<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 000-16461
COMMUNITY BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
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Delaware 63-0868361
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(State of Incorporation) (I.R.S. Employer Identification No.)
68149 Main Street, P. O. Box 1000, Blountsville, AL 35031
- --------------------------------------------------- -----
(Address of principal executive office) (Zip Code)
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Registrant's telephone number, including area code: (205) 429-1000
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No Change
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:
Yes [X] No [ ]
As of April 30, 2000, there were 4,674,995 shares of the Registrant's Common
Stock, $.10 par value per share, outstanding.
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INDEX
COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
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PART I. FINANCIAL INFORMATION PAGE
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Item 1. Financial Statements (Unaudited)
Consolidated Statements of Financial Condition - March 31, 2000
and December 31, 1999............................................................................ 4
Consolidated Statements of Income - Three months ended March 31,
2000 and 1999.................................................................................... 5
Consolidated Statements of Other Comprehensive Income - Three months
ended March 31, 2000 and 1999.................................................................... 6
Consolidated Statements of Cash Flows - Three months ended March 31,
2000 and 1999.................................................................................... 7
Notes to Consolidated Financial Statements - March 31, 2000...................................... 9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................................................. 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk........................................ 19
PART II. OTHER INFORMATION
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Item 1. Legal Proceedings................................................................................. 20
Item 2. Changes in Securities and Use of Proceeds......................................................... 20
Item 6. Exhibits and Reports on Form 8-K.................................................................. 21
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(a) Exhibits:
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Exhibit Number Description of Exhibit
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3.1 Certificate of Incorporation, as amended (Filed as Appendix II to the Proxy Statement
included in Part I of the Registrations Statement on Form S-14, Registration No. 2-92974,
and incorporated herein by reference)
3.2 Certificate of Amendment to the Certificate of Incorporation, changing the name of the
Registrant to Community Bancshares, Inc. (Filed as Exhibit 4 to Form 10-K for the year
Ended December 31, 1985, and incorporated herein by reference)
3.3 By-laws of Registrant, as amended and restated January 1999 (Filed as Exhibit 3.3 to
Form 10-K for the year ended December 31, 1998, and incorporated herein by reference)
3.4 Certificate of Amendment to the Certificate of Incorporation, providing for directors'
indemnification (Filed as Exhibit 3.4 to Form 10-K for the year ended December 31,
1987, and incorporated herein by reference)
3.5 Certificate of Amendment to the Certificate of Incorporation, increasing the number of
authorized shares (Filed as Exhibit 3.5 to Form 10-K for the year ended December 31,
1993, and incorporated herein by reference)
3.6 Amended Certificate of Amendment to the Certificate of Incorporation, increasing the
number of authorized shares (Filed as Exhibit 3 to Form 10-Q/A-1 for the quarter ended
September 30, 1998, and incorporated herein by reference)
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Exhibit Number Description of Exhibit
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4.1 Certificate of Registrant establishing the Series 1984-1 Preferred Stock dated August 17,
1984 ("Certificate of Stock Designation") (Filed as Appendix I to the Proxy Statement
included in Part I of the Registration Statement on Form S-14, Registration No. 2-92974,
and incorporated herein by reference)
4.2 Certificate of Amendment to the Certificate of Stock Designation (Filed as Exhibit 4.1 to
the Registration Statement of Form S-1, Registration No 33-7032, and incorporated
herein by reference)
4.3 Rights Agent Agreement, dated January 13, 1999, between Community Bancshares, Inc.
and the Bank of New York (Filed as Exhibit 4.1 to Form 8-A, filed January 21, 1999,
and incorporated herein by reference)
4.4 Indenture, dated March 23, 2000, by and between Community Bancshares, Inc. and
the Bank of New York
10.1 Amended and Restated Declaration of Trust, dated March 23, 2000, by and between the
Bank of New York (Delaware), The Bank of New York, Community Bancshares, Inc.
and Community (AL) Capital Trust I
10.2 Guarantee Agreement, dated March 23, 2000, by and between Community Bancshares, Inc.
and The Bank of New York
10.3 Placement Agreement, dated March 23, 2000, between Community (AL) Capital Trust I,
Community Bancshares, Inc. and Salomon Smith Barney, Inc.
11 Computation of Earnings Per Share
27 Financial Data Schedule (for the SEC use only)
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(b) Reports on Form 8-K
SIGNATURES
3
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PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
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MARCH 31, December 31,
2000 1999
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(UNAUDITED)
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ASSETS
Cash................................................................. $ 6,181,894 $ 11,698,392
Due from banks....................................................... 18,194,600 15,099,119
Interest-bearing deposits with banks................................. 700,000 700,000
Federal funds sold................................................... 4,000,000 -0-
Securities available for sale........................................ 97,013,887 96,847,273
Loans................................................................ 515,725,594 499,297,647
Less: Unearned income................................................ 421,408 571,295
Allowance for loan losses.................................... 2,841,441 2,603,128
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NET LOANS................................................. 512,462,745 496,123,224
Premises and equipment, net.......................................... 36,777,949 35,683,614
Accrued interest..................................................... 6,693,374 6,537,114
Intangibles, net..................................................... 7,025,864 7,156,449
Other real estate.................................................... 813,941 766,005
Other assets......................................................... 7,125,145 4,287,061
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TOTAL ASSETS.............................................. $ 696,989,399 $ 674,898,251
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing.............................................. $ 70,809,170 $ 64,840,153
Interest-bearing................................................. 520,307,843 508,420,641
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TOTAL DEPOSITS.......................................... 591,117,013 573,260,794
Other short-term borrowings.......................................... 1,237,614 2,493,842
Accrued interest..................................................... 4,058,110 3,743,606
FHLB borrowing....................................................... 38,000,000 40,000,000
Long-term debt....................................................... 6,404,528 6,637,162
Guaranteed preferred beneficial interest in the Company's junior
subordinated deferrable interest debentures...................... 10,000,000 -0-
Other liabilities.................................................... 4,843,364 4,287,471
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TOTAL LIABILITIES....................................... 655,660,629 630,422,875
Shareholders' equity
Preferred stock, par value $.01 per share, 200,000 shares
authorized, no shares issued................................ -0- -0-
Common stock, par value $.10 per share, 20,000,000 shares
authorized, 4,674,995 shares issued as of March 31, 2000 and
4,665,514 shares issued as of December 31, 1999............. 467,499 466,551
Capital surplus................................................... 29,633,369 29,411,513
Retained earnings................................................. 16,027,086 19,038,875
Unearned ESOP shares - 216,271 and 221,321 shares as of
March 31, 2000 and December 31, 1999, respectively.......... (2,750,298) (2,788,442)
Accumulated other comprehensive income........................... (2,048,886) (1,653,121)
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TOTAL SHAREHOLDERS' EQUITY........................... 41,328,770 44,475,376
-------------- --------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........... $ 696,989,399 $ 674,898,251
============== ==============
</TABLE>
See notes to consolidated financial statements
4
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COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
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Three Months Ended
March 31,
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2000 1999
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REVENUE FROM EARNING ASSETS
Interest and fees on loans........................................... $12,805,249 $ 10,650,297
Interest on investment securities:
Taxable securities................................................... 1,339,448 1,237,714
Securities exempt from federal income taxes.......................... 125,848 212,343
Interest on federal funds sold....................................... 30,799 -0-
Interest on deposits in other banks.................................. 13,733 37,288
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TOTAL REVENUE FROM EARNING ASSETS............................ 14,315,077 12,137,642
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INTEREST EXPENSE
Interest on deposits................................................. 6,741,700 5,744,087
Interest on other short-term borrowings.............................. 29,556 122,542
FHLB borrowing....................................................... 526,709 -0-
Interest on long-term debt........................................... 166,759 150,308
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TOTAL INTEREST EXPENSE....................................... 7,464,724 6,016,937
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NET INTEREST INCOME.................................................... 6,850,353 6,120,705
Provision for loan losses.............................................. 1,008,102 379,792
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NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES.................... 5,842,251 5,740,913
NONINTEREST INCOME
Service charges on deposits........................................... 981,616 800,729
Insurance commissions................................................. 578,952 495,651
Bank club dues........................................................ 175,554 172,701
Debt cancellation fees................................................ 196,043 106,681
Other operating income................................................ 589,229 290,712
Investment securities losses.......................................... (26,886) -0-
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TOTAL NONINTEREST INCOME..................................... 2,494,508 1,866,474
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NONINTEREST EXPENSES
Salaries and employee benefits....................................... 4,783,129 4,141,804
Occupancy expense.................................................... 645,166 615,378
Furniture and equipment expense...................................... 463,048 417,193
Director and committee fees.......................................... 148,504 169,487
Other operating expense.............................................. 1,576,291 1,488,843
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TOTAL NONINTEREST EXPENSES................................... 7,616,138 6,832,705
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Income before income taxes............................................. 720,621 774,682
PROVISION FOR INCOME TAXES............................................. 233,274 188,228
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NET INCOME................................................... $ 487,347 $ 586,454
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NET INCOME PER COMMON SHARE - BASIC.................................... $ 0.11 $ 0.13
NET INCOME PER COMMON SHARE - DILUTED.................................. $ 0.10 $ 0.13
</TABLE>
See notes to consolidated financial statements
5
<PAGE> 6
COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
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Three Months Ended
March 31,
--------------------------
2000 1999
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Net income............................................................... $ 487,347 $ 586,454
Components of other comprehensive income:
Unrealized holding losses arising during the period.................... (686,494) (642,715)
Reclassification adjustments for net losses included
in net income..................................................... 26,886 -0-
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Other comprehensive losses before income taxes.......................... (659,608) (642,715)
Income tax benefit related to other
Comprehensive losses.............................................. (263,843) (257,086)
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Total other comprehensive loss.......................................... (395,765) (385,629)
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Comprehensive income..................................................... $ 91,582 $ 200,825
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[The remainder of this page intentionally left blank]
See notes to consolidated financial statements
6
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COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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Three Months Ended
March 31,
-----------------------------
2000 1999
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OPERATING ACTIVITIES
Net income........................................................... $ 487,347 $ 586,454
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses.................................... 1,008,102 229,792
Provision for depreciation and amortization.................. 610,317 535,223
Amortization of investment security premiums and
accretion of discounts................................... 38,081 27,919
Deferred tax (benefit)/expense............................... (116,810) 49,532
Loss/(gain) on sale of premises and equipment................ 824 (2,462)
Realized investment security losses.......................... 26,886 -0-
(Increase)/decrease in accrued interest receivable........... (156,260) 151,595
Increase/(decrease) in accrued interest payable.............. 314,504 (100,944)
Other........................................................ (2,159,936) (1,889,618)
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NET CASH PROVIDED BY OPERATING ACTIVITIES.......... 53,055 (412,509)
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INVESTING ACTIVITIES:
Proceeds from sales of investment securities - AFS................... 4,684,487 -0-
Proceeds from maturity of investment securities - AFS................ 16,893,838 4,332,372
Purchase of investment securities - AFS.............................. (22,469,514) (3,478,148)
Net increase in loans to customers................................... (17,347,623) (9,915,414)
Proceeds from sale of premises and equipment......................... 117,660 37,949
Net proceeds from sale of other real estate.......................... 210,462 105,958
Capital expenditures................................................. (1,692,551) (1,537,859)
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NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES... (19,603,241) (10,455,142)
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FINANCING ACTIVITIES:
Net increase in demand deposits, NOW accounts,
and savings accounts............................................ 7,260,243 1,236,352
Net increase/(decrease) in certificates of deposit................... 10,595,976 (1,686,011)
Net(decrease)/increase in short-term borrowings...................... (1,256,228) 7,811,227
Decrease in FHLB borrowings.......................................... (2,000,000) -0-
Decrease in long-term debt........................................... (194,490) (191,520)
Issuance of guaranteed preferred beneficial interest in Company's
junior subordinated deferrable interest debentures.............. 10,000,000 -0-
Proceeds from issuance of common stock............................... 222,804 169,537
Cash dividends....................................................... (3,499,136) (2,788,754)
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NET CASH PROVIDED BY FINANCING ACTIVITIES............ 21,129,169 4,550,831
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Net increase/(decrease) in cash and cash equivalents................... $ 1,578,983 $(6,316,820)
Cash and cash equivalents at beginning of period....................... 26,797,511 25,553,170
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CASH AND CASH EQUIVALENTS AT END OF PERIOD............................. $28,376,494 $19,236,350
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</TABLE>
See notes to consolidated financial statements
7
<PAGE> 8
COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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<CAPTION>
Three Months Ended
March 31,
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2000 1999
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Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest.......................................................... $ 7,779,228 $ 5,860,649
Income taxes...................................................... 4,110 119,410
</TABLE>
Supplemental schedule of non-cash investing
and financing activities:
Upon the pledging of purchased shares to obtain additional ESOP debt of
$1,076,958 on december 1, 1998, long-term debt was increased and equity was
decreased. the debt was reduced and shares amounting to $38,143 and $41,847
were released during the three month periods ended march 31, 2000 and 1999,
respectively, as a result of payments made by the company's ESOP on the
outstanding ESOP debt.
Net unrealized losses on investment securities available for sale increased by
$659,608 during the three months ended MARCH 31, 2000.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
See notes to consolidated financial statements
8
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COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 2000
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ending March 31,
2000 are not necessarily indicative of the results that may be expected for the
year ended December 31, 2000. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1999.
NOTE B - INVESTMENT SECURITIES
At March 31, 2000 and December 31, 1999, the Company's investment securities
were categorized as available for sale and, as a result, are stated at fair
value based generally on quoted market prices. Unrealized holding gains and
losses, net of applicable deferred taxes, are included as a component of
shareholders' equity (Accumulated Other Comprehensive Income) until realized.
At March 31, 2000, the Company's available-for-sale investment securities
reflected net unrealized losses of $3,414,810, which resulted in a decrease in
shareholders' equity of $2,048,886, net of a deferred tax asset. The net
decrease in shareholders' equity as a result of this mark to market adjustment
from December 31, 1999 to March 31, 2000 was $395,765.
NOTE C - CAPITAL SECURITIES
In March 2000, the Company formed a wholly-owned Delaware statutory business
trust, Community (AL) Capital Trust I (the "Trust"), which issued $10,000,000
of guaranteed preferred securities representing undivided beneficial interests
in the assets of the Trust ("Capital Securities"). All of the common securities
of the Trust are owned by the Company. The proceeds from the issuance of the
Capital Securities and common securities ($310,000) were used by the Trust to
purchase $10,310,000 of junior subordinated deferrable interest debentures of
the Company which carry an annual interest rate of 10.875%. The debentures
represent the sole asset of the Trust. The debentures and related income
statement effects are eliminated in the Company's consolidated financial
statements. The Company is entitled to treat the aggregate liquidation amount
of the debentures as Tier I capital under Federal Reserve guidelines.
The Capital Securities accrue and pay distributions semiannually at a rate of
10.875% per annum of the stated liquidation value of $1,000 per Capital
Security. The Company has entered into an agreement which fully and
unconditionally guarantees payment, to the extent that the Trust has funds
therefore, of: (i) accrued and unpaid distributions required to be paid on the
Capital Securities; (ii) the redemption price with respect to any capital
securities called for redemption by the Trust and (iii) payments due upon a
voluntary or involuntary liquidation, winding up or termination of the Trust.
9
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NOTE C - CAPITAL SECURITIES (CONTINUED)
The Capital Securities are mandatorily redeemable upon the maturity of the
debentures on March 8, 2030, or upon earlier redemption as provided in the
indenture. The Company has the right to redeem the debentures purchased by the
Trust: (i) in whole or in part, on or after March 8, 2010, and (ii) in whole
(but not in part) at any time within 90 days following the occurrence and
during the continuation of a tax event, capital treatment event, or investment
company event (each as defined in the indenture). As specified in the
indenture, if the debentures are redeemed prior to maturity, the redemption
price will be a percentage of the principal amount, ranging from 105.438
percent in 2010 to 100.00 percent in and after 2020, plus accrued but unpaid
interest.
NOTE D - SHAREHOLDERS' EQUITY
Annual dividends of $.75 and $.60 per share were declared by the Company's
Board of Directors on its common stock and paid in January of 2000 and 1999,
respectively. The payment of dividends on common stock is subject to the prior
payment of principal and interest on the Company's long-term debt, maintenance
of sufficient earnings and capital of the subsidiaries and regulatory
restrictions.
On March 28, 1996, the Company issued a total of 270,000 options to its
directors to purchase shares of the Company's common stock. The options were
issued to the directors based upon their years of service and their positions
with the Company. Each of the stock option agreements contained an exercise
price of $10.00 per share, the market value (as determined by the Board of
Directors) of the Company's common stock at the time of issuance. The options
are exercisable through March 27, 2001. In March 1997, an additional 103,000
options were issued to the Company's directors with an exercise price of $12.50
per share, the market value (as determined by the Board of Directors) of the
Company's common stock at the time of issuance. These options are exercisable
through March 26, 2002. In March 1998, 203,331 options were issued to directors
and certain senior officers with an exercise price of $15.00 per share, the
market value (as determined by the Board of Directors) of the Company's common
stock at the time of issuance. These options are exercisable through March 25,
2003. In December 1999, 204,000 options were issued to directors and certain
senior officers with an exercise price of $20.00 per share, the market value
(as determined by the Board of Directors) of the Company's common stock at the
time of issuance. These options are exercisable through December 3, 2004. Each
of the above described options is treated as non-qualified options under the
provisions of the Internal Revenue Code. The agreements evidencing these
options also contain a provision whereby the Company will compensate the
optionee in cash for any federal or state tax liability incurred upon the
exercise of the options.
Options that have an exercise price below the current fair value of the
Company's common stock are assumed to be exercised in the calculation of
diluted average shares of common stock outstanding, causing the equivalent
average number of shares outstanding on a diluted basis to be 207,749 shares
greater than that used to calculate basic earnings per share for the three
months ended March 31, 2000. Average shares outstanding when assuming dilution
were greater than average shares outstanding for basic earnings per share by
109,877 shares at March 31, 1999.
NOTE E - EMPLOYEE STOCK OWNERSHIP PLAN
The Company adopted an Employee Stock Ownership Plan (the "ESOP") effective as
of January 1, 1985, which enables eligible employees of the Company and its
subsidiaries to own Company common stock. An employee becomes a participant in
the ESOP on June 30 or December 31 after completing 12 months of employment
during which the employee is credited with 1,000 or more hours of service.
Contributions to the ESOP are made at the discretion of the Company's Board of
Directors, but may not be less than the amount required to cover the debt
service on the ESOP loan. Employer contributions are allocated to eligible
participants in proportion to their compensation, which equals W-2 wages plus
pre-tax reductions for the Company's cafeteria plan. The Internal Revenue Code
imposes a limit ($170,000 in 2000) on the amount of compensation which may be
considered under the ESOP.
10
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NOTE E - EMPLOYEE STOCK OWNERSHIP PLAN (CONTINUED)
On November 3, 1993, the ESOP's Trustees executed a promissory note of
$1,200,000 in order to purchase common stock in the Company's initial public
offering. The note was originally secured by 80,000 shares of purchased stock.
The promissory note has been refinanced in years subsequent to 1993 as
additional shares were purchased by the ESOP. On December 1, 1998, this note
was refinanced and an additional 56,682 shares of the Company's common stock
were obtained by the ESOP. This note, in the original principal of $2,963,842,
was secured by 261,433 shares of the Company's common stock. The note bears
interest at a floating rate, with principal and interest payments due monthly
through November 16, 2010, with the remaining principal, if any, due on that
date. The initial monthly principal and interest payment on this debt in
December 1998 was $31,677. As changes occur in the interest rate on the loan,
appropriate adjustments are made to the monthly principal and interest
payments. At March 31, 2000, the monthly payment was $33,294. The Company has
guaranteed this debt and in accordance with the applicable accounting and
reporting guidelines the debt has been recognized on the Company's balance
sheet, with an offsetting charge against equity. As principal payments are made
by the ESOP, the debt and offsetting charge against equity are reduced. The
shares securing the note are released on a prorata basis by the lender as
monthly payments of principal and interest are made. As of March 31, 2000,
there were 216,271 unreleased shares with a fair value of approximately
$5,407,000. These shares are subtracted from outstanding shares for earnings
per share calculations.
Effective January 1, 1994, the Company applied the accounting and reporting
requirements of Statement of Position No. 93-6, Employers' Accounting for
Employee Stock Ownership Plans ("SOP 93-6"). Under the provisions of SOP 93-6,
the employer must recognize the indebtedness of its sponsored ESOP on its
financial statements and reduce its shareholders' equity for shares of stock
which have not been released by a lender to the ESOP for allocation to its
participating employees. The portion of payments made by the Company to the
ESOP on behalf of its participating employees which is used to pay interest on
the ESOP debt ($59,541 and $55,344 during the first quarter of 2000 and 1999,
respectively) is classified as interest expense on the Company's income
statement.
Dividends paid on released ESOP shares are credited to the accounts of the
participants to whom the shares are allocated. Dividends on unreleased shares
are treated as other income of the ESOP.
At March 31, 2000 and December 31, 1999, the Company's financial statements
reflect long term debt and a corresponding contra-equity account, as a result
of the ESOP debt, of $2,750,298 and $2,788,442, respectively.
Company contributions to the ESOP amounted to $97,684 and $95,032 for the three
months ended March 31, 2000 and 1999, respectively.
NOTE F - CONTINGENCIES
In September 1998, Community Bank determined that $9,360,000 in automobile and
truck loans originated in its Ft. Payne, Alabama Wal-Mart location during a
four-month period beginning in May 1998 were not in compliance with the Bank's
lending policy. As of December 31, 1999, approximately $5,594,000 of these
loans were in default. Community Bank has notified the appropriate authorities
and the Bank's fidelity bond insurance carrier, which are currently
investigating these loans. Management believes that these non-compliant loans
are an isolated occurrence, and that the Company has taken appropriate steps to
prevent their re-occurrence. Through December 31, 1999, Community Bank had
taken possession of a total of 362 vehicles which served as collateral for such
defaulted loans, and had received approximately $2,963,000 from the sale of
substantially all of the vehicles. These funds were applied to the outstanding
balances of the defaulted loans, reducing the total unpaid balances at December
31, 1999 to approximately $2,631,000. Management has determined that these
unpaid balances were impaired and has, therefore, made an appropriate charge to
its allowance for loan losses.
11
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ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This discussion is intended to assist in an understanding of the financial
condition and results of operations of Community Bancshares, Inc. (the
"Company") and its subsidiaries. Unless the context otherwise indicates, the
Company shall include the Company and its subsidiaries. This analysis should be
read in conjunction with the financial statements and related notes appearing
in Item 1 of this Report and Management's Discussion and Analysis of Financial
Condition and Results of Operations appearing in the Company's Annual Report on
Form 10-K for the year ended December 31, 1999.
Certain statements in this Report are "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1993, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These forward-looking
statements are not based on historical facts and may be identified by their
reference to a future period or by the use of forward-looking terminology, such
as "anticipate," "estimate," "expect," "may" and "should." These
forward-looking statements include, without limitation, those relating to the
Company's future growth and profitability, non-interest expenses, pending
litigation, non-compliant and impaired loans originated in Community Bank's Ft.
Payne, Alabama office, capital requirements, operating strategy, dependence on
Community Bank, interest rate sensitivity, market risk and impact of Year 2000
issues. We caution you not to place undue reliance on these forward-looking
statements. Actual results could differ materially from those indicated in such
forward-looking statements due to a variety of factors. These factors include,
but are not limited to, changes in economic conditions, government fiscal and
monetary policies and prevailing interest rates, effectiveness of the Company's
interest rate strategies, changes in laws, regulations and regulatory
authorities affecting financial institutions, changes in and effectiveness of
the Company's operating or expansion strategies, geographic concentration of
the Company's assets and operations, competition from other financial services
companies, Year 2000 compliance issues, the Company's ability to obtain
reimbursement from its fidelity bond insurance carrier or other persons
responsible for originating non-compliant and impaired loans in Community
Bank's Ft. Payne, Alabama office and other risks detailed from time to time in
the Company's press releases and filings with the Securities and Exchange
Commission. We undertake no obligation to update these forward-looking
statements to reflect events or circumstances occurring after the date of this
Report.
FINANCIAL CONDITION
MARCH 31, 2000 COMPARED TO DECEMBER 31, 1999
LOANS
Loans comprised the largest single category of the Company's earning assets on
March 31, 2000. Loans, net of unearned income and reserve for loan losses, were
73.5% of total assets at both March 31, 2000 and December 31, 1999. Loans, net
of unearned income and allowance for loan losses, were $512,462,745 at March
31, 2000, representing a 3.3% increase from the December 31, 1999 total of
$496,123,224.
INVESTMENT SECURITIES AND OTHER EARNING ASSETS
Investment securities increased $166,614, or 0.2%, to $97,013,887 at March 31,
2000 compared to $96,847,273 at December 31, 1999. The investment securities
portfolio is used to make various term investments, to provide a source of
liquidity and to serve as collateral to secure certain government deposits.
Short-term investments in the form of interest-bearing deposits with banks were
$700,000 at both March 31, 2000 and December 31, 1999. The Company had
$4,000,000 in federal funds sold at March 31, 2000 compared to none at December
31, 1999. Increase in federal funds sold is due primarily to growth in
deposits.
12
<PAGE> 13
ASSET QUALITY
Between December 31, 1999 and March 31, 2000, the ratio of loan loss allowance
to total nonperforming assets (defined as nonaccrual loans, loans past due 90
days or greater, restructured loans, nonaccruing securities, and other real
estate) improved from 0.54 at year-end 1999 to 1.03 at March 31,2000. The ratio
of total nonperforming assets to total assets declined to 0.004 at March 31,
2000 from 0.007 at year-end 1999, while the ratio of nonperforming loans to
total loans decreased to 0.004 at March 31, 2000 from 0.008 at December 31,
1999. The changes in these ratios were due primarily to decreases in loans past
due 90 days or more and nonaccrual loans. Other real estate did not change
significantly during the first quarter of 2000.
DEPOSITS
Total deposits of $591,117,013 at March 31, 2000 reflected an increase of
$17,856,219, or 3.1%, compared to total deposits of $573,260,794 at year-end
1999. Deposits are the Company's primary source of funds with which to support
its earning assets. Noninterest-bearing deposits increased $5,969,017, or 9.2%,
from year-end 1999 to March 31, 2000, and interest-bearing deposits increased
$11,887,202, or 2.3%, from year-end 1999 to March 31, 2000. Certificates of
deposit of $100,000 or more increased $2,303,357, or 2.0%, during the first
quarter of 2000.
OTHER SHORT-TERM BORROWINGS
Other short-term borrowings totaled $1,237,614 at March 31, 2000, a $1,256,228,
or 50.4%, decrease from the December 31, 1999 level of $2,493,842. At the end
of the first quarter of the year 2000, short-term borrowings consisted
primarily of the U. S. Treasury Tax and Loan Note Option account and securities
sold under agreement to repurchase. Balances under the U. S. Treasury Tax and
Loan Note Option are subject to call at any time by the U. S. Treasury. The
decrease during the first quarter of 2000 was due primarily to a decrease in
the balances outstanding under the U. S. Treasury Tax and Loan Note Option.
FHLB BORROWINGS AND LONG-TERM DEBT
At March 31, 2000 and December 31, 1999, the Company had notes payable totaling
$6,404,528 and $6,637,162, respectively.
In December 1992, the Company entered into a loan agreement with a regional
bank for amounts up to $6,500,000. At March 31, 2000 and December 31, 1999, the
amounts outstanding were $1,956,630 and $2,134,505, respectively, due December
2002, bearing interest at a floating prime rate, and collateralized by 100% of
the common stock of Community Bank, the Company's subsidiary bank. The note
agreement contains provisions which limit the Company's right to transfer or
issue shares of its subsidiary bank's stock. Principal payments of $59,292 are
due monthly; however, the Company has the option of postponing up to 24 monthly
principal payments, provided that no more than 6 consecutively scheduled
installments are deferred.
On November 3, 1993, the ESOP's Trustees executed a promissory note of
$1,200,000 in order to purchase common stock in the Company's initial public
offering. The note was originally secured by 80,000 shares of purchased stock.
The promissory note has been refinanced in years subsequent to 1993 as
additional shares were purchased by the ESOP. On December 1, 1998, this note
was refinanced and an additional 56,682 shares of the Company's common stock
were obtained by the ESOP. This note, in the original principal of $2,963,842,
was secured by 261,433 shares of the Company's common stock. The note bears
interest at a floating rate, with principal and interest payments due monthly
through November 16, 2010, with the remaining principal, if any, due on that
date. The initial monthly principal and interest payment on this debt in
December 1998 was $31,677. As changes occur in the interest rate on the loan,
appropriate adjustments are made to the monthly principal and interest
payments. At March 31, 2000, the monthly payment was $33,294. The Company has
guaranteed this debt and in accordance with the applicable accounting and
reporting guidelines the debt has been recognized on the Company's balance
sheet, with an offsetting
13
<PAGE> 14
charge against equity. As principal payments are made by the ESOP, the debt and
offsetting charge against equity are reduced. The shares securing the note are
released on a prorata basis by the lender as monthly payments of principal and
interest are made. The outstanding balance of this note was $2,750,298 at March
31, 2000 and $2,788,442 at December 31, 1999, secured by 216,271 and 221,321 of
unreleased shares of Company common stock, respectively.
On October 4, 1994, the Company entered into a 20-year subordinated installment
capital note due October 1, 2014 for the purchase of treasury stock. Monthly
principal and interest payments of $15,506 are made on the note, which bears
interest at the fixed rate of 7%. The Company maintains the right to prepay the
note at its sole discretion. The balance of the note was $1,697,600 at March
31, 2000 and $1,714,215 at December 31, 1999.
Since June 1999, Community Bank, the Company's subsidiary bank, has borrowed
funds under the Federal Home Loan Bank of Atlanta's "Convertible Advance
Program." These advances have had original maturities of 10-year (120 months),
with stated call features during the life of the obligation, at fixed interest
rates for the life of the obligations. Principal is due at final maturity or on
a stated call date, with interest payable each quarter. At December 31, 1999,
Community Bank had an outstanding advance of $40,000,000. This advance had a
final maturity of September 1, 2009 (120 months), with a call feature every 6
months during the life of the obligation, and carried a fixed rate of 4.99% per
annum. Due to a stated call of this obligation on March 1, 2000, Community Bank
made a $2,000,000 reduction in the amount advanced under the FHLB "Convertible
Advance Program" and refinanced $38,000,000. This new obligation having a final
maturity of March 1, 2010 (120 months), a call feature every 12 months during
the life of the obligation, and a fixed interest rate of 5.93% per annum with
interest payable each quarter. At March 31, 2000, outstanding funds advanced to
Community Bank under the FHLB "Convertible Loan Program" totaled $38,000,000.
In March 2000, the Company formed a wholly-owned Delaware statutory business
trust, Community (AL) Capital Trust I (the "Trust"), which issued $10,000,000
of guaranteed preferred securities representing undivided beneficial interests
in the assets of the Trust ("Capital Securities"). The proceeds from the
issuance of the Capital Securities and common securities ($310,000) were used
by the Trust to purchase $10,310,000 of junior subordinated deferrable interest
debentures of the Company which carry an annual interest rate of 10.875%. The
principal balance outstanding is due at maturity. However, as specified in the
indenture, the debentures can be redeemed prior to maturity at a redemption
price equal to a percentage of the principal amount, ranging from 105.438% in
the year 2010 to 100.00% in and after the year 2020, plus accrued but unpaid
interest. As of March 31, 2000, the Company's consolidated financial statements
reflected $10,000,000 in junior subordinated deferrable interest debentures,
after the effects of elimination. See Note C to the Consolidated Financial
Statements.
Maturities of long-term debt and FHLB borrowings for the years ending December
31, are as follows:
<TABLE>
<CAPTION>
Junior
Notes Subordinated FHLB Subordinated
Payable Debt Borrowings Debentures
--------------- ----------------- ---------------- ------------------
<S> <C> <C> <C> <C>
2000......................................... $ 660,645 $ 51,623 $ -0- $ -0-
2001......................................... 895,476 73,171 38,000,000 -0-
2002......................................... 912,234 78,461 -0- -0-
2003......................................... 219,019 84,133 -0- -0-
2004......................................... 238,970 90,215 -0- -0-
Thereafter................................... 1,780,584 1,319,997 -0- 10,000,000
--------------- ----------------- ---------------- ------------------
$ 4,706,928 $ 1,697,600 $ 38,000,000 $ 10,000,000
=============== ================= ================ ==================
</TABLE>
14
<PAGE> 15
SHAREHOLDERS' EQUITY
Company shareholders' equity decreased $3,146,606, or 7.1%, from $44,475,376 at
December 31, 1999 to $41,328,770 at March 31, 2000, due to net earnings of
$487,347, the payment of a cash dividend of $3,499,136, the reduction of ESOP
debt by $38,144, the issuance of additional common stock for $222,804, and an
increase in unrealized losses, net of a deferred tax assets, on securities
available for sale totaling $395,765.
CAPITAL RESOURCES
Bank regulatory authorities have placed increased emphasis on the maintenance
of adequate capital, and subsequently developed risk-based capital guidelines.
The guidelines take into consideration risk factors, as defined by regulators,
associated with various categories of assets, both on and off the balance
sheet. Under the guidelines, capital strength is measured in two tiers which
are used in conjunction with risk-adjusted assets to determine the risk-based
capital ratios. The Company's Tier I capital, which consists of common equity
and junior subordinated deferrable interest debentures (see Note C to the
Consolidated Financial Statements), less goodwill, amounted to $47,644.453 at
March 31, 2000. Tier II capital components include supplemental capital
components such as qualifying allowance for loan losses and qualifying
subordinated debt. Tier I capital plus Tier II capital components are referred
to as Total Risk-Based capital and was $51,953,975 at March 31, 2000.
As of March 31, 2000, the Company and Community Bank, its banking subsidiary,
were classified as well capitalized under the financial institutions regulatory
framework. Management has reviewed and will continue to monitor the Company's
asset mix, product pricing and loan loss allowance, which are the areas
determined to be most affected by these requirements.
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15
<PAGE> 16
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
SUMMARY
Net earnings of the Company for the three months ended March 31, 2000 were
$487,347, compared to $586,454 for the same period in 1999, representing a
16.9% decline. Basic net income per share was $.11 for the three months ended
March 31, 2000 as compared to $.13 for the same period in 1999. Fully diluted
net income per share was $.10 and $.13 for the three months ended March 31,
2000 and 1999, respectively. This decline reflects the impact of rising
interest rates on the Company's net interest income, increased provisions to
the allowance for loan losses and the cost associated with the Company's
expansion activities. Net interest income, before provision for loan losses,
increased $729,648, or 11.9%, during the first three months of 2000, as
compared to the same period of 1999. The provision for loan losses increased
$628,310, or 165.4%, during the three months ended March 31, 2000, as compared
to the same period of 1999. Noninterest income increased $628,304, or 33.7%,
while noninterest expenses increased $783,433, or 11.5%, during the first
quarter of 2000, as compared to the first quarter of 1999.
NET INTEREST INCOME
Net interest income, the difference between interest earned on assets and the
cost of interest-bearing liabilities, is the largest component of the Company's
net income. Revenues from interest earning assets of the Company during the
three months ended March 31, 2000 increased $2,177,435, or 17.9%, to
$14,315,077 from $12,137,642 for the same period in 1999. This increase was due
to both higher average outstanding balances of earning assets and an increase
in the yield on these balances. Average earning assets outstanding during the
first quarter of 2000 were $603,346,000, which represents an increase of
$68,543,000, or 12.8%, over the level of $534,803,000 for the first quarter of
1999. In addition, the Company's fully taxable equivalent yield on its average
earning assets increased 37 basis points to 9.59% during the first three months
of 2000, compared to 9.22% for the same period of 1999. Interest expense for
the three months ended March 31, 2000 increased $1,447,787, or 24.1%, to
$7,464,724 from $6,016,937 for the corresponding period of 1999. This increase
was due to both higher average outstanding balances of interest-bearing
liabilities and an increase in the rate paid on these balances. Average
interest-bearing liabilities during the first quarter of 2000 were
$563,900,000, which represents an increase of $79,221,000, or 16.4%, as
compared to $484,679,000 for the same period of 1999. The rate paid on average
interest-bearing liabilities increased 28 basis points to 5.31% for the three
month period ended March 31, 2000, compared to 5.03% for the first three months
of 1999. As a result of these factors, net interest income, before provision
for loan losses, increased $729,648, or 11.9%, in the three months ended March
31, 2000, compared to the same period of 1999.
PROVISION FOR LOAN LOSSES
The provision for loan losses, which is charged to current earnings, is based
on the growth of the loan portfolio, the amount of net loan losses incurred and
management's estimation of potential future losses based on an evaluation of
the risk in the loan portfolio. This review takes into consideration the
judgments of the responsible lending officers and senior management, and also
those of bank regulatory agencies that review the loan portfolio as part of the
regular bank examination process.
In evaluating the allowance, management also considers the historical loan loss
experience of Community Bank, including its finance company subsidiary, the
amount of past due and nonperforming loans, current and anticipated economic
conditions, lender requirements and other appropriate information. Community
Bank allocates its allowance for loan losses to specific loan categories based
on an average of the previous five years net losses for each loan type.
In September 1998, Community Bank determined that $9,360,000 in automobile and
truck loans originated in its Ft. Payne, Alabama Wal-Mart location during a
four-month period beginning in May 1998 were not in compliance with
16
<PAGE> 17
the Bank's lending policy. As of December 31, 1999, approximately $5,594,000 of
these loans were in default. Community Bank has notified the appropriate
authorities and the Bank's fidelity bond insurance carrier, which are currently
investigating these loans. Management believes that these non-compliant loans
are an isolated occurrence, and that the Company has taken appropriate steps to
prevent their re-occurrence. Through December 31, 1999, Community Bank had
taken possession of a total of 362 vehicles which served as collateral for such
defaulted loans, and had received approximately $2,963,000 from the sale of
substantially all of the vehicles. These funds were applied to the outstanding
balances of the defaulted loans, reducing the total unpaid balances at December
31, 1999, to approximately $2,631,000. Management has determined that these
unpaid balances were impaired and has, therefore, made an appropriate charge to
its allowance for loan losses. Although investigation of the Ft. Payne loans
has not yet been completed, management currently believes that Community Bank
has a valid claim and the right to receive reimbursement from its fidelity bond
carrier or through litigation against persons involved in originating the
impaired loans, and will not incur any material losses from such loans.
The provision for loan losses was $1,008,102 for the three months ended March
31, 2000 compared to $379,792 for the same period of 1999, representing an
increase of $628,310, or 165.4%. This increase in the provision for loan losses
during the first quarter of 2000 resulted from management's decision to make
provisions for current losses, actual growth in the loan portfolio and to
increase the overall level of the allowance for loan losses due to changes in
economic changes. Charge-offs exceeded recoveries by $770,000 for the three
months ended March 31, 2000. The reserve for loan losses as a percent of
outstanding loans, net of unearned income, was 0.55% at March 31, 2000 compared
to 0.52% at year-end 1999.
NONINTEREST INCOME
Noninterest income for the three months ended March 31, 2000 was $2,494,508,
compared to $1,866,474 for the same period of 1999. This 33.7% increase was
primarily due to an increase in service charges on deposit accounts of
$180,887, or 22.6%, from $800,729 in the first quarter of 1999 to $981,616 for
the same period of 2000. Other components of noninterest income reflecting
increases in the first quarter of 2000 compared to the same period of 1999 are
as follows: insurance commissions increased $83,301, or 16.8%; debt
cancellation fees increase $89,362, or 83.8%; and other operating income
increased $298,517, or 102.7%, primarily due to an increase in title insurance
revenues. The Company recorded net losses on the sale of securities of $26,886
during the three months ended March 31, 2000, while there were no investment
security sales for the same period of 1999.
NONINTEREST EXPENSES
Noninterest expenses for the three months ended March 31, 2000 were $7,616,138,
reflecting a $783,433, or 11.5%, increase over $6,832,705 for the same period
of 1999. The primary components of noninterest expenses are salaries and
employee benefits, which increased $641,325 for the three months ended March
31, 2000, 15.5% higher than in the same period of 1999. The increases in
salaries and employee benefits are due to staffing for new banking locations
and expansion as well as merit increases and incentive payments for existing
personnel. Occupancy costs increased $29,788, or 4.8%, furniture and equipment
expenses rose by $45,855, or 11.0%, while director and committee fees decreased
$20,983, or 12.4%. Other operating expenses rose by 5.9% to $1,576,291. As a
result of the Company's recent growth, management anticipates that noninterest
expenses will remain at least at their current level for the foreseeable
future.
The Company's strategy is to make each office of Community Bank, its subsidiary
bank, a vital part of the community it serves. Each office has management and
personnel similar to a full service, stand-alone bank. Although more expensive,
management believes this strategy has been successful for Community Bank, and
best serves the Company's communities, customers and shareholders. The Company
remains dependent upon Community Bank for most of its earnings.
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<PAGE> 18
INCOME TAXES
The Company attempts to maximize its net income through active tax planning.
The provision for income taxes increased $45,046, or 23.9%, to $233,274 for the
three months ended March 31, 2000 as compared to $188,228 for the same period
of 1999. The effective tax rate of approximately 32.4% for the first quarter of
2000 is less than the statutory rate and represents a increase from the
effective tax rate of approximately 24.3% for the same period of 1999. This
increase is in part due to the effect of a decline in tax-exempt interest
income.
YEAR 2000 ISSUES
As a result of the Company's comprehensive Year 2000 readiness, there was no
disruption in the Company's operations during the year-end date change period.
The Company has experienced no material adverse impact as a result of Y2K
noncompliance by any of the depositors, credit customers and other third
parties with which it transacts business. The Company experienced no disruption
in operations in connection with February 29, 2000 (the first leap year after
year-end 1999,) or March 31, 2000 (the first quarter-end in the year 2000.);
however, there remain some associated risks with certain other critical dates
in the Year 2000. These dates include December 31, 2000 (the first year-end in
the year 2000) and January 1, 2001 (the first new year after the year 2000.)
Management will continue to monitor the Company's Year 2000 readiness in
connection with these Year 2000 dates. Management currently believes that the
Company will not experience any disruption in operations or material adverse
impact on the Company's financial condition and results of operations in
conjunction with these Year 2000 dates.
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18
<PAGE> 19
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's net interest income, and the fair value of its financial
instruments, are influenced by changes in the level of interest rates. Interest
rate sensitivity is a function of the repricing characteristics of the
Company's interest-earning assets and interest-bearing liabilities. Management
monitors its interest rate risk exposure through the use of a Static Gap
analysis and an Interest Rate Shock analysis.
The static gap analysis measures the amount of repricing risk embedded in the
balance sheet at a specific point in time, by comparing the difference in the
volume of interest-earning assets and interest-bearing liabilities that are
subject to repricing within specific time periods. During the first quarter of
2000, Community Bank saw its interest earning assets repricing within one year
decline while its interest bearing liabilities repricing during this same
period increased. This resulted in the Company being more liability sensitive
at March 31, 2000, compared to year-end 1999, indicating that it had more
interest bearing liabilities than interest earning assets repricing during the
twelve months ending March 31, 2001. The cumulative static gap position of rate
sensitive assets to rate sensitive liabilities at March 31, 2000 was: i) 17% at
30 days; ii) 29% at 90 days; iii) 33% at 180 days; and iv) 39% at 365 days.
The interest rate shock analysis measures the impact on Community Bank's net
interest income as a result of immediate and sustained shift in interest rates.
The movement in market rates are based on statistical regression analyses while
management makes assumptions concerning balance sheet growth and the magnitude
of interest rate movements for certain interest earning asset and
interest-bearing liabilities. Using actual maturity and repricing opportunities
of Community Bank's portfolio, in conjunction with management's assumptions, a
rate shock analysis is performed using a plus 200 basis points shift and a
minus 200 basis points shift in interest rates. Based on the Company's March
31, 2000 Asset/Liability Analysis, the improvement in net interest income, over
the next 12 months, resulting from a 200 basis points decrease in the interest
rate environment would result in a $845,000, or 2.8%, increase in net interest
income. Conversely, a 200 basis points increase in interest rates would result
in a $1,590,000, or 5.2%, decrease in net interest income for the same period.
While movement of interest rates cannot be predicted with any certainty,
management expects interest rates to move higher during 2000 and believes that
Community Bank's current interest rate sensitivity analysis fairly reflects its
interest rate risk exposure during the twelve months ending March 31, 2001.
Management continually evaluates the condition of the economy, the pattern of
market interest rates and other economic data to determine the types of
investments that should be made and at what maturities.
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19
<PAGE> 20
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
On November 19, 1998, Mr. William Towns, a shareholder of the Company, filed a
shareholder derivative action against the directors of the Company in the state
Circuit Court of Blount County, Alabama. Mr. Towns amended his complaint on
January 14, 1999, to add the Company and Community Bank as defendants in the
action. On February 11, 1999, the complaint was again amended to add Mr. Pat
Bellew and Mrs. Mary Bellew, who are also shareholders of the Company, as
additional plaintiffs. On December 21, 1998, the Company and its directors
filed a motion with the court seeking to have the complaint dismissed. On March
1, 1999, the Company's Board of directors appointed a special Board committee,
comprised of Roy B. Jackson, Merritt M. Robbins and R. Wayne Washam, each of
whom is a non-employee director of the Company, to review the plaintiff's
allegations in accordance with Delaware law. On April 6, 1999, each of the
parties to the action requested that the court stay the litigation and related
discovery, motions and hearings, pending completion of the special committee's
review. On April 30, 1999, the court entered an order staying the litigation
and related discovery, motions and hearing in accordance with the parties'
request. On October 15, 1999, the special committee filed its final report with
the court. On October 21, 1999, the parties forwarded to the court an
agreed-upon order governing the confidentiality of the special committee's
report, which the court entered on January 2, 2000. The parties are awaiting a
hearing on the motion previously filed by the Company and its directors to
dismiss the complaint.
The complaint alleged that the directors of the Company breached their
fiduciary duty to the Company and its shareholders, engaged in fraud,
fraudulent concealment, suppression of material fact and suppression of the
plaintiff shareholders, failed to supervise management, and conspired to
conceal wrongful acts from the Company's shareholders and paid themselves
excessive director fees. The complaint also alleged that the Board of Directors
acquiesced in mismanagement and misconduct by Kennon R. Patterson, Sr., the
Chairman of the Board, Chief Executive Officer and President of the Company,
including alleged self dealing, payment of excessive compensation,
misappropriation of corporate opportunities and misappropriation of funds. The
complaint sought an unspecified amount of compensatory and punitive damages,
removal of the current directors, appointment of a new Board of Directors, and
attorneys fees and cost. Management of the Company believes that the
plaintiffs' allegations are false and that the action lacks merit. The Company
and its directors intend to defend the action vigorously, and management of the
Company believes that the action will not have a material adverse effect on the
Company's financial condition or results of operations.
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS
In January 2000, the Company issued an aggregate of 9,481 shares of Common
Stock to certain of Community Bank's city directors in payment of director
fees, in reliance upon an exemption from registration under Section 4(2) of the
Securities Act.
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20
<PAGE> 21
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
- -------------- ----------------------
<S> <C>
3.1 Certificate of Incorporation, as amended (Filed as Appendix II to the Proxy Statement
included in Part I of the Registrations Statement on Form S-14, Registration No. 2-92974, and
incorporated herein by reference)
3.2 Certificate of Amendment to the Certificate of Incorporation, changing the name of the
Registrant to Community Bancshares, Inc. (Filed as Exhibit 4 to Form 10-K for the year Ended
December 31, 1985, and incorporated herein by reference)
3.3 By-laws of Registrant, as amended and restated January 1999 (Filed as Exhibit 3.3 to Form
10-K for the year ended December 31, 1998, and incorporated herein by reference)
3.4 Certificate of Amendment to the Certificate of Incorporation, providing for directors'
indemnification (Filed as Exhibit 3.4 to Form 10-K for the year ended December 31, 1987, and
incorporated herein by reference)
3.5 Certificate of Amendment to the Certificate of Incorporation, increasing the number of
authorized shares (Filed as Exhibit 3.5 to Form 10-K for the year ended December 31, 1993,
and incorporated herein by reference)
3.6 Amended Certificate of Amendment to the Certificate of Incorporation, increasing the number
of authorized shares (Filed as Exhibit 3 to Form 10-Q/A-1 for the quarter ended September 30,
1998, and incorporated herein by reference)
4.1 Certificate of Registrant establishing the Series 1984-1 Preferred Stock dated August 17,
1984 ("Certificate of Stock Designation") (Filed as Appendix I to the Proxy Statement
included in Part I of the Registration Statement on Form S-14, Registration No. 2-92974, and
incorporated herein by reference)
4.2 Certificate of Amendment to the Certificate of Stock Designation (Filed as Exhibit 4.1 to the
Registration Statement of Form S-1, Registration No 33-7032, and incorporated herein by
reference)
4.3 Rights Agent Agreement, dated January 13, 1999, between Community Bancshares, Inc. and the
Bank of New York (Filed as Exhibit 4.1 to Form 8-A, filed January 21, 1999, and incorporated
herein by reference)
4.4 Indenture, dated March 23, 2000, by and between Community Bancshares, Inc. and the Bank of
New York
10.1 Amended and Restated Declaration of Trust, dated March 23, 2000, by and between The Bank of
New York (Delaware), The Bank of New York, Community Bancshares, Inc. and Community (AL)
Capital Trust I
10.2 Guarantee Agreement, dated March 23, 2000, by and between Community Bancshares, Inc. and The
Bank of New York
</TABLE>
21
<PAGE> 22
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
- -------------- ----------------------
<S> <C>
10.3 Placement Agreement, dated March 23, 2000, between Community (AL) Capital
Trust I, Community Bancshares, Inc. and Salomon Smith Barney, Inc.
11 Computation of Earnings Per Share
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the quarter ended March 31,
2000.
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22
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
<TABLE>
<S> <C>
COMMUNITY BANCSHARES, INC.
