<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 9, 1998
REGISTRATION NO. 333-55947
REGISTRATION NO. 333-55947-01
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
CNB BANCSHARES, INC. CNB CAPITAL TRUST I
(EXACT NAME OF REGISTRANT AS SPECIFIED (EXACT NAME OF CO-REGISTRANT AS
IN ITS CHARTER) SPECIFIED IN ITS CHARTER)
INDIANA
(STATE OR OTHER JURISDICTION OF DELAWARE
INCORPORATION OR ORGANIZATION) (STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
35-1568731
(I.R.S. EMPLOYER IDENTIFICATION NO.) APPLIED FOR
(I.R.S. EMPLOYER IDENTIFICATION NO.)
20 N.W. THIRD STREET, EVANSVILLE, INDIANA 47739 812-456-3400
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S AND CO-REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
----------------
JOHN R. SPRUILL
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
CNB BANCSHARES, INC.
20 N.W. THIRD STREET
EVANSVILLE, INDIANA 47739
812-456-3400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------
WITH COPIES TO:
THOMAS C. ERB, ESQ. LEE MEYERSON, ESQ.
LEWIS, RICE & FINGERSH, L.C. SIMPSON THACHER & BARTLETT
500 NORTH BROADWAY, SUITE 2000 425 LEXINGTON AVENUE
ST. LOUIS, MISSOURI 63102 NEW YORK, NEW YORK 10017
314-444-7600 212-455-2000
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item
11(a)(1) of this Form, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
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 THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS Subject to Completion, Dated June 9, 1998
- --------------------------------------------------------------------------------
6,000,000 Capital Securities
CNB CAPITAL TRUST I
% Shared Preference Redeemable Securities ("SPuRS"sm)
(Liquidation Amount $25 per Capital Security)
guaranteed, as described herein by, and
convertible into common stock of,
LOGO
- --------------------------------------------------------------------------------
The % Shared Preference Redeemable Securities (the "SPuRS" or "Capital
Securities") offered hereby represent preferred undivided beneficial ownership
interests in the assets of CNB Capital Trust I, a statutory business trust
created under the laws of the State of Delaware (the "Issuer"). CNB Bancshares,
Inc., an Indiana corporation (the "Company"), will be the owner of all the
beneficial ownership interests represented by the common securities of the
Issuer (the "Common Securities" and, together with the SPuRS, the "Trust
Securities").
(continued on next page)
SEE "RISK FACTORS" BEGINNING ON PAGE 10 HEREOF FOR CERTAIN INFORMATION RELEVANT
TO AN INVESTMENT IN THE CAPITAL SECURITIES.
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Price
toPublic(/1/)
UnderwritingCommission(/2/)(/3/)
Proceeds
toIssuer(/3/)
- --------------------------------------------------------------------------------
$25.00 $25.00
Per Capital Security $
- --------------------------------------------------------------------------------
$150,000,000
Total(/4/) $
$150,000,000
- --------------------------------------------------------------------------------
(1) Plus accrued distributions, if any, from , 1998, to date of
delivery.
(2) The Issuer and the Company have each agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the SPuRS will be
invested in the Convertible Subordinated Debentures, the Company has agreed
to pay the Underwriters as compensation for their arranging the investment
therein of such proceeds $ per SPuRS, or $ in the aggregate
($ if the over-allotment option is exercised in full). See
"Underwriting." The Company also has agreed to pay the expenses of the
offering estimated to be $460,000.
(4) The Issuer has granted the Underwriters an option exercisable within 30
days from the date of this Prospectus to purchase up to 900,000 additional
SPuRS on the same terms and conditions set forth above to cover over-
allotments, if any. If all such additional SPuRS are purchased, the total
Price to Public and Proceeds to Issuer will be $172,500,000.
The SPuRS are offered hereby subject to prior sale when, as and if accepted by
the Underwriters named herein. It is expected that the SPuRS will be ready for
delivery in book-entry form only through the facilities of The Depository Trust
Company in New York, New York, on or about , 1998, against payment
therefor in immediately available funds.
SBC WARBURG DILLON READ CIBC OPPENHEIMER
INC.
STIFEL, NICOLAUS & COMPANY INCORPORATED
HOWE BARNES INVESTMENTS, INC.
NATCITY INVESTMENTS, INC.
KEEFE, BRUYETTE & WOODS, INC.
WEDGEWOOD PARTNERS, INC.
The date of this Prospectus is June , 1998
<PAGE>
(cover page continued)
The Bank of New York is the Property Trustee (as defined herein) of the
Issuer. The Issuer exists for the sole purpose of issuing the Capital
Securities and the Common Securities and investing the proceeds thereof in
% Convertible Subordinated Debentures (the "Convertible Subordinated
Debentures") to be issued by the Company. The Convertible Subordinated
Debentures will mature on , 2028 (the "Stated Maturity"). The Capital
Securities will have a preference under certain circumstances with respect to
cash distributions and amounts payable on liquidation or redemption over the
Common Securities. See "Description of Trust Securities--Subordination of
Common Securities."
Each Capital Security is convertible on or after , 1998 [60 days
after the date of issue], at the option of the holder thereof into shares of
common stock, stated value $1.00 per share (the "Common Stock"), of the
Company, at an initial conversion ratio of shares of Common Stock for
each Capital Security (equivalent to an initial conversion price of $ per
share of Common Stock), subject to adjustment under certain circumstances
(such conversion ratio, as it may be adjusted from time to time as described
herein, the "Conversion Ratio"). The Common Stock is listed on the New York
Stock Exchange (the "NYSE") under the symbol "BNK". On June 5, 1998, the last
reported sale price of the Common Stock on the NYSE Composite Tape was $46.25.
The Capital Securities have been approved for listing on the NYSE, subject to
official notice of issuance, under the symbol "BNK PrA".
Holders of the Capital Securities will be entitled to receive cumulative
cash distributions accruing from the date of original issuance and payable
quarterly in arrears on the last day of March, June, September and December of
each year, commencing September 30, 1998, at the annual rate of % of the
liquidation amount (the "Liquidation Amount") of $25 per Capital Security
("Distributions"). Subject to certain exceptions, as described herein, the
Company has the right to defer payment of interest on the Convertible
Subordinated Debentures at any time or from time to time for a period not
exceeding 20 consecutive quarterly periods with respect to each deferral
period (each, an "Extension Period"), provided that no Extension Period may
extend beyond the Stated Maturity of the Convertible Subordinated Debentures.
Upon the termination of any such Extension Period and the payment of all
interest then accrued and unpaid (together with interest thereon at the rate
of % per annum, compounded quarterly, to the extent permitted by applicable
law), the Company may elect to begin a new Extension Period subject to the
requirements set forth herein. If interest payments on the Convertible
Subordinated Debentures are so deferred, Distributions on the Capital
Securities also will be deferred and the Company will not be permitted,
subject to certain exceptions described herein, to declare or pay any cash
distributions with respect to the Company's capital stock or debt securities
that rank pari passu with or junior to the Convertible Subordinated
Debentures. During an Extension Period, interest on the Convertible
Subordinated Debentures will continue to accrue (and the amount of
Distributions to which holders of the Capital Securities are entitled will
accumulate), at the rate of % per annum, compounded quarterly from the
relevant payment date for such interest, and holders of Capital Securities
will be required to accrue interest income for U.S. federal income tax
purposes. See "Description of Convertible Subordinated Debentures--Right to
Defer Interest Payments" and "Certain Federal Income Tax Consequences--
Potential Extension of Interest Payment Period and Original Issue Discount."
The Convertible Subordinated Debentures are unsecured and subordinated to
all Senior Debt (as defined herein) of the Company. Substantially all of the
Company's existing indebtedness constitutes Senior Debt. At June 5, 1998, the
aggregate amount of Senior Debt outstanding was $48.0 million. Because the
Company is a holding company, the right of the Company to participate in any
distribution of the assets of any subsidiary, including any bank subsidiary,
upon such subsidiary's liquidation or reorganization or otherwise (and thus
the ability of holders of the Trust Securities, or the holders of the Common
Stock which may be acquired upon conversion 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 Company may itself
be recognized as a creditor of that subsidiary. Accordingly, the Convertible
Subordinated Debentures (and therefore the Capital Securities) will be
effectively subordinated to all existing and future liabilities of the
Company's subsidiaries, and holders thereof should only look to the assets of
the Company for payments on the Convertible Subordinated Debentures. See
"Description of Convertible Subordinated Debentures--Subordination."
(continued on next page)
<PAGE>
(cover page continued)
The Company has, through the Guarantee, the Trust Agreement, the Convertible
Subordinated Debentures and the Indenture (each as defined herein), taken
together, fully, irrevocably and unconditionally guaranteed all obligations of
the Issuer under the Capital Securities. See "Relationship Among the Capital
Securities, the Convertible Subordinated Debentures and the Guarantee--Full
and Unconditional Guarantee." The Guarantee of the Company (the "Guarantee")
guarantees the payment of Distributions and payments on liquidation of the
Issuer or redemption of the Capital Securities, but only in each case to the
extent of funds held by the Issuer, as described herein. See "Description of
Guarantee." If the Company does not make interest payments on the Convertible
Subordinated Debentures held by the Issuer, the Issuer will have insufficient
funds to pay Distributions on the Capital Securities. The Guarantee does not
cover payment of Distributions when the Issuer has insufficient funds to pay
such Distributions. In such event, a holder of Capital Securities may
institute a legal proceeding directly against the Company pursuant to the
terms of the Indenture to enforce payment of amounts equal to such
Distributions to such holder. See "Description of Convertible Subordinated
Debentures--Enforcement of Certain Rights by Holders of Capital Securities."
The obligations of the Company under the Guarantee are subordinate and junior
in right of payment to all Senior Debt of the Company.
The Capital Securities are subject to mandatory redemption, in whole or in
part, upon repayment of the Convertible Subordinated Debentures at their
Stated Maturity or earlier redemption. Subject to the Company having received
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, the Convertible Subordinated Debentures are redeemable
prior to their Stated Maturity at the option of the Company (i) on or after
, 2001, in whole at any time or in part from time to time, or (ii) at any
time in certain circumstances as described under "Description of Convertible
Subordinated Debentures--Conditional Right to Redeem upon a Tax Event or
Capital Treatment Event," in whole (but not in part), within 90 days following
the occurrence of a Tax Event or Capital Treatment Event (as such terms are
defined herein). See "Description of Capital Securities--Redemption" and
"Description of Convertible Subordinated Debentures--Redemption."
The Capital Securities have been approved for listing on the NYSE, subject
to official notice of issuance. If Convertible Subordinated Debentures are
distributed to the holders of Capital Securities in exchange therefor upon the
liquidation of the Issuer, the Company will use its best efforts to list the
Convertible Subordinated Debentures on the NYSE or such other stock exchanges
or automated quotation systems, if any, on which the Capital Securities are
then listed or traded.
The Company, as the holder of the outstanding Common Securities of the
Issuer, will have the right at any time to terminate the Issuer, subject to
the Company having received prior approval of the Federal Reserve to do so if
then required under applicable capital guidelines or policies. See
"Description of Capital Securities--Liquidation of Issuer and Distribution of
Convertible Subordinated Debentures to Holders." In the event of the
termination of the Issuer, after satisfaction of liabilities to creditors of
the Issuer as required by applicable law, the holders of the Capital
Securities will be entitled to receive a Liquidation Amount of $25 per Capital
Security plus accumulated and unpaid Distributions thereon to the date of
payment, which may be in the form of a distribution of such amount in
Convertible Subordinated Debentures in exchange therefor, subject to certain
exceptions. See "Description of Capital Securities--Liquidation Distribution
Upon Termination."
The Capital Securities will be represented by one or more global
certificates registered in the name of The Depository Trust Company ("DTC") or
its nominee. Beneficial interests in the Capital Securities will be shown on,
and transfers thereof will be effected only through, records maintained by DTC
and its participants. Except as described herein, Capital Securities in
certificated form will not be issued in exchange for the global certificates.
See "Description of Capital Securities--Registration of Capital Securities."
----------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE CAPITAL
SECURITIES AND THE COMMON STOCK. SUCH TRANSACTIONS MAY INCLUDE OVERALLOTMENT,
STABILIZING TRANSACTIONS, THE PURCHASE OF CAPITAL SECURITIES TO COVER SHORT
POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF SUCH
ACTIVITIES, SEE "UNDERWRITING." SUCH STABILIZING TRANSACTIONS, IF COMMENCED,
MAY BE DISCONTINUED AT ANY TIME.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, previously filed by the Company with the Securities
and Exchange Commission (the "Commission") pursuant to Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), are
incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the year ended December
31,1997;
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998 (as amended by the Company's Quarterly Report on Form 10-Q/A
filed with the Commission on May 28, 1998);
(c) The Company's Current Reports on Form 8-K, as filed with the
Commission on May 1, 1998 (as amended by the Company's Current Report on
Form 8-K/A filed with the Commission on June 3, 1998), and June 3, 1998;
and
(d) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A, dated April 1, 1996, filed
pursuant to Section 12 of the Exchange Act, including any amendments or
reports filed for the purpose of updating such description.
On April 17, 1998, the Company acquired Pinnacle Financial Services, Inc., a
Michigan corporation ("Pinnacle") (File No. 0-17937). Pinnacle's Annual Report
on Form 10-K for the year ended December 31, 1997 is incorporated herein by
reference.
All reports filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Capital
Securities offered hereby shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A
COPY OF ANY OR ALL OF THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER
THAN EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY
REFERENCE IN SUCH DOCUMENTS). WRITTEN REQUEST FOR SUCH COPIES SHOULD BE
DIRECTED TO KATHRYN P. WILLIAMS, CNB BANCSHARES, INC., 20 N.W. THIRD STREET,
EVANSVILLE, INDIANA 47739. TELEPHONE REQUESTS MAY BE DIRECTED TO 812-456-3400.
AVAILABLE INFORMATION
This Prospectus constitutes a part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company and the Issuer with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Capital Securities, the Convertible Subordinated Debentures, the Common Stock
and the Guarantee. This Prospectus does not contain all of the information set
forth in such Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission, although it does
include a summary of the material terms of the Trust Agreement, the Indenture
and the Guarantee. Reference is made to such Registration Statement and to the
exhibits relating thereto for further information with respect to the Company,
the Issuer, the Capital Securities, the Convertible Subordinated Debentures,
the Common Stock and the Guarantee. Any statements contained herein concerning
the provisions of any document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission or incorporated by reference
herein are not necessarily complete and, in each instance, reference is made
to the copy of such document so filed for a more complete description of the
matter involved. Each such statement is qualified in its entirety by such
reference.
1
<PAGE>
The Company is subject to the informational requirements of the Exchange Act
and, in accordance therewith, files reports and other information with the
Commission. The Issuer is not currently subject to the information reporting
requirements of the Exchange Act and, although the Issuer will become subject
to such requirements upon the effectiveness of the Registration Statement, it
is not expected that the Issuer will be filing separate reports under the
Exchange Act. The Company's reports and other information can be inspected and
copied at the following public reference facilities maintained by the
Commission: 450 Fifth Street, N.W., Washington, D.C. 20549; 7 World Trade
Center, Suite 1300, New York, New York 10048; and the Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material may also be obtained by mail from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at
prescribed rates. The Commission maintains an Internet web site that contains
reports, proxy and information statements and other information regarding
issuers who file electronically with the Commission. The address of that site
is http://www.sec.gov. Such reports, proxy statements and information also can
be inspected at the office of the NYSE, 20 Broad Street, New York, New York
10005.
No separate financial statements of the Issuer have been included herein.
The Company and the Issuer do not consider that such financial statements
would be material to holders of Capital Securities because (i) all of the
voting securities of the Issuer will be owned by the Company, a reporting
company under the Exchange Act, (ii) the Issuer has no independent operations
but exists for the sole purpose of issuing securities representing undivided
beneficial interests in the assets of the Issuer and investing the proceeds
thereof in Convertible Subordinated Debentures issued by the Company, and
(iii) the obligations of the Company described herein to provide certain
indemnities in respect of and be responsible for certain costs, expenses,
debts and liabilities of the Issuer under the Indenture and pursuant to the
Trust Agreement, the Guarantee issued by Company with respect to the Capital
Securities, the Convertible Subordinated Debentures purchased by the Issuer
and the related Indenture, taken together, constitute a full and unconditional
guarantee of payments due on the Capital Securities. See "Description of
Convertible Subordinated Debentures" and "Description of Guarantee."
FORWARD-LOOKING STATEMENTS
Certain of the statements contained in this Prospectus and in documents
incorporated herein by reference that are not historical facts, including,
without limitation, statements of future expectations, projections of results
of operations and financial condition, statements of future economic
performance and other forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, are subject to known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to differ materially from
those contemplated in such forward-looking statements. The words "intend,"
"expect," "project," "estimate," "predict," "anticipate," "should," "believe"
and similar expressions also are intended to identify forward-looking
statements. Important factors which may cause actual results to differ from
those contemplated in such forward-looking statements include, but are not
limited to: (i) the specific matters referred to herein, including, without
limitation, those noted under the caption "Risk Factors," (ii) the results of
the Company's efforts to implement its business strategy, (iii) expected cost
savings that may be associated with future and recently completed or announced
acquisitions, including Pinnacle and National Bancorp, cannot be fully
realized and/or revenues following such acquisitions are lower than expected
and/or expenses following such acquisitions are higher than expected, (iv)
greater than expected deposit attrition or customer loss following the
acquisition of Pinnacle, (v) costs or difficulties related to the integration
of the businesses of the Company and Pinnacle are greater than expected, (vi)
changes in the interest rate environment reduce margins, (vii) legislation or
regulatory requirements or changes adversely affecting the businesses in which
the Company is engaged, (viii) adverse changes in business conditions and
inflation, (ix) general economic conditions, either nationally or regionally,
which are less favorable than expected and that result in, among other things,
a deterioration in credit quality, (x) competitive pressures among financial
institutions increase significantly, (xi) changes in the securities markets,
(xii) actions of the Company's competitors and the Company's ability to
respond to such actions, (xiii) the cost of the Company's capital, which may
depend in part on the Company's portfolio quality, ratings, prospects and
outlook, (xiv) changes in governmental regulation, tax rates and similar
matters, (xv) "year 2000" computer and data processing issues, and (xvi) other
risks detailed in the Company's other filings with the Commission. Should one
or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual outcomes may vary materially from those
indicated. All subsequent written and oral forward-looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by the foregoing factors. Investors are cautioned
not to place undue reliance on such statements, which speak only as of the
date hereof. The Company undertakes no obligation to release publicly any
revisions to these forward-looking statements after the completion of this
offering to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
2
<PAGE>
The Company, headquartered in Evansville, Indiana, has banking offices in
four states. The map below highlights the states and counties in which the
Company has banking offices.
LOGO
The distribution of the Company's banking offices, deposits and assets as of
March 31, 1998 is as follows ($ in millions):
<TABLE>
<CAPTION>
BANKING
OFFICES ASSETS DEPOSITS
------- ------ --------
<S> <C> <C> <C>
Indiana........................................... 94 $4,524 $3,294
Illinois.......................................... 12 687 497
Kentucky.......................................... 19 727 440
Michigan.......................................... 14 630 430
--- ------ ------
139 $6,568 $4,661
=== ====== ======
</TABLE>
3
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere (or incorporated by reference) in this
Prospectus. Unless otherwise indicated, (i) the information in this Prospectus
assumes that the Underwriters' over-allotment option will not be exercised,
(ii) all financial information in this Prospectus has been restated to give
retroactive effect to the Company's acquisition of Pinnacle on April 17, 1998
(the "Pinnacle Acquisition"), and (iii) the term "Company," as used under
"Prospectus Summary--CNB Bancshares, Inc." and "The Company," refers
collectively to CNB Bancshares, Inc. and its direct and indirect subsidiaries,
unless the context requires otherwise. Prospective investors should carefully
consider the information set forth under the heading "Risk Factors."
CNB BANCSHARES, INC.
CNB Bancshares, Inc. (the "Company"), headquartered in Evansville, Indiana,
is the largest bank holding company based in Indiana. The Company operates with
a super community bank philosophy--decentralizing day-to-day customer services
such as pricing and lending decisions, while centralizing data processing
systems, product development and back office support functions. Through its 139
banking offices, 29 consumer finance offices, and 190 ATMs, the Company
provides a wide range of commercial banking, retail banking, trust, insurance
and investment services to customers in Indiana, Illinois, Michigan, Kentucky
and Tennessee. At March 31, 1998 (on a pro forma basis giving effect to the
Pinnacle Acquisition), the Company had assets of $6.6 billion, deposits of $4.7
billion, loans of $3.9 billion and shareholders' equity of $525 million.
The Company has grown significantly through 32 acquisitions of banks and non-
banks since 1986. The Company consummated its largest acquisition to date on
April 17, 1998, when it acquired Pinnacle, a $2.1 billion bank holding company
headquartered in St. Joseph, Michigan. Pinnacle operated 14 offices in
southwestern Michigan and 30 offices in northwestern Indiana. The Pinnacle
Acquisition represents the Company's first entry into these markets. For
additional information regarding the Pinnacle Acquisition, see "Risk Factors--
Pinnacle Acquisition."
The Company's principal executive offices are located at 20 N.W. Third
Street, Evansville, Indiana 47739, and its telephone number is 812-456-3400.
For additional information regarding the Company, see "The Company."
CNB CAPITAL TRUST I
CNB Capital Trust I (the "Issuer") is a statutory business trust created
under Delaware law pursuant to (i) the trust agreement, executed by the
Company, as Depositor, The Bank of New York (Delaware) as Delaware Trustee, and
the Administrative Trustees named therein, and (ii) the filing of a certificate
of trust with the Delaware Secretary of State on June 1, 1998. The initial
trust agreement will be amended and restated in its entirety (as so amended and
restated, the "Trust Agreement") substantially in the form filed as an exhibit
to the Registration Statement of which this Prospectus forms a part. The Trust
Agreement will be qualified as an indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). The Issuer exists for the
exclusive purposes of (i) issuing and selling the Capital Securities and the
Common Securities, (ii) using the proceeds from the sale of the Capital
Securities and the Common Securities to acquire the Convertible Subordinated
Debentures issued by the Company, and (iii) engaging in only those other
activities necessary or incidental thereto (such as registering the transfer of
the Trust Securities). Accordingly, the Convertible Subordinated Debentures
will be the sole assets of the Issuer, and payments under the Convertible
Subordinated Debentures will be the sole revenue of the Issuer. Upon issuance
of the Trust Securities, the purchasers thereof will own all of the Trust
Securities. All of the Common Securities will be owned by the Company. The
principal executive office of the Issuer is c/o CNB Bancshares, Inc., 20 N.W.
Third Street, Evansville, Indiana 47739, and its telephone number is 812-456-
3400. For additional information regarding the Issuer, see "The Issuer."
4
<PAGE>
THE OFFERING
Securities Offered........ 6,000,000 Capital Securities having a Liquida-
tion Amount of $25 per Capital Security. The
Capital Securities represent beneficial owner-
ship interests in the Issuer, which will con-
sist solely of the Convertible Subordinated
Debentures and payments thereunder.
Distributions............. The Distributions payable on each Capital Secu-
rity will be fixed at a rate per annum of
% of the Liquidation Amount of $25 per
Capital Security, will be cumulative, will ac-
crue from , 1998, the date of origi-
nal issuance of the Capital Securities, and
will be payable quarterly in arrears, on March
31, June 30, September 30 and December 31 of
each year, commencing September 30, 1998. The
first Distribution payable on September 30,
1998, will be in the amount of $ per
Capital Security and thereafter quarterly Dis-
tributions will be in the amount of $
per Capital Security. See "Description of Cap-
ital Securities--Distributions--Payment of
Distributions."
Right to Defer Interest...
The Company has the right, at any time, so long
as no Debenture Event of Default (as defined
herein) has occurred and is continuing, to de-
fer payments of interest on the Convertible
Subordinated Debentures for a period not ex-
ceeding 20 consecutive quarters; provided,
that no Extension Period may extend beyond the
Stated Maturity of the Convertible Subordi-
nated Debentures. As a consequence of the ex-
tension by the Company of the interest payment
period, quarterly Distributions on the Capital
Securities will be deferred (though such Dis-
tributions will continue to accrue with inter-
est thereon compounded quarterly, since inter-
est will continue to accrue and compound on
the Convertible Subordinated Debentures) dur-
ing any such Extension Period. During an Ex-
tension Period, the Company will, among other
things, be prohibited, subject to certain ex-
ceptions described herein, from declaring or
paying any cash distributions with respect to
its capital stock or debt securities that rank
pari passu with or junior to the Convertible
Subordinated Debentures. Upon the termination
of any Extension Period and the payment of all
amounts then due, the Company may commence a
new Extension Period, subject to the foregoing
requirements. See "Description of Capital Se-
curities--Distributions--Extension Period" and
"Description of Convertible Subordinated De-
bentures--Right to Defer Interest Payments."
Should an Extension Period occur, holders of
Capital Securities will be required to include
deferred interest income in their gross income
for U.S. federal income tax purposes in ad-
vance of receipt of the cash distributions
with respect to such deferred interest pay-
ments. See "Certain Federal Income Tax Conse-
quences--Potential Extension of Interest Pay-
ment Period and Original Issue Discount."
Conversion into Common Each Capital Security is convertible on or af-
Stock.................... ter , 1998 [60 days after the date
of issue], at the option of the holder into
shares of Common Stock, at the initial Conver-
sion Ratio of
5
<PAGE>
shares of Common Stock for each Capital Secu-
rity (equivalent to an initial conversion
price of $ per share of Common Stock),
subject to adjustment under certain circum-
stances. The last reported sales price of the
Common Stock on the NYSE Composite Tape on
June 5, 1998, was $46.25. In connection with
any conversion of a Capital Security, the Con-
version Agent (as defined herein) will ex-
change such Capital Security for the appropri-
ate principal amount of Convertible Subordi-
nated Debentures held by the Issuer and imme-
diately convert such Convertible Subordinated
Debentures into shares of Common Stock. No
fractional shares of Common Stock will be is-
sued as a result of conversion, but in lieu
thereof such fractional interest will be paid
by the Company in cash. In addition, no addi-
tional shares of Common Stock will be issued
upon conversion of the Convertible Subordi-
nated Debentures to account for any accrued
and unpaid Distributions on the Capital Secu-
rities at the time of conversion. See "De-
scription of Capital Securities--Conversion
Rights."
Convertible Subordinated The Trust will invest the proceeds from the is-
Debentures............... suance of the Capital Securities and the Com-
mon Securities in an equivalent amount of Con-
vertible Subordinated Debentures of the Compa-
ny. The Convertible Subordinated Debentures
will mature on , 2028. The Con-
vertible Subordinated Debentures will rank
subordinate and junior in right of payment to
all Senior Debt of the Company. In addition,
the Company's obligations under the Convert-
ible Subordinated Debentures will be structur-
ally subordinated to all existing and future
liabilities and obligations of its subsidiar-
ies. See "Risk Factors--Ranking of Subordi-
nated Obligations Under Guarantee and Convert-
ible Subordinated Debentures," and "Descrip-
tion of Convertible Subordinated Debentures--
Subordination."
Redemption................
The Capital Securities are subject to mandatory
redemption, in whole or in part, upon repay-
ment of the Convertible Subordinated Deben-
tures at maturity or their earlier redemption.
Subject to Federal Reserve approval, if then
required under applicable capital guidelines
or policies of the Federal Reserve, the Con-
vertible Subordinated Debentures are redeem-
able prior to maturity at the option of the
Company (i) on or after , 2001, in
whole at any time or in part from time to
time, or (ii) at any time, in whole (but not
in part), within 90 days following the occur-
rence of a Tax Event or a Capital Treatment
Event, in each case at the redemption price
equal to 100% of the principal amount of the
Convertible Subordinated Debenture, together
with any accrued but unpaid interest to the
date fixed for redemption. See "Description of
Capital Securities--Redemptions" and "Descrip-
tion of Convertible Subordinated Debentures--
Redemption."
Distribution of The Company, as the holder of the outstanding
Convertible Subordinated Common Securities of the Issuer, has the right
Debentures............... at any time to terminate the Issuer and cause
the Convertible Subordinated Debentures to be
distributed to holders
6
<PAGE>
of Capital Securities in liquidation of the
Issuer, subject to the Company having received
prior approval of the Federal Reserve to do so
if then required under applicable capital
guidelines or policies of the Federal Reserve.
See "Description of Capital Securities--Re-
demption--Liquidation of Issuer and Distribu-
tion of Convertible Subordinated Debentures."
Guarantee................. The Company has guaranteed the payment of Dis-
tributions and payments on liquidation or re-
demption of the Capital Securities, but only
in each case to the extent of funds held by
the Issuer, as described herein. The Company
has, through the Guarantee, the Trust Agree-
ment, the Convertible Subordinated Debentures,
and the Indenture taken together, fully, ir-
revocably and unconditionally guaranteed all
of the obligations of the Issuer under the
Capital Securities. The obligations of the
Company under the Guarantee and the Capital
Securities are subordinate and junior in right
of payment to all Senior Debt of the Company.
If the Company does not make principal or in-
terest payments on the Convertible Subordi-
nated Debentures, the Issuer will not have
sufficient funds to make Distributions on the
Capital Securities; in which event, the Guar-
antee will not apply to such Distributions un-
til the Issuer has sufficient funds available
therefor. See "Description of Guarantee."
Limited Voting Rights..... The holders of the Capital Securities will have
no voting rights except in limited circum-
stances. See "Description of Capital Securi-
ties--Voting Rights; Amendment of Trust Agree-
ment."
Use of Proceeds........... The proceeds from the sale of the Capital Secu-
rities offered hereby will be used by the Is-
suer to purchase the Convertible Subordinated
Debentures issued by the Company. The Company
intends to use the net proceeds from the sale
of the Convertible Subordinated Debentures for
general corporate purposes including, without
limitation, the repayment of debt, the funding
of investments in or extensions of credit to
its subsidiaries, the financing of acquisi-
tions and the repurchase of its Common Stock.
Pending their application for any or all of
such purposes, the net proceeds will be in-
vested primarily in investment grade financial
instruments. See "Use of Proceeds" and "Capi-
talization."
Trading Symbol............
The Capital Securities have been approved for
listing on the NYSE under the symbol "BNK
PrA", subject to official notice of issuance.
7
<PAGE>
SUMMARY SUPPLEMENTAL CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The summary supplemental consolidated financial data presented below have
been prepared in accordance with generally accepted accounting principles, have
been restated to reflect the Pinnacle Acquisition which was accounted for under
the pooling of interests method of accounting, and should be read in
conjunction with the Company's Current Report on Form 8-K filed with the
Commission on June 3, 1998. Generally accepted accounting principles prescribe
giving effect to a consummated business combination, such as the Pinnacle
Acquisition, accounted for by the pooling of interests method in financial
statements that do not include the date of consummation. This summary
supplemental consolidated financial data does not extend through the date of
consummation of the Pinnacle Acquisition; however, it will become the
historical summary consolidated financial data of the Company after the
consolidated financial statements covering the date of consummation of the
business combination are issued. The unaudited summary supplemental
consolidated financial data presented below for, and as of, the three-month
periods ended March 31, 1998 and 1997 reflect, in the opinion of management,
all adjustments considered necessary for fair presentation. Interim results for
the three months ended March 31, 1998 are not necessarily indicative of results
which may be expected for future periods, including the year ending December
31, 1998. See "Available Information," "Incorporation of Certain Documents by
Reference," "Risk Factors--Pinnacle Acquisition" and "The Company--Recent
Developments."
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------------ ----------------------------------------------------------
1998 1997 1997(5) 1996(6) 1995 1994 1993
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Income statement data:
Interest income........ $ 123,157 $ 120,147 $ 500,694 $ 451,728 $ 387,880 $ 314,414 $ 305,748
Interest expense....... 65,792 63,562 267,112 234,496 198,448 146,342 147,194
Net interest income.... 57,365 56,585 233,582 217,232 189,432 168,072 158,554
Provision for loan
losses................ 3,316 3,563 24,886 13,283 8,349 7,538 5,679
Non-interest income.... 22,155 17,126 79,091 68,686 56,437 56,126 53,251
Non-interest expense... 47,619 43,745 198,224 191,940 157,108 146,942 135,854
Net income............. 19,582 17,548 59,874 53,682 52,847 45,954 47,043
Per share data:
Net income
Basic................ $ .58 $ .53 $ 1.80 $ 1.61 $ 1.70 $ 1.48 $ 1.54
Diluted.............. .58 .52 1.78 1.59 1.67 1.45 1.51
Dividends declared(1).. .23 .21 .86 .78 .53 .68 .64
Book value............. 15.64(4) 14.55 15.39 15.26 15.32 14.26 13.14
Balance sheet data at
period end:
Assets................. $6,568,285(4) $6,395,754 $6,595,718 $6,351,785 $5,576,314 $4,806,175 $4,413,795
Earning assets......... 6,101,945 5,992,409 6,144,991 5,928,180 5,177,427 4,479,696 4,034,543
Loans.................. 3,941,716 3,731,399 3,988,016 3,690,944 3,227,232 3,081,314 2,674,577
Deposits............... 4,660,897 4,552,296 4,614,555 4,593,441 4,255,135 3,631,957 3,560,483
FHLB advances and
long-term debt........ 654,000 597,090 722,393 545,968 202,939 252,384 236,119
Shareholders' equity... 524,635(4) 484,860 515,463 495,673 475,789 401,630 396,091
Financial ratios:
Return on average
assets(2)............. 1.20% 1.13% .93% .91% 1.05% 1.02% 1.09%
Return on average
equity(2)............. 15.32 14.41 12.02 11.16 12.31 11.37 12.68
Net interest
margin(2)............. 3.89 3.95 3.94 4.03 4.09 4.07 4.04
Equity to assets....... 7.99(4) 7.58 7.82 7.80 8.53 8.36 8.97
Tier 1 risk-based
capital............... 11.77(4) 11.93 11.49 11.92 11.93 11.87 12.63
Net charge-offs to
average loans(2)...... .34 .37 .42 .36 .27 .15 .20
Allowance for loan
losses to loans....... 1.40 1.25 1.38 1.25 1.34 1.33 1.32
Non-performing loans
to loans.............. .76 .84 .70 .91 1.00 .65 .80
Allowance for loan
losses to non-
performing loans...... 184 149 197 137 134 205 164
Risk assets to loan-
related assets(3)..... 1.12 1.23 1.10 1.36 1.38 1.11 1.35
</TABLE>
8
<PAGE>
- --------
(1) Not restated for pooling transactions. In the years prior to 1995, CNB
declared a dividend in one quarter and paid it in the next quarter. During
1995, CNB changed this policy and began declaring and paying dividends in
the same quarter. The fourth quarter dividend for 1995 was declared and
paid in January 1996.
(2) Annualized in the case of interim financial data.
(3) Risk assets include non-performing loans, loans past due 90 days and still
accruing interest and foreclosed properties. Loan-related assets include
loans and foreclosed properties.
(4) Results for 1998 do not reflect the one-time merger-related charges of
$30.0 million, net of taxes, that will be recorded by the Company during
the second quarter of 1998 in connection with the Pinnacle Acquisition
consummated on April 17, 1998. Including the effect of the charges, book
value per share would have been $14.75, assets would have been $6,550,585,
shareholders' equity would have been $494,635, equity to assets ratio would
have been 7.55% and Tier 1 risk-based capital ratio would have been 11.07%.
(5) Net income for 1997 was negatively impacted by restructuring charges of
$8.4 million, net of taxes, and conforming loan loss methodology charges of
$6.0 million, net of taxes, in connection with Pinnacle's August 1997
acquisitions of Indiana Federal Corporation and CB Bancorp reducing basic
and diluted income per share by $.43.
(6) Net income for 1996 included a one-time assessment, required of all
financial institutions with deposits insured by the Savings Association
Insurance Fund (SAIF), which reduced net income by $6.6 million and basic
and diluted earnings per share by $.20.
9
<PAGE>
RISK FACTORS
Prospective purchasers of the Capital Securities should carefully consider,
together with the information set forth under "Forward-Looking Statements" and
the other information contained herein and incorporated by reference herein,
the following risk factors in evaluating the Company and the Issuer. In
addition, because holders of Capital Securities may receive Convertible
Subordinated Debentures in exchange therefor upon liquidation of the Issuer,
and because the Capital Securities also are convertible into shares of Common
Stock of the Company as described herein, prospective purchasers of Capital
Securities also are making an investment decision with regard to the
Convertible Subordinated Debentures and the Common Stock and should carefully
review all the information herein or incorporated by reference herein
regarding the Convertible Subordinated Debentures and the Common Stock.
PINNACLE ACQUISITION
The Company acquired Pinnacle on April 17, 1998, increasing the Company's
total assets by approximately 50%. During the second quarter of 1998, the
Company will record one-time merger-related charges of $41.3 million ($30.0
million after taxes), which include $8.3 million for technology-related costs,
$9.7 million for severance and personnel costs, $6.7 million for professional
fees, $11.2 million in conforming accounting policies of Pinnacle to those of
the Company, and $5.4 million in other costs. During the two year period prior
to its agreement to merge with the Company, Pinnacle increased its assets from
$449 million to $2.1 billion as a result of three significant acquisitions. On
August 1, 1997, Pinnacle completed its most recent mergers with Indiana
Federal Corporation ("IFC"), headquartered in Valparaiso, Indiana, and CB
Bancorp ("CB"), headquartered in Michigan City, Indiana. In connection with
these two mergers, which increased its assets by approximately 95%, Pinnacle
experienced significant problems with the conversion of the data processing
systems and related reconcilement issues, the integration of operations, and
the departure of certain employees. These problems created customer service
issues, including the misposting of customer transactions, resulting in lower
than expected revenues and greater than expected expenses since the conversion
in the fourth quarter of 1997. The Company continues to work on clearing the
reconciling items and does not expect the resolution of such items to have a
material impact on the Company's future financial results.
The Company expects to achieve cost savings through the Pinnacle
Acquisition, principally from the consolidation of data processing and back
office operations and a reduction of corporate overhead, and also expects to
improve net interest income through a restructuring of the investment
portfolio and borrowed funds position and to increase non-interest income
through reduction in the waiver of fees, the sale of expanded product lines
and increased sales efforts. There can, however, be no assurance that such
cost savings and improvements will be achieved in the amounts or within the
time frames currently expected. The failure to achieve such cost savings and
improvements could adversely affect the market price for the Company's Common
Stock.
GROWTH THROUGH ACQUISITIONS
The Company has grown significantly through 32 acquisitions of banks and
non-banks since 1986. The future growth of the Company will be dependent in
part upon the ability of the Company to acquire businesses at favorable
prices, terms and conditions, and to properly manage and integrate their
operations. The Company's ability to expand successfully through acquisitions
depends upon many factors, including the successful identification and
acquisition of financial institutions and other related businesses and
management's ability to effectively integrate the acquired businesses. Future
acquisitions by the Company may involve the issuance of Common Stock which
would have the effect of diluting the ownership interests of the existing
shareholders of the Company.
Acquisitions entail risks that business judgments will prove inaccurate with
respect to anticipated market growth, projected revenue enhancements, and
expected operating expense savings. Acquisitions also entail the risks of the
diversion of management's attention and the conversion of the operations and
the assimilation of
10
<PAGE>
personnel of the acquired companies, each of which could adversely affect the
Company's operating results. In addition, the success of any acquisition will
depend in part upon the Company's ability to effectively integrate the
acquired company into the Company's operations and implement its business
style and philosophy.
There can be no assurance that future acquisition opportunities, if any, can
be consummated on favorable terms, that the Company will be successful in
acquiring or integrating any businesses, or that any such acquisitions,
including Pinnacle, will enhance the earnings of the Company.
RANKING OF SUBORDINATED OBLIGATIONS UNDER GUARANTEE AND CONVERTIBLE
SUBORDINATED DEBENTURES
The obligations of the Company under the Guarantee issued by the Company for
the benefit of the holders of Trust Securities and under the Convertible
Subordinated Debentures are unsecured and rank subordinate and junior in right
of payment to all Senior Debt of the Company, whether now existing or
hereafter incurred. At June 5, 1998, the aggregate outstanding Senior Debt of
the Company was $48.0 million. Because the Company is a holding company, the
right of the Company to participate in any distribution of the assets of any
subsidiary, including any bank subsidiary, upon such subsidiary's liquidation
or reorganization or otherwise (and thus the ability of holders of the Trust
Securities, or the holders of the Common Stock which may be acquired upon
conversion of the Capital Securities, to benefit indirectly from such
distribution) is subject to the prior claims of creditors of that subsidiary
(including depositors in the case of the bank subsidiaries), except to the
extent that the Company may itself be recognized as a creditor of that
subsidiary. There are various legal limitations on the extent to which certain
of the Company's subsidiaries may extend credit, pay dividends or management
fees or otherwise supply funds to, or engage in transactions with, the Company
or certain of its other subsidiaries. The Convertible Subordinated Debentures
and the Guarantee, therefore, will be effectively subordinated to all existing
and future liabilities of the Company's subsidiaries and holders of
Convertible Subordinated Debentures, Capital Securities and beneficiaries of
the Guarantee should look only to the assets of the Company for payments on
the Convertible Subordinated Debentures or under the Guarantee, as the case
may be. Neither the Indenture, the Guarantee nor the Trust Agreement places
any limitation on the amount of secured or unsecured debt, including Senior
Debt that may be incurred by the Company or its subsidiaries. See "Description
of Guarantee--Status of Guarantee" and "Description of Convertible
Subordinated Debentures--Subordination."
The ability of the Issuer to pay amounts due on the Capital Securities is
dependent solely upon the Company making payments on the Convertible
Subordinated Debentures as and when required.
HOLDING COMPANY SUPPORT OF SUBSIDIARY BANKS
Under Federal Reserve policy, the Company is expected to act as a source of
financial strength to, and to commit resources to support, each of its
subsidiary banks. Such support may be required at times when, absent such
Federal Reserve policy, the Company may not be inclined to provide it. In
addition, any capital loans by a bank holding company to any of its subsidiary
banks are subordinate in right of payment to deposits and to certain other
indebtedness of such subsidiary banks. In the event of a bank holding
company's bankruptcy, any commitment by the bank holding company to a federal
bank regulatory agency to maintain the capital of a subsidiary bank will be
assumed by the bankruptcy trustee and entitled to a priority of payment.
RIGHT TO DEFER INTEREST PAYMENTS; TAX CONSEQUENCES; MARKET PRICE CONSEQUENCES
The Company has the right under the Indenture, so long as no Debenture Event
of Default has occurred and is continuing, to defer the payment of interest on
the Convertible Subordinated Debentures at any time or from time to time for a
period not exceeding 20 consecutive quarters with respect to each Extension
Period; provided that no Extension Period may extend beyond the Stated
Maturity of the Convertible Subordinated Debentures. As a consequence of any
such deferral, quarterly Distributions on the Capital Securities by the Issuer
will be deferred (and the amount of Distributions to which holders of the
Capital Securities are entitled will accumulate additional Distributions
thereon at the rate of % per annum, compounded quarterly from the relevant
payment date for such Distributions) during any such Extension Period. During
any such Extension Period, the Company
11
<PAGE>
may not and may not permit any subsidiary of the Company to, (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any capital stock of the Company, (ii)
make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu
with or junior in interest to the Convertible Subordinated Debentures, or
(iii) make any guarantee payments with respect to any guarantee by the Company
of the debt securities of any subsidiary of the Company if such guarantee
ranks pari passu with or junior in interest to the Convertible Subordinated
Debentures (other than (a) dividends or distributions in capital stock of the
Company, (b) any declaration of a dividend in connection with the
implementation of a shareholders' rights plan, or the redemption or repurchase
of any such rights pursuant thereto, (c) purchases of Common Stock or rights
related to the rights under any of the Company's benefit plans for its
directors, officers or employees related to the issuance of Common Stock or
rights under a dividend reinvestment and stock purchase plan, or related to
the issuance of Common Stock (or securities convertible into or exchangeable
for Common Stock) as consideration in an acquisition transaction that was
entered into prior to the commencement of such Extension Period, and (d)
payments under the Guarantee). Prior to the termination of any such Extension
Period, the Company may further defer the payment of interest; provided that
no Extension Period may exceed 20 consecutive quarters or extend beyond the
Stated Maturity of the Convertible Subordinated Debentures. Upon the
termination of any Extension Period and the payment of all interest then
accrued and unpaid (together with interest thereon at the annual rate of %
compounded quarterly from the interest payment date for such interest, to the
extent permitted by applicable law), the Company may elect to begin a new
Extension Period, subject to the above requirements. Subject to the foregoing,
there is no limitation on the number of times that the Company may elect to
begin an Extension Period. See "Description of Capital Securities--
Distributions--Extension Period" and "Description of Convertible Subordinated
Debentures--Right to Defer Interest Payments."
Should an Extension Period occur, a holder of Capital Securities will be
required to accrue and recognize income (in the form of original issue
discount) in respect of its pro rata share of the stated interest accruing on
the Convertible Subordinated Debentures held by the Issuer for U.S. federal
income tax purposes. In this instance, a holder of Capital Securities must
include its pro rata share of the stated interest on the Convertible
Subordinated Debentures in gross income for U.S. federal income tax purposes
on a daily economic accrual basis, regardless of such holder's regular method
of tax accounting and in advance of the receipt of the cash attributable to
such income, and will not receive the cash related to such income from the
Issuer if the holder disposes of the Capital Securities prior to the record
date for the payment of the related Distributions. See "Certain Federal Income
Tax Consequences--Potential Extension of Interest Payment Period and Original
Issue Discount" and "--Disposition of Capital Securities."
The Company has no current intention of exercising its right to defer
payments of interest and it believes that, as a result of its inability to pay
any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, its Common Stock during an Extension
Period and the additional restrictions imposed upon it as described above, the
likelihood of its exercising its right to defer payments of interest is
remote. Should the Company elect, however, to exercise such right in the
future, the market price of the Capital Securities is likely to be adversely
affected. A holder that disposes of its Capital Securities during an Extension
Period, therefore, might not receive the same return on its investment as a
holder that continues to hold its Capital Securities. As a result of the
existence of the Company's right to defer interest payments, the market price
of the Capital Securities may be more volatile than the market prices of other
securities on which original issue discount accrues that are not subject to
such optional deferrals.
REDEMPTION UPON TAX EVENT OR CAPITAL TREATMENT EVENT
The Company has the right to redeem the Convertible Subordinated Debentures
in whole (but not in part) within 90 days following the occurrence and
continuance of a Tax Event or a Capital Treatment Event (whether occurring
before or after , 2001), and, therefore, cause a mandatory redemption of the
Trust Securities. The exercise of such right is subject to the Company having
received prior approval of the Federal Reserve to do so if then required under
applicable capital guidelines or policies of the Federal Reserve.
12
<PAGE>
A "Tax Event" means the receipt by the Issuer of an opinion of counsel
experienced in such matters to the effect that, as a result of any amendment
to, or change (including any announced proposed change) in, the laws (or any
regulations thereunder) of the U.S. or any political subdivision or taxing
authority thereof or therein, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or which proposed change,
pronouncement or decision is announced on or after the date of issuance of the
Capital Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) the Issuer is, or will be within 90 days of the
date of such opinion, subject to U.S. federal income tax with respect to
income received or accrued on the Convertible Subordinated Debentures, (ii)
interest payable by the Company on the Convertible Subordinated Debentures 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 U.S. federal income tax purposes, or
(iii) the Issuer is, or will be within 90 days of the date of the opinion,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges. With respect to Convertible Subordinated Debentures
which are no longer held by the Issuer or another issuer, "Tax Event" means
the receipt by the Company of an opinion of counsel experienced in such
matters to the effect that, as a result of any amendment to, or change
(including any announced proposed change) in, the laws (or any regulations
thereunder) of the U.S. or any political subdivision or taxing authority
thereof or therein, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or which proposed change,
pronouncement or decision is announced on or after the date of issuance of the
Convertible Subordinated Debentures under the Indenture, there is more than an
insubstantial risk that interest payable by the Company on the Convertible
Subordinated Debentures 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 U.S. federal
income tax purposes (each of the circumstances referred to in clauses (i),
(ii) and (iii) of the preceding sentence and the circumstances referred to in
this sentence being referred to herein as an "Adverse Tax Consequence").
A "Capital Treatment Event" means the reasonable determination by the
Company that, as a result of any amendment to, or change (including any
proposed change) in, the laws (or any regulations thereunder) of the U.S. or
any political subdivision thereof or therein, or as a result of any official
or administrative pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which proposed change, pronouncement, action or decision is announced on or
after the date of issuance of the Capital Securities under the Trust
Agreement, there is more than an insubstantial risk that the Company will not
be entitled to treat an amount equal to the Liquidation Amount of the Capital
Securities as "Tier 1 Capital" (or the then equivalent thereof) for purposes
of the capital adequacy guidelines of the Federal Reserve, as then in effect
and applicable to the Company.
The Company intends to deduct the interest accruing on the Convertible
Subordinated Debentures. Under the Taxpayer Relief Act of 1997, enacted on
August 5, 1997, issuers of certain convertible debt instruments are not
entitled to deduct interest thereon. For example, interest is not deductible
if the debt instrument is convertible into equity of the issuer (or a related
party) at the option of the holder and there is a substantial certainty that
the holder will exercise the conversion option. Similarly, interest is not
deductible if the debt instrument is part of an arrangement which is
reasonably expected to result in a conversion at the option of the issuer (or
a related party). The Company intends to take the position that this
legislation should not apply to the Convertible Subordinated Debentures. The
Internal Revenue Service (the "IRS"), however, has not yet issued any guidance
regarding its interpretation of the new legislation. There can be no assurance
that the IRS will not take the position that interest on the Convertible
Subordinated Debentures is not deductible. Accordingly, there can be no
assurance that an audit or future interpretation by the IRS of the new
legislation will not result in a Tax Event and an early redemption of the
Capital Securities before, or after, , 2001.
In addition, in recent years, there have been several proposals to adopt
legislation which, if enacted and made applicable to the Convertible
Subordinated Debentures, would preclude the Company from deducting interest
thereon. The most recent proposal was made by the Clinton Administration on
March 19, 1997. Such proposals were not adopted by Congress, but there can be
no assurance that similar proposals will not be adopted in the future and made
applicable to the Convertible Subordinated Debentures. Accordingly, there can
be no
13
<PAGE>
assurance that any such legislation will not result in a Tax Event which would
permit the Company to cause a redemption of the Capital Securities before, or
after, , 2001.
Recently, the IRS asserted that the interest payable on a security with
terms that are similar to the terms of the Convertible Subordinated Debentures
(but which are not convertible and which have a longer maturity than the
Convertible Subordinated Debentures) was not deductible for U.S. federal
income tax purposes. The taxpayer in that case has filed a petition in the
U.S. Tax Court challenging the IRS's position on this matter. If this matter
is in fact litigated and the Tax Court were to sustain the IRS's position on
this matter, such judicial decision could result in a Tax Event which would
permit the Company to cause a redemption of the Capital Securities before, or
after, , 2001.
RIGHTS UNDER GUARANTEE
The Guarantee guarantees to the holders of the Trust Securities the
following payments, to the extent not paid by the Issuer: (i) any accumulated
and unpaid Distributions required to be paid on the Trust Securities, to the
extent that the Issuer has funds on hand available therefor at such time, (ii)
the redemption price with respect to any Trust Securities called for
redemption, to the extent that the Issuer has funds on hand available therefor
at such time, and (iii) upon a voluntary or involuntary dissolution, winding
up or liquidation of the Issuer (unless the Convertible Subordinated
Debentures are distributed to holders of the Trust Securities), the lesser of
(a) the aggregate of the Liquidation Amount and all accumulated and unpaid
Distributions to the date of payment, to the extent that the Issuer has funds
on hand available therefor at such time, and (b) the amount of assets of the
Issuer remaining available for distribution to holders of the Trust Securities
after payment of creditors of the Issuer as required by applicable law. The
Guarantee will be qualified as an indenture under the Trust Indenture Act. The
Guarantee is subordinate as described under "--Ranking of Subordinated
Obligations Under the Guarantee and the Convertible Subordinated Debentures."
The holders of not less than a majority in aggregate Liquidation Amount of
the Capital Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Guarantee or to direct the exercise of any trust power
conferred upon the Guarantee Trustee under the Guarantee. Any holder of the
Capital Securities may institute a legal proceeding directly against the
Company to enforce its rights under the Guarantee without first instituting a
legal proceeding against the Issuer, the Guarantee Trustee or any other person
or entity. If the Company were to default on its obligation to pay amounts
payable under the Convertible Subordinated Debentures, the Issuer would lack
funds for the payment of Distributions or amounts payable on redemption of the
Capital Securities or otherwise, and, in such event, holders of the Capital
Securities would not be able to rely upon the Guarantee for payment of such
amounts. In the event that an Debenture Event of Default occurred and is
continuing and such event is attributable to the failure of the Company to pay
interest on or principal of the Convertible Subordinated Debentures on the
applicable payment date, then a holder of Capital Securities may institute a
legal proceeding directly against the Company pursuant to the terms of the
Indenture for enforcement of payment to such holder of the principal of or
interest on such Convertible Subordinated Debentures having a principal amount
equal to the aggregate Liquidation Amount of the Capital Securities of such
holder (a "Direct Action"). In connection with such Direct Action, the Company
will have a right of set-off under the Indenture to the extent of any payment
made by the Company to such holder of Capital Securities in the Direct Action.
Except as described herein, holders of Capital Securities will not be able to
exercise directly any other remedy available to the holders of the Convertible
Subordinated Debentures or assert directly any other rights in respect of the
Convertible Subordinated Debentures. The exercise by the Company of its right,
as described herein, to defer the payment of interest on the Convertible
Subordinated Debentures does not constitute a Debenture Event of Default. See
"Description of Convertible Subordinated Debentures--Enforcement of Certain
Rights by Holders of Capital Securities," "--Debenture Events of Default" and
"Description of Guarantee." The Trust Agreement provides that each holder of
Capital Securities by acceptance thereof agrees to the provisions of the
Guarantee and the Indenture.
14
<PAGE>
NO VOTING RIGHTS EXCEPT IN LIMITED CIRCUMSTANCES
Holders of Capital Securities generally will have limited voting rights
relating only to the modification of the Capital Securities and the Guarantee
and the exercise of the Issuer's rights as holder of Convertible Subordinated
Debentures. Holders of Capital Securities will not be entitled to vote to
appoint, remove or replace the Property Trustee, the Delaware Trustee or any
Administrative Trustee (each as defined herein), as such voting rights are
vested exclusively in the holder of the Common Securities except, with respect
to the Property Trustee and the Delaware Trustee, upon the occurrence of
certain events described herein. The Property Trustee, the Administrative
Trustees and the Company may amend the Trust Agreement without the consent of
holders of Capital Securities to ensure that the Issuer will not be classified
for U.S. federal income tax purposes as an association or publicly traded
partnership subject to taxation as a corporation unless such action materially
and adversely affects the interests of such holders. See "Description of
Capital Securities--Removal of Issuer Trustees" and "--Voting Rights;
Amendment of Trust Agreement."
EXCHANGE OF CAPITAL SECURITIES FOR CONVERTIBLE SUBORDINATED DEBENTURES
The Company, as the holder of the outstanding Common Securities of the
Issuer, will have the right at any time to terminate the Issuer and, after
satisfaction of liabilities to creditors of the Issuer as required by
applicable law, cause the Convertible Subordinated Debentures to be
distributed to the holders of the Capital Securities in exchange therefor upon
liquidation of the Issuer. The exercise of such right is subject to the
Company having received prior approval of the Federal Reserve if then required
under applicable capital guidelines or policies. See "Description of Capital
Securities--Redemption--Liquidation of Issuer and Distribution of Convertible
Subordinated Debentures."
Under current U.S. federal income tax law and interpretations and assuming,
as expected, that the Issuer is classified as a grantor trust for such
purposes, a distribution of the Convertible Subordinated Debentures upon a
liquidation of the Issuer should not be a taxable event to holders of the
Capital Securities. If, however, a Tax Event were to occur which would cause
the Issuer to be subject to U.S. federal income tax with respect to income
received or accrued on the Convertible Subordinated Debentures, a distribution
of the Convertible Subordinated Debentures by the Issuer could be a taxable
event to the Issuer and the holders of the Capital Securities. See "Certain
Federal Income Tax Consequences--Receipt of Convertible Subordinated
Debentures or Cash Upon Liquidation of Issuer."
POSSIBLE ADVERSE EFFECT ON MARKET PRICES
There can be no assurance as to the market prices for Capital Securities or,
if a termination of the Issuer were to occur, for the Convertible Subordinated
Debentures distributed to the holders of the Capital Securities in exchange
for the Capital Securities. Accordingly, the Capital Securities that an
investor may purchase, whether pursuant to the offer made hereby or in the
secondary market, or the Convertible Subordinated Debentures that a holder of
Capital Securities may receive on liquidation of the Issuer, may trade at a
discount to the price that the investor paid to purchase the Capital
Securities offered hereby. Because holders of Capital Securities may receive
Convertible Subordinated Debentures in liquidation of the Issuer and because
Distributions are otherwise limited to payments on the Convertible
Subordinated Debentures, and because the Capital Securities are convertible
into Common Stock as described herein, prospective purchasers of Capital
Securities are also making an investment decision with regard to the
Convertible Subordinated Debentures and the Common Stock and should carefully
review all the information regarding the Convertible Subordinated Debentures
and the Common Stock contained herein. See "Description of Convertible
Subordinated Debentures" and "Description of Capital Stock--Common Stock." As
a result of the existence of the Company's right to defer interest payments,
the market price of the Capital Securities (which represent beneficial
ownership interests in the Issuer) may be more volatile than the market prices
of other securities that are not subject to such optional deferrals. See
"Description of Convertible Subordinated Debentures" and "Description of
Capital Stock--Common Stock."
15
<PAGE>
If the Convertible Subordinated Debentures are distributed to the holders of
Capital Securities upon the liquidation of the Issuer, the Company will use
its best efforts to list the Convertible Subordinated Debentures for trading
on the NYSE or such stock exchanges or other organizations, if any, on which
the Capital Securities are then listed or quoted. The Common Stock is listed
on the NYSE under the symbol "BNK."
TRADING PRICE; ABSENCE OF PRIOR PUBLIC MARKET FOR THE CAPITAL SECURITIES
The Capital Securities may trade at prices that do not fully reflect the
value of accrued but unpaid interest with respect to the underlying
Convertible Subordinated Debentures. A holder of Capital Securities using the
accrual method of tax accounting (and a cash method holder, during and after
an Extension Period or if the Convertible Subordinated Debentures are deemed
to have been issued with original issue discount) that disposes of its Capital
Securities between record dates for payments of Distributions (and
consequently does not receive a Distribution from the Issuer for the period
prior to such disposition) will nevertheless be required to include accrued
but unpaid interest on the Convertible Subordinated Debentures through the
date of disposition in income as ordinary income and to add such amount to its
adjusted tax basis in its pro rata share of the underlying Convertible
Subordinated Debentures deemed disposed of. Such holder will recognize a
capital loss to the extent that the selling price (which may not fully reflect
the value of accrued but unpaid interest) is less than its adjusted tax basis
(which will include all accrued but unpaid interest). Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary income
for U.S. federal income tax purposes. See "Certain Federal Income Tax
Consequences--Disposition of Capital Securities."
There is no current public market for the Capital Securities. Although the
Capital Securities have been approved for listing on the NYSE, subject to
official notice of issuance, no assurance can be given as to the liquidity of
the trading market for the Capital Securities. The public offering price,
Distribution rate and Conversion Ratio for the Capital Securities have been
determined through negotiations between the Company and the Underwriters.
Prices for the Capital Securities will be determined in the marketplace and
may be influenced by many factors, including prevailing interest rates, the
liquidity of the market for the Capital Securities, the market price of the
Common Stock, investor perceptions of the Company and general industry and
economic conditions.
YEAR 2000 ISSUES
Most computer programs were originally designed to recognize calendar years
by only their last two digits. Consequently, these programs cannot
differentiate the year 2000 and beyond from the year 1900. This programming
issue will affect many data processing systems including those used by the
Company and its commercial customers. Management has formed a committee which
meets weekly to analyze the business and operational issues associated with
the year 2000 and to plan for and monitor the status of corrective measures.
The Company has outsourced most data processing activities and those vendors
are responsible for modifying their programs to be compliant with year 2000
processing. The committee has found that where outside vendors are not
responsible, most programs and equipment are fully depreciated and no write-
off costs will be necessary. Certifications from remaining vendors as to their
year 2000 compliance are expected by mid-1998 and all systems are expected to
be upgraded by December 31, 1998. Based on the foregoing, the Company does not
expect to spend any significant amounts with outside contractors related to
the year 2000. Commercial customers have been contacted and efforts made to
ensure their readiness for year 2000 also. At this time, management does not
anticipate any material impact to the Company's operations, cash flows or
financial condition as a result of these year 2000 issues.
16
<PAGE>
USE OF PROCEEDS
The Issuer will use the gross proceeds received from the sale of the Capital
Securities to purchase Convertible Subordinated Debentures from the Company.
The Company intends to use the net proceeds from the sale of the Convertible
Subordinated Debentures for general corporate purposes including, without
limitation the repayment of debt (as described below), the funding of
investments in or extensions of credit to its subsidiaries, the financing of
acquisitions and the repurchase of its Common Stock. The Company intends to
use approximately $45 million of the net proceeds to reduce to zero the amount
outstanding under the revolving loan portion of its Revolving Credit and Term
Loan Agreement (the "Loan Agreement"), dated March 31, 1995, as amended, with
SunTrust Bank, Nashville, N.A. The Company's obligations under the Loan
Agreement are unsecured and the interest rate under the revolving loan portion
of the Loan Agreement is the London Inter-Bank Offered Rate (LIBOR) plus .50%
(6.16% as of June 5, 1998). At June 5, 1998, $45 million was outstanding under
the revolving loan portion of the Loan Agreement and $3 million was
outstanding under the term loan portion of the Loan Agreement. Amounts
outstanding under the term loan portion of the Loan Agreement are not
currently expected to be repaid with any of the net proceeds. The revolving
loan portion of the Loan Agreement permits borrowings up to $50 million and
the Company may borrow additional amounts thereunder in the future. The
revolving portion of the Loan Agreement matures on June 30, 1999. Pending
their application for any or all of such purposes, the net proceeds will be
invested primarily in investment grade financial instruments. See
"Capitalization."
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth for the respective periods indicated the
ratios of the Company's consolidated earnings to fixed charges (as restated to
give effect to the Pinnacle Acquisition). For purposes of computing the ratio,
earnings represent net income from continuing operations plus total taxes
based on income and fixed charges. Fixed charges, excluding interest on
deposits, include interest expense (other than on deposits), and the
proportion deemed representative of the interest factor of rent expense, net
of income from subleases, and capitalized interest. Fixed charges, including
interest on deposits, include all interest expense and the proportion deemed
representative of the interest factor of rent expense, net of income from
subleases, and capitalized interest.
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------- ------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Excluding Interest on Deposits........ 2.54 2.59 2.18 2.51 2.87 3.76 4.36
Including Interest on Deposits........ 1.43 1.42 1.34 1.34 1.41 1.48 1.48
</TABLE>
17
<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Common Stock is listed for trading on the NYSE under the symbol "BNK."
The following table sets forth the high and low sales prices and cash
dividends declared per share of Common Stock for the periods indicated. Prior
to April, 1996, the Common Stock was quoted on The Nasdaq Stock Market's
National Market under the symbol "CNBE."
<TABLE>
<CAPTION>
PRICE RANGE
------------- DIVIDENDS
HIGH LOW DECLARED
------ ------ ---------
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
First quarter................................... $26.76 $25.17 $.19
Second quarter.................................. 26.30 25.40 .19
Third quarter................................... 28.09 24.72 .19
Fourth quarter.................................. 39.77 27.98 .21
YEAR ENDED DECEMBER 31, 1997
First quarter................................... $38.21 $34.76 $.21
Second quarter.................................. 42.74 37.62 .21
Third quarter................................... 43.19 38.33 .21
Fourth quarter.................................. 48.63 39.69 .23
YEAR ENDING DECEMBER 31, 1998
First quarter................................... $49.38 $41.38 $.23
Second quarter (through June 5)................. 53.75 43.25 .23
</TABLE>
As of June 5, 1998, there were approximately 12,000 holders of record of the
Common Stock. The last reported sales price of the Common Stock on the NYSE
Composite Tape on June 5, 1998 was $46.25.
The holders of the Common Stock will be entitled to receive any cash
dividends as may be declared by the Company's Board of Directors. The
declaration and payment of future dividends to holders of the Common Stock
will be at the discretion of the Company's Board of Directors and will depend
upon the Company's earnings and financial condition, capital requirements of
its subsidiaries, regulatory condition and considerations and such other
factors as the Company's Board of Directors may deem relevant. See
"Description of Capital Stock--Common Stock."
As a holding company, the Company is ultimately dependent upon its
subsidiaries to provide funding for its operating expenses, debt service and
dividends. Various banking laws applicable to the Company's subsidiaries limit
the payment of dividends, management fees and other distributions by such
subsidiaries to the Company and may therefore limit the ability of the Company
to make dividend payments.
18
<PAGE>
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
the Company at March 31, 1998, on a pro forma basis giving effect to the one-
time merger-related charges related to the Pinnacle Acquisition to be recorded
in the second quarter of 1998, and on an as adjusted basis giving effect to
the issuance of the Trust Securities hereby offered by the Issuer and the
receipt by the Company of the proceeds from the corresponding sale of the
Convertible Subordinated Debentures to the Issuer (the "Offering"), as if the
Offering had been consummated on March 31, 1998.
<TABLE>
<CAPTION>
MARCH 31, 1998
-----------------------------------
AS
ACTUAL PRO FORMA(1) ADJUSTED
---------- ------------ ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
LONG-TERM DEBT:
Parent company.................... $ 48,000 $ 48,000 $ 3,000(2)
Subsidiaries...................... 606,000 606,000 606,000
---------- ---------- ----------
TOTAL LONG-TERM DEBT............ 654,000 654,000 609,000
GUARANTEED PREFERRED BENEFICIAL
INTERESTS IN THE COMPANY'S
CONVERTIBLE SUBORDINATED
DEBENTURES......................... -- -- 150,000
SHAREHOLDERS' EQUITY:
Preferred stock, no par value per
share, 2,000,000 shares
authorized, no shares issued..... -- -- --
Common stock, stated value $1.00
per share; 100,000,000 shares
authorized, 33,540,415 shares
issued(3)........................ 33,540 33,540 33,540
Capital surplus................... 363,204 363,204 363,204
Retained earnings................. 122,244 92,244 92,244
Accumulated other comprehensive
income........................... 5,647 5,647 5,647
---------- ---------- ----------
TOTAL SHAREHOLDERS' EQUITY...... $ 524,635 $ 494,635 $ 494,635
========== ========== ==========
TOTAL CAPITALIZATION............ $1,178,635 $1,148,635 $1,253,635
========== ========== ==========
CAPITAL RATIOS:
Shareholders' equity to total
assets........................... 7.99% 7.55% 7.43%
Leverage ratio(4)................. 7.31 6.87 9.05
Risk-based:(4)
Tier 1 capital to risk-weighted
assets......................... 11.77 11.07 14.74
Total capital to risk-weighted
assets......................... 13.14 12.45 16.11
</TABLE>
- --------
(1) Gives effect to the one-time merger-related charges of $30.0 million, net
of taxes, that will be recorded during the second quarter of 1998. See
"Risk-Factors--Pinnacle Acquisition" and "The Company--Recent
Developments."
(2) Gives effect to the reduction of indebtedness under the revolving loan
portion of the Loan Agreement. See "Use of Proceeds" for a description of
the Loan Agreement.
(3) The Company's Restated Articles of Incorporation was amended at its Annual
Meeting of Shareholders on April 21, 1998, to increase the number of
authorized shares of Common Stock from 50,000,000 to 100,000,000.
(4) Federal Reserve guidelines for calculation of Tier 1 capital limit the
amount of cumulative preferred stock which can be included in Tier 1
capital to 25% of total Tier 1 capital. The aggregate amount of the
Capital Securities offered hereby will initially be included in Tier 1
capital for the Company. The as adjusted capital ratios are computed
including the estimated proceeds from the sale of the Capital Securities.
19
<PAGE>
THE COMPANY
GENERAL
The Company, headquartered in Evansville, Indiana, is the largest bank
holding company based in Indiana. Through its 139 banking offices, 29 consumer
finance offices, and 190 ATMs, the Company provides a wide range of commercial
banking, retail banking, trust, insurance and investment services to customers
in Indiana, Illinois, Michigan, Kentucky and Tennessee. At March 31, 1998 (on
a pro forma basis giving effect to the Pinnacle Acquisition), the Company had
assets of $6.6 billion, deposits of $4.7 billion, loans of $3.9 billion and
shareholders' equity of $525 million.
The Company has grown significantly through 32 acquisitions of banks and
non-banks since 1986. The Company consummated its largest acquisition to date
on April 17, 1998, when it acquired Pinnacle, a $2.1 billion bank holding
company headquartered in St. Joseph, Michigan. Pinnacle operated 14 offices in
southwestern Michigan and 30 offices in northwestern Indiana The Pinnacle
Acquisition represents the Company's first entry into these markets. For
additional information regarding the Pinnacle Acquisition, see "Risk Factors--
Pinnacle Acquisition." On February 13, 1998, the Company executed a definitive
agreement to acquire, for shares of Common Stock, National Bancorp, the
holding company for TCB Bank which operates five banking offices in two
counties just east of Evansville, Indiana. At March 31, 1998, National Bancorp
had assets of $189 million and shareholders' equity of $18 million. The
acquisition is subject to, among other things, approval by National Bancorp's
shareholders, and is expected to be completed in the third quarter of 1998.
The Company operates with a super community bank philosophy--decentralizing
day-to-day customer services such as pricing and lending decisions, while
centralizing data processing systems, product development and back office
support functions. The Company's operations in each market are managed by a
president under the guidance of a regional board of directors. By keeping the
decision-making process close to the customer, the Company believes it has a
competitive advantage over super regional companies, while providing the
necessary scale to manage expenses. Management believes that the Company's
size gives it a considerable advantage over community banks through a much
more diverse product offering and greater access to resources, especially
technology. The Company has operations in six of the ten largest Indiana
counties. Based upon the most recently available FDIC deposit data, 78% of its
deposits come from markets where the Company ranks first, second or third in
deposit market share.
The Company's principal goal is consistent growth of core earnings. To
achieve its goal, the Company focuses on revenue growth and expense
management.
Revenue growth is driven by (i) developing quality loans with small
businesses and consumers, (ii) selectively acquiring banks and non-bank
businesses, (iii) selling internally developed or third-party fee-based
products, and (iv) motivating associates with incentive compensation.
. The Company focuses on loan growth in the small business and consumer
markets. Management believes that its strong community-oriented
relationships provide a competitive advantage over super regional banks.
Without giving effect to the Pinnacle Acquisition, commercial, commercial
real estate and consumer loans have experienced double-digit growth on an
annualized basis each quarter since January 1, 1996.
. The Company has pursued a strategy of actively acquiring banks and
thrifts which are principally responsible for assets increasing from $1.9
billion at December 31, 1992, to $6.6 billion at March 31, 1998. To
complement its bank and thrift acquisitions, the Company has completed
non-banking acquisitions such as Wedgewood Partners, Inc. ("Wedgewood"),
a full service broker-dealer and asset management firm, Citizens
Insurance of Evansville, the largest independent insurance agency in
Evansville, and Small, Parker & Blossom, a third party employee benefit
plan administrator.
. In order to grow its fee based businesses, the Company focuses on
investment products sales, insurance sales and employee benefit plan
administration. Products are developed both in-house and selected from
third-party providers.
20
<PAGE>
. In 1997 all associates of the Company were granted stock options to
reward their contributions to the Company and align their interests with
the interests of the shareholders. Associates also are rewarded with
incentive bonuses for increasing earnings per share. In addition, an
extensive retail incentive program rewards associates for successful
referrals of new customers and cross-selling of the Company's products.
Expense management is driven by (i) back office operating efficiencies, (ii)
utilizing outsourcing where appropriate, and (iii) realizing cost savings from
acquisitions.
. The Company has three regional check processing and deposit operation
functions in Indiana and Illinois. Otherwise, essentially all other back
office support groups are located in Evansville. This approach to back
office operations facilitates efficiencies. At the same time, the
Company's banking units remain focused on customer service, selling and
credit quality.
. Outsourcing non-core activities has played a key role in expense control
by allowing experts to focus on operational issues of the Company. The
Company has entered into a facilities management arrangement with an
experienced third-party provider of data processing services and, in
1997, entered into a revenue sharing arrangement with a major credit card
servicer to which the Company sold its credit card portfolio.
. The Company has actively acquired banks, thrifts and non-bank businesses
to facilitate growth. Cost savings are generally realized from
acquisitions when they are converted to the Company's data processing,
back office, marketing, and product development systems. There can,
however, be no assurance that the Company will achieve cost savings in an
acquisition as they are subject to known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements to differ materially from those originally contemplated by
the Company.
RECENT DEVELOPMENTS
The following is an overview of the Company's results of operations for the
first quarter of 1998 and the year ended December 31, 1997, on a pro forma
basis after giving effect to the Pinnacle Acquisition which was consummated on
April 17, 1998, and accounted for as a pooling of interests.
Overview
First quarter 1998 diluted net income per share of $.58 was 12% higher than
the first quarter of 1997. Net income for the quarter was $19.6 million
compared to $18.6 million and $17.5 million for the fourth and first quarters
of 1997, respectively. Annualized returns on average assets and average
shareholders' equity for the quarter ended March 31, 1998, were 1.20% and
15.32%, respectively, compared with 1.13% and 14.41% for the same period of
1997.
