As filed with the Securities and Exchange Commission on July 28, 1999
Registration No. 333-
Registration No. 333- -1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
FIRST UNITED CORPORATION
FIRST UNITED CAPITAL TRUST
(Exact name of registrants as specified in their Charters)
<TABLE>
<CAPTION>
<S> <C> <C>
Maryland 6712 52-1380770
Delaware 6719 51-6513713
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Numbers) Numbers)
19 South Second Street, Oakland, Maryland 21550 (301) 334-9471
(Address, including zip code, and telephone number, including area code,
of registrants' principal executive offices)
William B. Grant, 19 South Second Street, Oakland,
Maryland 21550 (301) 334-9471 (Name, address, including zip
code, and telephone number, including area code, of agent for
service)
With copies to:
Abba David Poliakoff, Esquire Christopher D. Olander, Esquire
Michael A. Refolo, Esquire Sheryl N. Stephenson, Esquire
Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC Shapiro and Olander
233 E. Redwood Street, Baltimore, Maryland 21202 36 S. Charles Street, Baltimore, Maryland 21201
(410) 576-4000 (410) 385-0202
Approximate date of commencement of the proposed sale to public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. |_|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |_|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. |_|
====================================================================================================================================
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Title of Securities Amount to be Proposed Maximum Proposed Maximum Amount of
to be Registered Registered Offering Price Per Unit Aggregate Offering Price(1Registration Fee
- ------------------------------------------------------------------------------------------------------------------------------------
___% Preferred Securities of First United Capital Trust2,300,000 $10 $23,000,000 $6,394.00
- ------------------------------------------------------------------------------------------------------------------------------------
___% Junior Subordinated Deferrable Interest Debentures -- -- -- N/A
of First United Corporation (2)
- ------------------------------------------------------------------------------------------------------------------------------------
Guarantee of First United Corporation of certain -- -- -- N/A
obligations under the Preferred Securities (3)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Registration Fee -- -- -- $6,394.00
====================================================================================================================================
(1) Estimated solely for the purpose of calculating the registration fee,
exclusive of accrued interest and dividends, if any.
(2) The Junior Subordinated Deferrable Interest Debentures will be
purchased by First United Capital Trust. Such securities may later be
distributed for no additional consideration to the holders of the
Preferred Securities upon the dissolution of the Issuer Trust and the
distribution of its assets.
(3) This Registration Statement is deemed to cover the Guarantee. Pursuant
to Rule 457(n) under the Securities Act, no separate registration fee
is payable for the Guarantee.
The Registrants hereby amend this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrants shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
EXPLANATORY NOTE
The prospectus contained in this Registration Statement will be used in
connection with the offering of the following securities: (1) _________%
Preferred Securities of First United Capital Trust; (2) _________% Junior
Subordinated Deferrable Interest Debentures of First United Corporation; (3) a
Guarantee of First United Corporation of certain obligations under the Preferred
Securities.
</TABLE>
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
PROSPECTUS Preliminary Prospectus dated
July 28, 1999
$20,000,000
[LOGO]
First United Capital Trust
First United Corporation
_______% Preferred Securities
Guaranteed to the extent described in this
Prospectus by First United Corporation.
<TABLE>
<CAPTION>
<S> <C>
Consider carefully the "Risk First United Corporation--
Factors" beginning on Page 7 of o We are a bank holding company that offers, through our
this Prospectus. bank subsidiary, a full range of community banking and
related financial services to customers in Maryland and
Neither the Securities and West Virginia.
Exchange Commission nor any o We will purchase all of the common securities of the Trust.
State Securities Commission has o We have guaranteed the Trust's obligations under the
approved or disapproved of preferred securities, but only to the extent of funds held by
these securities or passed upon the Trust.
the adequacy or accuracy of this The Trust--
Prospectus. Any representation o First United Capital Trust is a Delaware business trust.
to the contrary is a criminal o We created the Trust for the limited purposes of issuing the
offense. common and preferred securities, investing in the junior
subordinated debentures, and engaging in incidental
Neither the preferred securities activities.
nor the junior subordinated The Preferred Securities--
debentures are deposit accounts o The preferred securities represent beneficial interests
of any bank, and neither are in the assets of the Trust, which will include the
insured to any extent by the junior subordinated debentures and payments on the
Federal Deposit Insurance junior subordinated debentures.
Corporation or any other o Holders of the preferred securities are entitled to cumulative
governmental agency. distributions at the annual rate of_______%.
o We have applied to have the preferred securities approved
The underwriters are offering for quotation under the proposed Nasdaq National Market
the preferred securities subject symbol "FUNCP."
to prior sale, when, as and if o The public offering price is $10.00 per preferred security.
delivered to and accepted by the o The Trust may redeem the preferred securities for cash or
underwriters. The underwriters in exchange for the junior subordinated debentures.
have the right to reject orders in o If we defer interest payments on the junior subordinated
whole or in part. The debentures, the Trust will defer distributions on the
underwriters expect that the preferred securities.
Trust will deliver the preferred The Junior Subordinated Debentures--
securities on or about _________, o We will sell up to $23,000,000 of our_____% junior
1999. subordinated debentures to the Trust, an amount equal to
the proceeds to the Trust from the sale of the common
and preferred securities.
o The junior subordinated debentures are scheduled to
mature on September 30, 2029, but we may shorten this
date.
o We may defer interest payments on the junior subordinated
debentures from time to time.
=============================================================================================================================
Price Underwriting Proceeds to the
to Discounts or Commissions Issuer Trust
Public
- -----------------------------------------------------------------------------------------------------------------------------
Per Preferred Security.............. $ $
- -----------------------------------------------------------------------------------------------------------------------------
Total............................... $ $
=============================================================================================================================
</TABLE>
In the table above, the price to the public includes accrued distributions, if
any, from ________________, 1999. We, along with the Trust, have agreed to
indemnify the underwriters against certain liabilities, including certain
liabilities under the Securities Act of 1933. See "Underwriting." Because all of
the proceeds from the sale of the preferred securities will be used to purchase
the junior subordinated debentures, we have agreed to pay the underwriters, as
compensation, $___ per preferred security or $____________ in the aggregate
($_____________ if the over-allotment option is exercised in full). See
"Underwriting." We have also agreed to pay the expenses of this offering,
estimated to be $_______. We have also granted the underwriters a 30-day option
to purchase up to a maximum of 300,000 additional preferred securities to cover
over-allotments, if any. If the over-allotment option is exercised in full, the
total price to the public will be $23,000,000, the total underwriting commission
will be $_______ and the total proceeds to the Trust will be $_______. See
"Underwriting."
Ferris, Baker Watts Advest, Inc.
Incorporated
<PAGE>
[FIRST UNITED MAP]
Certain persons participating in this offering may engage in transactions that
stabilize, maintain, or otherwise affect the market price of the preferred
securities being offered, including over-allotting shares of the preferred
securities and bidding for and purchasing these shares at a level above that
which otherwise might prevail in the open market. For a description of these
activities, see "Underwriting." These stabilizing transactions, once begun, may
be discontinued at any time. In connection with this offering, certain
underwriters (and selling group members) may engage in passive market making
transactions in the preferred securities on the Nasdaq National Market in
accordance with Rule 103 of SEC Regulation M. See "Underwriting."
<PAGE>
PROSPECTUS SUMMARY
First United Corporation
Overview
First United Corporation is a bank holding company whose principal
business is conducted by its wholly-owned subsidiary, First United Bank & Trust,
which is headquartered in Oakland, Maryland. We are the largest bank in Garrett
County, Maryland, where we have more than 50% of that county's deposits, and we
are among the leaders in deposit market share in five of the eight counties we
serve.
We provide a full range of commercial, retail banking, trust, and
related financial services from 22 branches and 26 ATMs in towns and rural areas
of western Maryland and West Virginia. In addition to our banking business, we
own a reinsurance company, Oakfirst Life Insurance Corporation, that reinsures
credit life, credit accident, and health insurance written on consumer loans
made by First United Bank & Trust. We also own an auto leasing company, First
United Auto Finance, LLC, and an insurance agency, Gonder Insurance Agency,
Inc., which sells business and personal insurance policies as agent and broker.
Since our formation in 1985, our return on assets has exceeded 1%. In
1998, our return on assets was 1.24%, and our return on equity was 12.92%. Our
net income for that period was $7.4 million, an 11.77% increase over 1997. As of
June 30, 1999, we had total assets of $689.9 million, gross loans of $551.0
million, deposits of $539.2 million, and shareholders' equity of $57.2 million.
For the six months ended June 30, 1999, our return on assets was 1.13% and our
return on equity was 12.98%.
Our Strategy
Our goal is to continue to build a responsive, high performance
community bank. We intend to achieve this goal by:
o Broadening our products and services to meet our customers'
changing needs;
o Retaining our most profitable and potentially profitable
customers;
o Expanding our geographic market area to attract profitable
customers; and
o Expanding the lines of business in which we can compete
profitably.
We believe that we will achieve these goals. In the past two years, we
have begun several strategic initiatives to make us more profitable and
competitive. We employed several nationally recognized industry consultants, and
together with our management, to examine almost every area of our operations.
These consultants, with management, reviewed our core businesses, operating
structure, management, personnel, staffing, technology, products, services,
policies, credit scoring, and loan and investment practices. We then changed our
organization and the way we conduct our businesses to enhance our relationships
with less profitable customers, provide better service to our most profitable
customers, and identify profitable opportunities in new markets and service
areas. In addition, to reduce the cost and investment of management time in
regulatory issues, we converted from a national banking association to a
Maryland-chartered bank.
<PAGE>
Services
We provide a complete range of retail and commercial banking, trust,
brokerage and insurance services to customers from Maryland, West Virginia, and
western Pennsylvania. Our customers include individuals, businesses, and
municipalities. Our services include checking, savings, NOW, money market
accounts, business loans, personal loans, mortgage loans, lines of credit, IRA
and KEOGH accounts, safe deposit and night depository facilities, and a complete
line of trust services. We respond to our customers' needs and are willing to
customize the products we offer based on the needs of individual customers.
Although traditionally a residential mortgage lender, we recently
expanded our efforts in indirect consumer lending, commercial lending, and home
equity lines to improve our asset mix, increase earnings and establish a broader
relationship with our customers. We are a certified Small Business
Administration lender. Commercial loans include lines of credit, term and demand
loans for the purchase of equipment and inventory, and accounts receivable
financing. We rely principally upon conventional deposits, Federal Home Loan
Bank borrowings, and a limited amount of wholesale deposits as funding sources.
We provide brokerage services through an arrangement with PrimeVest
Financial Services, Inc., a full service broker-dealer.
First United Capital Trust
First United Capital Trust is a Delaware statutory business trust that
we created for the limited purposes of:
o issuing the preferred securities and the common securities;
o investing the proceeds it receives from issuing the preferred
securities and the common securities in equivalent amount of
junior subordinated debentures issued by us; and
o engaging in activities related to the activities described
above.
The Trust will issue all of the preferred securities to the purchasers
in this offering. We will purchase all of the Trust's common securities. The
Trust's common securities will represent an aggregate liquidation amount equal
to at least 3% of the total capital of the Trust.
The junior subordinated debentures will be the only assets of the
Trust, and payments under the junior subordinated debentures will be the only
revenue of the Trust.
The Trust will be governed by the trust agreement among us, as
depositor, Bankers Trust (Delaware), as Delaware trustee, and Bankers Trust
Company, as property trustee.
The principal executive office of the Trust is c/o First United
Corporation at 19 South Second Street, Oakland, Maryland 21550, and its
telephone number is (301) 334-9471.
2
<PAGE>
<TABLE>
<CAPTION>
The Offering
<S> <C>
The Issuer.............................. First United Capital Trust, a Delaware statutory business trust.
The Securities Being Offered............ 2,000,000 preferred securities having a liquidation amount of
$10.00 per preferred security. The preferred securities represent
preferred undivided beneficial interests in the assets of the Trust,
which will consist solely of junior subordinated debentures. We
will guarantee payments on the preferred securities to the extent
of funds in the Trust. We have granted the underwriters an
option, exercisable within 30 days after the date of the offering,
to purchase up to an additional 300,000 preferred securities at
the initial offering price, solely to cover over-allotments, if any.
The Offering Price...................... $10.00 per preferred security.
The Payment of
Distributions........................... The Trust will pay distributions to you on each preferred
security at an annual rate of ____%. The distributions will be
cumulative, will accumulate from the date of issue, and will be
payable in arrears with additional distributions, compounded
quarterly, beginning September 30, 1999.
Our Option to Extend the
Interest Payment Period ................ At any time that we are not in default under the junior
subordinated debentures, we may defer payments of interest on
the junior subordinated debentures for up to 20 consecutive
quarters, but not beyond their stated maturity date. The Trust
would defer quarterly distributions on the preferred securities
while we are deferring payment on the junior subordinated
debentures. Deferred quarterly distributions will accumulate
additional distributions at an annual rate of ____% compounded
quarterly.
During any period that we are deferring interest payments, we
may not declare or pay any cash distributions on our capital
stock or debt securities that are of equal or lower rank than the
junior subordinated debentures. After the end of any period in
which we are deferring interest payments, if we have paid all
deferred and current interest under the junior subordinated
debentures, we may defer interest payments again. If we defer
interest payments, you will be required to include deferred
interest income in your gross income for United States federal
income tax purposes even if you have not received distributions.
Junior Subordinated
Debentures.............................. The Trust will invest the proceeds from the issuance of the
preferred securities and common securities in an equivalent
amount of our _____% junior subordinated debentures.
3
<PAGE>
Maturity of Debentures.................. The junior subordinated debentures are scheduled to mature on
September 30, 2029 unless we shorten the maturity date. We
will not shorten the maturity date unless we have received prior
approval, from our regulator, if it is required. The Trust must
redeem the preferred securities when the junior subordinated
debentures are paid on the maturity date, or following any
earlier redemption of the junior subordinated debentures.
Redemption of the
Preferred Securities
is Possible ............................ The Trust may redeem the preferred securities in whole or in
part, if we repay the junior subordinated debentures. Subject to
any regulatory approval that may then be required, we may
redeem the junior subordinated debentures before their scheduled
maturity either (1) on or after September 30, 2004, in whole at
any time or in part, from time to time, or (2) at any time, in
whole, but not in part, within 90 days after:
o certain tax events occur or become likely to occur;
o the Trust is or becomes likely to be deemed to be an
investment company; or
o there is a change in the regulatory capital treatment of the
preferred securities.
We will use the cash proceeds of any redemption to pay you the
liquidation amount for the preferred securities. The liquidation
amount you will receive will be $10.00 per preferred security
plus any accrued and unpaid distributions to the date of
redemption.
How the Securities will
Rank in Right of Payment................ The preferred securities will rank equally with the common
securities. The Trust will pay distributions on the preferred
securities and the common securities pro rata. If we default by
failing to pay interest payments on the junior subordinated
debentures, no distributions on the common securities will be
paid until all accumulated and unpaid distributions on the
preferred securities have been paid.
Our obligation under the junior subordinated debentures is
unsecured and generally will rank junior in priority to any of our
senior and other subordinated indebtedness. If we create any
other trusts similar to this Trust, then the subordinated
debentures will rank equally with any other junior subordinated
debentures we issue to the trusts.
4
<PAGE>
Our obligation under the guarantee is unsecured and will rank
junior to our senior and other subordinated indebtedness. If we
issue any other guarantees in the future relating to preferred
securities issued by the other trusts, then the guarantee issued in
this transaction will rank equally with the other guarantees.
Because we are a holding company, the junior subordinated
debentures and the guarantee will effectively be subordinated to
all existing and future liabilities of our subsidiaries.
The Junior Subordinated
Debentures may be
Distributed to You...................... Under certain circumstances and after we obtain any necessary
regulatory approvals, we may dissolve the Trust. If we dissolve
the Trust, after satisfaction of any of the Trust's liabilities to
creditors, the Trust will distribute your pro rata share of the
junior subordinated debentures to you in liquidation of the Trust.
Our Obligations to Guarantee
Payments................................ We provide an irrevocable and unconditional guarantee of
payments of distributions and other amounts due on the
preferred securities. Our obligations to guarantee the payments
and other amounts are found under the junior subordinated
debentures, the indenture, the trust agreement and the guarantee,
taken together.
If we do not make payments on the junior subordinated
debentures, the Trust will not have sufficient funds to make
distributions on the preferred securities. The guarantee does not
cover distributions when the Trust does not have sufficient
funds.
Limited Voting Rights................... You will have no voting rights except in limited circumstances.
The Use of Proceeds..................... The Trust will invest all of the proceeds from the sale of the
preferred and the common securities in our junior subordinated
debentures. We intend to contribute a large portion of the net
proceeds from our sale of the junior subordinated debentures to
our subsidiary bank to support internal growth opportunities, and
to use the remainder to finance growth, including future
acquisitions if and when suitable opportunities arise, and for
general corporate purposes.
The preferred securities may qualify in whole or in part, as our
"Tier 1" capital or core capital, with certain limitations, in
accordance with capital guidelines provided by The Federal
Reserve. The remaining amount of preferred securities that does
not qualify as our "Tier 1" capital will qualify as "Tier 2," or
supplementary capital.
Nasdaq National Market
Symbol.................................. The proposed Nasdaq National Market symbol is "FUNCP."
5
<PAGE>
Book-entry.............................. The preferred securities will be represented by a global security
that will be deposited with and registered in the name of The
Depository Trust Company, New York, New York, or its
nominee. You will not receive a certificate for your preferred
securities.
No Rating .............................. We do not expect that the preferred securities will be rated by
any rating service. Our other securities are not rated by any
rating service.
ERISA Considerations.................... You must consider carefully the information described under
"Certain ERISA Considerations."
For additional information regarding the preferred securities, see: "Description of Preferred
Securities," "Description of Junior Subordinated Debentures," "Description of Guarantee,"
"Relationship Among the Preferred Securities, the Junior Subordinated Debentures and the Guarantee,"
and "Certain Federal Income Tax Consequences."
RISK FACTORS
Before purchasing the preferred securities offered by this prospectus
you should carefully consider the "Risk Factors" beginning on page 7.
</TABLE>
6
<PAGE>
RISK FACTORS
You should carefully consider the following risk factors before
purchasing the preferred securities. This prospectus contains forward-looking
statements that involve risk and uncertainties. You can identify these
forward-looking statements because they may include terms such as "believes,"
"anticipates," "intends," "expects," or similar expressions, and may include
discussions of future strategy. We caution you not to rely unduly on any
forward-looking statements in this prospectus. Our actual results could differ
materially from the forward-looking statements. The risk factors described below
could cause or contribute to these differences and apply to all forward-looking
statements wherever they appear in this prospectus.
Risk Factors Relating to the Preferred Securities
If we default on our obligations to pay our other creditors, then we
may be prohibited from paying you. Our obligations to you under the guarantee
and the junior subordinated debentures are subordinate to our obligations to
most of our other creditors. If we do not pay our other creditors amounts we owe
them, we may be prohibited from paying you. If we go into bankruptcy or
insolvency, our other creditors must be paid in full before you may be paid.
If we extend the interest payment period, you will not receive
distributions, but you will recognize ordinary income, and incur a related
federal income tax liability, and you will recognize a capital loss that may be
used only to offset a capital gain. So long as we are not in default, we may
defer the payment of interest on the junior subordinated debentures from time to
time for up to 20 consecutive quarters. If we defer interest payments, the Trust
will defer quarterly distributions to you on the preferred securities. During a
deferral period you will continue to accrue income (in the form of original
issue discount) for federal income tax purposes on the preferred securities, but
you will not receive your cash distributions. In addition, your tax basis in the
preferred securities will increase by the amount of accrued but unpaid
distributions. If you sell the preferred securities during a deferral period,
your increased tax basis will decrease the amount of any capital gain or
increase the amount of any capital loss that you may have otherwise realized on
the sale. A capital loss, except in certain limited circumstances, cannot be
applied to offset ordinary income.
The Trust may return your principal to you early, which would require
you to reinvest your principal at a time when you may not be able to earn a
return that is as high as you were earning on the preferred securities. Under
the following circumstances we may return your principal before the stated
maturity of the junior subordinated debentures:
o We may redeem all of the junior subordinated debentures in
whole, but not in part, prior to maturity within 90 days after
certain occurrences at any time during the life of the Trust.
If we redeem the junior subordinated debentures due to the
occurrence of one of these events, the Trust will redeem the
preferred securities. You would receive the redemption price.
o We may also at any time shorten the maturity of the junior
subordinated debentures to a date not earlier than September
30, 2004. We may be required to obtain regulatory approval
before shortening the maturity of the junior subordinated
debentures.
o You should be aware that Congress may enact legislation that
would adversely affect our ability to deduct the interest we
pay on the junior subordinated debentures or that otherwise
results in unfavorable tax consequences for us or the Trust.
This legislation may cause us to redeem the junior
subordinated debentures and cause the Trust to redeem the
preferred securities.
7
<PAGE>
If we redeem the junior subordinated debentures we would redeem the
preferred securities, and you may be required to reinvest your principal.
We can distribute the junior subordinated debentures to you, which may
have adverse tax consequences for you and which may adversely affect the market
price of your investment. The Trust may be dissolved at any time before maturity
of the junior subordinated debentures on September 30, 2029. Then, the trustees
would distribute the junior subordinated debentures to the holders of the
preferred securities. The junior subordinated debentures that you receive upon a
distribution, or the preferred securities you hold pending this type of
distribution, may trade at a price that is less than you paid to purchase the
preferred securities.
Under current United States federal income tax laws, a distribution of
the junior subordinated debentures to you upon the dissolution of the Trust
would not be a taxable event to you. However, if the Trust were classified for
United States federal income tax purposes as an association taxable as a
corporation at the time it is dissolved, the distribution of the junior
subordinated debentures would be a taxable event to you. In addition, if there
is a change in law, a distribution of junior subordinated debentures upon the
dissolution of the Trust could be a taxable event to you.
Our guarantee covers payments to you only if the Trust has cash
available to make payments. If we do not make payments on the junior
subordinated debentures, the Trust will not have sufficient funds to pay
distributions or the liquidation amount. Because our guarantee does not cover
payments when the Trust does not have sufficient funds, you will not be able to
rely on our guarantee for payment of these amounts. Instead, you or the property
trustee may enforce the rights of the Trust under the junior subordinated
debentures against us directly.
You will have only limited voting rights as a holder of the preferred
securities, and we can amend the trust agreement without your consent. Your
voting rights will relate only to the modification of the preferred securities
and the exercise of the Trust's rights as holder of the junior subordinated
debentures. You will not usually be able to appoint, remove or replace the
property trustee or the Delaware trustee because these rights generally reside
with us as the holder of the common securities. Even if it would adversely
affect your rights, we, together with the property trustee and the trust
administrators, may amend the trust agreement without your consent to ensure
that the Trust will be classified as a grantor trust for United States federal
income tax purposes.
The market price for the preferred securities may decline during any
period that we are deferring interest payments on the junior subordinated
debentures. If this were the case, the preferred securities would not trade at a
price that accurately reflects the value of accrued but unpaid interest on the
underlying junior subordinated debentures.
There is no current public market for the preferred securities and one
may not develop. We plan to list the preferred securities on the Nasdaq National
Market. There is no guarantee that an active or liquid public trading market
will develop for the preferred securities or whether there will be continued
listing of the preferred securities on the Nasdaq National Market. Although the
underwriters have informed the Trust and us that they intend to make a market in
the preferred securities, they are not obligated to do so and any market making
activity may be terminated at any time without notice. Even if an active public
market does develop, there is no guarantee that the market price for the
preferred securities will equal or exceed the price you pay for the preferred
securities.
The indenture and the trust agreement do not restrict our business
operations for your benefit. Neither the indenture, which sets forth the terms
of the junior subordinated debentures, nor the trust agreement, which sets forth
the terms of the preferred securities and the common securities, protects
holders of junior subordinated debentures or the preferred securities if we
experience adverse changes in our financial condition or results of operations.
In addition, neither the indenture nor the trust agreement limit our ability or
the ability of any subsidiary to incur additional indebtedness.
8
<PAGE>
The preferred securities are not insured. Neither the Federal Deposit
Insurance Corporation nor any other governmental agency or private company has
insured the preferred securities.
Risk Factors Relating to the Company
The Trust will depend solely on our payments on the junior subordinated
debentures to pay amounts due to you on the preferred securities. Our ability to
make payments on the junior subordinated debentures is subject to the following
risks:
We depend primarily on dividends from our subsidiaries to pay you and
those dividends are restricted by regulation. We are a separate legal entity
from our subsidiaries and do not have significant operations of our own. We will
depend primarily on dividends we receive from our subsidiaries to make payments
on the junior subordinated debentures. Federal and state law and regulations
restrict the dividends our subsidiaries may pay us. If our subsidiaries are
prohibited from issuing dividends to us, we may not be able to make payments on
the junior subordinated debentures and the Trust will not be able to make
payments to you on the preferred securities.
The creditors of our subsidiaries have priority over us and you in any
distribution of our subsidiaries' assets in a liquidation or reorganization. We
are a holding company and our assets are primarily comprised of our investment
in the stock of our subsidiaries. The creditors of our subsidiaries will have
priority over us and you in any distribution of the subsidiaries' assets in a
liquidation, reorganization or otherwise, except to the extent that we are
recognized as a creditor of our subsidiaries. We will depend on dividends and
other amounts we receive from our subsidiaries to make payments on the junior
subordinated debentures. If our subsidiaries make no distributions to us, we may
not be able to make payments on the junior subordinated debentures and the Trust
will not be able to make payments to you on the preferred securities.
The Bank's reserve for possible credit losses may not be adequate to
cover actual loan losses and if we are required to increase our reserve, current
earnings may be reduced. When borrowers default and do not repay the loans that
we make to them, we may lose money. Our experience shows that some borrowers
either will not pay on time or will not pay at all, which will require us to
cancel or "charge off" the defaulted loan or loans. We provide for losses by
reserving what we believe to be an adequate amount to absorb any probable
inherent losses. A "charge off" reduces our reserve for possible credit losses.
If our reserve is not sufficient, we would have to record a larger reserve which
would reduce current period earnings.
Changes in the real estate market could result in "charge offs." The
Bank's loan portfolio includes many real estate secured loans. Real estate loans
are in demand when interest rates are low and economic conditions are favorable.
Even when economic conditions are favorable and interest rates are low, these
conditions may not continue. If the borrower does not pay a real estate loan, we
may have to "charge off" the loan. If real estate values decrease, then we may
not recover the full amount of the loan when we foreclose on the real estate.
The Bank's increased emphasis on indirect automobile lending could
result in increased "charge offs." Our indirect automobile lending grew 120.76%
in 1998 and comprised 25.81% of our loan portfolio on June 30, 1999. While we
have established credit and other controls, indirect lending can be subject to
greater credit risk, and possibly higher charge offs than direct lending.
The geographic concentration of the Bank's loans could result in
"charge offs." Most of our loans are made to borrowers located in Maryland, West
Virginia and Pennsylvania, in counties or surrounding counties in which our Bank
and its branches are located. A decline in local economic conditions could cause
more borrowers to default on their loans.
9
<PAGE>
The Bank may be unable to manage interest rate risks that could reduce
our net interest income. Our earnings depend greatly on our net interest income,
the difference between the interest earned on loans and investments and the
interest paid on deposits. If the interest rate paid on deposits is high and the
interest rate earned on loans and investments is low, we earn less or may lose
money. Because interest rates are established by competition, we have limited
control over our net interest income.
Risk Factors Relating to the Company's Industry
The banking industry is subject to extensive regulation which may
change the conditions of doing business without warning and increase the cost of
doing business. The banking industry is subject to many laws and regulations
which generally protect depositors, not shareholders. These regulations and laws
increase our operating expenses, affect our earnings, and put us at a
disadvantage relative to less regulated competitors, such as finance companies,
mortgage banking companies, and leasing companies.
The banking industry is heavily dependent on developments in
technology. Financial services use technology, including telecommunications,
data processing, computers, automation, telebanking, Internet-based banking,
debit cards, and "smart" cards. Technology changes rapidly. Our ability to
compete successfully with other banks and non-banks may depend on whether we can
exploit technological changes. We may not be able to exploit technological
changes and expensive new technology may not make us more profitable.
Our operations may be adversely affected if we, or certain persons with
whom we do business, fail to adequately address the Year 2000 issue. The "Year
2000 Issue" describes the problems that may result from the improper processing
of dates and date-sensitive calculations beginning in the Year 2000. Many
existing computer programs use only two digits to identify the year in the date
field of a program. These programs could experience serious malfunctions when
the last two digits of the year change to "00" as a result of identifying a year
designated "00" as the Year 1900 rather than the Year 2000. A system failure or
other disruptions of operations could occur if our computer programs and other
equipment identify a year designated "00" as the Year 1900 rather than the Year
2000. We cannot be certain that our computer programs and other equipment, and
the computer programs and other equipment of our customers, vendors, suppliers
and even the government will be Year 2000 compliant. Any systems failure,
disruption, or other losses could reduce our earnings.
For a more detailed discussion of our Year 2000 initiatives, see the
disclosure under "Impact of Year 2000" in our Annual Report on Form 10-K for the
year ended December 31, 1998, which has been incorporated by reference into this
prospectus.
10
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected financial data for the five years ended December
31, 1998 are derived from our audited consolidated financial statements. The
financial data for the six-month periods ended June 30, 1999 and 1998 are
derived from our unaudited financial statements. The unaudited financial
statements include all adjustments, consisting of normal recurring accruals,
which we consider necessary for a fair presentation of the financial position
and the results of operations for these periods. Our operating results for the
six months ended June 30, 1999 are not necessarily indicative of the results
that may be expected for the entire year ending December 31, 1999. You should
read the selected consolidated financial data with our consolidated financial
statements, related notes, and other financial information incorporated into
this prospectus by reference. See "Where You Can Find More Information."
<TABLE>
<CAPTION>
As of and For the Six
Months Ended June 30, As of and for the Years Ended December 31,
--------------------- ------------------------------------------
1999 1998 1998 1997 1996 1995 1994
-------- -------- ------- -------- -------- -------- --------
(In thousands, except per share data and ratios)
Balance Sheet Data
<S> <C> <C> <C> <C> <C> <C> <C>
Total Assets $ 689,888 $ 595,471 $ 641,114 $ 569,030 $ 523,621 $ 487,169 $ 459,040
Total Deposits 539,161 493,183 511,500 500,060 452,539 424,294 391,650
Net Loans 547,253 463,957 505,668 438,738 380,594 358,464 333,375
Total Shareholders' Equity 57,157 57,454 58,474 56,714 56,815 55,504 51,131
Statements of Income Data
Interest Income $ 25,526 $ 22,856 $ 47,242 $ 43,348 $ 39,273 $ 37,274 $ 33,059
Interest Expense 11,919 10,499 21,915 18,978 16,376 14,721 11,265
Net Interest Income 13,607 12,357 25,327 24,370 22,897 22,553 21,794
Provision for Possible
Credit Losses 836 475 1,176 935 749 - 165
Other Operating Income 3,074 3,069 6,316 6,037 4,869 4,290 3,832
Other Operating Expense 10,122 9,697 19,058 19,530 17,394 18,390 16,220
Income Before Income Taxes 5,723 5,254 11,409 9,942 9,623 8,453 9,241
Income Taxes 1,960 1,830 3,982 3,297 3,144 2,849 3,014
----- ----- ----- ----- ----- ----- -----
Net Income $ 3,763 $ 3,424 $ 7,427 $ 6,645 $ 6,479 $ 5,604 $ 6,227
===== ===== ===== ===== ===== ===== =====
Per Share Data
Net Income $ 0.61 $ 0.55 $ 1.20 $ 1.05 $ 1.00 $ 0.86 $ 0.96
Dividends Paid 0.31 0.30 .60 .56 .51 .46 .43
Book Value 9.39 9.23 9.50 9.05 8.82 8.96 8.25
Performance Ratios
Return on Average Assets 1.13% 1.18% 1.24% 1.21% 1.29% 1.18% 1.40 %
Return on Average Equity 12.98 12.01 12.92 11.70 11.48 10.44 12.45
Efficiency Ratio 59.34 61.62 58.98 62.98 61.48 67.33 62.46
Net Interest Margin 4.43 4.62 4.56 4.83 4.97 5.15 5.21
Net Interest Spread 3.96 4.24 4.33 4.60 4.73 4.89 5.18
Dividend Payout 50.82 54.55 50.00 53.33 51.00 53.49 44.79
Asset Quality Ratios
Reserve for Possible Credit Losses
to Total Loans 0.68% 0.63% 0.65% 0.60% 0.57% 0.59% 0.70 %
Net Charge-Offs to Average Loans 0.07 0.04 0.11 0.11 0.19 0.07 0.04
Reserve for Possible Credit Losses
to Non-Performing Loans 198.89 187.51 329.08 235.91 133.70 104.02 155.01
Capital Ratios
Tier 1 Risk-Based
Capital Ratio 11.06% 14.02% 12.68% 14.16% 17.26% 17.94% 15.49 %
Total Risk-Based
Capital Ratio 11.78 14.74 13.40 14.82 17.92 18.63 16.18
Leverage Ratio 8.60 10.02 9.71 10.33 11.31 11.48 11.52
</TABLE>
11
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
Our consolidated ratio of earnings to fixed charges is as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended December 31,
June 30, 1999 1998 1997 1996 1995 1994
------------- ---- ---- ---- ---- ----
Earnings to Fixed Charges:
<S> <C> <C> <C> <C> <C> <C>
Including Interest on Deposits 1.48 1.52 1.52 1.59 1.57 1.82
Excluding Interest on Deposits 4.36 7.25 26.43 58.62 39.48 27.18
</TABLE>
The ratio of earnings to fixed charges is computed by dividing income
before income taxes and fixed charges less interest capitalized during the
period, net of amortization of previously capitalized interest, by fixed
charges. Fixed charges consist of interest, expended or capitalized, on
borrowings (including or excluding deposits, as applicable), and the portion of
rental expense which is deemed representative of interest.
RECENT DEVELOPMENTS
Results of Operations
Our net income for the quarter ended June 30, 1999 was $1.95 million,
an increase of $200,000 or 11.43% over the $1.75 million earned during the
second quarter in 1998. This increase translates into $.31 earnings per share
for the current period, compared to $.28 earnings per share earned during the
second quarter of 1998. Our net income for the six months ended June 30, 1999
was $3.76 million as compared to $3.42 million for the same period in 1998, an
increase of $340,000, or 9.94%.
We have generated significant loan growth during the second quarter of
1999. Our loans increased by $25.52 million or 4.86% to $551.00 million. Our
loan growth during the second quarter of 1998 was $16.54 million. Our year to
date loan growth, through June 30, 1999, is $42.03 million, or 8.25%. Over the
past twelve months, our loan portfolio grew by $84.09 million, or 18.00%. The
majority of our loan growth has been in our commercial and indirect auto loan
portfolios.