May 12, 2000 /s/ Kennon R. Patterson, Sr.
- --------------------------------------- -------------------------------------------
Date Kennon R. Patterson, Sr.
Chairman, President and
Chief Executive Officer
May 12, 2000 /s/ Michael A. Bean
- --------------------------------------- -------------------------------------------
Date Michael A. Bean
Acting Chief Accounting Officer
</TABLE>
23
<PAGE> 24
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------
EXHIBITS TO
FORM 10-Q
FOR THE
QUARTERLY PERIOD ENDED MARCH 31, 2000
---------
COMMUNITY BANCSHARES, INC.
P.O. BOX 1000
MAIN STREET
BLOUNTSVILLE, ALABAMA 35031
- -------------------------------------------------------------------------------
<PAGE> 25
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
----------------------
<S> <C>
3.1 Certificate of Incorporation, as amended (Filed as Appendix II to the Proxy Statement
included in Part I of the Registrations Statement on Form S-14, Registration No.
2-92974, and incorporated herein by reference)
3.2 Certificate of Amendment to the Certificate of Incorporation, changing the name of the
Registrant to Community Bancshares, Inc. (Filed as Exhibit 4 to Form 10-K for the year
Ended December 31, 1985, and incorporated herein by reference)
3.3 By-laws of Registrant, as amended and restated January 1999 (Filed as Exhibit 3.3 to
Form 10-K for the year ended December 31, 1998, and incorporated herein by reference)
3.4 Certificate of Amendment to the Certificate of Incorporation, providing for directors'
indemnification (Filed as Exhibit 3.4 to Form 10-K for the year ended December 31, 1987,
and incorporated herein by reference)
3.5 Certificate of Amendment to the Certificate of Incorporation, increasing the number of
authorized shares (Filed as Exhibit 3.5 to Form 10-K for the year ended December 31,
1993, and incorporated herein by reference)
3.6 Amended Certificate of Amendment to the Certificate of Incorporation, increasing the
number of authorized shares (Filed as Exhibit 3 to Form 10-Q/A-1 for the quarter ended
September 30, 1998, and incorporated herein by reference)
4.1 Certificate of Registrant establishing the Series 1984-1 Preferred Stock dated August 17,
1984 ("Certificate of Stock Designation") (Filed as Appendix I to the Proxy Statement
included in Part I of the Registration Statement on Form S-14, Registration No. 2-92974,
and incorporated herein by reference)
4.2 Certificate of Amendment to the Certificate of Stock Designation (Filed as Exhibit 4.1 to
the Registration Statement of Form S-1, Registration No 33-7032, and incorporated
herein by reference)
4.3 Rights Agent Agreement, dated January 13, 1999, between Community Bancshares, Inc.
and the Bank of New York (Filed as Exhibit 4.1 to Form 8-A, filed January 21, 1999,
and incorporated herein by reference)
4.4 Indenture, dated March 23, 2000, by and between Community Bancshares, Inc. and
the Bank of New York
10.1 Amended and Restated Declaration of Trust, dated March 23, 2000, by and between The Bank
of New York (Delaware), The Bank of New York, Community Bancshares, Inc. and Community
(AL) Capital Trust I
10.2 Guarantee Agreement, dated March 23, 2000, by and between Community Bancshares, Inc. and
The Bank of New York
10.3 Placement Agreement, dated March 23, 2000, between Community (AL) Capital Trust I,
Community Bancshares, Inc. and Salomon Smith Barney, Inc.
11 Computation of Earnings Per Share
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 4.4
-----------------------------------------------
EXHIBIT 4.4
COMMUNITY BANCSHARES, INC.
AS ISSUER
INDENTURE
DATED AS OF MARCH 23, 2000
THE BANK OF NEW YORK
AS TRUSTEE
JUNIOR SUBORDINATED DEBT SECURITIES
-----------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Parties.........................................................................................1
Recitals........................................................................................1
Authorization of Indenture......................................................................1
Compliance with Legal Requirements..............................................................1
Purpose of and Consideration for Indenture......................................................1
ARTICLE I
DEFINITIONS
SECTION 1.01.
Definitions.....................................................................................1
Additional Interest.............................................................................1
Affiliate.......................................................................................1
Authenticating Agent............................................................................2
Bankruptcy Law..................................................................................2
Board of Directors..............................................................................2
Board Resolution................................................................................2
Business Day....................................................................................2
Capital Securities..............................................................................2
Capital Securities Guarantee....................................................................2
Capital Treatment Event.........................................................................2
Certificate.....................................................................................2
Common Securities...............................................................................2
Company.........................................................................................3
Comparable Treasury Issue.......................................................................3
Comparable Treasury Price.......................................................................3
Custodian.......................................................................................3
Debt Security or Debt Securities................................................................3
Debt Security Register..........................................................................3
Declaration.....................................................................................3
Default.........................................................................................3
Defaulted Interest..............................................................................3
Deferred Interest...............................................................................3
Event of Default................................................................................3
Extension Period................................................................................3
Federal Reserve.................................................................................3
Finance Subsidiary..............................................................................3
Indenture.......................................................................................4
Institutional Trustee...........................................................................4
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Interest Payment Date...........................................................................4
Interest Rate...................................................................................4
Investment Company Event........................................................................4
Liquidation Amount..............................................................................4
Maturity Date...................................................................................4
Officers' Certificate...........................................................................4
Opinion of Counsel..............................................................................4
Outstanding.....................................................................................4
Person..........................................................................................5
Predecessor Security............................................................................5
Primary Treasury Dealer.........................................................................5
Principal Office of the Trustee.................................................................5
Quotation Agent.................................................................................5
Redemption Date.................................................................................5
Reference Treasury Dealer.......................................................................6
Reference Treasury Dealer Quotations............................................................6
Remaining Life..................................................................................6
Responsible Officer.............................................................................6
Securityholder, holder of Debt Securities.......................................................6
Senior Indebtedness.............................................................................6
Special Event...................................................................................7
Special Redemption Date.........................................................................7
Special Redemption Price........................................................................7
Subsidiary......................................................................................7
Tax Event.......................................................................................7
Treasury Rate...................................................................................8
The Trust.......................................................................................8
Trust Indenture Act.............................................................................8
Trust Securities................................................................................8
Trustee.........................................................................................8
ARTICLE II
DEBT SECURITIES
SECTION 2.01. Authentication and Dating........................................................9
SECTION 2.02. Form of Trustee's Certificate of Authentication..................................9
SECTION 2.03. Form and Denomination of Debt Securities........................................10
SECTION 2.04. Execution of Debt Securities....................................................10
SECTION 2.05. Exchange and Registration of Transfer of Debt Securities........................10
SECTION 2.06. Mutilated, Destroyed, Lost or Stolen Debt Securities............................12
SECTION 2.07. Temporary Debt Securities.......................................................13
SECTION 2.08. Payment of Interest.............................................................13
SECTION 2.09. Cancellation of Debt Securities Paid, etc.......................................14
SECTION 2.10. Computation of Interest.........................................................15
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
SECTION 2.11. Extension of Interest Payment Period............................................15
SECTION 2.12. CUSIP Numbers...................................................................16
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01. Payment of Principal, Premium and Interest; Agreed Treatment of the
Debt Securities and the Capital Securities.....................................................16
SECTION 3.02. Offices for Notices and Payments, etc...........................................17
SECTION 3.03. Appointments to Fill Vacancies in Trustee's Office..............................17
SECTION 3.04. Provision as to Paying Agent....................................................18
SECTION 3.05. Certificate to Trustee..........................................................19
SECTION 3.06. Additional Sums.................................................................19
SECTION 3.07. Compliance with Consolidation Provisions........................................19
SECTION 3.08. Limitation on Dividends.........................................................19
SECTION 3.09. Covenants as to the Trust.......................................................20
ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
SECTION 4.01. Securityholders' Lists..........................................................20
SECTION 4.02. Preservation and Disclosure of Lists............................................21
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
UPON AN EVENT OF DEFAULT
SECTION 5.01. Events of Default...............................................................22
SECTION 5.02. Payment of Debt Securities on Default; Suit Therefor............................24
SECTION 5.03. Application of Moneys Collected by Trustee......................................25
SECTION 5.04. Proceedings by Securityholders..................................................26
SECTION 5.05. Proceedings by Trustee..........................................................26
SECTION 5.06. Remedies Cumulative and Continuing..............................................26
SECTION 5.07. Direction of Proceedings and Waiver of Defaults by Majority of
Securityholders................................................................................27
SECTION 5.08. Notice of Defaults..............................................................27
SECTION 5.09. Undertaking to Pay Costs........................................................28
ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee..........................................28
SECTION 6.02. Reliance on Documents, Opinions, etc............................................29
SECTION 6.03. No Responsibility for Recitals, etc.............................................30
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents, Transfer Agents or Registrar
May Own Debt Securities........................................................................30
SECTION 6.05. Moneys to be Held in Trust......................................................31
SECTION 6.06. Compensation and Expenses of Trustee............................................31
SECTION 6.07. Officers' Certificate as Evidence...............................................32
SECTION 6.08. Eligibility of Trustee..........................................................32
SECTION 6.09. Resignation or Removal of Trustee...............................................32
SECTION 6.10. Acceptance by Successor Trustee.................................................33
SECTION 6.11. Succession by Merger, etc.......................................................34
SECTION 6.12. Authenticating Agents...........................................................35
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders.......................................................36
SECTION 7.02. Proof of Execution by Securityholders...........................................37
SECTION 7.03. Who Are Deemed Absolute Owners..................................................37
SECTION 7.04. Debt Securities Owned by Company Deemed Not Outstanding.........................37
SECTION 7.05. Revocation of Consents; Future Holders Bound....................................38
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings............................................................38
SECTION 8.02. Call of Meetings by Trustee.....................................................38
SECTION 8.03. Call of Meetings by Company or Securityholders..................................39
SECTION 8.04. Qualifications for Voting.......................................................39
SECTION 8.05. Regulations.....................................................................39
SECTION 8.06. Voting..........................................................................40
SECTION 8.07. Quorum; Actions.................................................................40
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures without Consent of Securityholders......................41
SECTION 9.02. Supplemental Indentures with Consent of Securityholders.........................42
SECTION 9.03. Effect of Supplemental Indentures...............................................43
SECTION 9.04. Notation on Debt Securities.....................................................44
SECTION 9.05. Evidence of Compliance of Supplemental Indenture to be Furnished to
Trustee........................................................................................44
ARTICLE X
REDEMPTION OF SECURITIES
</TABLE>
<PAGE> 6
<TABLE>
<S> <C>
SECTION 10.01. Optional Redemption............................................................44
SECTION 10.02. Special Event Redemption.......................................................44
SECTION 10.03. Notice of Redemption; Selection of Debt Securities.............................44
SECTION 10.04. Payment of Debt Securities Called for Redemption...............................45
ARTICLE XI
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 11.01. Company May Consolidate, etc., on Certain Terms................................46
SECTION 11.02. Successor Entity to be Substituted.............................................46
SECTION 11.03. Opinion of Counsel to be Given to Trustee......................................47
ARTICLE XII
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 12.01. Discharge of Indenture.........................................................47
SECTION 12.02. Deposited Moneys to be Held in Trust by Trustee................................48
SECTION 12.03. Paying Agent to Repay Moneys Held..............................................48
SECTION 12.04. Return of Unclaimed Moneys.....................................................48
ARTICLE XIII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
SECTION 13.01. Indenture and Debt Securities Solely Corporate Obligations.....................48
ARTICLE XIV
MISCELLANEOUS PROVISIONS
SECTION 14.01. Successors.....................................................................49
SECTION 14.02. Official Acts by Successor Entity..............................................49
SECTION 14.03. Surrender of Company Powers....................................................49
SECTION 14.04. Addresses for Notices, etc.....................................................49
SECTION 14.05. Governing Law..................................................................49
SECTION 14.06. Evidence of Compliance with Conditions Precedent...............................49
SECTION 14.07. Non-Business Days..............................................................50
SECTION 14.08. Table of Contents, Headings, etc...............................................50
SECTION 14.09. Execution in Counterparts......................................................50
SECTION 14.10. Separability...................................................................50
SECTION 14.11. Assignment.....................................................................51
SECTION 14.12. Acknowledgment of Rights.......................................................51
ARTICLE XV
SUBORDINATION OF DEBT SECURITIES
SECTION 15.01. Agreement to Subordinate.......................................................51
</TABLE>
<PAGE> 7
<TABLE>
<S> <C>
SECTION 15.02. Default on Senior Indebtedness.................................................52
SECTION 15.03. Liquidation; Dissolution; Bankruptcy...........................................53
SECTION 15.04. Subrogation....................................................................54
SECTION 15.05. Trustee to Effectuate Subordination............................................55
SECTION 15.06. Notice by the Company..........................................................55
SECTION 15.07. Rights of the Trustee; Holders of Senior Indebtedness..........................56
SECTION 15.08. Subordination May Not Be Impaired..............................................56
</TABLE>
<PAGE> 8
THIS INDENTURE, dated as of March 23, 2000,
between Community Bancshares, Inc., a bank holding company
incorporated in Delaware (hereinafter sometimes called the
"Company"), and The Bank of New York, as trustee
(hereinafter sometimes called the "Trustee"),
W I T N E S S E T H :
WHEREAS, for its lawful corporate purposes, the
Company has duly authorized the issuance of its 10 7/8%
Junior Subordinated Deferrable Interest Debentures due 2030
(the "Debt Securities") under this Indenture to provide,
among other things, for the execution and authentication,
delivery and administration thereof, the Company has duly
authorized the execution of this Indenture; and
WHEREAS, all acts and things necessary to make
this Indenture a valid agreement according to its terms,
have been done and performed;
NOW, THEREFORE, This Indenture Witnesseth:
In consideration of the premises, and the purchase
of the Debt Securities by the holders thereof, the Company
covenants and agrees with the Trustee for the equal and
proportionate benefit of the respective holders from time to
time of the Debt Securities as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions
The terms defined in this Section 1.01 (except as
herein otherwise expressly provided or unless the context
otherwise requires) for all purposes of this Indenture and
of any indenture supplemental hereto shall have the
respective meanings specified in this Section 1.01. All
accounting terms used herein and not expressly defined shall
have the meanings assigned to such terms in accordance with
generally accepted accounting principles and the term
"generally accepted accounting principles" means such
accounting principles as are generally accepted at the time
of any computation. The words "herein," "hereof" and
"hereunder" and other words of similar import refer to this
Indenture as a whole and not to any particular Article,
Section or other subdivision.
"Additional Interest" shall have the meaning set
forth in Section 3.06.
"Affiliate" means, with respect to a specified
Person, any Person directly or indirectly controlling or
controlled by, or under direct or indirect common control
with the specified Person. For purposes of this definition,
1
<PAGE> 9
"control" when used with respect to any 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.
"Authenticating Agent" means any agent or agents
of the Trustee which at the time shall be appointed and
acting pursuant to Section 6.12.
"Bankruptcy Law" means Title 11, U.S. Code, or any
similar federal or state law for the relief of debtors.
"Board of Directors" means the board of directors
or the executive committee or any other duly authorized
designated officers of the Company.
"Board Resolution" means a copy of a resolution
certified by the Secretary or an Assistant Secretary of the
Company to have been duly adopted by the Board of Directors
and to be in full force and effect on the date of such
certification and delivered to the Trustee.
"Business Day" means any day other than a
Saturday, Sunday or any other day on which banking
institutions in New York City are permitted or required by
any applicable law to close.
"Capital Securities" means undivided beneficial
interests in the assets of Community (AL) Capital Trust I
which rank pari passu with Common Securities issued by
Community (AL) Capital Trust I; provided, however, that upon
the occurrence of an Event of Default (as defined in the
Declaration), the rights of holders of such Common
Securities to payment in respect of distributions and
payments upon liquidation, redemption and otherwise are
subordinated to the rights of holders of such Capital
Securities.
"Capital Securities Guarantee" means, in respect
of the guarantee that the Company may enter into with The
Bank of New York or other Persons that operates directly or
indirectly for the benefit of holders of Capital Securities
of Community (AL) Capital Trust I.
"Capital Treatment Event" means the reasonable
determination by the Company that, as a result of the
occurrence of any amendment to, or change (including any
announced prospective change) in, the laws of the United
States or any political subdivision thereof or therein, or
as the result of any official or administrative
pronouncement or action or decision interpreting or applying
such laws, rules or regulations, which amendment or change
is effective or which pronouncement, action or decision is
announced on or after the date of issuance of the Debt
Securities, there is more than an insubstantial risk that
the Company will not be entitled to treat an amount equal to
the aggregate Liquidation Amount of the Debt Securities as
"Tier I Capital" (or the then equivalent thereof) for
purposes of the capital adequacy guidelines of the
2
<PAGE> 10
Federal Reserve, as then in effect and applicable to the
Company.
"Certificate" means a certificate signed by any
one of the principal executive officer, the principal
financial officer or the principal accounting officer of the
Company.
"Common Securities" means undivided beneficial
interests in the assets of Community (AL) Capital Trust I
which rank pari passu with Capital Securities issued by
Community (AL) Capital Trust I; provided, however, that upon
the occurrence of an Event of Default (as defined in the
Declaration), the rights of holders of such Common
Securities to payment in respect of distributions and
payments upon liquidation, redemption and otherwise are
subordinated to the rights of holders of such Capital
Securities.
"Company" means Community Bancshares Inc., a bank
holding company incorporated in Delaware, and, subject to
the provisions of Article XI, shall include its successors
and assigns.
"Comparable Treasury Issue" means with respect to
any Special Redemption Date, the United States Treasury
security selected by the Quotation Agent as having a
maturity comparable to the Remaining Life that would be
utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to the
Remaining Life. If no United States Treasury security has a
maturity which is within a period from three months before
to three months after March 8, 2010, the two most closely
corresponding United States Treasury securities shall be
used as the Comparable Treasury Issue, and the Treasury Rate
shall be interpolated or extrapolated on a straight-line
basis, rounding to the nearest month using such securities.
"Comparable Treasury Price" means (a) the average
of five Reference Treasury Dealer Quotations for such
Special Redemption Date, after excluding the highest and
lowest such Reference Treasury Dealer Quotations, or (b) if
the Trustee obtains fewer than five such Reference Treasury
Dealer Quotations, the average of all such Quotations.
"Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
"Debt Security" or "Debt Securities" has the
meaning stated in the first recital of this Indenture.
"Debt Security Register" has the meaning specified
in Section 2.05.
"Declaration" means the Amended and Restated
Declaration of Trust of Community (AL) Capital Trust I, as
amended or supplemented from time to time.
3
<PAGE> 11
"Default" means any event, act or condition that
with notice or lapse of time, or both, would constitute an
Event of Default.
"Defaulted Interest" has the meaning set forth in
Section 2.08.
"Deferred Interest" has the meaning set forth in
Section 2.11.
"Event of Default" means any event specified in
Section 5.01, continued for the period of time, if any, and
after the giving of the notice, if any, therein designated.
"Extension Period" has the meaning set forth in
Section 2.11.
"Federal Reserve" means the Board of Governors of
the Federal Reserve System.
"Finance Subsidiary" means a special purpose
vehicle created expressly for the purpose of financing the
activities of the Company and its subsidiaries.
"Indenture" means this instrument as originally
executed or, if amended or supplemented as herein provided,
as so amended or supplemented, or both.
"Institutional Trustee" has the meaning set forth
in the Declaration.
"Interest Payment Date" means each March 8 and
September 8 during the term of this Indenture.
"Interest Rate" means 107/8%.
"Investment Company Event" means the receipt by
Community (AL) Capital Trust I of an opinion of counsel
experienced in such matters to the effect that, as a result
of the occurrence of a change in law or regulation or
written change (including any announced prospective change)
in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory
authority, there is more than an insubstantial risk that
Community (AL) Capital Trust I is or will be considered an
"investment company" that is required to be registered under
the Investment Company Act of 1940, as amended, which change
or prospective change becomes effective or would become
effective, as the case may be, on or after the date of the
issuance of the Debt Securities.
"Liquidation Amount" means the stated amount of
$1,000 per Trust Security.
"Maturity Date" means March 8, 2030.
4
<PAGE> 12
"Officers' Certificate" means a certificate signed
by the Chairman of the Board, the Vice Chairman, the
President, any Managing Director or any Vice President, and
by the Chief Financial Officer, the Treasurer, an Assistant
Treasurer, the Comptroller, an Assistant Comptroller, the
Secretary or an Assistant Secretary of the Company, and
delivered to the Trustee. Each such certificate shall
include the statements provided for in Section 14.06 if and
to the extent required by the provisions of such Section.
"Opinion of Counsel" means an opinion in writing
signed by legal counsel, who may be an employee of or
counsel to the Company, or may be other counsel satisfactory
to the Trustee. Each such opinion shall include the
statements provided for in Section 14.06 if and to the
extent required by the provisions of such Section.
The term "outstanding," when used with reference
to Debt Securities, subject to the provisions of Section
7.04, means, as of any particular time, all Debt Securities
authenticated and delivered by the Trustee or the
Authenticating Agent under this Indenture, except
(a) Debt Securities theretofore canceled by the Trustee or
the Authenticating Agent or delivered to the Trustee for cancellation;
(b) Debt Securities, or portions thereof, for the payment or
redemption of which moneys in the necessary amount shall have been
deposited in trust with the Trustee or with any paying agent (other
than the Company) or shall have been set aside and segregated in trust
by the Company (if the Company shall act as its own paying agent);
provided that, if such Debt Securities, or portions thereof, are to be
redeemed prior to maturity thereof, notice of such redemption shall
have been given as provided in Article Fourteen or provision
satisfactory to the Trustee shall have been made for giving such
notice; and
(c) Debt Securities paid pursuant to Section 2.06 or in lieu
of or in substitution for which other Debt Securities shall have been
authenticated and delivered pursuant to the terms of Section 2.06
unless proof satisfactory to the Company and the Trustee is presented
that any such Debt Securities are held by bona fide holders in due
course.
"Person" means any individual,
corporation, limited liability company, partnership, joint
venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Security" of any particular
Debt Security means every previous Debt Security evidencing
all or a portion of the same debt as that evidenced by such
particular Debt Security; and, for the purposes of this
definition, any Debt Security authenticated and delivered
under Section 2.06 in lieu of a lost, destroyed or stolen
Debt Security shall be deemed to evidence the same debt as
the lost, destroyed or stolen Debt Security.
5
<PAGE> 13
"Primary Treasury Dealer" means a primary United
States Government securities dealer in New York City.
"Principal Office of the Trustee," or other
similar term, means the office of the Trustee, at which at
any particular time its corporate trust business shall be
principally administered, which at the time of the execution
of this Indenture shall be 101 Barclay Street, Floor 21
West, New York, NY 10286.
"Quotation Agent" means Salomon Smith Barney, Inc.
and its successors; provided, however, that if the foregoing
shall cease to be a Primary Treasury Dealer, the Company
shall substitute therefor another Primary Treasury Dealer.
"Redemption Date" has the meaning set forth in
Section 10.01.
"Redemption Price" means the price set forth in
the following table for any Redemption Date or Special
Redemption Date that occurs within the twelve-month period
beginning in the relevant year indicated below, expressed in
percentage of the principal amount of the Debt Securities
being redeemed:
<TABLE>
<CAPTION>
Year
Beginning Percentage
--------- ----------
<S> <C>
March 8, 105.4
2010 38
March 8, 104.8
2011 94
March 8, 104.3
2012 50
March 8, 103.8
2013 06
March 8, 103.2
2014 63
March 8, 102.7
2015 19
March 8, 102.1
2016 75
March 8, 101.6
2017 31
March 8, 101.0
2018 88
</TABLE>
6
<PAGE> 14
<TABLE>
<S> <C>
March 8, 100.5
2019 44
March 8, 100.0
2020 and 00
after
</TABLE>
plus accrued and unpaid interest on such Debentures to the
Redemption Date or, in the case of a redemption due to the
occurrence of a Special Event, to the Special Redemption
Date.
"Reference Treasury Dealer" means (i) the
Quotation Agent and (ii) any other Primary Treasury Dealer
selected by the Trustee after consultation with the Company.
"Reference Treasury Dealer Quotations" means, with
respect to each Reference Treasury Dealer and any Redemption
Date, the average, as determined by the Quotation Agent, of
the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal
amount) quoted in writing to the Trustee by such Reference
Treasury Dealer at 5:00 p.m., New York City time, on the
third Business Day preceding such Redemption Date.
"Remaining Life" means, with respect to any Debt
Security, the period from the Special Redemption Date for
such Debt Security to March 8, 2010.
"Responsible Officer" means, with respect to the
Trustee, any officer within the Principal Office of the
Trustee, including any vice-president, any assistant
vice-president, any secretary, any assistant secretary, the
treasurer, any assistant treasurer, any trust officer or
other officer of the Principal Trust Office of the Trustee
customarily performing functions similar to those performed
by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular
subject.
"Securityholder," "holder of Debt Securities" or
other similar terms, means any Person in whose name at the
time a particular Debt Security is registered on the
register kept by the Company or the Trustee for that purpose
in accordance with the terms hereof.
"Senior Indebtedness" means, with respect to the
Company, (i) the principal, premium, if any, and interest in
respect of (A) indebtedness of the Company for money
borrowed and (B) indebtedness evidenced by securities,
debentures, notes, bonds or other similar instruments issued
by the
7
<PAGE> 15
Company; (ii) all capital lease obligations of the Company;
(iii) all obligations of the Company issued or assumed as
the deferred purchase price of property, all conditional
sale obligations of the Company and all obligations of the
Company under any title retention agreement (but excluding
trade accounts payable arising in the ordinary course of
business); (iv) all obligations of the Company for the
reimbursement of any letter of credit, any banker's
acceptance, any security purchase facility, any repurchase
agreement or similar arrangement, any interest rate swap,
any other hedging arrangement, any obligation under options
or any similar credit or other transaction; (v) all
obligations of the type referred to in clauses (i) through
(iv) above of other Persons for the payment of which the
Company is responsible or liable as obligor, guarantor or
otherwise; and (vi) all obligations of the type referred to
in clauses (i) through (v) above of other Persons secured by
any lien on any property or asset of the Company (whether or
not such obligation is assumed by 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 or pari passu in right of payment to the Debt
Securities, except for (1) any indebtedness between or among
the Company and any Finance Subsidiary of the Company, and
(2) Debt Securities issued pursuant to this Indenture and
guarantees in respect of such Debt Securities. Senior
Indebtedness shall continue to be Senior Indebtedness and be
entitled to the subordination provisions irrespective of any
amendment, modification or waiver of any term of such Senior
Indebtedness.
"Special Event" means any of a Tax Event, an
Investment Company Event or a Capital Treatment Event.
"Special Redemption Date" has the meaning set
forth in 10.02.
"Special Redemption Price" means (1) if the
Special Redemption Date is before March 8, 2010, the greater
of (a) 100% of the principal amount of the Debt Securities
being redeemed pursuant to Section 10.02 and (b) as
determined by a Quotation Agent, the sum of the present
values of scheduled payments of principal and interest over
the Remaining Life of such Debt Securities, discounted to
the Special Redemption Date on a semi-annual basis (assuming
a 360-day year consisting of twelve 30-day months) at the
Treasury Rate plus 0.45%, plus, in the case of either (a) or
(b), accrued and unpaid interest on such Debt Securities to
the Special Redemption Date and (2) if the Special
Redemption Date is on or after March 8, 2010, the Redemption
Price for such Special Redemption Date.
"Subsidiary" means, with respect to any Person,
(i) any corporation at least a majority of the outstanding
voting stock of which is owned, directly or indirectly, by
such Person or by one or more of its Subsidiaries, or by
such Person and one or more of its Subsidiaries, (ii) any
general partnership, joint venture or similar entity, at
least a majority of the
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outstanding partnership or similar interests of which shall
at the time be owned by such Person, or by one or more of
its Subsidiaries, or by such Person and one or more of its
Subsidiaries, and (iii) any limited partnership of which
such Person or any of its Subsidiaries is a general partner.
For the purposes of this definition, "voting stock" means
shares, interests, participations or other equivalents in
the equity interest (however designated) in such Person
having ordinary voting power for the election of a majority
of the directors (or the equivalent) of such Person, other
than shares, interests, participations or other equivalents
having such power only by reason of the occurrence of a
contingency.
"Tax Event" means the receipt by the Company and
Community (AL) Capital Trust I of an opinion of counsel
experienced in such matters to the effect that, as a result
of any amendment to or change (including any announced
prospective change) in the laws or any regulations
thereunder of the United States or any political subdivision
or taxing authority thereof or therein, or as a result of
any official administrative pronouncement (including any
private letter ruling, technical advice memorandum, field
service advice, regulatory procedure, notice or
announcement, including any notice or announcement of intent
to adopt such procedures or regulations (an "Administrative
Action")) or judicial decision interpreting or applying such
laws or regulations, regardless of whether such
Administrative Action or judicial decision is issued to or
in connection with a proceeding involving the Company or
Community (AL) Capital Trust I and whether or not subject to
review or appeal, which amendment, clarification, change,
Administrative Action or decision is enacted, promulgated or
announced, in each case on or after the date of issuance of
the Debt Securities, there is more than an insubstantial
risk that: (i) Community (AL) Capital Trust I is, or will be
within 90 days of the date of such opinion, subject to
United States federal income tax with respect to income
received or accrued on the Debt Securities; (ii) interest
payable by the Company on the Debt Securities is not, or
within 90 days of the date of such opinion, will not be,
deductible by the Company, in whole or in part, for United
States federal income tax purposes; or (iii) Community (AL)
Capital Trust I 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.
"Treasury Rate" means (i) the yield, under the
heading which represents the average for the week
immediately prior to the date of calculation, appearing in
the most recently published statistical release designated
H.15 (519) or any successor publication which is published
weekly by the Federal Reserve and which establishes yields
on actively traded United States Treasury securities
adjusted to constant maturity under the caption "Treasury
Constant Maturities," for the maturity corresponding to the
Remaining Life (if no maturity is within three months before
or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Remaining Life
shall be determined and the Treasury Rate
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shall be interpolated or extrapolated from such yields on a
straight-line basis, rounding to the nearest month) or (ii)
if such release (or any successor release) is not published
during the week preceding the calculation date or does not
contain such yields, the rate per annum equal to the
semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, calculated using a price for the Comparable
Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such
Special Redemption Date. The Treasury Rate shall be
calculated on the third Business Day preceding the Special
Redemption Date.
"Trust" means Community (AL) Capital Trust I, the
Delaware business trust, or any other similar trust created
for the purpose of issuing Capital Securities in connection
with the issuance of Debt Securities under this Indenture,
of which the Company is the sponsor.
"Trust Indenture Act" means the Trust Indenture
Act of 1939, as amended.
"Trust Securities" means Common Securities and
Capital Securities of Community (AL) Capital Trust I
"Trustee" means the Person identified as "Trustee"
in the first paragraph hereof, and, subject to the
provisions of Article VI hereof, shall also include its
successors and assigns as Trustee hereunder.
ARTICLE II
DEBT SECURITIES
SECTION 2.01. Authentication and Dating.
Upon the execution and delivery of this Indenture,
or from time to time thereafter, Debt Securities in an
aggregate principal amount not in excess of $10,310,000 may
be executed and delivered by the Company to the Trustee for
authentication, and the Trustee shall thereupon authenticate
and make available for delivery said Debt Securities to or
upon the written order of the Company, signed by its
Chairman of the Board of Directors, Vice Chairman, President
or Chief Financial Officer, one of its Managing Directors or
one of its Vice Presidents and by its Secretary, any
Assistant Secretary, Treasurer or any Assistant Treasurer,
without any further action by the Company hereunder. In
authenticating such Debt Securities, and accepting the
additional responsibilities under this Indenture in relation
to such Debt Securities, the Trustee shall be entitled to
receive, and (subject to Section 6.01) shall be fully
protected in relying upon:
(a) a copy of any Board Resolution or Board Resolutions
relating thereto and, if applicable, an appropriate record of any
action taken pursuant to such resolution, in each case certified by
the Secretary or an Assistant Secretary of the
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Company as the case may be; and
(b) an Opinion of Counsel prepared in accordance with
Section 14.06 which shall also state:
(1) that such Debt Securities, when authenticated
and delivered by the Trustee and issued by the Company in
each case in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute valid
and legally binding obligations of the Company; and
(2) that all laws and requirements in respect of
the execution and delivery by the Company of the Debt
Securities, have been complied with and that authentication
and delivery of the Debt Securities by the Trustee will not
violate the terms of this Indenture.
The Trustee shall have the right to decline to authenticate and
deliver any Debt Securities under this Section if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken or if a
Responsible Officer of the Trustee in good faith shall determine that such
action would expose the Trustee to personal liability to existing holders.
The definitive Debt Securities shall be typed, printed, lithographed
or engraved on steel engraved borders or may be produced in any other manner,
all as determined by the officers executing such Debt Securities, as evidenced
by their execution of such Debt Securities.
SECTION 2.02. Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication on all Debt Securities
shall be in substantially the following form:
This is one of the Debt Securities referred to in the within-mentioned
Indenture.
THE BANK OF NEW YORK, AS TRUSTEE
By:_________________________
Authorized Officer
Dated: ______________________
SECTION 2.03. Form and Denomination of Debt Securities.
The Debt Securities shall be in registered, certificated form without
coupons and in minimum denominations of $1,000 and any multiple of $1,000 in
excess thereof. The Debt Securities shall be numbered, lettered, or otherwise
distinguished in such manner or in accordance with such plans as the officers
executing the same may determine with the approval of the Trustee as evidenced
by the execution and authentication thereof.
SECTION 2.04. Execution of Debt Securities.
The Debt Securities shall be signed in the name and on behalf of the
Company by
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the manual or facsimile signature of its Chairman of the Board of Directors,
Vice Chairman, President or Chief Financial Officer, one of its Managing
Directors or one of its Executive Vice Presidents, Senior Vice Presidents or
Vice Presidents and by the manual or facsimile signature of its Secretary, one
of its Assistant Secretaries, its Treasurer or one of its Assistant Treasurers,
under its corporate seal which may be affixed thereto or printed, engraved or
otherwise reproduced thereon, by facsimile or otherwise, and which need not be
attested. Only such Debt Securities as shall bear thereon a certificate of
authentication substantially in the form herein before recited, executed by the
Trustee or the Authenticating Agent by the manual signature of an authorized
officer, shall be entitled to the benefits of this Indenture or be valid or
obligatory for any purpose. Such certificate by the Trustee or the
Authenticating Agent upon any Debt Security executed by the Company shall be
conclusive evidence that the Debt Security so authenticated has been duly
authenticated and delivered hereunder and that the holder is entitled to the
benefits of this Indenture.
In case any officer of the Company who shall have signed any of the
Debt Securities shall cease to be such officer before the Debt Securities so
signed shall have been authenticated and delivered by the Trustee or the
Authenticating Agent, or disposed of by the Company, such Debt Securities
nevertheless may be authenticated and delivered or disposed of as though the
Person who signed such Debt Securities had not ceased to be such officer of the
Company; and any Debt Security may be signed on behalf of the Company by such
Persons as, at the actual date of the execution of such Debt Security, shall be
the proper officers of the Company, although at the date of the execution of
this Indenture any such person was not such an officer.
Every Debt Security shall be dated the date of its authentication.
SECTION 2.05. Exchange and Registration of Transfer of Debt
Securities.
The Company shall cause to be kept, at the office or agency maintained
for the purpose of registration of transfer and for exchange as provided in
Section 3.02, a register (the "Debt Security Register") for the Debt Securities
issued hereunder in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration and transfer of all
Debt Securities as in this Article Two provided. Such register shall be in
written form or in any other form capable of being converted into written form
within a reasonable time.
Debt Securities to be exchanged may be surrendered at the principal
corporate trust office of the Trustee or at any office or agency to be
maintained by the Company for such purpose as provided in Section 3.02, and the
Company shall execute, the Company or the Trustee shall register and the Trustee
or the Authenticating Agent shall authenticate and make available for delivery
in exchange therefor the Debt Security or Debt Securities which the
Securityholder making the exchange shall be entitled to receive. Upon due
presentment for registration of transfer of any Debt Security at the principal
corporate trust office of the Trustee or at any office or agency of the Company
maintained for such purpose as provided in Section 3.02, the Company shall
execute, the Company or the Trustee shall register and the Trustee or the
Authenticating Agent shall authenticate and make available for delivery in the
name of the transferee or transferees a new Debt Security for a like aggregate
principal amount. Registration
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or registration of transfer of any Debt Security by the Trustee or by any agent
of the Company appointed pursuant to Section 3.02, and delivery of such Debt
Security, shall be deemed to complete the registration or registration of
transfer of such Debt Security.
All Debt Securities presented for registration of transfer or for
exchange or payment shall (if so required by the Company or the Trustee or the
Authenticating Agent) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company and
the Trustee or the Authenticating Agent duly executed by, the holder or his
attorney duly authorized in writing.
No service charge shall be made for any exchange or registration of
transfer of Debt Securities, but the Company or the Trustee may require payment
of a sum sufficient to cover any tax, fee or other governmental charge that may
be imposed in connection therewith.
The Company or the Trustee shall not be required to exchange or
register a transfer of any Debt Security for a period of 15 days next preceding
the date of selection of Debt Securities for redemption.
Notwithstanding the foregoing, Debt Securities may not be transferred
except in compliance with the restricted securities legend set forth below (the
"Restrictive Securities Legend"), unless otherwise determined by the Company in
accordance with applicable law:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF
THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE
TRANSFER SUCH SECURITY ONLY (A) TO THE COMPANY, (B) PURSUANT TO RULE 144A UNDER
THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) TO AN
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR
(7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS
OWN ACCOUNT, OR FOR THE ACCOUNT OF AN "ACCREDITED INVESTOR," FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (D) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSES (C) OR (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT IN ACCORDANCE WITH THE
INDENTURE, A COPY OF WHICH MAY BE OBTAINED
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FROM THE COMPANY. THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH
THE FOREGOING RESTRICTIONS.
SECTION 2.06. Mutilated, Destroyed, Lost or Stolen Debt Securities
In case any Debt Security shall become mutilated or be destroyed, lost
or stolen, the Company shall execute, and upon its written request the Trustee
shall authenticate and deliver, a new Debt Security bearing a number not
contemporaneously outstanding, in exchange and substitution for the mutilated
Debt Security, or in lieu of and in substitution for the Debt Security so
destroyed, lost or stolen. In every case the applicant for a substituted Debt
Security shall furnish to the Company and the Trustee such security or indemnity
as may be required by them to save each of them harmless, and, in every case of
destruction, loss or theft, the applicant shall also furnish to the Company and
the Trustee evidence to their satisfaction of the destruction, loss or theft of
such Debt Security and of the ownership thereof.
The Trustee may authenticate any such substituted Debt Security and
deliver the same upon the written request or authorization of any officer of the
Company. Upon the issuance of any substituted Debt Security, 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 connected
therewith. In case any Debt Security which has matured or is about to mature or
has been called for redemption in full shall become mutilated or be destroyed,
lost or stolen, the Company may, instead of issuing a substitute Debt Security,
pay or authorize the payment of the same (without surrender thereof except in
the case of a mutilated Debt Security) if the applicant for such payment shall
furnish to the Company and the Trustee such security or indemnity as may be
required by them to save each of them harmless and, in case of destruction, loss
or theft, evidence satisfactory to the Company and to the Trustee of the
destruction, loss or theft of such Security and of the ownership thereof.
Every substituted Debt Security issued pursuant to the provisions of
this Section 2.06 by virtue of the fact that any such Debt Security is
destroyed, lost or stolen shall constitute an additional contractual obligation
of the Company, whether or not the destroyed, lost or stolen Debt Security shall
be found at any time, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Debt Securities
duly issued hereunder. All Debt Securities shall be held and owned upon the
express condition that, to the extent permitted by applicable law, the foregoing
provisions are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Debt Securities and shall preclude any and
all other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment of
negotiable instruments or other securities without their surrender.
SECTION 2.07. Temporary Debt Securities.
Pending the preparation of definitive Debt Securities, the Company may
execute and the Trustee shall authenticate and make available for delivery
temporary Debt Securities that are typed, printed or lithographed. Temporary
Debt Securities shall be issuable in any authorized denomination, and
substantially in the form of the definitive Debt Securities but with such
omissions, insertions and variations as may be appropriate for temporary Debt
Securities, all as may be determined by the Company. Every such temporary Debt
Security shall be executed by
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the Company and be authenticated by the Trustee upon the same conditions and in
substantially the same manner, and with the same effect, as the definitive Debt
Securities. Without unreasonable delay the Company will execute and deliver to
the Trustee or the Authenticating Agent definitive Debt Securities and thereupon
any or all temporary Debt Securities may be surrendered in exchange therefor, at
the principal corporate trust office of the Trustee or at any office or agency
maintained by the Company for such purpose as provided in Section 3.02, and the
Trustee or the Authenticating Agent shall authenticate and make available for
delivery in exchange for such temporary Debt Securities a like aggregate
principal amount of such definitive Debt Securities. Such exchange shall be made
by the Company at its own expense and without any charge therefor except that in
case of any such exchange involving a registration of transfer the Company may
require payment of a sum sufficient to cover any tax, fee or other governmental
charge that may be imposed in relation thereto. Until so exchanged, the
temporary Debt Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Debt Securities authenticated and delivered
hereunder.
SECTION 2.08. Payment of Interest.
Each Debt Security will bear interest at the Interest Rate from and
including the original date of issuance of such Debt Security until the Maturity
Date, and on any overdue principal and (to the extent that payment of such
interest is enforceable under applicable law) Deferred Interest on any overdue
installment of interest (including Defaulted Interest), payable (subject to the
provisions of Article XII) on each Interest Payment Date commencing on September
8, 2000. Interest and any Deferred Interest on any Debt Security that is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date for Debt Securities shall be paid to the Person in whose name said Debt
Security (or one or more Predecessor Securities) is registered at the close of
business on the regular record date for such interest installment except that
interest and any Deferred Interest payable on the Maturity Date shall be paid to
the Person to whom principal is paid. In the event that any Debt Security or
portion thereof is called for redemption and the redemption date is subsequent
to a regular record date with respect to any Interest Payment Date and prior to
such Interest Payment Date, interest on such Debt Security will be paid upon
presentation and surrender of such Debt Security.
Any interest on any Debt Security, other than Deferred Interest, that
is payable, but is not punctually paid or duly provided for, on any Interest
Payment Date (herein called "Defaulted Interest") shall forthwith cease to be
payable to the registered holder on the relevant regular record date by virtue
of having been such holder; and such Defaulted Interest shall be paid by the
Company to the Persons in whose names such Debt Securities (or their respective
Predecessor Securities) are registered at the close of business on a special
record date for the payment of such Defaulted Interest, which shall be fixed in
the following manner: the Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each such Debt 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 Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this clause provided.
Thereupon the Trustee shall fix a special record date for the payment of such
Defaulted Interest which shall not be more than fifteen nor less than ten days
prior to the
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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 Securityholder at his or her address as it appears in the Debt
Security Register, not less than ten days prior to such special record date.
Notice of the proposed payment of such Defaulted Interest and the special record
date therefor having been mailed as aforesaid, such Defaulted Interest shall be
paid to the Persons in whose names such Debt Securities (or their respective
Predecessor Securities) are registered on such special record date and shall be
no longer payable.
Any interest scheduled to become payable on an Interest Payment Date
occurring during an Extension Period shall not be Defaulted Interest and shall
be payable on such other date as may be specified in the terms of such Debt
Securities.
The term "regular record date" as used in this Section shall mean
either the fifteenth day of the month immediately preceding the month in which
an Interest Payment Date shall occur, if such Interest Payment Date is the first
day of a month, or the last day of the month immediately preceding the month in
which an Interest Payment shall occur, if such Interest Payment Date is the
fifteenth day of a month, whether or not such date is a Business Day.
Subject to the foregoing provisions of this Section, each Debt
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Debt Security shall carry the rights to
interest accrued and unpaid, and to accrue, that were carried by such other Debt
Security.
SECTION 2.09. Cancellation of Debt Securities Paid, etc.
All Debt Securities surrendered for the purpose of payment,
redemption, exchange or registration of transfer, shall, if surrendered to the
Company or any paying agent, be surrendered to the Trustee and promptly canceled
by it, or, if surrendered to the Trustee or any Authenticating Agent, shall be
promptly canceled by it, and no Debt Securities shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Indenture. All
Debt Securities canceled by any Authenticating Agent shall be delivered to the
Trustee. The Trustee shall destroy all canceled Debt Securities unless the
Company otherwise directs the Trustee in writing. If the Company shall acquire
any of the Debt Securities, however, such acquisition shall not operate as a
redemption or satisfaction of the indebtedness represented by such Debt
Securities unless and until the same are surrendered to the Trustee for
cancellation.
SECTION 2.10. Computation of Interest.
The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months.
SECTION 2.11. Extension of Interest Payment Period.
So long as no Event of Default has occurred and is continuing, the
Company shall have the right, from time to time and without causing an Event of
Default, to defer payments of
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interest on the Debt Securities by extending the interest payment period on the
Debt Securities at any time and from time to time during the term of the Debt
Securities, for up to ten consecutive semi-annual periods (each such extended
interest payment period, an "Extension Period"), during which Extension Period
no interest shall be due and payable. No Extension Period may end on a date
other than an Interest Payment Date. During any Extension Period, interest will
continue to accrue on the Debt Securities and interest on such accrued interest
(such accrued interest and interest thereon referred to herein as "Deferred
Interest") will accrue at the Interest Rate, compounded semi-annually from the
date such Deferred Interest would have been payable were it not for the
Extension Period, both to the extent permitted by law. No interest or Deferred
Interest shall be due and payable during an Extension Period, except at the end
thereof, but each installment of interest that would otherwise have been due and
payable during such Extension Period shall bear Deferred Interest. At the end of
any such Extension Period the Company shall pay all Deferred Interest then
accrued and unpaid on the Debt Securities; provided, however, that no Extension
Period may extend beyond the Maturity Date; and provided further, however, that
during any such Extension Period, the Company may not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock or (ii)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu in
all respects with or junior in interest to the Debt Securities (other than (a)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Company in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable Extension Period, (b) as a result of any exchange or
conversion of any class or series of the Company's capital stock (or any capital
stock of a subsidiary of the Company) for any class or series of the Company's
capital stock or of any class or series of the Company's indebtedness for any
class or series of the Company's capital stock, (c) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, (d) any declaration of a dividend in connection with any
stockholder's rights plan, or the issuance of rights, stock or other property
under any stockholder's rights plan, or the redemption or repurchase of rights
pursuant thereto, or (e) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock). Prior
to the termination of any Extension Period, the Company may further extend such
period, provided that such period together with all such previous and further
consecutive extensions thereof shall not exceed ten consecutive semi-annual
periods, or extend beyond the Maturity Date. Upon the termination of any
Extension Period and upon the payment of all Deferred Interest, the Company may
commence a new Extension Period, subject to the foregoing requirements. The
Company must give the Trustee notice of its election to begin such Extension
Period at least one Business Day prior to the earlier of (i) the date interest
on the Debt Securities would have been payable except for the election to begin
such Extension Period or (ii) the date such interest is payable, but in any
event not less than one Business Day prior to such record date. The Trustee
shall give notice of the Company's election to begin a new Extension Period to
the Securityholders.
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SECTION 2.12. CUSIP Numbers.
The Company in issuing the Debt 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 Securityholders; provided that any
such notice may state that no representation is made as to the correctness of
such numbers either as printed on the Debt 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 Debt 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 in writing of any change in the CUSIP numbers.
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01. Payment of Principal, Premium and Interest; Agreed
Treatment of the Debt Securities.
(a) The Company covenants and agrees that it will duly and punctually
pay or cause to be paid the principal of and premium, if any, and interest on
the Debt Securities at the place, at the respective times and in the manner
provided in this Indenture and the Debt Securities. At the option of the
Company, each installment of interest on the Debt Securities may be paid (i) by
mailing checks for such interest payable to the order of the holders of Debt
Securities entitled thereto as they appear on the registry books of the Company
or (ii) by wire transfer to any account with a banking institution located in
the United States designated by such Person to the paying agent no later than
the related record date.
(b) The Company will treat the Debt Securities as indebtedness, and
the amounts payable in respect of the principal amount of such Debt Securities
as interest, for all U.S. federal income tax purposes. All payments in respect
of such Debt Securities will be made free and clear of U.S. withholding tax to
any beneficial owner thereof that has provided an Internal Revenue Service Form
W8 BEN (or any substitute or successor form) establishing its non-U.S. status
for U.S. federal income tax purposes.
(c) The Company has no present intention to exercise its right under
Section 2.11 to defer payments of interest on the Debt Securities by commencing
an Extension Period.
(d) The Company believes that the likelihood that it would exercise
its right under Section 2.11 to defer payments of interest on the Debt
Securities by commencing an Extension Period at any time during which the Debt
Securities are outstanding is remote because of the restrictions that would be
imposed on the Company's ability to declare or pay dividends or distributions
on, or to redeem, purchase or make a liquidation payment with respect to, any of
its outstanding equity and on the Company's ability to make any payments of
principal of or interest on, or repurchase or redeem, any of its debt securities
that rank pari passu in all respects with (or junior in interest to) the Debt
Securities.
SECTION 3.02. Offices for Notices and Payments, etc.
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So long as any of the Debt Securities remain outstanding, the Company
will maintain in Delaware, an office or agency where the Debt Securities may be
presented for payment, an office or agency where the Debt Securities may be
presented for registration of transfer and for exchange as in this Indenture
provided and an office or agency where notices and demands to or upon the
Company in respect of the Debt Securities or of this Indenture may be served.
The Company will give to the Trustee written notice of the location of any such
office or agency and of any change of location thereof. Until otherwise
designated from time to time by the Company in a notice to the Trustee, or
specified as contemplated by Section 2.05, such office or agency for all of the
above purposes shall be the office or agency of the Trustee. In case the Company
shall fail to maintain any such office or agency in Delaware, or shall fail to
give such notice of the location or of any change in the location thereof,
presentations and demands may be made and notices may be served at the principal
corporate trust office of the Trustee.