Diluted net income per share for the year ended December 31, 1997, was
$1.78, an increase of 12% over the $1.59 earned in 1996. Net income for 1997
was negatively impacted by restructuring charges and conforming loan loss
methodologies from Pinnacle's August 1997 acquisitions of IFC and CB. The
restructuring charges and conforming loan loss methodologies reduced net
income by $8.4 million and $6.0 million, respectively, and diluted net income
per share by $.25 and $.18, respectively. Net income for 1996 included a one-
time assessment, required of all financial institutions with deposits insured
by the Savings Association Insurance Fund (SAIF), which reduced net income and
diluted net income per share by $6.6 million and $.20, respectively. Excluding
these nonrecurring items, diluted net income per share for 1997 of $2.21
increased 23% from $1.79 in 1996.
The Company's earnings in 1997 resulted in returns on average assets and
shareholders' equity of .93% and 12.02%, respectively, compared with a return
on average assets of .91% and return on average shareholders' equity of 11.16%
in 1996. Exclusive of the restructuring charges, conforming adjustments, and
SAIF assessment, returns on average assets and shareholders' equity were 1.15%
and 14.94%, respectively, in 1997 compared to 1.03% and 12.55% in 1996,
respectively.
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Loans and Net Interest Income
Average loans, excluding residential mortgages, of $2.7 billion grew 13.2%
in the first quarter of 1998 from the same period in 1997. Including
residential mortgages, average loans increased 5.2% from the first quarter of
1997 and declined slightly from the fourth quarter of 1997. The Company
intends to continue growing the commercial and consumer loan sectors of its
loan portfolio, while selling its residential mortgage production. This
strategy, combined with normal prepayments, resulted in residential mortgages
declining $87.3 million between December 31, 1997 and March 31, 1998.
Net interest income for the first quarter of 1998 was $780 thousand greater
than the first quarter of 1997 due to increased earning assets offset by a
lower net interest margin. The margin was 3.89% for the first quarter of 1998
compared to 3.95% for the first quarter of 1997. The flat yield curve,
combined with increased competition and pre-payments, resulted in yields on
loans and securities falling and reducing the yield on interest earning assets
and the net interest margin.
Average loans for 1997 grew $406 million from 1996, principally from
increased commercial and commercial real estate lending and mortgage loans
purchased under agreements to resell. The net interest margin was 3.94% for
1997 versus 4.03% for the previous year. The strong loan growth came at
marginally lower rates causing average loan yields to fall. The net interest
margin also declined in 1997 due to the sale of the Company's credit card
portfolio and additional investment in corporate-owned life insurance, the
income on which is recorded as non-interest.
Asset Quality and Provision for Loan Losses
The allowance for loan losses at March 31, 1998, was $55.2 million, or 1.40%
of loans, compared to $55.2 million and 1.38% at year-end 1997. Non-performing
loans consist of loans classified as troubled debt restructurings and loans on
non-accrual status. The Company's non-performing loans as of March 31, 1998
totaled $29.9 million, an increase of $1.9 million from December 31, 1997. The
allowance for loan losses represented 1.84 times non-performing loans on March
31, 1998. Risk assets, which include non-performing loans, foreclosed
properties and loans past due 90 days or more and accruing, were $44.3 million
at March 31, 1998 or 1.12% of loan-related assets. The provision for loan
losses was $3.3 million for the first quarter of 1998, representing .34% of
average loans on an annualized basis. Net charge-offs were .34% of average
loans for the quarter, slightly better than the .37% for the first quarter of
1997.
The allowance for loan losses at December 31, 1997, was $55.2 million or
1.38% of loans compared to $46.2 million and 1.25% the prior year-end. Non-
performing loans at December 31, 1997, totaled $28.0 million, a decrease of
$5.6 million from December 31, 1996. The allowance for loan losses was 1.97
times non-performing loans at December 31, 1997, compared to 1.37 times at
year-end 1996. Risk assets declined $6.3 million to $44.1 million at year-end.
The provision for loan losses totaled $24.9 million in 1997, an increase of
$11.6 million over the prior year, principally as a result of additional
provisions to conform the loan loss methodologies of IFC and CB to that of
Pinnacle. Net charge-offs for 1997 increased to .42% of average loans from
.36% in 1996, also as a result of conforming loan loss methodologies.
Non-Interest Income
Non-interest income in the first quarter of 1998 was $22.2 million,
increasing $5.0 million or 29% from the same period in 1997, of which $459
thousand related to the January 1, 1998 acquisition of Wedgewood, a full
service broker/dealer and asset manager. Service charges on deposits increased
22% compared to the first quarter of 1997 as a result of an increased number
of deposit accounts and chargeable services, higher activity fees and new fee
sources, combined with improved efforts to collect a greater percentage of
assessable fees. Mortgage banking revenue increased due to strong demand for
new and refinanced residential mortgages and increased loan sales. Other
income increased $1.2 million as compared to the first quarter of 1997,
principally due to the Company's increased investment in a corporate-owned
life insurance program.
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Non-interest income represented 24.8% of net fully tax equivalent revenues
in 1997 as compared to 23.6% in 1996. Service charges on deposit accounts
increased 16% in 1997 compared to 1996 as a result of an increased number of
deposit accounts and chargeable services, higher activity fees and new fee
sources combined with improved efforts to collect a greater percentage of
assessable fees.
Trust and plan administration fees increased $2.1 million to $9.8 million in
1997. The May 31, 1996, acquisition of Small Parker & Blossom, a third party
administrator of employee benefit plans, accounted for $1.3 million of this
increase. Trust fee income, which is based primarily on the market value of
assets under management or custody, also increased over 1996.
Mortgage banking revenue decreased $1.3 million in 1997 due primarily to
gains recorded in 1996 from the securitization of large pools of residential
mortgage loans offset by increased mortgage origination activities. Other
income increased $6.5 million in 1997 compared to 1996. The Company recorded a
gain of $646 thousand from the sale of its credit card portfolio. The
remaining increase was principally due to increased revenues of $1.8 million
from a corporate-owned life insurance program, $481 thousand from the
expiration of interest rate option contracts, $412 thousand from net
securities trading account gains and $472 thousand from non-customer ATM
access fees.
Non-Interest Expense
Non-interest expense increased 9%, or $3.9 million, in the first quarter
1998 compared to the first quarter 1997, generally due to increased business
activity and the Wedgewood acquisition. The Wedgewood acquisition accounted
for $545 thousand of the expense increase. Salaries and employee benefits
increased $1.1 million to $24.1 million in the first quarter from the same
period in 1997.
Non-interest expense increased $6.3 million, or 3.3%, in 1997 compared with
1996. This increase was principally due to increased compensation of $10.2
million, data processing of $2.1 million, professional fees of $2.8 million,
and other expenses of $3.0 million, which were offset by a reduction in the
FDIC premiums of $2.4 million and the one-time SAIF assessment in 1996 of
$11.0 million. Included with 1997 expenses were $11.5 million of restructuring
charges recorded by Pinnacle in connection with its mergers with IFC and CB,
which increased compensation by $4.6 million, data processing by $2.2 million,
professional fees by $2.0 million and other expenses by $2.7 million.
Exclusive of the restructuring charges in 1997 and the SAIF assessment in
1996, non-interest expense increased 3.2% in 1997 compared with 1996.
Incentive compensation accounted for a significant portion of the remaining
increase in compensation expense as the Company continues to emphasize
performance-based awards tied to net income per share and product sales.
Occupancy expense and equipment related expenses increased $1.6 million due to
expanded business activities and equipment upgrades required to facilitate the
growth from acquisitions.
Merger Related Charges
In connection with the Pinnacle Acquisition, the Company will record during
the second quarter of 1998, one-time merger related charges of $41.3 million.
The charges include $8.3 million in technology-related costs (including
contract terminations and software and equipment write-offs), $9.7 million in
severance pay and other personnel related expenses, $6.7 million for
professional fees, $11.2 million in conforming accounting policies of Pinnacle
to those of the Company, and $5.4 million in other costs. The after-tax effect
of these charges is $30.0 million or $.89 per share. These charges are greater
than the Company originally anticipated, principally due to greater
adjustments to conform the accounting policies followed by Pinnacle to the
Company's more conservative policies for revenue and expense recognition under
generally accepted accounting principles, greater severance pay under
employment contracts and a higher level of attrition, and other costs,
including write-downs of equity investments.
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THE ISSUER
The Issuer is a statutory business trust created under Delaware law pursuant
to (i) the trust agreement, executed by the Company, as Depositor, The Bank of
New York, as Property Trustee, The Bank of New York (Delaware) as Delaware
Trustee, and the Administrative Trustees named therein, and (ii) the filing of
a certificate of trust with the Delaware Secretary of State on June 1, 1998.
The initial trust agreement will be amended and restated in its entirety (as
so amended and restated, the "Trust Agreement") substantially in the form
filed as an exhibit to the Registration Statement of which this Prospectus
forms a part. The Trust Agreement will be qualified as an indenture under the
Trust Indenture Act. The Issuer exists for the exclusive purposes of (i)
issuing and selling the Capital Securities and the Common Securities, (ii)
using the proceeds from the sale of the Capital Securities and the Common
Securities to acquire the Convertible Subordinated Debentures issued by the
Company, and (iii) engaging in only those other activities necessary or
incidental thereto (such as registering the transfer of the Trust Securities).
Accordingly, the Convertible Subordinated Debentures will be the sole assets
of the Issuer, and payments under the Convertible Subordinated Debentures will
be the sole revenue of the Issuer. Upon issuance of the Trust Securities, the
purchasers thereof will own all of the Trust Securities. All of the Common
Securities will be owned by the Company. 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 Company as holder of the Common Securities to payment in
respect of Distributions and payments upon liquidation, redemption or
otherwise will be subordinated to the rights of the holders of the Capital
Securities. See "Description of Capital Securities--Subordination of Common
Securities." The Company will acquire Common Securities in an aggregate
Liquidation Amount at least equal to 3% of the total capital of the Issuer.
The Issuer has a term of 55 years, but may terminate earlier as provided in
the Trust Agreement.
It is anticipated that the Issuer will not be subject to the reporting
requirements under the Exchange Act. The principal executive office of the
Issuer is c/o CNB Bancshares, Inc., 20 N.W. Third Street, Evansville, Indiana
47739, and its telephone number is 812-456-3400. The Company will pay all fees
and expenses related to the Issuer and the offering of the Capital Securities.
The number of trustees of the Issuer (the "Trustees") will, pursuant to the
Trust Agreement, initially be four. Two of the Trustees (the "Administrative
Trustees") will be persons who are employees or officers of, or who are
affiliated with, the Company. The third trustee will be a financial
institution that is unaffiliated with the Company, which trustee will serve as
institutional trustee under the Trust Agreement and as indenture trustee for
the purposes of compliance with the provisions of the Trust Indenture Act (the
"Property Trustee"). The Bank of New York, a New York banking corporation,
will be the Property Trustee until removed or replaced by the holder of the
Common Securities. For purposes of compliance with the provisions of the Trust
Indenture Act, The Bank of New York also will act as trustee (the "Guarantee
Trustee") under the Guarantee and as trustee (the "Debenture Trustee") under
the Indenture. The fourth trustee will be an entity that maintains its
principal place of business in the State of Delaware (the "Delaware Trustee").
The Bank of New York (Delaware), a Delaware banking corporation, will act as
Delaware Trustee. The Property Trustee will hold title to the Convertible
Subordinated Debentures for the benefit of the holders of the Trust Securities
and in such capacity will have the power to exercise all rights, powers and
privileges under the Indenture. The Property Trustee will also maintain
exclusive control of a segregated non-interest-bearing bank account (the
"Property Account") to hold all payments made in respect of the Convertible
Subordinated Debentures for the benefit of the holders of the Trust
Securities. The Property Trustee will make payments of Distributions and
payments on liquidation, redemption and otherwise to the holders of the Trust
Securities out of funds from the Property Account. The Guarantee Trustee will
hold the Guarantee for the benefit of the holders of the Capital Securities.
The Company, as the holder of all the Common Securities, will have the right
to appoint, remove or replace any Trustee and to increase or decrease the
number of Trustees. The rights of the holders of the Capital Securities,
including economic rights, rights to information and voting rights, are set
forth in the Trust Agreement, the Delaware Business Trust Act (the "Trust
Act") and the Trust Indenture Act. See "Description of Capital Securities."
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ACCOUNTING TREATMENT
The Issuer will be treated, for financial reporting purposes, as a
subsidiary of the Company and, accordingly, the accounts of the Issuer will be
included in the Company's consolidated financial statements. The Capital
Securities will be presented as part of a separate line item in the Company's
consolidated balance sheet under the caption "Guaranteed Preferred Beneficial
Interests in the Company's Convertible Subordinated Debentures," and
appropriate disclosures about the Capital Securities, the Guarantee and the
Convertible Subordinated Debentures will be included in the notes to the
Company's consolidated financial statements. The Company will record
Distributions payable on the Capital Securities as a minority interest
distribution in its consolidated statements of operations for financial
reporting purposes.
All future reports of the Company filed under the Exchange Act while the
Capital Securities are outstanding will (a) present the Trust Securities
issued by the Issuer on the balance sheets as part of a separate line item
entitled "Guaranteed Preferred Beneficial Interests in the Company's
Convertible Subordinated Debentures," (b) include in a footnote to the
Company's consolidated financial statements disclosure that the sole assets of
the Issuer are the Convertible Subordinated Debentures (including the
outstanding principal amount, interest rate, maturity date and conversion
ratio of such Convertible Subordinated Debentures), and (c) include in a
footnote to the consolidated financial statements disclosure that the Company
owns all of the Common Securities of the Issuer, the sole assets of the Issuer
are the Convertible Subordinated Debentures, and the back-up obligations, in
the aggregate, constitute a full and unconditional guarantee by the Company of
the obligations of the Issuer under the Capital Securities.
DESCRIPTION OF CAPITAL SECURITIES
GENERAL
Pursuant to the terms of the Trust Agreement, the Trustees on behalf of the
Issuer will issue the Capital Securities and the Common Securities. The
Capital Securities will represent preferred undivided beneficial ownership
interests in the Issuer and the holders thereof will be entitled to a
preference in certain circumstances with respect to Distributions and amounts
payable on redemption or liquidation over the Common Securities, as well as
other benefits as described herein and in the Trust Agreement. All of the
Common Securities will be owned by the Company. This summary of certain
provisions of the Capital Securities and Trust Agreement, which summarizes the
material terms thereof, does not purport to be complete and is subject to, and
is qualified in its entirety by reference to, all of the provisions of the
Trust Agreement, including the definitions therein of certain terms, and the
Trust Indenture Act, to each of which reference is hereby made. Wherever
particular defined terms of the Trust Agreement (as amended or supplemented
from time to time) are referred to herein, such defined terms are incorporated
herein by reference. The form of the Trust Agreement has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
The Issuer is a legally separate entity and its assets are not available to
satisfy the obligations of any other statutory business trust whose Common
Securities may hereafter be owned by the Company. The Trust Agreement does not
permit the issuance by the Issuer of any securities other than the Trust
Securities or the incurrence of any indebtedness by the Issuer.
The Capital Securities will be limited to $150,000,000 ($172,500,000 if the
underwriters' over-allotment option is exercised) aggregate Liquidation Amount
at any time outstanding. The Capital Securities will rank pari passu, and
payments will be made thereon pro rata, with the Common Securities except as
described under "--Subordination of Common Securities." Legal title to the
Convertible Subordinated Debentures will be held by the Property Trustee in
trust for the benefit of the holders of the Capital Securities and Common
Securities. The Guarantee executed by the Company for the benefit of the
holders of the Trust Securities will be a guarantee on a subordinated basis
with respect to the Trust Securities but will not guarantee payment of
Distributions or amounts payable on redemption or liquidation of the Trust
Securities when the Issuer does not have funds on hand available to make such
payments. See "Description of Guarantee."
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DISTRIBUTIONS
Payment of Distributions. The Capital Securities represent preferred
undivided beneficial ownership interests in the Issuer, and Distributions on
the Capital Securities will be payable at the annual rate of % on the
stated Liquidation Amount of $25, payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year (each, a "Distribution
Date"), to the holders of the Capital Securities on the relevant record dates.
The record dates for the Capital Securities will be, for so long as the
Capital Securities remain in book-entry form, one Business Day (as hereafter
defined) prior to the relevant Distribution Date and, in the event the Capital
Securities are not in book-entry form, the 15th day of the month in which the
relevant Distribution Date occurs. Distributions on the Capital Securities
will be cumulative and will accumulate from the date of original issuance. The
first Distribution Date for the Capital Securities will be September 30, 1998.
The period beginning on and including the date of original issuance and ending
on but excluding the first Distribution Date and each successive period
beginning on and including a Distribution Date and ending on but excluding the
next succeeding Distribution Date is herein called a "Distribution Period."
The first Distribution payable on September 30, 1998, will be in the amount of
$ per Capital Security and thereafter quarterly Distributions will be in the
amount of $ per Capital Security.
In the event that any Distribution Date would otherwise fall on a day that
is not a Business Day, such Distribution Date will be postponed to the next
day that is a Business Day (without any additional Distributions or other
payment in respect of such delay) unless it would thereby fall in the next
calendar year, in which event the Distribution Date will be brought forward to
the immediately preceding Business Day. A "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 are authorized or required by law or executive order to
remain closed or a day on which the corporate trust office of the Property
Trustee or the Debenture Trustee is closed for business.
Distributions on the Capital Securities will be payable to the holders
thereof as they appear on the register of the Issuer on the relevant record
date. Subject to any applicable laws and regulations and the provisions of the
Trust Agreement, each such payment will be made as described under "Book-Entry
Issuance."
Extension Period. So long as no Debenture Event of Default has occurred and
is continuing, the Company has the right under the Indenture to defer the
payment of interest on the Convertible Subordinated Debentures at any time or
from time to time for a period not exceeding 20 consecutive quarterly periods
with respect to each Extension Period, provided that no Extension Period may
extend beyond the Stated Maturity of the Convertible Subordinated Debentures.
As a consequence of any such deferral of interest payments by the Company,
quarterly Distributions on the Capital Securities by the Issuer also will be
deferred during any such Extension Period. Distributions to which holders of
the Capital Securities are entitled will accumulate additional Distributions
thereon at the rate of % per annum, compounded quarterly from the relevant
payment date for such Distributions. The term "Distributions" as used herein
includes any such additional Distributions. During any such Extension Period,
the Company may not, and may not permit any subsidiary of the Company to, (i)
declare or pay any dividends or distributions on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of the Company's capital
stock, (ii) make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company that rank pari
passu with or junior in interest to the Convertible Subordinated Debentures,
or (iii) make any guarantee payments with respect to any guarantee by the
Company of the debt securities of any subsidiary of the Company if such
guarantee ranks pari passu with or junior in interest to the Convertible
Subordinated Debentures (other than (a) dividends or distributions in capital
stock of the Company, (b) any declaration of a dividend in connection with the
implementation of a shareholders' rights plan or the redemption or repurchase
of any such rights pursuant thereto, (c) 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, related to the issuance of
Common Stock or rights under a dividend reinvestment and stock purchase plan,
or related to the issuance of Common Stock (or securities convertible into or
exchangeable
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for Common Stock) as consideration in an acquisition transaction that was
entered into prior to the commencement of such Extension Period, or (d)
payments under the Guarantee). Prior to the termination of any such Extension
Period, the Company may further defer the payment of interest on the
Convertible Subordinated Debentures, provided that no Extension Period may
exceed 20 consecutive quarterly periods or extend beyond the Stated Maturity
of the Convertible Subordinated Debentures. Upon the termination of any such
Extension Period and the payment of all interest then accrued and unpaid
(together with interest thereon at the rate of % per annum, compounded
quarterly, to the extent permitted by applicable law), the Company may elect
to begin a new Extension Period. There is no limitation on the number of times
that the Company may elect to begin an Extension Period. See "Description of
Convertible Subordinated Debentures--Right to Defer Interest Payments" and
"Certain Federal Income Tax Consequences--Potential Extension of Interest
Payment Period and Original Issue Discount."
The Company believes that, as a result of its inability to pay any dividends
or distributions on, or redeem, purchase, acquire or make a liquidation
payment with respect to, its Common Stock during an Extension Period and the
additional restrictions imposed upon it as described in the preceding
paragraph, the likelihood of its exercising its right to defer payments of
interest is remote and it has no such current intention. The Company, however,
reserves the right in the future to exercise its option to defer payments of
interest on the Convertible Subordinated Debentures. See "Risk Factors--Right
to Defer Interest Payments; Tax Consequences; Market Price Consequences."
Source of Distributions. The revenue of the Issuer available for
distribution to holders of its Capital Securities will be limited to payments
under the Convertible Subordinated Debentures in which the Issuer will invest
the proceeds from the issuance and sale of its Trust Securities. See
"Description of Convertible Subordinated Debentures." If the Company does not
make interest payments on the Convertible Subordinated Debentures, the
Property Trustee will not have funds available to pay Distributions on the
Capital Securities. The payment of Distributions (if and to the extent the
Issuer has funds legally available for the payment of such Distributions and
cash sufficient to make such payments) is guaranteed by the Company on the
basis set forth herein under "Description of Guarantee."
CONVERSION RIGHTS
General. Capital Securities will be convertible at any time on or after
, 1998 [60 days after the date of issue] and prior to the close of
business on the Business Day immediately preceding the date of repayment of
such Capital Securities, whether at Stated Maturity or upon redemption (either
at the option of the Company or pursuant to a Tax Event or a Capital Treatment
Event), at the option of the holder thereof and in the manner described below,
into shares of Common Stock at an initial Conversion Ratio of shares of
Common Stock for each Capital Security (equivalent to an initial conversion
price of $ per share of Common Stock), subject to adjustment as described
below under "--Conversion Ratio Adjustments." The Issuer will covenant in the
Trust Agreement not to convert Convertible Subordinated Debentures held by it
except pursuant to a notice of conversion delivered to the Property Trustee,
as conversion agent (the "Conversion Agent"), by a holder of Capital
Securities. A holder of a Capital Security wishing to exercise its conversion
right must deliver an irrevocable notice of conversion, together, if the
Capital Security is in certificated form, with the certificate representing
such Capital Security, to the Conversion Agent, which will, on behalf of such
holder, exchange such Capital Security for a portion of the Convertible
Subordinated Debentures and immediately convert such Convertible Subordinated
Debentures into Common Stock. Holders may obtain copies of the required form
of the conversion notice from the Conversion Agent. In the event Cede & Co.
(DTC's nominee) receives a conversion request from the Conversion Agent, DTC
will redeem the amount of interest credited to the applicable Direct
Participant(s) (as defined under "Book-Entry Issuance") in the Capital
Securities in accordance with its procedures.
Holders of Capital Securities at the close of business on a Distribution
record date will be entitled to receive the Distribution payable on such
Capital Securities on the corresponding Distribution Date notwithstanding the
conversion of such Capital Securities following such Distribution record date
but prior to such Distribution Date;
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provided, however, that if any Capital Securities are surrendered for
conversion during the period from the close of business on any record date
through and including the next succeeding Distribution Date (except any such
Capital Securities surrendered for conversion after such Capital Securities
have been called for redemption by the Company during an Extension Period),
such Capital Securities when surrendered for conversion must be accompanied by
payment in next day funds of an amount equal to the Distribution which the
registered holder on such record date is to receive. Except as described
above, no Distribution will be payable by the Company on converted Capital
Securities with respect to any Distribution Date subsequent to the date of
conversion. Except as provided above, neither the Issuer nor the Company will
make, or be required to make, any payment, allowance or adjustment for
accumulated and unpaid Distributions, whether or not in arrears, on Capital
Securities. Each conversion will be deemed to have been effected immediately
prior to the close of business on the day on which the related conversion
notice was received by the Conversion Agent. See "Description of Convertible
Subordinated Debentures--Conversion of Convertible Subordinated Debentures."
Shares of Common Stock issued upon conversion of Capital Securities will be
validly issued, fully paid and nonassessable. No fractional shares of Common
Stock will be issued as a result of conversion, but in lieu thereof such
fractional interest will be paid by the Company in cash based on the last
reported sale price of Common Stock on the date such Capital Securities are
surrendered for conversion.
Conversion Ratio Adjustments--General. The Conversion Ratio is subject to
adjustment in certain events, including (a) the issuance after the date of
issuance of the Capital Securities offered hereby (the "Issue Date") of shares
of Common Stock as a dividend or a distribution with respect to Common Stock,
(b) subdivisions, combinations and reclassification of Common Stock effected
after the Issue Date, (c) the issuance to all holders of Common Stock after
the Issue Date of rights or warrants entitling them (for a period not
exceeding 45 days) to subscribe for or purchase shares of Common Stock at less
than the then Current Market Price (as herein defined) of the Common Stock,
(d) the distribution to all holders of Common Stock after the Issue Date of
evidences of indebtedness, capital stock, cash or assets (including
securities, but excluding those rights, warrants, dividends and distributions
referred to above and dividends and distributions paid exclusively in cash),
(e) the payment of dividends (and other distributions) on Common Stock after
the Issue Date paid exclusively in cash, excluding cash dividends paid out of
retained earnings of the Company, and (f) the payment to holders of Common
Stock after the Issue Date in respect of a tender or exchange offer (other
than an odd-lot offer) by the Company for Common Stock at a price in excess of
110% of the then Current Market Price of Common Stock as of the trading day
next succeeding the last date tenders or exchanges may be made pursuant to
such tender or exchange offer.
"Current Market Price" means, in general, the average of the daily Closing
Prices (as defined herein) for the five consecutive trading days selected by
the Company commencing not more than 20 trading days before, and ending not
later than, the earlier of the day in question or, if applicable, the day
before the "ex" date with respect to the issuance or distribution in question.
"Closing Price" of any security on any day means the last reported sale
price, regular way, on such day or, if no sale takes place on such day, the
average of the reported closing bid and asked price on such day, regular way,
in either case as reported on the NYSE Composite Tape, or, if such security is
not listed or admitted to trading on the NYSE, on the principal national
securities exchange on which such security is listed or admitted to trading,
or if such security is not listed or admitted to trading on a national
securities exchange, on the National Market System of the National Association
of Securities Dealers, Inc., or, if such security is not quoted or admitted to
trading on such quotation system, on the principal quotation system on which
such security is listed or admitted to trading or quoted, or, if not listed or
admitted to trading or quoted on any national securities exchange or quotation
system, the average of the closing bid and asked prices of such security in
the over-the-counter market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similar generally accepted reporting
service, or, if not so available in such manner, as furnished by any NYSE
member firm selected from time to time by the Board of Directors of the
Company for that purpose or, if not so available in such manner, as otherwise
determined in good faith by the Board of Directors of the Company.
The Company from time to time may increase the conversion ratio of the
Convertible Subordinated Debentures (and thus increase the Conversion Ratio of
the Capital Securities) by any amount selected by the
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Company for any period of at least 20 days, in which case the Company shall
give at least fifteen days' notice of such increase. The Company may, at its
option, make such increases in the Conversion Ratio, in addition to those set
forth above, as the Company deems advisable to avoid or diminish any income
tax to holders of Common Stock resulting from any dividend or distribution of
stock (or rights to acquire stock) or from any event treated as such for
income tax purposes. See "Certain Federal Income Tax Considerations--
Adjustment of Conversion Ratio."
No adjustment of the Conversion Ratio will be made upon the issuance of any
shares of Common Stock pursuant to any present or future plan providing for
the reinvestment of dividends or interest payable on securities of the Company
and the investment of additional optional amounts in shares of Common Stock
under any such plan, or upon the issuance of any shares of Common Stock or
options or rights pursuant to any employee benefit plan or program, or
pursuant to any option, warrant, right or any exercisable, exchangeable or
convertible security outstanding as of the date on which the Convertible
Subordinated Debentures are first issued. No adjustment of the Conversion
Ratio will be made upon the issuance of rights under any shareholder rights
plan. The Conversion Ratio will be rounded to four decimal places. No
adjustment in the Conversion Ratio will be required unless adjustment would
require a change of at least one percent (1%) in the Conversion Ratio then in
effect; provided, however, that any adjustment that would not be required to
be made shall be carried forward and taken into account in any subsequent
adjustment. If any action would required adjustment of the Conversion Ratio
pursuant to more than one of the provisions described above, only one
adjustment will be made with respect to that action and such adjustment will
be the amount of adjustment that has the highest absolute value to the holder
of the Capital Securities.
Conversion Ratio Adjustments--Merger, Consolidation or Sale of Assets of
Company. In the event that the Company becomes a party to any transaction,
including, without limitation, and with certain exceptions, (a) a
recapitalization or reclassification of the Common Stock, (b) consolidation of
the Company with, or merger of the Company into, any other person, or any
merger of another person into the Company, (c) any sale, transfer or lease of
all or substantially all of the assets of the Company, or (d) any compulsory
share exchange pursuant to which the Common Stock is converted into the right
to receive other securities, cash or other property (each of the foregoing
being referred to as a "Transaction"), then the holders of Capital Securities
then outstanding will have the right to convert the Capital Securities into
the kind and amount of securities, cash or other property receivable upon the
consummation of such Transaction by a holder of the number of shares of Common
Stock issuable upon conversion of such Capital Securities immediately prior to
such Transaction.
In the case of a Transaction, each Capital Security would become convertible
into the securities, cash or property receivable by a holder of the number of
shares of the Common Stock into which such Capital Security was convertible
immediately prior to such Transaction. This change could substantially lessen
or eliminate the value of the conversion privilege associated with the Capital
Securities in the future. For example, if the Company were acquired in a cash
merger, each Capital Security would become convertible solely into cash and
would no longer be convertible into securities which value would vary
depending on the future prospects of the Company and other factors.
Conversion Ratio adjustments or omissions in making such adjustments may,
under certain circumstances, be deemed to be distributions that could be
taxable as dividends to holders of Capital Securities or to the holders of
Common Stock. See "Certain Federal Income Tax Considerations--Adjustment of
Conversion Ratio."
Whenever the Conversion Ratio is adjusted as herein provided, the Company
will place on file with the Property Trustee and with the Conversion Agent a
statement signed by the Chairman of the Board, President or a Vice President
of the Company and by its Treasurer or an Assistant Treasurer showing in
detail the facts requiring such adjustment and the Conversion Ratio after such
adjustment and the Trustee or the Conversion Agent will exhibit the same from
time to time to any holder desiring an inspection thereof.
REDEMPTION
General. The Convertible Subordinated Debentures will mature on ,
2028. The Company has the right to redeem the Convertible Subordinated
Debentures (i) on or after , 2001, in whole at
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any time or in part from time to time, or (ii) at any time, in certain
circumstances as described under "Description of Convertible Subordinated
Debentures--Conditional Right to Redeem Upon a Tax Event or Capital Treatment
Event," in whole (but not in part) within 90 days following the occurrence of
a Tax Event or a Capital Treatment Event. A redemption of the Convertible
Subordinated Debentures would cause a mandatory redemption of the Capital
Securities and the Common Securities.
Mandatory Redemption. Upon the repayment or redemption, in whole or in part,
of the Convertible Subordinated Debentures, whether at Stated Maturity or upon
earlier redemption as provided in the Indenture, the proceeds from such
repayment or redemption will be applied by the Property Trustee to redeem a
Like Amount (as defined herein) of the Trust Securities, upon not less than 30
nor more than 60 days' notice, at a redemption price (the "Redemption Price")
equal to the aggregate Liquidation Amount of such Trust Securities, plus
accumulated but unpaid Distributions thereon to the date of redemption (the
"Redemption Date"). The Redemption Price will be computed on the basis of a
360-day year of twelve 30-day months. See "Description of Convertible
Subordinated Debentures--Redemption." If less than all of the Convertible
Subordinated Debentures are to be repaid or redeemed on a Redemption Date,
then the proceeds from such repayment or redemption will be allocated to the
redemption pro rata of the Capital Securities and the Common Securities.
Liquidation of Issuer and Distribution of Convertible Subordinated
Debentures. Subject to the Company's having received prior approval of the
Federal Reserve to do so if then required under applicable capital guidelines
or policies, the Company has the right at any time to terminate the Issuer
and, after satisfaction of the liabilities of creditors of the Issuer as
provided by applicable law, cause the Convertible Subordinated Debentures in
respect of the Capital Securities and the Common Securities issued by the
Issuer to be distributed to the holders of the Capital Securities and the
Common Securities in exchange therefor upon liquidation of the Issuer.
Under current U.S. federal income tax law and interpretations and assuming,
as expected, that the Issuer is treated as a grantor trust, a distribution of
Convertible Subordinated Debentures in exchange for the Capital Securities
should not be a taxable event to holders of the Capital Securities. Should
there be a change in law, a change in legal interpretation, a Tax Event or
other circumstances, however, the distribution could be a taxable event to
holders of the Capital Securities. See "Certain Federal Income Tax
Consequences--Receipt of Convertible Subordinated Debentures or Cash Upon
Liquidation of Issuer." If the Company elects neither to redeem the
Convertible Subordinated Debentures prior to maturity nor to liquidate the
Issuer and distribute the Convertible Subordinated Debentures to holders of
the Capital Securities in exchange therefor, the Capital Securities will
remain outstanding until the Stated Maturity of the Convertible Subordinated
Debentures.
If the Company elects to liquidate the Issuer and thereby causes the
Convertible Subordinated Debentures to be distributed to holders of the
Capital Securities in exchange therefor upon liquidation of the Issuer, the
Company will continue to have the right to redeem the Convertible Subordinated
Debentures on or after , 2001, and at any time in certain circumstances
upon the occurrence of a Tax Event or Capital Treatment Event, as described
under "Description of Convertible Subordinated Debentures--Conditional Right
to Redeem Upon a Tax Event or Capital Treatment Event," and the Convertible
Subordinated Debentures will continue to be convertible into Common Stock, as
described under "Description of Convertible Subordinated Debentures--
Conversion of Convertible Subordinated Debentures."
After the liquidation date fixed for any distribution of Convertible
Subordinated Debentures for the Capital Securities (i) the Capital Securities
will no longer be deemed to be outstanding, (ii) DTC or its nominee, as the
record holder of the Capital Securities, will receive a registered global
certificate or certificates representing the Convertible Subordinated
Debentures to be delivered upon such distribution, and (iii) any certificates
representing the Capital Securities not held by DTC or its nominee will be
deemed to represent the Convertible Subordinated Debentures having a principal
amount equal to the stated Liquidation Amount of the Capital Securities, and
bearing accrued and unpaid interest in an amount equal to the accrued and
unpaid Distributions on the Capital Securities until such certificates are
presented to the Administrative Trustees or their agent for transfer or
reissuance.
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There can be no assurance as to the market prices for the Capital Securities
or the Convertible Subordinated Debentures that may be distributed in exchange
for Capital Securities if a dissolution and liquidation of the Issuer were to
occur. Accordingly, the Capital Securities that an investor may purchase, or
the Convertible Subordinated Debentures that the investor may receive on
dissolution and liquidation of the Issuer, may trade at a discount to the
price that the investor paid to purchase the Capital Securities offered
hereby.
Tax Event or Capital Treatment Event Redemption. If a Tax Event or Capital
Treatment Event in respect of the Capital Securities and Common Securities
occurs and is continuing, the Company has the right to redeem the Convertible
Subordinated Debentures in whole (but not in part) and thereby cause a
mandatory redemption of the Capital Securities and Common Securities in whole
(but not in part) at the Redemption Price within 90 days following the
occurrence of such Tax Event or Capital Treatment Event. In the event that a
Tax Event or a Capital Treatment Event in respect of the Capital Securities
and Common Securities has occurred and is continuing and the Company does not
elect to redeem the Convertible Subordinated Debentures and thereby cause a
mandatory redemption of the Capital Securities and the Common Securities or to
terminate the Issuer and cause the Convertible Subordinated Debentures to be
distributed to holders of the Capital Securities and Common Securities in
exchange therefor upon liquidation of the Issuer as described above, the
Capital Securities will remain outstanding.
Certain Definitions.
"Like Amount" means (i) with respect to a redemption of the Trust
Securities, Trust Securities having a Liquidation Amount equal to that portion
of the principal amount of Convertible Subordinated Debentures to be
contemporaneously redeemed in accordance with the Indenture, the proceeds of
which will be used to pay the Redemption Price of the Trust Securities, and
(ii) with respect to a distribution of Convertible Subordinated Debentures to
holders of the Trust Securities in exchange therefor in connection with a
dissolution or liquidation of the Issuer, Convertible Subordinated Debentures
having a principal amount equal to the Liquidation Amount of the Trust
Securities of the holder to whom such Convertible Subordinated Debentures
would be distributed.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
"Tax Event" means the receipt by the Issuer of an opinion of counsel
experienced in such matters to the effect that, as a result of any amendment
to, or change (including any announced proposed change) in, the laws (or any
regulations thereunder) of the U.S. or any political subdivision or taxing
authority thereof or therein, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or which proposed change,
pronouncement or decision is announced on or after the date of issuance of the
Capital Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) the Issuer is, or will be within 90 days of the
date of such opinion, subject to U.S. federal income tax with respect to
income received or accrued on the corresponding series of Convertible
Subordinated Debentures, (ii) interest payable by the Company on the
Convertible Subordinated Debentures 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
U.S. federal income tax purposes, or (iii) the Issuer 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. With respect to Convertible
Subordinated Debentures which are no longer held by the Issuer or another
issuer, "Tax Event" means the receipt by the Company of an opinion of counsel
experienced in such matters to the effect that, as a result of any amendment
to, or change (including any announced proposed change) in, the laws (or any
regulations thereunder) of the U.S. or any political subdivision or taxing
authority thereof or therein, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or which proposed change,
pronouncement or decision is announced on or after the date of issuance of the
Convertible Subordinated Debentures under the Indenture, there is more than an
insubstantial risk that interest payable by the Company on the Convertible
Subordinated Debentures 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 U.S. federal
income tax purposes (each of the circumstances referred to in clauses (i),
(ii) and (iii) of the preceding sentence and the circumstances referred to in
this sentence being referred to herein as an "Adverse Tax Consequence").
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"Capital Treatment Event" means the reasonable determination by the Company
that, as a result of any amendment to, or change (including any proposed
change) in, the laws (or any regulations thereunder) of the U.S. or any
political subdivision thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which proposed change, pronouncement, action or decision is announced on or
after the date of issuance of the Capital Securities under the Trust
Agreement, there is more than an insubstantial risk that the Company will not
be entitled to treat an amount equal to the Liquidation Amount of the Capital
Securities as "Tier 1 Capital" (or the then equivalent thereof) for purposes
of the capital adequacy guidelines of the Federal Reserve, as then in effect
and applicable to the Company.
REDEMPTION PROCEDURES
Capital Securities redeemed on each Redemption Date will be redeemed at the
Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Convertible Subordinated Debentures. Redemptions of the
Capital Securities will be made and the Redemption Price will be payable on
each Redemption Date only to the extent that the Issuer has funds on hand
available for the payment of such Redemption Price. See, also, "--
Subordination of Common Securities."
If the Issuer gives a notice of redemption in respect of its Capital
Securities, then, by 12:00 noon, Eastern time, on the Redemption Date, to the
extent funds are available, the Property Trustee will deposit irrevocably with
DTC funds sufficient to pay the applicable Redemption Price and will give DTC
irrevocable instructions and authority to pay the Redemption Price to the
holders of such Capital Securities. See "Book-Entry Issuance." If the Capital
Securities are no longer in book-entry form, the Property Trustee, to the
extent funds are available, will irrevocably deposit with the paying agent for
the Capital Securities funds sufficient to pay the applicable Redemption Price
and will give such paying agent irrevocable instructions and authority to pay
the Redemption Price to the holders thereof upon surrender of their
certificates evidencing the Capital Securities. Notwithstanding the foregoing,
Distributions payable on or prior to the Redemption Date for any Capital
Securities called for redemption will be payable to the holders of such
Capital Securities on the relevant record date for the related Distribution
Date. If notice of redemption has been given and funds deposited as required,
then upon the date of such deposit, all rights of the holders of such Capital
Securities so called for redemption will cease, except the right of the
holders of such Capital Securities to receive the Redemption Price, but
without interest on such Redemption Price, and such Capital Securities will
cease to be outstanding. In the event that any date fixed for redemption of
Capital Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day falls in the next calendar year,
such payment will be made on the immediately preceding Business Day. In the
event that payment of the Redemption Price in respect of Capital Securities
called for redemption is improperly withheld or refused and not paid either by
the Issuer or by the Company pursuant to the Guarantee as described under
"Description of Guarantee," Distributions on such Capital Securities will
continue to accrue at the then applicable rate, from the Redemption Date
originally established by the Issuer for such Capital Securities to the date
such Redemption Price is actually paid, in which case the actual payment date
will be the date fixed for redemption for purposes of calculating the
Redemption Price.
Subject to applicable law (including, without limitation, U.S. federal
securities laws), the Company 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.
Payment of the Redemption Price on the Capital Securities and any
distribution of Convertible Subordinated Debentures to holders of Capital
Securities will be made to the applicable recordholders thereof as they appear
on the register for such Capital Securities on the relevant record date, which
will be one Business Day prior to the relevant Redemption Date or liquidation
date, as applicable; provided, however, that in the event that any Capital
Securities are not in book-entry form, the relevant record date for such
Capital Securities will be a date 15 days prior to the Redemption Date or
liquidation date, as applicable.
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If less than all of the Capital Securities and Common Securities issued by
the Issuer are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of such Capital Securities and Common Securities to be
redeemed will be allocated pro rata to the Capital Securities and the Common
Securities based upon the relative Liquidation Amounts of such classes. The
particular Capital Securities to be redeemed will be selected on a pro rata
basis not more than 60 days prior to the Redemption Date by the Property
Trustee from the outstanding Capital Securities not previously called for
redemption, by such method as the Property Trustee deems fair and appropriate
and which may provide for the selection for redemption of portions (equal to
$25 or an integral multiple of $25 in excess thereof) of the Liquidation
Amount of Capital Securities. The Property Trustee will promptly notify the
trust registrar in writing of the Capital Securities selected for redemption
and, in the case of any Capital Securities selected for partial redemption,
the Liquidation Amount thereof to be redeemed. For all purposes of the Trust
Agreement, unless the context otherwise requires, all provisions relating to
the redemption of Capital Securities will relate, in the case of any Capital
Securities redeemed or to be redeemed only in part, to the portion of the
aggregate Liquidation Amount of Capital Securities which has been or is to be
redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each holder of Trust Securities to be
redeemed at its registered address.
REGISTRATION OF CAPITAL SECURITIES
The Capital Securities will be represented by global certificates registered
in the name of DTC or its nominee. Beneficial interest in the Capital
Securities will be shown on, and transfers thereof will be effected only
through, records maintained by Participants (as defined under "Book-Entry
Issuance") in DTC. Except as described below, Capital Securities in
certificated form will not be issued in exchange for the global certificates.
See "Book-Entry Issuance."
A global security will be exchangeable for Capital Securities registered in
the names of persons other than DTC or its nominee only if (i) DTC notifies
the Issuer that it is unwilling or unable to continue as a depositary for such
global security and no successor depositary has been appointed, or if at any
time DTC ceases to be a clearing agency registered under the Exchange Act at a
time when DTC is required to be so registered to act as such depositary, (ii)
the Issuer in its sole discretion determines that such global security will be
so exchangeable, or (iii) there occurs and is continuing a Debenture Event of
Default. Any global security that is exchangeable pursuant to the preceding
sentence will be exchangeable for definitive certificates registered in such
names as DTC directs. It is expected that such instructions will be based upon
directions received by DTC from its Participants with respect to ownership of
beneficial interests in such global security. In the event that Capital
Securities are issued in definitive form, such Capital Securities will be in
denominations of $25 and integral multiples thereof and may be transferred or
exchanged at the offices described below.
Payment on and any distributions of Convertible Subordinated Debentures in
exchange for Capital Securities represented by a global security will be made
to DTC, as the depositary for the Capital Securities. In the event Capital
Securities are issued in certificated form, the Liquidation Amount and
Distributions will be payable, the transfer of the Capital Securities will be
registrable, Convertible Subordinated Debentures will be distributed in
exchange for Capital Securities following a termination of the Issuer and
Capital Securities will be exchangeable for Capital Securities of other
denominations of a like aggregate Liquidation Amount, at the corporate office
of the Property Trustee in New York City, or at the offices of any paying
agent or transfer agent appointed by the Administrative Trustees, provided
that payment of any Distribution may be made at the option of the
Administrative Trustees by check mailed to the address of the persons entitled
thereto or by wire transfer. 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 "Book-Entry Issuance."
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SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the Capital
Securities and the Common Securities, as applicable, will be made pro rata
based on the Liquidation Amount of the Capital Securities and the Common
Securities; provided, however, that if on any Distribution Date or Redemption
Date a Debenture Event of Default has occurred and is continuing, no payment
of any Distribution on, or Redemption Price of, any Common Securities, and no
other payment on account of the redemption, liquidation or other acquisition
of the Common Securities, will be made unless payment in full in cash of all
accumulated and unpaid Distributions on all of the outstanding Capital
Securities for all Distribution periods terminating on or prior thereto, or in
the case of payment of the Redemption Price the full amount of such Redemption
Price on all of the outstanding Capital Securities then called for redemption,
has been made or provided for, and all funds available to the Property Trustee
will first be applied to the payment in full in cash of all Distributions on,
or the Redemption Price of, the Capital Securities then due and payable.
In the case of any Event of Default under the Trust Agreement resulting from
a Debenture Event of Default, the Company as holder of the Common Securities
will be deemed to have waived any right to act with respect to any such event
of default under the Trust Agreement until the effect of all such events of
default with respect to the Capital Securities have been cured, waived or
otherwise eliminated. Until all Events of Default under the Trust Agreement
with respect to the Capital Securities have been so cured, waived or otherwise
eliminated, the Property Trustee will act solely on behalf of the holders of
such Capital Securities and not on behalf of the Company as holder of the
Common Securities, and only the holders of such Capital Securities will have
the right to direct the Property Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON TERMINATION
Pursuant to the Trust Agreement, the Issuer will automatically terminate
upon expiration of its term and will terminate on the first to occur of (i)
certain events of bankruptcy, dissolution or liquidation of the Company, (ii)
the distribution of a Like Amount of the Convertible Subordinated Debentures
to the holders of the Trust Securities, if the Company, as Depositor, has
given written direction to the Property Trustee to terminate the Issuer
(subject to the Company having received prior approval of the Federal Reserve
if so required under applicable capital guidelines or policies), (iii)
redemption of all of the Capital Securities as described under "--
Redemption," and (iv) the entry of an order for the dissolution of the Issuer
by a court of competent jurisdiction.
If an early termination occurs as described in clause (i), (ii) or (iv)
above, the Issuer will be liquidated by the Trustees as expeditiously as the
Trustees determine to be possible by distributing, after satisfaction of
liabilities to creditors of the Issuer as provided by applicable law, to the
holders of the Trust Securities in exchange therefor a Like Amount of the
Convertible Subordinated Debentures, unless such distribution is determined by
the Property Trustee not to be practical, in which event such holders will be
entitled to receive out of the assets of the Issuer available for distribution
to holders, after satisfaction of liabilities to creditors of the Issuer as
provided by applicable law, an amount equal to, in the case of holders of
Capital Securities, the aggregate Liquidation Amount plus accrued and unpaid
Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution can be paid only
in part because the Issuer has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by
the Issuer on the Capital Securities will be paid on a pro rata basis. The
holder(s) of the Common Securities will be entitled to receive distributions
upon any such liquidation pro rata with the holders of the Capital Securities,
except that if a Debenture Event of Default has occurred and is continuing,
the Capital Securities will have a priority over the Common Securities. See
"--Subordination of Common Securities."
Under current U.S. federal income tax law and interpretations and assuming,
as expected, that the Issuer is treated as a grantor trust, a distribution of
the Convertible Subordinated Debentures should not be a taxable event to
holders of the Capital Securities. Should there be a change in law, a change
in legal interpretation, a Tax Event or other circumstances, however, the
distribution could be a taxable event to holders of the Capital Securities.
See "Certain Federal Income Tax Consequences--Receipt of Convertible
Subordinated Debentures
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or Cash Upon Liquidation of Issuer." If the Company elects neither to redeem
the Convertible Subordinated Debentures prior to maturity nor to liquidate the
Issuer and distribute the Convertible Subordinated Debentures to holders of
the Capital Securities, the Capital Securities will remain outstanding until
the repayment of the Convertible Subordinated Debentures.
LIQUIDATION VALUE
The amount of the Liquidation Distribution payable on the Capital Securities
in the event of any liquidation of the Issuer is $25 per Capital Security plus
accumulated and unpaid Distributions thereon to the date of payment, which may
be in the form of a distribution of a Like Amount of Convertible Subordinated
Debentures, subject to certain exceptions. See "--Liquidation Distribution
Upon Termination."
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under the
Trust Agreement (whatever the reason for such Event of Default and whether it
is voluntary or involuntary or is effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):
(i) the occurrence of a Debenture Event of Default under the Indenture
(see "Description of Convertible Subordinated Debentures--Debenture Events
of Default"); or
(ii) default by the Property Trustee in the payment of any Distribution
when it becomes due and payable, and continuation of such default for a
period of 30 days; or
(iii) default by the Property Trustee in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Trustees in the Trust Agreement (other than
a covenant or warranty a default in the performance of which or the breach
of which is dealt with in clause (ii) or (iii) above), and continuation of
such default or breach for a period of 90 days after there has been given,
by registered or certified mail, to the defaulting Trustee or Trustees by
the holders of at least 25% in aggregate Liquidation Amount of the
outstanding Capital Securities, a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a
"Notice of Default" under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by the Company to appoint a
successor Property Trustee within 90 days thereof.
Within ten Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee will transmit
notice of such Event of Default to the holders of the Capital Securities, the
Administrative Trustees and the Company, as Depositor, unless such Event of
Default has been cured or waived. The Company, as Depositor, and the
Administrative Trustees are required to file annually with the Property
Trustee a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing, the Capital
Securities will have a preference over the Common Securities as described
above. See "--Subordination of Common Securities" and "--Liquidation
Distribution Upon Termination." The existence of an Event of Default does not
entitle the holders of Capital Securities to accelerate the maturity thereof.
REMOVAL OF TRUSTEES
Unless a Debenture Event of Default has occurred and is continuing, any
Trustee may be removed at any time by the Company, as 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
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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 Company, as the holder of the Common Securities.
No resignation or removal of a Trustee and no appointment of a successor
trustee will be effective until the acceptance of appointment by the successor
trustee in accordance with the provisions of the Trust Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default has occurred and is continuing, at any time or
from time to time, for the purpose of meeting the legal requirements of the
Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property may at the time be located, the Company, as the holder of the Common
Securities, and the Administrative Trustees will 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 such Trust 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 appointment, 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 the Trust Agreement. In case a Debenture Event of
Default has occurred and is continuing, the Property Trustee alone will have
power to make such appointment.
MERGER OR CONSOLIDATION OF TRUSTEES
Any Person 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 Person resulting from any merger,
conversion or consolidation to which such Trustee is a party, or any Person
succeeding to all or substantially all the corporate trust business of such
Trustee, will be the successor of such Trustee under the Trust Agreement,
provided such Person is otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF ISSUER
The Issuer may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except as
described below or as otherwise described in the Trust Agreement. The Issuer
may, at the request of the Company, with the consent of the Administrative
Trustees and without the consent of the holders of the Capital Securities,
merge with or into, consolidate, amalgamate, or be replaced by, or convey,
transfer or lease its properties and assets substantially as an entirety to, a
trust organized as such under the laws of any State; provided, that (i) such
successor entity either (a) expressly assumes all of the obligations of the
Issuer 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 in priority with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii)
the Company expressly appoints a trustee of such successor entity possessing
the same powers and duties as the Property Trustee as the holder of the
Convertible 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
the Capital Securities are then listed, if any, (iv) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does
not cause the Capital Securities to be downgraded by any nationally recognized
statistical rating organization, (v) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the holders of the Capital Securities
(including any Successor Securities) in any material respect, (vi) such
successor entity has a purpose substantially identical to that of the Issuer,
(vii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Company has received an opinion from
independent counsel to the Issuer experienced in such matters to the effect
that (a) such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely affect the rights, preferences and
privileges of the holders of the Capital Securities (including any Successor
Securities) in any material respect, and (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease,
neither
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the Issuer 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 Company 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 Issuer will not, except with the consent of holders of 100%
in Liquidation Amount of the Capital Securities, consolidate, amalgamate,
merge with or into, or be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety to any other entity or
permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause or the successor entity to be
classified as other than a grantor trust for U.S. federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT
Except as provided below and under "Description of Guarantee--Amendments and
Assignment" and as otherwise required by law and the Trust Agreement, the
holders of the Capital Securities will have no voting rights.
The Trust Agreement may be amended from time to time by the Company, the
Property Trustee and the Administrative Trustees, without the consent of the
holders of the Capital Securities (i) to cure any ambiguity, correct or
supplement any provisions in the Trust Agreement that may be inconsistent with
any other provision, or to make any other provisions with respect to matters
or questions arising under the Trust Agreement, which may 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 may be
necessary to ensure that the Issuer will be classified for U.S. federal income
tax purposes as a grantor trust at all times that any Trust Securities are
outstanding or to ensure that the Issuer will not be required to register as
an "investment company" under the Investment Company Act; provided, however,
that in the case of either clause (i) or clause (ii), such action will not
adversely affect in any material respect the interests of any holder of
Capital Securities, and any such amendments of the Trust Agreement will become
effective when notice thereof is given to the holders of Trust Securities. The
Trust Agreement may be amended by the Trustees and the Company with (i) the
consent of holders representing not less than a majority (based upon
Liquidation Amounts) of the outstanding Trust Securities, and (ii) receipt by
the Trustees of an opinion of counsel to the effect that such amendment or the
exercise of any power granted to the Trustees in accordance with such
amendment will not affect the Issuer's status as a grantor trust for U.S.
federal income tax purposes or the Issuer'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 Convertible Subordinated Debentures are held by the Property
Trustee, the Trustees will not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee,
or executing any trust or power conferred on the Property Trustee with respect
to the Convertible Subordinated Debentures, (ii) waive any past default that
is waivable under the Indenture, (iii) exercise any right to rescind or annul
a declaration that the principal of all the Convertible Subordinated
Debentures are due and payable, or (iv) consent to any amendment, modification
or termination of the Indenture or Convertible Subordinated Debentures, where
such consent will be required, without, in each case, obtaining the prior
approval of the holders of a majority in aggregate Liquidation Amount of all
outstanding Capital Securities; provided, however, that where a consent under
the Indenture would require the consent of each holder of the Convertible
Subordinated Debentures affected thereby, no such consent will be given by the
Property Trustee without the prior consent of each holder of the Capital
Securities. The Trustees will not revoke any action previously authorized or
approved by a vote of the holders of the Capital Securities except by
subsequent vote of the holders of the Capital Securities. The Property Trustee
will notify each holder of Capital Securities of any
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notice of default with respect to the Convertible Subordinated Debentures. In
addition to obtaining the foregoing approvals of the holders of the Capital
Securities, prior to taking any of the foregoing actions, the Trustees will
obtain an opinion of counsel experienced in such matters to the effect that
such action would not cause the Issuer to be classified as other than a
grantor trust for U.S. federal income tax purposes.
Any required approval of holders of Capital Securities may be given at a
meeting of holders of Capital Securities convened for such purpose or pursuant
to written consent. The Property Trustee will cause a notice of any meeting at
which holders of Capital Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
given to each holder of record of Capital Securities in the manner set forth
in the Trust Agreement.
No vote or consent of the holders of Capital Securities will be required for
the Issuer to redeem and cancel the Capital Securities in accordance with the
Trust Agreement.
Notwithstanding that holders of Capital Securities are entitled to vote or
consent under any of the circumstances described above, any of the Capital
Securities that are owned by the Company, the Trustees or any affiliate of the
Company or any Trustees, will, for purposes of such vote or consent, be
treated as if they were not outstanding.
GLOBAL CAPITAL SECURITIES
The Capital Securities will be issued in the form of one or more Global
Capital Securities that will be deposited with, or on behalf of, DTC. Global
Capital Securities will be issued only in fully registered form and in either
temporary or permanent form. Unless and until it is exchanged in whole or in
part for the individual Capital Securities represented thereby, a Global
Capital Security may not be transferred except as a whole by DTC to a nominee
of DTC or by a nominee of DTC or another nominee of DTC or by DTC or any
nominee to a successor depository or any nominee of such successor.
Upon the issuance of the Global Capital Security, and the deposit of such
Global Capital Security with or on behalf of DTC, DTC or its nominee will
credit, on its book-entry registration and transfer system, the aggregate
Liquidation Amounts of the individual Capital Securities represented by such
Global Capital Securities to the accounts of Participants, which may include
the accounts of Morgan Guaranty Trust Company of New York, Brussels office, as
operator of the Euroclear System ("Euroclear"), and Cedel Bank, societe
anonyme ("Cedel"). Such accounts will be designated by the dealers,
underwriters or agents with respect to the Capital Securities. Ownership of
beneficial interests in the Global Capital Security will be limited to
Participants or persons that may hold interests through Participants,
including Euroclear and Cedel. Ownership of beneficial interests in the Global
Capital Security will be shown on, and the transfer of that ownership will be
effected only through records maintained by DTC or its nominee (with respect
to interests of Participants) and the records of Participants (with respect to
interests of persons who hold through Participants). The laws of some states
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the
ability to transfer beneficial interests in the Global Capital Security.
So long as DTC, or its nominee, is the registered owner of the Global
Capital Security, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the Capital Securities represented by the Global
Capital Security for all purposes under the Indenture. Except as provided
herein, owners of beneficial interests in the Global Capital Security will not
be entitled to have any of the individual Capital Securities represented by
the Global Capital Security registered in their names, will not receive or be
entitled to receive physical delivery of any Capital Securities in definitive
form and will not be considered the owners or holders thereof under the Trust
Agreement or the Indenture.
Payments of principal of (and premium, if any) and interest on individual
Capital Securities represented by the Global Capital Security registered in
the name of DTC or its nominee will be made to DTC or its nominee, as the case
may be, as the registered owner of the Global Capital Security representing
the Capital Securities.
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None of the Company, the Property Trustee, any Paying Agent, or the Securities
Registrar for such Capital Securities will have any responsibility or
liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests of the Global Capital Security or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The Company expects that DTC or its nominee, upon receipt of any payment of
Liquidation Amount, Redemption Price or Distributions in respect of a
permanent Global Capital Security representing any of the Capital Securities,
immediately will credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interest in the aggregate
Liquidation Amount of the Global Capital Security for the Capital Securities
as shown on the records of DTC or its nominee. The Company also expects that
payments by Participants to owners of beneficial interests in the Global
Capital Security held through such Participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name."
Such payments will be the responsibility of such Participants.
If DTC is at any time unwilling, unable or ineligible to continue as
depositary and a successor depositary is not appointed by the Issuer within 90
days, the Issuer will issue individual Capital Securities in exchange for the
Global Capital Security representing the Capital Securities. In addition, the
Issuer may at any time and in its sole discretion, determine not to have any
Capital Securities represented by one or more Global Capital Securities and,
in such event, will issue individual Capital Securities in exchange for the
Global Capital Security or Securities representing the Capital Securities.
Further, if the Issuer so specifies with respect to the Capital Securities, an
owner of a beneficial interest in the Global Capital Security representing
Capital Securities may, on terms acceptable to the Issuer, the Property
Trustee and DTC, receive individual Capital Securities in exchange for such
beneficial interests. In any such instance, an owner of a beneficial interest
in the Global Capital Security will be entitled to physical delivery of
individual Capital Securities equal in principal amount to such beneficial
interest and to have the Capital Securities registered in its name.
PAYMENT AND PAYING AGENCY
Payments in respect of the Capital Securities will be made to DTC, which
will credit the relevant accounts at DTC on the applicable Distribution Dates
or, if the Capital Securities are not held by DTC or its nominee, such
payments will be made by check mailed to the address of the holder entitled
thereto as such address appears on the Register. The Paying Agent will
initially be the Property Trustee and any co-paying agent chosen by the
Property Trustee and acceptable to the Administrative Trustees and the
Company. The Paying Agent will be permitted to resign as Paying Agent upon 30
days' written notice to the Property Trustee and the Company. In the event
that the Property Trustee is no longer the Paying Agent, the Administrative
Trustees will appoint a successor (which must be a bank or trust company
acceptable to the Administrative Trustees and the Company) to act as Paying
Agent.
REGISTRAR, TRANSFER AGENT AND CONVERSION AGENT
The Property Trustee will act as registrar, transfer agent and Conversion
Agent for the Capital Securities. Registration of transfers of Capital
Securities will be effected without charge by or on behalf of the Issuer, but
upon payment of any tax or other governmental charges that may be imposed in
connection with any transfer or exchange. The Issuer will not be required to
register or cause to be registered the transfer of the Capital Securities
after such Capital Securities have been called for redemption.
INFORMATION CONCERNING 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
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powers vested in it by the Trust Agreement at the request of any holder of
Capital Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby. If no Event of
Default has occurred and is continuing and the Property Trustee is required to
decide between alternative causes 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 are entitled to vote, then the Property Trustee will take such
action as is directed by the Company and if not so directed, will take such
action as it deems advisable and in the best interests of the holders of the
Trust Securities and will have no liability except for its own bad faith,
negligence or willful misconduct.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Issuer in such a way that the Issuer will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as other than a grantor trust for U.S.
federal income tax purposes and so that the Convertible Subordinated
Debentures will be treated as indebtedness of the Company for U.S. federal
income tax purposes. In this connection, the Company and the Administrative
Trustees are authorized to take any action, not inconsistent with applicable
law, the certificate of trust of the Issuer or the Trust Agreement, that the
Company 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 Capital
Securities. Holders of the Capital Securities have no preemptive or similar
rights. The Issuer may not borrow money or issue debt or mortgage or pledge
any of its assets.
DESCRIPTION OF CONVERTIBLE SUBORDINATED DEBENTURES
GENERAL
The Convertible Subordinated Debentures are to be issued under an Indenture
between the Company and The Bank of New York, as Debenture Trustee. The
Indenture is qualified under the Trust Indenture Act. This summary of certain
terms and provisions of the Convertible Subordinated Debentures and the
Indenture, which summarizes the material provisions thereof, does not purport
to be complete and is subject to, and is qualified in its entirety by
reference to, the Indenture, a copy of which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and to the Trust
Indenture Act, to each of which reference is hereby made. Whenever particular
defined terms of the Indenture (as supplemented or amended from time to time)
are referred to herein, such defined terms are incorporated herein or therein
by reference.
Concurrently with the issuance of the Capital Securities, the Issuer will
invest the proceeds thereof, together with the consideration paid by the
Company for the Common Securities, in the Convertible Subordinated Debentures
issued by the Company. The Convertible Subordinated Debentures will bear
interest at the annual rate of % of the principal amount thereof, payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of
each year (each, an "Interest Payment Date"), commencing September 30, 1998,
and at maturity to the person in whose name each Convertible Subordinated
Debenture is registered at the close of business on the record date next
preceding such Interest Payment Date. The period beginning on and including
the date of original issuance of the Convertible Subordinated Debentures and
ending on but excluding the first Interest Payment Date and each successive
period beginning on and including an Interest Payment Date and ending on but
excluding the next succeeding Interest Payment Date is herein called an
"Interest Period." It is anticipated that, until the liquidation, if any, of
the Issuer, each Convertible Subordinated Debenture will be held by the
Property Trustee in trust for the benefit of the holders of the Capital
Securities. The amount of interest payable for any Interest Period will be
computed on the basis of a 360-day year of twelve 30-day months. In the event
that any Interest Payment Date would otherwise fall on a day that is not a
Business Day, such Interest Payment Date will be postponed to the next day
that is a Business Day (without any interest or other payment in respect of
any such delay) unless it would thereby fall in the next calendar year, in
which event the Interest Payment Date will be brought forward to the
immediately preceding Business Day. Accrued interest that is not
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paid on the applicable Interest Payment Date will bear additional interest on
the amount thereof (to the extent permitted by law) at the rate of % per
annum, compounded quarterly from the relevant Interest Payment Date. The term
"interest" as used herein includes quarterly interest payments and interest on
quarterly interest payments not paid on the applicable Interest Payment Date,
as applicable. Notwithstanding anything to the contrary set forth above, if
the maturity date falls on a day that is not a Business Day, the payment of
principal and interest will be paid on the next succeeding Business Day, with
the same force and effect as if made on such maturity date and no interest on
such payments will accrue from and after the maturity date.
The Convertible Subordinated Debentures will mature on , 2028 (the
"Stated Maturity").
The Convertible Subordinated Debentures will be unsecured and will rank
junior and be subordinate in right of payment to all Senior Debt of the
Company. See "--Subordination." Substantially all of the Company's existing
indebtedness constitutes Senior Debt. Because the Company is a holding
company, the right of the Company to participate in any distribution of assets
of any subsidiary, including the Subsidiary Banks (as defined below), upon
such subsidiary's liquidation or reorganization or otherwise, is subject to
the prior claims of creditors of that subsidiary, except to the extent that
the Company may itself be recognized as a creditor of that subsidiary. At
March 31, 1998, the subsidiaries of the Company had total liabilities
(excluding liabilities owed to the Company) of approximately $6.0 billion
(including deposits in the case of subsidiaries which are financial
institutions) (the "Subsidiary Banks")). Accordingly, the Convertible
Subordinated Debentures and the Guarantee will be effectively subordinated to
all existing and future liabilities of the Company's subsidiaries, and holders
of Convertible Subordinated Debentures and beneficiaries of the Guarantee
should look only to the assets of the Company for payments on the Convertible
Subordinated Debentures or under the Guarantee. The Indenture does not limit
the incurrence or issuance of other secured or unsecured debt of the Company
or its subsidiaries, including Senior Debt, whether under the Indenture, any
other existing indenture or any other indenture that the Company may enter
into in the future or otherwise. See "Description of Convertible Subordinated
Debentures--Subordination."
In addition, as the Company is a non-operating holding company, almost all
of the operating assets of the Company are owned by its subsidiaries. The
Company relies primarily on dividends and management fees from such
subsidiaries to meet its obligations for payment of principal and interest on
its outstanding debt obligations, corporate expenses and dividend payments on
its Common Stock. The Subsidiary Banks are subject to certain restrictions
imposed by federal law on any extensions of credit and payment of management
fees to, and certain other transactions with, the Company and certain other
affiliates, and on investment in stock or other securities thereof. Such
restrictions prevent the Company and such other affiliates from borrowing from
the Subsidiary Banks unless the loans are secured by various types of
collateral. Further, such secured loans, other transactions and investment by
the Subsidiary Banks are generally limited in amount as to the Company and as
to each of such other affiliates to 10% of each such Subsidiary Bank's capital
and surplus and as to the Company and all of such other affiliates to an
aggregate of 20% of each such Subsidiary Bank's capital and surplus. In
addition, payment of dividends and management fees to the Company by the
Subsidiary Banks is subject to ongoing review by banking regulators and is
subject to various statutory limitations and in certain circumstances requires
prior approval by banking regulatory authorities. Under current banking
regulations referred to above, at December 31, 1997, the Subsidiary Banks
could have declared dividends to the Company of $76.6 million, of which $15.8
million has been subsequently declared and paid to the Company. Federal and
state regulatory agencies also have the authority to limit further the
Subsidiary Banks' payment of dividends based on other factors, such as the
maintenance of adequate capital for the Subsidiary Banks, which could reduce
the amount of dividends otherwise payable.
RIGHT TO DEFER INTEREST PAYMENTS
So long as no Debenture Event of Default has occurred and is continuing, the
Company has the right under the Indenture at any time or from time to time
during the term of the Convertible Subordinated Debentures to defer payment of
interest on the Convertible Subordinated Debentures for a period not exceeding
20 consecutive quarterly periods with respect to each Extension Period,
provided that no Extension Period may extend beyond
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the Stated Maturity of the Convertible Subordinated Debentures. At the end of
such Extension Period, the Company must pay all interest then accrued and
unpaid on the Convertible Subordinated Debentures (together with interest on
such unpaid interest at the rate of % per annum, compounded quarterly from
the relevant Interest Payment Date, to the extent permitted by applicable
law). During an Extension Period, interest will accrue and holders of
Convertible Subordinated Debentures (or holders of Capital Securities while
such series is outstanding) will be required to accrue interest income for
U.S. federal income tax purposes. See "Certain Federal Income Tax
Consequences--Potential Extension of Interest Payment Period and Original
Issue Discount."
During any such Extension Period, the Company may not, and may not permit
any subsidiary of the Company to, (i) declare or pay any dividends or
distribution on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Company's capital stock, (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Company that rank pari passu with or junior in interest
to the Convertible Subordinated Debentures, or (iii) make any guarantee
payments with respect to any guarantee by the Company of the debt securities
of any subsidiary of the Company if such guarantee ranks pari passu with or
junior in interest to the Convertible Subordinated Debentures (other than (a)
dividends or distributions in capital stock of the Company, (b) any
declaration of a dividend in connection with the implementation of a
shareholders' rights plan, or the redemption or repurchase of any such rights
pursuant thereto, (c) 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, related to the issuance of Common Stock or
rights under a dividend reinvestment and stock purchase plan, or related to
the issuance of Common Stock (or securities convertible into or exchangeable
for Common Stock) as consideration in an acquisition transaction that was
entered into prior to the commencement of such Extension Period, or (d)
payments under the Guarantee). Prior to the termination of any such Extension
Period, the Company may further defer the payment of interest on the
Convertible Subordinated Debentures, provided that no Extension Period may
exceed 20 consecutive quarterly period or extend beyond the Stated Maturity of
the Convertible Subordinated Debentures. Upon the termination of any such
Extension Period and the payment of all interest then accrued and unpaid
(together with interest thereon at the rate of % per annum, compounded
quarterly, to the extent permitted by applicable law), the Company may elect
to begin a new Extension Period subject to the above requirements. No interest
will be due and payable during an Extension Period, except at the end thereof.
The Company must give the Property Trustee, the Administrative Trustees and
the Debenture Trustee notice of its election to begin such Extension Period at
least one Business Day prior to the earlier of (i) the date Distributions on
the Trust Securities would have been payable except for the election to begin
such Extension Period, (ii) the date the Administrative Trustees are required
to give notice to the NYSE, the Nasdaq National Market or other applicable
stock exchange or automated quotation system on which the Capital Securities
are then listed or quoted, or (iii) the date such Distributions are payable,
but in any event not less than one Business Day prior to such record date. The
Debenture Trustee will give notice of the Company's election to begin a new
Extension Period to the holders of the Convertible Subordinated Debentures.
There is no limitation on the number of times that the Company may elect to
begin an Extension Period.
REDEMPTION
Subject to the Company's having received prior approval of the Federal
Reserve if then required under applicable capital guidelines or policies, the
Convertible Subordinated Debentures are redeemable prior to maturity at the
option of the Company (i) on or after , 2001, in whole at any time or in
part from time to time, or (ii) at any time, in certain circumstances as
described under "--Conditional Right to Redeem upon a Tax Event or Capital
Treatment Event," in whole (but not in part) within 90 days following the
occurrence of a Tax Event or Capital Treatment Event. The proceeds of any such
redemption will be used by the Issuer to redeem the Trust Securities. The
redemption price with respect to the Convertible Subordinated Debentures will
be equal to 100% of the principal amount of the Convertible Subordinated
Debentures so redeemed plus accrued and unpaid interest thereon to the date of
redemption. The Convertible Subordinated Debentures will not be subject to any
sinking fund.
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Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Convertible Subordinated
Debentures to be redeemed at its registered address. Unless the Company
defaults in payment of the redemption price, on and after the redemption date,
interest will cease to accrue on the Convertible Subordinated Debentures or
portions thereof called for redemption.
DISTRIBUTION OF CONVERTIBLE SUBORDINATED DEBENTURES
As described under "Description of Capital Securities--Redemption--
Liquidation of Issuer and Distribution of Convertible Subordinated
Debentures," under certain circumstances involving the termination of the
Issuer, Convertible Subordinated Debentures may be distributed to the holders
of the Capital Securities in exchange therefor upon liquidation of the Issuer
after satisfaction of liabilities to creditors of the Issuer as provided by
applicable law. If distributed to holders of Capital Securities, the
Convertible Subordinated Debentures will initially be issued in the form of
one or more global securities and DTC, or any successor depositary for the
Capital Securities, will act as depositary for the Convertible Subordinated
Debentures. It is anticipated that the depositary arrangements for the
Convertible Subordinated Debentures would be substantially identical to those
in effect for the Capital Securities. If Convertible Subordinated Debentures
are distributed to the holders of Capital Securities in exchange therefor upon
the liquidation of the Issuer, the Company will use its best efforts to list
the Convertible Subordinated Debentures on the NYSE or such other stock
exchanges or automated quotation systems, if any, on which the Capital
Securities are then listed or quoted. There can be no assurance as to the
market price of any Convertible Subordinated Debentures that may be
distributed to the holders of Capital Securities.