Our loan quality continues to be strong as demonstrated by the over
30-day delinquency ratio of .94% of gross loans, a number which compares very
favorably with our peers. Non performing loans were .34% of total loans as of
June 30, 1999, and our loan loss reserve of .68% of total loans represents
198.89% of nonperforming loans. Our core deposits grew $14.47 million for the
year to date through June 30, 1999. Since the core deposit growth was not
sufficient to support the strong loan demand that we experienced during the
first half of 1999, we drew upon supplementary funds from the Federal Home Loan
Bank System and from non-core brokered deposits.
Our fee income from other lines of businesses within our organization,
including income from our purchase of accounts receivables from commercial
customers, from our arrangement with PrimeVest, a full service broker-dealer,
and our trust department, continues to grow. During the second quarter of 1999,
our fee income increased $80,000 or 17.13% over the same time period in 1998.
Our year to date fee income increased $160,000, or 16.80%, over the same time
period in 1998.
12
<PAGE>
Year 2000 Issue
We are diligently preparing our computer systems, facilities, and
hardware for the upcoming century change. We are following the FFIEC guidelines
for Year 2000 readiness and have recently met important deadlines. As of June
30, 1999, all mission-critical systems have been thoroughly tested and are in
place, ready to transact business on January 1, 2000. We have significantly
completed testing of all non-mission critical systems in our test lab.
Additionally, we are testing the interfaces that connect us to the rest of the
financial services industry. As an added precaution, we are re-testing
mission-critical systems and any changed systems during the fourth quarter.
Contingency plans, a standard procedure in all financial institutions, have been
modified and expanded to include any possible Year 2000 issues. We also are
completing for the end of 1999 our development of a "command center" for the
century change period.
USE OF PROCEEDS
All the proceeds to the Trust from the sale of the preferred securities
will be invested by the Trust in the junior subordinated debentures. The net
proceeds we receive from the sale of the junior subordinated debentures, which
we estimate to be approximately $20,000,000 ($23,000,000 if the over-allotment
option is exercised in full), will be used:
o to make an equity contribution to our subsidiary, First United
Bank & Trust, to support internal growth opportunities;
o to finance growth, which may include one or more branch
acquisitions, acquisitions of other financial institutions, or
acquisitions of other financial services companies;
o to increase our capital; and
o for general corporate purposes.
The precise amounts and timing of the application of proceeds, and the type of
investment, will depend upon our and our subsidiaries' funding requirements and
the availability of other funds. We do not have any specific plans at this time
to make any particular acquisition.
Under the risk-based capital adequacy guidelines established by the
Board of Governors of The Federal Reserve System, the preferred securities
cannot constitute more than 25% of our total Tier 1 capital. Amounts in excess
of this 25% capital limitation will be Tier 2, or supplemental, capital, and
therefore will be included in total risk-based capital. We estimate that 95% of
the net proceeds of the sale of the preferred securities of the Trust will
initially be included in our Tier 1 capital, and the full amount will be
included in our total risk-based capital.
CAPITALIZATION
The following table sets forth: (1) our consolidated capitalization at
June 30, 1999; (2) our consolidated capitalization giving effect to the issuance
of the preferred securities; and (3) actual and pro forma capital ratios. The
"As Adjusted" column assumes application of the net proceeds from the
corresponding sale of the junior subordinated debentures to the Trust as if the
sale of the preferred securities had been consummated on June 30, 1999, and as
if the underwriters' over-allotment was not exercised. The table assumes that
the offering occurs on the last day of the period and that any resulting change
to average assets is considered immaterial.
13
<PAGE>
<TABLE>
<CAPTION>
At June 30, 1999
Actual As Adjusted
------ -----------
(Unaudited)
(Dollars In thousands)
Guaranteed preferred beneficial interests in our
<S> <C> <C> <C>
subordinated debt(1) $ 0 $20,000
Shareholders' Equity
Preferred stock no par value, 2,000,000
shares authorized, none issued 0 0
Capital stock .01 par value, 25,000,000
shares authorized; 6,085,192 shares
issued and outstanding 61 61
Surplus 20,397 20,397
Retained earnings 37,903 37,903
Accumulated other comprehensive income (1,204) (1,204)
------ ------
Total shareholders' equity $57,157 $57,157
------ ------
Total capitalization $57,157 $77,157
====== ======
Capital Ratios(2):
Equity to total assets 8.28% 8.05%
Tier 1 risk-based capital ratio(3)(4) 11.06 14.63
Total risk-based capital ratio(3)(4) 11.78 15.51
Leverage ratio 8.60 11.46
</TABLE>
(1) Reflects the Trust's preferred securities representing beneficial
interests in an aggregate principal amount of $20,000,000 of our ___%
junior subordinated debentures (not including the $3,000,000 aggregate
principal amount of junior subordinated debentures to be purchased in
the event the underwriters exercise their over-allotment option) that
will mature on September 30, 2029.
(2) The capital ratios, as adjusted, are computed including the total
estimated proceeds from the sale of the preferred securities in a
manner consistent with The Federal Reserve guidelines.
(3) The Federal Reserve guidelines for calculation of Tier 1 capital limit
the amount of preferred securities of the type offered by this
prospectus, together with other cumulative preferred stock, which can
be included in Tier 1 capital, to 25% of total Tier 1 capital.
(4) Assumes net proceeds of the offering of the preferred securities are
invested in assets with a 20% risk weighing under the risk-based
capital rules of The Federal Reserve.
14
<PAGE>
FIRST UNITED CAPITAL TRUST
The Trust is a statutory business trust created under Delaware law
pursuant to the filing of a Certificate of Trust with the Delaware Secretary of
State on July 19, 1999. The Trust will be governed by the trust agreement among
us, as depositor, Bankers Trust (Delaware), as Delaware trustee, and Bankers
Trust Company, as property trustee. We will select two individuals who are our
employees or officers to act as administrators of the Trust. See "Description of
Preferred Securities--Miscellaneous." The Trust exists for the exclusive
purposes of:
o issuing and selling the preferred securities and the common
securities;
o using the proceeds from the sale of the preferred securities
and the common securities to acquire the junior subordinated
debentures; and
o engaging in incidental activities (such as registering the
transfer of the preferred securities and the common
securities).
The junior subordinated debentures will be the sole assets of the Trust, and
payments under the junior subordinated debentures will be the sole source of
revenue of the Trust.
We will own all of the common securities. The common securities will
rank equally, and payments on them will be made pro rata, with the preferred
securities, except that upon the occurrence and during the continuation of an
event of default under the junior subordinated debentures, our rights as the
holder of the common securities to all payments will be subordinated to the
rights of the holders of the preferred securities. See "Description of Preferred
Securities--Subordination of Common Securities." We will acquire common
securities in an aggregate liquidation amount equal to 3% of the total capital
of the Trust. The Trust has a term of 30 years, but may terminate earlier as
provided in the trust agreement.
The address of the Delaware trustee is Bankers Trust (Delaware), 1101
Centre Road, Suite 200, Trust Department, Wilmington, Delaware 19805, and the
telephone number is (302) 636-3301.
The address of the property trustee, the guarantee trustee and the
debenture trustee is Bankers Trust Company, Four Albany Street, 4th Floor, New
York, New York 10006, and the telephone number is (212) 250-2500.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as our
subsidiary and the accounts of the Trust will be included in our consolidated
financial statements. The preferred securities will be reflected as debt in the
consolidated balance sheet and appropriate disclosures about the preferred
securities, the guarantee and the junior subordinated debentures will be
included in the notes to our consolidated financial statements. For financial
reporting purposes, we will record distributions on the preferred securities as
an expense in our consolidated statement of income.
DESCRIPTION OF PREFERRED SECURITIES
The Trust will issue the preferred securities and the common securities
under the trust agreement. The preferred securities will represent preferred
undivided beneficial interests in the assets of the Trust. You will be entitled
a preference with respect to distributions and amounts payable on redemption or
liquidation over the common securities in certain circumstances, as well as
other benefits as described in the trust agreement.
15
<PAGE>
This summary of certain provisions of the preferred securities and the
trust agreement is not complete. You should read the form of the trust
agreement, which is filed as an exhibit to the registration statement of which
this prospectus is a part. Wherever particular defined terms of the trust
agreement are referred to in this prospectus, the defined terms are incorporated
in this prospectus by reference. A copy of the form of the trust agreement is
also available upon request from the trustees.
General
The preferred securities will be limited to $20,000,000 aggregate
liquidation amount (as defined in the trust agreement) outstanding (which amount
may be increased to up to $23,000,000 aggregate liquidation amount of preferred
securities for exercise of the underwriters' over-allotment option, if any). See
"Underwriting." The preferred securities will rank equally, and payments will be
made pro rata, with the common securities except as described under
"Subordination of Common Securities." The junior subordinated debentures will be
registered in the name of the Trust and held by the property trustee in trust
for your benefit, as a holder of preferred securities, and for our benefit, as
the holders of the common securities. The guarantee we will execute for the
benefit of the holders of the preferred securities will be a guarantee on a
subordinated basis with respect to the preferred securities but will not
guarantee payments when the Trust does not have funds on hand available to make
these payments. See "Description of Guarantee."
Distributions
You will receive distributions on each preferred security at the annual
rate of ___% of the stated liquidation amount of $10.00, payable quarterly in
arrears on March 31, June 30, September 30 and December 31 of each year, to
record holders at the close of business on the 15th day of March, June,
September and December (whether or not a business day) next preceding the
relevant distribution date. Distributions on the preferred securities will be
cumulative. Distributions will accumulate from the date of issue. The first
distribution date for the preferred securities will be September 30, 1999. The
amount of distributions payable for any period less than a full distribution
period will be computed on the basis of a 360-day year of twelve 30-day months
and the actual days elapsed in a partial month in the period. Distributions
payable for each full distribution period will be computed by dividing the
annual rate by four. If any date on which distributions are payable is not a
business day, then payment will be made on the next succeeding day that is a
business day (without any additional distributions or other payment because of
the delay), except that, if the business day falls in the next calendar year,
the payment will be made on the immediately preceding business day.
So long as no debenture event of default has occurred and is
continuing, we have the right to defer the payment of interest on the junior
subordinated debentures at any time or from time to time for an "extension
period" not exceeding 20 consecutive quarterly periods, but not beyond the
maturity date of the junior subordinated debentures. Quarterly distributions on
the preferred securities will be deferred during the extension period.
Distributions to which you are entitled will accumulate additional distributions
at the annual rate of ______%, compounded quarterly from the relevant payment
date, computed on the basis of a 360-day year of twelve 30-day months and the
actual days elapsed in a partial month in the period. Additional distributions
payable for each full distribution period will be computed by dividing the
annual rate by four.
During any extension period, we may not: (1) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of our capital stock; or (2) make any
payment of principal (or any premium on the principal) or interest, or repay,
repurchase or redeem any of our debt securities that rank equally in all
respects with or junior in interest to the junior subordinated debentures.
16
<PAGE>
These prohibitions, however, do not apply to:
o repurchases, redemptions or other acquisitions of our capital
stock, in connection with any employment contract, benefit
plan or other similar arrangement, a dividend reinvestment or
shareholder stock purchase plan or the issuance of our capital
stock (or securities convertible into or exercisable for the
capital stock) as consideration in an acquisition or merger
transaction entered into prior to the applicable extension
period;
o a reclassification, exchange or conversion of any class or
series of our capital stock (or any capital stock of our
subsidiaries) for any class or series of our capital stock or
of any class or series of any indebtedness for any class or
series of our capital stock;
o the purchase of fractional interests in shares of our capital
stock pursuant to the conversion or exchange provisions of the
capital stock or the security being converted or exchanged;
o any declaration of a dividend in connection with any
shareholders' rights plan, or the issuance of rights, stock or
other property under any shareholders' rights plan, or the
redemption or repurchase of rights pursuant to any
shareholders' rights plan; or
o any dividend in the form of stock, warrants, options or other
rights, where the dividend stock or the stock issuable upon
exercise of the warrants, options or other rights is the same
stock as that on which the dividend is being paid or ranks
equally with or junior to the stock.
Upon the termination of an extension period and the payment of all
amounts then due, we may begin a new extension period. We must give the trustees
notice of our election to defer the payment of interest at least one business
day before the earlier of: (1) the date the distributions on the preferred
securities would have been payable but for the election to begin the extension
period; or (2) the date the property trustee is required to give you notice of
the record date or the date the distributions are payable, but in any event not
less than one business day prior to the record date. The property trustee will
give you notice of our election to begin a new extension period. Subject to the
foregoing, there is no limitation on the number of times that we may elect to
begin an extension period. See "Description of Junior Subordinated
Debentures--Option To Extend Interest Payment Period" and "Certain Federal
Income Tax Consequences--Interest Income and Original Issue Discount."
We currently do not intend to exercise our right to defer payments of
interest.
The revenue of the Trust available for distribution to you will be
limited to payments under the junior subordinated debentures. See "Description
of Junior Subordinated Debentures." If we do not make payments on the junior
subordinated debentures, the Trust may not have funds available to pay
distributions or other amounts payable on the preferred securities. The payment
of distributions and other amounts payable on the preferred securities (if and
to the extent the Trust has funds legally available for and cash sufficient to
make these payments) is guaranteed by us on a limited basis as described below
under "Description of Guarantee."
Redemption
If we repay or redeem the junior subordinated debentures, we must give
the property trustee not less than 30, nor more than 60 days notice so that it
can redeem a proportionate amount of the preferred and common securities.
17
<PAGE>
The redemption price for each preferred security shall equal $10.00
plus accumulated but unpaid distributions on the redemption date and the related
amount of the premium, if any, paid by us upon the concurrent redemption of the
junior subordinated debentures. See "Description of Junior Subordinated
Debentures--Redemption." If less than all the junior subordinated debentures are
to be repaid or redeemed on a redemption date, then the proceeds from the
repayment or redemption shall be allocated to the redemption pro rata of the
preferred securities and the common securities.
We may redeem the junior subordinated debentures: (1) on or after
September 30, 2004 in whole at any time or in part from time to time; or (2) in
whole, but not in part, at any time within 90 days following the occurrence and
during the continuation of a Tax Event, Investment Company Event or Capital
Treatment Event (each as defined below), in each case subject to possible
regulatory approval. See "Liquidation Distribution Upon Dissolution." A
redemption of the junior subordinated debentures would cause a mandatory
redemption of a proportionate amount of the preferred securities and common
securities at the redemption price.
"Tax Event" means the receipt by the Trust of an opinion of an
experienced counsel matters to the effect that, as a result of any amendment to,
or change (including an announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any of its political
subdivisions or taxing authorities, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying these laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance of
the preferred securities, there is more than an insubstantial risk that:
o the Trust is, or will be within 90 days of the delivery of the
opinion, subject to United States federal income tax with
respect to income received or accrued on the junior
subordinated debentures;
o interest payable by us on the junior subordinated debentures
is not, or within 90 days of the delivery of the opinion will
not be, deductible by us, in whole or in part, for United
States federal income tax purposes; or
o the Trust is, or will be within 90 days of the delivery of the
opinion, subject to more than a de minimis amount of other
taxes, duties or other governmental charges.
See "Certain Federal Income Tax Consequences--Pending Tax Litigation Affecting
the Preferred Securities" for a discussion of pending United States Tax Court
litigation that, if decided adversely to the taxpayer, could give rise to a Tax
Event, that may permit us to redeem the junior subordinated debentures before
September 30, 2004.
If a Tax Event described in the first or third circumstances above has
occurred and is continuing and the Trust holds all of the junior subordinated
debentures, we will pay on the junior subordinated debentures any additional
amounts necessary so that the amount of distributions then due and payable by
the Trust on the outstanding preferred securities and common securities of the
Trust will not be reduced as a result of any additional taxes, duties and other
governmental charges to which the Trust has become subject as a result of a Tax
Event.
"Investment Company Event" means the receipt by the Trust of an opinion
of an experienced counsel to the effect that, as a result of the occurrence of a
change in law or regulation or a written change (including any announced
prospective change) in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority, there is
more than an insubstantial risk that the Trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act, which change or prospective change
18
<PAGE>
becomes effective or would become effective, as the case may be, on or after the
date of the issuance of the preferred securities.
"Capital Treatment Event" means the reasonable determination by us
that, as a result of the occurrence of any amendment to, or change (including
any announced prospective change) in, the laws (or any rules or regulations
thereunder) of the United States or its political subdivisions, or as a result
of any official or administrative pronouncement or action or judicial decision
interpreting or applying their laws or regulations, which amendment or change is
effective or pronouncement, action or decision is announced on or after the date
of issuance of the preferred securities, there is more than an insubstantial
risk that we will not be entitled to treat an amount equal to the liquidation
amount of the preferred securities, as Tier 1 Capital (or any equivalent
amount), except as otherwise restricted by The Federal Reserve, for purposes of
the capital adequacy guidelines of The Federal Reserve, as then in effect and
applicable to us. The Federal Reserve has determined that the proceeds of
certain qualifying securities like the preferred securities will qualify as Tier
1 capital for us only up to an amount not to exceed, when taken together with
all of our cumulative preferred stock, if any, 25% of our Tier 1 capital.
Redemption Procedures
Preferred securities redeemed on each redemption date shall be redeemed
at a price equal to $10.00 plus accumulated but unpaid distributions, with the
applicable proceeds from the contemporaneous redemption of the junior
subordinated debentures. Redemptions of the preferred securities will be made
and the redemption price will be payable on each redemption date only to the
extent that the Trust has funds on hand available for the payment of the
redemption price. See also "Subordination of Common Securities."
If the Trust gives you notice of redemption of the preferred
securities, then, by 12:00 noon, eastern time, on the redemption date, to the
extent funds are available, in the case of preferred securities held in
book-entry form, the property trustee will deposit irrevocably with The
Depository Trust Company funds sufficient to pay the redemption price and will
give DTC irrevocable instructions and authority to pay the redemption price to
you. With respect to preferred securities not held in book-entry form, the
property trustee, to the extent funds are available, will irrevocably deposit
with the paying agent for the preferred securities funds sufficient to pay the
redemption price and will give the paying agent irrevocable instructions and
authority to pay the redemption price to you once you surrender your
certificates evidencing the preferred securities. However, distributions payable
on or before the redemption date for any preferred securities called for
redemption will be payable to you on the relevant record dates for the related
distribution dates.
If notice of redemption is given and funds are deposited as required,
then upon the date of the deposit all of your rights with respect to your
preferred securities so called for redemption will cease, except your right to
receive the redemption price and any distributions payable in respect of the
preferred securities on or prior to the redemption date, but without interest,
and preferred securities that are redeemed will no longer be outstanding. If any
date fixed for redemption of preferred securities is not a business day, then
payment of the redemption price payable on that date will be made on the next
succeeding day which is a business day (without any interest or other payment in
respect of any delay), except that, if the business day falls in the next
calendar year, the payment will be made on the immediately preceding business
day. In the event that payment of the redemption price for the preferred
securities called for redemption is improperly withheld or refused and not paid
either by the Trust or by us pursuant to the guarantee as described under
"Description of Guarantee," distributions on the preferred securities will
continue to accumulate at the then applicable rate, from the redemption date
originally established by the Trust for the preferred securities to the date the
19
<PAGE>
redemption price is actually paid, in which case the actual payment date will be
the date fixed for redemption for purposes of calculating the redemption price.
Subject to applicable law (including United States federal securities
laws), we or our affiliates may at any time and from time to time purchase
outstanding preferred securities by tender, in the open market or by private
agreement, and may resell the securities.
If less than all the preferred securities and common securities are to
be redeemed on a redemption date, then the aggregate liquidation amount of the
preferred securities and common securities to be redeemed will be allocated pro
rata to the preferred securities and the common securities based upon the
relative liquidation amounts of the classes. The particular preferred securities
to be redeemed will be selected on a pro rata basis not more than 60 days before
the redemption date by the property trustee from the outstanding preferred
securities not previously called for redemption, or in accordance with DTC's
customary procedures if the preferred securities are then held in the form of a
global preferred security. The property trustee must promptly notify the
securities registrar for the preferred securities in writing of the preferred
securities selected for redemption and, in the case of any preferred securities
selected for partial redemption, the liquidation amount of the preferred
securities to be redeemed. For all purposes of the trust agreement, unless the
context otherwise requires, all provisions relating to the redemption of
preferred securities will relate, in the case of any preferred securities
redeemed or to be redeemed only in part, to the portion of the aggregate
liquidation amount of preferred securities which has been or is to be redeemed.
Notice of any redemption will be mailed to you at your address as it
appears on the securities register for the Trust at least 30 days but not more
than 60 days before the redemption date if your preferred securities will be
redeemed. Unless we default in payment of the redemption price on the junior
subordinated debentures, on and after the redemption date, interest will no
longer accrue on the junior subordinated debentures or any portions called for
redemption.
Unless payment of the redemption price in respect of the preferred
securities is withheld or refused and not paid either by the Trust or us
pursuant to the guarantee, distributions will no longer accumulate on the
preferred securities or any portions called for redemption.
Subordination of Common Securities
Payment of distributions on, the redemption price of, and the
liquidation distribution in respect of, the preferred securities and common
securities, as applicable, will be made pro rata based on the liquidation amount
of the preferred securities and common securities. However, if on any
distribution date or redemption date a debenture event of default has occurred
and is continuing as a result of our failure by us to pay any amounts in respect
of the junior subordinated debentures when due, no payment of any distribution
on, or redemption price of, or liquidation distribution in respect of, any of
the common securities, and no other payment on account of the redemption,
liquidation or other acquisition of the common securities, may be made unless
payment in full in cash of all accumulated and unpaid distributions on all the
outstanding preferred securities for all distribution periods terminating on or
prior to our failure to pay, or in the case of payment of the redemption price,
the full amount of the redemption price on all the outstanding preferred
securities then called for redemption, shall have been made or provided for, and
all funds immediately available to the property trustee must first be applied to
the payment in full in cash of all distributions on, or redemption price of, the
preferred securities then due and payable.
In the case of any event of default with respect to the preferred
securities (as described below under "Events of Default; Notice") resulting from
an event of default with respect to junior subordinated debentures (as described
below under "Description of Junior Subordinated
20
<PAGE>
Debentures--Debenture Events of Default"), the holders of the common securities
will have no right to act with respect to any event of default under the trust
agreement until the effects of these events of default with respect to the
preferred securities have been cured, waived or otherwise eliminated. See
"Events of Default; Notice" and "Description of Junior Subordinated
Debentures--Debenture Events of Default." Until all events of default under the
trust agreement with respect to the preferred securities have been so cured,
waived or otherwise eliminated, the property trustee will act solely on your
behalf and not on our behalf, as the holders of the common securities, and only
you will have the right to direct the property trustee to act on your behalf.
Liquidation Distribution Upon Dissolution
The amount payable on the preferred securities in the event of any
liquidation of the Trust is $10.00 per preferred security plus accumulated and
unpaid distributions, subject to certain exceptions which may be in the form of
a distribution of this amount in junior subordinated debentures.
The holders of all the outstanding common securities have the right at
any time to dissolve the Trust and, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, cause the junior
subordinated debentures to be distributed to you and the holders of the common
securities in liquidation of the Trust.
The Federal Reserve's risk-based capital guidelines currently provide
that redemptions of permanent equity or other capital instruments before stated
maturity could have a significant impact on a bank holding company's overall
capital structure and that any organization considering a redemption should
consult with The Federal Reserve before redeeming any equity or capital
instrument prior to maturity if the redemption could have a material effect on
the level or composition of the organization's capital base (this consultation
may not be necessary if the equity or capital instrument is redeemed with the
proceeds of, or replaced by, a like amount of a similar or higher quality
capital instrument and The Federal Reserve considers the organization's capital
position to be fully adequate after the redemption).
In the event we, while a holder of common securities, dissolve the
Trust before the maturity date of the preferred securities and the dissolution
of the Trust is deemed to constitute the redemption of capital instruments by
The Federal Reserve under its risk-based capital guidelines or policies, our
dissolution of the Trust may be subject to the prior approval of The Federal
Reserve. Moreover, any changes in applicable law or changes in The Federal
Reserve's risk-based capital guidelines or policies could impose a requirement
on us to obtain the prior approval of The Federal Reserve to dissolve the Trust.
Pursuant to the trust agreement, the Trust will automatically dissolve
upon expiration of its term or, if earlier, will dissolve on the first to occur
of:
o certain events of bankruptcy, dissolution or liquidation of us
or another holder of the common securities;
o the distribution of a proportionate amount of the junior
subordinated debentures to you and the holders of the common
securities, if the holders of common securities have given
written direction to the property trustee to dissolve the
Trust (which direction, subject to the foregoing restrictions,
is optional and wholly within the discretion of the holders of
common securities);
o the redemption of all the preferred securities in connection
with the redemption of all the preferred securities and common
securities as described under "Redemption"; and
21
<PAGE>
o the entry of an order for the dissolution of the Trust by a
court of competent
jurisdiction.
If dissolution of the Trust occurs as described in any of the first three
circumstances described above, the Trust will be liquidated by the property
trustee as expeditiously as the property trustee determines to be possible by
distributing, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, to you and the holders of the common securities a
proportionate amount of the junior subordinated debentures, unless the
distribution is not practical.
If distribution of the junior subordinated debentures is not practical,
you and the holders of preferred securities and common securities will be
entitled to receive out of the assets of the Trust available for distribution to
holders, after satisfaction of liabilities to creditors of the Trust as provided
by applicable law, an amount equal to, in the case of your distribution, the
aggregate of the liquidation amount plus accumulated and unpaid distributions
thereon to the date of payment. If 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 its preferred securities shall be paid on a pro rata basis.
The holders of the common securities will be entitled to receive
distributions upon any liquidation pro rata with you, except that if an event of
default under the junior subordinated debentures has occurred and is continuing
as a result of our failure to pay any amounts in respect of the junior
subordinated debentures when due, the preferred securities shall have a priority
over the common securities. See "Subordination of Common Securities."
After the liquidation date is fixed for any distribution of junior
subordinated debentures:
o the preferred securities will no longer be deemed to be
outstanding;
o DTC or its nominee, as the registered holder of preferred
securities, will receive a registered global certificate or
certificates (which are not the registered global
certificates) representing the junior subordinated debentures
to be delivered upon the distribution with respect to
preferred securities held by DTC or its nominee; and
o any certificates representing the preferred securities not
held by DTC or its nominee will be deemed to represent the
junior subordinated debentures having a principal amount equal
to the stated liquidation amount of the preferred securities
and bearing accrued and unpaid interest in an amount equal to
the accumulated and unpaid distributions on the preferred
securities until the certificates are presented to the
security registrar for the preferred securities and common
securities for transfer or reissuance.
If we do not redeem the junior subordinated debentures before maturity,
the Trust is not liquidated, and the junior subordinated debentures are not
distributed to you, then the preferred securities will remain outstanding until
the repayment of the junior subordinated debentures and the distribution of the
liquidation distribution to you.
There can be no assurance as to the market prices for the preferred
securities or the junior subordinated debentures that may be distributed in
exchange for preferred securities if a dissolution and liquidation of the Trust
were to occur. Accordingly, the preferred securities that you may purchase, or
the junior subordinated debentures that you may receive on dissolution and
liquidation of the Trust, may trade at a discount to the price that you paid to
purchase the preferred securities offered by this prospectus.
22
<PAGE>
Events of Default; Notice
Any one of the following events is an event of default under the trust
agreement with respect to the preferred securities (whatever the reason for the
event of default and whether it is voluntary or involuntary or effected by
operation of law or pursuant to a judgment, decree or order of any court or any
order, rule or regulation of any administrative or governmental body):
o the occurrence of a event of default with respect to the
junior subordinated debentures (see "Description of Junior
Subordinated Debentures--Debenture Events of Default");
o default by the Trust in the payment of any distribution when
it becomes due and payable, and continuation of the default
for a period of 30 days;
o default by the Trust in the payment of any redemption price of
any preferred security and common security when it becomes due
and payable;
o default in the performance, or breach, in any material
respect, of any covenant or warranty of the trustees in the
trust agreement (other than a covenant or warranty a default
in the performance of which or the breach of which is
addressed in either of the second or third circumstances
above), and continuation of the default or breach for a period
of 60 days after the holders of at least 25% in aggregate
liquidation amount of the outstanding preferred securities
give, by registered or certified mail, to the trustees and us,
a written notice specifying the default or breach and
requiring it to be remedied and stating that the notice is a
"Notice of Default" under the trust agreement; or
o the occurrence of certain events of bankruptcy or insolvency
with respect to the property trustee if a successor property
trustee has not been appointed within 90 days of the event.
Within five business days after the occurrence of any event of default
actually known to the property trustee, the property trustee will transmit
notice of the event of default to you and the holders of the common securities
and the preferred securities and the administrators, unless the event of default
has been cured or waived. We, as depositor, and the administrators are required
to file annually with the property trustee a certificate as to whether or not we
are in compliance with all the conditions and covenants applicable to us under
the trust agreement.
If an event of default with respect to the junior subordinated
debentures has occurred and is continuing as a result of any failure by us to
pay any amounts in respect of the junior subordinated debentures when due, the
preferred securities will have a preference over the common securities with
respect to payments of any amounts as described above. See "Subordination of
Common Securities," "Liquidation Distribution Upon Dissolution" and "Description
of Junior Subordinated Debentures--Debenture Events of Default."
Removal of Trustees; Appointment of Successors
The holders of at least a majority in aggregate liquidation amount of
the outstanding preferred securities may remove any trustee for cause, or if an
event of default with respect to the junior subordinated debentures has occurred
and is continuing, with or without cause. If a trustee is removed by the holders
of the outstanding preferred securities, the successor may be appointed by the
holders of at least 25% in aggregate liquidation amount of preferred securities.
If a trustee resigns, the trustee will appoint its successor. If a trustee fails
to appoint a successor, the holders of at least 25% in
23
<PAGE>
aggregate liquidation amount of the outstanding preferred securities may appoint
a successor. If a successor has not been appointed by you or the holders, any
holder of preferred securities or common securities or the other trustee may
petition a court in the State of Delaware to appoint a successor. Any Delaware
trustee must meet the applicable requirements of Delaware law. Any property
trustee must be a national or state-chartered bank, and at the time of
appointment have securities rated in one of the three highest rating categories
by a nationally recognized statistical rating organization and have capital and
surplus of at least $50,000,000. No resignation or removal of a trustee and no
appointment of a successor trustee shall be effective until the acceptance of
appointment by the successor trustee in accordance with the provisions of the
trust agreement.
Merger or Consolidation of Trustees
Any entity into which the property trustee or the Delaware trustee may
be merged or converted or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which the trustee is a
party, or any entity succeeding to all or substantially all the corporate trust
business of the trustee, will be the successor of the trustee under the trust
agreement, provided the entity is otherwise qualified and eligible.
Mergers, Consolidations, Amalgamations or Replacements of the Trust
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, convey, transfer or lease its properties and assets substantially
as an entirety to, any entity, except as described below or as otherwise
provided in the trust agreement. The Trust may, at the request of the holders of
the common securities and with the consent of the holders of at least a majority
aggregate liquidation amount of the outstanding preferred securities, merge with
or into, consolidate, amalgamate, or be replaced by or convey, transfer or lease
its properties and assets substantially as an entirety to a trust organized
under the laws of any state, so long as:
o the successor entity: (1) expressly assumes all the
obligations of the Trust with respect to the preferred
securities; or (2) substitutes for the preferred securities
other securities having substantially the same terms as the
preferred securities so long as the substitute preferred
securities have the same priority as the preferred securities
with respect to distributions and payments upon liquidation,
redemption and otherwise;
o a trustee of the successor entity, possessing the same powers
and duties as the property trustee, is appointed to hold the
junior subordinated debentures;
o the merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the preferred
securities (including any substitute preferred securities) to
be downgraded by any nationally recognized statistical rating
organization, if then rated;
o the merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the holders of the
preferred securities (including any substitute preferred
securities) in any material respect;
o the successor entity has a purpose substantially identical to
that of the Trust;
o before the merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Trust has received an
opinion from independent and experienced counsel to
24
<PAGE>
the effect that: (1) the merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely
affect your rights, preference and privileges as a holder of
preferred securities (including any substitute preferred
securities) in any material respect; and (2) following the
merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, neither the Trust nor the successor entity
will be required to register as an investment company under
the Investment Company Act; and
o we or any permitted successor or assignee own all the common
securities of the successor entity and guarantee the
obligations of the successor entity under the successor
securities at least to the extent provided by the guarantee.
However, the Trust may not, except with the consent of all the holders of the
preferred securities, consolidate, amalgamate, merge with or into, or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to, any other entity or permit any other entity to consolidate,
amalgamate, merge with or into or replace it if the consolidation, amalgamation,
merger, replacement, conveyance, transfer or lease would cause the Trust or the
successor entity to be taxable as a corporation for United States federal income
tax purposes.
Voting Rights; Amendment of Trust Agreement
Except as provided above and under "Removal of Trustees; Appointment of
Successors" and "Description of Guarantee--Amendments and Assignment" and as
otherwise required by law and the trust agreement, you will have no voting
rights.
The trust agreement may be amended from time to time by the holders of
a majority of the common securities and the property trustee, without your
consent to:
o cure any ambiguity, correct or supplement any provisions in
the trust agreement that may be inconsistent with any other
provision, or to make any other provisions with respect to
matters or questions arising under the trust agreement,
provided that the amendment does not adversely affect in any
material respect your interests; or
o modify, eliminate or add to any provisions of the trust
agreement to the extent as may be necessary to ensure that the
Trust will not be taxable as a corporation for United States
federal income tax purposes at any time that any preferred or
common securities are outstanding or to ensure that the Trust
will not be required to register as an "investment company"
under the Investment Company Act.
Any amendments of the trust agreement will become effective when notice of the
amendment is given to the holders of preferred securities and common securities.
The trust agreement may be amended by the holders of a majority of the
common securities and the property trustee with:
o the consent of holders representing not less than a majority
in aggregate liquidation amount of the outstanding preferred
securities; and
o receipt by the trustees of an opinion of counsel to the effect
that the amendment or the exercise of any power granted to the
trustees in accordance with the amendment will
25
<PAGE>
not affect the Trust's not being taxable as a corporation for
United States federal income tax purposes or the Trust's
exemption from status as an "investment company" under the
Investment Company Act.
However, without the consent of every holder of preferred securities or common
securities affected, the trust agreement may not be amended to:
o change the amount or timing of any distribution on the
preferred securities and common securities or otherwise
adversely affect the amount of any distribution required to be
made in respect of the preferred securities and common
securities as of a specified date; or
o restrict your right and the right of a holder of common
securities to institute suit for the enforcement of the
payment on or after the specified date.
