses of Trustee . . . . . . . . . . . 42
SECTION 6.07. Officers' Certificate as Evidence . . . . . . . . . . . . 43
SECTION 6.08. Conflicting Interest of Trustee . . . . . . . . . . . . . 43
SECTION 6.09. Eligibility of Trustee . . . . . . . . . . . . . . . . . . 43
SECTION 6.10. Resignation or Removal of Trustee . . . . . . . . . . . . 44
SECTION 6.11. Acceptance by Successor Trustee . . . . . . . . . . . . . 46
SECTION 6.12. Succession by Merger, etc. . . . . . . . . . . . . . . . . 46
SECTION 6.13. Limitation on Rights of Trustee as a Creditor . . . . . . 47
SECTION 6.14. Authenticating Agents . . . . . . . . . . . . . . . . . . 47
ARTICLE VII
CONCERNING THE SECURITYHOLDERS . . . . . . . . . 48
SECTION 7.01. Action by Securityholders . . . . . . . . . . . . . . . . 48
SECTION 7.02. Proof of Execution by Securityholders . . . . . . . . . . 49
SECTION 7.03. Who Are Deemed Absolute Owners . . . . . . . . . . . . . . 50
SECTION 7.04. Securities Owned by Company Deemed Not Outstanding . . . . 50
SECTION 7.05. Revocation of Consents; Future Holders Bound . . . . . . . 50
ARTICLE VIII
SECURITYHOLDERS' MEETINGS . . . . . . . . . . . 51
SECTION 8.01. Purposes of Meetings . . . . . . . . . . . . . . . . . . . 51
SECTION 8.02. Call of Meetings by Trustee . . . . . . . . . . . . . . . 51
SECTION 8.03. Call of Meetings by Company or Securityholders . . . . . . 52
SECTION 8.04. Qualifications for Voting . . . . . . . . . . . . . . . . 52
SECTION 8.05. Regulations . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.06. Voting . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE IX
AMENDMENTS . . . . . . . . . . . . . . 54
SECTION 9.01. Without Consent of Securityholders . . . . . . . . . . . . 54
SECTION 9.02. With Consent of Securityholders . . . . . . . . . . . . . 55
SECTION 9.03. Compliance with Trust Indenture Act; Effect of
Supplemental Indentures . . . .. . . . . . . . . . . . . . 57
SECTION 9.04. Notation on Securities . . . . . . . . . . . . . . . . . . 57
SECTION 9.05. Evidence of Compliance of Supplemental Indenture to be
Furnished Trustee . . . . . . . . . . . . . . . . . . . . 57
ARTICLE X
CONSOLIDATION, CONVERSION, MERGER, SALE, CONVEYANCE AND LEASE . . 57
SECTION 10.01. Company May Consolidate, etc., on Certain Terms . . . . . 57
SECTION 10.02. Successor Corporation to be Substituted for Company . . . 58
SECTION 10.03. Opinion of Counsel to be Given Trustee . . . . . . . . . . 59
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE . . . . . . . 59
SECTION 11.01. Discharge of Indenture . . . . . . . . . . . . . . . . . . 59
SECTION 11.02. Deposited Moneys and U.S. Government Obligations to be
Held in Trust by Trustee . . . . . . . . . . . . . . . . . 60
SECTION 11.03. Paying Agent to Repay Moneys Held . . . . . . . . . . . . 60
SECTION 11.04. Return of Unclaimed Moneys . . . . . . . . . . . . . . . . 60
SECTION 11.05. Defeasance Upon Deposit of Moneys or U.S. Government
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS . . . . . . . . . . . 63
SECTION 12.01. Indenture and Securities Solely Corporate Obligations . . 63
ARTICLE XIII
MISCELLANEOUS PROVISIONS . . . . . . . . . . . 63
SECTION 13.01. Successors . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 13.02. Official Acts by Successor Corporation . . . . . . . . . . 63
SECTION 13.03. Surrender of Company Powers . . . . . . . . . . . . . . . 63
SECTION 13.04. Addresses for Notices, etc. . . . . . . . . . . . . . . . 64
SECTION 13.05. Governing Law . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 13.06. Evidence of Compliance with Conditions Precedent . . . . . 64
SECTION 13.07. Business Days . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 13.08. Trust Indenture Act to Control . . . . . . . . . . . . . . 65
SECTION 13.09. Table of Contents, Headings, etc. . . . . . . . . . . . . 65
SECTION 13.10. Execution in Counterparts . . . . . . . . . . . . . . . . 65
SECTION 13.11. Separability . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 13.12. Assignment . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 13.13. Acknowledgement of Rights . . . . . . . . . . . . . . . . 66
ARTICLE XIV
PREPAYMENT OF SECURITIES -- MANDATORY AND
OPTIONAL SINKING FUND . . . . . . . . . . . . 66
SECTION 14.01. Special Event Prepayment . . . . . . . . . . . . . . . . . 66
SECTION 14.02. Optional Prepayment by Company . . . . . . . . . . . . . . 67
SECTION 14.03. No Sinking Fund . . . . . . . . . . . . . . . . . . . . . 68
SECTION 14.04. Notice of Prepayment; Selection of
Securities . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 14.05. Payment of Securities Called for Prepayment . . . . . . . 69
ARTICLE XV
SUBORDINATION OF SECURITIES . . . . . . . . . . 69
SECTION 15.01. Agreement to Subordinate . . . . . . . . . . . . . . . . . 69
SECTION 15.02. Default on Senior Indebtedness . . . . . . . . . . . . . . 70
SECTION 15.03. Liquidation; Dissolution; Bankruptcy . . . . . . . . . . . 71
SECTION 15.04. Subrogation . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 15.05. Trustee to Effectuate Subordination . . . . . . . . . . . 73
SECTION 15.06. Notice by the Company . . . . . . . . . . . . . . . . . . 74
SECTION 15.07. Rights of the Trustee; Holders of Senior Indebtedness . . 75
SECTION 15.08. Subordination May Not Be Impaired . . . . . . . . . . . . 75
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD . . . . . . . . 76
SECTION 16.01. Extension of Interest Payment Period . . . . . . . . . . . 76
SECTION 16.02. Notice of Extension . . . . . . . . . . . . . . . . . . . 77
EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Testimonium
Signatures
Acknowledgements
THIS INDENTURE, dated as of February 3, 1997, between Community
Bank System, Inc., a Delaware corporation (hereinafter sometimes called
the "Company"), and The Chase Manhattan Bank, a New York banking corporation,
as trustee (hereinafter sometimes called the "Trustee"),
W I T N E S S E T H :
In consideration of the premises, and the purchase of the
Securities by the holders thereof, the Company covenants and agrees with
the Trustee for the equal and proportionate benefit of the respective
holders from time to time of the Securities, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.
The terms defined in this Section 1.01 (except as herein
otherwise expressly provided or unless the context otherwise requires) for
all purposes of this Indenture shall have the respective meanings
specified in this Section 1.01. All other terms used in this Indenture
which are defined in the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), or which are by reference therein defined in the
Securities Act, shall (except as herein otherwise expressly provided or
unless the context otherwise requires) have the meanings assigned to such
terms in said Trust Indenture Act and in said Securities Act as in force
at the date of this Indenture as originally executed. The following terms
have the meanings given to them in the Declaration: (i) Clearing Agency;
(ii) Delaware Trustee; (iii) Depository; (iv) Capital Security
Certificate; (v) Property Trustee; (vi) Administrative Trustees; (vii)
Direct Action; and (viii) Purchase Agreement. All accounting terms used
herein and not expressly defined shall have the meanings assigned to such
terms in accordance with generally accepted accounting principles and the
term "generally accepted accounting principles" means such accounting
principles as are generally accepted at the time of any computation. The
words "herein", "hereof" and "hereunder" and other words of similar import
refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision. Headings are used for convenience of
reference only and do not affect interpretation. The singular includes
the plural and vice versa.
"Additional Interest" shall have the meaning set forth in
Section 2.06(c).
"Adjusted Treasury Rate" shall mean, with respect to any
prepayment date, the rate per annum equal to (i) the yield, under the
heading which represents the average for the immediately prior week,
appearing in the most recently published statistical release designated
"H.15 (519)" or any successor publication which is published weekly by the
Federal Reserve and which establishes yields on actively traded United
States Treasury securities adjusted to constant maturity under the caption
"Treasury Constant Maturities," for the maturity corresponding to the
Remaining Life (if no maturity is within three months before or after the
maturity corresponding to the Remaining Life, yields for the two published
maturities most closely corresponding to the Remaining Life shall be
interpolated, and the Adjusted Treasury Rate shall be interpolated or
extrapolated from such yields on a straight-line basis, rounding to the
nearest month) or (ii) if such release (or any successor release) is not
published during the week preceding the calculation date or does not
contain such yields, the rate per annum equal to the semi-annual
equivalent yield to maturity of the Comparable Treasury Issue, calculated
using a price for the Comparable Treasury Issue (expressed as a percentage
of its principal amount) equal to the Comparable Treasury Price for such
prepayment date, in each case calculated on the third Business Day
preceding the prepayment date, plus in each case (a) 1.00% if such
prepayment date occurs on or prior to January 31, 1998, and (b) .50% in
all other cases.
"Affiliate" shall mean, with respect to a specified Person, (a)
any Person directly or indirectly owning, controlling or holding the power
to vote 10% or more of the outstanding voting securities or other
ownership interests of the specified Person, (b) any Person 10% or more of
whose outstanding voting securities or other ownership interests are
directly or indirectly owned, controlled or held with power to vote by the
specified Person, (c) any Person directly or indirectly controlling,
controlled by, or under common control with the specified Person, (d) a
partnership in which the specified Person is a general partner, (e) any
officer or director of the specified Person, and (f) if the specified
Person is an individual, any entity of which the specified Person is an
officer, director or general partner.
"Authenticating Agent" shall mean any agent or agents of the
Trustee which at the time shall be appointed and acting pursuant to
Section 6.14.
"Bankruptcy Law" shall mean Title 11, U.S. Code, or any similar
federal or state law for the relief of debtors.
"Board of Directors" shall mean either the Board of Directors of
the Company or any duly authorized committee of that board.
"Board Resolution" shall mean a copy of a resolution certified
by the Secretary or an Assistant Secretary of the Company to have been
duly adopted by the Board of Directors and to be in full force and effect
on the date of such certification, and delivered to the Trustee.
"Business Day" shall mean, with respect to any series of
Securities, any day other than a Saturday or a Sunday or a day on which
banking institutions in The City of New York or Wilmington, Delaware are
authorized or required by law or executive order to close.
"Capital Securities" shall mean undivided beneficial interests
in the assets of Community Capital Trust which rank pari passu with the
Common Securities issued by Community Capital Trust; provided, however,
-------- -------
that if an Event of Default has occurred and is continuing, no payments in
respect of Distributions on, or payments upon liquidation, prepayment or
otherwise with respect to, the Common Securities shall be made until the -
holders of the Capital Securities shall be paid in full the Distributions
and the liquidation, prepayment and other payments to which they are
entitled. References to "Capital Securities" shall include collectively
any Series A Capital Securities and Series B Capital Securities.
"Capital Securities Guarantee" shall mean any guarantee that the
Company may enter into with The Chase Manhattan Bank or other Persons that
operates directly or indirectly for the benefit of holders of Capital Secu-
rities of Community Capital Trust and shall include a Series A Capital
Securities Guarantee and a Series B Capital Securities Guarantee with
respect to the Series A Capital Securities and the Series B Capital Securi-
ties, respectively.
"Commission" shall mean the Securities and Exchange Commission,
as from time to time constituted, created under the Exchange Act, or if at
any time after the execution of this Indenture such Commission is not
existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
"Common Securities" shall mean undivided beneficial interests in
the assets of Community Capital Trust which rank pari passu with Capital
Securities issued by Community Capital Trust; provided, however, that if
-------- -------
an Event of Default has occurred and is continuing, no payments in respect
of Distributions on, or payments upon liquidation, prepayment or otherwise
with respect to, the Common Securities shall be made until the holders of
the Capital Securities shall be paid in full the Distributions and the
liquidation, prepayment and other payments to which they are entitled.
"Common Securities Guarantee" shall mean any guarantee that the
Company may enter into with any Person or Persons that operates directly
or indirectly for the benefit of holders of Common Securities of Community
Capital Trust.
"Common Stock" shall mean the Common Stock, par value $1.25
per share, of the Company or any other class of stock resulting from
changes or reclassifications of such Common Stock consisting solely of
changes in par value, or from par value to no par value, or from no par
value to par value.
"Community Capital Trust" or the "Trust" shall mean Community
Capital Trust I, a Delaware business trust created for the purpose of
issuing its undivided beneficial interests in connection with the issuance
of Securities under this Indenture.
"Company" shall mean Community Bank Systems, Inc., a Delaware
corporation, and, subject to the provisions of Article X, shall include
its successors and assigns.
"Company Request" or "Company Order" shall mean a written
request or order signed in the name of the Company by an Officer of the
Company, and delivered to the Trustee.
"Comparable Treasury Issue" shall mean the United States
Treasury security selected by the Quotation Agent as having a maturity
comparable to the Remaining Life of the Securities that would be utilized,
at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the Remaining Life of the Securities. If no United States
Treasury security has a maturity which is within a period from three
months before to three months after the Initial Optional Prepayment Date,
the two most closely corresponding United States Treasury securities shall
be used as the Comparable Treasury Issue, and the Adjusted Treasury Rate
shall be interpolated or extrapolated on a straight-line basis, rounding
to the nearest month, using such securities.
"Comparable Treasury Price" shall mean, with respect to any
prepayment date pursuant to Section 14.01, (i) the average of five
Reference Treasury Dealer Quotations for such prepayment date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations,
or (ii) if the Trustee obtains fewer than three such Reference
Treasury Dealer Quotations, the average of all such Quotations.
"Compounded Interest" shall have the meaning set forth in
Section 16.01.
"Custodian" shall mean any receiver, trustee, assignee, liquidator,
or similar official under any Bankruptcy Law.
"Declaration" shall mean the Amended and Restated Declaration of
Trust of Community Capital Trust, dated as of February 3, 1997.
"Default" shall mean any event, act or condition that with
notice or lapse of time, or both, would constitute an Event of Default.
"Deferred Interest" shall have the meaning set forth in Section
16.01.
"Definitive Securities" shall mean those securities issued in
fully registered certificated form not otherwise in global form.
"Depositary" shall mean, with respect to Securities of any
series, for which the Company shall determine that such Securities will be
issued as a Global Security, The Depository Trust Company, New York, New
York, another clearing agency, or any successor registered as a clearing
agency under the Exchange Act or other applicable statute or regulation,
which, in each case, shall be designated by the Company pursuant to
Section 2.05(d).
"Dissolution Event" shall mean the liquidation of the Trust
pursuant to the Declaration, and the distribution of the Securities held
by the Property Trustee to the holders of the Trust Securities issued by
the Trust pro rata in accordance with the Declaration.
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"Event of Default" shall mean any event specified in Section
5.01, continued for the period of time, if any, and after the giving of
the notice, if any, therein designated.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Exchange Offer" means the offer that may be made pursuant to
the Registration Rights Agreement (i) by the Company to exchange Series B
Securities for Series A Securities and to exchange a Series B Capital
Securities Guarantee for a Series A Capital Securities Guarantee and (ii)
by Community Capital Trust to exchange Series B Capital Securities for
Series A Capital Securities.
"Extended Interest Payment Period" shall have the meaning set
forth in Section 16.01.
"Federal Reserve" shall mean the Board of Governors of the
Federal Reserve System.
"Global Security" shall mean, with respect to the Securities, a
Security executed by the Company and delivered by the Trustee to the
Depositary or pursuant to the Depositary's instruction, all in accordance
with this Indenture, which shall be registered in the name of the
Depositary or its nominee.
"Indebtedness for Money Borrowed" shall mean any obligation of,
or any obligation guaranteed by, the Company for the repayment of borrowed
money, whether or not evidenced by bonds, debentures, notes or other
written instruments but shall not include (i) any trade accounts payable
in the ordinary course of business, (ii) any indebtedness that by its
terms ranks pari passu with or junior in right of payment to the Securities,
(iii) all other debt securities, and guarantees in respect of those
debt securities, issued to any other trust, or a trustee of such trust,
partnership or other entity affiliated with the Company that is a
financing vehicle of the Company (a "financing entity") in connection with
the issuance by such financing entity of equity securities or other
securities guaranteed by the Company pursuant to an instrument that ranks
pari passu with or junior in right of payment to the Capital Securities
Guarantee, and (iv) any other indebtedness that would otherwise qualify as
Indebtedness for Money Borrowed to the extent that such indebtedness by
its terms ranks pari passu with or junior in right of payment to any
Indebtedness described in any of (i), (ii) or (iii).
"Indenture" shall mean this instrument as originally executed
or, if amended as herein provided, as so amended.
"Initial Optional Prepayment Date" shall mean January 31, 2007.
"Interest Payment Date" shall have the meaning set forth in
Section 2.06.
"Liquidated Damages" shall have the meaning set forth in the
Registration Rights Agreement.
"Maturity Date" shall mean January 31, 2027.
"Mortgage" shall mean and include any mortgage, pledge, lien,
security interest, conditional sale or other title retention agreement or
other similar encumbrance.
"Non Book-Entry Capital Securities" shall have the meaning set
forth in Section 2.05.
"Officers" shall mean any of the Chairman, a Vice Chairman, the
Chief Executive Officer, the President, a Vice President (whether or not
designated by a number or a word or words added before or after such
title), the Comptroller, the Group Director, the Secretary or an Assistant
Secretary of the Company.
"Officers' Certificate" shall mean a certificate signed by two
Officers and delivered to the Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel,
who may be an employee of the Company, and who shall be acceptable to the
Trustee.
"Optional Prepayment Price" shall have the meaning set forth in
Section 14.02.
"Other Debentures" shall mean all junior subordinated debentures
issued by the Company from time to time and sold to trusts to be
established by the Company (if any), in each case similar to the Trust.
"Other Guarantees" shall mean all guarantees issued by the
Company with respect to capital securities (if any) and issued to other
trusts established by the Company (if any), in each case similar to the
Trust.
The term "outstanding," when used with reference to Securities,
shall, subject to the provisions of Section 7.04, mean, as of any
particular time, all Securities authenticated and delivered by the Trustee
or the Authenticating Agent under this Indenture, except
(a) Securities theretofore cancelled by the Trustee or the
Authenticating Agent or delivered to the Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or
prepayment of which moneys in the necessary amount shall have been deposited
in trust with the Trustee or with any paying agent (other than the Company)
or shall have been set aside and segregated in trust by the Company (if the
Company shall act as its own paying agent); provided that,
if such Securities, or portions thereof, are to be prepaid prior to maturity
thereof, notice of such prepayment shall have been given as in Article
Fourteen provided or provision satisfactory to the Trustee shall have been
made for giving such notice; and
(c) Securities in lieu of or in substitution for which other
Securities shall have been authenticated and delivered pursuant to the terms
of Section 2.08 unless proof satisfactory to the Company and the Trustee is
presented that any such Securities are held by bona fide holders in due
course.
"Person" shall mean any individual, corporation, estate,
partnership, joint venture, association, joint-stock company, limited
liability company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Predecessor Security" of any particular Security shall mean
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 2.08 in
lieu of a lost, destroyed or stolen Security shall be deemed to evidence
the same debt as the lost, destroyed or stolen Security.
"Prepayment Price" shall mean the Special Event Prepayment Price
or the Optional Prepayment Price, as the context requires.
"Principal Office of the Trustee", or other similar term, shall
mean the principal office of the Trustee, at which at any particular time
its corporate trust business shall be administered.
"Property Trustee" shall have the same meaning as set forth in
the Declaration.
"Purchase Agreement" shall mean the Purchase Agreement dated
January 29, 1997 among the Company, Community Capital Trust and the
Initial Purchaser named therein.
"Quotation Agent" shall mean the Reference Treasury Dealer
appointed by the Company or, if the Company fails to do so, by the
Property Trustee.
"Reference Treasury Dealer" shall mean a primary U.S. Government
securities dealer in New York City (a "Primary Treasury Dealer").
"Reference Treasury Dealer Quotations" shall mean, with respect
to each Reference Treasury Dealer and any prepayment date pursuant to
Section 14.01, the average, as determined by the Trustee, of the bid and
asked prices for the Comparable Treasury Issue (expressed in each case as
a percentage of its principal amount) quoted in writing to the Property
Trustee by such Reference Treasury Dealer at 5:00 p.m., New York City
time, on the third Business Day preceding such prepayment date.
"Registration Rights Agreement" shall mean the Registration
Rights Agreement, dated as of February 3, 1997, by and among the Company,
the Trust and the Initial Purchaser named therein as such agreement may be
amended, modified or supplemented from time to time.
"Regulatory Capital Event" shall mean that the Company shall
have received an opinion of independent bank regulatory counsel
experienced in such matters to the effect that, as a result of (a) any
amendment to, or change (including any announced prospective change) in,
the laws (or any regulations thereunder) of the United States or any
rules, guidelines or policies of the Federal Reserve or (b) any official
administrative pronouncement or judicial decision interpreting or applying
such laws or regulations, which amendment or change is effective or such
pronouncement or decision is announced on or after February 3, 1997, the
Capital Securities do not constitute, or within 90 days of the date of
such opinion, will not constitute, Tier 1 Capital (or its then
equivalent); provided, however, that the distribution of the Junior
Subordinated Debentures in connection with the liquidation of the Trust by
the Company shall not in and of itself constitute a Regulatory Capital
Event unless such liquidation shall have occurred in connection with a Tax
Event.
"Remaining Life" shall mean, with respect to any optional
prepayment pursuant to Section 14.01, the period from the date of such
prepayment to, and including, the Initial Optional Prepayment Date.
"Responsible Officer", when used with respect to the Trustee,
shall mean the chairman or any vice chairman of the board of directors,
the chairman or any vice chairman of the executive committee of the board
of directors, the chairman of the trust committee, the president, any vice
president, the cashier, any assistant cashier, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, any trust officer
or assistant trust officer, the controller or any assistant controller or
any other officer or assistant officer of the Trustee customarily performing
functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Restricted Security" shall mean Securities that bear or are
required to bear the legends set forth in Exhibit A hereto.
"Rule 144A" shall mean Rule 144A under the Securities Act, as
such Rule may be amended from time to time, or under any similar rule or
regulation hereafter adopted by the Commission.
"Securities" shall mean, collectively, the Series A Securities
and the Series B Securities.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Securityholder", "holder of Securities", "Holder", or other
similar terms, shall mean any person in whose name at the time a
particular Security is registered on the register kept by the Company or
the Trustee for that purpose in accordance with the terms hereof.
"Security Register" shall mean (i) prior to a Dissolution Event,
the list of holders provided to the Trustee pursuant to Section 4.01, and
(ii) following a Dissolution Event, any security register maintained by a
security registrar for the securities appointed by the Company following
the execution of a supplemental indenture providing for transfer
procedures as provided for in Section 2.07(a).
"Senior Indebtedness" shall mean all Indebtedness for Money
Borrowed, whether outstanding on the date of execution of this Indenture
or thereafter created, assumed or incurred, unless the terms thereof
specifically provide that it is not superior in right of payment to the
Series A Securities or the Series B Securities, and any deferrals, renewals
or extensions of such Senior Indebtedness.
"Series A Securities" means the Company's 9.75% Series A Junior
Subordinated Deferrable Interest Debentures due January 31, 2027, as
authenticated and issued under this Indenture.
"Series B Securities" means the Company's 9.75% Series B Junior
Subordinated Deferrable Interest Debentures due January 31, 2027, as
authenticated and issued under this Indenture.
"Special Event" shall mean either a Regulatory Capital Event or
a Tax Event.
"Special Event Prepayment Price" shall mean, with respect to any
prepayment of the Securities pursuant to Section 14.01 hereof, an amount
in cash equal to the greater of (i) 100% of the principal amount to be
prepaid or (ii) the sum, as determined by a Quotation Agent, of the
present value of 104.54% of the principal amount thereof plus scheduled
payments of interest on the Securities during the Remaining Life of the
Securities, discounted to the prepayment date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the
Adjusted Treasury Rate, plus, in each case, any accrued and unpaid interest
thereon, including Compounded Interest and Additional Interest, if
any, to the date of such prepayment.
"Subsidiary" shall mean with respect to any Person, (i) any
corporation at least a majority of whose outstanding voting stock of which
is owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries, (ii)
any general partnership, joint venture or similar entity, at least a
majority of whose outstanding partnership or similar interests shall at
the time be owned by such Person, or by one or more of its Subsidiaries,
or by such Person and one or more of its Subsidiaries and (iii) any
limited partnership of which such Person or any of its Subsidiaries is a
general partner. For the purposes of this definition, "voting stock"
means shares, interests, participations or other equivalents in the equity
interest (however designated) in such Person having ordinary voting power
for the election of a majority of the directors (or the equivalent) of
such Person, other than shares, interests, participations or other
equivalents having such power only by reason of the occurrence of a contin-
gency.
"Tax Event" shall mean the receipt by Community Capital Trust
and the Company of an opinion of a nationally recognized tax counsel
experienced in such matters to the effect that, as a result of (a) 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 (b) 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 February 3, 1997, there is more than an insubstantial risk that (i)
Community Capital Trust is, or will be within 90 days of the date of such
opinion, subject to United States federal income tax with respect to
income received or accrued on the Securities, (ii) interest payable by the
Company on the Securities is not, or within 90 days of the date of such
opinion will not be, deductible by the Company, in whole or in part, for
United States federal income tax purposes, or (iii) Community Capital
Trust is, or will be within 90 days of the date of such opinion, subject
to more than a de minimis amount of other taxes, duties or other
governmental charges.
"Trustee" shall mean the Person identified as "Trustee" in the
first paragraph hereof, and, subject to the provisions of Article Six
hereof, shall also include its successors and assigns as Trustee
hereunder. The term "Trustee" as used with respect to a particular series
of the Securities shall mean the trustee with respect to that series.
"Trust Indenture Act of 1939" shall mean the Trust Indenture Act
of 1939 as in force at the date of execution of this Indenture, except as
provided in Section 9.03.
"Trust Securities" shall mean the Capital Securities and the
Common Securities, collectively.
"U.S. Government Obligations" shall mean securities that are (i)
direct obligations of the United States of America for the payment of
which its full faith and credit is pledged or (ii) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of
the United States of America the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case under clauses (i) or (ii) are not callable
or redeemable at the option of the issuer thereof, and shall also include
a depository receipt issued by a bank or trust company as custodian with
respect to any such U.S. Government Obligation or a specific payment of
interest on or principal of any such U.S. Government Obligation held by
such custodian for the account of the holder of a depository receipt,
provided that (except as required by law) such custodian is not authorized
to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of
the U.S. Government Obligation or the specific payment of interest on or
principal of the U.S. Government Obligation evidenced by such depository
receipt.
ARTICLE II
SECURITIES
SECTION 2.01. Forms Generally.
The Securities and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A, the terms of which are
incorporated in and made a part of this Indenture. The Securities may
have notations, legends or endorsements required by law, stock exchange
rule, agreements to which the Company is subject or usage. Each Security
shall be dated the date of its authentication. The Securities shall be
issued in denominations of $1,000 and integral multiples thereof.
SECTION 2.02. Execution and Authentication.
An Officer shall sign the Securities for the Company by manual
or facsimile signature. If an Officer whose signature is on a Security no
longer holds that office at the time the Security is authenticated, the
Security shall nevertheless be valid.
A Security shall not be valid until authenticated by the manual
signature of the Trustee. The signature of the Trustee shall be
conclusive evidence that the Security has been authenticated under this
Indenture. The form of Trustee's certificate of authentication to be
borne by the Securities shall be substantially as set forth in Exhibit A
hereto.
The Trustee shall, upon a Company Order, authenticate for
original issue up to, and the aggregate principal amount of Securities
outstanding at any time may not exceed the sum of, $30,928,000 aggregate
principal amount of the Securities.
SECTION 2.03. Form and Payment.
Except as provided in Section 2.05, the Securities shall be
issued in fully registered certificated form without interest coupons.
Principal of, and premium, if any, and interest on, the Securities issued
in certificated form will be payable, the transfer of such Securities will
be registrable and such Securities will be exchangeable for Securities
bearing identical terms and provisions at the office or agency of the
Company maintained for such purpose under Section 3.02; provided, however,
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that payment of interest with respect to Securities (other than a Global
Security) may be made at the option of the Company (i) by check mailed to
the holder at such address as shall appear in the Security Register or
(ii) by transfer to an account maintained by the Person entitled thereto
as specified in the Security Register, provided that proper transfer
instructions have been received in writing by the relevant record date.
Notwithstanding the foregoing, so long as the holder of any Securities is
the Property Trustee, the payment of the principal of, and premium, if
any, and interest (including Compounded Interest and Additional Interest,
if any) on such Securities held by the Property Trustee will be made at
such place and to such account as may be designated by the Property
Trustee.
SECTION 2.04. Legends.
(a) Except as permitted by subsection (b) of this Section 2.04
or as otherwise determined by the Company in accordance with applicable
law, each Security shall bear the applicable legends relating to restrictions
on transfer pursuant to the securities laws in substantially the
form set forth on Exhibit A hereto.
(b) The Company shall issue and the Trustee shall authenticate
Series B Securities in exchange for Series A Securities accepted for
exchange in the Exchange Offer, which Series B Securities shall not bear
the legends required by subsection (a) above, in each case unless the
holder of such Series A Securities is either (A) a broker-dealer who pur-
chased such Series A Securities directly from the Company for resale
pursuant to Rule 144A or any other available exemption under the
Securities Act, (B) a Person participating in the distribution of the
Series A Securities or (C) a Person who is an affiliate (as defined in
Rule 144 under the Securities Act) of the Company.
SECTION 2.05. Global Security.
(a) In connection with a Dissolution Event,
(i) if any Capital Securities are held in book-entry form,
the related Definitive Securities shall be presented to the Trustee (if an
arrangement with the Depositary has been maintained) by the Property Trustee
in exchange for one or more Global Securities (as may be required pursuant to
Section 2.07) in an aggregate principal amount equal to the aggregate princi-
pal amount of all outstanding Securities, to be registered
in the name of the Depositary, or its nominee, and delivered by the Trustee
to the Depositary for crediting to the accounts of its participants pursuant
to the instructions of the Administrative Trustees; the Company upon any such
presentation shall execute one or more Global Securities in such aggregate
principal amount and deliver the same to the Trustee for authentication and
delivery in accordance with this Indenture;
and payments on the Securities issued as a Global Security will be made to
the Depositary; and
(ii) if any Capital Securities are held in certificated
form, the related Definitive Securities may be presented to the Trustee by
the Property Trustee and any Capital Security certificate which represents
Capital Securities other than Capital Securities in book-entry form ("Non
Book-Entry Capital Securities") will be deemed to represent beneficial inter-
ests in Securities presented to the Trustee by the Property Trustee having an
aggregate principal amount equal to the aggregate liquidation amount of the
Non Book-Entry Capital Securities until such Capital Security certificates
are presented to the Security Registrar for transfer or reissuance, at which
time such Capital Security certificates will be cancelled and a Security,
registered in the name of the holder of the Capital Security certificate or
the transferee of the holder of such Capital Security certificate, as the
case may be, with an aggregate principal amount equal to the aggregate
liquidation amount of the Capital Security certificate cancelled, will
be executed by the Company and delivered to the Trustee for authentication
and delivery in accordance with this Indenture. Upon the issuance of such
Securities, Securities with an equivalent aggregate principal amount that
were presented by the Property Trustee to the Trustee will be deemed to
have been cancelled.
(b) The Global Securities shall represent the aggregate amount
of outstanding Securities from time to time endorsed thereon; provided,
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that the aggregate amount of outstanding Securities represented thereby
may from time to time be reduced or increased, as appropriate, to reflect
exchanges and prepayments. Any endorsement of a Global Security to
reflect the amount of any increase or decrease in the amount of outstanding
Securities represented thereby shall be made by the Trustee, in accordance
with instructions given by the Company as required by this Section
2.05.
(c) The Global Securities may be transferred, in whole but not
in part, only to the Depositary, another nominee of the Depositary, or to
a successor Depositary selected or approved by the Company or to a nominee
of such successor Depositary.
(d) If at any time the Depositary notifies the Company that it
is unwilling or unable to continue as Depositary or the Depositary has
ceased to be a clearing agency registered under the Exchange Act, and a
successor Depositary is not appointed by the Company within 90 days after
the Company receives such notice or becomes aware of such condition, as
the case may be, the Company will execute, and the Trustee, upon written
notice from the Company, will authenticate and make available for delivery
the Definitive Securities, in authorized denominations, and in an aggregate
principal amount equal to the principal amount of the Global Security
in exchange for such Global Security. If there is an Event of Default,
the Depositary shall have the right to exchange the Global Securities for
Definitive Securities. In addition, the Company may at any time determine
that the Securities shall no longer be represented by a Global Security.
In the event of such an Event of Default or such a determination, the
Company shall execute, and subject to Section 2.07, the Trustee, upon receipt
of an Officers' Certificate evidencing such determination by the
Company, will authenticate and make available for delivery the Definitive
Securities, in authorized denominations, and in an aggregate principal
amount equal to the principal amount of the Global Security in exchange
for such Global Security. Upon the exchange of the Global Security for
such Definitive Securities, in authorized denominations, the Global Security
shall be cancelled by the Trustee. Such Definitive Securities issued
in exchange for the Global Security shall be registered in such names and
in such authorized denominations as the Depositary, pursuant to instructions
from its direct or indirect participants or otherwise, shall
instruct the Trustee. The Trustee shall deliver such Definitive Securities
to the Depositary for delivery to the Persons in whose names such Definitive
Securities are so registered.
SECTION 2.06 Interest.
(a) Each Security will bear interest at the rate of 9.75% per
annum (the "Coupon Rate") from the most recent date to which interest has
been paid or duly provided for or, if no interest has been paid or duly
provided for, from February 3, 1997 until the principal thereof becomes
due and payable and at the Coupon Rate on any overdue principal (and
premium, if any) and (to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest,
compounded semi-annually, payable (subject to the provisions of Article
XVI) semi-annually in arrears on January 31 and July 31 of each year
(each, an "Interest Payment Date") commencing on July 31, 1997, to the
Person in whose name such Security or any predecessor Security is registered,
at the close of business on the regular record date for such interest
installment, which shall be the fifteenth day prior to the relevant
Interest Payment Date.
(b) Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months and, for any period of less than a full
calendar month, the number of days elapsed in such month. In the event
that any Interest Payment Date falls on a day that is not a Business Day,
then payment of interest payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), with the same force and effect as
if made on such date.
(c) During such time as the Property Trustee is the holder of
any Securities, the Company shall pay any additional amounts on the
Securities as may be necessary in order that the amount of Distributions
then due and payable by the Trust on the outstanding Securities shall not
be reduced as a result of any additional taxes, duties and other governmental
charges to which the Trust has become subject as a result of
a Tax Event ("Additional Interest").
SECTION 2.07. Transfer and Exchange.
(a) Transfer Restrictions. (i) The Series A Securities, and
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those Series B Securities with respect to which any Person described in
Section 2.04(b)(A), (B) or (C) is the beneficial owner, may not be trans-
ferred except in compliance with the legend contained in Exhibit A unless
otherwise determined by the Company in accordance with applicable law.
Upon any distribution of the Securities following a Dissolution Event, the
Company and the Trustee shall enter into a supplemental indenture pursuant
to Section 9.01 to provide for the transfer restrictions and procedures
with respect to the Securities substantially similar to those contained in
the Declaration to the extent applicable in the circumstances existing at
such time.
(ii) Except as provided in a Company Order delivered to the
Trustees, the Securities will be issued and may be transferred only in
blocks having an aggregate principal amount of not less than $100,000.
Any such transfer of the Securities in a block having an aggregate
principal amount of less than $100,000 shall be deemed to be voided and of
no legal effect whatsoever. Any such transferee shall be deemed not to be
holder of such Securities for any purpose, including, but not limited to
the receipt of payments on such Securities, and such transferee shall be
deemed to have no interest whatsoever in such Securities.
(b) General Provisions Relating to Transfers and Exchanges. To
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permit registrations of transfers and exchanges, the Company shall execute
and the Trustee shall authenticate Definitive Securities and Global
Securities at the Company's request. All Definitive Securities and Global
Securities issued upon any registration of transfer or exchange of Definitive
Securities or Global Securities shall be the valid obligations of the
Company, evidencing the same debt, and entitled to the same benefits under
this Indenture, as the Definitive Securities or Global Securities surrendered
upon such registration of transfer or exchange.
No service charge shall be made to a holder for any registration
of transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith.
The Company shall not be required to (i) issue, register the
transfer of or exchange Securities during a period beginning at the
opening of business 15 days before the day of mailing of a notice of
prepayment or any notice of selection of Securities for prepayment under
Article Fifteen hereof and ending at the close of business on the day of
such mailing; or (ii) register the transfer of or exchange any Security so
selected for prepayment in whole or in part, except the unprepaid portion
of any Security being prepaid in part.
Prior to due presentment for the registration of a transfer of
any Security, the Trustee, any Authenticating Agent and the Company may
deem and treat the Person in whose name any Security is registered as the
absolute owner of such Security for the purpose of receiving payment of
principal of and premium, if any, and interest on such Securities, and
neither the Trustee, any Authenticating Agent nor the Company shall be
affected by notice to the contrary.
(c) Exchange of Series A Securities for Series B Securities.
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The Series A Securities may be exchanged for Series B Securities pursuant
to the terms of the Exchange Offer. The Trustee shall make the exchange
as follows:
The Company shall present the Trustee with an Officers'
Certificate certifying the following:
(A) upon issuance of the Series B Securities, the transactions
contemplated by the Exchange Offer have been consummated; and
(B) the principal amount of Series A Securities properly
tendered in the Exchange Offer that are represented by a Global Security and
the principal amount of Series A Securities properly tendered in the Exchange
Offer that are represented by Definitive Securities, the name of each holder
of such Definitive Securities, the principal amount at maturity properly
tendered in the Exchange Offer by each such holder and the name and address
to which Definitive Securities for Series B Securities shall be registered
and sent for each such holder.
The Trustee, upon receipt of (i) such Officers' Certificate,
(ii) an Opinion of Counsel (x) to the effect that the Series B Securities
have been registered under Section 5 of the Securities Act and the Indenture
has been qualified under the Trust Indenture Act and (y) with respect
to the matters set forth in Section 3(p) of the Registration Rights
Agreement and (iii) a Company Order, shall authenticate (A) a Global
Security for Series B Securities in aggregate principal amount equal to
the aggregate principal amount of Series A Securities represented by a
Global Security indicated in such Officers' Certificate as having been
properly tendered and (B) Definitive Securities representing Series B
Securities registered in the names of, and in the principal amounts indicated
in, such Officers' Certificate.
If the principal amount at maturity of the Global Security for
the Series B Securities is less than the principal amount at maturity of
the Global Security for the Series A Securities, the Trustee shall make an
endorsement on such Global Security for Series A Securities indicating a
reduction in the principal amount at maturity represented thereby.
The Trustee shall deliver such Definitive Securities for Series
B Securities to the holders thereof as indicated in such Officers'
Certificate.
SECTION 2.08. Replacement Securities.
If any mutilated Security is surrendered to the Trustee, or the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, the Company shall issue and
the Trustee shall authenticate a replacement Security if the Trustee's
requirements for replacements of Securities are met. An indemnity bond
must be supplied by the holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Authen-
ticating Agent or any authenticating agent from any loss that any of them
may suffer if a Security is replaced. The Company or the Trustee may
charge for its expenses in replacing a Security.
Every replacement Security is an obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Securities duly issued hereunder.
SECTION 2.09. Treasury Securities.
In determining whether the holders of the required principal
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company or any Affiliate of the Company shall be
considered as though not outstanding, except that for purposes of determining
whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Securities that a Responsible Officer
of the Trustee actually knows to be so owned shall be so considered.
SECTION 2.10. Temporary Securities.
Pending the preparation of Definitive Securities, the Company
may execute, and upon Company Order the Trustee shall authenticate and
make available for delivery, temporary Securities that are printed,
lithographed, typewritten, mimeographed or otherwise reproduced, in any
authorized denomination, substantially of the tenor of the definitive
Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as conclusively evidenced by
their execution of such Securities.
If temporary Securities are issued, the Company shall cause
Definitive Securities to be prepared without unreasonable delay. The
Definitive Securities shall be printed, lithographed or engraved, or
provided by any combination thereof, or in any other manner permitted by
the rules and regulations of any applicable securities exchange, all as
determined by the officers executing such Definitive Securities. 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 maintained by the Company for such
purpose pursuant to Section 3.02 hereof, 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 make
available for delivery, in exchange therefor the same aggregate principal
amount of Definitive Securities of authorized denominations. Until so ex-
changed, the temporary Securities shall in all respects be entitled to the
same benefits under this Indenture as Definitive Securities.
SECTION 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Trustee and no one else shall cancel all Securities
surrendered for registration of transfer, exchange, payment, replacement
or cancellation and shall retain or destroy cancelled Securities in
accordance with its normal practices (subject to the record retention
requirement of the Exchange Act) unless the Company directs them to be re-
turned to it. The Company may not issue new Securities to replace Securities
that have been paid or prepaid or that have been delivered to the
Trustee for cancellation. All cancelled Securities held by the Trustee
shall be delivered to the Company.
SECTION 2.12. Defaulted Interest.
Any interest on any Security that is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the
holder on the relevant regular record date by virtue of having been such
holder; and such Defaulted Interest shall be paid by the Company, at its
election, as provided in clause (a) or clause (b) below:
(a) The Company may make payment of any Defaulted Interest on
Securities to the Persons in whose names such Securities (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 such 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 proposed to be paid in respect of such Defaulted Inter-
est 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 not be more than 15 nor less than 10 days prior to the
date of the proposed payment and not less than 10 days after the receipt by
the 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 Securityholder at his or her
address as it appears in the Security Register, not less than 10 days prior
to such special record date. Notice of the proposed payment of such
Defaulted Interest and the special record date therefor having been mailed
as aforesaid, such Defaulted Interest shall be paid to the Persons in whose
names such Securities (or their respective Predecessor Securities)
are registered on such special record date and shall be no longer payable
pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted Interest on
any Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this clause, such manner of payment shall be deemed practicable by the
Trustee.
SECTION 2.13. 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 prepayment as a convenience to Securityholders;
provided that any such notice may state that no representation is made as
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to the correctness of such numbers either as printed on the Securities or
as contained in any notice of a prepayment and that reliance may be placed
only on the other identification numbers printed on the Securities, and
any such prepayment shall not be affected by any defect in or omission of
such numbers. The Company will promptly notify the Trustee of any change
in the CUSIP numbers.
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of the holders
of the Securities that it will duly and punctually pay or cause to be paid
the principal of and premium, if any, and interest on the Securities at
the place, at the respective times and in the manner provided herein.
Except as provided in Section 2.03, each installment of interest on the
Securities may be paid by mailing checks for such interest payable to the
order of the holder of Security entitled thereto as they appear in the
Security Register. The Company further covenants to pay any and all
amounts including, without limitation, Liquidated Damages, if any, on the
dates and in the manner required under the Registration Rights Agreement.
SECTION 3.02. Offices for Notices and Payments, etc.
So long as any of the Securities remain outstanding, the Company
will maintain in the Borough of Manhattan, The City of New York, an office
or agency where the Securities may be presented for payment, an office or
agency where the Securities may be presented for registration of transfer
and for exchange as in this Indenture provided and an office or agency
where notices and demands to or upon the Company in respect of the
Securities or of this Indenture may be served. The Company will give to
the Trustee written notice of the location of any such office or agency
and of any change of location thereof. Until otherwise designated from
time to time by the Company in a notice to the Trustee, any such office or
agency for all of the above purposes shall be the Principal Office of the
Trustee. In case the Company shall fail to maintain any such office or
agency in the Borough of Manhattan, The City of New York, or shall fail to
give such notice of the location or of any change in the location thereof,
presentations and demands may be made and notices may be served at the
Principal Office of the Trustee.
In addition to any such office or agency, the Company may from
time to time designate one or more offices or agencies outside the Borough
of Manhattan, The City of New York, where the Securities may be presented
for payment, registration of transfer and for exchange in the manner
provided in this Indenture, and the Company may from time to time rescind
such designation, as the Company may deem desirable or expedient;
provided, however, that no such designation or rescission shall in any
manner relieve the Company of its obligation to maintain any such office
or agency in the Borough of Manhattan, The City of New York, for the
purposes above mentioned. The Company will give to the Trustee prompt
written notice of any such designation or rescission thereof.
SECTION 3.03. Appointments to Fill Vacancies in Trustee's
Office.
The Company, whenever necessary to avoid or fill a vacancy in
the office of Trustee, will appoint, in the manner provided in Section
6.10, a Trustee, so that there shall at all times be a Trustee hereunder.
SECTION 3.04. Provision as to Paying Agent.
(a) If the Company shall appoint a paying agent other than the
Trustee with respect to the Securities, it will cause such paying agent to
execute and deliver to the Trustee an instrument in which such agent shall
agree with the Trustee, subject to the provision of this Section 3.04,
(1) that it will hold all sums held by it as such agent
for the payment of the principal of and premium, if any, or interest on the
Securities (whether such sums have been paid to it by the Company or by any
other obligor on the Securities) in trust for the benefit of the holders of
the Securities; and
(2) that it will give the Trustee notice of any failure by
the Company (or by any other obligor on the Securities) to make any payment
of the principal of and premium or interest on the Securities when
the same shall be due and payable.
(b) If the Company shall act as its own paying agent, it will,
on or before each due date of the principal of and premium, if any, or
interest on the Securities, set aside, segregate and hold in trust for the
benefit of the holders of the Securities a sum sufficient to pay such
principal, premium or interest so becoming due and will notify the Trustee
of any failure to take such action and of any failure by the Company (or by
any other obligor under the Securities) to make any payment of the principal
of and premium, if any, or interest on the Securities when the same shall
become due and payable.
(c) Anything in this Section 3.04 to the contrary
notwithstanding, the Company may, at any time, for the purpose of obtaining a
satisfaction and discharge with respect to the Securities hereunder, or for
any other reason, pay or cause to be paid to the Trustee
all sums held in trust for any Securities by the Trustee or any paying agent
hereunder, as required by this Section 3.04, such sums to be held by
the Trustee upon the trusts herein contained.
(d) Anything in this Section 3.04 to the contrary
notwithstanding, the agreement to hold sums in trust as provided in this
Section 3.04 is subject to Sections 11.03 and 11.04.
SECTION 3.05. Certificate to Trustee.
The Company will deliver to the Trustee on or before 120 days
after the end of each fiscal year in each year, commencing with the first
fiscal year ending after the date hereof, so long as Securities are outstand-
ing hereunder, an Officers' Certificate, one of the signers of which
shall be the principal executive, principal financial or principal
accounting officer of the Company stating that in the course of the perfor-
mance by the signers of their duties as officers of the Company they
would normally have knowledge of any default by the Company in the
performance of any covenants contained herein, stating whether or not they
have knowledge of any such default and, if so, specifying each such
default of which the signers have knowledge and the nature thereof.
SECTION 3.06. Compliance with Consolidation Provisions.
The Company will not, while any of the Securities remain out-
standing, consolidate with, or merge or convert into, or merge or convert
into itself, or sell or convey all or substantially all of its property
to, any other Person unless the provisions of Article Ten hereof are
complied with.
SECTION 3.07. Limitation on Dividends.
The Company will not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation
payment with respect to, any of the Company's capital stock (which
includes common and preferred stock), (ii) make any payment of principal,
interest or premium, if any, with respect to or repay, repurchase or
redeem any debt securities of the Company (including any Other Debentures)
that rank pari passu with or junior in right of payment to the Securities
or (iii) make any guarantee payments with respect to any guarantee by the
Company of the debt securities of any Subsidiary of the Company (including
any Other Guarantees) if such guarantee ranks pari passu or junior in
right of payment to the Securities (other than (a) dividends or distributions
in shares of, or options, warrants or rights to subscribe for or
purchase shares of, Common Stock of the Company; (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 Capital Securities Guarantee; (d) as a result of a reclassification
of the Company's capital stock or the exchange or the conversion of
one class or series of the Company's capital stock for another class or
series of the Company's capital stock; (e) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion
or exchange provisions of such capital stock or the security being
converted or exchanged; and (f) 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 any of the Company's
dividend reinvestment plans) if at such time (i) there shall have occurred
any event of which the Company has actual knowledge that (a) is or with
the giving of notice or the lapse of time, or both, would constitute an
Event of Default and (b) in respect of which the Company shall not have
taken reasonable steps to cure, (ii) if such Securities are held by the
Property Trustee, the Company shall be in default with respect to its
payment of any obligations under the Capital Securities Guarantee or (iii)
the Company shall have given notice of its election of the exercise of its
right to extend the interest payment period pursuant to Section 16.01 and
any such extension shall have commenced and shall be continuing.