CONDITIONAL RIGHT TO REDEEM UPON A TAX EVENT OR CAPITAL TREATMENT EVENT
If a Tax Event or a Capital Treatment Event occurs and either (i) in the
opinion of counsel to the Company experienced in such matters, there would in
all cases, after effecting the termination of the Issuer and the distribution
of the Convertible Subordinated Debentures to the holders of the Capital
Securities in exchange therefor upon liquidation of the Issuer, be more than
an insubstantial risk that an Adverse Tax Consequence (as defined in "Risk
Factors--Redemption Upon Tax Event or Capital Treatment Event") would continue
to exist, (ii) in the reasonable determination of the Company, there would in
all cases, after effecting the termination of the Issuer and the distribution
of the Convertible Subordinated Debentures to the holders of the Capital
Securities in exchange therefor upon liquidation of the Issuer, be more than
an insubstantial risk that the Company will not be entitled to treat an amount
equal to the Liquidation Amount of the Capital Securities as "Tier 1 Capital"
(or the then equivalent thereof) for purposes of the capital adequacy
guidelines of the Federal Reserve, as then in effect and applicable to the
Company, or (iii) the Convertible Subordinated Debentures are not held by the
Issuer, then the Company will have the right to redeem the Convertible
Subordinated Debentures, in whole but not in part, at any time within 90 days
following the occurrence of a Tax Event or Capital Treatment Event at a
redemption price equal to 100% of the principal amount thereof plus accrued
and unpaid interest thereon to the date of redemption. See "Description of
Capital Securities--Redemption."
REGISTRATION OF CONVERTIBLE SUBORDINATED DEBENTURES
The Convertible Subordinated Debentures will be registered in the name of
the Issuer. In the event that the Convertible Subordinated Debentures are
distributed to holders of the Capital Securities, it is anticipated that the
depositary and other arrangements for the Convertible Subordinated Debentures
will be substantially identical to those in effect for the Capital Securities,
as applicable. See "Description of Capital Securities--Registration of Capital
Securities."
PAYMENT AND PAYING AGENTS
Payment of principal of (and premium, if any) and any interest on
Convertible Subordinated Debentures (other than any Convertible Subordinated
Debentures represented by Global Convertible Subordinated Debentures) will be
made at the office of the Debenture Trustee in New York City or at the office
of such paying
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agent or paying agents as the Company may designate from time to time, except
that at the option of the Company payment of any interest may be made (i)
except in the case of Global Convertible Subordinated Debentures, by check
mailed to the address of the person entitled thereto as such address appears
in the securities register, or (ii) by transfer to an account maintained by
the Person entitled thereto as specified in the securities register, provided
that proper transfer instructions have been received by the applicable record
date. Payment of any interest on Convertible Subordinated Debentures will be
made to the Person in whose name such Convertible Subordinated Debentures are
registered at the close of business on the applicable record date for such
interest, except in the case of defaulted interest. The Company may at any
time designate additional paying agents or rescind the designation of any
paying agent; however, the Company will at all times be required to maintain a
paying agent in each place of payment for the Convertible Subordinated
Debentures.
Any moneys deposited with the Debenture Trustee or any paying agent, or then
held by the Company in trust, for the payment of the principal of (and
premium, if any) or interest on any Convertible Debenture and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable will, at the request of the Company, be repaid to
the Company and the holder of such Convertible Debenture must thereafter look,
as a general unsecured creditor, only to the Company for payment thereof.
RESTRICTIONS ON CERTAIN PAYMENTS
The Company will also covenant, as to the Convertible Subordinated
Debentures, that it will not, and will not permit any subsidiary of the
Company to, (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of the
Company's capital stock, (ii) make any payment of principal, interest or
premium, if any, on or repay or repurchase or redeem any debt securities of
the Company that rank pari passu with or junior in interest to the Convertible
Subordinated Debentures, or (iii) make any guarantee payments with respect to
any guarantee by the Company of the debt securities of any subsidiary of the
Company if such guarantee ranks pari passu with or junior in interest to the
Convertible Subordinated Debentures (other than (a) dividends or distributions
in capital stock of the Company, (b) any declaration of a dividend in
connection with the implementation of a shareholders' rights plan, or the
redemption or repurchase of any such rights pursuant thereto, (c) 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, related
to the issuance of Common Stock or rights under a dividend reinvestment and
stock purchase plan, or related to the issuance of Common Stock (or securities
convertible into or exchangeable for Common Stock) as consideration in an
acquisition transaction that was entered into prior to the commencement of
such Extension Period, and (d) payments under the Guarantee) if at such time
(i) there has occurred any event of which the Company has actual knowledge (a)
that with the giving of notice or the lapse of time, or both, would constitute
a Debenture Event of Default under the Indenture with respect to the
Convertible Subordinated Debentures, and (b) in respect of which the Company
has not taken reasonable steps to cure, or (ii) the Company has given notice
of its election of an Extension Period as provided in the Indenture with
respect to the Convertible Subordinated Debentures and has not rescinded such
notice, or such Extension Period, or any extension thereof, is continuing.
MODIFICATION OF INDENTURE
From time to time the Company and the Debenture Trustee may, without the
consent of the holders of the Convertible 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 interests of the
holders of the Convertible Subordinated Debentures or the holders of the
Capital Securities so long as they remain outstanding) and qualifying, or
maintaining the qualification of, the Indenture under the Trust Indenture Act.
The Indenture contains provisions permitting the Company and the Debenture
Trustee, with the consent of the holders of not less than a majority in
principal amount of the Convertible Subordinated Debentures affected, to
modify the Indenture; provided, that no such modification may, without the
consent of the holder of each outstanding Convertible Debenture so affected,
(i) change the Stated Maturity of the Convertible Subordinated Debentures, or
reduce the principal amount thereof,
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or reduce the rate or extend the time of payment of interest thereon or (ii)
reduce the percentage of principal amount of the Convertible Subordinated
Debentures, the holders of which are required to consent to any such
modification of the Indenture, provided further that, so long as any Capital
Securities remain outstanding, (a) no such modification may be made that
adversely affects the holders of such Capital Securities in any material
respect, and no termination of the Indenture may occur, and no waiver of any
event of default or compliance with any covenant under the Indenture may be
effective, without the prior consent of the holders of at least a majority of
the aggregate Liquidation Amount of all outstanding Capital Securities
affected unless and until the principal of the Convertible Subordinated
Debentures and all accrued and unpaid interest thereon have been paid in full
and certain other conditions have been satisfied, and (b) where a consent
under the Indenture would require the consent of each holder of Convertible
Subordinated Debentures, no such consent shall be given by the Property
Trustee without the prior consent of each holder of the Capital Securities. In
addition, the Company and the Debenture Trustee may execute, without the
consent of any holder of Convertible Subordinated Debentures, any supplemental
indenture for the purpose of creating any new series of junior subordinated
debentures.
DEBENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events that have occurred and are continuing constitutes a "Debenture Event of
Default" with respect to the Convertible Subordinated Debentures:
(i) failure for 30 days to pay any interest on the Convertible
Subordinated Debentures when due (subject to the deferral of any interest
payment in the case of an Extension Period), or
(ii) failure to pay any principal or premium, if any, on the Convertible
Subordinated Debentures when due whether at maturity or upon redemption, 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 Company from the Debenture Trustee or the holders of at least 25% in
aggregate outstanding principal amount of the outstanding Convertible
Subordinated Debentures, or
(iv) certain events in bankruptcy, insolvency or reorganization of the
Company.
The holders of a majority in aggregate outstanding principal amount of
Convertible 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 Convertible Subordinated
Debentures may declare the principal due and payable immediately upon a
Debenture Event of Default, and, should the Debenture Trustee or such holders
of the Convertible Subordinated Debentures fail to make such declaration, the
holders of at least 25% in aggregate Liquidation Amount of the Capital
Securities will have such right. The holders of a majority in aggregate
outstanding principal amount of Convertible Subordinated Debentures may annul
such declaration. Should the holders of the Convertible Subordinated
Debentures fail to annul such declaration and waive such default, the holders
of a majority in aggregate Liquidation Amount of the Capital Securities
affected will have such right.
The holders of a majority in aggregate outstanding principal amount of the
Convertible Subordinated Debentures affected thereby may, on behalf of the
holders of all of the Convertible Subordinated Debentures, waive any default,
except a default in the payment of principal or interest (unless such default
has been cured and a sum sufficient to pay all matured installments of
interest and principal due otherwise than by acceleration has been deposited
with the Debenture Trustee) or a default in respect of a covenant or provision
which under the Indenture cannot be modified or amended without the consent of
the holder of each outstanding Convertible Debenture. Should the holders of
the Convertible Subordinated Debentures fail to waive such default, the
holders of a majority in aggregate Liquidation Amount of the Capital
Securities affected will have such right. The Company is required to file
annually with the Debenture Trustee a certificate as to whether or not the
Company is in compliance with all the conditions and covenants applicable to
it under the Indenture.
In case a Debenture Event of Default occurs and is continuing, the Property
Trustee will have the right to declare the principal of and the interest on
the Convertible Subordinated Debentures, and any other amounts
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payable under the Indenture, to be forthwith due and payable and to enforce
its other rights as a creditor with respect to the Convertible Subordinated
Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest or
principal on the Convertible Subordinated Debentures on the date such interest
or principal is due and payable, a holder of Capital Securities may institute
a legal proceeding directly against the Company for enforcement of payment to
such holder of the principal of or interest on the Convertible Subordinated
Debentures having a principal amount equal to the aggregate Liquidation Amount
of the Capital Securities of such holder (a "Direct Action"). The Company may
not amend the Indenture to remove the foregoing right to bring a Direct Action
without the prior written consent of the holders of all of the Capital
Securities outstanding. If the right to bring a Direct Action is removed, the
Issuer may become subject to the reporting obligations under the Exchange Act.
The Company has the right under the Indenture to set-off any payment made to
such holder of Capital Securities by the Company in connection with a Direct
Action.
The holders of the 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 Convertible Subordinated Debentures unless there has
been an Event of Default under the Trust Agreement. See "Description of
Capital Securities--Events of Default; Notice."
CONVERSION OF CONVERTIBLE SUBORDINATED DEBENTURES
The Convertible Subordinated Debentures will be convertible into Common
Stock at the option of the holders of the Convertible Subordinated Debentures
at any time on or after , 1998 [60 days after the date of issue] and prior
to 5:00 p.m. (Eastern time) on the Business Day immediately preceding the date
of repayment of such Convertible Subordinated Debentures, whether at Stated
Maturity or upon redemption (either at the option of the Company or pursuant
to a Tax Event or a Capital Treatment Event), at the Conversion Ratio as
adjusted, as applicable, as described under "Description of Capital
Securities--Conversion Rights." The Issuer will covenant not to convert
Convertible Subordinated Debentures held by it except pursuant to a notice of
conversion delivered to the Conversion Agent by a holder of Capital
Securities. Upon surrender of a Capital Security to the Conversion Agent for
conversion, the Issuer will distribute $25 principal amount of the Convertible
Subordinated Debentures per Capital Security to the Conversion Agent on behalf
of the holder of the Capital Securities so converted whereupon the Conversion
Agent will convert such Convertible Subordinated Debentures to Common Stock on
behalf of such holder. The Company's delivery to the holders of the
Convertible Subordinated Debentures (through the Conversion Agent) of the
fixed number of shares of Common Stock into which the Convertible Subordinated
Debentures are convertible (together with the cash payment, if any, in lieu of
fractional shares) will be deemed to satisfy the Company's obligation to pay
the principal amount of the Convertible Subordinated Debentures so converted,
and the accrued and unpaid interest thereupon attributable to the period from
the last date to which interest has been paid or duly provided for; provided,
however, that if any Convertible Subordinated Debentures are converted after a
record date for payment of interest and on or before the related Interest
Payment Date, the interest payable on the related Interest Payment Date with
respect to such Convertible Subordinated Debentures will be paid to the Issuer
(which will distribute an equivalent amount to the holder of such Capital
Security on the related record date) or other holder of Convertible
Subordinated Debentures, as the case may be, despite such conversion, and the
holder of the Convertible Subordinated Debentures must deliver an amount equal
to the interest payable on the related Interest Payment Date prior to
receiving the shares of Common Stock; provided, further that if any
Convertible Subordinated Debentures are delivered for conversion during an
Extension Period by a holder after receiving a notice of redemption from the
Property Trustee, the Company will be required to pay to the Issuer or other
holder of the converted Convertible Subordinated Debentures all accrued and
unpaid interest, if any, on such Convertible Subordinated Debentures through
the date of conversion which amount will be simultaneously distributed to the
holders of the Capital Securities, if any, in respect of which such
Convertible Subordinated Debentures were delivered. Except as provided above,
neither the Issuer nor the Company will make, or be
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required to make, any payment, allowance or adjustment for accumulated and
unpaid interest, whether or not in arrears, on the Convertible Subordinated
Debentures. See "Description of Capital Securities--Conversion Rights."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Company may not consolidate with or merge
into any other Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, and no Person may consolidate with
or merge into the Company or convey, transfer or lease its properties and
assets substantially as an entirety to the Company, unless (i) in case the
Company consolidates with or merges into another Person or conveys or
transfers its properties and assets substantially as an entirety to any
Person, the successor Person is organized under the laws of the U.S. or any
state or the District of Columbia, and such successor Person expressly assumes
the Company's obligations on the Convertible Subordinated Debentures issued
under the Indenture, (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, has occurred and is
continuing, (iii) such transaction is permitted under the Trust Agreement and
the Guarantee and does not give rise to any breach or violation of the Trust
Agreement or the Guarantee, and (iv) certain other conditions as prescribed by
the Indenture are met.
The general provisions of the Indenture do not afford holders of the
Convertible Subordinated Debentures protection in the event of a highly
leveraged or other transaction involving the Company that may adversely affect
holders of the Convertible Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Convertible
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 their Stated Maturity within one year, and the Company deposits or
causes to be deposited with the Debenture Trustee funds, in trust, for the
purpose and in an amount in the currency or currencies in which the
Convertible Subordinated Debentures are payable sufficient to pay and
discharge the entire indebtedness on the Convertible Subordinated Debentures
not previously delivered to the Debenture Trustee for cancellation, for the
principal (and premium, if any) and interest to the date of the deposit or to
the Stated Maturity, as the case may be, then the Indenture will cease to be
of further effect (except as to the Company'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 Company will be deemed to
have satisfied and discharged the Indenture.
SUBORDINATION
In the Indenture, the Company has covenanted and agreed that any Convertible
Subordinated Debentures issued thereunder will be subordinate and junior in
right of payment to all Senior Debt to the extent provided in the Indenture.
Upon any payment or distribution of assets of the Company 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 Company, the holders of Senior Debt will first be
entitled to receive payment in full of principal of (and premium, if any) and
interest, if any, on such Senior Debt before the holders of Convertible
Subordinated Debentures will be entitled to receive or retain any payment in
respect of the principal of (and premium, if any) or interest, if any, on the
Convertible Subordinated Debentures; provided, however, that holders of Senior
Debt will not be entitled to receive payment of any such amounts to the extent
that such holders would be required by the subordination provisions of such
Senior Debt to pay such amounts over to the obligees on trade accounts payable
or other liabilities arising in the ordinary course of the Company's business.
In the event of the acceleration of the maturity of the Convertible
Subordinated Debentures, the holders of all Senior Debt outstanding at the
time of such acceleration will first be entitled to receive payment in full of
all amounts due thereon (including any amounts due upon acceleration thereof)
before the holders of Convertible Subordinated Debentures will be entitled to
receive or retain any payment in respect of the principal of (or premium, if
any) or interest, if any, on the Convertible Subordinated Debentures;
provided, however, that holders
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of Senior Debt will not be entitled to receive payment of any such amounts to
the extent that such holders would be required by the subordination provisions
of such Senior Debt to pay such amounts over to the obligees on trade accounts
payable or other liabilities arising in the ordinary course of the Company's
business.
The Convertible Subordinated Debentures will be unsecured and will rank
junior and be subordinate in right of payment to all Senior Debt of the
Company. At June 5, 1998, the aggregate outstanding Senior Debt of the Company
was $48 million. Because the Company is a holding company, the right of the
Company to participate in any distribution of assets of any subsidiary of the
Company, including any Subsidiary Bank, upon any such subsidiary's liquidation
or reorganization or otherwise (and thus the ability of holders of the
Convertible Subordinated Debentures to benefit indirectly from such
distribution), is subject to the prior claim of creditors of such
subsidiaries, except to the extent that the Company may itself be recognized
as a creditor of such subsidiary. The Convertible Subordinated Debentures
will, therefore, be effectively subordinated to all existing and future
liabilities of the subsidiaries of the Company, and holders of Convertible
Subordinated Debentures should look only to the assets of the Company for
payments on the Convertible Subordinated Debentures. The Indenture does not
limit the incurrence or issuance of other secured or unsecured debt of the
Company, including Senior Debt, or its subsidiaries whether under the
Indenture or any existing indenture or other indenture that the Company may
enter into in the future or otherwise. The Company expects from time to time
to incur additional indebtedness and other obligations constituting Senior
Debt.
No payments on account of principal (or premium, if any) or interest in
respect of the Convertible Subordinated Debentures may be made if there has
occurred and is continuing a default in any payment with respect to Senior
Debt or an event of default with respect to any Senior Debt resulting in the
acceleration of the maturity thereof, or if any judicial proceeding is pending
with respect to any such default.
"Debt" means with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed, (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses, (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities
issued for the account of such Person, (iv) every obligation of such Person
issued or assumed as the deferred purchase price of property or services (but
excluding trade accounts payable or accrued liabilities arising in the
ordinary course of business), (v) every capital lease obligation of such
Person, (vi) every obligation of such Person for claims in respect of
derivative products such as interest and foreign exchange rate contracts,
commodity contracts and similar arrangements, and (vii) every obligation of
the type referred to in clauses (i) through (vi) of another Person and all
dividends of another Person the payment of which, in either case, such Person
has guaranteed or is responsible or liable for, directly or indirectly, as
obligor or otherwise.
"Senior Debt" means the principal of (and premium, if any) and interest, if
any (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not such
claim for post-petition interest is allowed in such proceeding), on Debt,
whether incurred on or prior to the date of the Indenture or thereafter
incurred, unless, in the instrument creating or evidencing the same or
pursuant to which the same is outstanding, it is provided that such
obligations are not superior in right of payment to the Convertible
Subordinated Debentures or to other Debt which is pari passu with, or
subordinated to, the Convertible Subordinated Debentures; provided, however,
that Senior Debt will not be deemed to include (i) any Debt of the Company
which when incurred and without respect to any election under Section 1111(b)
of the U.S. Bankruptcy Code of 1978, as amended, was without recourse to the
Company, (ii) any Debt of the Company to any of its subsidiaries, (iii) any
Debt to any employee of the Company, (iv) Debt which by its terms is
subordinated to trade accounts payable or accrued liabilities arising in the
ordinary course of business to the extent that payments made to the holders of
such Debt by the holders of the Convertible Subordinated Debentures as a
result of the subordination provisions of the Indenture would be greater than
such payments otherwise would have been as a result of any obligation of such
holders of such Debt to pay amounts over to the obligees on such trade
accounts payable or accrued liabilities arising in the ordinary course of
business as a result of subordination provisions to which such Debt is
subject, and (v) any other debt securities issued pursuant to the Indenture.
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TRUST EXPENSES
Pursuant to the Indenture, the Company, as borrower, has agreed to pay all
debts and other obligations (other than with respect to the Capital
Securities) and all costs and expenses of the Issuer (including costs and
expenses relating to the organization of the Issuer, the fees and expenses of
the Trustees and the cost and expenses relating to the operation of the
Issuer) and to pay any and all taxes and all costs and expenses with respect
thereto (other than U.S. withholding taxes) to which the Issuer might become
subject.
GOVERNING LAW
The Indenture and the Convertible Subordinated Debentures will be governed
by and construed in accordance with the laws of the State of Indiana.
INFORMATION CONCERNING DEBENTURE TRUSTEE
The Debenture Trustee will 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 Convertible 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.
BOOK-ENTRY ISSUANCE
DTC will act as the initial securities depositary for all of the Capital
Securities and the Convertible Subordinated Debentures. The Capital Securities
and the Convertible Subordinated Debentures will be issued only as fully-
registered securities registered in the name of Cede & Co. (DTC's nominee).
One or more fully-registered global certificates will be issued for the
Capital Securities and the Convertible Subordinated Debentures, representing
in the aggregate the total number of the Capital Securities or aggregate
principal balance of Convertible Subordinated Debentures, respectively, and
will be deposited with the Property Trustee as custodian for DTC.
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. "Direct
Participants" include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations. DTC is owned by a
number of its Direct Participants and by the NYSE, the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system also is available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain custodial
relationships with Direct Participants, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants
are on file with the Commission.
Purchases of Capital Securities or Convertible Subordinated Debentures
within the DTC system must be made by or through Direct Participants, which
will receive a credit for the Capital Securities or Convertible
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Subordinated Debentures on DTC's records. The ownership interest of each
actual purchaser of each Capital Security and each Convertible Subordinated
Debenture ("Beneficial Owner") is in turn to be recorded on the Direct and
Indirect Participants' records, including Euroclear and Cedel. Beneficial
Owners will not receive written confirmation from DTC of their purchases, but
Beneficial Owners are expected to receive written confirmations providing
details of the transactions, as well as periodic statements of their holdings,
from the Direct or Indirect Participants through which the Beneficial Owners
purchased Capital Securities or Convertible Subordinated Debentures. Transfers
of ownership interests in the Capital Securities or Convertible Subordinated
Debentures are to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Capital Securities or
Convertible Subordinated Debentures, except in the event that use of the book-
entry system for the Capital Securities or Convertible Subordinated Debentures
is discontinued.
Transfers between Participants will be effected in accordance with DTC's
procedures and will be settled in same-day funds. Transfers between
participants in Euroclear and Cedel will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Cross-market transfers between Participants, on the one hand, and Euroclear
participants or Cedel participants, on the other hand, will be effected in DTC
in accordance with DTC's rules on behalf of Euroclear or Cedel, as the case
may be, by its respective depositary; however, such cross-market transactions
will require delivery of instructions to Euroclear or Cedel, as the case may
be, by the counterparty in such system in accordance with the rules and
procedures and within the established deadlines (Brussels time) of such
system. Euroclear or Cedel, as the case may be, will, if the transaction meets
its settlement requirements, deliver instructions to its respective depositary
to take action to effect final settlement on its behalf by delivering or
receiving interests in the Capital Securities or Convertible Subordinated
Debentures in DTC, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. Euroclear
participants and Cedel participants may not deliver instructions directly to
the depositaries for Euroclear or Cedel.
Because of time zone differences, the securities account of a Euroclear or
Cedel participant purchasing an interest in a Capital Security or Convertible
Subordinated Debenture from a Participant in DTC will be credited, and any
such crediting will be reported to the relevant Euroclear participant or Cedel
participant, during the securities settlement processing day (which must be a
business day for Euroclear and Cedel, as the case may be) immediately
following the DTC settlement date. Cash received in Euroclear or Cedel as a
result of sales of interests in a Capital Security or Convertible Subordinated
Debenture by or through a Euroclear or Cedel participant to a Participant in
DTC will be received with value on the DTC settlement date but will be
available in the relevant Euroclear or Cedel cash account only as of the
business day for Euroclear or Cedel following the DTC settlement date.
DTC has no knowledge of the actual Beneficial Owners of the Capital
Securities or Convertible Subordinated Debentures; DTC's records reflect only
the identity of the Direct Participants to whose accounts such Capital
Securities or Convertible Subordinated Debentures are credited, which may or
may not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners
will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Redemption notices will be sent to Cede & Co. as the registered holder of
the Capital Securities or Convertible Subordinated Debentures. If less than
all of the Capital Securities or the Convertible Subordinated Debentures are
being redeemed, DTC's current practice is to determine by lot the amount of
the interest of each Direct Participant to be redeemed.
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Although voting with respect to the Capital Securities or the Convertible
Subordinated Debentures is limited to the holders of record of the Capital
Securities or Convertible Subordinated Debentures, in those instances in which
a vote is required, neither DTC nor Cede & Co. will itself consent or vote
with respect to Capital Securities or Convertible Subordinated Debentures.
Under its usual procedures, DTC would mail an omnibus proxy (the "Omnibus
Proxy") to the Property Trustee as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts such Capital Securities or Convertible
Subordinated Debentures are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Distribution payments on the Capital Securities or the Convertible
Subordinated Debentures will be made by the Property Trustee to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment
date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed
by standing instructions and customary practices and will be the
responsibility of such Participant and not of DTC, the Property Trustee, the
Issuer or the Company, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of Distributions to DTC is the
responsibility of the Property Trustee, disbursement of such payments to
Direct Participants is the responsibility of DTC, and disbursements of such
payments to the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
DTC may discontinue providing its services as securities depositary with
respect to the Capital Securities or the Convertible Subordinated Debentures
at any time by giving reasonable notice to the Property Trustee and the
Company. In the event that a successor securities depositary is not obtained,
definitive Capital Security or Convertible Subordinated Debenture certificates
representing the Capital Securities or Convertible Subordinated Debentures are
required to be printed and delivered. The Company, at its option, may decide
to discontinue use of the system of book-entry transfers through DTC (or a
successor depositary). After a Debenture Event of Default, the holders of a
majority in Liquidation Amount of Capital Securities or aggregate principal
amount of Convertible Subordinated Debentures may determine to discontinue the
system of book-entry transfers through DTC. In any such event, definitive
certificates for such Capital Securities or Convertible Subordinated
Debentures will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Issuer and the Company believe to be
accurate, but the Issuer and the Company assume no responsibility for the
accuracy thereof. Neither the Issuer nor the Company has any responsibility
for the performance by DTC or its Participants of their respective obligations
as described herein or under the rules and procedures governing their
respective operations.
DESCRIPTION OF GUARANTEE
GENERAL
The Guarantee will be executed and delivered by the Company concurrently
with the issuance by the Issuer of its Capital Securities for the benefit of
the holders from time to time of such Capital Securities and Common
Securities. The Bank of New York will act as Guarantee Trustee under the
Guarantee for the purposes of compliance with the Trust Indenture Act and the
Guarantee will be qualified as an indenture under the Trust Indenture Act.
This summary of certain provisions of the Guarantee, which summarizes the
material terms thereof, does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all of the provisions of the
Guarantee, including the definitions therein of certain terms, and the Trust
Indenture Act, to each of which reference is hereby made. The form of the
Guarantee has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part. The Guarantee Trustee will hold the Guarantee
for the benefit of the holders of the Capital Securities and Common
Securities.
The Company will irrevocably agree to pay in full on a subordinated basis,
to the extent set forth therein, the Guarantee Payments (as defined herein) to
the holders of the Trust Securities, as and when due, regardless of
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any defense, right of set-off or counterclaim that the Issuer may have or
assert other than the defense of payment. The following payments with respect
to the Capital Securities, to the extent not paid by or on behalf of the
Issuer (the "Guarantee Payments"), will be subject to the Guarantee: (i) any
accumulated and unpaid Distributions required to be paid on the Capital
Securities, to the extent that the Issuer has funds on hand available therefor
at such time, (ii) the Redemption Price with respect to any Capital Securities
called for redemption, to the extent that the Issuer has funds on hand
available therefor at such time, or (iii) upon a voluntary or involuntary
dissolution, winding up or liquidation of the Issuer (unless the Convertible
Subordinated Debentures are distributed to holders of the Capital Securities
in exchange therefor), the lesser of (a) the Liquidation Distribution, and (b)
the amount of assets of the Issuer remaining available for distribution to
holders of Trust Securities after satisfaction of liabilities to creditors of
the Issuer as required by law. The Company's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Company to the holders of the Trust Securities or by causing the Issuer to pay
such amounts to such holders.
If the Company does not make interest payments on the Convertible
Subordinated Debentures held by the Issuer, the Issuer will not be able to pay
Distributions on the Capital Securities and will not have funds legally
available therefor. The Guarantee will rank subordinate and junior in right of
payment to all Senior Debt of the Company. See "-- Status of Guarantee."
Because the Company is a holding company, the right of the Company to
participate in any distribution of assets of any subsidiary, including the
Subsidiary Banks, 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 Company may itself be recognized as a creditor of
that subsidiary. Accordingly, the Company's obligations under the Guarantee
will be effectively subordinated to all existing and future liabilities of the
Company's subsidiaries, and claimants should look only to the assets of the
Company for payments thereunder. The Guarantee will not limit the incurrence
or issuance of other secured or unsecured debt of the Company, including
Senior Debt, or its subsidiaries whether under the Indenture, any other
existing indenture or any other indenture that the Company may enter into in
the future or otherwise. The Company expects from time to time to incur
additional indebtedness constituting Senior Debt.
The Company will, through the Guarantee, the Trust Agreement, the
Convertible Subordinated Debentures and the Indenture, taken together, fully,
irrevocably and unconditionally guaranteed all of the Issuer's obligations
under the Capital Securities. No single document standing alone or operating
in conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
Issuer's obligations under the Capital Securities. See "Relationship Among
Capital Securities, Convertible Subordinated Debentures and Guarantee."
As part of the Guarantee, the Company will agree that it will honor all
obligations described therein relating to the conversion of the Capital
Securities into Common Stock as described in "Description of Capital
Securities--Conversion Rights."
STATUS OF GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior Debt of the
Company in the same manner as the Convertible Subordinated Debentures. The
Guarantee will constitute a guarantee of payment and not of collection (i.e.,
the guaranteed party may institute a legal proceeding directly against the
Guarantor to enforce its rights under the Guarantee without first instituting
a legal proceeding against any other person or entity). The Guarantee will be
held for the benefit of the holders of the Trust Securities. The Guarantee
will not be discharged except by payment of the Guarantee Payments in full to
the extent not paid by the Issuer or upon distribution to the holders of the
Trust Securities of the Convertible Subordinated Debentures.
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AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the Trust Securities (in which case no vote will be
required), the Guarantee may not be amended without the prior approval of the
holders of not less than a majority of the aggregate Liquidation Amount of the
outstanding Trust Securities. The manner of obtaining any such approval will
be as set forth under "Description of Capital Securities--Voting Rights;
Amendment of Trust Agreement." All guarantees and agreements contained in the
Guarantee will bind the successors, assigns, receivers, trustees and
representatives of the Company and will inure to the benefit of the holders of
the related Trust Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of not less than a majority in aggregate Liquidation Amount of the
Trust Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the Guarantee. Any holder of the
Trust Securities may institute a legal proceeding directly against the Company
to enforce its rights under the Guarantee without first instituting a legal
proceeding against the Issuer, the Guarantee Trustee or any other person or
entity. The Company, as Guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
INFORMATION CONCERNING GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of a
default by the Company in performance of the Guarantee, will undertake to
perform only such duties as are specifically set forth in the Guarantee and,
after default with respect to the Guarantee, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the Guarantee Trustee will be
under no obligation to exercise any of the powers vested in it by the
Guarantee at the request of any holder of any Trust Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby.
TERMINATION OF GUARANTEE
The Guarantee will terminate and be of no further force and effect upon full
payment of the Redemption Price of the Trust Securities, upon full payment of
the amounts payable upon liquidation of the Issuer or upon distribution of
Convertible Subordinated Debentures to the holders of the Trust Securities in
exchange therefor. The Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of the Trust
Securities must restore payment of any sums paid under the Trust Securities or
the Guarantee.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of Indiana.
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RELATIONSHIP AMONG CAPITAL SECURITIES,
CONVERTIBLE SUBORDINATED DEBENTURES AND GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Capital Securities
(to the extent the Issuer has funds available for the payment of such
Distributions and other amounts) will be irrevocably guaranteed by the Company
as and to the extent set forth under "Description of Guarantee." Taken
together, the Company's obligations under the Convertible Subordinated
Debentures, the Indenture, the Trust Agreement and the Guarantee will provide,
in the aggregate, a full, irrevocable and unconditional guarantee of payments
of Distributions and other amounts due on the Capital Securities. No single
document standing alone or operating in conjunction with fewer than all of the
other documents constitutes such guarantee. It is only the combined operation
of these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Issuer's obligations under the Capital
Securities. If and to the extent that the Company does not make payments on
the Convertible Subordinated Debentures, the Issuer will not pay Distributions
or other amounts due on the Capital Securities. The Guarantee does not cover
payment of Distributions when the Issuer does not have sufficient funds to pay
such Distributions. In such event, the remedy of a holder the Capital
Securities is to institute a legal proceeding directly against the Company
pursuant to the terms of the Indenture for enforcement of payment of amounts
equal to such Distributions to such holder. The obligations of the Company
under the Guarantee will be subordinate and junior in right of payment to all
Senior Debt of the Company.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
Convertible Subordinated Debentures, such payments will be sufficient to cover
Distributions and other payments due on the Capital Securities, primarily
because (i) the aggregate principal amount of the Convertible Subordinated
Debentures will be equal to the sum of the aggregate stated Liquidation Amount
of the Capital Securities and Common Securities, (ii) the interest rate and
interest and other payment dates on the Convertible Subordinated Debentures
will match the Distribution rate and Distribution and other payment dates for
the Capital Securities, (iii) the Company will pay for all and any costs,
expenses and liabilities of the Issuer except the Issuer's obligations to
holders of the Capital Securities under the Capital Securities, and (iv) the
Trust Agreement further provides that the Issuer will not engage in any
activity that is not consistent with the limited purposes of the Issuer.
Notwithstanding anything to the contrary in the Indenture, the Company has
the right to set-off any payment it is otherwise required to make thereunder
with and to the extent the Company has theretofore made, or is concurrently on
the date of such payment making, a payment under the Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF CAPITAL SECURITIES
A holder of any Capital Security may institute a legal proceeding directly
against the Company to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, the Company or
any other Person or entity.
A default or event of default under any Senior Debt of the Company would not
constitute a default or Event of Default under the Indenture. In the event,
however, of payment defaults under, or acceleration of, Senior Debt of the
Company, the subordination provisions of the Indenture provide that no
payments may be made in respect of the Convertible Subordinated Debentures
until such Senior Debt has been paid in full or any payment default thereunder
has been cured or waived. Failure to make required payments on the Convertible
Subordinated Debentures would constitute an Event of Default under the
Indenture.
LIMITED PURPOSE OF ISSUER
The Capital Securities evidence a beneficial interest in the Issuer, and the
Issuer exists for the sole purpose of issuing its Capital Securities and
Common Securities and investing the proceeds thereof in the Convertible
Subordinated Debentures. A principal difference between the rights of a holder
of a Capital Security and a holder of a Convertible Subordinated Debenture is
that a holder of a Convertible Subordinated Debenture will be entitled to
receive from the Company the principal amount of and interest accrued on
Convertible Subordinated
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Debentures held, while a holder of Capital Securities will be entitled to
receive Distributions from the Issuer (or from the Company under the
Guarantee) if and to the extent the Issuer has funds available for the payment
of such Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding up or liquidation of
the Issuer involving the liquidation of the Convertible Subordinated
Debentures, after satisfaction of liabilities to creditors of the Issuer as
required by applicable law, the holders of the Capital Securities will be
entitled to receive, out of the assets held by the Issuer, the Liquidation
Distribution in cash. See "Description of Capital Securities--Liquidation
Distribution Upon Termination." Upon any voluntary or involuntary liquidation
or bankruptcy of the Company, the Property Trustee, as holder of the
Convertible Subordinated Debentures, would be a subordinated creditor of the
Company, subordinated in right of payment to all Senior Debt as set forth in
the Indenture, but entitled to receive payment in full of principal and
interest, before any shareholders of the Company receive payments or
distributions. Since the Company is the guarantor under the Guarantee and has
agreed to pay for all costs, expenses and liabilities of the Issuer (other
than the Issuer's obligations to the holders of its Capital Securities), the
positions of a holder of the Capital Securities and a holder of the
Convertible Subordinated Debentures relative to other creditors and to
shareholders of the Company in the event of liquidation or bankruptcy of the
Company are expected to be substantially the same.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Company's authorized capital stock consists of 100,000,000 shares of
Common Stock and 2,000,000 shares of preferred stock, no par value per share
(the "Preferred Stock"). As of March 31, 1998 (on a pro forma basis giving
effect to the Pinnacle Acquisition), there were 33,540,415 shares of Common
Stock outstanding and no shares of Preferred Stock outstanding.
COMMON STOCK
Dividend Rights
Holders of Common Stock are entitled to receive dividends when as and if
declared by the Company's Board of Directors out of funds legally available
therefor, subject to any preferential dividend rights which may attach to
preferred stock which may be issued by the Company in the future. The timing
and amount of future dividends will depend, among other things, upon the
earnings and financial condition of the Company and its subsidiaries. In
addition, the ability of the subsidiary banks of the Company to pay cash
dividends, which are expected to continue to be the Company's principal source
of income, is restricted by applicable banking laws.
Voting Rights
Holders of Common Stock are entitled to one vote per share in the election
of directors and in all other matters to be voted upon by the shareholders
generally. Shareholders do not have cumulative voting rights in the election
of directors. Therefore, holders of a majority of the shares of Common Stock
outstanding can elect the entire Board of Directors of the Company.
Liquidation Rights
In the event of liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, the holders of Common Stock would be
entitled to share ratably in any of its assets or funds that are available for
distribution to its shareholders after the satisfaction of its liabilities (or
after adequate provision is made therefor) and after preferences on any
outstanding preferred stock.
No Preemptive Rights
Holders of Common Stock do not have the preemptive right to subscribe on a
pro-rata basis for any presently or subsequently authorized shares of Common
Stock.
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Assessment and Redemption
The Common Stock is not subject to redemption or any sinking fund and the
outstanding shares are fully paid and non-assessable. The Citizens National
Bank of Evansville is the transfer agent for the Common Stock.
PREFERRED STOCK
The Board of Directors of the Company is authorized to cause the Preferred
Stock to be issued from time to time, in series, by resolution adopted prior
to the issue of shares of a particular series, and to fix and determine in the
resolution the designation, relative rights, preferences and limitations of
the shares of each series, including voting, dividend and liquidation rights
and all other matters with respect to such shares as are permitted to be fixed
and determined by the Board of Directors under the Indiana corporate law.
CERTAIN ANTI-TAKEOVER PROVISIONS
Shareholder Vote Required for Certain Transactions
Business Combinations. The Company's Restated Articles of Incorporation
include a so-called "fair price" provision. This provision generally provides
that mergers, other business combinations and similar transactions and the
sale, lease, mortgage or other disposition of more than 10% of total assets
involving the Company or any of its subsidiaries and any person or entity
beneficially owning directly or indirectly more than 10% of the outstanding
voting stock of the Company, or affiliates or associates of such an entity (a
"Company 10% shareholder"), may not be consummated without the approval of
holders of at least 80% of the voting stock of the Company, unless either: (i)
the transaction is approved by a majority of the members of the Board of
Directors who are not affiliated with the Company 10% shareholder, or (ii) the
transaction meets certain minimum ("fair price") price requirements (in either
of which cases, the shareholder and director approval requirements of the
"fair price" provision would no longer apply and only the normal shareholder
and director approval requirements of the Indiana corporate law would govern
the transaction).
The primary purpose of the Company's "fair price" provision is to provide
additional safeguards for the remaining shareholders in the event that an
individual or entity becomes a major shareholder of the Company. If the
Company comes under the control of a single person or entity, substantial
inequities could befall the minority shareholders. A bid for control of a
target company is often followed, in time, by a complete business combination
that eliminates minority interests in the target company on terms often
unfavorable to the minority--a so-called "two-tier" structured takeover.
Minority shareholders in these circumstances may be forced out by the
controlling shareholder in a business combination transaction at a time and
for a price (cash or other types of consideration, often including debt
instruments) not to their liking. The price per share in such transactions
often is lower than the price per share previously paid by the controlling
shareholder for its controlling block of stock in the first tier of the
takeover. The minority shareholders, in such event, may have no alternative to
accepting such price unless they choose to follow the statutory procedures for
appraisal rights as a dissenting shareholder or to bringing legal action
against the controlling shareholder for breach of fiduciary duty, either of
which procedures may be costly and time-consuming.
The Company's higher shareholder vote requirements make it more difficult
for a single shareholder to obtain ultimate "control" over the Company in the
sense of being able unilaterally to effect a completed business combination on
the controlling shareholder's own terms. A disadvantage of these higher
shareholder vote requirements, however, is that outside parties contemplating
an attempt to acquire control over the Company by acquiring less than all of
its outstanding stock may be discouraged from making such an attempt, because
ultimate "control" will require obtaining a higher percentage of the
outstanding shares of Common Stock than if normal shareholder vote
requirements were in effect. As a result, premium offers for the Common Stock
from outside parties interested in acquiring control may be somewhat less
likely from such parties than premium offers for other similar companies
without such high voting requirements. In addition, because outside parties
may be somewhat less likely to attempt to acquire control over the Company due
to its higher shareholder vote
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requirements, the management of the Company may be somewhat less vulnerable to
removal in the future than would be the case if such provisions were not in
effect.
Removal of Directors. The Indiana corporate law provides that directors may
be removed in any manner provided in the articles of incorporation. In
addition, the shareholders or directors may remove one or more directors with
or without cause unless the articles of incorporation provide otherwise. If a
director is elected by a voting group of shareholders, only the shareholders
of that voting group may participate in the vote to remove that director. A
director may be removed by the shareholders, if they are otherwise authorized
to do so, only at a meeting called for the purpose of removing the director
and the meeting notice must state that the purpose, or one of the purposes, of
the meeting is removal of the director.
The Company's Restated Articles of Incorporation provide that at a meeting
called expressly for that purpose, a director or the entire Board of Directors
may be removed without cause only upon the affirmative vote of the holders of
not less than 80% of the shares entitled to vote generally in an election of
directors. At a meeting called expressly for that purpose, a director may be
removed by the shareholders for cause by the affirmative vote of the holders
of a majority of the shares entitled to vote upon his election. The Restated
Articles of Incorporation provide that, except as may be otherwise provided by
law, cause for removal will be construed to exist only if the director whose
removal is proposed: (i) has been convicted of a felony by a court of
competent jurisdiction and such conviction is no longer subject to direct
appeal, or (ii) has been adjudged by a court of competent jurisdiction to be
liable for negligence or misconduct in the performance of his duty to the
Company in a manner of substantial importance to the Company, and such
adjudication is no longer subject to direct appeal.
The Company's 80% shareholder vote requirement for removal of directors
without cause precludes a majority shareholder from circumventing the
classified Board by decreasing the size of the Board of Directors until its
nominees have a numerical majority or by removing directors not up for
election, filling the resulting vacancy with its nominees, and thereby gaining
control of the Board of Directors. The removal provisions would make it more
difficult for shareholders of the Company to change the composition of the
Board of Directors even if the shareholders believe that such a change would
be desirable.
Amendments to Articles of Incorporation. The Indiana corporate law provides
that, unless a greater vote is required under a specific provision of the
Indiana corporate law or by a corporation's articles of incorporation or its
board of directors, a corporation may amend its articles of incorporation upon
the affirmative vote of the holders of a greater number of shares cast in
favor of the amendment than the holders of shares cast against the amendment,
unless the amendment creates dissenters' rights in which case a favorable vote
of the holders of a majority of the outstanding shares is required. Under the
Indiana corporate law, a corporation's board of directors may condition its
submission of a proposed amendment to the shareholders of the corporation on
any basis, including the requirement of the affirmative vote of holders of a
greater percentage of the voting shares of the corporation than otherwise
would be required under the Indiana corporate law.
The Company's Restated Articles of Incorporation provide that,
notwithstanding any other provision of the Restated Articles of Incorporation
or any provision of law or any preferred stock designation, the provisions of
Article VII (relating to the classification, number, terms, removal of
directors and newly created directorships and vacancies), Article IX (relating
to special meetings of shareholders) and Article X (relating to the "fair
price" provisions discussed under "--Business Combinations"), may be altered,
amended or repealed only with the affirmative vote of the holders of at least
80% of the Common Stock then entitled to vote in an election of directors.
Voting Rights. Holders of shares of Common Stock are entitled to one vote
per share in the election of directors and in all other matters to be voted
upon by the shareholders generally. Directors of the Company are elected by
the majority vote of the shareholders and shareholders of the Company are not
entitled to cumulative voting in the election of directors. Therefore, holders
of a majority of the shares of Common Stock can elect the entire the Board of
Directors.
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The number of directors to constitute the Company Board may not be more than
twenty nor less than six. The Company Board currently consists of twelve
members, and the directors are divided into three classes with the term of
office of one of such classes expiring in each year. At each annual meeting of
shareholders, the successors to the directors of the class whose term is
expiring at that time are elected to hold office for a term of three years.
Special Meeting of Shareholders; Shareholder Action by Written Consent
The Company's Restated Articles of Incorporation require that shareholders
must hold at least 80% of the outstanding voting shares of the Company in
order to call a special meeting of shareholders. This provision is intended to
discourage attempts by the holders of less than 80% of the outstanding voting
stock of the Company from disrupting the business of the corporation between
annual shareholders meetings by calling special meetings. Possible
disadvantages of this provision is that it makes it more difficult for a
shareholder or shareholder group to take action where such action is opposed
by a majority of the Board of Directors and management of the Company and it
may delay the removal of directors, even if cause exists for such removal. The
Indiana corporate law provides that any action required or permitted to be
taken at a meeting of shareholders may be taken without a meeting if a
consent, in writing, setting forth the action taken is signed by the holders
of all of the shares entitled to vote on the subject matter.
Takeover Statutes
The Indiana corporate law prohibits, in general, any business combination,
such as a merger or consolidation, between an Indiana corporation with shares
of its stock registered under the federal securities laws or that makes an
election under the Indiana corporate law, and an "interested shareholder"
(defined as any owner of 10% or more of the corporation's stock) for five
years after the date on which such shareholder became an interested
shareholder, unless the stock acquisition which caused the person to become an
interested shareholder was approved in advance by the corporation's board of
directors. This so-called "five-year freeze" provision of the Indiana
corporate law is effective even if all parties should subsequently decide that
they wish to engage in the business combination.
The Indiana corporate law also contains a "control share acquisition"
provision which effectively denies voting rights to shares of an "issuing
public corporation" acquired in control share acquisitions unless the grant of
such voting right is approved by a majority vote of disinterested
shareholders. An issuing public corporation is a corporation that (i) has 100
or more shareholders, (ii) has its principal place of business, its principal
office or substantial assets within Indiana, and (iii) either (a) more than
10% of its shareholders are Indiana residents, (b) more than 10% of its shares
are owned by Indiana residents, or (c) 10,000 or more of its shareholders are
residents of Indiana. The Company is an "issuing public corporation." A
control share acquisition is one by which a purchasing shareholder acquires
more than one-fifth, one-third, or one-half of the voting power of the stock
of an "issuing public corporation." In addition, if any person proposing to
make or who has made "control share acquisitions" does not file an "acquiring
person statement" with the issuing corporation or if the control shares are
not accorded full voting rights by other shareholders, and if the articles of
incorporation or by-laws of the corporation whose shares are acquired
authorize such redemption (The Company's By-laws do), the acquired shares are
subject to redemption by the corporation. Finally, if a control share
acquisition should be made of a majority of the corporation's voting stock,
and those shares are granted full voting rights, shareholders are granted
dissenters' rights.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a summary of the material U.S. federal income tax
considerations that may be relevant to the purchasers of the Capital
Securities which has been passed upon by Lewis, Rice & Fingersh, L.C., counsel
to the Company ("Tax Counsel"), insofar as it relates to matters of law and
legal conclusions. This summary is based upon current provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations
issued thereunder and current administrative rulings and court decisions, all
of which are subject to change at any time, with possible retroactive effect.
Subsequent changes may cause the tax consequences to vary substantially from
the consequences described below. Furthermore, the authorities on which the
following summary is based are subject to various interpretations, and it is
therefore possible that the U.S. federal income tax treatment of the purchase,
ownership, and disposition of the Capital Securities may differ from the
treatment described below.
No attempt has been made in the following discussion to comment on all U.S.
federal income tax matters affecting purchasers of the Capital Securities.
Moreover, unless otherwise stated, this summary generally focuses on
beneficial owners (each a "holder") of the Capital Securities who are
individual citizens or residents of the U.S. and who acquire the Capital
Securities upon their original issue at their initial issue price and hold the
Capital Securities as capital assets. This summary has only limited
application to dealers in securities, corporations, estates, trusts or
nonresident aliens and does not address all the tax consequences that may be
relevant to holders who may be subject to special tax treatment, such as, for
example, banks, thrifts, real estate investment trusts, regulated investment
companies, insurance companies, brokers or dealers in securities or
currencies, other financial institutions, 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 the 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. Accordingly, each
prospective investor should consult, and should rely exclusively on, such
investor's own tax advisors in analyzing the federal, state, local and foreign
tax consequences of the purchase, ownership or disposition of the Capital
Securities.
CLASSIFICATION OF CONVERTIBLE SUBORDINATED DEBENTURES
The Company, the Issuer and the holders of the Capital Securities (by
acceptance of a beneficial interest in a Capital Security) will agree to treat
the Convertible Subordinated Debentures as indebtedness for all U.S. tax
purposes. In connection with the issuance of the Convertible Subordinated
Debentures, Tax Counsel will deliver its opinion that, under current law, and
based on certain representations, facts and assumptions referenced in such
opinion, the Convertible Subordinated Debentures should be classified as
indebtedness for U.S. federal income tax purposes. No assurance can be given,
however, that such treatment will not be challenged by the IRS or, if
challenged, that such a challenge will not be successful. Investors should be
aware that legal opinions are not binding on the IRS or the courts.
CLASSIFICATION OF ISSUER
Tax Counsel also will deliver its opinion that, under current law and
assuming full compliance with the terms of the Trust Agreement and based upon
certain representations, facts and assumptions referenced in such opinion, the
Issuer will be classified for U.S. federal income tax purposes as a grantor
trust and not as an association taxable as a corporation. Accordingly, for
U.S. federal income tax purposes, each holder of the Capital Securities
generally will be treated as owning an undivided beneficial interest in the
Convertible Subordinated Debentures, and each holder will be required to
include in its gross income interest (and original issue discount, if any)
accrued with respect to its allocable share of the Convertible Subordinated
Debentures.
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POTENTIAL EXTENSION OF INTEREST PAYMENT PERIOD AND ORIGINAL ISSUE DISCOUNT
Under the applicable Treasury regulations, the Convertible Subordinated
Debentures will not be treated as issued with original issue discount ("OID")
within the meaning of Section 1273(a) of the Code. Accordingly, except as set
forth below, stated interest on the Convertible Subordinated Debentures
generally will be included in income by a holder as ordinary income at the
time it is paid or accrued in accordance with such holder's regular method of
tax accounting.
If, however, the Company exercises its right to defer payments of interest
on the Convertible Subordinated Debentures, the Convertible Subordinated
Debentures will become OID instruments at such time and all holders will be
required to accrue the stated interest on the Convertible Subordinated
Debentures on a daily economic accrual basis (using the constant-yield-to-
maturity method of accrual described in Section 1272 of the Code) during the
Extension Period even though the Company will not pay such interest until the
end of the Extension Period, and even though some holders may use the cash
method of tax accounting. Moreover, thereafter the Convertible Subordinated
Debentures will be taxed as OID instruments for as long as they remain
outstanding. Thus, even after the end of an Extension Period, all holders
would be required to continue to include their pro rata share of the stated
interest (and de minimis OID, if any) on the Convertible Subordinated
Debentures in income on a daily economic accrual basis, regardless of their
method of tax accounting and in advance of receipt of the cash attributable to
such interest income. Under the OID economic accrual rules, a holder would
accrue an amount of interest income each year that approximates the stated
interest payments called for under the terms of the Convertible Subordinated
Debentures, and actual cash payments of stated interest on the Convertible
Subordinated Debentures would not be reported separately as taxable income.
Any amount of OID included in a holder's gross income (whether or not during
an Extension Period) with respect to a Capital Security will increase such
holder's tax basis in such Capital Security, and the amount of Distributions
received by a holder in respect of such accrued OID will reduce the tax basis
of such Capital Security.
The Treasury regulations described above have not yet been addressed in any
rulings or other interpretations by the IRS, and it is possible that the IRS
could take a contrary position. If the IRS were to assert successfully that
the stated interest on the Convertible Subordinated Debentures was OID
regardless of whether the Company exercises its option to defer payments of
interest on such Convertible Subordinated Debentures, all holders of Capital
Securities would be required to include such stated interest in income on a
daily economic accrual basis as described above.
Because income on the Capital Securities will constitute interest income for
U.S. federal income tax purposes, corporate holders of the Capital Securities
will not be entitled to claim a dividends received deduction in respect of
such income.
MARKET DISCOUNT AND ACQUISITION PREMIUM
Holders of the Capital Securities other than a holder who purchased the
Capital Securities upon original issuance may be considered to have acquired
their undivided interests in the Convertible Subordinated Debentures with
"market discount" or "acquisition premium" as such phrases are defined for
U.S. federal income tax purposes. Such holders are advised to consult their
tax advisors as to the income tax consequences of the acquisition, ownership
and disposition of the Capital Securities.
RECEIPT OF CONVERTIBLE SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF
ISSUER
Under certain circumstances, as described under "Description of Capital
Securities--Redemption--Liquidation of Issuer and Distribution of Convertible
Subordinated Debentures," the Convertible Subordinated Debentures may be
distributed to holders of the Capital Securities upon a liquidation of the
Issuer. Under current U.S. federal income tax law, such a distribution would
be treated as a nontaxable event to each such holder and would result in such
holder having an adjusted tax basis in the Convertible Subordinated Debentures
received in the liquidation equal to such holder's adjusted tax basis in the
Capital Securities immediately before the
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distribution. A holder's holding period in the Convertible Subordinated
Debentures so received in liquidation of the Issuer would include the period
for which such holder held the Capital Securities.
If, however, a Tax Event were to occur which resulted in the Issuer being
treated as an association taxable as a corporation, the distribution would
likely constitute a taxable event to holders of the Capital Securities. Under
certain circumstances described herein, the Convertible 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 U.S. federal income tax purposes,
constitute a taxable disposition of the redeemed Capital Securities, and a
holder would recognize gain or loss as if the holder sold such Capital
Securities for cash. See "Description of Capital Securities--Redemption--
Liquidation of Issuer and Distribution of Convertible Subordinated
Debentures."
DISPOSITION OF CAPITAL SECURITIES
Upon the sale or other taxable disposition of the Capital Securities, a
holder will recognize a gain or loss in an amount equal to the difference
between the amount realized on such sale or disposition (except to the extent
of any amount received in respect of accrued but unpaid interest not
previously included in income) and the holder's adjusted tax basis in such
Capital Securities. A holder's adjusted tax basis in the Capital Securities
generally will be its initial purchase price increased by OID (if any)
previously includible in the 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. In
the case of individual taxpayers, the gain or loss will be considered a long-
term capital gain or loss if the holder held such Capital Securities for more
than one year prior to such sale or disposition. The tax rates applicable to
long-term capital gains generally will vary depending upon whether, at the
time of disposition, the Capital Securities have been held for more than
eighteen months.
The Capital Securities may trade at prices that do not fully reflect the
value of accrued but unpaid interest with respect to the underlying
Convertible Subordinated Debentures. A holder of Capital Securities using the
accrual method of tax accounting (and a cash method holder, during and after
an Extension Period or if the Convertible Subordinated Debentures are deemed
to have been issued with OID) that disposes of its Capital Securities between
record dates for payments of Distributions (and consequently does not receive
a Distribution from the Issuer for the period prior to such disposition) will
nevertheless be required to include accrued but unpaid interest on the
Convertible Subordinated Debentures through the date of disposition in income
as ordinary income and to add such amount to its adjusted tax basis in its pro
rata share of the underlying Convertible Subordinated Debentures deemed
disposed of. Such holder will recognize a capital loss to the extent that the
selling price (which may not fully reflect the value of accrued but unpaid
interest) is less than its adjusted tax basis (which will include all accrued
but unpaid interest). Subject to certain limited exceptions, capital losses
cannot be applied to offset ordinary income for U.S. federal income tax
purposes.
CONVERSION OF CAPITAL SECURITIES
A holder of Capital Securities generally will not recognize income, gain or
loss upon the conversion, through the Conversion Agent, of its Capital
Securities into Common Stock. A holder will, however, recognize gain upon the
receipt of cash in lieu of a fractional share of Common Stock equal to the
amount of cash received less the holder's tax basis in such fractional share.
A holder's tax basis in the Common Stock received upon exchange and conversion
should generally be equal to the holder's tax basis in the Capital Securities
delivered to the Conversion Agent for exchange less the basis allocated to any
fractional share for which cash is received, and a holder's holding period in
the Common Stock received upon exchange and conversion will generally begin on
the date that the holder acquired the Capital Securities delivered to the
Conversion Agent for exchange.
ADJUSTMENT OF CONVERSION RATIO
Treasury Regulations promulgated under Section 305 of the Code would treat
holders of Capital Securities as having received a constructive distribution
from the Company in the event that the Conversion Ratio of the
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Convertible Subordinated Debentures were adjusted if (i) as a result of such
adjustment, the proportionate interest (measured by the quantum of Common
Stock into or for which the Convertible Subordinated Debentures are
convertible or exchangeable) of the holders of the Capital Securities in the
assets or earnings and profits of the Company were increased, and (ii) the
adjustment was not made pursuant to a bona fide, reasonable anti-dilution
formula. An adjustment of the Conversion Ratio would not be considered made
pursuant to such a formula if the adjustment was made to compensate for
certain taxable distributions with respect to the Common Stock. Thus, under
certain circumstances, an increase in the Conversion Ratio for the holders may
result in deemed dividend income to holders to the extent of the current or
accumulated earnings and profits of the Company. Holders of the Capital
Securities would be required to include their allocable share of such deemed
dividend income in gross income but would not receive any cash related
thereto.
OWNERSHIP OF COMMON STOCK
Distributions received by holders of Common Stock ("Shareholders") in
respect of such Common Stock (other than certain distributions of additional
shares of Common Stock or rights to acquire additional shares of Common Stock)
will be treated as ordinary dividend income ("Dividends") to such Shareholders
to the extent such distributions are considered to be paid by the Company out
of its current or accumulated earnings and profits ("E&P"), as determined
under U.S. federal income tax principles. Corporate Shareholders may be
entitled to a "dividends-received deduction" with respect to such Dividends.
To the extent that any such distribution exceeds the Company's E&P, such
distribution will be treated, first, as a tax-free return of capital to a
Shareholder to the extent of such Shareholder's adjusted tax basis in the
Common Stock and, thereafter, as capital gain.
Distributions of additional shares of Common Stock, or rights to acquire
additional shares of Common Stock, that are received as part of a pro rata
distribution of such shares, or rights to acquire such shares, to all
Shareholders of the Company generally should not be subject to U.S. federal
income tax. The tax basis of such new shares or rights generally will be
determined by allocating the Shareholder's adjusted tax basis in the "old"
shares of Common Stock between such "old" shares and the new shares or rights
received by such Shareholder, based upon their relative fair market values on
the date of the distribution.
A Shareholder generally will recognize gain or loss on a sale or other
taxable disposition of Common Stock equal to the difference between the amount
realized by the Shareholder on such sale or disposition and the Shareholder's
adjusted tax basis in such Common Stock. Such gain or loss generally will be
capital gain or loss and generally will be considered long-term capital gain
or loss if the Shareholder had held such Common Stock for more than one year
immediately prior to such sale or disposition.
EFFECT OF RECENT CHANGES IN TAX LAWS
The Company intends to deduct the interest accruing on the Convertible
Subordinated Debentures. Under the Taxpayer Relief Act of 1997, enacted on
August 5, 1997, issuers of certain convertible debt instruments are not
entitled to deduct interest thereon. For example, interest is not deductible
if the debt instrument is convertible into equity of the issuer (or a related
party) at the option of the holder and there is a substantial certainty that
the holder will exercise the conversion option. Similarly, interest is not
deductible if the debt instrument is part of an arrangement which is
reasonably expected to result in a conversion at the option of the issuer (or
a related party). The Company intends to take the position that this
legislation should not apply to the Convertible Subordinated Debentures. The
Internal Revenue Service, however, has not yet issued any guidance regarding
its interpretation of the new legislation. There can be no assurance that the
Internal Revenue Service will not take the position that interest on the
Convertible Subordinated Debentures is not deductible. Accordingly, there can
be no assurance that an audit or future interpretation by the Internal Revenue
Service of the new legislation will not result in a tax event and an early
redemption of the Capital Securities before, or after, , 2001.
In addition, in recent years, there have been several proposals to adopt
legislation which, if enacted and made applicable to the Convertible
Subordinated Debentures, would preclude the Company from deducting
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interest thereon. The most recent proposal was made by the Clinton
Administration on March 19, 1997. Such proposals were not adopted by Congress,
but there can be no assurance that similar proposals will not be adopted in
the future and made applicable to the Convertible Subordinated Debentures.
Accordingly, there can be no assurance that any such legislation will not
result in a Tax Event which would permit the Company to cause a redemption of
the Capital Securities before, or after, , 2001.
Recently, the IRS asserted that the interest payable on a security with
terms that are similar to the terms of the Convertible Subordinated Debentures
(but which are not convertible and which have a longer maturity than the
Convertible Subordinated Debentures) was not deductible for U.S. federal
income tax purposes. The taxpayer in that case has filed a petition in the
U.S. Tax Court challenging the IRS's position on this matter. If this matter
is in fact litigated and the Tax Court were to sustain the IRS's position on
this matter, such judicial decision could result in a Tax Event which would
permit the Company to cause a mandatory redemption of the Capital Securities
before, or after, , 2001.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Subject to the qualifications discussed below, income on the Capital
Securities will be reported to holders on Forms 1099, which forms are expected
to be mailed to holders of Capital Securities by January 31 following each
calendar year.
The Issuer will be obligated to report annually to the holders of record of
the Capital Securities, the interest (or original issue discount) related to
the Convertible Subordinated Debentures for that year. The Issuer currently
intends to report such information on Form 1099 prior to January 31 following
each calendar year even though the Issuer is not legally required to report to
record holders until April 15 following each calendar year. Under current law,
holders of Capital Securities who hold as nominees for beneficial holders will
not have any obligation to report information regarding the beneficial holders
to the Issuer. The Issuer, moreover, will not have any obligation to report to
beneficial holders who are not also record holders.
Payments made on, and proceeds from the sale of, the Capital Securities may
be subject to a "backup" withholding tax of 31% unless the holder complies
with certain identification requirements. Any withheld amounts will be allowed
as a credit against the holder's federal income tax liability, provided the
required information is provided to the Internal Revenue Service.
NON-U.S. HOLDERS
For purposes of this discussion, a "Non-U.S. Holder" is any beneficial owner
of Capital Securities that is a corporation, individual, partnership, estate
or trust that is, as to the U.S., (i) a foreign corporation, (ii) a non-
resident alien individual, (iii) a foreign partnership, (iv) an estate the
income of which, from sources without the U.S. which is not effectively
connected with the conduct of a trade or business within the U.S., is not
includible in gross income for U.S. federal income tax purposes, or (v) a
trust for which either (a) no court within the U.S. is able to exercise
primary supervision over the administration of the trust, or (b) no U.S.
persons have authority to control all substantial decisions of the trust.
Under present U.S. federal income tax law, payments by the Issuer or any of
its paying agents to any holder of Capital Securities who or which is a Non-
U.S. Holder will not be subject to withholding of U.S. federal income tax
provided that (i) such Non-U.S. Holder does not actually or constructively
(including by virtue of its interest in the underlying Convertible
Subordinated Debentures) own 10% or more of the total combined voting power of
all classes of stock of the Company entitled to vote, (ii) such Non-U.S.
Holder is not a controlled foreign corporation that is related to the Company
through stock ownership, and (iii) either (a) such Non-U.S. Holder certifies
to the Issuer or its paying agent, under penalties of perjury, that it is not
a U.S. 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"), that holds
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the Capital Securities in such capacity, certifies to the Issuer or its paying
agent, under penalties of perjury, that such statement has been received from
such Non-U.S. Holder by it or by each Financial Institution between it and the
Non-U.S. Holder and furnishes the Issuer or its paying agent with a copy
thereof. The foregoing provisions regarding certification to be delivered to
the Issuer, or its paying agent, are applicable to payments made prior to
January 1, 2000. For payments made after December 31, 1999, recently adopted
U.S. Treasury Regulations provide additional rules governing the issuance and
ability to rely upon the certification described herein.
If a Non-U.S. Holder cannot satisfy the requirements of the "portfolio
interest" exception described above, payments of interest (including any OID)
made to such Non-U.S. Holder will be subject to a 30% U.S. federal withholding
tax unless the Non-U.S. Holder provides the Company or its paying agent, as
the case may be, with a properly executed (i) IRS Form 1001 (or successor
form) claiming an exemption from, or a reduction of, such withholding tax
under the benefit of a U.S. income tax treaty or (ii) IRS Form 4224 (or
successor form) stating that the interest paid with respect to such Non-U.S.
Holder's Capital Securities (or on such holder's Convertible Subordinated
Debentures) is not subject to such withholding tax because it is effectively
connected with the Non-U.S. Holder's conduct of a trade or business within the
U.S.
If a Non-U.S. Holder is engaged in a trade or business in the U.S. and the
interest paid with respect to such holder's Capital Securities (or on such
holder's Convertible Subordinated Debentures) is effectively connected with
the conduct of such trade or business, the Non-U.S. Holder, although exempt
from the withholding tax discussed above, will be subject to U.S. federal
income tax on such interest on a net income basis in the same manner as if it
were a U.S. person. In addition, if such Non-U.S. Holder is a foreign
corporation, it may be subject to a branch profits tax equal to 30% of its
effectively connected earnings and profits for the taxable year, subject to
adjustments.
Any gain realized by a Non-U.S. Holder on the sale or other taxable
disposition of Capital Securities, Convertible Subordinated Debentures or
Common Stock generally will not be subject to U.S. federal income or
withholding tax unless (i) such gain is effectively connected with the Non-
U.S. Holder's conduct of a trade or business carried on within the U.S., (ii)
in the case of a Non-U.S. Holder who is an individual, such individual is
present in the U.S. for 183 days or more during the taxable year in which such
sale or disposition occurs and certain other conditions are met, or (iii) in
the case of any gain representing accrued but unpaid interest (or OID) with
respect to the Capital Securities (or the Convertible Subordinated
Debentures), the portfolio interest exceptions described above are not
satisfied.
Neither the exchange of Capital Securities for a proportionate share of the
Convertible Subordinated Debentures held by the Issuer nor the conversion of
such Convertible Subordinated Debentures into Common Stock will be taxable
events for U.S. federal income tax purposes. Consequently, a Non-U.S. Holder
will not be subject to U.S. federal income or withholding tax on the
conversion of Convertible Subordinated Debentures into Common Stock.
If a Non-U.S. Holder receives a Dividend distribution with respect to his or
its Common Stock, or is treated as receiving a deemed dividend as a result of
an adjustment of the Conversion Ratio of the Convertible Subordinated
Debentures as described above under "--Adjustment of Conversion Ratio", the
gross amount of such Dividend or deemed dividend, will be subject to U.S.
federal withholding tax at a 30% (or lower treaty) rate unless the Dividend
(or deemed dividend) is effectively connected with the Non-U.S. Holder's
conduct of a trade or business within the U.S. In addition, Distributions paid
to Non-U.S. Holders in respect of their Capital Securities (or Convertible
Subordinated Debentures) also will be subject to U.S. federal withholding tax
at a 30% (or lower treaty) rate, if, contrary to the opinion of Tax Counsel,
the Convertible Subordinated Debentures are classified as equity interests in,
rather than indebtedness of, the Company for U.S. federal income tax purposes,
in which case the interest paid thereon will be treated as Dividends to the
extent it is deemed to be paid out of the Company's E & P.
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THE U.S. FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON THE
PARTICULAR SITUATION OF A HOLDER OF THE CAPITAL SECURITIES. HOLDERS OF THE
CAPITAL SECURITIES 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 U.S. FEDERAL OR OTHER
TAX LAWS.
ERISA CONSIDERATIONS
Employee benefit plans that are subject to fiduciary and prohibited
transaction rules of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or Section 4975 of the Code or entities which may be deemed
to hold the assets of such plans ("Plans"), generally may purchase Capital
Securities, subject to the investing fiduciary's determination that the
investment in Capital Securities satisfies ERISA's fiduciary standards and
other requirements applicable to investments by the Plan. The following
discussion is general in nature and is not intended to be all-inclusive.
Accordingly, each fiduciary of a Plan should consider the application of these
rules in the context of the Plan's particular circumstances before authorizing
an investment in the Capital Securities.
GENERAL PROHIBITED TRANSACTIONS
Section 406 of ERISA and Section 4975 of the Code prohibit Plans from
engaging in certain transactions involving "plan assets" with plan sponsors,
fiduciaries, service providers and certain other persons who have specified
relationships to the Benefit Plan ("parties in interest"). Such transactions
are treated as "prohibited transactions" and, absent an exemption, may result
in the imposition of excise taxes or other penalties. For example, absent an
exemption, prohibited transactions under Section 406 of ERISA and Section 4975
of the Code could occur by reason of the purchase of Capital Securities by
Plans with respect to which the Company or an affiliate thereof may be
considered to be parties in interest. However, certain exemptions from the
prohibited transaction rules could be applicable to such purchase and holding.
As a result, Plans with respect to which the Company or any of its affiliates
is a party in interest or a disqualified person should not acquire Capital
Securities unless such Capital Securities are acquired pursuant to and in
accordance with an applicable exemption. Any other Plans or other entities
whose assets include Plan assets subject to ERISA or Section 4975 of the Code
proposing to acquire Capital Securities should consult with their own counsel.
PLAN ASSETS REGULATION
Pursuant to a Department of Labor ("DOL") regulation codified at 29 C.F.R.
Section 2510.3-101 (the "Plan Assets Regulation"), in general and as
applicable here, when a Plan acquires an equity interest in an entity such as
the Issuer and such interest does not represent a "publicly offered security",
the Plan's assets include both the equity interest and an undivided interest
in each of the underlying assets of the entity, unless it is established that
equity participation in the entity by "benefit plan investors" is not
"significant" (as such terms are defined in the Plan Assets Regulation).
Although the Company believes that the requirements of the publicly offered
security exception of the Plan Assets Regulation will be satisfied, there can
be no assurance that this or any other exception set forth in the Plan Assets
Regulation will apply to the purchase of Capital Securities offered hereby. If
no such exception were to apply, an investing Plan's assets could be
considered to include an undivided interest in the assets of the Issuer and,
as a result, the Company, the Trustee and other persons, in providing services
with respect to the Convertible Subordinated Debentures, may be considered
fiduciaries to such Plan and subject to the fiduciary and prohibited
transaction rules of ERISA and the Code.
IN CONSIDERING WHETHER TO PURCHASE THE CAPITAL SECURITIES, EACH BENEFIT PLAN
FIDUCIARY SHOULD CONSULT WITH ITS COUNSEL REGARDING THE POTENTIAL CONSEQUENCES
UNDER ERISA, THE CODE OR OTHER APPLICABLE LAW OF THE PURCHASE AND HOLDING OF
THE CAPITAL SECURITIES.
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UNDERWRITING
The Underwriters named below, represented by SBC Warburg Dillon Read Inc.
and CIBC Oppenheimer Corp. (the "Representatives"), have severally agreed,
subject to the terms and conditions set forth in the Underwriting Agreement,
the form of which is filed as an exhibit to the Registration Statement of
which this Prospectus forms a part, to purchase from the Issuer the number of
Capital Securities set forth opposite their respective names below. The
several Underwriters have agreed in the Underwriting Agreement, subject to the
terms and conditions set forth therein, to purchase all the Capital Securities
offered hereby if any of the Capital Securities are purchased. In the event of
default by an Underwriter, the Underwriting Agreement provides that, in
certain circumstances, purchase commitments of the nondefaulting Underwriters
may be increased or the Underwriting Agreement may be terminated.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITING CAPITAL SECURITIES
------------ ------------------
<S> <C>
SBC Warburg Dillon Read Inc............................
CIBC Oppenheimer Corp..................................
Stifel, Nicolaus & Company Incorporated................
Howe Barnes Investments, Inc...........................
NatCity Investments, Inc...............................
Keefe, Bruyette & Woods, Inc...........................
Wedgewood Partners, Inc................................
---------
Total.............................................. 6,000,000
=========
</TABLE>
The Representatives have advised the Issuer that the Underwriters propose
initially to offer the Capital Securities to the public at the public offering
price set forth on the cover page of this Prospectus, and to certain dealers
at such price less a concession not in excess of $ per Capital Security.
The Underwriters may allow, and such dealers may reallow, a discount not in
excess of $ per Capital Security to certain other dealers. After the
initial public offering, the public offering price, concession and discount
may be changed. Because the National Association of Securities Dealers, Inc.
("NASD") is expected to view the Capital Securities as interests in a direct
participation program, the offering of the Capital Securities is being made in
compliance with the applicable provisions of Rule 2810 of the NASD's Conduct
Rules. Therefore, no Underwriter will execute any transaction in a
discretionary account without prior approval of the customer.
In view of the fact that the proceeds of the sale of the Capital Securities
will be used to purchase the Convertible Subordinated Debentures of the
Company, the Underwriting Agreement provides that the Company will pay as
compensation to the Underwriters for arranging the investment therein of such
proceeds $ per Capital Security (or $ in the aggregate) for the
account of the several Underwriters.
The Issuer has granted the Underwriters an option to purchase up to an
additional 900,000 Capital Securities at the initial public offering price.
Such option, which expires 30 days from the date of this Prospectus, may be
exercised solely to cover over-allotments. To the extent that the Underwriters
exercise such option, each of the Underwriters will have a firm commitment,
subject to certain conditions, to purchase approximately the same percentage
of the additional Capital Securities that the number of Capital Securities to
be purchased initially by the Underwriter is of the 6,000,000 Capital
Securities initially purchased by the Underwriter. To the extent that the
Underwriters exercise such option to purchase additional Capital Securities,
the Issuer will issue and sell to the Company additional Common Securities in
an aggregate Liquidation Amount equal to at least 3% of the total capital of
the Issuer and the Company will issue and sell to the Issuer Convertible
Subordinated Debentures in an aggregate principal amount equal to the
aggregate Liquidation Amount of the additional Capital Securities being
purchased pursuant to the option.