So long as any junior subordinated debentures are held by the Trust,
the property trustee will not:
o direct the time, method and place of conducting any proceeding
for any remedy available to the debenture trustee, or execute
any trust or power conferred on the property trustee with
respect to the junior subordinated debentures;
o waive any past default that is waivable under Section 5.13 of
the indenture;
o exercise any right to rescind or annul a declaration that the
principal of all the junior subordinated debentures shall be
due and payable; or
o consent to any amendment, modification or termination of the
indenture or the junior subordinated debentures, where the
consent shall be required, without, in each case, obtaining
the prior approval of the holders of at least a majority in
aggregate liquidation amount of the outstanding preferred
securities, or, if a consent under the indenture would require
the consent of every holder of junior subordinated debentures
affected, no consent will be given by the property trustee
without the prior consent of each holder of the preferred
securities.
The property trustee may not revoke any action previously authorized or
approved by a vote of the holders of the preferred securities except by
subsequent vote of the holders of the preferred securities. The property trustee
will notify you of any notice of default with respect to the junior subordinated
debentures. In addition to obtaining your approval as described above, before
taking any of the actions listed above, the property trustee will obtain an
opinion of experienced counsel to the effect that the Trust will not be taxable
as a corporation for United States federal income tax purposes on account of the
action.
Any required approval of holders of preferred securities may be given
at a meeting of holders of preferred securities convened for the purpose or
pursuant to written consent. The property trustee will cause a notice of any
meeting at which you are entitled to vote, or of any matter upon which action by
your written consent is to be taken, to be given to you in the manner provided
in the trust agreement.
Your vote or consent will not be required to redeem and cancel
preferred securities in accordance with the trust agreement.
26
<PAGE>
Notwithstanding that you are entitled to vote or consent under any of
the circumstances described above, any of the preferred securities that are
owned by us, the trustees or any of our affiliates or any trustees, will, for
purposes of the vote or consent, be treated as if they were not outstanding.
Expenses and Taxes
In the indenture, we have agreed to pay all debts and other obligations
(other than distributions on the preferred securities) and all costs and
expenses of the Trust (including costs and expenses relating to the organization
of the Trust, the fees and expenses of the trustees and the costs and expenses
relating to the operation of the Trust) and to pay any and all taxes and all
costs and expenses with respect to any taxes (other than United States
withholding taxes) to which the Trust might become subject. Our obligations
under the indenture are for the benefit of, and shall be enforceable by, any
creditor of the Trust to whom any of these debts, obligations, costs, expenses
and taxes are owed whether or not the creditor has received notice. The creditor
may enforce these obligations directly against us, and we have irrevocably
waived any right or remedy to require that any creditor take any action against
the Trust or any other person before proceeding against us. We have also agreed
in the indenture to execute the additional agreements as may be necessary or
desirable to give full effect to these payment obligations.
Book Entry, Delivery and Form
The preferred securities will be issued in the form of one or more
fully registered global securities, which will be deposited with, or on behalf
of, DTC and registered in the name of a DTC nominee. Unless and until it is
exchangeable in whole or in part for the preferred securities in definitive
form, a global security may not be transferred except as a whole by DTC to a
nominee of DTC or by a nominee of DTC to DTC or to another nominee of DTC or by
DTC or the nominee to a successor of DTC or to a nominee of the successor.
Ownership of beneficial interests in a global security will be limited
to participants that have accounts with DTC or its nominee or persons that may
hold interests through the participants. We expect that, upon the issuance of a
global security, DTC will credit, on its book-entry registration and transfer
system, the participants' accounts with their respective principal amounts of
preferred securities represented by the global security. Ownership of beneficial
interests in the global security will be shown on, and the transfer of the
ownership interests will be effected only through, records maintained by DTC
(with respect to your interests of participants) and on the records of
participants (with respect to your interests). You will not receive written
confirmation from DTC of your purchase, but are expected to receive written
confirmations from participants through which you entered into the transaction.
Transfers of ownership interests will be accomplished by entries on the
books of participants acting on your behalf. So long as DTC, or its nominee, is
the registered owner of a global security, DTC or the nominee, as the case may
be, will be considered the sole owner or holder of the preferred securities
represented by the global security for all purposes under the trust agreement.
Except as provided below, you are the owner of beneficial interests in a global
security and will not be entitled to receive physical delivery of the preferred
securities in definitive form.
You will not be considered an owner or holder under the trust
agreement. Accordingly, you must rely on the procedures of DTC and, if you are
not a participant, on the procedures of the participant through which you own
your interest, to exercise any rights as a holder of preferred securities under
the trust agreement. We understand that, under DTC's existing practices, in the
event that we request any action you, or if you desire to take any action which
a holder is entitled to take
27
<PAGE>
under the trust agreement, DTC would authorize the participants holding your
interests to take the action, and the participants would authorize you to take
the action or would otherwise act upon your instructions. Redemption notices
will also be sent to DTC. If less than all of the preferred securities are being
redeemed, we understand that it is DTC's existing practice to determine by lot
the amount of the interest of each participant to be redeemed.
Distributions on the preferred securities registered in the name of DTC
or its nominee will be made to DTC or its nominee, as the case may be, as the
registered owner of the global security representing the preferred securities.
Neither the trustees, nor the administrators, any paying agent or any other
agent of ours or the trustees will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the global security for the preferred securities or for
maintaining, supervising or reviewing any records relating to the beneficial
ownership interests. Disbursements of distributions to participants will be
DTC's responsibility. DTC's practice is to credit participants' accounts on a
payable date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payment on the payable
date. Payments by participants to you will be governed by standing instructions
and customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of the participant and not of DTC, us, the trustees, the paying
agent or any other agent of ours, subject to any statutory or regulatory
requirements as may be in effect from time to time.
DTC may discontinue providing its services as securities depository
with respect to the preferred securities at any time by giving reasonable notice
to us or the trustees. If DTC notifies us that it is unwilling to continue as
depository, or if it is unable to continue or ceases to be a clearing agency
registered under the Securities Exchange Act of 1934 and a successor depository
is not appointed by us within 90 days after receiving the notice or becoming
aware that DTC is no longer a registered clearing agency, we will issue the
preferred securities in definitive form upon registration of transfer of, or in
exchange for, the global security. In addition, we may at any time and in our
sole discretion determine not to have the preferred securities represented by
one or more global securities and, in this event, will issue preferred
securities in definitive form in exchange for all of the global securities
representing the preferred securities.
DTC has advised the Trust and us as follows:
o DTC is a limited purpose trust company organized under the
laws of the State of New York, a member of The Federal
Reserve, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act;
o DTC was created to hold securities for its participants and to
facilitate the clearance and settlement of securities
transactions between participants through electronic book
entry changes to accounts of its participants, thereby
eliminating the need for physical movement of certificates;
o participants include securities brokers and dealers (such as
the underwriters), banks, trust companies and clearing
corporations and may include certain other organizations;
o certain of the participants (or their representatives),
together with other entities, own DTC; and
28
<PAGE>
o indirect access to the DTC system is available to others such
as banks, brokers, dealers and trust companies that clear
through, or maintain a custodial relationship with, a
participant, either directly or indirectly.
Same-Day Settlement and Payment
Settlement for the preferred securities will be made by the
underwriters in immediately available funds.
Secondary trading in preferred securities of corporate issuers is
generally settled in clearinghouse or next-day funds. In contrast, the preferred
securities will trade in DTC's Same-Day Funds Settlement System, and secondary
market trading activity in the preferred securities will therefore be required
by DTC to settle in immediately available funds. No assurance can be given as to
the effect, if any, of settlement in immediately available funds on trading
activity in the preferred securities.
Payment and Paying Agency
Payments in respect of the preferred securities will be made to DTC,
which will credit the relevant accounts at DTC on the applicable distribution
dates or, if the preferred securities are not held by DTC, the payments will be
made by check mailed to the address of the holder entitled to it at the address
that appears on the securities register for the preferred securities and common
securities. The paying agent will initially be the property trustee and any
co-paying agent chosen by the property trustee and acceptable to the
administrators. The paying agent will be permitted to resign as paying agent
upon 30 days written notice to the property trustee and the administrators. If
the property trustee is no longer the paying agent, the property trustee will
appoint a successor (which must be a bank or trust company reasonably acceptable
to the administrators) to act as paying agent.
Registrar and Transfer Agent
The property trustee will act as registrar and transfer agent for the
preferred securities.
Registration of transfers of preferred securities will be effected
without charge by or on behalf of the Trust, but only upon payment of any tax or
other governmental charges that may be imposed in connection with any transfer
or exchange. The Trust will not be required to register or cause to be
registered the transfer of the preferred securities after the preferred
securities have been called for redemption.
Obligations and Duties of the Property Trustee
The property trustee, other than during the occurrence and continuance
of an event of default undertakes to perform only the duties that are
specifically provided in the trust agreement and, after any event of default,
must exercise the same degree of care and skill as a prudent person would
exercise or use in the conduct of his or her own affairs. Subject to this
provision, the property trustee is under no obligation to exercise any of the
powers vested in it by the trust agreement at your request unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred.
For information concerning the relationships between Bankers Trust
Company, the property trustee, and us, see "Description of Junior Subordinated
Debentures--Information Concerning the Debenture Trustee."
29
<PAGE>
Miscellaneous
The administrators and the property trustee are authorized and directed
to conduct the affairs of and to operate the Trust in such a way that: (1) the
Trust will not be deemed to be an "investment company" required to be registered
under the Investment Company Act or taxable as a corporation for United States
federal income tax purposes; and (2) the junior subordinated debentures will be
treated as our indebtedness for United States federal income tax purposes. In
this connection, the property trustee and the holders of common securities are
authorized to take any action not inconsistent with applicable law, the
certificate of trust of the Trust or the trust agreement that the property
trustee and the holders of common securities determine in their discretion to be
necessary or desirable for these purposes, as long as the action does not
materially adversely affect your interests.
You will not have preemptive or similar rights.
The Trust may not borrow money, issue debt or mortgage or pledge any of
its assets.
Governing Law
The trust agreement will be governed by and construed in accordance
with the laws of the State of Delaware.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The junior subordinated debentures are to be issued under the indenture
between Bankers Trust Company, the debenture trustee, and us. This summary of
certain terms and provisions of the junior subordinated debentures and the
indenture is not complete. You should read the form of the indenture that is
filed as an exhibit to the registration statement of which this prospectus is a
part. Whenever particular defined terms of the indenture (in effect from time to
time) are referred to in this prospectus, the defined terms are incorporated in
this prospectus by reference. A copy of the form of indenture is available from
the debenture trustee upon request.
General
Concurrently with the issuance of the preferred securities, the Trust
will invest the proceeds, together with the consideration paid by us for the
common securities, in the junior subordinated debentures issued by us. The
junior subordinated debentures will bear interest, accruing from the date of
issue, at the annual rate of ___% of the principal amount, payable quarterly in
arrears on March 31, June 30, September 30 and December 31 of each year,
beginning September 30, 1999, to the person in whose name each junior
subordinated debenture is registered at the close of business on the 15th day of
March, June, September or December (whether or not a business day) next
preceding the interest payment date. It is anticipated that, until the
liquidation, if any, of the Trust, each junior subordinated debenture will be
registered in the name of the Trust and held by the property trustee in trust
for you and the holders of the common securities.
The amount of interest payable for any period less than a full interest
period will be computed on the basis of a 360-day year of twelve 30-day months
and the actual days elapsed in a partial month in the period. The amount of
interest payable for any full interest period will be computed by dividing the
annual rate by four. If any date on which interest is payable to the junior
subordinated debentures is not a business day, then payment of the interest
payable on the date will be made on the next business day (without any interest
or other payment in respect of the delay), or, if the business day falls in the
next calendar year, the payment will be made on the immediately preceding
business day in each case with the same force and effect as if made on the date
the payment was originally payable.
30
<PAGE>
Accrued interest that is not paid on the applicable interest payment
date will bear additional interest on the amount (to the extent permitted by
law) at the annual rate of ___%, compounded quarterly and computed on the basis
of a 360-day year of twelve 30-day months and the actual days elapsed in a
partial month in the period. The amount of additional interest payable for any
full interest period will be computed by dividing the annual rate by four.
The term "interest" as used in this prospectus includes quarterly
interest payments, interest on quarterly interest payments not paid on the
applicable interest payment date and, if applicable, any additional sums we pay
on the junior subordinated debentures following a Tax Event (as defined under
"Description of Preferred Securities--Redemption") that may be required so that
distributions payable by the Trust will not be reduced by any additional taxes,
duties or other governmental changes resulting from the Tax Event.
The junior subordinated debentures will mature on September 30, 2029,
subject to our right to shorten the maturity date at any time to any date not
earlier than September 30, 2004, if we have received prior approval of The
Federal Reserve if the approval is then required under applicable capital
guidelines or policies of The Federal Reserve. If we elect to shorten the
maturity of the junior subordinated debentures, we will give notice to the
registered holders of the junior subordinated debentures, the debenture trustee
and the Trust no less than 90 days before the effectiveness of the maturity
date. The property trustee must give you and the holders of the common
securities notice of the shortened stated maturity at least 30 but not more than
60 days before the applicable date.
The junior subordinated debentures will be unsecured and will rank
junior and be subordinate in right of payment to any senior indebtedness. The
junior subordinated debentures will not be subject to a sinking fund. The
indenture does not limit our ability to incur or issue other secured or
unsecured debt, including senior indebtedness, whether under the junior
subordinated debentures or any existing or other indenture that we may enter
into in the future or otherwise. See "Subordination."
Option to Extend Interest Payment Period
So long as no event of default under the junior subordinated debentures
has occurred and is continuing, we have the right at any time during the term of
the junior subordinated debentures to defer the payment of interest at any time
or from time to time for a period not exceeding 20 consecutive quarterly periods
with respect to each extension period, provided that no extension period may
extend beyond the stated maturity of the junior subordinated debentures. During
any extension period we have the right to make partial payments of interest on
any interest payment date. At the end of an extension period, we must pay all
interest then accrued and unpaid (together with interest thereon at the annual
rate of ___%, compounded quarterly and computed on the basis of a 360-day year
of twelve 30-day months and the actual days elapsed in a partial month in the
period, to the extent permitted by applicable law). The amount of additional
interest payable for any full interest period will be computed by dividing the
annual rate by four. During an extension period, interest will continue to
accrue and holders of junior subordinated debentures (or holders of preferred
securities while outstanding) will be required to accrue interest income for
United States federal income tax purposes. See "Certain Federal Income Tax
Consequences--Interest Income and Original Issue Discount. "
During any extension period, we may not:
o make any payment of principal (or any premium on the
principal) or interest, or repay, repurchase or redeem any of
our debt securities that rank equally in all respects with or
junior in interest to the junior subordinated debentures; or
31
<PAGE>
o declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect
to, any of our capital stock, except that we may:
(a) repurchase, redeem or make other acquisitions of
shares of our capital stock in connection with any
employment contract benefit plan or other similar
arrangement with or for the benefit of any one or
more employees, officers directors or consultants, in
connection with a dividend reinvestment or
shareholder stock purchase plan or in connection with
the issuance of our capital stock (or securities
convertible into or exercisable for the capital
stock) as consideration in an acquisition transaction
entered into prior to the applicable extension
period;
(b) take any necessary action in connection with any
reclassification, exchange or conversion of any class
or series of our capital stock (or any capital stock
of any of our subsidiaries) for any class or series
of our capital stock or of any class or series of our
indebtedness for any class or series of our capital
stock;
(c) purchase fractional interests in shares of our
capital stock pursuant to the conversion or exchange
provisions of the capital stock or the security being
converted or exchanged;
(d) declare a dividend in connection with any
shareholders' rights plan, or issue rights, stock or
other property under any shareholders' rights plan,
or redeem or repurchase rights pursuant to any
shareholders' rights plan; or
(e) declare a dividend in the form of stock warrants,
options or other rights where the dividend stock or
the stock issuable upon exercise of the warrants,
options or other rights is the same stock as that on
which the dividend is being paid or ranks equally
with or junior to the stock.
Before the termination of any extension period, we may further defer
the payment of interest, provided that no extension period may exceed 20
consecutive quarterly periods or extend beyond the stated maturity of the junior
subordinated debentures. Upon the termination of any extension period and the
payment of all amounts then due, we may elect to begin a new extension period
subject to the above conditions. No interest shall be due and payable during an
extension period, except at its end. We must give the trustees notice of our
election of the extension period at least one business day prior to the earlier
of: (1) the date the distribution on the preferred securities would have been
payable but for the election to begin an extension period; and (2) the date the
property trustee is required to give you notice of the record date or the date
the distribution is payable, but in any event not less than one business day
prior to the record date. The property trustee will give you notice of our
election to begin a new extension period. There is no limitation on the number
of times that we may elect to begin an extension period.
Redemption
We may redeem the junior subordinated debentures prior to maturity at
our option: (1) on or after September 30, 2004, in whole at any time or in part
from time to time; or (2) in whole, but not in part, at any time within 90 days
following the occurrence and during the continuation of a Tax Event, Investment
Company Event or Capital Treatment Event (each as defined under "Description of
Preferred Securities--Redemption"), in each case at a redemption price equal to
the outstanding principal amount of the junior subordinated debentures plus
accrued interest (including any additional
32
<PAGE>
interest on any additional sums we pay following a Tax Event as described below
under "Additional Sums"). The proceeds of the redemption will be used by the
Trust to redeem the preferred securities.
The Federal Reserve's risk-based capital guidelines, which are subject
to change, currently provide that redemptions of permanent equity or other
capital instruments before stated maturity could have a significant impact on a
bank holding company's overall capital structure and that any organization
considering a redemption should consult with The Federal Reserve before
redeeming any equity or capital instrument prior to maturity if the redemption
could have a material effect on the level or composition of the organization's
capital base.
Consultation may not be necessary if the equity or capital instrument
was redeemed with the proceeds of, or replaced by, a like amount of a similar or
higher quality capital instrument and The Federal Reserve considers the
organization's capital position to be fully adequate after the redemption.
If we redeem the junior subordinated debentures prior to their stated
maturity, that would constitute the redemption of capital instruments under The
Federal Reserve's current risk-based capital guidelines and may be subject to
the prior approval of The Federal Reserve. The redemption of the junior
subordinated debentures also could be subject to the additional prior approval
of The Federal Reserve under its current risk-based capital guidelines.
Additional Sums
We have covenanted in the indenture that, if and for so long as the
Trust is the holder of all junior subordinated debentures and the Trust is
required to pay any additional taxes, duties or other governmental charges as a
result of a Tax Event, we will pay as additional sums on the junior subordinated
debentures the amounts as may be required so that the distributions payable by
the Trust will not be reduced as a result of any additional taxes, duties or
other governmental charges. See "Description of Preferred
Securities--Redemption."
Registration, Denomination and Transfer
The junior subordinated debentures will initially be registered in the
name of the Trust. If the junior subordinated debentures are distributed to you,
it is anticipated that the depositary arrangements for the junior subordinated
debentures will be substantially identical to those in effect for the preferred
securities. See "Description of Preferred Securities--Book Entry, Delivery and
Form."
Although DTC has agreed to the procedures described above, it is under
no obligation to perform or continue to perform the procedures, and the
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and we do not appoint a successor depositary
within 90 days of receipt of notice from DTC to the effect, we will cause the
junior subordinated debentures to be issued in definitive form.
Payments on junior subordinated debentures represented by a global
security will be made to Cede & Co., the nominee for DTC, as the registered
holder of the junior subordinated debentures, described under "Description of
Preferred Securities--Book Entry, Delivery and Form." If junior subordinated
debentures are issued in certificated form, principal and interest will be
payable, the transfer of the junior subordinated debentures will be
registerable, and junior subordinated debentures will be exchangeable for junior
subordinated debentures of other authorized denominations of a like aggregate
principal amount, at the corporate trust office of the debenture trustee in New
York, New York, or at the offices of any paying agent or transfer agent we
appoint, provided that payment of interest may be made at our option by check
mailed to the address of the persons entitled to the payment. However, a holder
of $1 million or more in aggregate principal amount of junior
33
<PAGE>
subordinated debentures may receive payments of interest (other than interest
payable at the stated maturity) by wire transfer of immediately available funds
upon written request to the debenture trustee not later than 15 calendar days
prior to the date on which the interest is payable.
Junior subordinated debentures are issuable only in registered form
without coupons in integral multiples of $10.00. Junior subordinated debentures
will be exchangeable for other junior subordinated debentures of like tenor, of
any authorized denominations, and of a like aggregate principal amount.
Junior subordinated debentures may be presented for exchange as
provided above, and may be presented for registration of transfer (with the form
of transfer endorsed thereon, or a satisfactory written instrument of transfer,
duly executed), at the office of the securities registrar appointed under the
indenture or at the office of any transfer agent we designate for that purpose
without service charge and upon payment of any taxes and other governmental
charges as described in the indenture. We will appoint the debenture trustee as
securities registrar under the indenture. We may at any time designate
additional transfer agents with respect to the junior subordinated debentures.
In the event of any redemption, we will not, nor will the debenture
trustee be required to:
o issue, register the transfer of, or exchange junior
subordinated debentures during a period beginning at the
opening of business 15 days before the day of selection for
redemption of the junior subordinated debentures to be
redeemed and ending at the close of business on the day of
mailing of the relevant notice of redemption; or
o transfer or exchange any junior subordinated debentures
selected for redemption, except, in the case of any junior
subordinated debentures being redeemed in part, any portion of
the debenture not to be redeemed.
Any monies deposited with the debenture trustee or any paying agent, or
then held by us in trust, for the payment of the principal of (and premium, if
any) or interest on any junior subordinated debenture and remaining unclaimed
for two years after this principal (and premium, if any) or interest has become
due and payable shall, at our request, be repaid to us, and the holder of the
junior subordinated debenture shall thereafter look, as a general unsecured
creditor, only to us for payment.
Restrictions on Certain Payments; Certain Covenants of the Company
We have covenanted that at any time: (1) there has occurred any event
(a) of which we have actual knowledge that with the giving of notice or the
lapse of time, or both, would constitute an event of default under the junior
subordinated debentures and that we have not taken reasonable steps to cure; (2)
if the junior subordinated debentures are held by the Trust, we are in default
with respect to our payment of any obligations under the guarantee; or (3) we
have given notice of our election of an extension period as provided in the
indenture and have not rescinded the notice, or any extension period, is
continuing, then we will not:
o make any payment of principal (or any premium on the
principal) or interest, or repay, repurchase or redeem any of
our debt securities that rank equally in all respects with, or
junior in interest to, the junior subordinated debentures; or
o declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect
to, any of our capital stock, except that we may:
34
<PAGE>
(a) repurchase, redeem or make other acquisitions of
shares of our capital stock in connection with any
employment contract, benefit plan or other similar
arrangement with or for the benefit of any one or
more employees, officers, directors or consultants,
in connection with a dividend reinvestment or
shareholder stock purchase plan or in connection with
the issuance of our capital stock (or securities
convertible into or exercisable for the capital
stock) as consideration in an acquisition transaction
entered into prior to the applicable extension period
or other event referred to below;
(b) take any necessary action in connection with any
reclassification, exchange or conversion of any class
or series of our capital stock (or any capital stock
of any of our subsidiaries) for any class or series
of our capital stock or of any class or series of our
indebtedness for any class or series of our capital
stock;
(c) purchase fractional interests in shares of our
capital stock pursuant to the conversion or exchange
provisions of the capital stock or the security being
converted or exchanged;
(d) declare a dividend in connection with any
shareholders' rights plan, or issue rights, stock or
other property under any shareholders' rights plan,
or redeem or repurchase rights pursuant to any
shareholders' rights plan; or
(e) declare a dividend in the form of stock, warrants,
options or other rights where the dividend stock or
the stock issuable upon exercise of the warrants,
options or other rights is the same stock as that on
which the dividend is being paid or ranks equally
with or junior to the stock.
We have covenanted in the indenture:
o to continue to hold, directly or indirectly, all of the common
securities, provided that certain successors that are
permitted pursuant to the indenture may succeed to our
ownership of the common securities;
o as holder of the common securities, not to voluntarily
terminate, wind up or liquidate the Trust, other than:
(a) in connection with a distribution of junior
subordinated debentures to the holders of the
preferred securities in liquidation of the Trust; or
(b) in connection with certain mergers, consolidations or
amalgamations permitted by the trust agreement; and
o to use reasonable efforts, consistent with the terms and
provisions of the trust agreement, to cause the Trust to
continue not to be taxable as a corporation for United States
federal income tax purposes.
Modification of Indenture
From time to time, we as well as the debenture trustee may, without the
consent of any of the holders of the outstanding junior subordinated debentures,
amend, waive or supplement the provisions of the indenture to:
35
<PAGE>
o evidence our succession to another corporation or association
and the assumption by the person of our obligations under the
junior subordinated debentures;
o add further covenants, restrictions or conditions for the
protection of holders of the junior subordinated debentures;
o cure ambiguities or correct the junior subordinated debentures
in the case of defects or inconsistencies in the provisions of
the debentures, so long as any cure or correction does not
adversely affect the interest of the holders of the junior
subordinated debentures in any material respect;
o change the terms of the junior subordinated debentures to
facilitate the issuance of the junior subordinated debentures
in certificated or other definitive form;
o evidence or provide for the appointment of a successor
debenture trustee; or
o qualify, or maintain the qualification of, the indenture under
the Trust Indenture Act.
The indenture contains provisions permitting the debenture trustee and
us, with the consent of the holders of not less than a majority in principal
amount of the junior subordinated debentures, to modify the indenture in a
manner affecting the rights of the holders of the junior subordinated
debentures. However, none of these modifications may be made, without the
consent of the holder of each outstanding junior subordinated debenture so
affected that would:
o change the stated maturity of, or any installment of interest
on, the junior subordinated debentures, or reduce the
principal amount, their rate of interest or any premium
payable upon any redemption, or change the place of payment
where, or the currency in which, the amount is payable, or
impair the right to institute suit for the enforcement of any
payment on junior subordinated debentures; or
o reduce the percentage of principal amount of junior
subordinated debentures, the holders of which are required to
consent to any modification of, or waiver of rights under, the
indenture.
Furthermore, so long as any of the preferred securities remain
outstanding, no modification may be made that adversely affects you in any
material respect, and no termination of the indenture may occur, and no waiver
of any event of default or compliance with any covenant under the indenture may
be effective, without the prior consent of the holders of at least a majority of
the aggregate liquidation amount of the outstanding preferred securities unless
and until the principal of (and premium, if any, on) the junior subordinated
debentures and all accrued and unpaid interest have been paid in full and
certain other conditions are satisfied.
Debenture Events of Default
The indenture provides that any one or more of the following described
events with respect to the junior subordinated debentures that has occurred and
is continuing constitute an "event of default" with respect to the junior
subordinated debentures:
o failure to pay any interest on the junior subordinated
debentures when due and continuance of this default for a
period of 30 days (subject to the deferral of any due date in
the case of an extension period); or
36
<PAGE>
o failure to pay any principal (or any premium on the principal)
on the junior subordinated debentures when due whether at the
stated maturity; or
o failure to observe or perform certain other covenants
contained in the indenture for 90 days after written notice of
the failure to us from the debenture trustee or the holders of
at least 25% in aggregate outstanding principal amount of the
outstanding junior subordinated debentures; or
o the occurrence of the appointment of a receiver or other
similar official in any liquidation, insolvency or similar
proceeding with respect to us or all or substantially all of
our property; or a court or other governmental agency shall
enter a decree or order appointing a receiver or similar
official and the decree or order shall remain unstayed and
undischarged for a period of 60 days.
As described in "Description of Preferred Securities--Events of
Default; Notice," the occurrence of an event of default in respect of the junior
subordinated debentures will also be an event of default in respect of the
preferred securities and common securities.
The holders of at least a majority in aggregate principal amount of
outstanding junior subordinated debentures have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
debenture trustee. The debenture trustee or the holders of not less than 25% in
aggregate principal amount of outstanding junior subordinated debentures may
declare the principal due and payable immediately upon an event of default, and,
should the debenture trustee or the holders of junior subordinated debentures
fail to make the declaration, the holders of at least 25% in aggregate
liquidation amount of the outstanding preferred securities shall have the right.
The holders of a majority in aggregate principal amount of outstanding junior
subordinated debentures may annul the declaration and waive the default if all
defaults (other than the non-payment of the principal of junior subordinated
debentures which has become due solely by the acceleration) have been cured and
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the debenture trustee.
Should the holders of junior subordinated debentures fail to annul the
declaration and waive the default, the holders of a majority in aggregate
liquidation amount of the outstanding preferred securities shall have the right.
The holders of at least a majority in aggregate principal amount of the
outstanding junior subordinated debentures affected may, on behalf of the
holders of all the junior subordinated debentures, waive any past default,
except a default in the payment of principal (or any premium) or interest
(unless this default has been cured and a sum sufficient to pay all matured
installments of interest and principal (and premium on, if any) due otherwise
than by acceleration has been deposited with the debenture trustee) or a default
in respect of a covenant or provision which under the indenture cannot be
modified or amended without the consent of the holder of each outstanding junior
subordinated debenture affected by the default. See "Modification of Junior
Subordinated Indenture." We are required to certify annually to the debenture
trustee as to whether or not we are in compliance with all the conditions and
covenants applicable to us under the indenture.
If an event of default occurs and is continuing, the property trustee
will have the right to declare the principal of and the interest on the junior
subordinated debentures, and any other amounts payable under the indenture, to
be due and payable and to enforce its other rights as a creditor with respect to
the junior subordinated debentures.
37
<PAGE>
Enforcement of Certain Rights by Holders of Preferred Securities
If an event of default has occurred and is continuing and the event is
attributable to our failure to pay any amounts payable in respect of the junior
subordinated debentures on the date the amounts are otherwise payable, you may
institute a legal action against us to enforce the payment to you of an amount
equal to the amount payable in respect of junior subordinated debentures having
a principal amount equal to the aggregate liquidation amount of the preferred
securities you hold. We may not amend the indenture to remove the foregoing
right to bring legal action without your prior written consent. We will have the
right under the indenture to set off any payment we make to you in connection
with a legal action.
You are not able to exercise directly any remedies available to the
holders of the junior subordinated debentures except under the circumstances
described in the preceding paragraph. See "Description of Preferred
Securities--Events of Default; Notice."
Consolidation, Merger, Sale of Assets and Other Transactions
The indenture provides that we may not consolidate with or merge into
any other entity or sell, convey, transfer or lease our properties and assets
substantially as an entirety, or sell, convey, transfer or distribute the
capital stock or all or substantially all of the assets of any principal
subsidiary bank to any entity, and no entity may consolidate with or merge into
us or convey, transfer or lease its properties and assets substantially as an
entirety to us, unless:
o in the event we consolidate with or merge into another entity
or convey or transfer our properties and assets substantially
as an entirety to any entity, the successor entity is
organized under the laws of the United States or any state or
the District of Columbia, and the successor entity expressly
assumes our obligations in respect of the junior subordinated
debentures; provided, however, that nothing in the indenture
shall be deemed to restrict or prohibit, and no supplemental
indenture shall be required in the case of the merger of a
bank (as defined below) with and into a bank or us, the
consolidation of banks into a bank or us, or the sale or other
disposition of all or substantially all of the assets of any
bank to another bank or us, if, in any case in which we are
not the surviving, resulting or acquiring entity, we would
own, directly or indirectly, at least 80% of the voting
securities of the bank (and of any other bank any voting
securities of which are owned, directly or indirectly, by the
bank) surviving the merger, resulting from the consolidation
or acquiring the assets;
o immediately after giving effect to the transaction, no event
of default with respect to the junior subordinated debentures,
and no event which, after notice or lapse of time or both,
would constitute an event of default with respect to the
junior subordinated debentures, has occurred and is
continuing; and
o certain other conditions as prescribed in the indenture are
satisfied.
For purposes of the first bullet point above, the term "bank" means
each of:
o any banking subsidiary of ours the consolidated assets of
which constitute 20% or more of our consolidated assets and
our consolidated subsidiaries;
o any other banking subsidiary designated as a bank pursuant to
a board resolution and provided in an officers' certificate
delivered to the trustee; and
38
<PAGE>
o any of our subsidiaries that owns, directly or indirectly, any
voting securities, or options, warrants or rights to subscribe
for or purchase voting securities, of any bank under the first
and second bullet points above and in the case of all three
bullet points above their respective successors (whether by
consolidation, merger, conversion, transfer of substantially
all their assets and business or otherwise) so long as the
successor is a banking subsidiary (in the case of the first
and second bullet point) or a subsidiary (in the case of the
third bullet point) of ours.
The provisions of the indenture do not afford holders of the junior
subordinated debentures protection in the event we are involved in a highly
leveraged or other transaction that may adversely affect holders of the junior
subordinated debentures.
Satisfaction and Discharge
The indenture will no longer be in effect and we will deemed to have
satisfied and discharged the indenture when:
o all junior subordinated debentures not previously delivered to
the debenture trustee for cancellation: (1) have become due
and payable; or (2) will become due and payable at the stated
maturity within one year;
o we deposit or cause to be deposited with the debenture trustee
funds, in trust, for the purpose and in an amount sufficient
to pay and discharge the entire indebtedness on the junior
subordinated debentures not previously delivered to the
debenture trustee for cancellation, for the principal (and
premium, if any) and interest to the date of the deposit or to
the stated maturity or redemption date; and
o we have paid all other sums payable by us under the indenture
and we have delivered applicable certificates and opinions
that indicate we have complied with all of our obligations.
Subordination
The junior subordinated debentures will be subordinate and junior in
right of payment, to the extent provided in the indenture, to all our senior
indebtedness (as defined below) of and equally with our obligations associated
with any future issuances of preferred securities. If we default in the payment
of any principal, premium, if any, or interest, if any, or any other amount
payable on any senior indebtedness when the payment becomes due and payable
whether at maturity or at a date fixed for redemption or by declaration of
acceleration or otherwise, then unless and until the default has been cured or
waived or has ceased to exist or all senior indebtedness has been paid, no
direct or indirect payment (in cash, property, securities, by set-off or
otherwise) may be made or agreed to be made on the junior subordinated
debentures, or in respect of any redemption repayment, retirement, purchase or
other acquisition of any of the junior subordinated debentures.
As used in this prospectus, "senior indebtedness" means, whether
recourse is to all or a portion of our assets and whether or not contingent:
o every obligation of ours for money borrowed;
o every obligation of ours evidenced by bonds, debentures, notes
or other similar instruments, including obligations incurred
in connection with the acquisition of property, assets or
businesses;
39
<PAGE>
o every reimbursement obligation of ours with respect to letters
of credit, bankers' acceptance or similar facilities issued
for our account;
o every obligation of ours issued or assumed as the deferred
purchase price of property or services (but excluding trade
accounts payable or accrued liabilities arising in the
ordinary course of business);
o every capital lease obligation of ours;
o every obligation of ours for claims (as defined in Section
101(4) of the United States Bankruptcy Code of 1978 and in any
amendments to the Bankruptcy Code) in respect of derivative
products such as interest foreign exchange rate contracts,
commodity contracts and similar arrangements; and
o every obligation of the type referred to above of another
person and all dividends of another person the payment of
which, in either case, we have guaranteed or are responsible
or liable, directly or indirectly, as obligor or otherwise.