In addition to any such office or agency, the Company may from time to
time designate one or more offices or agencies outside Delaware, where the Debt
Securities may be presented for registration of transfer and for exchange in the
manner provided in this Indenture, and the Company may from time to time rescind
such designation, as the Company may deem desirable or expedient; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain any such office or agency in Delaware, for
the purposes above mentioned. The Company will give to the Trustee prompt
written notice of any such designation or rescission thereof.
SECTION 3.03. Appointments to Fill Vacancies in Trustee's Office.
The Company, whenever necessary to avoid or fill a vacancy in the
office of Trustee, will appoint, in the manner provided in Section 6.09, a
Trustee, so that there shall at all times be a Trustee hereunder.
SECTION 3.04. Provision as to Paying Agent.
(a) If the Company shall appoint a paying agent other than the
Trustee, it will cause such paying agent to execute and deliver to the Trustee
an instrument in which such agent shall agree with the Trustee, subject to the
provision of this Section 3.04,
(1) that it will hold all sums held by it as such agent for
the payment of the principal of and premium, if any, or interest, if
any, on the Debt Securities (whether such sums have been paid to it by
the Company or by any other obligor on the Debt Securities) in trust
for the benefit of the holders of the Debt Securities;
(2) that it will give the Trustee prompt written notice of
any failure by the Company (or by any other obligor on the Debt
Securities) to make any payment of the principal of and premium, if
any, or interest, if any, on the Debt Securities when the same shall
be due and payable; and
(3) that it will, at any time during the continuance of any
Event of Default, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held in trust by such paying agent.
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(b) If the Company shall act as its own paying agent, it will, on or
before each due date of the principal of and premium, if any, or interest, if
any, on the Debt Securities, set aside, segregate and hold in trust for the
benefit of the holders of the Debt Securities a sum sufficient to pay such
principal, premium or interest so becoming due and will notify the Trustee in
writing of any failure to take such action and of any failure by the Company (or
by any other obligor under the Debt Securities) to make any payment of the
principal of and premium, if any, or interest, if any, on the Debt Securities
when the same shall become due and payable.
Whenever the Company shall have one or more paying agents for the Debt
Securities, it will, on or prior to each due date of the principal of and
premium, if any, or interest, if any, on the Debt Securities, deposit with a
paying agent a sum sufficient to pay the principal, premium or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled thereto and (unless such paying agent is the Trustee) the Company shall
promptly notify the Trustee in writing of its action or failure to act.
(c) Anything in this Section 3.04 to the contrary notwithstanding, the
Company may, at any time, for the purpose of obtaining a satisfaction and
discharge with respect to the Debt Securities, or for any other reason, pay, or
direct any paying agent to pay to the Trustee all sums held in trust by the
Company or any such paying agent, such sums to be held by the Trustee upon the
trusts herein contained.
(d) Anything in this Section 3.04 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 3.04 is subject to
Sections 12.03 and 12.04.
SECTION 3.05. Certificate to Trustee.
The Company will deliver to the Trustee on or before 120 days after
the end of each fiscal year in each year, so long as Debt Securities are
outstanding hereunder, a Certificate stating that in the course of the
performance by the signers of their duties as officers of the Company they would
normally have knowledge of any default by the Company in the performance of any
covenants contained herein, stating whether or not they have knowledge of any
such default and, if so, specifying each such default of which the signers have
knowledge and the nature thereof.
SECTION 3.06. Additional Interest.
If and for so long as the Trust is the holder of all Debt Securities
and the Trust is required to pay any additional taxes, duties, assessments or
other governmental charges as a result of a Tax Event, the Company will pay such
additional amounts (the "Additional Interest") on the Debt Securities as shall
be required so that the net amounts received and retained by the Trust after
paying taxes, duties, assessments or other governmental charges will be equal to
the amounts the Trust would have received if no such taxes, duties, assessments
or other governmental charges had been imposed. Whenever in this Indenture or
the Debt Securities there is a reference in any context to the payment of
principal of or interest on the Debt Securities, such mention shall be deemed to
include mention of payments of the Additional Interest provided for in this
paragraph to the extent that, in such context, Additional Interest is, was or
would be payable in respect thereof pursuant to the provisions of this paragraph
and
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express mention of the payment of Additional Interest (if applicable) in any
provisions hereof shall not be construed as excluding Additional Interest in
those provisions hereof where such express mention is not made, provided,
however, that the deferral of the payment of interest during an Extension Period
pursuant to Section 2.11 shall not defer the payment of any Additional Interest
that may be due and payable.
SECTION 3.07. Compliance with Consolidation Provisions.
The Company will not, while any of the Debt Securities remain
outstanding, consolidate with, or merge into, or merge into itself, or sell or
convey all or substantially all of its property to any other Person unless the
provisions of Article XI hereof are complied with.
SECTION 3.08. Limitation on Dividends.
If Debt Securities are initially issued to the Trust or a trustee of
such trust in connection with the issuance of Trust Securities by the Trust
(regardless of whether Debt Securities continue to be held by such trust) and
(i) there shall have occurred and be continuing any event that would constitute
an Event of Default, (ii) the Company shall be in default with respect to its
payment of any obligations under the Capital Securities Guarantee, or (iii) the
Company shall have given notice of its election to defer payments of interest on
the Debt Securities by extending the interest payment period as provided herein
and such period, or any extension thereof, shall be continuing, then the Company
may not (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of the
Company's capital stock or (ii) make any payment of principal of or interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Company that rank pari passu in all respects with or junior in interest to the
Debt Securities (other than (a) repurchases, redemptions or other acquisitions
of shares of capital stock of the Company in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
one or more employees, officers, directors or consultants, in connection with a
dividend reinvestment or stockholder stock purchase plan or in connection with
the issuance of capital stock of the Company (or securities convertible into or
exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the occurrence of the Event of Default, (b) as
a result of any exchange or conversion of any class or series of the Company's
capital stock (or any capital stock of a subsidiary of the Company) for any
class or series of the Company's capital stock or of any class or series of the
Company's indebtedness for any class or series of the Company's capital stock,
(c) the purchase of fractional interests in shares of the Company's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged, (d) any declaration of a dividend in
connection with any stockholder's rights plan, or the issuance of rights, stock
or other property under any stockholder's rights plan, or the redemption or
repurchase of rights pursuant thereto, or (e) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock issuable
upon exercise of such warrants, options or other rights is the same stock as
that on which the dividend is being paid or ranks pari passu with or junior to
such stock).
SECTION 3.09. Covenants as to the Trust.
For so long as such Trust Securities remain outstanding, the Company
shall maintain 100% ownership of the Common Securities; provided, however, that
any permitted
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successor of the Company under this Indenture may succeed to the Company's
ownership of such Common Securities. The Company, as owner of a majority of the
Common Securities shall cause the Trust (a) to remain a statutory business
trust, except in connection with a distribution of Debt Securities to the
holders of Trust Securities in liquidation of the Trust, the redemption of all
of the Trust Securities or certain mergers, consolidations or amalgamations,
each as permitted by the Declaration, (b) to otherwise continue to be classified
as a grantor trust for United States federal income tax purposes and (c) to use
its reasonable efforts to cause each holder of Trust Securities to be treated as
owning an undivided beneficial interest in the Debt Securities.
ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
SECTION 4.01. Securityholders' Lists.
The Company covenants and agrees that it will furnish or caused to be
furnished to the Trustee:
(a) on each regular record date for the Debt Securities, a list, in
such form as the Trustee may reasonably require, of the names and addresses of
the Securityholders of the Debt Securities as of such record date; and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished;
except that no such lists need be furnished under this Section 4.01 so long as
the Trustee is in possession thereof by reason of its acting as Debt Security
registrar.
SECTION 4.02. Preservation and Disclosure of Lists.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the holders of
Debt Securities (1) contained in the most recent list furnished to it as
provided in Section 4.01 or (2) received by it in the capacity of Debt
Securities registrar (if so acting) hereunder. The Trustee may destroy any list
furnished to it as provided in Section 4.01 upon receipt of a new list so
furnished.
(b) In case three or more holders of Debt Securities (hereinafter
referred to as "applicants") apply in writing to the Trustee and furnish to the
Trustee reasonable proof that each such applicant has owned a Debt Security for
a period of at least six months preceding the date of such application, and such
application states that the applicants desire to communicate with other holders
of Debt Securities with respect to their rights under this Indenture or under
such Debt Securities and is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee shall
within five Business Days after the receipt of such application, at its
election, either:
(1) afford such applicants access to the information
preserved
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at the time by the Trustee in accordance with the provisions of
subsection (a) of this Section 4.02, or
(2) inform such applicants as to the approximate number of
holders of Debt Securities whose names and addresses appear in the
information preserved at the time by the Trustee in accordance with
the provisions of subsection (a) of this Section 4.02, and as to the
approximate cost of mailing to such Securityholders the form of proxy
or other communication, if any, specified in such application.
If the Trustee shall elect not to afford such
applicants access to such information, the Trustee shall,
upon the written request of such applicants, mail to each
Securityholder of Debt Securities whose name and address
appear in the information preserved at the time by the
Trustee in accordance with the provisions of subsection (a)
of this Section 4.02 a copy of the form of proxy or other
communication which is specified in such request with
reasonable promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision for the
payment, of the reasonable expenses of mailing, unless
within five days after such tender, the Trustee shall mail
to such applicants and file with the Securities and Exchange
Commission, if permitted or required by applicable law,
together with a copy of the material to be mailed, a written
statement to the effect that, in the opinion of the Trustee,
such mailing would be contrary to the best interests of the
holders of all Debt Securities, as the case may be, or would
be in violation of applicable law. Such written statement
shall specify the basis of such opinion. If said Commission,
as permitted or required by applicable law, after
opportunity for a hearing upon the objections specified in
the written statement so filed, shall enter an order
refusing to sustain any of such objections or if, after the
entry of an order sustaining one or more of such objections,
said Commission shall find, after notice and opportunity for
hearing, that all the objections so sustained have been met
and shall enter an order so declaring, the Trustee shall
mail copies of such material to all such Securityholders
with reasonable promptness after the entry of such order and
the renewal of such tender; otherwise the Trustee shall be
relieved of any obligation or duty to such applicants
respecting their application.
(c) Each and every holder of Debt Securities, by receiving and holding
the same, agrees with Company and the Trustee that neither the Company nor the
Trustee nor any paying agent shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the holders
of Debt Securities in accordance with the provisions of subsection (b) of this
Section 4.02, regardless of the source from which such information was derived,
and that the Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under said subsection (b).
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
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UPON AN EVENT OF DEFAULT
SECTION 5.01. Events of Default.
The following Events of Default shall be "Events of Default"
with respect to Debt Securities:
(a) the Company defaults in the payment of any interest upon
any Debt Security when it becomes due and payable, and continuance of such
default for a period of 30 days; or
(b) the Company defaults in the payment of all or any part of
the principal of (or premium, if any, on) any Debt Securities as and when the
same shall become due and payable either at maturity, upon redemption
(including redemption for any sinking fund), by declaration of acceleration or
otherwise; or
(c) the Company defaults in the performance of, or breaches,
any of its covenants or agreements in Sections 3.06, 3.07, 3.08 and 3.09 of
this Indenture (other than a covenant or agreement a default in whose
performance or whose breach is elsewhere in this Section specifically dealt
with), and continuance of such default or breach for a period of 90 days after
there has been given, by registered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the holders of at least 25% in
aggregate principal amount of the outstanding Debt Securities, a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; or
(d) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Company in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of the Company or for any
substantial part of its property, or ordering the winding-up or liquidation of
its affairs and such decree or order shall remain unstayed and in effect for a
period of 90 consecutive days; or
(e) the Company shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary
case under any such law, or shall consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Company or of any substantial
part of its property, or shall make any general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due; or
(f) the Trust shall have voluntarily or involuntarily
liquidated, dissolved, wound-up its business or otherwise terminated its
existence except in connection with (1) the distribution of the Debt Securities
to holders of such Trust Securities in liquidation of their interests in the
Trust, (2) the redemption of all of the outstanding Trust Securities or (3)
certain mergers, consolidations or amalgamations, each as permitted by the
Declaration.
If an Event of Default occurs and is continuing with respect
to the Debt Securities, then, and in each and every such case, unless the
principal of the Debt Securities shall have
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already become due and payable, either the Trustee or the holders of not less
than 25% in aggregate principal amount of the Debt Securities then outstanding
hereunder, by notice in writing to the Company (and to the Trustee if given by
Securityholders), may declare the entire principal of the Debt Securities and
the interest accrued thereon, if any, to be due and payable immediately, and
upon any such declaration the same shall become immediately due and payable.
The foregoing provisions, however, are subject to the
condition that if, at any time after the principal of the Debt Securities shall
have been so declared due and payable, and before any judgment or decree for
the payment of the moneys due shall have been obtained or entered as
hereinafter provided, the Company shall pay or shall deposit with the Trustee a
sum sufficient to pay all matured installments of interest upon all the Debt
Securities and the principal of and premium, if any, on the Debt Securities
which shall have become due otherwise than by acceleration (with interest upon
such principal and premium, if any, and Deferred Interest, to the extent
permitted by law) and such amount as shall be sufficient to cover reasonable
compensation to the Trustee and each predecessor Trustee, their respective
agents, attorneys and counsel, and all other amounts due to the Trustee
pursuant to Section 6.06, and if any and all Events of Default under this
Indenture, other than the non-payment of the principal of or premium, if any,
on Debt Securities which shall have become due by acceleration, shall have been
cured, waived or otherwise remedied as provided herein -- then and in every
such case the holders of a majority in aggregate principal amount of the Debt
Securities then outstanding, by written notice to the Company and to the
Trustee, may waive all defaults and rescind and annul such declaration and its
consequences, but no such waiver or rescission and annulment shall extend to or
shall affect any subsequent default or shall impair any right consequent
thereon.
In case the Trustee shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such
case the Company, the Trustee and the holders of the Debt Securities shall be
restored respectively to their several positions and rights hereunder, and all
rights, remedies and powers of the Company, the Trustee and the holders of the
Debt Securities shall continue as though no such proceeding had been taken.
SECTION 5.02. Payment of Debt Securities on Default; Suit
Therefor.
The Company covenants that (a) in case default shall be made
in the payment of any installment of interest upon any of the Debt Securities
as and when the same shall become due and payable, and such default shall have
continued for a period of 30 days, or (b) in case default shall be made in the
payment of the principal of or premium, if any, on any of the Debt Securities
as and when the same shall have become due and payable, whether at maturity of
the Debt Securities or upon redemption or by declaration of acceleration or
otherwise -- then, upon demand of the Trustee, the Company will pay to the
Trustee, for the benefit of the holders of the Debt Securities the whole amount
that then shall have become due and payable on all Debt Securities for
principal and premium, if any, or interest, or both, as the case may be,
including Deferred Interest accrued on the Debt Securities; and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including a reasonable compensation to the Trustee, its
agents, attorneys and counsel, and any other amounts due to the
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Trustee under Section 6.06. In case the Company shall fail forthwith to pay
such amounts upon such demand, the Trustee, in its own name and as trustee of
an express trust, shall be entitled and empowered to institute any actions or
proceedings at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceeding to judgment or final
decree, and may enforce any such judgment or final decree against the Company
or any other obligor on such Debt Securities and collect in the manner provided
by law out of the property of the Company or any other obligor on such Debt
Securities wherever situated the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy
or for the reorganization of the Company or any other obligor on the Debt
Securities under Bankruptcy Law, or in case a receiver or trustee shall have
been appointed for the property of the Company or such other obligor, or in the
case of any other similar judicial proceedings relative to the Company or other
obligor upon the Debt Securities, or to the creditors or property of the
Company or such other obligor, the Trustee, irrespective of whether the
principal of the Debt 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 pursuant to the provisions of
this Section 5.02, shall be entitled and empowered, by intervention in such
proceedings or otherwise, to file and prove a claim or claims for the whole
amount of principal and interest owing and unpaid in respect of the Debt
Securities and, in case of any judicial proceedings, to file such proofs of
claim and other papers or documents as may be necessary or advisable in order
to have the claims of the Trustee (including any claim for reasonable
compensation to the Trustee and each predecessor Trustee, and their respective
agents, attorneys and counsel, and for reimbursement of all other amounts due
to the Trustee under Section 6.06) and of the Securityholders allowed in such
judicial proceedings relative to the Company or any other obligor on the Debt
Securities, or to the creditors or property of the Company or such other
obligor, unless prohibited by applicable law and regulations, to vote on behalf
of the holders of the Debt Securities in any election of a trustee or a standby
trustee in arrangement, reorganization, liquidation or other bankruptcy or
insolvency proceedings or Person performing similar functions in comparable
proceedings, and to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute the same after the deduction
of its charges and expenses; and any receiver, assignee or trustee in
bankruptcy or reorganization is hereby authorized by each of the
Securityholders to make such payments to the Trustee, and, in the event that
the Trustee shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee such amounts as shall be sufficient to
cover reasonable compensation to the Trustee, each predecessor Trustee and
their respective agents, attorneys and counsel, and all other amounts due to
the Trustee under Section 6.06.
Nothing herein contained shall be construed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Debt Securities or the rights of any holder thereof
or to authorize the Trustee to vote in respect of the claim of any
Securityholder in any such proceeding.
All rights of action and of asserting claims under this
Indenture, or under any of the Debt Securities, may be enforced by the Trustee
without the possession of any of the Debt Securities, or the production thereof
at any trial or other proceeding relative thereto, and any such
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suit or proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall be for the
ratable benefit of the holders of the Debt Securities.
In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Trustee shall be a party) the Trustee shall be held to represent all
the holders of the Debt Securities, and it shall not be necessary to make any
holders of the Debt Securities parties to any such proceedings.
SECTION 5.03. Application of Moneys Collected by Trustee.
Any moneys collected by the Trustee shall be applied in the
following order, at the date or dates fixed by the Trustee for the distribution
of such moneys, upon presentation of the several Debt Securities in respect of
which moneys have been collected, and stamping thereon the payment, if only
partially paid, and upon surrender thereof if fully paid:
First: To the payment of costs and expenses incurred by, and
reasonable fees of, the Trustee, its agents, attorneys and counsel, and of all
other amounts due to the Trustee under Section 6.06;
Second: To the payment of all Senior Indebtedness of the
Company if and to the extent required by Article XV;
Third: To the payment of the amounts then due and unpaid upon
Debt Securities for principal (and premium, if any), and interest on the Debt
Securities, in respect of which or for the benefit of which money has been
collected, ratably, without preference or priority of any kind, according to
the amounts due on such Debt Securities for principal (and premium, if any) and
interest, respectively; and
Fourth: The balance, if any, to the Company.
SECTION 5.04. Proceedings by Securityholders.
No holder of any Debt Security shall have any right to
institute any suit, action or proceeding for any remedy hereunder, unless such
holder previously shall have given to the Trustee written notice of an Event of
Default with respect to the Debt Securities and unless the holders of not less
than 25% in aggregate principal amount of the Debt Securities then outstanding
shall have given the Trustee a written request to institute such action, suit
or proceeding and shall have offered to the Trustee such reasonable indemnity
as it may require against the costs, expenses and liabilities to be incurred
thereby, and the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity shall have failed to institute any such action, suit or
proceeding; provided, that no holder of Debt Securities shall have any right to
prejudice the rights of any other holder of Debt Securities, obtain priority or
preference over any other such holder or enforce any right under this Indenture
except in the manner herein provided and for the equal, ratable and common
benefit of all holders of Debt Securities.
Notwithstanding any other provisions in this Indenture,
however, the right of any holder of any Debt Security to receive payment of the
principal of, premium, if any, and interest,
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on such Debt Security when due, or to institute suit for the enforcement of any
such payment, shall not be impaired or affected without the consent of such
holder. For the protection and enforcement of the provisions of this Section,
each and every Securityholder and the Trustee shall be entitled to such relief
as can be given either at law or in equity.
SECTION 5.05. Proceedings by Trustee.
In case of an Event of Default hereunder the Trustee may in
its discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either by suit in
equity or by action at law or by proceeding in bankruptcy or otherwise, whether
for the specific enforcement of any covenant or agreement contained in this
Indenture or in aid of the exercise of any power granted in this Indenture, or
to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.
SECTION 5.06. Remedies Cumulative and Continuing.
Except as otherwise provided in Section 2.06, all powers and
remedies given by this Article V to the Trustee or to the Securityholders
shall, to the extent permitted by law, be deemed cumulative and not exclusive
of any other powers and remedies available to the Trustee or the holders of the
Debt Securities, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements contained in this
Indenture or otherwise established with respect to the Debt Securities, and no
delay or omission of the Trustee or of any holder of any of the Debt Securities
to exercise any right or power accruing upon any Event of Default occurring and
continuing as aforesaid shall impair any such right or power, or shall be
construed to be a waiver of any such default or an acquiescence therein; and,
subject to the provisions of Section 5.04, every power and remedy given by this
Article V or by law to the Trustee or to the Securityholders may be exercised
from time to time, and as often as shall be deemed expedient, by the Trustee or
by the Securityholders.
SECTION 5.07. Direction of Proceedings and Waiver of Defaults
by Majority of Securityholders.
The holders of a majority in aggregate principal amount of
the Debt Securities affected (voting as one class) at the time outstanding
shall have the right to direct the time, method, and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee with respect to such Debt Securities; provided,
however, that (subject to the provisions of Section 6.01) the Trustee shall
have the right to decline to follow any such direction if the Trustee shall
determine that the action so directed would be unjustly prejudicial to the
holders not taking part in such direction or if the Trustee being advised by
counsel determines that the action or proceeding so directed may not lawfully
be taken or if a Responsible Officer of the Trustee shall determine that the
action or proceedings so directed would involve the Trustee in personal
liability. Prior to any declaration accelerating the maturity of the Debt
Securities, the holders of a majority in aggregate principal amount of the Debt
Securities at the time outstanding may on behalf of the holders of all of the
Debt Securities waive (or modify any previously granted waiver of) any past
default or Event of Default and its consequences, except a default (a) in the
payment of principal of, premium, if any, or interest on any of the Debt
Securities, (b) in respect of covenants or provisions hereof
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which cannot be modified or amended without the consent of the holder of each
Debt Security affected, or (c) in respect of the covenants contained in Section
3.09; provided, however, that if the Debt Securities are held by the Trust or a
trustee of such trust, such waiver or modification to such waiver shall not be
effective until the holders of a majority in liquidation preference of Trust
Securities of the Trust shall have consented to such waiver or modification to
such waiver; provided, further, that if the consent of the holder of each
outstanding Debt Security is required, such waiver shall not be effective until
each holder of the Trust Securities of the Trust shall have consented to such
waiver. Upon any such waiver, the default covered thereby shall be deemed to be
cured for all purposes of this Indenture and the Company, the Trustee and the
holders of the Debt Securities shall be restored to their former positions and
rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon. Whenever any default or Event of Default hereunder shall have been
waived as permitted by this Section 5.07, said default or Event of Default shall
for all purposes of the Debt Securities and this Indenture be deemed to have
been cured and to be not continuing.
SECTION 5.08. Notice of Defaults.
The Trustee shall, within 90 days after a Responsible Officer
of the Trustee shall have received notice or obtained actual knowledge of the
occurrence of a default with respect to the Debt Securities, mail to all
Securityholders, as the names and addresses of such holders appear upon the
Debt Security Register, notice of all defaults with respect to the Debt
Securities known to the Trustee, unless such defaults shall have been cured
before the giving of such notice (the term "defaults" for the purpose of this
Section 5.08 being hereby defined to be the events specified in subsections
(a), (b), (c), (d) and (e) of Section 5.01, not including periods of grace, if
any, provided for therein); provided, that, except in the case of default in
the payment of the principal of, premium, if any, or interest on any of the
Debt Securities, the Trustee shall be protected in withholding such notice if
and so long as a Responsible Officer of the Trustee in good faith determines
that the withholding of such notice is in the interests of the Securityholders.
SECTION 5.09. Undertaking to Pay Costs.
All parties to this Indenture agree, and each holder of any
Debt Security by his acceptance thereof shall be deemed to have agreed, that
any court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for
any action taken or omitted by it as Trustee, the filing by any party litigant
in such suit of an undertaking to pay the costs of such suit, and that such
court may in its discretion assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by such
party litigant; but the provisions of this Section 5.09 shall not apply to any
suit instituted by the Trustee, to any suit instituted by any Securityholder,
or group of Securityholders, holding in the aggregate more than 10% in
principal amount of the Debt Securities outstanding, or to any suit instituted
by any Securityholder for the enforcement of the payment of the principal of
(or premium, if any) or interest on any Debt Security against the Company on or
after the same shall have become due and payable.
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ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee.
With respect to the holders of Debt Securities issued
hereunder, the Trustee, prior to the occurrence of an Event of Default with
respect to the Debt Securities and after the curing or waiving of all Events of
Default which may have occurred, with respect to the Debt Securities,
undertakes to perform such duties and only such duties as are specifically set
forth in this Indenture. In case an Event of Default with respect to the Debt
Securities has occurred (which has not been cured or waived) the Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default with
respect to Debt Securities and after the curing or waiving of all Events of
Default which may have occurred
(1) the duties and obligations of the
Trustee with respect to Debt Securities shall be determined solely by
the express provisions of this Indenture, and the Trustee shall not be
liable except for the performance of such duties and obligations with
respect to the Debt Securities as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read into
this Indenture against the Trustee, and
(2) in the absence of bad faith on the part
of the Trustee, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but, in the case of
any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Officers of the Trustee, unless
it shall be proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(c) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith, in accordance with the
direction of the Securityholders pursuant to Section 5.07, relating to the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred upon the Trustee, under
this Indenture.
None of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers.
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SECTION 6.02. Reliance on Documents, Opinions, etc.
Except as otherwise provided in Section 6.01:
(a) the Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order, bond,
note, debenture or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by an Officers' Certificate
(unless other evidence in respect thereof be herein specifically prescribed);
and any Board Resolution may be evidenced to the Trustee by a copy thereof
certified by the Secretary or an Assistant Secretary of the Company;
(c) the Trustee may consult with counsel of its selection and
any advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders, pursuant to the provisions of this
Indenture, unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture; nothing
contained herein shall, however, relieve the Trustee of the obligation, upon
the occurrence of an Event of Default with respect to the Debt Securities (that
has not been cured or waived) to exercise with respect to Debt Securities such
of the rights and powers vested in it by this Indenture, and to use the same
degree of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, coupon or other paper or document, unless requested in writing to do
so by the holders of not less than a majority in principal amount of the
outstanding Debt Securities affected thereby; provided, however, that if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such expense or liability as a condition to so
proceeding;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents (including any Authenticating Agent) or attorneys, and the Trustee shall
not be responsible for any misconduct or negligence on the part of any such
agent or attorney appointed by it with due care; and
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(h) the Trustee shall not be charged with knowledge of any
Default or Event of Default with respect to the Debt Securities unless either
(1) a Responsible Officer shall have actual knowledge of such Default or Event
of Default or (2) written notice of such Default or Event of Default shall have
been given to the Trustee by the Company or any other obligor on the Debt
Securities or by any holder of the Debt Securities.
SECTION 6.03. No Responsibility for Recitals, etc.
The recitals contained herein and in the Debt Securities
(except in the certificate of authentication of the Trustee or the
Authenticating Agent) shall be taken as the statements of the Company and the
Trustee and the Authenticating Agent assume no responsibility for the
correctness of the same. The Trustee and the Authenticating Agent make no
representations as to the validity or sufficiency of this Indenture or of the
Debt Securities. The Trustee and the Authenticating Agent shall not be
accountable for the use or application by the Company of any Debt Securities or
the proceeds of any Debt Securities authenticated and delivered by the Trustee
or the Authenticating Agent in conformity with the provisions of this
Indenture.
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents,
Transfer Agents or Registrar May Own Debt Securities.
The Trustee or any Authenticating Agent or any paying agent
or any transfer agent or any Debt Security registrar, in its individual or any
other capacity, may become the owner or pledgee of Debt Securities with the
same rights it would have if it were not Trustee, Authenticating Agent, paying
agent, transfer agent or Debt Security registrar.
SECTION 6.05. Moneys to be Held in Trust.
Subject to the provisions of Section 12.04, all moneys
received by the Trustee or any paying agent shall, until used or applied as
herein provided, be held in trust for the purpose for which they were received,
but need not be segregated from other funds except to the extent required by
law. The Trustee and any paying agent shall be under no liability for interest
on any money received by it hereunder except as otherwise agreed in writing
with the Company. So long as no Event of Default shall have occurred and be
continuing, all interest allowed on any such moneys shall be paid from time to
time upon the written order of the Company, signed by the Chairman of the Board
of Directors, the President, the Chief Operating Officer, a Managing Director,
a Vice President, the Treasurer or an Assistant Treasurer of the Company.
SECTION 6.06. Compensation and Expenses of Trustee.
The Company covenants and agrees to pay to the Trustee from
time to time, and the Trustee shall be entitled to, such compensation as shall
be agreed to in writing between the Company and the Trustee (which shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust), and the Company will pay or reimburse the Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or
made by the Trustee in accordance with any of the provisions of this Indenture
(including the reasonable compensation and the expenses and disbursements of
its counsel and of all Persons not regularly in its employ) except any such
expense, disbursement or advance as may arise from its negligence or bad faith.
The Company also covenants to indemnify each of the Trustee or any
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predecessor Trustee (and its officers, agents, directors and employees) for,
and to hold it harmless against, any and all loss, damage, claim, liability or
expense including taxes (other than taxes based on the income of the Trustee)
incurred without negligence or bad faith on the part of the Trustee and arising
out of or in connection with the acceptance or administration of this trust,
including the costs and expenses of defending itself against any claim of
liability in the premises. The obligations of the Company under this Section
6.06 to compensate and indemnify the Trustee and to pay or reimburse the
Trustee for expenses, disbursements and advances shall constitute additional
indebtedness hereunder. Such additional indebtedness shall be secured by a lien
prior to that of the Debt Securities upon all property and funds held or
collected by the Trustee as such, except funds held in trust for the benefit of
the holders of particular Debt Securities.
Without prejudice to any other rights available to the
Trustee under applicable law, when the Trustee incurs expenses or renders
services in connection with an Event of Default specified in subsections (c),
(d) or (e) of Section 5.01, the expenses (including the reasonable charges and
expenses of its counsel) and the compensation for the services are intended to
constitute expenses of administration under any applicable federal or state
bankruptcy, insolvency or other similar law.
The provisions of this Section shall survive the resignation
or removal of the Trustee and the defeasance or other termination of this
Indenture.
SECTION 6.07. Officers' Certificate as Evidence.
Except as otherwise provided in Sections 6.01 and 6.02,
whenever in the administration of the provisions of this Indenture the Trustee
shall deem it necessary or desirable that a matter be proved or established
prior to taking or omitting any action hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may, in the
absence of negligence or bad faith on the part of the Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to
the Trustee, and such certificate, in the absence of negligence or bad faith on
the part of the Trustee, shall be full warrant to the Trustee for any action
taken or omitted by it under the provisions of this Indenture upon the faith
thereof.
SECTION 6.08. Eligibility of Trustee.
The Trustee hereunder shall at all times be a corporation
organized and doing business under the laws of the United States of America or
any state or territory thereof or of the District of Columbia or a corporation
or other Person authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least 50 million U.S. dollars
($50,000,000) and subject to supervision or examination by federal, state,
territorial, or District of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section 6.08 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
records of condition so published.
The Company may not, nor may any Person directly or
indirectly controlling,
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controlled by, or under common control with the Company, serve as Trustee;
provided, that such corporation shall be otherwise eligible and qualified under
this Article.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 6.08, the Trustee shall resign
immediately in the manner and with the effect specified in Section 6.09.
If the Trustee has or shall acquire any "conflicting
interest" within the meaning of ss. 310(b) of the Trust Indenture Act, the
Trustee shall either eliminate such interest or resign, to the extent and in
the manner provided by, and subject to this Indenture.
SECTION 6.09. Resignation or Removal of Trustee.
(a) The Trustee, or any trustee or trustees hereafter
appointed, may at any time resign by giving written notice of such resignation
to the Company and by mailing notice thereof, at the Company's expense, to the
holders of the Debt Securities at their addresses as they shall appear on the
Debt Security Register. Upon receiving such notice of resignation, the Company
shall promptly appoint a successor trustee or trustees by written instrument,
in duplicate, executed by order of its Board of Directors, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor Trustee. If no successor Trustee shall have been so appointed and
have accepted appointment within 30 days after the mailing of such notice of
resignation to the affected Securityholders, the resigning Trustee may petition
any court of competent jurisdiction for the appointment of a successor Trustee,
or any Securityholder who has been a bona fide holder of a Debt Security or
Debt Securities for at least six months may, subject to the provisions of
Section 5.09, on behalf of himself and all others similarly situated, petition
any such court for the appointment of a successor Trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor Trustee.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to
comply with the provisions of Section 6.08 after
written request therefor by the Company or by any
Securityholder who has been a bona fide holder of a
Debt Security or Debt Securities for at least six
months,
(2) the Trustee shall cease to be
eligible in accordance with the provisions of
Section 6.08 and shall fail to resign after written
request therefor by the Company or by any such
Securityholder, or
(3) the Trustee shall become
incapable of acting, or shall be adjudged a bankrupt
or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer
shall take charge or control of the Trustee or of
its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, the Company may remove the Trustee and appoint a
successor Trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor Trustee,
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or, subject to the provisions of Section 5.09, any Securityholder who has been
a bona fide holder of a Debt Security or Debt Securities for at least six
months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, remove the Trustee and
appoint successor Trustee.
(c) Upon prior written notice to the Company and the Trustee,
the holders of a majority in aggregate principal amount of the Debt Securities
at the time outstanding may at any time remove the Trustee and nominate a
successor Trustee, which shall be deemed appointed as successor Trustee unless
within ten Business Days after such nomination the Company objects thereto, in
which case or in the case of a failure by such holders to nominate a successor
Trustee, the Trustee so removed or any Securityholder, upon the terms and
conditions and otherwise as in subsection (a) of this Section 6.09 provided,
may petition any court of competent jurisdiction for an appointment of a
successor.
(d) Any resignation or removal of the Trustee and appointment
of a successor Trustee pursuant to any of the provisions of this Section 6.09
shall become effective upon acceptance of appointment by the successor Trustee
as provided in Section 6.10.
SECTION 6.10. Acceptance by Successor Trustee.
Any successor Trustee appointed as provided in Section 6.09
shall execute, acknowledge and deliver to the Company and to its predecessor
Trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, duties and obligations with respect to the
Debt Securities of its predecessor hereunder, with like effect as if originally
named as Trustee herein; but, nevertheless, on the written request of the
Company or of the successor Trustee, the Trustee ceasing to act shall, upon
payment of any amounts then due it pursuant to the provisions of Section 6.06,
execute and deliver an instrument transferring to such successor Trustee all
the rights and powers of the Trustee so ceasing to act and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee thereunder. Upon request of any such successor Trustee,
the Company shall execute any and all instruments in writing for more fully and
certainly vesting in and confirming to such successor Trustee all such rights
and powers. Any Trustee ceasing to act shall, nevertheless, retain a lien upon
all property or funds held or collected by such Trustee to secure any amounts
then due it pursuant to the provisions of Section 6.06.
If a successor Trustee is appointed, the Company, the
retiring Trustee and the successor Trustee shall execute and deliver an
indenture supplemental hereto which shall contain such provisions as shall be
deemed necessary or desirable to confirm that all the rights, powers, trusts
and duties of the retiring Trustee with respect to the Debt Securities as to
which the predecessor Trustee is not retiring shall continue to be vested in
the predecessor Trustee, and shall add to or change any of the provisions of
this Indenture as shall be necessary to provide for or facilitate the
administration of the Trust hereunder by more than one Trustee, it being
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understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be Trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee.
No successor Trustee shall accept appointment as provided in
this Section 6.10 unless at the time of such acceptance such successor Trustee
shall be eligible under the provisions of Section 6.08.
In no event shall a retiring Trustee be liable for the acts
or omissions of any successor Trustee hereunder.
Upon acceptance of appointment by a successor Trustee as
provided in this Section 6.10, the Company shall mail notice of the succession
of such Trustee hereunder to the holders of Debt Securities at their addresses
as they shall appear on the Debt Security Register. If the Company fails to
mail such notice within ten Business Days after the acceptance of appointment
by the successor Trustee, the successor Trustee shall cause such notice to be
mailed at the expense of the Company.
SECTION 6.11. Succession by Merger, etc.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder without the execution or filing of any paper or any further act on
the part of any of the parties hereto; provided, that such corporation shall be
otherwise eligible and qualified under this Article.
In case at the time such successor to the Trustee shall
succeed to the trusts created by this Indenture any of the Debt Securities
shall have been authenticated but not delivered, any such successor to the
Trustee may adopt the certificate of authentication of any predecessor Trustee,
and deliver such Debt Securities so authenticated; and in case at that time any
of the Debt Securities shall not have been authenticated, any successor to the
Trustee may authenticate such Debt Securities either in the name of any
predecessor hereunder or in the name of the successor Trustee; and in all such
cases such certificates shall have the full force which it is anywhere in the
Debt Securities or in this Indenture provided that the certificate of the
Trustee shall have; provided, however, that the right to adopt the certificate
of authentication of any predecessor Trustee or authenticate Debt Securities in
the name of any predecessor Trustee shall apply only to its successor or
successors by merger, conversion or consolidation.
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SECTION 6.12. Authenticating Agents.
There may be one or more Authenticating Agents appointed by
the Trustee upon the request of the Company with power to act on its behalf and
subject to its direction in the authentication and delivery of Debt Securities
issued upon exchange or registration of transfer thereof as fully to all
intents and purposes as though any such Authenticating Agent had been expressly
authorized to authenticate and deliver Debt Securities; provided, that the
Trustee shall have no liability to the Company for any acts or omissions of the
Authenticating Agent with respect to the authentication and delivery of Debt
Securities. Any such Authenticating Agent shall at all times be a corporation
organized and doing business under the laws of the United States or of any
state or territory thereof or of the District of Columbia authorized under such
laws to act as Authenticating Agent, having a combined capital and surplus of
at least $5,000,000 and being subject to supervision or examination by federal,
state, territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually pursuant to law or the
requirements of such authority, then for the purposes of this Section 6.12 the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to
be eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect herein specified in this Section.
Any corporation into which any Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, consolidation or conversion to which any
Authenticating Agent shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of any Authenticating Agent,
shall be the successor of such Authenticating Agent hereunder, if such
successor corporation is otherwise eligible under this Section 6.12 without the
execution or filing of any paper or any further act on the part of the parties
hereto or such Authenticating Agent.
Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Trustee and to the Company. The Trustee
may at any time terminate the agency of any Authenticating Agent with respect
to the Debt Securities by giving written notice of termination to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible under this Section 6.12, the
Trustee may, and upon the request of the Company shall, promptly appoint a
successor Authenticating Agent eligible under this Section 6.12, shall give
written notice of such appointment to the Company and shall mail notice of such
appointment to all holders of Debt Securities as the names and addresses of
such holders appear on the Debt Security Register. Any successor Authenticating
Agent upon acceptance of its appointment hereunder shall become vested with all
rights, powers, duties and responsibilities with respect to the Debt Securities
of its predecessor hereunder, with like effect as if originally named as
Authenticating Agent herein.
The Company agrees to pay to any Authenticating Agent from
time to time reasonable compensation for its services. Any Authenticating Agent
shall have no responsibility or liability for any action taken by it as such in
accordance with the directions of the Trustee.
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ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders.
Whenever in this Indenture it is provided that the holders of
a specified percentage in aggregate principal amount of the Debt Securities may
take any action (including the making of any demand or request, the giving of
any notice, consent or waiver or the taking of any other action) the fact that
at the time of taking any such action the holders of such specified percentage
have joined therein may be evidenced (a) by any instrument or any number of
instruments of similar tenor executed by such Securityholders in person or by
agent or proxy appointed in writing, (b) by the record of such holders of Debt
Securities voting in favor thereof at any meeting of such Securityholders duly
called and held in accordance with the provisions of Article VIII, (c) by a
combination of such instrument or instruments and any such record of such a
meeting of such Securityholders or (d) by any other method the Trustee deems
satisfactory.
If the Company shall solicit from the Securityholders any
request, demand, authorization, direction, notice, consent, waiver or other
action or revocation of the same, the Company may, at its option, as evidenced
by an Officers' Certificate, fix in advance a record date for such Debt
Securities for the determination of Securityholders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other
action or revocation of the same, but the Company shall have no obligation to
do so. If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other action or revocation of the same
may be given before or after the record date, but only the Securityholders of
record at the close of business on the record date shall be deemed to be
Securityholders for the purposes of determining whether Securityholders of the
requisite proportion of outstanding Debt Securities have authorized or agreed
or consented to such request, demand, authorization, direction, notice,
consent, waiver or other action or revocation of the same, and for that purpose
the outstanding Debt Securities shall be computed as of the record date;
provided, however, that no such authorization, agreement or consent by such
Securityholders on the record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than
six months after the record date.
SECTION 7.02. Proof of Execution by Securityholders.
Subject to the provisions of Sections 6.01, 6.02 and 8.05,
proof of the execution of any instrument by a Securityholder or his agent or
proxy shall be sufficient if made in accordance with such reasonable rules and
regulations as may be prescribed by the Trustee or in such manner as shall be
satisfactory to the Trustee. The ownership of Debt Securities shall be proved
by the Debt Security Register or by a certificate of the Debt Security
registrar. The Trustee may require such additional proof of any matter referred
to in this Section as it shall deem necessary.
The record of any Securityholders' meeting shall be proved in
the manner provided in Section 8.06.
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SECTION 7.03. Who Are Deemed Absolute Owners.
Prior to due presentment for registration of transfer of any
Debt Security, the Company, the Trustee, any Authenticating Agent, any paying
agent, any transfer agent and any Debt Security registrar may deem the Person
in whose name such Debt Security shall be registered upon the Debt Security
Register to be, and may treat him as, the absolute owner of such Debt Security
(whether or not such Debt Security shall be overdue) for the purpose of
receiving payment of or on account of the principal of, premium, if any, and
interest on such Debt Security and for all other purposes; and neither the
Company nor the Trustee nor any Authenticating Agent nor any paying agent nor
any transfer agent nor any Debt Security registrar shall be affected by any
notice to the contrary. All such payments so made to any holder for the time
being or upon his order shall be valid, and, to the extent of the sum or sums
so paid, effectual to satisfy and discharge the liability for moneys payable
upon any such Debt Security.
SECTION 7.04. Debt Securities Owned by Company Deemed Not
Outstanding.
In determining whether the holders of the requisite aggregate
principal amount of Debt Securities have concurred in any direction, consent or
waiver under this Indenture, Debt Securities which are owned by the Company or
any other obligor on the Debt Securities or by any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company or any other obligor on the Debt Securities shall be
disregarded and deemed not to be outstanding for the purpose of any such
determination; provided, that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, consent or waiver,
only Debt Securities which a Responsible Officer of the Trustee actually knows
are so owned shall be so disregarded. Debt Securities so owned which have been
pledged in good faith may be regarded as outstanding for the purposes of this
Section 7.04 if the pledgee shall establish to the satisfaction of the Trustee
the pledgee's right to vote such Debt Securities and that the pledgee is not
the Company or any such other obligor or Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Company or any such other obligor. In the case of a dispute as to such
right, any decision by the Trustee taken upon the advice of counsel shall be
full protection to the Trustee.
SECTION 7.05. Revocation of Consents; Future Holders Bound.
At any time prior to (but not after) the evidencing to the
Trustee, as provided in Section 7.01, of the taking of any action by the
holders of the percentage in aggregate principal amount of the Debt Securities
specified in this Indenture in connection with such action, any holder (in
cases where no record date has been set pursuant to Section 7.01) or any holder
as of an applicable record date (in cases where a record date has been set
pursuant to Section 7.01) of a Debt Security (or any Debt Security issued in
whole or in part in exchange or substitution therefor) the serial number of
which is shown by the evidence to be included in the Debt Securities the
holders of which have consented to such action may, by filing written notice
with the Trustee at the Principal Office of the Trustee and upon proof of
holding as provided in Section 7.02, revoke such action so far as concerns such
Debt Security (or so far as concerns the principal amount represented by any
exchanged or substituted Debt Security). Except as aforesaid any such action
taken by the holder of any Debt Security shall be conclusive and binding upon
such holder and upon all future holders and owners of such Debt Security, and
of
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any Debt Security issued in exchange or substitution therefor or on
registration of transfer thereof, irrespective of whether or not any notation
in regard thereto is made upon such Debt Security or any Debt Security issued
in exchange or substitution therefor.
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings.
A meeting of Securityholders may be called at any time and
from time to time pursuant to the provisions of this Article VIII for any of
the following purposes:
(a) to give any notice to the Company or to the Trustee, or
to give any directions to the Trustee, or to consent to the waiving of any
default hereunder and its consequences, or to take any other action authorized
to be taken by Securityholders pursuant to any of the provisions of Article V;
(b) to remove the Trustee and nominate a successor trustee
pursuant to the provisions of Article VI;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 9.02; or
(d) to take any other action authorized to be taken by or on
behalf of the holders of any specified aggregate principal amount of such Debt
Securities under any other provision of this Indenture or under applicable law.
SECTION 8.02. Call of Meetings by Trustee.
The Trustee may at any time call a meeting of Securityholders
to take any action specified in Section 8.01, to be held at such time and at
such place in Delaware, as the Trustee shall determine. Notice of every meeting
of the Securityholders, setting forth the time and the place of such meeting
and in general terms the action proposed to be taken at such meeting, shall be
mailed to holders of Debt Securities affected at their addresses as they shall
appear on the Debt Securities Register. Such notice shall be mailed not less
than 20 nor more than 180 days prior to the date fixed for the meeting.
SECTION 8.03. Call of Meetings by Company or Securityholders.
In case at any time the Company pursuant to a Board
Resolution, or the holders of at least 10% in aggregate principal amount of the
Debt Securities, as the case may be, then outstanding, shall have requested the
Trustee to call a meeting of Securityholders, by written request setting forth
in reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed the notice of such meeting within 20 days after
receipt of such request, then the Company or such Securityholders may determine
the time and the place in said Borough of Manhattan for such meeting and may
call such meeting to take any action authorized in Section 8.01, by mailing
notice thereof as provided in Section 8.02.
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SECTION 8.04. Qualifications for Voting.
To be entitled to vote at any meeting of Securityholders a
Person shall (a) be a holder of one or more Debt Securities with respect to
which the meeting is being held or (b) a Person appointed by an instrument in
writing as proxy by a holder of one or more such Debt Securities. The only
Persons who shall be entitled to be present or to speak at any meeting of
Securityholders shall be the Persons entitled to vote at such meeting and their
counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
SECTION 8.05. Regulations.
Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Securityholders, in regard to proof of the holding of Debt
Securities and of the appointment of proxies, and in regard to the appointment
and duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Securityholders as provided in Section 8.03, in which case
the Company or the Securityholders calling the meeting, as the case may be,
shall in like manner appoint a temporary chairman. A permanent chairman and a
permanent secretary of the meeting shall be elected by majority vote of the
meeting.
Subject to the provisions of Section 7.04, at any meeting
each holder of Debt Securities with respect to which such meeting is being held
or proxy therefor shall be entitled to one vote for each $1,000 principal
amount of Debt Securities held or represented by him; provided, however, that
no vote shall be cast or counted at any meeting in respect of any Debt Security
challenged as not outstanding and ruled by the chairman of the meeting to be
not outstanding. The chairman of the meeting shall have no right to vote other
than by virtue of Debt Securities held by him or instruments in writing as
aforesaid duly designating him as the Person to vote on behalf of other
Securityholders. Any meeting of Securityholders duly called pursuant to the
provisions of Section 8.02 or 8.03 may be adjourned from time to time by a
majority of those present, whether or not constituting a quorum, and the
meeting may be held as so adjourned without further notice.
SECTION 8.06. Voting.
The vote upon any resolution submitted to any meeting of
holders of Debt Securities with respect to which such meeting is being held
shall be by written ballots on which shall be subscribed the signatures of such
holders or of their representatives by proxy and the serial number or numbers
of the Debt Securities held or represented by them. The permanent chairman of
the meeting shall appoint two inspectors of votes who shall count all votes
cast at the meeting for or against any resolution and who shall make and file
with the secretary of the meeting their verified written reports in triplicate
of all votes cast at the meeting. A record in duplicate of the proceedings of
each meeting of Securityholders shall be prepared by the secretary of the
meeting and there shall be attached to said record the original reports of the
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inspectors of votes on any vote by ballot taken thereat and affidavits by one
or more Persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was mailed as provided in
Section 8.02. The record shall show the serial numbers of the Debt Securities
voting in favor of or against any resolution. The record shall be signed and
verified by the affidavits of the permanent chairman and secretary of the
meeting and one of the duplicates shall be delivered to the Company and the
other to the Trustee to be preserved by the Trustee, the latter to have
attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive
evidence of the matters therein stated.
SECTION 8.07. Quorum; Actions.
The Persons entitled to vote a majority in principal amount
of the Debt Securities shall constitute a quorum for a meeting of
Securityholders; provided, however, that if any action is to be taken at such
meeting with respect to a consent, waiver, request, demand, notice,
authorization, direction or other action which may be given by the holders of
not less than a specified percentage in principal amount of the Debt
Securities, the Persons holding or representing such specified percentage in
principal amount of the Debt Securities will constitute a quorum. In the
absence of a quorum within 30 minutes of the time appointed for any such
meeting, the meeting shall, if convened at the request of Securityholders, be
dissolved. In any other case the meeting may be adjourned for a period of not
less than 10 days as determined by the permanent chairman of the meeting prior
to the adjournment of such meeting. In the absence of a quorum at any such
adjourned meeting, such adjourned meeting may be further adjourned for a period
of not less than 10 days as determined by the permanent chairman of the meeting
prior to the adjournment of such adjourned meeting. Notice of the reconvening
of any adjourned meeting shall be given as provided in Section 8.02, except
that such notice need be given only once not less than five days prior to the
date on which the meeting is scheduled to be reconvened. Notice of the
reconvening of an adjourned meeting shall state expressly the percentage, as
provided above, of the principal amount of the Debt Securities which shall
constitute a quorum.