Although the Capital Securities have been approved for listing on the NYSE,
subject to notice of official issuance, no assurances can be made as to the
liquidity of such Capital Securities or that an active and liquid trading
market will develop or, if developed, that it will continue. The offering
price, Distribution rate and
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Conversion Ratio have been determined by negotiations among the Company and
the Representatives, and the offering price of the Capital Securities may not
be indicative of the market price following the offering.
The Issuer and the Company have agreed to indemnify the Underwriters
against, or contribute to payments that the Underwriters may be required to
make in respect of, certain liabilities, including liabilities under the
Securities Act.
In connection with the offering of the Capital Securities, the Underwriters
and any selling group members and their respective affiliates may engage in
transactions effected in accordance with Rule 104 of the Commission's
Regulation M that are intended to stabilize, maintain or otherwise affect the
market price of the Capital Securities and the Common Stock. Such transactions
may include over-allotment transactions in which an Underwriter creates a
short position for its own account by selling more Capital Securities than it
is committed to purchase from the Issuer. In such case, to cover all or part
of the short position, the Underwriters may exercise the over-allotment option
described above or may purchase Capital Securities in the open market
following completion of the initial offering of the Capital Securities. Each
Underwriter also may engage in stabilizing transactions in which it bids for,
and purchases, Capital Securities and Common Stock at a level above that which
might otherwise prevail in the open market for the purpose of preventing or
retarding a decline in the market price of the Capital Securities and the
Common Stock. The Underwriters also may reclaim any selling concessions
allowed to a dealer if the Underwriters repurchase Capital Securities
distributed by that dealer. Any of the foregoing transactions may result in
the maintenance of a price for the Capital Securities and the Common Stock at
levels above that which might otherwise prevail in the open market. Neither
the Company nor the Underwriters make any representation or prediction as to
the direction or magnitude of any effect that the transactions described above
may have on the price of the Capital Securities or the Common Stock. The
Underwriters are not required to engage in any of the foregoing transactions
and, if commenced, such transactions may be discontinued at any time without
notice.
Wedgewood is an indirect subsidiary of the Company. Certain of the
Underwriters and their affiliates have, from time to time, performed
investment, commercial banking and other services for the Company and its
affiliates in the ordinary course of business and have received fees in
connection therewith.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Capital
Securities, the enforceability of the Trust Agreement and the formation of the
Issuer will be passed upon by Richards, Layton & Finger P.A., special Delaware
counsel to the Company and the Issuer. Certain legal matters for the Company
and the Issuer, including the validity of the Guarantee and the Convertible
Subordinated Debentures, will be passed upon for the Company and the Issuer by
Lewis, Rice & Fingersh, L.C., St. Louis, Missouri, counsel to the Company and
the Issuer. Certain legal matters will be passed upon for the Underwriters by
Simpson Thacher & Bartlett, New York, New York. Counsel for the Company, the
Issuer and the Underwriters will rely on the opinion of Richards, Layton &
Finger P.A., as to matters of Delaware law. Certain matters relating to U.S.
federal income tax considerations will be passed upon for the Company by
Lewis, Rice & Fingersh, L.C.
EXPERTS
The consolidated financial statements of the Company as of December 31, 1997
and 1996, and for each of the years in the three-year period ended December
31, 1997, included in the Company's Annual Report on Form 10-K, and the
supplemental consolidated financial statements of the Company as of December
31, 1997 and 1996, and for each of the years in the three-year period ended
December 31, 1997, included in the Company's Current Report on Form 8-K dated
June 3, 1998, have been incorporated by reference herein and in the
Registration Statement in reliance upon the reports of KPMG Peat Marwick LLP,
independent certified public accountants, whose reports are incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
67
<PAGE>
The consolidated financial statements of Pinnacle as of December 31, 1997
and 1996, and for each of the years in the three-year period ended December
31, 1997, included in Pinnacle's Annual Report on Form 10-K, have been
incorporated by reference herein and in the Registration Statement in reliance
upon the reports of KPMG Peat Marwick LLP, independent certified public
accountants, whose report is incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing. KPMG Peat
Marwick LLP previously audited and reported on the consolidated balance sheet
of Pinnacle as of December 31, 1996, and the related consolidated statements
of income, changes in shareholders' equity, and cash flows for the years ended
December 31, 1996 and 1995, prior to their restatement for the 1997 pooling of
interests transactions with IFC and CB. The contribution of Pinnacle to total
assets and net income represented 50% and 57% of the respective restated
totals for the year ended December 31, 1996 and the contribution of Pinnacle
to net income represented 40% of the respective restated total for the year
ended December 31, 1995. Separate consolidated financial statements of the
other companies included in the December 31, 1996 restated consolidated
balance sheet and consolidated statements of income, changes in shareholders'
equity, and cash flows for the years ended December 31, 1996 and 1995 were
audited and reported on separately by other auditors. KPMG Peat Marwick LLP
audited the combination of the Pinnacle consolidated balance sheet as of
December 31, 1996 and consolidated statements of income, changes in
shareholders' equity, and cash flows for the years ended December 31, 1996 and
1995, after restatement for the 1997 pooling of interests transactions with
IFC and CB.
68
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY CNB
BANCSHARES, INC., CNB CAPITAL TRUST I OR THE UNDERWRITERS. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF CNB BANCSHARES, INC. SINCE THE DATE HEREOF OR THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION
IS UNLAWFUL.
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
Incorporation of Certain Documents by Reference............................ 1
Available Information...................................................... 1
Forward Looking Statements................................................. 2
Prospectus Summary......................................................... 4
Risk Factors............................................................... 10
Use of Proceeds............................................................ 17
Consolidated Ratio of Earnings to Fixed Charges............................ 17
Price Range of Common Stock and Dividends.................................. 18
Capitalization............................................................. 19
The Company................................................................ 20
The Issuer................................................................. 24
Accounting Treatment....................................................... 25
Description of Capital Securities.......................................... 25
Description of Convertible Subordinated Debentures......................... 40
Book-Entry Issuance........................................................ 49
Description of Guarantee................................................... 51
Relationship Among Capital Securities, Convertible Subordinated Debentures
and Guarantee............................................................. 54
Description of Capital Stock............................................... 55
Certain Federal Income Tax Consequences.................................... 59
ERISA Considerations....................................................... 65
Underwriting............................................................... 66
Legal Matters.............................................................. 67
Experts.................................................................... 67
</TABLE>
PROSPECTUS
June ,1998
LOGO
6,000,000 Capital Securities of
CNB CAPITAL TRUST I
% Shared Preference
Redeemable Securities ("SPuRS")
(Liquidation Amount $25 per Capital Security) guaranteed, as described herein
by, and convertible into Common Stock of,
CNB BANCSHARES, INC.
SBC WARBURG DILLON READ INC.
CIBC OPPENHEIMER
STIFEL, NICOLAUS & COMPANY
INCORPORATED
HOWE BARNES INVESTMENTS, INC.
NATCITY INVESTMENTS, INC.
KEEFE, BRUYETTE & WOODS, INC.
WEDGEWOOD PARTNERS, INC.
<PAGE>
PART II--INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14--OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following (except SEC, NASD and NYSE fees) are estimates of the other
expenses of issuance and distribution:
<TABLE>
<S> <C>
SEC Registration Fee............................................. $50,888
NASD Filing Fee.................................................. 17,750
NYSE Listing Fee................................................. 51,300
Blue Sky Qualification Fees and Expenses......................... 5,000
Accounting Fees and Expenses..................................... 50,000
Legal Fees and Expenses.......................................... 135,000
Trustees' Fees and Expenses...................................... 6,000
Printing and Engraving Expenses.................................. 110,000
Transfer and Registrar Fees...................................... 5,000
Miscellaneous.................................................... 29,062
-------
Total........................................................ 460,000
=======
</TABLE>
ITEM 15--INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to the Indiana Corporate Law and the Articles of Incorporation and
Bylaws of the Company, the Company is obligated to indemnify certain officers
and directors in connection with liabilities arising from legal proceedings
resulting from such person's service to the Company in certain circumstances.
The Company may also voluntarily undertake to indemnify certain persons acting
on the Company's behalf in certain circumstances.
The Indiana Corporate Law provides for mandatory indemnification of
directors and officers of Indiana corporations and permissive indemnification
of directors, officers, employees and agents of corporations who are made
parties to proceedings as a result of their relationship with such
corporation. The Indiana Corporate Law also applies to individuals who are
serving at such corporation's request as directors, officers, employees and
agents of such corporation's subsidiaries. The Indiana Corporate Law requires
corporations, unless limited by their articles of incorporation, to indemnify
any director or officer against reasonable expenses incurred in connection
with any proceeding to which such person was a party if the individual is
wholly successful on the merits. The Indiana Corporate Law authorizes
corporations to indemnify any director, officer, employee or agent against
liability incurred in such a proceeding generally if the individual's conduct
was in good faith and the individual reasonably believed, in the case of
conduct in the individual's official capacity, that his or her conduct was in
the corporation's best interests and in all other cases that his or her
conduct was not opposed to the best interests of such corporation.
The Indiana Corporate Law further authorizes any court of competent
jurisdiction, unless the articles of incorporation provide otherwise, to order
indemnification generally if the court determines a director or officer of a
corporation is entitled to mandatory indemnification or is otherwise fairly
and reasonably entitled to indemnification in view of all the relevant
circumstances. The Indiana Corporate Law also authorizes corporations to
advance reasonable expenses in advance of final disposition of a proceeding
generally if the individual affirms in writing a good faith belief that he
satisfies the standard of conduct for permissive indemnification, the
individual undertakes in a signed writing to repay the advance if it is
determined he does not satisfy the standard of conduct for permissive
indemnification and the corporation determines that the facts then known do
not preclude indemnification. Finally, the Indiana Corporate Law authorizes
further indemnification to the extent that the corporation may provide in its
articles of incorporation, by-laws, a resolution of the board of directors or
the shareholders or any other authorization, whenever adopted, after notice,
by a majority vote of holders of all the voting shares then issued and
outstanding. Except with respect to the advancement of expenses, the Company's
Bylaws generally provide for the indemnification of the Company's directors,
officers, employees and agents to the extent permitted by the Indiana
Corporate Law.
II-1
<PAGE>
ITEM 16--EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.
4.1 Form of Indenture.
4.2 Form of Convertible Subordinated Debenture (included in the
Indenture filed as Exhibit 4.1 to this Registration Statement).
4.3 Certificate of Trust of CNB Capital Trust I.
4.4 Trust Agreement of CNB Capital Trust I.
4.5 Form of Amended and Restated Trust Agreement.
4.6 Form of Capital Security Certificate (included as an exhibit to
the Amended and Restated Trust Agreement filed as Exhibit 4.5 to
this Registration Statement).
4.7 Form of Capital Securities Guarantee Agreement.
5.1 Opinion of Lewis, Rice & Fingersh, L.C. as to the validity of
the issuance of the Convertible Subordinated Debentures.
5.2 Opinion of Richards, Layton & Finger P.A., special Delaware
counsel, as to the legality of the Capital Securities.
8.1 Opinion of Lewis, Rice & Fingersh, L.C. as to certain federal
income tax matters.
12.1 Statements Regarding Computation of Ratio of Earnings to Fixed
Charges.
23.1 Consent of KPMG Peat Marwick LLP, Independent Public
Accountants.
23.2 Consent of KPMG Peat Marwick LLP, Independent Public
Accountants.
23.3 Consent of Lewis, Rice & Fingersh, L.C. (included in their
opinions filed as Exhibits 5.1 and 8.1).
23.4 Consent of Richards, Layton & Finger P.A. (included in their
opinion filed as Exhibit 5.2).
24.1 Powers of Attorney.
25.1 Form T-1 Statement of Eligibility of The Bank of New York to act
as trustee under the Indenture.
25.2 Form T-1 Statement of Eligibility of The Bank of New York to act
as trustee under the Amended and Restated Trust Agreement.
25.3 Form T-1 Statement of Eligibility of The Bank of New York to act
as trustee under the Capital Securities Guarantee Agreement.
</TABLE>
(b) Financial Statement Schedules--Not applicable as all required
information is contained in the financial statements and the notes thereto or
in the summary supplemental consolidated financial data.
ITEM 17--UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, (the "Securities Act") may be permitted to directors,
officers and controlling persons of the Company pursuant to the provisions
described under "Item 15--Indemnification of Directors and Officers" above, or
otherwise, the Company has been advised that in the opinion of the 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 the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company 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, the Company will,
II-2
<PAGE>
unless in the opinion of its counsel the matter has been sealed by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The Company hereby undertakes: (1) That for purposes of determining any
liability under the Securities Act, the information omitted from the form of
prospectus filed as part of this Registration Statement in reliance upon Rule
430A and contained in a form of prospectus filed by the Company pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared effective;
(2) That for the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof; (3) That for purposes of
determining any liability under the Securities Act, each filing of the
Company's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof; and (4) To deliver or cause to be delivered with the prospectus, to
each person to whom the prospectus is sent or given, the latest annual report,
to security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3
under the Exchange Act; and, where interim financial information required to
be presented by Article 3 of Regulation S-X is not set forth in the
prospectus, to deliver, or cause to be delivered to each person to whom the
prospectus is sent or given, the latest quarterly report that is specifically
incorporated by reference in the prospectus to provide such interim financial
information.
The Issuer hereby undertakes to provide to the Representatives at the
closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE UNDERSIGNED
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
AMENDMENT NO. 1 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN EVANSVILLE, INDIANA ON JUNE 8,
1998.
CNB Bancshares, Inc.
/s/ James J. Giancola
By: _________________________________
James J. Giancola
President and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE UNDERSIGNED
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT
NO. 1 TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN EVANSVILLE, INDIANA ON JUNE 8, 1998.
CNB Capital Trust I
/s/ James J. Giancola
By: _________________________________
James J. Giancola
Trustee
/s/ John R. Spruill
By: _________________________________
John R. Spruill
Trustee
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO REGISTRATION STATEMENT HAS BEEN SIGNED ON JUNE 8, 1998 BY THE
FOLLOWING PERSONS IN THE CAPACITIES .
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
* Chairman of the Board
___________________________________________
H. Lee Cooper III
/s/ James J. Giancola President and Chief Executive Officer
___________________________________________ (principal executive officer)
James J. Giancola
/s/ John R. Spruill Executive Vice President and Chief
___________________________________________ Financial Officer (principal financial
John R. Spruill officer)
* Senior Vice President and Controller,
___________________________________________ Treasurer (principal accounting officer)
Ralph L. Alley
* Director
___________________________________________
John D. Engelbrecht
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C>
* Director
___________________________________________
Terrence A. Friedman
* Director
___________________________________________
James E. Hutton
* Director
___________________________________________
Robert L. Koch, II
* Director
___________________________________________
Larry J. Kremer
* Director
___________________________________________
Edmund L. Hafer, Jr.
* Director
___________________________________________
Burkley F. McCarthy
* Director
___________________________________________
Robert K. Ruxer
* Director
___________________________________________
Thomas W. Traylor
* Director
___________________________________________
Alton C. Wendzel
</TABLE>
/s/ James J. Giancola
*By: ___________________________
Attorney-in-fact
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1 Form of Underwriting Agreement.
4.1 Form of Indenture.
4.2 Form of Convertible Subordinated Debenture (included in the
Indenture filed as Exhibit 4.1 to this Registration Statement).
4.3 Certificate of Trust of CNB Capital Trust I.*
4.4 Trust Agreement of CNB Capital Trust I.*
4.5 Form of Amended and Restated Trust Agreement.
4.6 Form of Capital Security Certificate (included as an exhibit to
the Amended and Restated Trust Agreement filed as Exhibit 4.5 to
this Registration Statement).
4.7 Form of Capital Securities Guarantee Agreement.*
5.1 Opinion of Lewis, Rice & Fingersh, L.C. as to the validity of the
issuance of the Convertible Subordinated Debentures.*
5.2 Opinion of Richards, Layton & Finger P.A., special Delaware
counsel, as to the legality of the Capital Securities.*
8.1 Opinion of Lewis, Rice & Fingersh, L.C. as to certain federal
income tax matters.*
12.1 Statements Regarding Computation of Ratio of Earnings to Fixed
Charges.*
23.1 Consent of KPMG Peat Marwick LLP, Independent Public Accountants.
23.2 Consent of KPMG Peat Marwick LLP, Independent Public Accountants.
23.3 Consent of Lewis, Rice & Fingersh, L.C. (included in their
opinions previously filed as Exhibits 5.1 and 8.1).
23.4 Consent of Richards, Layton & Finger P.A. (included in their
opinion previously filed as Exhibit 5.2).
24.1 Powers of Attorney.*
25.1 Form T-1 Statement of Eligibility of The Bank of New York to act
as trustee under the Indenture.*
25.2 Form T-1 Statement of Eligibility of The Bank of New York to act
as trustee under the Amended and Restated Trust Agreement.*
25.3 Form T-1 Statement of Eligibility of The Bank of New York to act
as trustee under the Capital Securities Guarantee Agreement.*
</TABLE>
- --------
*Previously filed.
II-6
<PAGE>
EXHIBIT 1.1
$150,000,000
% Convertible Trust Preferred Securities
UNDERWRITING AGREEMENT
June [ ], 1998
<PAGE>
UNDERWRITING AGREEMENT
June [__], 1998
SBC WARBURG DILLON READ INC.
CIBC OPPENHEIMER CORP.
as Managing Underwriters
535 Madison Avenue
New York, New York 10022
Dear Sirs:
CNB Capital Trust I (the "Trust"), a statutory business trust created
under the Business Trust Act (the "Delaware Act") of the State of Delaware, and
CNB Bancshares, Inc., a corporation organized under the laws of the State of
Indiana (the "Company"), propose to sell to you and the other underwriters named
in Schedule A to this Agreement (the "Underwriters"), for whom you are acting as
managing underwriters (the "Managing Underwriters"), an aggregate of 6,000,000
shares of its [ ]% Shared Preference Redeemable Securities (liquidation amount
$25.00 per Share Preference Redeemable Security) (the "Firm Capital
Securities"). In addition, the Trust and the Company propose to grant to the
Underwriters an option to purchase up to an additional 900,000 Capital
Securities on the terms and for the purposes set forth in Section 1 (the "Option
Capital Securities"). The Firm Capital Securities and the Option Capital
Securities, if purchased, are hereinafter collectively called the "Capital
Securities."
The Capital Securities will be guaranteed by the Company with respect
to distributions and amounts payable upon liquidation or redemption of such
Capital Securities (the "Guarantee") pursuant to the Guarantee Agreement (the
"Guarantee Agreement"), to be entered into between the Company and The Bank of
New York, as trustee (the "Guarantee Trustee"), for the benefit of holders from
time to time of the Capital Securities. The Company will be the owner of all of
the beneficial ownership interests represented by the common securities (the
"Common Securities") of the Trust. Proceeds from the sale of Capital Securities
to the Underwriters and from the concurrent sale of Common Securities to the
Company will be used to purchase [ ]% Convertible Subordinated Debentures,
due [ ] (the "Debentures") of the Company. The Debentures will be
issued by the Company pursuant to an Indenture (the "Indenture"), to be entered
into between the Company and The Bank of New York, as trustee (the "Debenture
Trustee"). This Agreement, the Indenture, the Debentures, the Trust Agreement
(as defined in Section 3(h)) and the Guarantee Agreement are referred to
collectively as the "Operative Documents". Copies of the Operative Documents,
in substantially final form, have been delivered to each of the Underwriters.
<PAGE>
-2-
The Company and the Trust have filed, in accordance with the
provisions of the Securities Act of 1933, as amended, and the rules and
regulations thereunder (collectively called the "Act"), with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-3,
including a prospectus relating to the Capital Securities and the shares (the
"Shares") of common stock, $1 stated value per share, of the Company (the
"Common Stock") issuable by the Company upon conversion of the Capital
Securities and the Debentures, which incorporates by reference documents which
the Company has filed or will file in accordance with the provisions of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (collectively called the "Exchange Act"). The Company and the Trust
have furnished to you, for use by the Underwriters and by dealers, copies of one
or more preliminary prospectuses and the documents incorporated by reference
therein (each thereof, including the documents incorporated therein by
reference, being herein called a "Preliminary Prospectus") relating to the
Capital Securities and the Shares. Except where the context otherwise requires,
the registration statement, as amended when it becomes effective, including all
documents filed as a part thereof or incorporated by reference therein, and
including information (if any) contained in a prospectus subsequently filed with
the Commission pursuant to Rule 424(b) under the Act and deemed to be a part of
the registration statement at the time of effectiveness pursuant to Rule 430(A)
under the Act, is herein called the "Registration Statement", and the
prospectus, including all documents incorporated therein by reference, in the
form filed by the Company and the Trust with the Commission pursuant to Rule
424(b) under the Act or, if no such filing is required, the form of final
prospectus included in the Registration Statement at the time it became
effective, is herein called the "Prospectus".
The Trust, the Company and the Underwriters agree as follows:
1. Sale and Purchase: Upon the basis of the warranties and
representations and the other terms and conditions herein set forth, the Trust
and the Company agree to sell to the respective Underwriters and each of the
Underwriters, severally and not jointly, agrees to purchase, the respective
number of Capital Securities set forth opposite the name of such Underwriter in
Schedule A attached hereto.
In addition, the Trust and the Company grant to the Underwriters an
option to purchase up to 900,000 Option Capital Securities. Such option is
granted solely for the purpose of covering over-allotments in the sale of
Capital Securities and is exercisable as provided in Section 2 hereof. Option
Capital Securities shall be purchased severally for the account of the
Underwriters in proportion to the number of Firm Capital Securities set opposite
the name of such Underwriters in Schedule A hereto. The respective purchase
obligations of each Underwriter with respect to the Option Capital Securities
shall be
<PAGE>
-3-
adjusted by you so that no Underwriter shall be obligated to purchase Option
Capital Securities other than in integral multiples of 100.
The price of both the Firm Capital Securities and any Option Capital
Securities shall be 100% of the aggregate liquidation amount thereof, plus
accrued distributions, if any, from June [ ], 1998 to the Delivery Date (as
defined in Section 2 hereof).
As compensation to the Underwriters for their commitment hereunder,
the Company will, on the applicable Delivery Date pay to you, for the accounts
of the several Underwriters, an amount equal to ___% of the aggregate
liquidation amount of the Capital Securities to be delivered by the Company and
the Trust hereunder on such Delivery Date.
The Trust and the Company are advised by you that the Underwriters
intend (i) to make a public offering of their respective portions of the Capital
Securities as soon after the effective date of the Registration Statement as in
your judgment is advisable and (ii) initially to offer the Capital Securities
upon the terms set forth in the Prospectus.
2. Payment and Delivery: Delivery of and payment for the Capital
Securities shall be made at the office of Simpson Thacher & Bartlett at 425
Lexington Avenue, New York, New York at 10:00 A.M., New York City time, on the
third full business day following the date of this Agreement or at such other
date or place as shall be determined by agreement between you, the Trust and the
Company. This date and time are sometimes referred to as the "First Delivery
Date". On the First Delivery Date, the Trust shall deliver or cause to be
delivered to you for the account of each Underwriter against payment to or upon
the order of the Trust of the purchase price in Federal or other funds
immediately available in New York City, the Capital Securities in the form of
one or more permanent global securities in definitive form (the "Global
Securities") deposited with the Property Trustee as custodian for the Depository
Trust Company ("DTC") and registered in the name of Cede & Co., as nominee for
DTC. Interests in any permanent Global Securities will be held only in book-
entry form through DTC. Time shall be of the essence, and delivery at the time
and place specified pursuant to this Agreement is a further condition of the
obligation of each Underwriter hereunder.
At any time on or before the thirtieth day after the date of this
Agreement the option granted in Section 1 may be exercised by written notice
being given by you to the Company. Such notice shall set forth the aggregate
number of Option Capital Securities as to which the option is being exercised
and the date and time when the Option Capital Securities are to be delivered;
provided, however, that this date and time shall not be earlier than the First
Delivery Date nor earlier than the second business day after the date on which
the option shall have been exercised nor later than the fifth business day
<PAGE>
-4-
after the date on which the option shall have been exercised. The date and time
the Option Capital Securities are delivered are sometimes referred to as the
"Second Delivery Date" and the First Delivery Date and the Second Delivery Date
are sometimes each referred to as a "Delivery Date".
Delivery of and payment for the Option Capital Securities shall be
made at the place specified in the first sentence of the first paragraph of this
Section 2 (or at such other place as shall be determined by agreement between
you and the Company on behalf of the Trust) at 10:00 A.M., New York City time,
on the Second Delivery Date. On the Second Delivery Date, the Trust shall
deliver or cause to be delivered the Option Capital Securities to you for the
account of each Underwriter against payment to or upon the order of the Trust of
the purchase price by wire transfer of immediately available funds to such
account as the Company shall specify on behalf of the Trust. Time shall be of
the essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligation of each Underwriter
hereunder. Upon delivery, the Option Capital Securities shall be in the form of
one or more global Option Capital Securities registered in the name of Cede &
Co., as nominee of DTC.
On each Delivery Date, the Company will pay, or cause to be paid, the
commission payable on such Delivery Date to the Underwriters under the
penultimate paragraph of Section 1 by wire transfer in immediately available
funds to such account as the Representatives shall specify.
3. Representations and Warranties of the Trust and the Company: The
Trust and the Company, jointly and severally, represent and warrant to each of
the Underwriters that:
(a) On the date the Registration Statement became effective (the
"Effective Date") the Registration Statement complied, and on the date of
the Prospectus, on the date any post-effective amendment to the
Registration Statement shall become effective, on the date any supplement
or amendment to the Prospectus is filed with the Commission and at the
Delivery Date, the Registration Statement and the Prospectus (and any
amendment thereof or supplement thereto) will comply, in all material
respects, with the applicable provisions of the Act and the Exchange Act.
The Registration Statement did not, as of the Effective Date, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading; and on the other dates referred to above, neither
the Registration Statement nor the Prospectus, nor any amendment thereof or
supplement thereto, will contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements
<PAGE>
-5-
therein not misleading. When any Preliminary Prospectus was first filed
with the Commission (whether filed as part of the Registration Statement or
any amendment thereto or pursuant to Rule 424(a) of the Act) and when any
amendment thereof or supplement thereto was first filed with the
Commission, such Preliminary Prospectus as amended or supplemented complied
in all material respects with the applicable provisions of the Act and did
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein not misleading; provided, however, that the Company
and the Trust make no warranty or representation with respect to any
statement contained in the Registration Statement or the Prospectus in
reliance upon and in conformity with information concerning the
Underwriters and furnished in writing by or on behalf of any Underwriter
through you to the Company expressly for use in the Registration Statement
or the Prospectus.
(b) The documents incorporated by reference in the Registration
Statement and the Prospectus, when they were filed with the Commission,
conformed in all material respects to the requirements of the Exchange Act,
and none of such documents, when read together with the other information
in the Prospectus, at the time the Registration Statement became effective
and at the Delivery Date, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary to make the statements made therein not misleading.
(c) As of the date of this Agreement, the Company has an authorized
capitalization as set forth under the heading entitled "Actual" in the
section of the Registration Statement and the Prospectus entitled
"Capitalization" and, as of the Delivery Date the Company shall have an
authorized capitalization as set forth under the heading entitled "As
Adjusted" in the section of the Registration Statement and the Prospectus
entitled "Capitalization"; all of the issued and outstanding shares of
capital stock of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable; the Company is duly
registered as a bank holding company under the Bank Holding Company Act of
1956, as amended (the BHC Act); the Company has been duly incorporated and
is validly existing as a corporation under the laws of the State of
Indiana, with full power and authority to own its properties and conduct
its business as described in the Registration Statement and the Prospectus,
to execute and deliver the relevant Operative Documents and to issue and
sell the Debentures and to issue Shares upon conversion of the Capital
Securities as herein contemplated.
(d) The Company and each of its subsidiaries (the "Subsidiaries") are
duly qualified or licensed by in each jurisdiction in which they conduct
their
<PAGE>
-6-
respective businesses and in which the failure, individually or in the
aggregate, to be so licensed or qualified could have a material adverse
effect on the operations, business or condition of the Company and its
Subsidiaries, taken as a whole; and the Company and each of its
Subsidiaries are in compliance in all material respects with the laws,
orders, rules, regulations and directives issued or administered by such
jurisdictions;
(e) The deposit accounts of the Company's bank and savings association
subsidiaries are insured by the Bank Insurance Fund of the Federal Deposit
Insurance Corporation ("FDIC") or the Savings Association Insurance Fund of
the FDIC to the fullest extent permitted by law and the rules and
regulations of the FDIC, and no proceedings for the termination of such
insurance are pending or threatened.
(f) Neither the Company nor any of its Subsidiaries is in breach of,
or in default under (nor has any event occurred which with notice, lapse of
time, or both would constitute a breach of, or default under), (i) its
respective charter or by-laws or (ii) in the performance or observance of
any obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, bank loan or credit agreement or other
agreement or instrument to which the Company or any of its Subsidiaries is
a party or by which any of them is bound (except, in the case of clause
(ii), where such breach or default does not have a material adverse effect
on the operations, business or condition of the Company and its
Subsidiaries, taken as a whole), and the execution, delivery and
performance of the Operative Documents by the Company and the Trust and the
issuance of the Capital Securities, the Debentures and the Shares and
consummation of the transactions contemplated hereby and thereby will not
conflict with, or result in any breach of or constitute a default under
(nor constitute any event which with notice, lapse of time, or both would
constitute a breach of, or default under), any provisions of the charter or
by-laws of the Company or any of its Subsidiaries or under any provision of
any license, indenture, mortgage, deed of trust, bank loan or credit
agreement or other agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which any of them or their respective
properties may be bound or affected, or under any federal, state, local or
foreign law, regulation or rule or any decree, judgment or order applicable
to the Company or any of its Subsidiaries.
(g) The Capital Securities and the Common Securities have been duly
and validly authorized and, when issued and delivered against payment
therefor as provided herein and in the Prospectus, will be duly and validly
issued, fully paid and non-assessable; and the Capital Securities and the
Common Securities, when issued and delivered, will conform in all material
respects to the descriptions
<PAGE>
-7-
thereof contained in the Prospectus; the Shares initially issuable upon
conversion of the Capital Securities have been duly authorized and validly
reserved for issuance upon conversion of the Capital Securities and are
free of statutory and contractual preemptive rights and are sufficient in
number to meet current conversion requirements, and such Shares, when so
issued upon such conversion in accordance with the terms of the Indenture
and Trust Agreement, will be duly and validly issued and fully paid and
nonassessable, with no personal liability attaching to the ownership
thereof.
(h) The Indenture has been duly authorized, and when duly executed by
the proper officers of the Company (assuming due execution and delivery by
the Indenture Trustee) and delivered by the Company will constitute a valid
and binding agreement of the Company enforceable against the Company in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing; and the
Debentures have been duly authorized and, when duly executed,
authenticated, issued and delivered as contemplated in the Indenture, will
constitute valid and binding obligations of the Company entitled to the
benefits of the Indenture and enforceable in accordance with their terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing; and the Debentures, when issued and delivered,
will conform in all material respects to the description thereof contained
in the Prospectus.
(i) The Trust has been duly created and is validly existing as a
statutory business trust in good standing under the Delaware Act with the
trust power and authority to own property and conduct its business as
described in the Prospectus, and has conducted and will conduct no business
other than the transactions contemplated by this Agreement as described in
the Prospectus; the Trust is not a party to or bound by any agreement or
instrument other than this Agreement, the Amended and Restated Trust
Agreement (the " Trust Agreement") among the Company, The Bank of New York,
as property trustee (the "Property Trustee"), The Bank of New York
(Delaware), as Delaware trustee (the "Delaware Trustee") and the
individuals named therein as the Administrative Trustees (the
"Administrative Trustees", and together with the Property Trustee and the
Delaware Trustees, the "Trustees"), and the agreements and instruments
contemplated by the Trust Agreement and described in the Prospectus; the
Trust has no liabilities or
<PAGE>
-8-
obligations other than those arising out of the transactions contemplated
by this Agreement and the agreements and instruments contemplated by the
Trust Agreement and described in the Prospectus; and the Trust is not a
party to or subject to any action, suit or proceeding of any nature.
(j) The Trust Agreement has been duly authorized by the Company and,
when duly executed and delivered by the Company and the Trustees, will be a
valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting the rights of creditors generally,
general equitable principles (whether considered in a proceeding in equity
or at law) and an implied covenant of good faith and fair dealing, and will
conform in all material respects to the description thereof contained in
the Prospectus. Each of the Administrative Trustees is an employee of the
Company and has been duly authorized by the Company to serve in such
capacity and to execute and deliver the Trust Agreement.
(k) The Guarantee Agreement has been duly authorized and, when duly
executed and delivered by the proper officers of the Company and the
Guarantee Trustee, will constitute a valid and legally binding agreement of
the Company enforceable against the Company in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing; and the Guarantee Agreement, when executed and
delivered, will conform in all material respects to the description thereof
contained in the Prospectus.
(l) This Agreement has been duly authorized, executed and delivered by
each of the Company and the Trust.
(m) The capital stock of the Company, including the Shares, conform in
all material respects to the description thereof contained in the
Registration Statement and Prospectus.
(n) No approval, authorization, consent or order of or filing with any
national, state or local governmental or regulatory commission, board,
body, authority or agency is required in connection with the execution,
delivery and performance by the Company and the Trust of the Operative
Documents or the issuance and sale of the Capital Securities and the Shares
as contemplated hereby other than as may be required under the Act and the
Exchange Act and any
<PAGE>
-9-
necessary qualification under the securities or blue sky laws of the
various jurisdictions in which the Capital Securities and the Shares are
being offered by the Underwriters.
(o) KPMG Peat Marwick LLP, whose reports on the consolidated financial
statements of the Company and its Subsidiaries are filed with the
Commission as part of the Registration Statement and Prospectus, are
independent public accountants as required by the Act and the applicable
published rules and regulations thereunder;
(p) Each of the Company and its Subsidiaries has all necessary
licenses, authorizations, consents and approvals and has made all necessary
filings required under any federal, state, local or foreign law, regulation
or rule, and has obtained all necessary authorizations, consents and
approvals from other persons, in order to conduct its respective business;
neither the Company nor any of its Subsidiaries is in violation of, or in
default under, any such license, authorization, consent or approval or any
federal, state, local or foreign law, regulation or rule or any decree,
order or judgment applicable to the Company or any of its Subsidiaries the
effect of which could have a material adverse effect on the Company and its
Subsidiaries taken as a whole.
(q) All legal or governmental proceedings, contracts or documents of a
character required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement have
been so described or filed as required.
(r) There are no actions, suits or proceedings pending or threatened
against the Company or any of its Subsidiaries or any of their respective
properties, at law or in equity, or before or by any federal, state, local
or foreign governmental or regulatory commission, board, body, authority or
agency which could result in a judgment, decree or order having a material
adverse effect on the business, condition, prospects or property of the
Company and its Subsidiaries taken as a whole.
(s) The audited financial statements included in the Registration
Statement and the Prospectus present fairly the consolidated financial
position of the Company and its Subsidiaries as of the dates indicated and
the consolidated results of operations and changes in financial position of
the Company and its Subsidiaries for the periods specified; such financial
statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis during the periods
involved.
<PAGE>
-10-
(t) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, and except as may be
otherwise stated in the Registration Statement or Prospectus, there has not
been (A) any material and unfavorable change, financial or otherwise, in
the business, properties, prospects, regulatory environment, results of
operations or condition (financial or otherwise), present or prospective,
of the Company and its Subsidiaries taken as a whole, (B) any transaction,
which is material to the Company and its Subsidiaries taken as a whole,
contemplated or entered into by the Company or either of its Subsidiaries
or (C) any obligation, contingent or otherwise, directly or indirectly,
incurred by the Company or any of its Subsidiaries which is material to the
Company and its Subsidiaries taken as a whole.
4. Certain Covenants of the Trust and the Company: The Trust and
the Company hereby agree:
(a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Capital Securities and the Shares for offering
and sale under the securities or blue sky laws of such states as you may
designate and to maintain such qualifications in effect as long as required
for the distribution of the Capital Securities and the Shares, provided
that the Trust and the Company shall not be required to qualify as a
foreign corporation or to consent to the service of process under the laws
of any such state (except service of process with respect to the offering
and sale of the Capital Securities and the Shares); and to promptly advise
you of the receipt by the Trust or the Company of any notification with
respect to the suspension of the qualification of the Capital Securities or
the Shares for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose;
(b) to make available to you in New York City, not later than 10:00
A.M. New York City time on the day following the execution and delivery of
this Agreement, and thereafter from time to time to furnish to the
Underwriters, as many copies of the Prospectus (or of the Prospectus as
amended or supplemented if the Company or the Trust shall have made any
amendments or supplements thereto after the effective date of the
Registration Statement) as the Underwriters may request for the purposes
contemplated by the Act;
(c) to advise you promptly and (if requested by you) to confirm such
advice in writing, (i) when the Registration Statement has become effective
and when any post effective amendment thereto becomes effective and (ii) if
Rule 430A under the Act is used, when the Prospectus is filed with the
Commission pursuant to Rule 424(b) under the Act (which the Company and the
Trust agree to file not
<PAGE>
-11-
later than 10:00 A.M. New York City time on the day following the execution
and delivery of this Agreement);
(d) to advise you promptly, confirming such advice in writing, of any
request by the Commission for amendments or supplements to the Registration
Statement or Prospectus or for additional information with respect thereto,
or of notice of institution of proceedings for, or the entry of a stop
order suspending the effectiveness of the Registration Statement and, if
the Commission should enter a stop order suspending the effectiveness of
the Registration Statement, to make every reasonable effort to obtain the
lifting or removal of such order as soon as possible; to advise you
promptly of any proposal to amend or supplement the Registration Statement
or Prospectus including by filing any documents that would be incorporated
therein by reference and to file no such amendment or supplement to which
you shall object in writing;
(e) to furnish to you and, upon request, to each of the other
Underwriters for a period of five years from the date of this Agreement (i)
copies of any reports or other communications which the Company shall send
to its stockholders or shall from time to time publish or publicly
disseminate, (ii) copies of all annual, quarterly and current reports filed
with the Commission on Forms 10-K, 10-Q and 8-K, or such other similar form
as may be designated by the Commission, and (iii) such other information as
you may reasonably request regarding the Company or its Subsidiaries;
(f) to advise the Underwriters promptly of the happening of any event
known to the Company or the Trust within the time during which a prospectus
relating to the Capital Securities and the Shares is required to be
delivered under the Act which, in the judgment of the Company, would
require the making of any change in the Prospectus then being used, or in
the information incorporated therein by reference, so that the Prospectus
would not include an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, and, during such
time, to prepare and furnish, at the Company's expense, to the Underwriters
promptly such amendments or supplements to such Prospectus as may be
necessary to reflect any such change and to furnish to you a copy of such
proposed amendment or supplement before filing any such amendment or
supplement with the Commission;
(g) to make generally available to its security holders in the manner
contemplated by Rule 158 under the Act, and to deliver to you, an earnings
statement of the Company (which will satisfy the provisions of Section
11(a) of the
<PAGE>
-12-
Act) covering a period of twelve months beginning after the effective date
of the Registration Statement, as soon as is reasonably practicable after
the termination of such twelve-month period;
(h) to furnish to you three signed copies of the Registration
Statement, as initially filed with the Commission, and of all amendments
thereto (including all exhibits thereto and documents incorporated by
reference therein) and sufficient conformed copies of the foregoing (other
than exhibits) for distribution of a copy to each of the other
Underwriters;
(i) to furnish to you as early as practicable prior to the time of
purchase, but no later than two business days prior thereto, a copy of the
latest available unaudited interim consolidated financial statements, if
any, of the Company and its Subsidiaries which have been read by the
Company's independent certified public accountants, as stated in their
letter to be furnished pursuant to Section 6(b) of this Agreement;
(j) to apply the net proceeds from the sale of the Capital Securities
and Debentures in the manner set forth under the caption "Use of Proceeds"
in the Prospectus;
(k) to pay all expenses, fees and taxes (other than any transfer taxes
and fees and disbursements of counsel for the Underwriters except as set
forth under Section 5 hereof and (iii) and (iv) below) in connection with
(i) the preparation and filing of the Registration Statement, each
Preliminary Prospectus, the Prospectus, and any amendments or supplements
thereto, and the printing and furnishing of copies of each thereof to the
Underwriters and to dealers (including costs of mailing and shipment),
(ii) the preparation, issuance, execution, authentication and delivery of
the Capital Securities, Debentures and the Shares, (iii) the word
processing and/or printing of this Agreement, any and Powers of Attorney,
the Operative Documents, and the reproduction and/or printing and
furnishing of copies of each thereof to the Underwriters and to dealers
(including costs of mailing and shipment), (iv) the qualification of the
Capital Securities and the Shares for offering and sale under state laws
and the determination of their eligibility for investment under state law
as aforesaid (including the legal fees and filing fees and other
disbursements of counsel for the Underwriters) and the printing and
furnishing of copies of any blue sky surveys or legal investment surveys to
the Underwriters and to dealers, (v) any listing of the Capital Securities
and the Shares on any securities exchange or qualification for quotation in
NASDAQ and any registration thereof under the Exchange Act, (vi) any fees
payable to investment rating agencies with respect to the Capital
Securities, (vii) any filing for review of the public offering of
<PAGE>
-13-
the Capital Securities and the Shares by the National Association of
Securities Dealers, Inc. and (viii) the performance of the Trust and the
Company's other obligations hereunder;
(l) to furnish to you, before filing with the Commission subsequent to
the Effective Date and during the period referred to in paragraph (f)
above, a copy of any document proposed to be filed pursuant to Sections 13,
14 or 15(d) of the Exchange Act;
(m) (i) not to sell, contract to sell, grant any option to sell or
otherwise dispose of, directly or indirectly, any additional securities of
the Trust or the Company substantially similar to the Capital Securities or
securities convertible into or exchangeable for similar securities or
warrants or other rights to purchase similar securities or permit the
registration under the Act of any similar securities, except for the
registration of the Capital Securities and the Shares and the sales to the
Underwriters pursuant to this Agreement, for a period of 90 days after the
date hereof, without the prior written consent of the Managing
Underwriters; and (ii) not to sell, contract to sell, grant any option to
sell or otherwise dispose of, directly or indirectly, any shares of Common
Stock or securities convertible into or exchangeable for Common Stock or
warrants or other rights to purchase Common Stock or permit the
registration under the Act of any shares of Common Stock, except for the
registration of the Capital Securities and the Shares and the sales to the
Underwriters pursuant to this Agreement and except for issuances of Common
Stock upon the exercise of outstanding options, warrants and debentures,
for a period of 90 days after the date hereof, without the prior written
consent of the Managing Underwriters;
(n) to use its best efforts to cause the Capital Securities and the
Shares to be listed on the New York Stock Exchange; and
(o) at any time that the number of authorized but unissued shares of
Common Stock (or shares of Common Stock held in treasury and available for
such purpose) shall be less than the aggregate number of shares of Common
Stock into which the Capital Securities then outstanding shall be
convertible, to take such action as is necessary to increase the number of
shares which the Company is authorized to issue so that the Company will
have a sufficient number of shares of Common Stock available for conversion
of the Capital Securities then outstanding.
5. Reimbursement of Underwriters' Expenses: If the Capital
Securities are not delivered for any reason other than the termination of this
Agreement pursuant to the first two paragraphs of Section 8 hereof or the
default by one or more of the
<PAGE>
-14-
Underwriters in its or their respective obligations hereunder, the Company shall
reimburse the Underwriters for all of their out-of-pocket expenses, including
the fees and disbursements of their counsel.
6. Conditions of Underwriters' Obligations: The several obligations
of the Underwriters hereunder are subject to the accuracy of the representations
and warranties on the part of the Trust and the Company on the date hereof and
on each Delivery Date, the performance by the Trust and the Company of their
obligations hereunder and to the following conditions:
(a) The Trust and the Company shall furnish to you an opinion of
Lewis, Rice and Fingersh, counsel for the Company, addressed to the
Underwriters and dated the time of purchase with reproduced copies thereof
for each of the other Underwriters, dated the Delivery Date and in form
satisfactory to Simpson Thacher & Bartlett, counsel for the Underwriters,
stating that:
(i) the Company is duly registered as a bank holding company under the
BHC Act and the Company has been duly incorporated and is validly
existing as a corporation under the laws of the State of Indiana, with
full corporate power and authority to own its properties and conduct
its business as described in the Registration Statement and the
Prospectus and to issue, sell and deliver the Debentures and the
Shares as herein contemplated; each of the Subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its respective jurisdiction of incorporation with
full corporate power and authority to own its respective properties
and to conduct its respective business;
(ii) the Company and its Subsidiaries are duly qualified or licensed
by each jurisdiction in which they conduct their respective businesses
and in which the failure, individually or in the aggregate, to be so
licensed or qualified could have a material adverse effect on the
operations, business or condition of the Company and its Subsidiaries
taken as a whole, and the Company and its Subsidiaries are duly
qualified, and are in good standing, in each jurisdiction in which
they own or lease real property or maintain an office and in which
such qualification is necessary;
(iii) this Agreement has been duly authorized, executed and delivered
by the Company and duly executed and delivered by the Trust;
(iv) the Trust Agreement has been duly authorized, executed and
delivered by the Company and duly executed and delivered by the Trust;
<PAGE>
-15-
(v) the Indenture has been duly authorized, executed and delivered by
the Company and (assuming due authorization, execution and delivery
thereof by the Indenture Trustee) constitutes a valid and binding
agreement of the Company enforceable against the Company in accordance
with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing; and
the Debentures have been duly authorized, executed, issued and
delivered by the Company as contemplated in the Indenture and
(assuming due authentication by the Indenture Trustee) constitute
valid and binding obligations of the Company entitled to the benefits
of the Indenture and enforceable in accordance with their terms,
subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing;
(vi) the Guarantee Agreement has been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution
and delivery by the Guarantee Trustee, constitutes a valid and legally
binding obligation of the Company enforceable against the Company in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith
and fair dealing;
(vii) the Shares initially issuable upon conversion of the Capital
Securities and the Debentures have been duly authorized and validly
reserved for issuance upon conversion of the Capital Securities and
the Debentures and are free of statutory and contractual preemptive
rights and are sufficient in number to meet current conversion
requirements, and such Shares, when so issued upon such conversion in
accordance with the terms of the Trust Agreement and the Indenture,
will be duly and validly issued and fully paid and nonassessable, with
no personal liability attaching to the ownership thereof;
(viii) the statements contained in the Prospectus under the caption
"Certain United States Federal Income Tax Consequences" are accurate
in all
<PAGE>
-16-
material respects and constitute a fair summary of the matters set
forth therein;
(ix) the Capital Securities, the Common Stock, including the Shares
and the Debentures conform in all material respects to the
descriptions thereof contained in the Registration Statement and
Prospectus;
(x) the statements in the Prospectus under the captions "Description
of Capital Securities," "Description of Convertible Subordinated
Debentures," "Description of Guarantee," and "Relationship Among
Capital Securities, Subordinated Debentures and Guarantee," insofar as
such statements constitute a summary of documents referred to therein
or matters of law, are fair summaries in all material respects and
accurately present the information called for with respect to such
documents and matters.
(xi) neither the Trust nor the Company nor any subsidiary of the
Company is required to register as an investment company under the
Investment Company Act as a result of the transactions contemplated by
the Operative Documents;
(xii) the Company has an authorized capitalization as set forth in
the Registration Statement and the Prospectus; the outstanding shares
of capital stock of the Company have been duly and validly authorized
and issued and are fully paid, non-assessable and free of statutory
and contractual preemptive rights;
(xiii) the Registration Statement and the Prospectus (except as to
the financial statements and other financial and statistical data
contained or incorporated by reference therein, as to which such
counsel need express no opinion) comply as to form in all material
respects with the requirements of the Act and the Trust Indenture Act;
(xiv) the Registration Statement has become effective under the Act
and, to the best of such counsel's knowledge, no stop order
proceedings with respect thereto are pending or threatened under the
Act;
(xv) no approval, authorization, consent or order of or filing with
any national, state or local governmental or regulatory commission,
board, body, authority or agency is required in connection with the
execution, delivery and performance by the Company and the Trust of
the Operative Documents or issue or sale of the Capital Securities and
the Shares as contemplated
<PAGE>
-17-
hereby other than as may be required under the Act and the Exchange
Act (except such counsel need express no opinion as to any necessary
qualification under the state securities or blue sky laws of the
various jurisdictions in which the Capital Securities and the Shares
are being offered by the Underwriters);
(xvi) the execution, delivery and performance of the Operative
Documents and the issuance of the Capital Securities, Debentures and
the Shares and the consummation by the Company and the Trust of the
transactions contemplated hereby and thereby do not and will not
conflict with, or result in any breach of, or constitute a default
under (nor constitute any event which with notice, lapse of time, or
both would constitute a breach of or default under), any provisions of
the charter or bylaws of the Company or any of its Subsidiaries or
under any provision of any license, indenture, mortgage, deed of
trust, bank loan, credit agreement or other agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which
any of them or their respective properties may be bound or affected,
or under any law, regulation or rule or any decree, judgment or order
applicable to the Company or any of its Subsidiaries;
(xvii) to the best of such counsel's knowledge, neither the Company
nor any of its Subsidiaries is in breach of, or in default under (nor
has any event occurred which with notice, lapse of time, or both would
constitute a breach of, or default under), any license, indenture,
mortgage, deed of trust, bank loan or credit agreement or any other
agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which any of them or their respective
properties may be bound or affected or under any law, regulation or
rule or any decree, judgment or order applicable to the Company or any
of its Subsidiaries;
(xviii) to the best of such counsel's knowledge, there are no
contracts, licenses, agreements, leases or documents of a character
which are required to be filed as exhibits to the Registration
Statement or to be summarized or described in the Prospectus which
have not been so filed, summarized or described;
(xix) to the best of such counsel's knowledge, there are no actions,
suits or proceedings pending or threatened against the Company or any
of its Subsidiaries or any of their respective properties, at law or
in equity or before or by any commission, board, body, authority or
agency which are required to be described in the Prospectus but are
not so described;
<PAGE>
-18-
(xx) the documents incorporated by reference in the Registration
Statement and Prospectus, when they were filed (or, if an amendment
with respect to any such document was filed when such amendment was
filed), complied as to form in all material respects with the Exchange
Act (except as to the financial statements and other financial and
statistical data contained or incorporated by reference therein as to
which such counsel need express no opinion);
(xxi) the Indenture, the Guarantee and the Trust Agreement have each
been duly qualified under the Trust Indenture Act; and
(xxii) such counsel have participated in conferences with officers
and other representatives of the Company, representatives of the
independent public accountants of the Company and representatives of
the Underwriters at which the contents of the Registration Statement
and Prospectus were discussed and, although such counsel is not
passing upon and does not assume responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement or Prospectus (except as and to the extent
stated in subparagraphs (vii), (viii), (xi) and (xi) above), on the
basis of the foregoing nothing has come to the attention of such
counsel that causes them to believe that the Registration Statement or
any amendment thereto at the time such Registration Statement or
amendment became effective contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that
the Prospectus or any supplement thereto at the date of such
Prospectus or such supplement, and at all times up to and including
the Delivery Date contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to
the financial statements and schedules and other financial and
statistical data included in the Registration Statement or
Prospectus).
(b) The Trust and the Company shall furnish to you an opinion of
Richards Layton & Finger, as special Delaware counsel to the Trust and the
Company, addressed to the Underwriters and dated the Delivery Date with
reproduced copies thereof for each of the other Underwriters and in form
satisfactory to Simpson Thacher & Bartlett, counsel for the Underwriters,
stating that:
<PAGE>
-19-
(i) the Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Act, and all
filings required under the laws of the State of Delaware with respect
to the creation and valid existence of the Trust as a business trust
have been made;
(ii) under the Delaware Act and the Trust Agreement the Trust has
the trust power and authority to own its property and conduct its
business as set forth in the Trust Agreement;
(iii) the Trust Agreement constitutes a valid and binding
obligation of the Company and the Trustees, and is enforceable against
the Company and the Trustees in accordance with its terms, subject, as
to enforcement, to the effect upon the Trust Agreement of (i)
bankruptcy, insolvency, moratorium, receivership, reorganization,
liquidation, fraudulent transfer and other similar laws relating to
the rights and remedies of creditors generally, (ii) principles of
equity, including applicable law relating to fiduciary duties
(regardless of whether considered and applied in a proceeding in
equity or at law), and (iii) the effect of applicable public policy on
the enforceability of provisions relating to indemnification or
contribution;
(iv) under the Delaware Act and the Trust Agreement, the Trust
has the trust power and authority (i) to execute and deliver, and to
perform its obligations under, the Operative Documents and (ii) to
issue and perform its obligations under the Capital Securities and the
Common Securities;
(v) under the Delaware Act and the Trust Agreement, the execution
and delivery by the Trust of this Agreement, and the performance by
the Trust of its obligations hereunder, have been duly authorized by
all necessary trust action on the part of the Trust;
(vi) the Capital Securities have been duly authorized by the
Trust Agreement and are duly and validly issued and, subject to the
qualifications set forth herein, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust and are
entitled to the benefits of the Trust Agreement. The holders of the
Capital Securities, as beneficial owners of the Trust, will 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. Such counsel may
note that the holders of Capital Securities may be obligated, pursuant
to the Trust Agreement, (i) to provide indemnity and/or security in
connection with and pay taxes or governmental charges arising from
transfers or exchanges
<PAGE>
-20-
of certificates of Capital Securities and the issuance of replacement
certificates of Capital Securities, and (ii) to provide security or
indemnity in connection with requests of or directions to the Property
Trustee to exercise its rights and powers under the Trust Agreement;
(vii) under the Delaware Act and the Trust Agreement, the
issuance of the Capital Securities is not subject to preemptive
rights;
(viii) the issuance and sale by the Trust of the Capital
Securities and Common Securities, the execution, delivery and
performance by the Trust of the Operative Documents, the consummation
by the Trust of the transactions contemplated hereby and compliance by
the Trust with its obligations hereunder, and the performance by the
Company, as depositor, of its obligations under the Trust Agreement
(A) do not violate (i) any of the provisions of the certificate of
trust of the Trust or the Trust Agreement or (ii) any applicable
Delaware law or administrative regulation (except that such counsel
need express no opinion with respect to the securities laws of the
State of Delaware) and (B) do not require any consent, approval,
license, authorization or validation of, or filing or registration
with, any Delaware legislative, administrative or regulatory body
under the laws or administrative regulations of the State of Delaware
(except that such counsel need express no opinion with respect to the
securities laws of the state of Delaware); and
(ix) assuming that the Trust derives no income from or in
connection with sources within the State of Delaware, is deemed to be
a grantor trust under the Internal Revenue Code of 1986, as amended,
and has no assets, activities (other than maintaining the Delaware
Trustee and the filing of documents with the Secretary of State of the
State of Delaware) or employees in the State of Delaware, the holders
of the Capital Securities (other than those holders of Capital
Securities who reside or are domiciled in the State of Delaware) will
have no liability for income taxes imposed by the State of Delaware
solely as a result of their participation in the Trust, and the Trust
will not be liable for any income tax imposed by the State of
Delaware.
(c) You shall have received from KPMG Peat Marwick LLP, letters dated,
respectively, as of the date of this Agreement and the Delivery Date, as
the case may be, and addressed to the Underwriters (with reproduced copies
for each of the other Underwriters) in the forms heretofore approved by the
Managing Underwriters.
<PAGE>
-21-
(d) You shall have received the opinion (addressed to the
Underwriters) of Simpson Thacher & Bartlett, counsel for the Underwriters,
dated the Delivery Date, with respect to, as applicable, the incorporation
of the Company, the Registration Statement, the Prospectus (other than
financial statements and other financial and statistical data included
therein) and other related matters as the Managing Underwriters may
reasonably request, and such counsel shall have received such documents and
information as they may reasonably request to enable them to pass upon such
matters.
(e) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) under the Act, not later than 10:00 A.M. on the day
following the execution and delivery of this Agreement.
(f) Prior to the Delivery Date (i) no stop order with respect to the
effectiveness of the Registration Statement shall have been issued under
the Act or proceedings initiated under Section 8(d) or 8(e) of the Act;
(ii) the Registration Statement and all amendments thereto, or
modifications thereof, if any, shall not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and
(iii) the Prospectus and all amendments or supplements thereto, or
modifications thereof, if any, shall not contain an untrue statement of
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they are made, not misleading.
(g) Between the time of execution of this Agreement and the Delivery
Date (i) no material and unfavorable change, financial or otherwise (other
than as referred to in the Registration Statement and Prospectus), in the
business, condition or prospects of the Company and its Subsidiaries taken
as a whole shall occur or become known and (ii) no transaction which is
material and unfavorable to the Company shall have been entered into by the
Company or any of its Subsidiaries.
(h) The Company will deliver to you a certificate, dated the Delivery
Date, of two of its executive officers to the effect that the
representations and warranties of the Company set forth in this Agreement
and the conditions set forth in paragraph (f) and paragraph (g) have been
met and are true and correct as of such date.
(i) You shall have received signed letters, dated the date of this
Agreement, from each of the directors and officers of the Company and
stockholders of the Company designated by you to the effect that such
persons shall
<PAGE>
-22-
not sell, contract to sell, grant any option to sell or otherwise dispose
of, directly or indirectly, any shares of Common Stock of the Company or
securities convertible into or exchangeable for Common Stock or warrants or
other rights to purchase Common Stock for a period of 90 days after the
date of the Prospectus without the prior written consent of the Managing
Underwriters.
(j) The Company shall have furnished to you such other documents and
certificates as to the accuracy and completeness of any statement in the
Registration Statement and the Prospectus as of the Delivery Date as you
may reasonably request.
(k) The Company and the Trust shall perform such of their obligations
under this Agreement as are to be performed by the terms hereof at or
before the Delivery Date or before the Second Delivery Date, as the case
may be.
(l) The Capital Securities and the Shares shall have been approved for
listing on the New York Stock Exchange, subject only to notice of issuance
at or prior to the Delivery Date.
(m) Between the time of execution of this Agreement and the Delivery
Date, there shall not have occurred any downgrading, nor shall any notice
have been given of (i) any intended or potential downgrading or (ii) any
review or possible change that does not indicate an improvement, in the
rating accorded any securities of or guaranteed by the Company by any
"nationally recognized statistical rating organization", as that term is
defined in Rule 436(g) (2) promulgated under the Act.
7. Effective Date of Agreement; Termination: This Agreement shall
become effective when the parties hereto have executed and delivered this
Agreement.
The obligations of the several Underwriters hereunder shall be subject
to termination in the absolute discretion of you or any group of Underwriters
(which may include you) which has agreed to purchase in the aggregate at least
50% of the Capital Securities if, since the time of execution of this Agreement
or the respective dates as of which information is given in the Registration
Statement and Prospectus, (a) there has been any material adverse and
unfavorable change, financial or otherwise (other than as referred to in the
Registration Statement and Prospectus), in the business, condition or prospects
of the Company and its Subsidiaries taken as a whole, which would, in your
reasonable professional judgment or in the reasonable professional judgment of
such group of Underwriters, make it impracticable to market the Capital
Securities, or (b) there shall have occurred any downgrading, or any notice
shall have been given of (i) any intended or
<PAGE>
-23-
potential downgrading or (ii) any review or possible change that does not
indicate an improvement, in the rating accorded any securities of or guaranteed
by the Company by any "nationally recognized statistical rating organization",
as that term is defined in Rule 436(g)(2) promulgated under the Act or, if, at
any time prior to the Delivery Date trading in securities on the New York Stock
Exchange shall have been suspended or minimum prices shall have been established
on the New York Stock Exchange, or if a banking moratorium shall have been
declared either by the United States or New York State authorities, or if the
United States shall have declared war in accordance with its constitutional
processes or there shall have occurred any material outbreak or escalation of
hostilities or other national or international calamity or crisis of such
magnitude in its effect on the financial markets of the United States as, in
your reasonable professional judgment or in the reasonable professional judgment
of such group of Underwriters, to make it impracticable to market the Capital
Securities.
If you or any group of Underwriters elect to terminate this Agreement
as provided in this Section 7, the Company and each other Underwriter shall be
notified promptly by letter or telegram.
If the sale to the Underwriters of the Capital Securities, as
contemplated by this Agreement, is not carried out by the Underwriters for any
reason permitted under this Agreement or if such sale is not carried out because
the Company or the Trust shall be unable to comply with any of the terms of this
Agreement, the Company shall not be under any obligation or liability under this
Agreement (except to the extent provided in Sections 4(k), 5 and 9 hereof), and
the Underwriters shall be under no obligation or liability to the Company or the
Trust under this Agreement (except to the extent provided in Section 9 hereof)
or to one another hereunder.
8. Increase in Underwriters' Commitments: If any Underwriter shall
default in its obligation to take up and pay for the Capital Securities to be
purchased by it hereunder and if the number of Capital Securities which all
Underwriters so defaulting shall have agreed but failed to take up and pay for
does not exceed 10% of the total number of Capital Securities, the non-
defaulting Underwriters shall take up and pay for (in addition to the number of
Capital Securities they are obligated to purchase pursuant to Section 1 hereof)
the number of Capital Securities agreed to be purchased by all such defaulting
Underwriters, as hereinafter provided. Such Capital Securities shall be taken
up and paid for by such non-defaulting Underwriter or Underwriters in such
amount or amounts as you may designate with the consent of each Underwriter so
designated or, in the event no such designation is made, such Capital Securities
shall be taken up and paid for by all non-defaulting Underwriters pro rata in
proportion to the number of Capital Securities set opposite the names of such
non-defaulting Underwriters in Schedule A.
<PAGE>
-24-
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company and the Trust agree with the non-defaulting Underwriters
that they will not sell any Capital Securities hereunder unless all of the
Capital Securities are purchased by the Underwriters (or by substituted
Underwriters selected by you with the approval of the Company or selected by the
Company with your approval).
If a new Underwriter or Underwriters are substituted by the
Underwriters or by the Company for a defaulting Underwriter or Underwriters in
accordance with the foregoing provision, the Company or you shall have the right
to postpone the Delivery Date for a period not exceeding five business days in
order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term Underwriter as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 8 with like effect as if
such substituted Underwriter had originally been named in Schedule A.
9. Indemnity by the Company, the Trust and the Underwriters:
(a) The Trust and the Company agree, jointly and severally, to
indemnify, defend and hold harmless each Underwriter, its directors and
officers, and any person who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, from and against any
loss, expense, liability or claim (including the reasonable cost of
investigation) which, jointly or severally, any such Underwriter or person may
incur under the Act, the Exchange Act or otherwise, insofar as such loss,
expense, liability or claim arises out of or is based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company or the Trust) or in a Prospectus (the term
Prospectus for the purpose of this Section 9 being deemed to include any
Preliminary Prospectus, the Prospectus and the Prospectus as amended or
supplemented by the Company or the Trust), or arises out of or is based upon any
omission or alleged omission to state a material fact required to be stated in
either such Registration Statement or Prospectus or necessary to make the
statements made therein not misleading, except insofar as any such loss,
expense, liability or claim arises out of or is based upon any untrue statement
or alleged untrue statement of a material fact contained in and in conformity
with information furnished in writing by any Underwriter through you to the
Company expressly for use with reference to such Underwriter in such
Registration Statement or such Prospectus or arises out of or is based upon any
omission or alleged omission to state a material fact in connection with such
information required to be stated in either such Registration Statement or
Prospectus or necessary to make such information not misleading.
<PAGE>
-25-
If any action is brought against an Underwriter or any such person in
respect of which indemnity may be sought against the Company and the Trust
pursuant to the foregoing paragraph, such Underwriter or such person shall
promptly notify the Company and the Trust in writing of the institution of such
action and the Company and the Trust shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to such indemnified
party and payment of all fees and expenses, provided, however, that the omission
to so notify the Company or the Trust shall not relieve the Company or the Trust
from any liability which they may have to any Underwriter or any such person or
otherwise. Such Underwriter or controlling person shall have the right to
employ its or their own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of such Underwriter or such person unless
the employment of such counsel shall have been authorized in writing by the
Company and the Trust in connection with the defense of such action or the
Company and the Trust shall not have employed counsel to have charge of the
defense of such action or such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from or additional to those available to the Company and the Trust
(in which case the Company and the Trust shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses shall be borne by the Company and the Trust
and paid as incurred (it being understood, however, that the Company and the
Trust shall not be liable for the expenses of more than one separate counsel in
any one action or series of related actions in the same jurisdiction
representing the indemnified parties who are parties to such action). The
Company and the Trust shall not be liable for any settlement of any such claim
or action effected without their written consent, but if settled with the
written consent of the Company and the Trust, the Company and the Trust agree to
indemnify and hold harmless any Underwriter and any such person from and against
any loss or liability by reason of such settlement. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second sentence of this paragraph, then the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 60 business days after receipt by such indemnifying party
of the aforesaid request, (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying
party at least 30 days' prior notice of its intention to settle. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional
<PAGE>
-26-
release of such indemnified party from all liability on claims that are the
subject matter of such proceeding.
(b) Each Underwriter severally agrees to indemnify, defend and hold
harmless the Trust and the Company, their directors and officers and any person
who controls the Trust or the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act from and against any loss, expense,
liability or claim (including the reasonable cost of investigation) which,
jointly or severally, the Trust or the Company or any such person may incur
under the Act or otherwise, insofar as such loss, expense, liability or claim
arises out of or is based upon any untrue statement or alleged untrue statement
of a material fact contained in and in conformity with information furnished in
writing by or on behalf of such Underwriter through you to the Company expressly
for use with reference to such Underwriter in the Registration Statement (or in
the Registration Statement as amended by any post-effective amendment thereof by
the Company or the Trust) or in a Prospectus, or arises out of or is based upon
any omission or alleged omission to state a material fact in connection with
such information required to be stated either in such Registration Statement or
Prospectus or necessary to make such information not misleading.
If any action is brought against the Trust or the Company or any such
person in respect of which indemnity may be sought against any Underwriter
pursuant to the foregoing paragraph, the Trust or the Company or such person
shall promptly notify such Underwriter in writing of the institution of such
action and such Underwriter shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses, provided, however, that the omission to so
notify such Underwriter shall not relieve such Underwriter, from any liability
which they may have to the Trust or the Company or any such person or otherwise.
The Trust or the Company or such person shall have the right to employ its own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of the Trust or the Company or such person unless the employment of
such counsel shall have been authorized in writing by such Underwriter shall not
have employed counsel to have charge of the defense of such action or such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to such Underwriter (in which case such Underwriter shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties, but such Underwriter may employ counsel and participate in the defense
thereof but the fees and expenses of such counsel shall be at the expense of
such Underwriter) in any of which events such fees and expenses shall be borne
by such Underwriter and paid as incurred (it being understood, however, that
such Underwriter shall not be liable for the expenses of more than one separate
counsel in any one action or series of related actions in the same jurisdiction
representing the indemnified
<PAGE>
-27-
parties who are parties to such action). No Underwriter shall be liable for any
settlement of any such claim or action effected without the written consent of
such Underwriter, but if settled with the written consent of such Underwriter,
such Underwriter agrees to indemnify and hold harmless the Trust and the Company
and any such person from and against any loss or liability by reason of such
settlement. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
sentence of this paragraph, then the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 60 business days after receipt
by such indemnifying party of the aforesaid request, (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement and (iii) such indemnified party
shall have given the indemnifying party at least 30 days' prior notice of its
intention to settle. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
(c) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsections (a) and (b) of this
Section 9 in respect of any losses, expenses, liabilities or claims referred to
therein, then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, expenses, liabilities or claims
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Trust and the Company on the one hand and the Underwriters on
the other hand from the offering of the Capital Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Trust and the
Company on the one hand and of the Underwriters on the other in connection with
the statements or omissions which resulted in such losses, expenses, liabilities
or claims, as well as any other relevant equitable considerations. The relative
benefits received by the Trust and the Company on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total proceeds from the offering (net of underwriting discounts and commissions
but before deducting expenses) received by the Trust and the Company bear to the
underwriting discounts and commissions received by the Underwriters. The
relative fault of the Trust and the Company on the one hand and of the
Underwriters on the other shall be determined by reference to, among other
things, whether the untrue statement or alleged untrue statement of a material
fact or omission or alleged omission relates to information supplied by the
Trust or the Company on the one
<PAGE>
-28-
hand or by the Underwriters and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims, damages
and liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any claim or action.
(d) The Trust, the Company and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 9 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in subsection (c)
above. Notwithstanding the provisions of this Section 9, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Capital Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 9 are several in proportion to their respective
underwriting commitments and not joint.
(e) The indemnity and contribution agreements contained in this
Section 9 and the covenants, warranties and representations of the Company and
the Trust contained in this Agreement shall remain in full force and effect
regardless of any investigation made by or on behalf of any Underwriter, its
directors or officers or any person who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, or by or on
behalf of the Trust or the Company, their directors and officers or any person
who controls the Trust or the Company within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, and shall survive any termination of this
Agreement or the issuance and delivery of the Capital Securities. The Company
and the Trust and each Underwriter agree promptly to notify the others of the
commencement of any litigation or proceeding against it and, in the case of the
Company and the Trust, against any of the Trust or the Company's officers and
directors, in connection with the issuance and sale of the Capital Securities,
or in connection with the Registration Statement or Prospectus.
10. Notices: Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by telegram and, if to
the Underwriters, shall be sufficient in all respects if delivered or sent to
SBC Warburg Dillon Read Inc., 535 Madison Avenue, New York, N.Y. 10022,
Attention: Syndicate Department and, if to the Company or the Trust, shall be
sufficient in all respects if
<PAGE>
-29-
delivered to the Company at the offices of the Company at [ ,
Attention: ].
11. Construction: This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York. The section headings in
this Agreement have been inserted as a matter of convenience of reference and
are not a part of this Agreement.
12. Parties at Interest: The Agreement herein set forth has been and
is made solely for the benefit of the Underwriters and the Trust and the Company
and the controlling persons, directors and officers referred to in Section 9
hereof, and their respective successors, assigns, executors and administrators.
No other person, partnership, association or corporation (including a purchaser,
as such purchaser, from any of the Underwriters) shall acquire or have any right
under or by virtue of this Agreement.
13. Counterparts: This Agreement may be signed by the parties in
counterparts which together shall constitute one and the same agreement among
the parties.
14. Miscellaneous:
(a) SBC Warburg Dillon Read Inc., an indirect, wholly owned subsidiary of
Swiss Bank Corporation, is not a bank and is separate from any affiliated
bank, including any U.S. branch or agency of Swiss Bank Corporation.
Because SBC Warburg Dillon Read Inc. is a separately incorporated entity,
it is solely responsible for its own contractual obligations and
commitments, including obligations with respect to sales and purchases of
securities. Securities sold, offered or recommended by SBC Warburg Dillon
Read Inc. are not deposits, are not insured by the Federal Deposit
Insurance Corporation, are not guaranteed by a branch or agency, and are
not otherwise an obligation or responsibility of a branch or agency. A
lending affiliate of SBC Warburg Dillon Read Inc. may have lending
relationships with issuers of securities underwritten or privately placed
by SBC Warburg Dillon Read Inc. To the extent required under the
securities laws, prospectuses and other disclosure documents for securities
underwritten or privately placed by SBC Warburg Dillon Read Inc. will
disclose the existence of any such lending relationships and whether the
proceeds of the issue will be used to repay debts owed to affiliates of SBC
Warburg Dillon Read Inc. Without the prior written approval of the Company,
the U.S. branches and agencies of Swiss Bank Corporation will not share
with SBC Warburg Dillon Read Inc. any non-public information concerning
you, and SBC Warburg Dillon Read Inc. will not share any non-public
information received from the Company with any of such U.S. branches and
agencies of Swiss Bank Corporation.
<PAGE>
-30-
(b) CIBC Oppenheimer Corp., an indirect, wholly owned subsidiary of
Canadian Imperial Bank of Commerce, is not a bank and is separate from any
affiliated bank, including any U.S. branch or agency of Canadian Imperial
Bank of Commerce. Because CIBC Oppenheimer Corp. is a separately
incorporated entity, it is solely responsible for its own contractual
obligations and commitments, including obligations with respect to sales
and purchases of securities. Securities sold, offered or recommended by
CIBC Oppenheimer Corp. are not deposits, are not insured by the Federal
Deposit Insurance Corporation, are not guaranteed by a branch or agency,
and are not otherwise an obligation or responsibility of a branch or
agency. A lending affiliate of CIBC Oppenheimer Corp. may have lending
relationships with issuers of securities underwritten or privately placed
by CIBC Oppenheimer Corp. To the extent required under the securities
laws, prospectuses and other disclosure documents for securities
underwritten or privately placed by CIBC Oppenheimer Corp. will disclose
the existence of any such lending relationships and whether the proceeds of
the issue will be used to repay debts owed to affiliates of CIBC
Oppenheimer Corp. Without the prior written approval of the Company, the
U.S. branches and agencies of Canadian Imperial Bank of Commerce will not
share with CIBC Oppenheimer Corp. any non-public information concerning the
Company, and CIBC Oppenheimer Corp. will not share any non-public
information received from the Company you with any of such U.S. branches
and agencies of Swiss Bank Corporation.
<PAGE>
-31-
If the foregoing correctly sets forth the understanding between the
Company and the Underwriters, please so indicate in the space provided below for
the purpose, whereupon this letter and your acceptance shall constitute a
binding agreement between the Company and the Underwriters, severally.
Very truly yours,
CNB CAPITAL TRUST I
By:
------------------------------
Title:
CNB BANCSHARES, INC.
By:
------------------------------
Title:
Accepted and agreed to as
of the date first above
written, on behalf of
themselves and the other
several Underwriters
named in Schedule A
SBC WARBURG DILLON READ INC.