However, senior indebtedness does not include any of the following:
o any obligations which, by their terms, are expressly stated to
rank equally in right of payment with or, to not be superior
in right of payment to, the junior subordinated debentures;
o any of our senior indebtedness which when incurred and without
respect to any election under Section 1111(b) of the United
States Bankruptcy Code of 1978, and in any amendments to the
Bankruptcy Code, was without recourse to us;
o any indebtedness of ours to any of our subsidiaries;
o any indebtedness to our executive officers or directors; or
o any indebtedness in respect of debt securities issued to any
trust, or a trustee of the trust, partnership or other entity
affiliated with us that is our financing entity in connection
with the issuance by the financing entity of securities that
are similar to the preferred securities.
As of July 28, 1999, we had no senior indebtedness. Any future senior
indebtedness (including any interest on the indebtedness accruing after the
commencement of any proceedings) shall first be paid in full before any payment
or distribution whether in cash, securities or other property is made on account
of the junior subordinated debentures in the event of:
o certain events of bankruptcy, dissolution or liquidation of us
or another holder of the common securities;
o any proceeding for our liquidation, dissolution or other
winding up, voluntary or involuntary, whether or not involving
insolvency or bankrupt proceedings;
o any assignment by us for the benefit of creditors; or
o any other marshaling of our assets.
40
<PAGE>
In this event, any payment or distribution on account of the junior subordinated
debentures, whether in cash, securities or other property, that would otherwise
(but for the subordination provisions) be payable or deliverable in respect of
the junior subordinated debentures will be paid as described above, directly to
the holders of senior indebtedness in accordance with the priorities then
existing among the holders until all senior indebtedness (including any interest
on the indebtedness accruing after the commencement of the proceedings) has been
paid in full.
In the event of any proceeding described above, after payment in full
of all sums owing with respect to our senior indebtedness, if any, the holders
of junior subordinated debentures, together with the holders of our obligations
ranking on a parity with the junior subordinated debentures, will be entitled to
be paid from our remaining assets the amounts at the time due and owing on the
junior subordinated debentures and other obligations. This payment will be made
before any payment or other distribution, whether in cash, property or
otherwise, will be made on account of any capital stock or obligations ranking
junior to the junior subordinated debentures and other obligations. If payment
or distribution on account of the junior subordinated debentures of any
character or security, whether in cash, securities or other property, is
received by any holder of any junior subordinated debentures in contravention of
any of these terms and before all our senior indebtedness, if any, has been paid
in full, the payment or distribution or security will be received in trust for
the benefit of, and must be paid over or delivered and transferred to, the
holders of our senior indebtedness at the time outstanding in accordance with
the priorities then existing among the holders for application to the payment of
all senior indebtedness remaining unpaid to the extent necessary to pay all
senior indebtedness in full.
By reason of the subordination, in the event of our insolvency, holders
of senior indebtedness may receive more, ratably, and holders of the junior
subordinated debentures may receive less, ratably, than our other creditors. The
subordination will not prevent the occurrence of any event of default in respect
of the junior subordinated debentures.
The indenture places no limitation on the amount of additional senior
indebtedness that we may incur. We expect from time to time to incur additional
senior indebtedness.
Information Concerning the Debenture Trustee
The debenture trustee, other than during the occurrence and continuance
of a default in the performance of our obligations under the junior subordinated
debentures, is under no obligation to exercise any of the powers vested in it by
the indenture at the request of any holder of junior subordinated debentures,
unless offered reasonable indemnity by the holder against the costs, expenses
and liabilities that might be incurred by the exercise of these powers. The
debenture trustee is not required to expend or risk its own funds or otherwise
incur personal financial liability in the performance of its duties if the
debenture trustee reasonably believes that repayment or adequate indemnity is
not reasonably assured to it.
Bankers Trust Company, the debenture trustee, may serve from time to
time as trustee under other indentures or trust agreements with us or our
subsidiaries relating to other issues of our securities. In addition, we as well
as certain of our affiliates may have other banking relationships with Bankers
Trust Company and its affiliates.
Governing Law
The indenture and the junior subordinated debentures will be governed
by and construed in accordance with the laws of the State of New York.
41
<PAGE>
DESCRIPTION OF GUARANTEE
We will execute and deliver the guarantee concurrently with the
issuance of preferred securities by the Trust for your benefit. Bankers Trust
Company will act as guarantee trustee under the guarantee. The guarantee trustee
will hold the guarantee for your benefit. This summary of certain provisions of
the guarantee is not complete. You should read the form of the guarantee, which
is filed as an exhibit to the registration statement of which this prospectus is
a part. A copy of the form of guarantee is available upon request from the
guarantee trustee.
General
We will irrevocably agree to pay in full on a subordinated basis, to
the extent provided in the guarantee and described in this prospectus, the
guarantee payments described below to you, as and when due, regardless of any
defense, right of set-off or counterclaim that the Trust may have or assert
other than the defense of payment. The following payments with respect to the
preferred securities, to the extent not paid by or on behalf of the Trust, will
be subject to the guarantee:
o any accrued and unpaid distributions required to be paid on
the preferred securities, to the extent that the Trust has
funds on hand available therefor at that time;
o the redemption price with respect to any preferred securities
called for redemption, to the extent that the Trust has funds
on hand available for its payment at that time; and
o upon a voluntary or involuntary dissolution, termination,
winding up or liquidation of the Trust (unless the junior
subordinated debentures are distributed to you), the lessor
of:
(a) the aggregate of the liquidation amount and all
accumulated and unpaid distributions to the date of
payment, to the extent that the Trust has funds on
hand available for their payment; and
(b) the amount of assets of the Trust remaining available
for distribution to you on liquidation of the Trust.
Our obligation to make a guarantee payment may be satisfied by our
direct payment to you or by causing the Trust to pay these amounts to you.
The guarantee will be an irrevocable guarantee of payment on a
subordinated basis of the Trust's obligations under the preferred securities,
but will apply only to the extent that the Trust has funds sufficient to make
the payments, and is not a guarantee of collection.
If we do not make payments on the junior subordinated debentures held
by the Trust, the Trust will not be able to pay any amounts payable in respect
of the preferred securities and will not have funds legally available for these
payments. The guarantee will rank subordinate and junior in right of payment to
all of our senior indebtedness. See "Status of the Guarantee." The guarantee
does not limit our ability to incur or issue other secured or unsecured debt,
including senior indebtedness, whether under the indenture or any other
indenture that we may enter into in the future or otherwise.
We have through the guarantee, the trust agreement, the junior
subordinated debentures and the indenture, taken together, fully, irrevocably
and unconditionally guaranteed all the Trust's obligations under the preferred
securities on a subordinated basis. No single document standing alone
42
<PAGE>
or operating in conjunction with fewer than all the other documents constitutes
the guarantee. Only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
Trust's obligations in respect of the preferred securities. See "Relationship
Among the Preferred Securities, the Junior Subordinated Debentures and the
Guarantee."
Status of the Guarantee
The guarantee will constitute our unsecured obligation and will rank
subordinate and junior in right of payment to our senior indebtedness, if any,
and equally with any additional obligations associated with any future issuances
of preferred securities.
The guarantee will constitute a guarantee of payment and not of
collection. This means that the guarantee trustee may institute a legal
proceeding directly against us as the guarantor to enforce its rights under the
guarantee without first instituting a legal proceeding against any other person
or entity. The guarantee will be held by the guarantee trustee for your benefit.
The guarantee will not be discharged except by payment of the guarantee payments
in full to the extent not paid by the Trust or distribution to the holders of
the preferred securities or the junior subordinated debentures.
Amendments and Assignment
Except with respect to any changes which do not materially adversely
affect your rights (in which case no consent will be required), the guarantee
may not be amended without the prior approval of the holders of not less than a
majority of the aggregate liquidation amount of the outstanding preferred
securities. The manner of obtaining the approval is described under "Description
of Preferred Securities--Voting Rights; Amendment of Trust Agreement." All
guarantees and agreements contained in the guarantee shall bind our successors,
assigns, receivers, trustees and representatives and shall inure to your benefit
and the benefit of all of the holders of the preferred securities then
outstanding.
Events of Default
An event of default under the guarantee will occur if we fail to
perform any of our payment or other obligations under the guarantee, or to
perform any non-payment obligation if the non-payment default remains unremedied
for 30 days. The holders of not less than a majority in aggregate liquidation
amount of the outstanding preferred securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the guarantee trustee in respect of the guarantee or to direct the exercise of
any trust or power conferred upon the guarantee trustee under the guarantee.
You may institute a legal proceeding directly against us to enforce
your rights under the guarantee without first instituting a legal proceeding
against the Trust, the guarantee trustee or any other person or entity.
We are required, as guarantor, to certify annually to the guarantee
trustee whether or not we are in compliance with all the conditions and
covenants applicable to us under the guarantee.
Information Concerning the Guarantee Trustee
The guarantee trustee, other than during the occurrence and continuance
of a default by us in performance of the guarantee, undertakes to perform only
the duties as are specifically provided in the guarantee and, after the
occurrence of an event of default with respect to the guarantee, must exercise
43
<PAGE>
the same degree of care and skill as a prudent person would exercise or use in
the conduct of his or her own affairs. Subject to this provision, the guarantee
trustee is under no obligation to exercise any of the powers vested in it by the
guarantee at your request unless it is offered reasonable indemnity against the
costs, expenses and liabilities that it might incur in the exercise of these
powers.
For information concerning our relationship with Bankers Trust Company,
as guarantee trustee, see "Description of Junior Subordinated
Debentures--Information Concerning the Debenture Trustee."
Termination of the Guarantee
The guarantee will terminate and be of no further force and effect upon
full payment of the redemption price of the preferred securities, upon full
payment of the amounts payable with respect to the preferred securities upon
liquidation of the Trust, or upon distribution of junior subordinated debentures
to you and the other holders of the preferred securities in exchange for all of
the preferred securities. The guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time you must restore payment of any
sums paid to you under the preferred securities or the guarantee.
Governing Law
The guarantee will be governed by and construed in accordance with the
laws of the State of New York.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE JUNIOR SUBORDINATED DEBENTURES, AND THE GUARANTEE
Full and Unconditional Guarantee
We have irrevocably guaranteed, on a subordinate basis, payments of
distributions and other amounts due on the preferred securities (to the extent
that Trust has funds available for the payment) and to the extent described
under "Description of Guarantee." Taken together, our obligations under the
junior subordinated debentures, the indenture, the trust agreement and the
guarantee provide, in the aggregate, a full, irrevocable and unconditional
guarantee of payments of distributions and other amounts due on the preferred
securities. No single document standing alone or operating in conjunction with
fewer than all the other documents constitutes the guarantee. It is only the
combined operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the Trust's obligations in respect of
the preferred securities.
If and to the extent that we do not make payments on the junior
subordinated debentures, the Trust will not have sufficient funds to pay
distributions or other amounts due on the preferred securities. The guarantee
does not cover payment of amounts payable with respect to the preferred
securities when the Trust does not have sufficient funds to pay the amounts. In
this event, your remedy is to institute a legal proceeding directly against us
for enforcement of our payment obligations under the junior subordinated
debentures having a principal amount equal to the liquidation amount of the
preferred securities you hold.
Our obligations under the junior subordinated debentures and the
guarantee are subordinate and junior in right of payment to all senior
indebtedness, if any, and rank equally with any additional obligations
associated with any future issuances of preferred securities.
44
<PAGE>
Sufficiency of Payments
As long as we make the payments on the junior subordinated debentures
when they are due, the payments will be sufficient to cover distributions and
other payments distributable on the preferred securities, primarily because:
o the aggregate principal amount of the junior subordinated
debentures will be equal to the sum of the aggregate stated
liquidation amount of the preferred securities and common
securities;
o the interest rate and interest and other payment dates on the
junior subordinated debentures will match the distribution
rate, distribution dates and other payment dates for the
preferred securities;
o we will pay for any and all costs, expenses and liabilities of
the Trust except the Trust's obligations to you and the
holders of the common securities; and
o the trust agreement further provides that the Trust will not
engage in any activity that is not consistent with the limited
purposes of the Trust.
Notwithstanding anything to the contrary in the indenture, we have the
right to set off any payment we are otherwise required to make thereunder
against and to the extent we have previously made, or are concurrently on the
date of the payment making, a payment under the guarantee.
Enforcement Rights of Holders of Preferred Securities
You may institute a legal proceeding directly against us to enforce
your rights under the guarantee without first instituting a legal proceeding
against the guarantee trustee, the Trust or any other person or entity. See
"Description of Guarantee."
A default or event of default under any of our senior indebtedness
would not constitute a default or event of default in respect of the preferred
securities. However, in the event of payment defaults under, or acceleration of
our senior indebtedness, the subordination provisions of the indenture provide
that no payments may be made in respect of the junior subordinated debentures
until the senior indebtedness has been paid in full or any payment default on
senior indebtedness has been cured or waived. See "Description of Junior
Subordinated Debentures--Subordination."
Limited Purpose of Trust
The preferred securities represent preferred undivided beneficial
interests in the assets of the Trust, and the Trust exists for the sole purpose
of issuing the preferred securities and common securities and investing the
proceeds from their issuance in the junior subordinated debentures. A principal
difference between your rights as a holder of preferred securities and a holder
of a junior subordinated debenture is that a holder of a junior subordinated
debenture is entitled to receive from us payments on junior subordinated
debentures held, while you are entitled to receive distributions or other
amounts distributable with respect to the preferred securities from the Trust
(or from us under the Guarantee) only if and to the extent the Trust has funds
available for the payment of the distributions.
45
<PAGE>
Rights Upon Dissolution
Upon any voluntary or involuntary dissolution of the Trust, other than
the dissolution involving the distribution of the junior subordinated debentures
and after satisfaction of liabilities to creditors of the Trust as required by
applicable law, you will be entitled to receive, out of assets held by the
Trust, the liquidation distribution in cash. See "Description of Preferred
Securities--Liquidation Distribution Upon Dissolution." If we are voluntarily or
involuntarily liquidated or declare bankruptcy, the Trust, as registered holder
of the junior subordinated debentures, will be our subordinated creditor,
subordinated and junior in right of payment to all our senior indebtedness, if
any, as provided in the indenture, but entitled to receive payment in full of
all amounts payable with respect to the junior subordinated debentures before
any of our shareholders receive payments or distributions. Since we are the
guarantor under the guarantee and have agreed under the indenture to pay for all
costs, expenses and liabilities of the Trust (other than the Trust's obligations
to you and the holders of the common securities), your position as a holder of
the preferred securities and the position of a holder of the junior subordinated
debentures relative to other creditors and to our shareholders in the event of
our liquidation or bankruptcy are expected to be substantially the same.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General
The preferred securities and payments on the preferred securities
generally are subject to taxation. Therefore, you should consider the tax
consequences of owning and receiving payments on the preferred securities before
acquiring them.
We have engaged Gordon, Feinblatt, Rothman, Hoffberger & Hollander,
LLC, Baltimore, Maryland as special tax counsel to review the following
discussion. They have given us their written legal opinion that the discussion
correctly describes the principal aspects of the U.S. federal tax treatment of
beneficial owners of preferred securities.
The following discussion is general and may not apply to your
particular circumstances for any of the following (or other) reasons:
o This summary is based on federal tax laws in effect as of the
date of this prospectus. Changes to any of these laws after
this date may affect the tax consequences described below.
o This summary discusses only preferred securities you acquire
at original issuance at the original offering price and hold
as capital assets (within the meaning of federal tax law). It
does not discuss all of the tax consequences that may be
relevant to the owners of preferred securities who are subject
to special rules, such as banks, thrift institutions, real
estate investment trusts, regulated investment companies,
insurance companies, brokers and dealers in securities or
currencies, certain securities traders, tax-exempt
organizations and certain other financial institutions.
This discussion also does not discuss tax consequences that may be relevant to
an owner of preferred securities in light of the owner's particular
circumstances, such as an owner holding a preferred security as a position in a
straddle, hedging, conversion or other integrated investment.
46
<PAGE>
o This summary does not address:
(a) The income tax consequences to shareholders in, or
partners or beneficiaries of, a holder of preferred
securities;
(b) the United States alternative minimum tax
consequences of purchasing, owning and disposing of
preferred securities; or
(c) any state, local or foreign tax consequences of
purchasing, owning and disposing of preferred
securities.
The authorities on which this summary is based are subject to various
interpretations, and the opinions of Gordon, Feinblatt, as tax counsel, are not
binding on the Internal Revenue Service or the courts, either of which could
take a contrary position. Moreover, no rulings have been or will be sought from
the IRS with respect to the transaction described in this prospectus.
Accordingly, we cannot assure you that the IRS will not challenge the opinion
expressed in this prospectus or that a court would not sustain a challenge.
We advise you to consult your own tax advisors regarding the tax
consequences of purchasing, owning and disposing of the preferred securities
because the following discussion may not apply to you.
U.S. Holders
In General. For purposes of the following discussion, a "U.S. Holder"
means:
o a citizen or individual resident of the United States;
o a corporation or partnership created or organized in or under
the laws of the United States or any of its political
subdivisions;
o an estate the income of which is includible in its gross
income for U.S. federal income tax purposes without regard to
its source; or
o a trust if a court within the United States is able to
exercise primary supervision over its administration and at
least one United States person has the authority to control
all substantial decisions of the trust.
Characterization of the Trust. Prior to the time that the preferred
securities are issued, Gordon, Feinblatt will give its opinion that: (1) under
then current law and based on the representations, facts and assumptions
provided in this prospectus; (2) assuming full compliance with the terms of the
trust agreement (and other relevant documents); and (3) based on certain
assumptions and qualifications referred to in the opinion, the Trust will be
characterized for United States federal income tax purposes as a grantor trust.
Accordingly, for United States federal income tax purposes, if you, as a U.S.
Holder, purchase a preferred security you will be considered the owner of an
undivided interest in the junior subordinated debentures owned by the Trust, and
you will be required to include all income or gain recognized for United States
federal income tax purposes with respect to your share of the junior
subordinated debentures on your income tax return.
Characterization of the Junior Subordinated Debentures. We intend to
take the position that, under current law, the junior subordinated debentures
are our debt for United States federal income tax purposes. We, along with the
Trust and you (by acceptance of a beneficial interest in a preferred
47
<PAGE>
security) agree to treat the junior subordinated debentures as our debt and the
preferred securities as evidence of a beneficial ownership interest in the
Trust. We cannot assure you, however, that the position will not be challenged
by the IRS or, if challenged, that a challenge will not be successful. The
remainder of this discussion assumes that the junior subordinated debentures
will be classified as our debt for United States federal income tax purposes.
Interest Income and Original Issue Discount. Under the terms of the
junior subordinated debentures, we have the ability to defer payments of
interest from time to time by extending the interest payment period for a period
not exceeding 20 consecutive quarterly periods, but not beyond the maturity of
the junior subordinated debentures. Treasury regulations provide that debt
instruments like the junior subordinated debentures will not be considered
issued with original issue discount ("OID") even if their issuer can defer
payments of interest if the likelihood of any deferral is "remote."
We have concluded, and this discussion assumes, that, as of the date of
this prospectus, the likelihood of our deferring payments of interest is
"remote" within the meaning of the applicable Treasury regulations. This
conclusion is based in part on the fact that exercising that option would
prevent us from declaring dividends on our common stock and would prevent us
from making any payments with respect to debt securities that rank equally with
or junior to the junior subordinated debentures. Therefore, the junior
subordinated debentures should not be treated as issued with OID by reason of
our deferral option. Rather, you will be taxed on stated interest on the junior
subordinated debentures when it is paid or accrued in accordance with your
method of accounting for income tax purposes. You should note, however, that no
published rulings or any other published authorities of the IRS have addressed
this issue. Accordingly, it is possible that the IRS could take a position
contrary to the interpretation described in this prospectus.
If we exercise our option to defer payments of interest, the junior
subordinated debentures would be treated as redeemed and reissued for OID
purposes. The sum of the remaining interest payments (and any de minimis OID) on
the junior subordinated debentures would thereafter be treated as OID. The OID
would accrue, and be includible in your taxable income, on an economic accrual
basis (regardless of your method of accounting for income tax purposes) over the
remaining term of the junior subordinated debentures (including any period of
interest deferral), without regard to the timing of payments under the junior
subordinated debentures. Subsequent distributions of interest on the junior
subordinated debentures generally would not be taxable. The amount of OID that
would accrue in any period would generally equal the amount of interest that
accrued on the junior subordinated debentures in that period at the stated
interest rate. Consequently, during any period of interest deferral, you will
include OID in gross income in advance of the receipt of cash, and if you
dispose of a preferred security prior to the record date for payment of
distributions on the junior subordinated debentures following that period, you
will be subject to income tax on OID accrued through the date of disposition
(and not previously included in income), but you will not receive cash from the
Trust with respect to the OID.
If the possibility of our exercising our option to defer payments of
interest is not remote, the junior subordinated debentures would be treated as
initially issued with OID in an amount equal to the aggregate stated interest
(plus any de minimis OID) over the term of the junior subordinated debentures.
You would include that OID in your taxable income, over the term of the junior
subordinated debentures, on an economic accrual basis.
Characterization of Income. Because the income underlying the preferred
securities will not be characterized as dividends for income tax purposes, if
you are a corporate holder of the preferred securities you will not be entitled
to a dividends-received deduction for any income you recognize with respect to
the preferred securities.
48
<PAGE>
Market Discount and Bond Premium. Under certain circumstances, you may
be considered to have acquired your undivided interests in the junior
subordinated debentures with market discount or bond premium (as each phrase is
defined for United States federal income tax purposes).
Receipt of Junior Subordinated Debentures or Cash Upon Liquidation of
the Trust. Under certain circumstances described above (See "Description of the
Preferred Securities--Liquidation Distribution Upon Dissolution"), the Trust may
distribute the junior subordinated debentures to you in exchange for your
preferred securities and in liquidation of the Trust. Except as discussed below,
a distribution would not be a taxable event for United States federal income tax
purposes, and you would have an aggregate adjusted basis in the junior
subordinated debentures you receive for United States federal income tax
purposes equal to your aggregate adjusted basis in your preferred securities.
For United States federal income tax purposes, your holding period in the junior
subordinated debentures you receive in a liquidation of the Trust would include
the period during which you held the preferred securities. If, however, the
relevant event is a Tax Event that results in the Trust being treated as an
association taxable as a corporation, the distribution would likely constitute a
taxable event to the Trust and to you for United States federal income tax
purposes, and in that event, your holding period for the junior subordinated
debentures would begin on the date that you received the debentures.
Under certain circumstances described in this prospectus (see
"Description of the Preferred Securities"), we may redeem junior subordinated
debentures for cash and distribute the proceeds of the redemption to you in
redemption of your preferred securities. A redemption would be taxable for
United States federal income tax purposes, and you would recognize gain or loss
as if you had sold the preferred securities for cash. See "Sales of Preferred
Securities" below.
Sales of Preferred Securities. If you sell preferred securities, you
will recognize gain or loss equal to the difference between your adjusted basis
in the preferred securities and the amount realized on the sale of the preferred
securities. Your adjusted basis in the preferred securities generally will be
the initial purchase price, increased by OID previously included (or currently
includible) in your gross income to the date of disposition, and decreased by
payments received on the preferred securities (other than any interest received
with respect to the period prior to the effective date we first exercise our
option to defer payments of interest). A gain or loss generally will be capital
gain or loss, and generally will be a long-term capital gain or loss if you have
held the preferred securities for more than one year prior to the date of
disposition.
If you dispose of your preferred securities between record dates for
payments of distributions thereon, you will be required to include accrued but
unpaid interest (or OID) on the junior subordinated debentures through the date
of disposition in your taxable income for United States federal income tax
purposes (notwithstanding that you may receive a separate payment from the
purchaser with respect to accrued interest). You may deduct that amount from the
sales proceeds received (including the separate payment, if any, with respect to
accrued interest) for the preferred securities (or as to OID only, to add the
amount to your adjusted tax basis in the preferred securities). To the extent
the selling price is less than your adjusted tax basis (which will include
accrued but unpaid OID if any), you will recognize a capital loss. Subject to
certain limited exceptions, capital losses cannot be applied to offset ordinary
income for United States federal income tax purposes.
Pending Tax Litigation Affecting the Preferred Securities
Last year, a taxpayer filed a petition in the United States Tax Court
contesting the IRS's disallowance of interest deductions that taxpayer claimed
in respect of securities issued in 1993 and 1994 that are, in some respects,
similar to the preferred securities. (Enron Corp. v. Commissioner, Docket No.
6149-98, filed April 1, 1998). Recently the IRS issued a private letter ruling
(PLR
49
<PAGE>
199910046) concluding that instruments similar in some respects to the preferred
securities were debt securities rather than equity securities. While a private
letter ruling may not be used as a legal precedent, it does provide insight as
to the views of the IRS on the issues in the ruling. An adverse decision by the
Tax Court in Enron Corp. concerning the deductibility of the interest may cause
a Tax Event. A Tax Event would give us the right to redeem the junior
subordinated debentures. See "Description of Junior Subordinated
Debentures--Redemption" and "Description of Preferred Securities--Liquidation
Distribution Upon Dissolution."
Non-U.S. Holders
The following discussion applies to you if you are not a U.S. Holder as
described above.
Payments to you, as a non-U.S. Holder, on a preferred security will
generally not be subject to withholding of income tax, provided that:
o you did not (directly or indirectly, actually or
constructively) own 10% or more of the total combined voting
power of all classes of our stock entitled to vote;
o you are not a controlled foreign corporation that is related
to us through stock ownership; and
o either (a) you certify to the Trust or its agent under
penalties of perjury, that you are not a U.S. Holder and
provide your name and address, or (b) a securities clearing
organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or
business, and holds the preferred security in that capacity,
certifies to the Trust or its agent, under penalties of
perjury, that it requires and has received a statement from
you or another financial institution between it and you in the
chain of ownership, and furnishes a copy of the statement to
the Trust or its agent.
As discussed above, it is possible that changes in the law affecting
the income tax consequences of the junior subordinated debentures could
adversely affect our ability to deduct interest payable on the junior
subordinated debentures. These changes could also cause the junior subordinated
debentures to be classified as our equity (rather than our debt) for United
States federal income tax purposes. This might cause the income derived from the
junior subordinated debentures to be characterized as dividends, generally
subject to a 30% income tax (on a withholding basis) when paid to you if you are
not a U.S. Holder, rather than as interest which, as discussed above, generally
is exempt from income tax in the hands of a person who is not a U.S. Holder.
You, as a non-U.S. Holder, will generally not be subject to withholding
of income tax on any gain realized upon the sale or other disposition of a
preferred security.
If you hold the preferred securities in connection with the active
conduct of a United States trade or business, you will be subject to income tax
on all income and gains recognized with respect to your proportionate share of
the junior subordinated debentures.
Information Reporting
In general, information reporting requirements will apply to payments
made on, and proceeds from the sale of, the preferred securities held by a
noncorporate U.S. Holder within the United States. In addition, payments made
on, and payments of the proceeds from the sale of, the preferred securities to
or through the United States office of a broker are subject to information
reporting unless you
50
<PAGE>
certify as to your non-U.S. Holder status or otherwise establish an exemption
from information reporting and backup withholding. See "Backup Withholding."
Taxable income on the preferred securities for a calendar year should be
reported to U.S. Holders on the appropriate forms by the following January 31st.
Backup Withholding
Payments made on, and proceeds from the sale of, the preferred
securities may be subject to a "backup" withholding tax of 31% unless you comply
with certain identification or exemption requirements. Any amounts so withheld
will be allowed as a credit against your income tax liability, or refunded,
provided the required information is provided to the IRS.
The preceding discussion is only a summary and does not address the
consequences to a particular person of the purchase, ownership and disposition
of the preferred securities. You are urged to contact your own tax advisor to
determine your particular tax consequences.
CERTAIN ERISA CONSIDERATIONS
We and certain of our affiliates may each be considered a "party in
interest" within the meaning of the Employee Retirement Income Security Act of
1974 ("ERISA"), and any amendments to ERISA, or a "disqualified person" within
the meaning of Section 4975 of the Internal Revenue Code with respect to many
employee benefit plans that are subject to ERISA and individual retirement
accounts ("IRAs"). The purchase of the preferred securities by an employee
benefit plan or IRA that is subject to the fiduciary responsibility provisions
of ERISA or the prohibited transaction provisions of Section 4975(e)(1) of the
Internal Revenue Code and with respect to which we, or any of our affiliates are
service providers (or otherwise a party in interest or a disqualified person),
may constitute or result in a prohibited transaction under ERISA or Section 4975
of the Internal Revenue Code, unless the preferred securities are acquired
pursuant to and in accordance with an applicable exemption. Any pension or other
employee benefit plan, fiduciary or IRA holder, proposing to acquire any
preferred securities for this type of plan or IRA should consult with legal
counsel.
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement,
dated _________, 1999, among us, the Trust, and Ferris, Baker Watts Incorporated
and Advest, Inc., as representatives of the underwriters, the Trust has agreed
to sell to the underwriters, and the underwriters have severally agreed to
purchase from the Trust, the following respective aggregate liquidation amounts
of preferred securities at the public offering price less the underwriting
discounts and commissions provided on the cover page of this prospectus:
Liquidation Amount of
Underwriter Preferred Securities
Ferris, Baker Watts Incorporated $_________
Advest, Inc. $_________
Total $_________
The underwriting agreement provides that the obligations of the
underwriters are subject to certain conditions precedent and that the
underwriters will purchase all of the preferred securities offered if any of the
preferred securities are purchased.
51
<PAGE>
The underwriters have advised us that they propose to offer the
preferred securities to the public at the public offering price provided on the
cover page of this prospectus and to certain dealers at the price less a
concession not in excess of $_______ per preferred security. The underwriters
may allow, and the dealers may reallow, a concession not in excess of $_______
per preferred security to certain other dealers. After the public offering, the
offering price and other selling terms may be changed by the underwriters. In
addition, we have agreed to pay a financial advisory fee to Ferris, Baker Watts
Incorporated of up to $75,000 in connection with the offering.
We have granted to the underwriters an option, exercisable not later
than 30 days after the date of the underwriting agreement, to purchase up to an
additional $3,000,000 aggregate liquidation amount of the preferred securities
at the public offering price. To the extent that the underwriters exercise the
option, we will be obligated, pursuant to the option, to sell the preferred
securities to the underwriters. The underwriters may exercise the option only to
cover over-allotments made in connection with the sale of the preferred
securities offered in this prospectus. If purchased, the underwriters will offer
these additional preferred securities on the same terms as those on which the
$20,000,000 aggregate liquidation amount of the preferred securities are being
offered.
In connection with this offering, the underwriters and any selling
group members and their respective affiliates may engage in transactions
effected in accordance with Rule 104 of SEC Regulation M that are intended to
stabilize, maintain or otherwise affect the market price of the preferred
securities. The transactions may include over-allotment transactions in which
the underwriters create a short position for their own account by selling more
preferred securities than they are committed to purchase from the Trust. In this
case, to cover all or part of the short position, the underwriters may exercise
the over-allotment option described above or may purchase preferred securities
in the open market following the initial offering of the preferred securities.
In connection with this offering, certain underwriters (and selling group
members) may engage in passive market making transactions in the preferred
securities on the Nasdaq National Market in accordance with Rule 103 of SEC
Regulation M. The underwriters also may engage in stabilizing transactions in
which they bid for, and purchase, shares of the preferred securities at a level
above that which might otherwise prevail in the open market for the purpose of
preventing or retarding a decline in the market price of the preferred
securities. The underwriters also may reclaim any selling concessions allowed to
an underwriter or dealer if the underwriters repurchase shares distributed by
that underwriter or dealer. Any of these transactions may result in the
maintenance of a price for the preferred securities at a level above that which
might otherwise prevail in the open market. We do not, nor do any of the
underwriters, make any representation or prediction as to the direction or
magnitude of any effect that the transactions described above may have on the
price of the preferred securities. The underwriters are not required to engage
in at any of the transactions and, once begun, the transactions may be
discontinued at any time without notice.
In view of the fact that the proceeds from the sale of the preferred
securities will be used to purchase our junior subordinated debentures, the
underwriting agreement provides that we will pay as compensation for the
underwriters' arranging the investment of the proceeds an amount of $_______ per
preferred security (or $_______ ($_______ if the over-allotment option is
exercised in full) in the aggregate).
Because the National Association of Securities Dealers, Inc. is
expected to view the preferred securities as interests in a direct participation
program, this offering is being made in compliance with the applicable
provisions of Rule 2810 of the NASD's Conduct Rules.
The preferred securities are a new issue of securities with no
established trading market. The representatives have advised the Trust and us
that they intend to make a market in the preferred securities. However, the
underwriters are not obligated to do so and the market making may be
52
<PAGE>
interrupted or discontinued at any time without notice at the sole discretion of
each of the underwriters. We have applied to have the preferred securities
approved for quotation on the Nasdaq National Market but a requirement for
initial listing, and for continued listing, is the presence of three, and two,
market makers, respectively, for the preferred securities, and the presence of a
third market maker cannot be assured. Accordingly, no assurance can be given as
to the development or liquidity of any market for the preferred securities.
We have agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act.
The representatives and certain of the other underwriters have in the
past, and may in the future perform various services for us, including
investment banking services, for which they have and may receive customary fees.
VALIDITY OF SECURITIES
The validity of the guarantee and the junior subordinated debentures
and certain tax matters will be passed upon for us by Gordon, Feinblatt,
Rothman, Hoffberger & Hollander, LLC, Baltimore, Maryland, our counsel, and
certain legal matters will be passed upon for the underwriters by Shapiro and
Olander, Baltimore, Maryland. Certain matters of Delaware law relating to the
validity of the preferred securities, the enforceability of the trust agreement
and the creation of the Trust will be passed upon by Richards, Layton & Finger,
as special Delaware counsel to us and the Trust. Gordon, Feinblatt, Rothman,
Hoffberger & Hollander, LLC and Shapiro and Olander will rely as to certain
matters of Delaware law on the opinion of Richards, Layton & Finger.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual Report on Form 10-K for the year
ended December 31, 1998, as set forth in their report, which is incorporated by
reference in this prospectus. Our financial statements are incorporated by
reference in reliance on Ernst & Young LLP's report, given on their authority as
experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934, and any amendments to the Exchange Act, and in accordance
with the Exchange Act, we file reports, proxy statements, information statements
and other information with the SEC. These reports, proxy statements and other
information can be inspected and copied at the public reference facilities of
the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
regional offices of the SEC located at 7 World Trade Center, 13th Floor, Suite
1300, New York, New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 50
West Madison Street, Chicago, Illinois 60661. You may obtain information on the
operation of the public reference room by calling the SEC at 1-800-SEC-0330.
Copies of this material can also be obtained at prescribed rates by writing to
the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington,
D.C. 20549. This material also may be accessed electronically by means of the
SEC's home page on the Internet at www.sec.gov.