SECTION 3.08. Covenants as to Community Capital Trust.
In the event Securities are issued to Community Capital Trust or
a trustee of such trust in connection with the issuance of Trust
Securities by Community Capital Trust, for so long as such Trust Securities
remain outstanding, the Company will (i) maintain 100% direct
ownership of the Common Securities of Community Capital Trust; provided,
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however, that any successor of the Company, permitted pursuant to Article
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Ten, may succeed to the Company's ownership of such Common Securities,
(ii) use its reasonable efforts to cause Community Capital Trust (a) to
remain a business trust, except in connection with a distribution of
Securities, the prepayment of all of the Trust Securities of Community
Capital Trust or certain mergers, consolidations or amalgamations, each as
permitted by the Declaration of Community Capital Trust, and (b) to otherwise
continue to be treated as a grantor trust and not an association
taxable as a corporation for United States federal income tax purposes and
(iii) to use its reasonable efforts to cause each holder of Trust Securities
to be treated as owning an undivided beneficial interest in the
Securities.
SECTION 3.09. Payment of Expenses.
In connection with the offering, sale and issuance of the
Securities to the Trust and in connection with the sale of the Trust
Securities by the Trust, the Company, in its capacity as borrower with
respect to the Securities, shall:
(a) pay all costs and expenses relating to the offering, sale
and issuance of the Securities, including commissions to the initial
purchasers payable pursuant to the Purchase Agreement, fees and expenses
in connection with any exchange offer or other action to be taken pursuant
to the Registration Rights Agreement and compensation of the Trustee in
accordance with the provisions of Section 6.06;
(b) pay all costs and expenses of the Trust (including, but not
limited to, costs and expenses relating to the organization of the Trust,
the offering, sale and issuance of the Trust Securities (including commis-
sions to the initial purchasers in connection therewith), the fees and
expenses of the Property Trustee and the Delaware Trustee, the costs and
expenses relating to the operation of the Trust, including without limita-
tion, costs and expenses of accountants, attorneys, statistical or
bookkeeping services, expenses for printing and engraving and computing or
accounting equipment, paying agent(s), registrar(s), transfer agent(s),
duplicating, travel and telephone and other telecommunications expenses
and costs and expenses incurred in connection with the acquisition,
financing, and disposition of Trust assets;
(c) be primarily and fully liable for any indemnification
obligations arising with respect to the Declaration;
(d) pay any and all taxes (other than United States withholding
taxes attributable to the Trust or its assets) and all liabilities, costs
and expenses with respect to such taxes of the Trust; and
(e) pay all other fees, expenses, debts and obligations (other
than payments of principal of, premium, if any, or interest on the Trust
Securities) related to Community Capital Trust.
SECTION 3.10. Payment Upon Resignation or Removal.
Upon termination of this Indenture or the removal or resignation
of the Trustee, unless otherwise stated, the Company shall pay to the
Trustee all amounts accrued and owing to the date of such termination,
removal or resignation. Upon termination of the Declaration or the
removal or resignation of the Delaware Trustee or the Property Trustee, as
the case may be, pursuant to Section 5.7 of the Declaration, the Company
shall pay to the Delaware Trustee or the Property Trustee, as the case may
be, all amounts accrued and owing to the date of such termination, removal
or resignation.
ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE
SECTION 4.01. Securityholders' Lists.
The Company covenants and agrees that it will furnish or cause
to be furnished to the Trustee:
(a) on a semi-annual basis on each regular record date for the
Securities, a list, in such form as the Trustee may reasonably require, of
the names and addresses of the Securityholders as of such record date; and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company, of any such request, a list
of similar form and content as of a date not more than 15 days prior to the
time such list is furnished, except that, no such lists need be furnished
so long as the Trustee is in possession thereof by reason of its acting as
Security registrar.
SECTION 4.02. Preservation and Disclosure of Lists.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
holders of the Securities (1) contained in the most recent list furnished to
it as provided in Section 4.01 or (2) received by it in the capacity of
Securities registrar (if so acting) hereunder. The Trustee may destroy any
list furnished to it as provided in Section 4.01 upon receipt of a new list
so furnished.
(b) In case three or more holders of Securities (hereinafter
referred to as "applicants") apply in writing to the Trustee and furnish to
the Trustee reasonable proof that each such applicant has owned a Security
for a period of at least six months preceding the date of such application,
and such application states that the applicants desire to
communicate with other holders of Securities or with holders of all
Securities with respect to their rights under this Indenture and is accompa-
nied by a copy of the form of proxy or other communication which such
applicants propose to transmit, then the Trustee shall within 5 Business Days
after the receipt of such application, at its election, either:
(1) afford such applicants access to the information preserved
at the time by the Trustee in accordance with the provisions of subsection
(a) of this Section 4.02; or
(2) inform such applicants as to the approximate number of
holders of all Securities, whose names and addresses appear in the informa-
tion preserved at the time by the Trustee in accordance with the provisions
of subsection (a) of this Section 4.02, and as to the approximate cost of
mailing to such Securityholders the form of proxy or other communication, if
any, specified in such application.
(c) Each and 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 paying agent shall be held accountable by
reason of the disclosure of any such information as to the names and
addresses of the holders of Securities in accordance with the provisions
of subsection (b) of this Section 4.02, regardless of the source from which
such information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made
under said subsection (b).
SECTION 4.03. Reports by the Company.
(a) The Company covenants and agrees to file with the Trustee,
within 15 days after the date on which the Company is required to file the
same with the Commission, copies of the annual reports and of the informa-
tion, documents and other reports (or copies of such portions of any of the
foregoing as the Commission may from time to time by rules and regulations
prescribe) which the Company may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the
Company is not required to file information, documents or reports pursuant to
either of such sections, then to file with the Trustee
and the Commission, in accordance with rules and regulations prescribed from
time to time by the Commission, such of the supplementary and periodic in-
formation, documents and reports which may be required pursuant
to Section 13 of the Exchange Act in respect of a security listed and
registered on a national securities exchange as may be prescribed from time
to time in such rules and regulations.
(b) The Company covenants and agrees to file with the Trustee
and the Commission, in accordance with the rules and regulations prescribed
from time to time by the Commission, such additional information, documents
and reports with respect to compliance by the Company with the conditions and
covenants provided for in this Indenture as may be required from time to time
by such rules and regulations.
(c) The Company covenants and agrees to transmit by mail to all
holders of Securities, as the names and addresses of such holders appear upon
the Security Register, within 30 days after the filing thereof with the
Trustee, such summaries of any information, documents and reports required to
be filed by the Company pursuant to subsections (a) and (b) of
this Section 4.03 as may be required by rules and regulations prescribed from
time to time by the Commission.
(d) Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
(e) So long as is required for an offer or sale of the
Securities to qualify for an exemption under Rule 144A under the Securities
Act, the Company shall, upon request, provide the information required by
clause (d)(4) thereunder to each Holder and to each beneficial
owner and prospective purchaser of Securities identified by each Holder of
Restricted Securities, unless such information is furnished to the Commission
pursuant to Section 13 or 15(d) of the Exchange Act.
SECTION 4.04. Reports by the 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. If required by Section 313(a) of the Trust
Indenture Act, the Trustee shall, within sixty days after each January 31
following the date of this Indenture, commencing January 31, 1998, deliver to
Holders a brief report, dated as of such January 31, which complies with the
provisions of such Section 313(a).
(b) A copy of each such report shall, at the time of such
transmission to Securityholders, be filed by the Trustee with each stock
exchange, if any, upon which the Securities are listed, with the Commission
and with the Company. The Company will promptly notify the Trustee when the
Securities are listed on any stock exchange.
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.01. Events of Default.
One or more of the following events of default shall constitute
an Event of Default hereunder (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 judgement, 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 or
any Other Debentures when it becomes due and payable, and continuance of such
default for a period of 30 days; provided, however, that a valid extension of
an interest payment period by the Company in accordance with the terms
hereof or, in the case of any Other Debentures, the indenture related
thereto, shall not constitute a default in the payment of interest for this
purpose; or
(b) default in the payment of all or any part of the principal
of (or premium, if any, on) any Security or any Other Debentures as and when
the same shall become due and payable either at maturity, upon prepayment, by
declaration of acceleration or otherwise; or
(c) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or warranty
a default in whose performance or whose breach is elsewhere in this Section
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 aggregate principal amount of the
outstanding Securities a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder; or
(d) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Company in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the Company or for
any substantial part of its property, or ordering the winding-up or
liquidation of its affairs and such decree or order shall remain unstayed and
in effect for a period of 90 consecutive days; or
(e) the Company shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary
case under any such law, or shall consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Company or of any substantial
part of its property, or shall make any general assignment
for the benefit of creditors, or shall fail generally to pay its debts as
they become due.
If an Event of Default with respect to Securities at the time
outstanding occurs and is continuing, then in every such case the Trustee
or the holders of not less than 25% in aggregate principal amount of the
Securities then outstanding may declare the principal amount of all Securi-
ties to be due and payable immediately, by a notice in writing to
the Company (and to the Trustee if given by the holders of the outstanding
Securities), and upon any such declaration the same shall become immediately
due and payable.
The foregoing provisions, however, are subject to the condition
that if, at any time after the principal of the Securities shall have been
so declared due and payable, and before any judgment or decree for the
payment of the moneys due shall have been obtained or entered as
hereinafter provided, (i) the Company shall pay or shall deposit with the
Trustee a sum sufficient to pay (A) all matured installments of interest
upon all the Securities and the principal of and premium, if any, on any
and all Securities which shall have become due otherwise than by acceleration
(with interest upon such principal and premium, if any, and, to the
extent that payment of such interest is enforceable under applicable law,
on overdue installments of interest, at the same rate as the rate of
interest specified in the Securities to the date of such payment or
deposit) and (B) such amount as shall be sufficient to cover reasonable
compensation to the Trustee and each predecessor Trustee, their respective
agents, attorneys and counsel, and all other expenses and liabilities
incurred, and all advances made, by the Trustee and each predecessor
Trustee except as a result of negligence or bad faith, and (ii) any and
all Events of Default under the Indenture, other than the non-payment of
the principal of the Securities which shall have become due solely by such
declaration of acceleration, shall have been cured, waived or otherwise
remedied as provided herein, then, in every such case, the holders of a
majority in aggregate principal amount of the Securities then outstanding,
by written notice to the Company and to the Trustee, may rescind and annul
such declaration and its consequences, but no such waiver or rescission
and annulment shall extend to or shall affect any subsequent default or
shall impair any right consequent thereon.
In case the Trustee shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any other reason
or shall have been determined adversely to the Trustee, then and in every
such case the Company, the Trustee and the holders of the Securities shall
be restored respectively to their several positions and rights hereunder,
and all rights, remedies and powers of the Company, the Trustee and the
holders of the Securities shall continue as though no such proceeding had
been taken.
SECTION 5.02. Payment of Securities on Default; Suit Therefor.
The Company covenants that (a) in case default shall be made in
the payment of any installment of interest upon any of the Securities as
and when the same shall become due and payable, and such default shall
have continued for a period of 30 days, or (b) in case default shall be
made in the payment of the principal of or premium, if any, on any of the
Securities as and when the same shall have become due and payable, whether
at maturity of the Securities or upon prepayment or by declaration of
acceleration or otherwise, then, upon demand of the Trustee, the Company
will pay to the Trustee, for the benefit of the holders of the Securities,
the whole amount that then shall have become due and payable on all such
Securities for principal and premium, if any, or interest, or both, as the
case may be, with interest upon the overdue principal and premium, if any,
and (to the extent that payment of such interest is enforceable under
applicable law and, if the Securities are held by Community Capital Trust
or a trustee of such trust, without duplication of any other amounts paid
by Community Capital Trust or trustee in respect thereof) upon the overdue
installments of interest at the rate borne by the Securities; and, in
addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including a reasonable compensation to
the Trustee, its agents, attorneys and counsel, and any expenses or
liabilities incurred by the Trustee hereunder other than through its negli-
gence or bad faith.
In case the Company shall fail forthwith to pay such amounts
upon such demand, the Trustee, in its own name and as trustee of an
express trust, shall be entitled and empowered to institute any actions or
proceedings at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceeding to judgment or
final decree, and may enforce any such judgment or final decree against
the Company or any other obligor on the Securities and collect in the
manner provided by law out of the property of the Company or any other
obligor on the Securities wherever situated the moneys adjudged or decreed
to be payable.
In case there shall be pending proceedings for the bankruptcy or
for the reorganization of the Company or any other obligor on the
Securities under Title 11, United States Code, or any other applicable
law, or in case a receiver or trustee shall have been appointed for the
property of the Company or such other obligor, or in the case of any other
similar judicial proceedings relative to the Company or other obligor upon
the Securities, or to the creditors or property of the Company or such
other obligor, the Trustee, irrespective of whether the principal of the
Securities 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 pursuant to the provisions of this Section 5.02,
shall be entitled and empowered, by intervention in such proceedings or
otherwise, to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Securities and,
in case of any judicial proceedings, to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for reasonable
compensation to the Trustee and each predecessor Trustee, and their
respective agents, attorneys and counsel, and for reimbursement of all
expenses and liabilities incurred, and all advances made, by the Trustee
and each predecessor Trustee, except as a result of negligence or bad
faith) and of the Securityholders allowed in such judicial proceedings
relative to the Company or any other obligor on the Securities, or to the
creditors or property of the Company or such other obligor, unless
prohibited by applicable law and regulations, to vote on behalf of the
holders of the Securities in any election of a trustee or a standby
trustee in arrangement, reorganization, liquidation or other bankruptcy or
insolvency proceedings or person performing similar functions in
comparable proceedings, and to collect and receive any moneys or other
property payable or deliverable on any such claims, and to distribute the
same after the deduction of its charges and expenses; and any receiver,
assignee or trustee in bankruptcy or reorganization is hereby authorized
by each of the Securityholders to make such payments to the Trustee, and,
in the event that the Trustee shall consent to the making of such payments
directly to the Securityholders, to pay to the Trustee such amounts as
shall be sufficient to cover reasonable compensation to the Trustee, each
predecessor Trustee and their respective agents, attorneys and counsel,
and all other expenses and liabilities incurred, and all advances made, by
the Trustee and each predecessor Trustee except as a result of negligence
or bad faith.
Nothing herein contained shall be construed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any holder thereof
or to authorize the Trustee to vote in respect of the claim of any
Securityholder in any such proceeding.
All rights of action and of asserting claims under this
Indenture, or under any of the Securities, may be enforced by the Trustee
without the possession of any of the Securities, or the production thereof
in any trial or other proceeding relative thereto, and any such suit or
proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall be for the
ratable benefit of the holders of the Securities.
In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this
Indenture to which the Trustee shall be a party) the Trustee shall be held
to represent all the holders of the Securities, and it shall not be
necessary to make any holders of the Securities parties to any such
proceedings.
SECTION 5.03. Application of Moneys Collected by Trustee.
Any moneys collected by the Trustee shall be applied in the
order following, at the date or dates fixed by the Trustee for the
distribution of such moneys, upon presentation of the Securities in
respect of which moneys have been collected, and stamping thereon the
payment, if only partially paid, and upon surrender thereof if fully paid:
First: To the payment of costs and expenses of collection
applicable to the Securities and reasonable compensation to the Trustee,
its agents, attorneys and counsel, and of all other expenses and
liabilities incurred, and all advances made, by the Trustee except as a
result of its negligence or bad faith;
Second: To the payment of all Senior Indebtedness of the
Company if and to the extent required by Article Fifteen;
Third: In case the principal of the outstanding Securities in
respect of which moneys have been collected shall not have become due and
be unpaid, to the payment of the amounts then due and unpaid upon
Securities for principal of (and premium, if any) and interest on the
Securities, in respect of which or for the benefit of which money has been
collected, ratably, without preference of priority of any kind, according
to the amounts due on such Securities for principal (and premium, if any)
and interest, respectively; and
Fourth: To the Company.
SECTION 5.04. Proceedings by Securityholders.
No holder of any Security shall have any right by virtue of or
by availing of any provision of this Indenture to institute any suit,
action or proceeding in equity or at law upon or under or with respect to
this Indenture or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless such holder previously shall have given to
the Trustee written notice of an Event of Default and of the continuance
thereof with respect to the Securities specifying such Event of Default,
as hereinbefore provided, and unless also the holders of not less than 25%
in aggregate principal amount of the Securities then outstanding shall
have made written request upon the Trustee to institute such action, suit
or proceeding in its own name as Trustee hereunder and shall have offered
to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity shall have failed to institute any such action, suit or
proceeding, it being understood and intended, and being expressly
covenanted by the taker and holder of every Security with every other
taker and holder and the Trustee, that no one or more holders of
Securities shall have any right in any manner whatever by virtue of or by
availing of any provision of this Indenture to affect, disturb or prejudice
the rights of any other holder of Securities, or to obtain or seek to
obtain priority over or preference to any other such holder, or to enforce
any right under this Indenture, except in the manner herein provided and
for the equal, ratable and common benefit of all holders of Securities.
Notwithstanding any other provisions in this Indenture, however,
the right of any holder of any Security to receive payment of the
principal of (premium, if any) and interest on such Security, on or after
the same shall have become due and payable, or to institute suit for the
enforcement of any such payment, shall not be impaired or affected without
the consent of such holder and by accepting a Security hereunder it is
expressly understood, intended and covenanted by the taker and holder of
every Security with every other such taker and holder and the Trustee,
that no one or more holders of Securities shall have any right in any
manner whatsoever by virtue or by availing of any provision of this
Indenture to affect, disturb or prejudice the rights of the holders of any
other Securities, or to obtain or seek to obtain priority over or
preference to any other such holder, or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable
and common benefit of all holders of Securities. For the protection and
enforcement of the provisions of this Section, each and every
Securityholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
The Company and the Trustee acknowledge that pursuant to the
Declaration, the holders of Capital Securities are entitled, in the
circumstances and subject to the limitations set forth therein, to
commence a Direct Action with respect to any Event of Default under this
Indenture and the Securities.
SECTION 5.05. Proceedings by Trustee.
In case an Event of Default occurs with respect to Securities
and is continuing, the Trustee may in its discretion proceed to protect
and enforce the rights vested in it by this Indenture by such appropriate
judicial proceedings as the Trustee shall deem most effectual to protect
and enforce any of such rights, either by suit in equity or by action at
law or by proceeding in bankruptcy or otherwise, whether for the specific
enforcement of any covenant or agreement contained in this Indenture or in
aid of the exercise of any power granted in this Indenture, or to enforce
any other legal or equitable right vested in the Trustee by this Indenture
or by law.
SECTION 5.06. Remedies Cumulative and Continuing.
All powers and remedies given by this Article V to the Trustee
or to the Securityholders shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any other powers and remedies available to
the Trustee or the holders of the Securities, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture or otherwise established with
respect to the Securities, and no delay or omission of the Trustee or of
any holder of any of the Securities to exercise any right or power
accruing upon any Event of Default occurring and continuing as aforesaid
shall impair any such right or power, or shall be construed to be a waiver
of any such default or an acquiescence therein; and, subject to the
provisions of Section 5.04, every power and remedy given by this Article V
or by law to the Trustee or to the Securityholders may be exercised from
time to time, and as often as shall be deemed expedient, by the Trustee or
by the Securityholders.
SECTION 5.07. Direction of Proceedings and Waiver of Defaults
by Majority of Securityholders.
The holders of a majority in aggregate principal amount of the
Securities at the time outstanding shall have the right to
direct the time, method, and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power
conferred on the Trustee; provided, however, that (subject to the
-------- -------
provisions of Section 6.01) the Trustee shall have the right to decline to
follow any such direction if the Trustee shall determine that the action
so directed would be unjustly prejudicial to the holders not taking part
in such direction or if the Trustee being advised by counsel determines
that the action or proceeding so directed may not lawfully be taken or if
the Trustee in good faith by its board of directors or trustees, executive
committee, or a trust committee of directors or trustees and/or
Responsible Officers shall determine that the action or proceedings so
directed would involve the Trustee in personal liability. Prior to any
declaration accelerating the maturity of the Securities, the holders of a
majority in aggregate principal amount of the Securities at the time
outstanding may on behalf of the holders of all of the Securities waive
any past default or Event of Default and its consequences except a default
(a) in the payment of principal of or premium, if any, or interest on any
of the Securities or (b) in respect of covenants or provisions hereof
which cannot be modified or amended without the consent of the holder of
each Security affected; provided, however, that if the Securities are held
-------- -------
by Property Trustee, such waiver or modification to such waiver shall not
be effective until the holders of a majority in aggregate liquidation
amount of Trust Securities shall have consented to such waiver or modifica-
tion to such waiver; provided further, that if the consent of the holder
-------- -------
of each outstanding Security is required, such waiver shall not be
effective until each holder of the Trust Securities shall have consented
to such waiver. Upon any such waiver, the default covered thereby shall
be deemed to be cured for all purposes of this Indenture and the Company,
the Trustee and the holders of the Securities shall be restored to their
former positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other default or impair any right
consequent thereon. Whenever any default or Event of Default hereunder
shall have been waived as permitted by this Section 5.07, said default or
Event of Default shall for all purposes of the Securities and this Indenture
be deemed to have been cured and to be not continuing.
SECTION 5.08. Notice of Defaults.
The Trustee shall, within 90 days after the occurrence of a
default with respect to the Securities, mail to all Securityholders, as
the names and addresses of such holders appear upon the Security register,
notice of all defaults known to the Trustee, unless such defaults shall
have been cured before the giving of such notice (the term "defaults" for
the purpose of this Section 5.08 being hereby defined to be the events
specified in clauses (a), (b), (c), (d) and (e) of Section 5.01, not
including periods of grace, if any, provided for therein, and irrespective
of the giving of written notice specified in clause (c) of Section 5.01);
and provided that, except in the case of default in the payment of the
principal of or premium, if any, or interest on any of the Securities, 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
Securityholders; and provided further, that in the case of any default of
the character specified in Section 5.01(c) no such notice to
Securityholders shall be given until at least 60 days after the occurrence
thereof but shall be given within 90 days after such occurrence.
SECTION 5.09. Undertaking to Pay 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 and expenses, against any party litigant
in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section 5.09 shall not apply to any suit instituted by the Trustee, to any
suit instituted by any Securityholder, or group of Securityholders,
holding in the aggregate more than 10% in aggregate principal amount of
the Securities outstanding, or to any suit instituted by any
Securityholder for the enforcement of the payment of the principal of (or
premium, if any) or interest on any Security against the Company on or
after the same shall have become due and payable.
ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee.
With respect to the holders of the Securities issued hereunder,
the Trustee, prior to the occurrence of an Event of Default and after the
curing or waiving of all Events of Default which may have occurred, under-
takes to perform such duties and only such duties as are specifically set
forth in this Indenture. In case an Event of Default has occurred (which
has not been cured or waived), the Trustee shall exercise such of the
rights and powers vested in it by this Indenture, and use the same degree
of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default and after
the curing or waiving of all Events of Default which may have occurred
(1) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Indenture, and the
Trustee shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture against
the Trustee; and
(2) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but, in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Indenture;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Responsible Officers, unless
it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith, in accordance with the
direction of the Securityholders pursuant to Section 5.07, relating to the
time, method and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture.
None of the provisions contained in this Indenture shall require
the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if there is reasonable ground for
believing that the repayment of such funds or liability is not reasonably
assured to it under the terms of this Indenture or adequate indemnity
against such risk is not reasonably assured to it.
SECTION 6.02. Reliance on Documents, Opinions, etc.
Except as otherwise provided in Section 6.01:
(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, consent, order, bond, note,
debenture or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Company
mentioned herein may be sufficiently evidenced by an Officers' Certificate
(unless other evidence in respect thereof be herein specifically prescribed);
and any Board Resolution may be evidenced to the Trustee by a copy thereof
certified by the Secretary or an Assistant Secretary of the Company;
(c) the Trustee may consult with counsel of its selection and
any advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered omitted by it hereunder
in good faith and in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders, pursuant to the provisions of this
Indenture, unless such Securityholders shall have offered to the Trustee
security or indemnity reasonably satisfactory to it against the
costs, expenses and liabilities which may be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture; nothing
contained herein shall, however, relieve the Trustee of the obligation, upon
the occurrence of an Event of Default (that has not been cured or waived), to
exercise such of the rights and powers vested in it by this Indenture, and to
use the same degree of care and skill in their exercise, as a prudent man
would exercise or use under the circumstances
in the conduct of his own affairs;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, coupon or other paper or document, unless requested in writing to
do so by the holders of a majority in aggregate
principal amount of the outstanding Securities; provided, however, that if
the payment within a reasonable time to the Trustee of the costs, expenses
or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to
the Trustee by the security afforded to it by the terms of this Indenture,
the Trustee may require reasonable indemnity against such expense or lia-
bility as a condition to so proceeding; 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 (including any Authenticating Agent) or attorneys, and the Trustee
shall not be responsible for any misconduct or negligence on the part of any
such agent or attorney appointed by it with due care.
SECTION 6.03. No Responsibility for Recitals, etc.
The recitals contained herein and in the Securities (except in
the certificate of authentication of the Trustee or the Authenticating
Agent) shall be taken as the statements of the Company and the Trustee and
the Authenticating Agent assume no responsibility for the correctness of
the same. The Trustee and the Authenticating Agent make no
representations as to the validity or sufficiency of this Indenture or of
the Securities. The Trustee and the Authenticating Agent shall not be
accountable for the use or application by the Company of any Securities or
the proceeds of any Securities authenticated and delivered by the Trustee
or the Authenticating Agent in conformity with the provisions of this
Indenture.
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents,
Transfer Agents or Registrar May Own Securities.
The Trustee or any Authenticating Agent or any paying agent or
any transfer agent or any Security registrar, in its individual or any
other capacity, may become the owner or pledgee of Securities with the
same rights it would have if it were not Trustee, Authenticating Agent,
paying agent, transfer agent or Security registrar.
SECTION 6.05. Moneys to be Held in Trust.
Subject to the provisions of Section 11.04, all moneys received
by the Trustee or any paying agent shall, until used or applied as herein
provided, be held in trust for the purpose for which they were received,
but need not be segregated from other funds except to the extent required
by law. The Trustee and any paying agent shall be under no liability for
interest on any money received by it hereunder except as otherwise agreed
in writing with the Company. So long as no Event of Default shall have
occurred and be continuing, all interest allowed on any such moneys shall
be paid from time to time upon the written order of the Company, signed by
the Chairman of the Board of Directors, the President or a Vice President
or the Treasurer or an Assistant Treasurer of the Company.
SECTION 6.06. Compensation and Expenses of Trustee.
The Company, as issuer of the Securities, covenants and agrees
to pay to the Trustee from time to time, and the Trustee shall be entitled
to, such compensation as shall be agreed to in writing between the Company
and the Trustee (which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust), and the
Company will pay or reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any of the provisions of this Indenture (including
the reasonable compensation and the expenses and disbursements
of its counsel and of all Persons not regularly in its employ) except any
such expense, disbursement or advance as may arise from its negligence or
bad faith. The Company also covenants to indemnify each of the Trustee
and any predecessor Trustee (and its officers, agents, directors and
employees) for, and to hold them harmless against, any and all loss,
damage, claim, liability or expense including taxes (other than taxes
based on the income of the Trustee) incurred without negligence or bad
faith on the part of the Trustee and arising out of or in connection with
the acceptance or administration of this trust, including the costs and
expenses of defending itself against any claim of liability in the premises.
The obligations of the Company under this Section 6.06 to compensate
and indemnify the Trustee and to pay or reimburse the Trustee for
expenses, disbursements and advances shall constitute additional indebtedness
hereunder. Such additional indebtedness shall be secured by a lien
prior to that of the Securities upon all property and funds held or
collected by the Trustee as such, except funds held in trust for the
benefit of the holders of particular Securities.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.01(d) or
Section 5.01(e), the expenses (including the reasonable charges and
expenses of its counsel) and the compensation for the services are
intended to constitute expenses of administration under any applicable
federal or state bankruptcy, insolvency or other similar law.
The provisions of this Section shall survive the termination of
this Indenture.
SECTION 6.07. Officers' Certificate as Evidence.
Except as otherwise provided in Sections 6.01 and 6.02, whenever
in the administration of the provisions of this Indenture the Trustee
shall deem it necessary or desirable that a matter be proved or
established prior to taking or omitting any action hereunder, such matter
(unless other evidence in respect thereof is herein specifically
prescribed) may, in the absence of negligence or bad faith on the part of
the Trustee, be deemed to be conclusively proved and established by an
Officers' Certificate delivered to the Trustee, and such certificate, in
the absence of negligence or bad faith on the part of the Trustee, shall
be full warrant to the Trustee for any action taken or omitted by it under
the provisions of this Indenture upon the faith thereof.
SECTION 6.08. Conflicting Interest of Trustee.
If the Trustee has or shall acquire any "conflicting interest"
within the meaning of Section 310(b) of the Trust Indenture Act, the
Trustee and the Company shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
SECTION 6.09. Eligibility of Trustee.
The Trustee hereunder shall at all times be a corporation
organized and doing business under the laws of the United States of
America or any state or territory thereof or of the District of Columbia
or a corporation or other Person permitted to act as trustee by the
Commission authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least 50 million U.S. dollars
($50,000,000) and subject to supervision or examination by federal, state,
territorial, or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section 6.09 the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published.
The Company may not, nor may any Person directly or indirectly
controlling, controlled by, or under common control with the Company,
serve as Trustee.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 6.09, the Trustee shall
resign immediately in the manner and with the effect specified in Section
6.10.
SECTION 6.10. Resignation or Removal of Trustee.
(a) The Trustee, or any trustee or trustees hereafter
appointed, may at any time resign by giving written notice of such
resignation to the Company and by mailing notice thereof to the holders of
the Securities at their addresses as they shall appear on the Security reg-
ister. Upon receiving such notice of resignation, the Company shall
promptly appoint a successor trustee or trustees by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee. If no successor trustee shall
have been so appointed and have accepted appointment within 60 days after the
mailing of such notice of resignation to the affected Securityholders, the
resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee, or any
Securityholder who has been a bona fide holder of a Security for at least
six months may, subject to the provisions of Section 5.09, on behalf of him-
self and all others similarly situated, petition any such court for the
appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, appoint a successor
trustee.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with the provisions
of Section 6.08 after written request therefor by the Company or by any
Securityholder who has been a bona fide holder of a Security or Securities
for at least six months, or
(2) the Trustee shall cease to be eligible in accordance
with the provisions of Section 6.09 and shall fail to resign after written
request therefor by the Company or by any such Securityholder, or
(3) the Trustee shall become incapable of acting, or shall
be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, the Company may remove the Trustee
and appoint a successor trustee by written instrument, in duplicate, one copy
of which instrument shall be delivered to the Trustee so removed and one copy
to the successor trustee, or, subject to the provisions of Section 5.09, any
Securityholder 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 and the appointment of a successor trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of
the Securities at the time outstanding may at any time remove the Trustee and
nominate a successor trustee, which shall be deemed appointed as successor
trustee unless within 10 days after such nomination the Company objects
thereto or if no successor trustee shall have been so appointed and shall
have accepted appointment within 30 days after such removal, in which case
the Trustee so removed or any Securityholder, upon the terms and conditions
and otherwise as in subsection (a) of this Section 6.10
provided, may petition any court of competent jurisdiction for an appointment
of a successor trustee.
(d) Any resignation or removal of the Trustee and appointment
of a successor trustee pursuant to any of the provisions of this Section 6.10
shall become effective upon acceptance of appointment by the successor
trustee as provided in Section 6.11.
SECTION 6.11. Acceptance by Successor Trustee.
Any successor trustee appointed as provided in Section 6.10
shall execute, acknowledge and deliver to the Company and to its
predecessor trustee an instrument accepting such appointment hereunder,
and thereupon the resignation or removal of the retiring trustee shall
become effective and such successor trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if
originally named as trustee herein; but, nevertheless, on the written
request of the Company or of the successor trustee, the trustee ceasing to
act shall, upon payment of any amounts then due it pursuant to the
provisions of Section 6.06, execute and deliver an instrument transferring
to such successor trustee all the rights and powers of the trustee so
ceasing to act and shall duly assign, transfer and deliver to such
successor trustee all property and money held by such retiring trustee
thereunder. Upon request of any such successor trustee, the Company shall
execute any and all instruments in writing for more fully and certainly
vesting in and confirming to such successor trustee all such rights and
powers. Any trustee ceasing to act shall, nevertheless, retain a lien
upon all property or funds held or collected by such trustee to secure any
amounts then due it pursuant to the provisions of Section 6.06.
No successor trustee shall accept appointment as provided in
this Section 6.11 unless at the time of such acceptance such successor
trustee shall be qualified under the provisions of Section 6.08 and
eligible under the provisions of Section 6.09.
Upon acceptance of appointment by a successor trustee as
provided in this Section 6.11, the Company shall mail notice of the
succession of such trustee hereunder to the holders of Securities at their
addresses as they shall appear on the Security register. If the Company
fails to mail such notice within 10 days after the acceptance of appointment
by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Company.
SECTION 6.12. Succession by Merger, etc.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder without the execution or filing of
any paper or any further act on the part of any of the parties hereto.
In case at the time such successor to the Trustee shall succeed
to the trusts created by this Indenture any Securities shall have been
authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor trustee, and
deliver such Securities so authenticated; and in case at that time any of
the Securities shall not have been authenticated, any successor to the
Trustee may authenticate such Securities either in the name of any
predecessor hereunder or in the name of the successor trustee; and in all
such cases such certificates shall have the full force which the
Securities or this Indenture elsewhere provides that the certificate of
the Trustee shall have; provided, however, that the right to adopt the
certificate of authentication of any predecessor Trustee or authenticate
Securities in the name of any predecessor Trustee shall apply only to its
successor or successors by merger, conversion or consolidation.
SECTION 6.13. Limitation on Rights of Trustee as a Creditor.
The Trustee shall comply with Section 311(a) of the Trust
Indenture Act, excluding any creditor relationship described in Section
311(b) of the Trust Indenture Act. A Trustee who has resigned or been
removed shall be subject to Section 311(a) of the Trust Indenture Act to
the extent included therein.
SECTION 6.14. Authenticating Agents.
There may be one or more Authenticating Agents appointed by the
Trustee upon the request of the Company with power to act on its behalf
and subject to its direction in the authentication and delivery of
Securities issued upon exchange or transfer thereof as fully to all
intents and purposes as though any such Authenticating Agent had been
expressly authorized to authenticate and deliver Securities; provided,
that the Trustee shall have no liability to the Company for any acts or
omissions of the Authenticating Agent with respect to the authentication
and delivery of Securities. Any such Authenticating Agent shall at all
times be a corporation organized and doing business under the laws of the
United States or of any state or territory thereof or of the District of
Columbia authorized under such laws to act as Authenticating Agent, having
a combined capital and surplus of at least $50,000,000 and being subject
to supervision or examination by federal, state, territorial or District
of Columbia authority. If such corporation publishes reports of condition
at least annually pursuant to law or the requirements of such authority,
then for the purposes of this Section 6.14 the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect herein specified in this
Section.
Any corporation into which any Authenticating Agent may be
merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, consolidation or conversion to
which any Authenticating Agent shall be a party, or any corporation
succeeding to the corporate trust business of any Authenticating Agent,
shall be the successor of such Authenticating Agent hereunder, if such
successor corporation is otherwise eligible under this Section 6.14
without the execution or filing of any paper or any further act on the
part of the parties hereto or such Authenticating Agent.
Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Trustee and to the Company. The
Trustee may at any time terminate the agency of any Authenticating Agent
by giving written notice of termination to such Authenticating Agent and
to the Company. Upon receiving such a notice of resignation or upon such
a termination, or in case at any time any Authenticating Agent shall cease
to be eligible under this Section 6.14, the Trustee may, and upon the
request of the Company shall, promptly appoint a successor Authenticating
Agent eligible under this Section 6.14, shall give written notice of such
appointment to the Company and shall mail notice of such appointment to
all Securityholders as the names and addresses of such holders appear on
the Security Register. Any successor Authenticating Agent upon acceptance
of its appointment hereunder shall become vested with all rights, powers,
duties and responsibilities of its predecessor hereunder, with like effect
as if originally named as Authenticating Agent herein.
The Company, as borrower, agrees to pay to any Authenticating
Agent from time to time reasonable compensation for its services. Any
Authenticating Agent shall have no responsibility or liability for any
action taken by it as such in accordance with the directions of the
Trustee.
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders.
Whenever in this Indenture it is provided that the holders of a
specified percentage in aggregate principal amount of the Securities may
take any action (including the making of any demand or request, the giving
of any notice, consent or waiver or the taking of any other action) the
fact that at the time of taking any such action the holders of such
specified percentage have joined therein may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed by such
Securityholders in person or by agent or proxy appointed in writing, or
(b) by the record of such holders of Securities voting in favor thereof at
any meeting of such Securityholders duly called and held in accordance
with the provisions of Article Eight, or (c) by a combination of such
instrument or instruments and any such record of such a meeting of such
Securityholders.
If the Company shall solicit from the Securityholders any
request, demand, authorization, direction, notice, consent, waiver or
other action, the Company may, at its option, as evidenced by an Officers'
Certificate, fix in advance a record date for the determination of
Securityholders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other action, but the Company shall
have no obligation to do so. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent, waiver or
other action may be given before or after the record date, but only the
Securityholders of record at the close of business on the record date
shall be deemed to be Securityholders for the purposes of determining
whether Securityholders of the requisite proportion of Outstanding
Securities have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other action, and for
that purpose the Outstanding Securities shall be computed as of the record
date; provided, however, that no such authorization, agreement or consent
-------- -------
by such Securityholders on the record date shall be deemed effective
unless it shall become effective pursuant to the provisions of this
Indenture not later than six months after the record date.
SECTION 7.02. Proof of Execution by Securityholders.
Subject to the provisions of Sections 6.01, 6.02 and 8.05, proof
of the execution of any instrument by a Securityholder or his agent or
proxy shall be sufficient if made in accordance with such reasonable rules
and regulations as may be prescribed by the Trustee or in such manner as
shall be satisfactory to the Trustee. The ownership of Securities shall
be proved by the Security Register or by a certificate of the Security
registrar. The Trustee may require such additional proof of any matter
referred to in this Section as it shall deem necessary.
The record of any Securityholders' meeting shall be proved in
the manner provided in Section 8.06.
SECTION 7.03. Who Are Deemed Absolute Owners.
Prior to due presentment for registration of transfer of any
Security, the Company, the Trustee, any Authenticating Agent, any paying
agent, any transfer agent and any Security registrar may deem the Person
in whose name such Security shall be registered upon the Security Register
to be, and may treat him as, the absolute owner of such Security (whether
or not such Security shall be overdue) for the purpose of receiving
payment of or on account of the principal of and premium, if any, and
(subject to Section 2.06) interest on such Security and for all other
purposes; and neither the Company nor the Trustee nor any Authenticating
Agent nor any paying agent nor any transfer agent nor any Security
registrar shall be affected by any notice to the contrary. All such
payments so made to any holder for the time being or upon his order shall
be valid, and, to the extent of the sum or sums so paid, effectual to
satisfy and discharge the liability for moneys payable upon any such
Security.
SECTION 7.04. Securities Owned by Company Deemed Not
Outstanding.
In determining whether the holders of the requisite aggregate
principal amount of Securities have concurred in any direction, consent or
waiver under this Indenture, Securities which are owned by the Company or
any other obligor on the Securities or by any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company, except Securities held by the Trust, or any
other obligor on the Securities shall be disregarded and deemed not to be
outstanding for the purpose of any such determination; provided that for
the purposes of determining whether the Trustee shall be protected in
relying on any such direction, consent or waiver, only Securities which
the Trustee actually knows are so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be regarded
as outstanding for the purposes of this Section 7.04 if the pledgee shall
establish to the satisfaction of the Trustee the pledgee's right to vote
such Securities and that the pledgee is not the Company or any such other
obligor or Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company or any such other
obligor. In the case of a dispute as to such right, any decision by the
Trustee taken upon the advice of counsel shall be full protection to the
Trustee.
SECTION 7.05. Revocation of Consents; Future Holders Bound.
At any time prior to (but not after) the evidencing to the
Trustee, as provided in Section 7.01, of the taking of any action by the
holders of the percentage in aggregate principal amount of the Securities
specified in this Indenture in connection with such action, any holder of
a Security (or any Security issued in whole or in part in exchange or
substitution therefor) the serial number of which is shown by the evidence
to be included in the Securities the holders of which have consented to
such action may, by filing written notice with the Trustee at its
principal office and upon proof of holding as provided in Section 7.02,
revoke such action so far as concerns such Security (or so far as concerns
the principal amount represented by any exchanged or substituted Security).
Except as aforesaid any such action taken by the holder of any
Security shall be conclusive and binding upon such holder and upon all
future holders and owners of such Security, and of any Security issued in
exchange or substitution therefor, irrespective of whether or not any nota-
tion in regard thereto is made upon such Security or any Security
issued in exchange or substitution therefor.
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings.
A meeting of Securityholders may be called at any time and from
time to time pursuant to the provisions of this Article Eight for any of
the following purposes:
(a) to give any notice to the Company or to the Trustee, or to
give any directions to the Trustee, or to consent to the waiving of any
Default hereunder and its consequences, or to take any other action
authorized to be taken by Securityholders pursuant to any of the provisions
of Article Five;
(b) to remove the Trustee and nominate a successor trustee
pursuant to the provisions of Article Six;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 9.02; or
(d) to take any other action authorized to be taken by or on
behalf of the holders of any specified aggregate principal amount of such
Securities under any other provision of this Indenture or under applicable
law.
SECTION 8.02. Call of Meetings by Trustee.
The Trustee may at any time call a meeting of Securityholders to
take any action specified in Section 8.01, to be held at such time and at
such place in the Borough of Manhattan, The City of New York, as the
Trustee shall determine. Notice of every meeting of the Securityholders,
setting forth the time and the place of such meeting and in general terms
the action proposed to be taken at such meeting, shall be mailed to
holders of Securities at their addresses as they shall appear on the
Securities Register. Such notice shall be mailed not less than 20 nor
more than 180 days prior to the date fixed for the meeting.
SECTION 8.03. Call of Meetings by Company or Securityholders.
In case at any time the Company pursuant to a resolution of the
Board of Directors, or the holders of at least 10% in aggregate principal
amount of the Securities then outstanding, shall have requested the
Trustee to call a meeting of Securityholders, by written request setting
forth in reasonable detail the action proposed to be taken at the meeting,
and the Trustee shall not have mailed the notice of such meeting within 20
days after receipt of such request, then the Company or such
Securityholders may determine the time and the place in the Borough of
Manhattan, The City of New York for such meeting and may call such meeting
to take any action authorized in Section 8.01, by mailing notice thereof
as provided in Section 8.02.
SECTION 8.04. Qualifications for Voting.
To be entitled to vote at any meeting of Securityholders a
Person shall be (a) a holder of one or more Securities or (b) a Person
appointed by an instrument in writing as proxy by a holder of one or more
Securities. The only Persons who shall be entitled to be present or to
speak at any meeting of Securityholders shall be the Persons entitled to
vote at such meeting and their counsel and any representatives of the
Trustee and its counsel and any representatives of the Company and its
counsel.
SECTION 8.05. Regulations.
Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for
any meeting of Securityholders, in regard to proof of the holding of
Securities and of the appointment of proxies, and in regard to the
appointment and duties of inspectors of votes, the submission and examination
of proxies, certificates and other evidence of the right to vote, and
such other matters concerning the conduct of the meeting as it shall think
fit.
The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been
called by the Company or by Securityholders as provided in Section 8.03,
in which case the Company or the Securityholders calling the meeting, as
the case may be, shall in like manner appoint a temporary chairman. A
permanent chairman and a permanent secretary of the meeting shall be
elected by majority vote of the meeting.
Subject to the provisions of Section 8.04, at any meeting each
holder of Securities or proxy therefor shall be entitled to one vote for
each $1,000 principal amount of Securities held or represented by him;
provided, however, that no vote shall be cast or counted at any meeting in
respect of any Security challenged as not outstanding and ruled by the
chairman of the meeting to be not outstanding. The chairman of the
meeting shall have no right to vote other than by virtue of Securities
held by him or instruments in writing as aforesaid duly designating him as
the person to vote on behalf of other Securityholders. Any meeting of
Securityholders duly called pursuant to the provisions of Section 8.02 or
8.03 may be adjourned from time to time by a majority of those present,
whether or not constituting a quorum, and the meeting may be held as so
adjourned without further notice.
SECTION 8.06. Voting.
The vote upon any resolution submitted to any meeting of holders
of Securities shall be by written ballots on which shall be subscribed the
signatures of such holders or of their representatives by proxy and the
serial number or numbers of the Securities held or represented by them.
The permanent chairman of the meeting shall appoint two inspectors of
votes who shall count all votes cast at the meeting for or against any
resolution and who shall make and file with the secretary of the meeting
their verified written reports in triplicate of all votes cast at the
meeting. A record in duplicate of the proceedings of each meeting of
Securityholders shall be prepared by the secretary of the meeting and
there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more persons having knowledge of the facts setting forth a copy of
the notice of the meeting and showing that said notice was mailed as
provided in Section 8.02. The record shall show the serial numbers of the
Securities voting in favor of or against any resolution. The record shall
be signed and verified by the affidavits of the permanent chairman and
secretary of the meeting and one of the duplicates shall be delivered to
the Company and the other to the Trustee to be preserved by the Trustee,
the latter to have attached thereto the ballots voted at the meeting. The
holders of the Series A Capital Securities and the Series B Capital
Securities shall vote for all purposes as a single class.
Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
ARTICLE IX
AMENDMENTS
SECTION 9.01. Without Consent of Securityholders.
The Company and the Trustee may from time to time and at any
time amend the Indenture, without the consent of the Securityholders, for
one or more of the following purposes:
(a) to evidence the succession of another corporation to the
Company, or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Company
pursuant to Article Ten hereof;
(b) to add to the covenants of the Company such further
covenants, restrictions or conditions for the protection of the
Securityholders as the Board of Directors and the Trustee shall consider to
be for the protection of the Securityholders, and to make the occurrence, or
the occurrence and continuance, of a default in any of such
additional covenants, restrictions or conditions a Default or an Event of
Default permitting the enforcement of all or any of the remedies provided in
this Indenture as herein set forth; provided, however, that in respect of any
such additional covenant, restriction or condition such amendment may provide
for a particular period of grace after default (which period may be shorter
or longer than that allowed in the case of other Defaults) or may provide for
an immediate enforcement upon such default or may limit
the remedies available to the Trustee upon such default;
(c) to provide for the issuance under this Indenture of
Securities in coupon form (including Securities registrable as to principal
only) and to provide for exchangeability of such Securities with
the Securities issued hereunder in fully registered form and to make all
appropriate changes for such purpose;
(d) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may be
defective or inconsistent with any other provision contained herein or in any
supplemental indenture, or to make such other provisions in regard to
matters or questions arising under this Indenture; provided that any such
action shall not materially adversely affect the interests of the holders of
the Securities;
(e) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities;
(f) to make provision for transfer procedures, certification,
book-entry provisions, the form of restricted securities legends, if any, to
be placed on Securities, and all other matters required pursuant to Section
2.07 or otherwise necessary, desirable or appropriate in connection with the
issuance of Securities to holders of Capital Securities in the event of a
distribution of Securities by Community Capital Trust following a Dissolution
Event;
(g) to qualify or maintain qualification of this Indenture
under the Trust Indenture Act; or
(h) to make any change that does not adversely affect the
rights of any Securityholder in any material respect.
The Trustee is hereby authorized to join with the Company in the
execution of any supplemental indenture to effect such amendment, to make
any further appropriate agreements and stipulations which may be therein
contained and to accept the conveyance, transfer and assignment of any
property thereunder, but the Trustee shall not be obligated to, but may in
its discretion, enter into any such supplemental indenture which affects
the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
Any amendment to this Indenture authorized by the provisions of
this Section 9.01 may be executed by the Company and the Trustee without
the consent of the holders of any of the Securities at the time
outstanding, notwithstanding any of the provisions of Section 9.02.
SECTION 9.02. With Consent of Securityholders.
With the consent (evidenced as provided in Section 7.01) of the
holders of a majority in aggregate principal amount of the Securities at
the time outstanding, the Company, when authorized by a Board Resolution,
and the Trustee may from time to time and at any time amend this Indenture
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of the holders of the Securities; provided, however,
that no such amendment shall without the consent of the holders of each
Security then outstanding and affected thereby (i) change the Maturity
Date of any Security, or reduce the rate or extend the time of payment of
interest thereon (except as contemplated by Article Sixteen), or reduce
the principal amount thereof, or reduce any amount payable on prepayment
thereof, or make the principal thereof or any interest or premium thereon
payable in any coin or currency other than that provided in the Securities,
or impair or affect the right of any Securityholder to institute
suit for payment thereof, or (ii) reduce the aforesaid percentage of
Securities the holders of which are required to consent to any such amendment
to this Indenture, provided, however, that if the Securities are held
by Community Capital Trust, such amendment shall not be effective until
the holders of a majority in liquidation amount of Trust Securities shall
have consented to such amendment; provided, further, that if the consent
of the holder of each outstanding Security is required, such amendment
shall not be effective until each holder of the Trust Securities shall
have consented to such amendment.