Except as limited by the proviso in the first paragraph of
Section 9.02, any resolution presented to a meeting or adjourned meeting duly
reconvened at which a quorum is present as aforesaid may be adopted by the
affirmative vote of the holders of a majority in principal amount of the Debt
Securities; provided, however, that, except as limited by the proviso in the
first paragraph of Section 9.02, any resolution with respect to any consent,
waiver, request, demand, notice, authorization, direction or other action that
this Indenture expressly provides may be given by the holders of not less than
a specified percentage in principal amount of the Debt Securities may be
adopted at a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid only by the affirmative vote of the holders of a
not less than such specified percentage in principal amount of the Debt
Securities.
Any resolution passed or decision taken at any meeting of
holders of Debt Securities duly held in accordance with this Section shall be
binding on all the Securityholders, whether or not present or represented at
the meeting.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures without Consent of
Securityholders.
The Company, when authorized by a Board Resolution, and the
Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto, without the consent of the Securityholders, for
one or more of the following purposes:
(a) to evidence the succession of another corporation to the
Company, or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Company,
pursuant to Article XI hereof;
(b) to add to the covenants of the Company such further
covenants, restrictions or conditions for the protection of the holders of Debt
Securities as the Board of Directors shall consider to be for the protection of
the holders of such Debt Securities, and to make the occurrence, or the
occurrence and continuance, of a default in any of such additional covenants,
restrictions or conditions a default or an Event of Default permitting the
enforcement of all or any of the several remedies provided in this Indenture as
herein set forth; provided, however, that in respect of any such additional
covenant, restriction or condition such supplemental indenture may provide for
a particular period of grace after default (which period may be shorter or
longer than that allowed in the case of other defaults) or may provide for an
immediate enforcement upon such default or may limit the remedies available to
the Trustee upon such default;
(c) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may be
defective or inconsistent with any other provision contained herein or in any
supplemental indenture, or to make such other provisions in regard to matters
or questions arising under this Indenture; provided, that any such action shall
not adversely affect the interests of the holders of the Debt Securities;
(d) to add to, delete from, or revise the terms of Debt
Securities, including, without limitation, any terms relating to the issuance,
exchange, registration or transfer of Debt Securities, including to provide for
transfer procedures and restrictions substantially similar to those applicable
to the Capital Securities as required by Section 2.05 (for purposes of assuring
that no registration of Debt Securities is required under the Securities Act of
1933, as amended); provided that any such action shall not adversely affect the
interests of the holders of the Debt Securities then outstanding (it being
understood, for purposes of this proviso, that transfer restrictions on Debt
Securities substantially similar to those that were applicable to Capital
Securities shall not be deemed to adversely affect the holders of the Debt
Securities);
(e) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Debt Securities and to add
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, pursuant to the requirements of Section 6.10;
(f) to make any change (other than as elsewhere provided in
this paragraph) that does not adversely affect the rights of any Securityholder
in any material respect; or
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(g) to provide for the issuance of and establish the form and
terms and conditions of the Debt Securities, to establish the form of any
certifications required to be furnished pursuant to the terms of this Indenture
or the Debt Securities, or to add to the rights of the holders of Debt
Securities.
The Trustee is hereby authorized to join with the Company in
the execution of any such supplemental indenture, to make any further
appropriate agreements and stipulations which may be therein contained and to
accept the conveyance, transfer and assignment of any property thereunder, but
the Trustee shall not be obligated to, but may in its discretion, enter into
any such supplemental indenture which affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of
this Section 9.01 may be executed by the Company and the Trustee without the
consent of the holders of any of the Debt Securities at the time outstanding,
notwithstanding any of the provisions of Section 9.02.
SECTION 9.02. Supplemental Indentures with Consent of
Securityholders.
With the consent (evidenced as provided in Section 7.01) of
the holders of not less than a majority in aggregate principal amount of the
Debt Securities at the time outstanding affected by such supplemental indenture
(voting as a class), the Company, when authorized by a Board Resolution, and
the Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act, then in effect, applicable to indentures qualified
thereunder) for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Indenture or of any
supplemental indenture or of modifying in any manner the rights of the holders
of the Debt Securities; provided, however, that no such supplemental indenture
shall without the consent of the holders of each Debt Security then outstanding
and affected thereby (i) extend the fixed maturity of any Debt Security, or
reduce the principal amount thereof or any premium thereon, or reduce the rate
or extend the time of payment of interest thereon, or reduce any amount payable
on redemption thereof or make the principal thereof or any interest or premium
thereon payable in any coin or currency other than that provided in the Debt
Securities, or impair or affect the right of any Securityholder to institute
suit for payment thereof or impair the right of repayment, if any, at the
option of the holder, or (ii) reduce the aforesaid percentage of Debt
Securities the holders of which are required to consent to any such
supplemental indenture; and provided, further, that if the Debt Securities are
held by the Trust or a trustee of such trust, such supplemental indenture shall
not be effective until the holders of a majority in liquidation preference of
Trust Securities shall have consented to such supplemental indenture; provided
further, that if the consent of the Securityholder of each outstanding Debt
Security is required, such supplemental indenture shall not be effective until
each holder of the Trust Securities shall have consented to such supplemental
indenture.
Upon the request of the Company accompanied by a Board
Resolution authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of Securityholders
as aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture
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affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.
Promptly after the execution by the Company and the Trustee
of any supplemental indenture pursuant to the provisions of this Section, the
Trustee shall transmit by mail, first class postage prepaid, a notice, prepared
by the Company, setting forth in general terms the substance of such
supplemental indenture, to the Securityholders thereby as their names and
addresses appear upon the Debt Security Register. Any failure of the Trustee to
mail such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture.
It shall not be necessary for the consent of the
Securityholders under this Section 9.02 to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.
SECTION 9.03. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture pursuant to
the provisions of this Article IX, this Indenture shall be and be deemed to be
modified and amended in accordance therewith and the respective rights,
limitations of rights, obligations, duties and immunities under this Indenture
of the Trustee, the Company and the holders of Debt Securities shall thereafter
be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.04. Notation on Debt Securities.
Debt Securities authenticated and delivered after the
execution of any supplemental indenture pursuant to the provisions of this
Article IX may bear a notation as to any matter provided for in such
supplemental indenture. If the Company or the Trustee shall so determine, new
Debt Securities so modified as to conform, in the opinion of the Board of
Directors of the Company, to any modification of this Indenture contained in
any such supplemental indenture may be prepared and executed by the Company,
authenticated by the Trustee or the Authenticating Agent and delivered in
exchange for the Debt Securities then outstanding.
SECTION 9.05. Evidence of Compliance of Supplemental
Indenture to be Furnished to Trustee.
The Trustee, subject to the provisions of Sections 6.01 and
6.02, shall, in addition to the documents required by Section 14.06, receive an
Officers' Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant hereto complies with the requirements
of this Article IX. The Trustee shall receive an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant to this
Article IX is authorized or permitted by, and conforms to, the terms of this
Article IX and that it is proper for the Trustee under the provisions of this
Article IX to join in the execution thereof.
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ARTICLE X
REDEMPTION OF SECURITIES
SECTION 10.01. Optional Redemption.
At any time the Company shall have the right, subject to the
receipt by the Company of prior approval from the Federal Reserve, if then
required under applicable capital guidelines or policies of the Federal
Reserve, to redeem the Debt Securities, in whole or in part, on any March 8 or
September 8 on or after March 8, 2010 (the "Redemption Date"), at the
Redemption Price.
SECTION 10.02. Special Event Redemption.
If a Special Event shall occur and be continuing, the Company
shall have the right, subject to the receipt by the Company of prior approval
from the Federal Reserve if then required under applicable capital guidelines
or policies of the Federal Reserve, to redeem the Debt Securities, in whole but
not in part, at any time within 90 days following the occurrence of such
Special Event (the "Special Redemption Date"), at the Special Redemption Price.
SECTION 10.03. Notice of Redemption; Selection of Debt
Securities.
In case the Company shall desire to exercise the right to
redeem all, or, as the case may be, any part of the Debt Securities, it shall
fix a date for redemption and shall mail a notice of such redemption at least
30 and not more than 60 days prior to the date fixed for redemption to the
holders of Debt Securities so to be redeemed as a whole or in part at their
last addresses as the same appear on the Debt Security Register. Such mailing
shall be by first class mail. The notice if mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the holder receives such notice. In any case, failure to give such notice by
mail or any defect in the notice to the holder of any Debt Security designated
for redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Debt Security.
Each such notice of redemption shall specify the date fixed
for redemption, the redemption price at which Debt Securities are to be
redeemed, the place or places of payment, that payment will be made upon
presentation and surrender of such Debt Securities, that interest accrued to
the date fixed for redemption will be paid as specified in said notice, and
that on and after said date interest thereon or on the portions thereof to be
redeemed will cease to accrue. If less than all the Debt Securities are to be
redeemed the notice of redemption shall specify the numbers of the Debt
Securities to be redeemed. In case the Debt Securities are to be redeemed in
part only, the notice of redemption shall state the portion of the principal
amount thereof to be redeemed and shall state that on and after the date fixed
for redemption, upon surrender of such Debt Security, a new Debt Security or
Debt Securities in principal amount equal to the unredeemed portion thereof
will be issued.
Prior to 10:00 a.m. on the Redemption Date or Special
Redemption Date specified in the notice of redemption given as provided in this
Section, the Company will deposit with the Trustee or with one or more paying
agents an amount of money sufficient to redeem on the
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redemption date all the Debt Securities so called for redemption at the
appropriate redemption price, together with accrued interest to the date fixed
for redemption.
The Company will give the Trustee notice not less than 45 nor
more than 60 days prior to the redemption date as to the aggregate principal
amount of Debt Securities to be redeemed and the Trustee shall select, in such
manner as in its sole discretion it shall deem appropriate and fair, the Debt
Securities or portions thereof (in integral multiples of $1,000) to be
redeemed. In the case of a redemption pursuant to Section 10.02 above, the
Trustee shall, promptly upon receipt of the Treasury Rate from the Quotation
Agent, provide the Treasury Rate to Chase Bank of Texas, National Association,
on behalf of the holders of the Capital Securities.
SECTION 10.04. Payment of Debt Securities Called for
Redemption.
If notice of redemption has been given as provided in Section
10.03, the Debt Securities or portions of Debt Securities with respect to which
such notice has been given shall become due and payable on the Redemption Date
or the Special Redemption Date, as the case may be, and at the place or places
stated in such notice at the applicable redemption price, together with
interest accrued to the date fixed for redemption, and on and after said
Redemption Date or Special Redemption Date (unless the Company shall default in
the payment of such Debt Securities at the redemption price, together with
interest accrued to said date) interest on the Debt Securities or portions of
Debt Securities so called for redemption shall cease to accrue. On presentation
and surrender of such Debt Securities at a place of payment specified in said
notice, such Debt Securities or the specified portions thereof shall be paid
and redeemed by the Company at the applicable redemption price, together with
interest accrued thereon to the Redemption Date or the Special Redemption Date,
as the case may be.
Upon presentation of any Debt 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 Debt
Security or Debt Securities of authorized denominations in principal amount
equal to the unredeemed portion of the Debt Security so presented.
ARTICLE XI
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 11.01. Company May Consolidate, etc., on Certain
Terms.
Nothing contained in this Indenture or in the Debt Securities
shall prevent any consolidation or merger of the Company with or into any other
corporation or corporations (whether or not affiliated with the Company) or
successive consolidations or mergers in which the Company or its successor or
successors shall be a party or parties, or shall prevent any sale, conveyance,
transfer or other disposition of the property of the Company or its successor
or successors as an entirety, or substantially as an entirety, to any other
corporation (whether or not affiliated with the Company, or its successor or
successors) authorized to acquire and operate the same; provided, however, that
the Company hereby covenants and agrees that, upon any such consolidation,
merger (where the Company is not the surviving corporation), sale, conveyance,
transfer or other disposition, the due and punctual payment of the principal of
(and premium, if
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any) and interest on all of the Debt Securities in accordance with their terms,
according to their tenor, and the due and punctual performance and observance
of all the covenants and conditions of this Indenture to be kept or performed
by the Company, shall be expressly assumed by supplemental indenture
satisfactory in form to the Trustee executed and delivered to the Trustee by
the entity formed by such consolidation, or into which the Company shall have
been merged, or by the entity which shall have acquired such property.
SECTION 11.02. Successor Entity to be Substituted.
In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition and upon the assumption by the successor entity,
by supplemental indenture, executed and delivered to the Trustee and
satisfactory in form to the Trustee, of the due and punctual payment of the
principal of and premium, if any, and interest on all of the Debt Securities
and the due and punctual performance and observance of all of the covenants and
conditions of this Indenture to be performed or observed by the Company, such
successor entity shall succeed to and be substituted for the Company, with the
same effect as if it had been named herein as the Company, and thereupon the
predecessor entity shall be relieved of any further liability or obligation
hereunder or upon the Debt Securities. Such successor entity thereupon 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 Debt Securities issuable hereunder which theretofore
shall not have been signed by the Company and delivered to the Trustee or the
Authenticating Agent; and, upon the order of such successor entity instead of
the Company and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee or the Authenticating Agent shall
authenticate and deliver any Debt Securities which previously shall have been
signed and delivered by the officers of the Company, to the Trustee or the
Authenticating Agent for authentication, and any Debt Securities which such
successor entity thereafter shall cause to be signed and delivered to the
Trustee or the Authenticating Agent for that purpose. All the Debt Securities
so issued shall in all respects have the same legal rank and benefit under this
Indenture as the Debt Securities theretofore or thereafter issued in accordance
with the terms of this Indenture as though all of such Debt Securities had been
issued at the date of the execution hereof.
SECTION 11.03. Opinion of Counsel to be Given to Trustee.
The Trustee, subject to the provisions of Sections 6.01 and
6.02, shall receive, in addition to the Opinion of Counsel required by Section
9.05, an Opinion of Counsel as conclusive evidence that any consolidation,
merger, sale, conveyance, transfer or other disposition, and any assumption,
permitted or required by the terms of this Article XI complies with the
provisions of this Article XI.
ARTICLE XII
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 12.01. Discharge of Indenture.
When (a) the Company shall deliver to the Trustee for
cancellation all Debt Securities theretofore authenticated (other than any Debt
Securities which shall have been
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destroyed, lost or stolen and which shall have been replaced or paid as
provided in Section 2.06) and not theretofore canceled, or (b) all the Debt
Securities not theretofore canceled or delivered to the Trustee for
cancellation shall have become due and payable, or are by their terms to become
due and payable within one year or are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the giving of notice of
redemption, and the Company shall deposit with the Trustee, in trust, funds,
which shall be immediately due and payable, sufficient to pay at maturity or
upon redemption all of the Debt Securities (other than any Debt Securities
which shall have been destroyed, lost or stolen and which shall have been
replaced or paid as provided in Section 2.06) not theretofore canceled or
delivered to the Trustee for cancellation, including principal and premium, if
any, and interest due or to become due to such date of maturity or redemption
date, as the case may be, but excluding, however, the amount of any moneys for
the payment of principal of, and premium, if any, or interest on the Debt
Securities (1) theretofore repaid to the Company in accordance with the
provisions of Section 12.04, or (2) paid to any state or to the District of
Columbia pursuant to its unclaimed property or similar laws, and if in the case
of either clause (a) or clause (b) the Company shall also pay or cause to be
paid all other sums payable hereunder by the Company, then this Indenture shall
cease to be of further effect except for the provisions of Sections 2.05, 2.06,
2.08, 3.01, 3.02, 3.04, 6.06, 6.09 and 12.04 hereof shall survive until such
Debt Securities shall mature and be paid. Thereafter, Sections 6.09 and 12.04
shall survive, and the Trustee, on demand of the Company accompanied by 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, and at the cost and
expense of the Company, shall execute proper instruments acknowledging
satisfaction of and discharging this Indenture, the Company, however, hereby
agreeing to reimburse the Trustee for any costs or expenses thereafter
reasonably and properly incurred by the Trustee in connection with this
Indenture or the Debt Securities.
SECTION 12.02. Deposited Moneys to be Held in Trust by
Trustee.
Subject to the provisions of Section 12.04, all moneys
deposited with the Trustee pursuant to Section 12.01 shall be held in trust and
applied by it to the payment, either directly or through any paying agent
(including the Company if acting as its own paying agent), to the holders of
the particular Debt Securities for the payment of which such moneys have been
deposited with the Trustee, of all sums due and to become due thereon for
principal, and premium, if any, and interest.
SECTION 12.03. Paying Agent to Repay Moneys Held.
Upon the satisfaction and discharge of this Indenture all
moneys then held by any paying agent of the Debt Securities (other than the
Trustee) shall, upon demand of the Company, be repaid to it or paid to the
Trustee, and thereupon such paying agent shall be released from all further
liability with respect to such moneys.
SECTION 12.04. Return of Unclaimed Moneys.
Any moneys deposited with or paid to the Trustee or any
paying agent for payment of the principal of, and premium, if any, or interest
on Debt Securities and not applied but remaining unclaimed by the holders of
Debt Securities for two years after the date upon
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which the principal of, and premium, if any, or interest on such Debt
Securities, as the case may be, shall have become due and payable, shall be
repaid to the Company by the Trustee or such paying agent on written demand;
and the holder of any of the Debt Securities shall thereafter look only to the
Company for any payment which such holder may be entitled to collect and all
liability of the Trustee or such paying agent with respect to such moneys shall
thereupon cease.
ARTICLE XIII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
SECTION 13.01. Indenture and Debt Securities Solely Corporate
Obligations.
No recourse for the payment of the principal of or premium,
if any, or interest on any Debt Security, or for any claim based thereon or
otherwise in respect thereof, and no recourse under or upon any obligation,
covenant or agreement of the Company in this Indenture or in any supplemental
indenture, or in any such Debt Security, or because of the creation of any
indebtedness represented thereby, shall be had against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or of any successor corporation of the Company, either directly or
through the Company or any successor corporation of the Company, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise; it being expressly understood that all
such liability is hereby expressly waived and released as a condition of, and
as a consideration for, the execution of this Indenture and the issue of the
Debt Securities.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
SECTION 14.01. Successors.
All the covenants, stipulations, promises and agreements in
this Indenture contained by the Company shall bind its successors and assigns
whether so expressed or not.
SECTION 14.02. Official Acts by Successor Entity.
Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or
officer of the Company shall and may be done and performed with like force and
effect by the like board, committee, officer or other authorized Person of any
entity that shall at the time be the lawful successor of the Company.
SECTION 14.03. Surrender of Company Powers.
The Company by instrument in writing executed by authority of
2/3 (two-thirds) of its Board of Directors and delivered to the Trustee may
surrender any of the powers reserved to the Company and thereupon such power so
surrendered shall terminate both as to the Company, and as to any permitted
successor.
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SECTION 14.04. Addresses for Notices, etc.
Any notice or demand which by any provision of this Indenture
is required or permitted to be given or served by the Trustee or by the
Securityholders on the Company may be given or served in writing by being
deposited postage prepaid by registered or certified mail in a post office
letter box addressed (until another address is filed by the Company, with the
Trustee for the purpose) to the Company at 68149 Main Street, Blountsville,
Alabama 35031 Attention: Kennon R. Patterson, Sr., Chairman and Chief Executive
Officer, and copy to: William H. Caughran, Assistant Secretary. Any notice,
direction, request or demand by any Securityholder or the Company to or upon
the Trustee shall be deemed to have been sufficiently given or made, for all
purposes, if given or made in writing at the office of the Trustee, addressed
to the Trustee, 101 Barclay Street, Floor 21W, New York, NY 10286 Attention:
Corporate Trust Administration.
SECTION 14.05. Governing Law.
This Indenture and each Debt Security shall be deemed to be a
contract made under the law of the State of New York, and for all purposes
shall be governed by and construed in accordance with the law of said State,
without regard to conflict of laws principles thereof.
SECTION 14.06. Evidence of Compliance with Conditions
Precedent.
Upon any application or demand by the Company to the Trustee
to take any action under any of the provisions of this Indenture, the Company
shall furnish to the Trustee an Officers' Certificate stating that in the
opinion of the signers all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with and an
Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.
Each certificate or opinion provided for in this Indenture
and delivered to the Trustee with respect to compliance with a condition or
covenant provided for in this Indenture shall include (a) a statement that the
person making such certificate or opinion has read such covenant or condition;
(b) 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; (c) a statement that, in the opinion of such
person, he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and (d) a statement as to whether or not, in
the opinion of such person, such condition or covenant has been complied with.
SECTION 14.07. Non-Business Days.
In any case where the date of payment of interest on or
principal of the Debt Securities will be a Saturday, Sunday or a day on which
banking institutions in New York City (in the State of New York) are permitted
or required by any applicable law to close, the payment of such interest on or
principal of the Debt Securities need not be made on such date but may be made
on the next succeeding day not a Saturday, Sunday or a day on which banking
institutions in such cities are permitted or required by any applicable law to
close, with the same force and effect as if made on the date of payment and no
interest shall accrue for the period from and after
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such date.
SECTION 14.08. Table of Contents, Headings, etc.
The table of contents and the titles and headings of the
articles and sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 14.09. Execution in Counterparts.
This Indenture may be executed in any number of counterparts,
each of which shall be an original, but such counterparts shall together
constitute but one and the same instrument.
SECTION 14.10. Separability.
In case any one or more of the provisions contained in this
Indenture or in the Debt Securities shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Indenture or of
such Debt Securities, but this Indenture and such Debt Securities shall be
construed as if such invalid or illegal or unenforceable provision had never
been contained herein or therein.
SECTION 14.11. Assignment.
The Company will have the right at all times to assign any of
its rights or obligations under this Indenture to a direct or indirect wholly
owned Subsidiary of the Company, provided that, in the event of any such
assignment, the Company will remain liable for all such obligations. Subject to
the foregoing, this Indenture is binding upon and inures to the benefit of the
parties hereto and their respective successors and assigns. This Indenture may
not otherwise be assigned by the parties thereto.
SECTION 14.12. Acknowledgment of Rights.
The Company acknowledges that, with respect to any Debt
Securities held by the Trust or the Institutional Trustee of the Trust, if the
Institutional Trustee of the Trust fails to enforce its rights under this
Indenture as the holder of Debt Securities held as the assets of the Trust
after the holders of a majority in liquidation amount of the Capital Securities
of the Trust have so directed such Institutional Trustee, a holder of record of
such Capital Securities may to the fullest extent permitted by law institute
legal proceedings directly against the Company to enforce such Institutional
Trustee's rights under this Indenture without first instituting any legal
proceedings against such Institutional Trustee or any other Person.
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to pay
interest (or premium, if any) or principal on the Debt Securities on the date
such interest (or premium, if any) or principal is otherwise payable (or in the
case of redemption, on the redemption date), the Company acknowledges that a
holder of record of Capital Securities of the Trust may directly institute a
proceeding against the Company for enforcement of payment to such holder
directly of the principal of (or premium, if any) or
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interest on the of Debt Securities having an aggregate principal amount equal
to the aggregate liquidation amount of the Capital Securities of such holder on
or after the respective due date specified in the Debt Securities.
ARTICLE XV
SUBORDINATION OF DEBT SECURITIES
SECTION 15.01. Agreement to Subordinate.
The Company covenants and agrees, and each holder of Debt
Securities issued hereunder and under any supplemental indenture or by any
Board Resolution (the "Additional Provisions") by such Securityholder's
acceptance thereof likewise covenants and agrees, that all Debt Securities
shall be issued subject to the provisions of this Article XV; and each holder
of a Debt Security, whether upon original issue or upon transfer or assignment
thereof, accepts and agrees to be bound by such provisions.
The payment by the Company of the principal of, and premium,
if any, and interest on all Debt Securities issued hereunder and under any
Additional Provisions shall, to the extent and in the manner hereinafter set
forth, be subordinated and junior in right of payment to the prior payment in
full of all Senior Indebtedness of the Company, whether outstanding at the date
of this Indenture or thereafter incurred.
No provision of this Article XV shall prevent the occurrence
of any default or Event of Default hereunder.
SECTION 15.02. Default on Senior Indebtedness.
In the event and during the continuation of any default by
the Company in the payment of principal, premium, interest or any other payment
due on any Senior Indebtedness of the Company following any grace period, or in
the event that the maturity of any Senior Indebtedness of the Company has been
accelerated because of a default, then, in either case, no payment shall be
made by the Company with respect to the principal (including redemption and
sinking fund payments) of, or premium, if any, or interest on the Debt
Securities.
In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee when such payment is prohibited by the
preceding paragraph of this Section 15.02, such payment shall, subject to
Section 15.06, be held in trust for the benefit of, and shall be paid over or
delivered to, the holders of Senior Indebtedness or their respective
representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Indebtedness may have been issued, as their respective
interests may appear, but only to the extent that the holders of the Senior
Indebtedness (or their representative or representatives or a trustee) notify
the Trustee in writing within 90 days of such payment of the amounts then due
and owing on the Senior Indebtedness and only the amounts specified in such
notice to the Trustee shall be paid to the holders of Senior Indebtedness.
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SECTION 15.03. Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company or distribution of assets of
the Company of any kind or character, whether in cash, property or securities,
to creditors upon any dissolution or winding-up or liquidation or
reorganization of the Company, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all amounts due upon
all Senior Indebtedness of the Company shall first be paid in full, or payment
thereof provided for in money in accordance with its terms, before any payment
is made by the Company, on account of the principal (and premium, if any) or
interest on the Debt Securities; and upon any such dissolution or winding-up or
liquidation or reorganization, any payment by the Company, or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities, to which the Securityholders or the Trustee would be entitled to
receive from the Company, except for the provisions of this Article XV, shall
be paid by the Company, or by any receiver, trustee in bankruptcy, liquidating
trustee, agent or other Person making such payment or distribution, or by the
Securityholders or by the Trustee under this Indenture if received by them or
it, directly to the holders of Senior Indebtedness of the Company (pro rata to
such holders on the basis of the respective amounts of Senior Indebtedness held
by such holders, as calculated by the Company) or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebtedness may have been issued,
as their respective interests may appear, to the extent necessary to pay such
Senior Indebtedness in full, in money or money's worth, after giving effect to
any concurrent payment or distribution to or for the holders of such Senior
Indebtedness, before any payment or distribution is made to the Securityholders
or to the Trustee.
In the event that, notwithstanding the foregoing, any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities, prohibited by the foregoing, shall be received by
the Trustee before all Senior Indebtedness of the Company is paid in full, or
provision is made for such payment in money in accordance with its terms, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, as their respective interests may appear, as calculated
by the Company, for application to the payment of all Senior Indebtedness of
the Company, remaining unpaid to the extent necessary to pay such Senior
Indebtedness in full in money in accordance with its terms, after giving effect
to any concurrent payment or distribution to or for the benefit of the holders
of such Senior Indebtedness.
For purposes of this Article XV, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this
Article XV with respect to the Debt Securities to the payment of all Senior
Indebtedness of the Company, that may at the time be outstanding, provided that
(a) such Senior Indebtedness is assumed by the new corporation, if any,
resulting from any such reorganization or readjustment, and (b) the rights of
the holders of such Senior Indebtedness are not, without the consent of such
holders, altered by such reorganization or readjustment. The consolidation of
the Company with, or the merger of the Company into, another corporation or the
liquidation or dissolution of the
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Company following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided for in Article IX of this Indenture shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 15.03 if such other corporation shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions stated in Article IX
of this Indenture. Nothing in Section 15.02 or in this Section 15.03 shall
apply to claims of, or payments to, the Trustee under or pursuant to Section
6.06 of this Indenture.
SECTION 15.04. Subrogation.
Subject to the payment in full of all Senior Indebtedness of
the Company, the Securityholders shall be subrogated to the rights of the
holders of such Senior Indebtedness to receive payments or distributions of
cash, property or securities of the Company, applicable to such Senior
Indebtedness until the principal of (and premium, if any) and interest on the
Debt Securities shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the holders of such Senior
Indebtedness of any cash, property or securities to which the Securityholders
or the Trustee would be entitled except for the provisions of this Article XV,
and no payment over pursuant to the provisions of this Article XV to or for the
benefit of the holders of such Senior Indebtedness by Securityholders or the
Trustee, shall, as between the Company, its creditors other than holders of
Senior Indebtedness of the Company, and the holders of the Debt Securities be
deemed to be a payment or distribution by the Company to or on account of such
Senior Indebtedness. It is understood that the provisions of this Article XV
are and are intended solely for the purposes of defining the relative rights of
the holders of the Securities, on the one hand, and the holders of such Senior
Indebtedness, on the other hand.
Nothing contained in this Article XV or elsewhere in this
Indenture, any Additional Provisions or in the Debt Securities is intended to
or shall impair, as between the Company, its creditors other than the holders
of Senior Indebtedness of the Company, and the holders of the Debt Securities,
the obligation of the Company, which is absolute and unconditional, to pay to
the holders of the Debt Securities the principal of (and premium, if any) and
interest on the Debt Securities as and when the same shall become due and
payable in accordance with their terms, or is intended to or shall affect the
relative rights of the holders of the Debt Securities and creditors of the
Company, other than the holders of Senior Indebtedness of the Company, nor
shall anything herein or therein prevent the Trustee or the holder of any Debt
Security from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article XV of the holders of such Senior Indebtedness in respect of cash,
property or securities of the Company, received upon the exercise of any such
remedy.
Upon any payment or distribution of assets of the Company
referred to in this Article XV, the Trustee, subject to the provisions of
Article VI of this Indenture, and the Securityholders shall be entitled to
conclusively rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person making such
payment or distribution, delivered to the Trustee or to the Securityholders,
for the purposes of ascertaining the Persons entitled to participate in such
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distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this
Article XV.
SECTION 15.05. Trustee to Effectuate Subordination.
Each Securityholder by such Securityholder's acceptance
thereof authorizes and directs the Trustee on such Securityholder's behalf to
take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article XV and appoints the Trustee such
Securityholder's attorney-in-fact for any and all such purposes.
SECTION 15.06. Notice by the Company.
The Company shall give prompt written notice to a Responsible
Officer of the Trustee at the Principal Office of the Trustee of any fact known
to the Company that would prohibit the making of any payment of monies to or by
the Trustee in respect of the Debt Securities pursuant to the provisions of
this Article XV. Notwithstanding the provisions of this Article XV or any other
provision of this Indenture or any Additional Provisions, the Trustee shall not
be charged with knowledge of the existence of any facts that would prohibit the
making of any payment of monies to or by the Trustee in respect of the Debt
Securities pursuant to the provisions of this Article XV, unless and until a
Responsible Officer of the Trustee at the Principal Office of the Trustee shall
have received written notice thereof from the Company or a holder or holders of
Senior Indebtedness or from any trustee therefor; and before the receipt of any
such written notice, the Trustee, subject to the provisions of Article VI of
this Indenture, shall be entitled in all respects to assume that no such facts
exist; provided, however, that if the Trustee shall not have received the
notice provided for in this Section 15.06 at least two Business Days prior to
the date upon which by the terms hereof any money may become payable for any
purpose (including, without limitation, the payment of the principal of (or
premium, if any) or interest on any Debt Security), then, anything herein
contained to the contrary notwithstanding, the Trustee shall have full power
and authority to receive such money and to apply the same to the purposes for
which they were received, and shall not be affected by any notice to the
contrary that may be received by it within two Business Days prior to such
date.
The Trustee, subject to the provisions of Article VI of this
Indenture, shall be entitled to conclusively rely on the delivery to it of a
written notice by a Person representing himself to be a holder of Senior
Indebtedness of the Company (or a trustee or representative on behalf of such
holder), to establish that such notice has been given by a holder of such
Senior Indebtedness or a trustee or representative on behalf of any such holder
or holders. In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
such Senior Indebtedness to participate in any payment or distribution pursuant
to this Article XV, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of such Senior
Indebtedness held by such Person, the extent to which such Person is entitled
to participate in such payment or distribution and any other facts pertinent to
the rights of such Person under this Article XV, 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.
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SECTION 15.07. Rights of the Trustee; Holders of Senior
Indebtedness.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article XV in respect of any Senior
Indebtedness at any time held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture or any Additional Provisions
shall deprive the Trustee of any of its rights as such holder.
With respect to the holders of Senior Indebtedness of the
Company, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article XV, and
no implied covenants or obligations with respect to the holders of such Senior
Indebtedness shall be read into this Indenture or any Additional Provisions
against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of such Senior Indebtedness and, subject to the provisions of
Article VI of this Indenture, the Trustee shall not be liable to any holder of
such Senior Indebtedness if it shall pay over or deliver to Securityholders,
the Company or any other Person money or assets to which any holder of such
Senior Indebtedness shall be entitled by virtue of this Article XV or
otherwise.
Nothing in this Article XV shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 6.06.
SECTION 15.08. Subordination May Not Be Impaired.
No right of any present or future holder of any Senior
Indebtedness of the Company to enforce subordination as herein provided shall
at any time in any way be prejudiced or impaired by any act or failure to act
on the part of the Company, or by any act or failure to act, in good faith, by
any such holder, or by any noncompliance by the Company, with the terms,
provisions and covenants of this Indenture, regardless of any knowledge thereof
that any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness of the Company may, at any time
and from time to time, without the consent of or notice to the Trustee or the
Securityholders, without incurring responsibility to the Securityholders and
without impairing or releasing the subordination provided in this Article XV or
the obligations hereunder of the holders of the Debt Securities to the holders
of such Senior Indebtedness, do any one or more of the following: (a) change
the manner, place or terms of payment or extend the time of payment of, or
renew or alter, such Senior Indebtedness, or otherwise amend or supplement in
any manner such Senior Indebtedness or any instrument evidencing the same or
any agreement under which such Senior Indebtedness is outstanding; (b) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing such Senior Indebtedness; (c) release any Person liable in
any manner for the collection of such Senior Indebtedness; and (d) exercise or
refrain from exercising any rights against the Company, and any other Person.
The Bank of New York hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions herein above set
forth.
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed by their respective officers thereunto duly
authorized, as of the day and year first above written.
COMMUNITY BANCSHARES, INC.
By /s/ Kennon R. Patterson, Sr.
------------------------------------
Name: Kennon R. Patterson, Sr.
Title: Chairman, President and Chief
Executive Officer
THE BANK OF NEW YORK, as Trustee
By /s/ Annette L. Kos
------------------------------------
Name: Annette L. Kos
Title: Assistant Vice President
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-------------------------------------------------
EXHIBIT 10.1
AMENDED AND RESTATED DECLARATION
OF TRUST
COMMUNITY (AL) CAPITAL TRUST I
Dated as of March 23, 2000
-------------------------------------------------
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<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
INTERPRETATION AND DEFINITIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 1.1 Definitions............................................................................ 1
ARTICLE II
ORGANIZATION
SECTION 2.1 Name................................................................................... 9
SECTION 2.2 Office................................................................................. 9
SECTION 2.3 Purpose................................................................................ 9
SECTION 2.4 Authority.............................................................................. 9
SECTION 2.5 Title to Property of the Trust......................................................... 9
SECTION 2.6 Powers and Duties of the Trustees and the Administrators............................... 9
SECTION 2.7 Prohibition of Actions by the Trust and the Trustees................................... 13
SECTION 2.8 Powers and Duties of the Institutional Trustee......................................... 14
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 2.9 Certain Duties and Responsibilities of the Trustees and Administrators................. 16
SECTION 2.10 Certain Rights of Institutional Trustee................................................ 17
SECTION 2.11 Delaware Trustee....................................................................... 19
SECTION 2.12 Execution of Documents................................................................. 20
SECTION 2.13 Not Responsible for Recitals or Issuance of Securities................................. 20
SECTION 2.14 Duration of Trust...................................................................... 20
SECTION 2.15 Mergers................................................................................ 20
ARTICLE III
SPONSOR
SECTION 3.1 Sponsor's Purchase of Common Securities................................................ 22
SECTION 3.2 Responsibilities of the Sponsor........................................................ 22
ARTICLE IV
TRUSTEES AND ADMINISTRATORS
SECTION 4.1 Number of Trustees..................................................................... 22
SECTION 4.2 Delaware Trustee....................................................................... 23
SECTION 4.3 Institutional Trustee; Eligibility..................................................... 23
SECTION 4.4 Certain Qualifications of the Delaware Trustee Generally............................... 23
SECTION 4.5 Administrators......................................................................... 23
SECTION 4.6 Delaware Trustee....................................................................... 24
SECTION 4.7 Appointment, Removal and Resignation of Trustees and Administrators.................... 24
SECTION 4.8 Vacancies Among Trustees............................................................... 25
SECTION 4.9 Effect of Vacancies.................................................................... 26
SECTION 4.10 Meetings of the Trustees and the Administrators........................................ 26
SECTION 4.11 Delegation of Power.................................................................... 26
SECTION 4.12 Conversion, Consolidation or Succession to Business.................................... 27
ARTICLE V
DISTRIBUTIONS
SECTION 5.1 Distributions.......................................................................... 27
</TABLE>
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<TABLE>
<CAPTION>
ARTICLE VI
ISSUANCE OF SECURITIES
<S> <C> <C>
SECTION 6.1 General Provisions Regarding Securities................................................ 27
SECTION 6.2 Paying Agent, Transfer Agent and Registrar............................................. 28
SECTION 6.3 Form and Dating........................................................................ 28
SECTION 6.4 Mutilated, Destroyed, Lost or Stolen Certificates...................................... 29
SECTION 6.5 Temporary Securities................................................................... 29
SECTION 6.6 Cancellation........................................................................... 30
SECTION 6.7 Rights of Holders; Waivers of Past Defaults............................................ 30
ARTICLE VII
DISSOLUTION AND TERMINATION OF TRUST
SECTION 7.1 Dissolution and Termination of Trust................................................... 32
ARTICLE VIII
TRANSFER OF INTERESTS
SECTION 8.1 General................................................................................ 33
SECTION 8.2 Transfer Procedures and Restrictions................................................... 34
SECTION 8.3 Deemed Security Holders................................................................ 35
ARTICLE IX
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 9.1 Liability.............................................................................. 36
SECTION 9.2 Exculpation............................................................................ 36
SECTION 9.3 Fiduciary Duty......................................................................... 36
SECTION 9.4 Indemnification........................................................................ 37
SECTION 9.5 Outside Businesses..................................................................... 40
SECTION 9.6 Compensation; Fee...................................................................... 40
ARTICLE X
ACCOUNTING
SECTION 10.1 Fiscal Year............................................................................ 41
SECTION 10.2 Certain Accounting Matters............................................................. 41
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 10.3 Banking................................................................................ 41
SECTION 10.4 Withholding............................................................................ 42
ARTICLE XI
AMENDMENTS AND MEETINGS
SECTION 11.1 Amendments............................................................................. 42
SECTION 11.2 Meetings of the Holders of Securities; Action by Written Consent....................... 44
ARTICLE XII
REPRESENTATIONS OF INSTITUTIONAL
TRUSTEE AND DELAWARE TRUSTEE
SECTION 12.1 Representations and Warranties of Institutional Trustee................................ 45
SECTION 12.2 Representations and Warranties of Delaware Trustee..................................... 46
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Notices................................................................................ 47
SECTION 13.2 Governing Law.......................................................................... 48
SECTION 13.3 Intention of the Parties............................................................... 48
SECTION 13.4 Headings............................................................................... 48
SECTION 13.5 Successors and Assigns................................................................. 48
SECTION 13.6 Partial Enforceability................................................................. 49
SECTION 13.7 Counterparts........................................................................... 49
</TABLE>
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AMENDED AND RESTATED DECLARATION OF TRUST
OF
COMMUNITY (AL) CAPITAL TRUST I
March 23, 2000
AMENDED AND RESTATED DECLARATION OF TRUST (this "Declaration") dated
and effective as of March 23, 2000, by the Trustees (as defined herein), the
Administrators (as defined herein), the Sponsor (as defined herein) and the
holders, from time to time, of undivided beneficial interests in the Trust (as
defined herein) to be issued pursuant to this Declaration;
WHEREAS, certain of the Trustees, the Administrators and the Sponsor
established COMMUNITY (AL) CAPITAL TRUST I (the "Trust"), a statutory business
trust under the Delaware Business Trust Act pursuant to a Declaration of Trust
dated as of March 7, 2000 (the "Original Declaration"), and a Certificate of
Trust filed with the Secretary of State of the State of Delaware on March 10,
2000, for the sole purpose of issuing and selling certain securities
representing undivided beneficial interests in the assets of the Trust and
investing the proceeds thereof in certain debentures of the Debenture Issuer (as
defined herein);
WHEREAS, as of the date hereof, no interests in the Trust have been
issued;
WHEREAS, all of the Trustees, the Administrators and the Sponsor, by
this Declaration, amend and restate each and every term and provision of the
Original Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a statutory business trust under the Business Trust Act
(as defined herein) and that this Declaration constitutes the governing
instrument of such statutory business trust, the Trustees declare that all
assets contributed to the Trust will be held in trust for the benefit of the
holders, from time to time, of the securities representing undivided beneficial
interests in the assets of the Trust issued hereunder, subject to the provisions
of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits to
this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act (as defined herein) has
the same meaning when used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires; and
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(f) a reference to the singular includes the plural and vice versa.
"Additional Interest" has the meaning set forth in Section 3.06 of the
Indenture.
"Administrative Action" has the meaning set forth in paragraph 4(a) of
Annex I.
"Administrators" means each of Denny Kelly and Elaine Corvin, solely in
such Person's capacity as Administrator of the Trust created and continued
hereunder and not in such Person's individual capacity, or such Administrator's
successor in interest in such capacity, or any successor appointed as herein
provided.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is authorized to
bind such Person.
"Bankruptcy Event" means, with respect to any Person:
(a) a court having jurisdiction in the premises enters a decree or
order for relief in respect of such Person in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or appoints a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of such Person or for any substantial part of
its property, or orders the winding-up or liquidation of its affairs, and such
decree, appointment or order remains unstayed and in effect for a period of 90
consecutive days; or
(b) such Person commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, consents
to the entry of an order for relief in an involuntary case under any such law,
or consents to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of such Person of any substantial part of its property, or makes any general
assignment for the benefit of creditors, or fails generally to pay its debts as
they become due.
"Business Day" means any day other than Saturday, Sunday or any other
day on which banking institutions in New York are permitted or required by any
applicable any applicable law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code,
12 Del. Code ss. 3801 et seq., as it may be amended from time to time, or any
successor legislation.
"Capital Securities" has the meaning set forth in 6.1(a).
"Capital Security Certificate" means a Certificate representing a
Capital Security substantially in the form of Exhibit A-1.
"Capital Treatment Event" has the meaning set forth in paragraph 4(a)
of Annex I.
"Certificate" means any certificate evidencing Securities.
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"Closing Date" has the meaning set forth in the Placement Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Securities" has the meaning set forth in Section 6.1(a).
"Common Security Certificate" means a definitive Certificate in fully
registered form representing a Common Security substantially in the form of
Exhibit A-2.
"Company Indemnified Person" means (a) any Administrator; (b) any
Affiliate of any Administrator; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Administrator; or
(d) any officer, employee or agent of the Trust or its Affiliates.
"Comparable Treasury Issue" has the meaning set forth in paragraph 4(a)
of Annex I.
"Comparable Treasury Price" has the meaning set forth in paragraph 4(a)
of Annex I.
"Corporate Trust Office" means the office of the Institutional Trustee
at which the corporate trust business of the Institutional Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Declaration is located at 101 Barclay Street, Floor 21 West,
New York, NY 10286.
"Covered Person" means: (a) any Administrator, officer, director,
shareholder, partner, member, representative, employee or agent of (i) the Trust
or (ii) the Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means Community Bancshares Inc., a bank holding
company incorporated in Delaware, in its capacity as issuer of the Debentures
under the Indenture.
"Debenture Trustee" means The Bank of New York, as trustee under the
Indenture until a successor is appointed thereunder, and thereafter means such
successor trustee.
"Debentures" means the 10 7/8% Junior Subordinated Deferrable Interest
Debentures due 2030 to be issued by the Debenture Issuer under the Indenture.
"Deferred Interest" means any interest on the Debentures that would
have been overdue and unpaid for more than one Distribution Payment Date but for
the imposition of an Extension Period, and the interest that shall accrue (to
the extent that the payment of such interest is legally enforceable) on such
interest at the rate per annum equal to 10 7/8%, compounded semi-annually from
the date on which such Deferred Interest would otherwise have been due and
payable until paid or made available for payment.
"Definitive Capital Securities" means any Capital Securities in
definitive form
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issued by the Trust.
"Delaware Trustee" has the meaning set forth in Section 4.2.
"Direct Action" has the meaning set forth in Section 2.8(e).
"Distribution" means a distribution payable to Holders of Securities in
accordance with Section 5.1.
"Distribution Payment Date" has the meaning set forth in paragraph 2(b)
of Annex I.
"Event of Default" means any one of the following events (whatever the
reason for such event 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 an Indenture Event of Default;
(b) default by the Trust in the payment of any Redemption Price of any
Security when it becomes due and payable;
(c) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Trustees in this Declaration (other than those
specified in clause (b) above) and continuation of such default or breach for a
period of 30 days after there has been given, by registered or certified mail to
the Trustees and to the Sponsor 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
(d) the occurrence of a Bankruptcy Event with respect to the
Institutional Trustee if a successor Institutional Trustee has not been
appointed within 90 days thereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Extension Period" has the meaning set forth in paragraph 2(b) of Annex
I.
"Federal Reserve" has the meaning set forth in paragraph 3 of Annex I.
"Fiduciary Indemnified Person" shall mean the Institutional Trustee,
the Delaware Trustee, any Affiliate of the Institutional Trustee or the Delaware
Trustee, and any officers, directors, shareholders, members, partners,
employees, representatives, custodians, nominees or agents of the Institutional
Trustee and the Delaware Trustee.
"Fiscal Year" has the meaning set forth in Section 10.1
"Guarantee" means the guarantee agreement to be dated as of March 23,
2000, of the Sponsor in respect of the Capital Securities.
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"Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.
"Indenture" means the Indenture dated as of March 23, 2000, among the
Debenture Issuer and the Debenture Trustee, and any indenture supplemental
thereto pursuant to which the Debentures are to be issued.
"Indenture Event of Default" means an "Event of Default" as defined in
the Indenture.
"Institutional Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 4.3.
"interest" means any interest due on the Debentures, including any
Deferred Interest and Defaulted Interest (as each such term is defined in the
Indenture).
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in paragraph 4(a)
of Annex I.
"Legal Action" has the meaning set forth in Section 2.8(e).
"Liquidation" has the meaning set forth in paragraph 3 of Annex I.
"Liquidation Distribution" has the meaning set forth in paragraph 3 of
Annex I.
"Majority in liquidation amount of the Securities" means Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of
more than 50% of the aggregate liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus accrued and
unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
"Officers' Certificates" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for it in this Declaration shall include:
(a) a statement that each officer signing the Certificate has read the
covenant or condition and the definitions relating thereto;
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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 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.
"Paying Agent" has the meaning specified in Section 6.2.
"Payment Amount" has the meaning set forth in Section 5.1.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Placement Agreement" means the Placement Agreement relating to the
offering and sale of Capital Securities in the form of Exhibit E.
"PORTAL" has the meaning set forth in Section 2.6(a)(i).
"Primary Treasury Dealer" has the meaning set forth in paragraph 4(a)
of Annex I.
"Property Account" has the meaning set forth in Section 2.8(c).
"Pro Rata" has the meaning set forth in paragraph 8 of Annex I.
"QIB" means a "qualified institutional buyer" as defined under Rule
144A of the Securities Act.
"Quorum" means a majority of the Administrators or, if there are only
two Administrators, both of them.
"Quotation Agent" has the meaning set forth in paragraph 4(a) of Annex
I.
"Redemption/Distribution Notice" has the meaning set forth in paragraph
4(e) of Annex I.
"Redemption Price" has the meaning set forth in paragraph 4(a) of Annex
I.
"Registrar" has the meaning set forth in Section 6.2.
"Reference Treasury Dealer" has the meaning set forth in paragraph 4(a)
of Annex I.
"Reference Treasury Dealer Quotations" has the meaning set forth in
paragraph 4(a) of Annex I.
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"Relevant Trustee" has the meaning set forth in Section 4.7(a).
"Remaining Life" has the meaning set forth in paragraph 4(a) of Annex
I.
"Responsible Officer" means, with respect to the Institutional Trustee,
any officer within the Corporate Trust Office of the Institutional Trustee,
including any vice-president, any assistant vice-president, any assistant
secretary, the treasurer, any assistant treasurer, any trust officer or other
officer of the Corporate Trust Office of the Institutional Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Restricted Securities Legend" has the meaning set forth in Section
8.2(c).
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"Rule 3a-7" means Rule 3a-7 under the Investment Company Act.
"Securities" means the Common Securities and the Capital Securities.
"Securities Act" means the Securities Act of 1933, as amended from time
to time or any successor legislation.
"Sponsor" means Community Bancshares Inc., a bank holding company
incorporated in Delaware, or any successor entity in a merger, consolidation or
amalgamation, in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning set forth in Section
4.7(a).
"Successor Entity" has the meaning set forth in Section 2.15(b).
"Successor Institutional Trustee" has the meaning set forth in Section
4.7(a).
"Successor Securities" has the meaning set forth in Section 2.15(b).
"Super Majority" has the meaning set forth in paragraph 5(b) of Annex
I.
"Tax Event" has the meaning set forth in paragraph 4(a) of Annex I.
"10% in liquidation amount of the Securities" means Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of 10%
or more of the aggregate liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined) of
all outstanding Securities of the relevant class.
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"Transfer Agent" has the meaning set forth in Section 6.2.