Our common stock trades on the Nasdaq National Market under the symbol
"FUNC." Documents filed by us with the SEC also can be inspected at the offices
of the National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
53
<PAGE>
We have filed a registration statement on Form S-3 with the SEC under
the Securities Act in connection with the offering. This prospectus does not
contain all of the information provided in the registration statement, certain
parts of which are omitted in accordance with the rules and regulations of the
SEC. The registration statement, including any amendments, schedules and
exhibits, is available for inspection and copying as provided above.
Statements contained in this prospectus as to the contents of any
contract or other document referred to in this document include all material
terms of the contract or other documents but are not necessarily complete, and
in each instance reference is made to the copy of the contract or other document
which may have been filed as an exhibit to the registration statement, each
statement being qualified in all respects by the reference.
No separate financial statements of the Trust have been included or
incorporated by reference in this document. We do not, nor does the Trust,
consider that the financial statements would be material to holders of the
preferred securities because the Trust is a newly formed special purpose entity,
has no operating history or independent operations and is not engaged in and
does not propose to engage in any activity other than holding as trust assets
the junior subordinated debentures and issuing the preferred securities and
common securities. See "First United Capital Trust," "Description of Preferred
Securities," "Description of Junior Subordinated Debentures" and "Description of
Guarantee." In addition, we do not expect that the Trust will be filing reports
under the Exchange Act with the SEC.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Our Annual Report on Form 10-K for the fiscal year ended December 31,
1998, our Quarterly Report on Form 10-Q for the quarter ended March 31, 1999,
and our Current Report on Form 8-K dated May 20, 1999, are incorporated into
this prospectus by reference.
In addition, all subsequent documents filed with the SEC by us pursuant
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
prospectus shall be deemed to be incorporated by reference into this prospectus
and to be a part of this prospectus from the date of filing the documents. Any
statement contained in this prospectus or in a document incorporated or deemed
to be incorporated by reference in this prospectus or any other document shall
be deemed to be modified or superseded for purposes of this prospectus to the
extent that a statement contained in this prospectus or any other document or in
any subsequently filed document which also is or is deemed to be incorporated by
reference in this prospectus modified or supersedes the statement. Any statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this prospectus.
This prospectus incorporates documents by reference which are not
presented here or delivered with this document. These documents (excluding
exhibits unless specifically incorporated in these documents) are available
without charge upon written or oral request to First United Corporation, 19
South Second Street, Oakland, Maryland 21550, attention: Corporate Secretary,
telephone: (301) 334- 9471.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This prospectus (including information included or incorporated by
reference in this prospectus) contains forward-looking statements with respect
to our financial condition, results of operations, plans, objectives, future
performance and business, including statements preceded by, followed by or that
include the words, "believes," "expects," "anticipates" or similar expressions.
54
<PAGE>
These forward-looking statements involve certain risks and uncertainties and may
relate to our future operating results.
Factors that may cause actual results to differ materially from those
contemplated by these forward-looking statements include, among others, the
following possibilities:
o earnings following acquisitions being lower than expected;
o a significant increase in competitive pressure among
depository and other financial
institutions;
o costs or difficulties related to the integration of the
acquired businesses being greater
than expected;
o changes in the interest rate environment resulting in reduced
margins;
o general economic or business conditions, either nationally or
in Maryland or West Virginia, being less favorable than
expected, resulting in, among other things, a deterioration in
credit quality or a reduced demand for credit;
o legislative or regulatory changes adversely affecting the
businesses in which we will be engaged;
o changes in the securities markets; and
o changes in the banking industry, including, the effects of
consolidation resulting from possible mergers of financial
institutions.
For other matters that may affect operating results you should
carefully consider the "Risk Factors" beginning on page 7.
55
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
====================================================== =========================================================
We have not authorized any person to give any
information or to make any representations
other than those contained in this Prospectus in
connection with the offer made by this
Prospectus and, if given or made, the
information or representations must not be
relied upon as having been authorized by us or $20,000,000
any underwriter. The delivery of this Aggregate Liquidation Amount
Prospectus shall not create an implication that
the information in this Prospectus is correct
after the date of this Prospectus. This
Prospectus is not an offer to, or solicitation by,
anyone in any jurisdiction in which the offer or First United Capital Trust
solicitation is not authorized or in which the
person making the offer or solicitation is not
qualified to do so or to anyone to whom it is ______% Preferred Securities
unlawful to make the offer or solicitation.
_______________ Guaranteed
to the extent described in this Prospectus by
First United Corporation
---------------
Prospectus
---------------
FERRIS, BAKER WATTS
INCORPORATED
ADVEST, INC.
______________, 1999
TABLE OF CONTENTS
Page
Prospectus Summary............................... 1
Risk Factors..................................... 7
Selected Consolidated Financial Data............. 11
Ratio of Earnings to Fixed Charges............... 12
Recent Developments ............................. 12
Use of Proceeds.................................. 13
Capitalization .................................. 13
First United Capital Trust....................... 15
Accounting Treatment............................. 15
Description of Preferred Securities.............. 15
Description of Junior Subordinated
Debentures.................................... 30
Description of Guarantee......................... 42
Relationship among the Preferred Securities,
the Junior Subordinated Debentures,
and the Guarantee.............................. 44
Certain Federal Income Tax Consequences.......... 46
Certain ERISA Considerations..................... 51
Underwriting...................................... 51
Validity of Securities........................... 53
Experts ......................................... 53
Where You Can Find More Information.............. 53
Incorporation of Certain Documents
by Reference.................................... 54
Cautionary Statement Concerning
Forward-Looking Information................... 54
====================================================== =========================================================
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following expenses will be incurred in connection with the issuance
and distribution of the Securities being registered, other than underwriting
discounts and commissions.
SEC registration fee $ 6,394
Printing and engraving 12,000
Accounting fees and expenses 40,000
Company counsel fees and expenses 45,000
Delaware counsel fees and expenses 7,500
Transfer agent fee 1,000
Trustee fee 8,000
Trustee counsel fee 8,000
Nasdaq listing fees 48,750
Blue sky fees and expenses 3,500
Financial advisory fee 71,500
Miscellaneous 5,000
------------
Total $ 256,644
===========
Item 15. Indemnification of Directors and Officers
Section 2-418 of the Maryland Annotated Code, Corporations and
Associations Article (1993) ("Maryland Code") provides that a corporation may
indemnify directors and officers against liabilities they may incur in such
capacities unless it is established that: (a) the directors act or omission was
material and (i) was committed in bad faith or (ii) was the result of active and
deliberate dishonesty; or (b) the director actually received an improper
personal benefit; or (c) the director had reasonable cause to believe that the
act or omission was unlawful. A corporation is required to indemnify directors
and officers against expenses they may incur in defending actions against them
in such capacities if they are successful on the merits or otherwise in the
defense of such actions.
The Maryland Code provides that the foregoing provisions shall not be
deemed exclusive of any other rights to which a director or officer seeking
indemnification may be entitled under, among other things, any by-law provision.
The Bylaws of the Company provide that it shall indemnify and advance
expenses to an officer or director in connection with a proceeding to the
fullest extent permitted by and in accordance with the Maryland Code and federal
law.
II-1
<PAGE>
Item 16. Exhibits
The exhibits listed on the Exhibit Index on page II-6 of this
Registration Statement are filed herewith or will be filed by amendment.
Item 17. Undertakings
Each of the undersigned Registrants hereby undertakes:
1. That, for purposes of determining any liability under the Securities
Act of 1933 and any amendments (the "Securities Act"), each filing of
the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
2. That, for purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to
be part of this registration statement as of the time it was declared
effective.
3. That, for the purpose of determining any lability under the Securities
Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Registrants
pursuant to the provisions provided in Item 15 hereof, or otherwise, the
Registrants have been advised that in the opinion of the Securities and Exchange
Commission ("Commission") such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrants of expenses incurred or paid by a director, officer
or controlling person of the Registrants in the successful defense of any
action, suit or proceedings) is asserted by such director, officer or
controlling person in connection with the securities being registered and the
Commission remains of the same opinion, the Registrants will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Oakland, State of Maryland, on July 28, 1999.
FIRST UNITED CORPORATION
By: /s/ William B. Grant
-------------------------------------
William B. Grant
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ William B. Grant Chairman of the Board July 28, 1999
- ---------------------------
William B. Grant Chief Executive Officer
and Director (Principal
Executive Officer)
/s/ Robert W. Kurtz President, Chief Financial July 28, 1999
- ----------------------------
Robert W. Kurtz Officer and Director
(Principal Financial and
Accounting Officer)
/s/ David J. Beachy* Director July 28, 1999
- ----------------------------
David J. Beachy
/s/ Donald M. Browning* Director July 28, 1999
- ----------------------------
Donald M. Browning
/s/ Rex W. Burton* Director July 28, 1999
- ----------------------------
Rex W. Burton
/s/ Paul Cox, Jr.* Director July 28, 1999
- ----------------------------
Paul Cox, Jr.
/s/ Richard D. Dailey, Jr.* Director July 28, 1999
- ----------------------------
Richard D. Dailey, Jr.
II-3
<PAGE>
/s/ Maynard G. Grossnickle* Director July 28, 1999
- ----------------------------
Maynard G. Grossnickle
/s/ Raymond F. Hinkle* Director July 28, 1999
- -----------------------------
Raymond F. Hinkle
/s/ Andrew E. Mance* Director July 28, 1999
- -----------------------------
Dr. Andrew E. Mance
/s/ Elaine L. McDonald Director July 28, 1999
- -----------------------------
Elaine L. McDonald
/s/ Donald E. Moran* Director July 28, 1999
- -----------------------------
Donald E. Moran
/s/ I. Robert Rudy* Director July 28, 1999
- -----------------------------
I. Robert Rudy
/s/ James F. Scarpelli, Sr.* Director July 28, 1999
- -----------------------------
James F. Scarpelli, Sr.
/s/ Richard G. Stanton * Director July 28, 1999
- -----------------------------
Richard G. Stanton
/s/ Robert G. Stuck* Director July 28, 1999
- -----------------------------
Robert G. Stuck
/s/Frederick A. Thayer, III* Director July 28, 1999
- -----------------------------
Frederick A. Thayer, III
*By: /s/ William B. Grant
----------------------------------
William B. Grant, Attorney-in-Fact July 28, 1999
II-4
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the Issuer
Trust has duly caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Oakland, State of
Maryland, on July 28, 1999.
FIRST UNITED CAPITAL TRUST
By: First United Corporation,
as Depositor
By: /s/ William B. Grant
---------------------------------
William B. Grant
Chairman of the Board and
Chief Executive Officer
F7777d.600 T
1:07/22/99
II-5
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
1.1 Form of Underwriting Agreement*
4.1 Form of Junior Subordinated Indenture
4.2 Form of Amended and Restated Trust Agreement
4.3 Form of Guarantee by First United Corporation
5.1 Opinion of Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC
5.2 Opinion of Richards, Layton & Finger
8.1 Tax opinion of Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC
23.1 Consent of Ernst & Young LLP
23.2 Consent of Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC
(included in Exhibits 5.1 and 8.1)
23.3 Consent of Richards, Layton & Finger (included in Exhibit 5.2)
24.1 Powers of Attorney of certain directors of First United Corporation
25.1 Statement of Eligibility under the Trust Indenture Act of 1939, and any
amendments, of Bankers Trust Company, as trustee under the Junior
Subordinated Indenture, the Amended and Restated Trust Agreement and the
Guarantee
- -----------------------------------
* To be filed by amendment.
II-6
<PAGE>
Exhibit 4.1
Form of Junior Subordinated Indenture
<PAGE>
JUNIOR SUBORDINATED INDENTURE
Between
FIRST UNITED CORPORATION
and
BANKERS TRUST COMPANY
(as Trustee)
dated as of
_______________________, 1999
<PAGE>
FIRST UNITED CAPITAL TRUST
Certain Sections of this Junior Subordinated Indenture relating
to Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Junior Subordinated
Act Section Indenture Section
<S> <C> <C> <C> <C> <C> <C>
Section 310 (a)(1).......................................................... 6.9
(a)(2).......................................................... 6.9
(a)(3).......................................................... Not Applicable
(a)(4).......................................................... Not Applicable
(a)(5).......................................................... 6.9
(b)............................................................. 6.8, 6.10
Section 311 (a)............................................................. 6.13
(b)............................................................. 6.13
(b)(2).......................................................... 7.3(a)
Section 312 (a)............................................................. 7.1, 7.2(a)
(b)............................................................. 7.2(b)
(c)............................................................. 7.2(c)
Section 313 (a)............................................................. 7.3(a)
(a)(4).......................................................... 7.3(a)
(b)............................................................. 7.3(b)
(c)............................................................. 7.3(a)
(d)............................................................. 7.3(c)
Section 314 (a)............................................................. 7.4
(b)............................................................. 7.4
(c)(1).......................................................... 1.2
(c)(2).......................................................... 1.2
(c)(3).......................................................... Not Applicable
(e)............................................................. 1.2
Section 315 (a)............................................................. 6.1(a)
(b)............................................................. 6.2, 7.3
(c)............................................................. 6.1(b)
(d)............................................................. 6.1(c)
(e)............................................................. 5.14
Section 316 (a)............................................................. 5.12
(a)(1)(A)....................................................... 5.12
(a)(1)(B)....................................................... 5.13
(a)(2).......................................................... Not Applicable
(b)............................................................. 5.8
(c)............................................................. 1.4(f)
Section 317 (a)(1).......................................................... 5.3
(a)(2).......................................................... 5.4
(b)............................................................. 10.3
Section 318 (a)............................................................. 1.7
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture.
</TABLE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C> <C> <C> <C> <C>
ARTICLE I DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION........................................................................ 1
Section 1.1. Definitions.......................................................................... 1
Section 1.2. Compliance Certificate and Opinions.................................................. 10
Section 1.3. Forms of Documents Delivered to Trustee.............................................. 10
Section 1.4. Acts of Holders...................................................................... 11
Section 1.5. Notices, Etc. to Trustee and Company................................................. 12
Section 1.6. Notice to Holders; Waiver............................................................ 13
Section 1.7. Conflict with Trust Indenture Act.................................................... 13
Section 1.8. Effect of Headings and Table of Contents............................................. 13
Section 1.9. Successors and Assigns............................................................... 13
Section 1.10. Separability Clause.................................................................. 13
Section 1.11. Benefits of Indenture................................................................ 14
Section 1.12. Governing Law........................................................................ 14
Section 1.13. Non-Business Days.................................................................... 14
ARTICLE II SECURITY FORMS................................................................................ 14
Section 2.1. Generally............................................................................ 14
Section 2.2. Form of Face of Security............................................................. 15
Section 2.3. Form of Reverse of Security.......................................................... 18
Section 2.4. Additional Provisions Required in Global Security.................................... 21
Section 2.5. Form of Trustee's Certificate of Authentication...................................... 21
ARTICLE III THE SECURITIES....................................................................... 21
Section 3.1. Title and Terms...................................................................... 21
Section 3.2. Denominations........................................................................ 22
Section 3.3. Execution, Authentication, Delivery and Dating....................................... 22
Section 3.4. Temporary Securities................................................................. 23
Section 3.5. Global Securities.................................................................... 24
Section 3.6. Registration, Transfer and Exchange Generally; Certain Transfers and
Exchanges; Securities Act Legends.................................................... 26
Section 3.7. Mutilated, Lost and Stolen Securities................................................ 27
Section 3.8. Payment of Interest and Additional Interest; Interest Rights Preserved............... 28
Section 3.9. Persons Deemed Owners................................................................ 29
Section 3.10. Cancellation......................................................................... 29
Section 3.11. Computation of Interest.............................................................. 30
Section 3.12. Deferrals of Interest Payment Dates.................................................. 30
Section 3.13. Right of Set-Off..................................................................... 31
Section 3.14. Agreed Tax Treatment................................................................. 31
Section 3.15. CUSIP Numbers........................................................................ 31
Section 3.16. Shortening of Stated Maturity........................................................ 31
ARTICLE IV SATISFACTION AND DISCHARGE.................................................................... 32
Section 4.1. Satisfaction and Discharge of Indenture.............................................. 32
Section 4.2. Application of Trust Money........................................................... 33
<PAGE>
ARTICLE V REMEDIES...................................................................................... 33
Section 5.1. Events of Default.................................................................... 33
Section 5.2. Acceleration of Maturity; Rescission and Annulment................................... 34
Section 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee...................... 35
Section 5.4. Trustee May File Proofs of Claim..................................................... 35
Section 5.5. Trustee May Enforce Claim Without Possession of Securities........................... 36
Section 5.6. Application of Money Collected....................................................... 36
Section 5.7. Limitation on Suits.................................................................. 37
Section 5.8. Unconditional Right of Holders to Receive Principal, Premium and
Interest; Direct Action by Holders of Preferred Securities........................... 37
Section 5.9. Restoration of Rights and Remedies................................................... 38
Section 5.10. Rights and Remedies Cumulative....................................................... 38
Section 5.11. Delay or Omission Not Waiver......................................................... 38
Section 5.12. Control by Holders................................................................... 38
Section 5.13. Waiver of Past Defaults.............................................................. 39
Section 5.14. Undertaking for Costs................................................................ 39
Section 5.15. Waiver of Usury, Stay or Extension Laws.............................................. 39
ARTICLE VI THE TRUSTEE................................................................................... 40
Section 6.1. Certain Duties and Responsibilities.................................................. 40
Section 6.2. Notice of Defaults................................................................... 41
Section 6.3. Certain Rights of Trustee............................................................ 41
Section 6.4. Not Responsible for Recitals or Issuance of Securities............................... 42
Section 6.5. May Hold Securities.................................................................. 42
Section 6.6. Money Held in Trust.................................................................. 42
Section 6.7. Compensation and Reimbursement....................................................... 42
Section 6.8. Disqualification; Conflicting Interests.............................................. 43
Section 6.9. Corporate Trustee Required; Eligibility.............................................. 43
Section 6.10. Resignation and Removal; Appointment of Successor.................................... 44
Section 6.11. Acceptance of Appointment by Successor............................................... 45
Section 6.12. Merger, Conversion, Consolidation or Succession to Business.......................... 46
Section 6.13. Preferential Collection of Claims Against Company.................................... 46
Section 6.14. Appointment of Authenticating Agent.................................................. 46
ARTICLE VII HOLDERS LISTS AND REPORTS BY TRUSTEE,
PAYING AGENT AND COMPANY...................................................................... 47
Section 7.1. Company to Furnish Trustee Names and Addresses of Holders............................ 47
Section 7.2. Preservation of Information, Communications to Holders............................... 48
Section 7.3. Reports by Trustee and Paying Agent.................................................. 48
Section 7.4. Reports by Company................................................................... 48
ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE........................................... 49
Section 8.1. Company May Consolidate, Etc., Only on Certain Terms................................. 49
Section 8.2. Successor Company Substituted........................................................ 50
ARTICLE IX SUPPLEMENTAL INDENTURES....................................................................... 50
Section 9.1. Supplemental Indentures Without Consent of Holders................................... 50
Section 9.2. Supplemental Indentures with Consent of Holders...................................... 51
Section 9.3. Execution of Supplemental Indentures................................................. 52
ii
<PAGE>
Section 9.4. Effect of Supplemental Indentures.................................................... 52
Section 9.5. Conformity with Trust Indenture Act.................................................. 52
Section 9.6. Reference in Securities to Supplemental Indentures................................... 52
ARTICLE X COVENANTS..................................................................................... 53
Section 10.1. Payment of Principal, Premium and Interest........................................... 53
Section 10.2. Maintenance of Office or Agency...................................................... 53
Section 10.3. Money for Security Payments to be Held in Trust...................................... 53
Section 10.4. Statement as to Compliance........................................................... 55
Section 10.5. Waiver of Certain Covenants.......................................................... 55
Section 10.6. Additional Sums...................................................................... 55
Section 10.7. Additional Covenants................................................................. 56
Section 10.8. Federal Tax Reports.................................................................. 57
ARTICLE XI REDEMPTION OF SECURITIES...................................................................... 57
Section 11.1. Applicability of this Article........................................................ 57
Section 11.2. Election to Redeem; Notice to Trustee................................................ 57
Section 11.3. Selection of Securities to be Redeemed............................................... 57
Section 11.4. Notice of Redemption................................................................. 58
Section 11.5. Deposit of Redemption Price.......................................................... 59
Section 11.6. Payment of Securities Called for Redemption.......................................... 59
Section 11.7. Right of Redemption of Securities Initially Issued to the Issuer Trust............... 59
ARTICLE XII SINKING FUNDS................................................................................. 60
ARTICLE XIII SUBORDINATION OF SECURITIES....................................................................... 60
Section 13.1. Securities Subordinate to Senior Indebtedness........................................ 60
Section 13.2. No Payment When Senior Indebtedness in Default; Payment Over of
Proceeds Upon Dissolution, Etc....................................................... 60
Section 13.3. Payment Permitted if No Default...................................................... 61
Section 13.4. Subrogation to Rights of Holders of Senior Indebtedness.............................. 62
Section 13.5. Provisions Solely to Define Relative Rights.......................................... 62
Section 13.6. Trustee to Effectuate Subordination.................................................. 62
Section 13.7 No Waiver of Subordination Provisions................................................ 63
Section 13.8. Notice to Trustee.................................................................... 63
Section 13.9. Reliance on Judicial Order or Certificate of Liquidating Agent....................... 64
Section 13.10. Trustee Not Fiduciary for Holders of Senior Indebtedness............................. 64
Section 13.11. Rights of Trustee as Holder of Senior Indebtedness; Preservation of
Trustee's Rights..................................................................... 64
Section 13.12. Article Applicable to Paying Agents.................................................. 64
Section 13.13. Certain Conversions or Exchanges Deemed Payment...................................... 64
ANNEX A FORM OF RESTRICTED SECURITIES CERTIFICATE.............................................................. 66
iii
</TABLE>
<PAGE>
JUNIOR SUBORDINATED INDENTURE
THIS JUNIOR SUBORDINATED INDENTURE, dated as of ____________, 1999
between FIRST UNITED CORPORATION, a Maryland corporation (the "Company"), having
its principal office at 19 South Second Street, Oakland, Maryland 21550 and
BANKERS TRUST COMPANY, as Trustee, having its principal office at Four Albany
Street, 4th Floor, New York, New York 10006 (the "Trustee").
RECITALS OF THE COMPANY
WHEREAS, the Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance of its unsecured junior subordinated
deferrable interest debentures due ________________, 2029 (the "Securities") of
substantially the tenor hereinafter provided, including Securities issued to
evidence loans made to the Company from the proceeds from the issuance from time
to time by First United Capital Trust, a Delaware business trust (the "Issuer
Trust") of undivided preferred beneficial interests in the assets of such Issuer
Trust (the "Preferred Securities") and common undivided interests in the assets
of such Issuer Trust (the "Common Securities" and, collectively with the
Preferred Securities, the "Trust Securities"), and to provide the terms and
conditions upon which the Securities are to be authenticated, issued and
delivered; and
WHEREAS, all things necessary to make this Indenture a valid agreement
of the Company, in accordance with its terms, have been done.
NOW THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders (as such term is defined in Section 1.1 hereof)
thereof, it is mutually covenanted and agreed, for the equal and proportionate
benefit of all Holders of the Securities or of any series thereof, and intending
to be legally bound hereby, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 1.1. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article I have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(b) all other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(c) the words "include," "includes" and "including" shall be deemed to
be followed by the phrase "without limitation";
(d) all accounting terms not otherwise defined herein have the meanings
assigned to them in
<PAGE>
accordance with generally accepted accounting principles as in effect at the
time of computation;
(e) whenever the context may require, any gender shall be deemed to
include the other;
(f) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may be,
of this Indenture; and
(g) the words "hereby", "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.
"25% Capital Limitation" means the limitation imposed by the Federal
Reserve that the proceeds of certain qualifying securities similar to the Trust
Securities will qualify as Tier 1 capital of the issuer up to an amount not to
exceed, when taken together with all cumulative preferred stock of the issuer,
if any, 25% of the issuer's Tier 1 capital, or any subsequent limitation adopted
by the Federal Reserve.
"Act" when used with respect to any Holder has the meaning specified in
Section 1.4.
"Additional Interest" means the interest, if any, that shall accrue on
any interest on the Securities of any series the payment of which has not been
made on the applicable Interest Payment Date and which shall accrue at the rate
per annum specified or determined as specified in such Security.
"Additional Sums" has the meaning specified in Section 10.6.
"Additional Taxes" means any additional taxes, duties and other
governmental charges to which the Issuer Trust has become subject from time to
time as a result of a Tax Event.
"Administrator" means, in respect of the Issuer Trust, each Person
appointed in accordance with the Trust Agreement, solely in such Person's
capacity as Administrator of the Issuer Trust and not in such Person's
individual capacity, or any successor Administrator appointed as therein
provided.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent Member" means any member of, or participant in, the Depositary.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Global Security, in each case to
the extent applicable to such transaction and as in effect from time to time.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.14 to act on behalf of the Trustee to authenticate
Securities.
"Board of Directors" means the board of directors of the Company or the
Executive Committee of the board of directors of the Company (or any other
committee of the board of directors of the Company performing similar functions)
or, for purposes of this Indenture, a committee designated by the
2
<PAGE>
board of directors of the Company (or such committee), comprised of two or more
members of the board of directors of the Company or officers of the Company, or
both.
"Board Resolution" means a copy of a resolution certified by the
Secretary or any Assistant Secretary of the Company to have been duly adopted by
the Board of Directors, or such committee of the Board of Directors or officers
of the Company to which authority to act on behalf of the Board of Directors has
been delegated, and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day other than (i) a Saturday or Sunday, (ii)
a day on which banking institutions in the State of Maryland or the City of New
York are authorized or required by law or executive order to remain closed, or
(iii) a day on which the Corporate Trust Office of the Trustee, or, with respect
to the Securities initially issued to the Issuer Trust, the "Corporate Trust
Office" (as defined in the Trust Agreement) of the Property Trustee or the
Delaware Trustee under the Trust Agreement, is closed for business.
"Capital Treatment Event" means, in respect of the Issuer Trust, the
reasonable determination by the Company that, as a result of the occurrence of
any amendment to, or change (including any announced prospective change) in, the
laws (or any rules or regulations thereunder) of the United States or any
political subdivision thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement, action or decision is announced on or after the date of the
issuance of the Preferred Securities of the Issuer Trust, there is more than an
insubstantial risk that the Company will not be entitled to treat an amount
equal to the Liquidation Amount (as defined in the Trust Agreement) of such
Preferred Securities as "Tier 1 Capital" (or the then equivalent thereof),
except as otherwise restricted under the 25% Capital Limitation, for purposes of
the risk-based capital adequacy guidelines of the Board of Governors of the
Federal Reserve System, as then in effect and applicable to the Company.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act, or, if at any time after
the execution of this instrument such Commission is not existing and performing
the duties now assigned to it under the Trust Indenture Act, then the body
performing such duties on such date.
"Common Securities" has the meaning specified in the first recital of
this Indenture.
"Common Stock" means the common stock, no par value per share, of the
Company.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor entity shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor entity.
"Company Request" and "Company Order" mean, respectively, the written
request or order signed in the name of the Company by any Chairman of the Board
of Directors, any Vice Chairman of the Board of Directors, its Chief Executive
Officer, President or a Vice President, and by its Chief Financial Officer, its
Treasurer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered,
which office at the date hereof is located at Four Albany
3
<PAGE>
Street, 4th Floor, New York, New York 10006.
"Creditor" has the meaning specified in Section 6.7.
"Defaulted Interest" has the meaning specified in Section 3.8.
"Delaware Trustee" means, with respect to the Issuer Trust, the Person
identified as the "Delaware Trustee" in the Trust Agreement, solely in its
capacity as Delaware Trustee of the Issuer Trust under the Trust Agreement and
not in its individual capacity, or its successor in interest in such capacity,
or any successor Delaware trustee appointed as therein provided.
"Depositary" means, with respect to the Securities issuable or issued
in whole or in part in the form of one or more Global Securities, the Person
designated as Depositary by the Company pursuant to Section 3.1 (or any
successor thereto).
"Discount Security" means any security that provides for an amount less
than the principal amount thereof to be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 5.2.
"Dollar" or "$" means the currency of the United States of America
that, as at the time of payment, is legal tender for the payment of public and
private debts.
The term "entity" includes a bank, corporation, association, company,
limited liability company, joint-stock company or business trust.
"Event of Default," has the meaning specified in Article V.
"Exchange Act" means the Securities Exchange Act of 1934 and any
successor statute thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 1.4.
"Extension Period" has the meaning specified in Section 3.12.
"Global Security" means a Security in the form prescribed in Section
2.4 evidencing all or part of the Securities, issued to the Depositary or its
nominee, and registered in the name of such Depositary or its nominee.
"Guarantee" means, with respect to the Issuer Trust, the Guarantee
Agreement, dated _________________, 1999, executed by the Company for the
benefit of the Holders of the Preferred Securities issued by the Issuer Trust as
modified, amended or supplemented from time to time.
"Holder" means a Person in whose name a Security is registered in the
Securities Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Institutional Accredited Investor" means an institutional accredited
investor within the meaning
4
<PAGE>
of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on such Securities.
"Investment Company Act" means the Investment Company Act of 1940 and
any successor statute thereto, in each case as amended from time to time.
"Investment Company Event" means the receipt by the Issuer Trust of an
Opinion of Counsel, rendered by counsel experienced in such matters, to the
effect that, as a result of the occurrence of a change in law or regulation or a
written change (including any announced prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more than an insubstantial risk that
the Issuer Trust is or will be considered an "investment company" that is
required to be registered under the Investment Company Act, which change or
prospective change becomes effective or would become effective, as the case may
be, on or after the date of the issuance of the Preferred Securities of the
Issuer Trust.
"Issuer Trust" has the meaning specified in the first recital of this
Indenture.
"Maturity" when used with respect to any Security means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in
Section 5.1(c).
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board, Chief Executive Officer,
President or a Vice President, and by the Chief Financial Officer, Treasurer, an
Associate Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary of such Person, and delivered to the Trustee. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
(a) a statement by each officer signing the Officers' Certificate that
such officer has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by such officer in rendering the Officers' Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of such officer, such
condition or covenant has been complied with;
provided, however, that the Officers' Certificate delivered pursuant to the
provisions of Section 10.4 hereof shall comply with the provisions of Section
314 of the Trust Indenture Act.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for or an employee of the Company or any Affiliate of the Company.
5
<PAGE>
"Original Issue Date" means the date of issuance specified as such in
each Security.
"Outstanding" means, when used in reference to any Securities, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(a) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(b) Securities for whose payment money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent in trust for the
Holders of such Securities; and
(c) Securities in substitution for or in lieu of other Securities which
have been authenticated and delivered or that have been paid pursuant to Section
3.6, unless proof satisfactory to the Trustee is presented that any such
Securities are held by Holders in whose hands such Securities are valid, binding
and legal obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor (other than, for the avoidance of doubt, the
Issuer Trust to which Securities of the applicable series were initially issued)
shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Securities that the Trustee knows to be so owned shall be so disregarded.
Securities so owned that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and that the pledgee
is not the Company or any other obligor upon the Securities or any Affiliate of
the Company or such other obligor (other than, for the avoidance of doubt, the
Issuer Trust). Upon the written request of the Trustee, the Company shall
furnish to the Trustee promptly an Officers' Certificate listing and identifying
all Securities, if any, known by the Company to be owned or held by or for the
account of the Company, or any other obligor on the Securities or any Affiliate
of the Company or such obligor (other than, for the avoidance of doubt, the
Issuer Trust), and, subject to the provisions of Section 6.1, the Trustee shall
be entitled to accept such Officers' Certificate as conclusive evidence of the
facts therein set forth and of the fact that all Securities not listed therein
are Outstanding for the purpose of any such determination.
"Outstanding Preferred Securities" means the $_____________ aggregate
liquidation amount of ____% Preferred Securities issued by First United Capital
Trust.
"Paying Agent" means the Trustee or any Person authorized by the
Company to pay the principal of (or premium, if any) or interest on, or other
amounts in respect of any Securities on behalf of the Company.
"Person" means any individual, partnership, trust, unincorporated
organization or entity (as defined herein) or government or any agency or
political subdivision thereof.
"Place of Payment" means, with respect to the Securities, the place or
places where the principal of (or premium, if any) and interest on the
Securities are payable pursuant to Section 3.1.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security. For the purposes of this
6
<PAGE>
definition, any security authenticated and delivered under Section 3.7 in lieu
of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence
the same debt as the mutilated, destroyed, lost or stolen Security.
"Preferred Securities" has the meaning specified in the first recital
of this Indenture.
"Principal Subsidiary Bank" means each of (i) First United Bank &
Trust, (ii) any other banking subsidiary of the Company the consolidated assets
of which constitute 20% or more of the consolidated assets of the Company and
its consolidated subsidiaries, (iii) any other banking subsidiary designated as
a Principal Subsidiary Bank pursuant to a Board Resolution and set forth in an
Officers' Certificate delivered to the Trustee, and (iv) any subsidiary of the
Company that owns, directly or indirectly, any voting securities, or options,
warrants or rights to subscribe for or purchase voting securities, of any
Principal Subsidiary Bank under clause (i), (ii) or (iii), and in the case of
clause (i), (ii), (iii) or (iv) their respective successors (whether by
consolidation, merger, conversion, transfer of substantially all their assets
and business or otherwise) so long as any such successor is a banking subsidiary
(in the case of clause (i), (ii) or (iii)) or a subsidiary (in the case of
clause (iv)) of the Company.
"Proceeding" has the meaning specified in Section 13.2.
"Property Trustee" means, with respect to the Issuer Trust, the Person
identified as the "Property Trustee" in the Trust Agreement, solely in its
capacity as Property Trustee of the Issuer Trust under the Trust Agreement and
not in its individual capacity, or its successor in interest in such capacity,
or any successor property trustee appointed as therein provided.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture or the terms of such Security.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date with respect to the Securities means, unless otherwise provided pursuant to
Section 3.1 with respect to the Securities, the close of business on March 15,
June 15, September 15 or December 15 next preceding such Interest Payment Date
(whether or not a Business Day).
"Responsible Officer", when used with respect to the Property Trustee
means any officer assigned to the Corporate Trust Office, including any managing
director, principal, vice president, assistant vice president, assistant
treasurer, assistant secretary or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and having direct responsibility for the administration of this
Indenture, and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Restricted Security" means each Security required pursuant to Section
3.6(c) to bear a Restricted Securities Legend.
"Restricted Securities Certificate" means a certificate substantially
in the form set forth in Annex A.
7
<PAGE>
"Restricted Securities Legend" means a legend substantially in the form
of the legend required in the form of Security set forth in Section 2.2 to be
placed upon a Restricted Security.
"Rights Plan" means any plan of the Company providing for the issuance
by the Company to all holders of its Common Stock, no par value per share, of
rights entitling the holders thereof to subscribe for or purchase shares of any
class or series of capital stock of the Company which rights (i) are deemed to
be transferred with such shares of such Common Stock, (ii) are not exercisable,
and (iii) are also issued in respect of future issuances of such Common Stock,
in each case until the occurrence of a specified event or events.