Upon the request of the Company accompanied by a copy of a
resolution of the Board of Directors certified by its Secretary or
Assistant Secretary authorizing the execution of any supplemental
indenture affecting such amendment, and upon the filing with the Trustee
of evidence of the consent of Securityholders as aforesaid, the Trustee
shall join with the Company in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to,
enter into such supplemental indenture. The Trustee may receive an
Opinion of Counsel as conclusive evidence that any supplemental indenture
executed pursuant to this Article is authorized or permitted by, and
conforms to, the terms of this Article and that it is proper for the
Trustee under the provisions of this Article to join in the execution
thereof.
Promptly after the execution by the Company and the Trustee of
any supplemental indenture pursuant to the provisions of this Section, the
Trustee shall transmit by mail, first class postage prepaid, a notice,
prepared by the Company, setting forth in general terms the substance of
such supplemental indenture, to the Securityholders as their names and
addresses appear upon the Security Register. Any failure of the Trustee
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
It shall not be necessary for the consent of the Securityholders
under this Section 9.02 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent shall
approve the substance thereof.
SECTION 9.03. Compliance with Trust Indenture Act; Effect of
Supplemental Indentures.
Any supplemental indenture executed pursuant to the provisions
of this Article Nine shall comply with the Trust Indenture Act. Upon the
execution of any supplemental indenture pursuant to the provisions of this
Article Nine, this Indenture shall be and be deemed to be modified and
amended in accordance therewith and the respective rights, limitations of
rights, obligations, duties and immunities under this Indenture of the
Trustee, the Company and the holders of Securities shall thereafter be
determined, exercised and enforced hereunder subject in all respects to
such modifications and amendments and all the terms and conditions of any
such supplemental indenture shall be and be deemed to be part of the terms
and conditions of this Indenture for any and all purposes.
SECTION 9.04. Notation on Securities.
Securities authenticated and delivered after the execution of
any supplemental indenture affecting such series pursuant to the
provisions of this Article Nine may bear a notation in form approved by
the Trustee as to any matter provided for in such supplemental indenture.
If the Company or the Trustee shall so determine, new Securities so
modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any modification of this Indenture contained in any such
supplemental indenture may be prepared and executed by the Company,
authenticated by the Trustee or the Authenticating Agent and delivered in
exchange for the Securities then outstanding.
SECTION 9.05. Evidence of Compliance of Supplemental Indenture
to be Furnished Trustee.
The Trustee, subject to the provisions of Sections 6.01 and
6.02, may receive an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant
hereto complies with the requirements of this Article Nine.
ARTICLE X
CONSOLIDATION, CONVERSION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 10.01. Company May Consolidate, etc., on Certain Terms.
Nothing contained in this Indenture or in any of the Securities
shall prevent any consolidation, conversion or merger of the Company with
or into any other Person (whether or not affiliated with the Company, as
the case may be), or successive consolidations, conversions or mergers in
which the Company or its successor or successors, as the case may be,
shall be a party or parties, or shall prevent any sale, conveyance,
transfer or lease of the property of the Company or its successor or
successors, as the case may be, as an entirety, or substantially as an
entirety, to any other Person (whether or not affiliated with the Company
or its successor or successors, as the case may be) authorized to acquire
and operate the same; provided, that (a) the Company is the surviving
Person, or the Person formed by or surviving any such consolidation,
conversion or merger (if other than the Company) or to which such sale,
conveyance, transfer or lease of property is made is a Person organized
and existing under the laws of the United States or any State thereof or
the District of Columbia, and (b) upon any such consolidation, conversion,
merger, sale, conveyance, transfer or lease, the due and punctual payment
of the principal of (and premium, if any) and interest on the Securities
according to their tenor and the due and punctual performance and observance
of all the covenants and conditions of this Indenture to be kept or
performed by the Company shall be expressly assumed, by supplemental inden-
ture (which shall conform to the provisions of the Trust Indenture Act, as
then in effect) satisfactory in form to the Trustee, and executed
and delivered to the Trustee by the Person formed by such consolidation or
conversion, or into which the Company shall have been converted or merged,
or by the Person which shall have acquired such property, as the case may
be, (c) after giving effect to such consolidation, conversion, merger,
sale, conveyance, transfer or lease, no Default or Event of Default shall
have occurred and be continuing and (d) such consolidation, conversion,
merger, sale, conveyance, transfer or lease does not cause the Securities
to be downgraded by a nationally recognized statistical rating organization.
SECTION 10.02. Successor Corporation to be Substituted for
Company.
In case of any such consolidation, conversion, merger,
conveyance or transfer and upon the assumption by the successor
corporation, by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the due and punctual
payment of the principal of and premium, if any, and interest on all of
the Securities and the due and punctual performance and observance of all
of the covenants and conditions of this Indenture to be performed or
observed by the Company, such successor Person shall succeed to and be
substituted for the Company, with the same effect as if it had been named
herein as the party of the first part, and the Company thereupon shall be
relieved of any further liability or obligation hereunder or upon the
Securities. Such successor Person thereupon may cause to be signed, and
may issue either in its own name or in the name of Community Financial
Corporation, any or all of the Securities issuable hereunder which there-
tofore shall not have been signed by the Company and delivered to the
Trustee or the Authenticating Agent; 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 or the Authenticating
Agent shall authenticate and deliver any Securities which previously shall
have been signed and delivered by the officers of the Company
to the Trustee or the Authenticating Agent for authentication, and any
Securities which such successor Person thereafter shall cause to be signed
and delivered to the Trustee or the Authenticating Agent for that purpose.
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.
SECTION 10.03. Opinion of Counsel to be Given Trustee.
The Trustee, subject to the provisions of Sections 6.01 and
6.02, may receive an Opinion of Counsel as conclusive evidence that any
consolidation, merger, sale, conveyance, transfer or lease, and any
assumption, permitted or required by the terms of this Article Ten
complies with the provisions of this Article Ten.
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 11.01. Discharge of Indenture.
When (a) the Company shall deliver to the Trustee for
cancellation all Securities theretofore authenticated (other than any
Securities which shall have been destroyed, lost or stolen and which shall
have been prepaid, paid or replaced (as provided in Section 2.08)) and not
theretofore cancelled, or (b) all the Securities not theretofore cancelled
or delivered to the Trustee for cancellation shall have become due and
payable, or are by their terms to become due and payable within one year
or are to be called for prepayment within one year under arrangements
satisfactory to the Trustee for the giving of notice of prepayment, and
the Company shall deposit or cause to be deposited with the Trustee, in
trust, funds sufficient to pay on the Maturity Date or upon prepayment all
of the Securities (other than any Securities which shall have been
destroyed, lost or stolen and which shall have been prepaid, paid or
replaced (as provided in Section 2.08)) not theretofore cancelled or
delivered to the Trustee for cancellation, including principal and
premium, if any, and interest due or to become due to the Maturity Date or
prepayment date, as the case may be, but excluding, however, the amount of
any moneys for the payment of principal of or premium, if any, or interest
on the Securities (1) theretofore repaid to the Company in accordance with
the provisions of Section 11.04, or (2) paid to any State or to the
District of Columbia pursuant to its unclaimed property or similar laws,
and if in either case the Company shall also pay or cause to be paid all
other sums payable hereunder by the Company, then this Indenture shall
cease to be of further effect except for the provisions of Sections 2.02,
2.07, 2.08, 3.01, 3.02, 3.04, 6.06, 6.10 and 11.04 hereof shall survive
until such Securities shall mature and be paid. Thereafter, Sections 6.10
and 11.04 shall survive, and the Trustee, on demand of the Company accompa-
nied by any Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Company, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture, the Company,
however, hereby agreeing to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred by the Trustee in
connection with this Indenture or the Securities.
SECTION 11.02. Deposited Moneys and U.S. Government Obligations
to be Held in Trust by Trustee.
Subject to the provisions of Section 11.04, all moneys and U.S.
Government Obligations deposited with the Trustee pursuant to Sections
11.01 or 11.05 shall be held in trust and applied by it to the payment,
either directly or through any paying agent (including the Company if
acting as its own paying agent), to the holders of the particular
Securities for the payment of which such moneys or U.S. Government
Obligations have been deposited with the Trustee, of all sums due and to
become due thereon for principal, premium, if any, and interest.
The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 11.05 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the holders of outstanding
Securities.
SECTION 11.03. Paying Agent to Repay Moneys Held.
Upon the satisfaction and discharge of this Indenture all moneys
then held by any paying agent of the Securities (other than the Trustee)
shall, upon written demand of the Company, be repaid to it or paid to the
Trustee, and thereupon such paying agent shall be released from all
further liability with respect to such moneys.
SECTION 11.04. Return of Unclaimed Moneys.
Any moneys deposited with or paid to the Trustee or any paying
agent for payment of the principal of or premium, if any, or interest on
Securities and not applied but remaining unclaimed by the holders of
Securities for two years after the date upon which the principal of or
premium, if any, or interest on such Securities, as the case may be, shall
have become due and payable, shall be repaid to the Company by the Trustee
or such paying agent on written demand; and the holder of any of the
Securities shall thereafter look only to the Company for any payment which
such holder may be entitled to collect and all liability of the Trustee or
such paying agent with respect to such moneys shall thereupon cease.
SECTION 11.05. Defeasance Upon Deposit of Moneys or U.S.
Government Obligations.
The Company shall be deemed to have been Discharged (as defined
below) from its obligations with respect to the Securities on the 91st day
after the applicable conditions set forth below have been satisfied:
(1) the Company shall have deposited or caused to be deposited
irrevocably with the Trustee or the Defeasance Agent (as defined below) as
trust funds in trust, specifically pledged as security for, and dedicated
solely to, the benefit of the holders of the Securities (i) money in an
amount, or (ii) U.S. Government Obligations which through the payment of
interest and principal in respect thereof in accordance with their terms will
provide, not later than one day before the due date of any payment, money in
an amount, or (iii) a combination of (i) and (ii), sufficient, in
the opinion (with respect to (ii) and (iii)) of a nationally recognized firm
of independent public accountants expressed in a written certification
thereof delivered to the Trustee and the Defeasance Agent, if any, to pay and
discharge each installment of principal of and interest
and premium, if any, on the outstanding Securities on the dates such
installments of principal, interest or premium are due;
(2) if the Securities are then listed on any national
securities exchange, the Company shall have delivered to the Trustee and the
Defeasance Agent, if any, an Opinion of Counsel to the effect that the
exercise of the option under this Section 11.05 would not cause such
Securities to be delisted from such exchange;
(3) no Default or Event of Default with respect to the Securities
shall have occurred and be continuing on the date of
such deposit; and
(4) the Company shall have delivered to the Trustee and the
Defeasance Agent, if any, an Opinion of Counsel to the effect that holders
of the Securities will not recognize income, gain or loss for United States
federal income tax purposes as a result of the exercise of the option under
this Section 11.05 and will be subject to United States
federal income tax on the same amount and in the same manner and at the same
times as would have been the case if such option had not been exercised, and
such opinion shall be based on a statement so providing or be accompanied by
a private letter ruling to that effect received from the
United States Internal Revenue Service or a revenue ruling pertaining to a
comparable form of transaction to that effect published by the United States
Internal Revenue Service.
"Discharged" means that the Company shall be deemed to have paid
and discharged the entire indebtedness represented by, and obligations
under, the Securities and to have satisfied all the obligations under this
Indenture relating to the Securities (and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging the same),
except (A) the rights of holders of Securities to receive, from the trust
fund described in clause (1) above, payment of the principal of and the
interest and premium, if any, on the Securities when such payments are
due; (B) the Company's obligations with respect to the Securities under
Sections 2.07, 2.08, 5.02 and 11.04; and (C) the rights, powers, trusts,
duties and immunities of the Trustee hereunder.
"Defeasance Agent" means another financial institution which is
eligible to act as Trustee hereunder and which assumes all of the
obligations of the Trustee necessary to enable the Trustee to act
hereunder. In the event such a Defeasance Agent is appointed pursuant to
this Section, the following conditions shall apply:
(1) the Trustee shall have approval rights over the document
appointing such Defeasance Agent and the document setting forth such
Defeasance Agent's rights and responsibilities; and
(2) the Defeasance Agent shall provide verification to the
Trustee acknowledging receipt of sufficient money and/or U. S. Government
Obligations to meet the applicable conditions set forth in this Section
11.05.
ARTICLE XII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 12.01. Indenture and Securities Solely Corporate
Obligations.
No recourse for the payment of the principal of or premium, if
any, or interest on any Security, or for any claim based thereon or
otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of the Company in this Indenture, or in
any Security, or because of the creation of any indebtedness represented
thereby, shall be had against any incorporator, stockholder, officer or
director, as such, past, present or future, of the Company or of any
successor Person to the Company, either directly or through the Company or
any successor Person to the Company, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly understood that all such
liability is hereby expressly waived and released as a condition of, and
as a consideration for, the execution of this Indenture and the issue of
the Securities.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.01. Successors.
All the covenants, stipulations, promises and agreements in this
Indenture contained by the Company shall bind its successors and assigns
whether so expressed or not.
SECTION 13.02. Official Acts by Successor Corporation.
Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or
officer of the Company shall and may be done and performed with like force
and effect by the like board, committee or officer of any corporation that
shall at the time be the lawful sole successor of the Company.
SECTION 13.03. Surrender of Company Powers.
The Company by instrument in writing executed by authority of
2/3 (two-thirds) of its Board of Directors and delivered to the Trustee
may surrender any of the powers reserved to the Company, and thereupon
such power so surrendered shall terminate both as to the Company, as the
case may be, and as to any successor Person.
SECTION 13.04. Addresses for Notices, etc.
Any notice or demand which by any provision of this Indenture is
required or permitted to be given or served by the Trustee or by the
holders of Securities on the Company may be given or served by being
deposited postage prepaid by registered or certified mail in a post office
letter box addressed (until another address is filed by the Company with
the Trustee for the purpose) to the Company, 5790 Widewaters Parkway,
Dewitt, New York 13214, Attention: Sanford A. Belden. Any notice, direc-
tion, request or demand by any Securityholder to or upon the Trustee
shall be deemed to have been sufficiently given or made, for all purposes,
if given or made in writing at the office of the Trustee, addressed to the
Trustee, 450 West 33rd Street, 15th Floor, New York, New York 10001, Atten-
tion: Global Trust Services.
SECTION 13.05. Governing Law.
This Indenture and each Security shall be deemed to be a
contract made under the laws of the State of New York, and for all
purposes shall be governed by and construed in accordance with the laws of
said State, without regard to conflicts of laws principles thereof.
SECTION 13.06. Evidence of Compliance with Conditions Precedent.
Upon any application or demand by the Company to the Trustee to
take any action under any of the provisions of this Indenture, the Company
shall furnish to the Trustee an Officers' Certificate stating that in the
opinion of the signers all conditions precedent, if any, provided for in
this Indenture relating to the proposed action have been complied with and
an Opinion of Counsel stating that, in the opinion of such counsel, all
such conditions precedent have been complied with.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or
covenant provided for in this Indenture (except certificates delivered
pursuant to Section 3.05) shall include (1) a statement that the person
making such certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based; (3) a statement that, in the opinion of
such person, he has made such examination or investigation as is necessary
to enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and (4) a statement as to
whether or not, in the opinion of such person, such condition or covenant
has been complied with.
SECTION 13.07. Business Days.
In any case where the date of payment of principal of or
premium, if any, or interest on the Securities will not be a Business Day,
the payment of such principal of or premium, if any, or interest on the
Securities need not be made on such date but may be made on the next suc-
ceeding Business Day, with the same force and effect as if made on the
date of payment and no interest shall accrue for the period from and after
such date.
SECTION 13.08. Trust Indenture Act to Control.
If and to the extent that any provision of this Indenture
limits, qualifies or conflicts with the duties imposed by Sections 310 to
317, inclusive, of the Trust Indenture Act of 1939, such imposed duties
shall control.
SECTION 13.09. Table of Contents, Headings, etc.
The table of contents and the titles and headings of the
articles and sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof, and shall in no
way modify or restrict any of the terms or provisions hereof.
SECTION 13.10. Execution in Counterparts.
This Indenture may be executed in any number of counterparts,
each of which shall be an original, but such counterparts shall together
constitute but one and the same instrument.
SECTION 13.11. Separability.
In case any one or more of the provisions contained in this
Indenture or in the Securities shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Indenture
or of the Securities, but this Indenture and the Securities shall be con-
strued as if such invalid or illegal or unenforceable provision had never
been contained herein or therein.
SECTION 13.12. Assignment.
The Company will have the right at all times to assign any of
its respective rights or obligations under this Indenture to a direct or
indirect wholly owned Subsidiary of the Company, provided that, in the
--------
event of any such assignment, the Company, as the case may be, will remain
liable for all such obligations. Subject to the foregoing, the Indenture
is binding upon and inures to the benefit of the parties thereto and their
respective successors and assigns. This Indenture may not otherwise be
assigned by the parties hereto.
SECTION 13.13. Acknowledgement of Rights.
The Company acknowledges that, with respect to any Securities
held by Community Capital Trust or a trustee of such trust, if the
Property Trustee of such Trust fails to enforce its rights under this
Indenture as the holder of the Securities held as the assets of Community
Capital Trust any holder of Capital Securities may institute legal proceed-
ings directly against the Company to enforce such Property
Trustee's rights under this Indenture without first instituting any legal
proceedings against such Property Trustee or any other Person or entity.
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to
pay principal of or premium, if any, or interest on the Securities when
due, the Company acknowledges that a holder of Capital Securities may di-
rectly institute a proceeding for enforcement of payment to such holder of
the principal of or premium, if any, or interest on the Securities having
a principal amount equal to the aggregate liquidation amount of the Capital
Securities of such holder on or after the respective due date specified in
the Securities.
ARTICLE XIV
PREPAYMENT OF SECURITIES -- MANDATORY AND
OPTIONAL SINKING FUND
SECTION 14.01. Special Event Prepayment.
If a Special Event has occurred and is continuing then,
notwithstanding Section 14.02(a) but subject to Section 14.02(c), the
Company shall have the right at any time prior to the Initial Optional
Prepayment Date, upon not (i) less than 45 days' written notice to the
Trustee and (ii) less than 30 days' nor more than 60 days' written notice
to the Securityholders, to prepay the Securities, in whole (but not in
part), within 90 days following the occurrence of such Special Event at
the Special Event Prepayment Price. Following a Special Event, the
Company shall take such action as is necessary to promptly determine the
Special Event Prepayment Price, including without limitation the appointment
by the Company of a Quotation Agent. The Special Event Prepayment
Price shall be paid prior to 12:00 noon, New York time, on the date of
such prepayment or such earlier time as the Company determines, provided
--------
that the Company shall deposit with the Trustee an amount sufficient to
pay the Special Event Prepayment Price by 10:00 a.m., New York time, on
the date such Special Event Prepayment Price is to be paid.
SECTION 14.02. Optional Prepayment by Company.
(a) Subject to the provisions of this Article Fourteen, the Com-
pany shall have the right to prepay the Securities, in whole or in
part, from time to time, on or after the Initial Optional Prepayment Date
at the optional prepayment prices set forth below (expressed as percentages
of principal) plus, in each case, accrued and unpaid interest thereon
(including Additional Interest and Compounded Interest, if any) to the
applicable date of prepayment (the "Optional Prepayment Price") if prepaid
during the 12-month period beginning January 31 of the years indicated
below.
Year Percentage
---- ----------
2007..........................104.54%
2008..........................104.08%
2009..........................103.63%
2010..........................103.18%
2011..........................102.72%
2012..........................102.27%
2013..........................101.82%
2014..........................101.36%
2015..........................100.91%
2016..........................100.45%
2017 and thereafter...........100.00%
------
If the Securities are only partially prepaid pursuant to this
Section 14.02, the Securities will be prepaid pro rata or by lot or by any
--- ----
other method utilized by the Trustee; provided, that if at the time of
--------
prepayment the Securities are registered as a Global Security, the Depositary
shall determine, in accordance with its procedures, the principal
amount of Securities held by each holder of a Security to be prepaid. The
Optional Prepayment Price shall be paid prior to 12:00 noon, New York
time, on the date of such prepayment or at such earlier time as the
Company determines, provided that the Company shall deposit with the
--------
Trustee an amount sufficient to pay the Optional Prepayment Price by 10:00
a.m., New York time, on the date such Optional Prepayment Price is to be
paid.
(b) Notwithstanding the first sentence of Section 14.02, upon
the entry of an order for dissolution of the Community Capital Trust by a
court of competent jurisdiction, the Securities thereafter will be subject
to optional prepayment, in whole only, but not in part, on or after
January 31, 2007, at the optional prepayment prices set forth in Section
14.02 and otherwise in accordance with this Article Fourteen.
(c) Any prepayment of Securities pursuant to Section 14.01 or
Section 14.02 shall be subject to the receipt by the Company of the
approval of the Federal Reserve and any other required regulatory
approval.
SECTION 14.03. No Sinking Fund.
The Securities are not entitled to the benefit of any sinking
fund.
SECTION 14.04. Notice of Prepayment; Selection of Securities.
In case the Company shall desire to exercise the right to prepay
all, or, as the case may be, any part of the Securities in accordance with
their terms, it shall fix a date for prepayment and shall mail a notice of
such prepayment at least 30 and not more than 60 days prior to the date
fixed for prepayment to the holders of Securities so to be prepaid as a
whole or in part at their last addresses as the same appear on the
Security Register. Such mailing shall be by first class mail. The notice
if mailed in the manner herein provided shall be conclusively presumed to
have been duly given, whether or not the holder receives such notice. In
any case, failure to give such notice by mail or any defect in the notice
to the holder of any Security designated for prepayment as a whole or in
part shall not affect the validity of the proceedings for the prepayment
of any other Security.
Each such notice of prepayment shall specify the CUSIP number of
the Securities to be prepaid, the date fixed for prepayment, the prepayment
price at which the Securities are to be prepaid (or the method by
which such prepayment price is to be calculated), the place or places of
payment that payment will be made upon presentation and surrender of the
Securities, that interest accrued to the date fixed for prepayment will be
paid as specified in said notice, and that on and after said date interest
thereon or on the portions thereof to be prepaid will cease to accrue. If
less than all the Securities are to be prepaid the notice of prepayment
shall specify the numbers of the Securities to be prepaid. In case any
Security is to be prepaid in part only, the notice of prepayment shall
state the portion of the principal amount thereof to be prepaid and shall
state that on and after the date fixed for prepayment, upon surrender of
such Security, a new Security or Securities in principal amount equal to
the unprepaid portion thereof will be issued.
By 10:00 a.m., New York time, on the prepayment date specified
in the notice of prepayment given as provided in this Section, the Company
will deposit with the Trustee or with one or more paying agents an amount
of money sufficient to prepay on the prepayment date all the Securities so
called for prepayment at the appropriate Prepayment Price, together with
accrued interest to the date fixed for prepayment.
The Company will give the Trustee notice not less than 45 days
prior to the prepayment date as to the aggregate principal amount of
Securities to be prepaid and the Trustee shall select, in such manner as
in its sole discretion it shall deem appropriate and fair, the Securities
or portions thereof (in integral multiples of $1,000, except as otherwise
set forth in the applicable form of Security) to be prepaid.
SECTION 14.05. Payment of Securities Called for Prepayment.
If notice of prepayment has been given as provided in Section
14.04, the Securities or portions 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 Prepayment Price,
together with interest accrued to the date fixed for prepayment (subject
to the rights of holders of Securities on the close of business on a
regular record date in respect of an Interest Payment Date occurring on or
prior to the prepayment date), and on and after said date (unless the
Company shall default in the payment of such Securities at the Prepayment
Price, together with interest accrued to said date) interest on the
Securities or portions of Securities so called for prepayment shall cease
to accrue. On presentation and surrender of such Securities at a place of
payment specified in said notice, the said Securities or the specified
portions thereof shall be prepaid by the Company at the applicable
Prepayment Price, together with interest accrued thereon to the date fixed
for prepayment (subject to the rights of holders of Securities on the
close of business on a regular record date in respect of an Interest
Payment Date occurring on or prior to the prepayment date).
Upon presentation of any Security prepaid in part only, the
Company shall execute and the Trustee shall authenticate and make
available for delivery to the holder thereof, at the expense of the
Company, a new Security or Securities of authorized denominations, in
principal amount equal to the unprepaid portion of the Security so presented.
ARTICLE XV
SUBORDINATION OF SECURITIES
SECTION 15.01. Agreement to Subordinate.
The Company covenants and agrees, and each holder of Securities
issued hereunder likewise covenants and agrees, that the Securities shall
be issued subject to the provisions of this Article Fifteen; and each
holder of a Security, whether upon original issue or upon transfer or
assignment thereof, accepts and agrees to be bound by such provisions.
The payment by the Company of the principal of, premium, if any,
and interest on all Securities issued hereunder shall, to the extent and
in the manner hereinafter set forth, be subordinated and junior in right
of payment to all Senior Indebtedness, whether outstanding at the date of
this Indenture or thereafter incurred.
No provision of this Article Fifteen shall prevent the occurrence
of any Default or Event of Default hereunder.
SECTION 15.02. Default on Senior Indebtedness.
No payment of principal (including prepayment) of, premium, if
any, or interest on the Securities may be made at any time when (i) any
Senior Indebtedness is not paid when due, (ii) any applicable grace period
with respect to such default has ended and such default has not been cured
or waived or ceased to exist, or (iii) the maturity of any Senior Indebted-
ness has been accelerated because of a default.
In the event of the acceleration of the maturity of the
Securities, then no payment shall be made by the Company with respect to
the principal (including prepayments) of or premium, if any, or interest
on the Securities until the holders of all Senior Indebtedness outstanding
at the time of such acceleration shall receive payment in full of all
amounts due in respect of such Senior Indebtedness (including any amounts
due upon acceleration).
In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee when such payment is prohibited by the
preceding paragraphs of this Section 15.02, such payment shall be held in
trust for the benefit of, and shall be paid over or delivered to, the
holders of Senior Indebtedness or their respective representatives, or to
the trustee or trustees under any indenture pursuant to which any of such
Senior Indebtedness may have been issued, as their respective interests
may appear, but only to the extent that the holders of the Senior Indebted-
ness (or their representative or representatives or a trustee) notify
the Trustee in writing, within 90 days of such payment of the amounts then
due and owing on such Senior Indebtedness and only the amounts specified
in such notice to the Trustee shall be paid to the holders of such Senior
Indebtedness.
SECTION 15.03. Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company or distribution of assets of the
Company of any kind or character, whether in cash, property or securities,
to creditors upon any dissolution or winding-up or liquidation or
reorganization of the Company, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all amounts due
upon all Senior Indebtedness of the Company shall first be paid in full,
or payment thereof provided for in money in accordance with its terms,
before any payment is made by the Company on account of the principal (and
premium, if any) or interest with respect to the Securities; and upon any
such dissolution or winding-up or liquidation or reorganization, any
payment by the Company, or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to which the
Securityholders or the Trustee would be entitled to receive from the Company,
except for the provisions of this Article Fifteen, shall be paid
by the Company or by any receiver, trustee in bankruptcy, liquidating
trustee, agent or other Person making such payment or distribution, or by
the Securityholders or by the Trustee under this Indenture if received by
them or it, directly to the holders of Senior Indebtedness of the Company
(pro rata to such holders on the basis of the respective amounts of Senior
--- ----
Indebtedness held by such holders, as calculated by the Company) or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior
Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay such Senior Indebtedness in full,
in money or money's worth, after giving effect to any concurrent payment
or distribution to or for the holders of such Senior Indebtedness, before
any payment or distribution is made to the Securityholders or to the
Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities, prohibited by the foregoing, shall be received
by the Trustee before all Senior Indebtedness is paid in full, or
provision is made for such payment in money in accordance with its terms,
such payment or distribution shall be held in trust for the benefit of and
shall be paid over or delivered to the holders of such Senior Indebtedness
or their representative or representatives, or to the trustee or trustees
under any indenture pursuant to which any instruments evidencing such
Senior Indebtedness may have been issued, and their respective interests
may appear, as calculated by the Company, for application to the payment
of all Senior Indebtedness remaining unpaid to the extent necessary to pay
such Senior Indebtedness in full in money in accordance with its terms,
after giving effect to any concurrent payment or distribution to or for
the benefit of the holders of such Senior Indebtedness.
For purposes of this Article Fifteen, the words "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,
the payment of which is subordinated at least to the extent provided in this
Article Fifteen with respect to the Securities to the payment of
Senior Indebtedness that may at the time be outstanding, provided that (i)
such Senior Indebtedness is assumed by the new corporation, if any,
resulting from any such reorganization or readjustment, and (ii) the
rights of the holders of such Senior Indebtedness are not, without the
consent of such holders, altered by such reorganization or readjustment.
The consolidation of the Company with, or the merger of the Company into,
another Person or the liquidation or dissolution of the Company following
the sale, conveyance, transfer or lease of its property as an entirety, or
substantially as an entirety, to another Person upon the terms and conditions
provided for in Article Ten of this Indenture shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of
this Section 15.03 if such other Person shall, as a part of such consoli-
dation, merger, sale, conveyance, transfer or lease, comply with the condi-
tions stated in Article Ten of this Indenture. Nothing in Section
15.02 or in this Section 15.03 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 6.05 of this Indenture.
SECTION 15.04. Subrogation.
Subject to the payment in full of all Senior Indebtedness, the
rights of the Securityholders shall be subrogated to the rights of the
holders of such Senior Indebtedness to receive payments or distributions
of cash, property or securities of the Company, as the case may be,
applicable to such Senior Indebtedness until the principal of (and
premium, if any) and interest on the Securities shall be paid in full;
and, for the purposes of such subrogation, no payments or distributions to
the holders of such Senior Indebtedness of any cash, property or
securities to which the Securityholders or the Trustee would be entitled
except for the provisions of this Article Fifteen, and no payment over
pursuant to the provisions of this Article Fifteen to or for the benefit
of the holders of such Senior Indebtedness by Securityholders or the
Trustee, shall, as between the Company, its creditors other than holders
of Senior Indebtedness of the Company, and the holders of the Securities,
be deemed to be a payment by the Company to or on account of such Senior
Indebtedness. It is understood that the provisions of this Article
Fifteen are and are intended solely for the purposes of defining the
relative rights of the holders of the Securities, on the one hand, and the
holders of such Senior Indebtedness on the other hand.
Nothing contained in this Article Fifteen or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as between
the Company, its creditors other than the holders of Senior Indebtedness
of the Company, and the holders of the Securities, the obligation of the
Company, which is absolute and unconditional, to pay to the holders of the
Securities the principal of (and premium, if any) and interest on the
Securities as and when the same shall become due and payable in accordance
with their terms, or is intended to or shall affect the relative rights of
the holders of the Securities and creditors of the Company, as the case
may be, other than the holders of Senior Indebtedness of the Company, as
the case may be, nor shall anything herein or therein prevent the Trustee
or the holder of any Security from exercising all remedies otherwise per-
mitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article Fifteen of the holders of such Senior
Indebtedness in respect of cash, property or securities of the Company, as
the case may be, received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company
referred to in this Article Fifteen, the Trustee, subject to the
provisions of Article Six of this Indenture, and the Securityholders shall
be entitled to conclusively rely upon any order or decree made by any
court of competent jurisdiction in which such dissolution, winding-up,
liquidation or reorganization proceedings are pending, or a certificate of
the receiver, trustee in bankruptcy, liquidation trustee, agent or other
Person making such payment or distribution, delivered to the Trustee or to
the Securityholders, for the purposes of ascertaining the Persons entitled
to participate in such distribution, the holders of Senior Indebtedness
and other indebtedness of the Company, as the case may be, the amount
thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article Fifteen.
SECTION 15.05. Trustee to Effectuate Subordination.
Each Securityholder by such Securityholder's acceptance thereof
authorizes and directs the Trustee on such Securityholder's behalf to take
such action as may be necessary or appropriate to effectuate the
subordination provided in this Article Fifteen and appoints the Trustee
such Securityholder's attorney-in-fact for any and all such purposes.
SECTION 15.06. Notice by the Company.
The Company shall give prompt written notice to a Responsible
Officer of any fact known to the Company that would prohibit the making of
any payment of monies to or by the Trustee in respect of the Securities
pursuant to the provisions of this Article Fifteen. Notwithstanding the
provisions of this Article Fifteen or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment of
monies to or by the Trustee in respect of the Securities pursuant to the
provisions of this Article Fifteen, unless and until a Responsible Officer
shall have received written notice thereof from the Company or a holder or
holders of Senior Indebtedness or from any trustee therefor; and before
the receipt of any such written notice, the Trustee, subject to the
provisions of Article Six of this Indenture, shall be entitled in all
respects to assume that no such facts exist; provided, however, that if
-------- -------
the Trustee shall not have received the notice provided for in this
Section 15.06 at least two Business Days prior to the date upon which by
the terms hereof any money may become payable for any purpose (including,
without limitation, the payment of the principal of (or premium, if any)
or interest on any Security), then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority
to receive such money and to apply the same to the purposes for which they
were received, and shall not be affected by any notice to the contrary
that may be received by it within two Business Days prior to such date.
The Trustee, subject to the provisions of Article Six of this
Indenture, shall be entitled to conclusively rely on the delivery to it of
a written notice by a Person representing himself to be a holder of Senior
Indebtedness of the Company (or a trustee on behalf of such holder), to
establish that such notice has been given by a holder of such Senior
Indebtedness or a trustee on behalf of any such holder or holders. In the
event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of such
Senior Indebtedness to participate in any payment or distribution pursuant
to this Article Fifteen, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
such Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any
other facts pertinent to the rights of such Person under this Article
Fifteen, 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.
Upon any payment or distribution of assets of the Company
referred to in this Article Fifteen, the Trustee and the Securityholders
shall be entitled to rely upon any order or decree entered by any court of
competent jurisdiction in which such insolvency, bankruptcy, receivership,
liquidation, reorganization, dissolution, winding up or similar case or
proceeding is pending, or a certificate of the trustee in bankruptcy,
liquidating trustee, custodian, receiver, assignee for the benefit of
creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Securityholders, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to
this Article Fifteen.
SECTION 15.07. Rights of the Trustee; Holders of Senior
Indebtedness.
The Trustee in its individual capacity shall be entitled to all
the rights set forth in this Article Fifteen in respect of any Senior
Indebtedness at any time held by it, to the same extent as any other
holder of Senior Indebtedness, and nothing in this Indenture shall deprive
the Trustee of any of its rights as such holder.
With respect to the holders of Senior Indebtedness of the
Company, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article
Fifteen, and no implied covenants or obligations with respect to the
holders of such Senior Indebtedness shall be read into this Indenture
against the Trustee. The Trustee shall not be deemed to owe any fiduciary
duty to the holders of such Senior Indebtedness and, subject to the provi-
sions of Article Six of this Indenture, the Trustee shall not be liable to
any holder of such Senior Indebtedness if it shall pay over or deliver to
Securityholders, the Company or any other Person money or assets to which
any holder of such Senior Indebtedness shall be entitled by virtue of this
Article Fifteen or otherwise.
Nothing in this Article Fifteen shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 6.06.
SECTION 15.08. Subordination May Not Be Impaired.
No right of any present or future holder of any Senior
Indebtedness of the Company 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, as the case may be, or by any
act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company, as the case may be, with the terms,
provisions and covenants of this Indenture, regardless of any knowledge
thereof that any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness of the Company may, at any
time and from time to time, without the consent of or notice to the
Trustee or the Securityholders, without incurring responsibility to the
Securityholders and without impairing or releasing the subordination
provided in this Article Fifteen or the obligations hereunder of the
holders of the Securities to the holders of such Senior Indebtedness, do
any one or more of the following: (i) change the manner, place or terms
of payment or extend the time of payment of, or renew or alter, such
Senior Indebtedness, or otherwise amend or supplement in any manner such
Senior Indebtedness or any instrument evidencing the same or any agreement
under which such Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing such Senior Indebtedness; (iii) release any Person liable in
any manner for the collection of such Senior Indebtedness; and (iv)
exercise or refrain from exercising any rights against the Company, as the
case may be, and any other Person.
ARTICLE XVI
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 16.01. Extension of Interest Payment Period.
So long as no Event of Default has occurred and is continuing,
the Company shall have the right, at any time and from time to time during
the term of the Securities, to defer payments of interest by extending the
interest payment period of such Securities for a period not exceeding 10
consecutive semi-annual periods, including the first such semi-annual
period during such extension period (the "Extended Interest Payment Period"),
during which Extended Interest Payment Period no interest shall be
due and payable; provided that no Extended Interest Payment Period shall
-------- ----
end on a date other than an Interest Payment Date or may extend beyond the
Maturity Date. To the extent permitted by applicable law, interest, the
payment of which has been deferred because of the extension of the
interest payment period pursuant to this Section 16.01, will bear interest
thereon at the Coupon Rate compounded semi-annually for each semi-annual
period of the Extended Interest Payment Period ("Compounded Interest").
At the end of the Extended Interest Payment Period, the Company shall pay
all interest accrued and unpaid on the Securities, including any Additional
Interest and Compounded Interest (together, "Deferred Interest") that
shall be payable to the holders of the Securities in whose names the
Securities are registered in the Security Register on the record date for
the Interest Payment Date on which such Extended Interest Payment Period
ends. Before the termination of any Extended Interest Payment Period, the
Company may further defer payments of interest by further extending such
period, provided that such period, together with all such previous and
further extensions within such Extended Interest Payment Period, shall not
exceed 10 consecutive semi-annual periods, including the first such semi-
annual period during such Extended Interest Payment Period, or extend
beyond the Maturity Date. Upon the termination of any Extended Interest
Payment Period and the payment of all Deferred Interest then due, the
Company may elect to commence a new Extended Interest Payment Period,
subject to the foregoing requirements. No interest shall be due and
payable during an Extended Interest Payment Period, except at the end
thereof, but the Company may prepay at any time all or any portion of the
interest accrued during an Extended Interest Payment Period.
SECTION 16.02. Notice of Extension.
(a) If the Property Trustee is the only registered holder of
the Securities at the time the Company selects an Extended Interest
Payment Period, the Company shall give written notice to the
Administrative Trustees, the Property Trustee and the Trustee of its selec-
tion of such Extended Interest Payment Period five Business Days
before the earlier of (i) the next succeeding date on which Distributions
on the Trust Securities issued by Community Capital Trust are payable, or
(ii) the date the Trust is required to give notice of the record date, or
the date such Distributions are payable, to any national securities
exchange or to holders of the Capital Securities issued by the Trust, but
in any event at least five Business Days before such record date.
(b) If the Property Trustee is not the only holder of the
Securities at the time the Company selects an Extended Interest Payment
Period, the Company shall give the holders of the Securities and the
Trustee written notice of its selection of such Extended Interest Payment
Period at least 10 Business Days before the earlier of (i) the next suc-
ceeding Interest Payment Date, or (ii) the date the Company is required to
give notice of the record or payment date of such interest payment to any
national securities exchange.
(c) The semi-annual period in which any notice is given pursuant
to paragraphs (a) or (b) of this Section 16.02 shall be counted as
one of the 10 semi-annual periods permitted in the maximum Extended
Interest Payment Period permitted under Section 16.01.
The Chase Manhattan Bank hereby accepts the trusts in this Inden-
ture declared and provided, upon the terms and conditions hereinabove
set forth.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed by their respective officers thereunto duly
authorized, as of the day and year first above written.
COMMUNITY BANK SYSTEM, INC.
By _______________________________
Name: Sanford A. Belden
Title: President and
Chief Executive Officer
The Chase Manhattan Bank,
as Trustee
By ____________________________
Name:
Title:
EXHIBIT A
---------
(FORM OF FACE OF SECURITY)
(IF THE SECURITY IS A GLOBAL SECURITY, INSERT: - 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 NO TRANSFER OF THIS
SECURITY (OTHER THAN A TRANSFER OF THIS 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 SECURITY 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 SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DTC (AND
ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.)
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER
OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY
OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDE-
CESSOR OF THIS SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRA-
TION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT,
(C) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE
THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES
ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUB-
PARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT
IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH
A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT,
SUBJECT TO THE RIGHT OF THE COMPANY PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
(i) PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO THE
COMPANY, AND (ii) PURSUANT TO CLAUSE (E), TO REQUIRE THAT A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THE REVERSE OF THIS SECURITY IS COMPLETED
AND DELIVERED BY THE TRANSFEREE TO THE COMPANY. SUCH HOLDER FURTHER AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
No. Cusip No.
------- ---------
COMMUNITY BANK SYSTEM, INC.
9.75% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE,
SERIES A, DUE JANUARY 31, 2027
Community Bank System, Inc., a Delaware corporation (the "Company",
which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to Community Capital
Trust I (the "Trust") or registered assigns, the principal sum of thirty
million nine hundred twenty-eight thousand Dollars on January 31, 2027 (the
"Maturity Date"), unless previously prepaid, and to pay interest on the
outstanding principal amount hereof from February 3, 1997, or from the most
recent interest payment date (each such date, an "Interest Payment Date") to
which interest has been paid or duly provided for, semi-annually (subject to
deferral as set forth herein) in arrears on January 31 and July 31 of each
year, commencing July 31, 1997 at the rate of 9.75% per annum until the
principal hereof shall have become due and payable, and on any overdue
principal and premium, if any, and (without duplication and to the extent
that payment of such interest is enforceable under applicable law) on any
overdue installment of interest at the same rate per annum compounded semi-
annually. The amount of interest payable on any Interest Payment Date shall
be computed on the basis of a 360-day year of twelve 30-day months and, for
any period less than a full calendar month, the number of days elapsed in
such month. In the event that any date on which the principal of (or
premium, if any) or interest on this Security is payable is not a Business
Day, then payment payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in
respect of any such delay), with the same force and effect as if made on such
date.
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, as defined in said Indenture) is registered at the
close of business on the regular record date for such interest installment,
which shall be the fifteenth day prior to the relevant Interest Payment Date.
Any such interest installment not punctually paid or duly provided for shall
forthwith cease to be payable to the holders on such regular record date and
may be paid to the Person in whose name this Security (or one or more Prede-
cessor Securities) is registered at the close of business on a special record
date to be fixed by the Trustee for the payment of such defaulted interest,
notice whereof shall be given to the holders of Securities not less than 10
days prior to such special record date, or may be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may
be required by such exchange, all as more fully provided in the Indenture.
The principal of (and premium, if any) and interest on this
Security shall be payable at the office or agency of the Trustee maintained
for that purpose in any coin or currency of the United States of America that
at the time of payment is legal tender for payment of public and private
debts; provided, however, that, payment of interest may be made at the option
-------- -------
of the Company by (i) check mailed to the holder at such address as shall
appear in the Security Register or (ii) by transfer to an account maintained
by the Person entitled thereto, provided that proper written transfer
instructions have been received by the relevant record date. Notwithstanding
the foregoing, so long as the Holder of this Security is the Trust, the
payment of the principal of (and premium, if any) and interest on this
Security will be made at such place and to such account as may be designated
by the Property Trustee.
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of Senior Indebtedness, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each holder
of this Security, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Trustee on his or her behalf
to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination so provided and (c) appoints the Trustee his or
her attorney-in-fact for any and all such purposes. Each holder hereof, by
his or her acceptance hereof, hereby waives all notice of the acceptance of
the subordination provisions contained herein and in the Indenture by each
holder of Senior Indebtedness, whether now outstanding or hereafter incurred,
and waives reliance by each such holder upon said provisions.
This Security shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any
purpose until the Certificate of Authentication hereon shall have been signed
by or on behalf of the Trustee.
The provisions of this Security are continued on the reverse side
hereof and such provisions shall for all purposes have the same effect as
though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
COMMUNITY BANK SYSTEM, INC.
By: ____________________________
Name:
Title:
Attest:
By: _______________________
Name:
Title:
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: ______________
The Chase Manhattan Bank,
as Trustee
By: ____________________
Authorized Signatory
(FORM OF REVERSE OF SECURITY)
This Security is one of the Securities of the Company (herein
sometimes referred to as the "Securities"), specified in the Indenture, all
issued or to be issued under and pursuant to an Indenture, dated as of
February 3, 1997 (the "Indenture"), duly executed and delivered between the
Company and The Chase Manhattan Bank, as Trustee (the "Trustee"), to which
Indenture reference is hereby made for a description of the rights, limita-
tions of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders of the Securities.
Upon the occurrence and continuation of a Special Event, the
Company shall have the right at any time prior to January 31, 2007 (the
"Initial Optional Prepayment Date"), within 90 days following the occurrence
of such Special Event to prepay this Security in whole (but not in part) at
the Special Event Prepayment Price. "Special Event Prepayment Price" shall
mean, with respect to any prepayment of the Securities following a Special
Event, an amount in cash equal to the greater of (i) 100% of the principal
amount to be prepaid or (ii) the sum, as determined by a Quotation Agent, of
the present value of 104.54% of the principal amount thereof plus the
scheduled payments of interest thereon on the Securities from the prepayment
date to and including the Initial Optional Prepayment Date, discounted to the
prepayment date on a semi-annual basis (assuming a 360-day year consisting
of twelve 30-day months) at the Adjusted Treasury Rate, plus any accrued and
unpaid interest thereon, including Compounded Interest and Additional Inter-
est, if any, to the date of such prepayment.
In addition, the Company shall have the right to prepay this Secur-
ity, in whole or in part, at any time on or after the Initial Optional
Prepayment Date (an "Optional Prepayment"), at the prepayment prices as set
forth below (expressed as percentages of principal to be prepaid) plus, in
each case, accrued and unpaid interest thereon (including Additional Interest
and Compounded Interest, if any) to the applicable date of prepayment (the
"Optional Prepayment Price"), if prepaid during the 12-month period beginning
January 31 of the years indicated below.
Year Percentage
---------------
2007......................104.54%
2008......................104.08%
2009......................103.63%
2010......................103.18%
2011......................102.72%
2012......................102.27%
2013......................101.82%
2014......................101.36%
2015......................100.91%
2016......................100.45%
2017 and thereafter.......100.00%
The Optional Prepayment Price or the Special Event Prepayment
Price, as the case requires, shall be paid prior to 12:00 noon, New York
time, on the date of such prepayment or at such earlier time as the Company
determines, provided, that the Company shall deposit with the Trustee an
amount sufficient to pay the applicable Prepayment Price by 10:00 a.m., New
York City time, on the date such Prepayment Price is to be paid. Any pr-
epayment pursuant to this paragraph will be made upon not less than 30 days
nor more than 60 days notice. If the Securities are only partially prepaid
by the Company pursuant to an Optional Prepayment, the Securities will be
prepaid pro rata or by lot or by any other method utilized by the Trustee;
--- ----
provided that if, at the time of prepayment, the Securities are registered
- --------
as a Global Security, the Depositary shall determine the particular
Securities to be prepaid in accordance with its procedures.
In the event of prepayment of this Security in part only, a new
Security or Securities for the unprepaid portion hereof will be issued in the
name of the holder hereof upon the cancellation hereof.
Notwithstanding the foregoing, any prepayment of Securities by the
Company shall be subject to the receipt by the Company of the approval of the
Federal Reserve and any other required regulatory approval.
In case an Event of Default, as defined in the Indenture, shall
have occurred and be continuing, the principal of all of the Securities may
be declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the
Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of a majority in aggregate principal
amount of the Securities at the time outstanding, as defined in the
Indenture, to execute supplemental indentures for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of the Indenture or of modifying in any manner the rights of the holders of
the Securities; provided, however, that no such supplemental indenture shall,
without the consent of each holder of Securities then outstanding and
affected thereby, (i) extend the Maturity Date of any Securities, or reduce
the principal amount thereof, or reduce any amount payable on prepayment
thereof, or reduce the rate or extend the time of payment of interest thereon
(subject to Article Sixteen of the Indenture), or make the principal of, or
interest or premium on, the Securities payable in any coin or currency other
than U.S. dollars, or impair or affect the right of any holder of Securities
to institute suit for the payment thereof, or (ii) reduce the aforesaid
percentage of Securities, the holders of which are required to consent to any
such supplemental indenture. The Indenture also contains provisions permit-
ting the holders of a majority in aggregate principal amount of the
Securities at the time outstanding affected thereby, on behalf of all of the
holders of the Securities, to waive any past default in the performance of
any of the covenants contained in the Indenture, or established pursuant to
the Indenture, and its consequences, except a default in the payment of the
principal of or premium, if any, or interest on any of the Securities or a
default in respect of any covenant or provision under which the Indenture
cannot be modified or amended without the consent of each holder of Securi-
ties then outstanding. Any such consent or waiver by the holder of this
Security (unless revoked as provided in the Indenture) shall be conclusive
and binding upon such Holder and upon all future holders and owners of this
Security and of any Security issued in exchange herefor or in place hereof
(whether by registration of transfer or otherwise), irrespective of whether
or not any notation of such consent or waiver is made upon this Security.