"Treasury Rate" has the meaning set forth in paragraph 4(a) of Annex I.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Property" means (a) the Debentures, (b) any cash on deposit in,
or owing to, the Property Account and (c) all proceeds and rights in respect of
the foregoing and any other property and assets for the time being held or
deemed to be held by the Institutional Trustee pursuant to the trusts of this
Declaration.
"U.S. Person" means a United States Person as defined a Section
7701(a)(30) of the Code.
ARTICLE II
ORGANIZATION
SECTION 2.1 Name. The Trust is named "Community (AL) Capital Trust I,"
as such name may be modified from time to time by the Administrators following
written notice to the Holders of the Securities. The Trust's activities may be
conducted under the name of the Trust or any other name deemed advisable by the
Administrators.
SECTION 2.2 Office. The address of the principal office of the Trust is
68149 Main Street, Blountsville, Alabama 35031. On ten Business Days written
notice to the Holders of the Securities, the Administrators may designate
another principal office which, shall be in a State of the United States or the
District of Columbia.
SECTION 2.3 Purpose. The exclusive purposes and functions of the Trust
are (a) to issue and sell the Securities representing undivided beneficial
interests in the assets of the Trust, (b) to invest the gross proceeds from such
sale to acquire the Debentures and (c) except as otherwise limited herein, to
engage in only those other activities necessary or incidental thereto. The Trust
shall not borrow money, issue debt or reinvest proceeds derived from
investments, pledge any of its assets, or otherwise undertake (or permit to be
undertaken) any activity that would cause the Trust not to be classified for
United States federal income tax purposes as a grantor trust.
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SECTION 2.4 Authority. Except as specifically provided in this
Declaration, the Institutional Trustee shall have exclusive and complete
authority to carry out the purposes of the Trust. An action taken by a Trustee
in accordance with its powers shall constitute the act of and serve to bind the
Trust. In dealing with the Trustees acting on behalf of the Trust, no Person
shall be required to inquire into the authority of the Trustees to bind the
Trust. Persons dealing with the Trust are entitled to rely conclusively on the
power and authority of the Trustees as set forth in this Declaration. The
Administrators shall have only those ministerial duties set forth herein with
respect to accomplishing the purposes of the Trust and are not intended to be
trustees or fiduciaries with respect to the Trust or the Holders.
SECTION 2.5 Title to Property of the Trust. Except as provided in
Section 2.8 with respect to the Debentures and the Property Account or as
otherwise provided in this Declaration, legal title to all assets of the Trust
shall be vested in the Trust. The Holders shall not have legal title to any part
of the assets of the Trust, but shall have an undivided beneficial interest in
the assets of the Trust.
SECTION 2.6 Powers and Duties of the Trustees and the Administrators.
(a) The Trustees and the Administrators shall conduct the affairs of
the Trust in accordance with the terms of this Declaration. Subject to the
limitations set forth in paragraph (b) of this Section, and in accordance with
the following provisions (i) and (ii), the Trustees and the Administrators 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 or the Administrators, as the case may be,
under this Declaration, and to perform all acts in furtherance thereof,
including without limitation, the following:
(i) Each Administrator 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 Securities;
(B) to cause the Trust to enter into, and to execute and
deliver on behalf of the Trust, such agreements as may be necessary or
desirable in connection with the purposes and function of the Trust,
including agreements with the Paying Agent;
(C) ensuring compliance with the Securities Act, applicable
state securities or blue sky laws;
(D) if and at such time determined by the Sponsor at the
request of the Holders, assisting in the designation of the Capital
Securities for trading in the Private Offering, Resales and Trading
through the Automatic Linkages ("PORTAL") system;
(E) the sending of notices (other than notices of default) and
other information regarding the Securities and the Debentures to the
Holders in accordance with this Declaration;
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(F) the consent to the appointment of a Paying Agent, Transfer
Agent and Registrar in accordance with this Declaration, which consent
shall not be unreasonably withheld;
(G) execution and delivery of the Securities in accordance
with this Declaration;
(H) execution and delivery of closing certificates, pursuant
to the Placement Agreement and the application for a taxpayer
identification number;
(I) unless otherwise determined by the Institutional Trustee
or the Holders of a Majority in liquidation amount of the Securities or
as otherwise required by the Business Trust Act, to execute on behalf
of the Trust (either acting alone or together with any or all of the
Administrators) any documents that the Administrators have the power to
execute pursuant to this Declaration;
(J) the taking of any action incidental to the foregoing as
the Institutional Trustee may from time to time determine is necessary
to give effect to the terms of this Declaration for the benefit of the
Holders (without consideration of the effect of any such action on any
particular Holder);
(K) to establish a record date with respect to all actions to
be taken hereunder that require a record date be established, including
Distributions, voting rights, redemptions and exchanges, and to issue
relevant notices to the Holders of Capital Securities and Holders of
Common Securities as to such actions and applicable record dates; and
(L) to duly prepare and file all applicable tax returns and
tax information reports that are required to be filed with respect to
the Trust on behalf of the Trust.
(ii) As among the Trustees and the Administrators, the
Institutional 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 Property 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 Property Account;
(D) the distribution through the Paying Agent of amounts owed
to the Holders in respect of the Securities;
(E) the exercise of all of the rights, powers and privileges
of a holder of the Debentures;
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(F) the sending of notices of default and other information
regarding the Securities and the Debentures to the Holders in
accordance with this Declaration;
(G) the distribution of the Trust Property in accordance with
the terms of this Declaration;
(H) to the extent provided in this Declaration, the winding up
of the affairs of and liquidation of the Trust and the preparation,
execution and filing of the certificate of cancellation with the
Secretary of State of the State of Delaware;
(I) after any Event of Default (provided that such Event of
Default is not by or with respect to the Institutional Trustee) the
taking of any action incidental to the foregoing as the Institutional
Trustee may from time to time determine is necessary or advisable to
give effect to the terms of this Declaration and protect and conserve
the Trust Property for the benefit of the Holders (without
consideration of the effect of any such action on any particular
Holder); and
(J) to take all action that may be necessary for the
preservation and the continuation of the Trust's valid existence,
rights, franchises and privileges as a statutory business trust under
the laws of the State of Delaware and of each other jurisdiction in
which such existence is necessary to protect the limited liability of
the Holders of the Capital Securities or to enable the Trust to effect
the purposes for which the Trust was created.
(b) So long as this Declaration remains in effect, the Trust (or
the Trustees or Administrators acting on behalf of the Trust) shall not
undertake any business, activities or transaction except as expressly provided
herein or contemplated hereby. In particular, neither the Trustees nor the
Administrators may cause the Trust to (i) acquire any investments or engage in
any activities not authorized by this Declaration, (ii) sell, assign, transfer,
exchange, mortgage, pledge, set-off or otherwise dispose of any of the Trust
Property or interests therein, including to Holders, except as expressly
provided herein, (iii) take any action that would cause the Trust to fail or
cease to qualify as a "grantor trust" for United States federal income tax
purposes, (iv) incur any indebtedness for borrowed money or issue any other debt
or (v) take or consent to any action that would result in the placement of a
lien on any of the Trust Property. The Institutional Trustee shall, at the sole
cost and expense of the Trust, 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 Holders in their capacity as Holders.
(c) In connection with the issuance and sale of the Capital
Securities, the Sponsor 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 Sponsor in furtherance of the following prior to the date
of this Declaration are hereby ratified and confirmed in all respects):
(i) the taking of any action necessary to obtain an exemption
from the Securities Act;
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(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 Sponsor
deems necessary or advisable in order to comply with the applicable laws
of any such States in connection with the sale of the Capital Securities;
(iii) the negotiation of the terms of, and the execution and
delivery of, the Placement Agreement providing for the sale of the Capital
Securities; and
(iv) 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
Administrators and the Holders of a Majority in liquidation amount of the Common
Securities are authorized and directed to conduct the affairs of the Trust and
to operate the Trust so that (i) the Trust will not be deemed to be an
"investment company" required to be registered under the Investment Company Act
and (ii) the Trust will not fail to be classified as a grantor trust for United
States federal income tax purposes. The Administrator and the Holders of a
Majority in liquidation amount of the Common Securities shall not take any
action inconsistent with the treatment of the Debentures as indebtedness of the
Debenture Issuer for United States federal income tax purposes. In this
connection, the Holders of a Majority in liquidation amount of the Common
Securities are authorized to take any action, not inconsistent with applicable
laws, the Original Declaration or this Declaration, as amended from time to
time, that such Holders determine in their discretion to be necessary or
desirable for such purposes, even if such action adversely affects the interests
of the Holders of the Capital Securities.
(e) All expenses incurred by the Administrators or the Trustees
pursuant to this Section 2.6 shall be reimbursed by the Sponsor, and the
Trustees shall have no obligations with respect to such expenses.
(f) The assets of the Trust shall consist of the Trust Property.
(g) Legal title to all Trust Property shall be vested at all
times in the Institutional Trustee (in its capacity as such) and shall be held
and administered by the Institutional Trustee for the benefit of the Trust and
neither the Administrators nor the Holders in accordance with this Declaration.
SECTION 2.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Institutional Trustee shall
cause the Trust not to, engage in any activity other than as required or
authorized by this Declaration. In particular, the Trust shall not and the
Institutional Trustee shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders of the
Securities pursuant to the terms of this Declaration and of the Securities;
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(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust Property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(v) possess any power or otherwise act in such a way as to vary
the Trust assets or the terms of the Securities;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities; or
(vii) other than as provided in this Declaration (including
Annex I), (A) direct the time, method and place of exercising any trust
or power conferred upon the Debenture Trustee with respect to the
Debentures, (B) waive any past default that is waivable under the
Indenture, (C) exercise any right to rescind or annul any declaration
that the principal of all the Debentures shall be due and payable, or
(D) consent to any amendment, modification or termination of the
Indenture or the Debentures where such consent shall be required unless
the Trust shall have received an opinion of counsel to the effect that
such modification will not cause the Trust to cease to be classified as
a grantor trust for United States federal income tax purposes.
SECTION 2.8 Powers and Duties of the Institutional Trustee.
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Institutional Trustee in trust for the benefit of the
Trust. The right, title and interest of the Institutional Trustee to the
Debentures shall vest automatically in each Person who may hereafter be
appointed as Institutional Trustee in accordance with Section 4.7. Such vesting
and cessation of title shall be effective whether or not conveyancing documents
with regard to the Debentures have been executed and delivered.
(b) The Institutional Trustee shall not transfer its right, title and
interest in the Debentures to the Administrators or to the Delaware Trustee.
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Property Account") in the United States (as defined in
Treasury Regulations section 301.7701-7), in the name of and under the
exclusive control of the Institutional Trustee, and maintained in the
Institutional Trustee's trust department, on behalf of the Holders of
the Securities and, upon the receipt of payments of funds made in
respect of the Debentures held by the Institutional Trustee, deposit
such funds into the Property Account and make payments to the Holders
of the Capital Securities and Holders of the Common Securities from the
Property Account in accordance with Section 5.1. Funds in the Property
Account shall be held uninvested until disbursed in accordance with
this Declaration;
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(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of the Capital
Securities and the Common Securities to the extent the Debentures are
redeemed or mature; and
(iii) upon written notice of distribution issued by the
Administrators in accordance with the terms of the Securities, engage
in such ministerial activities as shall be necessary or appropriate to
effect the distribution of the Debentures to Holders of Securities upon
the occurrence of certain circumstances pursuant to the terms of the
Securities.
(d) The Institutional Trustee shall take all actions and
perform such duties as may be specifically required of the Institutional Trustee
pursuant to the terms of the Securities.
(e) The Institutional Trustee may bring or defend, pay,
collect, compromise, arbitrate, resort to legal action with respect to, or
otherwise adjust claims or demands of or against, the Trust (a "Legal Action")
which arises out of or in connection with an Event of Default of which a
Responsible Officer of the Institutional Trustee has actual knowledge or the
Institutional Trustee's duties and obligations under this Declaration or the
Trust Indenture Act; provided, however, that if an Event of Default has occurred
and is continuing and such event is attributable to the failure of the Debenture
Issuer to pay interest or principal on the Debentures on the date such interest
or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a Holder of the Capital Securities may directly institute
a proceeding for enforcement of payment to such Holder of the principal of or
interest on the Debentures having a principal amount equal to the aggregate
liquidation amount of the Capital Securities of such Holder (a "Direct Action")
on or after the respective due date specified in the Debentures. In connection
with such Direct Action, the rights of the Holders of the Common Securities will
be subrogated to the rights of such Holder of the Capital Securities to the
extent of any payment made by the Debenture Issuer to such Holder of the Capital
Securities in such Direct Action; provided, however, that a Holder of the Common
Securities may exercise such right of subrogation only so long as an Event of
Default with respect to the Capital Securities has occurred and is continuing.
(f) The Institutional Trustee shall continue to serve as a
Trustee until either:
(i) the Trust has been completely liquidated and the proceeds
of the liquidation distributed to the Holders of the Securities
pursuant to the terms of the Securities; or
(ii) a Successor Institutional Trustee has been appointed and
has accepted that appointment in accordance with Section 4.7.
(g) The Institutional Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a Holder of the Debentures
under the Indenture and, if an Event of Default occurs and is continuing, the
Institutional Trustee may, for the benefit of Holders of the Securities, enforce
its rights as holder of the Debentures subject to the rights of the Holders
pursuant to this Declaration (including Annex I) and the terms of the
Securities.
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The Institutional Trustee must exercise the powers set forth
in this Section 2.8 in a manner that is consistent with the purposes and
functions of the Trust set out in Section 2.3, and the Institutional Trustee
shall not take any action that is inconsistent with the purposes and functions
of the Trust set out in Section 2.3.
SECTION 2.9 Certain Duties and Responsibilities of the
Trustees and Administrators.
(a) The Institutional Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Declaration and no implied covenants shall be read into this
Declaration against the Institutional Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 6.7), the
Institutional Trustee shall exercise such of the rights and powers vested in it
by this Declaration, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(b) The duties and responsibilities of the Trustees and the
Administrators shall be as provided by this Declaration and, in the case of the
Institutional Trustee, by the Trust Indenture Act. Notwithstanding the
foregoing, no provision of this Declaration shall require the Trustees or
Administrators to expend or risk their own funds or otherwise incur any
financial liability in the performance of any of their duties hereunder, or in
the exercise of any of their rights or powers. Whether or not therein expressly
so provided, every provision of this Declaration relating to the conduct or
affecting the liability of or affording protection to the Trustees or
Administrators shall be subject to the provisions of this Article. Nothing in
this Declaration shall be construed to release an Administrator or Trustee from
liability for its own negligent action, its own negligent failure to act, or its
own willful misconduct. To the extent that, at law or in equity, a Trustee or an
Administrator has duties and liabilities relating to the Trust or to the
Holders, such Trustee or Administrator shall not be liable to the Trust or to
any Holder for such Trustee's or Administrator's good faith reliance on the
provisions of this Declaration. The provisions of this Declaration, to the
extent that they restrict the duties and liabilities of the Administrators or
the Trustees otherwise existing at law or in equity, are agreed by the Sponsor
and the Holders to replace such other duties and liabilities of the
Administrators or the Trustees.
(c) All payments made by the Institutional Trustee or a Paying
Agent in respect of the 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
Institutional Trustee or a Paying Agent to make payments in accordance with the
terms hereof. Each Holder, by its acceptance of a Security, agrees that it will
look solely to the revenue and proceeds from the Trust Property to the extent
legally available for distribution to it as herein provided and that the
Trustees and the Administrators are not personally liable to it for any amount
distributable in respect of any Security or for any other liability in respect
of any Security. This Section 2.9(c) does not limit the liability of the
Trustees expressly set forth elsewhere in this Declaration or, in the case of
the Institutional Trustee, in the Trust Indenture Act.
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(d) No provision of this Declaration shall be construed to
relieve the Institutional Trustee from liability with respect to matters that
are within the authority of the Institutional Trustee under this Declaration for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) the Institutional Trustee shall not be liable for any
error or judgment made in good faith by an Authorized Officer of the
Institutional Trustee, unless it shall be proved that the Institutional
Trustee was negligent in ascertaining the pertinent facts;
(ii) the Institutional 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 Capital Securities or the Common
Securities, as applicable, relating to the time, method and place of
conducting any proceeding for any remedy available to the Institutional
Trustee, or exercising any trust or power conferred upon the
Institutional Trustee under this Declaration;
(iii) the Institutional Trustee's sole duty with respect to
the custody, safe keeping and physical preservation of the Debentures
and the Property Account shall be to deal with such property in a
similar manner as the Institutional Trustee deals with similar property
for its own account, subject to the protections and limitations on
liability afforded to the Institutional Trustee under this Declaration
and the Trust Indenture Act;
(iv) the Institutional Trustee shall not be liable for any
interest on any money received by it except as it may otherwise agree
in writing with the Sponsor; and money held by the Institutional
Trustee need not be segregated from other funds held by it except in
relation to the Property Account maintained by the Institutional
Trustee pursuant to Section 2.8(c)(i) and except to the extent
otherwise required by law; and
(v) the Institutional Trustee shall not be responsible for
monitoring the compliance by the Administrators or the Sponsor with
their respective duties under this Declaration, nor shall the
Institutional Trustee be liable for any default or misconduct of the
Administrators or the Sponsor.
SECTION 2.10 Certain Rights of Institutional Trustee.
Subject to the provisions of Section 2.9:
(a) the Institutional Trustee may conclusively rely and shall
fully 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, direction, 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, sent or
presented by the proper party or parties;
(b) if (i) in performing its duties under this Declaration,
the Institutional Trustee is required to decide between alternative courses of
action, (ii) in construing any of the provisions of this Declaration, the
Institutional Trustee finds the same ambiguous or inconsistent with any other
provisions contained herein, or (iii) the Institutional Trustee is unsure
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of the application of any provision of this Declaration, then, except as to any
matter as to which the Holders of Capital Securities are entitled to vote under
the terms of this Declaration, the Institutional Trustee may deliver a notice to
the Sponsor requesting the Sponsor's opinion as to the course of action to be
taken and the Institutional Trustee shall take such action, or refrain from
taking such action, as the Institutional Trustee shall be directed, in which
event the Institutional Trustee shall have no liability except for its own
negligence or willful misconduct;
(c) any direction or act of the Sponsor or the Administrators
contemplated by this Declaration shall be sufficiently evidenced by an Officers'
Certificate;
(d) whenever in the administration of this Declaration, the
Institutional Trustee shall deem it desirable that a matter be proved or
established before undertaking, suffering or omitting any action hereunder, the
Institutional Trustee (unless other evidence is herein specifically prescribed)
may request and conclusively rely upon an Officers' Certificate as to factual
matters which, upon receipt of such request, shall be promptly delivered by the
Sponsor or the Administrators;
(e) the Institutional 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 Institutional Trustee may consult with counsel of its
selection (which counsel may be counsel to the Sponsor or any of its Affiliates)
and the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon and in accordance with such advice; the
Institutional Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of competent
jurisdiction;
(g) the Institutional Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration at the
request or direction of any of the Holders pursuant to this Declaration, unless
such Holders shall have offered to the Institutional Trustee security or
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction; provided, that nothing contained in this Section 2.10(g) shall be
taken to relieve the Institutional Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the rights and powers vested in it by
this Declaration;
(h) the Institutional Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond, debenture, note or other evidence of indebtedness or other paper
or document, unless requested in writing to do so by one or more Holders, but
the Institutional Trustee may make such further inquiry or investigation into
such facts or matters as it may see fit;
(i) the Institutional Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through its agents or attorneys and the Institutional Trustee shall not be
responsible for any misconduct or negligence on the
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part of, or for the supervision of, any such agent or attorney appointed with
due care by it hereunder;
(j) whenever in the administration of this Declaration the
Institutional Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action hereunder,
the Institutional Trustee (i) may request instructions from the Holders of the
Capital Securities, which instructions may be given only by
the Holders of the same proportion in liquidation amount of the Capital
Securities as would be entitled to direct the Institutional Trustee under the
terms of the Capital Securities in respect of such remedy, right or action, (ii)
may refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be fully protected in
acting in accordance with such instructions;
(k) except as otherwise expressly provided in this
Declaration, the Institutional Trustee shall not be under any obligation to take
any action that is discretionary under the provisions of this Declaration;
(l) when the Institutional Trustee incurs expenses or renders
services in connection with a Bankruptcy Event, such expenses (including the
fees and expenses of its counsel) and the compensation for such services are
intended to constitute expenses of administration under any bankruptcy law or
law relating to creditors rights generally;
(m) the Institutional Trustee shall not be charged with
knowledge of an Event of Default unless a Responsible Officer of the
Institutional Trustee obtains actual knowledge of such event or the
Institutional Trustee receives written notice of such event from any Holder;
(n) any action taken by the Institutional Trustee or its
agents hereunder shall bind the Trust and the Holders of the Securities, and the
signature of the Institutional Trustee or its agents alone shall be sufficient
and effective to perform any such action and no third party shall be required to
inquire as to the authority of the Institutional Trustee to so act or as to its
compliance with any of the terms and provisions of this Declaration, both of
which shall be conclusively evidenced by the Institutional Trustee's or its
agent's taking such action; and
(o) no provision of this Declaration shall be deemed to impose
any duty or obligation on the Institutional 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 Institutional
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 Institutional
Trustee shall be construed to be a duty.
SECTION 2.11 Delaware Trustee. Notwithstanding any other
provision of this Declaration other than Section 4.2, the Delaware Trustee shall
not be entitled to exercise any powers, nor shall the Delaware Trustee have any
of the duties and responsibilities of any of the Trustees or the Administrators
described in this Declaration. Except as set forth in Section 4.2, the Delaware
Trustee shall be a Trustee for the sole and limited purpose of fulfilling the
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requirements of ss. 3807 of the Business Trust Act.
SECTION 2.12 Execution of Documents. Subject to the provisions
of Section 2.11, unless otherwise determined in writing by the Institutional
Trustee, and except as otherwise required by the Business Trust Act, the
Institutional Trustee, or any one or more of the Administrators, as the case may
be, is authorized to execute on behalf of the Trust any documents that the
Trustees or the Administrators, as the case may be, have the power and
authority to execute pursuant to Section 2.6.
SECTION 2.13 Not Responsible for Recitals or Issuance of
Securities. The recitals contained in this Declaration and the Securities shall
be taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration, the Debentures or the Securities.
SECTION 2.14 Duration of Trust. The Trust, unless dissolved
pursuant to the provisions of Article VII hereof, shall have existence for
fifty-five (55) years from the Closing Date.
SECTION 2.15 Mergers. (a) The Trust may not 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 corporation or
other body, except as described in this Section 2.15(b) and (c).
(b) The Trust may, with the consent of the Institutional
Trustee and without the consent of the Delaware Trustee or the Holders of the
Capital Securities, consolidate, amalgamate, merge with or into, or be replaced
by a trust organized as such under the laws of any State; provided, that:
(i) if the Trust is not the Survivor, such successor entity
(the "Successor Entity") either:
(A) expressly assumes all of the obligations of the
Trust under the Securities; or
(B) substitutes for the Securities other securities
having substantially the same terms as the Securities (the
"Successor Securities") so that the Successor Securities rank
the same as the Securities rank with respect to Distributions
and payments upon Liquidation, redemption and otherwise;
(ii) the Institutional Trustee expressly appoints a trustee of
the Successor Entity that possesses the same powers and duties as the
Institutional Trustee as the Holder of the Debentures;
(iii) the Capital Securities or any Successor Securities are
listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or with another
organization on which the Capital Securities are then
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listed or quoted, if any;
(iv) such merger, consolidation, amalgamation or replacement
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 or replacement
does not adversely affect the rights, preferences and privileges of the
Holders of the Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of such
Holders' interests in the Successor Entity as a result of such merger,
consolidation, amalgamation or replacement);
(vi) such Successor Entity has a purpose substantially
identical to that of the Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Trust has received an opinion of a nationally
recognized independent counsel to the Trust experienced in such matters
to the effect that:
(A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences
and privileges of the Holders of the Securities (including any
Successor Securities) in any material respect (other than with
respect to any dilution of the Holders' interest in the
Successor Entity);
(B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor the
Successor Entity will be required to register as an Investment
Company;
(C) following such merger, consolidation,
amalgamation or replacement, the Trust (or the Successor
Entity) will continue to be classified as a grantor trust for
United States federal income tax purposes; and
(viii) the Sponsor guarantees the obligations of such
Successor Entity under the Successor Securities at least to the extent
provided by the Guarantee; and
(ix) prior to such merger, consolidation, amalgamation or
replacement, the Institutional Trustee shall have received an Officers'
Certificate of the Administrators and an opinion of counsel, each to
the effect that all conditions precedent of this paragraph (b) to such
transaction have been satisfied.
(c) Notwithstanding Section 2.15(b), the Trust shall not,
except with the consent of Holders of 100% in liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or to be replaced by
any other entity or permit any other entity to consolidate, amalgamate, merge
with or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or Successor Entity to be classified as other
than a grantor trust for United States federal income tax purposes.
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ARTICLE III SPONSOR
SECTION 3.1 Sponsor's Purchase of Common Securities. On the
Closing Date, the Sponsor will purchase all of the Common Securities issued by
the Trust, in an amount at least equal to 3% of the capital of the Trust, at the
same time as the Capital Securities are sold.
SECTION 3.2 Responsibilities of the Sponsor. In connection
with the issue and sale of the Capital Securities, the Sponsor shall have the
exclusive right and responsibility to engage in the following activities:
(a) to determine the States in which to take appropriate
action to qualify or register for sale all or part of the Capital Securities and
to do any and all such acts, other than actions which must be taken by the
Trust, and advise the Trust of actions it must take, and prepare for execution
and filing any documents to be executed and filed by the Trust, as the Sponsor
deems necessary or advisable in order to comply with the applicable laws of any
such States;
(b) to prepare for filing and request the Administrators to
cause the filing by the Trust, as may be appropriate, of an application to the
PORTAL system, for listing or quotation upon notice of issuance of any Capital
Securities, if required ; and
(c) to negotiate the terms of and/or execute on behalf of the
Trust, the Placement Agreement and other related agreements providing for the
sale of the Capital Securities.
ARTICLE IV
TRUSTEES AND ADMINISTRATORS
SECTION 4.1 Number of Trustees. The number of Trustees
initially shall be two, and:
(a) at any time before the issuance of any Securities, the
Sponsor may, by written instrument, increase or decrease the number of Trustees;
and
(b) after the issuance of any Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a Majority in
liquidation amount of the Capital Securities voting as a class at a meeting of
the Holders of the Capital Securities; provided, however, that there shall be a
Delaware Trustee if required by Section 4.2; and there shall always be one
Trustee who shall be the Institutional Trustee, and such Trustee may also serve
as Delaware Trustee if it meets the applicable requirements, in which case
Section 2.11 shall have no application to such entity in its capacity as
Institutional Trustee.
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SECTION 4.2 Delaware Trustee. If required by the Business
Trust Act, one Trustee (the "Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of
Delaware; or
(b) if not a natural person, an entity which is organized
under the laws of the United States or any State thereof or the District of
Columbia, has its principal place of business in the State of Delaware, and
otherwise meets the requirements of applicable law, including ss.3807 of the
Business Trust Act.
SECTION 4.3 Institutional Trustee; Eligibility. (a) There
shall at all times be one Trustee which shall act as Institutional Trustee which
shall:
(i) not be an Affiliate of the Sponsor;
(ii) not offer or provide credit or credit enhancement to
the Trust; and
(iii) be a banking corporation organized and doing business
under the laws of the United States of America or any State thereof or
of the District of Columbia authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000), and subject to supervision
or examination by Federal, State or District of Columbia authority. If
such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the supervising or examining
authority referred to above, then for the purposes of this Section
4.3(a)(ii), the combined capital and surplus of such corporation shall
be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published.
(b) If at any time the Institutional Trustee shall cease to be
eligible to so act under Section 4.3(a), the Institutional Trustee shall
immediately resign in the manner and with the effect set forth in Section
4.7(a).
(c) If the Institutional Trustee has or shall acquire any
"conflicting interest" within the meaning of ss. 310(b) of the Trust Indenture
Act, the Institutional Trustee shall either eliminate such interest or resign,
to the extent and in the manner provided by, and subject to this Declaration.
(d) The initial Institutional Trustee shall be The Bank of New
York.
SECTION 4.4 Certain Qualifications of the Delaware Trustee
Generally. The Delaware Trustee shall be a U.S. Person and either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more Authorized Officers.
SECTION 4.5 Administrators. Each Administrator shall be a
U.S. Person. The initial Administrators shall be Denny Kelly and Elaine Corvin.
There shall at all times be at least one Administrator.
Except where a requirement for action by a specific number of
Administrators is
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expressly set forth in this Declaration and except with respect to any action
the taking of which is the subject of a meeting of the Administrators any action
required or permitted to be taken by the Administrators may be taken by, and any
power of the Administrators may be exercised by, or with the consent of, any one
such Administrator.
SECTION 4.6 Initial Delaware Trustee. The initial Delaware
Trustee shall be The Bank of New York (Delaware).
SECTION 4.7 Appointment, Removal and Resignation of Trustees
and Administrators.
(a) No resignation or removal of any Trustee (the "Relevant
Trustee") and no appointment of a successor Trustee pursuant to this Article
shall become effective until the acceptance of appointment by the successor
Trustee in accordance with the applicable requirements of this Section 4.7.
Subject to the immediately preceding paragraph, a Relevant
Trustee may resign at any time by giving written notice thereof to the Holders
of the Securities and by appointing a successor Relevant Trustee. Upon the
resignation of the Institutional Trustee, the Institutional Trustee shall
appoint a successor by requesting from each of Bank One Trust Company, NA,
Bankers Trust Company and State Street Bank & Trust Company, its expenses and
charges to serve as the successor Institutional Trustee on a form provided by
the Administrators, and selecting the Person who agrees to the lowest expense
and charges (the "Successor Institutional Trustee"). If the instrument of
acceptance by the successor Relevant Trustee required by Section 4.7 shall not
have been delivered to the Relevant Trustee within 60 days after the giving of
such notice of resignation or delivery of the instrument of removal, the
Relevant Trustee may petition, at the expense of the Trust, any Federal, State
or District of Columbia court of competent jurisdiction for the appointment of a
successor Relevant Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper, appoint a Relevant Trustee. The
Institutional Trustee shall have no liability for the selection of such
successor pursuant to this Section 4.7.
The Institutional Trustee or the Delaware Trustee, or both of
them, may be removed by the 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) if an Event of Default shall
have occurred and be continuing. If any Trustee shall be so removed, the Holders
of Capital Securities, by act of the Holders of a Majority in liquidation amount
of the Capital Securities then outstanding delivered to the Relevant Trustee,
shall promptly appoint a successor Relevant Trustee or Trustees, and such
successor Trustee shall comply with the applicable requirements of this Section
4.7. If no successor Relevant Trustee shall have been so appointed by the
Holders of a Majority in liquidation amount of the Capital Securities and
accepted appointment in the manner required by this Section 4.7, within 30 days
after delivery of an instrument of removal, the Relevant Trustee or any Holder
who has been a Holder of the Securities for at least six months may, on behalf
of himself and all others similarly situated, petition any Federal, State or
District of Columbia court of competent jurisdiction for the appointment of a
successor Relevant Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper, appoint a successor Relevant Trust or
Trustees.
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The Institutional Trustee shall give notice of each
resignation and each removal of a Trustee and each appointment of a successor
Trustee to all Holders in the manner provided in Section 4.7(b) and shall give
notice to the Sponsor. Each notice shall include the name of the successor
Relevant Trustee and the address of its Corporate Trust Office if it is the
Institutional Trustee.
Notwithstanding the foregoing or any other provision of this
Declaration, in the event a Delaware Trustee who is a natural person dies or
becomes incompetent or incapacitated, the vacancy created by such death,
incompetence or incapacity may be filled by the Institutional Trustee following
the procedures in this Section 4.7 (with the successor being a Person who
satisfies the eligibility requirement for a Delaware Trustee set forth in this
Declaration) (the "Successor Delaware Trustee").
(b) 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 Securities and the Trust and (b) shall add to or
change any of the provisions of this Declaration as shall be necessary to
provide for or facilitate the administration of the Trust by more than one
Relevant Trustee, it being understood that nothing herein or in such amendment
shall constitute such Relevant Trustees co-trustees and upon the execution and
delivery of such amendment the resignation or removal of the retiring Relevant
Trustee shall become effective to the extent provided therein and each such
successor Relevant Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring
Relevant Trustee; but, on request of the Trust of 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 Securities
and the Trust.
(c) No Institutional Trustee or Delaware Trustee shall be
liable for the acts or omissions to act of any Successor Institutional Trustee
or Successor Delaware Trustee, as the case may be.
(d) The Holders of the Capital Securities will have no right
to vote to appoint, remove or replace the Administrators, which voting rights
are vested exclusively in the Holder of the Common Securities.
SECTION 4.8 Vacancies Among Trustees. If a Trustee ceases to
hold office for any reason and the number of Trustees is not reduced pursuant to
Section 4.1, or if the number of Trustees is increased pursuant to Section 4.1,
a vacancy shall occur. A resolution certifying the existence of such vacancy by
the Trustees or, if there are more than two, a majority of the Trustees shall be
conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with an a Trustee appointed in accordance with Section 4.7.
SECTION 4.9 Effect of Vacancies. The death, resignation,
retirement, removal, bankruptcy, dissolution, liquidation, incompetence or
incapacity to perform the duties of a
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Trustee shall not operate to dissolve, terminate or annul the Trust. Whenever a
vacancy in the number of Trustees shall occur, until such vacancy is filled by
the appointment of a Trustee in accordance with Section 4.7, the Institutional
Trustee shall have all the powers granted to the Trustees and shall discharge
all the duties imposed upon the Trustees by this Declaration.
SECTION 4.10 Meetings of the Trustees and the Administrators.
Meetings of the Trustees or the Administrators shall be held from time to time
upon the call of any Trustee or Administrator, as applicable. Regular meetings
of the Trustees and the Administrators, respectively, may be in person in the
United States or by telephone, at a place (if applicable) and time fixed by
resolution of the Trustees or the Administrators, as applicable. Notice of any
in- person meetings of the Trustees or the Administrators shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a hard
copy by overnight courier) not less than 48 hours before such meeting. Notice of
any telephonic meetings of the Trustees or the Administrators or any committee
thereof shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours
before a meeting. Notices shall contain a brief statement of the time, place and
anticipated purposes of the meeting. The presence (whether in person or by
telephone) of a Trustee or an Administrator, as the case may be, at a meeting
shall constitute a waiver of notice of such meeting except where a Trustee or an
Administrator, as the case may be, attends a meeting for the express purpose of
objecting to the transaction of any activity on the ground that the meeting has
not been lawfully called or convened. Unless provided otherwise in this
Declaration, any action of the Trustees or the Administrators, as the case may
be, may be taken at a meeting by vote of a majority of the Trustees or the
Administrators present (whether in person or by telephone) and eligible to vote
with respect to such matter; provided, that a Quorum is present, or without a
meeting by the unanimous written consent of the Trustees or the Administrators.
Meetings of the Trustees and the Administrators together shall be held from the
time to time upon the call of any Trustee or Administrator.
SECTION 4.11 Delegation of Power. (a) Any Trustee or any
Administrator, as the case may be, may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 that is
a U.S. Person his or her power for the purpose of executing any documents
contemplated in Section 2.6; and
(b) the Trustees shall have power to delegate from time to
time to such of their number or to any officer of the Trust that is a U.S.
Person, the doing of such things and the execution of such instruments either in
the name of the Trust or the names of the Trustees or otherwise as the Trustees
may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of the Trust, as set forth herein.
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SECTION 4.12 Conversion, Consolidation or Succession to
Business. Any Person into which the Institutional Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either may
be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Institutional Trustee or the Delaware Trustee, as the
case may be, shall be a party, or any Person succeeding to all or substantially
all the corporate trust business of the Institutional Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the Institutional Trustee
or the Delaware Trustee, as the case may be, hereunder, provided such Person
shall be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto.
ARTICLE V
DISTRIBUTIONS
SECTION 5.1 Distributions. Holders shall receive Distributions
in accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Capital Securities and the Common Securities
in accordance with the preferences set forth in their respective terms. If and
to the extent that the Debenture Issuer makes a payment of interest (including
any Additional Interest or Deferred Interest) and/or principal on the Debentures
held by the Institutional Trustee (the amount of any such payment being a
"Payment Amount"), the Institutional Trustee shall and is directed, to the
extent funds are available for that purpose, to make a distribution (a
"Distribution") of the Payment Amount to Holders.
ARTICLE VI
ISSUANCE OF SECURITIES
SECTION 6.1 General Provisions Regarding Securities.
(a) The Administrators shall on behalf of the Trust issue one
series of capital securities substantially in the form of Exhibit A-1
representing undivided beneficial interests in the assets of the Trust having
such terms as are set forth in Annex I (the "Capital Securities") and one series
of common securities representing undivided beneficial interests in the assets
of the Trust having such terms as are set forth in Annex I (the "Common
Securities"). The Trust shall issue no securities or other interests in the
assets of the Trust other than the Capital Securities and the Common Securities.
The Capital Securities rank pari passu and payment thereon shall be made Pro
Rata with the Common Securities except that, where an Event of Default has
occurred and is continuing, the rights of Holders of the Common Securities to
payment in respect of Distributions and payments upon liquidation, redemption
and otherwise are subordinated to the rights to payment of the Holders of the
Capital Securities.
(b) The Certificates shall be signed on behalf of the Trust by
one or more Administrators. Such signature shall be the facsimile or manual
signature of any Administrator. In case any Administrator of the Trust who shall
have signed any of the Securities shall cease to be such Administrator before
the Certificates so signed shall be delivered by the Trust, such Certificates
nevertheless may be delivered as though the person who signed such Certificates
had not ceased to be such Administrator; and any Certificate may be signed on
behalf of the Trust by
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such person who, at the actual date of execution of such Security, shall be an
Administrator of the Trust, although at the date of the execution and delivery
of the Declaration any such person was not such an Administrator. A Capital
Security shall not be valid until authenticated by the manual signature of an
Authorized Officer of the Institutional Trustee. Such signature shall be
conclusive evidence that the Capital Security has been authenticated under this
Declaration. Upon written order of the Trust signed by one Administrator, the
Institutional Trustee shall authenticate the Capital Securities for original
issue. The Institutional Trustee may appoint an authenticating agent that is a
U.S. Person acceptable to the Trust to authenticate the Capital Securities. A
Common Security need not be so authenticated.
(c) The consideration received by the Trust for the issuance
of the Securities shall constitute a contribution to the capital of the Trust
and shall not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and non-assessable.
(e) Every Person, by virtue of having become a Holder or a
Capital Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the terms
of, and shall be bound by, this Declaration and the Guarantee.
SECTION 6.2 Paying Agent, Transfer Agent and Registrar. The
Trust shall maintain in New York, New York, an office or agency where the
Capital Securities may be presented for payment (the "Paying Agent"), and an
office or agency where Securities may be presented for registration of transfer
(the "Transfer Agent"). The Trust shall keep or cause to be kept at such office
or agency a register for the purpose of registering Securities and transfers and
exchanges of Securities, such register to be held by a registrar (the
"Registrar"). The Administrators may appoint the Paying Agent, the Registrar and
the Transfer Agent, and may appoint one or more additional Paying Agents or one
or more co-Registrars, or one or more co-Transfer Agents in such other
locations as it shall determine. The term "Paying Agent" includes any additional
paying agent, the term "Registrar" includes any additional registrar or co-
Registrar and the term "Transfer Agent" includes any additional transfer agent.
The Administrators may change any Paying Agent without prior notice to any
Holder. The Administrators shall notify the Institutional Trustee of the name
and address of any Paying Agent, Transfer Agent and Registrar not a party to
this Declaration. The Administrators hereby appoint the Institutional Trustee to
act as Paying Agent, Transfer Agent and Registrar for the Capital Securities and
the Common Securities. The Institutional Trustee or any of its Affiliates in the
United States may act as Paying Agent, Transfer Agent or Registrar.
SECTION 6.3 Form and Dating. The Capital Securities and the
Institutional Trustee's certificate of authentication thereon shall be
substantially in the form of Exhibit A-1, and the Common Securities shall be
substantially in the form of Exhibit A-2, each of which is hereby incorporated
in and expressly made a part of this Declaration. Certificates may be typed,
printed, lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Administrators, as conclusively evidenced by their
execution thereof. The Securities may have letters, numbers, notations or other
marks of identification or designation
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and such legends or endorsements required by law, stock exchange rule,
agreements to which the Trust is subject, if any, or usage (provided, that any
such notation, legend or endorsement is in a form acceptable to the Sponsor).
The Trust at the direction of the Sponsor shall furnish any such legend not
contained in Exhibit A-1 to the Institutional Trustee in writing. Each Capital
Security shall be dated the date of its authentication. The terms and provisions
of the Securities set forth in Annex I and the forms of Securities set forth in
Exhibits A-1 and A-2 are part of the terms of this Declaration and to the extent
applicable, the Institutional Trustee, the Delaware Trustee, the Administrators
and the Sponsor, by their execution and delivery of this Declaration, expressly
agree to such terms and provisions and to be bound thereby. Capital Securities
will be issued only in blocks having a stated liquidation amount of not less
than $1,000.
The Capital Securities are being offered and sold by the Trust
pursuant to the Placement Agreement in definitive, registered form without
coupons with the Restricted Securities Legend.
SECTION 6.4 Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to the
Registrar, or if the Registrar shall receive evidence to their satisfaction of
the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Registrar, the
Administrators and the Institutional Trustee such security or indemnity as may
be required by them to keep each of them harmless; then, in the absence of
notice that such Certificate shall have been acquired by a bona fide purchaser,
an Administrator on behalf of the Trust shall execute (and in the case of a
Capital Security Certificate, the Institutional Trustee shall authenticate) and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like denomination. In connection with
the issuance of any new Certificate under this Section 6.4, the Registrar or the
Administrators 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 Certificate issued pursuant to this Section shall constitute
conclusive evidence of an ownership interest in the relevant Securities, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
SECTION 6.5 Temporary Securities. Until definitive Securities
are ready for delivery, the Administrators may prepare and, in the case of the
Capital Securities, the Institutional Trustee shall authenticate, temporary
Securities. Temporary Securities shall be substantially in form of definitive
Securities but may have variations that the Administrators consider appropriate
for temporary Securities. Without unreasonable delay, the Administrators shall
prepare and, in the case of the Capital Securities, the Institutional Trustee
shall authenticate definitive Securities in exchange for temporary Securities.
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SECTION 6.6 Cancellation. The Administrators at any time may
deliver Securities to the Institutional Trustee for cancellation. The Registrar
shall forward to the Institutional Trustee any Securities surrendered to it for
registration of transfer, redemption or payment. The Institutional Trustee shall
promptly cancel all Securities surrendered for registration of transfer,
payment, replacement or cancellation and shall dispose of such canceled
Securities as the Administrators direct. The Administrators may not issue new
Securities to replace Securities that have been paid or that have been delivered
to the Institutional Trustee for cancellation.
SECTION 6.7 Rights of Holders; Waivers of Past Defaults.
(a) The legal title to the Trust Property is vested
exclusively in the Institutional Trustee (in its capacity as such) in accordance
with Section 2.5, and the Holders shall not have any right or title therein
other than the undivided beneficial interest in the assets of the Trust
conferred by their 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 Securities shall be personal property giving only the
rights specifically set forth therein and in this Declaration. The Securities
shall have no preemptive or similar rights and when issued and delivered to
Holders against payment of the purchase price therefor will be fully paid and
nonassessable by the Trust.
(b) For so long as any Capital Securities remain outstanding,
if, upon an Indenture 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 a majority in liquidation amount of the Capital
Securities then outstanding shall have the right to make such declaration by a
notice in writing to the Institutional Trustee, the Sponsor and the Debenture
Trustee.
At any time after 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 provided in the
Indenture, if the Institutional Trustee fails to annul any such declaration and
waive such default, the Holders of at least a majority in liquidation amount of
the Capital Securities, by written notice to the Institutional Trustee, the
Sponsor and the Debenture Trustee, may rescind and annul such declaration and
its consequences if:
(i) the Sponsor has paid or deposited with the Debenture
Trustee a sum sufficient to pay
(A) all overdue installments of interest on all of
the Debentures,
(B) any accrued Deferred Interest on all of the
Debentures,
(C) the principal of (and premium, if any, on) any
Debentures that have become due otherwise than by such
declaration of acceleration and interest and Deferred
Interest thereon at the rate borne by the Debentures, and
(D) all sums paid or advanced by the Debenture
Trustee under the Indenture and the reasonable compensation,
expenses, disbursements and
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advances of the Debenture Trustee and the Institutional 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 that has become
due solely by such acceleration, have been cured or waived as provided
in Section 5.07 of the Indenture.
The Holders of at least a majority in liquidation amount of
the Capital Securities may, on behalf of the Holders of all the Capital
Securities, waive any past default or Event of Default under the Indenture,
except a default or Event of Default in the payment of principal or interest
(unless such default or Event of 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 or
Event of Default in respect of a covenant or provision that under the Indenture
cannot be modified or amended without the consent of the holder of each
outstanding Debenture. No such rescission shall affect any subsequent default or
impair any right consequent thereon.
Upon receipt by the Institutional Trustee of written notice
declaring such an acceleration, or rescission and annulment thereof, by Holders
of any part of the Capital Securities 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
Institutional Trustee receives such notice. The Holders on such record date, or
their duly designated proxies, and only such Persons, shall be entitled to join
in such notice, whether or not such Holders remain Holders after such record
date; provided, that, unless such declaration of acceleration, or rescission and
annulment, as the case may be, shall have become effective by virtue of the
requisite percentage having joined in such notice prior to the day that is 90
days after such record date, such notice of declaration of acceleration, or
rescission and annulment, as the case may be, shall automatically and without
further action by any Holder be canceled and of no further effect. Nothing in
this paragraph shall prevent a Holder, or a proxy of a Holder, from giving,
after expiration of such 90-day period, a new written notice of declaration of
acceleration, or rescission and annulment thereof, as the case may be, that is
identical to a written notice that 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 6.7.
(d) Except as otherwise provided in paragraphs (a) and (b) of
this Section 6.7, the Holders of at least a majority in liquidation amount of
the Capital Securities may, on behalf of the Holders of all the Capital
Securities, waive any past default or Event of Default and its consequences.
Upon such waiver, any such default or Event of Default shall cease to exist, and
any default or Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Trust Agreement, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.
ARTICLE VII
DISSOLUTION AND TERMINATION OF TRUST
SECTION 7.1 Dissolution and Termination of Trust. (a) The
Trust shall dissolve on the first to occur of:
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(i) unless earlier dissolved, on March 8, 2055, the
expiration of the term of the Trust;
(ii) upon a Bankruptcy Event with respect to the Sponsor, the
Trust or the Debenture Issuer;
(iii) (other than in connection with a merger, consolidation
or similar transaction not prohibited by the Indenture, this
Declaration or the Guarantee, as the case may be) upon the filing of a
certificate of dissolution or its equivalent with respect to the
Sponsor; upon the revocation of the charter of the Sponsor and the
expiration of 90 days after the date of revocation without a
reinstatement thereof;
(iv) upon the distribution of the Debentures to the Holders
of the Securities, upon exercise of the right of the Holder of all of
the outstanding Common Securities to dissolve the Trust as provided in
Annex I hereto;
(v) upon the entry of a decree of judicial dissolution of
the Holder of the Common Securities, the Sponsor, the Trust or the
Debenture Issuer;
(vi) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the
Securities; or
(vii) before the issuance of any Securities, with the consent
of all of the Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 7.1(a), and after satisfaction of liabilities to
creditors of the Trust as required by applicable law, including Section 3808 of
the Business Trust Act, and subject to the terms set forth in Annex I, the
Institutional Trustee shall terminate the Trust by filing a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 2.9 and Article IX shall
survive the termination of the Trust.
ARTICLE VIII
TRANSFER OF INTERESTS
SECTION 8.1 General. (a) Where Capital Securities are
presented to the Registrar or a co-registrar with a request to register a
transfer or to exchange them for an equal number of Capital Securities
represented by different certificates, the Registrar shall register the transfer
or make the exchange if its requirements for such transactions are met. To
permit registrations of transfer and exchanges, the Trust shall issue and the
Institutional Trustee shall authenticate Capital Securities at the Registrar's
request.
(b) Upon issuance of the Common Securities, the Sponsor shall
acquire and retain beneficial and record ownership of the Common Securities and
for so long as
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the Securities remain outstanding, the Sponsor shall maintain 100% ownership of
the Common Securities; provided, however, that any permitted successor of the
Sponsor under the Indenture that is a U.S. Person may succeed to the Sponsor's
ownership of the Common Securities.
(c) Capital Securities may only be transferred, in whole or in
part, in accordance with the terms and conditions set forth in this Declaration
and in the terms of the Securities. To the fullest extent permitted by
applicable law, any transfer or purported transfer of any Security not made in
accordance with this Declaration shall be null and void and will be deemed to be
of no legal effect whatsoever and any such transferee shall be deemed not to be
the holder of such Capital Securities for any purpose, including but not limited
to the receipt of Distributions on such Capital Securities, and such transferee
shall be deemed to have no interest whatsoever in such Capital Securities.
(d) The Registrar shall provide for the registration of
Securities and of transfers of Securities, which will be effected without charge
but only upon payment (with such indemnity as the Registrar may require) in
respect of any tax or other governmental charges that may be imposed in relation
to it. Upon surrender for registration of transfer of any Securities, the
Registrar shall cause one or more new Securities to be issued in the name of the
designated transferee or transferees. Every Security surrendered for
registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by the Holder or
such Holder's attorney duly authorized in writing. Each Security surrendered for
registration of transfer shall be canceled by the Institutional Trustee pursuant
to Section 6.6. A transferee of a Security shall be entitled to the rights and
subject to the obligations of a Holder hereunder upon the receipt by such
transferee of a Security. By acceptance of a Security, each transferee shall be
deemed to have agreed to be bound by this Declaration.