"Securities" or "Security" means any debt securities or debt security,
as the case may be, authenticated and delivered under this Indenture.
"Securities Act" means the Securities Act of 1933 and any successor
statute thereto, in each case as amended from time to time.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 3.6.
"Senior Indebtedness" means, whether recourse is to all or a portion of
the assets of the Company and whether or not contingent, (i) every obligation of
the Company for money borrowed; (ii) every obligation of the Company evidenced
by bonds, debentures, notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets or businesses;
(iii) every reimbursement obligation of the Company with respect to letters of
credit, bankers' acceptances or similar facilities issued for the account of the
Company; (iv) every obligation of the Company issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts payable or
accrued liabilities arising in the ordinary course of business); (v) every
capital lease obligation of the Company; (vi) every obligation of the Company
for claims (as defined in Section 101(4) of the United States Bankruptcy Code of
1978, as amended) in respect of derivative products such as interest and foreign
exchange rate contracts, commodity contracts and similar arrangements; and (vii)
every obligation of the type referred to in clauses (i) through (vi) of another
person and all dividends of another person the payment of which, in either case,
the Company has guaranteed or is responsible or liable, directly or indirectly,
as obligor or otherwise. Senior Indebtedness shall not include (i) any
obligations which, by their terms, are expressly stated to rank pari passu in
right of payment with, or to not be superior in right of payment to, the Junior
Subordinated Debentures, (ii) any Senior Indebtedness of the Company which when
incurred and without respect to any election under Section 1111(b) of the United
States Bankruptcy Code of 1978, as amended, was without recourse to the Company,
(iii) any indebtedness of the Company to any of its subsidiaries, (iv)
indebtedness to any executive officer or director of the Company, or (v) any
indebtedness in respect of debt securities issued to any trust, or a trustee of
such trust, partnership or other entity affiliated with the Company that is a
financing entity of the Company in connection with the issuance of such
financing entity of securities that are similar to the Preferred Securities,
including the obligations associated with the Outstanding Preferred Securities.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.8.
"Stated Maturity," when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
pursuant to the terms of such Security as the fixed date on which the principal
of such Security or such installment of principal or interest is due and
payable, as such
8
<PAGE>
date may, in the case of such principal, be shortened or extended as provided
pursuant to the terms of such Security and this Indenture.
"Subsidiary" means an entity more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For purposes of this definition, "voting stock" means stock that ordinarily has
voting power for the election of directors, whether at all times or only so long
as no senior class of stock has such voting power by reason of any contingency.
"Successor Security" of any particular Security means every Security
issued after, and evidencing all or a portion of the same debt as that evidenced
by, such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 3.7 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Tax Event" means the receipt by the Issuer Trust of an Opinion of
Counsel, rendered by counsel experienced in such matters, to the effect that, as
a result of any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, or as a result of
any official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement or decision is announced on or after the date
of issuance of the Preferred Securities of the Issuer Trust, there is more than
an insubstantial risk that (a) the Issuer Trust is, or will be within 90 days of
the delivery of such Opinion of Counsel, subject to United States federal income
tax with respect to income received or accrued on the corresponding series of
Securities issued by the Company to the Issuer Trust, (b) interest payable by
the Company on the Securities is not, or within 90 days of the delivery of such
Opinion of Counsel will not be, deductible by the Company, in whole or in part,
for United States federal income tax purposes, or (c) the Issuer Trust is, or
will be within 90 days of the delivery of such Opinion of Counsel, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges.
"Trust Agreement" means the Amended and Restated Trust Agreement, dated
as of ________________, 1999, as amended, modified or supplemented from time to
time, among the trustees of the Issuer Trust named therein, the Company, as
depositor, and the holders from time to time of undivided beneficial ownership
interests in the assets of the Issuer Trust.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture, solely in its capacity as such and not in its
individual capacity, until a successor Trustee shall have become such pursuant
to the applicable provisions of this Indenture, and thereafter "Trustee" shall
mean or include each Person who is then a Trustee hereunder and, if at any time
there is more than one such Person, "Trustee" as used with respect to the
Securities shall mean the Trustee with respect to Securities.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
by the Trust Indenture Reform Act of 1990, or any successor statute, in each
case as amended from time to time, except as provided in Section 9.5.
"Trust Securities" has the meaning specified in the first recital of
this Indenture.
"Vice President," when used with respect to the Company, means any duly
appointed vice president, whether or not designated by a number or a word or
words added before or after the title "vice
9
<PAGE>
president."
Section 1.2. Compliance Certificate and Opinions.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent
(including covenants compliance with which constitutes a condition precedent),
if any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent (including covenants compliance with
which constitutes a condition precedent), if any, have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than the
certificates provided pursuant to Section 10.4) shall include:
(a) a statement by each individual signing such certificate or opinion
that such individual has read such covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions of such individual contained
in such certificate or opinion are based;
(c) a statement that, in the opinion of such individual, he or she has
made such examination or investigation as is necessary to enable him or her to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether, in the opinion of such individual, such
condition or covenant has been complied with.
Section 1.3. Forms of Documents Delivered to Trustee.
(a) In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
(b) Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to matters upon which his or her certificate or opinion is based
are erroneous. Any such certificate or Opinion of Counsel may be based, insofar
as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
10
<PAGE>
(c) Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions, or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 1.4. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given to, made or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments is or are
delivered to the Trustee, and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.1) conclusive in favor of
the Trustee and the Company, if made in the manner provided in this Section 1.4.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him or her the execution thereof.
Where such execution is by a Person acting in other than his or her individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his or her authority.
(c) The fact and date of the execution by any Person of any such
instrument or writing, or the authority of the Person executing the same, may
also be provided in any other manner that the Trustee deems sufficient and in
accordance with such reasonable rules as the Trustee may determine.
(d) The ownership of Securities shall be proved by the Securities
Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done or suffered to be done by the Trustee or the Company in reliance
thereon, whether or not notation of such action is made upon such Security.
(f) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given to, made or taken by
Holders of Securities, provided that the Company may not set a record date for,
and the provisions of this Section 1.4(f) shall not apply with respect to, the
giving or making of any notice, declaration, request or direction referred to in
Section 1.4(g). If any record date is set pursuant to this Section 1.4(f), the
Holders of Outstanding Securities on such record date, and no other Holders,
shall be entitled to take the relevant action, whether or not such Holders
remain Holders after such record date, provided, however that no such action
shall be effective hereunder unless taken on or prior to the applicable
Expiration Date (as defined below) by Holders of the requisite principal amount
of Outstanding Securities on such record date. Nothing in this Section 1.4(f)
shall be construed to prevent the Company from setting a new record date for any
action for which a record date has previously been set pursuant to this Section
1.4(f) (whereupon the record date previously set shall automatically and with no
action by
11
<PAGE>
any Person be canceled and of no effect), and nothing in this Section 1.4(f)
shall be construed to render ineffective any action taken by Holders of the
requisite principal amount of Outstanding Securities on the date such action is
taken. Promptly after any record date is set pursuant to this Section 1.4(f),
the Company, at its own expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to the
Trustee in writing and to each Holder of Securities in the manner set forth in
Section 1.6.
(g) The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to join in the giving
or making of (i) any Notice of Default, (ii) any declaration of acceleration
referred to in Section 5.2, (iii) any request to institute proceedings referred
to in Section 5.7(b), or (iv) any direction referred to in Section 5.12, in each
case with respect to Securities. If any record date is set pursuant to this
Section 1.4(g), the Holders of Outstanding Securities on such record date, and
no other Holders, shall be entitled to join in such notice, declaration, request
or direction, whether or not such Holders remain Holders after such record date,
provided, however that no such action shall be effective hereunder unless taken
on or prior to the applicable Expiration Date by Holders of the requisite
principal amount of Outstanding Securities on such record date. Nothing in this
Section 1.4(g) shall be construed to prevent the Trustee from setting a new
record date for any action for which a record date has previously been set
pursuant to this Section 1.4(g) (whereupon the record date previously set shall
automatically and with no action by any Person be canceled and of no effect) and
nothing in this paragraph shall be construed to render ineffective any action
taken by Holders of the requisite principal amount of Outstanding Securities on
the date such action is taken. Promptly after any record date is set pursuant to
this paragraph, the Trustee, at the Company's expense, shall cause notice of
such record date, the proposed action by Holders and the applicable Expiration
Date to be given to the Company in writing and to each Holder of Securities in
the manner set forth in Section 1.6.
(h) With respect to any record date set pursuant to this Section 1.4,
the party hereto that sets such record date may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day, provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto in
writing, and to each Holder of Securities in the manner set forth in Section 1.6
on or prior to the existing Expiration Date. If an Expiration Date is not
designated with respect to any record date set pursuant to this Section, the
party hereto that set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this Section 1.4(h). Notwithstanding the foregoing, no Expiration Date shall
be later than the 180th day after the applicable record date.
(i) Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
Section 1.5. Notices, Etc. to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder, any holder of Preferred Securities or
the Company shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Trustee at its Corporate Trust
Office, or
12
<PAGE>
(b) the Company by the Trustee, any Holder or any holder of Preferred
Securities shall be sufficient for every purpose (except as otherwise provided
in Section 5.1) hereunder if in writing and mailed, first class, postage
prepaid, to the Company addressed to it at the address of its principal office
specified in the first paragraph of this instrument or at any other address
previously furnished in writing to the Trustee by the Company.
Section 1.6. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first class postage prepaid, to each Holder affected
by such event, at the address of such Holder as it appears in the Securities
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. If, by reason of the suspension
of or irregularities in regular mail services or for any other reason, it shall
be impossible or impracticable to mail notice of any event to Holders when said
notice is required to be given pursuant to any provision of this Indenture or of
the Securities, then any manner of giving such notice as shall be satisfactory
to the Trustee shall be deemed to be a sufficient giving of such notice. In any
case where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
Section 1.7. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision
of the Trust Indenture Act that is required thereunder to be a part of and
govern this Indenture, the provision of the Trust Indenture Act shall control.
If any provision of this Indenture modifies or excludes any provision of the
Trust Indenture Act that may be so modified or excluded, the latter provision
shall be deemed to apply to this Indenture as so modified or to be excluded, as
the case may be.
Section 1.8. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 1.9. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 1.10. Separability Clause.
If any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
13
<PAGE>
Section 1.11. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors and
assigns, the holders of Senior Indebtedness, the Holders of the Securities and,
to the extent expressly provided in Sections 5.2, 5.8, 5.9, 5.11, 5.13, 9.1 and
9.2, the holders of Preferred Securities, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
Section 1.12. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 1.13. Non-Business Days.
If any Interest Payment Date, Redemption Date or Stated Maturity of any
Security shall not be a Business Day, then (notwithstanding any other provision
of this Indenture or the Securities) payment of interest or principal (and
premium, if any) other amounts in respect of such Security need not be made on
such date, but may be made on the next succeeding Business Day (and no interest
shall accrue in respect of the amounts whose payment is so delayed for the
period from and after such Interest Payment Date, Redemption Date or Stated
Maturity, as the case may be, until such next succeeding Business Day) except
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day (in each case with the
same force and effect as if made on the Interest Payment Date or Redemption Date
or at the Stated Maturity).
ARTICLE II
SECURITY FORMS
Section 2.1. Generally.
(a) The Securities and the Trustee's certificate of authentication
shall be in substantially the forms set forth in this Article II, or in such
other form or forms as shall be established by or pursuant to a Board Resolution
or in one or more indentures supplemental hereto, in each case with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may be required to comply with applicable tax laws or the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such securities, as evidenced by their execution of the
Securities. If the form of Securities is established by action taken pursuant to
a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Company Order
contemplated by Section 3.3 with respect to the authentication and delivery of
such Securities.
(b) The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods, if required by any
securities exchange on which the Securities may be listed, on a steel engraved
border or steel engraved borders or may be produced in any other manner
permitted by the rules of any securities exchange on which the Securities may be
listed, all as determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
14
<PAGE>
(c) Securities distributed to holders of Global Preferred Securities
(as defined in the Trust Agreement) upon the dissolution of the Issuer Trust
shall be distributed in the form of one or more Global Securities registered in
the name of a Depositary or its nominee, and deposited with the Securities
Registrar, as custodian for such Depositary, or with such Depositary, for credit
by the Depositary to the respective accounts of the beneficial owners of the
Securities represented thereby (or such other accounts as they may direct).
Securities distributed to holders of Preferred Securities other than Global
Preferred Securities upon the dissolution of the Issuer Trust shall not be
issued in the form of a Global Security or any other form intended to facilitate
book-entry trading in beneficial interests in such Securities.
Section 2.2. Form of Face of Security.
FIRST UNITED CORPORATION
______% Junior Subordinated Deferrable Interest Debentures due __________, 2029
[If the Security is a Restricted Security, insert - THE SECURITIES
EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (A) BY ANY INITIAL INVESTOR THAT IS NOT A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT,
(I) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (II) IN AN OFFSHORE TRANSACTION COMPLYING WITH THE PROVISIONS OF RULE 903
OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (III) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), OR (B) BY AN INITIAL INVESTOR THAT IS A QUALIFIED
INSTITUTIONAL BUYER OR BY ANY SUBSEQUENT INVESTOR, AS SET FORTH IN (A) ABOVE
AND, IN ADDITION, TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND, IN EACH
CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER
JURISDICTIONS OF THE UNITED STATES. THE HOLDER OF THIS SECURITY AGREES THAT IT
WILL COMPLY WITH THE FOREGOING RESTRICTIONS. SECURITIES OWNED BY AN INITIAL
INVESTOR THAT IS NOT A QUALIFIED INSTITUTIONAL BUYER MAY NOT BE HELD IN GLOBAL
FORM AND MAY NOT BE TRANSFERRED WITHOUT CERTIFICATION THAT THE TRANSFER COMPLIES
WITH THE FOREGOING RESTRICTIONS, AS PROVIDED IN THE INDENTURE REFERRED TO BELOW.
NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED
BY RULE 144 FOR RESALES OF THE SECURITIES.]
No. $__________
First United Corporation, a Maryland corporation (hereinafter called
the "Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to First
United Capital Trust, or registered assigns, the principal sum of __________
Dollars on __________________, 2029, or such other principal amount represented
hereby as may be set forth in the records of the Securities Registrar
hereinafter referred to in accordance with the Indenture
15
<PAGE>
provided that the Company may shorten the Stated Maturity of the principal of
this Security to a date not earlier than __________________, 2004. The Company
further promises to pay interest on said principal from __________________,
1999, or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, quarterly (subject to deferral as set forth herein)
in arrears on March 31, June 30, September 30 and December 31 of each year,
commencing __________________, 1999 at the rate of _______% per annum, together
with Additional Sums, if any, as provided in Section 10.6 of the Indenture,
until the principal hereof is paid or duly provided for or made available for
payment; provided that any overdue principal, premium or Additional Sums and any
overdue installment of interest shall bear Additional Interest at the rate of
_______% per annum (to the extent that the payment of such interest shall be
legally enforceable), compounded quarterly from the dates such amounts are due
until they are paid or made available for payment, and such interest shall be
payable on demand. The amount of interest payable for any period less than a
full interest period shall be computed on the basis of a 360-day year of twelve
30-day months and the actual days elapsed in a partial month in such period. The
amount of interest payable for any full interest period shall be computed by
dividing the applicable rate per annum by four. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture, be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business on
the Regular Record Date for such interest installment, which shall be the 15th
day of March, June, September and December (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date. Any such interest
not so punctually paid or duly provided for shall forthwith cease to be payable
to the Holder on such Regular Record Date and may either be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities of this series not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in said Indenture.
So long as no Event of Default has occurred and is continuing, the
Company shall have the right, at any time during the term of this Security, from
time to time to defer the payment of interest on this Security for up to 20
consecutive quarterly interest payment periods with respect to each deferral
period (each an "Extension Period"), during which Extension Periods the Company
shall have the right to make partial payments of interest on any Interest
Payment Date, and at the end of which the Company shall pay all interest then
accrued and unpaid including Additional Interest, as provided below; provided
however, that no Extension Period shall extend beyond the Stated Maturity of the
principal of this Security, as then in effect, and no such Extension Period may
end on a date other than an Interest Payment Date; and provided further,
however, that during any such Extension Period, the Company shall 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 this Security,
including the Company's obligations associated with the Outstanding Preferred
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
any one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment or stockholder stock purchase plan or in connection
with the issuance of capital stock of the Company (or securities convertible
into or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of a reclassification, an exchange or conversion of any class or series
of the Company's capital stock (or any capital stock of a Subsidiary of the
Company) for any
16
<PAGE>
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,
(iii) 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, (iv) any declaration of a dividend in
connection with any Rights Plan, or the issuance of rights, stock or other
property under any 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). Prior
to the termination of any such Extension Period, the Company may further defer
the payment of interest, provided that no Extension Period shall exceed 20
consecutive quarterly interest payment periods, extend beyond the Stated
Maturity of the principal of this Security or end on a date other than an
Interest Payment Date. Upon the termination of any such Extension Period and
upon the payment of all accrued and unpaid interest and any Additional Interest
then due on any Interest Payment Date, the Company may elect to begin a new
Extension Period, subject to the above conditions. No 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 Additional Interest (to the extent that the
payment of such interest shall be legally enforceable) at the rate of _______%
per annum, compounded quarterly and calculated as set forth in the first
paragraph of this Security, from the date on which such amounts would otherwise
have been due and payable until paid or made available for payment. The Company
shall give the Holder of this Security and the Trustee notice of its election to
begin any Extension Period at least one Business Day prior to the next
succeeding Interest Payment Date on which interest on this Security would be
payable but for such deferral or so long as such securities are held by First
United Capital Trust, or at least one Business Day prior to the earlier of (i)
the next succeeding date on which Distributions on the Preferred Securities of
the Issuer Trust would be payable but for such deferral, and (ii) the date on
which the Property Trustee of the Issuer Trust is required to give notice to
holders of such Preferred Securities of the record date or the date such
Distributions are payable, but in any event not less than one Business Day prior
to such record date.
Payment of the principal of and interest on this Security will be made
at the office or agency of the Company maintained for that purpose in the United
States, in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts; provided
however, that at the option of the Company payment of interest may be made (i)
by check mailed to the address of the Person entitled thereto as such address
shall appear in the Securities Register, or (ii) if to a Holder of $1,000,000 or
more in aggregate principal amount of this Security, by wire transfer in
immediately available funds upon written request to the Trustee not later than
15 calendar days prior to the date on which the interest is payable.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and subject in right of payments to the prior
payment in full of all Senior Indebtedness, and this Security is issued subject
to the provisions of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, (i) agrees to and shall be bound by such
provisions, (ii) authorizes and directs the Trustee on his or her behalf to take
such actions as may be necessary or appropriate to effectuate the subordination
so provided, and (iii) appoints the Trustee his or her attorney-in-fact for any
and all such purposes. Each Holder hereof, by his or her acceptance hereof,
waives all notice of the acceptance of the subordination provisions contained
herein and in the Indenture by each holder of Senior Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each such holder upon
said provisions.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof,
17
<PAGE>
which further provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual or facsimile signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
FIRST UNITED CORPORATION
By:
Name:
Title:
Attest:
Secretary or Assistant Secretary
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
Dated:
BANKERS TRUST COMPANY,
as Trustee
By: __________________
Name:
Title:
Section 2.3. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued under the
Junior Subordinated Indenture, dated as of _______, 1999 (herein called the
"Indenture"), between the Company and Bankers Trust Company, as Trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee, the holders of
Senior Indebtedness and the Holders of the Securities, and of the terms upon
which the Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face hereof, limited in
aggregate principal amount to $______________.
All terms used in this Security that are defined in the Indenture or,
if not defined in the Indenture,
18
<PAGE>
in the Amended and Restated Trust Agreement dated as of __________________, 1999
(as modified, amended or supplemented from time to time the "Trust Agreement"),
relating to First United Capital Trust (the "Issuer Trust") among the Company,
as Depositor, the Trustees named therein and the Holders from time to time of
the Trust Securities issued pursuant thereto shall have the meanings assigned to
them in the Indenture or the Trust Agreement, as the case may be.
The Company has the right to redeem this Security (i) on or after
__________________, 2004, in whole at any time or in part from time to time, or
(ii) in whole (but not in part), at any time within 90 days following the
occurrence and during the continuation of a Tax Event, Investment Company Event,
or Capital Treatment Event, in each case at the Redemption Price described
below, and subject to possible regulatory approval. The Redemption Price shall
equal 100% of the principal amount hereof being redeemed, together with accrued
interest to but excluding the date fixed for redemption.
In the event of redemption of this Security in part only, a new
Security or Securities for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.
[If applicable, insert - The Indenture contains provisions for
defeasance at any time [of the entire indebtedness of this Security] [or]
[certain restrictive covenants and Events of Default with respect to this
Security] [, in each case] upon compliance by the Company with certain
conditions set forth in the Indenture.]
The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee at any time to enter into a supplemental indenture or
indentures for the purpose of modifying in any manner the rights and obligations
of the Company and of the Holders of the Securities, with the consent of the
Holders of not less than a majority in principal amount of the Outstanding
Securities to be affected by such supplemental indenture. The Indenture also
contains provisions permitting Holders of specified percentages in principal
amount of the Securities at the time Outstanding, on behalf of the Holders of
all Securities, to waive compliance by the Company with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.
[If the Security is not a Discount Security, insert - As provided in
and subject to the provisions of the Indenture, if an Event of Default with
respect to the Securities at the time Outstanding occurs and is continuing, then
and in every such case the Trustee or the Holders of not less than 25% in
aggregate principal amount of the Outstanding Securities may declare the
principal amount of all the Securities to be due and payable immediately, by a
notice in writing to the Company (and to the Trustee if given by Holders),
provided that, if upon an Event of Default, the Trustee or such Holders fail to
declare the principal of all the Outstanding Securities to be immediately due
and payable, the holders of at least 25% in aggregate Liquidation Amount (as
defined in the Trust Agreement) of the Preferred Securities then outstanding
shall have the right to make such declaration by a notice in writing to the
Company and the Trustee; and upon any such declaration the principal amount of
and the accrued interest (including any Additional Interest) on all the
Securities shall become immediately due and payable, provided that the payment
of principal and interest (including any Additional Interest) on such Securities
shall remain subordinated to the extent provided in Article XIII of the
Indenture.]
[If the Security is a Discount Security, insert - As provided in and
subject to the provisions of the Indenture, if an Event of Default with respect
to the Securities at the time Outstanding occurs and is
19
<PAGE>
continuing, then and in every such case the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Outstanding Securities may declare
an amount of principal of the Securities to be due and payable immediately, by a
notice in writing to the Company (and to the Trustee if given by Holders),
provided that, if upon an Event of Default, the Trustee or such Holders fail to
declare such principal amount of the Outstanding Securities to be immediately
due and payable, the Holders of at least 25% in aggregate Liquidation Amount (as
defined in the Trust Agreement) of the Preferred Securities then outstanding
shall have the right to make such declaration by a notice in writing to the
Company and the Trustee. The principal amount payable upon such acceleration
shall be equal to [insert formula for determining the amount]. Upon any such
declaration, such amount of the principal of and the accrued interest (including
any Additional Interest) on all the Securities shall become immediately due and
payable, provided that the payment of such principal and interest (including any
Additional Interest) on all the Securities shall remain subordinated to the
extent provided in Article XIII of the Indenture. Upon payment (i) of the amount
of principal so declared due and payable and (ii) of interest on any overdue
principal, premium and interest (in each case to the extent that the payment of
such interest shall be legally enforceable), all of the Company's obligations in
respect of the payment of the principal of and premium and interest, if any, on
this Security shall terminate.]
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest (including Additional Interest) on this Security at the times, place
and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Securities
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained under Section 10.2 of the Indenture
for such purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Securities Registrar duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Securities, of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
As provided in the Indenture and subject to certain limitations therein
set forth, Securities are exchangeable for a like aggregate principal amount of
Securities and of like tenor of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Company and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Security agrees that for United States federal, state and
local tax purposes it is intended that this Security constitute indebtedness.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
20
<PAGE>
THIS SECURITY IS A DIRECT AND UNSECURED OBLIGATION OF THE COMPANY, DOES
NOT EVIDENCE DEPOSITS AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER INSURER OR GOVERNMENT AGENCY.
Section 2.4. Additional Provisions Required in Global Security.
Unless otherwise specified as contemplated by Section 3.1, any Global
Security issued hereunder shall, in addition to the provisions contained in
Sections 2.2 and 2.3, bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
Section 2.5. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially
the following form:
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: BANKERS TRUST COMPANY,
as Trustee
By:
-----------------------------------
Authorized Signatory
ARTICLE III
THE SECURITIES
Section 3.1. Title and Terms.
(a) The aggregate principal amount of Securities that may be
authenticated and delivered under this Indenture is $______________.
(b) Subject to Section 3.16, the Securities' Stated Maturity shall be
__________________, 2029.
(c) The Securities, established pursuant to a Board Resolution, shall
bear interest at a per
21
<PAGE>
annum rate equal to _______% from __________________, 1999 or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, as the case may be, payable quarterly (subject to deferral as set forth in
Section 3.12), in arrears, on March 31, June 30, September 30 and December 31 of
each year, commencing __________________, 1999, until the principal thereof is
paid or made available for payment. Interest will compound quarterly and will
accrue at a per annum rate equal to _______% to the extent permitted by
applicable law, on any interest installment in arrears for more than one
quarterly period or during an extension of an interest payment period as set
forth below in Section 3.12.
(d) The principal of (and premium, if any) and interest on the
Securities shall be payable at the office or agency of the Paying Agent in the
United States maintained for such purpose and at any other office or agency
maintained by the Company for such purpose in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts; provided, however, that at the option of the
Company payment of interest may be made (i) by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register or (ii) by wire transfer in immediately available funds at such place
and to such account as may be designated by the Person entitled thereto as
specified in the Security Register.
(e) Securities may be issuable in whole or in part in the form of one
or more Global Securities and, in such case, the Depositary for such Global
Securities shall be The Depository Trust Company.
(f) The securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article XIII.
Section 3.2. Denominations.
The Securities shall be in registered form without coupons and shall be
issuable in denominations of $_______ and any integral multiple thereof.
Section 3.3. Execution, Authentication, Delivery and Dating.
(a) The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its Chief Executive
Officer, President or one of its Vice Presidents, and attested by its Secretary
or one of its Assistant Secretaries. The signature of any of these officers on
the Securities may be manual or facsimile.
(b) Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities. At any time and from
time to time after the execution and delivery of this Indenture, the Company may
deliver Securities executed by the Company to the Trustee for authentication,
together with a Company Order for the authentication and delivery of such
Securities, and the Trustee in accordance with the Company Order shall
authenticate and deliver such Securities. If the form or terms of the Securities
have been established by or pursuant to one or more Board Resolutions as
permitted by Sections 2.1 and 3.1, in authenticating such Securities, and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive, and (subject to
Section 6.1) shall be fully protected in relying upon, an Opinion of Counsel
stating:
22
<PAGE>
(i) if the form of such Securities has been established by or
pursuant to Board Resolution as permitted by Section 2.1, that such
form has been established in conformity with the provisions of this
Indenture;
(ii) if the terms of such Securities have been established by
or pursuant to Board Resolution as permitted by Section 3.1, that such
terms have been established in conformity with the provisions of this
Indenture; and
(iii) that such Securities, when authenticated and delivered
by the Trustee and issued by the Company in the manner and subject to
any conditions specified in such Opinion of Counsel, will constitute
valid and legally binding obligations of the Company enforceable in
accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to
general equity principles.
(c) If such form or terms have been so established, the Trustee shall
not be required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner that
is not reasonably acceptable to the Trustee.
(d) Notwithstanding the provisions of Section 3.1 and Section 3.3(b),
if all Securities are not to be originally issued at one time, it shall not be
necessary to deliver the Officers' Certificate otherwise required pursuant to
Section 3.1 or the Company Order and Opinion of Counsel otherwise required
pursuant to Section 3.3(b) at or prior to the authentication of each Security if
such documents are delivered at or prior to the authentication upon original
issuance of the first Security to be issued.
(e) Each Security shall be dated the date of its authentication.
(f) No Security shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose, unless there appears on such Security
a certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual or facsimile signature of one of its
authorized officers, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such security has been duly authenticated
and delivered hereunder. Notwithstanding the foregoing, if any Security shall
have been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 3.10, for all purposes of this Indenture
such Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
Section 3.4. Temporary Securities.
(a) Pending the preparation of definitive Securities, the Company may
execute, and upon receipt of a Company Order the Trustee shall authenticate and
deliver, temporary Securities that are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
(b) If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary
23
<PAGE>
Securities shall be exchangeable for definitive Securities upon surrender of the
temporary Securities at the office or agency of the Company designated for that
purpose without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor one or more definitive securities,
of any authorized denominations having the same Original Issue Date and Stated
Maturity and having the same terms as such temporary Securities. Until so
exchanged, the temporary Securities shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities.
Section 3.5. Global Securities.
(a) Each Global Security issued under this Indenture shall be
registered in the name of the Depositary designated by the Company for such
Global Security or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such Global Security shall
constitute a single Security for all purposes of this Indenture.
(b) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the name
of any Person other than the Depositary for such Global Security or a nominee
thereof unless (i) such Depositary advises the Trustee in writing that such
Depositary is no longer willing or able to properly discharge its
responsibilities as Depositary with respect to such Global Security, and the
Company is unable to locate a qualified successor within 90 days of receipt of
such notice from the Depositary, (ii) the Company executes and delivers to the
Trustee a Company Order stating that the Company elects to terminate the
book-entry system through the Depositary, or (iii) there shall have occurred and
be continuing an Event of Default.
(c) If any Global Security is to be exchanged for other Securities or
cancelled in whole, it shall be surrendered by or on behalf of the Depositary or
its nominee to the Securities Registrar for exchange or cancellation as provided
in this Article III. If any Global Security is to be exchanged for other
Securities or canceled in part, or if another Security is to be exchanged in
whole or in part for a beneficial interest in any Global Security, then either
(i) such Global Security shall be so surrendered for exchange or cancellation as
provided in this Article III or (ii) the principal amount thereof shall be
reduced, or increased by an amount equal to the portion thereof to be so
exchanged or canceled, or equal to the principal amount of such other Security
to be so exchanged for a beneficial interest therein, as the case may be, by
means of an appropriate adjustment made on the records of the Securities
Registrar, whereupon the Trustee, in accordance with the Applicable Procedures,
shall instruct the Depositary or its authorized representative to make a
corresponding adjustment to its records. Upon any such surrender or adjustment
of a Global Security by the Depositary, accompanied by registration
instructions, the Trustee shall, subject to Section 3.6(b) and as otherwise
provided in this Article III, authenticate and deliver any Securities issuable
in exchange for such Global Security (or any portion thereof) in accordance with
the instructions of the Depositary. The Trustee shall not be liable for any
delay in delivery of such instructions and may conclusively rely on, and shall
be fully protected in relying on, such instructions.
(d) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Article III, Section 9.6 or 11.6 or otherwise,
shall be authenticated and delivered in the form of, and shall be, a Global
Security, unless such Security is registered in the name of a Person other than
the Depositary for such Global Security or a nominee thereof.
(e) The Depositary or its nominee, as the registered owner of a Global
Security, shall be the
24
<PAGE>
Holder of such Global Security for all purposes under this Indenture and the
Securities, and owners of beneficial interests in a Global Security shall hold
such interests pursuant to the Applicable Procedures. Accordingly, any such
owner's beneficial interest in a Global Security shall be shown only on, and the
transfer of such interest shall be effected only through, records maintained by
the Depositary or its nominee or agent. Neither the Trustee nor the Securities
Registrar shall have any liability in respect of any transfers effected by the
Depositary.
(f) The rights of owners of beneficial interests in a Global Security
shall be exercised only through the Depositary and shall be limited to those
established by law and agreements between such owners and the Depositary and/or
its Agent Members.
Section 3.6. Registration, Transfer and Exchange Generally; Certain
Transfers and Exchanges; Securities Act Legends.
(a) The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register in which, subject to such reasonable regulations as it
may prescribe, the Company shall provide for the registration of Securities and
transfers of Securities. Such register is herein sometimes referred to as the
"Securities Register." The Trustee is hereby appointed "Securities Registrar"
for the purpose of registering Securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any Security at the
offices or agencies of the Company designated for that purpose, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Securities of any
authorized denominations of like tenor and aggregate principal amount and
bearing such restrictive legends as may be required by this Indenture.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations, of like tenor and aggregate
principal amount and bearing such restrictive legends as may be required by this
Indenture, upon surrender of the Securities to be exchanged at such office or
agency. Whenever any securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Securities
that the Holder making the exchange is entitled to receive.
All Securities issued upon any transfer or exchange of Securities shall
be the valid obligations of the Company, evidencing the same debt, and entitled
to the same benefits under this Indenture, as the Securities surrendered upon
such transfer or exchange.
Every Security presented or surrendered for transfer or exchange shall
(if so required by the Company or the Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Securities Registrar, duly executed by the Holder thereof or
such Holder's attorney duly authorized in writing.
No service charge shall be made to a Holder for any transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any transfer or exchange of Securities.
Neither the Company nor the Trustee shall be required, pursuant to the
provisions of this Section, (i) to issue, register the transfer of, or exchange
any Security during a period beginning at the opening of business 15 days before
the day of selection for redemption of Securities pursuant to Article XI and
ending at the close of business on the day of mailing of the notice of
redemption, or (ii) to register the
25
<PAGE>
transfer of or exchange any Security so selected for redemption in whole or in
part, except, in the case of any such Security to be redeemed in part, any
portion thereof not to be redeemed.
(b) Certain Transfers and Exchanges. Notwithstanding any other
provision of this Indenture, transfers and exchanges of Securities and
beneficial interests in a Global Security shall be made only in accordance with
this Section 3.6(b).
(i) Restricted Non-Global Security to Global Security. If the
Holder of a Restricted Security (other than a Global Security) wishes
at any time to transfer all or any portion of such Security to a Person
who wishes to take delivery thereof in the form of a beneficial
interest in a Global Security, such transfer may be effected only in
accordance with the provisions of this clause (b)(i) and subject to the
Applicable Procedures. Upon receipt by the Securities Registrar of (A)
such Security as provided in Section 3.6(a) and instructions
satisfactory to the Securities Registrar directing that a beneficial
interest in the Global Security in a specified principal amount not
greater than the principal amount of such Security be credited to a
specified Agent Member's account and (B) a Restricted Securities
Certificate duly executed by such Holder or such Holder's attorney duly
authorized in writing, then the Securities Registrar shall cancel such
Security (and issue a new Security in respect of any untransferred
portion thereof) as provided in Section 3.6(a) and increase the
aggregate principal amount of the Global Security by the specified
principal amount as provided in Section 3.5(c).