CIBC OPPENHEIMER CORP.
By: SBC WARBURG DILLON READ INC.
By:
-------------------------------
Title:
By: CIBC OPPENHEIMER CORP.
By:
-------------------------------
Title:
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Underwriter Number of Capital Securities
- ----------- ----------------------------
<S> <C>
SBC WARBURG DILLON READ INC.
CIBC OPPENHEIMER CORP.
STIFEL, NICOLAUS & COMPANY INCORPORATED
HOWE BARNES INVESTMENTS, INC.
NATCITY INVESTMENTS, INC.
KEEFE, BRUYETTE & WOODS, INC.
WEDGEWOOD PARTNERS, INC.
Total........................
</TABLE>
<PAGE>
EXHIBIT 4.1
CNB BANCSHARES, INC.
---------------------------
INDENTURE
Dated as of _______________, 1998
<PAGE>
Reconciliation and tie between the Trust Indenture Act of 1939 (including
cross-references to provisions of Sections 310 to and including 317 which,
pursuant to Section 318(c) of the Trust Indenture Act of 1939, as amended by the
Trust Reform Act of 1990, are a part of and govern the Indenture whether or not
physically contained therein) and the Indenture, dated as of ___________, 1998.
<TABLE>
<CAPTION>
Trust Indenture Act Selection Indenture Section
- ----------------------------- -----------------
<S> <C>
(S) 310 (a) (1), (2) and (5)............................. 6.9
(a) (3).......................................... Not Applicable
(a) (4).......................................... Not Applicable
(b).............................................. 6.8, 6.10
(c).............................................. Not Applicable
(S) 311 (a).............................................. 6.13(a)
(b).............................................. 6.13(b)
(b) (2).......................................... 7.3(a) (2)
(S) 312 (a).............................................. 7.1, 7.2(a)
(b).............................................. 7.2(b)
(c).............................................. 7.2(c)
(S) 313 (a).............................................. 7.3(a)
(b).............................................. 7.3(b)
(c).............................................. 7.3(a), 7.3(b)
(d).............................................. 7.3(c)
(S) 314 (a) (1), (2) and (3)............................. 7.4
(a) (4).......................................... 10.5
(b).............................................. Not Applicable
(c) (1).......................................... 1.2
(c) (2).......................................... 1.2
(c) (3).......................................... Not Applicable
(d).............................................. Not Applicable
(e).............................................. 1.2
(f).............................................. Not Applicable
(S) 315 (a).............................................. 6.1(a)
(b).............................................. 6.2, 7.3(a) (6)
(c).............................................. 6.1(b)
(d).............................................. 6.1(c)
(d) (1).......................................... 6.1(a) (1)
(d) (2).......................................... 6.1(c) (2)
(d) (3).......................................... 6.1(c) (3)
(e).............................................. 5.14
(S) 316 (a).............................................. 1.1
(a) (1) (A)...................................... 5.12
(a) (1) (B)...................................... 5.13
(a) (2).......................................... Not Applicable
(b).............................................. 5.8
(c).............................................. 1.4(f)
(S) 317 (a) (1).......................................... 5.3
(a) (2).......................................... 5.4
(b).............................................. 10.3
(S) 318 (a).............................................. 1.7
</TABLE>
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Junior Subordinated Indenture.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION........ 1
SECTION 1.1. Definitions................................................. 1
SECTION 1.2. Compliance Certificate and Opinions......................... 8
SECTION 1.3. Forms of Documents Delivered to Trustee..................... 9
SECTION 1.4. Acts of Holders............................................. 9
SECTION 1.5. Notices, Etc. to Trustee and Company........................ 11
SECTION 1.6. Notice to Holders; Waiver................................... 11
SECTION 1.7. Conflict with Trust Indenture Act........................... 12
SECTION 1.8. Effect of Headings and Table of Contents.................... 12
SECTION 1.9. Successors and Assigns...................................... 12
SECTION 1.10. Separability Clause........................................ 12
SECTION 1.11. Benefits of Indenture...................................... 12
SECTION 1.12. Governing Law.............................................. 12
SECTION 1.13. Non-Business Days.......................................... 12
ARTICLE II. SECURITY FORMS................................................ 13
SECTION 2.1. Forms Generally............................................. 13
SECTION 2.2. Form of Face of Security.................................... 13
SECTION 2.3. Form of Reverse of Security................................. 17
SECTION 2.4. Additional Provisions Required in Global Security........... 19
SECTION 2.5. Form of Trustee's Certificate of Authentication............. 20
SECTION 2.6. Form of Conversion Notice................................... 21
ARTICLE III. SECURITIES................................................... 22
SECTION 3.1. Title and Terms; Paying Agent............................... 22
SECTION 3.2. Denominations............................................... 23
SECTION 3.3. Execution, Authentication, Delivery and Dating.............. 23
SECTION 3.4. Temporary Securities........................................ 23
SECTION 3.5. Registration, Transfer and Exchange......................... 24
SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities............ 25
SECTION 3.7. Payment of Interest; Interest Rights Preserved.............. 26
SECTION 3.8. Persons Deemed Owners....................................... 27
SECTION 3.9. Cancellation................................................ 27
SECTION 3.10. Computation of Interest.................................... 28
SECTION 3.11. Deferrals of Interest Payment Dates........................ 28
SECTION 3.12. Right of Set-Off........................................... 29
SECTION 3.13. Agreed Tax Treatment....................................... 29
SECTION 3.14. Shortening or Extension of Stated Maturity................. 29
SECTION 3.15. CUSIP Numbers.............................................. 29
ARTICLE IV. SATISFACTION AND DISCHARGE.................................... 29
SECTION 4.1. Satisfaction and Discharge of Indenture..................... 29
SECTION 4.2. Application of Trust Money.................................. 30
ARTICLE V. REMEDIES....................................................... 31
SECTION 5.1. Events of Default........................................... 31
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.......... 32
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement
by Trustee................................................. 33
SECTION 5.4. Trustee May File Proofs of Claim........................... 33
SECTION 5.5. Trustee May Enforce Claims Without Possession of
Securities................................................. 34
SECTION 5.6. Application of Money Collected............................. 34
SECTION 5.7. Limitation on Suits........................................ 35
SECTION 5.8. Unconditional Right of Holders to Receive Principal,
Premium and Interest; Direct Action by Holders of Capital
Securities................................................. 35
SECTION 5.9. Restoration of Rights and Remedies......................... 35
SECTION 5.10. Rights and Remedies Cumulative............................. 36
SECTION 5.11. Delay or Omission Not Waiver............................... 36
SECTION 5.12. Control by Holders......................................... 36
SECTION 5.13. Waiver of Past Defaults.................................... 36
SECTION 5.14. Undertaking for Costs...................................... 37
SECTION 5.15. Waiver of Usury, Stay or Extension Laws.................... 37
ARTICLE VI. TRUSTEE....................................................... 37
SECTION 6.1. Certain Duties and Responsibilities........................ 38
SECTION 6.2. Notice of Defaults......................................... 38
SECTION 6.3. Certain Rights of Trustee.................................. 39
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities..... 40
SECTION 6.5. May Hold Securities........................................ 40
SECTION 6.6. Money Held in Trust........................................ 40
SECTION 6.7. Compensation and Reimbursement............................. 40
SECTION 6.8. Disqualification; Conflicting Interests.................... 41
SECTION 6.9. Corporate Trustee Required; Eligibility.................... 41
SECTION 6.10. Resignation and Removal; Appointment of Successor.......... 41
SECTION 6.11. Acceptance of Appointment by Successor..................... 42
SECTION 6.12. Merger, Conversion, Consolidation or Succession to
Business................................................... 43
SECTION 6.13. Preferential Collection of Claims Against Company.......... 43
SECTION 6.14. Appointment of Authenticating Agent........................ 43
ARTICLE VII. HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY............ 45
SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders.. 45
SECTION 7.2. Preservation of Information, Communications to Holders..... 45
SECTION 7.3. Reports by Trustee......................................... 45
SECTION 7.4. Reports by Company......................................... 46
ARTICLE VIII. CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE........ 46
SECTION 8.1. Company May Consolidate, Etc., Only on Certain Terms....... 46
SECTION 8.2. Successor Corporation Substituted.......................... 47
ARTICLE IX. SUPPLEMENTAL INDENTURES....................................... 47
SECTION 9.1. Supplemental Indentures without Consent of Holders......... 47
SECTION 9.2. Supplemental Indentures with Consent of Holders............ 48
SECTION 9.3. Execution of Supplemental Indentures....................... 49
SECTION 9.4. Effect of Supplemental Indentures.......................... 49
SECTION 9.5. Conformity with Trust Indenture Act........................ 49
SECTION 9.6. Reference in Securities to Supplemental Indentures......... 49
ARTICLE X. COVENANTS...................................................... 50
SECTION 10.1. Payment of Principal, Premium and Interest................. 50
SECTION 10.2. Maintenance of Office or Agency............................ 50
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SECTION 10.3. Money for Security Payments to be Held in Trust........... 50
SECTION 10.4. Statement as to Compliance................................ 51
SECTION 10.5. Waiver of Certain Covenants............................... 52
SECTION 10.6. Payment of Trust Costs and Expenses....................... 52
SECTION 10.7. Additional Covenants...................................... 52
ARTICLE XI. REDEMPTION OF SECURITIES...................................... 53
SECTION 11.1. Applicability of Article.................................. 53
SECTION 11.2. Election to Redeem; Notice to Trustee..................... 53
SECTION 11.3. Selection of Securities to be Redeemed.................... 53
SECTION 11.4. Notice of Redemption...................................... 54
SECTION 11.5. Deposit of Redemption Price............................... 54
SECTION 11.6. Payment of Securities Called for Redemption............... 55
SECTION 11.7. Right of Redemption of Securities......................... 55
ARTICLE XII. CONVERSION OF SECURITIES..................................... 55
SECTION 12.1. Conversion Rights......................................... 55
SECTION 12.2. Conversion Procedures..................................... 56
SECTION 12.3. Conversion Ratio Adjustments.............................. 58
SECTION 12.4. Reclassification, Consolidation, Merger or Sale of Assets. 61
SECTION 12.5. Notice of Adjustments of Conversion Ratio................. 61
SECTION 12.6. Prior Notice of Certain Events............................ 62
SECTION 12.7. Certain Defined Terms..................................... 62
SECTION 12.8. Dividend or Interest Reinvestment Plans................... 63
SECTION 12.9. Certain Additional Rights................................. 63
SECTION 12.10. Trustee Not Responsible for Determining Conversion
Ratio or Adjustments...................................... 64
ARTICLE XIII. SUBORDINATION OF SECURITIES................................. 64
SECTION 13.1. Securities Subordinate to Senior Debt..................... 64
SECTION 13.2. Payment Over of Proceeds Upon Dissolution, Etc............ 64
SECTION 13.3. Prior Payment to Senior Debt Upon Acceleration of
Securities................................................ 65
SECTION 13.4. No Payment When Senior Debt in Default.................... 66
SECTION 13.5. Payment Permitted if no Default........................... 66
SECTION 13.6. Subrogation to Rights of Holders of Senior Debt........... 67
SECTION 13.7. Provisions Solely to Define Relative Rights............... 67
SECTION 13.8. Trustee to Effectuate Subordination....................... 67
SECTION 13.9. No Waiver of Subordination Provisions..................... 67
SECTION 13.10. Notice to Trustee......................................... 68
SECTION 13.11. Reliance on Judicial Order or Certificate of
Liquidating Agent......................................... 68
SECTION 13.12. Trustee Not Fiduciary for Holders of Senior Debt.......... 69
SECTION 13.13. Rights of Trustee as Holder of Senior Debt;
Preservation of Trustee's Rights.......................... 69
SECTION 13.14. Article Applicable to Paying Agents....................... 69
SECTION 13.15. Certain Conversions or Exchanges Deemed Payment........... 69
SECTION 13.16. Trust Moneys Not Subordinated............................. 69
</TABLE>
iii
<PAGE>
INDENTURE, dated as of _____________, 1998 between CNB BANCSHARES, INC., an
Indiana corporation (hereinafter called the "Company") having its principal
office at 20 N.W. Third Street, Evansville, Indiana 47739, and THE BANK OF NEW
YORK, a New York banking corporation, as Trustee (hereinafter called the
"Trustee").
RECITALS
A. For its lawful corporate purposes, the Company has duly authorized the
execution and delivery of this Indenture to provide for the issuance of
securities to be known as its ____% Convertible Subordinated Debentures due 2028
(hereinafter referred to as the "Securities"), the form and substance of such
Securities and the terms, provisions and conditions thereof to be set forth as
provided in this Indenture.
B. CNB Capital Trust I, a Delaware statutory business trust (the
"Trust"), has offered to the public $__________ aggregate liquidation amount of
preferred interests in such Trust (the "Capital Securities") and proposes to
invest the proceeds from such offering, together with the proceeds of the
issuance and sale by the Trust to the Company of $_________ aggregate
liquidation amount of common interests in such Trust (the "Common Securities"
and collectively with the Capital Securities, the "Trust Securities"), in
$__________ aggregate principal amount of the Securities.
C. The Company has requested that the Trustee execute and deliver this
Indenture.
D. All requirements necessary to make this Indenture a valid instrument
in accordance with its terms, and to make the Securities, when executed by the
Company and authenticated and delivered by the Trustee, the valid obligations of
the Company, have been performed, and the execution and delivery of this
Indenture have been duly authorized in all respects.
E. To provide the terms and conditions upon which the Securities are to
be authenticated, issued and delivered, the Company has duly authorized the
execution of this Indenture.
F. All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the
premises and the purchase of the Securities by the Holders (as defined herein)
thereof, it is mutually covenanted and agreed, for the equal and proportionate
benefit of all of the Holders of the Securities, as follows:
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
<PAGE>
(1) The terms defined in this Article have the meanings assigned to them in
this Article, and include the plural as well as the singular;
(2) All other terms used herein which are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(3) All accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and the term "generally accepted accounting principles" with respect to any
computation required or permitted hereunder shall mean such accounting
principles which are generally accepted at the date or time of such computation;
provided, that when two or more principles are so generally accepted, it shall
mean that set of principles consistent with those in use by the Company; and
(4) The words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.
"Act" when used with respect to any Holder has the meaning specified in
Section 1.4.
"Additional Interest" means the interest, if any, that shall accrue on any
interest on the Securities the payment of which has not been made on the
applicable Interest Payment Date and which shall accrue at the rate of ____% per
annum compounded quarterly.
"Additional Taxes" means the sum of any additional taxes, duties and other
governmental charges to which the Trust has become subject from time to time as
a result of a Tax Event.
"Administrative Trustee" means each Person identified as an "Administrative
Trustee" in the Trust Agreement, solely in such Person's capacity as
Administrative Trustee of the Trust under such Trust Agreement and not in such
Person's individual capacity, or any successor administrative trustee appointed
as therein provided.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person; provided, however, the Trust shall not be
deemed to be an Affiliate of the Company. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 6.14 to act on behalf of the Trustee to authenticate Securities.
"Board of Directors" means either the board of directors of the Company or
any committee of the board duly authorized to act hereunder.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors, or such committee of the Board of Directors or officers of the
Company to which authority to act on behalf of the Board of Directors has been
delegated, and to be in full force and effect on the date of such certification,
and delivered to the Trustee.
2
<PAGE>
"Business Day" means any day other than (i) a Saturday or Sunday, (ii) a
day on which banking institutions in the City of New York are authorized or
required by law or executive order to remain closed, or (iii) a day on which the
Corporate Trust Office of the Trustee, or the principal office of the Property
Trustee under the Trust Agreement, is closed for business.
"Capital Securities" has the meaning specified in the Recitals of this
Indenture.
"Capital Treatment Event," with respect to the Trust, means the reasonable
determination by the Company that, as a result of any amendment to, or change
(including any proposed change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision thereof or therein, or as a
result of any official or administrative pronouncement or action or judicial
decision interpreting or applying such laws or regulations, which amendment or
change is effective or such proposed change, pronouncement, action or decision
is announced on or after the date of issuance of the Capital Securities, there
is more than an insubstantial risk that the Company will not be entitled to
treat an amount equal to the Liquidation Amount (as defined in the Trust
Agreement) of such Capital Securities as "Tier 1 Capital" (or the then
equivalent thereof) for purposes of the capital adequacy guidelines of the
Federal Reserve, as then in effect and applicable to the Company.
"Closing Prices" has the meaning specified in Section 12.7(a).
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or if at any time after the
execution of this 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" has the meaning specified in the Recitals of this
Indenture.
"Common Stock" means the common stock, no par value per share, of the
Company.
"Company" means the Person named as the "Company" in the first paragraph of
this Indenture until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Request" and "Company Order" mean, respectively, the written
request or order signed in the name of the Company by the Chairman of the Board
of Directors, its President or a Vice President, and by its Treasurer, an
Assistant Treasurer, its Secretary or an Assistant Secretary of the Company, and
delivered to the Trustee.
"Conversion Agent" means the Person appointed to act on behalf of the
holders of Capital Securities in effecting the conversion of Capital Securities
to Securities and Securities to Common Stock as and in the manner set forth it
the Trust Agreement and this Indenture.
"Conversion Ratio" has the meaning specified in Section 12.1.
"Conversion Request" means (a) the irrevocable request to be given by a
Holder to the Conversion Agent directing the Conversion Agent to convert the
Holder's Security into shares of Common Stock, and (b) the irrevocable request
to be given by a holder of Capital Securities to the Conversion Agent directing
the Conversion Agent to exchange such Capital Securities for Securities and to
convert such Securities into Common Stock on behalf of such holder.
3
<PAGE>
"Corporate Trust Office" means the principal office of the Trustee at which
at any particular time its corporate trust business shall be administered, which
at the date hereof is 101 Barclay Street, Floor 21 West, New York, New York
10286.
"Corporation" includes a corporation, association, company, joint-stock
company or business trust.
"Current Market Price" has the meaning specified in Section 12.3(f).
"Debt" means, with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed, (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses, (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person, (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business), (v) every capital lease obligation of such Person, (vi) every
obligation of such Person for claims in respect of derivative products,
including interest rate, foreign exchange rate and commodity forward contracts,
options and swaps and similar arrangements, and (vii) every obligation of the
type referred to in clauses (i) through (vi) of another Person and all dividends
of another Person the payment of which, in either case, such Person has
guaranteed or is responsible or liable for, directly or indirectly, as obligor
or otherwise.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Depositary" means, with respect to the Securities issuable or issued in
whole or in part in the form of one or more Global Securities, the Person
designated as Depositary by the Company pursuant to this Indenture (or any
successor thereto).
"Distributions," with respect to the Trust Securities, means amounts
payable in respect of such Trust Securities as provided in the Trust Agreement
and referred to therein as "Distributions."
"Dollar" means the currency of the United States of America that, as at the
time of payment, is legal tender for the payment of public and private debts.
"Event of Default" has the meaning specified in Article V.
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 1.4(f).
"Extension Period" has the meaning specified in Section 3.11.
"Federal Reserve" means the Board of Governors of the Federal Reserve
System, as from time to time constituted, or if at any time after the execution
of this Indenture the Federal Reserve is not existing and performing the duties
now assigned to it, then the body performing such duties at such time.
4
<PAGE>
"Global Security" means a Security in the form prescribed in Section 2.4
evidencing all or part of the Securities, issued to the Depositary or its
nominee, and registered in the name of such Depositary or its nominee.
"Guarantee," with respect to the Trust Securities, means the guarantee by
the Company of Distributions on such Trust Securities to the extent provided in
the Guarantee Agreement.
"Guarantee Agreement," with respect to the Trust Securities, means the
Guarantee Agreement, dated as of _________________, 1998, between the Company
and The Bank of New York, as amended from time to time.
"Holder" means a Person in whose name a Security is registered in the
Securities Register.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Junior Subordinated Payment" has the meaning specified in Section 13.2.
"Maturity" when used with respect to the Securities means the date on which
the principal of the Securities becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in Section
5.1(3).
"NYSE" has the meaning specified in Section 12.3(f).
"Officers' Certificate" means a certificate signed by the Chairman of the
Board of Directors, the President or a Vice President, and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, and
delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company, and who shall be acceptable to the Trustee.
"Original Issue Date" means ________________, 1998.
"Outstanding" means, when used in reference to any Securities, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Securities for whose payment or redemption price money in the
necessary amount has been theretofore deposited with the Trustee or any Paying
Agent in trust for the Holders of such Securities; and
5
<PAGE>
(iii) Securities in substitution for or in lieu of which other Securities
have been authenticated and delivered or which have been paid pursuant to
Section 3.6, unless proof satisfactory to the Trustee is presented that any such
Securities are held by Holders in whose hands such Securities are valid, binding
and legal obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee actually knows to be so
owned shall be so disregarded. Securities so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or such other obligor. Upon the
written request of the Trustee, the Company shall furnish to the Trustee
promptly an Officers' Certificate listing and identifying all Securities, if
any, known by the Company to be owned or held by or for the account of the
Company or any other obligor on the Securities or any Affiliate of the Company
or such obligor, and, subject to the provisions of Section 6.1, the Trustee
shall be entitled to accept such Officers' Certificate as conclusive evidence of
the facts therein set forth and of the fact that all Securities not listed
therein are Outstanding for the purpose of any such determination.
"Paying Agent" means the Trustee or any Person authorized by the Company to
pay the principal of (or premium, if any) or interest on the Securities on
behalf of the Company.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment" means, with respect to the Securities, the place or
places where the principal of (and premium, if any) and interest on the
Securities are payable pursuant to Section 3.11.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in lieu of a lost, destroyed or
stolen Security shall be deemed to evidence the same debt as the lost, destroyed
or stolen Security.
"Proceeding" has the meaning specified in Section 13.2.
"Property Trustee" means the commercial bank or trust company identified as
the "Property Trustee" in the Trust Agreement, solely in its capacity as
Property Trustee of such Trust under such Trust Agreement and not in its
individual capacity, or its successor in interest in such capacity, or any
successor property trustee appointed as therein provided.
"Purchased Shares" has the meaning specified in Section 12.3(e).
"Redemption Date," when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price," when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
6
<PAGE>
"Regular Record Date" for the interest payable on any Interest Payment
Date, means (i) in the case of Securities represented by one or more Global
Securities, the Business Day next preceding such Interest Payment Date, and (ii)
in the case of Securities not represented by one or more Global Securities, the
date which is fifteen days next preceding such Interest Payment Date (whether or
not a Business Day).
"Responsible Officer" when used with respect to the Trustee means any
officer of the Trustee assigned by the Trustee from time to time to administer
its corporate trust matters.
"Rights Plan" means a plan of the Company, if any, providing for the
issuance by the Company to all holders of its Common Stock of rights entitling
the holders thereof to subscribe for or purchase shares of Common Stock or any
class or series of preferred stock of the Company, which rights (i) are deemed
to be transferred with such shares of Common Stock, (ii) are not exercisable,
and (iii) are also issued in respect of future issuances of Common Stock, in
each case until the occurrence of a specified event or events.
"Securities" or "Security" has the meaning specified in the Recitals to
this Indenture.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 3.5.
"Senior Debt" means the principal of (and premium, if any) and interest, if
any (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not such
claim for post-petition interest is allowed in such proceeding), on Debt of the
Company, whether incurred on or prior to the date of this Indenture or
thereafter incurred, unless, in the instrument creating or evidencing the same
or pursuant to which the same is outstanding, it is provided that such
obligations are not superior in right of payment to the Securities or to other
Debt which is pari passu with, or subordinated to, the Securities, provided,
however, that Senior Debt shall not be deemed to include (a) any Debt of the
Company which, when incurred and without respect to any election under Section
1111(b) of the Bankruptcy Reform Act of 1978, was without recourse to the
Company, (b) any Debt of the Company to any of its Subsidiaries, (c) Debt to any
employee of the Company, (d) Debt which by its terms is subordinated to trade
accounts payable or accrued liabilities arising in the ordinary course of
business to the extent that payments made to the holders of such Debt by the
holders of the Securities as a result of the subordination provisions of this
Indenture would be greater than such payments otherwise would have been (absent
giving effect to this clause (d)) as a result of any obligation of such holders
of such Debt to pay amounts over to the obligees on such trade accounts payable
or accrued liabilities arising in the ordinary course of business as a result of
subordination provisions to which such Debt is subject, and (e) any Securities.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.7.
"Stated Maturity" when used with respect to any Security or any installment
of principal thereof or interest thereon means the date specified pursuant to
the terms of such Security as the date on which the principal of such Security
or such installment of interest is due and payable, in the case of such
principal, as such date may be shortened as provided pursuant to the terms of
such Security and this Indenture.
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"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For purposes of this definition, "voting stock" means stock which ordinarily has
voting power for the election of directors, whether at all times or only so long
as no senior class of stock has such voting power by reason of any contingency.
"Tax Event" means the receipt by the Trust of an Opinion of Counsel (as
defined in the Trust Agreement) experienced in such matters to the effect that,
as a result of any amendment to, or change (including any announced proposed
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, or as a result of
any official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which proposed change, pronouncement or decision is announced on or after the
date of issuance of the Capital Securities, there is more than an insubstantial
risk that (i) the Trust is, or will be within 90 days of the date of such
Opinion of Counsel, subject to United States federal income tax with respect to
income received or accrued on the Securities, (ii) interest payable by the
Company on the Securities is not, or within 90 days of the date of such Opinion
of Counsel, will not be, deductible by the Company, in whole or in part, for
United States federal income tax purposes, or (iii) such Trust is, or will be
within 90 days of the date of such Opinion of Counsel, subject to more than a de
minimis amount of other taxes, duties or other governmental charges.
"Trading Day" has the meaning specified in Section 12.7(b).
"Trust" has the meaning specified in the second recital of this Indenture.
"Trust Agreement" means the Amended and Restated Trust Agreement between
the Company, as depositor, James J. Giancola and John R. Spruill, as
Administrative Trustees, The Bank of New York, as Property Trustee, and The Bank
of New York (Delaware), as Delaware Trustee, as amended from time to time.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include such successor Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C. (S)
77aaa-77bbb), as amended and as in effect on the date as of this Indenture,
except as provided in Section 9.5.
"Trust Securities" has the meaning specified in the Recitals of this
Indenture.
"Vice President," when used with respect to the Company means any duly
appointed vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
SECTION 1.2. Compliance Certificate and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent
(including covenants, compliance with which constitutes a condition precedent),
if any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions
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precedent (including covenants compliance with which constitute a condition
precedent), if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than the certificates provided
pursuant to Section 10.5) shall include:
(1) a statement that each individual signing such certificate or opinion has
read such covenant or condition and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has made or
caused to be made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such individual, such
condition or covenant has been complied with.
SECTION 1.3. Forms of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or covered
by an opinion of, any specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such Person, or
that they be so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and one or more
other such Persons as to other matters, and any such Person may certify or give
an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based, insofar
as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer or counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his or her certificate or
opinion is based are erroneous. Any Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel rendering such Opinion of Counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions, or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.4. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver or
other action provided by this Indenture to be given to or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent or proxy duly appointed in
writing; and, except as herein otherwise expressly provided, such action
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<PAGE>
shall become effective when such instrument or instruments is or are delivered
to the Trustee, and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent or proxy shall be sufficient for any purpose
of this Indenture and (subject to Section 6.1) conclusive in favor of the
Trustee and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
the certificate of any notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a Person acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority.
(c) The fact and date of the execution by any Person of any such instrument
or writing, or the authority of the Person executing the same, may also be
proved in any other manner which the Trustee deems sufficient and in accordance
with such reasonable rules as the Trustee may determine.
(d) The ownership of Securities shall be proved by the Securities Register.
(e) Any request, demand, authorization, direction, notice, consent, waiver or
other action by the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the transfer thereof
or in exchange therefor or in lieu thereof in respect of anything done, omitted
or suffered to be done by the Trustee or the Company in reliance thereon,
whether or not notation of such action is made upon such Security.
(f) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given, made or taken by
Holders of Securities, provided that the Company may not set a record date for,
and the provisions of this paragraph shall not apply with respect to, the giving
or making of any notice, declaration, request or direction referred to in the
next paragraph. If any record date is set pursuant to this paragraph, the
Holders of the relevant Outstanding Securities on such record date, and no other
Holders, shall be entitled to take the relevant action, whether or not such
Holders remain Holders after such record date, provided that no such action
shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of the relevant
Outstanding Securities on such record date. Nothing in this paragraph shall be
construed to prevent the Company from setting a new record date for any action
for which a record date has previously been set pursuant to this paragraph
(whereupon the record date previously set shall automatically and with no action
by any Person be cancelled and of no effect), and nothing in this paragraph
shall be construed to render ineffective any action taken by Holders of the
requisite principal amount of the relevant Outstanding Securities on the date
such action is taken. Promptly after any record date is set pursuant to this
paragraph, the Company, at its own expense, shall cause notice of such record
date, the proposed action by Holders and the applicable Expiration Date to be
given to the Trustee in writing and to each Holder of the relevant Securities in
the manner set forth in Section 1.6.
The Trustee may set any day as a record date for the purpose of determining
the Holders of Outstanding Securities entitled to join in the giving or making
of (i) any Notice of Default, (ii) any declaration of acceleration referred to
in Section 5.2, (iii) any request to institute proceedings referred
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to in Section 5.7(2), or (iv) any direction referred to in Section 5.12. If any
record date is set pursuant to this paragraph, the Holders of the Outstanding
Securities on such record date shall be entitled to join in such notice,
declaration, request or direction, whether or not such Holders remain Holders
after such record date, provided that no such action shall be effective
hereunder unless taken on or prior to the applicable Expiration Date by Holders
of the requisite principal amount of the Outstanding Securities on such record
date. Nothing in this paragraph shall be construed to prevent the Trustee from
setting a new record date for any action for which a record date has previously
been set pursuant to this paragraph (whereupon the record date previously set
shall automatically and with no action by any Person be cancelled and of no
effect), and nothing in this paragraph shall be construed to render ineffective
any action taken by Holders of the requisite principal amount of the Outstanding
Securities on the date such action is taken. Promptly after any record date is
set pursuant to this paragraph, the Trustee, at the Company's expense, shall
cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Company in writing and to each
Holder of the Securities in the manner set forth in Section 1.6.
With respect to any record date set pursuant to this Section, the party hereto
which sets such record dates may designate any day as the "Expiration Date" and
from time to time may change the Expiration Date to any earlier or later day,
provided that no such change shall be effective unless notice of the proposed
new Expiration Date is given to the other party hereto in writing, and to each
Holder of the Outstanding Securities in the manner set forth in Section 10.6, on
or prior to the existing Expiration Date. If an Expiration Date is not
designated with respect to any record date set pursuant to this Section 1.4, the
party hereto which set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
(g) Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any Security may do so with regard to all or any
part of the principal amount of such Security or by one or more duly appointed
agents each of which may do so pursuant to such appointment with regard to all
or any part of such principal amount.
SECTION 1.5. Notices, Etc. to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or Act
of Holders or other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with,
(1) the Trustee by any Holder, any holder of Capital Securities or the
Company shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Trustee at its Corporate Trust
Office, or
(2) the Company by the Trustee, any Holder or any holder of Capital
Securities shall be sufficient for every purpose (except as otherwise provided
in Section 5.1) hereunder if in writing and mailed, first class, postage
prepaid, to the Company addressed to it at the address of its principal office
specified in the first paragraph of this instrument or at any other address
previously furnished in writing to the Trustee by the Company.
SECTION 1.6. Notice to Holders; Waiver.
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Where this Indenture provides for notice to Holders of any event, such notice
shall be sufficiently given (unless otherwise herein expressly provided) if in
writing and mailed, first class postage prepaid, to each Holder affected by such
event, at the address of such Holder as it appears in the Securities Register,
not later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice. In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
SECTION 1.7. Conflict with Trust Indenture Act.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by any of Sections 310 to 317, inclusive, of the Trust Indenture
Act through operation of Section 318(c) thereof, such imposed duties shall
control.
SECTION 1.8. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 1.9. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind its
successors and assigns, whether so expressed or not.
SECTION 1.10. Separability Clause.
In case any provision of this Indenture or in the Securities shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.11. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall give
to any Person, other than the parties hereto and their successors and assigns,
the holders of Senior Debt, the Holders of the Securities and, to the extent
expressly provided in Sections 5.2, 5.8, 5.9, 5.11, 5.13, 9.1 and 9.2, the
holders of Capital Securities, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
SECTION 1.12. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF INDIANA, WITHOUT REGARD TO CONFLICTS OF
LAW PRINCIPLES THEREOF.
SECTION 1.13. Non-Business Days.
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In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or the Securities) payment of interest or
principal (and premium, if any) need not be made on such date, but may be made
on the next succeeding Business Day (and no interest shall accrue for the period
from and after such Interest Payment Date, Redemption Date or Stated Maturity,
as the case may be, until such next succeeding Business Day) except that, if
such Business Day is in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business Day (in each case with the same force
and effect as if made on the Interest Payment Date or Redemption Date or at the
Stated Maturity).
ARTICLE II.
SECURITY FORMS
SECTION 2.1. Forms Generally.
The Securities and the Trustee's certificate of authentication shall be in
substantially the forms set forth in this Article II, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with applicable tax laws or the rules of any securities
exchange or automated quotation system on which the Securities may be listed or
traded or as may, consistently herewith, be determined by the officers executing
such Securities, as evidenced by their execution of the Securities.
The definitive Securities shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods, if required by any
securities exchange or automated quotation system on which the Securities may be
listed or traded, on a steel engraved border or steel engraved borders or may be
produced in any other manner permitted by the rules of any securities exchange
or automated quotation system on which the Securities may be listed or traded,
all as determined by the officers executing such Securities, as evidenced by
their execution of such Securities.
SECTION 2.2. Form of Face of Security.
CNB BANCSHARES, INC. CUSIP ____
__% Convertible Subordinated Debentures
No.____ $_________
CNB BANCSHARES, INC., a corporation organized and existing under the laws
of the state of Indiana (hereinafter called the "Company," which term includes
any successor corporation under the Indenture hereinafter referred to), for
value received, hereby promises to pay to , or registered assigns, the
principal sum of Dollars on __________ __, 2028. The Company further
promises to pay interest on said principal sum from , 1998 or from the
most recent interest payment date (each such date, an "Interest Payment Date")
on which interest has been paid or duly provided for, quarterly (subject to
deferral as set forth herein) in arrears on March 31, June 30, September 30 and
December 31 of each year, commencing September 30, 1998, at the rate of % per
annum, until the principal hereof shall have become due and payable, plus
Additional Interest, if any, until the principal hereof is paid or duly provided
for or made available for payment and on any overdue principal and (without
duplication and to the extent that payment of such interest is
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enforceable under applicable law) on any overdue installment of interest at the
rate of % per annum, compounded quarterly. The amount of interest payable for
any period shall be computed on the basis of twelve 30-day months and a 360-day
year. The amount of interest payable for any partial period shall be computed on
the basis of the number of days elapsed in a 360-day year of twelve 30-day
months. In the event that any date on which interest is payable on this Security
is not a Business Day, then a payment of the interest payable on such date shall
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), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on the date the payment was originally payable. A "Business
Day" shall mean any day other than (i) a Saturday or Sunday, (ii) a day on which
banking institutions in New York City are authorized or required by law or
executive order to remain closed, or (iii) a day on which the Corporate Trust
Office of the Trustee or the principal office of the Property Trustee under the
Trust Agreement hereinafter referred to for CNB Capital Trust I is closed for
business. The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date shall, as provided in the Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest installment, which shall be, in the case of Securities
represented by one or more Global Securities, the Business Day next preceding
such Interest Payment Date and, in the case of Securities not represented by one
or more Global Securities, the date which is fifteen days next preceding such
Interest Payment Date (whether or not a Business Day). Any such interest
installment not so punctually paid or duly provided for shall forthwith cease to
be payable to the Holder on such Regular Record Date and may either be paid to
the Person in whose name this Security (or one or more Predecessor Securities)
is registered at the close of business on a Special Record Date for the payment
of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities not less than ten days prior to such Special
Record Date, or be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange or automated quotation system
on which the Securities may be listed or traded, and upon such notice as may be
required by such exchange or self-regulatory organization, all as more fully
provided in the Indenture.
So long as no Event of Default has occurred and is continuing, the Company
shall have the right at any time during the term of this Security to defer
payment of interest on this Security, at any time or from time to time, for up
to 20 consecutive quarterly interest payment periods with respect to each
deferral period (each an "Extension Period"), during which Extension Periods the
Company shall have the right to make partial payments of interest on any
Interest Payment Date, and at the end of which the Company shall pay all
interest then accrued and unpaid (together with Additional Interest thereon to
the extent permitted by applicable law); provided, however, that no Extension
Period shall extend beyond the Stated Maturity of the principal of this
Security; provided, further, that during any such Extension Period, the Company
shall not, and shall not permit any Subsidiary of the Company to, (i) declare or
pay any dividends or distributions on or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock, or (ii)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt security of the Company that ranks pari passu with
or junior in interest to this Security, or (iii) make any guarantee payments
with respect to any guarantee by the Company of the debt securities of any
Subsidiary of the Company if such guarantee ranks pari passu with or junior in
interest to this Security (other than (a) dividends or distributions in the
Company's capital stock, (b) any declaration of a dividend in connection with
the implementation of a Rights Plan or the redemption or repurchase of any
rights distributed pursuant to a Rights Plan, (c) payments under the Guarantee
with respect to this Security, and (d) purchases of Common Stock related to the
issuance of Common Stock or rights under any of the Company's benefit plans for
its directors, officers or employees, related to the issuance of Common Stock or
rights under
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a dividend reinvestment and stock purchase plan, or related to the issuance of
Common Stock (or securities convertible or exchangeable for Common Stock) as
consideration in an acquisition transaction that was entered into prior to the
commencement of such Extension Period). Prior to the termination of any such
Extension Period, the Company may further defer the payment of interest,
provided that no Extension Period shall exceed 20 consecutive quarters or extend
beyond the Stated Maturity of the principal of this Security. Upon the
termination of any such Extension Period and upon the payment of all accrued and
unpaid interest and any Additional Interest then due, the Company may elect to
begin a new Extension Period, subject to the above requirements. No interest
shall be due and payable during an Extension Period except at the end thereof.
The Company shall give the Holder of this Security and the Trustee notice of its
election to begin any Extension Period at least one Business Day prior to the
next succeeding Interest Payment Date on which interest on this Security would
be payable but for such deferral or, with respect to the Securities issued to
the Trust, so long as such Securities are held by the Trust, prior to the
earlier of (i) the next succeeding date on which Distributions on the Capital
Securities would be payable but for such deferral, or (ii) the date the
Administrative Trustees are required to give notice to any securities exchange
or other applicable self-regulatory organization or to holders of such Capital
Securities of the record date or the date such Distributions are payable, but in
any event not less than one Business Day prior to such record date.
Payment of principal of (and premium, if any) and interest on this Security
shall be made at the office or agency of the Company maintained for that purpose
in the United States, in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts; provided, however, that at the option of the Company payment of interest
may be made, except in the case of Securities in global form, (i) by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Securities Register, or (ii) by wire transfer in immediately
available funds at such place and to such account as may be designated in
writing at least fifteen days before the relevant Interest Payment Date by the
Person entitled thereto as specified in the Securities Register.
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinate and subject in right of payments to the prior payment
in full of all Senior Debt, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such actions as may be
necessary or appropriate to effectuate the subordination so provided, and (c)
appoints the Trustee his attorney-in-fact for any and all such purposes. Each
Holder hereof, by his acceptance hereof, waives all notice of the acceptance of
the subordination provisions contained herein and in the Indenture by each
holder of Senior Debt, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
CNB BANCSHARES, INC.
By:
--------------------------
[President or Vice President]
Attest:
------------------------------
[Secretary or Assistant Secretary]
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SECTION 2.3. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company, designated as its ____% Convertible Subordinated Debentures (herein
called the "Securities"), limited in aggregate principal amount to $__________,
issued under an Indenture, dated as of ____________, 1998 (herein called the
"Indenture"), between the Company and The Bank of New York, as Trustee (herein
called the "Trustee," which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Trustee, the Company and the Holders of
the Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered. All capitalized terms used but not defined in this
Security that are defined in the Indenture or in the Amended and Restated Trust
Agreement, dated as of _________, 1998 (the "Trust Agreement"), among CNB
Bancshares, Inc., as Depositor, and the Trustees named therein, shall have the
meanings assigned to them in the Indenture or the Trust Agreement, as the case
may be.
The Company may at any time, at its option, on or after _________, 2001,
and subject to the terms and conditions of Article XI of the Indenture, redeem
this Security in whole at any time or in part from time to time, without premium
or penalty, at a redemption price equal to 100% of the principal amount thereof
plus accrued and unpaid interest including Additional Interest, if any, to the
Redemption Date. Upon the occurrence and during the continuation of a Tax Event
or a Capital Treatment Event, the Company may, at its option, at any time within
90 days of the occurrence of such Tax Event or Capital Treatment Event redeem
this Security, in whole but not in part, subject to the provisions of Section
11.7 and the other provisions of Article XI of the Indenture, at a redemption
price equal to 100% of the principal amount thereof plus accrued and unpaid
interest, including Additional Interest, if any, to the Redemption Date. In the
event of redemption of this Security in part only, a new Security or Securities
for the unredeemed portion hereof shall be issued in the name of the Holder
hereof upon the cancellation hereof.
The Indenture contains provisions for satisfaction and discharge of the
entire indebtedness of this Security upon compliance by the Company with certain
conditions set forth in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee at any time to enter into a supplemental indenture or
indentures for the purpose of modifying in any manner the rights and obligations
of the Company and of the Holders of the Securities, with the consent of the
Holders of not less than a majority in principal amount of the Outstanding
Securities. The Indenture also contains provisions permitting Holders of
specified percentages in principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all Securities, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, if an Event
of Default with respect to the Securities at the time Outstanding occurs and is
continuing, then and in every such case the Trustee or the Holders of not less
than 25% in principal amount of the Outstanding Securities may declare the
principal amount of all the Securities to be due and payable immediately, by a
notice in writing to the Company (and to the Trustee if given by Holders),
provided that, in the case of the Securities issued to the Trust, if upon an
Event of Default, the Trustee or the Holders of not less than
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25% in principal amount of the Outstanding Securities fails to declare the
principal of all the Securities to be immediately due and payable, the holders
of at least 25% in aggregate Liquidation Amount of the Capital Securities then
outstanding shall have such right by a notice in writing to the Company and the
Trustee; and upon any such declaration the principal amount of and the accrued
interest (including any Additional Interest) on all the Securities shall become
immediately due and payable, provided that the payment of principal and interest
(including any Additional Interest) on such Securities shall remain subordinated
to the extent provided in Article XIII of the Indenture.
The Holder of any Security has the right, exercisable at any time after
, 1998 and on or before 5:00 p.m. (Eastern Standard time) on the
Business Day immediately preceding the date of repayment of the Securities,
whether at maturity or upon redemption (either at the option of the Company or
pursuant to a Tax Event or a Capital Treatment Event), to convert the principal
amount thereof (or any portion thereof that is an integral multiple of $25) into
fully paid and nonassessable shares of Common Stock of the Company at an initial
conversion ratio of shares of Common Stock for each $25 in aggregate principal
amount of Securities (equal to an initial conversion price of $ per share of
Common Stock), subject to adjustment under certain circumstances (the
"Conversion Ratio"). The number of shares issuable upon conversion of a Security
shall be determined by multiplying the principal amount of the Security to be
converted by the Conversion Ratio in effect on the Conversion Date. No
fractional shares of Common Stock shall be issued upon conversion and, in lieu
thereof, a cash payment shall be made for any fractional interest. The
outstanding principal amount of any Security shall be reduced by the portion of
the principal amount thereof converted into shares of Common Stock.
To convert a Security, a Holder must (i) complete and sign a Conversion
Request substantially in the form attached hereto, (ii) surrender the Security
to the Conversion Agent, (iii) furnish appropriate endorsements or transfer
documents if required by the Security Registrar or Conversion Agent, and (iv)
pay any transfer or similar tax, if required. If a Conversion Request is
delivered on or after the Regular Record Date and prior to the subsequent
Interest Payment Date, the Holder shall be required to pay to the Company the
interest payment to be made on the subsequent Interest Payment Date, and shall
be entitled to receive the interest payable on the subsequent Interest Payment
Date, on the portion of Securities to be converted notwithstanding the
conversion thereof prior to such Interest Payment Date. Notwithstanding the
foregoing, if, during an Extension Period, a notice of redemption is mailed
pursuant to Section 11.06 of the Indenture and a Security is converted after
such mailing but prior to the relevant Redemption Date, all accrued but unpaid
interest (including Additional Payments, if any) through the date of conversion
shall be paid to the holder of such Security on the Redemption Date. Except as
otherwise provided in the immediately preceding two sentences, in the case of
any Security which is converted, interest with a Stated Maturity which is after
the date of conversion of such Security shall not be payable, and the Company
shall not make nor be required to make any other payment, adjustment or
allowance with respect to accrued but unpaid interest (including Additional
Payments, if any) on the Securities being converted, which shall be deemed to be
paid in full. If any Security called for redemption is converted, any money
deposited with the Trustee or with any Paying Agent or so segregated and held in
trust for the redemption of such Security shall (subject to any right of the
Holder of such Security or any Predecessor Security to receive interest as
provided in the last paragraph of Section 3.07 of the Indenture and this
paragraph) be paid to the Company upon Company Request or, if then held by the
Company, shall be discharged from such trust.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
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As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Securities Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company maintained under Section 10.2 of the Indenture duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Securities Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities, of authorized denominations and for the same aggregate
principal amount, shall be issued to the designated transferee or transferees.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Securities are issuable only in registered form without coupons in
denominations of $25 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of a different
authorized denomination, as requested by the Holder surrendering the same.
The Company and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Security agree that for United States federal, state and local
tax purposes it is intended that this Security constitute indebtedness.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF INDIANA WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES THEREOF.
SECTION 2.4. Additional Provisions Required in Global Security.
Any Global Security issued hereunder shall, in addition to the provisions
contained in Sections 2.2 and 2.3, bear a legend in substantially the following
form:
"This Security is a Global Security within the meaning of the Indenture
hereinafter referred to and is registered in the name of a Depositary or a
nominee of a Depositary. This Security is exchangeable for Securities registered
in the name of a person other than the Depositary or its nominee only in the
limited circumstances described in the Indenture and may not be transferred
except as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary."
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SECTION 2.5. Form of Trustee's Certificate of Authentication.
This is one of the Securities referred to in the within mentioned
Indenture.
Dated: The Bank of New York
as Trustee
By:
-------------------------
Authorized Signatory
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SECTION 2.6. Form of Conversion Notice.
CONVERSION REQUEST
To: CNB Bancshares, Inc.
The undersigned owner of these Securities hereby irrevocably elects to
convert these Securities, or the portion below designated, into Common Stock of
the Company (the "Common Stock") in accordance with the terms of the Indenture
(the "Indenture"), dated as of _________ __, 1998, between the Company and The
Bank of New York, as Trustee.
The undersigned owner of these Securities hereby directs the Conversion
Agent to convert such Securities on behalf of the undersigned, into Common Stock
(at the Conversion Ratio specified in the Indenture). The undersigned owner of
these Securities also hereby notifies the Conversion Agent that the shares
issuable and deliverable upon conversion, together with any check in payment for
fractional shares, should be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment below.
(If shares are to be issued in the name of a person other than the undersigned,
the undersigned shall pay all transfer taxes payable with respect thereto.)
Date: ______________
Principal Amount of Securities to be converted ($25 or integral multiples
thereof): $ ______________
If a name or names other than the undersigned, please indicate in the spaces
below the name or names in which the shares of Common Stock are to be issued,
along with the address or addresses of such person or persons.
- -------------------------
- -------------------------
- -------------------------
(Sign exactly as your name appears on the other side of this Security) (for
conversion only)
Please print or type name and address, including zip code, and social security
or other identifying number:
- -------------------------
- -------------------------
- -------------------------
Signature Guarantee:* _________________________
- --------------------
*Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities and Exchange Act of 1934, as amended.
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ARTICLE III.
SECURITIES
SECTION 3.1. Title and Terms; Paying Agent.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is limited to $___________ except for Securities
authenticated and delivered upon registration of, transfer of, or in exchange
for, or in lieu of, other Securities pursuant to Section 3.4, 3.5, 3.6, 9.6 or
11.6 and except for any Securities which, pursuant to the last paragraph of
Section 3.3, are deemed never to have been authenticated and delivered
hereunder.
The Securities shall be known and designated as the "____% Convertible
Subordinated Debentures" of the Company. Their Stated Maturity shall be
______________, 2028, or if the Company elects to accelerate the maturity date
in accordance with Section 5.2 hereof, such earlier date as the Company selects,
but in no event before ________________, 2001.
The Securities shall bear interest at the rate of ____% per annum, from
_________, 1998 or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, as the case may be, payable quarterly
(subject to deferral as set forth herein), in arrears, on March 31, June 30,
September 30 and December 31 of each year, commencing September 30, 1998 until
the principal thereof is paid or made available for payment. Accrued interest
that is not paid on the applicable Interest Payment Date (even if unpaid due to
an extension of an interest payment period as set forth below in this Section
3.1) shall bear Additional Interest on the amount thereof. In the event that any
date on which interest is payable on the Securities is not a Business Day, then
a payment of the interest payable on such date shall be made on the next
succeeding day which is a Business Day (except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding 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 the
date the payment was originally payable.
The principal of and premium, if any, and interest on the Securities
shall be payable at the office of the Paying Agent or Paying Agents as the
Company may designate for such purpose from time to time, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that at the
option of the Company payment of interest may be made, except in the case of
Securities in global form, (i) by check mailed to the address of the Person
entitled thereto as such address shall appear in the Securities Register, or
(ii) by transfer to an account maintained by the Person entitled thereto as
specified in the Securities Register; provided that proper transfer instructions
have been received by the Regular Record Date.
The Company designates The Bank of New York as the initial Paying Agent
with respect to the Securities. The Company may at any time designate additional
Paying Agents or rescind the designation of any Paying Agent or approve a change
in the office through which any Paying Agent acts pursuant to Section 10.2.
The Securities shall be subordinated in right of payment to Senior Debt as
provided in Article XIII.
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SECTION 3.2. Denominations.
The Securities shall be in registered form without coupons and shall
be issuable in denominations of $25 and any integral multiple thereof.
SECTION 3.3. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its Chief
Executive Officer, President or one of its Vice Presidents under its corporate
seal reproduced or impressed thereon and attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Securities
may be manual or facsimile. Securities bearing the manual or facsimile
signatures of individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery
of such Securities or did not hold such offices at the date of such Securities.
The Securities may contain such notations, legends or endorsements required by
law, stock exchange rule or usage. Each Security shall be dated the date of its
authentication by the Trustee.
(1) A Security shall not be valid until manually authenticated by an
authorized signatory of the Trustee, or by an Authenticating Agent. Such
signature shall be conclusive evidence that the Security so authenticated has
been duly authenticated and delivered hereunder and that the holder is entitled
to the benefits of this Indenture. Notwithstanding the foregoing, if any
Security shall have been authenticated and delivered hereunder but never issued
and sold by the Company, and the Company shall deliver such Security to the
Trustee for cancellation as provided in Section 3.9, for all purposes of this
Indenture such Security shall be deemed never to have been authenticated and
delivered hereunder and shall not be entitled to the benefits of this Indenture.
(2) At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities executed by the
Company to the Trustee for authentication, together with a written order of the
Company for the authentication and delivery of such Securities signed by its
Chief Executive Officer, President or any Vice President and its Treasurer or
any Assistant Treasurer, and the Trustee in accordance with such written order
shall authenticate and deliver such Securities.
(3) In authenticating such Securities and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and shall be fully protected in relying
upon, an Opinion of Counsel stating that the form and terms thereof have been
established in conformity with the provisions of this Indenture.
(4) The Trustee shall not be required to authenticate such Securities
if the issue of such Securities pursuant to this Indenture shall affect the
Trustee's own rights, duties or immunities under the Securities and this
Indenture or otherwise in a manner that is not reasonably acceptable to the
Trustee.
Each Security shall be dated the date of its authentication.
SECTION 3.4. 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 which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized
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denomination, substantially of the tenor of the definitive Securities in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities may
determine, as evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company designated for that purpose without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Securities,
the Company shall execute and the Trustee shall authenticate and make available
for delivery in exchange therefor one or more definitive Securities, of any
authorized denominations having the same Original Issue Date and Stated Maturity
and having the same terms as such temporary Securities. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
SECTION 3.5. Registration, Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register in which, subject to such reasonable regulations as it
may prescribe, the Company shall provide for the registration of Securities and
of transfers of Securities. Such register is herein sometimes referred to as the
"Securities Register." The Trustee is hereby appointed "Securities Registrar"
for the purpose of registering Securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any Security at the
office or agency of the Company designated for that purpose the Company shall
execute, and the Trustee shall authenticate and make available for delivery, in
the name of the designated transferee or transferees, one or more new Securities
of any authorized denominations, of a like aggregate principal amount, of the
same Original Issue Date and Stated Maturity and having the same terms.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations, of a like aggregate principal
amount, of the same Original Issue Date and Stated Maturity and having the same
terms, upon surrender of the Securities to be exchanged at such office or
agency. Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and make available for
delivery, the Securities which the Holder making the exchange is entitled to
receive.
All Securities issued upon any transfer or exchange of Securities
shall be the valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Securities
surrendered upon such transfer or exchange.
Every Security presented or surrendered for transfer or exchange shall
(if so required by the Company or the Securities Registrar) be duly endorsed, or
be accompanied by a written instrument of transfer in form satisfactory to the
Company and the Securities Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made to a Holder for any transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Securities.
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The provisions of clauses (1), (2), (3) and (4) below shall apply only
to Global Securities:
(1) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated for such Global Security or
a nominee thereof and delivered to such Depositary or a nominee thereof or
custodian therefor, and each such Global Security shall constitute a single
Security for all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the name
of any Person other than the Depositary for such Global Security or a nominee
thereof unless (A) such Depositary (i) has notified the Company that it is
unwilling or unable to continue as Depositary for such Global Security, or (ii)
has ceased to be a clearing agency registered under the Exchange Act at a time
when the Depositary is required to be so registered to act as depositary, in
either case unless the Company has approved a successor Depositary within 90
days, (B) there shall have occurred and be continuing an Event of Default with
respect to such Global Security, or (C) the Company in its sole discretion
determines that such Global Security shall be so exchangeable or transferable.
(3) Subject to Clause (2) above, any exchange of a Global Security
for other Securities may be made in whole or in part, and all Securities issued
in exchange for a Global Security or any portion thereof shall be registered in
such names as the Depositary for such Global Security shall direct.
(4) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Section, Section 3.4, 3.6, 9.6 or 11.6 or
otherwise, shall be authenticated and delivered in the form of, and shall be, a
Global Security, unless such Security is registered in the name of a Person
other than the Depositary for such Global Security or a nominee thereof.
Neither the Company nor the Trustee shall be required, pursuant to the
provisions of this Section 3.5, (a) to issue, transfer or exchange any Security
during a period beginning at the opening of business fifteen days before the day
of selection for redemption of Securities pursuant to Article XI and ending at
the close of business on the day of mailing of notice of redemption, or (b) to
transfer or exchange any Security so selected for redemption in whole or in
part, except, in the case of any Security to be redeemed in part, any portion
thereof not to be redeemed.
SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee together with
such security or indemnity as may be required by the Company or the Trustee to
save each of them harmless, the Company shall execute and the Trustee shall
authenticate and make available for delivery in exchange therefor a new Security
of like tenor and principal amount, having the same Original Issue Date and
Stated Maturity and bearing the same interest rate as such mutilated Security,
and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and to the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security, and (ii) such security or indemnity as may be required by them to save
each of them harmless, then, in the absence of notice to the Company or the
Trustee that such Security has been acquired by a bona fide purchaser, the
Company shall execute and upon its request the Trustee shall authenticate and
make available for delivery, in lieu of any such destroyed,
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lost or stolen Security, a new Security of like tenor and principal amount,
having the same Original Issue Date and Stated Maturity and bearing the same
interest rate as such destroyed, lost or stolen Security, and bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section 3.6, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section 3.6 in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section 3.6 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.7. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date, shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest payment,
except that, unless otherwise provided in the Securities, interest payable on
the Stated Maturity of the principal of a Security shall be paid to the Person
to whom principal is paid. The initial payment of interest on any Security which
is issued between a Regular Record Date and the related Interest Payment Date
shall be payable as provided in such Security. At the option of the Company,
interest on any Securities may be paid (i) by check mailed to the address of the
Person entitled thereto as it shall appear on the Securities Register, or (ii)
by wire transfer in immediately available funds at such place and to such
account as designated by the Person entitled thereto as specified in the
Securities Register.
Any interest on any Security which is payable, but is not timely paid
or duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest"), shall forthwith cease to be payable to the registered Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the
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Trustee for such deposit prior to the date of the proposed payment, such money
when deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this clause provided. Thereupon the Trustee shall
fix a Special Record Date for the payment of such Defaulted Interest which shall
be not more than fifteen days and not less than ten days prior to the date of
the proposed payment and not less than ten days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first class, postage prepaid,
to each Holder of a Security at the address of such Holder as it appears in the
Securities Register not less than ten days prior to such Special Record Date.
The Trustee may, in its discretion, in the name and at the expense of the
Company, cause a similar notice to be published at least once in a newspaper,
customarily published in the English language on each Business Day and of
general circulation in New York City, but such publication shall not be a
condition precedent to the establishment of such Special Record Date. Notice of
the proposed payment of such Defaulted Interest and the Special Record Date
therefor having been mailed as aforesaid, such Defaulted Interest shall be paid
to the Persons in whose names the Securities (or their respective Predecessor
Securities) are registered on such Special Record Date and shall no longer be
payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any securities
exchange or automated quotation system on which the Securities may be listed or
traded and, upon such notice as may be required by such exchange (or by the
Trustee if the Securities are not listed), if, after notice given by the Company
to the Trustee of the proposed payment pursuant to this clause, such payment
shall be deemed practicable by the Trustee.
Any interest on any Security which is deferred or extended pursuant to
Section 3.11 shall not be Defaulted Interest for the purposes of this Section
3.7.
Subject to the foregoing provisions of this Section 3.7, each Security
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Security shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
SECTION 3.8. Persons Deemed Owners.
The Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name any Security is registered as the owner of
such Security for the purpose of receiving payment of principal of and (subject
to Section 3.7) any interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
SECTION 3.9. Cancellation.
All Securities surrendered for payment, redemption, transfer,
conversion or exchange shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee, and any such Securities and Securities
surrendered directly to the Trustee for any such purpose shall be promptly
canceled by it. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and all Securities
so delivered shall be promptly canceled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this
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Section 3.9, except as expressly permitted by this Indenture. All canceled
Securities shall be returned by the Trustee to the Company and destroyed by the
Company.
SECTION 3.10. Computation of Interest.
Interest on the Securities payable for any full quarterly period shall be
computed on the basis of a 360-day year of twelve 30-day months and interest on
the Securities for any partial period shall be computed on the basis of the
number of days elapsed in a 360-day year of twelve 30-day months.
SECTION 3.11. Deferrals of Interest Payment Dates.
So long as no Event of Default has occurred and is continuing, the Company
shall have the right, at any time during the term of the Securities, from time
to time to defer the payment of interest on the Securities for up to 20
consecutive quarterly interest payment periods with respect to each deferral
period (each, an "Extension Period") during which Extension Periods the Company
shall have the right to make partial payments of interest on any Interest
Payment Date. No Extension Period shall end on a date other than an Interest
Payment Date. At the end of any such Extension Period the Company shall pay all
interest then accrued and unpaid on the Securities (together with Additional
Interest thereon, if any, at the rate of ____%, to the extent permitted by
applicable law) to the Persons in whose names the Securities are registered at
the close of business on the Regular Record Date with respect to the Interest
Payment Date at the end of such Extension Period; provided, however, that no
Extension Period shall extend beyond the Stated Maturity of the principal of the
Securities; provided, further, that during any such Extension Period, the
Company shall not, and shall not permit any Subsidiary to, (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock, (ii)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt security of the Company that ranks pari passu with
or junior in interest 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 that by their terms rank pari passu with or junior in
interest to the Securities (other than (a) dividends or distributions in the
Company's capital stock, (b) any declaration of a dividend in connection with
the implementation of a Rights Plan, or the redemption or repurchase of any
rights distributed pursuant to a Rights Plan, (c) payments under the Guarantee
with respect to such Security, and (d) purchases of Common Stock related to the
issuance of Common Stock or rights under any of the Company's benefit plans for
its directors, officers or employees, related to the issuance of Common Stock or
rights under a dividend reinvestment and stock purchase plan, or related to the
issuance of Common Stock (or securities convertible or exchangeable for Common
Stock) as consideration in an acquisition transaction that was entered into
prior to the commencement of such Extension Period). Prior to the termination of
any such Extension Period, the Company may further defer the payment of
interest, provided that no Extension Period shall exceed 20 consecutive
quarterly periods or extend beyond the Stated Maturity of the principal of the
Securities. Upon termination of any Extension Period and upon the payment of all
accrued and unpaid interest and any Additional Interest then due on any Interest
Payment Date, the Company may elect to begin a new Extension Period, subject to
the above requirements. No interest shall be due and payable during an Extension
Period, except at the end thereof. The Company shall give the Holders of the
Securities and the Trustee written notice of its election to begin any such
Extension Period at least one Business Day prior to the next succeeding Interest
Payment Date on which interest on the Securities would be payable but for such
deferral or, with respect to Securities issued to the Trust, so long as such
Securities are held by the Trust, prior to the earlier of (i) the next
succeeding date on which Distributions on the Capital Securities of the Trust
would be payable but for such deferral or (ii) the date the Administrative
Trustees of the Trust are required to give notice to any securities exchange or
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other applicable self-regulatory organization or to holders of such Capital
Securities of the record date or the date such Distributions are payable, but in
any event not less than one Business Day prior to such record date.
The Trustee shall promptly give notice, in the name and at the expense of
the Company, of the Company's election to begin any such Extension Period to the
Holders of the Outstanding Securities.
SECTION 3.12. Right of Set-Off.
Notwithstanding anything to the contrary in the Indenture, the Company
shall have the right to set-off any payment it is otherwise required to make
thereunder in respect of any Security to the extent the Company has theretofore
made, or is concurrently on the date of such payment making, a payment under the
Guarantee or under Section 5.8 of this Indenture.
SECTION 3.13. Agreed Tax Treatment.
Each Security issued hereunder shall provide that the Company and, by its
acceptance of a Security or a beneficial interest therein, the Holder of, and
any Person that acquires a beneficial interest in, such Security intend that
such Security constitutes indebtedness and agree to treat such Security as
indebtedness for United States federal, local and state tax purposes.
SECTION 3.14. Shortening of Stated Maturity.
The Company shall have the right to shorten the Stated Maturity of the
principal of the Securities at any time to any date not earlier than the first
date on which the Company has the right to redeem the Securities. In the event
that the Company elects to shorten the Stated Maturity of the Securities, it
shall give written notice to the Trustee, and the Trustee shall give notice of
such shortening to the Holders, no less than 30 and no more than 60 days prior
to the effectiveness thereof. The Company's right to shorten the Stated Maturity
of the principal of the Securities is subject to the Company having received
prior approval of the Federal Reserve if then required under applicable capital
guidelines or policies.
SECTION 3.15. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use CUSIP numbers in notices of
redemption as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such numbers either as
printed on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee of any
change in the CUSIP numbers.
ARTICLE IV.
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture.
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This Indenture shall, upon Company Request, cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for and as otherwise provided in this
Section 4.1) and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 3.6, and (ii) Securities
for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust, as provided in Section 10.3) have
been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year of the date of deposit, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of clause (B) (i), (ii) or (iii) above,
has deposited or caused to be deposited with the Trustee as trust
funds in trust for such purpose an amount in the currency or
currencies in which the Securities are payable sufficient to pay and
discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for principal (and premium,
if any) and interest (including any Additional Interest) to the date
of such deposit (in the case of Securities which have become due and
payable) or to the Stated Maturity or Redemption Date, as the case may
be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel each stating that all conditions precedent herein provided
for relating to the satisfaction and discharge of this Indenture have been
complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, the obligations of
the Company to any Authenticating Agent under Section 6.14 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 4.2 and the last
paragraph of Section 10.3 shall survive.
SECTION 4.2. Application of Trust Money.
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Subject to the provisions of the last paragraph of Section 10.3, all money
deposited with the Trustee pursuant to Section 4.1 shall be held in trust and
applied by the Trustee, in accordance with the provisions of the Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for the payment of which such money or obligations have been
deposited with or received by the Trustee.
ARTICLE V.
REMEDIES
SECTION 5.1. Events of Default.
"Event of Default," wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of any interest upon the Securities, including
any Additional Interest in respect thereof, when it becomes due and payable, and
continuance of such default for a period of 30 days (subject to the deferral of
any interest payment date in the case of an Extension Period); or
(2) default in the payment of the principal of (or premium, if any, on)
the Securities at their Maturity; or
(3) default in the performance, or breach, in any material respect, of any
covenant or warranty of the Company in this Indenture (other than a covenant or
warranty a default in the performance of which or the breach of which is
elsewhere in this Section 5.1 specifically dealt with), and continuance of such
default or breach for a period of 90 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities a written notice specifying such default or breach and
requiring it to be remedied; or
(4) the entry of a decree or order by a court having jurisdiction in the
premises adjudging the Company a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or composition
of or in respect of the Company under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law, or appointing a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or of any substantial part of its property or ordering
the winding up or liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive days; or
(5) the institution by the Company of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable federal or
state bankruptcy, insolvency, reorganization or other similar law, or the
consent by it to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or of any substantial part of its property, or the
making by it of an assignment for the benefit for creditors, or the admission by
it in writing of its
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inability to pay its debts generally as they become due and its willingness to
be adjudicated a bankrupt, or the taking of corporate action by the Company in
furtherance of any such action; or
(6) any other Event of Default provided with respect to the Securities.
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in Section
5.1(4) or 5.1(5)) occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities may declare the principal amount of all the Securities to
be due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by Holders), provided that, in the case of the Securities
issued to the Trust, if, upon an Event of Default, the Trustee or the Holders of
not less than 25% in principal amount of the Outstanding Securities fail to
declare the principal amount of all the Securities to be immediately due and
payable, the holders of at least 25% in aggregate liquidation amount of the
corresponding Capital Securities then outstanding shall have such right by a
notice in writing to the Company and the Trustee; and upon any such declaration
such principal amount (or specified portion thereof) of and the accrued interest
(including any Additional Interest) on all the Securities shall become
immediately due and payable. Payment of principal and interest (including any
Additional Interest) on such Securities shall remain subordinated to the extent
provided in Article XIII notwithstanding that such amount shall become
immediately due and payable as herein provided. If an Event of Default specified
in Section 5.1(4) or 5.1(5) occurs, the principal amount of all the Securities
shall automatically, and without any declaration or other action on the part of
the Trustee or any Holder, become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter in this Article V
provided, the Holders of a majority in principal amount of the Outstanding
Securities, by written notice to the Company and the Trustee, may rescind and
annul such declaration and its consequences if:
(1) the Company has paid or deposited with the Trustee a sum sufficient to
pay:
(A) all overdue installments of interest (including any Additional
Interest) on all of the Securities,
(B) the principal of (and premium, if any, on) any Securities which
have become due otherwise than by such declaration of acceleration and
interest thereon at the rate borne by the Securities, and
(C) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default, other than the non-payment of the principal of
Securities which has become due solely by such acceleration, have been cured or
waived as provided in Section 5.13;
provided that, in the case of Securities held by the Trust, if the Holders of at
least a majority in principal amount of the Outstanding Securities fail to
rescind and annul such declaration and its consequences, the holders of a
majority in aggregate Liquidation Amount (as defined in the Trust
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Agreement) of the Capital Securities then outstanding shall have such right by
written notice to the Company and the Trustee, subject to the satisfaction of
the conditions set forth in Clauses (1) and (2) above of this Section 5.2.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if:
(1) default is made in the payment of any installment of interest
(including any Additional Interest) on any Security when such interest becomes
due and payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (and premium, if
any, on) any Security at the Maturity thereof,
the Company shall, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities, the whole amount then due and payable
on such Securities for principal (and premium, if any) and interest (including
any Additional Interest); and, in addition thereto, all amounts owing the
Trustee under Section 6.7.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 5.4. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors,
(a) the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration of
acceleration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of overdue principal (and
premium, if any) or interest (including any Additional Interest)) shall be
entitled and empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest (including any Additional Interest) owing and
unpaid in respect to the
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Securities and to file such other papers or documents as may be necessary
or advisable and to take any and all actions as are authorized under the
Trust Indenture Act in order to have the claims of the Holders and any
predecessor to the Trustee under Section 6.7 allowed in any such judicial
proceedings; and
(ii) in particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such
claims and to distribute the same in accordance with Section 5.6; and
(b) any custodian, receiver, assignee, trustee, liquidator, sequestrator
(or other similar official) in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee for distribution in
accordance with Section 5.6, and in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due to it and any predecessor Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
SECTION 5.5. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of all the amounts owing the Trustee and any predecessor Trustee
under Section 6.7, its agents and counsel, be for the ratable benefit of the
Holders of the Securities in respect of which such judgment has been recovered.
SECTION 5.6. Application of Money Collected.
Any money or property collected or to be applied by the Trustee pursuant to
this Article V shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money or property
on account of principal (or premium, if any) or interest (including any
Additional Interest), upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee and any predecessor
Trustee under Section 6.7;
SECOND: Subject to Article XIII, to the payment of the amounts then due and
unpaid upon the Securities for principal (and premium, if any), interest
(including any Additional Interest) and Additional Taxes, in respect of which or
for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and payable on
the Securities for principal (and premium, if any) and interest (including any
Additional Interest), respectively; and
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THIRD: The balance, if any, to the Person or Persons entitled thereto.
SECTION 5.7. Limitation on Suits.
No Holder of any Security shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture or for the appointment of
a receiver, assignee, trustee, liquidator, sequestrator (or other similar
official) or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable security
or indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request and
offer of security or indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Holders of a majority in principal
amount of the Outstanding Securities;
it being understood and intended that no one or more of the Holders shall have
any right in any manner whatever by virtue of, or by availing itself of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders, or to obtain or to seek to obtain priority or preference over any
other Holders or to enforce any right under this Indenture, except in the manner
herein provided and for the equal and ratable benefit of all Holders.
SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium
and Interest; Direct Action by Holders of Capital Securities.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right which is absolute and unconditional to receive
payment of the principal of (and premium, if any) and (subject to Section 3.7)
interest (including any Additional Interest) on such Security on the respective
Stated Maturities expressed in such Security (or, in the case of redemption, on
the Redemption Date) and to institute suit for the enforcement of any such
payment, and such right shall not be impaired without the consent of such
Holder. In the case of Securities held by the Trust, any holder of the Capital
Securities shall have the right, upon the occurrence of an Event of Default
described in Section 5.1(1) or 5.1(2), to institute a suit directly against the
Company for enforcement of payment to such holder of principal of (premium, if
any) and (subject to Section 3.7) interest (including any Additional Interest)
on the Securities having a principal amount equal to the aggregate Liquidation
Amount (as defined in the Trust Agreement) of such Capital Securities held by
such holder.
SECTION 5.9. Restoration of Rights and Remedies.
If the Trustee, any Holder or any holder of Capital Securities has
instituted any proceeding to enforce any right or remedy under this Indenture
and such proceeding has been discontinued or
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abandoned for any reason, or has been determined adversely to the Trustee, such
Holder or such holder of Capital Securities, then and in every such case the
Company, the Trustee, the Holders and such holder of Capital Securities shall,
subject to any determination in such proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee, the Holders and the holders of Capital Securities shall
continue as though no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative.
Except as otherwise provided in the last paragraph of Section 3.6, no right
or remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee, any Holder of any Security or any
holder of any Capital Security to exercise any right or remedy accruing upon any
Event of Default shall impair any such right or remedy or constitute a waiver of
any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article V or by law to the Trustee or
to the Holders and the right and remedy given to the holders of Capital
Securities by Section 5.8 may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee, the Holders or the holders of Capital
Securities, as the case may be.
SECTION 5.12. Control by Holders.
The Holders of a majority in principal amount of the Outstanding Securities
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee, provided that:
(1) such direction shall not be in conflict with any rule of law or with
this Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(3) subject to the provisions of Section 6.1, the Trustee shall have the
right to decline to follow such direction if a Responsible Officer or Officers
of the Trustee shall, in good faith, determine that the proceeding so directed
would be unjustly prejudicial to the Holders not joining in any such direction
or would involve the Trustee in personal liability.
SECTION 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities and, in the case of any Securities issued to the Trust,
the holders of a majority in Liquidation Amount (as defined in the Trust
Agreement) of Capital Securities issued by the Trust may waive any past default
hereunder and its consequences, except a default:
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(1) in the payment of the principal of (or premium, if any) or interest
(including any Additional Interest) on any Security (unless all Events of
Default, other than the non-payment of the principal of Securities which has
become due solely by such acceleration, have been cured or annulled as provided
in Section 5.3 and the Company has paid or deposited with the Trustee a sum
sufficient to pay all overdue installments of interest (including any Additional
Interest) on all Securities, the principal of (and premium, if any, on) any
Securities which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Securities, and all
sums paid or advanced by the Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel), or
(2) in respect of a covenant or provision hereof which under Article IX
cannot be modified or amended without the consent of the Holder of each
Outstanding Security affected.