(e) The Trust shall not be required (i) to issue, register the
transfer of, or exchange any Securities during a period beginning at the opening
of business 15 days before the day of any selection of Securities for redemption
and ending at the close of business on the earliest date on which the relevant
notice of redemption is deemed to have been given to all Holders of the
Securities to be redeemed, or (ii) to register the transfer or exchange of any
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.
SECTION 8.2 Transfer Procedures and Restrictions.
(a) General. (i) The Capital Securities shall bear the
Restricted Securities Legend, which shall not be removed unless there is
delivered to the Trust such satisfactory evidence, which may include an opinion
of counsel licensed to practice law in the State of New York, as may be
reasonably required by the Trust, that neither the legend nor the restrictions
on transfer set forth therein are required to ensure that transfers thereof
comply with the provisions of the Securities Act or that such Securities are not
"restricted" within the meaning of Rule 144 under the Securities Act. Upon
provision of such satisfactory evidence, the Institutional Trustee, at the
written direction of the Trust, shall authenticate and deliver Capital
Securities that do not bear the legend.
(b) Transfer and Exchange of Capital Securities. When Capital
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Securities are presented to the Registrar (x) to register the transfer of such
Capital Securities, or (y) to exchange such Capital Securities for an equal
number of Capital Securities of another number, the Registrar shall register the
transfer or make the exchange as requested if its reasonable requirements for
such transaction are met; provided, however, that the Capital Securities
surrendered for registration of transfer or exchange shall be duly endorsed or
accompanied by a written instrument of transfer in form reasonably satisfactory
to the Trust and the Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing and (i) if such Capital Securities are being
transferred to a QIB, accompanied by a certificate of the transferee
substantially in the form set forth as Exhibit C hereto or (ii) if such Capital
Securities are being transferred otherwise than to a QIB, accompanied by a
certificate of the transferee substantially in the form set forth as Exhibit B
hereto.
(c) Legend. Except as permitted by Section 8.2(a), each
Capital Security shall bear a legend (the "Restricted Securities Legend") in
substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF
THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE
TRANSFER SUCH SECURITY ONLY (A) TO THE DEBENTURE ISSUER OR THE TRUST, (B)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (C) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT
IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF AN
"ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE DEBENTURE
ISSUER'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSES (C) OR (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN
ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY OF WHICH MAY BE OBTAINED FROM
THE DEBENTURE ISSUER OR THE TRUST. THE HOLDER OF THIS SECURITY AGREES THAT IT
WILL COMPLY WITH THE FOREGOING RESTRICTIONS.
(d) Obligations with Respect to Transfers and
Exchanges of Capital Securities.
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(i) To permit registrations of transfers and exchanges, the
Trust shall execute and the Institutional Trustee shall authenticate
Capital Securities at the Registrar's request.
(ii) Registrations of transfers or exchanges will be effected
without charge, but only upon payment (with such indemnity as the
Registrar or the Sponsor may require) in respect of any tax or other
governmental charge that may be imposed in relation to it.
(iii) The Registrar shall not be required to register the
transfer of or exchange of any Capital Security during a period
beginning at the opening of business 15 days before the day of any
selection of any Capital Security for redemption set forth in the terms
and ending at the close of business on the earliest date on which the
relevant notice of redemption is deemed to have been given to all
Holders of Capital Securities to be redeemed.
(iv) All Capital Securities issued upon any registration of
transfer or exchange pursuant to the terms of this Declaration shall
evidence the same security and shall be entitled to the same benefits
under this Declaration as the Capital Securities surrendered upon such
registration of transfer or exchange.
SECTION 8.3 Deemed Security Holders. The Trust, the
Administrators, the Trustees, the Paying Agent, the Transfer Agent or the
Registrar may treat the Person in whose name any Certificate shall be registered
on the books and records of the Trust as the sole holder of such Certificate and
of the Securities represented by such Certificate for purposes of receiving
Distributions and for all other purposes whatsoever and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in such
Certificate or in the Securities represented by such Certificate on the part of
any Person, whether or not the Trust, the Administrators, the Trustees, the
Paying Agent, the Transfer Agent or the Registrar shall have actual or other
notice thereof.
ARTICLE IX
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 9.1 Liability. (a) Except as expressly set forth in
this Declaration, the Guarantee and the terms of the Securities, the Sponsor
shall not be:
(i) personally liable for the return of any portion of the
capital contributions (or any return thereon) of the Holders of the
Securities which shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder of the
Securities any deficit upon dissolution of the Trust or otherwise.
(b) 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
Securities) to the extent not satisfied out of the Trust's assets.
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(c) Pursuant to ss. 3803(a) of the Business Trust Act, the
Holders of the Capital Securities shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
SECTION 9.2 Exculpation. (a) No Indemnified Person shall be
liable, responsible or accountable in damages or otherwise to the Trust or any
Covered Person for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith on behalf
of the Trust and in a manner such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Declaration or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's
negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and, if selected by such Indemnified Person,
has been selected by such Indemnified Person with reasonable care by or on
behalf of the Trust, including information, opinions, reports or statements as
to the value and amount of the assets, liabilities, profits, losses or any other
facts pertinent to the existence and amount of assets from which Distributions
to Holders of Securities might properly be paid.
SECTION 9.3 Fiduciary Duty. (a) To the extent that, at law or
in equity, an Indemnified Person has duties (including fiduciary duties) and
liabilities relating thereto to the Trust or to any other Covered Person, an
Indemnified Person acting under this Declaration shall not be liable to the
Trust or to any other Covered Person for its good faith reliance on the
provisions of this Declaration. The provisions of this Declaration, to the
extent that they restrict the duties and liabilities of an Indemnified Person
otherwise existing at law or in equity (other than the duties imposed on the
Institutional Trustee under the Trust Indenture Act), are agreed by the parties
hereto to replace such other duties and liabilities of the Indemnified Person.
(b) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar authority,
the Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have no
duty or obligation to give any consideration to any interest of or
factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard,
the Indemnified Person shall act under such express standard and shall
not be subject to any other or different standard imposed by this
Declaration or by applicable law.
SECTION 9.4 Indemnification. (a) (i) The Sponsor shall
indemnify, to the full extent permitted by law, any Indemnified Person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust) by
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reason of the fact that he is or was an Indemnified Person against expenses
(including attorneys' fees and expenses), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the Indemnified Person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the Trust,
and, with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(ii) The Sponsor shall indemnify, to the full extent
permitted by law, any Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Trust to procure a judgment
in its favor by reason of the fact that he is or was an Indemnified
Person against expenses (including attorneys' fees and expenses)
actually and reasonably incurred by him in connection with the defense
or settlement of such action or suit if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best
interests of the Trust and except that no such indemnification shall
be made in respect of any claim, issue or matter as to which such
Indemnified Person shall have been adjudged to be liable to the Trust
unless and only to the extent that the Court of Chancery of Delaware
or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which such Court of
Chancery or such other court shall deem proper.
(iii) To the extent that an Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action
without prejudice or the settlement of an action without admission of
liability) in defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 9.4(a), or in defense of any
claim, issue or matter therein, he shall be indemnified, to the full
extent permitted by law, against expenses (including attorneys' fees
and expenses) actually and reasonably incurred by him in connection
therewith.
(iv) Any indemnification of an Administrator under paragraphs
(i) and (ii) of this Section 9.4(a) (unless ordered by a court) shall
be made by the Sponsor only as authorized in the specific case upon a
determination that indemnification of the Indemnified Person is proper
in the circumstances because he has met the applicable standard of
conduct set forth in paragraphs (i) and (ii). Such determination shall
be made (A) by the Administrators by a majority vote of a Quorum
consisting of such Administrators who were not parties to such action,
suit or proceeding, (B) if such a Quorum is not obtainable, or, even if
obtainable, if a Quorum of disinterested Administrators so directs, by
independent legal counsel in a written opinion, or (C) by the Common
Security Holder of the Trust.
(v) To the fullest extent permitted by law, expenses
(including attorneys' fees and expenses) incurred by an Indemnified
Person in defending a civil, criminal,
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administrative or investigative action, suit or proceeding referred to
in paragraphs (i) and (ii) of this Section 9.4(a) shall be paid by the
Sponsor in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such
Indemnified Person to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Sponsor as
authorized in this Section 9.4(a). Notwithstanding the foregoing, no
advance shall be made by the Sponsor if a determination is reasonably
and promptly made (A) by the Administrators by a majority vote of a
Quorum of disinterested Administrators, (B) if such a Quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested
Administrators so directs, by independent legal counsel in a written
opinion or (C) by the Common Security Holder of the Trust, that, based
upon the facts known to the Administrators, counsel or the Common
Security Holder at the time such determination is made, such
Indemnified Person acted in bad faith or in a manner that such Person
did not believe to be in or not opposed to the best interests of the
Trust, or, with respect to any criminal proceeding, that such
Indemnified Person believed or had reasonable cause to believe his
conduct was unlawful. In no event shall any advance be made in
instances where the Administrators, independent legal counsel or the
Common Security Holder reasonably determine that such Person
deliberately breached his duty to the Trust or its Common or Capital
Security Holders.
(vi) Each Trustee, at the sole cost and expense of the
Sponsor, retains the right to representation by counsel of its own
choosing in any action, suit or any other proceeding hereunder or
against it by relation to the foregoing, without affecting its right to
indemnification hereunder or waiving any rights afforded to it under
this Declaration or applicable law.
(b) The Sponsor shall indemnify, to the fullest extent
permitted by applicable law, each 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 arising out of or in
connection with or 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 Declaration, except that no Indemnified Person shall
be entitled to be indemnified in respect of any loss, damage or claim incurred
by such Indemnified Person by reason of gross negligence or willful misconduct
with respect to such acts or omissions.
(c) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other paragraphs of this Section 9.4 shall not
be deemed exclusive of any other rights to which those seeking indemnification
and advancement of expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Sponsor or Capital Security
Holders of the Trust or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office. All rights to
indemnification under this Section 9.4 shall be deemed to be provided by a
contract between the Sponsor and each Indemnified Person who serves in such
capacity at any time while this Section 9.4 is in effect. Any repeal or
modification of this Section 9.4 shall not affect any rights or obligations then
existing.
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(d) The Sponsor or the Trust may purchase and maintain
insurance on behalf of any Person who is or was an Indemnified Person against
any liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Sponsor would have the
power to indemnify him against such liability under the provisions of this
Section 9.4.
(e) For purposes of this Section 9.4, references to "the
Trust" shall include, in addition to the resulting or surviving entity, any
constituent entity (including any constituent of a constituent) absorbed in a
consolidation or merger, so that any Person who is or was a director, trustee,
officer or employee of such constituent entity, or is or was serving at the
request of such constituent entity as a director, trustee, officer, employee or
agent of another entity, shall stand in the same position under the provisions
of this Section 9.4 with respect to the resulting or surviving entity as he
would have with respect to such constituent entity if its separate existence had
continued.
(f) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Section 9.4 shall, unless otherwise provided
when authorized or ratified, continue as to a Person who has ceased to be an
Indemnified Person and shall inure to the benefit of the heirs, executors and
administrators of such a Person.
The provisions of this Section shall survive the termination
of this agreement or the earlier resignation or removal of the Institutional
Trustee. The obligations of the Sponsor under this Section 9.4 to compensate and
indemnify the Trustees and to pay or reimburse the Trustees for expenses,
disbursements and advances shall constitute additional indebtedness hereunder.
Such additional indebtedness shall be secured by a lien prior to that of the
Securities upon all property and funds held or collected by the Trustees as
such, except funds held in trust for the benefit of the holders of particular
Securities.
SECTION 9.5 Outside Businesses. Any Covered Person, the
Sponsor, the Delaware Trustee and the Institutional Trustee (subject to Section
4.3(c)) 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 Securities shall
have no rights by virtue of this Declaration in and to such independent ventures
or the income or profits derived therefrom, and the pursuit of any such venture,
even if competitive with the business of the Trust, shall not be deemed wrongful
or improper. None of any Covered Person, the Sponsor, the Delaware Trustee or
the Institutional Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and any
Covered Person, the Sponsor, the Delaware Trustee and the Institutional 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 Covered Person, the Delaware Trustee and the Institutional
Trustee may engage or be interested in any financial or other transaction with
the Sponsor or any Affiliate of the Sponsor, or may act as depositary for,
trustee or agent for, or act on any committee or body of holders of, securities
or other obligations of the Sponsor or its Affiliates.
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SECTION 9.6 Compensation; Fee. The Sponsor agrees:
(a) to pay to the Trustees from time to time such compensation
for all services rendered by them hereunder as the parties shall agree from time
to time (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust); and
(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 Declaration (including the reasonable compensation and the expenses and
disbursements of their respective agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or willful
misconduct.
The provisions of this Section 9.6 shall survive the
dissolution of the Trust and the termination of this Declaration and the removal
or resignation of any Trustee.
No Trustee may claim any lien or charge on any property of the
Trust as a result of any amount due pursuant to this Section 9.6.
ARTICLE X
ACCOUNTING
SECTION 10.1 Fiscal Year. The fiscal year (the "Fiscal Year")
of the Trust shall be the calendar year, or such other year as is required by
the Code.
SECTION 10.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the
Administrators shall keep, or cause to be kept at the principal office of the
Trust in the United States, as defined for purposes of Treasury regulations
section 301.7701-7, full books of account, records and supporting documents,
which shall reflect in reasonable detail each transaction of the Trust. The
books of account shall be maintained on the accrual method of accounting, in
accordance with generally accepted accounting principles, consistently applied.
The books of account and the records of the Trust shall be examined by and
reported upon as of the end of each Fiscal Year of the Trust by a firm of
independent certified public accountants selected by the Administrators.
(b) The Administrators shall cause to be prepared at the
principal office of the Trust in the United States, as defined for purposes of
Treasury regulations section 301.7701-7, and delivered to each of the Holders of
Securities, within 90 days after the end of each Fiscal Year of the Trust,
annual financial statements of the Trust, including a balance sheet of the Trust
as of the end of such Fiscal Year, and the related statements of income or loss
which shall be examined by and reported upon by a firm of independent certified
public accountants selected by the Administrators.
(c) The Administrators shall cause to be duly prepared and
delivered to each of the Holders of Securities Form 1099 or such other annual
United States federal income tax
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information statement required by the Code, containing such information with
regard to the Securities held by each Holder as is required by the Code and the
Treasury Regulations. Notwithstanding any right under the Code to deliver any
such statement at a later date, the Administrators shall endeavor to deliver all
such statements within 30 days after the end of each Fiscal Year of the Trust.
(d) The Administrators shall cause to be duly prepared in the
United States, as defined for purposes of Treasury regulations section
301.7701-7, and filed an annual United States federal income tax return on a
Form 1041 or such other form required by United States federal income tax law,
and any other annual income tax returns required to be filed by the
Administrators on behalf of the Trust with any state or local taxing authority.
(e) So long as the only Holder of the Capital Securities is
Regional Diversified Funding Limited, the Administrators will cause the
Sponsor's reports on Form FR Y-9C, FR Y-9LP and FR Y-6 to be delivered to the
Holder promptly following their filing with the Federal Reserve.
SECTION 10.3 Banking. The Trust shall maintain one or more
bank accounts in the United States, as defined for purposes of Treasury
regulations section 301.7701-7, in the name and for the sole benefit of the
Trust; provided, however, that all payments of funds in respect of the
Debentures held by the Institutional Trustee shall be made directly to the
Property Account and no other funds of the Trust shall be deposited in the
Property Account. The sole signatories for such accounts (including the Property
Account) shall be designated by the Institutional Trustee.
SECTION 10.4 Withholding. The Institutional Trustee or any
Paying Agent and the Administrators shall comply with all withholding
requirements under United States federal, state and local law. The Institutional
Trustee or any Paying Agent shall request, and each Holder shall provide to the
Institutional Trustee or any Paying Agent, such forms or certificates as are
necessary to establish an exemption from withholding with respect to the Holder,
and any representations and forms as shall reasonably be requested by the
Institutional Trustee or any Paying Agent to assist it in determining the extent
of, and in fulfilling, its withholding obligations. The Administrators shall
file required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Institutional Trustee or any Paying Agent is required to withhold and pay over
any amounts to any authority with respect to distributions or allocations to any
Holder, the amount withheld shall be deemed to be a Distribution to the Holder
in the amount of the withholding. In the event of any claimed overwithholding,
Holders shall be limited to an action against the applicable jurisdiction. If
the amount required to be withheld was not withheld from actual Distributions
made, the Institutional Trustee or any Paying Agent may reduce subsequent
Distributions by the amount of such withholding.
ARTICLE XI
AMENDMENTS AND MEETINGS
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SECTION 11.1 Amendments. (a) Except as otherwise provided
in this Declaration or by any applicable terms of the Securities, this
Declaration may only be amended by a written instrument approved and executed by
(i) the Institutional Trustee, and
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware
Trustee.
(b) Notwithstanding any other provision of this Article
XI, no amendment shall be made, and any such purported amendment shall be void
and ineffective:
(i) unless the Institutional Trustee shall have first
received
(A) an Officers' Certificate from each of the Trust
and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the
terms of the Securities); and
(B) an opinion of counsel (who may be counsel to the
Sponsor or the Trust) that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the
terms of the Securities); and
(ii) if the result of such amendment would be to
(A) cause the Trust to cease to be classified for
purposes of United States federal income taxation as a grantor
trust;
(B) reduce or otherwise adversely affect the powers
of the Institutional Trustee in contravention of the Trust
Indenture Act;
(C) cause the Trust to be deemed to be an Investment
Company required to be registered under the Investment Company
Act; or
(D) cause the Debenture Issuer to be unable to treat
an amount equal to the Liquidation Amount of the Debentures as
"Tier 1 Capital" for purposes of the capital adequacy
guidelines of the Federal Reserve.
(c) Except as provided in Section 11.1(d), (e) or (h), no
amendment shall be made, and any such purported amendment shall be void and
ineffective unless the Holders of a Majority in liquidation amount of the
Capital Securities shall have consented to such amendment.
(d) In addition to and notwithstanding any other provision in
this Declaration, without the consent of each affected Holder, this Declaration
may not be amended to (i) change the amount or timing of any Distribution on the
Securities or otherwise adversely affect the amount of any Distribution required
to be made in respect of the Securities as of a specified date or (ii) restrict
the right of a Holder to institute suit for the enforcement of any such payment
on or after such date.
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(e) Section 8.1(b) and 8.1(c) and this Section 11.1 shall not
be amended without the consent of all of the Holders of the Securities.
(f) Article III shall not be amended without the consent of
the Holders of a Majority in liquidation amount of the Common Securities.
(g) the rights of the Holders of the Capital Securities under
Article IV to increase or decrease the number of, and appoint and remove,
Trustees shall not be amended without the consent of the Holders of a Majority
in liquidation amount of the Capital Securities.
(h) This Declaration may be amended by the Institutional
Trustee and the Holders of a Majority in the liquidation amount of the Common
Securities without the consent of the Holders of the Capital Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration
that may be defective or inconsistent with any other provision of this
Declaration;
(iii) add to the covenants, restrictions or obligations of the
Sponsor; and
(iv) modify, eliminate or add to any provision of this
Declaration to such extent as may be necessary to ensure that the Trust
will be classified for United States federal income tax purposes at all
times as a grantor trust and will not be required to register as an
"investment company" under the Investment Company Act (including
without limitation to conform to any change in Rule 3a-5, Rule 3a-7 or
any other applicable rule under the Investment Company Act or written
change in interpretation or application thereof by any legislative
body, court, government agency or regulatory authority) which amendment
does not have a material adverse effect on the right, preferences or
privileges of the Holders of Securities;
provided, however, that no such modification, elimination or addition
referred to in clauses (i), (ii) or (iii) shall adversely affect the powers,
preferences or special rights of Holders of Capital Securities.
SECTION 11.2 Meetings of the Holders of Securities; Action by
Written Consent.
(a) Meetings of the Holders of any class of Securities may be
called at any time by the Administrators (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading, if any. The Administrators shall
call a meeting of the Holders of such class if directed to do so by the Holders
of at least 10% in liquidation amount of such class of Securities. Such
direction shall be given by delivering to the Administrators one or more calls
in a writing stating that the signing Holders of the Securities wish to call a
meeting and indicating the general or specific purpose for which the meeting is
to be called. Any Holders of the Securities calling a meeting shall specify in
writing the Certificates held by the Holders of
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the Securities exercising the right to call a meeting and only those Securities
represented by such Certificates shall be counted for purposes of determining
whether the required percentage set forth in the second sentence of this
paragraph has been met.
(b) Except to the extent otherwise provided in the terms of
the Securities, the following provisions shall apply to meetings of Holders of
the Securities:
(i) notice of any such meeting shall be given to all the
Holders of the Securities having a right to vote thereat at least 7
days and not more than 60 days before the date of such meeting.
Whenever a vote, consent or approval of the Holders of the Securities
is permitted or required under this Declaration or the rules of any
stock exchange on which the Capital Securities are listed or admitted
for trading, if any, such vote, consent or approval may be given at a
meeting of the Holders of the Securities. Any action that may be taken
at a meeting of the Holders of the Securities may be taken without a
meeting if a consent in writing setting forth the action so taken is
signed by the Holders of the Securities owning not less than the
minimum amount of Securities in liquidation amount that would be
necessary to authorize or take such action at a meeting at which all
Holders of the Securities having a right to vote thereon were present
and voting. Prompt notice of the taking of action without a meeting
shall be given to the Holders of the Securities entitled to vote who
have not consented in writing. The Administrators may specify that any
written ballot submitted to the Holders of the Securities for the
purpose of taking any action without a meeting shall be returned to the
Trust within the time specified by the Administrators;
(ii) each Holder of a Security may authorize any Person to act
for it by proxy on all matters in which a Holder of Securities is
entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. No proxy shall be valid after the
expiration of 11 months from the date thereof unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the
Holder of the Securities executing it. Except as otherwise provided
herein, all matters relating to the giving, voting or validity of
proxies shall be governed by the General Corporation Law of the State
of Delaware relating to proxies, and judicial interpretations
thereunder, as if the Trust were a Delaware corporation and the Holders
of the Securities were stockholders of a Delaware corporation; each
meeting of the Holders of the Securities shall be conducted by the
Administrators or by such other Person that the Administrators may
designate; and
(iii) unless the Business Trust Act, this Declaration, the
terms of the Securities, the Trust Indenture Act or the listing rules
of any stock exchange on which the Capital Securities are then listed
for trading, if any, otherwise provides, the Administrators, in their
sole discretion, shall establish all other provisions relating to
meetings of Holders of Securities, including notice of the time, place
or purpose of any meeting at which any matter is to be voted on by any
Holders of the Securities, waiver of any such notice, action by consent
without a meeting, the establishment of a record date, quorum
requirements, voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote; provided, however,
that each meeting shall be conducted in the United States (as that term
is defined in Treasury regulations section 301.7701-7).
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ARTICLE XII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 12.1 Representations and Warranties of Institutional
Trustee. The Trustee that acts as initial Institutional Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Institutional Trustee represents and warrants to the Trust and
the Sponsor at the time of the Successor Institutional Trustee's acceptance of
its appointment as Institutional Trustee, that:
(a) the Institutional Trustee is a banking corporation with
trust powers, duly organized, validly existing and in good standing under the
laws of the United States with trust power and authority to execute and deliver,
and to carry out and perform its obligations
under the terms of, this Declaration;
(b) the execution, delivery and performance by the
Institutional Trustee of this Declaration has been duly authorized by all
necessary corporate action on the part of the Institutional Trustee. This
Declaration has been duly executed and delivered by the Institutional Trustee,
and it constitutes a legal, valid and binding obligation of the Institutional
Trustee, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency and other similar
laws affecting creditors' rights generally and to general principles of equity
(regardless of whether considered in a proceeding in equity or at law);
(c) the execution, delivery and performance of this
Declaration by the Institutional Trustee does not conflict with or constitute a
breach of the charter or by-laws of the Institutional Trustee; and
(d) no consent, approval or authorization of, or registration
with or notice to, any state or federal banking authority is required for the
execution, delivery or performance by the Institutional Trustee of this
Declaration.
SECTION 12.2 Representations and Warranties of Delaware
Trustee. The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee, that:
(a) The Delaware Trustee is duly organized, validly existing
and in good standing under the laws of the State of Delaware, with trust power
and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, this Declaration.
(b) The Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and this Declaration. This
Declaration under Delaware law constitutes a legal, valid and binding obligation
of the Delaware Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium, insolvency and
other similar laws affecting creditors' rights generally, and to general
principles
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of equity (regardless of whether considered in a proceeding in equity or at
law).
(c) No consent, approval or authorization of, or registration
with or notice to, any state or federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee of this Declaration.
(d) The Delaware Trustee is a natural person who is a resident
of the State of Delaware or, if not a natural person, an entity which has its
principal place of business in the State of Delaware and, in either case, a
Person that satisfies for the Trust the requirements of Section 3807 of the
Business Trust Act.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Notices. All notices provided for in this
Declaration shall be in writing, duly signed by the party giving such notice,
and shall be delivered, telecopied (which telecopy shall be followed by notice
delivered or mailed by first class mail) or mailed by first class mail, as
follows:
(a) if given to the Trust, in care of the Administrators at
the Trust's mailing address set forth below (or such other address as the Trust
may give notice of to the Holders of the Securities:
Community (AL) Capital Trust I
c/o Community Bancshares, Inc.
68149 Main Street
Blountsville, Alabama 35031
Attention: Administrators of Community (AL)
Capital Trust I
(b) if given to the Delaware Trustee, at the mailing address
set forth below (or such other address as Delaware Trustee may give notice of to
the Holders of the Securities):
The Bank of New York (Delaware)
White Clay Center, Route 273
Newark, Delaware
Attention: Corporate Trust Administration
Telecopy:
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(c) if given to the Institutional Trustee, at the
Institutional Trustee's mailing address set forth below (or such other address
as the Institutional Trustee may give notice of to the Holders of the
Securities):
The Bank of New York
101 Barclay Street, Floor 21W
New York, NY 10286
Attention: Corporate Trust Administration
Telecopy: 212-819-5915
(d) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice of to the Trust):
Community Bancshares, Inc.
68149 Main Street
Blountsville, Alabama 35031
Attention: Kennon R. Patterson, Sr.,
Chairman and Chief Executive Officer
Copy to: William H. Caughran, Assistant
Secretary
(e) if given to any other Holder, at the address set forth on
the books and records of the Trust.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 13.2 Governing Law. This Declaration and the rights of
the parties hereunder shall be governed by and interpreted in accordance with
the law of the State of Delaware and all rights and remedies shall be governed
by such laws without regard to the principles of conflict of laws of the State
of Delaware or any other jurisdiction that would call for the application of the
law of any jurisdiction other than the State of Delaware; provided, however,
that there shall not be applicable to the Trust, the Trustees or this
Declaration any provision of the laws (statutory or common) of the State of
Delaware pertaining to trusts that relate to or regulate, in a manner
inconsistent with the terms hereof (a) the filing with any court or governmental
body or agency of trustee accounts or schedules of trustee fees and charges, (b)
47
<PAGE> 52
affirmative requirements to post bonds for trustees, officers, agents or
employees of a trust, (c) the necessity for obtaining court or other
governmental approval concerning the acquisition, holding or disposition of real
or personal property, (d) fees or other sums payable to trustees, officers,
agents or employees of a trust, (e) the allocation of receipts and expenditures
to income or principal, (f) restrictions or limitations on the permissible
nature, amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding or investing trust assets or (g)
the establishment of fiduciary or other standards of responsibility or
limitations on the acts or powers of trustees that are inconsistent with the
limitations or liabilities or authorities and powers of the Trustees as set
forth or referenced in this Declaration. Section 3540 of Title 12 of the
Delaware Code shall not apply to the Trust.
SECTION 13.3 Intention of the Parties. It is the intention of
the parties hereto that the Trust be classified for United States federal income
tax purposes as a grantor trust. The provisions of this Declaration shall be
interpreted to further this intention of the parties.
SECTION 13.4 Headings. Headings contained in this Declaration
are inserted for convenience of reference only and do not affect the
interpretation of this Declaration or any provision hereof.
SECTION 13.5 Successors and Assigns. Whenever in this
Declaration any of the parties hereto is named or referred to, the successors
and assigns of such party shall be deemed to be included, and all covenants and
agreements in this Declaration by the Sponsor and the Trustees shall bind and
inure to the benefit of their respective successors and assigns, whether or not
so expressed.
SECTION 13.6 Partial Enforceability. If any provision of this
Declaration, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Declaration, or the application of
such provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
SECTION 13.7 Counterparts. This Declaration may contain more
than one counterpart of the signature page and this Declaration may be executed
by the affixing of the signature of each of the Trustees and Administrators to
any 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.
48
<PAGE> 53
IN WITNESS WHEREOF, the undersigned have caused these presents
to be executed as of the day and year first above written.
THE BANK OF NEW YORK (DELAWARE)
as Delaware Trustee
By:/s/ William T. Lewis
-----------------------------------------------
Name: William T. Lewis
Title: Senior Vice President
THE BANK OF NEW YORK
as Institutional Trustee
By:/s/ Annette L. Kos
-----------------------------------------------
Name: Annette L. Kos
Title: Assistant Vice President
COMMUNITY BANCSHARES, INC.
as Sponsor
By:/s/ Kennon R. Patterson, Sr.
-----------------------------------------------
Name: Kennon R. Patterson, Sr.
Title: Chairman, President and Chief
Executive Officer
COMMUNITY (AL) CAPITAL TRUST I
By:/s/ Denny Kelly
-----------------------------------------------
Administrator
By:/s/ Elaine E. Corvin
-----------------------------------------------
Administrator
<PAGE> 54
ANNEX I
TERMS OF FIXED RATE CAPITAL TRUST PASS-THROUGH SECURITIES(R) (TRUPS(R))
Pursuant to Section 6.1 of the Amended and Restated Declaration of
Trust, dated as of March 23, 2000 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Capital Securities and the Common
Securities are set out below (each capitalized term used but not defined herein
has the meaning set forth in the Declaration):
1. Designation and Number. (a) Capital Securities. 10,000 Capital
Securities of Community (AL) Capital Trust I (the "Trust"), with an aggregate
stated liquidation amount with respect to the assets of the Trust of Ten Million
Dollars ($10,000,000) and a stated liquidation amount with respect to the assets
of the Trust of $1,000 per Capital Security, are hereby designated for the
purposes of identification only as the "Fixed Rate Capital Trust Pass- through
Securities"(R) (the "Capital Securities"). The Capital Security Certificates
evidencing the Capital Securities shall be substantially in the form of Exhibit
A-1 to the Declaration, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice or to conform
to the rules of any stock exchange on which the Capital Securities are listed,
if any.
(b) Common Securities. 310 Common Securities of the Trust (the
"Common Securities") will be evidenced by Common Security Certificates
substantially in the form of Exhibit A-2 to the Declaration, with such changes
and additions thereto or deletions therefrom as may be required by ordinary
usage, custom or practice.
2. Distributions. (a) Distributions payable on each Security will
be payable at an annual rate equal to 10 7/8% (the "Coupon Rate") of the stated
liquidation amount of $1,000 per Security, such rate being the rate of interest
payable on the Debentures to be held by the Institutional Trustee. Except as set
forth below in respect of an Extension Period, Distributions in arrears for more
than one semi-annual period will bear interest thereon compounded semi-annually
at the Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes cash distributions and any such
compounded distributions payable unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Institutional Trustee and to the extent the Institutional Trustee
has funds available therefor. The amount of Distributions payable for any period
will be computed for any full semi-annual period on the basis of a 360-day year
of twelve 30-day months.
(b) Distributions on the Securities will be cumulative, will
accrue from the date of original issuance, and will be payable, subject to
extension of distribution payment periods as described herein, semi-annually in
arrears on March 8 and September 8 of each year, commencing on September 8, 2000
(each, a "Distribution Payment Date") when, as and if available for payment. The
Debenture Issuer has the right under the Indenture to defer
<PAGE> 55
payments of interest on the Debentures by extending the interest payment period
for up to 10 consecutive semi-annual periods (each, an "Extension Period") at
any time and from time to time on the Debentures, subject to the conditions
described below, although such interest would continue to accrue on the
Debentures, and interest will accrue on such Deferred Interest at an annual rate
equal to 10 7/8%, compounded semi-annually to the extent permitted by law during
any Extension Period. No Extension Period may end on a date other than a
Distribution Payment Date. At the end of any such Extension Period the Debenture
Issuer shall pay all Deferred Interest; provided, however, that no Extension
Period may extend beyond the Maturity Date and provided further, that, during
any such Extension Period, the Debenture Issuer may not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Debenture Issuer'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 Debenture Issuer that
rank pari passu in all respects with or junior in interest to the Debentures
(other than (a) repurchases, redemptions or other acquisitions of shares of
capital stock of the Debenture Issuer in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
one or more employees, officers, directors or consultants, in connection with a
dividend reinvestment or stockholder stock purchase plan or in connection with
the issuance of capital stock of the Debenture Issuer (or securities convertible
into or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of any exchange or conversion of any class or series of the Debenture
Issuer's capital stock (or any capital stock of a subsidiary of the Debenture
Issuer) for any class or series of the Debenture Issuer's capital stock or of
any class or series of the Debenture Issuer's indebtedness for any class or
series of the Debenture Issuer's capital stock, (c) the purchase of fractional
interests in shares of the Debenture Issuer's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, (d) any declaration of a dividend in connection with any
stockholder's rights plan, or the issuance of rights, stock or other property
under any stockholder's rights plan, or the redemption or repurchase of rights
pursuant thereto, or (e) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock). Prior
to the termination of any Extension Period, the Debenture Issuer may further
extend such period, provided that such period together with all such previous
and further consecutive extensions thereof shall not exceed 10 consecutive
semi-annual periods, or extend beyond the Maturity Date. Upon the termination of
any Extension Period and upon the payment of all Deferred Interest, the
Debenture Issuer may commence a new Extension Period, subject to the foregoing
requirements. No interest or Deferred Interest shall be due and payable during
an Extension Period, except at the end thereof, but each installment of interest
that would otherwise have been due and payable during such Extension Period
shall bear Deferred Interest. If Distributions are deferred, the Distributions
due shall be paid on the date that the related Extension Period terminates, or,
if such date is not a Distribution Payment Date, on the immediately following
Distribution Payment Date, to Holders of the Securities as they appear on the
books and records of the Trust on the record date immediately preceding such
date. Distributions on the Securities must be paid on the dates payable (after
giving effect to any Extension Period) to the extent that
<PAGE> 56
the Trust has funds available for the payment of such distributions in the
Property Account of the Trust. The Trust's funds available for Distribution to
the Holders of the Securities will be limited to payments received from the
Debenture Issuer. The payment of Distributions out of moneys held by the Trust
is guaranteed by the Guarantor pursuant to the Guarantee.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the relevant
record dates. The relevant record dates shall be selected by the Administrators,
which dates shall be 15 days before the relevant payment dates. Distributions
payable on any Securities that are not punctually paid on any Distribution
Payment Date, as a result of the Debenture Issuer having failed to make a
payment under the Debentures, as the case may be, when due (taking into account
any Extension Period), will cease to be payable to the Person in whose name such
Securities are registered on the relevant record date, and such defaulted
Distribution will instead be payable to the Person in whose name such Securities
are registered on the special record date or other specified date determined in
accordance with the Indenture. If any date on which Distributions are payable on
the Securities is not a Business Day, then payment of the Distribution payable
on such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay) except that,
if such Business Day 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 such payment date.
(d) In the event that there is any money or other property held by
or for the Trust that is not accounted for hereunder, such property shall be
distributed pro rata (as defined herein) among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution. In the event of the
voluntary or involuntary liquidation, dissolution, winding-up or termination of
the Trust (each, a "Liquidation") other than in connection with a redemption of
the Debentures, the Holders of the Securities will be entitled to receive out of
the assets of the Trust available for distribution to Holders of the Securities,
after satisfaction of liabilities to creditors of the Trust (to the extent not
satisfied by the Debenture Issuer), distributions equal to the aggregate of the
stated liquidation amount of $1,000 per Security plus accrued and unpaid
Distributions thereon to the date of payment (such amount being the "Liquidation
Distribution"), unless in connection with such Liquidation, the Debentures in an
aggregate stated principal amount equal to the aggregate stated liquidation
amount of such Securities, with an interest rate equal to the Coupon Rate of,
and bearing accrued and unpaid interest in an amount equal to the accrued and
unpaid Distributions on, and having the same record date as, such Securities,
after paying or making reasonable provision to pay all claims and obligations of
the Trust in accordance with Section 3808(e) of the Business Trust Act, shall be
distributed on a Pro Rata basis to the Holders of the Securities in exchange for
such Securities.
The Sponsor, as the Holder of all of the Common Securities, has the
right at any time to dissolve the Trust (including without limitation upon the
occurrence of a Tax Event, an
<PAGE> 57
Investment Company Event or a Capital Treatment Event), subject to the receipt
by the Debenture Issuer of prior approval from the Board of Governors of the
Federal Reserve System (the "Federal Reserve"), if then required under
applicable capital guidelines or policies of the Federal Reserve and, after
satisfaction of liabilities to creditors of the Trust, cause the Debentures to
be distributed to the Holders of the Securities on a Pro Rata basis in
accordance with the aggregate stated liquidation amount thereof.
The Trust shall dissolve on the first to occur of (i) March 8, 2055,
the expiration of the term of the Trust, (ii) a Bankruptcy Event with respect to
the Sponsor, Trust or the Debenture Issuer, (iii) (other than in connection with
a merger, consolidation or similar transaction not prohibited by the Indenture,
this Declaration or the Guarantee, as the case may be) upon the filing of a
certificate of dissolution of the Sponsor or upon revocation of the charter of
the Sponsor and the expiration of 90 days after the date of revocation without a
reinstatement thereof, (iv) the distribution to the Holders of the Securities of
the Debentures, upon exercise of the right of the Holder of all of the
outstanding Common Securities to dissolve the Trust as described above, (v) the
entry of a decree of a judicial dissolution of the Sponsor or the Trust, or (vi)
when all of the Securities shall have been called for redemption and the amounts
necessary for redemption thereof shall have been paid to the Holders in
accordance with the terms of the Securities. As soon as practicable after the
dissolution of the Trust and upon completion of the winding up of the Trust, the
Trust shall terminate upon the filing of a certificate of cancellation with the
Secretary of State of the State of Delaware.
If a Liquidation of the Trust occurs as described in clause (i), (ii),
(iii) or (v) in the immediately preceding paragraph, the Trust shall be
liquidated by the Trustees of the Trust as expeditiously as such Trustees
determine to be possible by distributing, after satisfaction of liabilities to
creditors of the Trust, to the Holders of the Securities, the Debentures on a
Pro Rata basis to the extent not satisfied by the Debenture Issuer, unless such
distribution is determined by the Institutional Trustee not to be practical, in
which event such Holders will be entitled to receive out of the assets of the
Trust available for distribution to the Holders, after satisfaction of
liabilities of creditors of the Trust to the extent not satisfied by the
Debenture Issuer, an amount equal to the Liquidation Distribution. An early
Liquidation of the Trust pursuant to clause (iv) above shall occur if the
Institutional Trustee determines that such Liquidation is possible by
distributing, after satisfaction of liabilities to creditors of Trust, to the
Holders of the Securities on a Pro Rata basis, the Debentures, and such
distribution occurs.
If, upon any such Liquidation the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on such Capital Securities shall be paid to the Holders of the Trust
Securities on a pro rata basis, except that if an Event of Default has occurred
and is continuing, the Capital Securities shall have a preference over the
Common Securities with regard to such distributions.
Upon any such Liquidation of the Trust involving a distribution of the
Debentures, if at the time of such Liquidation, the Capital Securities were
rated by at least one nationally-recognized statistical rating organization, the
Debenture Issuer will use its reasonable
<PAGE> 58
best efforts to obtain from at least one such or other rating organization a
rating for the Debentures.
After the date for any distribution of the Debentures upon dissolution
of the Trust, (i) the Securities of the Trust will be deemed to be no longer
outstanding, and (ii) any certificates representing the Capital Securities will
be deemed to represent undivided beneficial interests in such of the Debentures
as have an aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the distribution rate of, and
bearing accrued and unpaid interest equal to accrued and unpaid distributions
on, the Securities until such certificates are presented to the Debenture Issuer
or its agent for transfer or reissuance.
4. Redemption and Distribution.
(a) The Debentures will mature on March 8, 2030. The Debentures
may be redeemed by the Debenture Issuer, in whole or in part, on any March 8 or
September 8 on or after March 8, 2010, at the Redemption Price, upon not less
than 30 days nor more than 60 day's notice to Holders of such Debentures. In
addition, upon the occurrence and continuation of a Tax Event, an Investment
Company Event or a Capital Treatment Event, the Debentures may be redeemed by
the Debenture Issuer in whole but not in part, at any time within 90 days
following the occurrence of such Tax Event, Investment Company Event or Capital
Treatment Event, as the case may be (the "Special Redemption Date"), at the
Special Redemption Price, upon not less than 30 nor more than 60 days' notice
to Holders of the Debentures so long as such Tax Event, Investment Company Event
or Capital Treatment Event, as the case may be, is continuing. In each case, the
right of the Debenture Issuer to redeem the Debentures is subject to the
Debenture Issuer having received prior approval from the Federal Reserve, if
then required under applicable capital guidelines or policies of the Federal
Reserve.
"Tax Event" means the receipt by the Debenture Issuer and the Trust of
an opinion of counsel experienced in such matters to the effect that, as a
result of any amendment to or change (including any announced prospective
change) in the laws or any regulations thereunder of the United States or any
political subdivision or taxing authority thereof or therein, or as a result of
any official administrative pronouncement (including any private letter ruling,
technical advice memorandum, field service advice, regulatory procedure, notice
or announcement, including any notice or announcement of intent to adopt such
procedures or regulations (an "Administrative Action")) or judicial decision
interpreting or applying such laws or regulations, regardless of whether such
Administrative Action or judicial decision is issued to or in connection with a
proceeding involving the Debenture Issuer or the Trust and whether or not
subject to review or appeal, which amendment, clarification, change,
Administrative Action or decision is enacted, promulgated or announced, in each
case on or after the date of issuance of the Debentures, there is more than an
insubstantial risk that: (i) the Trust is, or will be within 90 days of the date
of such opinion, subject to United States federal income tax with respect to
income received or accrued on the Debentures; (ii) interest payable by the
Debenture Issuer on the Debentures is not, or within 90 days of the date of such
opinion, will not be, deductible by the Debenture Issuer, in whole or in part,
for United States federal income tax purposes; or (iii) the Trust is, or will be
within 90 days of the date of such opinion, subject to more than a de
<PAGE> 59
minimis amount of other taxes, duties or other governmental charges.
"Investment Company Event" means the receipt by the Trust of an opinion
of counsel experienced in such matters to the effect that, as a result of the
occurrence of a change in law or regulation or written change (including any
announced prospective change) in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority, there is more than an insubstantial risk that the Trust is or will be
considered an "investment company" that is required to be registered under the
Investment Company Act of 1940, as amended which change or prospective change
becomes effective or would become effective, as the case may be, on or after the
date of the issuance of the Debentures.
"Capital Treatment Event" means the reasonable determination by the
Debenture Issuer that, as a result of the occurrence of any amendment to, or
change (including any announced prospective change) in, the laws of the United
States or any political subdivision thereof or therein, or as the result of any
official or administrative pronouncement or action or decision interpreting or
applying such laws, rules or regulations, which amendment or change is effective
or which pronouncement, action or decision is announced on or after the date of
issuance of the Debentures, there is more than an insubstantial risk that the
Debenture Issuer will not be entitled to treat an amount equal to the aggregate
Liquidation Amount of the Debentures as "Tier I 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 Debenture Issuer; provided, however,
that the distribution of the Debentures in connection with the Liquidation of
the Trust by the Debenture Issuer shall not in and of itself constitute a
Capital Treatment Event unless such Liquidation shall have occurred in
connection with a Tax Event or an Investment Company Event.
"Special Event" means any of a Capital Treatment Event, a Tax Event or
an Investment Company Event.
"Redemption Price" means the price set forth in the following table for
any Redemption Date or Special Redemption Date that occurs within the
twelve-month period beginning in the relevant year indicated below, expressed in
percentage of the principal amount of the Debt Securities being redeemed:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
March 8, 2010 105.438
March 8, 2011 104.894
March 8, 2012 104.350
March 8, 2013 103.806
March 8, 2014 103.263
</TABLE>
<PAGE> 60
<TABLE>
<S> <C>
March 8, 2015 102.719
March 8, 2016 102.175
March 8, 2017 101.631
March 8, 2018 101.088
March 8, 2019 100.544
March 8, 2020 and after 100.000
</TABLE>
plus accrued and unpaid interest on such Debentures to the Redemption
Date or, in the case of a redemption due to the occurrence of a Special Event,
to the Special Redemption Date.
"Special Redemption Price" means (1) if the Special Redemption Date is
before March 8, 2010, the greater of (a) 100% of the principal amount of the
Debentures being redeemed and (b) as determined by a Quotation Agent, the sum of
the present values of scheduled payments of principal and interest from the
Special Redemption Date to March 8, 2010 (the "Remaining Life") discounted to
the Special Redemption Date on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Treasury Rate plus 0.45%, plus, in
the case of either (a) or (b), accrued and unpaid interest on such Debentures to
the Special Redemption Date and (2) if the Special Redemption Date is on or
after March 8, 2010, the Redemption Price for such Special Redemption Date.
"Comparable Treasury Issue" means with respect to any Special
Redemption Date the United States Treasury security selected by the Quotation
Agent as having a maturity comparable to the Remaining Life that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the Remaining Life. If no United States Treasury security has a
maturity which is within a period from three months before to three months after
March 8, 2010, the two most closely corresponding United States Treasury
securities shall be used as the Comparable Treasury Issue, and the Treasury Rate
shall be interpolated or extrapolated on a straight-line basis, rounding to the
nearest month using such securities.
"Comparable Treasury Price" means (a) the average of five Reference
Treasury Dealer Quotations for such Special Redemption Date, after excluding the
highest and lowest such Reference Treasury Dealer Quotations, or (b) if the
Quotation Agent obtains fewer than five such Reference Treasury Dealer
Quotations, the average of all such Quotations.
"Primary Treasury Dealer" shall mean a primary United States Government
securities dealer in New York City.
"Quotation Agent" means Salomon Smith Barney, Inc. and its successors;
provided, however, that if the foregoing shall cease to be a primary United
States Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Debenture Issuer shall substitute therefor another Primary
Treasury Dealer.
"Redemption Date" shall mean the date fixed for the redemption of
Capital Securities, which shall be any March 8 or September 8 commencing on
March 8, 2010.
<PAGE> 61
"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any
other Primary Treasury Dealer selected by the Debenture Trustee after
consultation with the Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Quotation Agent, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted in
writing to the Debenture Trustee by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such Redemption Date.
"Treasury Rate" means (i) the yield, under the heading which represents
the average for the week immediately prior to the date of calculation, appearing
in the most recently published statistical release designated H.15 (519) or any
successor publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities", for the
maturity corresponding to the Remaining Life (if no maturity is within three
months before or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Remaining Life shall be determined
and the Treasury Rate shall be interpolated or extrapolated from such yields on
a straight-line basis, rounding to the nearest month) or (ii) if such release
(or any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such Special Redemption Date. The Treasury Rate shall be calculated on the third
Business Day preceding the Special Redemption Date.
(b) Upon the repayment in full at maturity or redemption in whole
or in part of the Debenture (other than following the distribution of the
Debenture to the Holders of the Securities), the proceeds from such repayment or
payment shall concurrently be applied to redeem Pro Rata at the applicable
Redemption Price, Securities having an aggregate liquidation amount equal to the
aggregate principal amount of the Debenture so repaid or redeemed; provided,
however, that holders of such Securities shall be given not less than 30 nor
more than 60 days' notice of such redemption (other than at the scheduled
maturity of the Debenture).
(c) If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Capital Securities will be redeemed Pro
Rata and the Capital Securities to be redeemed will be as described in Section
4(e)(ii) below.
(d) The Trust may not redeem fewer than all the outstanding
Capital Securities unless all accrued and unpaid Distributions have been paid on
all Capital Securities for all semi-annual Distribution periods terminating on
or before the date of redemption.
<PAGE> 62
(e) Redemption or Distribution Procedures.
(i) Notice of any redemption of, or notice of distribution of
the Debentures in exchange for, the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder of Securities to be
redeemed or exchanged not fewer than 30 nor more than 60 days before the date
fixed for redemption or exchange thereof which, in the case of a redemption,
will be the date fixed for redemption of the Debentures. For purposes of the
calculation of the date of redemption or exchange and the dates on which notices
are given pursuant to this Section 4(e)(i), a Redemption/Distribution Notice
shall be deemed to be given on the day such notice is first mailed by
first-class mail, postage prepaid, to Holders of such Securities. Each
Redemption/Distribution Notice shall be addressed to the Holders of such
Securities at the address of each such Holder appearing on the books and records
of the Trust. No defect in the Redemption/Distribution Notice or in the mailing
thereof with respect to any Holder shall affect the validity of the redemption
or exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding
Securities are to be redeemed, the Securities to be redeemed shall be redeemed
Pro Rata from each Holder of Capital Securities.
(iii) If the Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Debentures are redeemed as set out in this Section 4 (which notice will be
irrevocable), then, provided that the Institutional Trustee has a sufficient
amount of cash in connection with the related redemption or maturity of the
Debentures, the Institutional Trustee will pay the relevant Redemption Price to
the Holders of such Securities by check mailed to the address of each such
Holder appearing on the books and records of the Trust on the redemption date.