(ii) Non-Global Security to Non-Global Security. A Security
that is not a Global Security may be transferred, in whole or in part,
to a Person who takes delivery in the form of another Security that is
not a Global Security as provided in Section 3.6(a), provided that if
the Security to be transferred in whole or in part is a Restricted
Security, the Securities Registrar shall have received a Restricted
Securities Certificate duly executed by the transferor Holder or such
Holder's attorney duly authorized in writing.
(iii) Exchanges Between Global Security and Non-Global
Security. A beneficial interest in a Global Security may be exchanged
for a Security that is not a Global Security as provided in Section
3.5.
(iv) Certain Initial Transfers of Non-Global Securities. In
the case of Securities initially issued other than in global form, an
initial transfer or exchange of such Securities that does not involve
any change in beneficial ownership may be made to an Institutional
Accredited Investor or Investors as if such transfer or exchange were
not an initial transfer or exchange; provided, however that written
certification shall be provided by the transferee and transferor of
such Securities to the Securities Registrar that such transfer or
exchange does not involve a change in beneficial ownership.
(c) Restricted Securities Legend. Except as set forth below, all
Securities shall bear a Restricted Securities Legend:
(i) subject to the following clauses of this Section 3.6(c), a
Security or any portion thereof that is exchanged, upon transfer or
otherwise, for a Global Security or any portion thereof shall bear the
Restricted Securities Legend while represented thereby;
(ii) subject to the following clauses of this Section 3.6(c),
a new Security which is not a Global Security and is issued in exchange
for another Security (including a Global Security) or
26
<PAGE>
any portion thereof, upon transfer or otherwise, shall, if such new
Security is required pursuant to Section 3.6(b)(ii) or (iii) to be
issued in the form of a Restricted Security, bear a Restricted
Securities Legend;
(iii) a new Security (other than a Global Security) that does
not bear a Restricted Security Legend may be issued in exchange for or
in lieu of a Restricted Security or any portion thereof that bears such
a legend if, in the Company's judgment, placing such a legend upon such
new Security is not necessary to ensure compliance with the
registration requirements of the Securities Act, and the Trustee, at
the written direction of the Company in the form of an Officers'
Certificate, shall authenticate and deliver such a new Security as
provided in this Article III;
(iv) notwithstanding the foregoing provisions of this Section
3.6(c), a Successor Security of a Security that does not bear a
Restricted Securities Legend shall not bear such form of legend unless
the Company has reasonable cause to believe that such Successor
Security is a "restricted security" within the meaning of Rule 144, in
which case the Trustee, at the written direction of the Company in the
form of an Officers' Certificate, shall authenticate and deliver a new
Security bearing a Restricted Securities Legend in exchange for such
Successor Security as provided in this Article III; and
(v) Securities distributed to a holder of Preferred Securities
upon dissolution of an Issuer Trust shall bear a Restricted Securities
Legend if the Preferred Securities so held bear a similar legend.
Section 3.7. Mutilated, Lost and Stolen Securities.
(a) If any mutilated Security is surrendered to the Trustee together
with such security or indemnity as may be required by the Company or the Trustee
to save each of them harmless, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security, of like tenor and
aggregate principal amount, bearing the same legends, and bearing a number not
contemporaneously outstanding.
(b) If there shall be delivered to the Company and to the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security, and (ii) such security or indemnity as may be required by them to save
each of them harmless, then, in the absence of notice to the Company or the
Trustee that such Security has been acquired by a bona fide purchaser or a
protected purchaser, the Company shall execute and upon its request the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security, of like tenor and aggregate principal amount and
bearing the same legends as such destroyed, lost or stolen Security, and bearing
a number not contemporaneously outstanding.
(c) If any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
(d) Upon the issuance of any new Security under this Section 3.7, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
(e) Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen
27
<PAGE>
Security shall constitute an original additional contractual obligation of the
Company, whether or not the destroyed, lost or stolen Security shall be at any
time enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Securities duly
issued hereunder.
(f) The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
Section 3.8. Payment of Interest and Additional Interest; Interest Rights
Preserved.
(a) Interest and Additional Interest on any Security that is payable,
and is punctually paid or duly provided for, on any Interest Payment Date, shall
be paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest in respect of Securities, except that, unless otherwise
provided in the Securities, interest payable on the Stated Maturity of the
principal of a Security shall be paid to the Person to whom principal is paid.
The initial payment of interest on any Security that is issued between a Regular
Record Date and the related Interest Payment Date shall be payable as provided
in such Security or in the Board Resolution pursuant to Section 3.1 with respect
to the Securities.
(b) Any interest on any Security that is due and payable, but is not
timely paid or duly provided for, on any Interest Payment Date for Securities
(herein called "Defaulted Interest"), shall forthwith cease to be payable to the
registered Holder on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in clause (i) or (ii) below:
(i) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities in respect of
which interest is in default (or their respective Predecessor
Securities) are registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest, which shall be fixed
in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Security and the date of the proposed payment, and which shall be fixed
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 be not more than 15 days and
not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first class, postage
prepaid, to each Holder of a Security at the address of such Holder as
it appears in the Securities Register not less than 10 days prior to
such Special Record Date. The Trustee may, in its discretion, in the
name and at the expense of the Company, cause a similar notice to be
published at least once in a newspaper, customarily published in the
English language on each Business Day and of general circulation in the
Borough of Manhattan, The City of New York, but such publication shall
not be a condition precedent to the establishment of such Special
Record Date. Notice of the proposed payment of such Defaulted Interest
and the Special Record
28
<PAGE>
Date therefor having been mailed as aforesaid, such Defaulted Interest
shall be paid to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered on such Special
Record Date and shall no longer be payable pursuant to the following
clause (ii).
(ii) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities in respect of which
interest is in default may be listed and, upon such notice as may be
required by such exchange (or by the Trustee if the Securities are not
listed), if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this clause (ii), such payment shall be
deemed practicable by the Trustee.
(c) Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Security shall carry the rights to interest accrued and unpaid, and to
accrue interest, that were carried by such other Security.
Section 3.9. Persons Deemed Owners.
(a) The Company, the Trustee and any agent of the Company or the
Trustee shall treat the Person in whose name any Security is registered as the
owner of such Security for the purpose of receiving payment of principal of and
(subject to Section 3.8) any interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and none of the
Company, the Trustee or any agent of the Company or the Trustee shall be
affected by notice to the contrary.
(b) No holder of any beneficial interest in any Global Security held on
its behalf by a Depositary shall have any rights under this Indenture with
respect to such Global Security, and such Depositary may be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the owner of
such Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy or
other authorization furnished by a Depositary or impair, as between a Depositary
and such holders of beneficial interests, the operation of customary practices
governing the exercise of the rights of the Depositary (or its nominee) as
Holder of any Security.
Section 3.10. Cancellation.
All Securities surrendered for payment, redemption, transfer or
exchange shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee, and any such Securities, and Securities surrendered
directly to the Trustee for any such purpose, shall be promptly canceled by it.
The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder that the Company may
have acquired in any manner whatsoever, and all Securities so delivered shall be
promptly canceled by the Trustee. No Securities shall be authenticated in lieu
of or in exchange for any Securities canceled as provided in this Section 3.10,
except as expressly permitted by this Indenture. All canceled Securities shall
be destroyed by the Trustee and the Trustee shall deliver to the Company a
certificate of such destruction.
29
<PAGE>
Section 3.11. Computation of Interest.
Interest on the Securities for any period shall be computed on the
basis of a 360-day year of twelve 30-day months and the actual number of days
elapsed in any partial month in such period, and interest on the Securities for
a full period shall be computed by dividing the rate per annum by the number of
interest periods that together constitute a full twelve months.
Section 3.12. Deferrals of Interest Payment Dates.
(a) So long as no Event of Default has occurred and is continuing, the
Company shall have the right, at any time during the term of the Securities,
from time to time to defer the payment of interest on such Securities for such
period or periods (each an "Extension Period") not to exceed the number of
consecutive interest periods that equal five years with respect to each
Extension Period, during which Extension Periods the Company shall have the
right to make partial payments of interest on any Interest Payment Date. No
Extension Period shall end on a date other than an Interest Payment Date. At the
end of any such Extension Period, the Company shall pay all interest then
accrued and unpaid on the Securities (together with Additional Interest thereon,
if any, at the rate specified for the Securities to the extent permitted by
applicable law); provided, however, that no Extension Period shall extend beyond
the Stated Maturity of the principal of the Securities; and provided further,
however, that, during any such Extension Period, the Company shall 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 Securities,
including the Company's obligations associated with the Outstanding Preferred
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
any one or more employees, officers, directors or consultants, in connection
with a dividend reinvestment or stockholder stock purchase plan or in connection
with the issuance of capital stock of the Company (or securities convertible
into or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (B) as a
result of a reclassification, an exchange or conversion of any class or series
of the Company's capital stock (or any capital stock of a Subsidiary of the
Company) for any class or series of the Company's capital stock or of any class
or series of the Company's indebtedness for any class or series of the Company's
capital stock, (C) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (D) any
declaration of a dividend in connection with any Rights Plan, or the issuance of
rights, stock or other property under any Rights Plan, or the redemption or
repurchase of rights pursuant thereto, or (E) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock issuable
upon exercise of such warrants, options or other rights is the same stock as
that on which the dividend is being paid or ranks pari passu with or junior to
such stock). Prior to the termination of any such Extension Period, the Company
may further defer the payment of interest, provided that no Event of Default has
occurred and is continuing and provided further, that no Extension Period shall
exceed the period or periods specified in such Securities, extend beyond the
Stated Maturity of the principal of such Securities or end on a date other than
an Interest Payment Date. Upon the termination of any such Extension Period and
upon the payment of all accrued and unpaid interest and any Additional Interest
then due on any Interest Payment Date, the Company may elect to begin a new
Extension Period, subject to the above conditions. No interest or Additional
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 Additional Interest. The Company
shall give the Holders of the Securities and
30
<PAGE>
the Trustee notice of its election to begin any such Extension Period at least
one Business Day prior to the next succeeding Interest Payment Date on which
interest on Securities would be payable but for such deferral or, with respect
to any Securities issued to the Issuer Trust, so long as any such Securities are
held by the Issuer Trust, at least one Business Day prior to the earlier of (x)
the next succeeding date on which Distributions (as defined in the Trust
Agreement) on the Preferred Securities of the Issuer Trust would be payable but
for such deferral, and (y) the date on which the Property Trustee of the Issuer
Trust is required to give notice to holders of such Preferred Securities of the
record date or the date such Distributions are payable, but in any event not
less than one Business Day prior to such record date.
(b) The Trustee shall promptly give notice of the Company's election to
begin any such Extension Period to the Holders of the Outstanding Securities.
Section 3.13. Right of Set-Off.
With respect to the Securities initially issued to the Issuer Trust,
notwithstanding anything to the contrary herein, the Company shall have the
right to set off any payment it is otherwise required to make in respect of any
such Security to the extent the Company has theretofore made, or is concurrently
on the date of such payment making, a payment under the Guarantee relating to
such Security or to a holder of Preferred Securities pursuant to an action
undertaken under Section 5.8 of this Indenture.
Section 3.14. Agreed Tax Treatment.
Each Security issued hereunder shall provide that the Company and, by
its acceptance of a Security or a beneficial interest therein, the Holder of,
and any Person that acquires a beneficial interest in, such Security agree that
for United States federal, state and local tax purposes it is intended that such
Security constitutes indebtedness.
Section 3.15. CUSIP Numbers.
The Company, in issuing the Securities, may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notice of redemption and other similar or related materials as a convenience to
Holders; provided that any such notice or other materials may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of redemption or other materials
and that reliance may be placed only on the other identification numbers printed
on the Securities, and any such redemption shall not be affected by any defect
in or omission of such numbers.
Section 3.16. Shortening of Stated Maturity.
The Company shall have the right to shorten the Stated Maturity of the
principal of the Securities at any time to any date not earlier than
__________________, 2004, provided that the Company shall give notice to the
Holders, the Trustee and, in the case of Securities issued to an Issuer Trust,
the Issuer Trust of such shortening no less than 90 days prior to the
effectiveness thereof.
31
<PAGE>
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall, upon Company Request, cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for and as otherwise provided
in this Section 4.1) and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when:
(a) either
(i) all Securities theretofore authenticated and delivered
(other than (A) Securities that have been destroyed, lost or stolen and
that have been replaced or paid as provided in Section 3.7 and (B)
Securities for whose payment money has theretofore been deposited in
trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 10.3) have been delivered to the Trustee for cancellation; or
(ii) all such Securities not theretofore delivered to the
Trustee for cancellation
(A) have become due and payable,
(B) will become due and payable at their Stated
Maturity within one year of the date of deposit, or
(C) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name, and at the
expense, of the Company,
and the Company, in the case of subclause (ii)(A), (B) or (C) above, has
deposited or caused to be deposited with the Trustee as trust funds in trust for
such purpose an amount in the currency or currencies in which the Securities are
payable sufficient to pay and discharge the entire indebtedness on such
Securities not theretofore delivered to the Trustee for cancellation, for the
principal (and premium, if any) and interest (including any Additional Interest)
to the date of such deposit (in the case of Securities that have become due and
payable) or to the Stated Maturity or Redemption Date, as the case may be;
(b) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
(d) Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 6.7, the obligations
of the Company to any Authenticating Agent under Section 6.14 and, if money
shall have been deposited with the Trustee pursuant to subclause (ii) of clause
(a) of this Section, the obligations of the Trustee under Section 4.2 and the
last paragraph of Section 10.3 shall survive.
32
<PAGE>
Section 4.2. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3, all
money deposited with the Trustee pursuant to Section 4.1 shall be held in trust
and applied by the Trustee, in accordance with the provisions of the Securities
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest and Additional Interest for the payment of which such money or
obligations have been deposited with or received by the Trustee.
ARTICLE V
REMEDIES
Section 5.1. Events of Default.
"Event of Default", wherever used herein with respect to the
Securities, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) default in the payment of any interest upon any Security, including
any Additional Interest in respect thereof, when it becomes due and payable and
continuance of such default for a period of 30 days (subject to the deferral of
any due date in the case of an Extension Period);
(b) default in the payment of (and premium, if any, on) the principal
of any Security at its Stated Maturity;
(c) failure on the part of the Company duly to observe or perform any
other of the covenants or agreements on the part of the Company in the
Securities or in this Indenture for a period of 90 days after the date on which
written notice of such failure, requiring the Company to remedy the same, shall
have been given to the Company by the Trustee by registered or certified mail or
to the Company and the Trustee by the Holders of at least 25% in aggregate
principal amount of the Outstanding Securities; or
(d) the occurrence of the appointment of a receiver or other similar
official in any liquidation, insolvency or similar proceeding with respect to
the Company or all or substantially all of its property; or a court or other
governmental agency shall enter a decree or order appointing a receiver or
similar official and such decree or order shall remain unstayed and undischarged
for a period of 60 days.
33
<PAGE>
Section 5.2. Acceleration of Maturity; Rescission and Annulment.
(a) If an Event of Default (other than an Event of Default specified in
Section 5.1(d)) with respect to Securities at the time Outstanding occurs and is
continuing, then, and in every such case, the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Outstanding Securities may declare
the principal amount (or, if the Securities are Discount Securities, such
portion of the principal amount as may be specified in the terms) of all the
Securities to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), provided, however that, if,
upon an Event of Default, the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Securities fail to declare the principal of
all the Outstanding Securities to be immediately due and payable, the holders of
at least 25% in aggregate Liquidation Amount (as defined in the Trust Agreement)
of the Preferred Securities issued by the Issuer Trust then outstanding shall
have the right to make such declaration by a notice in writing to the Company
and the Trustee; and upon any such declaration such principal amount (or
specified portion thereof) of and the accrued interest (including any Additional
Interest) on all the Securities shall become immediately due and payable. If an
Event of Default specified in Section 5.1(d) with respect to Securities at the
time Outstanding occurs, the principal amount of all the Securities (or, if the
Securities are Discount Securities, such portion of the principal amount of such
Securities as may be specified by the terms) shall automatically, and without
any declaration or other action on the part of the Trustee or any Holder, become
immediately due and payable. Payment of principal and interest (including any
Additional Interest) on such Securities shall remain subordinated to the extent
provided in Article XIII notwithstanding that such amount shall become
immediately due and payable as herein provided.
(b) At any time after such a declaration of acceleration with respect
to the Securities has been made and before a judgment or decree for payment of
the money due has been obtained by the Trustee as hereinafter in this Article V,
provided the Holders of a majority in aggregate principal amount of the
Outstanding Securities, by written notice to the Company and the Trustee, may
rescind and annul such declaration and its consequences if:
(i) the Company has paid or deposited with the Trustee a sum
sufficient to pay:
(A) all overdue installments of interest on all Securities;
(B) any accrued Additional Interest on all Securities;
(C) the principal of (and premium, if any on) any
Securities that have become due otherwise than by such
declaration of acceleration and interest and Additional
Interest thereon at the rate borne by the Securities; and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel; and
(ii) all Events of Default with respect to Securities, other
than the non-payment of the principal of Securities that has become due
solely by such acceleration, have been cured or waived as provided in
Section 5.13.
(c) If the Holders of Securities fail to annul such declaration and
waive such default, the holders of a majority in aggregate Liquidation Amount
(as defined in the Trust Agreement) of Preferred
34
<PAGE>
Securities issued by the Issuer Trust then outstanding shall also have the right
to rescind and annul such declaration and its consequences by written notice to
the Company and the Trustee, subject to the satisfaction of the conditions set
forth in clauses (a) and (b) above of this Section 5.2.
(d) No such rescission shall affect any subsequent default or impair
any right consequent thereon.
Section 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee.
(a) The Company covenants that if:
(i) default is made in the payment of any installment of
interest (including any Additional Interest) on any Security when such
interest becomes due and payable and such default continues for a
period of 30 days or
(ii) default is made in the payment of the principal of (and
premium, if any, on) any Security at the Stated Maturity thereof,
then the Company will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of the Securities, the whole amount then due and payable
on the Securities for principal (and premium, if any) and interest (including
any Additional Interest), and, in addition thereto, all amounts owing the
Trustee under Section 6.7.
(b) If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, and may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Company or any other obligor upon such Securities
and collect the monies adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor upon the
Securities, wherever situated.
(c) If an Event of Default with respect to Securities occurs and is
continuing, the Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders of Securities by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
Section 5.4. Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial or
administrative proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors,
(a) the Trustee (irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
on the Company for the payment of overdue principal (and premium, if any) or
interest (including any Additional Interest)) shall be entitled and empowered,
by intervention in such proceeding or otherwise:
35
<PAGE>
(i) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest (including any Additional
Interest) owing and unpaid in respect to the Securities and to file
such other papers or documents as may be necessary or advisable and to
take any and all actions as are authorized under the Trust Indenture
Act in order to have the claims of the Holders and any predecessor to
the Trustee under Section 6.7 allowed in any such judicial or
administrative proceedings; and
(ii) in particular, the Trustee shall be authorized to collect
and receive any monies or other property payable or deliverable on any
such claims and to distribute the same in accordance with Section 5.6;
and
(b) any custodian, receiver, assignee, trustee, liquidator,
sequestrator, conservator (or other similar official) in any such judicial or
administrative proceeding is hereby authorized by each Holder to make such
payments to the Trustee for distribution in accordance with Section 5.6, and in
the event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Trustee any amount due to it and any predecessor
Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
Section 5.5. Trustee May Enforce Claim Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, subject to
Article XIII and after provision for the payment of all the amounts owing the
Trustee and any predecessor Trustee under Section 6.7, its agents and counsel,
be for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
Section 5.6. Application of Money Collected.
Any money or property collected or to be applied by the Trustee with
respect to the Securities pursuant to this Article V shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money or property on account of principal (and premium, if
any) or interest (including any Additional Interest), upon presentation of the
Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any
predecessor Trustee under Section 6.7;
SECOND: Subject to Article XIII, to the payment of the amounts
then due and unpaid upon Securities for principal (and premium, if any) and
interest (including any Additional Interest) in respect of which or for the
benefit of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such
Securities for principal (and
36
<PAGE>
premium, if any) and interest (including any Additional Interest), respectively;
and
THIRD: The balance, if any, to the Person or Persons entitled
thereto.
Section 5.7. Limitation on Suits.
Subject to Section 5.8, no Holder of any Securities shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture or for the appointment of a receiver, assignee, trustee, liquidator,
sequestrator (or other similar official) or for any other remedy hereunder,
unless:
(a) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities;
(b) the Holders of not less than 25% in aggregate principal amount of
the Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
aggregate principal amount of the Outstanding Securities; it being understood
and intended that no one or more of such Holders shall have any right in any
manner whatever by virtue of, or by availing itself of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other Holders of
Securities, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such
Holders.
Section 5.8. Unconditional Right of Holders to Receive Principal, Premium
and Interest; Direct Action by Holders of Preferred
Securities.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Sections 3.8 and 3.12) interest (including any Additional Interest) on such
Security on the Stated Maturity (or in the case of redemption, on the Redemption
Date) and to institute suit for the enforcement of any such payment, and such
right shall not be impaired without the consent of such Holder. Any registered
holder of the Preferred Securities issued by the Issuer Trust shall have the
right, upon the occurrence of an Event of Default described in Section 5.1(a) or
5.1(b), to institute a suit directly against the Company for enforcement of
payment to such holder of principal of (and premium, if any) and (subject to
Sections 3.8 and 3.12) interest (including any Additional Interest) on the
Securities having a principal amount equal to the aggregate Liquidation Amount
(as defined in the Trust Agreement) of such Preferred Securities held by such
holder.
37
<PAGE>
Section 5.9. Restoration of Rights and Remedies.
If the Trustee, any Holder or any holder of Preferred Securities issued
by the Issuer Trust has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to the Trustee, such Holder or such
holder of Preferred Securities, then, and in every such case, the Company, the
Trustee, such Holders and such holder of Preferred Securities shall, subject to
any determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee, such Holder and such holder of Preferred Securities shall continue as
though no such proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative.
Except as otherwise provided in the last paragraph of Section 3.7, no
right or remedy herein conferred upon or reserved to the Trustee or the Holders
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.11. Delay or Omission Not Waiver.
(a) No delay or omission of the Trustee, any Holder of any Security
with respect to the Securities or any holder of any Preferred Security to
exercise any right or remedy accruing upon any Event of Default with respect to
the Securities shall impair any such right or remedy or constitute a waiver of
any such Event of Default or an acquiescence therein.
(b) Every right and remedy given by this Article V or by law to the
Trustee or to the Holders and the right and remedy given to the holders of
Preferred Securities by Section 5.8 may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee, the Holders or the holders of
Preferred Securities, as the case may be.
Section 5.12. Control by Holders.
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee, with respect to the
Securities, provided that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture,
(b) the Trustee may take any other action deemed proper by the Trustee
that is not inconsistent with such direction, and
(c) subject to the provisions of Section 6.1, the Trustee shall have
the right to decline to follow such direction if a Responsible Officer or
Officers of the Trustee shall, in good faith, determine that the proceeding so
directed would be unjustly prejudicial to the Holders not joining in any such
direction or would involve the Trustee in personal liability.
38
<PAGE>
Section 5.13. Waiver of Past Defaults.
(a) The Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities affected thereby and, the holders of a
majority in aggregate Liquidation Amount (as defined in the Trust Agreement) of
the Preferred Securities issued by the Issuer Trust may waive any past default
hereunder and its consequences except a default:
(i) in the payment of the principal of (and premium, if any)
or interest (including any Additional Interest) on any Security (unless
such default has been cured and the Company has paid to or deposited
with the Trustee a sum sufficient to pay all matured installments of
interest (including Additional Interest) and all principal of (and
premium, if any) all Securities due otherwise than by acceleration), or
(ii) in respect of a covenant or provision hereof that under
Article IX cannot be modified or amended without the consent of each
Holder of any Outstanding Security affected thereby.
(b) Any such waiver shall be deemed to be on behalf of the Holders of
all the Securities, or in the case of waiver by holders of Preferred Securities
issued by the Issuer Trust, by all holders of Preferred Securities issued by the
Issuer Trust.
(c) Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture, but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
Section 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may, in
its discretion, require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may, in its
discretion, assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant, but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in aggregate principal amount of the Outstanding
Securities, or to any suit instituted by any Holder for the enforcement of the
payment of the principal of (and premium, if any) or interest (including any
Additional Interest) on any Security on or after the Stated Maturity.
Section 5.15. Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
39
<PAGE>
ARTICLE VI
THE TRUSTEE
Section 6.1. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(i) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture, but in the case of any such certificates or opinions
that by any provisions hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct except that:
(i) this subsection shall not be construed to limit the
effect of subsection (a) of this Section 6.1;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of Holders pursuant to Section 5.12 relating to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture with respect to the Securities.
(d) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
40
<PAGE>
Section 6.2. Notice of Defaults.
Within 90 days after actual knowledge by a Responsible Officer of the
Trustee of the occurrence of any default hereunder with respect to the
Securities, the Trustee shall transmit by mail to all Holders of Securities, as
their names and addresses appear in the Securities Register, notice of such
default, unless such default shall have been cured or waived; provided, however,
that, except in the case of a default in the payment of the principal of (and
premium, if any) or interest (including any Additional Interest) on any
Security, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determines
that the withholding of such notice is in the interests of the Holders of
Securities; and provided further, that, in the case of any default of the
character specified in Section 5.1(c), no such notice to Holders of Securities
shall be given until at least 30 days after the occurrence thereof. For the
purpose of this Section 6.2, the term "default" means any event that is, or
after notice or lapse of time or both would become, an Event of Default with
respect to the Securities.
Section 6.3. Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, Security or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its choice and the advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that might be incurred by it in compliance with such
request or direction; provided, however, that nothing herein shall relieve the
Trustee of its obligations upon the occurrence of an Event of Default that has
not been cured or waived to exercise with respect to the Securities such of the
rights and powers vested in the Trustee by this Indenture, and to use the same
degree of care and skill in exercising such rights and powers as a reasonably
prudent person would 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, direction, consent,
41
<PAGE>
order, bond, indenture, Security or other paper or document, but the Trustee in
its discretion may make such inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
Section 6.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities. Neither the
Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of the Securities or the proceeds thereof.
Section 6.5. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Securities
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
6.8 and 6.13, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Securities
Registrar or such other agent.
Section 6.6. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
Section 6.7. Compensation and Reimbursement.
(a) The Company agrees to pay to the Trustee from time to time
reasonable compensation for all services rendered by it hereunder in such
amounts as the Company and the Trustee shall agree from time to time (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust).
(b) The Company agrees to reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its agents and
counsel), except any such expense disbursement or advance as may be attributable
to its negligence, bad faith or willful misconduct.
(c) Since the Issuer Trust is being formed solely to facilitate an
investment in the Preferred Securities, the Company, as Holder of the Common
Securities, hereby covenants to pay all debts and obligations (other than with
respect to the Preferred Securities and the Common Securities) and all
reasonable costs and expenses of the Issuer Trust (including without limitation
all costs and expenses
42
<PAGE>
relating to the organization of the Issuer Trust, the fees and expenses of the
trustees and all reasonable costs and expenses relating to the operation of the
Issuer Trust) and to pay any and all taxes, duties, assessments or governmental
charges of whatever nature (other than withholding taxes) imposed on the Issuer
Trust by the United States, or any taxing authority, so that the net amounts
received and retained by the Issuer Trust and the Property Trustee after paying
such expenses will be equal to the amounts the Issuer Trust and the Property
Trustee would have received had no such costs or expenses been incurred by or
imposed on the Issuer Trust. The foregoing obligations of the Company are for
the benefit of, and shall be enforceable by, any person to whom any such debts,
obligations, costs, expenses and taxes are owed (each, a "Creditor") whether or
not such Creditor has received notice thereof. Any such Creditor may enforce
such obligations directly against the Company, and the Company irrevocably
waives any right or remedy to require that any such Creditor take any action
against the Issuer Trust or any other person before proceeding against the
Company. The Company shall execute such additional agreements as may be
necessary or desirable to give full effect to the foregoing.
(d) The Company shall indemnify the Trustee, its directors, officers,
employees and agents for, and hold them harmless against, any loss, liability or
expense (including the reasonable compensation and the expenses and
disbursements of its agents and counsel) incurred without negligence, bad faith
or willful misconduct, arising out of or in connection with the acceptance or
administration of this trust or the performance of its duties hereunder,
including the reasonable costs and expenses of defending against any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder. This indemnification shall survive the termination of this
Indenture or the resignation or removal of the Trustee.
(e) When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 5.1(d) occurs, the expenses and the compensation
for the services are intended to constitute expenses of administration under the
Bankruptcy Reform Act of 1978 or any successor statute.
Section 6.8. Disqualification; Conflicting Interests.
The Trustee for the Securities issued hereunder shall be subject to,
and shall comply fully with, the provisions of Section 310(b) of the Trust
Indenture Act. Nothing herein shall prevent the Trustee from filing with the
Commission the application referred to in the second to last paragraph of said
Section 310(b).
Section 6.9. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee with respect to the Securities
issued hereunder which shall be:
(a) a Person organized and doing business under the laws of the United
States of America or of any state or territory thereof or of the District of
Columbia, authorized under such laws to exercise corporate trust powers and
subject to supervision or examination by federal, state, territorial or District
of Columbia authority, or
(b) an entity organized and doing business under the laws of a foreign
government that is permitted to act as Trustee pursuant to a rule, regulation or
order of the Commission, authorized under such laws to exercise corporate trust
powers, and subject to supervision or examination by authority of such foreign
government or a political subdivision thereof substantially equivalent to
supervision or examination applicable to United States institutional trustees;
in either case having a combined capital and
43
<PAGE>
surplus of at least $50,000,000, subject to supervision or examination by
federal or state authority. If such entity publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then, for the purposes of this Section 6.9,
the combined capital and surplus of such entity shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article VI. Neither
the Company nor any Person directly or indirectly controlling, controlled by or
under common control with the Company shall serve as Trustee for the Securities
issued hereunder.
Section 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time with respect to the Securities
by giving written notice thereof to the Company. If an instrument of acceptance
by a successor Trustee shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time with respect to the
Securities by Act of the Holders of a majority in aggregate principal amount of
the Outstanding Securities, delivered to the Trustee and to the Company.
(d) If at any time:
(i) the Trustee shall fail to comply with Section 6.8 after
written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Security for at least six months, or
(ii) the Trustee shall cease to be eligible under Section 6.9
and shall fail to resign after written request therefor by the Company
or by any such Holder, or
(iii) the Trustee shall become incapable of acting or shall be
adjudged 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, (x) the Company, acting pursuant to the authority of a
Board Resolution, may remove the Trustee with respect to the Securities issued
hereunder, or (y) subject to Section 5.14, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of such Holder and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee with respect to the Securities issued hereunder and
the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause with
respect to the Securities, the Company, by a Board Resolution, shall promptly
appoint a successor Trustee with respect to the Securities. If, within one year
44
<PAGE>
after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee with respect to the Securities shall be appointed
by Act of the Holders of a majority in aggregate principal amount of the
Outstanding Securities delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Trustee with respect to the Securities and
supersede the successor Trustee appointed by the Company. If no successor
Trustee with respect to the Securities shall have been so appointed by the
Company or the Holders and accepted appointment in the manner hereinafter
provided, any Holder who has been a bona fide Holder of a Security for at least
six months may, subject to Section 5.14, on behalf of such Holder and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities.
(f) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the Securities and each appointment of a
successor Trustee with respect to the Securities by mailing written notice of
such event by first-class mail, postage prepaid, to the Holders of Securities as
their names and addresses appear in the Securities Register. Each notice shall
include the name of the successor Trustee with respect to the Securities and the
address of its Corporate Trust Office.
Section 6.11. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
(b) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all rights, powers and trusts referred to
in Section 6.11(a).
(c) No successor Trustee shall accept its appointment unless, at the
time of such acceptance, such successor Trustee shall be qualified and eligible
under this Article VI.
45
<PAGE>
Section 6.12. Merger, Conversion, Consolidation or Succession to Business.
Any entity into which the Trustee may be merged or converted or with
which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any entity
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such entity
shall be otherwise qualified and eligible under this Article VI, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto. In case any Securities shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication and
deliver the Securities so authenticated, and in case any Securities shall not
have been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor Trustee or in the name of such
successor Trustee, and in all cases the certificate of authentication shall have
the full force which it is provided anywhere in the Securities or in this
Indenture that the certificate of the Trustee shall have.
Section 6.13. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
Section 6.14. Appointment of Authenticating Agent.
(a) The Trustee may appoint an Authenticating Agent or Agents with
respect to the Securities, which shall be authorized to act on behalf of the
Trustee to authenticate Securities issued upon original issue and upon exchange,
registration of transfer or partial redemption thereof or pursuant to Section
3.6, and Securities so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if authenticated
by the Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be an entity organized and doing business under the laws of the United
States of America, 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 not less than $50,000,000 and subject to
supervision or examination by federal or state authority. If such Authenticating
Agent publishes reports of condition at least annually, pursuant to law or to
the requirements of said supervising or examining authority, then for the
purposes of this Section the combined capital and surplus of such Authenticating
Agent shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. If at any time an Authenticating
Agent shall cease to be eligible in accordance with the provisions of this
Section 6.14, such Authenticating Agent shall resign immediately in the manner
and with the effect specified in this Section 6.14.
(b) Any entity into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any entity resulting from any
merger, conversion or consolidation to which such Authenticating Agent shall be
a party, or any entity succeeding to all or substantially all of the corporate
trust business of an Authenticating Agent shall be the successor Authenticating
Agent hereunder, provided such entity shall be otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the Trustee or the Authenticating Agent.
46
<PAGE>
(c) An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent, which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 1.6 to all Holders of Securities.
Any successor Authenticating Agent upon acceptance hereunder shall become vested
with all the rights, powers and duties of its predecessor hereunder, with like
effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provision of
this Section.
(d) The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payment, subject to the
provisions of Section 6.7.
(e) If an appointment is made pursuant to this Section 6.14, the
Securities may have endorsed thereon, in addition to the Trustee's certificate
of authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities referred to in the within mentioned
Indenture.
Dated: BANKERS TRUST COMPANY,
as Trustee
By:
-----------------------------------
As Authenticating Agent
By:
-----------------------------------
As Authenticating Agent
ARTICLE VII
HOLDERS LISTS AND REPORTS BY TRUSTEE,
PAYING AGENT AND COMPANY
Section 7.1. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee:
(a) quarterly, not more than 15 days after March 15, June 15, September
15, and December 15 in each year, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders as of such dates,
excluding from any such list names and addresses received by the Trustee in its
capacity as Securities Registrar, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished, excluding from any such list names and addresses received by the
47
<PAGE>
Trustee in its capacity as Securities Registrar.
Section 7.2. Preservation of Information, Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as Securities
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided in the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of the
disclosure of information as to the names and addresses of the Holders made
pursuant to the Trust Indenture Act.
Section 7.3. Reports by Trustee and Paying Agent.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act, at the times and in the manner provided pursuant thereto.