Any such waiver shall be deemed to be on behalf of the Holders of all the
Securities or, in the case of a waiver by holders of Capital Securities issued
by the Trust, by all holders of Capital Securities.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees 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 5.14 shall not apply to any suit instituted by
the Trustee, to any suit instituted by any Holder, or group of Holders, holding
in the aggregate more than 10% in principal amount of the Outstanding
Securities, or to any suit instituted by any Holder for the enforcement of the
payment of the principal of (or premium, if any) or interest (including any
Additional Interest) on any Security on or after the respective Stated
Maturities expressed in such Security.
SECTION 5.15. Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE VI.
TRUSTEE
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SECTION 6.1. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; but in
the case of any such certificates or opinions which by any provisions
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct except that
(1) this subsection (c) shall not be construed to limit the effect of
subsection (a) of this Section 6.1;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of Holders pursuant to Section 5.12 relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture with respect to the Securities.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(e) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section
6.1.
SECTION 6.2. Notice of Defaults.
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Within 90 days after actual knowledge by a Responsible Officer of the
Trustee of the occurrence of any default hereunder, the Trustee shall transmit
by mail to all Holders of Securities, as their names and addresses appear in the
Securities Register, notice of such default, unless such default shall have been
cured or waived; provided, however, that, except in the case of a default in the
payment of the principal of (or premium, if any) or interest (including any
Additional Interest) on any Security, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors and/or Responsible Officers of the
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders of Securities; and provided, further, that, in the case
of any default of the character specified in Section 5.1(3), no such notice to
Holders of Securities shall be given until at least 30 days after the occurrence
thereof. For the purpose of this Section 6.2, the term "default" means any event
which is, or after notice or lapse of time or both would become, an Event of
Default.
SECTION 6.3. Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, Security or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its selection and the advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders pursuant to this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, indenture,
Security or other paper or document, but the Trustee in its discretion may make
such inquiry or investigation into such facts or matters as it may see fit, and,
if the Trustee shall determine to make such inquiry or investigation, it shall
be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible
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for any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder; and
(h) the Trustee shall not be liable for any action taken, suffered, or
omitted to be taken by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Indenture.
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities.
The Recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities. Neither the Trustee nor
any Authenticating Agent shall be accountable for the use or application by the
Company of the Securities or the proceeds thereof.
SECTION 6.5. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Securities
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
6.8 and 6.13, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Securities
Registrar or such other agent.
SECTION 6.6. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed in writing with the Company.
SECTION 6.7. Compensation and Reimbursement.
The Company, as borrower, agrees
(1) to pay to the Trustee from time to time such compensation as shall be
agreed in writing between the Company and the Trustee for all services rendered
by it hereunder (which compensation shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust);
(2) to reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith;
and
(3) to indemnify each of the Trustee and any predecessor Trustee for, and
to hold it harmless against, any and all loss, liability, damage, claim or
expense (including the reasonable compensation and the expenses and
disbursements of its agents and counsel) incurred without negligence or bad
faith, arising out of or in connection with the acceptance or administration of
this trust or the performance of its duties hereunder, including the costs and
expenses of defending itself
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against any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder. This indemnification shall survive the
termination of this Indenture.
To secure the Company's payment obligations in this Section 6.7, the
Company and the Holders agree that the Trustee shall have a lien prior to the
Securities on all money or property held or collected by the Trustee. Such lien
shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 5.1(4) or (5) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under the Bankruptcy Reform Act of 1978 or any successor statute.
SECTION 6.8. Disqualification; Conflicting Interests.
The Trustee shall be subject to the provisions of Section 310(b) of the
Trust Indenture Act. Nothing herein shall prevent the Trustee from filing with
the Commission the application referred to in the second to last paragraph of
said Section 310(b).
SECTION 6.9. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be:
(a) a corporation organized and doing business under the laws of the
United States of America or of any state or territory or the District of
Columbia, authorized under such laws to exercise corporate trust powers and
subject to supervision or examination by federal, state, territorial or District
of Columbia authority, or
(b) a corporation or other Person organized and doing business under the
laws of a foreign government that is permitted to act as Trustee pursuant to a
rule, regulation or order of the Commission, authorized under such laws to
exercise corporate trust powers, and subject to supervision or examination by
authority of such foreign government or a political subdivision thereof
substantially equivalent to supervision or examination applicable to United
States institutional trustees,
in either case having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by federal or state authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then,
for the purposes of this Section 6.9, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section
6.9, it shall resign immediately in the manner and with the effect hereinafter
specified in this Article VI. Neither the Company nor any Person directly or
indirectly controlling, controlled by or under common control with the Company
shall serve as Trustee for the Securities issued hereunder.
SECTION 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article VI shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
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(b) The Trustee may resign at any time by giving written notice thereof to
the Company. If an instrument of acceptance by a successor Trustee shall not
have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Securities, delivered to the
Trustee and to the Company. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after such
removal, the Trustee being removed may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.8 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.9 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company, acting pursuant to the authority
of a Board Resolution, may remove the Trustee, or (ii) subject to Section
5.14, any Holder who has been a bona fide Holder of a Security for at least
six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Company,
by a Board Resolution, shall promptly appoint a successor Trustee. If, within
one year after such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Securities delivered to the
Company and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor Trustee
and supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders and accepted
appointment in the manner hereinafter provided, any Holder who has been a bona
fide Holder of a Security for at least six months may, subject to Section 5.14,
on behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee by mailing written
notice of such event by first-class mail, postage prepaid, to the Holders of
Securities as their names and addresses appear in the Securities Register. Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office.
SECTION 6.11. Acceptance of Appointment by Successor.
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(a) In case of the appointment hereunder of a successor Trustee, every
such successor Trustee so appointed shall execute, acknowledge and deliver to
the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder.
(b) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all rights, powers and trusts referred to in Section
6.11(a).
(c) No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article VI.
SECTION 6.12. Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article VI, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated, and in case any
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor Trustee or in
the name of such successor Trustee, and in all cases the certificate of
authentication shall have the full force which it is provided anywhere in the
Securities or in this Indenture that the certificate of the Trustee shall have .
SECTION 6.13. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
SECTION 6.14. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents which shall be
authorized to act on behalf of the Trustee to authenticate Securities issued
upon original issue and upon exchange, registration of transfer or partial
redemption thereof or pursuant to Section 3.6, and Securities so authenticated
shall be entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee hereunder.
Wherever reference is made in this Indenture to the authentication and delivery
of Securities by the Trustee or the Trustee's certificate of authentication,
such reference shall be deemed to include authentication and delivery on behalf
of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, or of any state
or territory or the District of Columbia, authorized under such laws to act
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as Authenticating Agent, having a combined capital and surplus of not less than
$50,000,000 and subject to supervision or examination by federal or state
authority. If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section 6.14 the combined
capital and surplus of such Authenticating Agent shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section 6.14, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in
this Section 6.14.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of an Authenticating Agent shall be the successor
Authenticating Agent hereunder, provided such corporation shall be otherwise
eligible under this Section 6.14, without the execution or filing of any paper
or any further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.14, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall give
notice of such appointment in the manner provided in Section 1.6 to all Holders
of Securities. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provision of this Section 6.14.
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section 6.14.
If an appointment is made pursuant to this Section 6.14, the Securities may
have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities referred to in the within mentioned
Indenture.
Dated: /s/
-------------------------
As Trustee
By:
-------------------------
As Authenticating Agent
By:
------------------------
Authorized Officer
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ARTICLE VII.
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders.
The Company shall furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than fifteen days after January 15 and July 15
in each year, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such January 1 and July 1, 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 fifteen days prior to the time such
list is furnished,
excluding from any such list names and addresses received by the Trustee in its
capacity as Securities Registrar.
SECTION 7.2. Preservation of Information, Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as Securities
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with respect
to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided in the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of the
disclosure of information as to the names and addresses of the Holders made
pursuant to the Trust Indenture Act.
SECTION 7.3. Reports by Trustee.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto. If
required by Section 313(a) of the Trust Indenture Act, the Trustee shall, within
60 days after each May 15 following the date of this Indenture deliver to
Holders a brief report, dated as of such May 15, 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
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed and also with the Commission. The Company will promptly
notify the Trustee when any Securities are listed on any stock exchange.
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SECTION 7.4. Reports by Company.
The Company shall file with the Trustee and with the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided in the Trust Indenture Act; provided that any
such information, documents or reports required to be filed with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act shall be filed with
the Trustee within fifteen days after the same is required to be filed with the
Commission. Notwithstanding that the Company may not be required to remain
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall continue to file with the Commission and provide the
Trustee with the annual reports and the information, documents and other reports
which are specified in Sections 13 and 15(d) of the Exchange Act. The Company
also shall comply with the other provisions of Trust Indenture Act Section
314(a). 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, including
the Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
ARTICLE VIII.
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, and no Person shall consolidate with or merge into the Company or
convey, transfer or lease its properties and assets substantially as an entirety
to the Company, unless:
(1) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance or transfer, or
which leases, the properties and assets of the Company substantially as an
entirety shall be a corporation, partnership or trust organized and existing
under the laws of the United States of America or any State or the District of
Columbia and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the Trustee, the
due and punctual payment of the principal of (and premium, if any) and interest
(including any Additional Interest) on all the Securities and the performance of
every covenant of this Indenture on the part of the Company to be performed or
observed;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have happened and be continuing;
(3) in the case of Securities held by the Trust, such consolidation,
merger, conveyance, transfer or lease is permitted under the Trust Agreement and
Guarantee and does not give rise to any breach or violation of the Trust
Agreement or Guarantee; and
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(4) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation, merger, conveyance,
transfer or lease and any such supplemental indenture complies with this Article
VIII and that all conditions precedent herein provided for relating to such
transaction have been complied with; and the Trustee, subject to Section 6.1,
may rely upon such Officers' Certificate and Opinion of Counsel as conclusive
evidence that such transaction complies with this Section 8.1.
SECTION 8.2. Successor Corporation Substituted.
Upon any consolidation or merger by the Company with or into any other
Person, or any conveyance, transfer or lease by the Company of its properties
and assets substantially as an entirety to any Person in accordance with Section
8.1, the successor Person formed by such consolidation or into which the Company
is merged or to which such conveyance, transfer or lease is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such successor Person
had been named as the Company herein; and in the event of any such conveyance,
transfer or lease the Company shall be discharged from all obligations and
covenants under the Indenture and the Securities and may be dissolved and
liquidated.
Such successor Person may cause to be signed, and may issue either in its
own name or in the name of the Company, any or all of the Securities issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee; and, upon the written order of such successor Person
instead of the Company and subject to all the terms, conditions and limitations
in this Indenture prescribed, the Trustee shall authenticate and shall make
available for delivery any Securities which previously shall have been signed
and delivered by the officers of the Company to the Trustee for authentication
pursuant to such provisions and any Securities which such successor Person
thereafter shall cause to be signed and delivered to the Trustee on its behalf
for the purpose pursuant to such provisions. All the Securities so issued shall
in all respects have the same legal rank and benefit under this Indenture as the
Securities theretofore or thereafter issued in accordance with the terms of this
Indenture as though all of such Securities had been issued at the date of the
execution hereof.
In case of any such consolidation, merger, sale, conveyance or lease, such
changes in phraseology and form may be made in the Securities thereafter to be
issued as may be appropriate.
ARTICLE IX.
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form reasonably satisfactory to
the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company, and the
assumption by any such successor of the covenants of the Company herein and in
the Securities contained; or
(2) to convey, transfer, assign, mortgage or pledge any property to or with
the Trustee or to surrender any right or power herein conferred upon the
Company; or
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(3) to add to the covenants of the Company for the benefit of the Holders,
or to surrender any right or power herein conferred upon the Company; or
(4) to add any additional Events of Default; or
(5) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective only when
there is no Security Outstanding created prior to the execution of such
supplemental indenture which is entitled to the benefit of such provision; or
(6) to cure any ambiguity, to correct or supplement any provision herein
which may be defective or inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising under
this Indenture, provided that such action pursuant to this clause (6) shall not
adversely affect the interest of the Holders in any material respect or, in the
case of the Securities issued to the Trust and for so long as any of the
corresponding Capital Securities issued by the Trust shall remain outstanding,
the holders of such Capital Securities; or
(7) to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trust hereunder by more than one Trustee, pursuant to the requirements of
Section 6.11(b); or
(8) to comply with the requirements of the Commission in order to effect or
maintain the qualification of this Indenture under the Trust Indenture Act.
SECTION 9.2. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Securities, by Act of said Holders delivered to the
Company and the Trustee, the Company, when authorized by a Board Resolution, and
the Trustee may enter into an indenture or indentures supplemental hereto for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of modifying in any manner the rights
of the Holders under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby,
(1) except to the extent permitted by Section 3.11 or as otherwise
specified as contemplated by Section 2.1 with respect to the deferral of the
payment of interest on the Securities, change the Stated Maturity of the
principal of, or any installment of interest (including any Additional Interest)
on, any Security, or reduce the principal amount thereof or the rate of interest
thereon or reduce any premium payable upon the redemption thereof, or change the
place of payment where, or the coin or currency in which, any Security or
interest thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity thereof (or, in
the case of redemption, on or after the Redemption Date), or
(2) reduce the percentage in principal amount of the Outstanding
Securities, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture, or
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(3) modify any of the provisions of this Section 9.2, Section 5.13 or
Section 10.5, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Security affected thereby; or
(4) modify the provisions in Article XIII of this Indenture with respect to
the subordination of Outstanding Securities in a manner adverse to the Holders
thereof;
provided, further, that, in the case of Securities issued to the Trust, so long
as any of the Capital Securities issued by the Trust remains outstanding, (i) no
such amendment shall be made that adversely affects the holders of such Capital
Securities in any material respect, and no termination of this Indenture shall
occur, and no waiver of any Event of Default or compliance with any covenant
under this Indenture shall be effective, without the prior consent of the
holders of at least a majority of the aggregate Liquidation Amount (as defined
in the Trust Agreement) of the Capital Securities then outstanding unless and
until the principal (and premium, if any) of the Securities and all accrued and,
subject to Section 3.7, unpaid interest (including any Additional Interest)
thereon have been paid in full, and (ii) no amendment shall be made to Section
5.8 that would impair the rights of the holders of Capital Securities provided
therein without the prior consent of the holders of each Capital Security then
outstanding unless and until the principal (and premium, if any) of the
Securities and all accrued and (subject to Section 3.7) unpaid interest
(including any Additional Interest) thereon have been paid in full.
It shall not be necessary for any Act of Holders under this Section 9.2 to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 9.3. Execution of Supplemental Indentures.
In executing or accepting the additional trusts created by any supplemental
indenture permitted by this Article IX or the modifications thereby of the
trusts created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 6.1) shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture, and that
all conditions precedent have been complied with. The Trustee may, but shall not
be obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article IX,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 9.5. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article IX shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 9.6. Reference in Securities to Supplemental Indentures.
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Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article IX may, and shall if required by
the Company, bear a notation in form approved by the Company as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Company, to any
such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities.
ARTICLE X.
COVENANTS
SECTION 10.1. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of the Securities that it
shall duly and punctually pay the principal of (and premium, if any) and
interest (including Additional Interest) on the Securities in accordance with
the terms of the Securities and this Indenture.
SECTION 10.2. Maintenance of Office or Agency.
The Company shall maintain in each Place of Payment for the Securities, an
office or agency where Securities may be presented or surrendered for payment
and an office or agency where Securities may be surrendered for transfer,
conversion or exchange and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The Company
initially appoints the Trustee, acting through its Corporate Trust Office, as
its agent for said purposes. The Company shall give prompt written notice to the
Trustee of any change in the location of any such office or agency. If at any
time the Company shall fail to maintain such office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
of such purposes, and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in each Place of
Payment for Securities for such purposes. The Company shall give prompt written
notice to the Trustee of any such designation and any change in the location of
any such office or agency.
SECTION 10.3. Money for Security Payments to be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it shall, on
or before each due date of the principal of (and premium, if any) or interest on
any of the Securities, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal (and premium, if
any) or interest so becoming due until such sums shall be paid to such Persons
or otherwise disposed of as herein provided, and shall promptly notify the
Trustee of its failure so to act.
Whenever the Company shall have one or more Paying Agents, it shall, prior
to 10:00 a.m. Eastern Standard time on each due date of the principal of or
interest on any Securities, deposit with a Paying Agent a sum sufficient to pay
the principal (and premium, if any) or interest so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such principal and
premium (if
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any) or interest, and (unless such Paying Agent is the Trustee) the Company
shall promptly notify the Trustee of its failure so to act.
The Company shall cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section 10.3, that such
Paying Agent shall:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest (including Additional Interest) on Securities in
trust for the benefit of the Persons entitled thereto until such sums shall be
paid to such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any other
obligor upon the Securities) in the making of any payment of principal (and
premium, if any) or interest (including Additional Interest);
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent; and
(4) comply with the provisions of the Trust Indenture Act applicable to it
as a Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by the Company or any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any)
or interest (including Additional Interest) on any Security and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall (unless otherwise required by mandatory
provision of applicable escheat or abandoned or unclaimed property law) be paid
on Company Request to the Company, or (if then held by the Company) shall
(unless otherwise required by mandatory provision of applicable escheat or
abandoned or unclaimed property law) be discharged from such trust; and the
Holder of such Security shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in a newspaper
published in the English language, customarily published on each Business Day
and of general circulation in New York City, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
SECTION 10.4. Statement as to Compliance.
The Company shall deliver to the Trustee, within 120 days after the end of
each calendar year of the Company ending after the date hereof, an Officers'
Certificate, one of the signatories of which shall be the principal executive,
principal financial or principal accounting officer of the Company,
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covering the preceding calendar year, stating whether or not to the best
knowledge of the signers thereof the Company is in default in the performance,
observance or fulfillment of or compliance with any of the terms, provisions,
covenants and conditions of this Indenture, and if the Company shall be in
default, specifying all such defaults and the nature and status thereof of which
they may have knowledge. For the purpose of this Section 10.4, compliance shall
be determined without regard to any grace period or requirement of notice
provided pursuant to the terms of this Indenture.
SECTION 10.5. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any covenant
or condition provided pursuant to Section 9.1(3) or 9.1(4), if before or after
the time for such compliance the Holders of at least a majority in principal
amount of the Outstanding Securities shall, by Act of such Holders, either waive
such compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company in respect of any
such covenant or condition shall remain in full force and effect.
SECTION 10.6. Payment of Trust Costs and Expenses.
Since the Trust is being formed solely to facilitate an investment in the
Securities, the Company, in its capacity as the issuer of the Securities, hereby
covenants to pay all debts and obligations (other than with respect to the
Capital Securities and Common Securities) and all costs and expenses of the
Trust (including, but not limited to, all costs and expenses relating to the
organization of the Trust, the fees and expenses of the Trustees and all costs
and expenses relating to the operation of the Trust) and to pay any and all
taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed on the Trust by the United States, or any other
taxing authority, so that the net amounts received and retained by the Trust and
the Property Trustee after paying such expenses shall be equal to the amounts
the Trust and the Property Trustee would have received had no such costs or
expenses been incurred by or imposed on the Trust. The obligations of the
Company to pay all debts, obligations, costs and expenses of the Trust (other
than with respect to the Capital Securities and Common Securities) shall
constitute additional indebtedness hereunder and shall survive the satisfaction
and discharge of this Indenture.
SECTION 10.7. Additional Covenants.
The Company covenants and agrees with each Holder of Securities that it
shall not, and it shall not permit any Subsidiary of the Company to, (i) declare
or pay any dividends or distributions on, or redeem purchase, acquire or make a
liquidation payment with respect to, any shares of the Company's capital stock,
or (ii) make any payment of principal of or interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company that rank pari
passu with or junior in interest to the Securities, or (iii) make any guarantee
payments with respect to any guarantee by the Company of debt securities of any
subsidiary of the Company if such guarantee ranks pari passu with or junior in
interest to the Securities (other than (a) dividends or distributions in the
Company's capital stock, (b) any declaration of a dividend in connection with
the implementation of a Rights Plan or the redemption or repurchase of any
rights distributed pursuant to a Rights Plan, (c) payments under the Guarantee,
and (d) purchases of Common Stock related to the issuance of Common Stock or
rights under any of the Company's benefit plans for its directors, officers or
employees, related to the issuance of Common Stock or rights under a dividend
reinvestment and stock purchase plan, or related to the issuance of Common Stock
(or securities convertible or exchangeable for Common Stock) as consideration in
an acquisition transaction that was entered into prior to the commencement of
such
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Extension Period) if at such time (x) there shall have occurred any event of
which the Company has actual knowledge that (A) with the giving of notice or the
lapse of time or both, would constitute an Event of Default with respect to the
Securities, and (B) in respect of which the Company shall not have taken
reasonable steps to cure, (y) if the Securities are held by a Trust, the Company
shall be in default with respect to its payment of any obligations under the
Guarantee, or (z) the Company shall have given notice of its election to begin
an Extension Period with respect to the Securities as provided herein and shall
not have rescinded such notice, or such Extension Period, or any extension
thereof, shall be continuing.
The Company also covenants with each Holder of Securities to the Trust (i)
to maintain directly or indirectly 100% ownership of the Common Securities of
the Trust; provided, however, that any permitted successor of the Company
hereunder may succeed to the Company's ownership of such Common Securities, (ii)
not to voluntarily terminate, wind-up or liquidate the Trust, except (a) in
connection with a distribution of the Securities to the holders of the Trust
Securities in liquidation of the Trust, or (b) in connection with certain
mergers, consolidations or amalgamations permitted by the Trust Agreement, and
(iii) to use its reasonable efforts, consistent with the terms and provisions of
the Trust Agreement, to cause the Trust to remain classified as a grantor trust
and not an association taxable as a corporation for United States federal income
tax purposes.
ARTICLE XI.
REDEMPTION OF SECURITIES
SECTION 11.1. Applicability of Article.
Redemption of Securities as permitted or required by any form of Security
issued pursuant to this Indenture shall be made in accordance with such form of
Security and this Article XI; provided, however, that if any provision of any
such form of Security shall conflict with any provision of this Article XI, the
provision of such form of Security shall govern. Except as otherwise set forth
in the form of Security, each Security shall be subject to partial redemption
only in the amount of $25 or integral multiples thereof.
SECTION 11.2. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced by
or pursuant to a Board Resolution. In case of any redemption at the election of
the Company of the Securities, the Company shall, not less than 45 nor more than
60 days prior to the Redemption Date (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such date and of the
principal amount of Securities to be redeemed. In the case of any redemption of
Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Securities, the Company shall furnish the Trustee
with an Officers' Certificate and an Opinion of Counsel evidencing compliance
with such restriction.
SECTION 11.3. Selection of Securities to be Redeemed.
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities not previously
called for redemption, by lot or such other method as the Trustee shall deem
fair and appropriate and which may provide for the selection for redemption of a
portion of the principal amount of any
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Security, provided that the unredeemed portion of the principal amount of any
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security. If less than all the
Securities are to be redeemed, the particular Securities to be redeemed shall be
selected not more than 60 days prior to the Redemption Date by the Trustee, from
the Outstanding Securities of such specified tenor not previously called for
redemption in accordance with the preceding sentence.
The Trustee shall promptly notify the Company in writing of the Securities
selected for partial redemption and the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities shall relate, in the case of
any Security redeemed or to be redeemed only in part, to the portion of the
principal amount of such Security which has been or is to be redeemed. If the
Company shall so direct, Securities registered in the name of the Company, any
Affiliate or any Subsidiary thereof shall not be included in the Securities
selected for redemption.
SECTION 11.4. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not later than the 30th day, and not earlier than the 60th day, prior to
the Redemption Date, to each Holder of Securities to be redeemed, at the address
of such Holder as it appears in the Securities Register.
Each notice of redemption shall identify the Securities to be redeemed
(including CUSIP number, if a CUSIP number has been assigned to such Securities)
and shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all Outstanding Securities are to be redeemed, the
identification (and, in the case of partial redemption, the respective principal
amounts) of the particular Securities to be redeemed;
(d) that on the Redemption Date, the Redemption Price shall become due and
payable upon each such Security or portion thereof, and that interest thereon,
if any, shall cease to accrue on and after said date; and
(e) the place or places where such Securities are to be surrendered for
payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall not be
irrevocable. The notice if mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the Holder
receives such notice. In any case, a failure to give such notice by mail or any
defect in the notice to the Holder of any Security designated for redemption as
a whole or in part shall not affect the validity of the proceedings for the
redemption of any other Security.
SECTION 11.5. Deposit of Redemption Price.
Prior to 10:00 a.m. Eastern Standard time on the Redemption Date specified
in the notice of redemption given as provided in Section 11.4, the Company shall
deposit with the Trustee or with one
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or more Paying Agents (or if the Company is acting as its own Paying Agent, the
Company will segregate and hold in trust as provided in Section 10.3) an amount
of money sufficient to pay the Redemption Price of, and any accrued interest
(including Additional Interest) on, all the Securities which are to be redeemed
on that date.
SECTION 11.6. Payment of Securities Called for Redemption.
If any notice of redemption has been given as provided in Section 11.4, the
Securities or portion of Securities with respect to which such notice has been
given shall become due and payable on the date and at the place or places stated
in such notice at the applicable Redemption Price. On presentation and surrender
of such Securities at a Place of Payment in said notice specified, the said
Securities or the specified portions thereof shall be paid and redeemed by the
Company at the applicable Redemption Price, together with accrued interest
(including any Additional Interest) to the Redemption Date; provided, however,
that installments of interest whose Stated Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section
3.7.
Upon presentation of any Security redeemed in part only, the Company shall
execute and the Trustee shall authenticate and make available for delivery to
the Holder thereof, at the expense of the Company, a new Security or Securities,
of authorized denominations, in aggregate principal amount equal to the
unredeemed portion of the Security so presented and having the same Original
Issue Date, Stated Maturity and terms. If a Global Security is so surrendered,
such new Security shall also be a new Global Security.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal of and premium, if any, on such Security
shall, until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.
SECTION 11.7. Right of Redemption of Securities.
The Company, at its option, may redeem such Securities (i) on or after
_____________, 2001, in whole at any time or in part from time to time, or (ii)
upon the occurrence and during the continuation of a Tax Event or a Capital
Treatment Event, at any time within 90 days following the occurrence of such Tax
Event or Capital Treatment Event in respect of the Trust, in whole (but not in
part), in each case at a Redemption Price equal to 100% of the principal amount
thereof; provided that the Company's right to redeem such Securities pursuant to
clause (i) or (ii) above is subject to the Company having received the prior
approval of the Federal Reserve if required under applicable capital guidelines
or policies.
ARTICLE XII.
CONVERSION OF SECURITIES
SECTION 12.1. Conversion Rights.
Subject to and upon compliance with the provisions of this Article XII, the
Securities are convertible, at the option of the Holder, at any time after
______________, 1998, and on or before 5:00 p.m. (Eastern Standard time) on the
Business Day immediately preceding the date of repayment of such Securities,
whether at maturity or upon redemption, into fully paid and nonassessable shares
of
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Common Stock at an initial conversion ratio of _____ shares of Common Stock
for each $25 in aggregate principal amount of Securities (equal to an initial
conversion price of $_____ per share of Common Stock), subject to adjustment as
described in this Article XII (the "Conversion Ratio"). A Holder of Securities
may convert any portion of the principal amount of the Securities into that
number of fully paid and nonassessable shares of Common Stock (calculated as to
each conversion to the nearest 1/100th of a share) obtained by multiplying (x)
the quotient obtained by dividing the principal amount of the Securities to be
converted by $25.00, by (y) the Conversion Ratio. In case a Security or portion
thereof is called for redemption, such conversion right in respect of the
Security or portion so called shall expire at 5:00 p.m. (Eastern Standard time)
on the Business Day immediately preceding the corresponding Redemption Date,
unless the Company defaults in making the payment due upon redemption.
SECTION 12.2. Conversion Procedures.
(a) To convert all or a portion of the Securities, the Holder thereof shall
deliver to the Conversion Agent an irrevocable Conversion Request setting forth
the principal amount of Securities to be converted, together with the name or
names, if other than the Holder, in which the shares of Common Stock should be
issued upon conversion and, if such Securities are definitive Securities,
surrender to the Conversion Agent the Securities to be converted, duly endorsed
or assigned to the Company or in blank. In addition, a holder of Capital
Securities may exercise its right under the Trust Agreement to exchange such
Capital Securities for Securities which shall be converted into Common Stock by
delivering to the Conversion Agent an irrevocable Conversion Request setting
forth the information called for by the preceding sentence and directing the
Conversion Agent (i) to exchange such Capital Security for a portion of the
Securities held by the Trust (at an exchange rate of $25 principal amount of
Securities for each Capital Security), and (ii) to immediately convert such
Securities, on behalf of such Holder, into Common Stock pursuant to this Article
XII and, if such Capital Securities are in definitive form, surrendering such
Capital Securities, duly endorsed or assigned to the Company or in blank. So
long as any Capital Securities are outstanding, the Trust shall not convert any
Securities except pursuant to a Conversion Request delivered to the Conversion
Agent by a holder of Capital Securities.
If a Conversion Request is delivered on or after the Regular Record Date
and prior to the subsequent Interest Payment Date, the Holder shall be required
to pay to the Company the interest payable to the Holder on the subsequent
Interest Payment Date prior to receiving the shares of Common Stock, and shall
be entitled to receive the interest payable on the subsequent Interest Payment
Date, on the portion of Securities to be converted notwithstanding the
conversion thereof prior to such Interest Payment Date. Except as provided in
the immediately preceding sentence, the Company shall not make, or be required
to make, any payment, allowance or adjustment for accumulated and unpaid
interest, whether or not in arrears, on converted Securities; provided, however,
that if notice of redemption of Securities is mailed or otherwise given to
Holders of Securities, then, if any Holder of Securities converts any Securities
into Common Stock on any date on or after the date on which such notice of
prepayment is mailed or otherwise given, and if such date of conversion falls on
any day from and including the first day of an Extension Period and on or prior
to the Interest Payment Date upon which such Extension Period ends, such
converting Holder shall be entitled to receive either (i) if the date of such
conversion falls after a Regular Record Date and on or prior to the next
succeeding Interest Payment Date, all accrued and unpaid interest on such
Securities (including interest thereon, if any, to the extent permitted by
applicable law) to such Interest Payment Date, or (ii) if the date of such
conversion does not fall on a date described in clause (i) above, all accrued
and unpaid interest on such Securities (including interest thereon, if any, to
the extent permitted by applicable law) to the most recent Interest Payment Date
prior to the date of such conversion, which interest shall, in either such
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case, be paid to such converting Holder unless the date of conversion of such
Securities is on or prior to the Interest Payment Date upon which such Extension
Period ends and after the Regular Record Date for such Interest Payment Date, in
which case such interest shall be paid to the person who was the Holder of such
Securities (or one or more predecessor Securities) at 5:00 p.m. (Eastern
Standard time) on such Regular Record Date. Except as otherwise set forth above
in this paragraph, in the case of any Security which is converted, interest
whose Stated Maturity is after the date of conversion of such Security shall not
be payable, and the Company shall not make nor be required to make any other
payment, adjustment or allowance with respect to accrued but unpaid interest
(including Additional Interest, if any) on the Securities being converted, which
shall be deemed to be paid in full. If any Security called for redemption is
converted, any money deposited with the Trustee or with any paying agent or so
segregated and held in trust for the redemption of such Security shall (subject
to any right of the Holder of such Security or any Predecessor Security to
receive interest as provided in this Indenture) be paid to the Company upon
Company Request or, if then held by the Company, shall be discharged from such
trust.
Each conversion shall be deemed to have been effected immediately prior to
5:00 p.m. (Eastern Standard time) on the day on which the Conversion Request was
received (the "Conversion Date") by the Conversion Agent from the Holder or from
a holder of the Capital Securities effecting a conversion thereof pursuant to
its conversion rights under the Trust Agreement, as the case may be. The Person
or Persons entitled to receive the Common Stock issuable upon such conversion
shall be treated for all purposes as a record holder or holders of such Common
Stock as of the Conversion Date. As promptly as practicable on or after the
Conversion Date, the Company shall issue and deliver at the office of the
Conversion Agent, unless otherwise directed by the Holder in the Conversion
Request, a certificate or certificates for the number of full shares of Common
Stock issuable upon such conversion, together with the cash payment, if any, in
lieu of any fraction of any share to the Person or Persons entitled to receive
the same. The Conversion Agent shall deliver such certificate or certificates to
each Person or Persons.
(b) Subject to any right of the Holder of such Security or any Predecessor
Security to receive interest as provided in Section 12.2(a), the Company's
delivery upon conversion of the fixed number of shares of Common Stock into
which the Securities are convertible (together with the cash payment, if any, in
lieu of fractional shares) shall be deemed to satisfy the Company's obligation
to pay the principal amount at maturity of the portion of Securities so
converted and any unpaid interest (including Additional Interest, if any)
accrued on such Securities at the time of such conversion.
(c) No fractional shares of Common Stock shall be issued as a result of
conversion, but in lieu thereof, the Company shall pay to the Conversion Agent a
cash adjustment in an amount equal to the same fraction of the last reported
sale price of such fractional interest on the date on which the Securities or
Capital Securities, as the case may be, were duly surrendered to the Conversion
Agent for conversion, or, if such day is not a Trading Day, on the next Trading
Day, and the Conversion Agent in turn shall make such payment, if any, to the
Holder of the Securities or the holder of the Capital Securities so converted.
(d) In the event of the conversion of any Security in part only, a new
Security or Securities for the unconverted portion thereof shall be issued in
the name of the Holder thereof upon the cancellation thereof in accordance with
Section 3.6.
(e) In effecting the conversion transactions described in this Section
12.2, the Conversion Agent is acting as agent of the holders of Capital
Securities (in the exchange of Capital Securities for Securities) and as agent
of the Holders of Securities (in the conversion of Securities into Common
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Stock), as the case may be, directing it to effect such conversion transactions.
The Conversion Agent is hereby authorized (i) to exchange Capital Securities for
Securities held by the Trust from time to time in connection with the conversion
of such Capital Securities in accordance with this Article XII, and (ii) to
convert all or a portion of the Securities into Common Stock and thereupon to
deliver such shares of Common Stock in accordance with the provisions of this
Article XII and to deliver to the Trust a new Security or Securities for any
resulting unconverted principal amount.
SECTION 12.3. Conversion Ratio Adjustments.
The Conversion Ratio shall be subject to adjustment (without duplication)
from time to time as follows:
(a) In case the Company shall, while any of the Securities are outstanding,
(i) pay a dividend or make a distribution with respect to its Common Stock in
shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock,
(iii) combine its outstanding shares of Common Stock into a smaller number of
shares, or (iv) issue by reclassification of its shares of Common Stock any
shares of capital stock of the Company, then the Conversion Ratio in effect
immediately prior to such action shall be adjusted so that the Holder of any
Securities thereafter surrendered for conversion shall be entitled to receive
the number of shares of capital stock of the Company which he would have owned
immediately following such action had such Securities been converted immediately
prior thereto. An adjustment made pursuant to this Section 12.3(a) shall become
effective immediately after the record date in the case of a dividend or other
distribution and shall become effective immediately after the effective date in
case of a subdivision, combination or reclassification (or immediately after the
record date if a record date shall have been established for such event). If, as
a result of an adjustment made pursuant to this Section 12.3(a), the Holder of
any Security thereafter surrendered for conversion shall become entitled to
receive shares of two or more classes or series of capital stock of the Company,
the Board of Directors (whose determination shall be conclusive and shall be
described in a Board Resolution filed with the Trustee) shall determine the
allocation of the adjusted Conversion Ratio between or among shares of such
classes or series of capital stock.
(b) In case the Company shall, while any of the Securities are outstanding,
issue rights or warrants to all holders of its Common Stock entitling them (for
a period expiring within 45 days after the record date mentioned in this Section
12.3(b)) to subscribe for or purchase shares of Common Stock at a price per
share less than the Current Market Price per share of Common Stock on such
record date, then the Conversion Ratio for the Securities shall be adjusted so
that the same shall equal the ratio determined by multiplying the Conversion
Ratio in effect immediately prior to the date of issuance of such rights or
warrants by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding on the date of issuance of such rights or warrants plus
the number of additional shares of Common Stock offered for subscription or
purchase, and of which the denominator shall be the number of shares of Common
Stock outstanding on the date of issuance of such rights or warrants plus the
number of shares which the aggregate offering price of the total number of
shares so offered for subscription or purchase would purchase at such Current
Market Price. Such adjustment shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
rights or warrants. For the purposes of this Section 12.3(b), the number of
shares of Common Stock at any time outstanding shall not include shares held in
the treasury of the Company. The Company shall not issue any rights or warrants
in respect of the shares of Common Stock held in the treasury of the Company. In
case any rights or warrants referred to in this Section 12.3(b) in respect of
which an adjustment shall have been made shall expire unexercised within 45 days
after the same shall have been distributed or issued by the Company, the
Conversion Ratio shall be readjusted at
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the time of such expiration to the Conversion Ratio that would have been in
effect if no adjustment had been made on account of the distribution or issuance
of such expired rights or warrants.
(c) Subject to the last sentence of this Section 12.3(c), in case the
Company shall, by dividend or otherwise, distribute to all holders of its Common
Stock evidences of its indebtedness, shares of any class or series of capital
stock, cash or assets (including securities, but excluding any rights or
warrants referred to in Section 12.3(b), any dividend or distribution paid
exclusively in cash and any dividend or distribution referred to in Section
12.3(a)), then the Conversion Ratio shall be increased so that the same shall
equal the ratio determined by multiplying the Conversion Ratio in effect
immediately prior to the effectiveness of the Conversion Ratio increase
contemplated by this Section 12.3(c) by a fraction of which the numerator shall
be the Current Market Price per share of Common Stock on the date fixed for the
payment of such distribution (the "Reference Date"), and of which the
denominator shall be, the Current Market Price per share of the Common Stock on
the Reference Date less the fair market value (as determined in good faith by
the Board of Directors, whose determination shall be conclusive and described in
a Board Resolution), on the Reference Date, of the portion of the evidences of
indebtedness, shares of capital stock, cash and assets so distributed applicable
to one share of Common Stock, such increase to become effective immediately
prior to the opening of business on the day following the Reference Date. In the
event that such dividend or distribution is not so paid or made, the Conversion
Ratio shall again be adjusted to be the Conversion Ratio which would then be in
effect if such dividend or distribution had not occurred. If the Board of
Directors determines the fair market value of any distribution for purposes of
this Section 12.3(c) by reference to the actual or when issued trading market
for any securities comprising such distribution, it must in doing so consider
the prices in such market over the same period used in computing the Current
Market Price per share of Common Stock. For purposes of this Section 12.3(c),
any dividend or distribution that includes shares of Common Stock or rights or
warrants to subscribe for or purchase shares of Common Stock shall be deemed
instead to be (1) a dividend or distribution of the evidences of indebtedness,
shares of capital stock, cash or assets other than such shares of Common Stock
or such rights or warrants (making any Conversion Ratio increase required by
this Section 12.3(c)) immediately followed by (2) a dividend or distribution of
such shares of Common Stock or such rights or warrants (making any further
Conversion Ratio increase required by Section 12.3(a) or 12.3 (b)), except (A)
the Reference Date of such dividend or distribution as defined in this Section
12.3(c) shall be substituted as (a) "the record date in the case of a dividend
or other distribution," and (b) "the record date for the determination of
shareholders entitled to receive such rights or warrants," and (c) "the date
fixed for such determination" within the meaning of Sections 12.3(a) and
12.3(b), and (B) any shares of Common Stock included in such dividend or
distribution shall not be deemed outstanding for purposes of computing any
adjustment of the Conversion Ratio in Section 12.3(a).
(d) In case the Company shall pay or make a dividend or other distribution
on its Common Stock exclusively in cash (excluding all cash dividends paid out
of the retained earnings of the Company), then the Conversion Ratio shall be
increased so that the same shall equal the ratio determined by multiplying the
Conversion Ratio in effect immediately prior to the effectiveness of the
Conversion Ratio increase contemplated by this Section 12.3(d) by a fraction of
which the numerator shall be the Current Market Price per share of the Common
Stock, and of which the denominator shall be the Current Market Price per share
of Common Stock on the date fixed for the payment of such distribution less the
amount of cash so distributed and not excluded as provided applicable to one
share of Common Stock on the date fixed for the payment of such distribution,
such increase to become effective immediately prior to the opening of business
on the day following the date fixed for the payment of such distribution;
provided, however, that in the event the portion of the cash so distributed
applicable to one share of Common Stock is equal to or greater than the Current
Market Price per share of the Common Stock on the record date mentioned above,
in lieu of the foregoing adjustment,
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adequate provision shall be made so that each Holder of Securities shall have
the right to receive upon conversion the amount of cash such Holder would have
received had such Holder converted each Security immediately prior to the record
date for the distribution of the cash. In the event that such dividend or
distribution is not so paid or made, the Conversion Ratio shall again be
adjusted to be the Conversion Ratio which would then be in effect if such record
date had not been fixed.
(e) In case a tender or exchange offer (other than an odd-lot offer) made
by the Company or any subsidiary of the Company for all or any portion of the
Common Stock shall expire and such tender or exchange offer shall involve the
payment by the Company or such subsidiary of consideration per share of Common
Stock having a fair market value (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution) at the last time (the "Expiration Time") tenders or exchanges may be
made pursuant to such tender or exchange offer (as it shall have been amended)
that exceeds 110% of the Current Market Price per share of Common Stock on the
Trading Day next succeeding the Expiration Time, then the Conversion Ratio shall
be increased so that the same shall equal the ratio determined by multiplying
the Conversion Ratio in effect immediately prior to the effectiveness of the
Conversion Ratio increase contemplated by this Section 12.3(e) by a fraction of
which the numerator shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to shareholders based on the
acceptance (up to any maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum, being
referred to as the "Purchased Shares"), and (y) the product of the number of
shares of Common Stock outstanding (less any Purchased Shares) at the Expiration
Time and the Current Market Price per share of Common Stock on the Trading Day
next succeeding the Expiration Time, and of which the denominator shall be the
number of shares of Common Stock outstanding (including any tendered or
exchanged shares) at the Expiration Time multiplied by the Current Market Price
per share of Common Stock on the Trading Day next succeeding the Expiration
Time, such increase to become effective immediately prior to the opening of
business on the day following the Expiration Time.
(f) For the purpose of any computation under Sections 12.3(b), (c), (d) or
(e), the "Current Market Price" per share of Common Stock on any date in
question shall be deemed to be the average of the daily Closing Prices for the
five consecutive Trading Days selected by the Company commencing not more than
20 Trading Days before, and ending not later than the earlier of the day in
question or, if applicable, the day before the "ex" date with respect to the
issuance or distribution requiring such computation; provided, however, that if
another event occurs that would require an adjustment pursuant to Sections
12.3(a) through (e), inclusive, the Board of Directors may make such adjustments
to the Closing Prices during such five Trading Day period as it deems
appropriate to effectuate the intent of the adjustments in this Section 12.3, in
which case any such determination by the Board of Directors shall be set forth
in a Board Resolution and shall be conclusive. For purposes of this Section
12.3(f), the term "ex" date, (i) when used with respect to any issuance or
distribution, means the first date on which the Common Stock trades regular way
on the New York Stock Exchange (the "NYSE") or on such successor securities
exchange as the Common Stock may be listed or in the relevant market from which
the Closing Prices were obtained without the right to receive such issuance or
distribution, and (ii) when used with respect to any tender or exchange offer,
means the first date on which the Common Stock trades regular way on such
securities exchange or in such market after the Expiration Time of such offer.
(g) The Company may make such increases in the Conversion Ratio, in
addition to those required by Sections (a) through (e), as it considers to be
advisable to avoid or diminish any income tax to holders of Common Stock or
rights to purchase Common Stock resulting from any dividend or
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distribution of stock (or rights to acquire stock) or from any event treated as
such for income tax purposes. The Company from time to time may increase the
Conversion Ratio by any amount for any period of time if the period is at least
20 days, the increase is irrevocable during the period, and the Board of
Directors shall have made a determination that such increase would be in the
best interest of the Company, which determination shall be conclusive. Whenever
the Conversion Ratio is increased pursuant to the preceding sentence, the
Company shall mail to Holders of record of the Securities a notice of the
increase at least fifteen days prior to the date the increased Conversion Ratio
takes effect, and such notice shall state the increased Conversion Ratio and the
period it shall be in effect.
(h) No adjustment in the Conversion Ratio shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
Conversion Ratio; provided, however, that any adjustments which by reason of
this Section 12.3(h) are not required to be made shall be carried forward and
taken into account in determining whether any subsequent adjustment shall be
required.
(i) If any action would require adjustment of the Conversion Ratio pursuant
to more than one of the provisions described above, only one adjustment shall be
made and such adjustment shall be the amount of adjustment that has the highest
absolute value to the Holder of the Securities.
SECTION 12.4. Reclassification, Consolidation, Merger or Sale of Assets.
In the event that the Company shall be a party to any transaction,
including without limitation (a) any recapitalization or reclassification of the
Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination of the Common Stock), (b) any consolidation of the Company with, or
merger of the Company into any other Person, any merger of another Person into
the Company (other than a merger which does not result in a reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock of
the Company), (c) any sale, transfer or lease of all or substantially all of the
assets of the Company, or (d) any compulsory share exchange, in each case
pursuant to which the Common Stock is converted into the right to receive other
securities, cash or other property, then lawful provision shall be made as part
of the terms of such transaction whereby the Holder of each Security then
outstanding shall have the right thereafter to convert each Security only into
the kind and amount of securities, cash or other property receivable upon
consummation of such transaction by a holder of the number of shares of Common
Stock of the Company into which such Security could have been converted
immediately prior to such transaction.
The Company or the Person formed by such consolidation or resulting from
such merger or which acquired such assets or which acquires the shares of the
Company, as the case may be, shall make provision in its certificate or articles
of incorporation or other constituent document to establish such right. Such
certificate or articles of incorporation or other constituent document shall
provide for adjustments which, for events subsequent to the effective date of
such certificate or articles of incorporation or other constitution document,
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Article XII. The above provisions shall similarly apply to
successive transactions of the foregoing type.
SECTION 12.5. Notice of Adjustments of Conversion Ratio.
Whenever the Conversion Ratio is adjusted as herein provided:
(a) The Company shall compute the adjusted Conversion Ratio and shall
prepare a certificate signed by the Chairman of the Board, President or a Vice
President of the Company and by
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its Treasurer or an Assistant Treasurer of the Company setting forth the
adjusted Conversion Ratio and showing in reasonable detail the facts upon which
such adjustment is based, and such certificate shall forthwith be filed with the
Trustee, the Conversion Agent and the transfer agent for the Capital Securities
and the Securities; and
(b) notice stating that the Conversion Ratio has been adjusted and setting
forth the adjusted Conversion Ratio shall as soon as practicable be mailed by
the Company to all record holders of Capital Securities and the Securities at
their last addresses as they appear upon the stock transfer books of the Company
and the Trust.
SECTION 12.6. Prior Notice of Certain Events.
In case:
(a) the Company shall (i) declare any dividend (or any other distribution)
on its Common Stock, other than (A) a dividend payable in shares of Common
Stock, or (B) a dividend payable in cash that would not require an adjustment
pursuant to Section 12.3(c) or (d), or (ii) authorize a tender or exchange offer
that would require an adjustment pursuant to Section 12.3(e);
(b) the Company shall authorize the granting to all holders of Common Stock
of rights or warrants to subscribe for or purchase any shares of stock of any
class or series or of any other rights or warrants;
(c) of any reclassification of Common Stock (other than a subdivision or
combination of the outstanding Common Stock, or a change in par value, or from
par value to no par value, or from no par value to par value), or of any
consolidation or merger to which the Company is a party and for which approval
of any shareholders of the Company shall be required, or the sale or transfer of
all or substantially all of the assets of the Company or of any compulsory share
exchange whereby the Common Stock is converted into other securities, cash or
other property; or
(d) of the voluntary or involuntary dissolution, liquidation or winding up
of the Company; then the Company shall (1) if any Capital Securities are
outstanding, cause to be filed with the transfer agent for the Capital
Securities, and shall cause to be mailed to the holders of record of the Capital
Securities, at their last addresses as they shall appear upon the securities
register of the Trust, or (2) shall cause to be mailed to all Holders at their
last addresses as they shall appear in the Security Register, at least fifteen
days prior to the applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record (if any) is to be taken for the
purpose of such dividend, distribution, rights or warrants or, if a record is
not to be taken, the date as of which the holders of Common Stock of record to
be entitled to such dividend, distribution, rights or warrants are to be
determined, or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, share exchange, dissolution, liquidation or winding up
is expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up (but no failure to mail such notice or
any defect therein or in the mailing thereof shall affect the validity of the
corporate action required to be specified in such notice).
SECTION 12.7. Certain Defined Terms.
The following definitions shall apply to terms used in this Article XII:
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(a) "Closing Prices" of any security on any day shall mean the last
reported sale price for such security, regular way, on such day or, if no sale
takes place on such day, the average of the reported closing bid and asked
prices on such day, regular way, of such security, in either case as reported on
the NYSE Composite Tape or, if the security is not listed or admitted to trading
on the NYSE, on the principal national securities exchange on which such
security is listed or admitted to trading, or, if not listed or admitted to
trading on a national securities exchange, on the National Market System of the
National Association of Securities Dealers, Inc. or, if such security is not
quoted or admitted to trading on such quotation system, on the principal
quotation system on which such security is listed or admitted to trading or
quoted, or, if not listed or admitted to trading or quoted on any national
securities exchange or quotation system, the average of the closing bid and
asked prices of such security in the over-the-counter market on the day in
question as reported by the National Quotation Bureau Incorporated, or a similar
generally accepted reporting service, or, if not so available in such manner, as
furnished by any NYSE member firm selected from time to time by the Board of
Directors for that purpose or, if not so available in such manner, as otherwise
determined in good faith by the Board of Directors.
(b) "Trading Day" shall mean a day on which securities are traded on the
national securities exchange or quotation system used to determine the Closing
Price.
SECTION 12.8. Dividend or Interest Reinvestment Plans.
Notwithstanding the foregoing provisions, the issuance of any shares of
Common Stock pursuant to any plan providing for the reinvestment of dividends or
interest payable on securities of the Company and the investment of additional
optional amounts in shares of Common Stock under any such plan, and the issuance
of any shares of Common Stock or options or rights to purchase such shares
pursuant to any employee benefit plan or program of the Company or pursuant to
any option, warrant, right or exercisable, exchangeable or convertible security
outstanding as of the date the Securities were first issued, shall not be deemed
to constitute an issuance of Common Stock or exercisable, exchangeable or
convertible securities by the Company to which any of the adjustment provisions
described above shall apply. There also shall be no adjustment of the Conversion
Ratio in case of the issuance of any stock (or securities convertible into or
exchangeable for stock) of the Company except as specifically described in this
Article XII.
SECTION 12.9. Certain Additional Rights.
In case the Company shall, by dividend or otherwise, declare or make a
distribution on its Common Stock referred to in Section 12.3(c) or (d)
(including, without limitation, dividends or distributions referred to in the
last sentence of Section 12.3(c)), then the Holder of the Securities, upon the
conversion thereof subsequent to 5:00 p.m. (Eastern Standard time) on the date
fixed for the determination of shareholders entitled to receive such
distribution and prior to the effectiveness of the Conversion Ratio adjustment
in respect of such distribution, also shall be entitled to receive for each
share of Common Stock into which the Securities are converted, the portion of
the shares of Common Stock, rights, warrants, evidences of indebtedness, shares
of capital stock, cash and assets so distributed applicable to one share of
Common Stock; provided, however, that, at the election of the Company (whose
election shall be evidenced by a Board Resolution) with respect to all Holders
so converting, the Company may, in lieu of distributing to such Holder any
portion of such distribution not consisting of cash or securities of the
Company, pay such Holder an amount in cash equal to the fair market value
thereof (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution). If any
conversion of Securities described in
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the immediately preceding sentence occurs prior to the payment date for a
distribution to holders of Common Stock which the Holder of Securities so
converted is entitled to receive in accordance with the immediately preceding
sentence, the Company may elect (such election to be evidenced by a Board
Resolution) to distribute to such Holder a due bill for the shares of Common
Stock, rights, warrants, evidences of indebtedness, shares of capital stock,
cash or assets to which such Holder is so entitled, provided, that such due bill
(i) meets any applicable requirements of the principal national securities
exchange or other market on which the Common Stock is then traded, and (ii)
requires payment or delivery of such shares of Common Stock, rights, warrants,
evidences of indebtedness, shares of capital stock, cash or assets no later than
the date of payment or delivery thereof to holders of shares of Common Stock
receiving such distribution.
SECTION 12.10. Trustee Not Responsible for Determining Conversion Ratio or
Adjustments.
Neither the Trustee nor any Conversion Agent shall at any time be under any
duty or responsibility to any Holder to determine whether any facts exist which
may require any adjustment of the Conversion Ratio, or with respect to the
nature or extent of any such adjustment when made, or with respect to the method
employed, or herein or in any supplemental indenture provided to be employed, in
making the same. Neither the Trustee nor any Conversion Agent shall be
accountable with respect to the validity or value (or the kind of account) of
any shares of Common Stock or of any securities or property, which may at any
time be issued or delivered upon the conversion of any Security; and neither the
Trustee nor any Conversion Agent makes any representation with respect thereto.
Neither the Trustee nor any Conversion Agent shall be responsible for any
failure of the Company to make any cash payment or to issue, transfer or deliver
any shares of Common Stock or stock certificates or other securities or property
upon the surrender of any Security for the purpose of conversion, or, except as
expressly herein provided, to comply with any of the covenants of the Company
contained in Article X or this Article XII.
ARTICLE XIII.
SUBORDINATION OF SECURITIES
SECTION 13.1. Securities Subordinate to Senior Debt.
The Company covenants and agrees, and each Holder of a Security, by its
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article XIII, the payment of the
principal of (and premium, if any) and interest (including any Additional
Interest) on each and all of the Securities are hereby expressly made
subordinate and subject in right of payment to the prior payment in full of all
Senior Debt.
SECTION 13.2. Payment Over of Proceeds Upon Dissolution, Etc.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company (each such event, if any, herein
sometimes referred to as a "Proceeding"), then the holders of Senior Debt shall
be entitled to receive payment in full of all amounts due or to become due on
such Senior Debt, or provision shall be made for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of Senior Debt,
before the Holders of the Securities are entitled to receive or retain any
payment or distribution of any kind or character, whether in cash, property or
securities (including any payment or distribution which may be payable or
deliverable by reason of the
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payment of any other Debt of the Company (including the Securities) subordinated
to the payment of the Securities, such payment or distribution being hereinafter
referred to as a "Junior Subordinated Payment"), on account of principal of (or
premium, if any) or interest (including any Additional Interest) on the
Securities or on account of the purchase or other acquisition of Securities by
the Company or any Subsidiary and to that end the holders of Senior Debt shall
be entitled to receive, for application to the payment thereof, any payment or
distribution of any kind or character, whether in cash, property or securities,
including any Junior Subordinated Payment, which may be payable or deliverable
in respect of the Securities in any such Proceeding; provided, however, that
holders of Senior Debt shall not be entitled to receive payment of any such
amounts to the extent that such holders would be required by the subordination
provisions of such Senior Debt to pay such amounts over to the obligees on trade
accounts payable or other liabilities arising in the ordinary course of the
Company's business.
In the event that, notwithstanding the foregoing provisions of this Section
13.2, the Trustee or the Holder of any Security shall have received any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities, including any Junior Subordinated Payment, before
all amounts due or to become due on all Senior Debt are paid in full or payment
thereof is provided for in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of Senior Debt, and if such fact shall, at or prior
to the time of such payment or distribution, have been made known to the Trustee
or, as the case may be, such Holder, then and in such event such payment or
distribution shall be paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other
Person making payment or distribution of assets of the Company for application
to the payment of all amounts due or to become due on all Senior Debt remaining
unpaid, to the extent necessary to pay all amounts due or to become due on all
Senior Debt in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt; provided, however, that
holders of Senior Debt shall not be entitled to receive payment of any such
amounts to the extent that such holders would be required by the subordination
provisions of such Senior Debt to pay such amounts over to the obligees on trade
accounts payable or other liabilities arising in the ordinary course of the
Company's business.
For purposes of this Article XIII only, the words "any payment or
distribution of any kind or character, whether in cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment which securities are subordinated in
right of payment to all then outstanding Senior Debt to substantially the same
extent as the Securities are so subordinated as provided in this Article XIII.
The consolidation of the Company with, or the merger of the Company into,
another Person or the liquidation or dissolution of the Company following the
sale of all or substantially all of its properties and assets as an entirety to
another Person upon the terms and conditions set forth in Article VIII shall not
be deemed a Proceeding for the purposes of this Section 13.2 if the Person
formed by such consolidation or into which the Company is merged or the Person
which acquires by sale such properties and assets as an entirety, as the case
may be, shall, as a part of such consolidation, merger, or sale comply with the
conditions set forth in Article VIII.
SECTION 13.3. Prior Payment to Senior Debt Upon Acceleration of Securities.
In the event that any Securities are declared due and payable before their
Stated Maturity, then and in such event the holders of the Senior Debt
outstanding at the time such Securities so become due and payable shall be
entitled to receive payment in full of all amounts due on or in respect of such
Senior Debt (including any amounts due upon acceleration), or provision shall be
made for such payment in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of Senior
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Debt, before the Holders of the Securities are entitled to receive any payment
or distribution of any kind or character, whether in cash, properties or
securities (including any Junior Subordinated Payment) by the Company on account
of the principal of (or premium, if any) or interest (including any Additional
Interest) on the Securities or on account of the purchase or other acquisition
of Securities by the Company or any Subsidiary.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section 13.3, and if such fact shall, at or prior
to the time of such payment, have been made known to the Trustee or, as the case
may be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
The provisions of this Section 13.3 shall not apply to any payment with
respect to which Section 13.2 would be applicable.
SECTION 13.4. No Payment When Senior Debt in Default.
(a) In the event and during the continuation of any default in the payment
of principal of (or premium, if any) or interest on any Senior Debt, or in the
event that any event of default with respect to any Senior Debt shall have
occurred and be continuing and shall have resulted in such Senior Debt becoming
or being declared due and payable prior to the date on which it would otherwise
have become due and payable, unless and until such event of default shall have
been cured or waived or shall have ceased to exist and such acceleration shall
have been rescinded or annulled, or (b) in the event any judicial proceeding
shall be pending with respect to any such default in payment or such event or
default, then no payment or distribution of any kind or character, whether in
cash, properties or securities (including any Junior Subordinated Payment) shall
be made by the Company on account of principal of (or premium, if any) or
interest (including any Additional Interest), if any, on the Securities or on
account of the purchase or other acquisition of Securities by the Company or any
Subsidiary, in each case unless and until all amounts due or to become due on
such Senior Debt are paid in full.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section 13.4, and if such fact shall, at or prior
to the time of such payment, have been made known to the Trustee or, as the case
may be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
The provisions of this Section 13.4 shall not apply to any payment with
respect to which Section 13.2 would be applicable.
SECTION 13.5. Payment Permitted if no Default.
Nothing contained in this Article XIII or elsewhere in this Indenture or in
any of the Securities shall prevent (a) the Company, at any time except during
the pendency of any Proceeding referred to in Section 13.2 or under the
conditions described in Sections 13.3 and 13.4, from making payments at any time
of principal of (and premium, if any) or interest (including Additional
Interest) on the Securities, or (b) the application by the Trustee of any money
deposited with it hereunder to the payment of or on account of the principal of
(and premium, if any) or interest (including any Additional Interest) on the
Securities or the retention of such payment by the Holders, if, at the time of
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such application by the Trustee, it did not have knowledge that such payment
would have been prohibited by the provisions of this Article XIII.
SECTION 13.6. Subrogation to Rights of Holders of Senior Debt.
Subject to the payment in full of all amounts due or to become due on all
Senior Debt, or the provision for such payment in cash or cash equivalents or
otherwise in a manner satisfactory to the holders of Senior Debt, the Holders of
the Securities shall be subrogated to the extent of the payments or
distributions made to the holders of such Senior Debt pursuant to the provisions
of this Article XIII (equally and ratably with the holders of all indebtedness
of the Company which by its express terms is subordinated to Senior Debt of the
Company to substantially the same extent as the Securities are subordinated to
the Senior Debt and is entitled to like rights of subrogation by reason of any
payments or distributions made to holders of such Senior Debt) to the rights of
the holders of such Senior Debt to receive payments and distributions of cash,
property and securities applicable to the Senior Debt until the principal of
(and premium, if any) and interest on the Securities shall be paid in full. For
purposes of such subrogation, no payments or distributions to the holders of the
Senior Debt of any cash, property or securities to which the Holders of the
Securities or the Trustee would be entitled except for the provisions of this
Article XIII, and no payments over pursuant to the provisions of this Article
XIII to the holders of Senior Debt by Holders of the Securities or the Trustee,
shall, as among the Company, its creditors other than holders of Senior Debt,
and the Holders of the Securities, be deemed to be a payment or distribution by
the Company to or on account of the Senior Debt.
SECTION 13.7. Provisions Solely to Define Relative Rights.
The provisions of this Article XIII are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities, on the
one hand, and the holders of Senior Debt, on the other hand. Nothing contained
in this Article XIII or elsewhere in this Indenture or in the Securities is
intended to or shall (a) impair, as between the Company and the Holders of the
Securities, the obligations of the Company, which are absolute and
unconditional, to pay to the Holders of the Securities the principal of (and
premium, if any) and interest (including any Additional Interest) on the
Securities as and when the same shall become due and payable in accordance with
their terms, or (b) affect the relative rights against the Company of the
Holders of the Securities and creditors of the Company other than their rights
in relation to the holders of Senior Debt, or (c) prevent the Trustee or the
Holder of any Security from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture including, without limitation,
filing and voting claims in any Proceeding, subject to the rights, if any, under
this Article XIII of the holders of Senior Debt to receive cash, property and
securities otherwise payable or deliverable to the Trustee or such Holder.
SECTION 13.8. Trustee to Effectuate Subordination.
Each Holder of a Security by his or her acceptance thereof authorizes and
directs the Trustee on his or her behalf to take such action as may be necessary
or appropriate to acknowledge or effectuate the subordination provided in this
Article XIII and appoints the Trustee his or her attorney-in-fact for any and
all such purposes.
SECTION 13.9. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Debt to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder, or by any
67
<PAGE>
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof that any such holder may have or
be otherwise charged with.
Without in any way limiting the generality of the immediately preceding
paragraph, the holders of Senior Debt may, at any time and from to time, without
the consent of or notice to the Trustee or the Holders of the Securities,
without incurring responsibility to the Holders of the Securities and without
impairing or releasing the subordination provided in this Article XIII or the
obligations hereunder of the Holders of the Securities to the holders of Senior
Debt, do any one or more of the following: (i) change the manner, place or terms
of payment or extend the time of payment of, or renew or alter, Senior Debt, or
otherwise amend or supplement in any manner Senior Debt or any instrument
evidencing the same or any agreement under which Senior Debt is outstanding,
(ii) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing Senior Debt, (iii) release any Person liable in
any manner for the collection of Senior Debt, and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
SECTION 13.10. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of this
Article XIII or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Debt or from any trustee, agent or representative
therefor; provided, however, that if the Trustee shall not have received the
notice provided for in this Section 13.10 at least two Business Days prior to
the date upon which by the terms hereof any monies may become payable for any
purpose (including, without limitation, the payment of the principal of (and
premium, if any) or interest (including any Additional Interest) on any
Security), then, anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such monies and to apply
the same to the purpose for which they were received and shall not be affected
by any notice to the contrary which may be received by it within two Business
Days prior to such date.
Subject to the provisions of Section 6.1, the Trustee shall be entitled to
rely on the delivery to it of a written notice by a Person representing himself
to be a holder of Senior Debt (or a trustee therefor) to establish that such
notice has been given by a holder of Senior Debt (or a trustee therefor). In the
event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of Senior Debt to
participate in any payment or distribution pursuant to this Article XIII, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Debt held by such Person,
the extent to which such Person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such Person under
this Article XIII, and if such evidence is not furnished, the Trustee may defer
any payment to such Person pending judicial determination as to the right of
such Person to receive such payment.
SECTION 13.11. Reliance on Judicial Order or Certificate of Liquidating
Agent.
Upon any payment or distribution of assets of the Company referred to in
this Article XIII, the Trustee, subject to the provisions of Section 6.1, and
the Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such Proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian,
68
<PAGE>
assignee for the benefit of creditors, agent or other Person making such payment
or distribution, delivered to the Trustee or to the Holders of Securities, for
the purpose of ascertaining the Persons entitled to participate in such payment
or distribution, the holders of the Senior Debt 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
XIII.
SECTION 13.12. Trustee Not Fiduciary for Holders of Senior Debt.
The Trustee, in its capacity as trustee under this Indenture, shall not be
deemed to owe any fiduciary duty to the holders of Senior Debt and shall not be
liable to any such holders if it shall in good faith mistakenly pay over or
distribute to Holders of Securities or to the Company or to any other Person
cash, property or securities to which any holders of Senior Debt shall be
entitled by virtue of this Article XIII or otherwise. With respect to the
holders of Senior Debt, the Trustee undertakes to perform or to observe only
such of its covenants or obligations as are specifically set forth in this
Article XIII and no implied covenants or obligations with respect to holders of
Senior Debt shall be read into this Indenture against the Trustee.
SECTION 13.13. Rights of Trustee as Holder of Senior Debt; Preservation of
Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article XIII with respect to any Senior Debt which may at any
time be held by it, to the same extent as any other holder of Senior Debt, and
nothing in this Indenture shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.7.
SECTION 13.14. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article XIII shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article XIII in addition to or in place of the Trustee.
SECTION 13.15. Certain Conversions or Exchanges Deemed Payment.
For the purposes of this Article XIII only, (a) the issuance and delivery
of junior securities upon conversion or exchange of Securities shall not be
deemed to constitute a payment or distribution on account of the principal of
(or premium, if any) or interest (including any Additional Interest) on
Securities or on account of the purchase or other acquisition of Securities, and
(b) the payment, issuance or delivery of cash, property or securities (other
than junior securities) upon conversion or exchange of a Security shall be
deemed to constitute payment on account of the principal of such security. For
the purposes of this Section 13.15, the term "junior securities" means (i)
shares of any stock of any class of the Company, and (ii) securities of the
Company which are subordinated in right of payment to all Senior Debt which may
be outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in this Article XIII.
SECTION 13.16. Trust Moneys Not Subordinated.
69
<PAGE>
Notwithstanding anything contained herein to the contrary, payments from
money held in trust under Article IV by the Trustee for the payment of principal
of, premium, if any, and interest on the Securities shall not be subordinated to
the prior payment of any Senior Debt of the Company or subject to the
restrictions set forth in this Article XIII and none of the Holders shall be
obligated to pay over any such amount to the Company or any holder of Senior
Debt of the Company or any other creditor of the Company.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
CNB BANCSHARES, INC.
By:
-------------------------------------------
James J. Giancola
President and Chief Executive Officer
THE BANK OF NEW YORK
as Trustee
By:
-------------------------------------------
Name:
Title:
70
<PAGE>
EXHIBIT 4.5
AMENDED AND RESTATED
TRUST AGREEMENT
among
CNB BANCSHARES, INC., as Depositor,
THE BANK OF NEW YORK
as Property Trustee,
THE BANK OF NEW YORK (DELAWARE)
as Delaware Trustee,
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN,
and
THE SEVERAL HOLDERS (AS DEFINED HEREIN)
Dated as of ____________, 1998
CNB CAPITAL TRUST I
<PAGE>
CNB CAPITAL TRUST I
Certain Sections of this Trust Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Trust Agreement
Act Section Section
- --------------- --------------------
<S> <C> <C>
(S) 310 (a)(1).......................................................... 5.7
(a)(2).......................................................... 5.7
(a)(3).......................................................... 5.9
(a)(4).......................................................... 2.7(a)(ii)
(b)............................................................. 5.8
(S) 311 (a)............................................................. 5.13
(b)............................................................. 5.13
(S) 312 (a)............................................................. Section 17 of
Annex I
(b)............................................................. Section 17 of
Annex I
(c)............................................................. Section 17 of
Annex I
(S) 313 (a)............................................................. 5.14(a)
(a)(4).......................................................... 5.14(b)
(b)............................................................. 5.14(b)
(c)............................................................. 7.9
(d)............................................................. 5.14(c)
(S) 314 (a)............................................................. 5.15
(b)............................................................. Not Applicable
(c)(1).......................................................... 5.16
(c)(2).......................................................... 5.16
(c)(3).......................................................... Not Applicable
(d)............................................................. Not Applicable
(e)............................................................. 1.1, 5.16
(S) 315 (a)............................................................. 5.1(a), 5.3(a)
(b)............................................................. 5.2, 7.9
(c)............................................................. 5.1(a)
(d)............................................................. 5.1, 5.3
(e)............................................................. Not Applicable
(S) 316 (a)............................................................. Not Applicable
(a)(1)(A)....................................................... Not Applicable
(a)(1)(B)....................................................... Not Applicable
(a)(2).......................................................... Not Applicable
(b)............................................................. Section 24 of
Annex I
(c)............................................................. Section 33 of
Annex I
(S) 317 (a)(1).......................................................... Not Applicable
(a)(2).......................................................... Not Applicable
(b)............................................................. Section 19 of
Annex I
(S) 318 (a)............................................................. 7.11
</TABLE>
________
Note: This reconciliation and tie sheet shall not, for any purpose, be deemed to
be a part of the Trust Agreement.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINED TERMS........................................ 1
Section 1.1 Definitions.......................................... 1
ARTICLE II Continuation of Trust................................ 9
Section 2.1 Name................................................. 9
Section 2.2 Office of Delaware Trustee; Principal Place of
Business............................................. 10
Section 2.3 Initial Contribution of Trust Property;
Organizational Expenses.............................. 10
Section 2.4 Issuance of Capital Securities....................... 10
Section 2.5 Issuance of Common Securities; Subscription and
Purchase of Debentures............................... 10
Section 2.6 Declaration of Trust................................. 11
Section 2.7 Authorization to Enter into Certain Transactions..... 11
Section 2.8 Assets of Trust...................................... 14
Section 2.9 Title to Trust Property.............................. 14
ARTICLE III Payment Account...................................... 14
Section 3.1 Payment Account...................................... 14
ARTICLE IV Representations and Warranties....................... 15
Section 4.1 Representations and Warranties of Property
Trustee and Delaware Trustee......................... 15
Section 4.2 Representations and Warranties of Depositor.......... 16
ARTICLE V The Trustees......................................... 16
Section 5.1 Certain Duties and Responsibilities.................. 16
Section 5.2 Certain Notices...................................... 17
Section 5.3 Certain Rights of Property Trustee................... 18
Section 5.4 Not Responsible for Recitals or Issuance
of Securities........................................ 19
Section 5.5 May Hold Securities.................................. 20
Section 5.6 Compensation; Indemnity; Fees........................ 20
Section 5.7 Corporate Property Trustee Required; Eligibility
of Trustees.......................................... 21
Section 5.8 Conflicting Interests................................ 21
Section 5.9 Co-Trustees and Separate Trustee..................... 21
Section 5.10 Resignation and Removal; Appointment of Successor.... 23
Section 5.11 Acceptance of Appointment by Successor............... 24
Section 5.12 Merger, Conversion, Consolidation or Succession
to Business.......................................... 24
Section 5.13 Preferential Collection of Claims Against
Depositor or Trust................................... 25
Section 5.14 Reports by Property Trustee.......................... 25
Section 5.15 Reports to Property Trustee.......................... 26
Section 5.16 Evidence of Compliance with Conditions Precedent..... 26
Section 5.17 Number of Trustees................................... 26
Section 5.18 Delegation of Power.................................. 26
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ARTICLE VI Termination, Liquidation and Merger.................. 27
Section 6.1 Termination Upon Expiration Date..................... 27
Section 6.2 Early Termination.................................... 27
Section 6.3 Termination.......................................... 27
Section 6.4 Liquidation.......................................... 27
Section 6.5 Mergers, Consolidations, Amalgamations or
Replacements of Trust................................ 29
ARTICLE VII Miscellaneous Provisions............................. 30
Section 7.1 Limitation of Rights of Securityholders.............. 30
Section 7.2 Liability of Common Securityholder................... 30
Section 7.3 Amendment............................................ 30
Section 7.4 Separability......................................... 31
Section 7.5 Governing Law........................................ 31
Section 7.6 Payments Due on Non-Business Day..................... 31
Section 7.7 Successors........................................... 31
Section 7.8 Headings............................................. 32
Section 7.9 Reports, Notices and Demands......................... 32
Section 7.10 Agreement Not to Petition............................ 32
Section 7.11 Trust Indenture Act; Conflict with Trust
Indenture Act........................................ 33
Section 7.12 Acceptance of Terms of Trust Agreement, Guarantee
and Indenture........................................ 33
Section 7.13 Holders are Parties.................................. 33
Section 7.14 Counterparts......................................... 33
</TABLE>
ii
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT
THIS AMENDED AND RESTATED TRUST AGREEMENT (this "Trust Agreement"), dated
as of ___________, 1998, among (i) CNB Bancshares, Inc., an Indiana corporation
(including any successors or assigns, the "Depositor"), (ii) THE BANK OF NEW
YORK, a New York banking corporation, as property trustee (in such capacity, the
"Property Trustee" and, in its separate corporate capacity and not in its
capacity as Property Trustee, the "Bank"), (iii) THE BANK OF NEW YORK
(DELAWARE), a banking corporation organized under the laws of the State of
Delaware, as Delaware trustee (the "Delaware Trustee"), (iv) JAMES J. GIANCOLA,
an individual, and JOHN R. SPRUILL, an individual, each of whose address is c/o
CNB Bancshares, Inc., 20 N.W. Third Street, Evansville, Indiana 47739 (each an
"Administrative Trustee" and collectively the "Administrative Trustees") (the
Property Trustee, the Delaware Trustee and the Administrative Trustees are
referred to individually as a "Trustee" and collectively as the "Trustees"), and
(v) the several Holders (as hereinafter defined).