If a Redemption/Distribution Notice shall have been given and funds deposited as
required then immediately prior to the close of business on the date of such
deposit Distributions will cease to accrue on the Securities so called for
redemption and all rights of Holders of such Securities so called for redemption
will cease, except the right of the Holders of such Securities to receive the
applicable Redemption Price specified in Section 4(a), but without interest on
such Redemption Price. If any date fixed for redemption of Securities is not a
Business Day, then payment of any such Redemption Price payable on such date
will be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date fixed for redemption. If payment of the Redemption Price
in respect of any Securities is improperly withheld or refused and not paid
either by the Trust or by the Debenture Issuer as guarantor pursuant to the
Guarantee, Distributions on such Securities will continue to accrue at the then
applicable rate from the original
<PAGE> 63
redemption date to the actual date of payment, in which case the actual
payment date will be considered the date fixed for redemption for
purposes of calculating the Redemption Price. In the event of any
redemption of the Capital Securities issued by the Trust in part, the
Trust shall not be required to (i) issue, register the transfer of or
exchange any Security during a period beginning at the opening of
business 15 days before any selection for redemption of the Capital
Securities and ending at the close of business on the earliest date on
which the relevant notice of redemption is deemed to have been given to
all Holders of the Capital Securities to be so redeemed or (ii)
register the transfer of or exchange any Capital Securities so selected
for redemption, in whole or in part, except for the unredeemed portion
of any Capital Securities being redeemed in part.
(iv) Redemption/Distribution Notices shall be sent by
the Administrators on behalf of the Trust (A) in respect of the Capital
Securities, to the Holders thereof, and (B) in respect of the Common
Securities, to the Holder thereof.
(v) Subject to the foregoing and applicable law
(including, without limitation, United States federal securities laws),
and provided that the acquiror is not the Holder of the Common
Securities or the obligor under the Indenture, the Sponsor or any of
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.
5. Voting Rights - Capital Securities. (a) Except as provided
under Sections 5(b) and 7 and as otherwise required by law and the Declaration,
the Holders of the Capital Securities will have no voting rights. The
Administrators are required to call a meeting of the Holders of the Capital
Securities if directed to do so by Holders of at least 10% in liquidation amount
of the Capital Securities.
(b) Subject to the requirements of obtaining a tax opinion by
the Institutional Trustee in certain circumstances set forth in the last
sentence of this paragraph, the Holders of a Majority in liquidation amount of
the Capital Securities, voting separately as a class, have the right to direct
the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the Declaration, including the
right to direct the Institutional Trustee, as holder of the Debentures, to (i)
exercise the remedies available under the Indenture as the holder of the
Debentures, (ii) waive any past default that is waivable under the Indenture, or
(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 on behalf of all the
Holders of the Capital Securities to any amendment, modification or termination
of the Indenture or the Debentures where such consent shall be required;
provided, however, that, where a consent or action under the Indenture would
require the consent or act of the holders of greater than a simple majority in
principal amount of Debentures (a "Super Majority") affected thereby, the
Institutional Trustee may only give such consent or take such action at the
written direction of the Holders of at least the proportion in liquidation
amount of the Capital Securities outstanding which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding. If
the Institutional Trustee fails to enforce its rights under the Debentures after
the Holders of a
<PAGE> 64
Majority in liquidation amount of such Capital Securities have so directed the
Institutional Trustee, to the fullest extent permitted by law, a Holder of the
Capital Securities may institute a legal proceeding directly against the
Debenture Issuer to enforce the Institutional Trustee's rights under the
Debentures without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if an Event of Default has occurred and is continuing and such event
is attributable to the failure of the Debenture Issuer to pay interest or
principal on the Debentures on the date the interest or principal is payable (or
in the case of redemption, the redemption date), then a Holder of record of the
Capital Securities may directly institute a proceeding for enforcement of
payment, on or after the respective due dates specified in the Debentures, to
such Holder directly of the principal of or interest on the Debentures having an
aggregate principal amount equal to the aggregate liquidation amount of the
Capital Securities of such Holder. The Institutional Trustee shall notify all
Holders of the Capital Securities of any default actually known to the
Institutional Trustee with respect to the Debentures unless (x) such default has
been cured prior to the giving of such notice or (y) the Institutional Trustee
determines in good faith that the withholding of such notice is in the interest
of the Holders of such Capital Securities, except where the default relates to
the payment of principal of or interest on any of the Debentures. Such notice
shall state that such Indenture Event of Default also constitutes an Event of
Default hereunder. Except with respect to directing the time, method and place
of conducting a proceeding for a remedy, the Institutional Trustee shall not
take any of the actions described in clauses (i), (ii) or (iii) above unless the
Institutional Trustee has obtained an opinion of tax counsel to the effect that,
as a result of such action, the Trust will not be classified as other than a
grantor trust for United States federal income tax purposes.
In the event the consent of the Institutional Trustee, as the
holder of the Debentures is required under the Indenture with respect to any
amendment, modification or termination of the Indenture, the Institutional
Trustee shall request the direction of the Holders of the Securities with
respect to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed by a Majority
in liquidation amount of the Securities voting together as a single class;
provided, however, that where a consent under the Indenture would require the
consent of a Super Majority, the Institutional Trustee may only give such
consent at the direction of the Holders of at least the proportion in
liquidation amount of such Trust Securities outstanding which the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding. The Institutional Trustee shall not take any such action in
accordance with the directions of the Holders of the Securities unless the
Institutional Trustee has obtained an opinion of tax counsel to the effect that,
as a result of such action, the Trust will not be classified as other than a
grantor trust for United States federal income tax purposes.
A waiver of an Indenture Event of Default will constitute a
waiver of the corresponding Event of Default hereunder. Any required approval or
direction of Holders of the Capital Securities may be given at a separate
meeting of Holders of the Capital Securities convened for such purpose, at a
meeting of all of the Holders of the Securities in the Trust or pursuant to
written consent. The Institutional Trustee will cause a notice of any meeting at
<PAGE> 65
which Holders of the Capital Securities are entitled to vote, or of any matter
upon which action by written consent of such Holders is to be taken, to be
mailed to each Holder of record of the Capital Securities. Each such notice will
include a statement setting forth the following information (i) the date of such
meeting or the date by which such action is to be taken, (ii) a description of
any resolution proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents. No vote or consent
of the Holders of the Capital Securities will be required for the Trust to
redeem and cancel Capital Securities or to distribute the Debentures in
accordance with the Declaration and the terms of the Securities.
Notwithstanding that Holders of the Capital Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Capital Securities that are owned by the Sponsor or any Affiliate of the
Sponsor shall not entitle the Holder thereof to vote or consent and shall, for
purposes of such vote or consent, be treated as if such Capital Securities were
not outstanding.
In no event will Holders of the Capital Securities have the
right to vote to appoint, remove or replace the Administrators, which voting
rights are vested exclusively in the Sponsor as the Holder of all of the Common
Securities of the Trust. Under certain circumstances as more fully described in
the Declaration, Holders of Capital Securities have the right to vote to
appoint, remove or replace the Institutional Trustee and the Delaware Trustee.
6. Voting Rights - Common Securities. (a) Except as provided
under Sections 6(b), 6(c) and 7 and as otherwise required by law and the
Declaration, the Common Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in
accordance with Article V of the Declaration, to vote to appoint, remove or
replace any Administrators.
(c) Subject to Section 6.7 of the Declaration and only after
each Event of Default (if any) with respect to the Capital Securities has been
cured, waived or otherwise eliminated and subject to the requirements of the
second to last sentence of this paragraph, the Holders of a Majority in
liquidation amount of the Common Securities, voting separately as a class, may
direct the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the Declaration, including (i)
directing the time, method, place of conducting any proceeding for any remedy
available to the Debenture Trustee, or exercising any trust or power conferred
on the Debenture Trustee with respect to the Debentures, (ii) waive any past
default and its consequences that is waivable under the Indenture, or (iii)
exercise any right to rescind or annul a declaration that the principal of all
the Debentures shall be due and payable, provided, however, that, where a
consent or action under the Indenture would require a Super Majority, the
Institutional Trustee may only give such consent or take such action at the
written
<PAGE> 66
direction of the Holders of at least the proportion in liquidation amount of the
Common Securities which the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding. Notwithstanding this Section
6(c), the Institutional Trustee shall not revoke any action previously
authorized or approved by a vote or consent of the Holders of the Capital
Securities. Other than with respect to directing the time, method and place of
conducting any proceeding for any remedy available to the Institutional Trustee
or the Debenture Trustee as set forth above, the Institutional Trustee shall not
take any action described in (i), (ii) or (iii) above, unless the Institutional
Trustee has obtained an opinion of tax counsel to the effect that for the
purposes of United States federal income tax the Trust will not be classified as
other than a grantor trust on account of such action. If the Institutional
Trustee fails to enforce its rights under the Declaration to the fullest extent
permitted by law, any Holder of the Common Securities may institute a legal
proceeding directly against any Person to enforce the Institutional Trustee's
rights under the Declaration, without first instituting a legal proceeding
against the Institutional Trustee or any other Person.
Any approval or direction of Holders of the Common Securities
may be given at a separate meeting of Holders of the Common Securities convened
for such purpose, at a meeting of all of the Holders of the Securities in the
Trust or pursuant to written consent. The Administrators will cause a notice of
any meeting at which Holders of the Common Securities are entitled to vote, or
of any matter upon which action by written consent of such Holders is to be
taken, to be mailed to each Holder of the Common Securities. Each such notice
will include a statement setting forth (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which written consent is sought and (iii) instructions
for the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities
will be required for the Trust to redeem and cancel Common Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
7. Amendments to Declaration and Indenture. (a) In addition to
any requirements under Section 11.1 of the Declaration, if any proposed
amendment to the Declaration provides for, or the Trustees otherwise propose to
effect, (i) any action that would adversely affect the powers, preferences or
special rights of the Securities, whether by way of amendment to the Declaration
or otherwise, or (ii) the Liquidation of the Trust, other than as described in
Section 7.1 of the Declaration, then the Holders of outstanding Securities,
voting together as a single class, will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of the Holders of at least a Majority in liquidation amount of the
Securities, affected thereby; provided, however, if any amendment or proposal
referred to in clause (i) above would adversely affect only the Capital
Securities or only the Common Securities, then only the affected class will be
entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of a Majority in liquidation
amount of such class of Securities.
<PAGE> 67
(b) In the event the consent of the Institutional Trustee as
the holder of the Debentures is required under the Indenture with respect to any
amendment, modification or termination of the Indenture or the Debentures, the
Institutional Trustee shall request the written direction of the Holders of the
Securities with respect to such amendment, modification or termination and shall
vote with respect to such amendment, modification, or termination as directed by
a Majority in liquidation amount of the Securities voting together as a single
class; provided, however, that where a consent under the Indenture would require
a Super Majority, the Institutional Trustee may only give such consent at the
direction of the Holders of at least the proportion in liquidation amount of the
Securities which the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding.
(c) Notwithstanding the foregoing, no amendment or
modification may be made to a Declaration if such amendment or modification
would (i) cause the Trust to be classified for purposes of United States federal
income taxation as other than a grantor trust, (ii) reduce or otherwise
adversely affect the powers of the Institutional Trustee or (iii) cause the
Trust to be deemed an "investment company" which is required to be registered
under the Investment Company Act.
(d) Notwithstanding any provision of the Declaration, the
right of any Holder of the Capital Securities to receive payment of
distributions and other payments upon redemption or otherwise, on or after their
respective due dates, or to institute a suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of such Holder. For the protection and enforcement of the
foregoing provision, each and every Holder of the Capital Securities shall be
entitled to such relief as can be given either at law or equity.
8. Pro Rata. A reference in these terms of the Securities to
any payment, distribution or treatment as being "Pro Rata" shall mean pro rata
to each Holder of the Securities according to the aggregate liquidation amount
of the Securities held by the relevant Holder in relation to the aggregate
liquidation amount of all Securities outstanding unless, in relation to a
payment, an Event of Default has occurred and is continuing, in which case any
funds available to make such payment shall be paid first to each Holder of the
Capital Securities Pro Rata according to the aggregate liquidation amount of the
Capital Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Capital Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Capital Securities, to
each Holder of the Common Securities Pro Rata according to the aggregate
liquidation amount of the Common Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Common Securities outstanding.
9. Ranking. The Capital Securities rank pari passu with and
payment thereon shall be made Pro Rata with the Common Securities except that,
where an Event of Default has occurred and is continuing, the rights of Holders
of the Common Securities to receive payment of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights of the
Holders of the Capital Securities with the result that no payment of any
Distribution on, or Redemption Price of, any Common Security, and no other
<PAGE> 68
payment on account of redemption, liquidation or other acquisition of Common
Securities, shall be made unless payment in full in cash of all accumulated and
unpaid Distributions 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 Institutional Trustee shall
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.
10. Acceptance of Guarantee and Indenture. Each Holder of the
Capital Securities and the Common Securities, by the acceptance of such
Securities, agrees to the provisions of the Guarantee, including the
subordination provisions therein and to the provisions of the Indenture.
11. No Preemptive Rights. The Holders of the Securities
shall have no preemptive or similar rights to subscribe for any additional
securities.
12. Miscellaneous. These terms constitute a part of the
Declaration. The Sponsor will provide a copy of the Declaration, the Guarantee,
and the Indenture to a Holder without charge on written request to the Sponsor
at its principal place of business.
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF
THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE
TRANSFER SUCH SECURITY ONLY (A) TO THE DEBENTURE ISSUER OR THE TRUST, (B)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (C) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT
IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF AN
"ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN
<PAGE> 69
CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (D)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT TO THE DEBENTURE ISSUER'S AND THE TRUST'S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (C) OR (D) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE DECLARATION OF
TRUST, A COPY OF WHICH MAY BE OBTAINED FROM THE DEBENTURE ISSUER OR THE TRUST.
THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE FOREGOING
RESTRICTIONS.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATE AND OTHER INFORMATION MAY BE
REQUIRED BY THE DECLARATION TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS.
<PAGE> 70
Certificate Number P-1 Number of Capital Securities: 10,000
CUSIP NO ___________
Certificate Evidencing Capital Securities
of
Community (AL) Capital Trust I
Fixed Rate Capital Pass-through Securities(R) (TRUPS(R))
(liquidation amount $1,000 per Capital Security)
Community (AL) Capital Trust I , a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of securities of the Trust
representing undivided beneficial interests in the assets of the Trust,
designated the Fixed Rate Capital Trust Pass-through Securities(R) (liquidation
amount $1,000 per Capital Security) (the "Capital Securities"). Subject to the
Declaration (as defined below), the Capital Securities are transferable on the
books and records of the Trust, in person or by a duly authorized attorney, upon
surrender of this Certificate duly endorsed and in proper form for transfer. The
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Capital Securities represented hereby are issued pursuant to,
and shall in all respects be subject to, the provisions of the Amended and
Restated Declaration of Trust of the Trust dated as of March 23, 2000, among
Denny Kelly and Elaine Corvin, as Administrators, The Bank of New York
(Delaware), as Delaware Trustee, The Bank of New York, as Institutional Trustee,
Community Bancshares, Inc., as Sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Trust, including the
designation of the terms of the Capital Securities as set forth in Annex I to
the Declaration, as the same may be amended from time to time (the
"Declaration"). Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits of
the Guarantee to the extent provided therein. The Sponsor will provide a copy of
the Declaration, the Guarantee, and the Indenture to the Holder without charge
upon written request to the Trust at its principal place of business.
Upon receipt of this Security, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.
By acceptance of this Security, the Holder agrees to treat, for United
States federal income tax purposes, the Debentures as indebtedness and the
Capital Securities as evidence of beneficial ownership in the Debentures.
A-1-3
<PAGE> 71
This Capital Security is governed by, and construed in accordance with,
the laws of the State of Delaware, without regard to principles of conflict of
laws.
<PAGE> 72
IN WITNESS WHEREOF, the Trust has duly executed this certificate.
COMMUNITY (AL) CAPITAL TRUST I
By:
--------------------------------
Name:
Title: Administrator
Dated:
----------------------------
CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
THE BANK OF NEW YORK, as the Institutional
Trustee
By:
---------------------------------
Authorized Officer
Dated:
-----------------------------
<PAGE> 73
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be payable
at an annual rate of 10 7/8% (the "Coupon Rate") of the stated liquidation
amount of $1,000 per Capital Security, such rate being the rate of interest
payable on the Debentures to be held by the Institutional Trustee. Except as set
forth below in respect of an Extension Period, Distributions in arrears for more
than a semi-annual period will bear interest thereon compounded semi-annual at
the Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes cash distributions, any such compounded
interest and any Additional Interest payable on the Debentures unless otherwise
stated. A Distribution is payable only to the extent that payments are made in
respect of the Debentures held by the Institutional Trustee and to the extent
the Institutional Trustee has funds available therefor. The amount of
Distributions payable for any period will be computed for any full semi-annual
Distribution period on the basis of a 360-day year of twelve 30-day months.
Except as otherwise described below, Distributions on the
Capital Securities will be cumulative, will accrue from the date of original
issuance and will be payable semi-annually in arrears on March 8 and September 8
of each year, commencing on September 8, 2000. The Debenture Issuer has the
right under the Indenture to defer payments of interest on the Debentures by
extending the interest payment period for up to 10 consecutive semi-annual
periods (each, an "Extension Period") at any time and from time to time on the
Debentures, subject to the conditions described below, although such interest
would continue to accrue on the Debentures, and Interest will accrue on such
Deferred Interest, at an annual rate equal to 10 7/8%, compounded semi-annually
to the extent permitted by law during any Extension Period. No Extension Period
may end on a date other than a Distribution Payment Date. At the end of any such
Extension Period the Debenture Issuer shall pay all Deferred Interest then
accrued and unpaid on the Debentures; provided however, that no Extension Period
may extend beyond the Maturity Date. Prior to the termination of any Extension
Period, the Debenture Issuer may further extend such period, provided that such
period together with all such previous and further consecutive extensions
thereof shall not exceed 10 consecutive semi-annual periods, or extend beyond
the Maturity Date. Upon the termination of any Extension Period and upon the
payment of all Deferred Interest, the Debenture Issuer may commence a new
Extension Period, subject to the foregoing requirements. No interest or Deferred
Interest shall be due and payable during an Extension Period, except at the end
thereof, but each installment of interest that would otherwise have been due and
payable during such Extension Period shall bear Deferred Interest. If
Distributions are deferred, the Distributions due shall be paid on the date that
the related Extension Period terminates, or, if such date is not a Distribution
Payment Date, on the immediately following Distribution Payment Date, to Holders
of the Securities as they appear on the books and records of the Trust on the
record date immediately preceding such date. Distributions on the Securities
must be paid on the dates payable (after giving effect to any Extension Period)
to the extent that the Trust has funds available for the payment of such
distributions in the Property Account of the Trust. The Trust's funds available
for Distribution to the Holders of the Securities will be limited to payments
received from the Debenture Issuer. The payment of Distributions out of moneys
held by the Trust is guaranteed by the Guarantor pursuant to the Guarantee.
The Capital Securities shall be redeemable as provided in the
Declaration.
<PAGE> 74
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Capital Security Certificate to:
(Insert assignee's social security or tax identification number)
(Insert address and zip code of assignee), and irrevocably appoints
as agent to transfer this Capital Security Certificate on the books of the
Trust. The agent may substitute another to act for him or her.
Date:
Signature:
(Sign exactly as your name appears on the other side of this
Capital Security Certificate)
Signature Guarantee:(1)
- -------------------
(1) 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 Security 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 Security registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
<PAGE> 75
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION.
THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED.
Certificate Number C-1 Number of Common
Securities: 310
Certificate Evidencing Common Securities
of
Community (AL) Capital Trust I
Community (AL) Capital Trust I, a statutory business trust
created under the laws of the State of Delaware (the "Trust"), hereby certifies
that Community Bancshares, Inc. (the "Holder") is the registered owner of common
securities of the Trust representing undivided beneficial interests in the
assets of the Trust (the "Common Securities"). The designation, rights,
privileges, restrictions, preferences and other terms and provisions of the
Common Securities represented hereby are issued pursuant to, and shall in all
respects be subject to, the provisions of the Amended and Restated Declaration
of Trust of the Trust dated as of March 23, 2000, among Denny Kelly and Elaine
Corvin, as Administrators, The Bank of New York (Delaware), as Delaware Trustee,
The Bank of New York, as Institutional Trustee, Community Bancshares, Inc., as
Sponsor and the holders from time to time of undivided beneficial interest in
the assets of the Trust including the designation of the terms of the Common
Securities as set forth in Annex I to the Declaration, as the same may be
amended from time to time (the "Declaration"). Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration. The Holder is
entitled to the benefits of the Guarantee to the extent provided therein. The
Sponsor will provide a copy of the Declaration, the Guarantee and the Indenture
to the Holder without charge upon written request to the Sponsor at its
principal place of business.
As set forth in the Declaration, where an Event of Default has
occurred and continuing, the rights of Holders of Common securities to payment
in respect of Distributions and payments upon Liquidation, redemption or
otherwise are subordinated to the rights of payment of Holders of the Capital
Securities.
Upon receipt of this Certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
A-2-1
<PAGE> 76
By acceptance of this Certificate, the Holder agrees to treat,
for United States federal income tax purposes, the Debentures as indebtedness
and the Common Securities as evidence of undivided beneficial ownership in the
Debentures.
This Common Security is governed by, and construed in
accordance with, the laws of the State of Delaware, without regard to principles
of conflict of laws.
<PAGE> 77
IN WITNESS WHEREOF, the Trust has executed this certificate
this 23rd day of March, 2000.
COMMUNITY (AL) CAPITAL TRUST I
By:
------------------------------
Name:
Title: Administrator
<PAGE> 78
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be identical in
amount to the Distributions payable on each Capital Security, which is at an
annual rate of 10 7/8% (the "Coupon Rate") of the stated liquidation amount of
$1,000 per Capital Security, such rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Except as set forth below in
respect of an Extension Period, Distributions in arrears for more than one
period will bear interest thereon compounded at the Coupon Rate (to the extent
permitted by applicable law). The term "Distributions" as used herein includes
cash distributions, any such compounded distribution and any Additional Interest
payable on the Debentures unless otherwise stated. A Distribution is payable
only to the extent that payments are made in respect of the Debentures held by
the Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. The amount of Distributions payable for any period will be
computed for any full semi-annual Distribution period on 360-day year of twelve
30-day months.
Except as otherwise described below, Distributions on the Common
Securities will be cumulative, will accrue from the date of original issuance
and will be payable semi-annually in arrears on March 8 and September 8 of each
year, commencing on September 8, 2000. The Debenture Issuer has the right under
the Indenture to defer payments of interest on the Debentures by extending the
interest payment period for up to 10 consecutive semi-annual periods (each, an
"Extension Period") at any time and from time to time on the Debentures, subject
to the conditions described below, during which Extension Period no interest
shall be due and payable. No Extension Period may end on a date other than a
Distribution Payment Date. During an Extension Period, interest would continue
to accrue on the Debentures, and interest on such accrued interest (such accrued
interest and interest thereon referred to herein as "Deferred Interest") will
accrue at an annual rate equal to 10 7/8%, compounded semi-annually from the
date such Deferred Interest would have been payable were it not for the
Extension Period to the extent permitted by law during any Extension Period. At
the end of any such Extension Period the Debenture Issuer shall pay all Deferred
Interest then accrued and unpaid on the Debentures; provided, however, that no
Extension Period may extend beyond the Maturity Date. Prior to the termination
of any Extension Period, the Debenture Issuer may further extend such period,
provided that such period together with all such previous and further
consecutive extensions thereof shall not exceed 10 consecutive semi-annual
periods, or extend beyond the Maturity Date. Upon the termination of any
Extension Period and upon the payment of all Deferred Interest, the Debenture
Issuer may commence a new Extension Period, subject to the foregoing
requirements. No interest or Deferred Interest shall be due and payable during
an Extension Period, except at the end thereof, but each installment of interest
that would otherwise have been due and payable during such Extension Period
shall bear Deferred Interest. If Distributions are deferred, the Distributions
due shall be paid on the date that the related Extension Period terminates, or,
if such date is not a Distribution Payment Date, on the immediately following
Distribution Payment Date, to Holders of the Securities as they appear on the
books and records of the Trust on the record date immediately preceding such
date. Distributions on the Securities must be paid on the dates payable (after
giving effect to any Extension Period) to the extent that the Trust has funds
available for the payment of such distributions in the Property Account of the
Trust. The Trust's funds available for Distribution to the Holders of the
Securities will be limited to payments received from the Debenture Issuer. The
payment of Distributions out of moneys held by the Trust is guaranteed by the
Guarantor pursuant to the Guarantee.
<PAGE> 79
The Common Securities shall be redeemable as provided in the Declaration.
<PAGE> 80
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common
Security Certificate to:
(Insert assignee's social security or tax identification number)
(Insert address and zip code of assignee), and irrevocably appoints
as agent to transfer this Common Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date:
Signature:
(Sign exactly as your name appears on the other side of this Common
Security Certificate)
Signature Guarantee:(2):
- ----------------------
(2) 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 Security 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 Security registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
<PAGE> 81
EXHIBIT B
FORM OF TRANSFEREE CERTIFICATE
TO BE EXECUTED BY TRANSFEREES OTHER THAN QIBS
__________, [ ]
Community Bancshares, Inc.
Community (AL) Capital Trust I
68149 Main Street
Blountsville, AL 35031
Re: Purchase of $1,000 stated liquidation amount of Fixed Rate Capital
Trust Pass-through Securities(R) (TruPS)(R) (the "Capital
Securities") of Community (AL) Capital Trust I
Ladies and Gentlemen:
In connection with our purchase of the Capital Securities we
confirm that:
1. We understand that the Fixed Rate Capital Trust
Pass-through Securities(R) (the "Capital Securities") (including the guarantee
(the "Guarantee") of Community Bancshares, Inc. (the "Company") executed in
connection therewith) and the Fixed Rate Junior Subordinated Deferrable Interest
Debentures due 2030 (the "Subordinated Debt Securities") of the Company (the
Capital Securities, the Guarantee and the Subordinated Debt Securities together
being referred to herein as "Offered Securities"), have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), and may not
be offered or sold except as permitted in the following sentence. We agree on
our own behalf and on behalf of any investor account for which we are purchasing
the Offered Securities that, if, we decide to offer, sell or otherwise transfer
any such Offered Securities, such offer, sale or transfer will be made only (a)
to [_________] or [________], (b) pursuant to Rule 144A under the Securities
Act, to a person we reasonably believe is a qualified institutional buyer under
Rule 144A (a "QIB") that purchases for its own account or for the account of a
QIB and to whom notice is given that the transfer is being made in reliance on
Rule 144A, (c) to an "accredited investor" with the meaning of subparagraph (a)
(1), (2), (3) or (7) of Rule 501 under the Securities Act that is acquiring
Offered Securities for its own account or for the account of such an accredited
investor for investment purposes and not with a view to, or for offer or sale in
connection with, any distribution thereof in violation of the Securities Act, or
(d) pursuant to another available exemption from the registration requirements
of the Securities Act, subject in each of the foregoing cases to any
requirements of law that the disposition of our property or compliance with any
applicable state securities laws. The foregoing restrictions on resale will not
apply subsequent to the Resale Restriction Termination Date. If any resale or
other transfer of the Offered Securities is proposed to be made pursuant to
clause (c) or (d) above the transferor shall deliver a letter from the
transferee substantially in the form of this letter to The Bank of New York as
Transfer Agent, which shall provide as applicable, among other things, that the
transferee is an "accredited investor" within the meaning of subparagraph (a)
(1), (2), (3) or (7) of Rule 501 under the Securities Act that
<PAGE> 82
is acquiring such Securities for investment purposes and not for distribution in
violation of the Securities Act. We acknowledge on our behalf and on behalf of
any investor account for which we are purchasing Securities that the [______]
and [__________] reserve the right prior to any offer, sale or other transfer
pursuant to clauses (d) or (e) to require the delivery of any opinion of
counsel, certifications and/or other information satisfactory to the Trust and
the Company. We understand that the certificates for any Offered Security that
we receive will bear a legend substantially to the effect of the foregoing.
2. We are an "accredited investor" with the meaning of
subparagraph (a) (1), (2), (3) or (7) of Rule 501 under the Securities Act
purchasing for our own account or for the account of such an "accredited
investor," and we are acquiring the Offered Securities for the investment
purposes and not with view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act and we have such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of our investment in the Offered Securities, and we and any
account for which we are acting are each able to bear the economic risks of our
or its investment.
3. We are acquiring the Offered Securities purchased by us for
our own account (or for one or more accounts as to each of which we exercise
sole investment discretion and have authority to make, and do make, the
statements contained in this letter) and not with a view to any distribution of
the Offered Securities, subject, nevertheless, to the understanding that the
disposition of our property will at all times be and remain within our control.
4. In the event that we purchase any Capital Securities or any
Subordinated Debt Securities, we will acquire such Capital Securities having an
aggregate stated liquidation amount of not less than $1,000 or such Subordinated
Debt Securities having an aggregate principal amount not less than $1,000, for
our own account and for each separate account for which we are acting.
5. We acknowledge that we either (A) are not a fiduciary of a
pension, profit-sharing or other employee benefit plan subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") (a "Plan"), or an
entity whose assets include "plan assets" by reason of any Plan's investment in
the entity and are not purchasing the Offered Securities on behalf of or with
"plan assets" by reason of any Plan's investment in the entity and is not
purchasing the Offered Securities on behalf of or with "plan assets" of any Plan
or (B) are eligible for the exemptive relief available under one ore more of the
following prohibited transaction class exemptions ("PTCEs") issued by the U.S.
Department of Labor: PTCE 96-23, 95-60, 91-38, 90-1 or 84-14.
6. We acknowledge that [_________] and [_______] and others
will rely upon the truth and accuracy of the foregoing acknowledges,
representations, warranties and agreements and agree that if any of the
acknowledgments, representations, warranties and agreements deemed to have been
made by our purchase of the Offered Securities are no longer accurate, we shall
promptly notify the Initial Purchasers. If we are acquiring any Offered
Securities as a fiduciary or agent for one or more investor accounts, we
represent that we have sole discretion with respect to each such investor
account and that we have full power to make the foregoing acknowledgments,
representations and agreement on behalf of each such investor account.
Very truly yours,
<PAGE> 83
(Name of Purchaser)
By:
Date:
Upon transfer of the Offered Securities would be registered in
the name of the new beneficial owner as follows.
Name:
Address:
Taxpayer ID Number:
EXHIBIT C
FORM OF TRANSFEREE CERTIFICATE
TO BE EXECUTED FOR QIBs
__________, [ ]
Community Bancshares, Inc.
Community (AL) Capital Trust I
68149 Main Street
Blountsville, AL 35031
Re: Purchase of $1,000 stated liquidation amount of Fixed Rate Capital
Trust Pass-through Securities(R) (TRUPS)(R) (the "Capital Securities")
of Community (AL) Capital Trust I
Reference is hereby made to the Amended and Restated
Declaration dated as of March 23, 2000 (the "Declaration") among Denny Kelly and
Elaine Corvin, as Administrators, The Bank of New York (Delaware), as Delaware
Trustee, The Bank of New York, as Institutional Trustee, Community Bancshares,
Inc., as Sponsor, and the holders from time to time of undivided beneficial
interest in the assets of Community (AL) Capital Trust I. Capitalized terms used
but not defined herein shall have the meanings given them in the Declaration.
<PAGE> 84
This letter relates to $[_______________] aggregate
liquidation amount of Capital Securities which are held in the name of [name of
transferor] (the "Transferor").
In connection with such request, and in respect to such
Capital Securities, the transferor does hereby certify that such Capital
Securities are being transferred in accordance with (i) the transfer
restrictions set forth in the Capital Securities and (ii) Rule 144A under the
United States Securities Act of 1933, as amended ("Rule 144A"), to a transferee
that the Transferor reasonably believes is purchasing the Capital Securities for
its own account or an account with respect to which the transferee exercises
sole investment discretion and the transferee and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A, in a
transaction meeting the requirements of Rule 144A and in accordance with
applicable securities laws of any state of the United States or any other
jurisdiction.
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
(Name of Transferor)
By:
Name:
Title:
Date:
<PAGE> 85
EXHIBIT D
SPECIMEN OF INITIAL DEBENTURE
D-1
<PAGE> 86
EXHIBIT E
PLACEMENT AGREEMENT
<PAGE> 1
EXHIBIT 10.2
------------------------------------------
EXHIBIT 10.2
GUARANTEE AGREEMENT
COMMUNITY BANCSHARES, INC.
DATED AS OF MARCH 23, 2000
------------------------------------------
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation................................................1
ARTICLE II
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE
SECTION 2.1 Powers and Duties of the Guarantee Trustee....................................4
SECTION 2.2 Certain Rights of Guarantee Trustee...........................................5
SECTION 2.3 Not Responsible for Recitals or Issuance of Guarantee.........................7
SECTION 2.4 Events of Default; Waiver.....................................................7
SECTION 2.5 Events of Default; Notice.....................................................8
ARTICLE III
GUARANTEE TRUSTEE
SECTION 3.1 Guarantee Trustee; Eligibility................................................8
SECTION 3.2 Appointment, Removal and Resignation of Guarantee Trustee.....................9
ARTICLE IV
GUARANTEE
SECTION 4.1 Guarantee.....................................................................9
SECTION 4.2 Waiver of Notice and Demand..................................................10
SECTION 4.3 Obligations Not Affected.....................................................10
SECTION 4.4 Rights of Holders............................................................11
SECTION 4.5 Guarantee of Payment.........................................................11
SECTION 4.6 Subrogation..................................................................11
SECTION 4.7 Independent Obligations......................................................12
SECTION 4.8 Enforcement by a Beneficiary.................................................12
ARTICLE V
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 5.1 Limitation of Transactions...................................................12
SECTION 5.2 Ranking......................................................................13
ARTICLE VI
TERMINATION
SECTION 6.1 Termination..................................................................13
ARTICLE VII
INDEMNIFICATION
SECTION 7.1 Exculpation..................................................................13
SECTION 7.2 Indemnification..............................................................14
SECTION 7.3 Compensation; Reimbursement of Expenses......................................15
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Successors and Assigns.......................................................15
SECTION 8.2 Amendments...................................................................16
SECTION 8.3 Notices......................................................................16
SECTION 8.4 Benefit......................................................................16
SECTION 8.5 Governing Law................................................................17
</TABLE>
<PAGE> 4
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Guarantee"), dated as of March
23, 2000, is executed and delivered by Community Bancshares, Inc., a bank
holding company incorporated in Delaware (the "Guarantor"), and The Bank of New
York, as trustee (the "Guarantee Trustee"), for the benefit of the Holders (as
defined herein) from time to time of the Capital Securities (as defined herein)
of Community (AL) Capital Trust I, a Delaware statutory business trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of March 23, 2000, among the trustees named
therein of the Issuer, Community Bancshares, Inc., as sponsor, and the holders
from time to time of undivided beneficial interests in the assets of the Issuer,
the Issuer is issuing on the date hereof securities, having an aggregate
liquidation amount of up to $10,000,000, designated the Fixed Rate Capital Trust
Pass-through Securities(R) (the "Capital Securities");
WHEREAS, as incentive for the Holders to purchase the Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Guarantee, to pay to the Holders of Capital
Securities the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein; and
NOW, THEREFORE, in consideration of the purchase by each
Holder of the Capital Securities, which purchase the Guarantor hereby agrees
shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee
for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
In this Guarantee, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee but not
defined in the preamble above have the respective meanings assigned to
them in this Section 1.1;
(b) a term defined anywhere in this Guarantee has the
same meaning throughout;
(c) all references to "the Guarantee" or "this Guarantee"
are to this Guarantee as modified, supplemented or amended from time to
time;
(d) all references in this Guarantee to Articles and
Sections are to Articles and Sections of this Guarantee, unless
otherwise specified;
(e) terms defined in the Declaration as at the date of
execution of this Guarantee have the same meanings when used in this
Guarantee, unless otherwise defined in this Guarantee or unless the
context otherwise requires; and
(f) a reference to the singular includes the plural and
vice versa.
1
<PAGE> 5
"Beneficiaries" means any Person to whom the Trust is or
hereafter becomes indebted or liable.
"Corporate Trust Office" means the office of the Guarantee
Trustee at which the corporate trust business of the Guarantee Trustee shall, at
any particular time, be principally administered, which office at the date of
execution of this Guarantee Agreement is located at 101 Barclay Street, Floor
21W, New York, NY 10286.
"Covered Person" means any Holder of Capital Securities.
"Debentures" means the junior subordinated debentures of
Community Bancshares, Inc., designated the 10 7/8% Junior Subordinated
Deferrable Interest Debentures due 2030, held by the Institutional Trustee (as
defined in the Declaration) of the Issuer.
"Declaration Event of Default" means an "Event of Default" as
defined in the Declaration.
"Event of Default" has the meaning set forth in Section
2.4.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Capital Securities, to
the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Declaration) which are required to be paid on
such Capital Securities to the extent the Issuer shall have funds available
therefor, (ii) the Redemption Price (as defined in the Indenture) to the extent
the Issuer has funds available therefor, with respect to any Capital Securities
called for redemption by the Issuer, (iii) the Special Redemption Price (as
defined in the Indenture) to the extent the Issuer has funds available therefor,
with respect to Capital Securities redeemed upon the occurrence of a Special
Event (as defined in the Indenture), and (iv) upon a voluntary or involuntary
liquidation, dissolution, winding-up or termination of the Issuer (other than in
connection with the distribution of Debentures to the Holders of the Capital
Securities in exchange therefor as provided in the Declaration), the lesser of
(a) the aggregate of the liquidation amount and all accrued and unpaid
Distributions on the Capital Securities to the date of payment, to the extent
the Issuer shall have funds available therefor, and (b) the amount of assets of
the Issuer remaining available for distribution to Holders in liquidation of the
Issuer (in either case, the "Liquidation Distribution").
"Guarantee Trustee" means The Bank of New York, until a
Successor Guarantee Trustee has been appointed and has accepted such appointment
pursuant to the terms of this Guarantee and thereafter means each such Successor
Guarantee Trustee.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Capital Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Capital
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Guarantee Trustee, any
Affiliate of the Guarantee Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives, nominees, custodians or agents of
the Guarantee Trustee.
2
<PAGE> 6
"Indenture" means the Indenture dated as of March 23, 2000,
between the Guarantor and The Bank of New York, not in its individual capacity
but solely as trustee, and any indenture supplemental thereto pursuant to which
the Debentures are to be issued to the Institutional Trustee of the Issuer.
"Liquidation Distribution" has the meaning set forth in the
definition of "Guarantee Payments" herein.
"Majority in liquidation amount of the Capital Securities"
means Holder(s) of outstanding Capital Securities, voting together as a class,
but separately from the holders of Common Securities, of more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all Capital
Securities then outstanding.
"Obligations" means any costs, expenses or liabilities (but
not including liabilities related to taxes) of the Trust, other than obligations
of the Trust to pay to holders of any Trust Securities the amounts due such
holders pursuant to the terms of the Trust Securities.
"Officer's Certificate" means, with respect to any Person, a
certificate signed by one Authorized Officer of such Person. Any Officer's
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee shall include:
(a) a statement that each officer signing the Officer's
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officer's 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.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Redemption Price" has the meaning set forth in the
definition of "Guarantee Payments" herein.
"Responsible Officer" means, with respect to the Guarantee
Trustee, any officer within the Corporate Trust Office of the Guarantee Trustee,
including any Vice President, Assistant Vice President, Secretary, Assistant
Secretary or any other officer of the Guarantee Trustee customarily performing
functions similar to those performed by any of the above
3
<PAGE> 7
designated officers and also, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.
"Successor Guarantee Trustee" means a successor Guarantee
Trustee possessing the qualifications to act as Guarantee Trustee under Section
3.1.
"Trust Securities" means the Common Securities and the Capital
Securities.
ARTICLE II
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE
SECTION 2.1 Powers and Duties of the Guarantee Trustee
(a) This Guarantee shall be held by the Guarantee Trustee
for the benefit of the Holders of the Capital Securities, and the
Guarantee Trustee shall not transfer this Guarantee to any Person
except a Holder of Capital Securities exercising his or her rights
pursuant to Section 4.4(b) or to a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to
act as Successor Guarantee Trustee. The right, title and interest of
the Guarantee Trustee shall automatically vest in any Successor
Guarantee Trustee, and such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Guarantee
Trustee.
(b) If an Event of Default actually known to a
Responsible Officer of the Guarantee Trustee has occurred and is
continuing, the Guarantee Trustee shall enforce this Guarantee for the
benefit of the Holders of the Capital Securities.
(c) The Guarantee Trustee, before the occurrence of any
Event of Default and after curing all Events of Default that may have
occurred, shall undertake to perform only such duties as are
specifically set forth in this Guarantee, and no implied covenants
shall be read into this Guarantee against the Guarantee Trustee. In
case an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.4) and is actually known to a Responsible
Officer of the Guarantee Trustee, the Guarantee Trustee shall exercise
such of the rights and powers vested in it by this Guarantee, and use
the same degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(d) No provision of this Guarantee shall be construed to
relieve the Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of
Default and after the curing or waiving of all such Events of
Default that may have occurred:
4
<PAGE> 8
(A) the duties and obligations of the
Guarantee Trustee shall be determined solely by the
express provisions of this Guarantee, and the
Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are
specifically set forth in this Guarantee, and no
implied covenants or obligations shall be read into
this Guarantee against the Guarantee Trustee; and
(B) in the absence of bad faith on the
part of the Guarantee Trustee, the Guarantee Trustee
may conclusively rely, as to the truth of the
statements and the correctness of the opinions
expressed therein, upon any certificates or opinions
furnished to the Guarantee Trustee and conforming to
the requirements of this Guarantee; but in the case
of any such certificates or opinions furnished to the
Guarantee Trustee, the Guarantee Trustee shall be
under a duty to examine the same to determine whether
or not they conform to the requirements of this
Guarantee;
(ii) the Guarantee Trustee shall not be liable
for any error of judgment made in good faith by a Responsible
Officer of the Guarantee Trustee, unless it shall be proved
that such Responsible Officer of the Guarantee Trustee or the
Guarantee Trustee was negligent in ascertaining the pertinent
facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable
with respect to any action taken or omitted to be taken by it
in good faith in accordance with the direction of the Holders
of not less than a Majority in liquidation amount of the
Capital Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the
Guarantee Trustee, or exercising any trust or power conferred
upon the Guarantee Trustee under this Guarantee; and
(iv) no provision of this Guarantee shall require
the Guarantee Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of
its rights or powers, if the Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such
funds is not reasonably assured to it under the terms of this
Guarantee, or security and indemnity, reasonably satisfactory
to the Guarantee Trustee, against such risk or liability is
not reasonably assured to it.
SECTION 2.2 Certain Rights of Guarantee Trustee
(a) Subject to the provisions of Section 2.1:
(i) The Guarantee Trustee may conclusively rely,
and shall be fully protected in acting or refraining from
acting upon, any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be
genuine and to have been signed, sent or presented by the
proper party or parties.
5
<PAGE> 9
(ii) Any direction or act of the Guarantor
contemplated by this Guarantee shall be sufficiently evidenced
by an Officer's Certificate.
(iii) Whenever, in the administration of this
Guarantee, the Guarantee Trustee shall deem it desirable that
a matter be proved or established before taking, suffering or
omitting any action hereunder, the Guarantee Trustee (unless
other evidence is herein specifically prescribed) may, in the
absence of bad faith on its part, request and conclusively
rely upon an Officer's Certificate of the Guarantor which,
upon receipt of such request, shall be promptly delivered by
the Guarantor.
(iv) The Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any instrument
(or any rerecording, refiling or registration thereof).
(v) The Guarantee Trustee may consult with
counsel of its selection, and the advice or opinion of such
counsel with respect to legal matters 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 accordance with such advice or opinion. Such counsel may be
counsel to the Guarantor or any of its Affiliates and may
include any of its employees. The Guarantee Trustee shall have
the right at any time to seek instructions concerning the
administration of this Guarantee from any court of competent
jurisdiction.
(vi) The Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in
it by this Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the
Guarantee Trustee such security and indemnity, reasonably
satisfactory to the Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses and the
expenses of the Guarantee Trustee's agents, nominees or
custodians) and liabilities that might be incurred by it in
complying with such request or direction, including such
reasonable advances as may be requested by the Guarantee
Trustee; provided, however, that nothing contained in this
Section 2.2(a)(vi) shall be taken to relieve the Guarantee
Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by
this Guarantee.
(vii) The Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper
or document, but the Guarantee Trustee, in its discretion, may
make such further inquiry or investigation into such facts or
matters as it may see fit.
(viii) The Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents, nominees, custodians
or attorneys, and the Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder.
6
<PAGE> 10
(ix) Any action taken by the Guarantee Trustee or
its agents hereunder shall bind the Holders of the Capital
Securities, and the signature of the Guarantee Trustee or its
agents alone shall be sufficient and effective to perform any
such action. No third party shall be required to inquire as to
the authority of the Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of this
Guarantee, both of which shall be conclusively evidenced by
the Guarantee Trustee's or its agent's taking such action.
(x) Whenever in the administration of this
Guarantee the Guarantee Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or
right or taking any other action hereunder, the Guarantee
Trustee (A) may request instructions from the Holders of a
Majority in liquidation amount of the Capital Securities, (B)
may refrain from enforcing such remedy or right or taking such
other action until such instructions are received, and (C)
shall be protected in conclusively relying on or acting in
accordance with such instructions.
(xi) The Guarantee 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 Guarantee.
(b) No provision of this Guarantee shall be deemed to
impose any duty or obligation on the Guarantee Trustee to perform any
act or acts or exercise any right, power, duty or obligation conferred
or imposed on it, in any jurisdiction in which it shall be illegal or
in which the Guarantee Trustee shall be unqualified or incompetent in
accordance with applicable law to perform any such act or acts or to
exercise any such right, power, duty or obligation. No permissive power
or authority available to the Guarantee Trustee shall be construed to
be a duty.
SECTION 2.3 Not Responsible for Recitals or Issuance of Guarantee
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee makes no
representation as to the validity or sufficiency of this Guarantee.
SECTION 2.4 Events of Default; Waiver
(a) An Event of Default under this Guarantee will occur
upon the failure of the Guarantor to perform any of its payment or other
obligations hereunder.
(b) The Holders of a Majority in liquidation amount of
Capital Securities may, voting or consenting as a class, on behalf of the
Holders of all of the Capital Securities, waive any past Event of Default and
its consequences. Upon such waiver, any such Event of Default shall cease to
exist, and shall be deemed to have been cured, for every purpose of this
Guarantee, but no such waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent thereon.
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SECTION 2.5 Events of Default; Notice
(a) The Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Capital Securities, notices of
all Events of Default actually known to a Responsible Officer of the
Guarantee Trustee, unless such defaults have been cured before the
giving of such notice, provided, however, that the Guarantee Trustee
shall be protected in withholding such notice if and so long as a
Responsible Officer of the Guarantee Trustee in good faith determines
that the withholding of such notice is in the interests of the Holders
of the Capital Securities.
(b) The Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Guarantee Trustee shall
have received written notice from the Guarantor or a Holder of the
Capital Securities (except in the case of a payment default), or a
Responsible Officer of the Guarantee Trustee charged with the
administration of this Guarantee shall have obtained actual knowledge,
thereof.
ARTICLE III
GUARANTEE TRUSTEE
SECTION 3.1 Guarantee Trustee; Eligibility
(a) There shall at all times be a Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing
business under the laws of the United States of America or any
State or Territory thereof or of the District of Columbia, or
Person authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least 50
million U.S. dollars ($50,000,000), and subject to supervision
or examination by Federal, State, Territorial or District of
Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority
referred to above, then, for the purposes of this Section
3.1(a) (ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Guarantee Trustee shall cease to
be eligible to so act under Section 3.1(a), the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section
3.2(c).
(c) If the Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Guarantee Trustee shall either eliminate such
interest or resign to the extent and in the manner provided by, and
subject to this Guarantee.
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SECTION 3.2 Appointment, Removal and Resignation of Guarantee Trustee
(a) Subject to Section 3.2(b), the Guarantee Trustee may
be appointed or removed without cause at any time by the Guarantor
except during an Event of Default.
(b) The Guarantee Trustee shall not be removed in
accordance with Section 3.2(a) until a Successor Guarantee Trustee has
been appointed and has accepted such appointment by written instrument
executed by such Successor Guarantee Trustee and delivered to the
Guarantor.
(c) The Guarantee Trustee appointed to office shall hold
office until a Successor Guarantee Trustee shall have been appointed or
until its removal or resignation. The Guarantee Trustee may resign from
office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Guarantee Trustee and delivered
to the Guarantor, which resignation shall not take effect until a
Successor Guarantee Trustee has been appointed and has accepted such
appointment by an instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning
Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 3.2
within 60 days after delivery of an instrument of removal or
resignation, the Guarantee Trustee resigning or being removed may
petition any court of competent jurisdiction for appointment of a
Successor Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a
Successor Guarantee Trustee.
(e) No Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Guarantee Trustee.
(f) Upon termination of this Guarantee or removal or
resignation of the Guarantee Trustee pursuant to this Section 3.2, the
Guarantor shall pay to the Guarantee Trustee all amounts owing to the
Guarantee Trustee under Sections 7.2 and 7.3 accrued to the date of
such termination, removal or resignation.
ARTICLE IV
GUARANTEE
SECTION 4.1 Guarantee
(a) The Guarantor irrevocably and unconditionally agrees
to pay in full to the Holders the Guarantee Payments (without duplication of
amounts theretofore paid by the Issuer), as and when due, regardless of any
defense (except as defense of payment by the Issuer), right of set-off or
counterclaim that the Issuer may have or assert. The Guarantor's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders.
(b) The Guarantor hereby also agrees to assume any and
all Obligations of the Trust and in the event any such Obligation is not so
assumed, subject to the terms and conditions
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hereof, the Guarantor hereby irrevocably and unconditionally guarantees to each
Beneficiary the full payment, when and as due, of any and all obligations to
such Beneficiaries. This Agreement is intended to be for the benefit of, and to
be enforceable by, all such Beneficiaries, whether or not such Beneficiaries
have received notice hereof.