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 time and place and at
the rate and in the money herein prescribed.
The Company shall have the right, at any time and from time to time
during the term of the Securities, to defer payments of interest by extending
the interest payment period of such Securities for a period not exceeding 10
consecutive semi-annual periods, including the first such semi-annual period
during such extension period, and not to extend beyond the Maturity Date of
the Securities (an "Extended Interest Payment Period"), at the end of which
period the Company shall pay all interest then accrued and unpaid (together
with interest thereon at the rate specified for the Securities to the extent
that payment of such interest is enforceable under applicable law). Before
the termination of any such Extended Interest Payment Period, the Company may
further defer payments of interest by further extending such Extended
Interest Payment Period, provided that such Extended Interest Payment Period,
--------
together with all such previous and further extensions within such Extended
Interest Payment Period, (i) shall not exceed 10 consecutive semi-annual
periods, including the first semi-annual period during such Extended Interest
Payment Period, (ii) shall not end on any date other than an Interest Payment
Date and (iii) shall not extend beyond the Maturity Date of the Securities.
Upon the termination of any such Extended Interest Payment Period and the
payment of all accrued and unpaid interest and any additional amounts then
due, the Company may commence a new Extended Interest Payment Period, subject
to the foregoing requirements.
The Company has agreed that it will not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a liqui-
dation payment with respect to, any of the Company's capital stock (which
includes common and preferred stock), (ii) make any payment of principal,
interest or premium, if any, with respect to or repay, repurchase or redeem
any debt securities of the Company that rank pari passu with or junior in
right of payment to the Securities or (iii) make any guarantee payments with
respect to any guarantee by the Company of the debt securities or any
Subsidiary of the Company (including any Other Guarantees) if such guarantee
ranks pari passu or junior in right of payment to the Securities (other than
(a) dividends or distributions in shares of, or options, warrants or rights
to subscribe for or purchase shares of, Common Stock of the Company; (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 Capital Securities Guarantee; (d) as a result
of a reclassification of the Company's capital stock or the exchange or the
conversion of one class or series of the Company's capital stock for another
class or series of the Company's capital stock; (e) the purchase of fraction-
al interests in shares of the Company's capital stock pursuant to the
exchange or conversion of such capital stock or the security being exchanged
or converted; and (f) purchases of Common Stock related to the issuance of
Common Stock or rights under any of the Company's benefit plans for its
directors, officers or employees or any of the Company's dividend reinvest-
ment plans) if at such time (i) there shall have occurred any event of which
the Company has actual knowledge that (a) is, or with the giving of notice
or the lapse of time, or both, would be, an Event of Default and (b) in
respect of which the Company shall not have taken reasonable steps to cure,
(ii) if the Securities are held by Community Capital Trust, the Company shall
be in default with respect to its payment of any obligations under the Cap-
ital Securities Guarantee or (iii) the Company shall have given notice of its
election of the exercise of its right to extend the interest payment period
and any such extension shall be continuing.
The Securities are issuable only in registered form without coupons
in denominations of $1,000.00 and any integral multiple thereof. As provided
in the Indenture and subject to the transfer restrictions limitations as may
be contained herein and therein from time to time, this Security is transfer-
able by the holder hereof on the Security Register of the Company, upon
surrender of this Security for registration of transfer at the office or
agency of the Company in the City and State of New York accompanied by a
written instrument or instruments of transfer in form satisfactory to the
Company or the Trustee duly executed by the holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Securities of
authorized denominations and for the same aggregate principal amount and
series will be issued to the designated transferee or transferees. No service
charge will be made for any such transfer, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in relation thereto.
Prior to due presentment for registration of transfer of this
Security, the Company, the Trustee, any authenticating agent, any paying
agent, any transfer agent and the registrar may deem and treat the registered
holder hereof as the absolute owner hereof (whether or not this Security
shall be overdue and notwithstanding any notice of ownership or writing
hereon made by anyone other than the Security Registrar) for the purpose of
receiving payment of or on account of the principal hereof and premium, if
any, and (subject to the Indenture) interest due hereon and for all other
purposes, and neither the Company nor the Trustee nor any authenticating
agent nor any paying agent nor any transfer agent nor any registrar shall be
affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or
premium, if any, or interest on this Security, or for any claim based hereon,
or otherwise in respect hereof, or based on or in respect of the Indenture,
against any incorporator, stockholder, officer or director, past, present or
future, as such, of the Company or of any predecessor or successor Person,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the
issuance hereof, expressly waived and released.
All terms used in this Security that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICT OF LAW PROVISIONS THEREOF.
EXHIBIT 4.3
CERTIFICATE OF TRUST
OF
COMMUNITY CAPITAL TRUST I
THIS Certificate of Trust of Community Capital Trust I (the
"Trust"), dated as of January 27, 1997, has been duly executed and is being
filed by the undersigned, as trustee, to form a business trust under the
Delaware Business Act (12 Del. C. Section3801, et seq.).
------- -- ----
1. Name. The name of the business trust formed hereby is
----
Community Capital Trust I.
2. Delaware Trustee. The name and business address of the
----------------
trustee of the Trust with a principal place of business in the State of
Delaware are Chase Manhattan Bank Delaware, 1201 Market Street, Wilmington,
Delaware 19801.
3. Effective Date. This Certificate of Trust shall be effective
--------------
upon filing.
IN WITNESS WHEREOF, the undersigned trustee of the Trust has
executed this Certificate of Trust as of the date first-above written.
CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but solely as
trustee of the Trust
By:
-----------------------------------------
Name:
Title:
EXHIBIT 4.4
DECLARATION OF TRUST
OF
COMMUNITY CAPITAL TRUST I
THIS DECLARATION OF TRUST is made as of January 29, 1997 (this
"Trust Agreement"), by and between Community Bank System, Inc., a Delaware
corporation, as sponsor (the "Sponsor"), and Chase Manhattan Bank Delaware, a
Delaware banking corporation, as trustee (the "Trustee"). The Sponsor and
the Trustee hereby agree as follows:
1. The trust created hereby shall be known as "Community Capital
Trust I" (the "Trust"), in which name the Trustee or the Sponsor, to the
extent provided herein, may conduct the business of the Trust, make and
execute contracts, and sue and be sued.
2. The Sponsor hereby assigns, transfers, conveys and sets over
to the Trust the sum of ten dollars ($10). Such amount shall constitute the
initial trust estate. It is the intention of the parties hereto that the
Trust created hereby constitute a business trust under Chapter 38 of Title
12 of the Delaware Code, 12 Del. C. Section 3801, et seq. (the "Business
------- -- ----
Trust Act"), and that this document constitute the governing instrument of
the Trust. The Trustee is hereby authorized and directed to execute and file
a certificate of trust with the Delaware Secretary of State in accordance
with the provisions of the Business Trust Act.
3. The Sponsor and the Trustee will enter into an amended and
restated Trust Agreement or Declaration satisfactory to each such party to
provide for the contemplated operation of the Trust created hereby and the
issuance of the Capital Securities (the "Capital Securities") and the Common
Securities (the "Common Securities") referred to in the Offering Memorandum
(as hereinafter defined). Prior to the execution and delivery of such
amended and restated Trust Agreement or Declaration, the Trustee shall not
have any duty or obligation hereunder or with respect to the trust estate,
except as otherwise required by applicable law or as may be necessary to
obtain prior to such execution and delivery any licenses, consents or
approvals required by applicable law or otherwise. Notwithstanding the
foregoing, the Trustee may take all actions deemed proper as are necessary to
effect the transactions contemplated herein.
4. The Sponsor, as sponsor of the Trust, is hereby authorized, in
its discretion, (i) to prepare and distribute one or more offering memoranda
in preliminary and final form, including any necessary or desirable
amendments, relating to the offering and sale of Capital Securities of the
Trust in a transaction exempt from the registration requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and such other forms or
filings as may be required by the 1933 Act, the Securities Exchange Act of
1934, as amended, or the Trust Indenture Act of 1939, as amended, in each
case relating to the Capital Securities of the Trust (the "Offering
Memorandum"); (ii) to file and execute on behalf of the Trust, such
applications, reports, surety bonds, irrevocable consents, appointments of
attorney for service of process and other papers and documents that shall be
necessary or desirable to register or establish the exemption from
registration of the Capital Securities of the Trust under the securities or
"Blue Sky" laws of such jurisdictions as the Sponsor, on behalf of the Trust,
may deem necessary or desirable; (iii) to execute and file an application,
and all other applications, statements, certificates, agreements and other
instruments that shall be necessary or desirable to cause the Capital
Securities to be listed, if and at such time as determined by the Sponsor,
with the New York Stock Exchange or any other national stock exchange or the
Nasdaq National Market for listing or quotation of the Capital Securities of
the Trust; (iv) to execute and deliver letters or documents to, or
instruments for filing with, a depository relating to the Capital Securities
of the Trust; (v) to execute, deliver and perform on behalf of the Trust one
or more underwriting or purchase agreements, registration rights agreements,
dealer manager agreements, escrow agreements, subscription agreements and
other similar or related agreements providing for or relating to the sale of
the Capital Securities of the Trust; and (vi) to execute on behalf of the
Trust any and all documents, papers and instruments as may be desirable in
connection with any of the foregoing. Notwithstanding anything to the
contrary contained herein, the Trust shall be authorized to issue and sell
the Capital Securities at an offering price per Capital Security to be
determined by the Sponsor in its sole and absolute discretion, including,
without limitation, at an offering price that is less than the liquidation
amount thereof, which offering price shall be specified in the offering
material relating thereto and the Common Securities shall be issued and sold
at an offering price per Common Security that is equal to the offering price
per Capital Security.
In the event that any filing referred to in this Section 4 is
required by the rules and regulations of the Commission or state securities
or Blue Sky laws to be executed on behalf of the Trust by a Trustee, the
Trustee or any trustee of the Trust appointed pursuant to Section 6 hereof,
in its capacity as trustee of the Trust, is hereby authorized and directed to
join in any such filing and to execute on behalf of the Trust any and all of
the foregoing, it being understood that any such trustee of the Trust, in its
capacity as trustee of the Trust, shall not be required to join in any such
filing or execute on behalf of the Trust any such document unless required by
the rules and regulations of the Commission or state securities or Blue Sky
laws.
5. This Trust Agreement may be executed in one or more
counterparts.
6. The number of trustees of the Trust initially shall be one and
thereafter the number of trustees of the Trust shall be such number as shall
be fixed from time to time by a written instrument signed by the Sponsor
which may increase or decrease (but not below one) the number of trustees of
the Trust; provided, however, that to the extent required by the Business
Trust Act, one trustee of the Trust shall either be a natural person who is a
resident of the State of Delaware, or, if not a natural person, an entity
which has its principal place of business in the State of Delaware. Subject
to the foregoing, the Sponsor is entitled to appoint or remove without cause
any trustee of the Trust at any time. Any trustee of the Trust may resign
upon thirty days' prior notice to the Sponsor.
7. This Trust Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to
conflict of laws principles).
IN WITNESS WHEREOF, the parties hereto have caused this Declaration
of Trust to be duly executed as of the day and year first above written.
COMMUNITY BANK SYSTEM, INC.,
as Sponsor
By:
-----------------------------------------
Name:
Title:
CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but solely as
trustee of the Trust
By:
-----------------------------------------
Name:
Title:
EXHIBIT 4.5
AMENDED AND RESTATED DECLARATION
OF TRUST
Community Capital Trust I
Dated as of February 3, 1997
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . . 10
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . . . 10
SECTION 2.3 Reports by the Property Trustee . . . . . . . . . . . 11
SECTION 2.4 Periodic Reports to Property Trustee . . . . . . . . 11
SECTION 2.5 Evidence of Compliance with Conditions Precedent . . 11
SECTION 2.6 Events of Default; Waiver . . . . . . . . . . . . . . 11
SECTION 2.7 Event of Default; Notice . . . . . . . . . . . . . . 13
ARTICLE III
ORGANIZATION
SECTION 3.1 Name . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.2 Office . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.3 Purpose . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.4 Authority . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.5 Title to Property of the Trust . . . . . . . . . . . 15
SECTION 3.6 Powers and Duties of the Administrative Trustees . . 15
SECTION 3.7 Prohibition of Actions by the Trust and the Trust-
ees . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.8 Powers and Duties of the Property Trustee . . . . . . 20
SECTION 3.9 Certain Duties and Responsibilities of the Property
Trustee . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.10 Certain Rights of the Property Trustee . . . . . . . 24
SECTION 3.11 Delaware Trustee . . . . . . . . . . . . . . . . . . 27
SECTION 3.12 Execution of Documents . . . . . . . . . . . . . . . 27
SECTION 3.13 Not Responsible for Recitals or Issuance of Securi-
ties . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.14 Duration of Trust . . . . . . . . . . . . . . . . . . 27
SECTION 3.15 Mergers . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities . . . . . . . 29
SECTION 4.2 Responsibilities of the Sponsor . . . . . . . . . . . 30
SECTION 4.3 Right to Proceed . . . . . . . . . . . . . . . . . . 31
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees; Appointment of Co-Trustee . . . . 31
SECTION 5.2 Delaware Trustee . . . . . . . . . . . . . . . . . . 32
SECTION 5.3 Property Trustee; Eligibility . . . . . . . . . . . . 32
SECTION 5.4 Certain Qualifications of Administrative Trustees
and Delaware Trustee Generally . . . . . . . . . . . 33
SECTION 5.5 Administrative Trustees . . . . . . . . . . . . . . . 33
SECTION 5.6 Delaware Trustee . . . . . . . . . . . . . . . . . . 34
SECTION 5.7 Appointment, Removal and Resignation of Trustees . . 34
SECTION 5.8 Vacancies of Trustees . . . . . . . . . . . . . . . . 36
SECTION 5.9 Effect of Vacancies . . . . . . . . . . . . . . . . . 36
SECTION 5.10 Meetings . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.11 Delegation of Power . . . . . . . . . . . . . . . . . 37
Section 5.12 Merger, Conversion, Consolidation or Succession to
Business . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions . . . . . . . . . . . . . . . . . . . . 38
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities . . . . . . . 38
SECTION 7.2 Execution and Authentication . . . . . . . . . . . . 39
SECTION 7.3 Form and Dating . . . . . . . . . . . . . . . . . . . 40
SECTION 7.4 Registrar, Paying Agent and Exchange Agent . . . . . 42
SECTION 7.5 Paying Agent to Hold Money in Trust . . . . . . . . . 42
SECTION 7.6 Replacement Securities . . . . . . . . . . . . . . . 43
SECTION 7.7 Outstanding Capital Securities . . . . . . . . . . . 43
SECTION 7.8 Capital Securities in Treasury . . . . . . . . . . . 44
SECTION 7.9 Temporary Securities . . . . . . . . . . . . . . . . 44
SECTION 7.10 Cancellation . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.11 CUSIP Numbers . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VIII
DISSOLUTION OF TRUST
SECTION 8.1 Dissolution of Trust . . . . . . . . . . . . . . . . 46
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities . . . . . . . . . . . . . . . 47
SECTION 9.2 Transfer Procedures and Restrictions . . . . . . . . 47
SECTION 9.3 Deemed Security Holders . . . . . . . . . . . . . . . 56
SECTION 9.4 Book Entry Interests . . . . . . . . . . . . . . . . 57
SECTION 9.5 Notices to Clearing Agency . . . . . . . . . . . . . 57
SECTION 9.6 Appointment of Successor Clearing Agency . . . . . . 58
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.2 Exculpation . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.3 Fiduciary Duty . . . . . . . . . . . . . . . . . . . 59
SECTION 10.4 Indemnification . . . . . . . . . . . . . . . . . . . 60
SECTION 10.5 Outside Businesses . . . . . . . . . . . . . . . . . 63
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year . . . . . . . . . . . . . . . . . . . . . 64
SECTION 11.2 Certain Accounting Matters . . . . . . . . . . . . . 64
SECTION 11.3 Banking . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 11.4 Withholding . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments . . . . . . . . . . . . . . . . . . . . . 65
SECTION 12.2 Meetings of the Holders; Action by Written Consent . 67
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee . 69
SECTION 13.2 Representations and Warranties of Delaware Trustee . 70
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 Registration Rights Agreement . . . . . . . . . . . . 70
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 15.2 Governing Law . . . . . . . . . . . . . . . . . . . . 72
SECTION 15.3 Intention of the Parties . . . . . . . . . . . . . . 72
SECTION 15.4 Headings . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 15.5 Successors and Assigns . . . . . . . . . . . . . . . 72
SECTION 15.6 Partial Enforceability . . . . . . . . . . . . . . . 72
SECTION 15.7 Counterparts . . . . . . . . . . . . . . . . . . . . 72
ANNEX I TERMS OF SECURITIES . . . . . . . . . . . . . . . . . . . I-1
EXHIBIT A-1 FORM OF CAPITAL SECURITY CERTIFICATE . . . . . . . . . . A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE . . . . . . . . . . A2-1
EXHIBIT B SPECIMEN OF DEBENTURE . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C PURCHASE AGREEMENT . . . . . . . . . . . . . . . . . . . . C-1
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
COMMUNITY CAPITAL TRUST I
February 3, 1997
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of February 3, 1997, by the Trustees (as defined herein), the
Sponsor (as defined herein) and by the holders, from time to time, of
undivided beneficial interests in the Trust to be issued pursuant to this
Declaration;
WHEREAS, the Trustees and the Sponsor established Community Capital
Trust I (the "Trust"), a trust formed under the Delaware Business Trust Act
pursuant to a Declaration of Trust dated as of January 29, 1997 (the
"Original Declaration"), and a Certificate of Trust filed with the Secretary
of State of the State of Delaware on January 29, 1997, for the sole purpose
of issuing and selling certain securities representing undivided beneficial
interests in the assets of the Trust and investing the proceeds thereof in
certain Debentures of the Debenture Issuer (each as hereinafter defined) and
engaging in only those activities necessary or advisable or incidental
thereto;
WHEREAS, prior to the date hereof, no Securities (as defined
herein) have been issued;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original
Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
-----------
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above or elsewhere herein have the respective meanings as-
signed to them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are
to this Declaration (including Annexes and Exhibits) as modified,
supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections
and Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires; and
(f) a term defined in the Indenture (as defined herein) has the
same meaning when used in this Declaration unless otherwise defined in
this Declaration or the context otherwise requires; and
(g) a reference to the singular includes the plural and vice
versa.
"Administrative Trustee" has the meaning set forth in Section 5.1.
----------------------
"Affiliate" has the same meaning as given to that term in Rule 405
---------
under the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent, Registrar or Exchange Agent.
-----
"Authorized Officer" of a Person means any other Person that is
------------------
authorized to legally bind such former Person.
"Book Entry Interest" means a beneficial interest in a Global Cer
-------------------
tificate registered in the name of a Clearing Agency or its nominee, owner-
ship and transfers of which shall be maintained and made through book entries
by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a Saturday or a Sunday or
------------
a day on which banking institutions in The City of New York or Wilmington,
Delaware are authorized or required by law or executive order to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
------------------
Code, 12 Del. Code Section3801 et seq., as it may be amended from time to
------------ -- ---
time, or any successor legislation.
"Capital Security Beneficial Owner" means, with respect to a Book
---------------------------------
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books
of a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Capital Securities" means, collectively, the Series A Capital
------------------
Securities and the Series B Capital Securities.
"Capital Securities Guarantee" means, collectively, the Series A
----------------------------
Capital Securities Guarantee and the Series B Capital Securities Guarantee.
"Clearing Agency" means an organization registered as a "Clearing
---------------
Agency" pursuant to Section 17A of the Exchange Act that is acting as
depositary for the Capital Securities and in whose name or in the name of a
nominee of that organization shall be registered a Global Certificate and
which shall undertake to effect book entry transfers and pledges of the
Capital Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
---------------------------
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with
the Clearing Agency.
"Closing Time" means the "Closing Time" under the Purchase Agree
------------
ment.
"Code" means the Internal Revenue Code of 1986, as amended from
----
time to time, or any successor legislation.
"Commission" means the United States Securities and Exchange
----------
Commission as from time to time constituted, or if any time after the
execution of this Declaration such Commission is not existing and performing
the duties now assigned to it under applicable Federal securities laws, then
the body performing such duties at such time.
"Common Securities" has the meaning specified in Section 7.1(a).
-----------------
"Common Securities Guarantee" means the guarantee agreement dated
---------------------------
as of February 3, 1997 of the Sponsor in respect of the Common Securities.
"Company Indemnified Person" means (a) any Administrative Trustee;
--------------------------
(b) any Affiliate of any Administrative Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Administrative Trustee; or (d) any officer, employee or agent of the Trust or
its Affiliates.
"Corporate Trust Office" means the office of the Property Trustee
----------------------
at which the corporate trust business of the Property Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Agreement is located at 450 West 33rd Street, 15th Floor,
New York, New York 10001.
"Covered Person" means: (a) any officer, director, trustee,
--------------
shareholder, partner, member, representative, employee or agent of (i) the
Trust or (ii) the Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means Community Bank System, Inc., a Delaware
----------------
corporation, or any successor entity resulting from any consolidation, amal-
gamation, merger or other business combination, in its capacity as issuer of
the Debentures under the Indenture.
"Debenture Trustee" means The Chase Manhattan Bank, a New York
-----------------
banking corporation, as trustee under the Indenture until a successor is ap-
pointed thereunder, and thereafter means such successor trustee.
"Debentures" means, collectively, the Series A Debentures and the
----------
Series B Debentures.
"Default" means an event, act or condition that with notice or
-------
lapse of time, or both, would constitute an Event of Default.
"Definitive Capital Securities" has the meaning set forth in
-----------------------------
Section 7.3(c).
"Delaware Trustee" has the meaning set forth in Section 5.2.
----------------
"Direct Action" has the meaning set forth in Section 3.8(e).
-------------
"Distribution" means a distribution payable to Holders in
------------
accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing
---
Agency.
"Event of Default" in respect of the Securities means an Event of
----------------
Default (as defined in the Indenture) that has occurred and is continuing in
respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended from time to time, or any successor legislation.
"Exchange Agent" has the meaning set forth in Section 7.4.
--------------
"Exchange Offer" means the offer that may be made pursuant to the
--------------
Registration Rights Agreement (i) by the Trust to exchange Series B Capital
Securities for Series A Capital Securities and (ii) by the Debenture Issuer
to exchange Series B Debentures for Series A Debentures and the Series B
Capital Securities Guarantee for the Series A Capital Securities Guarantee.
"Federal Reserve Board" means the Board of Governors of the Federal
---------------------
Reserve System.
"Fiduciary Indemnified Person" has the meaning set forth in Section
----------------------------
10.4(b).
"Global Capital Securities" has the meaning set forth in Section
-------------------------
7.3(a).
"Global Capital Security" has the meaning set forth in Section
-----------------------
7.3(a).
"Holder" means a Person in whose name a Security is registered,
------
such Person being a beneficial owner within the meaning of the Business Trust
Act.
"Indemnified Person" means a Company Indemnified Person or a
------------------
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of February 3, 1997, among
---------
the Debenture Issuer and the Debenture Trustee, as amended from time to time.
"Investment Company" means an investment company as defined in the
------------------
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940,
----------------------
as amended from time to time, or any successor legislation.
"Legal Action" has the meaning set forth in Section 3.6(g).
------------
"Liquidation Amount" with respect to any Security means the amount
------------------
designated as such with respect thereto as set forth in Appendix I hereto.
"Majority in Liquidation Amount" means, with respect to the Trust
------------------------------
Securities, except as provided in the terms of the Capital Securities or by
the Trust Indenture Act, Holder(s) of outstanding Trust Securities voting
together as a single class or, as the context may require, Holders of out-
standing Capital Securities or Holders of outstanding Common Securities
voting separately as a class, who are the record owners of more than 50% of
the aggregate Liquidation Amount (including the stated amount that would be
paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined)
of all outstanding Securities of the relevant class.
"Ministerial Action" has the meaning set forth in Annex I hereto.
------------------
"Offering Memorandum" has the meaning set forth in Section 3.6(b).
-------------------
"Officers' Certificate" means, with respect to any Person, a
---------------------
certificate signed by the Chairman, a Vice Chairman, the Chief Executive
Officer, the President, a Vice President (whether or not designated by a
number or a word or words added before or after such title), the Comptroller,
the Secretary or an Assistant Secretary, or the Secretary or an Assistant
Secretary of such Person. Any Officers' Certificate delivered with respect
to compliance with a condition or covenant provided for in this Declaration
shall include:
(a) a statement that each officer signing the Certificate has read
the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the
Certificate;
(c) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may
------------------
be an employee of the Sponsor.
"Paying Agent" has the meaning specified in Section 7.4.
------------
"Person" means a legal person, including any individual, corpora-
------
tion, 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.
"Property Trustee" has the meaning set forth in Section 5.3(a).
----------------
"Property Trustee Account" has the meaning set forth in Section
------------------------
3.8(c).
"Purchase Agreement" means the Purchase Agreement for the initial
------------------
offering and sale of Capital Securities in the form of Exhibit C.
"QIBs" shall mean qualified institutional buyers as defined in Rule
----
144A.
"Quorum" means a majority of the Administrative Trustees or, if
------
there are only two Administrative Trustees, both of them.
"Registrar" has the meaning set forth in Section 7.4.
---------
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement dated as of February 3, 1997, by and among the Trust, the Debenture
Issuer and the Initial Purchaser named therein, as amended from time to time.
"Registration Statement" has the meaning set forth in the
----------------------
Registration Rights Agreement.
"Related Party" means, with respect to the Sponsor, any direct or
-------------
indirect wholly owned subsidiary of the Sponsor or any other Person that
owns, directly or indirectly, 100% of the outstanding voting securities of
the Sponsor.
"Responsible Officer" means, with respect to the Property Trustee,
-------------------
any officer within the Corporate Trust Office of the Property Trustee,
including any vice-president, any assistant vice-president, any secretary,
any assistant secretary, the treasurer, any assistant treasurer or other
officer of the Corporate Trust Office of the Property Trustee customarily
performing functions similar to those performed by any of the above desig-
nated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.
"Restricted Definitive Capital Securities" has the meaning set
----------------------------------------
forth in Section 7.3(c).
"Restricted Capital Security" means a Capital Security required by
---------------------------
Section 9.2 to contain a Restricted Securities Legend.
"Restricted Securities Legend" has the meaning set forth in Section
----------------------------
9.2.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act, or
---------
any successor rule or regulation.
"Rule 144" means Rule 144 under the Securities Act, as such rule
--------
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
"Rule 144A" means Rule 144A under the Securities Act, as such rule
---------
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
"Securities" or "Trust Securities" means the Common Securities and
---------- ----------------
the Capital Securities.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time, or any successor legislation.
"Securities Guarantees" means the Common Securities Guarantee and
---------------------
the Capital Securities Guarantee.
"Series A Capital Securities" has the meaning specified in Section
---------------------------
7.1(a).
"Series B Capital Securities" has the meaning specified in Section
---------------------------
7.1(a).
"Series A Capital Securities Guarantee" means the guarantee
-------------------------------------
agreement dated as of February 3, 1997 of the Sponsor in respect of the
Series A Capital Securities.
"Series B Capital Securities Guarantee" means the guarantee
-------------------------------------
agreement to be entered in connection with the Exchange Offer by the Sponsor
in respect of the Series B Capital Securities.
"Series A Debentures" means the Series A 9.75% Junior Subordinated
-------------------
Deferrable Interest Debentures due January 31, 2027 of the Debenture Issuer
issued pursuant to the Indenture.
"Series B Debentures" means the Series B 9.75% Junior Subordinated
-------------------
Deferrable Interest Debentures due January 31, 2027 of the Debenture Issuer
issued pursuant to the Indenture.
"Special Event" has the meaning set forth in Annex I hereto.
-------------
"Sponsor" means Community Bank System, Inc., a Delaware corpo
-------
ration, or any successor entity resulting from any merger, consolidation,
amalgamation or other business combination, in its capacity as sponsor of the
Trust.
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
--------------
"10% in Liquidation Amount" means, with respect to the Trust
-------------------------
Securities, except as provided in the terms of the Capital Securities or by
the Trust Indenture Act, Holders of outstanding Trust Securities voting
together as a single class or, as the context may require, Holders of out-
standing Capital Securities or Holders of outstanding Common Securities
voting separately as a class, who are the record owners of 10% or more of the
aggregate Liquidation Amount (including the stated amount that would be paid
on redemption, liquidation or otherwise, plus accumulated and unpaid Dis-
tributions to the date upon which the voting percentages are determined) of
all outstanding Securities of the relevant class.
"Treasury Regulations" means the income tax regulations, including
--------------------
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
------- --------
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and references herein to a Trustee or the Trustees
shall refer to such Person or Persons solely in their capacity as trustees
hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
-------------------
amended from time to time, or any successor legislation.
"Trust Property" means (a) the Debentures, (b) any cash on deposit
--------------
in, or owing to, the Property Trustee 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 this
Declaration.
"Unrestricted Global Capital Security" has the meaning set forth
------------------------------------
in Section 9.2(b).
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
--------------------------------
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration in order for
this Declaration to be a qualified indenture under the Trust Indenture Act
and shall, to the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by SectionSection 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
------------------------------
(a) Each of the Sponsor and the Administrative Trustees on behalf
of the Trust shall provide the Property Trustee, unless the Property Trustee
is Registrar for the Securities (i) within 14 days after each record date for
payment of Distributions, a list, in such form as the Property Trustee may
reasonably require, of the names and addresses of the Holders ("List of Hold-
ers") as of such record date, provided that neither the Sponsor nor the
-------- ----
Administrative Trustees on behalf of the Trust shall be obligated to provide
such List of Holders at any time the List of Holders does not differ from the
most recent List of Holders given to the Property Trustee by the Sponsor and
the Administrative Trustees on behalf of the Trust, and (ii) at any other
time, within 30 days of receipt by the Trust of a written request for a List
of Holders as of a date no more than 14 days before such List of Holders is
given to the Property Trustee. The Property Trustee shall preserve, in as
current a form as is reasonably practicable, all information contained in
Lists of Holders given to it or which it receives in the capacity as Paying
Agent (if acting in such capacity), provided that the Property Trustee may
destroy any List of Holders previously given to it on receipt of a new List
of Holders.
(b) The Property Trustee shall comply with its obligations under
SectionSection 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Property Trustee.
-------------------------------
Within 60 days after January 31 of each year, commencing January
31, 1998, the Property Trustee shall provide to the Holders of the Capital
Securities 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 Property Trustee shall also comply with the
requirements of
Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
------------------------------------
Each of the Sponsor and the Administrative Trustees on behalf of
the Trust shall provide to the Property Trustee such documents, reports and
information as are required by Section 314 (if any) and the compliance cer-
tificate required by Section 314 of the Trust Indenture Act in the form, in
the manner and at the times required by Section 314 of the Trust Indenture
Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
------------------------------------------------
Each of the Sponsor and the Administrative Trustees on behalf of
the Trust shall provide to the Property Trustee such evidence of compliance
with any conditions precedent provided for in this Declaration that relate to
any of the matters set forth in 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 may be given in the form of an
Officers' Certificate.
SECTION 2.6 Events of Default; Waiver.
-------------------------
(a) The Holders of a Majority in Liquidation Amount of the Capital
Securities may, by vote, on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default in respect of the Capital
Securities and its consequences, provided that, if the underlying Event of
-------- ----
Default under the Indenture:
(i) is not waivable under the Indenture, the Event of Default
under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
aggregate principal amount of the holders of the Debentures (a "Super
Majority") to be waived under the Indenture, the Event of Default under
the Declaration may only be waived by the vote of the Holders of at
least the proportion in aggregate Liquidation Amount of the Capital
Securities that the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and
the Securities, as permitted by the Trust Indenture Act. Upon such waiver,
any such default shall cease to exist, and any Event of Default with respect
to the Capital Securities arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend
to any subsequent or other default or an Event of Default with respect to the
Capital Securities or impair any right consequent thereon. Any waiver by the
Holders of the Capital Securities of an Event of Default with respect to the
Capital Securities shall also be deemed to constitute a waiver by the Holders
of the Common Securities of any such Event of Default with respect to the
Common Securities for all purposes of this Declaration without any further
act, vote, or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in Liquidation Amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
-------- ----
Default under the Indenture:
(i) is not waivable under the Indenture, except where the Holders
of the Common Securities are deemed to have waived such Event of Default
under the Declaration as provided below in this Section 2.6(b), the
Event of Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of a Super Majority to be waived,
except where the Holders of the Common Securities are deemed to have
waived such Event of Default under the Declaration as provided below in
this Section 2.6(b), the Event of Default under the Declaration may only
be waived by the vote of the Holders of at least the proportion in
aggregate Liquidation Amount of the Common Securities that the relevant
Super Majority represents of the aggregate principal amount of the
Debentures outstanding;
provided further, that the Holder of the Common Securities will be deemed to
- -------- -------
have waived any such Event of Default and all Events of Default with respect
to the Common Securities and its consequences if all Events of Default with
respect to the Capital Securities have been cured, waived or otherwise
eliminated, and until such Events of Default have been so cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be acting solely
on behalf of the Holders of the Capital Securities and only the Holders of
the Capital Securities will have the right to direct the Property Trustee in
accordance with the terms of the Securities. The foregoing provisions of
this Section 2.6(b) shall be in lieu of SectionSection 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act and such SectionSection 316(a)(1)(A)
and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded
from this Declaration and the Securities, as permitted by the Trust Indenture
Act. Subject to the foregoing provisions of this Section 2.6(b), upon such
waiver, any such default shall cease to exist and any Event of Default with
respect to the Common Securities arising therefrom shall be deemed to have
been cured for every purpose of this Declaration, but no such waiver shall
extend to any subsequent or other default or Event of Default with respect to
the Common Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Property Trustee, at the direction of the Holders of the Capital Securities,
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in
lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section
316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from
this Declaration and the Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 Event of Default; Notice.
------------------------
(a) The Property Trustee shall, within 90 days after the occur-
rence of an Event of Default, transmit by mail, first class postage prepaid,
to the Holders, the Administrative Trustees and the Sponsor, notices of all
defaults with respect to the Securities actually known to a Responsible
Officer, unless such defaults have been cured before the giving of such
notice (the term "defaults" for the purposes of this Section 2.7(a) being
hereby defined to be an Event of Default as defined in the Indenture, not in-
cluding any periods of grace provided for therein and irrespective of the
giving of any notice provided therein); provided that, except for a default
in the payment of principal of (or premium, if any) or interest on any of the
Debentures, the Property Trustee shall be protected in withholding such
notice at the direction of an Administrative Trustee if and so long as a
Responsible Officer in good faith determines that the withholding of such
notice is in the interests of the Holders.
(b) Within five Business Days after the occurrence of any Event of
Default actually known to the Property Trustee, the Property Trustee shall
transmit notice of such Event of Default to the Holders of the Capital
Securities, the Administrative Trustees and the Sponsor, unless such Event of
Default shall have been cured or waived. The Sponsor and the Administrative
Trustees shall file annually with the Property Trustee a certification as to
whether or not they are in compliance with all the conditions and covenants
applicable to them under this Declaration.
(c) For purposes of this Section 2.7, the Property Trustee shall
not be deemed to have knowledge of any default except:
(i) a default under Sections 5.01(a) and 5.01(b) of the Indenture;
or
(ii) any default as to which the Property Trustee shall have
received written notice or of which a Responsible Officer charged with
the administration of the Declaration shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
----
The Trust is named "Community Capital Trust I" as such name may be
modified from time to time by the Administrative Trustees following written
notice to the Holders. The Trust's activities may be conducted under the
name of the Trust or any other name deemed advisable by the Administrative
Trustees.
SECTION 3.2 Office.
------
The address of the principal office of the Trust is c/o Community
Bank System, Inc., 5790 Widewaters Parkway, Dewitt, New York 13214. On ten
Business Days written notice to the Holders of Securities, the Administrative
Trustees may designate another principal office.
SECTION 3.3 Purpose.
-------
The exclusive purposes and functions of the Trust are (a) to issue
and sell the Trust Securities, (b) to use the proceeds from the sale of the
Securities to acquire the Debentures, and (c) except as otherwise limited
herein, to engage in only those other activities necessary, advisable or
incidental thereto. The Trust shall not borrow money, issue debt or reinvest
proceeds derived from investments, mortgage or pledge any of its assets, or
otherwise undertake (or permit to be undertaken) any activity that would
cause the Trust not to be classified for United States federal income tax
purposes as a grantor trust.
SECTION 3.4 Authority.
---------
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Administrative Trustees shall
have exclusive and complete authority to carry out the purposes of the Trust.
An action taken by the Administrative Trustees or any of them in accordance
with their powers shall constitute the act of and serve to bind the Trust and
an action taken by the Property Trustee on behalf of the Trust in accordance
with its powers shall constitute the act of and serve to bind the Trust. In
dealing with the Trustees acting on behalf of the Trust, no person shall be
required to inquire into the authority of the Trustees to bind the Trust.
Persons dealing with the Trust are entitled to rely conclusively on the power
and authority of the Trustees as set forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
------------------------------
Except as provided in Section 3.8 with respect to the Debentures
and the Property Trustee Account or as otherwise provided in this
Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The Holders shall not have legal title to any part of the assets of
the Trust, but shall have an undivided beneficial interest in the assets of
the Trust.
SECTION 3.6 Powers and Duties of the Administrative Trustees.
------------------------------------------------
The Administrative Trustees shall have the exclusive power, duty
and authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Securities in accordance with this
Declaration; provided, however, that except, in the
-------- -------
case of (i) and (ii), as contemplated in Section 7.1(a), (i) the Trust may
issue no more than one series of Capital Securities and no more than one
series of Common Securities, (ii) there shall be no interests in the Trust
other than the Securities, and (iii) the issuance of Securities shall be
limited to a simultaneous issuance of both Capital Securities and Common
Securities at the Closing Time and the issuance of Series B Capital
Securities in exchange for Series A Capital Securities pursuant to the
Exchange Offer, if any,
(b) in connection with the issue and sale of the Capital
Securities and the consummation of the Exchange Offer, at the direction of
the Sponsor, to:
(i) prepare and execute, if necessary, an offering memorandum (the
"Offering Memorandum") in preliminary and final form prepared by the
Sponsor, in relation to the offering and sale of Series A Capital Secu-
rities to qualified institutional buyers in reliance on Rule 144A under
the Securities Act and to institutional "accredited investors" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act);
and to execute and file with the Commission, at such time as determined
by the Sponsor, any Registration Statement, including any amendments
thereto, as contemplated by the Registration Rights Agreement;
(ii) execute and file any documents prepared by the Sponsor, or
take any acts as determined by the Sponsor to be necessary in order to
qualify or register all or part of the Capital Securities in any State
in which the Sponsor has determined to qualify or register such Capital
Securities for sale;
(iii) at the direction of the Sponsor, execute and file an
application, prepared by the Sponsor, to the New York Stock Exchange or
any other national stock exchange or NASDAQ Stock Market's National Mar-
ket for listing or quotation of the Capital Securities;
(iv) to execute and deliver letters, documents, or instruments with
DTC and other Clearing Agencies relating to the Capital Securities;
(v) if required, execute and file with the Commission a registra-
tion statement on Form 8-A, including any amendments thereto, prepared
by the Sponsor, relating to the registration of the Capital Securities
under Section 12(b) of the Exchange Act; and
(vi) execute and enter into the Purchase Agreement and the
Registration Rights Agreement providing for the sale of the Capital
Securities;
(c) to acquire the Series A Debentures with the proceeds of the
sale of the Series A Capital Securities and the Common Securities and to
exchange the Series A Debentures for a like principal amount of Series B
Debentures, pursuant to the Exchange Offer; provided, however, that the Admi
-------- -------
nistrative Trustees shall cause legal title to the Debentures to be held of
record in the name of the Property Trustee for the benefit of the Holders;
(d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Special Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and with
respect to, for the purposes of Section316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue
relevant notices to the Holders as to such actions and applicable record
dates;
(f) to take all actions and perform such duties as may be required
of the Administrative Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, re-
sort to legal action, or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to Section 3.8(e), the Property
Trustee has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors, and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations
under the Trust Indenture Act;
(j) to give the certificate required by Section 314(a)(4) of the
Trust Indenture Act to the Property Trustee, which certificate may be
executed by any Administrative Trustee;
(k) to incur expenses that are necessary or incidental to carry
out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, Registrar and
Exchange Agent for the Securities or to appoint a Paying Agent for the
Securities as provided in Section 7.4 except for such time as such power to
appoint a Paying Agent is vested in the Property Trustee;
(m) to give prompt written notice to the Property Trustee and to
Holders of any notice received from the Debenture Issuer of its election to
defer payments of interest on the Debentures by extending the interest
payment period under the Indenture;
(n) to execute all documents or instruments, perform all duties
and powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing;
(o) to take all action that may be necessary or appropriate for
the preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders or to enable the
Trust to effect the purposes for which the Trust was created;
(p) to take any action, not inconsistent with this Declaration or
with applicable law, that the Administrative Trustees determine in their
discretion to be necessary or desirable in carrying out the activities of the
Trust as set out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States federal
income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer for
United States federal income tax purposes;
(q) to take all action necessary to consummate the Exchange Offer
or otherwise cause the Capital Securities to be registered pursuant to an
effective registration statement in accordance with the provisions of the
Registration Rights Agreement.
(r) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with
respect to the Trust to be duly prepared and filed by the Administrative
Trustees, on behalf of the Trust.
The Administrative Trustees must exercise the powers set forth in
this Section 3.6 in a manner that is consistent with the purposes and
functions of the Trust set out in Section 3.3, and the Administrative
Trustees shall not take any action that is inconsistent with the purposes and
functions of the Trust set forth in Section 3.3.
Subject to this Section 3.6, the Administrative Trustees shall have
none of the powers or the authority of the Property Trustee set forth in
Section 3.8.
Any expenses incurred by the Administrative Trustees pursuant to
this Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
----------------------------------------------------
The Trust shall not, and the Trustees (including the Property
Trustee) shall not, engage in any activity other than as required or
authorized by this Declaration. The Trust shall not:
(a) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders pursuant
to the terms of this Declaration and of the Securities;
(b) acquire any assets other than as expressly provided herein;
(c) possess Trust Property for other than a Trust purpose;
(d) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(e) possess any power or otherwise act in such a way as to vary
the Trust assets or the terms of the Securities in any way whatsoever;
(f) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the Se-
curities; or
(g) other than as provided in this Declaration, or Annex I,
(A) direct the time, method and place of conducting any proceeding with
respect to any remedy available to the Debenture Trustee, or exercising
any trust or power conferred upon the Debenture Trustee with respect to
the Debentures, (B) waive any past default that is waivable under the
Indenture, (C) exercise any right to rescind or annul any declaration
that the principal of all the Debentures shall be due and payable, or
(D) consent to any amendment, modification or termination of the
Indenture or the Debentures where such consent shall be required unless
the Trust shall have received an opinion of a nationally recognized
independent tax counsel experienced in such matters to the effect that
such amendment, modification or termination will not cause more than an
insubstantial risk that for United States federal income tax purposes
the Trust will not be classified as a grantor trust.
SECTION 3.8 Powers and Duties of the Property Trustee.
-----------------------------------------
(a) The legal title to the Debentures shall be owned by and held
of record in the name of the Property Trustee in trust for the benefit of the
Trust and the Holders. The right, title and interest of the Property Trustee
to the Debentures shall vest automatically in each Person who may hereafter
be appointed as Property Trustee in accordance with Section 5.7. Such
vesting and cessation of title shall be effective whether or not conveyancing
documents with regard to the Debentures have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Administrative Trustees or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Property Trustee Account") in the name of and under the
exclusive control of the Property Trustee on behalf of the Holders and,
upon the receipt of payments of funds made in respect of the Debentures
held by the Property Trustee, deposit such funds into the Property
Trustee Account and make payments or cause the Paying Agent to make
payments to the Holders from the Property Trustee Account in accordance
with Section 6.1. Funds in the Property Trustee Account shall be held
uninvested until disbursed in accordance with this Declaration. The
Property Trustee Account shall be an account that is maintained with a
banking institution the rating on whose long-term unsecured indebtedness
is at least equal to the rating assigned to the Capital Securities or,
if the Debentures are rated, the Debentures, by a "nationally recognized
statistical rating organization", as that term is defined for purposes
of Rule 436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Securities to the extent the
Debentures are prepaid or mature; and
(iii) upon written notice of distribution issued by the Admi-
nistrative Trustees in accordance with the terms of the Securities,
engage in such ministerial activities as shall be necessary or appropri-
ate to effect the distribution of the Debentures to Holders upon the oc-
currence of certain events.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to
the terms of this Declaration and the Securities.
(e) Subject to Section 3.9(a), the Property Trustee shall take any
Legal Action which arises out of or in connection with an Event of Default of
which a Responsible Officer has actual knowledge or the Property Trustee's
duties and obligations under this Declaration or the Trust Indenture Act and
if such Property Trustee shall have failed to take such Legal Action, the
Holders of the Capital Securities may take such Legal Action, to the same
extent as if such Holders of Capital Securities held an aggregate principal
amount of Debentures equal to the aggregate Liquidation Amount of such
Capital Securities, without first proceeding against the Property Trustee or
the Trust; provided however, that if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Debenture
Issuer to pay the principal of or premium, if any, or interest on the Deben-
tures on the date such principal, premium, if any, or interest is otherwise
payable (or in the case of prepayment, on the prepayment date), then a Holder
of Capital Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or premium, if any, or interest on
the Debentures having a principal amount equal to the aggregate Liquidation
Amount of the Capital Securities of such Holder (a "Direct Action") on or
after the respective due date specified in the Debentures. In connection
with such Direct Action, the rights of the Holders of the Common Securities
will be subrogated to the rights of such Holder of Capital Securities to the
extent of any payment made by the Debenture Issuer to such Holder of Capital
Securities in such Direct Action. Except as provided in the preceding
sentences, the Holders of Capital Securities will not be able to exercise
directly any other remedy available to the holders of the Debentures.
(f) The Property Trustee shall continue to serve as a Trustee
until either:
(i) the Trust has been completely liquidated and the proceeds of
the liquidation distributed to the Holders pursuant to the terms of the
Securities; or
(ii) a successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 5.7 (a "Successor
Property Trustee").
(g) The Property Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a holder of Debentures under the
Indenture and, if an Event of Default actually known to a Responsible Officer
occurs and is continuing, the Property Trustee shall, for the benefit of
Holders, enforce its rights as holder of the Debentures subject to the rights
of the Holders pursuant to this Declaration and the terms of such Securities.
The Property Trustee must exercise the powers set forth in this Section 3.8
in a manner that is consistent with the purposes and functions of the Trust
set out in Section 3.3, and the Property Trustee shall not take any action
that is inconsistent with the purposes and functions of the Trust set out in
Section 3.3.
(h) The Property Trustee shall be authorized to undertake any
actions set forth in Section 317(a) of the Trust Indenture Act.
(i) For such time as the Property Trustee is the Paying Agent, the
Property Trustee may authorize one or more Persons to act as additional
Paying Agents and to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all Securities and any such
Paying Agent shall comply with Section 317(b) of the Trust Indenture Act.
Any such additional Paying Agent may be removed by the Property Trustee at
any time the Property Trustee remains as Paying Agent and a successor Paying
Agent or additional Paying Agents may be (but are not required to be) ap-
pointed at any time by the Property Trustee.
(j) Subject to this Section 3.8, the Property Trustee shall have
none of the duties, liabilities, powers or the authority of the
Administrative Trustees set forth in Section 3.6.
The Property Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Property Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust set
out in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee.
-----------------------------------------------------------
(a) The Property Trustee, before the occurrence of any Event of
Default and after the curing of all Trust Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Declaration and in the Securities and no implied covenants
shall be read into this Declaration against the Property Trustee. In case an
Event of Default has occurred (that has not been cured or waived pursuant to
Section 2.6) of which a Responsible Officer has actual knowledge, the Prop-
erty Trustee shall exercise such of the rights and powers vested in it by
this Declaration, and use the same degree of care and skill in their exer-
cise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee shall
be determined solely by the express provisions of this Declaration
and in the Securities and the Property Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Declaration and in the Securities,
and no implied covenants or obligations shall be read into this
Declaration against the Property Trustee; and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to
the Property Trustee and conforming to the requirements of this
Declaration; provided, however, that in the case of any such
-------- -------
certificates or opinions that by any provision hereof are specifi-
cally required to be furnished to the Property Trustee, the
Property Trustee shall be under a duty to examine the same to de-
termine whether or not they conform to the requirements of this
Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall be
proved that the Property Trustee was negligent in ascertaining the per-
tinent facts;
(iii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accor-
dance with the direction of the Holders of not less than a Majority in
Liquidation Amount of the Securities relating to the time, method and
place of conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power conferred upon the
Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that the repayment of such funds or liability is
not reasonably assured to it under the terms of this Declaration or
indemnity reasonably satisfactory to the Property Trustee against such
risk or liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Debentures and the
Property Trustee Account shall be to deal with such property in a
similar manner as the Property Trustee deals with similar property for
its own account, subject to the protections and limitations on liability
afforded to the Property Trustee under this Declaration and the Trust
Indenture Act;
(vi) the Property Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or sufficiency of the
Debentures or the payment of any taxes or assessments levied thereon or
in connection therewith;
(vii) the Property Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree in writing
with the Sponsor. Money held by the Property Trustee need not be segre-
gated from other funds held by it except in relation to the Property
Trustee Account maintained by the Property Trustee pursuant to Section
3.8(c)(i) and except to the extent otherwise required by law; and
(viii) the Property Trustee shall not be responsible for monitoring
the compliance by the Administrative Trustees or the Sponsor with their
respective duties under this Declaration, nor shall the Property Trustee
be liable for any default or misconduct of the Administrative Trustees
or the Sponsor.