WITNESSETH
WHEREAS, the Depositor, the Delaware Trustee and the Administrative
Trustees have heretofore duly declared and established a business trust pursuant
to the Delaware Business Trust Act by the entering into that certain Trust
Agreement, dated as of June 1, 1998 (the "Original Trust Agreement"), and by the
execution and filing with the Secretary of State of the State of Delaware of the
Certificate of Trust, filed on June 1, 1998, attached as Exhibit A (the
"Certificate of Trust"); and
WHEREAS, the Depositor and the Trustees desire to amend and restate the
Original Trust Agreement in its entirety as set forth herein to provide for,
among other things, (i) the issuance of the Common Securities (as hereinafter
defined) by the Trust to the Depositor, (ii) the issuance and sale of the
Capital Securities (as hereinafter defined) by the Trust pursuant to the
Underwriting Agreement (as hereinafter defined), and (iii) the acquisition by
the Trust from the Depositor of all of the right, title and interest in the
Debentures (as hereinafter defined).
NOW THEREFORE, in consideration of the agreements and obligations set forth
herein and for other good and valuable consideration, the sufficiency of which
is hereby acknowledged, each party, for the benefit of the other parties and for
the benefit of the Securityholders (as hereinafter defined), hereby amends and
restates the Original Trust Agreement in its entirety and agrees as follows:
ARTICLE I
DEFINED TERMS
Section 1.1 Definitions.
For all purposes of this Trust Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular;
<PAGE>
(b) all other terms used herein that are defined in the Trust Indenture
Act (as hereinafter defined), either directly or by reference therein, have the
meanings assigned to them therein;
(c) unless the context otherwise requires, any reference to an "Article"
or a "Section" refers to an Article or a Section, as the case may be, of this
Trust Agreement; and
(d) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.
"Act" has the meaning specified in Section 34 of Annex I hereto.
"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, the amount of Additional Interest (as
defined in the Indenture) paid by the Depositor on a Like Amount of Debentures
for such period.
"Administrative Trustee" means each of the individuals identified as an
"Administrative Trustee" in the preamble to this Trust Agreement solely in such
individual's capacity as Administrative Trustee of the Trust and not in such
individual's individual capacity, or such Administrative Trustee's successor in
interest in such capacity, or any successor trustee appointed as herein
provided.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Bank" has the meaning specified in the preamble to this Trust Agreement.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction in the
premises judging such Person a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjudication or
composition of or in respect of such Person under any applicable federal or
state bankruptcy, insolvency, reorganization or other similar law, or appointing
a receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of such Person or of any substantial part of its property or ordering
the winding up or liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive days; or
(b) the institution by such Person of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable federal or
state bankruptcy, insolvency, reorganization or other similar law, or the
consent by it to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or similar official) of
such Person or of any substantial part of its property, or the making by it of
an assignment for the benefit of creditors, or the admission by it in writing of
its inability to pay its debts generally as they become due and its willingness
to be adjudicated a bankrupt, or the taking of corporate action by such Person
in furtherance of any such action.
2
<PAGE>
"Bankruptcy Laws" has the meaning specified in Section 7.10.
"Board Resolution" means a copy of a resolution certified by the Secretary or
an Assistant Secretary of the Depositor to have been duly adopted by the
Depositor's Board of Directors, or such committee of the Board of Directors or
officers of the Depositor to which authority to act on behalf of the Board of
Directors has been delegated, and to be in full force and effect on the date of
such certification, and delivered to the Trustees.
"Book-Entry Capital Securities Certificates" means a beneficial interest in
the Capital Securities Certificates, ownership and transfers of which shall be
made through book entries by a Clearing Agency as described in Section 22 of
Annex I hereto.
"Business Day" means a day other than (i) a Saturday or Sunday, and (ii) a day
that is not a day on which banking institutions in The City of New York are
authorized or required by law or executive order to remain closed.
"Capital Security" means an undivided beneficial interest in the assets of the
Trust, having a Liquidation Amount of $25 and having the rights provided
therefor in this Trust Agreement and in Annex I hereto, including the right to
convert to shares of the Common Stock of the Depositor and the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Capital Securities Certificate" means a certificate evidencing ownership of
Capital Securities, substantially in the form attached as Exhibit D.
"Capital Treatment Event" means the reasonable determination by the Depositor
that, as a result of any amendment to, or change (including any proposed change)
in, the laws (or any regulations thereunder) of the United States or any
political subdivision thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such proposed change, pronouncement, action or decision is announced on or after
the date of issuance of the Capital Securities hereunder, there is more than an
insubstantial risk that the Depositor will not be entitled to treat an amount
equal to the Liquidation Amount of the Capital Securities as "Tier 1 Capital"
(or the then equivalent thereof) for purposes of the capital adequacy guidelines
of the Federal Reserve, as then in effect and applicable to the Depositor.
"Certificate Depository Agreement" means the agreement among the Trust, the
Depositor and The Depository Trust Company, as the initial Clearing Agency,
dated as of the Closing Date, relating to the Capital Securities Certificates,
substantially in the form attached as Exhibit B, as the same may be amended and
supplemented from time to time.
"Certificate of Trust" has the meaning specified in the recitals hereof, as
amended from time to time.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. The
Depository Trust Company will be the initial Clearing Agency.
3
<PAGE>
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"Closing Date" means the date of execution and delivery of this Trust
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, as amended,
or, if at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"Common Securities Certificate" means a certificate evidencing ownership of
Common Securities, substantially in the form attached as Exhibit C.
"Common Security" means an undivided beneficial interest in the assets of the
Trust, having a Liquidation Amount of $25 and having the rights provided
therefor in this Trust Agreement and in Annex I hereto, including the right to
convert to shares of the Common Stock of the Depositor and the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Common Stock" means the common stock of the Depositor, stated value $1.00 per
share.
"Conversion Agent" has the meaning set forth in Section 5(d) of Annex I
hereto.
"Conversion Date" has the meaning set forth in Section 5(b) of Annex I hereto.
"Conversion Ratio" has the meaning set forth in Section 5(a) Annex I hereto.
"Conversion Request" has the meaning set forth in Section 5(b) of Annex I
hereto.
"Corporate Trust Office" means, when used with respect to the Property Trustee
or the Debenture Trustee, the principal office of the Property Trustee or the
Debenture Trustee, as applicable, located in New York, New York.
"Debenture Event of Default" means an "Event of Default" as defined in the
Indenture.
"Debenture Maturity Date" means the date specified pursuant to the terms of
the Debentures as the date on which the principal of the Debentures is due and
payable.
"Debenture Redemption Date" means, with respect to any Debentures to be
redeemed under the Indenture, the date fixed for redemption under the Indenture.
"Debenture Tax Event" means a "Tax Event" as defined in the Indenture.
"Debenture Trustee" means The Bank of New York, a New York banking
corporation, as trustee under the Indenture, and any successor trustee appointed
as provided therein.
4
<PAGE>
"Debentures" means the [$154,639,200] aggregate principal amount [(or, if the
overallotment option is exercised pursuant to the Underwriting Agreement, the
$____________ aggregate principal amount )] of the Depositor's ____% Convertible
Subordinated Debentures issued pursuant to the Indenture.
"Definitive Capital Securities Certificates" means either or both (as the
context requires) of (a) Capital Securities Certificates issued as Book-Entry
Capital Securities Certificates as provided in Section 22 (a) of Annex I hereto,
and (b) Capital Securities Certificates issued in certificated, fully registered
form as provided in Annex I hereto.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. 3801, et seq., as it may be amended from time to time.
"Delaware Trustee" means the Person identified as the "Delaware Trustee" in
the preamble to this Trust Agreement solely in its capacity as Delaware Trustee
of the Trust and not in its individual capacity, or its successor in interest in
such capacity, or any successor trustee appointed as herein provided.
"Depositor" has the meaning specified in the preamble to this Trust Agreement.
"Direct Action" has the meaning specified in Section 25(e) of Annex I hereto.
"Distribution Date" has the meaning specified in Section 3(a) of Annex I
hereto.
"Distributions" means amounts payable in respect of the Trust Securities as
provided in Section 3 of Annex I hereto.
"Early Termination Event" has the meaning specified in Section 6.2.
"Event of Default" means any one of the following events (whatever the reason
for such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Property Trustee in the payment of any Distribution when
it becomes due and payable, and continuation of such default for a period of 30
days; or
(c) default by the Property Trustee in the payment of any Redemption Price of
any Trust Security when it becomes due and payable; or
(d) default in the performance, or breach, in any material respect, of any
covenant or warranty of the Trustees in this Trust Agreement (other than a
covenant or warranty a default in the performance or breach of which is dealt
with in clause (b) or (c) above) and continuation of such default or breach for
a period of 90 days after there has been given, by registered or certified mail,
to the defaulting Trustee or Trustees by the Holders of at least 25% in
aggregate Liquidation Amount of the Outstanding Capital Securities, a written
notice specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
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(e) the occurrence of a Bankruptcy Event with respect to the Property Trustee
and the failure by the Depositor to appoint a successor Property Trustee within
90 days thereof.
"Expiration Date" has the meaning specified in Section 6.1.
"Federal Reserve" means the Board of Governors of the Federal Reserve System,
as from time to time constituted, or if at any time after the execution of this
Trust Agreement the Federal Reserve is not existing and performing the duties
now assigned to it, then the body performing such duties at such time.
"Guarantee" means the Guarantee Agreement executed and delivered by the
Depositor and The Bank of New York, as trustee, contemporaneously with the
execution and delivery of this Trust Agreement, for the benefit of the Holders
of the Trust Securities, as amended from time to time.
"Indenture" means the Indenture, dated as of _____________, 1998 between the
Depositor and the Debenture Trustee, as trustee, as amended or supplemented from
time to time.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of trust,
adverse ownership interest, hypothecation, assignment, security interest or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount equal to the principal amount of
Debentures to be contemporaneously redeemed in accordance with the Indenture the
proceeds of which will be used to pay the Redemption Price of such Trust
Securities, and (b) with respect to a distribution of Debentures to Holders of
Trust Securities in connection with a dissolution or liquidation of the Trust,
Debentures having a principal amount equal to the Liquidation Amount of the
Trust Securities of the Holder to whom such Debentures are distributed.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
"Liquidation Date" means the date on which Debentures are to be distributed to
Holders of Trust Securities in connection with a termination and liquidation of
the Trust pursuant to Section 9.4(a).
"Liquidation Distribution" has the meaning specified in Section 6.4(d).
"1940 Act" means the Investment Company Act of 1940, as amended.
"Officers' Certificate" means a certificate signed by the Chairman, Chief
Executive Officer, President, a Vice President, and by the Treasurer, an
Assistant Treasurer, the Controller, the Secretary or an Assistant Secretary, of
the Depositor, and delivered to the appropriate Trustee. One of the officers
signing an Officers' Certificate given pursuant to Section 5.16 shall be the
principal executive, financial or accounting officer of the Depositor. Any
Officers' Certificate delivered with respect to compliance with a condition or
covenant provided for in this Trust Agreement shall include:
(a) a statement that each officer signing the Officers' Certificate has read
the covenant or condition and the definitions relating thereto;
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(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Trust, the Property Trustee or the Depositor, and who shall be
reasonably acceptable to the Property Trustee.
"Original Trust Agreement" has the meaning specified in the recitals to this
Trust Agreement.
"Outstanding," when used with respect to Trust Securities, means, as of the
date of determination, all Trust Securities theretofore executed and delivered
under this Trust Agreement, except:
(a) Trust Securities theretofore cancelled by the Securities Registrar or
delivered to the Securities Registrar for cancellation;
(b) Trust Securities for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Property Trustee or any Paying
Agent for the Holders of such Trust Securities; provided that, if such Trust
Securities are to be redeemed, notice of such redemption has been duly given
pursuant to this Trust Agreement; and
(c) Trust Securities which have been converted pursuant to Section 5 of Annex
I hereto; and
(d) Trust Securities which have been paid or in exchange for or in lieu of
which other Trust Securities have been executed and delivered pursuant to this
Trust Agreement, including pursuant to Sections 14, 15, 21 and 23 of Annex I
hereto;
provided, however, that in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Capital Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, Capital
Securities owned by the Depositor, any Trustee or any Affiliate of the Depositor
or any Trustee shall be disregarded and deemed not to be Outstanding, except
that (a) in determining whether any Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice, consent or waiver,
only Capital Securities that such Trustee actually knows to be so owned shall be
so disregarded and (b) the foregoing shall not apply at any time when all of the
Outstanding Capital Securities are owned by the Depositor, one or more of the
Trustees and/or any such Affiliate. Capital Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Administrative Trustees the pledgee's right so to act
with respect to such Capital Securities and that the pledgee is not the
Depositor or any Affiliate of the Depositor.
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"Owner" means each Person who is the beneficial owner of a Book-Entry Capital
Securities Certificate as reflected in the records of the Clearing Agency or, if
a Clearing Agency Participant is not the beneficial owner, then as reflected in
the records of a Person maintaining an account with such Clearing Agency
(directly or indirectly, in accordance with the rules of such Clearing Agency).
"Paying Agent" means any paying agent or co-paying agent appointed pursuant to
Annex I hereto and shall initially be the Bank.
"Payment Account" means a segregated non-interest-bearing corporate trust
account maintained by the Property Trustee with the Bank in its corporate trust
department for the benefit of the Securityholders in which all amounts paid in
respect of the Debentures will be held and from which the Property Trustee,
through the Paying Agent, shall make payments to the Securityholders in
accordance with Annex I hereto.
"Person" means any individual, corporation, partnership, joint venture, trust,
limited liability company or corporation, unincorporated organization or
government or any agency or political subdivision thereof.
"Property Trustee" means the Person identified as the "Property Trustee" in
the preamble to this Trust Agreement solely in its capacity as Property Trustee
of the Trust heretofore created and continued hereunder and not in its
individual capacity, or its successor in interest in such capacity, or any
successor property trustee appointed as herein provided.
"Redemption Date" means, with respect to any Trust Security to be redeemed,
the date fixed for such redemption by or pursuant to this Trust Agreement;
provided that each Debenture Redemption Date and the Debenture Maturity Date
shall be a Redemption Date for a Like Amount of Trust Securities.
"Redemption Price" means, with respect to any Trust Security, the Liquidation
Amount of such Trust Security, plus accumulated and unpaid Distributions to the
Redemption Date, paid by the Depositor upon the concurrent redemption of a Like
Amount of Debentures, allocated on a pro rata basis (based on Liquidation
Amounts) among the Trust Securities.
"Relevant Trustee" shall have the meaning specified in Section 5.10(a).
"Securities Register" and "Securities Registrar" have the respective meanings
specified in Section 14 of Annex I hereto.
"Securityholder" or "Holder" means a Person in whose name a Trust Security or
Trust Securities is registered in the Securities Register; any such Person shall
be a beneficial owner within the meaning of the Delaware Business Trust Act;
provided, however, that in determining whether the Holders of the requisite
amount of Capital Securities have voted on any matter provided for in this Trust
Agreement, then for the purpose of any such determination, so long as Definitive
Capital Securities Certificates have not been issued, the term Securityholders
or Holders as used herein shall refer to the Owners.
"Tax Event" means the receipt by the Trust of an Opinion of Counsel
experienced in such matters to the effect that, as a result of any amendment to,
or change (including any announced proposed change) in, the laws (or any
regulations thereunder) of the United States or any political
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subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which proposed change, pronouncement or decision is announced on or after the
date of issuance of the Capital Securities under this Trust Agreement, there is
more than an insubstantial risk that (i) the Trust is, or will be within 90 days
after the date of such Opinion of Counsel, subject to United States federal
income tax with respect to income received or accrued on the Debentures, (ii)
interest payable by the Depositor on the Debentures is not, or within 90 days
after the date of such Opinion of Counsel, will not be, deductible by the
Depositor, in whole or in part, for United States federal income tax purposes,
or (iii) the Trust is, or will be within 90 days after the date of such Opinion
of Counsel, subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
"Trust" means the Delaware business trust created and continued hereby and
identified on the cover page to this Trust Agreement.
"Trust Agreement" means this Amended and Restated Trust Agreement, as the
same may be modified, amended or supplemented in accordance with the applicable
provisions hereof, including (i) all exhibits and annexes hereto, and (ii) for
all purposes of this Trust Agreement and any such modification, amendment or
supplement, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this Trust Agreement and any such modification, amendment or
supplement, respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trust Property" means (a) the Debentures, (b) any cash on deposit in, or
owing to, the Payment Account, and (c) all proceeds and rights in respect of the
foregoing.
"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Capital Securities Certificates.
"Trust Security" means any one of the Common Securities or the Capital
Securities.
"Trustees" means, collectively, the Property Trustee, the Delaware Trustee
and the Administrative Trustees.
"Underwriting Agreement" means the Underwriting Agreement, dated as of
____________, 1998, among the Trust, the Depositor and SBC Warburg Dillon Reed
Inc. and CIBC Oppenheimer Corp., as representatives of the underwriters named
therein.
ARTICLE II
Continuation of Trust
Section 2.1 Name.
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The Trust continued hereby shall be known as "CNB Capital Trust I", as such
name may be modified from time to time by the Administrative Trustees following
written notice to the Holders of Trust Securities and the other Trustees, in
which name the Trustees engage in the transactions contemplated hereby, make and
execute contracts and other instruments on behalf of the Trust and sue and be
sued.
Section 2.2 Office of Delaware Trustee; Principal Place of Business.
The address of the Delaware Trustee in the State of Delaware is White Clay
Center, Route 273, Newark, Delaware, Attention: Corporate Trust Administration,
or such other address in the State of Delaware as the Delaware Trustee may
designate by written notice to the Securityholders and the Depositor. The
principal executive office of the Trust is c/o CNB Bancshares, Inc., 20 N.W.
Third Street, Evansville, Indiana 47739.
Section 2.3 Initial Contribution of Trust Property; Organizational
Expenses.
The Property Trustee acknowledges receipt in trust from the Depositor in
connection with the Original Trust Agreement of the sum of $10, which
constituted the initial Trust Property. The Depositor shall pay organizational
expenses of the Trust as they arise or shall, upon request of any Trustee,
promptly reimburse such Trustee for any such expenses paid by such Trustee. The
Depositor shall make no claim upon the Trust Property for the payment of such
expenses.
Section 2.4 Issuance of Capital Securities.
An Administrative Trustee shall on behalf of the Trust execute and deliver
to the Underwriters ____% Capital Securities Certificates representing undivided
beneficial interests in the assets of the Trust having such terms as are set
forth in this Trust Agreement and in Annex I hereto.
Section 2.5 Issuance of Common Securities; Subscription and Purchase of
Debentures.
(a) An Administrative Trustee shall on behalf of the Trust execute and
deliver to the Underwriters ______% Common Securities Certificates representing
undivided beneficial interests in the assets of the Trust having such terms as
are set forth in this Trust Agreement and in Annex I hereto. Contemporaneously
therewith, an Administrative Trustee, on behalf of the Trust, shall subscribe to
and purchase from the Depositor Debentures, registered in the name of the Trust
and having an aggregate principal amount equal to [$154,639,200], and, in
satisfaction of the purchase price plus accrued interest from ___________, 1998,
if any, for such Debentures, the Property Trustee, on behalf of the Trust, shall
deliver to the Depositor the sum of [$154,639,200] (being the sum of the amounts
delivered to the Property Trustee pursuant to (i) the second sentence of Section
1(a) of Annex I hereto, and (ii) the first sentence of Section 2(a) of Annex I
hereto).
(b) In the event the underwriters elect to exercise their overallotment
option pursuant to the Underwriting Agreement, contemporaneously therewith, an
Administrative Trustee, on behalf of the Trust, shall subscribe to and purchase
from the Depositor Debentures, registered in the name of the Trust and having an
aggregate principal amount equal to $______________, and, in satisfaction of the
purchase price plus accrued interest from ______________, 1998, if any, for such
Debentures, the Property Trustee, on behalf of the Trust, shall deliver to the
Depositor the sum of $_______________ (being the sum of the amounts delivered to
the Property Trustee pursuant to (i) the second sentence of Section 1(b) of
Annex I hereto, and (ii) the first sentence of Section 2(b) of Annex I hereto).
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Section 2.6 Declaration of Trust.
The exclusive purposes and functions of the Trust are (a) to issue and sell
Trust Securities, (b) to use the proceeds from such sale to acquire the
Debentures, and (c) to engage in those activities necessary or incidental
thereto. The Depositor hereby appoints the Trustees as trustees of the Trust, to
have all the rights, powers and duties to the extent set forth herein, and the
Trustees hereby accept such appointment. The Property Trustee hereby declares
that it will hold the Trust Property in trust upon and subject to the conditions
set forth herein for the benefit of the Trust and the Securityholders. The
Administrative Trustees shall have all rights, powers and duties set forth
herein and in accordance with applicable law with respect to accomplishing the
purposes of the Trust. The Delaware Trustee shall not be entitled to exercise
any powers, nor shall the Delaware Trustee have any of the duties and
responsibilities, of the Property Trustee or the Administrative Trustees set
forth herein. The Delaware Trustee shall be one of the Trustees of the Trust for
the sole and limited purpose of fulfilling the requirements of Section 3807 of
the Delaware Business Trust Act.
Section 2.7 Authorization to Enter into Certain Transactions.
(a) The Trustees shall conduct the affairs of the Trust in accordance with
the terms of this Trust Agreement. Subject to the limitations set forth in
paragraph (b) of this Section and Article VIII and in accordance with the
following provisions (i) and (ii), the Trustees shall have the authority to
enter into all transactions and agreements determined by the Trustees to be
appropriate in exercising the authority, express or implied, otherwise granted
to the Trustees under this Trust Agreement, and to perform all acts in
furtherance thereof, including without limitation, the following:
(i) As among the Trustees, each Administrative Trustee, acting singly
or collectively, shall have the power and authority to act on behalf of the
Trust with respect to the following matters:
(A) the issuance and sale of the Trust Securities;
(B) to cause the Trust to enter into, and to execute, deliver and
perform on behalf of the Trust, the Certificate Depository Agreement
and such other agreements as may be necessary or desirable in
connection with the purposes and function of the Trust;
(C) assisting in the registration of the Capital Securities under
the Securities Act of 1933, as amended, and under state securities or
blue sky laws, and the qualification of this Trust Agreement as a
trust indenture under the Trust Indenture Act;
(D) assisting in the listing, if any, of the Capital Securities
upon the New York Stock Exchange or any other such national stock
exchange or exchanges or the Nasdaq National Market or any other
automated quotation system or systems as shall be determined by the
Depositor and the registration of the Capital Securities under the
Securities Exchange Act of 1934, as amended, and the preparation and
filing of all periodic and other reports and other documents pursuant
to the foregoing;
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(E) the sending of notices (other than notices of default) and
other information regarding the Trust Securities and the Debentures to
the Securityholders in accordance with this Trust Agreement;
(F) the appointment of a Paying Agent, Conversion Agent and
Securities Registrar in accordance with this Trust Agreement;
(G) registering transfer of the Trust Securities in accordance
with this Trust Agreement;
(H) to the extent provided in this Trust Agreement, the winding
up of the affairs of and liquidation of the Trust and the execution
and filing of the certificate of cancellation with the Secretary of
State of the State of Delaware;
(I) unless otherwise required by the Delaware Business Trust Act
or the Trust Indenture Act, to execute on behalf of the Trust (either
acting alone or together with any or all of the Administrative
Trustees) any documents that the Administrative Trustees have the
power to execute pursuant to this Trust Agreement; and
(J) the taking of any action incidental to the foregoing as the
Trustees may from time to time determine is necessary or advisable to
give effect to the terms of this Trust Agreement for the benefit of
the Securityholders (without consideration of the effect of any such
action on any particular Securityholder).
(ii) As among the Trustees, the Property Trustee shall have the power,
duty and authority to act on behalf of the Trust with respect to the
following matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal and any other payments
made in respect of the Debentures in the Payment Account;
(D) the distribution through the Paying Agent of amounts owed to
the Securityholders in respect of the Trust Securities;
(E) the exercise of all of the rights, powers and privileges of a
holder of the Debentures;
(F) the sending of notices of default and other information
regarding the Trust Securities and the Debentures to the
Securityholders in accordance with this Trust Agreement;
(G) the distribution of the Trust Property in accordance with the
terms of this Trust Agreement;
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(H) to the extent provided in this Trust Agreement, the winding
up of the affairs of and liquidation of the Trust and the execution
and filing of the certificate of cancellation with the Secretary of
State of the State of Delaware; and
(I) except as otherwise provided in this Section 2.7(a)(ii), the
Property Trustee shall have none of the duties, liabilities, powers or
the authority of the Administrative Trustees set forth in Section
2.7(a)(i).
(b) So long as this Trust Agreement remains in effect, the Trust (or the
Trustees acting on behalf of the Trust) shall not undertake any business,
activities or transaction except as expressly provided herein or contemplated
hereby. In particular, the Trustees shall not (i) acquire any investments or
engage in any activities not authorized by this Trust Agreement, (ii) sell,
assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose of
any of the Trust Property or interests therein, including to Securityholders,
except as expressly provided herein, (iii) take any action that would cause the
Trust to fail or cease to qualify as a "grantor trust" for United States federal
income tax purposes, (iv) incur any indebtedness for borrowed money or issue any
other debt, (v) take or consent to any action that would result in the placement
of a Lien on any of the Trust Property, (vi) invest any proceeds received by the
Trust from holding the Debentures, but shall distribute all such proceeds to
Holders of Trust Securities pursuant to the terms of this Trust Agreement and of
the Trust Securities, (vii) acquire any assets other than the Trust Property,
(viii) possess any power or otherwise act in such a way as to vary the Trust
Property, (ix) possess any power or otherwise act in such a way as to vary the
terms of the Trust Securities in any way whatsoever (except to the extent
expressly authorized in this Trust Agreement or by the terms of the Trust
Securities), or (x) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the Trust
Securities. The Administrative Trustees shall defend all claims and demands of
all Persons at any time claiming any Lien on any of the Trust Property adverse
to the interest of the Trust or the Securityholders in their capacity as
Securityholders.
(c) In connection with the issue and sale of the Capital Securities, the
Depositor shall have the right and responsibility to assist the Trust with
respect to, or effect on behalf of the Trust, the following (and any actions
taken by the Depositor in furtherance of the following prior to the date of this
Trust Agreement are hereby ratified and confirmed in all respects):
(i) the preparation and filing by the Trust with the Commission and
the execution on behalf of the Trust of one or more registration statements
on the appropriate form in relation to the Capital Securities, including
any amendments thereto;
(ii) the determination of the states in which to take appropriate
action to qualify or register for sale all or part of the Capital
Securities and the determination of any and all such acts, other than
actions which must be taken by or on behalf of the Trust, and the advice to
the Trustees of actions they must take on behalf of the Trust, and the
preparation for execution and filing of any documents to be executed and
filed by the Trust or on behalf of the Trust, as the Depositor deems
necessary or advisable in order to comply with the applicable laws of any
such states;
(iii) the preparation for filing by the Trust and execution on behalf
of the Trust of an application to the New York Stock Exchange or any other
national stock exchange or the Nasdaq National Market or any other
automated quotation system for listing upon notice of issuance of any
Capital Securities and filing with such exchange or self-regulatory
organization
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such notifications and documents as may be necessary from time to time to
maintain such listing;
(iv) the negotiation of the terms of, and the execution and delivery
of, the Underwriting Agreement providing for the sale of the Capital
Securities; and
(v) the taking of any other actions necessary or desirable to carry
out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the Administrative
Trustees are authorized and directed to conduct the affairs of the Trust and to
operate the Trust so that the Trust will not be deemed to be an "investment
company" required to be registered under the 1940 Act, or fail to be classified
as a grantor trust for United States federal income tax purposes and so that the
Debentures will be treated as indebtedness of the Depositor for United States
federal income tax purposes. In this connection, the Depositor and the
Administrative Trustees are authorized to take any action, not inconsistent with
applicable law, the Certificate of Trust or this Trust Agreement, that each of
the Depositor and any Administrative Trustee determines in its discretion to be
necessary or desirable for such purposes, as long as such action does not
adversely affect in any material respect the interests of the Holders of the
Capital Securities.
Section 2.8 Assets of Trust.
The assets of the Trust shall consist solely of the Trust Property.
Section 2.9 Title to Trust Property.
Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and administered by
the Property Trustee for the benefit of the Trust and the Securityholders in
accordance with this Trust Agreement.
ARTICLE III
Payment Account
Section 3.1 Payment Account.
(a) On or prior to the Closing Date, the Property Trustee shall establish
the Payment Account. The Property Trustee and any agent of the Property Trustee
shall have exclusive control and sole right of withdrawal with respect to the
Payment Account for the purpose of making deposits in and withdrawals from the
Payment Account in accordance with this Trust Agreement. All monies and other
property deposited or held from time to time in the Payment Account shall be
held by the Property Trustee in the Payment Account for the exclusive benefit of
the Securityholders and for distribution as herein provided, including (and
subject to) any priority of payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest or premium on, and any
other payments or proceeds with respect to, the Debentures. Amounts held in the
Payment Account shall not be invested by the Property Trustee.
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ARTICLE IV
Representations and Warranties
Section 4.1 Representations and Warranties of Property Trustee and Delaware
Trustee.
The Property Trustee and the Delaware Trustee, each severally on behalf of
and as to itself, hereby represents and warrants for the benefit of the
Depositor and the Securityholders that:
(a) the Property Trustee is a New York banking corporation duly organized,
validly existing and in good standing under the laws of the State of New York;
(b) the Property Trustee has full corporate power, authority and legal
right to execute, deliver and perform its obligations under this Trust Agreement
and has taken all necessary action to authorize the execution, delivery and
performance by it of this Trust Agreement;
(c) the Delaware Trustee is a Delaware banking corporation duly organized,
validly existing and in good standing in the State of Delaware;
(d) the Delaware Trustee has full corporate power, authority and legal
right to execute, deliver and perform its obligations under this Trust Agreement
and has taken all necessary action to authorize the execution, delivery and
performance by it of this Trust Agreement;
(e) this Trust Agreement has been duly authorized, executed and delivered
by the Property Trustee and the Delaware Trustee and constitutes the valid and
legally binding agreement of each of the Property Trustee and the Delaware
Trustee enforceable against each of them in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles;
(f) the execution, delivery and performance of this Trust Agreement has
been duly authorized by all necessary corporate or other action on the part of
the Property Trustee and the Delaware Trustee and does not require any approval
of stockholders of the Property Trustee and the Delaware Trustee and such
execution, delivery and performance will not (i) violate the charter or by-laws
of the Property Trustee or the Delaware Trustee, (ii) violate any provision of,
or constitute, with or without notice or lapse of time, a default under, or
result in the creation or imposition of, any Lien on any properties included in
the Trust Property pursuant to the provisions of, any indenture, mortgage,
credit agreement, license or other agreement or instrument to which the Property
Trustee or the Delaware Trustee is a party or by which it is bound, or (iii)
violate any law, governmental rule or regulation of the State of New York or the
State of Delaware, as the case may be, governing the banking, trust or general
powers of the Property Trustee or the Delaware Trustee (as appropriate in
context) or any order, judgment or decree applicable to the Property Trustee or
the Delaware Trustee;
(g) neither the authorization, execution or delivery by the Property
Trustee or the Delaware Trustee of this Trust Agreement nor the consummation of
any of the transactions by the Property Trustee or the Delaware Trustee (as
appropriate in context) contemplated herein or therein requires the consent or
approval of, the giving of notice to, the registration with or the taking of any
other action with respect to any governmental authority or agency under any
existing New York or Delaware law governing the banking, trust or general powers
of the Property Trustee or the Delaware Trustee, as the case may be; and
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(h) there are no proceedings pending or, to the best of each of the
Property Trustee's and the Delaware Trustee's knowledge, threatened against or
affecting the Property Trustee or the Delaware Trustee in any court or before
any governmental authority, agency or arbitration board or tribunal which,
individually or in the aggregate, would materially and adversely affect the
Trust or would question the right, power and authority of the Property Trustee
or the Delaware Trustee, as the case may be, to enter into or perform its
obligations as one of the Trustees under this Trust Agreement.
Section 4.2 Representations and Warranties of Depositor.
The Depositor hereby represents and warrants for the benefit of the
Securityholders that:
(a) the Trust Securities Certificates issued at the Closing Date on behalf
of the Trust have been duly authorized and will have been, duly and validly
executed, issued and delivered by the Trustees pursuant to the terms and
provisions of, and in accordance with the requirements of, this Trust Agreement
and the Securityholders will be, as of such date, entitled to the benefits of
this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges payable by the
Trust (or the Trustees on behalf of the Trust) under the laws of the State of
Delaware or any political subdivision thereof in connection with the execution,
delivery and performance by the Property Trustee or the Delaware Trustee, as the
case may be, of this Trust Agreement.
ARTICLE V
The Trustees
Section 5.1 Certain Duties and Responsibilities.
(a) The duties and responsibilities of the Trustees shall be as provided by
this Trust Agreement and, in the case of the Property Trustee, by the Trust
Indenture Act. Notwithstanding the foregoing, no provision of this Trust
Agreement shall require the Trustees to expend or risk their own funds or
otherwise incur any financial liability in the performance of any of their
duties hereunder, or in the exercise of any of their rights or powers, if they
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
them. Whether or not therein expressly so provided, every provision of this
Trust Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustees shall be subject to the provisions of this
Section 5.1. Nothing in this Trust Agreement shall be construed to release an
Administrative Trustee from liability for its own gross negligent action, its
own gross negligent failure to act, or its own willful misconduct. To the extent
that, at law or in equity, an Administrative Trustee has duties (including
fiduciary duties) and liabilities relating thereto to the Trust or to the
Securityholders, such Administrative Trustee shall not be liable to the Trust or
to any Securityholder for such Trustee's good faith reliance on the provisions
of this Trust Agreement. The provisions of this Trust Agreement, to the extent
that they restrict the duties and liabilities of the Administrative Trustees
otherwise existing at law or in equity, are agreed by the Depositor and the
Securityholders to replace such other duties and liabilities of the
Administrative Trustees.
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(b) All payments made by the Property Trustee or a Paying Agent in respect
of the Trust Securities shall be made only from the revenue and proceeds from
the Trust Property and only to the extent that there shall be sufficient revenue
or proceeds from the Trust Property to enable the Property Trustee or a Paying
Agent to make payments in accordance with the terms hereof. Each Securityholder,
by its acceptance of a Trust Security, agrees that it shall look solely to the
revenue and proceeds from the Trust Property to the extent legally available for
distribution to it as herein provided and that the Trustees are not personally
liable to it for any amount distributable in respect of any Trust Security or
for any other liability in respect of any Trust Security. This Section 5.1(b)
does not limit the liability of the Trustees expressly set forth elsewhere in
this Trust Agreement or, in the case of the Property Trustee, in the Trust
Indenture Act.
(c) No provision of this Trust Agreement shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) the Property Trustee shall not be liable for any error of
judgment made in good faith by an authorized officer of the Property
Trustee, unless it shall be proved that the Property Trustee was negligent
in ascertaining the pertinent facts;
(ii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of not less than a majority in Liquidation
Amount of the Trust Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee,
or exercising any trust or power conferred upon the Property Trustee under
this Trust Agreement;
(iii) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Debentures and the Payment
Account shall be to deal with such property in a similar manner as the
Property Trustee deals with similar property for its own account, subject
to the protections and limitations on liability afforded to the Property
Trustee under this Trust Agreement and the Trust Indenture Act;
(iv) 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
Depositor; and money held by the Property Trustee need not be segregated
from other funds held by it except in relation to the Payment Account
maintained by the Property Trustee pursuant to Section 3.1 and except to
the extent otherwise required by law; and
(v) the Property Trustee shall not be responsible for monitoring the
compliance by the Administrative Trustees or the Depositor with their
respective duties under this Trust Agreement, nor shall the Property
Trustee be liable for the default or misconduct of the Administrative
Trustees or the Depositor.
Section 5.2 Certain Notices.
(a) Within ten Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit, in
the manner and to the extent provided in Section 7.9, notice of such Event of
Default to the Securityholders, the Administrative Trustees and the Depositor,
unless such Event of Default shall have been cured or waived.
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(b) Within five Business Days after the receipt of notice of the
Depositor's exercise of its right to defer the payment of interest on the
Debentures pursuant to the Indenture, the Administrative Trustee shall transmit,
in the manner and to the extent provided in Section 7.9, notice of such exercise
to the Securityholders and the Property Trustee, unless such exercise shall have
been revoked.
Section 5.3 Certain Rights of Property Trustee.
Subject to the provisions of Section 5.1:
(a) the Property Trustee may rely and shall be protected in acting or
refraining from acting in good faith upon any resolution, Opinion of Counsel,
certificate, written representation of a Holder or transferee, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) if (i) in performing its duties under this Trust Agreement the
Property Trustee is required to decide between alternative courses of action, or
(ii) in construing any of the provisions of this Trust Agreement the Property
Trustee finds the same ambiguous or inconsistent with any other provisions
contained herein, or (iii) the Property Trustee is unsure of the application of
any provision of this Trust Agreement, then, except as to any matter as to which
the Capital Securityholders are entitled to vote under the terms of this Trust
Agreement, the Property Trustee shall deliver a notice to the Depositor
requesting written instructions of the Depositor as to the course of action to
be taken and the Property Trustee shall take such action, or refrain from taking
such action, as the Property Trustee shall be instructed in writing to take, or
to refrain from taking, by the Depositor; provided, however, that if the
Property Trustee does not receive such instructions of the Depositor within ten
Business Days after it has delivered such notice, or such reasonably shorter
period of time set forth in such notice (which to the extent practicable shall
not be less than two Business Days), it may, but shall be under no duty to, take
or refrain from taking such action not inconsistent with this Trust Agreement as
it shall deem advisable and in the best interests of the Securityholders, in
which event the Property Trustee shall have no liability except for its own bad
faith, negligence or willful misconduct;
(c) any direction or act of the Depositor or the Administrative Trustees
contemplated by this Trust Agreement shall be sufficiently evidenced by an
Officers' Certificate;
(d) whenever in the administration of this Trust Agreement, the Property
Trustee shall deem it desirable that a matter be established before undertaking,
suffering or omitting any action hereunder, the Property Trustee (unless other
evidence is herein specifically prescribed) may, in the absence of bad faith on
its part, request and rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Depositor or the Administrative
Trustees;
(e) the Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or reregistration thereof;
(f) the Property Trustee may consult with counsel of its selection (which
counsel may be counsel to the Depositor or any of its Affiliates, and may
include any of its employees) and the advice of such counsel shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon and in
accordance with such
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advice, such counsel may be counsel to the Depositor 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 Trust
Agreement from any court of competent jurisdiction;
(g) the Property Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Securityholders pursuant to this Trust Agreement, unless
such Securityholders shall have offered to the Property Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(h) the Property Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other evidence of indebtedness or other paper or document,
unless requested in writing to do so by one or more Securityholders, but the
Property Trustee may make such further inquiry or investigation into such facts
or matters as it may see fit;
(i) the Property Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through its agents or
attorneys, provided that the Property Trustee shall be responsible for its own
negligence or recklessness with respect to selection of any agent or attorney
appointed by it hereunder;
(j) whenever in the administration of this Trust Agreement the Property
Trustee shall deem it desirable to receive written instructions with respect to
enforcing any remedy or right or taking any other action hereunder the Property
Trustee (i) may request written instructions from the Holders of the Trust
Securities which written instructions may only be given by the Holders of the
same proportion in Liquidation Amount of the Trust Securities as would be
entitled to direct the Property Trustee under the terms of the Trust Securities
in respect of such remedy, right or action, (ii) may refrain from enforcing such
remedy or right or taking such other action until such written instructions are
received, and (iii) shall be protected in acting in accordance with such written
instructions; and
(k) except as otherwise expressly provided by this Trust Agreement, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Trust Agreement.
(l) No provision of this Trust Agreement shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
Section 5.4 Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Trust Securities Certificates
shall be taken as the statements of the Trust, and the Trustees do not assume
any responsibility for their correctness. The Trustees shall not be accountable
for the use or application by the Depositor of the proceeds of the Debentures.
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Section 5.5 May Hold Securities.
Any Trustee or any other agent of any Trustee or the Trust, in its
individual or any other capacity, may become the owner or pledgee of Trust
Securities and, subject to Sections 5.8 and 5.13, except as provided in the
definition of the term "Outstanding" in Article I, may otherwise deal with the
Trust with the same rights it would have if it were not a Trustee or such other
agent.
Section 5.6 Compensation; Indemnity; Fees.
Pursuant to Section 10.6 of the Indenture, the Depositor, as borrower,
agrees:
(a) to pay to the Trustees from time to time such compensation as shall be
agreed in writing with the Depositor for all services rendered by them hereunder
(which compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustees upon request for all reasonable expenses, disbursements and advances
incurred or made by the Trustees in accordance with any provision of this Trust
Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and
(c) to the fullest extent permitted by applicable law, to indemnify and
hold harmless (i) each Trustee, (ii) any Affiliate of any Trustee, (iii) any
officer, director, shareholder, employee, representative or agent of any
Trustee, and (iv) any employee or agent of the Trust or its Affiliates,
(referred to herein as an "Indemnified Person") from and against any and all
loss, damage, liability, tax, penalty, expense or claim of any kind or nature
whatsoever incurred by such Indemnified Person by reason of the creation,
operation or termination of the Trust or any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of
authority conferred on such Indemnified Person by this Trust Agreement, except
that no Indemnified Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Indemnified Person by reason of
negligence or willful misconduct with respect to such acts or omissions. When
the Property Trustee incurs expenses or renders services in connection with an
Event of Default specified in Section 5.1(4) or Section 5.1(5) of the Indenture,
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.
(d) The provisions of this Section 5.6 shall survive the termination of
this Trust Agreement.
(e) No Trustee may claim any lien or charge on any Trust Property as a
result of any amount due pursuant to this Section 5.6.
(f) The Depositor and any Trustee (in the case of the Property Trustee,
subject to Section 5.8 hereof) may engage in or possess an interest in other
business ventures of any nature or description, independently or with others,
similar or dissimilar to the business of the Trust, and the Trust and the
Holders of Trust Securities shall have no rights by virtue of this Trust
Agreement in and to such independent ventures or the income or profits derived
therefrom, and the pursuit of any such venture, even if competitive with the
business of the Trust, shall not be deemed wrongful or improper.
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Neither the Depositor, nor any Trustee, shall be obligated to present any
particular investment or other opportunity to the Trust even if such opportunity
is of a character that, if presented to the Trust, could be taken by the Trust,
and the Depositor or any Trustee shall have the right to take for its own
account (individually or as a partner or fiduciary) or to recommend to others
any such particular investment or other opportunity. Any Trustee may engage or
be interested in any financial or other transaction with the Depositor or any
Affiliate of the Depositor, or may act as depository for, trustee or agent for,
or act on any committee or body of holders of, securities or other obligations
of the Depositor or its Affiliates.
Section 5.7 Corporate Property Trustee Required; Eligibility of
Trustees.
(a) There shall at all times be a Property Trustee hereunder with respect
to the Trust Securities. The Property Trustee shall be a Person that is eligible
pursuant to the Trust Indenture Act to act as such and has a combined capital
and surplus of at least $50,000,000. If any such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of its
supervising or examining authority, then for the purposes of this Section 5.7,
the combined capital and surplus of such Person shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Property Trustee with respect to the Trust
Securities shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article V.
(b) There shall at all times be one or more Administrative Trustees
hereunder with respect to the Trust Securities. Each Administrative Trustee
shall be either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more persons authorized to bind that
entity.
(c) There shall at all times be a Delaware Trustee with respect to the
Trust Securities. The Delaware Trustee shall either be (i) a natural person who
is at least 21 years of age and a resident of the State of Delaware, or (ii) a
legal entity with its principal place of business in the State of Delaware and
that otherwise meets the requirements of applicable Delaware law that shall act
through one or more persons authorized to bind such entity.
Section 5.8 Conflicting Interests.
If the Property Trustee has or shall acquire a conflicting interest within
the meaning of the Trust Indenture Act, the Property Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Trust
Agreement.
Section 5.9 Co-Trustees and Separate Trustee.
(a) Unless an Event of Default shall have occurred and be continuing, at
any time or times, for the purpose of meeting the legal requirements of the
Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property may at the time be located, the Depositor and the Administrative
Trustees, by agreed action of the majority of such Trustees, shall have power to
appoint, and upon the written request of the Administrative Trustees, the
Depositor shall for such purpose join with the Administrative Trustees in the
execution, delivery, and performance of all instruments and agreements necessary
or proper to appoint, one or more Persons approved by the Property Trustee
either to act as co-trustee, jointly with the Property Trustee, of all or any
part of such Trust Property, or to the extent required by law to act as separate
trustee of any such property, in
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either case with such powers as may be provided in the instrument of
appointment, and to vest in such Person or Persons in the capacity aforesaid,
any property, title, right or power deemed necessary or desirable, subject to
the other provisions of this Section 5.9. If the Depositor does not join in such
appointment within fifteen days after the receipt by it of a request so to do,
or in case a Debenture Event of Default has occurred and is continuing, the
Property Trustee alone shall have power to make such appointment. Any co-trustee
or separate trustee appointed pursuant to this Section 5.9 shall either be (i) a
natural person who is at least 21 years of age and a resident of the United
States, or (ii) a legal entity with its principal place of business in the
United States that shall act through one or more persons authorized to bind such
entity. Should any written instrument from the Depositor be required by any co-
trustee or separate trustee so appointed for more fully confirming to such co-
trustee or separate trustee such property, title, right, or power, any and all
such instruments shall, on request, be executed, acknowledged and delivered by
the Depositor.
(b) Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms,
namely:
(i) The Trust Securities shall be executed and delivered and all
rights, powers, duties, and obligations hereunder in respect of the custody
of securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustees specified hereunder shall be
exercised solely by such Trustees and not by such co-trustee or separate
trustee.
(ii) The rights, powers, duties, and obligations hereby conferred or
imposed upon the Property Trustee in respect of any property covered by
such appointment shall be conferred or imposed upon and exercised or
performed by the Property Trustee or by the Property Trustee and such co-
trustee or separate trustee jointly, as shall be provided in the instrument
appointing such co-trustee or separate trustee, except to the extent that
under any law of any jurisdiction in which any particular act is to be
performed, the Property Trustee shall be incompetent or unqualified to
perform such act, in which event such rights, powers, duties and
obligations shall be exercised and performed by such co-trustee or separate
trustee.
(iii) The Property Trustee at any time, by an instrument in writing
executed by it, with the written concurrence of the Depositor, may accept
the resignation of or remove any co-trustee or separate trustee appointed
under this Section 5.9, and, in case a Debenture Event of Default has
occurred and is continuing, the Property Trustee shall have power to accept
the resignation of, or remove, any such co-trustee or separate trustee
without the concurrence of the Depositor. Upon the written request of the
Property Trustee, the Depositor shall join with the Property Trustee in the
execution, delivery and performance of all instruments and agreements
necessary or proper to effectuate such resignation or removal. A successor
to any co-trustee or separate trustee so resigned or removed may be
appointed in the manner provided in this Section 5.9.
(iv) No co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Property Trustee or any
other trustee hereunder.
(v) The Property Trustee shall not be liable by reason of any act of a
co-trustee or separate trustee.
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(vi) Any Act of Holders delivered to the Property Trustee shall be
deemed to have been delivered to each such co-trustee and separate trustee.
Section 5.10 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of any Trustee (the "Relevant Trustee") and
no appointment of a successor Trustee pursuant to this Article V shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 5.11.
(b) Subject to Section 5.10(a), the Relevant Trustee may resign at any time
by giving written notice thereof to the Securityholders. If the instrument of
acceptance by the successor Trustee required by Section 5.11 shall not have been
delivered to the Relevant Trustee within 30 days after the giving of such notice
of resignation, the Relevant Trustee may petition, at the expense of the Trust,
any court of competent jurisdiction for the appointment of a successor Relevant
Trustee.
(c) Unless a Debenture Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by Act of the Common
Securityholder. If a Debenture Event of Default shall have occurred and be
continuing, the Property Trustee or the Delaware Trustee, or both of them, may
be removed at such time by Act of the Holders of a majority in Liquidation
Amount of the Capital Securities, delivered to the Relevant Trustee (in its
individual capacity and on behalf of the Trust). An Administrative Trustee may
be removed by the Common Securityholder at any time. If the instrument of
acceptance by the successor Trustee required by Section 5.11 shall not have been
delivered to the Relevant Trustee within 30 days after such removal, the
Relevant Trustee may petition, at the expense of the Trust, any court of
competent jurisdiction for the appointment of a successor Relevant Trustee.
(d) If any Trustee shall resign, be removed or become incapable of acting
as Trustee, or if a vacancy shall occur in the office of any Trustee for any
cause, at a time when no Debenture Event of Default shall have occurred and be
continuing, the Common Securityholder, by Act of the Common Securityholder
delivered to the retiring Trustee, shall promptly appoint a successor Trustee or
Trustees, and the retiring Trustee shall comply with the applicable requirements
of Section 5.11. If the Property Trustee or the Delaware Trustee shall resign,
be removed or become incapable of continuing to act as the Property Trustee or
the Delaware Trustee, as the case may be, at a time when a Debenture Event of
Default shall have occurred and be continuing, the Capital Securityholders, by
Act of the Securityholders of a majority in Liquidation Amount of the Capital
Securities then Outstanding delivered to the retiring Relevant Trustee, shall
promptly appoint a successor Relevant Trustee or Trustees, and such successor
Trustee shall comply with the applicable requirements of Section 5.11. If an
Administrative Trustee shall resign, be removed or become incapable of acting as
Administrative Trustee, at a time when a Debenture Event of Default shall have
occurred and be continuing, the Common Securityholder by Act of the Common
Securityholder delivered to the Administrative Trustee shall promptly appoint a
successor Administrative Trustee or Administrative Trustees and such successor
Administrative Trustee or Trustees shall comply with the applicable requirements
of Section 5.11. If no successor Relevant Trustee shall have been so appointed
by the Common Securityholder or the Capital Securityholders and accepted
appointment in the manner required by Section 5.11, any Securityholder who has
been a Securityholder of Trust Securities for at least six months may, on behalf
of himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Relevant Trustee.
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(e) The Property Trustee shall give notice of each resignation and each
removal of a Trustee and each appointment of a successor Trustee to all
Securityholders in the manner provided in Section 7.9 and shall give notice to
the Depositor. Each notice shall include the name of the successor Relevant
Trustee and the address of its Corporate Trust Office if it is the Property
Trustee.
(f) Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or a Delaware Trustee who is
a natural person dies or becomes, in the opinion of the Depositor, incompetent
or incapacitated, the vacancy created by such death, incompetence or incapacity
may be filled by (i) the unanimous act of the remaining Administrative Trustees
if there are at least two of them, or (ii) otherwise by the Depositor (with the
successor in each case being a Person who satisfies the eligibility requirement
for Administrative Trustees or Delaware Trustee, as the case may be, set forth
in Section 5.7).
Section 5.11 Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Relevant Trustee, the
retiring Relevant Trustee and each successor Relevant Trustee with respect to
the Trust Securities shall execute and deliver an amendment hereto wherein each
successor Relevant Trustee shall accept such appointment and which (a) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Relevant Trustee all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Trust Securities and the Trust, and (b) shall add to or change any of the
provisions of this Trust Agreement as shall be necessary to provide for or
facilitate the administration of the Trust by more than one Relevant Trustee, it
being understood that nothing herein or in such amendment shall constitute such
Relevant Trustees co-trustees and upon the execution and delivery of such
amendment the resignation or removal of the retiring Relevant Trustee shall
become effective to the extent provided therein and each such successor Relevant
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Relevant Trustee; but,
on written request of the Trust or any successor Relevant Trustee such retiring
Relevant Trustee shall duly assign, transfer and deliver to such successor
Relevant Trustee all Trust Property, all proceeds thereof and money held by such
retiring Relevant Trustee hereunder with respect to the Trust Securities and the
Trust. Upon written request of any such successor Relevant Trustee, the Trust
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Relevant Trustee all such rights, powers and
trusts referred to in this Section 5.11. No successor Relevant Trustee shall
accept its appointment unless at the time of such acceptance such successor
Relevant Trustee shall be qualified and eligible under this Article.
Section 5.12 Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Property Trustee or the Delaware Trustee may be
merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which such Relevant
Trustee shall be a party, or any Person succeeding to all or substantially all
the corporate trust business of such Relevant Trustee, shall be the successor of
such Relevant Trustee hereunder, provided such Person shall be otherwise
qualified and eligible under this Article V, without the execution or filing of
any paper or any further act on the part of any of the parties hereto.
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Section 5.13 Preferential Collection of Claims Against Depositor or Trust.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
similar judicial proceeding relative to the Trust or any other obligor upon the
Trust Securities or the property of the Trust or of such other obligor or their
creditors, the Property Trustee (irrespective of whether any Distributions on
the Trust Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Property Trustee shall
have made any demand on the Trust for the payment of any past due Distributions)
shall be entitled and empowered, to the fullest extent permitted by law, by
intervention in such proceeding or otherwise:
(i) to file and prove a claim for the whole amount of any
Distributions owing and unpaid in respect of the Trust Securities and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Property Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Property Trustee, its agents and counsel) and of the Holders allowed in
such judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Property Trustee and, in the event the
Property Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amounts due the Property Trustee. Nothing
herein contained shall be deemed to authorize the Property Trustee to authorize
or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement adjustment or compensation affecting the Trust
Securities or the rights of any Holder thereof or to authorize the Property
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 5.14 Reports by Property Trustee.
(a) The Property Trustee shall transmit to Securityholders such reports
concerning the Property Trustee and its actions under this Trust Agreement as
may be required pursuant to the Trust Indenture Act at the times and in the
manner provided pursuant thereto. If required by Section 313(a) of the Trust
Indenture Act, the Property Trustee shall, within 60 days after each May 15
following the date of this Trust Agreement deliver to Securityholders a brief
report, dated as of such May 15, 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
Holders, be filed by the Property Trustee with each national stock exchange, the
Nasdaq National Market or such other interdealer quotation system or self-
regulatory organization upon which the Capital Securities are listed or traded,
if any, with the Commission and with the Depositor. The Depositor will promptly
notify the Property Trustee of any such listing or trading.
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Section 5.15 Reports to Property Trustee.
The Depositor and the Administrative Trustees on behalf of the Trust shall
provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust Indenture Act (if any) and the compliance
certificate required by Section 314(a) of the Trust Indenture Act in the form,
in the manner and at the times required by Section 314 of the Trust Indenture
Act. Delivery of such reports, information and documents to the Property Trustee
is for informational purposes only and the Property Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Trust's
compliance with any of its covenants hereunder (as to which the Property Trustee
is entitled to rely exclusively on Officers' Certificates).
Section 5.16 Evidence of Compliance with Conditions Precedent.
Each of the Depositor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Trust Agreement that relate
to any of the matters set forth in Section 314(c) of the Trust Indenture Act.
Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) of the Trust Indenture Act shall be given in the form of an
Officers' Certificate.
Section 5.17 Number of Trustees.
(a) The number of Trustees shall be four, provided that the Holder of all
of the Common Securities by written instrument may increase or decrease the
number of Administrative Trustees. The Property Trustee and the Delaware Trustee
may be the same Person.
(b) If a Trustee ceases to hold office for any reason and the number of
Administrative Trustees is not reduced pursuant to Section 5.17(a), or if the
number of Trustees is increased pursuant to Section 5.17(a), a vacancy shall
occur. The vacancy shall be filled with a Trustee appointed in accordance with
Section 5.10.
(c) The death, resignation, retirement, removal, bankruptcy, incompetence
or incapacity to perform the duties of a Trustee shall not operate to dissolve,
terminate or annul the Trust. Whenever a vacancy in the number of Administrative
Trustees shall occur, until such vacancy is filled by the appointment of an
Administrative Trustee in accordance with Section 5.10, the Administrative
Trustees in office, regardless of their number (and notwithstanding any other
provision of this Trust Agreement), shall have all the powers granted to the
Administrative Trustees and shall discharge all the duties imposed upon the
Administrative Trustees by this Trust Agreement.
Section 5.18 Delegation of Power.
(a) Any Administrative Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
2.7, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and
(b) The Administrative Trustees shall have power to delegate from time to
time to such of their number or to the Depositor the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Administrative Trustees or otherwise as the
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Administrative Trustees may deem expedient, to the extent such delegation is not
prohibited by applicable law or contrary to the provisions of this Trust
Agreement, as set forth herein.
ARTICLE VI
Termination, Liquidation and Merger
Section 6.1 Termination Upon Expiration Date.
Unless earlier terminated, the Trust shall automatically terminate on
__________, 2053 (the "Expiration Date"), following the distribution of the
Trust Property in accordance with Section 6.4.
Section 6.2 Early Termination.
The first to occur of any of the following events is an "Early Termination
Event":
(a) the occurrence of a Bankruptcy Event in respect of, or the dissolution
or liquidation of, the Holder of the Common Securities;
(b) the written direction to the Property Trustee from the Depositor at
any time to terminate the Trust and, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, distribute Debentures to
Securityholders in exchange for the Capital Securities (which direction is
optional and wholly within the discretion of the Depositor);
(c) the redemption of all of the Capital Securities in connection with the
redemption of all of the Debentures;
(d) the entry of an order for dissolution of the Trust by a court of
competent jurisdiction; and
(e) upon the distribution of Common Stock to all Securityholders upon
conversion of all outstanding Capital Securities.
Section 6.3 Termination.
The respective obligations and responsibilities of the Trustees and the
Trust created and continued hereby shall terminate upon the latest to occur of
the following: (a) the distribution by the Property Trustee to Securityholders
upon the liquidation of the Trust pursuant to Section 6.4, or upon the
redemption of all of the Trust Securities pursuant to Section 4 of Annex I
hereto, of all amounts required to be distributed hereunder upon the final
payment of the Trust Securities; (b) the payment of any expenses owed by the
Trust; and (c) the discharge of all administrative duties of the Administrative
Trustees, including the performance of any tax reporting obligations with
respect to the Trust or the Securityholders.
Section 6.4 Liquidation.
(a) If an Early Termination Event specified in clause (a), (b) or (d) of
Section 6.2 occurs or upon the Expiration Date, the Trust shall be liquidated by
the Trustees as expeditiously as the Trustees determine to be possible by
distributing, after satisfaction or the making of reasonable provisions for the
payment of liabilities to creditors of the Trust as provided by applicable law,
to each
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Securityholder a Like Amount of Debentures, subject to Section 6.4(d). Notice of
liquidation shall be given by the Property Trustee by first-class mail, postage
prepaid mailed not later than 30 nor more than 60 days prior to the Liquidation
Date to each Holder of Trust Securities at such Holder's address appearing in
the Securities Register. All notices of liquidation shall:
(i) state the CUSIP Number of the Trust Securities;
(ii) state the Liquidation Date;
(iii) state that from and after the Liquidation Date, the Trust
Securities will no longer be deemed to be Outstanding and any Trust
Securities Certificates not surrendered for exchange will be deemed to
represent a Like Amount of Debentures; and
(iv) provide such information with respect to the mechanics by which
Holders may exchange Trust Securities Certificates for Debenture or, if
Section 6.4(d) applies, receive a Liquidation Distribution, as the
Administrative Trustees or the Property Trustee shall deem appropriate.
(b) Except where Section 6.2(c) or 6.4(d) applies, in order to effect the
liquidation of the Trust and distribution of the Debentures to Securityholders,
the Property Trustee shall establish a record date for such distribution (which
shall be not more than 45 days prior to the Liquidation Date) and, either itself
acting as exchange agent or through the appointment of a separate exchange
agent, shall establish such procedures as it shall deem appropriate to effect
the distribution of Debentures in exchange for the Outstanding Trust Securities
Certificates.
(c) Except where Section 6.2(c) or 6.4(d) applies, after the Liquidation
Date, (i) the Trust Securities shall no longer be deemed to be Outstanding, (ii)
certificates representing a Like Amount of Debentures shall be issued to Holders
of Trust Securities Certificates, upon surrender of such certificates to the
Administrative Trustees or their agent for exchange, (iii) the Depositor shall
use its best efforts to have the Debentures listed on the New York Stock
Exchange or on such other exchange, interdealer quotation system or self-
regulatory organization as the Capital Securities are then listed or traded,
(iv) any Trust Securities Certificates not so surrendered for exchange shall be
deemed to represent a Like Amount of Debentures, accruing interest at the rate
provided for in the Debentures from the last Distribution Date on which a
Distribution was made on such Trust Securities Certificates until such
certificates are so surrendered (and until such certificates are so surrendered,
no payments of interest or principal will be made to Holders of Trust Securities
Certificates with respect to such Debentures), and (v) all rights of
Securityholders holding Trust Securities shall cease, except the right of such
Securityholders to receive Debentures upon surrender of Trust Securities
Certificates.
(d) In the event that, notwithstanding the other provisions of this
Section 6.4, whether because of an order for dissolution entered by a court of
competent jurisdiction or otherwise, distribution of the Debentures in the
manner provided herein is determined by the Property Trustee not to be
practical, the Trust Property shall be liquidated, and the Trust shall be wound-
up or terminated, by the Property Trustee. In such event, Securityholders will
be entitled to receive out of the assets of the Trust available for distribution
to Securityholders, after satisfaction of liabilities to creditors of the Trust
as provided by applicable law, an amount equal to the Liquidation Amount per
Trust Security plus accumulated and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"). If, upon any such
winding up or termination, the Liquidation Distribution can be paid only in part
because the Trust has insufficient assets available to pay in full the aggregate
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Liquidation Distribution, then, subject to the next succeeding sentence, the
amounts payable by the Trust on the Trust Securities shall be paid on a pro rata
basis (based upon Liquidation Amounts). The Holder of the Common Securities
shall be entitled to receive Liquidation Distributions upon any such winding-up
or termination pro rata (determined as aforesaid) with Holders of Capital
Securities, except that, if a Debenture Event of Default has occurred and is
continuing, the Capital Securities shall have a priority over the Common
Securities.
Section 6.5 Mergers, Consolidations, Amalgamations or Replacements of
Trust.
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except pursuant
to this Article VI. At the request of the Depositor, with the consent of the
Administrative Trustees and without the consent of the Holders of the Capital
Securities, the Property Trustee or the Delaware Trustee, the Trust may merge
with or into, consolidate, amalgamate, or be replaced by or convey, transfer or
lease its properties and assets substantially as an entirety to a trust
organized as such under the laws of any State; provided, that (i) such successor
entity either (a) expressly assumes all of the obligations of the Trust with
respect to the 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 Depositor
expressly appoints a trustee of such successor entity possessing the same powers
and duties as the Property Trustee as the holder of the Debentures, (iii) the
Successor Securities are listed or traded, or any Successor Securities shall be
listed upon notification of issuance, on any national securities exchange or
other organization on which the Capital Securities are then listed or traded, if
any, (iv) such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not cause the Capital Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization, (v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the Holders of the Capital Securities (including any Successor
Securities) in any material respect, (vi) such successor entity has a purpose
substantially identical to that of the Trust, (vii) prior to such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, the
Depositor has received an Opinion of Counsel to the effect that (a) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the Holders of the
Capital Securities (including any Successor Securities) in any material respect,
and (b) following such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, neither the Trust nor such successor entity will
be required to register as an investment company under the 1940 Act, and (viii)
the Depositor owns all of the common securities of such successor entity and
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee. Notwithstanding the
foregoing, the Trust shall not, except with the consent of Holders of 100% in
Liquidation Amount of the Capital Securities, consolidate, amalgamate, merge
with or into, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to any other Person or permit any other
Person to consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or lease
would cause the Trust or the successor entity to be classified as other than a
grantor trust for United States federal income tax purposes.
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ARTICLE VII
Miscellaneous Provisions
Section 7.1 Limitation of Rights of Securityholders.
The death, incapacity, liquidation, dissolution, termination or bankruptcy
of any Person having an interest, beneficial or otherwise, in Trust Securities
shall not operate to terminate this Trust Agreement, nor entitle the legal
representatives or heirs of such Person or any Securityholder for such Person,
to claim an accounting, take any action or bring any proceeding in any court for
a partition or winding up of the arrangements contemplated hereby, nor otherwise
affect the rights, obligations and liabilities of the parties hereto or any of
them.
Section 7.2 Liability of Common Securityholder.
The Holder of the Common Securities shall be liable for all of the debts
and obligations of the Trust (other than with respect to the Trust Securities)
to the extent not satisfied out of the Trust's assets.
Section 7.3 Amendment.
(a) This Trust Agreement may be amended from time to time by the Property
Trustee, the Administrative Trustees and the Depositor, without the consent of
any Securityholders, (i) to cure any ambiguity, correct or supplement any
provision herein which may be inconsistent with any other provision herein, or
to make any other provisions with respect to matters or questions arising under
this Trust Agreement, which shall not be inconsistent with the other provisions
of this Trust Agreement, or (ii) to modify, eliminate or add to any provisions
of this Trust Agreement to such extent as shall be necessary to ensure that the
Trust will be classified for United States federal income tax purposes as a
grantor trust at all times that any Trust Securities are Outstanding or to
ensure that the Trust will not be required to register as an investment company
under the 1940 Act; provided, however, that in the case of clause (i) or clause
(ii), such action shall not adversely affect in any material respect the
interests of any Securityholder, and any such amendments of this Trust Agreement
shall become effective when notice thereof is given to the Securityholders.
(b) Except as provided in Section 7.3(c) hereof, any provision of this
Trust Agreement may be amended by the Trustees and the Depositor with (i) the
consent of Trust Securityholders representing not less than a majority (based
upon Liquidation Amounts) of the Trust Securities then Outstanding, and (ii)
receipt by the Trustees of an Opinion of Counsel to the effect that such
amendment or the exercise of any power granted to the Trustees in accordance
with such amendment will not affect the Trust's status as a grantor trust for
United States federal income tax purposes or the Trust's exemption from status
of an investment company under the 1940 Act.
(c) In addition to and notwithstanding any other provision in this Trust
Agreement, without the consent of each affected Securityholder (such consent
being obtained in accordance with Sections 29 or 32 of Annex I hereto), this
Trust Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date, or (ii) restrict the right of a Securityholder to institute suit
for the enforcement of any such payment on or after such date; notwithstanding
any other provision herein, without the unanimous consent of the
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<PAGE>
Securityholders (such consent being obtained in accordance with Annex I hereto),
this Section 7.3(c) may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement, no
Trustee shall enter into or consent to any amendment to this Trust Agreement
which would cause the Trust to fail or cease to qualify for the exemption from
status of an investment company under the 1940 Act or fail or cease to be
classified as a grantor trust for United States federal income tax purposes.
(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Depositor, this Trust Agreement may not be amended in
a manner which imposes any additional obligation on the Depositor.
(f) In the event that any amendment to this Trust Agreement is made, the
Administrative Trustees shall promptly provide to the Depositor a copy of such
amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be
required to enter into any amendment to this Trust Agreement which affects its
own rights, duties or immunities under this Trust Agreement. The Property
Trustee shall be entitled to receive an Opinion of Counsel and an Officers'
Certificate stating that any amendment to this Trust Agreement is in compliance
with this Trust Agreement.
Section 7.4 Separability.
In case any provision in this Trust Agreement or in the Trust Securities
Certificates shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 7.5 Governing Law.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH RESPECT TO THIS TRUST AGREEMENT
AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES).
Section 7.6 Payments Due on Non-Business Day.
If the date fixed for any payment on any Trust Security shall be a day that
is not a Business Day, then such payment need not be made on such date but may
be made on the next succeeding day that is a Business Day (except as otherwise
provided in Sections 3(a) and 4(d) of Annex I hereto, with the same force and
effect as though made on the date fixed for such payment, and no interest shall
accrue thereon for the period after such date.
Section 7.7 Successors.
This Trust Agreement shall be binding upon and shall inure to the benefit
of any successor to the Depositor, the Trust or the Relevant Trustee, including
any successor by operation of law. Except in connection with a consolidation,
merger or sale involving the Depositor that is permitted under
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Article Eight of the Indenture and pursuant to which the assignee agrees in
writing to perform the Depositor's obligations hereunder, the Depositor shall
not assign its obligations hereunder.
Section 7.8 Headings.
(a) The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement.
Section 7.9 Reports, Notices and Demands.
(a) Any report, notice, demand or other communication which by any
provision of this Trust Agreement is required or permitted to be given or served
to or upon any Securityholder or the Depositor may be given or served in writing
by deposit thereof, first-class postage prepaid, in the United States mail, hand
delivery or facsimile transmission, in each case, addressed, (i) in the case of
a Capital Securityholder, to such Capital Securityholder as such
Securityholder's name and address may appear on the Securities Register; and
(ii) in the case of the Common Securityholder or the Depositor, to CNB
Bancshares, Inc. 20 N.W. Third Street, Evansville, Indiana 47729, Attention:
James J. Giancola, President and Chief Executive Officer, facsimile no.:
812-456-3496. Such notice, demand or other communication to or upon a
Securityholder shall be deemed to have been sufficiently given or made, for all
purposes, upon hand delivery, mailing or transmission.
(b) Any notice, demand or other communication which by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
the Trust, the Property Trustee, the Delaware Trustee or the Administrative
Trustees shall be given in writing addressed (until another address is published
by the Trust) as follows: (i) with respect to the Property Trustee to The Bank
of New York, 101 Barclay Street, Floor 21 West, New York, New York 10286,
Attention: Corporate Trust Administration, Facsimile no.: 212-815-5915; (ii)
with respect to the Delaware Trustee, to The Bank of New York (Delaware), White
Clay Center, Route 273, Newark, Delaware 19711, Attention: Corporate Trust
Administration, facsimile no.: 212-815-5915, with a copy to the Property Trustee
at the address set forth in Clause (i); and (iii) with respect to the
Administrative Trustees, to them at the address above for notices to the
Depositor, marked "Attention Administrative Trustees of CNB Capital Trust I".
Such notice, demand or other communication to or upon the Trust or the Property
Trustee shall be deemed to have been sufficiently given or made only upon actual
receipt of the writing by the Trust or the Property Trustee.
Section 7.10 Agreement Not to Petition.
Each of the Trustees and the Depositor agree for the benefit of the
Securityholders that, until at least one year and one day after the Trust has
been terminated in accordance with Article VI, they shall not file, or join in
the filing of, a petition against the Trust under any bankruptcy, insolvency,
reorganization or other similar law (including, without limitation, the United
States Bankruptcy Code) (collectively, "Bankruptcy Laws") or otherwise join in
the commencement of any proceeding against the Trust under any Bankruptcy Law.
In the event the Depositor takes action in violation of this Section 7.10, the
Property Trustee agrees, for the benefit of Securityholders, that at the expense
of the Depositor, it shall file an answer with the bankruptcy court or otherwise
properly contest the filing of such petition by the Depositor against the Trust
or the commencement of such action and raise the defense that the Depositor has
agreed in writing not to take such action and should be stopped and precluded
therefrom and such other defenses, if any, as counsel for the Property Trustee
or the Trust may assert. The provisions of this Section 7.10 shall survive the
termination of this Trust Agreement.
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Section 7.11 Trust Indenture Act; Conflict with Trust Indenture Act.
(a) This Trust Agreement is subject to the provisions of the Trust
Indenture Act that are required or deemed to be part of this Trust Agreement and
shall, to the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a trustee for
the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required or deemed to be included in this Trust
Agreement by any of the provisions of the Trust Indenture Act, such required or
deemed provision shall control. If any provision of this Trust Agreement
modifies or excludes any provision of the Trust Indenture Act which may be so
modified or excluded, the latter provision shall be deemed to apply to this
Trust Agreement as so modified or excluded, as the case may be.
(d) The application of the Trust Indenture Act to this Trust Agreement
shall not affect the nature of the Trust Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
Section 7.12 Acceptance of Terms of Trust Agreement, Guarantee and
Indenture.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY
OR ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE
OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL
ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN
SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND
AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND
THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH
SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS TRUST
AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND
SUCH SECURITYHOLDER AND SUCH OTHERS.
Section 7.13 Holders are Parties.
Notwithstanding that Holders have not executed and delivered this Trust
Agreement or any counterpart thereof, Holders shall be deemed to be parties to
this Trust Agreement and shall be bound by all of the terms and conditions
hereof and of the Trust Securities by acceptance and delivery of the Trust
Securities.
Section 7.14 Counterparts.
This Trust Agreement may contain more than one counterpart of the signature
page and this Trust Agreement may be executed by the affixing of the signature
of each of the Trustees of 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.
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CNB Bancshares, inc.
By:____________________________________
Name: James J. Giancola
Title: President and Chief
Executive Officer
THE BANK OF NEW YORK,
as Property Trustee
By:____________________________________
Name:
Title:
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By:____________________________________
Name:
Title:
_______________________________________
James J. Giancola
as Administrative Trustee
_______________________________________
John R. Spruill
as Administrative Trustee
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<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST
OF
CNB CAPITAL TRUST I
THIS CERTIFICATE OF TRUST OF CNB CAPITAL TRUST I (the "Trust"), dated June
1, 1998, is being duly executed and filed by THE BANK OF NEW YORK (DELAWARE), a
Delaware banking corporation, James J. Giancola and John R. Spruill, each an
individual, as trustees, to form a business trust under the Delaware Business
Trust Act (12 Del. C. Section 3801 et seq.).