SECTION 4.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Issuer
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
SECTION 4.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the
Guarantor under this Guarantee shall in no way be affected or impaired by reason
of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer of any
express or implied agreement, covenant, term or condition relating to
the Capital Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer
of all or any portion of the Distributions, Redemption Price, Special
Redemption Price, Liquidation Distribution or any other sums payable
under the terms of the Capital Securities or the extension of time for
the performance of any other obligation under, arising out of, or in
connection with, the Capital Securities (other than an extension of
time for payment of Distributions, Redemption Price, Special Redemption
Price, Liquidation Distribution or other sum payable that results from
the extension of any interest payment period on the Debentures or any
extension of the maturity date of the Debentures permitted by the
Indenture);
(c) any failure, omission, delay or lack of diligence on
the part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to the
terms of the Capital Securities, or any action on the part of the
Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of debt of, or other similar
proceedings affecting, the Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the
Capital Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might
otherwise constitute a legal or
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equitable discharge or defense of a guarantor, it being the intent of
this Section 4.3 that the obligations of the Guarantor hereunder shall
be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 4.4 Rights of Holders
(a) The Holders of a Majority in 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 this Guarantee or to direct the
exercise of any trust or power conferred upon the Guarantee Trustee
under this Guarantee; provided, however, that (subject to Section 2.1)
the Guarantee Trustee shall have the right to decline to follow any
such direction if the Guarantee Trustee shall determine that the
actions so directed would be unjustly prejudicial to the Holders not
taking part in such direction or if the Guarantee Trustee being advised
by counsel determines that the action or proceeding so directed may not
lawfully be taken or if the Guarantor Trustee in good faith by its
board of directors or trustees, executive committees or a trust
committee of directors or trustees and/or Responsible Officers shall
determine that the action or proceedings so directed would involve the
Guarantee Trustee in personal liability.
(b) Any Holder of Capital Securities may institute a
legal proceeding directly against the Guarantor to enforce the
Guarantee Trustee's rights under this Guarantee, without first
instituting a legal proceeding against the Issuer, the Guarantee
Trustee or any other Person. The Guarantor waives any right or remedy
to require that any such action be brought first against the Issuer,
the Guarantee Trustee or any other Person before so proceeding directly
against the Guarantor.
SECTION 4.5 Guarantee of Payment
This Guarantee creates a guarantee of payment and not of
collection.
SECTION 4.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of
the Holders of Capital Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Guarantee; provided, however,
that the Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any right that it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee, if, after
giving effect to any such payment, any amounts are due and unpaid under this
Guarantee. If any amount shall be paid to the Guarantor in violation of the
preceding sentence, the Guarantor agrees to hold such amount in trust for the
Holders and to pay over such amount to the Holders.
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SECTION 4.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Capital
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 4.3 hereof.
SECTION 4.8 Enforcement by a Beneficiary
A Beneficiary may enforce the obligations of the Guarantor
contained in Section 4.1(b) directly against the Guarantor and the Guarantor
waives any right or remedy to require that any action be brought against the
Trust or any other person or entity before preceding against the Guarantor. The
Guarantor shall be subrogated to all rights (if any) of any Beneficiary against
the Trust in respect of any amounts paid to the Beneficiaries by the Guarantor
under this Agreement; provided, however, that the Guarantor shall not (except to
the extent required by mandatory provisions of law) be entitled to enforce or
exercise any rights that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under this
Agreement, if, after giving effect to such payment, any amounts are due and
unpaid under this Agreement.
ARTICLE V
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 5.1 Limitation of Transactions
So long as any Capital Securities remain outstanding, if (a)
there shall have occurred and be continuing an Event of Default or a Declaration
Event of Default or (b) the Guarantor shall have selected an Extension Period as
provided in the Declaration and such period, or any extension thereof, shall be
continuing, then the Guarantor may not (x) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Guarantor's capital stock or (y) make any payment of
principal of or interest or premium, if any, on or repay, repurchase or redeem
any debt securities of the Guarantor that rank pari passu in all respects with
or junior in interest to the Debentures (other than (i) repurchases, redemptions
or other acquisitions of shares of capital stock of the Guarantor in connection
with any employment contract, benefit plan or other similar arrangement with or
for the benefit of one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock purchase plan or in
connection with the issuance of capital stock of the Guarantor (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to occurrence of the Event of Default
or Declaration Event of Default or the applicable Extension Period, (ii) as a
result of any exchange or conversion of any class or series of the Guarantor's
capital stock (or any capital stock of a subsidiary of the Guarantor) for any
class or series of the Guarantor's capital stock or of any class or series of
the Guarantor's indebtedness for any class or series of the Guarantor's capital
stock, (iii) the purchase of fractional interests in shares of the Guarantor's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (iv) any declaration of a
dividend in connection
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with any stockholder's rights plan, or the issuance of rights, stock or other
property under any stockholder's rights plan, or the redemption or repurchase of
rights pursuant thereto, or (v) any dividend in the form of stock, warrants,
options or other rights where the dividend stock or the stock issuable upon
exercise of such warrants, options or other rights is the same stock as that on
which the dividend is being paid or ranks pari passu with or junior to such
stock).
SECTION 5.2 Ranking
This Guarantee will constitute an unsecured obligation of the
Guarantor and will rank subordinate and junior in right of payment to all
present and future Senior Indebtedness (as defined in the Indenture) of the
Guarantor. By their acceptance thereof, each Holder of Capital Securities agrees
to the foregoing provisions of this Guarantee and the other terms set forth
herein.
The right of the Guarantor to participate in any distribution
of assets of any of its subsidiaries upon any such subsidiary's liquidation or
reorganization or otherwise is subject to the prior claims of creditors of that
subsidiary, except to the extent the Guarantor may itself be recognized as a
creditor of that subsidiary. Accordingly, the Guarantor's obligations under this
Guarantee will be effectively subordinated to all existing and future
liabilities of the Guarantor's subsidiaries, and claimants should look only to
the assets of the Guarantor for payments thereunder. This Guarantee does not
limit the incurrence or issuance of other secured or unsecured debt of the
Guarantor, including Senior Indebtedness of the Guarantor, under any indenture
that the Guarantor may enter into in the future or otherwise.
ARTICLE VI
TERMINATION
SECTION 6.1 Termination
This Guarantee shall terminate as to the Capital Securities
(i) upon full payment of the Redemption Price of all Capital Securities, (ii)
upon the distribution of the Debentures to the Holders of all of the Capital
Securities or (iii) upon full payment of the amounts payable in accordance with
the Declaration upon dissolution of the Issuer. This Guarantee will continue to
be effective or will be reinstated, as the case may be, if at any time any
Holder of Capital Securities must restore payment of any sums paid under the
Capital Securities or under this Guarantee.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1 Exculpation
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered
Person for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith
in accordance with this Guarantee and in a manner that such Indemnified
Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Guarantee or by law,
except that an Indemnified
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Person shall be liable for any such loss, damage or claim incurred by
reason of such Indemnified Person's negligence or willful misconduct
with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Issuer or the Guarantor
and upon such information, opinions, reports or statements presented to
the Issuer or the Guarantor by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional
or expert competence and who, if selected by such Indemnified Person,
has been selected with reasonable care by such Indemnified Person,
including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses, or any other
facts pertinent to the existence and amount of assets from which
Distributions to Holders of Capital Securities might properly be paid.
SECTION 7.2 Indemnification
(a) The Guarantor agrees to indemnify each Indemnified
Person for, and to hold each Indemnified Person harmless against, any and all
loss, liability, damage, claim or expense incurred without negligence or willful
misconduct on the part of the Indemnified Person, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of the Indemnified Person defending itself against, or investigating,
any claim or liability in connection with the exercise or performance of any of
the Indemnified Person's powers or duties hereunder. The obligation to indemnify
as set forth in this Section 7.2 shall survive the resignation or removal of the
Guarantee Trustee and the termination of this Guarantee.
(b) Promptly after receipt by an Indemnified Person under
this Section 7.2 of notice of the commencement of any action, such Indemnified
Person will, if a claim in respect thereof is to be made against the Guarantor
under this Section 7.2, notify the Guarantor in writing of the commencement
thereof; but the failure so to notify the Guarantor (i) will not relieve the
Guarantor from liability under paragraph (a) above unless and to the extent that
the Guarantor did not otherwise learn of such action and such failure results in
the forfeiture by the Guarantor of substantial rights and defenses and (ii) will
not, in any event, relieve the Guarantor from any obligations to any Guarantor
other than the indemnification obligation provided in paragraph (a) above. The
Guarantor shall be entitled to appoint counsel of the Guarantor's choice at the
Guarantor's expense to represent the Indemnified Person in any action for which
indemnification is sought (in which case the Guarantor shall not thereafter be
responsible for the fees and expenses of any separate counsel retained by the
Indemnified Person or Persons except as set forth below); provided, however,
that such counsel shall be satisfactory to the Indemnified Person.
Notwithstanding the Guarantor's election to appoint counsel to represent the
Guarantor in an action, the Indemnified Person shall have the right to employ
separate counsel (including local counsel), and the Guarantor shall bear the
reasonable fees, costs and expenses of such separate counsel if (i) the use of
counsel chosen by the Guarantor to represent the Indemnified Person would
present such counsel with a conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such action include both the Indemnified
Person and the Guarantor and the Indemnified Person shall have reasonably
concluded that there may be legal defenses available to it and/or other
Indemnified Person which are different from or additional to
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those available to the Guarantor, (iii) the Guarantor shall not have employed
counsel satisfactory to the Indemnified Person to represent the Indemnified
Person within a reasonable time after notice of the institution of such action
or (iv) the Guarantor shall authorize the Indemnified Person to employ separate
counsel at the expense of the Guarantor. The Guarantor will not, without the
prior written consent of the Indemnified Persons, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the Indemnified Persons are
actual or potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each Indemnified
Person from all liability arising out of such claim, action, suit or proceeding.
SECTION 7.3 Compensation; Reimbursement of Expenses
The Guarantor agrees:
(a) to pay to the Guarantee Trustee from time to time
such compensation for all services rendered by it hereunder as the parties shall
agree to from time to time (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust); and
(b) except as otherwise expressly provided herein, to
reimburse the Guarantee Trustee upon request for all reasonable expenses,
disbursements and advances incurred or made by it in accordance with any
provision of this Guarantee (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 willful
misconduct.
The provisions of this Section 7.3 shall survive the
resignation or removal of the Guarantee Trustee and the termination of this
Guarantee.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Successors and Assigns
All guarantees and agreements contained in this Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the Capital
Securities then outstanding. Except in connection with any merger or
consolidation of the Guarantor with or into another entity or any sale, transfer
or lease of the Guarantor's assets to another entity, in each case, to the
extent permitted under the Indenture, the Guarantor may not assign its rights or
delegate its obligations under this Guarantee without the prior approval of the
Holders of at least a Majority in liquidation amount of the Capital Securities.
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SECTION 8.2 Amendments
Except with respect to any changes that do not adversely
affect the rights of Holders of the Capital Securities in any material respect
(in which case no consent of Holders will be required), this Guarantee may be
amended only with the prior approval of the Holders of not less than a Majority
in liquidation amount of the Capital Securities. The provisions of the
Declaration with respect to amendments thereof apply to the giving of such
approval.
SECTION 8.3 Notices
All notices provided for in this Guarantee shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by first class mail, as follows:
(a) If given to the Guarantee Trustee, at the Guarantee
Trustee's mailing address set forth below (or such other address as the
Guarantee Trustee may give notice of to the Holders of the Capital
Securities):
The Bank of New York
101 Barclay Street, Floor 21W
New York, NY 10286
Attention: Corporate Trust Administration
Telecopy: 212-815-5915
(b) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may
give notice of to the Holders of the Capital Securities and to the
Guarantee Trustee):
68149 Main Street
Blountsville, AL 35031
Attention: Kennon R. Patterson, Sr.
(c) If given to any Holder of the Capital Securities, at
the address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 8.4 Benefit
This Guarantee is solely for the benefit of the Holders of the
Capital Securities
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<PAGE> 20
and, subject to Section 2.1(a), is not separately transferable from the Capital
Securities.
SECTION 8.5 Governing Law
THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES THEREOF.
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<PAGE> 21
THIS GUARANTEE is executed as of the day and year first above
written.
COMMUNITY BANCSHARES, INC.,
as Guarantor
By:/s/ Kennon R. Patterson, Sr.
------------------------------------------
Name: Kennon R. Patterson, Sr.
Title: Chairman, President and Chief
Executive Officer
THE BANK OF NEW YORK,
as Guarantee Trustee
By:/s/ Annette L. Kos
------------------------------------------
Name: Annette L. Kos
Title: Assistant Vice President
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<PAGE> 1
EXHIBIT 10.3
----------------------------------------------------
10.3
PLACEMENT AGREEMENT
DATED MARCH 23, 2000
BETWEEN COMMUNITY (AL) CAPITAL TRUST 1
COMMUNITY BANCSHARES, INC.
AND
SALOMON SMITH BARNEY, INC
----------------------------------------------------
<PAGE> 2
COMMUNITY (AL) CAPITAL TRUST I
$10,000,000
10 7/8% Fixed Rate Capital Trust Pass-Through Securities(R) (TruPS)(R)
Fully and Unconditionally Guaranteed as to Distributions
and Other Payments by
Community Bancshares Inc.
PLACEMENT AGREEMENT
New York, New York
March 9, 2000
Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
Community Bancshares Inc., a bank holding company incorporated in
Delaware (the "Company") and Community (AL) Capital Trust I, a Delaware
statutory business trust (the "Trust"), propose, subject to the terms and
conditions stated herein, to issue and sell $10,000,000 of 10 7/8% Fixed Rate
Capital Trust Pass-through Securities(R) of the Trust, having a stated
liquidation amount of $1,000 per capital security (the "Capital Securities").
Salomon Smith Barney Inc. is acting as the exclusive agent of the Company and
the Trust in connection with the offering of the Capital Securities.
The Capital Securities will be fully and unconditionally guaranteed on
a subordinated basis by the Company with respect to distributions and amounts
payable upon liquidation, redemption or repayment (the "Guarantee") pursuant to
the Guarantee Agreement (the "Guarantee Agreement"), to be dated as of the
Closing Date specified in Section 3 hereof and executed and delivered by the
Company and The Bank of New York, as trustee (the "Guarantee Trustee"), for the
benefit of the holders from time to time of the Capital Securities. The entire
proceeds from the sale of the Capital Securities will be combined with the
entire proceeds from the sale by the Trust to the Company of its common
securities (the "Common Securities"), and will be used by the Trust to purchase
$10,310,000 in principal amount of the Fixed Rate Junior Subordinated Deferrable
Interest Debentures due 2030 of the Company (the "Subordinated Debt
Securities"). The Capital Securities and the Common Securities for the Trust
will be issued pursuant to the Amended and Restated Declaration of Trust (the
"Declaration"), to be dated as of the Closing Date among the Company, as
sponsor, the Administrator(s) named therein (the "Administrators"), The Bank of
New York
<PAGE> 3
(Delaware), a Delaware corporation (the "Delaware Trustee"), The Bank of New
York (the "Institutional Trustee"), and the holders from time to time of
undivided beneficial interests in the assets of the Trust. The Subordinated Debt
Securities will be issued pursuant to an Indenture, to be dated as of the
Closing Date (the "Indenture"), between the Company and The Bank of New York, as
trustee (the "Indenture Trustee").
The Capital Securities, the Common Securities and the Subordinated
Debt Securities are collectively referred to herein as the "Securities." This
Agreement, the Indenture, the Declaration, the Guarantee Agreement and the
Securities are referred to collectively as the "Operative Documents."
Capitalized terms used herein without definition have the respective meanings
specified in the Declaration.
The Securities have not been and will not be registered under the
Securities Act of 1933, as amended (the "Securities Act").
1. Representations and Warranties. The Company and the Trust jointly
and severally represent and warrant to, and agree with you as set forth below in
this Section 1.
(a) Neither the Company nor the Trust, nor any of their Affiliates (as
defined in Rule 501(b) of Regulation D under the Securities Act ("Regulation
D")), nor any person acting on its or their behalf has, directly or indirectly,
made offers or sales of any security, or solicited offers to buy any security,
under circumstances that would require the registration of any of the Securities
under the Securities Act.
(b) Neither the Company nor the Trust, nor any of their Affiliates,
nor any person acting on its or their behalf has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with any offer or sale of any of the Securities.
(c) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(d) Neither the Company nor the Trust, nor any of their Affiliates,
nor any person acting on its or their behalf, has engaged or will engage in any
directed selling efforts with respect to the Securities within the meaning of
Regulation S.
(e) Neither the Company nor the Trust is an "investment company" or an
entity "controlled" by an "investment company," in each case within the meaning
of Section 3(a) of the Investment Company Act of 1940, as amended (the
"Investment Company Act") without regard to Section 3(c) of the Investment
Company Act.
(f) Neither the Company nor the Trust has paid or agreed to pay to any
person any compensation for soliciting another to purchase any of the
Securities.
(g) The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act, 12 Del. C.
3801, et seq. (the "Business Trust Act") with the power and authority to own
property and to conduct the business it transacts and proposes to transact and
to enter into and perform its obligations under the Operative
22
<PAGE> 4
Documents. The Trust is duly qualified to transact business as a foreign entity
and is in good standing in each jurisdiction in which such qualification is
necessary, except where the failure to so qualify or be in good standing would
not have a material adverse effect on such Trust. The Trust is not a party to or
otherwise bound by any agreement other than the Operative Documents. The Trust
is and will, under current law, be classified for federal income tax purposes as
a grantor trust and not as an association taxable as a corporation.
(h) The Declaration has been duly authorized by the Company and, on
the Closing Date, will have been duly executed and delivered by the Company and
the Administrators of the relevant Trust, and, assuming due authorization,
execution and delivery by the Delaware Trustee and the Institutional Trustee, be
a valid and binding obligation of the Company and such Administrators,
enforceable against them in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and to general principles of equity ("Bankruptcy and Equity"). Each of the
Administrators of the Trust is an employee of the Company and has been duly
authorized by the Company to execute and deliver the Declaration.
(i) Each of the Guarantee Agreement and the Indenture has been duly
authorized by the Company and, on the Closing Date will have been duly executed
and delivered by the Company, and, assuming due authorization, execution and
delivery by the Guarantee Trustee, in the case of the Guarantee, and by the
Indenture Trustee, in the case of the Indenture, be a valid and binding
obligation of the Company enforceable against it in accordance with its terms,
subject to Bankruptcy and Equity.
(j) The Capital Securities and the Common Securities have been duly
authorized by the Declaration and, when issued and delivered against payment
therefor on the Closing Date to you, in the case of the Capital Securities, and
to the Company, in the case of the Common Securities, will be validly issued and
represent undivided beneficial interests in the assets of the Trust. The
issuance of none of the Capital Securities or the Common Securities is subject
to preemptive or other similar rights. On the Closing Date, all of the issued
and outstanding Common Securities will be directly owned by the Company free and
clear of any pledge, security interest, claim, lien or other encumbrance.
(k) The Subordinated Debt Securities have been duly authorized by the
Company and, at the Closing Date, will have been duly executed and delivered to
the Indenture Trustee for authentication in accordance with the Indenture, and,
when authenticated in the manner provided for in the Indenture and delivered
against payment therefor by the Trust, will constitute valid and binding
obligations of the Company entitled to the benefits of the Indenture enforceable
against the Company in accordance with their terms, subject to Bankruptcy and
Equity.
(l) This Agreement has been duly authorized, executed and delivered by
the Company and the Trust.
(m) The Trust is not in violation of the Declaration or any provision
of the Business Trust Act. The execution, delivery and performance of the
Operative Documents to which it is a party by the Company or Trust, and the
consummation of the transactions contemplated herein or therein, will not
conflict with or constitute a breach of, or a default under, or result in the
creation
23
<PAGE> 5
or imposition of any lien, charge or other encumbrance upon any property or
assets of the Trust, the Company or any of the Company's subsidiaries pursuant
to any contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Trust, the Company or any of its subsidiaries is a party
or by which it or any of them may be bound, or to which any of the property or
assets of any of them is subject, except for a conflict, breach, default, lien,
charge or encumbrance which could not reasonably be expected to have an adverse
effect on the consummation of the transactions contemplated herein or therein,
nor will such action result in any violation of the Declaration or the Business
Trust Act or require the consent, approval, authorization or order of any court
or governmental agency or body.
(n) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of Delaware, with all requisite
corporate power and authority to own its properties and conduct the business it
transacts and proposes to transact, and is duly qualified to transact business
and is in good standing as a foreign corporation in each jurisdiction where the
nature of its activities requires such qualification except where the failure of
the Company to be so qualified would not, singly or in the aggregate, have a
materially adverse effect on the condition (financial or otherwise), earnings or
business of the Company and its subsidiaries taken as a whole, whether or not
occurring in the ordinary course of business (a "Material Adverse Effect").
(o) Each of the Company's significant subsidiaries listed in Exhibit 1
(the "Subsidiaries") has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction in which it is
chartered or organized, with all requisite corporate power and authority to own
its properties and conduct the business it transacts and proposes to transact,
and is duly qualified to transact business and is in good standing as a foreign
corporation in each jurisdiction where the nature of its activities requires
such qualification except where the failure of such Subsidiary to be so
qualified would not, singly or in the aggregate, have a Material Adverse Effect.
(p) The Company and each of its Subsidiaries have all requisite power
and authority, and all necessary material authorizations, approvals, orders,
licenses, certificates and permits of and from regulatory or governmental
officials, bodies and tribunals, to own or lease their respective properties and
to conduct their respective businesses as now being conducted, and neither the
Company nor any of the Subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such authorizations,
approvals, orders, licenses, certificates or permits which, singly or in the
aggregate, if the failure to be so licensed or approved or if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse Effect;
and the Company and its Subsidiaries are in compliance with all applicable laws,
rules, regulations and orders and consents, the violation of which would have a
Material Adverse Effect.
(q) The audited consolidated financial statements (including the notes
thereto) and schedules of the Company and its consolidated subsidiaries for
December 31, 1998 (the "Financial Statements") and the interim unaudited
consolidated financial statements of the Company and its consolidated
subsidiaries for December 31, 1999 (the "Interim Financial Statements") provided
to you are the most recent available audited and unaudited consolidated
financial statements of the Company and its consolidated subsidiaries,
respectively, and fairly presents in all
24
<PAGE> 6
material respects, in accordance with generally accepted accounting principles,
the financial position of the Company and its consolidated subsidiaries, and the
results of operations and changes in financial condition as of the dates and for
the periods therein specified, subject, in the case of Interim Financial
Statements, to year-end adjustments. Such consolidated financial statements and
schedules have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved (except as
otherwise noted therein).
(r) The Company's report on FRY-9C dated December 31, 1999 (the
"FRY-9C") provided to you is the most recent available such report and the
information therein fairly presents in all material respects the financial
position of the Company and its subsidiaries.
(s) Since the respective dates of the Financial Statements, Interim
Financial Statements and the FRY-9C, there has been no material adverse change
or development with respect to the financial condition or earnings of the
Company and its subsidiaries, taken as a whole.
(t) Neither the Company nor any of the Subsidiaries is in violation of
its respective charter or by-laws or similar organizational documents or in
default in the performance or observance of any obligation, agreement, covenant
or condition contained in any contract, indenture, mortgage, loan agreement,
note, lease or other agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which it or any of them may be bound or to which
any of the property or assets of the Company or any of the Subsidiaries is
subject, the effect of which violation or default in performance or observance
would have a Material Adverse Effect.
(u) The Company is duly registered as a bank holding company under the
Bank Holding Company Act of 1956, as amended (the "Bank Holding Company Act"),
and the regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve"), and the deposit accounts of the Company's subsidiary banks
are insured by the Federal Deposit Insurance Corporation ("FDIC") to the fullest
extent permitted by law and the rules and regulations of the FDIC, and no
proceeding for the termination of such insurance are pending or threatened.
2. Sale of the Capital Securities. Subject to the terms and conditions
and in reliance upon the representations and warranties herein set forth, the
Company and the Trust jointly and severally hereby appoint you as placement
agent (the "Placement Agent"), and you hereby accept such appointment, to act as
the exclusive agent of the Company and the Trust, in connection with the
offering of the Capital Securities contemplated hereby, for the purpose of
soliciting offers and sales of the Capital Securities.
The Placement Agent shall solicit offers to purchase Capital
Securities in connection with the offering contemplated hereby. The Placement
Agent shall use its best efforts, subject to the terms and conditions of this
Agreement, to procure subscribers for the Capital Securities with an aggregate
stated liquidation amount of $10,000,000 at a purchase price equal to 100% of
the stated liquidation amount thereof. The Placement Agent shall not, in
fulfilling its obligations hereunder, act as an underwriter for the Capital
Securities and is in no way obligated, directly or indirectly, to advance its
own funds to purchase any Capital Securities.
If the sale and delivery of the Capital Securities as provided herein
is consummated, the Company will pay to the Placement Agent on the Closing Date
a commission per Capital
25
<PAGE> 7
Security equal to 3% of the stated liquidation amount thereof. Any payment
pursuant to this Section 2 shall be made by wire transfer in immediately
available funds to the U.S. account designated in writing by the party entitled
to receive such payment.
The dividend rate of the Capital Securities, as of the date hereof, is
10 7/8%. Under certain circumstances, the dividend rate of the Capital
Securities may be reduced pursuant to a written agreement between you and the
Company made prior to the Closing Date.
3. Delivery and Payment. Delivery of and payment for the Capital
Securities shall be made at 10:00 AM, New York City time, on March 23, 2000, or
such later date as you shall designate, which date and time may be postponed by
agreement between you, on the one hand, and the Company and the Trust, on the
other hand (such date and time of delivery and payment for the Capital
Securities being herein called the "Closing Date").
Delivery of the Capital Securities shall be made at such location, and
in such names and denominations, as you shall designate at least one business
day in advance of the Closing Date. The Company and the Trust agree to have the
Capital Securities available for inspection and checking by you in New York, New
York, not later than 1:00 PM on the business day prior to the Closing Date. The
closing for the purchase and sale of the Capital Securities shall occur at the
offices of Cleary, Gottlieb, Steen & Hamilton, One Liberty Plaza, New York, NY
10006, or such other place as the parties hereto shall agree.
4. Representations. You represent to the Company and the Trust that:
(a) You are aware that the Securities have not been and will not be
registered under the Securities Act and may not be offered or sold within the
United States or to U.S persons except in accordance with Rule 903 of Regulation
S under the Securities Act or pursuant to an exemption from the registration
requirements of the Securities Act. You will not offer, sell or arrange for the
offer or sale of any Securities to purchasers ("Purchasers") except in privately
negotiated transactions that will not require registration of the Securities
under the Securities Act. Terms used in the first sentence of this subsection
(a) have the meanings given to them by Regulation S under the Securities Act.
(b) You have not offered or sold or and will not arrange for the offer
or sale of the Capital Securities except (i) in an offshore transaction
complying with Rule 903 of Regulation S under the Securities Act, (ii) to those
you reasonably believe are qualified institutional buyers (as defined in Rule
144A under the Securities Act) and that in connection with each such sale, you
have taken or will take reasonable steps to ensure that the purchaser of any
Capital Securities is aware that such sale is being made in reliance on Rule
144A or (iii) to "accredited investors" (as defined in Rule 501(a)(1), (2), (3)
or (7) of Regulation D) who provide to you and to the Company a letter in the
form set out in the Declaration.
(c) You represent and agree that you and each of your Affiliates has
not entered, and will not enter into any contractual arrangement with respect to
the distribution of the Securities except with the prior written consent of the
Company
(d) Neither you, nor any of your Affiliates, nor any person acting on
your or their
26
<PAGE> 8
behalf has engaged, or will engage, in any form of general solicitation or
general advertising (within the meaning of Regulation D) in connection with any
offer or sale of the Securities.
(e) Neither you nor any or your Affiliates, nor any person acting on
your or their behalf, has engaged or will engage in any directed selling efforts
within the meaning of Regulation S under the Securities Act with respect to the
Securities.
5. Agreements. The Company and the Trust agree with the Placement
Agent that:
(a) The Company and the Trust will arrange for the qualification of
the Capital Securities for sale under the laws of such jurisdictions as you may
designate and will maintain such qualifications in effect so long as required
for the sale of the Capital Securities. The Company or the Trust, as the case
may be, will promptly advise you of the receipt by the Company or the Trust, as
the case may be, of any notification with respect to the suspension of the
qualification of the Capital Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.
(b) Neither the Company nor the Trust will, nor will either of them
permit any of its Affiliates to, resell any Capital Securities that have been
acquired by any of them.
(c) Neither the Company nor the Trust will, nor will either of them
permit any of its Affiliates, nor any person acting on its or their behalf, to,
directly or indirectly, make offers or sales of any security, or solicit offers
to buy any security, under circumstances that would require the registration of
any of the Securities under the Securities Act.
(d) Neither the Company nor the Trust will, nor will either of them
permit any of its Affiliates, nor any person acting on its or their behalf, to,
engage in any form of general solicitation or general advertising (within the
meaning of Regulation D) in connection with any offer or sale of the any of the
Securities.
(e) Neither the Company nor the Trust will, nor will either of them
permit any of its Affiliates, nor any person acting on its or their behalf to
engage in any directed selling efforts within the meaning of Regulation S under
the Securities Act with respect to the Securities.
(f) So long as any of the Securities are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, each of the Company and the Trust will, during any period in
which it is not subject to and in compliance with Section 13 or 15(d) of the
Exchange Act or it is not exempt from such reporting requirements pursuant to
and in compliance with Rule 12g3-2(b) under the Exchange Act, provide to each
holder of such restricted securities and to each prospective purchaser (as
designated by such holder) of such restricted securities, upon the request of
such holder or prospective purchaser, any information required to be provided by
Rule 144A(d)(4) under the Securities Act. This covenant is intended to be for
the benefit of the holders, and the prospective purchasers designated by such
holders, from time to time of such restricted securities. The information
provided by the Company and the Trust pursuant to this Section 5(f) hereof will
not, at the date thereof, contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in the
light of the
27
<PAGE> 9
circumstances under which they were made, not misleading.
(g) Neither the Company nor the Trust will, until 180 days following
the Closing Date, without your prior written consent, offer, sell, contract to
sell, grant any option to purchase or otherwise dispose of, directly or
indirectly, (i) any Capital Securities or other securities of the Trust other
than as contemplated by this Agreement, (ii) any securities that are
substantially similar to the Securities or (iii) any other securities
convertible into, or exercisable or exchangeable for, any of (i) or (ii), or
enter into an agreement, or announce an intention, to do any of the foregoing.
(h) The Company agrees to pay (i) the costs incident to the
authorization, issuance, sale and delivery of the Capital Securities and any
taxes payable in that connection; (ii) the fees and expenses of qualifying the
Capital Securities under the securities laws of the several jurisdictions as
provided in Section 5(a); and (iii) the fees and expenses of the Institutional
Trustee (as defined in the Declaration), the Guarantee Trustee and the Indenture
Trustee.
6. Conditions to Your Obligations. Your obligations to use your best
efforts to procure subscription and payment for the Capital Securities shall be
subject to the accuracy of the representations and warranties on the part of the
Company and the Trust contained herein as of the date and time that this
Agreement is executed (the "Execution Time") and the Closing Date, to the
accuracy of the statements of the Company and the Trust made in any Capital
Securities pursuant to the provisions hereof, to the performance by the Company
and the Trust of their obligations hereunder and to the following additional
conditions:
(a) The Company shall have furnished to you the opinion of Bishop K.
Walker, Jr., General Counsel to the Company, dated the Closing Date, addressed
to you to, in substantially the form set out in Annex A hereto.
(b) The Company shall have furnished to you the opinion of Bishop K.
Walker, Jr., special tax counsel to the Company, dated the Closing Date,
containing such assumptions, qualifications and limitations as shall be
reasonably acceptable to you and your counsel to the effect that for U.S.
federal income tax purposes, the Subordinated Debt Securities will constitute
indebtedness of the Company.
(c) You shall have received the opinion of Richards, Layton & Finger,
special Delaware counsel for the Company and the Trust, dated the Closing Date,
addressed to you, in substantially the form set out in Annex B hereto.
(d) You shall have received the opinion of White & Case, LLP, counsel
for the Guarantee Trustee, the Institutional Trustee and the Indenture Trustee,
dated the Closing Date addressed to you, in substantially the form set out in
Annex C hereto.
(e) You shall have received the opinion of Richards, Layton & Finger,
counsel for the Delaware Trustee, dated the Closing Date, addressed to you, in
substantially the form set out in Annex D hereto.
(f) The Company shall have furnished to you a certificate of the
Company, signed by a Vice President and by a Treasurer or Chief Financial
Officer of the Company, dated the Closing
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<PAGE> 10
Date, to the effect that:
(i) the representations and warranties of the Company and
the Trust in this Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect as if made
on the Closing Date, and the Company and the Trust have complied with
all the agreements and satisfied all the conditions on either of their
part to be performed or satisfied at or prior to the Closing Date; and
(ii) since the date of the most recent financial statements
provided to you, there has been no material adverse change in the
condition (financial or other), earnings, business or properties of
the Company and its subsidiaries, whether or not arising from
transactions in the ordinary course of business.
(g) Subsequent to the Execution Time there shall not have been any
change, or any development involving a prospective change, in or affecting the
business or properties of the Company and its subsidiaries the effect of which,
is, in your judgment, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or delivery of the Capital Securities.
(h) Prior to the Closing Date, the Company and the Trust shall have
furnished to you such further information, certificates and documents as you may
reasonably request.
(i) At the Closing Date, each of the Operative Documents shall have
been duly authorized, executed and delivered by each party thereto, and copies
thereof shall have been delivered to you.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions, certificates and documents mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to you, this Agreement and all your
obligations hereunder may be canceled at, or at any time prior to, the Closing
Date by you. Notice of such cancellation shall be given to the Company and the
Trust in writing or by telephone or telegraph confirmed in writing.
7. Reimbursement of Your Expenses. If the sale of the Capital
Securities provided for herein is not consummated because any condition to set
forth in Section 6 hereof is not satisfied, because of any termination pursuant
to Section 9 hereof or because of any refusal, inability or failure on the part
of the Company or the Trust to perform any agreement herein or comply with any
provision hereof, the Company will reimburse you upon demand for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by you in connection with the proposed offering of
the Capital Securities.
8. Indemnification. (a) The Company and the Trust agree jointly and
severally to indemnify and hold harmless you and your directors, officers,
employees and agents and each person who controls you within the meaning of
either the Securities Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of them
may become subject under the Securities Act, the Exchange Act or other Federal
or state statutory law
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<PAGE> 11
or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in any information (whether oral or written) or documents furnished or
made available to you in connection with the transactions contemplated herein,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and agrees to reimburse each such indemnified
party, as incurred, for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action. This indemnity agreement will be in addition to any
liability which the Company or the Trust may otherwise have.
(b) The Company agrees to indemnify the Trust against all loss,
liability, claim, damage and expense whatsoever, as due from the Trust under
Section 8(a) hereunder.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve the
indemnifying party from liability under paragraph (a), above unless and to the
extent that the indemnifying party did not otherwise learn of such action and
such failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) above. The indemnifying
party shall be entitled to appoint counsel of the indemnifying party's choice at
the indemnifying party's expense to represent the indemnified party in any
action for which indemnification is sought (in which case the indemnifying party
shall not thereafter be responsible for the fees and expenses of any separate
counsel retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
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<PAGE> 12
9. Termination. This Agreement shall be subject to termination in the
absolute discretion of you, by notice given to the Company and the Trust prior
to delivery of and payment for the Capital Securities, if prior to such time (i)
trading in any of the Company's securities shall have been suspended by the
Commission or trading in securities generally on the New York Stock Exchange
shall have been suspended or limited or minimum prices shall have been
established on such Exchange, (ii) a banking moratorium shall have been declared
either by Federal or Delaware authorities or (iii) there shall have occurred any
outbreak or escalation of hostilities, declaration by the United States of a
national emergency or war or other calamity or crisis the effect of which on
financial markets is such as to make it, in your judgment, impracticable or
inadvisable to proceed with the offering or delivery of the Capital Securities.
10. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company and the Trust or their respective officers or trustees and of you set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of you, the Company
or the Trust or any of the officers, directors or trustees, administrators,
controlling persons, and will survive delivery of and payment for the Capital
Securities. The provisions of Sections 7 and 8 hereof shall survive the
termination or cancellation of this Agreement.
11. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to you, will be mailed, delivered or
telegraphed and confirmed to at 388 Greenwich Street , New York, New York 10013,
attention of the Legal Department; if sent to the Company or the Trust, will be
mailed, delivered or telegraphed and confirmed to it at 68149 Main Street,
Blountsville, Alabama 35031, Attention: Kennon R. Patterson, Sr., Chairman and
Chief Executive Officer, and copy to: William H. Caughran, Assistant Secretary.
12. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons, and no other person will have any right
or obligation hereunder.
13. Applicable Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO
PRINCIPLES OF CONFLICTS OF LAW.
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<PAGE> 13
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company, the Trust and you.
Very truly yours,
Community Bancshares, Inc.
By: /s/ Kennon R. Patterson, Sr.
--------------------------------------
Name: Kennon R. Patterson, Sr.
Title: Chairman, President and Chief
Executive Officer
Community (AL) Capital Trust I
By:
----------------------------
By: /s/ Denny Kelly
----------------------------
Name: Denny Kelly
Title: Administrator
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Smith Barney Inc.
By: /s/ Paul R. Bitler
----------------------
Name: Paul R. Bitler
Title: Vice President
32
<PAGE> 14
SCHEDULE 1
List of Significant Subsidiaries
Community Bank
33
<PAGE> 15
ANNEX A
Pursuant to Section 6(a) of the Placement Agreement, the General
Counsel of the Company shall deliver an opinion to the effect that:
(i) each of the Company and the Subsidiaries (A) has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction in which it is chartered
or organized, with full corporate power and authority to own its
properties and conduct the business it transacts and proposes to
transact, (B) is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each
jurisdiction which requires such qualification wherein it owns or
leases material properties or conducts material business, except where
the failure to be so qualified would not, singularly or in the
aggregate, have a Material Adverse Effect, and (C) holds all material
approvals, authorizations, orders, licenses, certificates and permits
from governmental authorities necessary for the conduct of its
business, except where the failure to hold such approvals,
authorizations, orders, licenses, certificates and/or permits would
not, singularly or in the aggregate, have a Material Adverse Effect;
(ii) no consent, approval, authorization or order of any
court or governmental agency or body is required for the consummation
of the transactions contemplated herein or in the Operative Documents,
in connection with the solicitation of the purchase and sale of the
Capital Securities by you or the purchase of the Subordinated Debt
Securities by the Trust except such approvals (specified in such
opinion) as have been obtained;
(iii) neither the issue and sale of the Capital Securities
or the Subordinated Debt Securities, the execution and delivery of the
Operative Documents by the Company or the Trust and the consummation
of any other of the transactions therein contemplated in any Operative
Document nor the fulfillment of the terms thereof will conflict with,
result in a breach or violation of, or constitute a default under any
law or the charter or by-laws of the Company or any of its
Subsidiaries, the terms of any indenture or other agreement or
instrument known to such counsel and to which the Company or any of
its Subsidiaries is a party or bound or any judgment, order, decree,
of any court, regulatory body, administrative agency, governmental
body or arbitrator having jurisdiction over the Company or any of its
Subsidiaries, or any provision of applicable law, known to such
counsel to be applicable to the Company or any of its Subsidiaries,
except for such conflicts, breaches, violations or defaults which are
not, in the aggregate, material to the Company and its subsidiaries
taken as a whole and which do not adversely affect the consummation of
the transactions contemplated in this Agreement and the Operative
Documents;
(iv) the Company is duly registered as a bank holding
company under the Bank Holding Company Act and the regulations
thereunder of the Federal Reserve, and the deposit accounts of the
Company's banking subsidiaries are insured by the FDIC to the fullest
extent permitted by law and the rules and regulations of the FDIC, and
no proceeding for the termination of such insurance are pending or
threatened;
1
<PAGE> 16
(v) each of the Indenture and the Guarantee Agreement has
been duly authorized, executed and delivered by the Company, and (in
the case of the Indenture and the Guarantee, respectively, assuming it
is duly authorized, executed and delivered by the Indenture Trustee
and the Guarantee Trustee, respectively) constitutes a legal, valid
and binding instrument of the Company enforceable against the Company
in accordance with its terms, subject to Bankruptcy and Equity; the
Subordinated Debt Securities have been duly and validly authorized and
delivered to the Indenture Trustee for authentication in accordance
with the Indenture, when authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the
relevant Trust, will constitute legal, valid and binding obligations
of the Company entitled to the benefits of the Indenture and
enforceable against the Company in accordance with its terms, subject
to Bankruptcy and Equity;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company;
(vii) the Declaration has been duly authorized, executed and
delivered by the Company and the Trust;
(viii) this Agreement has been duly executed and delivered
by the Trust;
(ix) neither the Company nor the Trust is an "investment
company" or an entity "controlled" by an "investment company," in each
case within the meaning of Section 3(a) of the Investment Company Act;
and
(x) assuming the accuracy of the representations and
warranties and compliance with the agreements contained herein, no
registration of any of the Securities under the Securities Act is
required for the offer and sale to you of the Capital Securities in
the manner contemplated by this Agreement, and the Indenture, the
Declaration and the Guarantee are not required to be qualified under
the Trust Indenture Act of 1939.
In rendering such opinions, such counsel may (A) state that
its opinion is limited to the laws of Delaware and New York, the
corporate laws of the State of Delaware and the Federal laws of the
United States and (B) rely as to matters involving the application of
laws of any jurisdiction other than New York and Delaware or the United
States, to the extent deemed proper and specified in such opinion, upon
the opinion of other counsel of good standing believed to be reliable
and who are satisfactory to you and as to matters of fact, to the
extent deemed proper, on certificates of responsible officers of the
Company and public officials.
2
<PAGE> 17
ANNEX B
Pursuant to Section 6(c) of the Placement Agreement, Richards, Layton
& Finger shall deliver an opinion in the following form.
(i) The Trust is a duly formed and validly existing statutory business
trust in good standing under the Business Trust Act of the State of Delaware
with the business trust power and authority to enter into and perform its
obligations under this Agreement, the Securities and the Declaration and to own
property and conduct its business as described in the Declaration.
(ii) Under the Delaware Business Trust Act and the Declaration, 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 business trust action on the part of the Trust.
(iii) The Declaration constitutes a valid and binding obligation of
the Company and the Trustees, enforceable against the Company and the Trustees,
in accordance with its terms, subject, as to enforcement, to the effect upon the
Declaration of (a) bankruptcy, insolvency, moratorium, receivership,
liquidation, fraudulent conveyance and transfer, reorganization and other
similar laws relating to or affecting the remedies and rights of creditors, (b)
general principles of equity (regardless of whether considered or applied in a
proceeding in equity or at law), (c) considerations of public policy or the
effect of applicable law relating to fiduciary duties, and (d) principles of
course of dealing or course of performance and standards of good faith, fair
dealing, materiality or reasonableness that may be applied by a court to the
exercise of rights or remedies.
(iv) The Common Securities have been duly authorized for issuance by
the Trust and upon issuance and delivery by the Trust to the Company against
payment therefor as described in the Declaration, will be duly and validly
issued and will represent duly issued beneficial interests in the Trust. The
issuance of the Common Securities is not subject to preemptive or other similar
rights under the Declaration or the Business Trust Act; provided, that such
counsel may note that the holders of Common Securities may be required to make
payment or provide indemnity or security as set forth in the Declaration.
(v) The Capital Securities have been duly authorized for issuance by
the Trust, and, when issued and delivered against payment therefor as provided
herein, will be duly and validly issued and, subject to the qualifications set
forth herein, fully paid and non-assessable beneficial interests in the Trust;
the issuance of the Capital Securities is not subject to preemptive or other
similar rights under the Declaration or the Business Trust Act; and the holders
of the Capital Securities 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; provided that such
counsel need express no opinion as to any holder of a Capital Security that is,
was or becomes a named Trustee of the Trust. Such counsel may note that the
holders of the Capital Securities may be required to make payment or provide
indemnity or security as set forth in the Declaration.
(vi) The issuance and sale by the Trust of the Securities, the
execution, delivery
1
<PAGE> 18
and performance by the Trust of the Agreement, the consummation by the Trust of
the transactions contemplated therein and the compliance by the Trust with its
obligations thereunder do not violate (a) any of the provisions of the
Certificate of Trust of the Trust or the Declaration or (b) any Delaware law or
Delaware administrative regulation applicable to the Trust.
(vii) Assuming that the Trust derives no income from or connected with
sources within the State of Delaware and has no assets, activities (other than
having a Delaware trustee as required by the Delaware Business Trust Act and the
filing of documents with the Secretary of State of the State of Delaware) or
employees in the State of Delaware, no authorization, approval, consent or order
of any Delaware court or Delaware governmental authority or Delaware agency is
required to be obtained by the Trust solely as a result of the issuance and sale
of the Capital Securities, the consummation by the Trust of the transactions
contemplated herein or the compliance by the Trust with its obligations
hereunder, except such as have been obtained and such as may be required by the
securities laws of the State of Delaware (as to which such counsel need express
no opinion).
(viii) Assuming that the Trust derives no income from or connected
with sources within the State of Delaware and has no assets, activities (other
than having a Delaware trustee as required by the Delaware Business Trust Act
and the filing of documents with the Secretary of State of the State of
Delaware) or employees in the State of Delaware, and assuming that the Trust is
treated as a grantor trust for federal income tax purposes and that the holders
of the Capital Securities are viewed for federal income tax purposes as owners
of either all of, or their liquidation and accrued but unpaid share of, the
Subordinated Debt Securities held by the Trust, the holders of Capital
Securities (other than those holders of Capital Securities, or persons who are
partners or S corporation shareholders for federal income tax purposes in such
holders of Capital Securities, who reside or are domiciled in the State of
Delaware or who are otherwise subject to income taxation 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 (in
rendering the opinion expressed in this paragraph (viii), such counsel need
express no opinion concerning the securities laws of the State of Delaware).
2
<PAGE> 19
ANNEX C
Pursuant to Section 6(d) of the Placement Agreement, White & Case LLP
shall deliver an opinion to the effect that:
(i) The Bank of New York, is a national banking association
with trust powers duly organized and validly existing in good standing
under the laws of the United States of America with all necessary
corporate power and authority to execute, deliver and carry out and
perform its obligations under the terms of the Guarantee Agreement,
the Declaration and the Indenture;
(ii) the execution, delivery and performance by The Bank of
New York of the Guarantee Agreement, the Declaration and the Indenture
have been duly authorized by all necessary corporate action on the
part of The Bank of New York and each of the Guarantee Agreement, the
Declaration and the Indenture has been duly executed and delivered by
The Bank of New York, and constitutes the legal, valid and binding
obligation of The Bank of New York, enforceable against it in
accordance with its terms (subject to Bankruptcy and Equity);
(iii) the execution, delivery and performance of the
Guarantee Agreement, the Declaration and the Indenture by The Bank of
New York do not conflict with or constitute a breach of the charter or
by-laws of The Bank of New York; and
(iv) no consent, approval or authorization of, or
registration with or notice to, any governmental authority or agency
of the United States of America governing the banking or trust powers
of The Bank of New York is required for the execution, delivery or
performance by it of the Guarantee Agreement, the Declaration and the
Indenture.
1
<PAGE> 20
ANNEX D
Pursuant to Section 6(e) of the Placement Agreement, Richards, Layton
& Finger shall deliver an opinion to the following form.
1
<PAGE> 1
EXHIBIT 11 -- STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
The following tabulation presents the calculation of primary and fully diluted
earnings per common share for the three-month periods ended March 31, 2000 and
1999:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------
2000 1999
---------- ----------
<S> <C> <C>
Reported net income ................................... $ 487,347 $ 586,454
========== ==========
Net income on common shares ........................... $ 487,347 $ 586,454
========== ==========
Weighted average common shares outstanding - basic .... 4,455,062 4,410,692
========== ==========
Net income per common share - basic
Income from continuing operations ................. $ 0.11 $ 0.13
========== ==========
Net income ........................................ $ 0.11 $ 0.13
========== ==========
Weighted average common shares outstanding - diluted .. 4,662,811 4,520,569
========== ==========
Net income per common share - diluted
Income from continuing operations ................. $ 0.10 $ 0.13
========== ==========
Net income ........................................ $ 0.10 $ 0.13
========== ==========
</TABLE>
[The remainder of this page intentionally left blank]
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THE COMMUNITY BANCSHARES, INC. FOR THE QUARTER ENDED
MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 6,181,894
<INT-BEARING-DEPOSITS> 700,000
<FED-FUNDS-SOLD> 4,000,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 97,013,887
<INVESTMENTS-CARRYING> 97,013,887
<INVESTMENTS-MARKET> 97,013,887
<LOANS> 515,304,186
<ALLOWANCE> 2,841,441
<TOTAL-ASSETS> 696,989,399
<DEPOSITS> 591,117,013
<SHORT-TERM> 1,237,614
<LIABILITIES-OTHER> 8,901,474
<LONG-TERM> 54,404,528
0
0
<COMMON> 467,499
<OTHER-SE> 40,861,271
<TOTAL-LIABILITIES-AND-EQUITY> 696,989,399
<INTEREST-LOAN> 12,805,249
<INTEREST-INVEST> 1,465,296
<INTEREST-OTHER> 44,532
<INTEREST-TOTAL> 14,315,077
<INTEREST-DEPOSIT> 6,741,700
<INTEREST-EXPENSE> 7,464,724
<INTEREST-INCOME-NET> 6,850,353
<LOAN-LOSSES> 1,008,102
<SECURITIES-GAINS> (26,886)
<EXPENSE-OTHER> 7,616,138
<INCOME-PRETAX> 720,621
<INCOME-PRE-EXTRAORDINARY> 720,621
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 487,347
<EPS-BASIC> .11
<EPS-DILUTED> .10
<YIELD-ACTUAL> 4.63
<LOANS-NON> 949,000
<LOANS-PAST> 1,002,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,603,128
<CHARGE-OFFS> 824,179
<RECOVERIES> 54,390
<ALLOWANCE-CLOSE> 2,841,441
<ALLOWANCE-DOMESTIC> 2,841,441
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