SECTION 3.10 Certain Rights of the Property Trustee.
--------------------------------------
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Administrative
Trustees contemplated by this Declaration may be sufficiently evidenced
by an Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder,
the Property Trustee (unless other evidence is herein specifically pre-
scribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Sponsor or the Admi-
nistrative Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any fi-
nancing or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel or other experts
of its selection and the advice or opinion of such counsel and experts
with respect to legal matters or advice within the scope of such
experts' area of expertise shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon and in accordance with
such advice or opinion, such counsel may be counsel to the Sponsor or
any of its Affiliates, and may include any of its employees. The
Property Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of com-
petent jurisdiction;
(vi) the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Declaration at the
request or direction of any Holder, unless such Holder shall have
provided to the Property Trustee security and indemnity, reasonably
satisfactory to the Property Trustee, against the costs, expenses (in-
cluding reasonable attorneys' fees and expenses and the expenses of the
Property Trustee's agents, nominees or custodians) and liabilities that
might be incurred by it in complying with such request or direction, in-
cluding such reasonable advances as may be requested by the Property
Trustee provided, that, nothing contained in this Section 3.10(a)(vi)
shall be taken to relieve the Property Trustee, upon the occurrence of
an Event of Default, of its obligation to exercise the rights and powers
vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, approval, bond, debenture, note, other evi-
dence of indebtedness or other paper or document, but the Property
Trustee, in its discretion, may make such further inquiry or invest-
igation into such facts or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents, custodians, nominees or attorneys and the Property
Trustee shall not be responsible for any misconduct or negligence on the
part of any agent or attorney appointed with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders, and the signature of the
Property Trustee or its agents alone shall be sufficient and effective
to perform any such action and no third party shall be required to
inquire as to the authority of the Property Trustee to so act or as to
its compliance with any of the terms and provisions of this Declaration,
both of which shall be conclusively evidenced by the Property Trustee's
or its agent's taking such action;
(x) whenever in the administration of this Declaration the
Property Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Property Trustee (A) may request instructions from the
Holders which instructions shall be given by the Holders of the same
proportion in Liquidation Amount of the Securities as would be entitled
to direct the Property Trustee under the terms of the Securities in
respect of such remedy, right or action, (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 conclusively relying on or
acting in accordance with such instructions;
(xi) except as otherwise expressly provided by this Declaration,
the Property Trustee shall not be under any obligation to take any
action that is discretionary under the provisions of this Declaration;
and
(xii) the Property Trustee shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith, without
negligence, and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in
any jurisdiction in which it shall be illegal, or in which the Property
Trustee shall be unqualified or incompetent in accordance with applicable
law, to perform any such act or acts, or to exercise any such right, power,
duty or obligation. No permissive power or authority available to the
Property Trustee shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
----------------
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and responsi-
bilities of the Administrative Trustees or the Property Trustee described in
this Declaration. Except as set forth in Section 5.2, the Delaware Trustee
shall be a Trustee for the sole and limited purpose of fulfilling the
requirements of Section3807 of the Business Trust Act and taking such actions
as are required to be taken by the Delaware Trustee under the Business Trust
Act.
SECTION 3.12 Execution of Documents.
----------------------
Unless otherwise determined by the Administrative Trustees, any
Administrative Trustee is authorized to execute on behalf of the Trust any
documents that the Administrative Trustees have the power and authority to
execute pursuant to Section 3.6; provided that, the registration statement
-------- ----
referred to in Section 3.6(b)(i), including any amendments thereto, shall be
signed by all of the Administrative Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
------------------------------------------------------
The recitals contained in this Declaration and the Securities shall
be taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part
thereof. The Trustees make no representations as to the validity or
sufficiency of this Declaration or the Securities.
SECTION 3.14 Duration of Trust.
-----------------
The Trust, unless dissolved pursuant to the provisions of Article
VIII hereof, shall have existence up to February 3, 2028.
SECTION 3.15 Mergers.
-------
(a) The Trust may not merge or convert with or into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its properties
and assets substantially as an entirety to any Person, except as described in
Section 3.15(b) and (c).
(b) The Trust may, at the request of the Sponsor, with the consent
of the Administrative Trustees or, if there are more than two, a majority of
the Administrative Trustees and without the consent of the Holders, the Dela-
ware Trustee or the Property Trustee, merge or convert with or into, consoli-
date, amalgamate, or be replaced by, or convey, transfer or lease its
properties and assets as an entirety or substantially as an entirety to, a
trust organized as such under the laws of any State; provided that:
-------- ----
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust
under the Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Securities (the "Successor
Securities") so long as the Successor Securities rank the same as
the Securities rank with respect to Distributions and payments upon
liquidation, redemption and otherwise;
(ii) the Sponsor expressly appoints a trustee of the Successor
Entity that possesses the same powers and duties as the Property Trustee
as the holder of the Debentures;
(iii) the Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any national
securities exchange or with another organization on which the Capital
Securities are then listed or quoted, if any;
(iv) such merger, conversion, consolidation, amalgamation, replace-
ment, conveyance, transfer or lease does not cause the Capital Securiti-
es (including any Successor Securities) or, if the Debentures are so
rated, the Debentures,to be downgraded by any nationally recognized sta-
tistical rating organization;
(v) such merger, conversion, consolidation, amalgamation, replace-
ment, conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the Holders (including the holders
of any Successor Securities) in any material respect (other than with
respect to any dilution of such Holders' interests in the new entity);
(vi) such Successor Entity has a purpose substantially identical to
that of the Trust;
(vii) prior to such merger, conversion, consolidation, amal-
gamation, replacement, conveyance, transfer or lease, the Sponsor has
received an opinion of an independent counsel to the Trust experienced
in such matters to the effect that:
(A) such merger, conversion, consolidation, amalgamation, re-
placement, conveyance, transfer or lease does not adversely affect
the rights, preferences and privileges of the Holders (including
the holders of any Successor Securities) in any material respect
(other than with respect to any dilution of the Holders' interest
in the new entity); and
(B) following such merger, conversion, consolidation, amal-
gamation, replacement, conveyance, transfer or lease, neither the
Trust nor the Successor Entity will be required to register as an
Investment Company; and
(C) following such merger, conversion, consolidation,
amalgamation, replacement, conveyance, transfer, or lease, the
Trust (or the Successor Entity) will continue to be classified as a
grantor trust for United States federal income tax purposes;
(viii) the Sponsor or any permitted successor or assignee owns all
of the common securities of such Successor Entity and guarantees the
obligations of such Successor Entity under the Successor Securities at
least to the extent provided by the Capital Securities Guarantee and the
Common Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except
with the consent of all Holders, consolidate, amalgamate, merge or convert
with or into, or be replaced by, or convey, transfer or lease its properties
and assets as an entirety or substantially as an entirety to, any other enti-
ty or permit any other entity to consolidate, amalgamate, merge or convert
with or into, or replace it if such consolidation, amalgamation, merger,
conversion, replacement, conveyance, transfer or lease would cause the Trust
or the Successor Entity not to be classified as a grantor trust for United
States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
---------------------------------------
At the Closing Time, the Sponsor will purchase all of the Common
Securities then issued by the Trust, in an amount at least equal to 3% of the
capital of the Trust, at the same time as the Series A Capital Securities are
issued and sold.
SECTION 4.2 Responsibilities of the Sponsor.
-------------------------------
In connection with the issue and sale of the Capital Securities,
the Sponsor shall have the exclusive right and responsibility to engage in
the following activities (and any actions taken by the Sponsor in furtherance
of the following prior to the date of this Declaration are hereby ratified
and confirmed in all respects):
(a) to prepare the Offering Memorandum and to prepare for filing
by the Trust with the Commission any Registration Statement, including any
amendments thereto as contemplated by the Registration Rights Agreement;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Capital Securities and to do
any and all such acts, other than actions which must be taken by the Trust,
and advise the Trust of actions it must take, and prepare for execution and
filing any documents to be executed and filed by the Trust, as the Sponsor
deems necessary or advisable in order to comply with the applicable laws of
any such States;
(c) if deemed necessary or advisable by the Sponsor, to prepare
for filing by the Trust an application to the New York Stock Exchange or any
other national stock exchange or the Nasdaq National Market for listing or
quotation of the Capital Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of the
Capital Securities under Section 12(b) of the Exchange Act, including any
amendments thereto;
(e) to negotiate the terms of the Purchase Agreement and the
Registration Rights Agreement providing for the sale of the Capital
Securities; and
(f) notwithstanding anything to the contrary contained herein, the
Trust shall be authorized to issue and sell the Capital Securities at an
offering price per Capital Security to be determined by the Sponsor in its
sole and absolute discretion, including, without limitation, at an offering
price that is less than the Liquidation Amount, which offering price shall be
specified in the Offering Memorandum, and the Common Securities shall be
issued and sold at an offering price per Common Security that is equal to the
offering price per Capital Security.
SECTION 4.3 Right to Proceed.
----------------
The Sponsor acknowledges the rights of the Holders of Capital
Securities, in the event that a failure of the Trust to pay Distributions on
the Capital Securities is attributable to the failure of the Company to pay
interest or principal on the Debentures, to institute Direct Actions against
the Debenture Issuer for enforcement of its payment obligations on the Deben-
tures.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees; Appointment of Co-Trustee.
---------------------------------------------
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees
may be increased or decreased by vote of the Holders of a Majority in
Liquidation Amount of the Common Securities voting as a class at a meeting of
the Holders of the Common Securities;
provided, however, that, the number of Trustees shall in no event be less
- -------- -------
than two (2); provided further that (1) one Trustee, in the case of a natural
-------- -------
person, shall be a person who is a resident of the State of Delaware or that,
if not a natural person, is an entity which has its principal place of
business in the State of Delaware (the "Delaware Trustee"); (2) there shall
be at least one Trustee who is an employee or officer of, or is affiliated
with the Sponsor (an "Administrative Trustee"); and (3) one Trustee shall be
the Property Trustee for so long as this Declaration is required to qualify
as an indenture under the Trust Indenture Act, and such Trustee may also
serve as Delaware Trustee if it meets the applicable requirements.
Notwithstanding the above, unless an Event of Default shall have occurred and
be continuing, at any time or times, for the purpose of meeting the legal
requirements of the Trust Indenture Act or of any jurisdiction in which any
part of the Trust's property may at the time be located, the Holders of a
Majority in Liquidation Amount of the Common Securities acting as a class at
a meeting of the Holders of the Common Securities, and the Administrative
Trustees shall have power to appoint one or more persons either to act as a
co-trustee, jointly with the Property Trustee, of all or any part of the
Trust's property, or to act as separate trustee of any such property, in
either case with such powers as may be provided in the instrument of appoint-
ment, and to vest in such person or persons in such capacity any property,
title, right or power deemed necessary or desirable, subject to the
provisions of this Declaration. In case an Event of Default has occurred and
is continuing, the Property Trustee alone shall have power to make any such
appointment of a co-trustee.
SECTION 5.2 Delaware Trustee.
----------------
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware;
or
(b) if not a natural person, an entity which has its principal
place of business in the State of Delaware, and otherwise meets the
requirements of applicable law, provided that, if the Property Trustee has
-------- ----
its principal place of business in the State of Delaware and otherwise meets
the requirements of applicable law, including Section3807 of the Business
Trust Act, then the Property Trustee shall also be the Delaware Trustee and
Section 3.11 shall have no application.
SECTION 5.3 Property Trustee; Eligibility.
-----------------------------
(a) There shall at all times be one Trustee (the "Property
Trustee") which shall act as Property Trustee and which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the laws
of the United States of America or any State or Territory thereof or of
the District of Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least 50 million U.S.
dollars ($50,000,000), and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining authority
referred to above, then for the purposes of this Section 5.3(a)(ii), the
combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent report
of condition so published.
(b) If at any time the Property Trustee shall cease to be eligible
to so act under Section 5.3(a), the Property Trustee shall immediately resign
in the manner and with the effect set forth in Section 5.7(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act,
the Property Trustee shall eliminate such interest or resign, to the extent
and in the manner provided by, and subject to the provisions of the Trust In-
denture Act or this Declaration.
(d) The Capital Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first provision contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001
Attention: Global Trust Services
SECTION 5.4 Certain Qualifications of Administrative Trustees and Delaware
--------------------------------------------------------------
Trustee Generally.
- -----------------
Each Administrative Trustee and the Delaware Trustee (unless the
Property Trustee also acts as Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act
through one or more Authorized Officers.
SECTION 5.5 Administrative Trustees.
-----------------------
The initial Administrative Trustees shall be:
Sanford A. Belden
David G. Wallace
Joseph J. Lemchak
(a) Except as expressly set forth in this Declaration and except
if a meeting of the Administrative Trustees is called with respect to any
matter over which the Administrative Trustees have power to act, any power of
the Administrative Trustees may be exercised by, or with the consent of, any
one such Administrative Trustee.
(b) Unless otherwise determined by the Administrative Trustees,
and except as otherwise required by the Business Trust Act or applicable law,
any Administrative Trustee is authorized to execute on behalf of the Trust
any documents which the Administrative Trustees have the power and authority
to cause the Trust to execute pursuant to Section 3.6, provided, that, the
-------- ----
registration statement referred to in Section 3.6, including any amendments
thereto, shall be signed by all of the Administrative Trustees; and
(c) An Administrative Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21
his or her power for the purposes of signing any documents which the
Administrative Trustees have power and authority to cause the Trust to
execute pursuant to Section 3.6.
SECTION 5.6 Delaware Trustee.
----------------
The initial Delaware Trustee shall be:
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
SECTION 5.7 Appointment, Removal and Resignation of Trustees.
------------------------------------------------
(a) Subject to Section 5.7(b), Trustees may be appointed or
removed without cause at any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor;
(ii) unless an Event of Default shall have occurred and be
continuing after the issuance of any Securities, by vote of the Holders
of a Majority in Liquidation Amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities; and
(iii) if an Event of Default shall have occurred and be
continuing after the issuance of the Securities, with respect to the
Property Trustee or the Delaware Trustee, by vote of Holders of a
Majority in Liquidation Amount of the Capital Securities voting as a
class at a meeting of Holders of the Capital Securities.
(b) (i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.7(a) until a Successor Property Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Property Trustee and delivered to the Administra-
tive Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed
in accordance with this Section 5.7(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under Sections
5.2 and 5.4 (a "Successor Delaware Trustee") has been appointed and has
accepted such appointment by written instrument executed by such Succes-
sor Delaware Trustee and delivered to the Administrative Trustees and
the Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resigna-
tion. Any Trustee may resign from office (without need for prior or subse-
quent accounting) by an instrument in writing signed by the Trustee and de-
livered to the Sponsor and the Trust, which resignation shall take effect
upon such delivery or upon such later date as is specified therein; provided,
--------
however, that:
- -------
(i) No such resignation of the Trustee that acts as the Property
Trustee shall be effective:
(A) until a Successor Property Trustee has been appointed and
has accepted such appointment by instrument executed by such Suc-
cessor Property Trustee and delivered to the Trust, the Sponsor and
the resigning Property Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the Holders; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by
such Successor Delaware Trustee and delivered to the Trust, the Sponsor
and the resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Delaware Trustee or Successor
Property Trustee, as the case may be, if the Property Trustee or the Delaware
Trustee delivers an instrument of resignation in accordance with this Section
5.7.
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Sec-
tion 5.7 within 60 days after delivery of an instrument of resignation or
removal, the Property Trustee or Delaware Trustee resigning or being removed,
as applicable, may petition any court of competent jurisdiction for appoint-
ment of a Successor Property Trustee or Successor Delaware Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper and prescribe, appoint a Successor Property Trustee or Successor
Delaware Trustee, as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for
the acts or omissions to act of any Successor Property Trustee or successor
Delaware Trustee, as the case may be.
SECTION 5.8 Vacancies of Trustees.
---------------------
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees
is increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Administrative Trustees or,
if there are more than two, a majority of the Administrative Trustees shall
be conclusive evidence of the existence of such vacancy. The vacancy shall
be filled with a Trustee appointed in accordance with Section 5.7.
SECTION 5.9 Effect of Vacancies.
-------------------
The death, resignation, retirement, removal, bankruptcy, dissolu-
tion, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to dissolve, terminate or annul the Trust.
Whenever a vacancy in the number of Administrative Trustees shall occur,
until such vacancy is filled by the appointment of an Administrative Trustee
in accordance with Section 5.7, the Administrative Trustees in office, re-
gardless of their number, shall have all the powers granted to the
Administrative Trustees and shall discharge all the duties imposed upon the
Administrative Trustees by this Declaration.
SECTION 5.10 Meetings.
--------
If there is more than one Administrative Trustee, meetings of the
Administrative Trustees shall be held from time to time upon the call of any
Administrative Trustee. Regular meetings of the Administrative Trustees may
be held at a time and place fixed by resolution of the Administrative
Trustees. Notice of any in-person meetings of the Administrative Trustees
shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours
before such meeting. Notice of any telephonic meetings of the Administrative
Trustees or any committee thereof shall be hand delivered or otherwise deliv-
ered in writing (including by facsimile, with a hard copy by overnight couri-
er) not less than 24 hours before a meeting. Notices shall contain a brief
statement of the time, place and anticipated purposes of the meeting. The
presence (whether in person or by telephone) of an Administrative Trustee at
a meeting shall constitute a waiver of notice of such meeting except where an
Administrative Trustee attends a meeting for the express purpose of objecting
to the transaction of any activity on the ground that the meeting has not
been lawfully called or convened. Unless provided otherwise in this Declara-
tion, any action of the Administrative Trustees may be taken at a meeting by
vote of a majority of the Administrative Trustees present (whether in person
or by telephone) and eligible to vote with respect to such matter, provided
that a Quorum is present, or without a meeting by the unanimous written con-
sent of the Administrative Trustees. In the event there is only one
Administrative Trustee, any and all action of such Administrative Trustee
shall be evidenced by a written consent of such Administrative Trustee.
SECTION 5.11 Delegation of Power.
-------------------
(a) Any Administrative Trustee may, by power of attorney consis-
tent 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 contemplat-
ed in Section 3.6, including any registration statement or amendment thereto
filed with the Commission, or making any other governmental filing; and
(b) the Administrative Trustees shall have power to delegate from
time to time to such of their number or to officers of the Trust the doing of
such things and the execution of such instruments either in the name of the
Trust or the names of the Administrative Trustees or otherwise as the
Administrative Trustees may deem expedient, to the extent such delegation is
not prohibited by applicable law or contrary to the provisions of the Trust,
as set forth herein.
Section 5.12 Merger, Conversion, Consolidation or Succession to Business.
-----------------------------------------------------------
Any corporation into which the Property Trustee or the Delaware Trustee
or any Administrative Trustee that is not a natural person, as the case may
be, may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which
the Property Trustee or the Delaware Trustee, as the case may be, shall be a
party, or any corporation succeeding to all or substantially all the
corporate trust business of the Property Trustee or the Delaware Trustee, as
the case may be, shall be the successor of the Property Trustee or the
Delaware Trustee, as the case may be, hereunder, 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.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
-------------
Each Holder shall receive Distributions in accordance with the
terms of such Holder's Securities. If and to the extent that the Debenture
Issuer makes a payment of interest (including Compounded Interest (as defined
in the Indenture) and Additional Interest (as defined in the Indenture)),
premium and/or principal with respect to the Debentures held by the Property
Trustee or Liquidated Damages (as defined in the Registration Rights Agree-
ment) or any other payments pursuant to the Registration Rights Agreement
with respect to the Debentures held by the Property Trustee (the amount of
any such payment being a "Payment Amount"), the Property Trustee shall and is
directed, to the extent funds are available for that purpose, to make a
distribution (a "Distribution") of the Payment Amount to Holders in
accordance with the respective terms of the Securities held by them.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
---------------------------------------
(a) The Administrative Trustees shall on behalf of the Trust issue
one class of capital securities representing undivided beneficial interests
in the assets of the Trust having such terms as are set forth in Annex I (the
"Series A Capital Securities") and one class of common securities repre-
senting undivided beneficial interests in the assets of the Trust having such
terms as are set forth in Annex I (the "Common Securities"), which is
incorporated in and expressly made a part of this Declaration. The Adminis-
trative Trustees shall on behalf of the Trust issue one class of capital
securities representing undivided beneficial interests in the Trust having
such terms as set forth in Annex I (the "Series B Capital Securities") in
exchange for Series A Capital Securities accepted for exchange in the
Exchange Offer, which Series B Capital Securities shall not bear the legends
required by Section 9.2(i) unless the Holder of such Series A Capital
Securities is either (A) a broker-dealer who purchased such Series A Capital
Securities directly from the Trust for resale pursuant to Rule 144A or any
other available exemption under the Securities Act, (B) a Person
participating in the distribution of the Series A Capital Securities or (C) a
Person who is an affiliate (as defined in Rule 144A) of the Trust. The Trust
shall issue no securities or other interests in the assets of the Trust other
than the Securities.
(b) The Capital Securities rank pari passu and payment thereon
shall be made Pro Rata with the Common Securities except that, where an Event
of Default has occurred and is continuing, the rights of Holders of the
Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to
payment of the Holders of the Capital Securities.
(c) The consideration received by the Trust for the issuance of
the Securities shall constitute a contribution to the capital of the Trust
and shall not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this Declara-
tion, the Securities so issued shall be deemed to be validly issued, fully
paid and non-assessable notwithstanding that the Securities shall have been
issued and sold at an offering price that is less than the Liquidation Amount
thereof.
(e) Every Person, by virtue of having become a Holder or a Capital
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and
shall be bound by, this Declaration.
SECTION 7.2 Execution and Authentication.
----------------------------
(a) The Securities shall be signed on behalf of the Trust by an
Administrative Trustee by manual or facsimile signature. In case any
Administrative Trustee of the Trust who shall have signed any of the Securi-
ties shall cease to be such Administrative Trustee before the Securities so
signed shall be delivered by the Trust, such Securities nevertheless may be
delivered as though the person who signed such Securities had not ceased to
be such Administrative Trustee; and any Securities may be signed on behalf of
the Trust by such persons who, at the actual date of execution of such Secu-
rity, shall be the Administrative Trustees of the Trust, although at the date
of the execution and delivery of this Declaration any such person was not
such an Administrative Trustee.
(b) One Administrative Trustee shall sign the Securities for the
Trust by manual or facsimile signature.
A Common Security shall be valid upon execution by an
Administrative Trustee without any act of the Property Trustee. A Capital
Security shall not be valid until authenticated by the manual signature of an
authorized signatory of the Property Trustee. The signature shall be conclu-
sive evidence that the Capital Security has been authenticated under this
Declaration.
Upon a written order of the Trust signed by one Administrative
Trustee, the Property Trustee shall authenticate the Capital Securities for
original issue. The aggregate number of Capital Securities outstanding at
any time shall not exceed the number set forth in the Terms in Annex I hereto
except as provided in Section 7.6.
The Property Trustee may appoint an authenticating agent acceptable
to the Trust to authenticate Capital Securities. An authenticating agent may
authenticate Capital Securities whenever the Property Trustee may do so.
Each reference in this Declaration to authentication by the Property Trustee
includes authentication by such agent. An authenticating agent has the same
rights as the Property Trustee hereunder with respect to the Sponsor or an
Affiliate.
SECTION 7.3 Form and Dating.
---------------
The Capital Securities and the Property Trustee's certificate of
authentication shall be substantially in the form of Exhibit A-1 and the
Common Securities shall be substantially in the form of Exhibit A-2, each of
which is hereby incorporated in and expressly made a part of this Decla-
ration. Certificates representing the Securities may be printed,
lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Administrative Trustees, as evidenced by their
execution thereof. The Securities may have letters, CUSIP or other numbers,
notations or other marks of identification or designation and such legends or
endorsements required by law, stock exchange rule, agreements to which the
Trust is subject, if any, or usage (provided that any such notation, legend
or endorsement is in a form acceptable to the Trust). The Trust at the
direction of the Sponsor shall furnish any such legend not contained in
Exhibit A-1 to the Property Trustee in writing. Each Capital Security shall
be dated the date of its authentication. The terms and provisions of the
Securities set forth in Annex I and the forms of Securities set forth in
Exhibits A-1 and A-2 are part of the terms of this Declaration and to the
extent applicable, the Property Trustee and the Sponsor, by their execution
and delivery of this Declaration, expressly agree to such terms and provi-
sions and to be bound thereby.
(a) Global Securities. Securities offered and sold to QIBs in
-----------------
reliance on Rule 144A, as provided in the Purchase Agreement, shall be issued
in the form of one or more, permanent global Securities in definitive, fully
registered form without Distribution coupons with the global legend and
Restricted Securities Legend set forth in Exhibit A-1 hereto (a "Global
Capital Security"), which shall be deposited on behalf of the purchasers of
the Capital Securities represented thereby with the Property Trustee, at its
New York office, as custodian for the Clearing Agency, and registered in the
name of the Clearing Agency or a nominee of the Clearing Agency, duly
executed by an Administrative Trustee on behalf of the Trust and authen-
ticated by the Property Trustee as hereinafter provided. The number of Cap-
ital Securities represented by the Global Capital Security may from time to
time be increased or decreased by adjustments made on the records of the
Property Trustee and the Clearing Agency or its nominee as hereinafter
provided.
(b) Book-Entry Provisions. This Section 7.3(b) shall apply only
---------------------
to the Global Capital Security and such other Capital Securities in global
form as may be authorized by the Trust to be deposited with or on behalf of
the Clearing Agency.
An Administrative Trustee shall execute on behalf of the Trust and
the Property Trustee shall, in accordance with this Section 7.3, authenticate
and make available for delivery initially one or more Global Capital
Securities that (i) shall be registered in the name of Cede & Co. or other
nominee of such Clearing Agency and (ii) shall be delivered by the Trustee to
such Clearing Agency or pursuant to such Clearing Agency's written
instructions or held by the Property Trustee as custodian for the Clearing
Agency.
Members of, or participants in, the Clearing Agency ("Par-
ticipants") shall have no rights under this Declaration with respect to any
Global Capital Security held on their behalf by the Clearing Agency or by the
Property Trustee as the custodian of the Clearing Agency or under such Global
Capital Security, and the Clearing Agency may be treated by the Trust, the
Property Trustee and any agent of the Trust or the Property Trustee as the
absolute owner of such Global Capital Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Trust, the
Property Trustee or any agent of the Trust or the Property Trustee from
giving effect to any written certification, proxy or other authorization fur-
nished by the Clearing Agency or impair, as between the Clearing Agency and
its Participants, the operation of customary practices of such Clearing
Agency governing the exercise of the rights of a holder of a beneficial
interest in any Global Capital Security.
(c) Definitive Capital Securities. Except as provided in Section
-----------------------------
7.9, owners of beneficial interests in a Global Capital Security will not be
entitled to receive physical delivery of certificated Capital Securities
("Definitive Capital Securities"). Purchasers of Securities who are
"accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act) will receive Capital Securities in the form of individual
certificates in definitive, fully registered form without distribution
coupons and with the Restricted Securities Legend set forth in Exhibit A-1
hereto ("Restricted Definitive Capital Securities"); provided, however, that
-------- -------
upon transfer of such Restricted Definitive Capital Securities to a QIB, such
Restricted Definitive Capital Securities will, unless the Global Capital
Security has previously been exchanged, be exchanged for an interest in a
Global Capital Security pursuant to the provisions of Section 9.2.
Restricted Definitive Capital Securities will bear the Restricted Securities
Legend set forth on Exhibit A-1 unless removed in accordance with this
Section 7.3 or Section 9.2.
SECTION 7.4 Registrar, Paying Agent and Exchange Agent.
------------------------------------------
The Trust shall maintain in the Borough of Manhattan, The City of
New York, (i) an office or agency where Capital Securities may be presented
for registration of transfer ("Registrar"), (ii) an office or agency where
Capital Securities may be presented for payment ("Paying Agent") and (iii) an
office or agency where Securities may be presented for exchange ("Exchange
Agent"). The Registrar shall keep a register of the Capital Securities and
of their transfer. The Trust may appoint the Registrar, the Paying Agent and
the Exchange Agent and may appoint one or more co-registrars, one or more
additional paying agents and one or more additional exchange agents in such
other locations as it shall determine. The term "Registrar" includes any
additional registrar. "Paying Agent" includes any additional paying agent
and the term "Exchange Agent" includes any additional exchange agent. The
Trust may change any Paying Agent, Registrar, co-registrar or Exchange Agent
without prior notice to any Holder. The Paying Agent shall be permitted to
resign as Paying Agent upon 30 days' written notice to the Administrative
Trustees. The Trust shall notify the Property Trustee of the name and
address of any Agent not a party to this Declaration. If the Trust fails to
appoint or maintain another entity as Registrar, Paying Agent or Exchange
Agent, the Property Trustee shall act as such. The Trust or any of its
Affiliates may act as Paying Agent, Registrar, or Exchange Agent. The Trust
shall act as Paying Agent, Registrar, co-registrar, and Exchange Agent for
the Common Securities.
The Trust initially appoints the Property Trustee as Registrar,
Paying Agent and Exchange Agent for the Capital Securities.
SECTION 7.5 Paying Agent to Hold Money in Trust.
-----------------------------------
The Trust shall require each Paying Agent other than the Property
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Property Trustee all money held by the Paying Agent
for the payment of Liquidation Amounts or Distributions, and will notify the
Property Trustee if there are insufficient funds for such purpose. While any
such insufficiency continues, the Property Trustee may require a Paying Agent
to pay all money held by it to the Property Trustee. The Trust at any time
may require a Paying Agent to pay all money held by it to the Property
Trustee and to account for any money disbursed by it. Upon payment over to
the Property Trustee, the Paying Agent (if other than the Trust or an Affili-
ate of the Trust) shall have no further liability for the money. If the
Trust or the Sponsor or an Affiliate of the Trust or the Sponsor acts as
Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the Holders all money held by it as Paying Agent.
SECTION 7.6 Replacement Securities.
----------------------
If a Holder claims that a Security owned by it has been lost, de-
stroyed or wrongfully taken or if such Security is mutilated and is
surrendered to the Trust or in the case of the Capital Securities to the
Property Trustee, the Trust shall issue and the Property Trustee shall
authenticate a replacement Security if the Property Trustee's and the Trust's
requirements, as the case may be, are met. An indemnity bond must be
provided by the Holder which, in the judgment of the Property Trustee, is
sufficient to protect the Trustees, the Sponsor or any authenticating agent
from any loss which any of them may suffer if a Security is replaced. The
Trust may charge such Holder for its expenses in replacing a Security.
Every replacement Security is an additional beneficial interest in
the Trust.
SECTION 7.7 Outstanding Capital Securities.
------------------------------
The Capital Securities outstanding at any time are all the Capital
Securities authenticated by the Property Trustee except for those cancelled
by it, those delivered to it for cancellation, and those described in this
Section as not outstanding.
If a Capital Security is replaced, paid or purchased pursuant to
Section 7.6 hereof, it ceases to be outstanding unless the Property Trustee
receives proof satisfactory to it that the replaced, paid or purchased
Capital Security is held by a bona fide purchaser.
If Capital Securities are considered paid in accordance with the
terms of this Declaration, they cease to be outstanding and Distributions on
them shall cease to accumulate.
A Capital Security does not cease to be outstanding because one of
the Trust, the Sponsor or an Affiliate of the Sponsor holds the Security.
SECTION 7.8 Capital Securities in Treasury.
------------------------------
In determining whether the Holders of the required amount of
Securities have concurred in any direction, waiver or consent, Capital
Securities owned by the Trust, the Sponsor or an Affiliate of the Sponsor, as
the case may be, shall be disregarded and deemed not to be outstanding,
except that for the purposes of determining whether the Property Trustee
shall be fully protected in relying on any such direction, waiver or consent,
only Securities which the Property Trustee actually knows are so owned shall
be so disregarded.
SECTION 7.9 Temporary Securities.
--------------------
(a) Until Definitive Securities are ready for delivery, the Trust
may prepare and, in the case of the Capital Securities, the Property Trustee
shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of Definitive Securities but may have variations
that the Trust considers appropriate for temporary Securities. Without
unreasonable delay, the Trust shall prepare and, in the case of the Capital
Securities, the Property Trustee shall authenticate Definitive Securities in
exchange for temporary Securities.
(b) A Global Capital Security deposited with the Clearing Agency
or with the Property Trustee or the Registrar as custodian for the Clearing
Agency pursuant to Section 7.3 shall be transferred to the beneficial owners
thereof in the form of certificated Capital Securities only if such transfer
complies with Section 9.2 and (i) the Clearing Agency notifies the Company
that it is unwilling or unable to continue as Clearing Agency for such Global
Capital Security or if at any time such Clearing Agency ceases to be a
"clearing agency" registered under the Exchange Act and a clearing agency is
not appointed by the Sponsor within 90 days of such notice, (ii) a Default or
an Event of Default has occurred and is continuing or (iii) the Trust at its
sole discretion elects to cause the issuance of certificated Capital Securi-
ties.
(c) Any Global Capital Security that is transferable to the
beneficial owners thereof in the form of certificated Capital Securities
pursuant to this Section 7.9 shall be surrendered by the Clearing Agency to
the Property Trustee located in the Borough of Manhattan, The City of New
York, to be so transferred, in whole or from time to time in part, without
charge, and the Property Trustee shall authenticate and make available for
delivery, upon such transfer of each portion of such Global Capital Security,
an equal aggregate Liquidation Amount of Securities of authorized
denominations in the form of certificated Capital Securities. Any portion of
a Global Capital Security transferred pursuant to this Section shall be
registered in such names as the Clearing Agency shall direct. Any Capital
Security in the form of certificated Capital Securities delivered in exchange
for an interest in the Restricted Global Capital Security shall, except as
otherwise provided by Sections 7.3 and 9.1, bear the Restricted Securities
Legend set forth in Exhibit A-1 hereto.
(d) Subject to the provisions of Section 7.9(c), the Holder of a
Global Capital Security may grant proxies and otherwise authorize any person,
including Participants and persons that may hold interests through
Participants, to take any action which such Holder is entitled to take under
this Declaration or the Securities.
(e) In the event of the occurrence of any of the events specified
in Section 7.9(b), the Trust will promptly make available to the Property
Trustee or the Registrar a reasonable supply of certificated Capital
Securities in fully registered form without distribution coupons.
SECTION 7.10 Cancellation.
------------
The Trust at any time may deliver Capital Securities to the
Property Trustee for cancellation. The Registrar, Paying Agent and Exchange
Agent shall forward to the Property Trustee any Capital Securities surren-
dered to them for registration of transfer, redemption, exchange or payment.
The Property Trustee shall promptly cancel all Capital Securities,
surrendered for registration of transfer, redemption, exchange, payment,
replacement or cancellation and shall dispose of cancelled Capital Securities
as the Trust directs, provided that the Property Trustee shall not be
obligated to destroy Capital Securities. The Trust may not issue new Capital
Securities to replace Capital Securities that it has paid or that have been
delivered to the Property Trustee for cancellation or that any Holder has ex-
changed.
SECTION 7.11 CUSIP Numbers.
-------------
The Trust in issuing the Capital Securities may use "CUSIP" numbers
(if then generally in use), and, if so, the Property Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders of
Capital Securities; provided that any such notice may state that no
--------
representation is made as to the correctness of such numbers either as
printed on the Capital Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Capital Securities, and any such redemption shall not
be affected by any defect in or omission of such numbers. The Sponsor will
promptly notify the Property Trustee of any change in the CUSIP numbers.
ARTICLE VIII
DISSOLUTION OF TRUST
SECTION 8.1 Dissolution of Trust.
--------------------
(a) The Trust shall automatically be dissolved and its affairs
wound up upon the earliest to occur of the following events:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution or liquidation
or its equivalent with respect to the Sponsor; or the revocation of the
Sponsor's charter and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(iii) following the distribution of a Like Amount of the
Debentures to the Holders, provided that, the Property Trustee has
-------- ----
received written notice from the Sponsor directing the Property Trustee to
terminate the Trust (which direction is optional, and except as otherwise ex-
pressly provided below, within the discretion of the Sponsor) and provided,
--------
further, that such direction and such distribution is conditioned on (i) the
receipt by the Sponsor or the Trust, as the case requires, of the approval of
the Federal Reserve and any other required regulatory approval, (ii) the
Administrative Trustees' receipt of an opinion of an independent tax counsel
experienced in such matters, which opinion may rely on published rulings of
the Internal Revenue Service, to the effect that the Holders will not recog-
nize any gain or loss for United States federal income tax purposes as a
result of the dissolution of the Trust and the distribution of Debentures;
(iv) upon the entry of a decree of judicial dissolution of the
Trust by a court of competent jurisdiction;
(v) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the Securities;
or
(vi) the expiration of the term of the Trust provided in Section
3.14.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a) and the completion of the winding up of the
Trust and satisfaction of all liabilities of the Trust, the Administrative
Trustees shall file a certificate of cancellation with the Secretary of State
of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
----------------------
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. Any transfer or purported transfer of any Secu-
rity not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, Capital Securities may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Declaration. Any transfer or purported transfer of any
Security not made in accordance with this Declaration shall be null and void.
(c) The Sponsor may not transfer the Common Securities.
(d) The Administrative Trustees shall provide for the registration
of Capital Securities and of the transfer of Capital Securities, which will
be effected without charge but only upon payment (with such indemnity as the
Administrative Trustees may require) in respect of any tax or other
governmental charges that may be imposed in relation to it. Upon surrender
for registration of transfer of any Capital Securities, the Administrative
Trustees shall cause one or more new Capital Securities to be issued in the
name of the designated transferee or transferees. Every Capital Security
surrendered for registration of transfer shall be accompanied by a written
instrument of transfer in form satisfactory to the Administrative Trustees
duly executed by the Holder or such Holder's attorney duly authorized in
writing. Each Capital Security surrendered for registration of transfer
shall be canceled by the Property Trustee in accordance with Section 7.10. A
transferee of a Capital Security shall be entitled to the rights and subject
to the obligations of a Holder hereunder upon the receipt by such transferee
of a Security. By acceptance of a Security, each transferee shall be deemed
to have agreed to be bound by this Declaration.
SECTION 9.2 Transfer Procedures and Restrictions
------------------------------------
(a) General. Except as otherwise provided in Section 9.2(b), if
-------
Capital Securities are issued upon the transfer, exchange or replacement of
Capital Securities bearing the Restricted Securities Legend set forth in
Exhibit A-1 hereto, or if a request is made to remove such Restricted Securi-
ties Legend on Capital Securities, the Capital Securities so issued shall
bear the Restricted Securities Legend, or the Restricted Securities Legend
shall not be removed, as the case may be, unless there is delivered to the
Trust and the Property Trustee such satisfactory evidence, which shall
include an Opinion of Counsel licensed to practice law in the State of New
York, as may be reasonably required by the Sponsor and the Property Trustee,
that neither the legend nor the restrictions on transfer set forth therein
are required to ensure that transfers thereof are made pursuant to an
exception from the registration requirements of the Securities Act or, with
respect to Restricted Securities, that such Securities are not "restricted"
within the meaning of Rule 144. Upon provision of such satisfactory evi-
dence, the Property Trustee, at the written direction of the Trust, shall
authenticate and deliver Capital Securities that do not bear the legend.
(b) Transfers After Effectiveness of a Registration Statement.
---------------------------------------------------------
After the effectiveness of a Registration Statement with respect to any
Capital Securities, all requirements pertaining to legends on such Capital
Securities will cease to apply, and beneficial interests in a Capital
Security in global form without legends will be available to transferees of
such Capital Securities, upon exchange of the transferring holder's Re-
stricted Definitive Capital Security or directions to transfer such Holder's
beneficial interest in the Global Capital Security. No such transfer or
exchange of a Restricted Definitive Capital Security or of an interest in the
Global Capital Security shall be effective unless the transferor delivers to
the Trust a certificate in a form substantially similar to that attached
hereto as the "Form of Assignment" in Exhibit A-1. Except as otherwise
provided in Section 9.2(m), after the effectiveness of a Registration State-
ment, the Trust shall issue and the Property Trustee, upon a written order of
the Trust signed by one Administrative Trustee, shall authenticate a Capital
Security in global form without the Restricted Securities Legend (the
"Unrestricted Global Capital Security") to deposit with the Clearing Agency
to evidence transfers of beneficial interests from the (i) Global Capital
Security and (ii) Restricted Definitive Capital Securities.
(c) Transfer and Exchange of Definitive Capital Securities. When
------------------------------------------------------
Definitive Capital Securities are presented to the Registrar or co-Registrar:
(x) to register the transfer of such Definitive Capital
Securities; or
(y) to exchange such Definitive Capital Securities which became
mutilated, destroyed, defaced, stolen or lost, for an equal number of
Definitive Capital Securities, the Registrar or co-Registrar shall
register the transfer or make the exchange as requested if its
reasonable requirements for such transaction are met; provided, however,
that the Definitive Capital Securities surrendered for transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written instrument
of transfer in form reasonably satisfactory to the Trust and the
Registrar or co-registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing; and
(ii) in the case of Definitive Capital Securities that are
Restricted Definitive Capital Securities:
(A) if such Restricted Capital Securities are being delivered
to the Registrar by a Holder for registration in the name of such
Holder, without transfer, a certification from such Holder to that
effect; or
(B) if such Restricted Capital Securities are being trans-
ferred: (i) a certification from the transferor in a form
substantially similar to that attached hereto as the "Form of
Assignment" in Exhibit A-1, and (ii) if the Trust or Registrar so
requests, evidence reasonably satisfactory to them as to the
compliance with the restrictions set forth in the Restricted
Securities Legend.
(d) Restrictions on Transfer of a Definitive Capital Security for
-------------------------------------------------------------
a Beneficial Interest in a Global Capital Security. A Definitive Capital
- --------------------------------------------------
Security may not be exchanged for a beneficial interest in a Global Capital
Security except upon satisfaction of the requirements set forth below. Upon
receipt by the Property Trustee of a Definitive Capital Security, duly en-
dorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Property Trustee, together with:
(i) if such Definitive Capital Security is a Restricted Capital
Security, certification (in a form substantially similar to that
attached hereto as the "Form of Assignment" in Exhibit A-1); and
(ii) whether or not such Definitive Capital Security is a
Restricted Capital Security, written instructions directing the Property
Trustee to make, or to direct the Clearing Agency to make, an adjustment
on its books and records with respect to the appropriate Global Capital
Security to reflect an increase in the number of the Capital Securities
represented by such Global Capital Security, then the Property Trustee
shall cancel such Definitive Capital Security and cause, or direct the
Clearing Agency to cause, the aggregate number of Capital Securities
represented by the appropriate Global Capital Security to be increased
accordingly. If no Global Capital Securities are then outstanding, the
Trust shall issue and the Property Trustee shall authenticate, upon
written order of any Administrative Trustee, an appropriate number of
Capital Securities in global form.
(e) Transfer and Exchange of Global Capital Securities. Subject
--------------------------------------------------
to Section 9.02(f), the transfer and exchange of Global Capital Securities or
beneficial interests therein shall be effected through the Clearing Agency,
in accordance with this Declaration (including applicable restrictions on
transfer set forth herein, if any) and the procedures of the Clearing Agency
therefor.
(f) Transfer of a Beneficial Interest in a Global Capital Security
--------------------------------------------------------------
for a Definitive Capital Security.
- ---------------------------------
(i) Any Person having a beneficial interest in a Global Capital
Security may upon request, but only upon 20 days prior notice to the
Property Trustee, and if accompanied by the information specified below,
exchange such beneficial interest for a Definitive Capital Security
representing the same number of Capital Securities. Upon receipt by the
Property Trustee from the Clearing Agency or its nominee on behalf of
any Person having a beneficial interest in a Global Capital Security of
written instructions or such other form of instructions as is customary
for the Clearing Agency or the Person designated by the Clearing Agency
as having such a beneficial interest in a Restricted Capital Security
and a certification from the transferor (in a form substantially similar
to that attached hereto as the "Form of Assignment" in Exhibit A-1),
which may be submitted by facsimile, then the Property Trustee will
cause the aggregate number of Capital Securities represented by Global
Capital Securities to be reduced on its books and records and, following
such reduction, the Trust will execute and the Property Trustee will
authenticate and make available for delivery to the transferee a
Definitive Capital Security.
(ii) Definitive Capital Securities issued in exchange for a
beneficial interest in a Global Capital Security pursuant to this
Section 9.2(f) shall be registered in such names and in such authorized
denominations as the Clearing Agency, pursuant to instructions from its
Participants or indirect participants or otherwise, shall instruct the
Property Trustee in writing. The Property Trustee shall deliver such
Capital Securities to the persons in whose names such Capital Securities
are so registered in accordance with such instructions of the Clearing
Agency.
(g) Restrictions on Transfer and Exchange of Global Capital
-------------------------------------------------------
Securities. Notwithstanding any other provisions of this Declaration (other
- ----------
than the provisions set forth in subsection (h) of this Section 9.2), a
Global Capital Security may not be transferred as a whole except by the
Clearing Agency to a nominee of the Clearing Agency or another nominee of the
Clearing Agency or by the Clearing Agency or any such nominee to a successor
Clearing Agency or a nominee of such successor Clearing Agency.
(h) Authentication of Definitive Capital Securities. If at any
-----------------------------------------------
time:
(i) there occurs a Default or an Event of Default which is
continuing, or
(ii) the Trust, in its sole discretion, notifies the Property
Trustee in writing that it elects to cause the issuance of Definitive
Capital Securities under this Declaration,
then the Trust will execute, and the Property Trustee, upon receipt of a
written order of the Trust signed by one Administrative Trustee requesting
the authentication and delivery of Definitive Capital Securities to the Per-
sons designated by the Trust, will authenticate and make available for
delivery Definitive Capital Securities, equal in number to the number of
Capital Securities represented by the Global Capital Securities, in exchange
for such Global Capital Securities.
(i) Legend.
------
(i) Except as permitted by the following paragraph (ii), each
Capital Security certificate evidencing the Global Capital Securities
and the Definitive Capital Securities (and all Capital Securities issued
in exchange therefor or substitution thereof) shall bear a legend (the
"Restricted Securities Legend") in substantially the following form:
THIS CAPITAL SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE
SECURITIES LAW. NEITHER THIS CAPITAL SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS
SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE
HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS
CAPITAL SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRIC-
TION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE
LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST
DATE ON WHICH THE CORPORATION OR ANY AFFILIATE OF THE
CORPORATION WAS THE OWNER OF THIS CAPITAL SECURITY (OR
ANY PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO THE
CORPORATION, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) SO LONG AS THIS CAPITAL SECURITY IS ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A)
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,
(D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITU-
TIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUB-
PARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THIS CAPITAL SECURITY
FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTI-
TUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES
ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES
ACT, SUBJECT TO THE RIGHT OF THE TRUST AND THE CORPORA-
TION PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSU-
ANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFOR-
MATION SATISFACTORY TO EACH OF THEM, AND (ii) PURSUANT TO
CLAUSE (E), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN
THE FORM APPEARING ON THE REVERSE OF THIS CAPITAL
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEREE TO
THE TRUST. SUCH HOLDER FURTHER AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS CAPITAL SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF ALSO
AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT AN
EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYMENT RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR (ii) THE ACQUISITION
AND HOLDING OF THIS CAPITAL SECURITY BY IT IS NOT PROHIBITED BY
EITHER SECTION 406 OF ERISA OR SECTION 4975 OF THE U.S. INTERNAL
REVENUE CODE OF 1986, AS AMENDED, OR EXEMPT FROM ANY SUCH PROHI-
BITION.
(ii) Upon any sale or transfer of a Restricted Capital Security
(including any Restricted Capital Security represented by a Global
Capital Security) pursuant to an effective registration statement under
the Securities Act or pursuant to Rule 144 under the Securities Act
after such registration statement ceases to be effective:
(A) in the case of any Restricted Capital Security that is a
Definitive Capital Security, the Registrar shall permit the Holder
thereof to exchange such Restricted Capital Security for a Defini-
tive Capital Security that does not bear the Restricted Securities
Legend and rescind any restriction on the transfer of such Re-
stricted Capital Security; and
(B) in the case of any Restricted Capital Security that is
represented by a Global Capital Security, the Registrar shall per-
mit the Holder of such Global Capital Security to exchange such
Global Capital Security for another Global Capital Security that
does not bear the Restricted Securities Legend.