1. NAME. The name of the business trust formed hereby is CNB CAPITAL TRUST I.
2. DELAWARE TRUSTEE. The name and business address of the trustee of the
Trust in the State of Delaware is THE BANK OF NEW YORK (DELAWARE), White
Clay Center, Route 273, Newark, Delaware 19711.
3. EFFECTIVE DATE. This Certificate of Trust shall be effective upon filing.
IN WITNESS WHEREOF, the undersigned, being the sole trustees of the Trust,
have executed this Certificate of Trust as of the date first above written.
_______________________________________
as trustee
By:____________________________________
James J. Giancola, as trustee
By:____________________________________
John R. Spruill, as trustee
A-1
<PAGE>
EXHIBIT B
CERTIFICATE DEPOSITORY AGREEMENT
Letter of Representations
[To be Completed by Issuer and Agent]
CNB CAPITAL TRUST I
---------------------------------------------
[Name of Issuer]
BANK OF NEW YORK
---------------------------------------------
[Name of Agent]
June , 1998
-------------
[Date]
Attention: General Counsel's Office
The Depository Trust Company
55 Water Street; 49th Floor
New York, NY 10041-0099
Re: CNB CAPITAL TRUST I
------------------------------------------------------------------------
____ % CONVERTIBLE TRUST PREFERRED SECURITIES
------------------------------------------------------------------------
Due June __, 2028, CUSIP No.
------------------------------------------------------------------------
[Issue Description, including CUSIP number]
Ladies and Gentlemen:
This letter sets forth our understanding with respect to certain matters
relating to the above-referenced issue (the "Securities"). Issuer is selling the
Securities to SBC Warburg Dillon Read Inc.* (the "Initial Purchaser") pursuant
to an underwriting Agreement dated June , 199__ (the "Document"). Initial
Purchaser will take delivery of the Securities through The Depository Trust
- ------------------------
*CIBC Oppenheimer corp., Stifel, Nicholas & Company, Incorporated, Howe
Barnes Investments, Inc., NatCity Investments, Inc., Keefe Bruyette & Woods,
Inc. and Wedgewood Partners, Inc.
B-1
<PAGE>
Company ("DTC"). The Bank of New York is acting as transfer agent, paying agent,
and registrar with respect to the Securities (the "Agent").
To induce DTC to accept the Securities as eligible for deposit at DTC, and
to act in accordance with its Rules with respect to the Securities, Issuer and
Agent make the following representations to DTC:
1. Prior to closing on the Securities on June , 199__, there shall be
deposited with DTC one Security certificate registered in the name of DTC's
nominee, Cede & Co., for each of the Securities with the offering value set
forth on Schedule A hereto, the total of which represents 100% of the offering
value of such Securities. If, however, the offering value of any Security
exceeds $200 million, one certificate will be issued with respect to each $200
million of offering value and an additional certificate will be issued with
respect to any remaining offering value. Each Security certificate shall bear
the following legend:
Unless this certificate if presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Issuer
or its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as
the registered owner hereof, Cede & Co., has an interest herein.
If the Securities will be held by Agent, as custodian for DTC, such Security
certificate shall remain in Agent's custody pursuant to the provisions of the
FAST Balance Certificate Agreement currently in effect between Agent and DTC.
2. Issuer: (a) understands that DTC has no obligation to, and will not,
communicate to its Participants or to any person having an interest in the
Securities any information contained in the Security certificate(s); and (b)
acknowledges that neither DTC's Participants nor any person having an interest
in the Securities shall be deemed to have notice of the provisions of the
Security certificate(s) by virtue of submission of such certificate(s) to DTC.
3. In the event of any solicitation of consents from or voting by holders
of the Securities, Issuer or Agent shall establish a record date for such
purposes (with no provision for revocation of consents or votes by subsequent
holders) and shall send notice of such record date to DTC not less than 15
calendar days in advance of such record date. Notices to DTC pursuant to this
Paragraph by telecopy shall be sent to DTC's Reorganization Department at (212)
709-6896 or (212) 709-6897, and receipt of such notices shall be confirmed by
telephoning (212) 709-6870. Notices to DTC pursuant to this Paragraph by mail or
by any other means shall be sent to DTC's Reorganization Department as indicated
in Paragraph 7.
4. In the event of a stock split, recapitalization, conversion, or any
similar transaction resulting in the cancellation of all or any part of the
Securities represented thereby, the Agent shall send DTC a notice of such event
as soon as practicable, but in no event less than five business days prior to
the effective date of such transaction.
B-2
<PAGE>
5. In the event of a full or partial redemption, Issuer or Agent shall
send a notice to DTC specifying: (a) the amount of the redemption or refunding;
(b) in the case of a refunding, the maturity date(s) established under the
refunding; and (c) the date such notice is to be distributed to Security holders
or published (the "Publication Date"). Such notice shall be sent to DTC by a
secure means (e.g., legible telecopy, registered or certified mail, overnight
delivery) in a timely manner designed to assure that such notice is in DTC's
possession no later than the close of business on the business day before or, if
possible, two business days before the Publication Date. Issuer or Agent shall
forward such notice either in a separate secure transmission for each CUSIP
number or in a secure transmission for multiple CUSIP numbers (if applicable)
which includes a manifest or list of each CUSIP number submitted in that
transmission. (The party sending such notice shall have a method to verify
subsequently the use of such means and the timeliness of such notice.) The
Publication Date shall be not less than 30 days nor more than 60 days prior to
the redemption date or, in the case of an advance refunding, the date that the
proceeds are deposited in escrow. Notices to DTC pursuant to this Paragraph by
telecopy shall be sent to DTC's Call Notification Department at (516) 227-4039
or (516) 227-4190. If the party sending the notice does not receive a telecopy
receipt from DTC confirming that the notice has been received, such party shall
telephone (516) 227-4070. Notices to DTC pursuant to this Paragraph by mail or
by any other means shall be sent to:
Manager; Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, NY 11530-4719
6. In the event of an offering or issuance of rights with respect to the
Securities outstanding, Agent shall send DTC's Dividend and Reorganization
Departments a notice specifying: (a) the amount of and conditions, if any,
applicable to such rights offering or issuance; (b) any applicable expiration or
deadline date, or any date by which any action on the part of holders of such
Securities is required; and (c) the Publication Date of such notice.
The Publication Date will be as soon as practicable after the announcement
by the Company of any such offering or issuance of rights with respect to the
Securities represented thereby. DTC requires that the Publication Date be not
less than 30 days nor more than 60 days prior to the related payment date,
distribution date, or issuance date, respectively.
Notices to DTC pursuant to this Paragraph by telecopy shall be sent to
DTC's Dividend Department at (212) 709-1623, and receipt of such notices shall
be confirmed by telephoning (212) 709-1282. Notices to DTC pursuant to the
above by mail or any other means shall be sent to:
Supervisor; Stock Dividends
Dividend Department
7 Hanover Square; 24th Floor
New York, NY 10004-2695
Notices to DTC pursuant to this Paragraph by telecopy shall be sent to
DTC's Reorganization Department at (212) 709-1093, and receipt of such fax shall
be confirmed by telephoning (212) 709-1063. Notices to DTC pursuant to the above
by mail or any other means shall be sent to:
Supervisor; Rights Offering
Reorganization Department
B-3
<PAGE>
7 Hanover Square; 23rd Floor
New York, NY 10004-2695
7. In the event of an invitation to tender the Securities (including
mandatory tenders, exchanges, and capital changes), notice by Issuer or Agent to
Security holders specifying the terms of the tender and the Publication Date of
such notice shall be sent to DTC by a secure means in the manner set forth in
Paragraph 5. Notices to DTC pursuant to this Paragraph and notices of other
corporate actions by telecopy shall be sent to DTC's Reorganization Department
at (212) 709-1093 or (212) 709-1094, and receipt of such notices shall be
confirmed by telephoning (212) 709-6884. Notices to DTC pursuant to the above by
mail or by any other means shall be sent to:
Manager; Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, NY 10004-2695
8. All notices and payment advises sent to DTC shall contain the CUSIP
number of the Securities (listed on Schedule A hereto) and the accompanying
description of such Securities, which, as of the date of this letter, is " ___ %
Convertible Trust Preferred Securities, CUSIP No. ."
9. Issuer or Agent shall provide written notice of dividend payment
information to a standard dividend announcement service subscribed to by DTC as
soon as the information is available. In the event that no such service exists,
Issuer or Agent shall provide such notice directly to DTC electronically, as
previously arranged by Issuer or Agent and DTC, as soon as the payment
information is available. If electronic transmission has not been arranged,
absent any other arrangements between Issuer or Agent and DTC, such information
should be sent by telecopy to DTC's Dividend Department at (212) 709-1723 or
(212) 709-1686, and receipt of such notices shall be confirmed by telephoning
(212) 709-1270. Notices to DTC pursuant to the above by mail or by any other
means shall be sent to:
Manager; Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square, 22nd Floor
New York, NY 10004-2695
After establishing the amount of payment to be made on the Securities in
question, Issuer or Agent will notify DTC's Dividend Department of the payment
and payment date preferably five, but not less than two, business days prior to
the effective date for such transaction.
10. Issuer or Agent shall provide CUSIP-level detail for dividend payments
to DTC no later than noon (Eastern Time) on the payment date.
11. Dividend payments and cash distributions shall be received by Cede &
Co. as nominee of DTC, or its registered assigns, in same-day funds no later
than 2:30 p.m. (Eastern Time) on each payment date. Absent any other
arrangements between Issuer or Agent and DTC, such funds shall be wired as
follows:
B-4
<PAGE>
The Chase Manhattan Bank
ABA #021 000 021
For credit to a/c Cede & Co.
c/o The Depository Trust Company
Dividend Deposit Account #066-026776
12. Redemption payments shall be received by Cede & Co., as nominee of
DTC, or its registered assigns, in same-day funds no later than 2:30 p.m.
(Eastern Time) on payment date. Absent any other arrangements between Agent and
DTC, such funds shall be wired as follows:
The Chase Manhattan Bank
ABA #021 000 021
For credit to a/c Cede & Co.
c/o The Depository Trust Company
Dividend Deposit Account #066-027306
13. Reorganization payments resulting from corporate actions (such as
tender offers or mergers) shall be received by Cede & Co., as a nominee of DTC,
or its registered assigns, in same-day funds no later than 2:30 p.m. (Eastern
Time) on payment date. Absent any other arrangements between Agent and DTC, such
funds shall be wired as follows:
The Chase Manhattan Bank
ABA #021 000 021
For credit to a/c Cede & Co.
c/o The Depository Trust Company
Dividend Deposit Account #066-027608
14. DTC may direct Issuer or Agent to use any other number or address as
the number or address to which notices or payments of dividends, distributions,
or redemption proceeds may be sent.
15. In the even of a redemption, acceleration, or any other similar
transaction (e.g., tender made and accepted in response to Issuer's or Agent's
invitation) necessitating a reduction in the aggregate principal amount of
Securities outstanding or an advance refunding of part of the Securities
outstanding, DTC, in its discretion: (a) may request Issuer or Agent to issue
and authenticate a new Security certificate; or (b) may make an appropriate
notation on the Security certificate indicating the date and amount of such
reduction in the number of Securities outstanding, except in the case of final
redemption, in which case the certificate will be presented to Issuer or Agent
prior to payment, if required.
16. In the event that Issuer determines that beneficial owners of
Securities shall be able to obtain certificated Securities, Issuer or Agent
shall notify DTC of the availability of certificates, in such event, Issuer or
Agent shall transfer and exchange certificates in appropriate amounts, as
required by DTC and others.
17. DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to Issuer
or Agent (at which time DTC will confirm with Issuer or Agent the aggregate
principal amount of Securities outstanding). Under such circumstances, at DTC's
request Issuer and Agent shall cooperate fully with DTC by taking
B-5
<PAGE>
appropriate action to make available one or more separate certificates
evidencing Securities to any DTC Participant having Securities credited to its
DTC accounts.
18. Nothing herein shall be deemed to require Agent to advance funds on
behalf of Issuer.
19. This letter of Representations may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
but all such counterparts together shall constitute but one and the same
instrument.
20. This Letter of Representations may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
but all such counterparts together shall constitute but one and the same
instrument.
21. The following riders, attached hereto, are hereby incorporated into
this Letter of Representations:
______________________________________________________________
______________________________________________________________
Notes:
- -----
A. If there is an Agent (as defined in this Letter of
Representations), Agent as well as Issuer must sign this
Letter. If there is no Agent, in signing this Letter Issuer
Itself undertakes to perform all of the obligations set
forth herein.
B. Schedule B contains statements that DTC believes
accurately describe DTC, the method of effecting book-
entry transfers of securities distributed through DTC,
and certain related matters.
Very truly yours,
CNB Capital Trust I
__________________________________________
(Issuer)
By:_______________________________________
(Authorized Officer's Signature)
The Bank of New York as Trustee
__________________________________________
(Agent)
By:_______________________________________
(Authorized Officer's Signature)
B-6
<PAGE>
Received and Accepted:
THE DEPOSITORY TRUST COMPANY
By:_______________________________
cc: Underwriter
Underwriter's Counsel
__________________________________________________________________
__________________________________________________________________
(Describe issue)
<TABLE>
<CAPTION>
CUSIP Number Share Total Offering ($) Value
------------ ----------- ------------------
<S> <C> <C>
</TABLE>
See attached.
B-7
<PAGE>
EXHIBIT C
FORM OF COMMON SECURITY
THIS CERTIFICATE IS NOT TRANSFERABLE TO ANY PERSON
Certificate Number: Number of Common Securities:
C-1 ______
Certificate Evidencing Common Securities
of
CNB Capital Trust I
____% Convertible Common Securities,
(Liquidation Amount $25 per Common Security)
CNB Capital Trust I, a statutory business trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that CNB Bancshares, Inc.
(the "Holder") is the registered owner of ______ common securities of the Trust
representing beneficial ownership interests of the Trust and designated the
____% Convertible Common Securities (Liquidation Amount $25 per Convertible
Common Security) (the "Common Securities"). In accordance with Section 5.11 of
the Trust Agreement (as defined below) the Common Securities are not
transferable and any attempted transfer thereof shall be void. The designations,
rights, privileges, restrictions, preferences and other terms and provisions of
the Common Securities are set forth in, and this certificate and the Common
Securities represented hereby are issued and shall in all respects be subject to
the terms and provisions of, the Amended and Restated Trust Agreement of the
Trust dated as of __________, 1998, as the same may be amended from time to time
(the "Trust Agreement") including the designation of the terms of the Common
Securities as set forth therein. The Trust will furnish a copy of the Trust
Agreement to the Holder without charge upon written request to the Trust at its
principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder and by acceptance hereof
agrees to the provisions of (i) the Guarantee Agreement entered into by CNB
Bancshares, Inc., an Indiana corporation ("CNB"), and The Bank of New York, a
New York banking corporation ("Bank of New York"), as guarantee trustee, dated
as of __________, 1998, and (ii) the Indenture entered into by CNB and Bank of
New York, as trustee, dated as of __________, 1998.
In Witness Whereof, one of the Administrative Trustees of the Trust has
executed this certificate.
CNB CAPITAL TRUST I
By:
------------------------------
Name: John R. Spruill
Administrative Trustee
B-8
<PAGE>
EXHIBIT D
FORM OF CAPITAL SECURITY
This is a Global Certificate within the meaning of the Trust Agreement
hereinafter referred to and is registered in the name of The Depository Trust
Company (the "Depositary") or a nominee of the Depositary. This Capital Security
is exchangeable for Capital Securities registered in the name of a person other
than the Depositary or its nominee only in the limited circumstances described
in the Trust Agreement and no transfer of this Capital Security (other than a
transfer of this Capital 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 Capital Security is presented by an authorized representative
of the Depositary (55 Water Street, New York, New York) to CNB Capital Trust I
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 inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
Certificate Number: Number of Capital Securities:
P-1 ______
CUSIP NO. ________
Certificate Evidencing Convertible Trust Preferred Securities
of
CNB Capital Trust I
____% Convertible Trust Preferred Securities,
(Liquidation Amount $25 per Capital Security)
CNB Capital Trust I, a statutory business trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the
"Holder") is the registered owner of __________ preferred securities of the
Trust representing an undivided beneficial ownership interest in the assets of
the Trust and designated the CNB Capital Trust I ____% Convertible Trust
Preferred Securities (Liquidation Amount $25 per Convertible Capital Security)
(the "Capital Securities"). The Capital Securities are transferable on the books
and records of the Trust, in person by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form for transfer as
provided in Section 5.4 of the Trust Agreement (as defined below). The
designations, rights, privileges, restrictions, preferences and other terms and
provisions of the Capital Securities are set forth in, and this certificate and
the Capital Securities represented hereby are issued and shall in all respects
be subject to, the terms and provisions of, the Amended and Restated Trust
Agreement of the Trust dated as of __________, 1998, as the same may be amended
from time to time (the "Trust Agreement") including the designation of the terms
of Capital Securities as set forth herein. The Holder is entitled to the
benefits of the Guarantee Agreement entered into by CNB Bancshares, Inc., an
Indiana corporation ("CNB"), and The Bank of New York, a New York banking
corporation ("Bank of New
B-9
<PAGE>
York"), as guarantee trustee, dated as of __________, 1998 (the "Guarantee"), to
the extent provided therein. The Trust will furnish a copy of the Trust
Agreement and the Guarantee to the Holder without charge upon written request to
the Trust at its principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder and by acceptance hereof
agrees to the provisions of (i) the Guarantee, and (ii) the Indenture entered
into by CNB and Bank of New York, as trustee, dated as of __________, 1998.
In Witness Whereof, one of the Administrative Trustees of the Trust has
executed this certificate.
CNB CAPITAL TRUST I
By:
------------------------------------------
Name: James J. Giancola
Administrative Trustee
This is one of the Securities referred to in the within mentioned Trust
Agreement.
Date of Authentication:
__________, 1998
By:
--------------------------
Name:
Title: Property Trustee
B-10
<PAGE>
ASSIGNMENT
For Value Received, the undersigned assigns and transfers this Capital
Security to:
(Insert assignee's social security or tax identification number)
(Insert address and zip code of assignee)
and irrevocably appoints
agent to transfer this Capital Securities 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)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.1.
CONVERSION REQUEST
To: Bank of New York, as Conversion Agent under the Trust Agreement
of CNB Capital Trust I
The undersigned owner of these Capital Securities hereby irrevocably
exercises the option to convert these Capital Securities, or the portion below
designated, into Common Stock of CNB BANCSHARES, INC. (the "Common Stock") in
accordance with the terms of the Trust Agreement. Pursuant to the aforementioned
exercise of the option to convert these Capital Securities, the undersigned
hereby directs the Conversion Agent (as that term is defined in the Trust
Agreement) to (i) exchange such Capital Securities for a portion of the
Debentures (as that term is defined in the Trust Agreement) held by the Trust at
the Conversion Ratio specified in the Trust Agreement, and (ii) immediately
convert such Debentures on behalf of the undersigned, into Common Stock at the
Conversion Ratio specified in the Trust Agreement.
The undersigned also hereby directs the Conversion Agent that the shares
issuable and deliverable upon conversion, together with any check in payment for
fractional shares, be issued in the name of and delivered to the undersigned,
unless a different name has been indicated in the assignment
B-11
<PAGE>
below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto.
Date:
------------------
Number of Capital Securities to be converted:
-----------
If a name or names other than the undersigned, please indicate in the spaces
below the name or names in which the shares of Common Stock are to be issued,
along with the address or addresses of such person or persons.
- -------------------------------------------
- -------------------------------------------
- -------------------------------------------
(Sign exactly as your name appears
on the other side of this Capital
Security certificate) (for conversion of
definitive Capital Securities only)
Please Print or Typewrite Name and Address,
Including Zip Code, and Social Security or
Other Identifying Number.
- -------------------------------------------
- -------------------------------------------
- -------------------------------------------
Signature Guarantee:*
-------------------------------
- ----------------------------
*(Signature must be guaranteed by an "eligible guarantor institution" that is, a
bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended)
B-12
<PAGE>
ANNEX I
TERMS OF
____% CONVERTIBLE TRUST PREFERRED SECURITIES
_____% COMMON CONVERTIBLE SECURITIES
Pursuant to Sections 2.4 and 2.5 of the Amended and Restated Trust
Agreement, dated as of _________, 1998 (as amended from time to time, the "Trust
Agreement"), the designation, rights, privileges, restrictions, preferences and
other terms and provisions of the Trust Securities are set forth below. Each
capitalized term used but not defined herein has the meaning set forth in the
Trust Agreement.
Section 1. Designation and Number of Capital Securities.
(a) As of _____________, 1998, the Depositor, on behalf of the
Trust and pursuant to the Original Trust Agreement, executed and delivered the
Underwriting Agreement. Contemporaneously with the execution and delivery of
this Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall
execute in accordance with Section 12 hereof and deliver to the Underwriters
named in the Underwriting Agreement Capital Securities Certificates, registered
in the name of the nominee of the initial Clearing Agency, in an aggregate
amount of [6,000,000] Capital Securities having an aggregate Liquidation Amount
of [$150,000,000], against receipt of an aggregate purchase price plus accrued
distributions from ____________, 1998, if any, of such Capital Securities of
$150,000,000, which amount such Administrative Trustee shall promptly deliver to
the Property Trustee.
(b) In the event the underwriters elect to exercise their
overallotment option pursuant to the Underwriting Agreement, contemporaneously
with the execution and delivery of this Trust Agreement, an Administrative
Trustee, on behalf of the Trust, shall execute in accordance with Section 5.2
and deliver to the Underwriters named in the Underwriting Agreement Capital
Securities Certificates, registered in the name of the nominee of the initial
Clearing Agency, in an aggregate amount of _________Capital Securities having an
aggregate Liquidation Amount of $_____________, against receipt of an aggregate
purchase price plus accrued distributions from ____________, 1998, if any, of
such Capital Securities of $____________ which amount such Administrative
Trustee shall promptly deliver to the Property Trustee.
Section 2. Designation and Number of Common Securities.
(a) Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrative Trustee, on behalf of the Trust, shall execute in
accordance with Section 12 hereof and deliver to the Depositor Common Securities
Certificates, registered in the name of the Depositor, in an aggregate amount of
________ Common Securities having an aggregate Liquidation Amount of $
__________ against payment by the Depositor of an aggregate purchase price plus
accrued distributions from ___________, 1998, if any, of such Common Securities
of $ __________, which amount such Administrative Trustee shall promptly deliver
to the Property Trustee.
(b) In the event the underwriters elect to exercise their
overallotment option pursuant to the Underwriting Agreement, contemporaneously
with the execution and delivery of this
I-1
<PAGE>
Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall
execute in accordance with Section 12 hereof and deliver to the Depositor Common
Securities Certificates, registered in the name of the Depositor, in an
aggregate amount of ________ Common Securities having an aggregate Liquidation
Amount of $ __________ against payment by the Depositor of an aggregate purchase
price plus accrued distributions from ___________, 1998, if any, of such Common
Securities of $ __________, which amount such Administrative Trustee shall
promptly deliver to the Property Trustee.
Section 3. Distributions.
(a) The Trust Securities represent undivided beneficial ownership interests
in the Trust Property, and distributions (the "Distributions") (including
Additional Amounts) shall be made on the Trust Securities at the rate and on the
dates that payments of interest (including Additional Interest, as defined in
the Indenture) are made on the Debentures. Accordingly:
(i) Distributions on the Trust Securities shall be cumulative, and
shall accumulate whether or not there are funds of the Trust available for
the payment of Distributions. Distributions shall accrue from ____________,
1998, and, except in the event (and to the extent) that the Depositor
exercises its right to defer the payment of interest on the Debentures
pursuant to the Indenture, shall be payable quarterly in arrears on March
31, June 30, September 30 and December 31 of each year, commencing on
September 30, 1998. If any date on which a Distribution is otherwise
payable on the Trust Securities is not a Business Day, then the payment of
such Distribution shall be made on the next succeeding day that is a
Business Day (without any additional Distributions or other payment in
respect of such delay) except that, if such Business Day is in the next
succeeding calendar year, payment of such Distribution shall be made on the
immediately preceding Business Day, 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 this Section 3(a), a "Distribution Date").
(ii) Assuming payments of interest on the Debentures are made when due
(and before giving effect to Additional Amounts, if applicable),
Distributions on the Trust Securities shall be payable at a rate of _____%
per annum of the Liquidation Amount of the Trust Securities, the rate per
annum provided for in the Debentures, the first Distribution payable on
September 30, 1998 shall be in the amount of $ ________ per Trust Security
and thereafter quarterly Distributions shall be in the amount of $ ________
per Trust Security. Notwithstanding the foregoing, the amount of
Distributions payable for any period also shall include the Additional
Amounts, if any.
(iii) Distributions on the Trust Securities shall be made by the
Property Trustee from the Payment Account and shall be payable on each
Distribution Date only to the extent that the Trust has funds then on hand
and available in the Payment Account for the payment of such Distributions.
(b) Distributions on the Trust Securities with respect to a Distribution
Date shall be payable to the Holders thereof as they appear on the Securities
Register for the Trust Securities on the relevant record date, which shall be
one Business Day prior to such Distribution Date; provided, however, that in the
event that the Capital Securities do not remain in book-entry-only form, the
relevant record date shall be the 15th day of the month in which the relevant
Distribution Date occurs
I-2
<PAGE>
without giving effect to the third sentence of Section 3(a)(i) hereof (whether
or not such record date is a Business Day).
Section 4. Redemption.
(a) On each Debenture Redemption Date and on the Debenture Maturity Date,
the Trust shall be required to redeem a Like Amount of Trust Securities at the
Redemption Price. The Redemption Price shall be computed on the basis of a 360-
day year of twelve 30-day months.
(b) Notice of redemption shall be given by the Property Trustee by first-
class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior
to the Redemption Date to each Holder of Trust Securities to be redeemed, at
such Holder's address appearing in the Security Register. All notices of
redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the CUSIP number;
(iv) if less than all the Outstanding Trust Securities are to be
redeemed, the identification and the total Liquidation Amount of the
particular Trust Securities to be redeemed;
(v) that on the Redemption Date the Redemption Price shall become
due and payable upon each such Trust Security to be redeemed and that
Distributions thereon shall cease to accrue on and after said date; and
(vi) if the Capital Securities are no longer in book-entry-only
form, the place and address where the Holders shall surrender their Capital
Securities Certificates.
(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the proceeds from the contemporaneous
redemption at Debenture Redemption Date or payment at Debenture Maturity Date.
Redemptions of the Trust Securities shall be made and the Redemption Price shall
be payable on each Redemption Date only to the extent that the Trust has funds
then on hand and available in the Payment Account for the payment of such
Redemption Price.
(d) If the Property Trustee gives a notice of redemption in respect of any
Capital Securities, then, by 12:00 noon, Eastern time, on the Redemption Date,
subject to Section 4(c) hereof, the Property Trustee shall, so long as the
Capital Securities are in book-entry-only form, irrevocably deposit with the
Clearing Agency for the Capital Securities funds sufficient to pay the
applicable Redemption Price and shall give such Clearing Agency irrevocable
instructions and authority to pay the Redemption Price to the Holders thereof.
If the Capital Securities are no longer in book-entry-only form, the Property
Trustee, subject to Section 4(c) hereof, shall irrevocably deposit with the
Paying Agent funds sufficient to pay the applicable Redemption Price and shall
give the Paying Agent irrevocable instructions and authority to pay the
Redemption Price to the Holders thereof upon surrender of their Capital
Securities Certificates. Notwithstanding the foregoing, Distributions payable on
or prior to the Redemption Date for any Trust Securities called for redemption
shall be payable to the Holders of such Trust Securities as they appear on the
Securities Register for the Trust Securities
I-3
<PAGE>
on the relevant record dates for the related Distribution Dates. If notice of
redemption shall have been given and funds deposited as required, then upon the
date of such deposit, all rights of Securityholders holding Trust Securities so
called for redemption shall cease, except (i) the right of such Securityholders
to receive the Redemption Price and any Distribution payable on or prior to the
Redemption Date, but without interest thereon, and (ii) the right of the
Securityholders to cause the Conversion Agent to convert the Trust Securities,
and such Trust Securities shall cease to be Outstanding. In the event that any
date on which any Redemption Price is payable is not a Business Day, then
payment of the Redemption Price payable on such date 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), except that, if such Business Day falls in the
next calendar year, such payment shall be made on the immediately preceding
Business Day, in each case, with the same force and effect as if made on such
date. In the event that payment of the Redemption Price in respect of any Trust
Securities called for redemption is improperly withheld or refused and not paid
either by the Trust or by the Depositor pursuant to the Guarantee, Distributions
on such Trust Securities shall continue to accrue, at the then applicable rate,
from the Redemption Date originally established by the Trust for such Trust
Securities to the date such Redemption Price is actually paid, in which case the
actual payment date shall be the date fixed for redemption for purposes of
calculating the Redemption Price.
(e) Payment of the Redemption Price on the Trust Securities shall be made
to the recordholders thereof as they appear on the Securities Register for the
Trust Securities on the relevant record date, which shall be one Business Day
prior to the relevant Redemption Date; provided, however, that in the event that
the Capital Securities do not remain in book-entry-only form, the relevant
record date shall be the date fifteen days prior to the relevant Redemption
Date.
(f) Subject to Section 6(a) hereof, if less than all of the Outstanding
Trust Securities are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of Trust Securities to be redeemed shall be allocated on a
pro rata basis (based on Liquidation Amounts) among the Common Securities and
the Capital Securities. The particular Capital Securities to be redeemed shall
be selected on a pro rata basis (based upon Liquidation Amounts) not more than
60 days prior to the Redemption Date by the Property Trustee from the
Outstanding Capital Securities not previously called for redemption, by such
method (including, without limitation, by lot) as the Property Trustee shall
deem fair and appropriate and which may provide for the selection for redemption
of portions (equal to $25 or an integral multiple of $25 in excess thereof) of
the Liquidation Amount of Capital Securities of a denomination larger than $25.
The Property Trustee shall promptly notify the Security Registrar in writing of
the Capital Securities selected for redemption and, in the case of any Capital
Securities selected for partial redemption, the Liquidation Amount thereof to be
redeemed. For all purposes of this Trust Agreement, unless the context otherwise
requires, all provisions relating to the redemption of Capital Securities shall
relate, in the case of any Capital Securities redeemed or to be redeemed only in
part, to the portion of the Liquidation Amount of Capital Securities that has
been or is to be redeemed.
Section 5. Conversion.
The Securityholders shall have the right at any time prior to 5:00 p.m.
(Eastern time) on the Business Day immediately preceding the date of repayment
of such Trust Securities, whether at maturity or upon redemption (either at the
option of the Depositor or pursuant to a Tax Event), at their option, to cause
the Conversion Agent to convert Trust Securities, on behalf of the converting
Holders, into shares of the Common Stock in the manner described herein on and
subject to the following terms and conditions:
I-4
<PAGE>
(a) The Trust Securities shall be convertible at the office of the
Conversion Agent into fully paid and nonassessable shares of Common Stock
pursuant to the Holder's direction to the Conversion Agent to exchange such
Trust Securities for a portion of the Debentures theretofore held by the Trust
on the basis of one Security per $25 principal amount of Debentures, and
immediately convert such amount of Debentures into fully paid and nonassessable
shares of Common Stock of the Depositor at an initial conversion rate of [_____]
shares of Common Stock per $25 principal amount of Debentures (which is
equivalent to an initial conversion price of $[_____] per share of Common
Stock), subject to certain adjustments set forth in the terms of the Debentures
(as so adjusted, the "Conversion Ratio").
(b) In order to convert Trust Securities into Common Stock, the Holder
shall submit to the Conversion Agent an irrevocable request to convert Trust
Securities on behalf of such Holder (the "Conversion Request"), together, if the
Trust Securities are in certificated form, with such Trust Security
Certificates. The Conversion Request shall (i) set forth the number of Trust
Securities to be converted and the name or names, if other than the Holder, in
which the shares of Common Stock should be issued, and (ii) direct the
Conversion Agent (A) to exchange such Trust Securities for a portion of the
Debentures held by the Trust (at the rate of exchange specified in Section 5(a)
hereof), and (B) to immediately convert such Debentures on behalf of such Holder
into Common Stock (at the Conversion Ratio specified in Section 5(a) hereof).
The Conversion Agent shall notify the Trust of the Holder's election to exchange
Trust Securities for a portion of the Debentures held by the Trust and the
Property Trustee on behalf of the Trust shall, upon receipt of such notice,
deliver to the Conversion Agent the appropriate principal amount of Debentures
for exchange in accordance with this Section 5. The Conversion Agent shall
thereupon notify the Depositor of the Holder's election to convert such
Debentures into shares of Common Stock.
(c) Accrued Distributions shall not be paid on Capital Securities that are
converted, nor shall any payment, allowance or adjustment be made for
accumulated and unpaid Distributions, whether or not in arrears, on converted
Capital Securities, except that if any Capital Security is converted (i) on or
after a record date for payment of Distributions thereon and prior to the
related Distribution Date, the amount of the Distributions payable on the
related Distribution Date with respect to such Capital Security shall be paid by
the converting Holder to the Trust and the Distributions payable on the related
Distribution Date with respect to such Capital Security shall be distributed to
the Holder on such record date, despite such conversion, and (ii) during an
Extension Period and after the Property Trustee mails a notice of redemption
with respect to the Capital Securities that are converted, accrued and unpaid
Distributions through the date of conversion on such Capital Securities called
for redemption shall be distributed to the Holder who converts such Capital
Securities, which Distribution shall be made on the Redemption Date fixed for
redemption. Except as provided above, neither the Trust nor the Depositor shall
make, or be required to make, any payment, allowance or adjustment upon any
conversion on account of any accumulated and unpaid Distributions accrued on the
Trust Securities (including any Additional Amount) surrendered for conversion,
or on account of any accumulated and unpaid dividends, if any, on the shares of
Common Stock issued upon such conversion. The Depositor shall make no payment or
allowance for distributions on the shares of Common Stock issued upon such
conversion, except to the extent that such shares of Common Stock are held of
record on the record date for any such distributions and except as provided in
Section 12.9 of the Indenture. Trust Securities shall be deemed to have been
converted immediately prior to 5:00 p.m. (Eastern time) on the day on which a
Conversion Request relating to such Trust Securities is received by the Trust in
accordance with the foregoing provisions of this Section 5 (the "Conversion
Date"). The Person or Persons entitled to receive the Common Stock issuable upon
conversion of the
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Debentures shall be treated for all purposes as the record holder or holders of
such Common Stock at such time. As promptly as practicable on or after the
Conversion Date, the Depositor shall issue and deliver at the office of the
Conversion Agent a certificate or certificates for the number of full shares of
Common Stock issuable upon such conversion, together with the cash payment, if
any, in lieu of any fraction of any share to the Person or Persons entitled to
receive the same as provided in Section 5(e) hereof, unless otherwise directed
by the Holder in the Conversion Request, and the Conversion Agent shall
distribute such certificate or certificates to such Person or Persons.
(d) Each Holder of a Trust Security by his acceptance thereof appoints the
Bank (the "Conversion Agent") for the purpose of effecting the conversion of
Trust Securities in accordance with this Section 5. In effecting the conversion
and transactions described in this Section 5, the Conversion Agent shall be
acting as agent of the Securityholders directing it to effect such conversion
transactions. The Conversion Agent is hereby authorized (i) to exchange Trust
Securities from time to time for Debentures held by the Trust in connection with
the conversion of such Trust Securities in accordance with this Section 5, and
(ii) to convert all or a portion of the Debentures into Common Stock and
thereupon to deliver such shares of Common Stock in accordance with the
provisions of this Section 5 and to deliver to the Trust a new Debenture or
Debentures for any resulting unconverted principal amount.
(e) No fractional shares of Common Stock shall be issued as a result of
conversion, but in lieu thereof, such fractional interest shall be paid in cash
(based on the last reported sale price of the Common Stock on the Conversion
Date) by the Depositor to the Trust, which in turn shall make such payment to
the Holder or Holders of Trust Securities so converted.
(f) The Depositor shall at all times reserve and keep available out of its
authorized and unissued Common Stock, solely for issuance upon the conversion of
the Debentures, free from any preemptive or other similar rights, such number of
shares of Common Stock as shall from time to time be issuable upon the
conversion of all of the Debentures then outstanding. Notwithstanding the
foregoing, the Depositor shall be entitled to deliver, upon conversion of
Debentures, shares of Common Stock reacquired and held in the treasury of the
Depositor (in lieu of the issuance of authorized and unissued shares of Common
Stock), so long as any such treasury shares are free and clear of all liens,
charges, security interests or encumbrances. Any shares of Common Stock issued
upon conversion of the Debentures shall be duly authorized, validly issued,
fully paid and nonassessable. The Trust shall deliver the shares of Common Stock
of the Depositor received upon conversion of the Debentures to the converting
Holder free and clear of all liens, charges, security interests and
encumbrances, except for United States withholding taxes. Each of the Depositor
and the Trust shall prepare and shall use its best efforts to obtain and keep in
force such governmental or regulatory permits or other authorizations as may be
required by law, and shall comply with all applicable requirements as to
registration or qualification of the Common Stock (and all requirements to list
the Common Stock issuable upon conversion of Debentures that are at the time
applicable), in order to enable the Depositor to lawfully issue Common Stock to
the Trust upon conversion of the Debentures and the Trust to lawfully deliver
the Common Stock to each Holder upon conversion of the Trust Securities.
(g) The Depositor shall pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Common Stock on conversion of
Debentures and the delivery of the shares of Common Stock by the Trust upon
conversion of the Trust Securities. The Depositor shall not, however, be
required to pay any tax that may be payable in respect of any transfer involved
in the issue and delivery of shares of Common Stock in a name other than that in
which the Trust Securities
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so converted were registered, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the Trust the amount of
any such tax or has established to the satisfaction of the Trust that such tax
has been paid.
(h) Nothing in the preceding Section 5 shall limit the requirement of the
Trust to withhold taxes pursuant to the terms of the Trust Securities or as set
forth in this Trust Agreement or otherwise require the Property Trustee or the
Trust to pay any amount on account of such withholdings.
Section 6. Subordination of Common Securities.
(a) Payment of Distributions (including Additional Amounts, if applicable)
on, and the Redemption Price of, the Trust Securities, as applicable, shall be
made, subject to Section 4(f) hereof, pro rata among the Common Securities and
the Capital Securities based on the Liquidation Amount of the Trust Securities;
provided, however, that if on any Distribution Date or Redemption Date any Event
of Default resulting from a Debenture Event of Default shall have occurred and
be continuing, no payment of any Distribution (including Additional Amounts, if
applicable) on, or Redemption Price of, any Common Security, and no other
payment on account of the redemption, liquidation or other acquisition of Common
Securities, shall be made unless payment in full in cash of all accumulated and
unpaid Distributions (including Additional Amounts, if applicable) on all
Outstanding Capital Securities for all Distribution periods terminating on or
prior thereto, or in the case of payment of the Redemption Price the full amount
of such Redemption Price on all Outstanding Capital Securities then called for
redemption, shall have been made or provided for, and all funds immediately
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions (including Additional Amounts, if applicable) on,
or the Redemption Price of, Capital Securities then due and payable.
(b) In the case of the occurrence of any Event of Default resulting from
any Debenture Event of Default, the Holder of Common Securities shall be deemed
to have waived any right to act with respect to any such Event of Default under
this Trust Agreement until the effect of all such Events of Default with respect
to the Capital Securities shall have been cured, waived or otherwise eliminated.
Until any such Event of Default under this Trust Agreement with respect to the
Capital Securities 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 the Holder of the Common Securities, and only the Holders of
the Capital Securities shall have the right to direct the Property Trustee to
act on their behalf.
Section 7. Payment Procedures.
Payments of Distributions (including Additional Amounts, if applicable) in
respect of the Capital Securities shall be made by check mailed to the address
of the Person entitled thereto as such address shall appear on the Securities
Register or, if the Capital Securities are held by a Clearing Agency, such
Distributions shall be made to the Clearing Agency in immediately available
funds, which shall credit the relevant Persons' accounts at such Clearing Agency
on the applicable Distribution Dates. Payments in respect of the Common
Securities shall be made in such manner as shall be mutually agreed in writing
between the Property Trustee and the Common Securityholder.
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Section 8. Tax Returns and Reports.
The Administrative Trustees shall prepare (or cause to be prepared), at the
Depositor's expense, and file all United States federal, state and local tax and
information returns and reports required to be filed by or in respect of the
Trust. In this regard, the Administrative Trustees shall (a) prepare and file
(or cause to be prepared and filed) the appropriate Internal Revenue Service
Form required to be filed in respect of the Trust in each taxable year of the
Trust and (b) prepare and furnish (or cause to be prepared and furnished) to
each Securityholder the appropriate Internal Revenue Service form and the
information required to be provided on such form. The Administrative Trustees
shall provide the Depositor and the Property Trustee with a copy of all such
returns and reports promptly after such filing or furnishing. The Trustees shall
comply with United States federal withholding and backup withholding tax laws
and information reporting requirements with respect to any payments to
Securityholders under the Trust Securities.
Section 9. Payment of Expenses of Trust.
Pursuant to Section 10.6 of the Indenture, the Depositor, as borrower, has
agreed to pay to the Trust, and reimburse the Trust for, the full amount of any
costs, expenses or liabilities of the Trust (other than obligations of the Trust
to pay the Holders of any Capital Securities or other similar interests in the
Trust the amounts due such Holders pursuant to the terms of the Capital
Securities or such other similar interests, as the case may be), including,
without limitation, any taxes, duties or other governmental charges of whatever
nature (other than withholding taxes) imposed on the Trust by the United States
or any other taxing authority. Such payment obligation includes any such costs,
expenses or liabilities of the Trust that are required by applicable law to be
satisfied in connection with a termination of the Trust.
Section 10. Payments under Indenture or Pursuant to Direct Actions.
Any amount payable hereunder to any Holder of Capital Securities shall be
reduced by the amount of any corresponding payment such Holder (or an Owner with
respect to the Holder's Capital Securities) has directly received pursuant to
Section 5.8 of the Indenture or Section 23 hereof.
Section 11. Initial Ownership of Trust Securities Certificates.
Upon the creation of the Trust and the contribution by the Depositor
pursuant to Section 2.3 of the Trust Agreement and until the issuance of the
Trust Securities, and at any time during which no Trust Securities are
Outstanding, the Depositor shall be the sole beneficial owner of the Trust.
Section 12. Trust Securities Certificates.
The Capital Securities Certificates shall be issued in minimum
denominations of $25 Liquidation Amount and integral multiples of $25 in excess
thereof, and the Common Securities Certificates shall be issued in denominations
of $25 Liquidation Amount and integral multiples thereof. The Trust Securities
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of at least one Administrative Trustee and, if executed on behalf of
the Trust by facsimile, countersigned by a transfer agent or its agent. The
Capital Securities Certificates shall be authenticated by the Property Trustee
by manual or facsimile signature of an authorized signatory thereof and, if
executed by such authorized signatory of the Property Trustee by facsimile,
countersigned by a transfer agent or its agent. Trust Securities Certificates
bearing the manual
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signatures of individuals who were, at the time when such signatures shall have
been affixed, authorized to sign on behalf of the Trust or the Property Trustee
or, if executed on behalf of the Trust or the Property Trustee by facsimile,
countersigned by a transfer agent or its agent, shall be validly issued and
entitled to the benefits of this Trust Agreement, notwithstanding that such
individuals or any of them shall have ceased to be so authorized prior to the
delivery of such Trust Securities Certificates or did not hold such offices at
the date of delivery of such Trust Securities Certificates. A transferee of a
Trust Securities Certificate shall become a Securityholder, and shall be
entitled to the rights and subject to the obligations of a Securityholder
hereunder, upon due registration of such Trust Securities Certificate in such
transferee's name pursuant to Sections 14, 22 and 24 hereof.
Section 13. Execution and Delivery of Trust Securities Certificates.
On the Closing Date, the Administrative Trustees shall cause Trust
Securities Certificates, in an aggregate Liquidation Amount as provided in
Sections 1 and 2 hereof, to be executed on behalf of the Trust and delivered to
or upon the written order of the Depositor, signed by its chairman of the board,
its president, any executive vice president or any vice president, treasurer or
assistant treasurer or controller without further corporate action by the
Depositor, in authorized denominations.
Section 14. Registration of Transfer and Exchange of Capital Securities
Certificates.
(a) The Depositor shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 18 hereof, a register or registers for the
purpose of registering Trust Securities Certificates and transfers and exchanges
of Capital Securities Certificates (the "Securities Register") in which the
transfer agent and registrar designated by the Depositor (the "Securities
Registrar"), subject to such reasonable regulations as it may prescribe, shall
provide for the registration of Capital Securities Certificates and Common
Securities Certificates (subject to Section 21 hereof in the case of the Common
Securities Certificates) and registration of transfers and exchanges of Capital
Securities Certificates as herein provided. The Bank shall be the initial
Securities Registrar.
(b) Upon surrender for registration of transfer of any Capital Securities
Certificate at the office or agency maintained pursuant to Section 18 hereof,
the Administrative Trustees or any one of them shall execute on behalf of the
Trust (and if executed on behalf of the Trust by a facsimile signature, such
certificate shall be countersigned by a transfer agent or its agent) and
deliver, in the name of the designated transferee or transferees, one or more
new Capital Securities Certificates in authorized denominations of a like
aggregate Liquidation Amount dated the date of execution by such Administrative
Trustee or Trustees. The Securities Registrar shall not be required to register
the transfer of any Capital Securities that have been called for redemption
during a period beginning at the opening of business 15 days before the day of
selection for such redemption.
(c) At the option of a Holder, Capital Securities Certificates may be
exchanged for other Capital Securities Certificates in authorized denominations
of the same class and of a like aggregate Liquidation Amount upon surrender of
the Capital Securities Certificates to be exchanged at the office or agency
maintained pursuant to Section 18 hereof.
(d) Every Capital Securities Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to an Administrative Trustee and the
Securities Registrar duly executed by the Holder or his attorney duly authorized
in writing. Each Capital Securities Certificate surrendered for registration of
transfer or
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exchange shall be cancelled and subsequently disposed of by an Administrative
Trustee or the Securities Registrar in accordance with such Person's customary
practice.
(e) No service charge shall be made for any registration of transfer or
exchange of Capital Securities Certificates, but the Securities Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Capital Securities
Certificates.
Section 15. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates.
If (a) any mutilated Trust Securities Certificate shall be surrendered to
the Securities Registrar, or if the Securities Registrar shall receive evidence
to its satisfaction of the destruction, loss or theft of any Trust Securities
Certificate, and (b) there shall be delivered to the Securities Registrar and
the Administrative Trustees such security or indemnity as may be required by
them to save each of them harmless, then in the absence of notice that such
Trust Securities Certificate shall have been acquired by a bona fide purchaser,
the Administrative Trustees, or any one of them, on behalf of the Trust shall
execute by manual or facsimile signature and, if executed on behalf of the Trust
by facsimile signature, such certificate shall be countersigned by a transfer
agent, and make available for delivery, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Trust Securities Certificate, a new Trust
Securities Certificate of like class, tenor and denomination. In connection with
the issuance of any new Trust Securities Certificate under this Section 15, the
Administrative Trustees or the Securities Registrar may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection therewith. Any duplicate Trust Securities Certificate issued
pursuant to this Section 15 shall constitute conclusive evidence of an undivided
beneficial interest in the Trust Property, as if originally issued, whether or
not the lost, stolen or destroyed Trust Securities Certificate shall be found at
any time.
Section 16. Persons Deemed Securityholders.
The Trustees or the Securities Registrar shall treat the Person in whose
name any Trust Securities Certificate shall be registered in the Securities
Register as the owner of such Trust Securities Certificate for the purpose of
receiving Distributions and for all other purposes whatsoever, and neither the
Trustees nor the Securities Registrar shall be bound by any notice to the
contrary.
Section 17. Access to List of Securityholders' Names and Addresses.
Each Holder and each Owner shall be deemed to have agreed not to hold the
Depositor, the Property Trustee or the Administrative Trustees accountable by
reason of the disclosure of its name and address, regardless of the source from
which such information was derived.
Section 18. Maintenance of Office or Agency.
The Administrative Trustees shall maintain an office or offices or agency
or agencies where Capital Securities Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Trustees in respect of the Trust Securities Certificates may be served. The
Administrative Trustees initially designate The Bank of New York, Attn:
Corporate Trust Administration, as its principal corporate trust office for such
purposes. The Administrative Trustees shall give prompt written notice to the
Depositor, the Property Trustee and to the Securityholders of any change in the
location of the Securities Register or any such office or agency.
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Section 19. Appointment of Paying Agent.
The Paying Agent shall make Distributions to Securityholders from the
Payment Account and shall report the amounts of such Distributions to the
Property Trustee and the Administrative Trustees. Any Paying Agent shall have
the revocable power to withdraw funds from the Payment Account for the purpose
of making the Distributions referred to above. The Administrative Trustees may
revoke such power and remove the Paying Agent if such Trustees determine in
their sole discretion that the Paying Agent shall have failed to perform its
obligations under this Trust Agreement in any material respect. The Paying Agent
shall initially be the Bank, and any co-paying agent chosen by the Bank, and
acceptable to the Administrative Trustees and the Depositor. Any Person acting
as Paying Agent shall be permitted to resign as Paying Agent upon 30 days'
written notice to the Administrative Trustees, the Property Trustee and the
Depositor. In the event that the Bank shall no longer be the Paying Agent or a
successor Paying Agent shall resign or its authority to act be revoked, the
Administrative Trustees shall appoint a successor that is acceptable to the
Property Trustee and the Depositor to act as Paying Agent (which shall be a bank
or trust company). The Administrative Trustees shall cause such successor Paying
Agent or any additional Paying Agent appointed by the Administrative Trustees to
execute and deliver to the Trustees an instrument in which such successor Paying
Agent or additional Paying Agent shall agree with the Trustees that, as Paying
Agent, such successor Paying Agent or additional Paying Agent will hold all
sums, if any, held by it for payment to the Securityholders in trust for the
benefit of the Securityholders entitled thereto until such sums shall be paid to
such Securityholders. The Paying Agent shall return all unclaimed funds to the
Property Trustee and upon resignation or removal of a Paying Agent such Paying
Agent shall also return all funds in its possession to the Property Trustee. The
provisions of Sections 5.1, 5.3 and 5.6 of the Trust Agreement shall apply to
the Bank also in its role as Paying Agent, for so long as the Bank shall act as
Paying Agent and, to the extent applicable, to any other paying agent appointed
hereunder, and any Paying Agent shall be bound by the requirements with respect
to paying agents of securities issued pursuant to the Trust Indenture Act. Any
reference in this Agreement to the Paying Agent shall include any co-paying
agent unless the context requires otherwise.
Section 20. Appointment of Conversion Agent.
The Conversion Agent shall convert the Trust Securities of the
Securityholders in accordance with Section 5 hereof. The Administrative Trustees
may revoke such power and remove the Conversion Agent if such Trustees determine
in their sole discretion that the Conversion Agent shall have failed to perform
its obligations under this Trust Agreement in any material respect. The
Conversion Agent shall initially be the Bank, and any co-paying agent chosen by
the Bank, and acceptable to the Administrative Trustees and the Depositor. Any
Person acting as Conversion Agent shall be permitted to resign as Conversion
Agent upon 30 days' written notice to the Administrative Trustees, the Property
Trustee and the Depositor. In the event that the Bank shall no longer be the
Conversion Agent or a successor Conversion Agent shall resign or its authority
to act be revoked, the Administrative Trustees shall appoint a successor that is
acceptable to the Property Trustee and the Depositor to act as Conversion Agent
(which shall be a bank or trust company). The provisions of Sections 5.1, 5.3
and 5.6 of the Trust Agreement shall apply to the Bank also in its role as
Conversion Agent, for so long as the Bank shall act as Conversion Agent and, to
the extent applicable, to any other conversion agent appointed hereunder, and
any Conversion Agent shall be bound by the requirements with respect to
conversion agents of securities issued pursuant to the Trust Indenture Act. Any
reference in this Agreement to the Conversion Agent shall include any co-paying
agent unless the context requires otherwise.
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Section 21. Ownership of Common Securities by Depositor.
On the Closing Date, the Depositor shall acquire and retain beneficial and
record ownership of the Common Securities. To the fullest extent permitted by
law, other than a transfer in connection with a consolidation or merger of the
Depositor into another Person, or any conveyance, transfer or lease by the
Depositor of its properties and assets substantially as an entirety to any
Person, pursuant to Section 8.1 of the Indenture, any attempted transfer of the
Common Securities shall be void. The Administrative Trustees shall cause each
Common Securities Certificate issued to the Depositor to contain a legend
stating "THIS CERTIFICATE IS NOT TRANSFERABLE TO ANY PERSON."
Section 22. Book-Entry Capital Securities Certificates; Common Securities
Certificate.
(a) The Capital Securities Certificates, upon original issuance, shall be
issued in the form of a typewritten Capital Securities Certificate or
Certificates representing Book-Entry Capital Securities Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Trust. Such Capital Securities Certificate or Certificates
shall initially be registered on the Securities Register in the name of Cede &
Co., the nominee of the initial Clearing Agency, and no Owner will receive a
Definitive Capital Securities Certificate representing such Owner's interest in
such Capital Securities, except as provided in Section 24 hereof. Unless and
until Definitive Capital Securities Certificates have been issued to Owners
pursuant to Section 24 hereof:
(i) the provisions of this Section 22(a) shall be in full force and
effect;
(ii) the Securities Registrar and the Trustees shall be entitled to
deal with the Clearing Agency for all purposes of this Trust Agreement
relating to the Book-Entry Capital Securities Certificates (including the
payment of the Liquidation Amount of and Distributions on the Capital
Securities evidenced by Book-Entry Capital Securities Certificates and the
giving of instructions or directions to Owners of Capital Securities
evidenced by Book-Entry Capital Securities Certificates) as the sole Holder
of Capital Securities evidenced by Book-Entry Capital Securities
Certificates and shall have no obligations to the Owners thereof;
(iii) to the extent that the provisions of this Section 22 conflict
with any other provisions of this Trust Agreement, the provisions of this
Section 22 shall control; and
(iv) the rights of the Owners of the Book-Entry Capital Securities
Certificates shall be exercised only through the Clearing Agency and shall
be limited to those established by law and agreements between such Owners
and the Clearing Agency and/or the Clearing Agency Participants. Pursuant
to the Certificate Depository Agreement, unless and until Definitive
Capital Securities Certificates are issued pursuant to Section 24 hereof,
the initial Clearing Agency shall make book-entry transfers among the
Clearing Agency Participants and receive and transmit payments on the
Capital Securities to such Clearing Agency Participants.
(b) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive Common
Securities Certificate.
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Section 23. Notices to Clearing Agency.
To the extent that a notice or other communication to the Owners is
required under this Trust Agreement, unless and until Definitive Capital
Securities Certificates shall have been issued to Owners pursuant to Section 24
hereof, the Trustees shall give all such notices and communications specified
herein to be given to Owners to the Clearing Agency, and shall have no
obligations to the Owners.
Section 24. Definitive Capital Securities Certificates.
If (a) the Depositor advises the Trustees in writing that the Clearing
Agency is no longer willing or able to properly discharge its responsibilities
with respect to the Capital Securities Certificates, and the Depositor is unable
to locate a qualified successor, (b) the Depositor at its option advises the
Trustees in writing that it elects to terminate the book-entry system through
the Clearing Agency, or (c) after the occurrence of a Debenture Event of
Default, Owners of Capital Securities Certificates representing beneficial
interests aggregating at least a majority of the Liquidation Amount advise the
Administrative Trustees in writing that the continuation of a book-entry system
through the Clearing Agency is no longer in the best interest of the Owners of
Capital Securities Certificates, then the Administrative Trustees shall notify
other Trustees and the Clearing Agency, and the Clearing Agency, in accordance
with its customary rules and procedures, shall notify all Clearing Agency
Participants for whom it holds Capital Securities of the occurrence of any such
event and of the availability of the Definitive Capital Securities Certificates
to Owners of such class or classes, as applicable, requesting the same. Upon
surrender to the Administrative Trustees of the typewritten Capital Securities
Certificate or Certificates representing the Book-Entry Capital Securities
Certificates by the Clearing Agency, accompanied by registration instructions,
the Administrative Trustees, or any one of them, shall execute the Definitive
Capital Securities Certificates in accordance with the instructions of the
Clearing Agency or, if executed on behalf of the Trust by facsimile,
countersigned by a transfer agent or its agent. Neither the Securities Registrar
nor the Trustees shall be liable for any delay in delivery of such instructions
and may conclusively rely upon, and shall be protected in relying upon, such
instructions. Upon the issuance of Definitive Capital Securities Certificates,
the Trustees shall recognize the Holders of the Definitive Capital Securities
Certificates as Securityholders. The Definitive Capital Securities Certificates
shall be typewritten, printed, lithographed or engraved or may be produced in
any other manner as is reasonably acceptable to the Administrative Trustees that
meets the requirements of any stock exchange or automated quotation system on
which the Capital Securities are then listed or approved for trading, as
evidenced by the execution thereof by the Administrative Trustees or any one of
them.
Section 25. Rights of Securityholders.
(a) The legal title to the Trust Property is vested exclusively in the
Property Trustee (in its capacity as such) in accordance with Section 2.9 of the
Trust Agreement, and the Securityholders shall not have any right or title
therein other than the undivided beneficial ownership interest in the assets of
the Trust conferred by their Trust Securities and they shall have no right to
call for any partition or division of property, profits or rights of the Trust
except as described below. The Trust Securities shall be personal property
giving only the rights specifically set forth therein and in this Trust
Agreement. The Trust Securities shall have no preemptive or similar rights and
when issued and delivered to Securityholders against payment of the purchase
price therefor shall be fully paid and nonassessable by the Trust. The Holders
of the Capital Securities, in their capacities as such, shall be entitled to the
same limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware.
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(b) For so long as any Capital Securities remain Outstanding, if, upon a
Debenture Event of Default, the Debenture Trustee fails or the holders of not
less than 25% in principal amount of the outstanding Debentures fail to declare
the principal of all of the Debentures to be immediately due and payable, the
Holders of at least 25% in Liquidation Amount of the Capital Securities then
Outstanding shall have such right by a notice in writing to the Depositor and
the Debenture Trustee; and upon any such declaration such principal amount of
and the accrued interest on all of the Debentures shall become immediately due
and payable as set forth in the Indenture, provided that the payment of
principal and interest on such Debentures shall remain subordinated to the
extent provided in the Indenture. At any time after such a declaration of
acceleration with respect to the Debentures has been made and before a judgment
or decree for payment of the money due has been obtained by the Debenture
Trustee as described in the Indenture, the Holders of a majority in Liquidation
Amount of the Capital Securities, by written notice to the Property Trustee, the
Depositor and the Debenture Trustee, may rescind and annul such declaration and
its consequences if: (i) the Depositor has paid or deposited with the Debenture
Trustee a sum sufficient to pay; (A) all overdue installments of interest
(including any Additional Interest (as defined in the Indenture)) on all of the
Debentures, (B) the principal of any Debentures which have become due otherwise
than by such declaration of acceleration and interest thereon at the rate borne
by the Debentures, and (C) all sums paid or advanced by the Debenture Trustee
under the Indenture and the reasonable compensation, expenses, disbursements and
advances of the Debenture Trustee and the Property Trustee, their agents and
counsel; and (ii) all Events of Default with respect to the Debentures, other
than the non-payment of the principal of the Debentures which has become due
solely by such acceleration, have been cured or waived as provided in Section
5.13 of the Indenture.
(c) The Holders of a majority in aggregate Liquidation Amount of the
Capital Securities may, on behalf of the Holders of all the Capital Securities,
waive any past default under the Indenture, except a default in the payment of
principal or interest (unless all Events of Default with respect to the
Debentures, other than the non-payment of the principal of the Debentures which
has become due solely by such acceleration, have been cured or annulled as
provided in Section 5.3 of the Indenture and the Depositor has paid or deposited
with the Debenture Trustee a sum sufficient to pay all overdue installments of
interest (including any Additional Interest) on the Debentures, the principal of
any Debentures which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Debentures, and all
sums paid or advanced by the Debenture Trustee under the Indenture and the
reasonable compensation, expenses, disbursements and advances of the Debenture
Trustee and the Property trustee, their agents and counsel) or a default in
respect of a covenant or provision which under the Indenture cannot be modified
or amended without the consent of the holder of each outstanding Debenture. No
such rescission shall affect any subsequent default or impair any right
consequent thereon.
(d) Upon receipt by the Property Trustee of written notice declaring such
an acceleration, or rescission and annulment thereof, by Holders of the Capital
Securities all or part of which is represented by Book-Entry Capital Securities
Certificates, a record date shall be established for determining Holders of
Outstanding Capital Securities entitled to join in such notice, which record
date shall be at the close of business on the day the Property Trustee receives
such notice. The Holders of Outstanding Capital Securities on such record date,
or their duly designated proxies, and only such Persons, shall be entitled to
join in such notice, whether or not such Holders remain Holders after such
record date; provided, that, unless such declaration of acceleration, or
rescission and annulment, as the case may be, shall have become effective by
virtue of the requisite percentage having joined in such notice prior to the day
which is 90 days after such record date, such notice of declaration of
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acceleration, or rescission and annulment, as the case may be, shall
automatically and without further action by any Holder be canceled and of no
further effect. Nothing in this paragraph shall prevent a Holder, or a proxy of
a Holder, from giving, after expiration of such 90-day period, a new written
notice of declaration of acceleration, or rescission and annulment thereof, as
the case may be, that is identical to a written notice which has been canceled
pursuant to the proviso to the preceding sentence, in which event a new record
date shall be established pursuant to the provisions of this Section 25(d).
(e) For so long as any Capital Securities remain Outstanding, to the
fullest extent permitted by law and subject to the terms of this Trust Agreement
and the Indenture, upon a Debenture Event of Default specified in Section 5.1(1)
or 5.1(2) of the Indenture, any Holder of Capital Securities shall have the
right to institute a proceeding directly against the Depositor, pursuant to
Section 5.8 of the Indenture, for enforcement of payment to such Holder of the
principal amount of or interest on Debentures having a principal amount equal to
the Liquidation Amount of the Capital Securities of such Holder (a "Direct
Action"). Except as set forth in this Section 25, the Holders of Capital
Securities shall have no right to exercise directly any right or remedy
available to the holders of, or in respect of, the Debentures.
Section 26. CUSIP Numbers.
The Administrative Trustees 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;
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 Administrative Trustees will promptly notify the Property Trustee of any
change in the CUSIP numbers.
Section 27. Limitations on Voting Rights.
(a) Except as provided in this Section 27, in Section 25 hereof and in
Sections 5.10 and 7.3 of the Trust Agreement and in the Indenture and as
otherwise required by law, no Holder of Capital Securities shall have any right
to vote or in any manner otherwise control the administration, operation and
management of the Trust or the obligations of the parties hereto, nor shall
anything herein set forth, or contained in the terms of the Trust Securities
Certificates, be construed so as to constitute the Securityholders from time to
time as partners or members of an association.
(b) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on the Debenture Trustee with respect to such
Debentures, (ii) waive any past default which is waiveable under Section 5.13 of
the Indenture, (iii) exercise any right to rescind or annul a declaration that
the principal of all the Debentures shall be due and payable, or (iv) consent to
any amendment, modification or termination of the Indenture or the Debentures,
where such consent shall be required, without, in each case, obtaining the prior
approval of the Holders of at least a majority in Liquidation Amount of all
Outstanding Capital Securities; provided, however, that where a consent under
the Indenture would require the consent of each holder of Debentures affected
thereby, no such consent shall be given by the Property Trustee without the
prior written consent of each Holder of Capital Securities. The Trustees shall
not revoke any action previously authorized or approved by a vote of the Holders
of Capital Securities, except by a
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subsequent vote of the Holders of Capital Securities. The Property Trustee shall
notify all Holders of the Capital Securities of any notice of default received
from the Debenture Trustee with respect to the Debentures. In addition to
obtaining the foregoing approvals of the Holders of the Capital Securities,
prior to taking any of the foregoing actions, the Administrative Trustees shall,
at the expense of the Depositor, obtain an Opinion of Counsel experienced in
such matters to the effect that such action shall not cause the Trust to fail to
be classified as a grantor trust for United States federal income tax purposes.
(c) If any proposed amendment to the Trust Agreement provides for, or the
Trustees otherwise propose to effect, (i) any action that would adversely affect
in any material respect the powers, preferences or special rights of the Capital
Securities, whether by way of amendment to the Trust Agreement or otherwise, or
(ii) the dissolution, winding-up or termination of the Trust, other than
pursuant to the terms of this Trust Agreement, then the Holders of Outstanding
Capital Securities as a class shall be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of the Holders of at least a majority in Liquidation Amount of the
Outstanding Capital Securities. Notwithstanding any other provision of this
Trust Agreement, no amendment to this Trust Agreement may be made if, as a
result of such amendment, it would cause the Trust to fail to be classified as a
grantor trust for United States federal income tax purposes.
Section 28. Notice of Meetings.
Notice of all meetings of the Capital Securityholders, stating the time,
place and purpose of the meeting, shall be given by the Property Trustee
pursuant to Section 7.9 of the Trust Agreement to each Capital Securityholder of
record, at his registered address, at least 15 days and not more than 90 days
before the meeting. At any such meeting, any business properly before the
meeting may be so considered whether or not stated in the notice of the meeting.
Any adjourned meeting may be held as adjourned without further notice.
Section 29. Meetings of Capital Securityholders.
(a) No annual meeting of Securityholders is required to be held. The
Administrative Trustees, however, shall call a meeting of Capital
Securityholders to vote on any matter upon the written request of the Capital
Securityholders of record of 25% of the Outstanding Capital Securities (based
upon their Liquidation Amount) and the Administrative Trustees or the Property
Trustee may, at any time in their discretion, call a meeting of Capital
Securityholders to vote on any matters as to which Capital Securityholders are
entitled to vote.
(b) Capital Securityholders of record of 50% of the Outstanding Capital
Securities (based upon their Liquidation Amount), present in person or by proxy,
shall constitute a quorum at any meeting of Capital Securityholders.
(c) If a quorum is present at a meeting, an affirmative vote by the Capital
Securityholders of record present, in person or by proxy, holding more than a
majority of the Outstanding Capital Securities (based upon their Liquidation
Amount) held by holders of record of Outstanding Capital Securities present,
either in person or by proxy, at such meeting shall constitute the action of the
Capital Securityholders, unless this Trust Agreement requires a greater number
of affirmative votes.
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Section 30. Voting Rights.
Securityholders shall be entitled to one vote for each $25 of Liquidation
Amount represented by their Trust Securities in respect of any matter as to
which such Securityholders are entitled to vote.
Section 31. Proxies, etc.
At any meeting of Securityholders, any Securityholder entitled to vote
thereat may vote by proxy, provided that no proxy shall be voted at any meeting
unless it shall have been placed on file with the Administrative Trustees, or
with such other officer or agent of the Trust as the Administrative Trustees may
direct, for verification prior to the time at which such vote shall be taken.
Pursuant to a resolution of the Property Trustee, proxies may be solicited in
the name of the Property Trustee or one or more officers of the Property
Trustee. Only Securityholders of record shall be entitled to vote. When Trust
Securities are held jointly by several Persons, any one of them may vote at any
meeting in person or by proxy in respect of such Trust Securities, but if more
than one of them shall be present at such meeting in person or by proxy, and
such joint owners or their proxies so present disagree as to any vote to be
cast, such vote shall not be received in respect of such Trust Securities. A
proxy purporting to be executed by or on behalf of a Securityholder shall be
deemed valid unless challenged at or prior to its exercise, and the burden of
proving invalidity shall rest on the challenger. No proxy shall be valid more
than three years after its date of execution.
Section 32. Securityholder Action by Written Consent.
Any action which may be taken by Securityholders at a meeting may be taken
without a meeting if Securityholders holding a majority of all Outstanding Trust
Securities (based upon their Liquidation Amount) entitled to vote in respect of
such action (or such larger proportion thereof as shall be required by any
express provision of the Trust Agreement or this Annex I) shall consent to the
action in writing.
Section 33. Record Date for Voting and Other Purposes.
For the purposes of determining the Securityholders who are entitled to
notice of and to vote at any meeting or by written consent, or to participate in
any Distribution on the Trust Securities in respect of which a record date is
not otherwise provided for in this Trust Agreement, or for the purpose of any
other action, the Administrative Trustees may from time to time fix a date, not
more than 90 days prior to the date of any meeting of Securityholders or the
payment of a Distribution or other action, as the case may be, as a record date
for the determination of the identity of the Securityholders of record for such
purposes.
Section 34. Acts of Securityholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Trust Agreement to be given, made
or taken by Securityholders or Owners may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such Securityholders
or Owners in person or by an agent duly appointed in writing; and, except as
otherwise expressly provided herein, such action shall become effective when
such instrument or instruments are delivered to an Administrative Trustee. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Securityholders or
Owners signing such instrument or instruments. Proof of execution of any
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such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Trust Agreement and (subject to Section 5.1 of the Trust
Agreement) conclusive in favor of the Trustees, if made in the manner provided
in this Section 34.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which any Trustee receiving the same deems sufficient.
(c) The ownership of Capital Securities shall be proved by the Securities
Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Securityholder of any Trust Security shall bind every future
Securityholder of the same Trust Security and the Securityholder of every Trust
Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered to
be done by the Trustees or the Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.
(e) Without limiting the foregoing, a Securityholder entitled hereunder to
take any action hereunder with regard to any particular Trust Security may do so
with regard to all or any part of the Liquidation Amount of such Trust Security
or by one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such Liquidation Amount.
(f) If any dispute shall arise between the Securityholders and the
Administrative Trustees or among such Securityholders or Trustees with respect
to the authenticity, validity or binding nature of any request, demand,
authorization, direction, consent, waiver or other Act of such Securityholder or
Trustee under Sections 27 through 34 hereof, then the determination of such
matter by the Property Trustee shall be conclusive with respect to such matter.
Section 35. Inspection of Records.
Upon reasonable notice to the Administrative Trustees and the Property
Trustee, the records of the Trust shall be open to inspection by Securityholders
during normal business hours for any purpose reasonably related to such
Securityholder's interest as a Securityholder.
Section 36. Ranking.
The Capital Securities rank pari passu with the Common Securities and
payment thereon shall be made pro rata with the Common Securities, except that,
if an Event of Default under the Trust Agreement 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.
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Section 37. Acceptance of Guarantee and Indenture.
Each Holder of Capital Securities and Common Securities, by the acceptance
thereof, agrees to the provisions of the Guarantee, including the subordination
provisions therein, and to the provisions of the Indenture.
Section 38. No Preemptive Rights.
The Holders of the Trust Securities shall have no preemptive or similar
rights to subscribe for any additional securities.
Section 39. Miscellaneous.
(a) These terms constitute a part of the Trust Agreement.
(b) The Depositor will provide a copy of the Trust Agreement, the Guarantee
and the Indenture (including any supplemental indenture) to a Holder without
charge on written request to the Depositor at its principal place of business.
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Independent Auditors' Consent
The Board of Directors
CNB Bancshares, Inc.:
We consent to the incorporation by reference in this registration statement on
Form S-3 of CNB Bancshares, Inc. of our reports dated January 14, 1998, relating
to the consolidated balance sheets of CNB Bancshares, Inc. and subsidiaries as
of December 31, 1997 and 1996 and the related consolidated statements of income,
changes in shareholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1997, which report is included in the
December 31, 1997 annual report on Form 10-K of CNB Bancshares, Inc., and June
1, 1998, relating to the supplemental consolidated balance sheets of CNB
Bancshares, Inc. and subsidiaries as of December 31, 1997 and 1996, and the
related supplemental consolidated statements of income, changes in shareholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 1997, which report is included in current report on Form 8-K dated
June 3, 1998.
/S/ KPMG Peat Marwick LLP
St. Louis, Missouri
June 8, 1998
<PAGE>
Independent Auditors' Consent
The Board of Directors
CNB Bancshares, Inc.;
We consent to the incorporation by reference in this registration statement on
Form S-3 of CNB Bancshares, Inc. of our report dated March 30, 1998, relating to
the consolidated balance sheets of Pinnacle Financial Services, Inc. and
subsidiaries (Pinnacle) as of December 31, 1997 and 1996 and the related
consolidated statements of income, changes in stockholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1997,
which report is incorporated by reference in the December 31, 1997 annual report
on Form 10-K of Pinnacle.
Our report dated March 30, 1998 contains a paragraph that states we previously
audited and reported on the consolidated balance sheet of Pinnacle as of
December 31, 1996, and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for the years ended December 31, 1996 and
1995, prior to their restatement for the 1997 pooling of interests. The
contribution of Pinnacle to total assets and net income represented 50% and 57%
of the respective restated totals for the year ended December 31, 1996 and the
contribution of Pinnacle to total assets and net income represented 50% and 40%
of the respective restated total for the year ended December 31, 1995. Separate
consolidated financial statements of the other companies included in the
December 31, 1996 restated consolidated balance sheet and consolidated
statements of income, changes in stockholders' equity, and cash flows for the
years ended December 31, 1996 and 1995 were audited and reported on separately
by other auditors. We audited the combination of the Pinnacle consolidated
balance sheet as of December 31, 1996 and consolidated statements of income,
changes in stockholders' equity, and cash flows for the years ended December 31,
1996 and 1995, after restatement for the 1997 pooling of interests; in our
opinion, such consolidated statements have been properly combined on the basis
described in note 1 of the notes to the consolidated financial statements.
/S/ KPMG Peat Marwick LLP
Chicago, Illinois
June 8, 1998