(j) Cancellation or Adjustment of Global Capital Security.
-----------------------------------------------------
Notwithstanding any other provisions hereof, at such time as all beneficial
interests in a Global Capital Security have either been exchanged for Defini-
tive Capital Securities to the extent permitted by this Declaration or re-
deemed, repurchased or canceled in accordance with the terms of this
Declaration, such Global Capital Security shall be returned to the Clearing
Agency for cancellation or retained and canceled by the Property Trustee. At
any time prior to such cancellation, if any beneficial interest in a Global
Capital Security is exchanged for Definitive Capital Securities, Capital
Securities represented by such Global Capital Security shall be reduced and
an adjustment shall be made on the books and records of the Property Trustee
(if it is then the custodian for such Global Capital Security) with respect
to such Global Capital Security, by the Property Trustee, to reflect such
reduction.
(k) Obligations with Respect to Transfers and Exchanges of
------------------------------------------------------
Capital Securities.
- ------------------
(i) To permit registrations of transfers and exchanges, the Trust
shall execute and the Property Trustee shall authenticate Definitive
Capital Securities and Global Capital Securities at the Registrar's or
co-Registrar's request in accordance with the terms of this Declaration.
(ii) Registrations of transfers or exchanges will be effected
without charge, but only upon payment (with such indemnity as the Trust
or the Sponsor may require) in respect of any tax or other governmental
charge that may be imposed in relation to it.
(iii) The Registrar or co-Registrar shall not be required to
register the transfer of or exchange (a) Capital Securities during a
period beginning at the opening of business 15 days before the day of
mailing of a notice of redemption or any notice of selection of Capital
Securities for redemption and ending at the close of business on the day
of such mailing; or (b) any Capital Security so selected for redemption
in whole or in part, except the unredeemed portion of any Capital
Security being redeemed in part.
(iv) Prior to the due presentation for registrations of transfer of
any Capital Security, the Trust, the Property Trustee, the Paying Agent,
the Registrar or any co-Registrar may deem and treat the person in whose
name a Capital Security is registered as the absolute owner of such
Capital Security for the purpose of receiving Distributions on such
Capital Security and for all other purposes whatsoever, and none of the
Trust, the Property Trustee, the Paying Agent, the Registrar or any co-
Registrar shall be affected by notice to the contrary.
(v) All Capital Securities issued upon any transfer or exchange
pursuant to the terms of this Declaration shall evidence the same
security and shall be entitled to the same benefits under this
Declaration as the Capital Securities surrendered upon such transfer or
exchange.
(l) No Obligation of the Property Trustee.
-------------------------------------
(i) The Property Trustee shall have no responsibility or
obligation to any beneficial owner of a Global Capital Security, a
Participant in the Clearing Agency or other Person with respect to the
accuracy of the records of the Clearing Agency or its nominee or of any
Participant thereof, with respect to any ownership interest in the Capi-
tal Securities or with respect to the delivery to any Participant, bene-
ficial owner or other Person (other than the Clearing Agency) of any
notice (including any notice of redemption) or the payment of any
amount, under or with respect to such Capital Securities. All notices
and communications to be given to the Holders and all payments to be
made to Holders under the Capital Securities shall be given or made only
to or upon the order of the registered Holders (which shall be the
Clearing Agency or its nominee in the case of a Global Capital Securi-
ty). The rights of beneficial owners in any Global Capital Security
shall be exercised only through the Clearing Agency subject to the
applicable rules and procedures of the Clearing Agency. The Property
Trustee may conclusively rely and shall be fully protected in relying
upon information furnished by the Clearing Agency or any agent thereof
with respect to its Participants and any beneficial owners.
(ii) The Property Trustee and Registrar shall have no obligation or
duty to monitor, determine or inquire as to compliance with any
restrictions on transfer imposed under this Declaration or under appli-
cable law with respect to any transfer of any interest in any Capital
Security-(including any transfers between or among Clearing Agency
Participants or beneficial owners in any Global Capital Security)
other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so
if and when expressly required by, the terms of this Declaration,
and to examine the same to determine substantial compliance as to
form with the express requirements hereof.
(m) Exchange of Series A Capital Securities for Series B
----------------------------------------------------
Capital Securities. The Series A Capital Securities may
- ------------------
be exchanged for Series B Securities pursuant to the terms of the Exchange
Offer. The Trustee shall make the exchange as follows:
The Sponsor shall present the Property Trustee with an Officers'
Certificate certifying the following:
(A) upon issuance of the Series B Capital Securities, the
transactions contemplated by the Exchange Offer have been
consummated; and
(B) the number of Series A Capital Securities properly
tendered in the Exchange Offer that are represented by a
Global Capital Security and the number of Series A
Capital Securities properly tendered in the Exchange Of-
fer that are represented by Definitive Capital Securi-
ties, the name of each Holder of such Definitive Capital
Securities, the Liquidation Amount of Capital Securities
properly tendered in the Exchange Offer by each such
Holder and the name and address to which Definitive Capi-
tal Securities for Series B Capital Securities shall be
registered and sent for each such Holder.
The Property Trustee, upon receipt of (i) such Officers' Certif-
icate, (ii) an Opinion of Counsel (x) to the effect that the Series B Capital
Securities have been registered under Section 5 of the Securities Act and the
Indenture has been qualified under the Trust Indenture Act and (y) with
respect to the matters set forth in Section 3(p) of the Registration Rights
Agreement and (iii) a Company Order, shall authenticate (A) a Global Capital
Security for Series B Capital Securities in aggregate Liquidation Amount
equal to the aggregate Liquidation Amount of Series A Capital Securities rep-
resented by a Global Capital Security indicated in such Officers' Certificate
as having been properly tendered and (B) Definitive Capital Securities repre-
senting Series B Capital Securities registered in the names of, and in the
Liquidation Amounts indicated in such Officers' Certificate.
If, upon consummation of the Exchange Offer, less than all the
outstanding Series A Capital Securities shall have been properly tendered and
not withdrawn, the Property Trustee shall make an endorsement on the Global
Capital Security for Series A Capital Securities indicating the reduction in
the number and aggregate Liquidation Amount represented thereby as a result
of the Exchange Offer.
The Trust shall deliver such Definitive Capital Securities for
Series B Capital Securities to the Holders thereof as indicated in such
Officers' Certificate.
(n) Minimum Transfers. Series A Capital Securities may only be
-----------------
transferred in minimum blocks of $100,000 aggregate Liquidation Amount until
such Series A Capital Securities are registered pursuant to an effective
registration statement filed under the Securities Act or are "unrestricted"
pursuant to Rule 144 under the Securities Act.
SECTION 9.3 Deemed Security Holders.
-----------------------
The Trustees may treat the Person in whose name any Security shall
be registered on the books and records of the Trust as the sole owner of such
Security for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Security on the part of any Person,
whether or not the Trust shall have actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
--------------------
Global Capital Securities shall initially be registered on the
books and records of the Trust in the name of Cede & Co., the nominee of the
Clearing Agency, and no Capital Security Beneficial Owner will receive a
definitive Capital Security Certificate representing such Capital Security
Beneficial Owner's interests in such Global Capital Securities, except as
provided in Sections 7.9 and 9.2 Unless and until definitive, fully
registered Capital Securities certificates have been issued to the Capital
Security Beneficial Owners pursuant to Sections 7.9 and 9.2:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the
payment of Distributions on the Global Capital Securities and receiving
approvals, votes or consents hereunder) as the Holder of the Capital
Securities and the sole holder of the Global Certificates and shall have
no obligation to the Capital Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict
with any other provisions of this Declaration, the provisions of this
Section 9.4 shall control; and
(d) the rights of the Capital Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Capital Security
Beneficial Owners and the Clearing Agency and/or the Clearing Agency
Participants and receive and transmit payments of Distributions on the
Global Certificates to such Clearing Agency Participants. DTC will make
book entry transfers among the Clearing Agency Participants.
SECTION 9.5 Notices to Clearing Agency.
--------------------------
Whenever a notice or other communication to the Capital Security
Holders is required under this Declaration, the Trustees shall give all such
notices and communications specified herein to be given to the Holders of
Global Capital Securities to the Clearing Agency, and shall have no notice
obligations to the Capital Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
----------------------------------------
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Capital Securities, the
Administrative Trustees may, in their sole discretion, appoint a successor
Clearing Agency with respect to such Capital Securities.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
---------
(a) Except as expressly set forth in this Declaration, the
Securities Guarantees and the terms of the Securities, the Sponsor shall not
be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders which shall be made
solely from assets of the Trust; and
(ii) be required to pay to the Trust or to any Holder any deficit
upon dissolution of the Trust or otherwise.
(b) The Debenture Issuer shall be liable for all of the debts and
obligations of the Trust (other than with respect to the payment of
principal, interest and premium, if any, with respect to the Securities) to
the extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the
Holders shall be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit organized under
the General Corporation Law of the State of Delaware.
SECTION 10.2 Exculpation.
-----------
(a) No Indemnified Person shall be liable, responsible or ac-
countable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and
in a manner such Indemnified Person reasonably believed to be within the
scope of the authority conferred on such Indemnified Person by this
Declaration or by law, except that an Indemnified Person shall be liable for
any such loss, damage or claim incurred by reason of such Indemnified Per-
son's gross negligence or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's profes-
sional or expert competence and who has been selected with reasonable care by
or on behalf of the Trust, including information, opinions, reports or state-
ments as to the value and amount of the assets, liabilities, profits, losses,
or any other facts pertinent to the existence and amount of assets from which
Distributions to Holders of Securities might properly be paid.
SECTION 10.3 Fiduciary Duty.
--------------
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to
the Trust or to any other Covered Person, an Indemnified Person acting under
this Declaration shall not be liable to the Trust or to any other Covered
Person for its good faith reliance on the provisions of this Declaration.
The provisions of this Declaration, to the extent that they restrict the
duties and liabilities of an Indemnified Person otherwise existing at law or
in equity (other than the duties imposed on the Property Trustee under the
Trust Indenture Act), are agreed by the parties hereto to replace such other
duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any
Covered Persons; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in a
manner that is, or provides terms that are, fair and reasonable to the
Trust or any Holder of Securities, each Covered Person or Indemnified
Person shall resolve such conflict of interest, take such action or
provide such terms, considering in each case the relative interest of
each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any
applicable generally accepted accounting practices or principles. In
the absence of bad faith by the Indemnified Person, the resolution,
action or term so made, taken or provided by the Indemnified Person
shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified
Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is per-
mitted or required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have no
duty or obligation to give any consideration to any interest of or
factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not
be subject to any other or different standard imposed by this Declara-
tion or by applicable law.
SECTION 10.4 Indemnification.
---------------
(a) (i) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, adminis-
trative or investigative (other than an action by or in the right of the
Trust) by reason of the fact that he is or was a Company Indemnified
Person against expenses (including attorneys' fees and expenses), judg-
ments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption
that the Company Indemnified Person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was
unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent per-
mitted by law, any Company Indemnified Person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Trust to procure a judgment in
its favor by reason of the fact that he is or was a Company Indemnified
Person against expenses (including attorneys' fees and expenses) actual-
ly and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to the Trust
unless and only to the extent that the Court of Chancery of Delaware or
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such Court of Chancery or
such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action
without prejudice or the settlement of an action without admission of
liability) in defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 10.4(a), or in defense of any
claim, issue or matter therein, he shall be indemnified, to the full
extent permitted by law, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the
Debenture Issuer only as authorized in the specific case upon a determi-
nation that indemnification of the Company Indemnified Person is proper
in the circumstances because he has met the applicable standard of con-
duct set forth in paragraphs (i) and (ii). Such determination shall be
made (1) by the Administrative Trustees by a majority vote of a Quorum
consisting of such Administrative Trustees who were not parties to such
action, suit or proceeding, (2) if such a Quorum is not obtainable, or,
even if obtainable, if a Quorum of disinterested Administrative Trustees
so directs, by independent legal counsel in a written opinion, or (3) by
the Common Security Holder of the Trust.
(v) Expenses (including attorneys' fees and expenses) incurred by
a Company Indemnified Person in defending a civil, criminal, administra-
tive or investigative action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 10.4(a) shall be paid by the
Debenture Issuer in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of
such Company Indemnified Person to repay such amount if it shall ulti-
mately be determined that he is not entitled to be indemnified by the
Debenture Issuer as authorized in this Section 10.4(a). Notwithstanding
the foregoing, no advance shall be made by the Debenture Issuer if a
determination is reasonably and promptly made (i) by the Administrative
Trustees by a majority vote of a quorum of disinterested Administrative
Trustees, (ii) if such a quorum is not obtainable, or, even if obtain-
able, if a quorum of disinterested Administrative Trustees so directs,
by independent legal counsel in a written opinion or (iii) the Common
Security Holder of the Trust, that, based upon the facts known to the
Administrative Trustees, counsel or the Common Security Holder at the
time such determination is made, such Company Indemnified Person acted
in bad faith or in a manner that such person did not believe to be in or
not opposed to the best interests of the Trust, or, with respect to any
criminal proceeding, that such Company Indemnified Person believed or
had reasonable cause to believe his conduct was unlawful. In no event
shall any advance be made in instances where the Administrative
Trustees, independent legal counsel or Common Security Holder reasonably
determine that such person deliberately breached his duty to the Trust
or its Common or Capital Security Holders.
(vi) The indemnification and advancement of expenses provided by,
or granted pursuant to, the other paragraphs of this Section 10.4(a)
shall not be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any
agreement, vote of stockholders or disinterested directors of the
Debenture Issuer or Capital Security Holders of the Trust or otherwise,
both as to action in his official capacity and as to action in another
capacity while holding such office. All rights to indemnification under
this Section 10.4(a) shall be deemed to be provided by a contract be-
tween the Debenture Issuer and each Company Indemnified Person who
serves in such capacity at any time while this Section 10.4(a) is in ef-
fect. Any repeal or modification of this Section 10.4(a) shall not
affect any rights or obligations then existing.
(vii) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a Company
Indemnified Person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as
such, whether or not the Debenture Issuer would have the power to indem-
nify him against such liability under the provisions of this Section
10.4(a).
(viii) For purposes of this Section 10.4(a), references to "the
Trust" shall include, in addition to the resulting or surviving entity,
any constituent entity (including any constituent of a constituent)
absorbed in a consolidation or merger, so that any person who is or was
a director, trustee, officer or employee of such constituent entity, or
is or was serving at the request of such constituent entity as a
director, trustee, officer, employee or agent of another entity, shall
stand in the same position under the provisions of this Section 10.4(a)
with respect to the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence had contin-
ued.
(ix) The indemnification and advancement of expenses provided by,
or granted pursuant to, this Section 10.4(a) shall, unless otherwise
provided when authorized or ratified, continue as to a person who has
ceased to be a Company Indemnified Person and shall inure to the benefit
of the heirs, executors and administrators of such a person.
(b) The Debenture Issuer agrees to indemnify the (i) Property
Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the Property
Trustee and the Delaware Trustee, and (iv) any officers, directors,
shareholders, members, partners, employees, representatives, custodians,
nominees or agents of the Property Trustee and the Delaware Trustee (each of
the Persons in (i) through (iv) being referred to as a "Fiduciary Indemnified
Person") for, and to hold each Fiduciary Indemnified Person harmless against,
any and all loss, liability, damage, claim or expense including taxes (other
than taxes based on the income of such Fiduciary Indemnified Person) incurred
without negligence or bad faith on its part, arising out of or in connection
with the acceptance or administration of the trust or trusts hereunder,
including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against or investigating any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 10.4(b)
shall survive the satisfaction and discharge of this Declaration or the
earlier resignation or removal of such Fiduciary Indemnified Person.
SECTION 10.5 Outside Businesses.
------------------
Any Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee may engage in or possess an interest in other business ven-
tures of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders shall
have no rights by virtue of this Declaration in and to such independent
ventures or the income or profits derived therefrom, and the pursuit of any
such venture, even if competitive with the business of the Trust, shall not
be deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware
Trustee, or the Property Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and
any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee shall have the right to take for its own account (individually or as
a partner or fiduciary) or to recommend to others any such particular invest-
ment or other opportunity. Any Covered Person, the Delaware Trustee and the
Property Trustee may engage or be interested in any financial or other trans-
action with the Sponsor or any Affiliate of the Sponsor, or may act as depos-
itary for, trustee or agent for, or act on any committee or body of holders
of, securities or other obligations of the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
-----------
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
--------------------------
(a) At all times during the existence of the Trust, the Admi-
nistrative Trustees shall keep, or cause to be kept, full books of account,
records and supporting documents, which shall reflect in reasonable detail,
each transaction of the Trust. The books of account shall be maintained on
the accrual method of accounting, in accordance with generally accepted
accounting principles, consistently applied. The Trust shall use the accrual
method of accounting for United States federal income tax purposes. The
books of account and the records of the Trust shall be examined by and
reported upon as of the end of each Fiscal Year of the Trust by a firm of
independent certified public accountants selected by the Administrative
Trustees.
(b) The Administrative Trustees shall cause to be duly prepared
and delivered to each of the Holders, any annual United States federal income
tax information statement, required by the Code, containing such information
with regard to the Securities held by each Holder as is required by the Code
and the Treasury Regulations. Notwithstanding any right under the Code to
deliver any such statement at a later date, the Administrative Trustees shall
endeavor to deliver all such information statements within 30 days after the
end of each Fiscal Year of the Trust.
(c) The Administrative Trustees shall cause to be duly prepared
and filed with the appropriate taxing authority, an annual United States fed-
eral income tax return, on a Form 1041 or such other form required by United
States federal income tax law, and any other annual income tax returns re-
quired to be filed by the Administrative Trustees on behalf of the Trust with
any state or local taxing authority.
SECTION 11.3 Banking.
-------
The Trust shall maintain one or more bank accounts in the name and
for the sole benefit of the Trust; provided, however, that all pay
-------- -------
ments of funds in respect of the Debentures held by the Property Trustee
shall be made directly to the Property Trustee Account and no other funds of
the Trust shall be deposited in the Property Trustee Account. The sole
signatories for such accounts shall be designated by the Administrative
Trustees; provided, however, that the Property Trustee shall designate the
-------- -------
signatories for the Property Trustee Account.
SECTION 11.4 Withholding.
-----------
The Trust and the Administrative Trustees shall comply with all
withholding requirements under United States federal, state and local law.
The Trust shall request, and the Holders shall provide to the Trust, such
forms or certificates as are necessary to establish an exemption from
withholding with respect to each Holder, and any representations and forms as
shall reasonably be requested by the Trust to assist it in determining the
extent of, and in fulfilling, its withholding obligations. The
Administrative Trustees shall file required forms with applicable
jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the
Holder to applicable jurisdictions. To the extent that the Trust is required
to withhold and pay over any amounts to any authority with respect to
Distributions or allocations to any Holder, the amount withheld shall be
deemed to be a Distribution in the amount of the withholding to the Holder.
In the event of any claimed over withholding, Holders shall be limited to an
action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Trust may
reduce subsequent Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
----------
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by:
(i) the Administrative Trustees;
(ii) the Property Trustee; and
(iii) the Delaware Trustee.
(b) No amendment shall be made, and any such purported amendment
shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the Property
Trustee shall have first received an Officers' Certificate from each of
the Trust and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the terms of the
Securities);
(ii) unless, in the case of any proposed amendment which affects
the rights, powers, duties, obligations or immunities of the Property
Trustee, the Property Trustee shall have first received:
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities);
and
(B) an opinion of counsel (who may be counsel to the Sponsor
or the Trust) that such amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the Securi-
ties),
provided, however, that the Property Trustee shall not be required to
-------- -------
sign any such amendment, and
(iii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be classified for
purposes of United States federal income taxation as a grantor
trust;
(B) reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust Indenture Act; or
(C) cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(c) At such time after the Trust has issued any Securities that
remain outstanding, any amendment that would adversely affect the rights,
privileges or preferences of any Holder of Securities may be effected only
with such additional requirements as may be set forth in the terms of such
Securities;
(d) Section 10.1(c) and this Section 12.1 shall not be amended
without the consent of all of the Holders;
(e) Article IV shall not be amended without the consent of the
Holders of a Majority in Liquidation Amount of the Common Securities;
(f) The rights of the Holders of the Common Securities under
Article V to increase or decrease the number of, and appoint and remove
Trustees shall not be amended without the consent of the Holders of a Majori-
ty in Liquidation Amount of the Common Securities; and
(g) Notwithstanding Section 12.1(c), this Declaration may be
amended without the consent of the Holders of the Securities to:
(i) cure any ambiguity, correct or supplement any provision in
this Declaration that may be inconsistent with any other provision of
this Declaration or to make any other provisions with respect to matters
or questions arising under this Declaration which shall not be
inconsistent with the other provisions of the Declaration; and
(ii) to modify, eliminate or add to any provisions of the Declara-
tion 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 Securities are outstanding or to ensure that
the Trust will not be required to register as an Investment Company
under the Investment Company Act.
provided, however, that in the case of clause (i), such action shall not
- -------- -------
adversely affect in any material respect the interests of the Holders, and
any amendments of this Declaration shall become effective when notice thereof
is given to the Holders.
SECTION 12.2 Meetings of the Holders; Action by Written Consent.
--------------------------------------------------
(a) Meetings of the Holders of any class of Securities may be
called at any time by the Administrative Trustees (or as provided in the
terms of the Securities) to consider and act on any matter on which Holders
of such class of Securities are entitled to act under the terms of this
Declaration, the terms of the Securities or the rules of any stock exchange
on which the Capital Securities are listed or admitted for trading. The
Administrative Trustees shall call a meeting of the Holders of such class if
directed to do so by the Holders of at least 10% in Liquidation Amount of
such class of Securities. Such direction shall be given by delivering to the
Administrative Trustees one or more notices in a writing stating that the
signing Holders of Securities wish to call a meeting and indicating the
general or specific purpose for which the meeting is to be called. Any Hold-
ers calling a meeting shall specify in writing the Security Certificates held
by the Holders exercising the right to call a meeting and only those
Securities specified shall be counted for purposes of determining whether the
required percentage set forth in the second sentence of this paragraph has
been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the Holders
having a right to vote thereat at least seven days and not more than 60
days before the date of such meeting. Whenever a vote, consent or
approval of the Holders is permitted or required under this Declaration
or the rules of any stock exchange on which the Capital Securities are
listed or admitted for trading, such vote, consent or approval may be
given at a meeting of the Holders. Any action that may be taken at a
meeting of the Holders may be taken without a meeting if a consent in
writing setting forth the action so taken is signed by the Holders
owning not less than the minimum amount of Securities in Liquidation
Amount that would be necessary to authorize or take such action at a
meeting at which all Holders having a right to vote thereon were present
and voting. Prompt notice of the taking of action without a meeting
shall be given to the Holders entitled to vote who have not consented in
writing. The Administrative Trustees may specify that any written
ballot submitted to the Security Holder for the purpose of taking any
action without a meeting shall be returned to the Trust within the time
specified by the Administrative Trustees;
(ii) each Holder may authorize any Person to act for it by proxy on
all matters in which a Holder is entitled to participate, including
waiving notice of any meeting, or voting or participating at a meeting.
No proxy shall be valid after the expiration of 11 months from the date
thereof unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the Holder of Securities executing it.
Except as otherwise provided herein, all matters relating to the giving,
voting or validity of proxies shall be governed by the General Corpora-
tion Law of the State of Delaware relating to proxies, and judicial in-
terpretations thereunder, as if the Trust were a Delaware corporation
and the Holders were stockholders of a Delaware corporation;
(iii) each meeting of the Holders shall be conducted by the
Administrative Trustees or by such other Person that the Administrative
Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms of
the Securities, the Trust Indenture Act or the listing rules of any
stock exchange on which the Capital Securities are then listed or trad-
ing, otherwise provides, the Administrative Trustees, in their sole
discretion, shall establish all other provisions relating to meetings of
Holders, including notice of the time, place or purpose of any meeting
at which any matter is to be voted on by any Holders, waiver of any such
notice, action by consent without a meeting, the establishment of a re-
cord date, Quorum requirements, voting in person or by proxy or any
other matter with respect to the exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee.
--------------------------------------------------
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) The Property Trustee is a New York banking corporation with
trust powers and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, this Declaration;
(b) The execution, delivery and performance by the Property
Trustee of this Declaration has been duly authorized by all necessary
corporate action on the part of the Property Trustee. This Declaration has
been duly executed and delivered by the Property Trustee and constitutes a
legal, valid and binding obligation of the Property Trustee, enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity and the dis-
cretion of the court (regardless of whether the enforcement of such remedies
is considered in a proceeding in equity or at law);
(c) The execution, delivery and performance of this Declaration by
the Property Trustee does not conflict with or constitute a breach of the
charter or by-laws of the Property Trustee; and
(d) No consent, approval or authorization of, or registration with
or notice to, any New York State or federal banking authority is required for
the execution, delivery or performance by the Property Trustee of this Decla-
ration.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
--------------------------------------------------
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is duly organized, validly existing and
in good standing under the laws of the State of Delaware, with trust power
and authority to execute and deliver, and to carry out and perform its obli-
gations under the terms of, this Declaration;
(b) The execution, delivery and performance by the Delaware Trust-
ee of this Declaration has been duly authorized by all necessary corporate
action on the part of the Delaware Trustee. This Declaration has been duly
executed and delivered by the Delaware Trustee and constitutes a legal, valid
and binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law);
(c) No consent, approval or authorization of, or registration with
or notice to, any federal banking authority is required for the execution,
delivery or performance by the Delaware Trustee of this Declaration; and
(d) The Delaware Trustee is a natural person who is a resident of
the State of Delaware or, if not a natural person, an entity which has its
principal place of business in the State of Delaware.
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 Registration Rights Agreement.
-----------------------------
The Holders of the Capital Securities, the Debentures and the
Capital Securities Guarantee are entitled to the benefits of the Registration
Rights Agreement.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices.
-------
All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Administrative Trustees
at the Trust's mailing address set forth below (or such other address as the
Trust may give notice of to the Holders):
Community Capital Trust I
c/o Community Bank System, Inc.
5790 Widewaters Parkway
Dewitt, New York 13214
Attention: Sanford A. Belden
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as Delaware Trustee may give notice of to
the Holders):
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
Attention: John J. Cashin
(c) if given to the Property Trustee, at the Property Trustee's
mailing address set forth below (or such other address as the Property Tr-
ustee may give notice of to the Holders):
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001
Attention: Global Trust Services
(d) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice to the Trust):
Community Bank System, Inc.
5790 Widewaters Parkway
Dewitt, New York 13214
Attention: Sanford A. Belden
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 15.2 Governing Law.
-------------
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
SECTION 15.3 Intention of the Parties.
------------------------
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust.
The provisions of this Declaration shall be interpreted to further this
intention of the parties.
SECTION 15.4 Headings.
--------
Headings contained in this Declaration are inserted for convenience
of reference only and do not affect the interpretation of this Declaration or
any provision hereof.
SECTION 15.5 Successors and Assigns.
----------------------
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 15.6 Partial Enforceability.
----------------------
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder
of this Declaration, or the application of such provision to persons or cir-
cumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 15.7 Counterparts.
------------
This Declaration may contain more than one counterpart of the sig-
nature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed
a single signature page.
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
__________________________________
Sanford A. Belden,
as Administrative Trustee
__________________________________
David G. Wallace,
as Administrative Trustee
__________________________________
Joseph J. Lemchak,
as Administrative Trustee
Chase Manhattan Bank Delaware,
as Delaware Trustee
By:
---------------------------------
Name:
Title:
The Chase Manhattan Bank,
as Property Trustee
By:
-------------------------------
Name:
Title:
Community Bank System, Inc.
as Sponsor
By:
-------------------------------
Name:
Title:
ANNEX I
TERMS OF
9.75% SERIES A/SERIES B CAPITAL SECURITIES
9.75% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of February 3, 1997 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, prefer-
ences and other terms and provisions of the Securities are set out below
(each capitalized term used but not defined herein has the meaning set forth
in the Declaration or, if not defined in such Declaration, as defined in the
Indenture or, if not defined therein, as defined in the Offering Memorandum:
1. Designation and Number.
----------------------
(a) Capital Securities. 30,000 Series A Capital Securities of
------------------
the Trust and 30,000 Series B Capital Securities of the Trust, each series
with an aggregate Liquidation Amount with respect to the assets of the Trust
of $30,000,000 and each with a Liquidation Amount with respect to the assets
of the Trust of $1,000 per Security, are hereby designated for the purposes
of identification only as "9.75% Series A Capital Securities" and "9.75%
Series B Capital Securities", respectively (collectively, the "Capital
Securities"). The certificates evidencing the Capital Securities shall be
substantially in the form of Exhibit A-1 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice or to conform to the rules of any stock
exchange or quotation system on which the Capital Securities are listed or
quoted.
(b) Common Securities. 928 Common Securities of the Trust with
-----------------
an aggregate Liquidation Amount with respect to the assets of the Trust of
$30,928,000 and each with a Liquidation Amount with respect to the assets of
the Trust of $1,000 per Security, are hereby designated for the purposes of
identification only as "9.75% Common Securities" (the "Common Securities").
The certificates evidencing the Common Securities shall be substantially in
the form of Exhibit A-2 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage, custom
or practice.
2. Distributions.
-------------
(a) Distributions payable on each Security will be fixed at a rate
per annum of 9.75% (the "Coupon Rate") of the liquidation amount of $1,000
per Security (the "Liquidation Amount"), such rate being the rate of interest
payable on the Debentures to be held by the Property Trustee. Distributions
in arrears for more than one semi-annual period will bear additional distri-
butions thereon compounded semi-annually at the Coupon Rate (to the extent
permitted by applicable law). Pursuant to the Registration Rights Agreement,
in certain limited circumstances the Debenture Issuer will be required to pay
Liquidated Damages (as defined in the Registration Rights Agreement) with
respect to the Debentures. The term "Distributions", as used herein, in-
cludes distributions of any such interest and Liquidated Damages payable
unless otherwise stated. A Distribution is payable only to the extent that
payments are made in respect of the Debentures held by the Property Trustee
and to the extent the Property Trustee has funds on hand legally available
therefor.
(b) Distributions on the Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid
or, if no Distributions have been paid, from February 3, 1997, and will be
payable semi-annually in arrears on January 31 and July 31 of each year, com-
mencing on July 31, 1997, except as otherwise described below. The amount of
Distributions payable for any period will be computed on the basis of a 360-
day year consisting of twelve 30-day months and for any period of less than a
full calendar month on the basis of the actual number of days elapsed in such
month. If any date on which Distributions are payable on the Securities is
not a Business Day, then payment of the Distribution payable on such date
shall be made on the next succeeding day that is a Business Day (and without
any interest or other payment in respect of any such delay), with the same
force and effect as if made on the date such payment was originally payable
(each date on which Distributions are payable in accordance with the
foregoing, a "Distribution Date"). So long as no Event of Default (as
defined in the Indenture) has occurred and is continuing under the Indenture,
the Debenture Issuer has the right under the Indenture to defer payments of
interest by extending the interest payment period at any time and from time
to time on the Debentures for a period not exceeding 10 consecutive semi-
annual periods, including the first such semi-annual period during such
period (each an "Extension Period"), during which Extension Period no
interest shall be due and payable on the Debentures, provided that no
-------- ----
Extension Period shall extend beyond the Maturity Date of the Debentures. As
a consequence of such deferral, Distributions will also be deferred.
Notwithstanding such deferral, Distributions will continue to accumulate with
additional Distributions thereon at the Coupon Rate (to the extent permitted
by applicable law but not at a rate greater than the rate at which interest
is then accruing on the Debentures) compounded semi-annually on the relevant
Distribution Dates during any such Extension Period. Prior to the expiration
of any such Extension Period, the Debenture Issuer may further defer payments
of interest by further extending such Extension Period; provided that such
-------- ----
Extension Period, together with all previous and further extensions, if any,
within such Extension Period, may not exceed 10 consecutive semi-annual
periods, including the first semi-annual period during such Extension Period,
or extend beyond the Maturity Date of the Debentures. Upon the expiration of
any Extension Period and the payment of all amounts then due, the Debenture
Issuer may commence a new Extension Peri od, subject to the above requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the date
fifteen days prior to the relevant Distribution Date, which Distribution
Dates correspond to the interest payment dates on the Debentures. Subject to
any applicable laws and regulations and the provisions of the Declaration,
each such payment in respect of the Capital Securities will be made as
follows: (i) if the Capital Securities are held in global form by a Clearing
Agency (or its nominee), in accordance with the procedures of the Clearing
Agency; and (ii) if the Capital Securities are held in definitive form by
check mailed to the address of the Holder thereof as reflected in the records
of the Registrar unless otherwise agreed by the Trust. The relevant record
dates for the Common Securities shall be the same as the record dates for the
Capital Securities. Distributions payable on any Securities that are not
punctually paid on any Distribution Date, as a result of the Debenture Issuer
having failed to make a payment under the Debentures, will cease to be
payable to the Holder on the relevant record date, and such defaulted
Distribution will instead be payable to the Person in whose name such
Securities are registered on the special record date or other specified date
determined in accordance with the Indenture.
(d) In the event that there is any money or other property held by
or for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) pursuant to Section 8 among the
Holders.
3. Liquidation Distribution Upon Dissolution.
-----------------------------------------
In the event of any dissolution of the Trust or the Sponsor
otherwise gives notice of its election to liquidate the Trust pursuant to
Section 8.1(a)(iii) of the Declaration, the Trust shall be liquidated by the
Administrative Trustees as expeditiously as the Administrative Trustees
determine to be possible by distributing, after satisfaction of liabilities
to creditors of the Trust as provided by applicable law, to the Holders a
Like Amount (as defined below) of the Debentures, unless such distribution is
determined by the Property Trustee not to be practicable, in which event such
Holders will be entitled to receive pro rata out of the assets of the Trust
legally available for distribution to Holders, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, an
amount equal to the aggregate of the Liquidation Amount of $1,000 per Securi-
ty plus accumulated and unpaid Distributions thereon to the date of payment
(such amount being the "Liquidation Distribution").
"Like Amount" means (i) with respect to a redemption of the
Securities, Securities having a Liquidation Amount equal to the principal
amount of Debentures to be paid in accordance with their terms and (ii) with
respect to a distribution of Debentures upon the liquidation of the Trust,
Debentures having a principal amount equal to the Liquidation Amount of the
Securities of the Holder to whom such Debentures are distributed.
If, upon any such liquidation, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets on hand legally
available to pay in full the aggregate Liquidation Distribution, then the
amounts payable directly by the Trust on the Securities shall be paid on a
Pro Rata basis as set forth in Section 8.
4. Redemption and Distribution.
---------------------------
(a) Upon the repayment of the Debentures on the Maturity Date
thereof or prepayment thereof (in whole or in part) prior thereto in
accordance with the terms thereof, the proceeds from such repayment or
prepayment shall be simultaneously applied by the Property Trustee (subject
to the Property Trustee having received notice no later than 45 days prior to
such repayment or prepayment) to redeem a Like Amount of the Securities at a
redemption price equal to (i) in the case of the repayment of the Debentures
on the Maturity Date, the Maturity Redemption Price (as defined below), (ii)
in the case of the optional prepayment of the Debentures upon the occurrence
and continuation of a Special Event, the Special Event Redemption Price (as
defined below) and (iii) in the case of the optional prepayment of the
Debentures other than as a result of the occurrence and continuance of a
Special Event, the Optional Redemption Price (as defined below). The
Maturity Redemption Price, the Special Event Redemption Price and the Option-
al Redemption Price are referred to collectively as the "Redemption Price".
Holders will be given not less than 30 nor more than 60 days notice of such
redemption.
(b) (i) The "Maturity Redemption Price", with respect to a
redemption of Securities, shall mean an amount equal to the principal of and
accrued and unpaid interest on the Debentures as of the Maturity Date
thereof.
(ii) In the case of an optional prepayment of the Debentures, if
fewer than all the outstanding Securities are to be so redeemed, the Capital
Securities will be redeemed Pro Rata and the Capital Securities to be re-
deemed will be determined as described in Section 4(f)(ii) below. Upon the
entry of an order for the dissolution of the Trust by a court of competent
jurisdiction, the Debentures thereafter will be subject to optional
repayment, in whole, but not in part, on or after January 31, 2007 (the
"Initial Optional Redemption Date").
The Debenture Issuer shall have the right (subject to the
conditions in the Indenture) to elect to prepay the Debentures in whole or in
part at any time on or after the Initial Optional Prepayment Date, upon not
less than 30 days and not more than 60 days notice, at the Optional
Prepayment Price and, simultaneous with such prepayment, to cause a Like
Amount of the Securities to be redeemed by the Trust at the Optional
Redemption Price on a Pro Rata basis. "Optional Redemption Price" shall mean
a price equal to the percentage of the Liquidation Amount of Securities to be
redeemed plus accumulated and unpaid Distributions thereon, if any, to the
date of such redemption if redeemed during the 12-month period beginning
January 31 of the years indicated below:
Year Percentage
---------------
2007 104.54%
2008 104.08%
2009 103.63%
2010 103.18%
2011 102.72%
2012 102.27%
2013 101.82%
2014 101.36%
2015 100.91%
2016 100.45%
2017 and thereafter 100.00%
(c) If at any time a Tax Event or a Regulatory Capital Event (each
as defined below, and each a "Special Event") occurs, the Debenture Issuer
shall have the right (subject to the conditions set forth in the Indenture)
at any time prior to the Initial Optional Redemption Date, upon not less than
30 nor more than 60 days notice, to prepay the Debentures in whole, but not
in part, within the 90 days following the occurrence of such Special Event
(the "90 Day Period"), and, simultaneous with such redemption, to cause a
Like Amount of the Securities to be redeemed by the Trust at the Special
Event Redemption Price on a Pro Rata basis.
"Tax Event" shall occur upon receipt by the Administrative Trustee,
of an opinion of a nationally recognized tax counsel experienced in such
matters to the effect that, as a result of (i) any amendment to, or change
(including any announced prospective change) in, the laws or any regulations
thereunder of the United States or any political subdivision or taxing
authority thereof or therein, or (ii) as a result of any official administra-
tive 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 February 3, 1997, there is more than an
insubstantial risk that (i) the Trust is, or will be within 90 days of the
date of such opinion, subject to United States federal income tax with
respect to income received or accrued on the Debentures, (ii) interest
payable by the Debenture Issuer on the Debentures is not, or within 90 days
of the date of such opinion, will not be, deductible by the Debenture Issuer,
in whole or in part, for United States federal income tax purposes, or (iii)
the Trust is, or will be within 90 days of the date of such opinion, subject
to more than a de minimis amount of other taxes, duties or other governmental
charges.
"Regulatory Capital Event" shall mean that the Debenture Issuer
shall have received an opinion of independent bank regulatory counsel
experienced in such matters to the effect that, as a result of (a) any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any rules,
guidelines or policies of the Federal Reserve or (b) any official administra-
tive pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such pronouncement or
decision is announced on or after February 3, 1997, the Capital Securities do
not constitute, or within 90 days of the date of such opinion, will not
constitute, Tier 1 Capital (or its then equivalent); provided, however, that
the distribution of the Debentures in connection with the liquidation of the
Trust by the Debenture Issuer shall not in and of itself constitute a
Regulatory Capital Event unless such liquidation shall have occurred in
connection with a Tax Event.
"Special Event Redemption Price" shall mean, with respect to a
redemption of Securities, a price equal to the greater of (i) 100% of the
principal of a Like Amount of Debentures to be redeemed or (ii) the sum, as
determined by a Quotation Agent (as defined in the Indenture), of the present
values of 104.54% of the principal amount thereof plus scheduled payments of
interest thereon from the redemption date to and including the Initial
Optional Redemption Date, discounted to the redemption date on a semi-annual
basis (assuming a 360-day year consisting of twelve 30-day months) at the
Adjusted Treasury Rate (as defined in the Indenture), plus, in each case,
accumulated and unpaid Distributions thereon, if any, to the date of such
redemption.
(d) On and from the date fixed by the Administrative Trustees for
any distribution of Debentures and liquidation of the Trust: (i) the Securi-
ties will no longer be deemed to be outstanding, (ii) the Clearing Agency or
its nominee (or any successor Clearing Agency or its nominee), as the Holder
of the Capital Securities, will receive a registered global certificate or
certificates representing the Debentures to be delivered upon such distri-
bution and any certificates representing Securities not held by the Clearing
Agency or its nominee (or any successor Clearing Agency or its nominee) will
be deemed to represent beneficial interests in a Like Amount of Debentures
until such certificates are presented to the Debenture Issuer or its agent
for transfer or reissue.
(e) The Trust may not redeem fewer than all the outstanding
Securities unless all accumulated and unpaid Distributions have been paid on
all Securities for all semi-annual Distribution periods that expire on or
before the date of redemption.
(f) The procedure with respect to redemptions or distributions of
Debentures shall be as follows:
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder to be re-
deemed or exchanged not fewer than 30 nor more than 60 days before the
date fixed for redemption or exchange thereof which, in the case of a
redemption, will be the date fixed for repayment or prepayment of the
Debentures. For purposes of the calculation of the date of redemption
or exchange and the dates on which notices are given pursuant to this
Section 4(f)(i), a Redemption/ Distribution Notice shall be deemed to be
given on the day such notice is first mailed by first-class mail, post-
age prepaid, to Holders. Each Redemption/Distribution Notice shall be
addressed to the Holders the address of each such Holder appearing in
the books and records of the Trust. No defect in the Redemp-
tion/Distribution Notice or in the mailing of either thereof with re-
spect to any Holder shall affect the validity of the redemption or
exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities
are to be redeemed, the Securities to be redeemed shall be redeemed pro
rata from each Holder, it being understood that, in respect of Capital
Securities registered in the name of and held of record by the Clearing
Agency or its nominee (or any successor Clearing Agency or its nominee)
or any nominee, the distribution of the proceeds of such redemption will
be made to the Clearing Agency or its nominee and disbursed by such
Clearing Agency or its nominee in accordance with the procedures applied
by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice (such notice shall be irrevocable), and
(A) with respect to Capital Securities registered in the name of or held
of record by a Clearing Agency or its nominee, by 12:00 noon, New York
City time, on the redemption date, provided that the Debenture Issuer
has paid the Property Trustee a sufficient amount of cash in connection
with the related maturity or prepayment of the Debentures by 10:00 a.m.,
New York City time, on the Maturity Date or the date of prepayment as
the case may be, the Property Trustee or the Paying Agent will pay to
the Clearing Agency or its nominee (or successor Clearing Agency or its
nominee) funds sufficient to pay the applicable Redemption Price with
respect to such Capital Securities and (B) with respect to Capital Secu-
rities issued in certificated form and Common Securities, provided that
the Debenture Issuer has paid the Property Trustee a sufficient amount
of cash in connection with the related maturity or prepayment of the
Debentures, the Property Trustee or the Paying Agent will pay the rele-
vant Redemption Price to the Holders of such Securities against
presentation to the Registrar of the certificates therefor. If a
Redemption/Distribution Notice shall have been given and funds deposited
with the Property Trustee to pay the Redemption Price (including all
unpaid Distributions) with respect to the Securities called for
redemption, then immediately prior to the close of business on the date
of such deposit, or on the redemption date, as applicable, Distributions
will cease to accumulate on the Securities so called for redemption and
all rights of Holders of such Securities so called for redemption will
cease, except the right of the Holders of such Securities to receive the
Redemption Price, but without interest on such Redemption Price, and
such Securities shall cease to be outstanding.
(iv) Payment of accumulated and unpaid Distributions on the
redemption date of any Securities will be subject to the rights of
Holders of such Securities on the close of business on a regular record
date in respect of a Distribution Date occurring on or prior to such
Redemption Date.
(v) Neither the Administrative Trustees nor the Trust shall be
required to register or cause to be registered the transfer of (A) any
Securities beginning on the opening of business 15 days before the day
of mailing of a notice of redemption or any notice of selection of
Securities for redemption or (B) any Securities selected for redemption
(except the unredeemed portion of any Security being redeemed). If any
date fixed for redemption of Securities is not a Business Day, then
payment of the Redemption Price payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such
Business Day falls in the next calendar year, such payment will be made
on the immediately preceding Business Day, with the same force and
effect as if made on such date fixed for redemption. If payment of the
Redemption Price in respect of any Securities is improperly withheld or
refused and not paid either by the Property Trustee or the Paying Agent
or by the Sponsor as guarantor pursuant to the relevant Securities
Guarantee, on the date fixed for redemption, (A) Distributions on such
Securities will continue to accumulate from such redemption date to the
actual date of payment, and (B) the actual payment date will be consid-
ered the date fixed for redemption for purposes of calculating the
Redemption Price.
(vi) Redemption/Distribution Notices shall be sent by the Property
Trustee on behalf of the Trust to (A) in respect of the Capital
Securities, the Clearing Agency or its nominee (or any successor
Clearing Agency or its nominee) if the Global Certificates have been
issued or, if Definitive Capital Security Certificates have been issued,
to the Holder thereof, and (B) in respect of the Common Securities to
the Holder thereof.
(vii) Subject to the foregoing and applicable law (including,
without limitation, United States federal securities laws and banking
laws), provided the acquiror is not the Holder of the Common Securities
or the obligor under the Indenture, the Sponsor or any of its Affiliates
may at any time and from time to time purchase outstanding Capital
Securities by tender, in the open market or by private agreement.
5. Voting Rights - Capital Securities.
----------------------------------
(a) Except as provided under Sections 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the Capital Securities
will have no voting rights.
(b) So long as any Debentures are held by the Property Trustee,
the Trustees shall not (i) direct the time, method and place of conducting
any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on such Debenture Trustee with respect
to the Debentures, (ii) waive any past default that is waivable under Section
5.07 of the Indenture, (iii) exercise any right to rescind or annul a decla-
ration of acceleration of the maturity of the principal of the Debentures 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 a Majority in
Liquidation Amount of all outstanding Capital Securities; provided, however,
that where a consent under the Indenture would require
the consent of each holder of Debentures affected thereby, no such consent
shall be given by the Property Trustee without the prior approval of each
Holder of the Capital Securities. The Trustees shall not revoke any action
previously authorized or approved by a vote of the Holders of the Capital
Securities except by subsequent vote of such Holders. The Property Trustee
shall notify each Holder of Capital Securities of any notice of default with
respect to the Debentures. In addition to obtaining the foregoing approvals
of such Holders of the Capital Securities, prior to taking any of the
foregoing actions, the Trustees shall obtain an Opinion of Counsel experi-
enced in such matters to the effect that the Trust will not be classified as
an association taxable as a corporation for United States federal income tax
purposes on account of such action.
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture
Issuer to pay principal of or premium, if any, or interest on the Debentures
on any due date (including any Interest Payment Date or prepayment date or
the Maturity Date), then a Holder of Capital Securities may directly insti-
tute a proceeding for enforcement of payment to such Holder of the principal
of or premium, if any, or interest on a Like Amount of Debentures (a "Direct
Action") on or after the respective due date specified in the Debentures. In
connection with such Direct Action, the rights of the Common Security Holders
will be subrogated to the rights of the Holders of Capital Securities to the
extent of any payment made by the Debenture Issuer to the Holders of Capital
Securities in such Direct Action. Except as provided in the second preceding
sentence, the Holders of Capital Securities will not be able to exercise
directly any other remedy available to the holders of the Debentures.
Any approval or direction of Holders of Capital Securities may be
given at a separate meeting of Holders of Capital Securities convened for
such purpose, at a meeting of all of the Holders of Securities in the Trust
or pursuant to written consent. The Property Trustee will cause a notice of
any meeting at which Holders of Capital Securities are entitled to vote, or
of any matter upon which action by written consent of such Holders is to be
taken, to be mailed to each Holder of record of Capital Securities. Each
such notice will include a statement setting forth (i) the date of such
meeting or the date by which such action is to be taken, (ii) a description
of any resolution proposed for adoption at such meeting on which such Holders
are entitled to vote or of such matter upon which written consent is sought
and (iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Capital Securities will be
required for the Trust to redeem and cancel Capital Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
Notwithstanding that Holders of Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned by the Sponsor or any Affiliate of the
Sponsor shall not be entitled to vote or consent and shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
---------------------------------
(a) Except as provided under Sections 6(b), 6(c), and 7 or as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) Unless an Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by the Holder of the
Common Securities. If an Event of Default has occurred and is continuing,
the Property Trustee and the Delaware Trustee may be removed at such time by
the Holders of a Majority in Liquidation Amount of the outstanding Capital
Securities. In no event will the Holders of the Capital Securities have the
right to vote to appoint, remove or replace the Administrative Trustees,
which voting rights are vested exclusively in the Sponsor as the Holder of
the Common Securities. No resignation or removal of a Trustee and no
appointment of a successor trustee shall be effective until the acceptance of
appointment by the successor trustee in accordance with the provisions of the
Declaration.
(c) So long as any Debentures are held by the Property Trustee,
the Trustees shall not (i) direct the time, method and place of conducting
any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on such Debenture Trustee with respect
to the Debentures, (ii) waive any past default that is waivable under Section
5.07 of the Indenture, (iii) exercise any right to rescind or annul a decla-
ration of acceleration of the maturity of the principal of the Debentures 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 a Majority in
Liquidation Amount of all outstanding Common Securities; provided, however,
that where a consent under the Indenture would require
the consent of each holder of Debentures affected thereby, no such consent
shall be given by the Property Trustee without the prior approval of each
Holder of the Common Securities. The Trustees shall not revoke any action
previously authorized or approved by a vote of the Holders of the Common
Securities except by subsequent vote of such Holders. The Property Trustee
shall notify each Holder of Common Securities of any notice of default with
respect to the Debentures. In addition to obtaining the foregoing approvals
of such Holders of the Common Securities, prior to taking any of the
foregoing actions, the Trustees shall obtain an Opinion of Counsel experi-
enced in such matters to the effect that the Trust will not be classified as
an association taxable as a corporation for United States federal income tax
purposes on account of such action.
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture
Issuer to pay principal of or premium, if any, or interest on the Debentures
on the due date therefor (including any Interest Payment Date or prepayment
date or the Maturity Date), then a Holder of Common Securities may institute
a Direct Action for enforcement of payment to such Holder of the principal of
or premium, if any, or interest on a Like Amount of Debentures on or after
the respective due date specified in the Debentures. In connection with any
Direct Action, the rights of the Capital Securities Holders will be
subrogated to the rights of the Holders of Common Securities to the extent of
any payment made by the Debenture Issuer to Holders of Common Securities in
such Direct Action. Except as provided in the second preceding sentence, the
Holders of Common Securities will not be able to exercise directly any other
remedy available to the holders of the Debentures.
Any approval or direction of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Administrative Trustees will cause a notice
of any meeting at which Holders of Common Securities are entitled to vote, or
of any matter upon which action by written consent of such Holders is to be
taken, to be mailed to each Holder of record of Common Securities. Each such
notice will include a statement setting forth (i) the date of such meeting or
the date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to dis-
tribute the Debentures in accordance with the Declaration and the terms of
the Securities.
7. Amendments to Declaration and Indenture.
---------------------------------------
In addition to the requirements set out in Section 12.1 of the
Declaration, the Declaration may be amended from time to time by the Sponsor
and the Trustees, without the consent of the Holders (i) to cure any ambigu-
ity, correct or supplement any provisions in the Declaration that may be
inconsistent with any other provisions, or to make any other provisions with
respect to matters or questions arising under the Declaration which shall not
be inconsistent with the other provisions of the Declaration, or (ii) to
modify, eliminate or add to any provisions of the Declaration to such extent
as shall be necessary to ensure that the Trust will be classified for United
States federal income tax purposes as a grantor trust at all times that any
Securities are outstanding or to ensure that the Trust will not be required
to register as an "Investment Company" under the Investment Company Act;
provided, however, that in the case of clause (i), such action shall not
adversely affect in any material respect the interests of any Holder of
Securities. Any amendments of the Declaration pursuant to the foregoing
shall become effective when notice thereof is given to the Holders of the
Securities. The Declaration also may be amended by the Trustees and the
Sponsor with (i) the consent of Holders representing a Majority in Liqui-
dation Amount of all outstanding Securities, and (ii) receipt by the Trustees
of an Opinion of Counsel experienced in such matters to the effect that such
amendment or the exercise of any power granted to the Trustees in accordance
with such amendment will not affect the Trust's status as a grantor trust for
United States federal income tax purposes or the Trust's exemption from
status as an Investment Company under the Investment Company Act, provided
that, without the consent of each Holder of Trust Securities, the Declaration
may not be amended to (i) change the amount or timing of any Distribution on
the Trust Securities or otherwise adversely affect the amount of any
Distribution required to be made in respect of the Trust Securities as of a
specified date or (ii) restrict the right of a Holder of Trust Securities to
institute suit for the enforcement of any such payment on or after such date.
8. Pro Rata.
--------
A reference in these terms of the Securities to any payment, dis-
tribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
according to the aggregate Liquidation Amount of the Securities held by the
relevant Holder in relation to the aggregate Liquidation Amount of all
Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the Cap-
ital Securities pro rata according to the aggregate Liquidation Amount of
Capital Securities held by the relevant Holder relative to the aggregate
Liquidation Amount of all Capital Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Capital Securities, to
each Holder of Common Securities pro rata according to the aggregate Liquida-
tion Amount of Common Securities held by the relevant Holder relative to the
aggregate Liquidation Amount of all Common Securities outstanding.
9. Ranking.
-------
The Capital Securities rank pari passu with the Common
---- -----
Securities and payment thereon shall be made Pro Rata with the Common Securi-
ties, except that, if an Event of Default under the Declaration occurs and is
continuing, no payments in respect of Distributions on, or payments upon
liquidation, redemption or otherwise with respect to, the Common Securities
shall be made until the Holders of the Capital Securities shall be paid in
full the Distributions, Redemption Price, Liquidation Distribution and other
payments to which they are entitled at such time.
10. Acceptance of Securities Guarantee and Indenture.
------------------------------------------------
Each Holder of Capital Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Capital Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture.
11. No Preemptive Rights.
--------------------
The Holders shall have no preemptive rights to subscribe for any
additional securities.
12. Miscellaneous.
-------------
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Capital
Securities Guarantee or the Common Securities Guarantee (as may be appropri-
ate), and the Indenture (including any supplemental indenture) to a Holder
without charge on written request to the Sponsor at its principal place of
business.
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
(FORM OF FACE OF SECURITY)
(IF THIS GLOBAL SECURITY IS A GLOBAL CAPITAL SECURITY, INSERT:
THIS CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY WITHIN THE MEANING OF THE
DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY") OR A NOMINEE OF THE CLEARING
AGENCY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES REGIS-
TERED IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY OR ITS NOMINEE
ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANS-
FER OF THIS CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL SECURITY
AS A WHOLE BY THE CLEARING AGENCY TO A NOMINEE OF THE CLEARING AGENCY OR BY A
NOMINEE OF THE CLEARING AGENCY TO THE CLEARING AGENCY OR ANOTHER NOMINEE OF
THE CLEARING AGENCY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK,
NEW YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.)
THIS CAPITAL SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS
OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS CAPITAL SECURITY NOR
ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANS-
FERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
SUCH REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES
TO OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY, PRIOR TO THE DATE
(THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE
LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH
COMMUNITY BANK SYSTEM, INC. (THE "COMPANY") OR ANY AFFILIATE OF THE COMPANY
WAS THE OWNER OF THIS CAPITAL SECURITY (OR ANY PREDECESSOR OF THIS CAPITAL
SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS
THIS CAPITAL SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D)
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT,
(E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUB-
PARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT
IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT,
SUBJECT TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIV-
ERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND (ii) PURSUANT TO CLAUSE (E), TO REQUIRE
THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE REVERSE OF THIS
CAPITAL SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEREE TO THE TRUST.
SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
CAPITAL SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF ALSO
AGREES, REPRESENTS AND WARRANTS THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT
PLAN SUBJECT TO THE EMPLOYMENT RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA") OR (ii) THE ACQUISITION AND HOLDING OF THIS CAPITAL
SECURITY BY IT IS NOT PROHIBITED BY EITHER SECTION 406 OF ERISA OR SECTION
4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR EXEMPT FROM
ANY SUCH PROHIBITION.
Certificate Number Number of Capital Securities
CUSIP NO. __________
Certificate Evidencing Capital Securities
of
Community Capital Trust I
9.75% Series _____ Capital Securities
(Liquidation Amount $1,000 per Capital Security)
Community Capital Trust 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 30,000 securities of
the Trust representing undivided beneficial interests in the assets of the
Trust designated the 9.75% Series ______ Capital Securities (Liquidation
Amount $1,000 per Capital Security) (the "Capital Securities"). The Capital
Securities are transferable on the books and records of the Trust, in person
or by a duly authorized attorney, upon surrender of this certificate duly en-
dorsed and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Capital
Securities represented hereby are set forth herein, on the reverse hereof and
in the Amended and Restated Declaration of Trust of the Trust dated as of
February 3, 1997, as the same may be amended from time to time (the "Declara-
tion"), and shall in all respects be subject to the provisions thereof, in-
cluding the designation of the terms of the Capital Securities as set forth
in Annex I to the Declaration. Each capitalized term used but not defined
herein or in any legend, form or certificate hereon shall have the meaning
given to it in the Declaration. The Sponsor will provide a copy of the
Declaration, the Capital Securities Guarantee and the Indenture to any Holder
without charge upon written request to the Trust at its principal place of
business.
Upon receipt of this certificate, the Holder is bound by the Decla-
ration and is entitled to the benefits thereunder and to the benefits of the
Capital Securities Guarantee to the extent provided therein.
By its acceptance hereof, the Holder agrees to treat, for United
States federal income tax purposes, the Debentures as indebtedness and the
Capital Securities as evidence of indirect beneficial ownership in the Deben-
tures.
IN WITNESS WHEREOF, the Trust has executed this certificate this
___ day of ____________, 1997.
COMMUNITY CAPITAL TRUST I
By:________________________________
Name:
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the within-
mentioned Declaration.
Dated: _____________, 1997
The Chase Manhattan Bank,
as Property Trustee
By:
---------------------
Authorized Signatory
(FORM OF REVERSE OF SECURITY)
Distributions payable on each Capital Security will be fixed at a
rate per annum of 9.75% (the "Coupon Rate") of the Liquidation Amount of
$1,000 per Capital Security, such rate being the rate of interest payable on
the Debentures to be held by the Property Trustee. Distributions in arrears
for more than one semi-annual period will bear interest thereon compounded
semi-annually at the Coupon Rate (to the extent permitted by applicable law).
Pursuant to the Registration Rights Agreement, in certain limited
circumstances the Debenture Issuer will be required to pay Liquidated Damages
(as defined in the Registration Rights Agreement) with respect to the Deben-
tures. The term "Distributions", as used herein, includes such cash distri-
butions and any such interest and such Liquidated Damages payable unless
otherwise stated. A Distribution is payable only to the extent that payments
are made in respect of the Debentures held by the Property Trustee and to the
extent the Property Trustee has funds on hand legally available therefor.
Distributions on the Capital Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid
or, if no Distributions have been paid, from ___________________, 1997 and
will be payable semi-annually in arrears, on January 31 and July 31 of each
year, commencing on July 31, 1997, except as otherwise described below and in
the Declaration. Distributions will be computed on the basis of a 360-day
year consisting of twelve 30-day months and, for any period of less than a
full calendar month, the number of days elapsed in such month. As long as no
Event of Default (as defined in the Indenture) has occurred and is continu-
ing, the Debenture Issuer has the right under the Indenture to defer payment
of interest by extending the interest payment period at any time and from
time to time on the Debentures for a period not exceeding 10 consecutive
calendar semi-annual periods, including the first such semi-annual period
during such extension period (each an "Extension Period"), provided that no
Extension Period shall extend beyond the Maturity Date of the Debentures.
As a consequence of such deferral, Distributions will also be deferred.
Notwithstanding such deferral, semiannual Distributions will continue to
accumulate with interest thereon (to the extent permitted by applicable law,
but not at a rate exceeding the rate of interest then accruing on the
Debentures) at the Coupon Rate compounded semi-annually during any such
Extension Period. Prior to the termination of any such Extension Period,
the Debenture Issuer may further defer payments of interest by further
extending such Extension Period; provided that such Extension Period,
together with all such previous and further extensions, if any, within
such Extension Period, may not exceed 10 consecutive semi-annual periods,
including the first semi-annual period during such Extension Period, or
extend beyond the Maturity Date of the Debentures. Payments of
Distributions that have accumulated but not been paid during any Extension
Period will be payable to Holders as they appear on the books and records
of the Trust on the record date for the first scheduled Distribution payment
date following the expiration of such Extension Period. Upon the expiration
of any Extension Period and the payment of all amounts then due, the
Debenture Issuer may commence a new Extension Period, subject to the
above requirements.
Subject to obtaining any regulatory approval then required and to
certain other conditions set forth in the Declaration and the Indenture, the
Property Trustee shall, at the direction of the Sponsor, at any time liqui-
date the Trust and cause the Debentures to be distributed to the holders of
the Securities in liquidation of the Trust or, simultaneously with any
redemption of the Debentures, cause a Like Amount of the Securities to be
redeemed by the Trust.
The Capital Securities shall be redeemable as provided in the
Declaration.
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security Certificate to:
_____________________________________________________________________________
_____________________________________________________________________________
_________________________________________
(Insert assignee's social security or tax identification number)
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________
(Insert address and zip code of assignee)
and irrevocably appoints
_________________________________________________________________
_________________________________________________________________
___________________________________________________________ agent to transfer
this Capital Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Capital Security
Certificate)
Signature Guarantee: ___________________________________
(Include the following if the Capital Security bears a Restricted Capital
Securities Legend --
In connection with any transfer of any of the Capital Securities evidenced by
this certificate, the undersigned confirms that such Capital Securities are
being:
CHECK ONE BOX BELOW
(1) / / exchanged for the undersigned's own account without transfer;
or
(2) / / transferred pursuant to and in compliance with Rule 144A under
the Securities Act of 1933; or
(3) / / transferred pursuant to and in compliance with Regulation S
under the Securities Act of 1933; or
(4) / / transferred to an institutional "accredited investor" within
the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule
501 under the Securities Act of 1933 that is acquiring the
Capital Securities for its own account, or for the account of
such an institutional "accredited investor," for investment
purposes and not with a view to, or for offer or sale in con-
nection with, any distribution in violation of the Securities
Act of 1933; or
(5) / / transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933; or
(6) / / transferred pursuant to an effective registration statement.
Unless one of the boxes is checked, the Registrar will refuse to register any
of the Capital Securities evidenced by this certificate in the name of any
person other than the registered Holder thereof; provided, however,
-------- -------
that if box (3), (4) or (5) is checked, the Registrar may require, prior to
registering any such transfer of the Capital Securities such legal opinions,
certifications and other information as the Trust has reasonably requested to
confirm that such transfer is being made pursuant to an exemption from, or in
a transaction not subject to, the registration requirements of the Securities
Act of 1933, such as the exemption provided by Rule 144 under such Act;
provided, further, that (i) if box 2 is checked, the transferee must also
certify that it is a qualified institutional buyer as defined in Rule 144A
or (ii) if box (4) is checked, the transferee must also provide to the
Exchange Agent a Transferee Letter of Representation in the form attached
to the Offering Memorandum of the Trust dated January 29, 1997; provided,
further, that after the date that a Registration Statement has been filed
and so long as such Registration Statement continues to be effective, the
Registrar may only permit transfers for which box (5) has been checked.
--------------------------------------------
Signature
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS
OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS COMMON SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANS-
FERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
SUCH REGISTRATION.
THE HOLDER OF THIS COMMON SECURITY BY ITS ACCEPTANCE HEREOF AGREES
TO OFFER, SELL OR OTHERWISE TRANSFER THIS COMMON SECURITY, PRIOR TO THE DATE
(THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE
LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH
COMMUNITY BANK SYSTEM, INC. (THE "COMPANY") OR ANY AFFILIATES OR ANY AFFIL-
IATE OF THE COMPANY WAS THE OWNER OF THIS CAPITAL SECURITY (OR ANY PREDECES-
SOR OF THIS CAPITAL SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) SO LONG AS THIS COMMON SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THIS COMMON SECURITY FOR ITS OWN ACCOUNT, OR
FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES
ACT, SUBJECT TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND (ii) PURSUANT TO CLAUSE (E), TO REQUIRE
THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE REVERSE OF THIS
COMMON SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEREE TO THE TRUST.
SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
COMMON SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND.
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
Community Capital Trust I
9.75% Common Securities
(Liquidation Amount $1,000 per Common Security)
Community Capital Trust I, a statutory business trust formed under
the laws of the State of Delaware (the "Trust"), hereby certifies that
Community Financial Corporation (the "Holder") is the registered owner of 928
common securities of the Trust representing undivided beneficial interests in
the assets of the Trust designated the 9.75% Common Securities (Liquidation
Amount $1,000 per Common Security) (the "Common Securities"). The Common
Securities are transferable on the books and records of the Trust, in person
or by a duly authorized attorney, upon surrender of this certificate duly en-
dorsed and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities represented hereby are set forth herein, on the reverse hereof and
in the Amended and Restated Declaration of Trust of the Trust dated as of
February 3, 1997, as the same may be amended from time to time (the "Declara-
tion"), and shall in all respects be subject to the provisions thereof in-
cluding the designation of the terms of the Common Securities as set forth in
Annex I to the Declaration. Each capitalized term used but not defined
herein or in any legend, form or certificate hereon shall have the meaning
given to it in the Declaration. The Sponsor will provide a copy of the
Declaration, the Common Securities Guarantee and the Indenture (including any
supplemental indenture) to any Holder without charge upon written request to
the Sponsor at its principal place of business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Common Securities Guarantee to the extent provided therein.
By its acceptance hereof, the Holder agrees to treat, for United
States federal income tax purposes, the Debentures as indebtedness and the
Common Securities as evidence of indirect beneficial ownership in the
Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this
3rd day of February, 1997.
COMMUNITY CAPITAL TRUST I
By:________________________________
Name:
Administrative Trustee
(FORM OF REVERSE OF SECURITY)
Distributions payable on each Common Security will be fixed at a
rate per annum of 9.75% (the "Coupon Rate") of the Liquidation Amount of
$1,000 per Common Security, such rate being the rate of interest payable on
the Debentures to be held by the Property Trustee. Distributions in arrears
for more than one semi-annual period will bear interest thereon compounded
semi-annually at the Coupon Rate (to the extent permitted by applicable law).
Pursuant to the Registration Rights Agreement, in certain limited
circumstances the Debenture Issuer will be required to pay Liquidated Damages
(as defined in the Registration Rights Agreement) with respect to the
Debentures. The term "Distributions", as used herein, includes such cash
distributions and any such interest and such Liquidated Damages payable
unless otherwise stated. A Distribution is payable only to the extent that
payments are made in respect of the Debentures held by the Property Trustee
and to the extent the Property Trustee has funds available therefor.
Distributions on the Common Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid
or, if no Distributions have been paid, from February 3, 1997 and will be
payable semi-annually in arrears, on January 31 and July 31 of each year,
commencing on July 31, 1997, except as otherwise described below and in the
Declaration. Distributions will be computed on the basis of a 360-day year
consisting of twelve 30-day months and, for any period less than a full
calendar month, the number of days elapsed in such month. As long as no
Event of Default (as defined herein) has occurred and is continuing, the
Debenture Issuer has the right under the Indenture to defer payment of
interest on the Debentures by extending the interest payment period at any
time and from time to time for a period not exceeding 10 consecutive calendar
semi-annual periods, including the first such semi-annual period
during such extension period (each an "Extension Period"), provided that
no Extension Period shall extend beyond the Maturity Date of the Debentures.
As a consequence of such deferral, Distributions will also be deferred.
Notwithstanding such deferral, Distributions will continue to accumulate with
interest thereon (to the extent permitted by applicable law, but not at a
rate exceeding the rate of interest then accruing on the Debentures) at the
Coupon Rate compounded semi-annually during any such Extension Period. Prior
to the termination of any such Extension Period, the Debenture Issuer may
further defer payments of interest by further extending such Extension Peri-
od; provided that such Extension Period, together with all such previous and
further extensions, if any, within such Extension Period, may not exceed 10
consecutive semi-annual periods, including the first semi-annual period
during such Extension Period, or extend beyond the Maturity Date of the
Debentures. Payments of Distributions that have accumulated but not been
paid during any Extension Period will be payable to Holders as they appear on
the books and records of the Trust on the record date for the first Distribu-
tion Date following the expiration of such Extension Period. Upon the
expiration of any Extension Period and the payment of all amounts then due,
the Debenture Issuer may commence a new Extension Period, subject to the
above requirements.
Subject to the Sponsor obtaining any regulatory prior approval then
required and to certain other conditions set forth in the Declaration and the
Indenture, the Property Trustee shall, at the direction of the Sponsor, at
any time liquidate the Trust and cause the Debentures to be distributed to
the holders to the Securities in liquidation of the Trust or, simultaneous
with any redemption of the Debentures, cause a Like Amount of the Securities
to be redeemed by the Trust.
The Common Securities shall be redeemable as provided in the
Declaration.
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common
Security Certificate to:
_____________________________________________________________________________
_____________________________________________________________________________
_________________________________________
(Insert assignee's social security or tax identification number)
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________
(Insert address and zip code of assignee)
and irrevocably appoints ________________________________________
_____________________________________________________________________________
__________________________________ agent to transfer this Common 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 Common Security
Certificate)
Signature Guarantee: ___________________________________
(Include the following if the Common Security bears a Restricted Common
Securities Legend --
In connection with any transfer of any of the Common Securities evidenced by
this certificate, the undersigned confirms that such Common Securities are
being:
CHECK ONE BOX BELOW
(1) / / exchanged for the undersigned's own account without transfer;
or
(2) / / transferred pursuant to and in compliance with Rule 144A under
the Securities Act of 1933; or
(3) / / transferred pursuant to and in compliance with Regulation S
under the Securities Act of 1933; or
(4) / / transferred to an institutional "accredited investor" within
the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule
501 under the Securities Act that is acquiring the Preferred
Security for its own account, or for the account of such an
institutional "accredited investor," for investment purposes
and not with a view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act; or
(5) / / transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933; or
(6) / / transferred pursuant to an effective registration statement.
Unless one of the boxes is checked, the Registrar will refuse to register any
of the Common Securities evidenced by this certificate in the name of any
person other than the registered Holder thereof; provided, however,
-------- -------
that if box (3), (4) or (5) is checked, the Registrar may require, prior to
registering any such transfer of the Common Securities such legal opinions,
certifications and other information as the Trust has reasonably requested to
confirm that such transfer is being made pursuant to an exemption from, or in
a transaction not subject to, the registration requirements of the Securities
Act of 1933, such as the exemption provided by Rule 144 under such Act;
provided, further, that (i) if box 2 is checked, the transferee must also
certify that it is a qualified institutional buyer as defined in Rule 144A
or (ii) if box 4 is checked, the transferee must also provide a Transferee
Representation Letter in the form attached to the Offering Memorandum of
the Trust, dated January 29, 1997, after the date that a Registration
Statement has been filed and so long as such Registration Statement
continues to be effective, the Exchange Agent may only permit transfers
for which box (5) has been checked.
--------------------------------------------
Signature
EXHIBIT 4.8
REGISTRATION RIGHTS AGREEMENT
Dated February 3, 1997
among
COMMUNITY BANK SYSTEM, INC.
COMMUNITY CAPITAL TRUST I
and
M.A. SCHAPIRO & CO., INC.
as Initial Purchaser
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
---------
entered into as of February 3, 1997 among COMMUNITY BANK SYSTEM, INC., a
Delaware bank holding corporation (the "Company"), COMMUNITY CAPITAL TRUST
-------
I, a business trust formed under the laws of the state of Delaware (the
"Trust"), and M.A. SCHAPIRO & CO., INC. (the "Initial Purchaser").
----- -----------------
This Agreement is made in connection with the Purchase Agreement
dated January 29, 1997 the "Purchase Agreement"), among the Company, as
------------------
issuer of the Series A 9.75% Junior Subordinated Deferrable Interest
Debentures due January 31, 2027 (the "Subordinated Debentures"), the Trust
-----------------------
and the Initial Purchaser, which provides for among other things, the sale by
the Trust to the Initial Purchaser of 30,000 of the Trust's Series A 9.75%
Capital Securities, liquidation amount $1,000 per Capital Security (the
"Capital Securities") the proceeds of which will be used by the Trust
------------------
to purchase Subordinated Debentures. The Capital Securities, together with
the Subordinated Debentures and the Company's guarantee of the Capital
Securities (the "Capital Securities Guarantee") are collectively
----------------------------
referred to as the "Securities". In order to induce the Initial Purchaser to
enter into the Purchase Agreement, the Company and the Trust have agreed to
provide to the Initial Purchaser and its direct and indirect transferees the
registration rights set forth in this Agreement. The execution and delivery
of this Agreement is a condition to the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the following
-----------
capitalized defined terms shall have the following meanings:
"Advice" shall have the meaning set forth in the last paragraph of
------
Section 3 hereof.
"Applicable Period" shall have the meaning set forth in Section 3(t)
-----------------
hereof.
"Business Day" shall mean a day that is not a Saturday, a Sunday, or
------------
a day on which banking institutions in New York, New York are authorized or
required to be closed.
"Closing Time" shall mean the Closing Time as defined in the Purchase
------------
Agreement.
"Company" shall have the meaning set forth in the preamble to this
-------
Agreement and also includes the Company's successors and permitted assigns.
"Declaration" or "Declaration of Trust" shall mean the Amended and
----------- --------------------
Restated Declaration of Trust, dated as of February 3, 1997, by the trustees
named therein and the Company as sponsor.
"Depositary" shall mean The Depository Trust Company, or any other
----------
depositary appointed by the Trust; provided, however, that such depositary
-------- -------
must have an address in the Borough of Manhattan, in The City of New York.
"Effectiveness Period" shall have the meaning set forth in Section
--------------------
2(b) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended from time to time, or any successor legislation.
"Exchange Offer" shall mean the offer by the Company and the Trust to
--------------
the Holders to exchange all of the Registrable Securities (other than Private
Exchange Securities) for a like principal amount of Exchange Securities
pursuant to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the
---------------------------
Securities Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
-------------------------------------
registration statement on Form S-4 (or, if applicable, on another appropriate
form), and all amendments and supplements to such registration statement, in
each case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
"Exchange Period" shall have the meaning set forth in Section 2(a)
---------------
hereof.
"Exchange Securities" shall mean (i) with respect to the Subordinated
-------------------
Debentures, the Series B 9.75% Junior Subordinated Deferrable Interest
Debentures due January 31, 2027 (the "Exchange Debentures") containing
-------------------
terms identical to the Subordinated Debentures (except that they will not
contain terms with respect to the transfer restrictions under the Securities
Act, will not require transfers thereof to be in minimum blocks of $100,000
principal amount and will not provide for any increase in the interest rate
thereon), (ii) with respect to the Capital Securities, the Trust's Series B
9.75% Capital Securities, liquidation amount $1,000 per Capital Security (the
"Exchange Capital Securities") which will have terms identical to
---------------------------
the Capital Securities (except they will not contain terms with respect
to transfer restrictions under the Securities Act, will not require
minimum transfers thereof to be in blocks of $100,000 liquidation amount and
will not provide for any increase in the Distribution rate thereon) and
(iii) with respect to the Capital Securities Guarantee, the Company's
guarantee (the "Exchange Capital Securities Guarantee") of the
-------------------------------------
Exchange Capital Securities which will have terms identical to the Capital
Securities Guarantee.
"Holder" shall mean the Initial Purchaser, for so long as it owns any
------
Registrable Securities, and its successors, assigns and direct and indirect
transferees who become registered owners of Registrable Securities under the
Indenture or Declaration of Trust.
"Indenture" shall mean the Indenture relating to the Subordinated
---------
Debentures and the Exchange Debentures dated as of February 3, 1997 among the
Company, as issuer, and The Chase Manhattan Bank, as trustee, as the same may
be amended from time to time in accordance with the terms thereof.
"Initial Purchaser" shall have the meaning set forth in the preamble
-----------------
to this Agreement.
"Inspectors" shall have the meaning set forth in Section 3(n) hereof.
----------
"Issue Date" shall mean the date of original issuance of the
----------
Securities.
"Liquidated Damages" shall have the meaning set forth in Section 2(e)
------------------
hereof.
"Majority Holders" shall mean the Holders of a majority of the
----------------
aggregate liquidation amount of outstanding Capital Securities.
"Participating Broker-Dealer" shall have the meaning set forth in
---------------------------
Section 3(t) hereof.
"Person" shall mean 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.
"Private Exchange" shall have the meaning set forth in Section 2(a)
----------------
hereof.
"Private Exchange Securities" shall have the meaning set forth in
---------------------------
Section 2(a) hereof.
"Prospectus" shall mean the prospectus included in a Registration
----------
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to a prospectus, including posteffective
amendments, and in each case including all material incorporated by reference
therein.
"Purchase Agreement" shall have the meaning set forth in the preamble
------------------
to this Agreement.
"Records" shall have the meaning set forth in Section 3(n) hereof.
-------
"Registrable Securities" shall mean the Securities and, if issued,
----------------------
the Private Exchange Securities; provided, however, that Securities or
-------- -------
Private Exchange Securities, as the case may be, shall cease to be
Registrable Securities when (i) a Registration Statement with respect to such
Securities or Private Exchange Securities for the exchange or resale thereof,
as the case may be, shall have been declared effective under the Securities
Act and such Securities or Private Exchange Securities, as the case may be,
shall have been disposed of pursuant to such Registration Statement,
(ii) such Securities or Private Exchange Securities, as the case may be,
shall have been sold to the public pursuant to Rule 144(k) (or any similar
provision then in force, but not Rule 144A) under the Securities Act,
(iii) such Securities or Private Exchange Securities, as the case may be,
shall have ceased to be outstanding or (iv) with respect to the Securities,
such Securities have been exchanged for Exchange Securities upon consummation
of the Exchange Offer and are thereafter freely tradeable by the holder
thereof (other than an affiliate of the Company).
"Registration Expenses" shall mean any and all expenses incident to
---------------------
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC or National Association of Securities
Dealers, Inc. (the "NASD") registration and filing fees, including, if
----
applicable, the fees and expenses of any "qualified independent underwriter"
(and its counsel) that is required to be retained by any Holder of
Registrable Securities in accordance with the rules and regulations of the
NASD, (ii) all fees and expenses incurred in connection with compliance with
state securities or blue sky laws (including reasonable fees and
disbursements of counsel for any underwriters or Holders in connection with
blue sky qualification of any of the Exchange Securities or Registrable
Securities) and compliance with the rules of the NASD, (iii) all expenses of
any Persons in preparing or assisting in preparing, word processing, printing
and distributing any Registration Statement, any Prospectus and any
amendments or supplements thereto, and in preparing or assisting in
preparing, printing and distributing any underwriting agreements, securities
sales agreements and other documents relating to the performance of and
compliance with this Agreement, (iv) all rating agency fees, (v) the fees and
disbursements of counsel for the Company and of the independent certified
public accountants of the Company, including the expenses of any "cold
comfort" letters required by or incident to such performance and compliance,
(vi) the fees and expenses of the Trustee, and any exchange agent or
custodian, (vii) all fees and expenses incurred in connection with the
listing, if any, of any of the Registrable Securities on any securities
exchange or exchanges, and (viii) the reasonable fees and expenses of any
special experts retained by the Company in connection with any Registration
Statement.
"Registration Statement" shall mean any registration statement of the
----------------------
Company and the Trust which covers any of the Exchange Securities or
Registrable Securities pursuant to the provisions of this Agreement, and all
amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Rule 144(k) Period" shall mean the period of three years (or such
------------------
shorter period as may hereafter be referred to in Rule 144(k) under the
Securities Act (or similar successor rule)) commencing on the Issue Date.
"SEC" shall mean the Securities and Exchange Commission.
---
"Securities" shall have the meaning set forth in the preamble to this
----------
Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended
--------------
from time to time.
"Shelf Registration" shall mean a registration effected pursuant to
------------------
Section 2(b) hereof.
"Shelf Registration Event" shall have the meaning set forth in
------------------------
Section 2(b) hereof.
"Shelf Registration Event Date" shall have the meaning set forth in
-----------------------------
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
----------------------------
statement of the Company and the Trust pursuant to the provisions of Section
2(b) hereof which covers all of the Registrable Securities or all of the
Private Exchange Securities, as the case may be, on an appropriate form under
Rule 415 under the Securities Act, or any similar rule that may be adopted by
the SEC, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"TIA" shall have the meaning set forth in Section 3(1) hereof.
---
"Trustees" shall mean any and all trustees with respect to (i) the
--------
Capital Securities under the Declaration, (ii) the Subordinated Debentures
under the Indenture and (iii) the Capital Securities Guarantee.
2. Registration Under the Securities Act.
-------------------------------------
(a) Exchange Offer. To the extent not prohibited by any
--------------
applicable law or applicable interpretation of the staff of the SEC, the
Company and the Trust shall, for the benefit of the Holders, at the Company's
cost, use their reasonable best efforts to (i) cause to be filed with the SEC
within 150 days after January 29, 1997 an Exchange Offer Registration
Statement on an appropriate form under the Securities Act covering the
Exchange Offer, (ii) cause such Exchange Offer Registration Statement to be
declared effective under the Securities Act by the SEC not later than the
date which is 180 days after January 29, 1997, and (iii) keep such Exchange
Offer Registration Statement effective for not less than 30 calendar days (or
longer if required by applicable law) after the date notice of the Exchange
Offer is mailed to the Holders. Upon the effectiveness of the Exchange Offer
Registration Statement, the Company and the Trust shall promptly commence the
Exchange Offer, it being the objective of such Exchange Offer to enable each
Holder eligible and electing to exchange Registrable Securities for a like
principal amount of Exchange Debentures or a like liquidation amount of
Exchange Capital Securities, together with the Exchange Guarantee, as
applicable (assuming that such Holder is not an affiliate of the Company
within the meaning of Rule 405 under the Securities Act and is not a
broker-dealer tendering Registrable Securities acquired directly from the
Company for its own account, acquires the Exchange Securities in the ordinary
course of such Holder's business and has no arrangements or understandings
with any Person to participate in the Exchange Offer for the purpose of
distributing the Exchange Securities) to transfer such Exchange Securities
from and after their receipt without any limitations or restrictions under
the Securities Act and under state securities or blue sky laws.
In connection with the Exchange Offer, the Company and the Trust
shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter of
transmittal and related documents;
(ii) keep the Exchange Offer open for acceptance for a period of not
less than 30 days after the date notice thereof is mailed to the Holders (or
longer if required by applicable law) (such period referred to herein as the
"Exchange Period");
---------------
(iii) utilize the services of the Depositary for the Exchange Offer:
(iv) permit Holders to withdraw tendered Securities at any time prior to
the close of business, New York time, on the last Business Day of the
Exchange Period, by sending to the institution specified in the notice, a
telegram, telex, facsimile transmission or letter setting forth the name of
such Holder, the principal amount of Securities delivered for exchange, and a
statement that such Holder is withdrawing his election to have such
Securities exchanged;
(v) notify each Holder that any Security not tendered by such Holder in
the Exchange Offer will remain outstanding and continue to accrue interest or
accumulate distributions, as the case may be, but will not retain any rights
under this Agreement (except in the case of the Initial Purchaser and
Participating Broker-Dealers as provided herein); and
(vi) otherwise comply in all respects with all applicable laws relating
to the Exchange Offer.
If the Initial Purchaser determines upon advice of its outside
counsel that it is not eligible to participate in the Exchange Offer with
respect to the exchange of Securities constituting any portion of an unsold
allotment in the initial distribution, as soon as practicable upon receipt by
the Company and the Trust of a written request from the Initial Purchaser,
the Company and the Trust, as applicable, shall issue and deliver to the
Initial Purchaser in exchange (the "Private Exchange") for the
----------------
Securities held by the Initial Purchaser, a like liquidation amount of
Capital Securities of the Trust, together with the Exchange Guarantee, or a
like principal amount of the Subordinated Debentures of the Company, as
applicable, that are identical (except that such securities may bear a
customary legend with respect to restrictions on transfer pursuant to the
Securities Act) to the Exchange Securities (the "Private Exchange
----------------
Securities") and which are issued pursuant to the Indenture, the
- ----------
Declaration or the Guarantee (which provides that the Exchange Securities
will not be subject to the transfer restrictions set forth in the Indenture
or the Declaration, as applicable, and that the Exchange Securities, the
Private Exchange Securities and the Securities will vote and consent together
on all matters as one class and that neither the Exchange Securities, the
Private Exchange Securities nor the Securities will have the right to vote or
consent as a separate class on any matter). The Private Exchange Securities
shall be of the same series as the Exchange Securities and the Company and
the Trust will seek to cause the CUSIP Service Bureau to issue the same CUSIP
Numbers for the Private Exchange Securities as for the Exchange Securities
issued pursuant to the Exchange Offer.
As soon as practicable after the close of the Exchange Offer and,
if applicable, the Private Exchange, the Company and the Trust, as the case
requires, shall:
(i) accept for exchange all Securities or portions thereof tendered and
not validly withdrawn pursuant to the Exchange Offer or the Private Exchange;
(ii) deliver, or cause to be delivered, to the applicable Trustee for
cancellation all Securities or portions thereof so accepted for exchange by
the Company; and
(iii) issue, and cause the applicable Trustee under the Indenture,
the Declaration or the Guarantee, as applicable, to promptly authenticate and
deliver to each Holder, new Exchange Securities or Private Exchange
Securities, as applicable, equal in principal amount to the principal amount
of the Subordinated Debentures or equal in liquidation amount to the
liquidation amount to the Capital Securities (together with the guarantee
thereof) as are surrendered by such Holder.
Distributions on each Exchange Capital Security and interest on
each Exchange Debenture and Private Exchange Security issued pursuant to the
Registered Exchange Offer and in the Private Exchange will accumulate or
accrue, as the case may be, from the last date on which a Distribution or
interest was paid on the Capital Security or the Subordinated Debenture
surrendered in exchange therefore or, if no Distribution or interest has been
paid on such Capital Security or Subordinated Debenture, from the Issue Date.
To the extent not prohibited by any law or applicable interpretation of the
staff of the SEC, the Company and the Trust shall use their best efforts to
complete the Exchange Offer as provided above, and shall comply with the
applicable requirements of the Securities Act, the Exchange Act and other
applicable laws in connection with the Exchange Offer. The Exchange Offer
shall not be subject to any conditions, other than that the Exchange Offer
does not violate applicable law or any applicable interpretation of the staff
of the SEC. Each Holder of Registrable Securities who wishes to exchange
such Registrable Securities for Exchange Securities in the Exchange Offer
will be required to make certain customary representations in connection
therewith, including, in the case of any Holder of Capital Securities,
representations that (i) it is not an affiliate of the Trust or the Company,
(ii) the Exchange Securities to be received by it were acquired in the
ordinary course of its business and (iii) at the time of the Exchange Offer,
it has no arrangement with any person to participate in the distribution
(within the meaning of the Securities Act) of the Exchange Capital
Securities. The Company and the Trust shall inform the Initial Purchaser,
after consultation with the Trustee, of the names and addresses of the
Holders to whom the Exchange Offer is made, and the Initial Purchaser shall
have the right to contact such Holders and otherwise facilitate the tender of
Registrable Securities in the Exchange Offer.
Upon consummation of the Exchange Offer in accordance with this
Section 2(a), the provisions of this Agreement shall continue to apply,
mutatis mutandis, solely with respect to Registrable Securities that are
- ----------------
Private Exchange Securities and Exchange Securities held by Participating
Broker-Dealers, and the Company and the Trust shall have no further
obligation to register the Registrable Securities (other than Private
Exchange Securities) pursuant to Section 2(b) of this Agreement.
(b) Shelf Registration. In the event that (i) the Company, the
------------------
Trust or the Majority Holders reasonably determine, after conferring with
counsel (which may be in-house counsel), that the Exchange Offer Registration
provided in Section 2(a) above is not available because of any change in law
or in currently prevailing interpretations of the staff of the SEC, (ii) the
Exchange Offer Registration Statement is not declared effective within 180
days of January 29, 1997 or (iii) upon the request of the Initial Purchaser
with respect to any Registrable Securities held by it, if the Initial
Purchaser is not permitted, in the reasonable opinion of Brown & Wood LLP,
pursuant to applicable law or applicable interpretations of the staff of the
SEC, to participate in the Exchange Offer and thereby receive securities that
are freely tradeable without restriction under the Securities Act and
applicable blue sky or state securities laws (any of the events specified in
(i)-(iii) being a "Shelf Registration Event" and the date of occurrence
------------------------
thereof, the "Shelf Registration Event Date"), the Company and the Trust
-----------------------------
shall, at their cost, use their reasonable best efforts to cause to be filed
as promptly as practicable after such Shelf Registration Event Date, as the
case may be, and, in any event, within 45 days after such Shelf Registration
Event Date (which shall be no earlier than 75 days after the Closing Time),
a Shelf Registration Statement providing for the sale by the Holders of all
of the Registrable Securities, and shall use their reasonable best efforts to
have such Shelf Registration Statement declared effective by the SEC as soon
as practicable. No Holder of Registrable Securities shall be entitled to
include any of its Registrable Securities in any Shelf Registration pursuant
to this Agreement unless and until such Holder agrees in writing to be bound
by all of the provisions of this Agreement applicable to such Holder and
furnishes to the Company and the Trust in writing, within 15 days after
receipt of a request therefor, such information as the Company and the Trust
may, after conferring with counsel with regard to information relating to
Holders that would be required by the SEC to be included in such Shelf
Registration Statement or Prospectus included therein, reasonably request for
inclusion in any Shelf Registration Statement or Prospectus included therein.
Each Holder as to which any Shelf Registration is being effected agrees to
furnish to the Company and the Trust all information with respect to such
Holder necessary to make the information previously furnished to the Company
by such Holder not materially misleading.
The Company and the Trust agree to use their reasonable best
efforts to keep the Shelf Registration Statement continuously effective for
the Rule 144(k) Period (subject to extension pursuant to the last paragraph
of Section 3 hereof) or for such shorter period which will terminate when all
of the Registrable Securities covered by the Shelf Registration Statement
have been sold pursuant to the Shelf Registration Statement or cease to be
outstanding (the "Effectiveness Period"). The Company and the Trust
--------------------
shall not permit any securities other than Registrable Securities
to be included in the Shelf Registration. The Company and the
Trust will, in the event a Shelf Registration Statement is declared
effective, provide to each Holder a reasonable number of copies of the
Prospectus which is a part of the Shelf Registration Statement, notify each
such Holder when the Shelf Registration has become effective and use its best
efforts to take certain other actions as are required to permit certain
unrestricted resales of the Registrable Securities. The Company and the
Trust further agree, if necessary, to supplement or amend the Shelf
Registration Statement, if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Shelf
Registration Statement or by the Securities Act or by any other rules and
regulations thereunder for shelf registrations, and the Company and the Trust
agree to furnish to the Holders of Registrable Securities copies of any such
supplement or amendment promptly after its being used or filed with the SEC.
(c) Expenses. The Company shall pay all Registration Expenses
--------
in connection with the registration pursuant to Section 2(a) or 2(b) hereof
and will reimburse the Initial Purchaser for the reasonable fees and
disbursements of Brown & Wood LLP, counsel for the Initial Purchaser,
incurred in connection with the Exchange Offer and, if applicable, the
Private Exchange Offer, and either Brown & Wood LLP or any one other counsel
designated in writing by the Majority Holders to act as counsel for the
Holders of the Registrable Securities in connection with a Shelf Registration
Statement, which other counsel shall be reasonably satisfactory to the
Company. Except as provided herein, each Holder shall pay all expenses of
its counsel, underwriting discounts and commissions and transfer taxes if
any, relating to the sale or disposition of such Holder's Registrable
Securities pursuant to the Shelf Registration Statement.
(d) Effective Registration Statement. An Exchange Offer
--------------------------------
Registration Statement pursuant to Section 2(a) hereof or a Shelf
Registration Statement pursuant to Section 2(b) hereof will not be deemed to
have become effective unless it has been declared effective by the SEC;
provided, however, that if, after it has been declared effective, the
- -------- -------
offering of Registrable Securities pursuant to a Shelf Registration Statement
is interfered with by any stop order, injunction or other order or
requirement of the SEC or any other governmental agency or court, such
Registration Statement will be deemed not to have been effective during the
period of such interference, until the offering of Registrable Securities
pursuant to such Registration Statement may legally resume. The Company and
the Trust will be deemed not to have used their best efforts to cause the
Exchange Offer Registration Statement or the Shelf Registration Statement, as
the case may be, to become, or to remain, effective during the requisite
period if either of them voluntarily take any action that would result in any
such Registration Statement not being declared effective or in the Holders of
Registrable Securities covered thereby not being able to exchange or offer
and sell such Registrable Securities during that period unless such action is
required by applicable law.
(e) Liquidated Damages. In the event that (i) (A) neither the
------------------
Exchange Offer Registration Statement nor a Shelf Registration Statement is
filed with the SEC on or prior to the 150th day after January 29, 1997 or
(B) notwithstanding that the Company and the Trust have consummated or will
consummate an Exchange Offer, the Company and the Trust are required to file
a Shelf Registration Statement and such Shelf Registration Statement is not
filed on or prior to the date required by Section 2(b) hereof, then
commencing on the day after the applicable required filing date, additional
interest shall accrue on the principal amount of the Subordinated Debentures,
and additional Distributions shall accumulate on the liquidation amount of
the Capital Securities, each at a rate of 0.25% per annum; or
(ii) (A) neither the Exchange Offer Registration Statement nor a Shelf
Registration Statement is declared effective by the SEC on or prior to the
30th day after the applicable required filing date or (B) notwithstanding
that the Company and the Trust have consummated or will consummate an
Exchange Offer, the Company and the Trust are required to file a Shelf
Registration Statement and such Shelf Registration Statement is not declared
effective by the SEC on or prior to the 30th day after the date such Shelf
Registration Statement was required to be filed, then, commencing on the 31st
day after the applicable required filing date, additional interest shall
accrue on the principal amount of the Subordinated Debentures, and additional
Distributions shall accumulate on the liquidation amount of the Capital
Securities, each at a rate of 0.25% per annum; or
(iii) (A) the Trust has not exchanged Exchange Capital Securities for
all Capital Securities or the Company has not exchanged the Exchange
Guarantee and Exchange Subordinated Debentures for the Guarantee and all
Subordinated Debentures validly tendered, in accordance with the terms of the
Exchange Offer on or prior to the 30th day after the date on which the
Exchange Offer Registration Statement was declared effective or (B) if
applicable, the Shelf Registration Statement has been declared effective and
such Shelf Registration Statement ceases to be effective at any time prior to
the expiration of the Rule 144(k) Period (other than after such time as all
Capital Securities have been disposed of thereunder or otherwise cease to be
Registrable Securities), then additional interest shall accrue on the
principal amount of Subordinated Debentures, and additional Distributions
shall accumulate on the liquidation amount of the Capital Securities, each at
a rate of 0.25% per annum commencing on (x) the 31st day after such effective
date, in the case of (A) above, or (y) the day such Shelf Registration
Statement ceases to be effective in the case of (B) above;
provided, however, that neither the additional interest rate on the
Subordinated Debentures, nor the additional distribution rate on the
liquidation amount of the Capital Securities, may exceed in the aggregate
0.25% per annum; provided, further, however, that (1) upon the filing of the
Exchange Offer Registration Statement or a Shelf Registration Statement (in
the case of clause (i) above), (2) upon the effectiveness of the Exchange
Offer Registration Statement or a Shelf Registration Statement (in the case
of clause (ii) above), or (3) upon the exchange of Exchange Capital
Securities, the Exchange Guarantee and Exchange Subordinated Debentures for
all Capital Securities, the Guarantee and Subordinated Debentures tendered
(in the case of clause (iii)(A) above), or upon the effectiveness of the
Shelf Registration Statement which had ceased to remain effective (in the
case of clause (iii)(B) above), additional interest on the Subordinated
Debentures, and additional distributions on the liquidation amount of the
Capital Securities as a result of such clause (or the relevant subclause
thereof), as the case may be, shall cease to accrue or accumulate, as the
case may be.
Any amounts of additional interest and additional Distributions due
pursuant to Section 2(e)(i), (ii) or (iii) above (the "Liquidated Damages")
will be payable in cash on January 31 and July 31 of each year to the holders
of record on the 15th day prior to the relevant payment date.
(f) Specific Enforcement. Without limiting the remedies
--------------------
available to the Holders, the Company and the Trust acknowledge that any
failure by the Company or the Trust to comply with its obligations under
Section 2(a) and Section 2(b) hereof may result in material irreparable
injury to the Holders for which there is no adequate remedy at law, that it
would not be possible to measure damages for such injuries precisely and
that, in the event of any such failure, any Holder may obtain such relief as
may be required to specifically enforce the Company's and the Trust's
obligations under Section 2(a) and Section 2(b) hereof.
3. Registration Procedures. In connection with the
-----------------------
obligations of the Company and the Trust with respect to the Registration
Statements pursuant to Sections 2(a) and 2(b) hereof, the Company and the
Trust shall use their reasonable best efforts to:
(a) prepare and file with the SEC a Registration Statement or
Registration Statements as prescribed by Sections 2(a) and 2(b) hereof
within the relevant time period specified in Section 2 hereof on the
appropriate form under the Securities Act, which form (i) shall be
selected by the Company and the Trust, (ii) shall, in the case of a
Shelf Registration, be available for the sale of the Registrable
Securities by the selling Holders thereof and (iii) shall comply as to
form in all material respects with the requirements of the applicable
form and include all financial statements required by the SEC to be
filed therewith; and use its best efforts to cause such Registration
Statement to become effective and remain effective in accordance with
Section 2 hereof; provided, however, that if (1) such filing
-------- -------
is pursuant to Section 2(b), or (2) a Prospectus contained in an
Exchange Offer Registration Statement filed pursuant to Section 2(a) is
required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Securities, before filing any
Registration Statement or Prospectus or any amendments or supplements
thereto, the Company and the Trust shall furnish to and afford the
Holders of the Registrable Securities and each such Participating
Broker-Dealer, as the case may be, covered by such Registration
Statement, their counsel and the managing underwriters, if any, a
reasonable opportunity to review copies of all such documents (including
copies of any documents to be incorporated by reference therein and all
exhibits thereto) proposed to be filed. The Company and the Trust shall
not file any Registration Statement or Prospectus or any amendments or
supplements thereto in respect of which the Holders must be afforded an
opportunity to review prior to the filing of such document if the
Majority Holders or such Participating Broker-Dealer, as the case may
be, their counsel or the managing underwriters, if any, shall reasonably
object;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary to keep such Registration Statement effective for the
Effectiveness Period or the Applicable Period, as the case may be; and
cause each Prospectus to be supplemented, if so determined by the
Company or the Trust or requested by the SEC, by any required prospectus
supplement and as so supplemented to be filed pursuant to Rule 424 (or
any similar provision then in force) under the Securities Act, and
comply with the provisions of the Securities Act, the Exchange Act and
the rules and regulations promulgated thereunder applicable to it with
respect to the disposition of all securities covered by each
Registration Statement during the Effectiveness Period or the Applicable
Period, as the case may be, in accordance with the intended method or
methods of distribution by the selling Holders thereof described in this
Agreement (including sales by any Participating Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify each Holder of
Registrable Securities included in the Shelf Registration Statement, at
least three Business Days prior to filing, that a Shelf Registration
Statement with respect to the Registrable Securities is being filed and
advising such Holder that the distribution of Registrable Securities
will be made in accordance with the method selected by the Majority
Holders; and (ii) furnish to each Holder of Registrable Securities
included in the Shelf Registration Statement and to each underwriter of
an underwritten offering of Registrable Securities, if any, without
charge, as many copies of each Prospectus, including each preliminary
Prospectus, and any amendment or supplement thereto and such other
documents as such Holder or underwriter may reasonably request, in order
to facilitate the public sale or other disposition of the Registrable
Securities; and (iii) consent to the use of the Prospectus or any
amendment or supplement thereto by each of the selling Holders of
Registrable Securities included in the Shelf Registration Statement in
connection with the offering and sale of the Registrable Securities
covered by the Prospectus or any amendment or supplement thereto;
(d) in the case of a Shelf Registration, use their reasonable best
efforts to register or qualify the Registrable Securities under all
applicable state securities or "blue sky" laws of such jurisdictions by
the time the applicable Registration Statement is declared effective by
the SEC as any Holder of Registrable Securities covered by a
Registration Statement and each underwriter of an underwritten offering
of Registrable Securities shall reasonably request in writing in advance
of such date of effectiveness, and do any and all other acts and things
which may be reasonably necessary or advisable to enable such Holder and
underwriter to consummate the disposition in each such jurisdiction of
such Registrable Securities owned by such Holder; provided, however,
-------- -------
that the Company and the Trust shall not be required to (i) qualify as a
foreign corporation or as a dealer in securities in any jurisdiction
where it would not otherwise be required to qualify but for this Section
3(d); (ii) file any general consent to service of process in any
jurisdiction where it would not otherwise be subject to such service of
process or (iii) subject itself to taxation in any such jurisdiction if
it is not then so subject;
(e) in the case of (1) a Shelf Registration or (2) Participating
Broker-Dealers from whom the Company or the Trust has received prior
written notice that they will be utilizing the Prospectus contained in
the Exchange Offer Registration Statement as provided in Section 3(t)
hereof, are seeking to sell Exchange Securities and are required to
deliver Prospectuses, notify each Holder of Registrable Securities, or
such Participating Broker-Dealers, as the case may be, their counsel and
the managing underwriters, if any, promptly and promptly confirm such
notice in writing (i) when a Registration Statement has become effective
and when any post-effective amendments and supplements thereto become
effective, (ii) of any request by the SEC or any state securities
authority for amendments and supplements to a Registration Statement or
Prospectus or for additional information after the Registration
Statement has become effective, (iii) of the issuance by the SEC or any
state securities authority of any stop order suspending the
effectiveness of a Registration Statement or the qualification of the
Registrable Securities or the Exchange Securities to be offered or sold
by any Participating Broker-Dealer in any jurisdiction described in
paragraph 3(d) hereof or the initiation of any proceedings for that
purpose, (iv) in the case of a Shelf Registration, if, between the
effective date of a Registration Statement and the closing of any sale
of Registrable Securities covered thereby, the representations and
warranties of the Company and the Trust contained in any purchase
agreement, securities sales agreement or other similar agreement, if any
cease to be true and correct in all material respects, and (v) of the
happening of any event or the failure of any event to occur or the
discovery of any facts or otherwise, during the Effectiveness Period
which makes any statement made in such Registration Statement or the
related Prospectus untrue in any material respect or which causes such
Registration Statement or Prospectus to omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and (vi) the
Company and the Trust's reasonable determination that a post-effective
amendment to the Registration Statement would be appropriate;
(f) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the
earliest possible moment;
(g) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities included within the coverage of such Shelf
Registration Statement, without charge, at least one conformed copy of
each Registration Statement relating to such Shelf Registration and any
post-effective amendment thereto (without documents incorporated therein
by reference or exhibits thereto, unless requested);
(h) in the case of a Shelf Registration, cooperate with the
selling Holders of Registrable Securities to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends and in
such denominations (consistent with the provisions of the Indenture and
the Declaration) and registered in such names as the selling Holders or
the underwriters may reasonably request at least two Business Days prior
to the closing of any sale of Registrable Securities pursuant to such
Shelf Registration Statement;
(i) in the case of a Shelf Registration or an Exchange Offer
Registration, upon the occurrence of any circumstance contemplated by
Section 3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, use its best
efforts to prepare a supplement or post-effective amendment to a
Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; and to notify each Holder to suspend use of
the Prospectus as promptly as practicable after the occurrence of such
an event, and each Holder hereby agrees to suspend use of the Prospectus
until the Company has amended or supplemented the Prospectus to correct
such misstatement or omission;
(j) in the case of a Shelf Registration, a reasonable time prior
to the filing of any document which is to be incorporated by reference
into a Registration Statement or a Prospectus after the initial filing
of a Registration Statement, provide a reasonable number of copies of
such document to the Holders; and make such of the representatives of
the Company and the Trust as shall be reasonably requested by the
Holders of Registrable Securities or the Initial Purchaser on behalf of
such Holders available for discussion of such document;
(k) obtain a CUSIP number for all Exchange Capital Securities and
the Capital Securities (and if the Trust has made a distribution of the
Subordinated Debentures to the Holders of the Capital Securities, the
Subordinated Debentures or the Exchange Subordinated Debentures), as the
case may be, not later than the effective date of a Registration
Statement, and provide the Trustee with printed certificates for the
Exchange Securities or the Registrable Securities, as the case may be,
in a form eligible for deposit with the Depositary;
(l) cause the Indenture, the Declaration, the Guarantee and the
Exchange Guarantee to be qualified under the Trust Indenture Act of 1939
(the "TIA") in connection with the registration of the Exchange
---
Securities or Registrable Securities, as the case may be, and effect
such changes to such documents as may be required for them to be so
qualified in accordance with the terms of the TIA and execute, and use
its best efforts to cause the relevant trustee to execute, all documents
as may be required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable such documents to
be so qualified in a timely manner;
(m) in the case of a Shelf Registration, enter into such
agreements (including underwriting agreements) as are customary in
underwritten offerings and take all such other appropriate actions as
are reasonably requested in order to expedite or facilitate the
registration or the disposition of such Registrable Securities, and in
such connection, whether or not an underwriting agreement is entered
into and whether or not the registration is an underwritten
registration, if requested by (x) the Initial Purchaser, in the case
where the Initial Purchaser holds Securities acquired by it as part of
its initial distribution and (y) other Holders of Securities covered
thereby: (i) make such representations and warranties to Holders of
such Registrable Securities and the underwriters (if any), with respect
to the business of the Trust, the Company and its subsidiaries as then
conducted and the Registration Statement, Prospectus and documents, if
any, incorporated or deemed to be incorporated by reference therein, in
each case, as are customarily made by issuers to underwriters in
underwritten offerings, and confirm the same if and when requested;
(ii) obtain opinions of counsel to the Company and the Trust and updates
thereof (which may be in the form of a reliance letter) in form and
substance reasonably satisfactory to the managing underwriters (if any)
and the Holders of a majority in principal amount of the Registrable
Securities being sold, addressed to each selling Holder and the
underwriters (if any) covering the matters customarily covered in
opinions requested in underwritten offerings and such other matters as
may be reasonably requested by such underwriters (it being agreed that
the matters to be covered by such opinion may be subject to customary
qualifications and exceptions); (iii) obtain "cold comfort" letters and
updates thereof in form and substance reasonably satisfactory to the
managing underwriters from the independent certified public accountants
of the Company and the Trust (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company and the
Trust or of any business acquired by the Company and the Trust for which
financial statements and financial data are, or are required to be,
included in the Registration Statement), addressed to each of the
underwriters, such letters to be in customary form and covering matters
of the type customarily covered in "cold comfort" letters in connection
with underwritten offerings and such other matters as reasonably
requested by such underwriters in accordance with Statement on Auditing
Standards No. 72; and (iv) if an underwriting agreement is entered into,
the same shall contain indemnification provisions and procedures no less
favorable than those set forth in Section 4 hereof (or such other
provisions and procedures acceptable to Holders of a majority in
aggregate principal amount of Registrable Securities covered by such
Registration Statement and the managing underwriters or agents) with
respect to all parties to be indemnified pursuant to said Section
(including, without limitation, such underwriters and selling Holders).
The above shall be done at each closing under such underwriting
agreement, or as and to the extent required thereunder;
(n) if (1) a Shelf Registration is filed pursuant to Section 2(b)
or (2) a Prospectus contained in an Exchange Offer Registration
Statement filed pursuant to Section 2(a) is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks to
sell Exchange Securities during the Applicable Period, make reasonably
available for inspection by any selling Holder of such Registrable
Securities being sold, or each such Participating Broker-Dealer, as the
case may be, any underwriter participating in any such disposition of
Registrable Securities, if any, and any attorney, accountant or other
agent retained by any such selling Holder or each such Participating
Broker-Dealer, as the case may be, or underwriter (collectively, the
"Inspectors"), at the offices where normally kept, during
----------
reasonable business hours, all financial and other records,
pertinent corporate documents and properties of the Trust, the
Company and its subsidiaries (collectively, the "Records")
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as shall be reasonably necessary to enable them to exercise any
applicable due diligence responsibilities, and cause the officers,
directors and employees of the Trust, the Company and its subsidiaries
to supply all relevant information in each case reasonably requested by
any such Inspector in connection with such Registration Statement
provided, however, that the foregoing inspection and
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information gathering shall be coordinated on behalf of
the Purchasers by the Initial Purchaser and on behalf of the other
parties, by one counsel designated by the Initial Purchaser and on
behalf of such other parties as described in Section 2(c) hereof.
Records which the Company and the Trust determine, in good faith, to be
confidential and any records which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records is necessary to avoid or correct a material
misstatement or omission in such Registration Statement, (ii) the
release of such Records is ordered pursuant to a subpoena or other order
from a court of competent jurisdiction or is necessary in connection
with any action, suit or proceeding or (iii) the information in such
Records has been made generally available to the public. Each selling
Holder of such Registrable Securities and each such Participating
Broker-Dealer will be required to agree in writing that information
obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Trust or the Company unless and
until such is made generally available to the public. Each selling
Holder of such Registrable Securities and each such Participating
Broker-Dealer will be required to further agree in writing that it will,
upon learning that disclosure of such Records is sought in a court of
competent jurisdiction, give notice to the Company and allow the Company
at its expense to undertake appropriate action to prevent disclosure of
the Records deemed confidential;
(o) comply with all applicable rules and regulations of the SEC so
long as any provision of this Agreement shall be applicable and make
generally available to its securityholders earning statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no
later than 45 days after the end of any 12-month period (or 90 days
after the end of any 12-month period if such period is a fiscal year)
(i) commencing at the end of any fiscal quarter in which Registrable
Securities are sold to underwriters in a firm commitment or best efforts
underwritten offering and (ii) if not sold to underwriters in such an
offering, commencing on the first day of the first fiscal quarter of the
Company after the effective date of a Registration Statement, which
statements shall cover said 12-month periods;
(p) upon consummation of an Exchange Offer or a Private Exchange,
if requested by a Trustee, obtain an opinion of counsel to the Company
addressed to the Trustee for the benefit of all Holders of Registrable
Securities participating in the Exchange Offer or the Private Exchange,
as the case may be, and which includes an opinion that (i) the Company
and the Trust, as the case requires, has duly authorized, executed and
delivered the Exchange Securities and Private Exchange Securities, and
(ii) each of the Exchange Securities or the Private Exchange Securities,
as the case may be, constitute a legal, valid and binding obligation of
the Company or the Trust, as the case requires, enforceable against the
Company or the Trust, as the case requires, in accordance with its
respective terms (in each case, with customary exceptions);
(q) if an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Securities by Holders to
the Company or the Trust, as applicable (or to such other Person as
directed by the Company or the Trust, respectively), in exchange for the
Exchange Securities or the Private Exchange Securities, as the case may
be, the Company or the Trust, as applicable, shall mark, or cause to be
marked, on such Registrable Securities delivered by such Holders that
such Registrable Securities are being cancelled in exchange for the
Exchange Securities or the Private Exchange Securities, as the case may
be; in no event shall such Registrable Securities be marked as paid or
otherwise satisfied;
(r) cooperate with each seller of Registrable Securities covered
by any Registration Statement and each underwriter, if any,
participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be
made with the NASD;
(s) use its best efforts to take all other steps necessary to
effect the registration of the Registrable Securities covered by a
Registration Statement contemplated hereby;
(t) (A) in the case of the Exchange Offer Registration Statement
(i) include in the Exchange Offer Registration Statement a section
entitled "Plan of Distribution, which section shall be reasonably
acceptable to the Initial Purchaser or another representative of the
Participating Broker-Dealers, and which shall contain a summary
statement of the positions taken or policies made by the staff of the
SEC with respect to the potential "underwriter" status of any
broker-dealer (a "Participating Broker-Dealer") that holds
---------------------------
Registrable Securities acquired for its own account as a result of
market-making activities or other trading activities and that will be
the beneficial owner (as defined in Rule 13d-3 under the Exchange Act)
of Exchange Securities to be received by such broker-dealer in the
Exchange Offer, whether such positions or policies have been publicly
disseminated by the staff of the SEC or such positions or policies, in
the reasonable judgment of the Initial Purchaser or such other
representative, represent the prevailing views of the staff of the SEC,
including a statement that any such broker-dealer who receives Exchange
Securities for Registrable Securities pursuant to the Exchange Offer may
be deemed a statutory underwriter and must deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of
such Exchange Securities, (ii) furnish to each Participating
Broker-Dealer who has delivered to the Company the notice referred to in
Section 3(e), without charge, as many copies of each Prospectus included
in the Exchange Offer Registration Statement, including any preliminary
prospectus, and any amendment or supplement thereto, as such
Participating Broker-Dealer may reasonably request (each of the Company
and the Trust hereby consents to the use of the Prospectus forming part
of the Exchange Offer Registration Statement or any amendment or
supplement thereto by any Person subject to the prospectus delivery
requirements of the Securities Act, including all Participating
Broker-Dealers, in connection with the sale or transfer of the Exchange
Securities covered by the Prospectus or any amendment or supplement
thereto), (iii) use its best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the
Prospectus contained therein in order to permit such Prospectus to be
lawfully delivered by all Persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as such
Persons must comply with such requirements under the Securities Act and
applicable rules and regulations in order to resell the Exchange
Securities; provided, however, that such period shall not be required
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to exceed 90 days (or such longer period if extended pursuant to the
last sentence of Section 3 hereof) (the "Applicable Period"), and
-----------------
(iv) include in the transmittal letter or similar documentation to be
executed by an exchange offeree in order to participate in the Exchange
Offer (x) the following provision:
"If the exchange offeree is a broker-dealer holding
Registrable Securities acquired for its own account as a
result of market-making activities or other trading
activities, it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any
resale of Exchange Securities received in respect of such
Registrable Securities pursuant to the Exchange Offer";
and (y) a statement to the effect that by a broker-dealer making the
acknowledgment described in clause (x) and by delivering a Prospectus in
connection with the exchange of Registrable Securities, the
broker-dealer will not be deemed to admit that it is an underwriter
within the meaning of the Securities Act; and
(B) in the case of any Exchange Offer Registration Statement, the
Company and the Trust agree to deliver to the Initial Purchaser or to
another representative of the Participating Broker-Dealers, if requested
by the Initial Purchaser or such other representative of the
Participating Broker-Dealers, on behalf of the Participating
Broker-Dealers upon consummation of the Exchange Offer (i) an opinion of
counsel in form and substance reasonably satisfactory to the Initial
Purchaser or such other representative of the Participating
Broker-Dealers, covering the matters customarily covered in opinions
requested in connection with Exchange Offer Registration Statements and
such other matters as may be reasonably requested (it being agreed that
the matters to be covered by such opinion may be subject to customary
qualifications and exceptions), (ii) an officers' certificate containing
certifications substantially similar to those set forth in Section 5(f)
of the Purchase Agreement and such additional certifications as are
customarily delivered in a public offering of debt securities and
(iii) as well as upon the effectiveness of the Exchange Offer
Registration Statement, a comfort letter, in each case, in customary
form if permitted by Statement on Auditing Standards No. 72.
The Company or the Trust may require each seller of Registrable
Securities as to which any registration is being effected to furnish to the
Company or the Trust, as applicable, such information regarding such seller
as may be required by the staff of the SEC to be included in a Registration
Statement. The Company or the Trust may exclude from such registration the
Registrable Securities of any seller who unreasonably fails to furnish such
information within a reasonable time after receiving such request. The
Company shall have no obligation to register under the Securities Act the
Registrable Securities of a seller who so fails to furnish such information.
In the case of (1) a Shelf Registration Statement or
(2) Participating Broker-Dealers who have notified the Company and the Trust
that they will be utilizing the Prospectus contained in the Exchange Offer
Registration Statement as provided in Section 3(t) hereof, are seeking to
sell Exchange Securities and are required to deliver Prospectuses each Holder
agrees that, upon receipt of any notice from the Company or the Trust of the
happening of any event of the kind described in Section 3(e)(ii), 3(e)(iii),
3(e)(v) or 3(e)(vi) hereof, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to a Registration Statement
until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 3(i) hereof or until it is advised in
writing (the "Advice") by the Company and the Trust that the
------
use of the applicable Prospectus may be resumed, and, if so
directed by the Company and the Trust, such Holder will deliver to the
Company or the Trust (at the Company's or the Trust's expense, as the case
requires) all copies in such Holder's possession, other than permanent file
copies then in such Holder's possession, of the Prospectus covering such
Registrable Securities or Exchange Securities, as the case may be, current at
the time of receipt of such notice. If the Company or the Trust shall give
any such notice to suspend the disposition of Registrable Securities or
Exchange Securities, as the case may be, pursuant to a Registration
Statement, the Company and the Trust shall use their best efforts to file and
have declared effective (if an amendment) as soon as practicable an amendment
or supplement to the Registration Statement and shall extend the period
during which such Registration Statement shall be maintained effective
pursuant to this Agreement by the number of days in the period from and
including the date of the giving of such notice to and including the date
when the Company and the Trust shall have made available to the Holders
(x) copies of the supplemented or amended Prospectus necessary to resume such
dispositions or (y) the Advice.
4. Indemnification and Contribution. In connection with any
--------------------------------
Registration Statement, the Company and the Trust shall, jointly and
severally, indemnify and hold harmless the Initial Purchaser, each Holder,
each underwriter who participates in an offering of the Registrable
Securities, each Participating Broker-Dealer, each Person, if any, who
controls any of such parties within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act and each of their respective
directors, officers, employees and agents, as follows:
(i) from and against any and all loss, liability, claim, damage
and expense whatsoever, joint or several, as incurred, arising out of
any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement (or any amendment thereto),
covering Registrable Securities or Exchange Securities, including all
documents incorporated therein by reference, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out
of any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (or any amendment or supplement thereto) or
the omission or alleged omission therefrom of a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) from and against any and all loss, liability, claim, damage
and expense whatsoever, joint or several, as incurred, to the extent of
the aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any court or governmental agency or body,
commenced or threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the prior written consent
of the Company; and
(iii) from and against any and all expenses whatsoever, as
incurred (including reasonable fees and disbursements of counsel chosen
by such Holder, such Participating Broker-Dealer, or any underwriter
(except to the extent otherwise expressly provided in Section 4(c)
hereof)), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any court
or governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such
expense is not paid under subparagraph (i) or (ii) of this Section 4(a);
provided, however, that (i) this indemnity does not apply to any loss,
- -------- -------
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished in writing
to the Company or the Trust by such Holder, such Participating Broker-Dealer
or any underwriter with respect to such Holder, Participating Broker-Dealer
or any underwriter, as the case may be, expressly for use in the Registration
Statement (or any amendment thereto) or any Prospectus (or any amendment or
supplement thereto) and (ii) the Company and the Trust shall not be liable to
any such Holder, Participating Broker-Dealer, any underwriter or controlling
person, with respect to any untrue statement or alleged untrue statement or
omission or alleged omission in any preliminary Prospectus to the extent that
any such loss, liability, claim, damage or expense of any Holder,
Participating Broker-Dealer, any underwriter or controlling person results
from the fact that such Holder, any underwriter or Participating
Broker-Dealer sold Securities to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of the
final Prospectus as then amended or supplemented if the Company had
previously furnished copies thereof to such Holder, underwriter or
Participating Broker-Dealer and the loss, liability, claim, damage or expense
of such Holder, underwriter, Participating Broker-Dealer or controlling
person results from an untrue statement or omission of a material fact
contained in the preliminary Prospectus which was corrected in the final
Prospectus. Any amounts advanced by the Company or the Trust to an
indemnified party pursuant to this Section 4 as a result of such losses shall
be returned to the Company or the Trust if it shall be finally determined by
such a court in a judgment not subject to appeal or final review that such
indemnified party was not entitled to indemnification by the Company or the
Trust.
(b) Each Holder agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Trust, any underwriter and the other
selling Holders and each of their respective directors, officers (including
each officer of the Company and the Trust who signed the Registration
Statement), employees and agents and each Person, if any, who controls the
Company, the Trust, any underwriter or any other selling Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any and all loss, liability, claim, damage and expense
whatsoever described in the indemnity contained in Section 4(a) hereof, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto)
in reliance upon and in conformity with written information furnished to the
Company or the Trust by such selling Holder with respect to such Holder
expressly for use in the Registration Statement (or any amendment thereto),
or any such Prospectus (or any amendment or supplement thereto);
provided, however, that, in the case of Shelf Registration Statement, no such
- -------- -------
Holder shall be liable for any claims hereunder in excess of the amount of net
proceeds received by such Holder from the sale of Registrable Securities
pursuant to such Shelf Registration Statement.
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, enclosing a copy of all papers properly
served on such indemnified party, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability which it
may have under this Section 4, except to the extent that it is materially
prejudiced by such failure. An indemnifying party may participate at its own
expense in the defense of such action. If an indemnifying party so elects
within a reasonable time after receipt of such notice, an indemnifying party,
severally or jointly with any other indemnifying parties receiving such
notice, may assume the defense of such action with counsel chosen by it and
reasonably acceptable to the indemnified parties defendant in such action,
provided, however, that if (i) representation of such indemnified party
- -------- -------
by the same counsel would present a conflict of interest or (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and any such indemnified party
reasonably determines that there may be legal defenses available to such
indemnified party which are different from or in addition to those available
to such indemnifying party, then in the case of clauses (i) and (ii) of this
Section 4(c) such indemnifying party and counsel for each indemnifying party
or parties shall not be entitled to assume such defense. If an indemnifying
party is not entitled to assume the defense of such action as a result of the
proviso to the preceding sentence, counsel for such indemnifying party and
counsel for each indemnified party or parties shall be entitled to conduct
the defense of such indemnified party or parties. If an indemnifying party
assumes the defense of such action, in accordance with and as permitted by
the provisions of this paragraph, such indemnifying parties shall not be
liable for any fees and expenses of counsel for the indemnified parties
incurred thereafter in connection with such action. In no event shall the
indemnifying parties be liable for the fees and expenses of more than one
counsel (in addition to local counsel), separate from its own counsel,
for-all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. No indemnifying party shall, without
the prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 4 (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional written
release in form and substance satisfactory to the indemnified parties of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as
to or an admission of fault, culpability or a failure to act by or on behalf
of any indemnified party.
(d) Notwithstanding the last sentence of Section 4(c), if at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for reasonable fees and expenses of counsel
pursuant to Section 4(a)(iii) above, such indemnifying party agrees that it
shall be liable for any settlement effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party
shall have received notice of the terms of such settlement at least 30 days
prior to such settlement being entered into and (iii) such indemnifying party
shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement; provided that an indemnifying
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party shall not be liable for any such settlement effected without its consent
if such indemnifying party (1) reimburses such indemnified party in accordance
with such request to the extent it considers reasonable and (2) provides
written notice to the indemnified party substantiating the unpaid balance as
unreasonable, in each case prior to the date of such settlement.
(e) In order to provide for just and equitable contribution in
circumstances under which any of the indemnity provisions set forth in this
Section 4 is for any reason held to be unavailable to the indemnified parties
although applicable in accordance with its terms, the Company, the Trust, and
the Holders shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity agreement
incurred by the Company, the Trust, and the Holders, as incurred; provided
--------
that no Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any
Person that was not guilty of such fraudulent misrepresentation. As between
the Company, the Trust, and the Holders, such parties shall contribute to
such aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnity agreement in such proportion as shall be
appropriate to reflect the relative fault of the Company and Trust, on the one
hand, and the Holders, on the other hand, with respect to the statements or
omissions which resulted in such loss, liability, claim, damage or expense, or
action in respect thereof, as well as any other relevant equitable
considerations. The relative fault of the Company and the Trust, on the one
hand, and of the Holders, on the other hand, shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Trust, on the one hand,
or by or on behalf of the Holders, on the other, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Trust and the Holders
of the Registrable Securities agree that it would not be just and equitable
if contribution pursuant to this Section 4 were to be determined by pro
rata allocation or by any other method of allocation that does not
take into account the relevant equitable considerations. For purposes
of this Section 4, each affiliate of a Holder, and each director,
officer, employee, agent and Person, if any, who controls a Holder
or such affiliate within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act shall have the same rights to
contribution as such Holder, and each director of each of the Company or the
Trust, each officer of each of the Company or the Trust who signed the
Registration Statement, and each Person, if any, who controls each of the
Company and the Trust within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act shall have the same rights to contribution
as each of the Company or the Trust.
5. Participation in Underwritten Registrations. No Holder may
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participate in any underwritten registration hereunder unless such Holder
(a) agrees to sell such Holder's Registrable Securities on the basis provided
in any underwriting arrangements approved by the Persons entitled hereunder
to approve such arrangements and (b) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting agreements,
lock-up letters and other documents reasonably required under the terms of
such underwriting arrangements.
6. Selection of Underwriters. The Holders of Registrable
-------------------------
Securities covered by the Shelf Registration Statement who desire to do so
may sell the securities covered by such Shelf Registration in an underwritten
offering. In any such underwritten offering, the underwriter or underwriters
and manager or managers that will administer the offering will be selected by
the Holders of a majority in aggregate principal amount of the Registrable
Securities included in such offering; provided, however, that such
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underwriters and managers must be reasonably satisfactory to the
Company and the Trust.
7. Miscellaneous.
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(a) Rule 144 and Rule 144A. For so long as the Company or the
----------------------
Trust is subject to the reporting requirements of Section 13 or 15 of the
Exchange Act and any Registrable Securities remain outstanding, each of the
Company and the Trust will use its best efforts to file the reports required
to be filed by it under the Securities Act and Section 13(a) or 15(d) of the
Exchange Act and the rules and regulations adopted by the SEC thereunder,
that if it ceases to be so required to file such reports, it will, upon the
request of any Holder of Registrable Securities (a) make publicly available
such information as is necessary to permit sales of their securities pursuant
to Rule 144 under the Securities Act, (b) deliver such information to a
prospective purchaser as is necessary to permit sales of their securities
pursuant to Rule 144A under the Securities Act and it will take such further
action as any Holder of Registrable Securities may reasonably request, and
(c) take such further action that is reasonable in the circumstances, in each
case, to the extent required from time to time to enable such Holder to sell
its Registrable Securities without registration under the Securities Act
within the limitation of the exemptions provided by (i) Rule 144 under the
Securities Act, as such rule may be amended from time to time, (ii) Rule 144A
under the Securities Act, as such rule may be amended from time to time, or
(iii) any similar rules or regulations hereafter adopted by the SEC. Upon
the request of any Holder of Registrable Securities, the Company and the
Trusts will deliver to such Holder a written statement as to whether it has
complied with such requirements.
(b) No Inconsistent Agreements. The Company or the Trust has
--------------------------
not entered into nor will the Company or the Trust on or after the date of
this Agreement enter into any agreement which is inconsistent with the rights
granted to the Holders of Registrable Securities in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent
with the rights granted to the holders of the Company's or the Trust's other
issued and outstanding securities under any such agreements.
(c) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given unless the Company and the Trust has obtained the
written consent of Holders of at least a majority in aggregate principal
amount of the outstanding Registrable Securities affected by such amendment,
modification, supplement, waiver or departure; provided no
--------
amendment, modification or supplement or waiver or consent to the departure
with respect to the provisions of Section 4 hereof shall be effective as
against any Holder of Registrable Securities unless consented to in writing
by such Holder of Registrable Securities. Notwithstanding the foregoing
sentence, (i) this Agreement may be amended, without the consent of any
Holder of Registrable Securities, by written agreement signed by the Company,
the Trust and Initial Purchaser, to cure any ambiguity, correct or supplement
any provision of this Agreement that may be inconsistent with any other
provision of this Agreement or to make any other provisions with respect to
matters or questions arising under this Agreement which shall not be
inconsistent with other provisions of this Agreement, (ii) this Agreement may
be amended, modified or supplemented, and waivers and consents to departures
from the provisions hereof may be given, by written agreement signed by the
Company, the Trust and Initial Purchaser to the extent that any such
amendment, modification, supplement, waiver or consent is, in their
reasonable judgment, necessary or appropriate to comply with applicable law
(including any interpretation of the Staff of the SEC) or any change therein
and (iii) to the extent any provision of this Agreement relates to the
Initial Purchaser, such provision may be amended, modified or supplemented,
and waivers or consents to departures from such provisions may be given, by
written agreement signed by Initial Purchaser, the Company and the Trust.
(d) Notices. All notices and other communications provided for
-------
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder
to the Company or the Trust by means of a notice given in accordance with the
provisions of this Section 7(d), which address initially is, with respect to
the Initial Purchaser, the address set forth in the Purchase Agreement; and
(ii) if to the Company or the Trust, initially at the Company's address set
forth in the Purchase Agreement and thereafter at such other address, notice
of which is given in accordance with the provisions of this Section 7(d).
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied;
and on the next Business Day, if timely delivered to an air courier
guaranteeing overnight delivery.
Copies of all such notices, demands, or other communications shall
be concurrently delivered by the Person giving the same to the Trustee, at
the address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors, assigns and transferees of the
Initial Purchaser, including, without limitation and without the need for an
express assignment, subsequent Holders; provided, however, that
-------- -------
nothing herein shall be deemed to permit any assignment, transfer or other
disposition of Registrable Securities in violation of the terms of the
Purchase Agreement or the Indenture. If any transferee of any Holder shall
acquire Registrable Securities, in any manner, whether by operation of law or
otherwise, such Registrable Securities shall be held subject to all of the
terms of this Agreement, and by taking and holding such Registrable
Securities, such Person shall be conclusively deemed to have agreed to be
bound by and to perform all of the terms and provisions of this Agreement and
such Person shall be entitled to receive the benefits hereof.
(f) Third Party Beneficiary. The Initial Purchaser shall be a
-----------------------
third party beneficiary of the agreements made hereunder between the Company
and the Trust, on the one hand, and the Holders, on the other hand, and shall
have the right to enforce such agreements directly to the extent it deems
such enforcement necessary or advisable to protect its rights or the rights
of Holders hereunder.
(g) Counterparts. This Agreement may be executed in any number
------------
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for
--------
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN
-------------
MADE IN THE STATE OF NEW YORK. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS. EACH OF THE
PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT.
(j) Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(k) Securities Held by the Company, the Trust or its
------------------------------------------------
Affiliates. Whenever the consent or approval of Holders of a specified
- ----------
percentage of Registrable Securities is required hereunder, Registrable
Securities held by the Company, the Trust or its affiliates (as such term is
defined in Rule 405 under the Securities Act) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
COMMUNITY BANK SYSTEM, INC.
By:
-------------------------------------
Name: Sanford A. Belden
Title: President
and Chief Executive Officer
COMMUNITY CAPITAL TRUST I
By: COMMUNITY BANK SYSTEM, INC.,
as Sponsor
By:
----------------------------
Name: Sanford A. Belden
Title: President
and Chief Executive Officer
Confirmed and accepted as of
the date first above
written:
M.A. SCHAPIRO & CO., INC.
By: ________________________________
Name: Richard J. Kelly
Title: Director of Investment Banking
EXHIBIT 12.1
COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The Corporation's ratios of earnings to fixed charges for the three months
ended March 31, 1997 and 1996 and for the five years ended December 31, 1996
were as follows:
<TABLE>
<CAPTION>
(dollars in millions) Three Months
Ended
March 31, Years Ended December 31,
1997 1996 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C>
Net Income . . . . . . . . $ 3,665 $3,138 $14,133 $11,470 $10,109 $ 9,575 $7,506
Extraordinary items, net of 0 0 0 0 0 0 0
tax . . . . . . . . . . . .
Cumulative effect of changes
in accounting principles,
net 0 0 0 0 0 0 0
of tax . . . . . . . . .
Income tax expense . . . . 2,122 2,180 9,660 7,384 6,256 5,765 3,139
Pretax earnings . . . . . . $ 5,787 $ 5,318 $23,793 $18,854 $16,365 $ 15,340 $10,645
Fixed charges:
Portion of rental expense
(net of sublease
rental income) which
approximates the interest
factor . . . . . . . . . 64 55 244 208 166 157 243
Interest on borrowed funds 3,313 374 6,039 5,535 3,917 771 256
TOTAL FIXED CHARGES . . $ 3,377 $ 429 $ 6,283 $ 5,743 $ 4,083 $ 928 $ 499
Earnings (for ratio $ 9,164 $ 5,747 $30,076 $24,597 $20,448 $ 16,268 $ 11,144
calculation) . . . . . . .
Ratio of earnings to fixed
charges . . . . . . . . 271.37% 1338.81% 478.68% 428.30% 500.87% 1753.02% 2233.27%
</TABLE>
For purposes of computing the consolidated ratio of earnings to fixed
charges, "earnings" represent net income before extraordinary items plus
applicable income taxes and fixed charges. "Fixed charges" include gross
interest expense (other than on deposits) and the proportion deemed
representative of the interest factor of rent expense.
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
_____________________
We consent to the incorporation by reference in this registration statement
of Community Capital Trust I, a subsidiary business trust of Community Bank
System, Inc., on Form S-4 of our report dated January 24, 1997 (except for
Note R for which the date is February 11, 1997) on our audits of the
consolidated financial statements of Community Bank System, Inc. as of
December 31, 1996 and 1995 and for each of the three years in the period
ended December 31, 1996, included in the Company's Annual Report on Form 10-
K. We also consent to the reference to our firm under the caption "Experts."
/s/ COOPERS & LYBRAND LLP
Syracuse, New York
June 25, 1997
EXHIBIT 24
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this Power
of Attorney has been signed by the following persons in the capacities and on
the dates indicated. By so signing, each of the undersigned, in his or her
capacity as a director or officer, or both, as the case may be, of Community
Bank System, Inc. (the "Corporation"), does hereby appoint Sanford A. Belden,
Dr. Earl W. MacArthur and David G. Wallace, and each of them severally, or if
more than one acts, a majority of them, his or her true and lawful attorneys
or attorney to execute in his or her name, place and stead, in his or her
capacity as a director or officer or both, as the case may be, of the
Corporation, the Registration Statement on Form S-4 to be filed with the
Securities and Exchange Commission (the "Commission"), and any and all
amendments to said Registration Statement and all instruments necessary or
incidental in connection therewith, and to file the same with the Commission.
Each of said attorneys shall have full power and authority to do and perform
in the name and on behalf of each of the undersigned, in any and all
capacities, every act whatsoever requisite or necessary to be done in the
premises as fully and to all intents and purposes as each of the undersigned
might or could do in person, hereby ratifying and approving the acts of said
attorneys and each of them.
SIGNATURE TITLE DATE
--------- ----
President, Chief
/s/Sanford A. Belden Executive Officer June 24, 1997
--------------------- and Director
(Sanford A. Belden)
/s/Dr. Earl W. MacArthur
--------------------- Chairman of the
(Dr. Earl W. MacArthur) Board of Directors June 24, 1997
Directors and Director
/s/David G. Wallace
---------------------
(David G. Wallace) Treasurer June 24, 1997
/s/John M. Burgess Director June 24, 1997
---------------------
(John M. Burgess)
/s/William M. Dempsey Director June 24, 1997
---------------------
(William M. Dempsey)
/s/Lee T. Hirschey Director June 24, 1997
_____________________
(Lee T. Hirschey)
/s/William N. Sloan Director June 24, 1997
---------------------
(William N. Sloan)
/s/Hugh G. Zimmer Director June 24, 1997
---------------------
(Hugh G. Zimmer)
/s/Richard C. Cummings
--------------------- Director June 24, 1997
(Richard C. Cummings)
/s/Nicholas A. DiCerbo
--------------------- Director June 24, 1997
(Nicholas A. DiCerbo)
/s/James A. Gabriel
--------------------- Director June 24, 1997
(James A. Gabriel)
/s/David C. Patterson
--------------------- Director June 24, 1997
(David C. Patterson)
EXHIBIT 25.1
___________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_________________________
FORM T-1
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
___________________________________________
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
________________________________________
THE CHASE MANHATTAN BANK
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
270 Park Avenue
New York, New York 10017
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
_____________________________________________
Community Bank System, Inc.
Community Bank System, Inc.
(Exact name of obligor as specified in its charter)
Delaware 16-1213679
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
5790 Widewaters Parkway
5790 Widewaters Parkway
DeWitt, New York 13214
DeWitt, New York 13214
(Address of principal executive offices) (Zip Code)
___________
Series B Junior Subordinated Deferrable Interest Debentures
Series B Junior Subordinated Deferrable Interest Debentures
(Title of the indenture securities)
GENERAL
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
New York State Banking Department, State House, Albany, New York
12110. Board of Governors of the Federal Reserve System,
Washington, D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of
Amendment dated February 17, 1969, August 31, 1977, December 31, 1980,
September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see
Exhibit 1 to Form T-1 filed in connection with Registration Statement No.
333-06249, which is incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14,
1996, in connection with the merger of Chemical Bank and The Chase Manhattan
Bank (National Association), Chemical Bank, the surviving corporation, was
renamed The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement
No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining
authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York and State of New York, on the 24th
24th
day of June, 1997.
June, 1997.
THE CHASE MANHATTAN BANK
THE CHASE MANHATTAN BANK
By
________________________________________
James D. Heaney
Vice President
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business March 31, 1997, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
Dollar Amounts
ASSETS in Millions
ASSETS in Millions
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin . . . . . . . . . . . $ 11,721
Interest-bearing balances . . . . . . . 3,473
Securities: . . . . . . . . . . . . . . . .
Held to maturity securities . . . . . . . . . 2,965
Available for sale securities . . . . . . . 35,903
Federal Funds sold and securities purchased under
agreements to resell . . . . . . . . . . 24,025
Loans and lease financing receivables:
Loans and leases, net of unearned income $123,957
Less: Allowance for loan and lease losses 2,853
Less: Allocated transfer risk reserve ............................
_____
13
___
Loans and leases, net of unearned income,
allowance, and reserve . . . . . . . . . 121,091
Trading Assets . . . . . . . . . . . . . . . 54,340
Premises and fixed assets (including capitalized
leases) . . . . . . . . . . . . . . . . 2,875
Other real estate owned . . . . . . . . . . 302
Investments in unconsolidated subsidiaries and
associated companies . . . . . . . . . . 139
Customers liability to this bank on acceptances
outstanding . . . . . . . . . . . . . . 2,270
Intangible assets . . . . . . . . . . . . . 1,535
Other assets . . . . . . . . . . . . . . . . 10,283
______
TOTAL ASSETS . . . . . . . . . . . . . . . . $270,922
. . . . . . . . . . . . . . . . . . =========
LIABILITIES
Deposits
In domestic offices . . . . . . . . . . $84,776
Noninterest-bearing . . . . . . . . . . $32,492
Interest-bearing . . . . . . . . . . . . 52,284
_______
In foreign offices, Edge and Agreement subsidiaries,
and IBF's . . . . . . . . . . . . . . . 69,171
Noninterest-bearing . . . . . . . . . . $ 4,181
Interest-bearing . . . . . . . . . . . . 64,990
Federal funds purchased and securities sold under
agreements to repurchase . . . . . . . . 32,885
Demand notes issued to the U.S. Treasury . . 1,000
Trading liabilities . . . . . . . . . . . . 42,538
Other Borrowed money (includes mortgage indebtedness
and obligations under calitalized leases):
With a remaining maturity of one year or less 4,431
With a remaining maturity of more than one year . 466
Bank's liability on acceptances executed and outstanding
2,270
Subordinated notes and debentures . . . . . 5,911
Other liabilities . . . . . . . . . . . . . 11,575
TOTAL LIABILITIES . . . . . . . . . . . . . 255,023
_______
EQUITY CAPITAL
Perpetual Preferred stock and related surplus 0
Common stock . . . . . . . . . . . . . . . . 1,211
Surplus (exclude all surplus related to preferred stock) 10,283
Undivided profits and capital reserves . . . 4,941
Net unrealized holding gains (Losses)
on available-for-sale securities . . . . . . (552)
Cumulative foreign currency translation adjustments 16
TOTAL EQUITY CAPITAL . . . . . . . . . . . . 15,899
. . . . . . . . . . . . . . . . . . ______
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL . . . . . . . . $270,922
. . . . . . . . . . . . . . . . . . ==========
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named
bank, do hereby declare that this Report of Condition has
been prepared in conformance with the instructions issued
by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness
of this Report of Condition and declare that it has been
examined by us, and to the best of our knowledge and
belief has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE )DIRECTORS
WILLIAM B. HARRISON, JR. )
EXHIBIT 25.2
___________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
___________________________________________
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
________________________________________
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
_____________________________________________
COMMUNITY CAPITAL TRUST I
(Exact name of obligor as specified in its charter)
DELAWARE 16-6453481
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
5790 WIDEWATERS PARKWAY
DEWITT, NEW YORK 13214
(Address of principal executive offices) (Zip Code)
-----------
SERIES B CAPITAL SECURITIES
(Title of the indenture securities)
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of
Amendment dated February 17, 1969, August 31, 1977, December 31, 1980,
September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see
Exhibit 1 to Form T-1 filed in connection with Registration Statement No.
333-06249, which is incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14,
1996, in connection with the merger of Chemical Bank and The Chase Manhattan
Bank (National Association), Chemical Bank, the surviving corporation, was
renamed The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement
No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining
authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York and State of New York, on the 24TH
day of JUNE, 1997.
THE CHASE MANHATTAN BANK
By ________________________________
James D. Heaney
Vice President
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business March 31, 1997, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
ASSETS Dollar Amounts in
Millions
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin . . . . . . . . . . . . . $ 11,721
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . 3,473
Securities: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Held to maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,965
Available for sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . 35,903
Federal Funds sold and securities purchased under agreements to resell . . . . . 24,025
Loans and lease financing receivables:
Loans and leases, net of unearned income $123,957
Less: Allowance for loan and lease losses 2,853
Less: Allocated transfer risk reserve . . . . . . . . . . . . 13
--------
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . 121,091
Trading Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,340
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . 2,875
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 302
Investments in unconsolidated subsidiaries and associated companies . . . . . . . 139
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . 2,270
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,535
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,283
------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $270,922
========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
DepositsIn domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . $84,776
Noninterest-bearing . . . . . . . . . . . . . . . . . . . . . . .$32,492
Interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . 52,284
-------
In foreign offices, Edge and Agreement subsidiaries, and IBF's . 69,171
Noninterest-bearing . . . . . . . . . . . . . . . . . . . . . . .$ 4,181
Interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . 64,990
Federal funds purchased and securities sold under agreements to repurchase 32,885
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . 1,000
Trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,538
Other Borrowed money (includes mortgage indebtedness
and obligations under calitalized leases):
With a remaining maturity of one year or less . . . . . . . . . . 4,431
With a remaining maturity of more than one year . . . . . . . . . 466
Bank's liability on acceptances executed and outstanding . . . . . . . . 2,270
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . 5,911
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,575
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255,023
-------
Perpetual Preferred stock and related surplus 0
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,211
Surplus (exclude all surplus related to preferred stock) . . . . . . . . 10,283
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . 4,941
Net unrealized holding gains (Losses) on available-for-sale securities . (552)
Cumulative foreign currency translation adjustments . . . . . . . . . . . 16
TOTAL EQUITY CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . 15,899
------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED STOCK AND EQUITY CAPITAL . . . $270,922
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR. )
EXHIBIT 25.3
___________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
___________________________________________
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
________________________________________
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
_____________________________________________
COMMUNITY BANK SYSTEM, INC.
(Exact name of obligor as specified in its charter)
DELAWARE 16-1213679
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
5790 WIDEWATERS PARKWAY
DEWITT, NEW YORK 13214
(Address of principal executive offices) (Zip Code)
-----------
SERIES B GUARANTEE WITH RESPECT TO
SERIES B CAPITAL SECURITIES OF COMMUNITY CAPITAL TRUST I
(Title of the indenture securities)
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of
Amendment dated February 17, 1969, August 31, 1977, December 31, 1980,
September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see
Exhibit 1 to Form T-1 filed in connection with Registration Statement No.
333-06249, which is incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14,
1996, in connection with the merger of Chemical Bank and The Chase Manhattan
Bank (National Association), Chemical Bank, the surviving corporation, was
renamed The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement
No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining
authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York and State of New York, on the 24TH
day of JUNE, 1997.
THE CHASE MANHATTAN BANK
By _______________________________
James D. Heaney
Vice President
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business March 31, 1997, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
ASSETS Dollar Amounts in
Millions
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin . . . . . . . . . . . . . $ 11,721
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . 3,473
Securities: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Held to maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,965
Available for sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . 35,903
Federal Funds sold and securities purchased under agreements to resell . . . . . 24,025
Loans and lease financing receivables:
Loans and leases, net of unearned income $123,957
Less: Allowance for loan and lease losses 2,853
Less: Allocated transfer risk reserve . . . . . . . . . . . . 13
--------
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . 121,091
Trading Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,340
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . 2,875
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 302
Investments in unconsolidated subsidiaries and associated companies . . . . . . . 139
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . 2,270
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,535
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,283
------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $270,922
========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
DepositsIn domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . $84,776
Noninterest-bearing . . . . . . . . . . . . . . . . . . . . . . .$32,492
Interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . 52,284
-------
In foreign offices, Edge and Agreement subsidiaries, and IBF's . 69,171
Noninterest-bearing . . . . . . . . . . . . . . . . . . . . . . .$ 4,181
Interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . 64,990
Federal funds purchased and securities sold under agreements to repurchase 32,885
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . 1,000
Trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,538
Other Borrowed money (includes mortgage indebtedness
and obligations under calitalized leases):
With a remaining maturity of one year or less . . . . . . . . . . 4,431
With a remaining maturity of more than one year . . . . . . . . . 466
Bank's liability on acceptances executed and outstanding . . . . . . . . 2,270
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . 5,911
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,575
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255,023
-------
Perpetual Preferred stock and related surplus 0
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,211
Surplus (exclude all surplus related to preferred stock) . . . . . . . . 10,283
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . 4,941
Net unrealized holding gains (Losses) on available-for-sale securities . (552)
Cumulative foreign currency translation adjustments . . . . . . . . . . . 16
TOTAL EQUITY CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . 15,899
------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED STOCK AND EQUITY CAPITAL . . . $270,922
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR. )