(b) Reports so required to be transmitted at stated intervals of not
more than 12 months shall be transmitted within 60 days of January 31 in each
calendar year, commencing with January 31, 2000.
(c) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each securities exchange upon which any
Securities are listed and also with the Commission. The Company will notify the
Trustee when any Securities are listed on any securities exchange.
(d) The Paying Agent shall comply with all withholding, backup
withholding, tax and information reporting requirements under the Internal
Revenue Code of 1986, as amended, and the Treasury Regulations issued thereunder
with respect to payments on, or with respect to, the Securities.
Section 7.4. Reports by Company.
The Company shall file or cause to be filed with the Trustee and with
the Commission, and transmit to Holders, such information, documents and other
reports, and such summaries thereof, as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided in the Trust Indenture
Act. In the case of information, documents or reports required to be filed with
the Commission pursuant to Section 13(a) or Section 15(d) of the Exchange Act,
the Company shall file or cause the filing of such information documents or
reports with the Trustee within 15 days after the same is required to be filed
with the Commission.
48
<PAGE>
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.1. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person
or sell, convey, transfer or lease its properties and assets substantially as an
entirety, or sell, convey, transfer or distribute the capital stock or all or
substantially all of the assets of any Principal Subsidiary Bank to any Person,
and no Person shall consolidate with or merge into the Company or convey,
transfer or lease its properties and assets substantially as an entirety to the
Company, unless:
(a) if the Company shall consolidate with or merge into another Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, the entity formed by such consolidation or into which
the Company is merged or the Person that acquires by conveyance or transfer, or
that leases, the properties and assets of the Company substantially as an
entirety shall be an entity organized and existing under the laws of the United
States of America or any state thereof or the District of Columbia and shall
expressly assume, by an indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the due and punctual payment
of the principal of (and premium, if any) and interest (including any Additional
Interest) on all the Securities of every series and the performance of every
covenant of this Indenture on the part of the Company to be performed or
observed; provided, however, that nothing herein shall be deemed to restrict or
prohibit, and no supplemental indenture shall be required in the case of, the
merger of a Principal Subsidiary Bank with and into a Principal Subsidiary Bank
or the Company, the consolidation of Principal Subsidiary Banks into a Principal
Subsidiary Bank or the Company, or the sale or other disposition of all or
substantially all of the assets of any Principal Subsidiary Bank to another
Principal Subsidiary Bank or the Company, if, in any such case in which the
surviving, resulting or acquiring entity is not the Company, the Company would
own, directly or indirectly, at least 80% of the voting securities of the
Principal Subsidiary Bank (and of any other Principal Subsidiary Bank any voting
securities of which are owned, directly or indirectly, by such Principal
Subsidiary Bank) surviving such merger, resulting from such consolidation or
acquiring such assets;
(b) immediately after giving effect to such transaction, no Event of
Default, and no event that, after notice or lapse of time, or both, would
constitute an Event of Default, shall have occurred and be continuing; and
(c) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and any such supplemental indenture comply with
this Article and that all conditions precedent herein provided for relating to
such transaction have been complied with and, in the case of a transaction
subject to this Section 8.1 but not requiring a supplemental indenture under
paragraph (a) of this Section 8.1, an Officer's Certificate or Opinion of
Counsel to the effect that the surviving, resulting or successor entity is
legally bound by the Indenture and the Securities; and the Trustee, subject to
Section 6.1, may rely upon such Officers' Certificates and Opinions of Counsel
as conclusive evidence that such transaction complies with this Section 8.1.
49
<PAGE>
Section 8.2. Successor Company Substituted.
(a) Upon any consolidation or merger by the Company with or into any
other Person, or any conveyance, transfer or lease by the Company of its
properties and assets substantially as an entirety to any Person in accordance
with Section 8.1, the successor entity formed by such consolidation or into
which the Company is merged or to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; and in the event of any
such conveyance, transfer or lease the Company shall be discharged from all
obligations and covenants under the Indenture and the Securities.
(b) Such successor Person may cause to be executed, and may issue
either in its own name or in the name of the Company, any or all of the
Securities issuable hereunder that theretofore shall not have been signed by the
Company and delivered to the Trustee; and, upon the order of such successor
Person instead of the Company and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver any Securities that previously shall have been signed and
delivered by the officers of the Company to the Trustee for authentication
pursuant to such provisions and any Securities that such successor Person
thereafter shall cause to be executed and delivered to the Trustee on its behalf
for the purpose pursuant to such provisions. All the Securities so issued shall
in all respects have the same legal rank and benefit under this Indenture as the
Securities theretofore or thereafter issued in accordance with the terms of this
Indenture.
(c) In case of any such consolidation, merger, sale, conveyance or
lease, such changes in phraseology and form may be made in the Securities
thereafter to be issued as may be appropriate.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.1. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may amend
or waive any provision of this Indenture or enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, for any of the
following purposes:
(a) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company herein and
in the Securities contained;
(b) to convey, transfer, assign, mortgage or pledge any property to or
with the Trustee or to surrender any right or power herein conferred upon the
Company;
(c) to facilitate the issuance of Securities in certificated or other
definitive form;
(d) to add to the covenants of the Company for the benefit of the
Holders of the Securities or to surrender any right or power herein conferred
upon the Company;
(e) to add any additional Events of Default for the benefit of the
Holders of the Securities;
50
<PAGE>
(f) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall not apply to any Outstanding
Securities;
(g) to cure any ambiguity, to correct or supplement any provision
herein that may be defective or inconsistent with any other provision herein, or
to make any other provisions with respect to matters or questions arising under
this Indenture, provided that such action pursuant to this clause (g) shall not
adversely affect the interest of the Holders of Securities in any material
respect or, in the case of the Securities issued to the Issuer Trust and for so
long as any of the Preferred Securities issued by the Issuer Trust shall remain
outstanding, the holders of such Preferred Securities;
(h) to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee with respect to the 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 6.11(b); or
(i) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust Indenture
Act.
Section 9.2. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby:
(a) change the Stated Maturity of the principal of, or any installment
of interest (including any Additional Interest) on, any Security, or reduce the
principal amount thereof or the rate of interest thereon or any premium payable
upon the redemption thereof, or reduce the amount of principal of a Discount
Security that would be due and payable upon a declaration of acceleration of the
Stated Maturity thereof pursuant to Section 5.2, or change the place of payment
where, or the coin or currency in which, any Security or interest thereon is
payable, or impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of redemption,
on or after the Redemption Date),
(b) reduce the percentage in aggregate principal amount of the
Outstanding Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture, or
(c) modify any of the provisions of this Section, Section 5.13 or
Section 10.5, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Security affected thereby;
provided, further, that, in the case of the Securities issued to the Issuer
Trust, so long as any of the Preferred Securities issued by the Issuer Trust
remains outstanding, (i) no such amendment shall be made
51
<PAGE>
that adversely affects the holders of such Preferred Securities in any material
respect, and no termination of this Indenture shall occur, and no waiver of any
Event of Default or compliance with any covenant under this Indenture shall be
effective, without the prior consent of the holders of at least a majority of
the aggregate Liquidation Amount (as defined in the Trust Agreement) of such
Preferred Securities then outstanding unless and until the principal of (and
premium, if any, on) the Securities and all accrued and (subject to Section 3.8)
unpaid interest (including any Additional Interest) thereon have been paid in
full, and (ii) no amendment shall be made to Section 5.8 of this Indenture that
would impair the rights of the holders of Preferred Securities issued by the
Issuer Trust provided therein without the prior consent of the holders of each
such Preferred Security then outstanding unless and until the principal of (and
premium, if any, on) the Securities of such series and all accrued and (subject
to Section 3.8) unpaid interest (including any Additional Interest) thereon have
been paid in full.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
Section 9.3. Execution of Supplemental Indentures.
In executing or accepting the additional trusts created by any
supplemental indenture permitted by this Article IX or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 6.1) shall be fully protected in relying upon,
an Officers' Certificate and an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this Indenture, and
that all conditions precedent herein provided for relating to such action have
been complied with. The Trustee may, but shall not be obligated to, enter into
any such supplemental indenture that affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 9.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article IX,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 9.5. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article IX shall
conform to the requirements of the Trust Indenture Act as then in effect.
Section 9.6. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article IX may, and shall if required by
the Company, bear a notation in form approved by the Company as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Company, to any
such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities.
52
<PAGE>
ARTICLE X
COVENANTS
Section 10.1. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of the Securities that
it will duly and punctually pay the principal of (and premium, if any) and
interest (including any Additional Interest) on the Securities in accordance
with the terms of such Securities and this Indenture.
Section 10.2. Maintenance of Office or Agency.
(a) The Company will maintain in each Place of Payment an office or
agency where Securities may be presented or surrendered for payment, where
Securities may be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Company initially appoints the Trustee, acting
through its Corporate Trust Office, as its agent for said purposes. The Company
will give prompt written notice to the Trustee of any change in the location of
any such office or agency. If at any time the Company shall fail to maintain
such office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
(b) The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all of such purposes, and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in each
Place of Payment for Securities for such purposes. The Company will give prompt
written notice to the Trustee of any such designation and any change in the
location of any such office or agency.
Section 10.3. Money for Security Payments to be Held in Trust.
(a) If the Company shall at any time act as its own Paying Agent with
respect to the Securities, it will, on or before each due date of the principal
of (and premium, if any) or interest (including Additional Interest) on any of
the Securities, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal or interest (including
Additional Interest) so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided, and will promptly notify
the Trustee of its failure so to act.
(b) Whenever the Company shall have one or more Paying Agents, it will,
prior to 10:00 a.m., New York City time, on each due date of the principal of
(and premium, if any) (or premium, if any) or interest, including Additional
Interest on any Securities, deposit with a Paying Agent a sum sufficient to pay
the principal or interest, including Additional Interest so becoming due, such
sum to be held in trust for the benefit of the Persons entitled to such
principal or interest, including Additional Interest, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its
failure so to act.
53
<PAGE>
(c) The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(i) hold all sums held by it for the payment of the principal
of (and premium, if any) or interest (including Additional Interest) on
the Securities in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise disposed of
as herein provided;
(ii) give the Trustee notice of any default by the Company (or
any other obligor upon such Securities) in the making of any payment of
principal (and premium, if any) or interest (including Additional
Interest) in respect of any Security;
(iii) at any time during the continuance of any default with
respect to the Securities, upon the written request of the Trustee,
forthwith pay to the Trustee all sums so held in trust by such Paying
Agent; and
(iv) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent.
(d) The Company may, at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same terms as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
(e) Any money deposited with the Trustee or any Paying Agent, or then
held by the Company in trust for the payment of the principal of (and premium,
if any) or interest (including Additional Interest) on any Security and
remaining unclaimed for two years after such principal (and premium, if any) or
interest (including Additional Interest) has become due and payable shall
(unless otherwise required by mandatory provision of applicable escheat or
abandoned or unclaimed property law) be paid on Company Request to the Company,
or (if then held by the Company) shall (unless otherwise required by mandatory
provision of applicable escheat or abandoned or unclaimed property law) be
discharged from such trust; and the Holder of such Security shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the Borough of
Manhattan, the City of New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
54
<PAGE>
Section 10.4. Statement as to Compliance.
The Company shall deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate covering the preceding calendar year, stating whether or not to the
best knowledge of the signers thereof the Company is in default in the
performance, observance or fulfillment of or compliance with any of the terms,
provisions, covenants and conditions of this Indenture, and if the Company shall
be in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge. For the purpose of this Section 10.4, compliance
shall be determined without regard to any grace period or requirement of notice
provided pursuant to the terms of this Indenture.
Section 10.5. Waiver of Certain Covenants.
Subject to the rights of holders of Preferred Securities specified in
Section 9.2, if any, the Company may omit in any particular instance to comply
with any covenant or condition provided pursuant to Section 3.1, 9.1(c) or
9.1(d) with respect to the Securities, if before or after the time for such
compliance the Holders of at least a majority in aggregate principal amount of
the Outstanding Securities shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company in respect of any such covenant
or condition shall remain in full force and effect.
Section 10.6. Additional Sums.
So long as no Event of Default has occurred and is continuing and
except as otherwise specified as contemplated by Section 2.1 or Section 3.1, if:
(a) the Issuer Trust is the Holder of all of the Outstanding Securities, and (b)
a Tax Event described in clause (a) or (c) of the definition of "Tax Event" in
Section 1.1 hereof has occurred and is continuing in respect of the Issuer
Trust, the Company shall pay the Issuer Trust (and its permitted successors or
assigns under the Trust Agreement) for so long as the Issuer Trust (or its
permitted successor or assignee) is the registered holder of the Outstanding
Securities, such additional sums as may be necessary in order that the amount of
Distributions (including any Additional Amount (as defined in the Trust
Agreement)) then due and payable by the Issuer Trust on the Preferred Securities
and Common Securities that at any time remain outstanding in accordance with the
terms thereof shall not be reduced as a result of such Additional Taxes (the
"Additional Sums"). Whenever in this Indenture or the Securities there is a
reference in any context to the payment of principal of or interest on the
Securities, such mention shall be deemed to include mention of the payments of
the Additional Sums provided for in this paragraph to the extent that, in such
context, Additional Sums are, were or would be payable in respect thereof
pursuant to the provisions of this paragraph and express mention of the payment
of Additional Sums (if applicable) in any provisions hereof shall not be
construed as excluding Additional Sums in those provisions hereof where such
express mention is not made; provided, however, that the deferral of the payment
of interest pursuant to Section 3.12 or the Securities shall not defer the
payment of any Additional Sums that may be due and payable.
55
<PAGE>
Section 10.7. Additional Covenants.
The Company covenants and agrees with each Holder of Securities that it
shall not: (a) declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any shares of
the Company's capital stock, or (b) make any payment of principal of or interest
or premium, if any, on or repay, repurchase or redeem any debt securities of the
Company that rank pari passu in all respects with or junior in interest to the
Securities, including the Company's obligations associated with the Outstanding
Preferred Securities, (other than (i) repurchases, redemptions or other
acquisitions of shares of capital stock of the Company in connection with any
employment contract, benefit plan or other similar arrangement with or for the
benefit of any one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock purchase plan or in
connection with the issuance of capital stock of the Company (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the applicable Extension Period or
other event referred to below, (ii) as a result of a reclassification, 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, (iii) 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, (iv) any declaration of a dividend in connection with
any Rights Plan, or the issuance of rights, stock or other property under any
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) if at such time (A) there shall
have occurred any event (x) of which the Company has actual knowledge that with
the giving of notice or the lapse of time, or both, would constitute an Event of
Default with respect to the Securities, and (y) which the Company shall not have
taken reasonable steps to cure, (B) if the Securities are held by the Issuer
Trust, the Company shall be in default with respect to its payment of any
obligations under the Guarantee relating to the Preferred Securities issued by
the Issuer Trust, or (C) the Company shall have given notice of its election to
begin an Extension Period with respect to the Securities as provided herein and
shall not have rescinded such notice, or such Extension Period, or any extension
thereof, shall be continuing.
The Company also covenants with each Holder of Securities issued to the
Issuer Trust (a) to hold, directly or indirectly, 100% of the Common Securities
of the Issuer Trust, provided that any permitted successor of the Company as
provided under Section 8.2 may succeed to the Company's ownership of such Common
Securities, (b) as holder of such Common Securities, not to voluntarily
terminate, windup or liquidate the Issuer Trust, other than (i) in connection
with a distribution of the Securities to the holders of the Preferred Securities
in liquidation of the Issuer Trust, or (ii) in connection with certain mergers,
consolidations or amalgamations permitted by the Trust Agreement, and (c) to use
its reasonable efforts, consistent with the terms and provisions of the Trust
Agreement, to cause the Issuer Trust to continue not to be taxable as a
corporation for United States federal income tax purposes.
56
<PAGE>
Section 10.8. Federal Tax Reports.
On or before December 15 of each year during which any Securities are
outstanding, the Company shall furnish to each Paying Agent such information as
may be reasonably requested by each Paying Agent in order that each Paying Agent
may prepare the information which it is required to report for such year on
Internal Revenue Service Forms 1096 and 1099 pursuant to Section 6049 of the
Internal Revenue Code of 1986, as amended. Such information shall include the
amount of original issue discount includible in income for each authorized
minimum denomination of principal amount at Stated Maturity of outstanding
Securities during such year.
ARTICLE XI
REDEMPTION OF SECURITIES
Section 11.1. Applicability of this Article.
Redemption of Securities as permitted or required by any form of
Security issued pursuant to this Indenture shall be made in accordance with such
form of Security and this Article; provided, however, that, if any provision of
any such form of Security shall conflict with any provision of this Article XI,
the provision of such form of Security shall govern.
Section 11.2. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced
by or pursuant to a Board Resolution. In case of any redemption at the election
of the Company, the Company shall, not less than 30 nor more than 60 days prior
to the Redemption Date (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee and, in the case of Securities held by the Issuer
Trust, the Property Trustee under the Trust Agreement of such date and of the
principal amount of Securities to be redeemed and provide the additional
information required to be included in the notice or notices contemplated by
Section 11.4; provided, that, for so long as such Securities are held by the
Issuer Trust, such notice shall be given not less than 45 nor more than 75 days
prior to such Redemption Date (unless a shorter notice shall be satisfactory to
the Property Trustee under the Trust Agreement). In the case of any redemption
of Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Securities, the Company shall furnish the Trustee
with an Officers' Certificate and an Opinion of Counsel evidencing compliance
with such restriction.
Section 11.3. Selection of Securities to be Redeemed.
(a) If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities not previously
called for redemption, by such method as the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of a portion
of the principal amount of any Security, provided that the unredeemed portion of
the principal amount of any Security shall be in an authorized denomination
(which shall not be less than the minimum authorized denomination) for such
Security.
(b) The Trustee shall promptly notify the Company in writing of the
Securities selected for partial redemption and the principal amount thereof to
be redeemed. For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
57
<PAGE>
in the case of any Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security that has been or is to be
redeemed.
Section 11.4. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not later than the thirtieth day, and not earlier than the
sixtieth day, prior to the Redemption Date, to each Holder of Securities to be
redeemed, at the address of such Holder as it appears in the Securities
Register.
With respect to Securities to be redeemed, each notice of redemption
shall state:
(a) the Redemption Date;
(b) the Redemption Price or, if the Redemption Price cannot be
calculated prior to the time the notice is required to be sent, the estimate of
the Redemption Price provided pursuant to the Indenture together with a
statement that it is an estimate and that the actual Redemption Price will be
calculated on the third Business Day prior to the Redemption Date (if such an
estimate of the Redemption Price is given, a subsequent notice shall be given as
set forth above setting forth the Redemption Price promptly following the
calculation thereof);
(c) if less than all Outstanding Securities are to be redeemed, the
identification (and, in the case of partial redemption, the respective principal
amounts) of the particular Securities to be redeemed;
(d) that, on the Redemption Date, the Redemption Price will become due
and payable upon each such Security or portion thereof, and that interest
thereon, if any, shall cease to accrue on and after said date;
(e) the place or places where such Securities are to be surrendered for
payment of the Redemption Price;
(f) such other provisions as may be required in respect of the terms of
the Securities; and
(g) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.
The notice, if mailed in the manner provided above, shall be conclusively
presumed to have been duly given, whether or not the Holder receives such
notice. In any case, a failure to give such notice by mail or any defect in the
notice to the Holder of any Security designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the redemption of any
other Security.
58
<PAGE>
Section 11.5. Deposit of Redemption Price.
Prior to 10:00 a.m., New York City time, on the Redemption Date
specified in the notice of redemption given as provided in Section 11.4, the
Company will deposit with the Trustee or with one or more Paying Agents (or if
the Company is acting as its own Paying Agent, the Company will segregate and
hold in trust as provided in Section 10.3) an amount of money sufficient to pay
the Redemption Price of, and any accrued interest (including Additional
Interest) on, all the Securities (or portions thereof) that are to be redeemed
on that date.
Section 11.6. Payment of Securities Called for Redemption.
(a) If any notice of redemption has been given as provided in Section
11.4, the Securities or portion of Securities with respect to which such notice
has been given shall become due and payable on the date and at the place or
places stated in such notice at the applicable Redemption Price, together with
accrued interest (including any Additional Interest) to the Redemption Date. On
presentation and surrender of such Securities at a Place of Payment in said
notice specified, the said Securities or the specified portions thereof shall be
paid and redeemed by the Company at the applicable Redemption Price, together
with accrued interest (including any Additional Interest) to the Redemption
Date; provided, however, that, installments of interest (including Additional
Interest) whose Stated Maturity is on or prior to the Redemption Date will be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant record
dates according to their terms and the provisions of Section 3.8.
(b) Upon presentation of any Security redeemed in part only, the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder thereof, at the expense of the Company, a new Security or Securities, of
authorized denominations, in aggregate principal amount equal to the unredeemed
portion of the Security so presented and having the same Original Issue Date,
Stated Maturity and terms.
(c) If any Security called for redemption shall not be so paid under
surrender thereof for redemption, the principal of and premium, if any, on such
Security shall, until paid, bear interest from the Redemption Date at the rate
prescribed therefor in the Security.
Section 11.7. Right of Redemption of Securities Initially Issued to the
Issuer Trust.
(a) The Company, at its option, may redeem such Securities (i) on or
after __________________, 2004, in whole at any time or in part from time to
time, or (ii) upon the occurrence and during the continuation of a Tax Event, an
Investment Company Event or a Capital Treatment Event, at any time within 90
days following the occurrence and during the continuation of such Tax Event,
Investment Company Event or Capital Treatment Event, in whole (but not in part),
in each case at a Redemption Price specified in such Security, together with
accrued interest (including Additional Interest) to the Redemption Date.
(b) If less than all the Securities are to be redeemed, the aggregate
principal amount of such Securities remaining Outstanding after giving effect to
such redemption shall be sufficient to satisfy any provisions of the Trust
Agreement.
59
<PAGE>
ARTICLE XII
SINKING FUNDS
Except as may be provided in any supplemental or amended indenture, no
sinking fund shall be established or maintained for the retirement of
Securities.
ARTICLE XIII
SUBORDINATION OF SECURITIES
Section 13.1. Securities Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a Security, by its
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article, the payment of the principal
of (and premium, if any) and interest (including any Additional Interest) on
each and all of the Securities are hereby expressly made subordinate and subject
in right of payment to the prior payment in full of all Senior Indebtedness.
Section 13.2. No Payment When Senior Indebtedness in Default; Payment Over
of Proceeds Upon Dissolution, Etc.
(a) If the Company shall default in the payment of any principal of
(and premium, if any) or interest on any Senior Indebtedness when the same
becomes due and payable, whether at maturity or at a date fixed for prepayment
or by declaration of acceleration or otherwise, then, upon written notice of
such default to the Company by the holders of Senior Indebtedness or any trustee
therefor, unless and until such default shall have been cured or waived or shall
have ceased to exist, no direct or indirect payment (in cash, property,
securities, by set-off or otherwise) shall be made or agreed to be made on
account of the principal of (and premium, if any) or interest (including
Additional Interest) on any of the Securities, or in respect of any redemption,
repayment, retirement, purchase or other acquisition of any of the Securities.
(b) In the event of (i) any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment, composition or other similar
proceeding relating to the Company, its creditors or its property, (ii) any
proceeding for the liquidation, dissolution or other winding up of the Company,
voluntary or involuntary, whether or not involving insolvency or bankruptcy
proceedings, (iii) any assignment by the Company for the benefit of creditors or
(iv) any other marshalling of the assets of the Company (each such event, if
any, herein sometimes referred to as a "Proceeding"), all Senior Indebtedness
(including any interest thereon accruing after the commencement of any such
proceedings) shall first be paid in full before any payment or distribution,
whether in cash, securities or other property, shall be made to any Holder on
account thereof. Any payment or distribution, whether in cash, securities or
other property (other than securities of the Company or any other entity
provided for by a plan of reorganization or readjustment, the payment of which
is subordinate, at least to the extent provided in these subordination
provisions with respect to the indebtedness evidenced by the Securities, to the
payment of all Senior Indebtedness at the time outstanding and to any securities
issued in respect thereof under any such plan of reorganization or
readjustment), which would otherwise (but for these subordination provisions) be
payable or deliverable in respect of the Securities shall be paid or delivered
directly to the holders of Senior Indebtedness in accordance with the priorities
then existing among such holders until all Senior Indebtedness (including any
interest thereon accruing after the commencement of any Proceeding) shall
60
<PAGE>
have been paid in full.
(c) In the event of any Proceeding, after payment in full of all sums
owing with respect to Senior Indebtedness, the Holders of the Securities,
together with the holders of any obligations of the Company ranking on a parity
with the Securities, shall be entitled to be paid from the remaining assets of
the Company the amounts at the time due and owing on account of unpaid principal
of (and premium, if any) and interest on the Securities and such other
obligations before any payment or other distribution, whether in cash, property
or otherwise, shall be made on account of any capital stock or any obligations
of the Company ranking junior to the Securities, and such other obligations. If,
notwithstanding the foregoing, any payment or distribution of any character or
any security, whether in cash, securities or other property (other than
securities of the Company or any other entity provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at least to
the extent provided in these subordination provisions with respect to the
indebtedness evidenced by the Securities, to the payment of all Senior
Indebtedness at the time outstanding and to any securities issued in respect
thereof under any plan of reorganization or readjustment), shall be received by
the Trustee or any Holder in contravention of any of the terms hereof and before
all Senior Indebtedness shall have been paid in full, such payment or
distribution or security shall be received in trust for the benefit of, and
shall be paid over or delivered and transferred to, the holders of the Senior
Indebtedness at the time outstanding in accordance with the priorities then
existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all such Senior
Indebtedness in full. In the event of the failure of the Trustee or any Holder
to endorse or assign any such payment, distribution or security, each holder of
Senior Indebtedness is hereby irrevocably authorized to endorse or assign the
same.
(d) The Trustee and the Holders shall take such action (including,
without limitation, the delivery of this Indenture to an agent for the holders
of Senior Indebtedness or consent to the filing of a financing statement with
respect hereto) as may, in the opinion of counsel designated by the holders of a
majority in principal amount of the Senior Indebtedness at the time outstanding,
be necessary or appropriate to assure the effectiveness of the subordination
effected by these provisions.
(e) The provisions of this Section 13.2 shall not impair any rights,
interests, remedies or powers of any secured creditor of the Company in respect
of any security interest the creation of which is not prohibited by the
provisions of this Indenture.
(f) The securing of any obligations of the Company, otherwise ranking
on a parity with the Securities or ranking junior to the Securities shall not be
deemed to prevent such obligations from constituting, respectively, obligations
ranking on a parity with the Securities or ranking junior to the Securities.
Section 13.3. Payment Permitted if No Default.
Nothing contained in this Article XIII or elsewhere in this Indenture
or in any of the Securities shall prevent (a) the Company, at any time, except
during the pendency of the conditions described in the first paragraph of
Section 13.2 or of any Proceeding referred to in Section 13.2, from making
payments at any time of principal of (and premium, if any) or interest
(including Additional Interest) on the Securities, or (b) the application by the
Trustee of any monies deposited with it hereunder to the payment of or on
account of the principal of (and premium, if any) or interest (including any
Additional Interest) on the Securities or the retention of such payment by the
Holders, if, at the time of such application by the Trustee, it did not have
knowledge that such payment would have been prohibited by the provisions of this
Article.
61
<PAGE>
Section 13.4. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all amounts due or to become due on
all Senior Indebtedness, or the provision for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of Senior
Indebtedness, the Holders of the Securities shall be subrogated to the extent of
the payments or distributions made to the holders of such Senior Indebtedness
pursuant to the provisions of this Article (equally and ratably with the holders
of all indebtedness of the Company that by its express terms is subordinated to
Senior Indebtedness of the Company to substantially the same extent as the
Securities are subordinated to the Senior Indebtedness and is entitled to like
rights of subrogation by reason of any payments or distributions made to holders
of such Senior Indebtedness) to the rights of the holders of such Senior
Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness until the principal of and
interest (including Additional Interest) on the Securities shall be paid in
full. For purposes of such subrogation, no payments or distributions to the
holders of the Senior Indebtedness of any cash, property or securities to which
the Holders of the Securities or the Trustee would be entitled except for the
provisions of this Article, and no payments pursuant to the provisions of this
Article to the holders of Senior Indebtedness by Holders of the Securities or
the Trustee, shall, as among the Company, its creditors other than holders of
Senior Indebtedness, and the Holders of the Securities, be deemed to be a
payment or distribution by the Company to or on account of the Senior
Indebtedness.
Section 13.5. Provisions Solely to Define Relative Rights.
The provisions of this Article XIII are, and are intended solely for,
the purpose of defining the relative rights of the Holders of the Securities on
the one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article XIII or elsewhere in this Indenture or in the
Securities is intended to or shall (a) impair, as between the Company and the
Holders of the Securities, the obligations of the Company, which are absolute
and unconditional, to pay to the Holders of the Securities the principal of (and
premium, if any) and interest (including any Additional Interest) on the
Securities as and when the same shall become due and payable in accordance with
their terms; (b) affect the relative rights against the Company of the Holders
of the Securities and creditors of the Company other than their rights in
relation to the holders of Senior Indebtedness; or (c) prevent the Trustee or
the Holder of any Security (or to the extent expressly provided herein, the
holder of any Preferred Security) from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, including filing
and voting claims in any Proceeding, subject to the rights, if any, under this
Article XIII of the holders of Senior Indebtedness to receive cash, property and
securities otherwise payable or deliverable to the Trustee or such Holder.
Section 13.6. Trustee to Effectuate Subordination.
Each Holder of a Security by his or her acceptance thereof authorizes
and directs the Trustee on his or her behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination provided
in this Article XIII and appoints the Trustee his or her attorney-in-fact for
any and all such purposes.
62
<PAGE>
Section 13.7 No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any Senior Indebtedness
to enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof that any such holder may have or
be otherwise charged with.
(b) Without in any way limiting the generality of Section 13.7(a), the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders of the Securities,
without incurring responsibility to such Holders of the Securities and without
impairing or releasing the subordination provided in this Article XIII or the
obligations hereunder of such Holders of the Securities to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the manner, place
or terms of payment or extent the time of payment of, or renew or alter, Senior
Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness
or any instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii)
release any Person liable in any manner for the collection of Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Company and any other Person.
Section 13.8. Notice to Trustee.
(a) The Company shall give prompt written notice to a Responsible
Officer of the Trustee of any fact known to the Company that would prohibit the
making of any payment to or by the Trustee in respect of the Securities.
Notwithstanding the provisions of this Article XIII or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts that would prohibit the making of any payment to or by the Trustee
in respect of the Securities, unless and until the Trustee shall have received
written notice thereof from the Company or a holder of Senior Indebtedness or
from any trustee, agent or representative therefor; provided, however, that if
the Trustee shall not have received the notice provided for in this Section at
least two Business Days prior to the date upon which by the terms hereof any
monies may become payable for any purpose (including, the payment of the
principal of (and premium, if any, on) or interest (including any Additional
Interest) on any Security), then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive such
monies and to apply the same to the purpose for which they were received and
shall not be affected by any notice to the contrary that may be received by it
within two Business Days prior to such date.
(b) Subject to the provisions of Section 6.1, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself or herself to be a holder of Senior Indebtedness (or a
trustee or attorney-in-fact therefor) to establish that such notice has been
given by a holder of Senior Indebtedness (or a trustee or attorney-in-fact
therefor). In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior 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, 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.
63
<PAGE>
Section 13.9. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Section 6.1, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such Proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, conservator,
liquidating trustee, custodian, assignee for the benefit of creditors, agent or
other Person making such payment or distribution, delivered to the Trustee or to
the Holders of Securities, for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of the Senior
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 XIII.
Section 13.10. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee, in its capacity as trustee under this Indenture, shall not
be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and
shall not be liable to any such holders if it shall in good faith mistakenly pay
over or distribute to Holders of Securities or to the Company or to any other
Person cash, property or securities to which any holders of Senior Indebtedness
shall be entitled by virtue of this Article or otherwise.
Section 13.11. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness that
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
Section 13.12. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article XIII shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee.
Section 13.13. Certain Conversions or Exchanges Deemed Payment.
For purposes of this Article only, (a) the issuance and delivery of
junior securities upon conversion or exchange of Securities shall not be deemed
to constitute a payment or distribution on account of the principal of (or
premium, if any, on) or interest (including any Additional Interest) on such
Securities or on account of the purchase or other acquisition of such
Securities, and (b) the payment, issuance or delivery of cash, property or
securities (other than junior securities) upon conversion or exchange of a
Security shall be deemed to constitute payment on account of the principal of
such security. For the purposes of this Section, the term "junior securities"
means (i) shares of any stock of any class of the Company, and (ii) securities
of the Company that are subordinated in right of payment to all Senior
Indebtedness that may be outstanding at the time of issuance or delivery of such
securities to substantially the same extent as, or to a greater extent than, the
Securities are so subordinated as provided in this Article.
64
<PAGE>
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective seals to be hereunto affixed, all as of the
day and year first above written.
FIRST UNITED CORPORATION
By:
------------------------------------
William B. Grant
Chairman of the Board and
Chief Executive Officer
BANKERS TRUST COMPANY,
as Trustee
By:
------------------------------------
Marc J. Parilla
Assistant Vice President
F7746a.600 Y/L:1
65
<PAGE>
ANNEX A
FORM OF RESTRICTED SECURITIES CERTIFICATE
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to Section 3.6(b) of
the Indenture referred to below)
[ ],
as Securities Registrar
[address]
Re: _______% Junior Subordinated Debentures of First United Corporation
(the "Securities")
Reference is made to the Junior Subordinated Indenture, dated as of
__________________, 1999 (the "Indenture"), between First United Corporation, a
Maryland corporation, and Bankers Trust Company, as Trustee. Terms used herein
and defined in the Indenture or in Regulation S, Rule 144A or Rule 144 under the
U.S. Securities Act of 1933, as amended (the "Securities Act") are used here as
so defined.
This certificate relates to $________ aggregate principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s).
CERTIFICATE No(s).
CURRENTLY IN GLOBAL FORM: Yes No (check one)
The person in whose name this certificate is executed below (the
"Undersigned") hereby certifies that either (a) it is the sole beneficial owner
of the Specified Securities or (b) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through a Depositary or an Agent Member in the name of the Undersigned, as or on
behalf of the Owner. If the Specified Securities are not represented by a Global
Security, they are registered in the name of the Undersigned, as or on behalf of
the Owner.
The Owner has requested that the Specified Securities be transferred to
a person (the "Transferee") who will take delivery in the form of a Restricted
Security. In connection with such transfer, the Owner hereby certifies that,
unless such transfer is being effected pursuant to an effective registration
statement under the Securities Act, it is being effected in accordance with Rule
144A, Rule 904 of Regulation S or Rule 144 under the Securities Act and all
applicable securities laws of the states of the United States and other
jurisdictions. Accordingly, the Owner hereby further certifies that:
<PAGE>
(a) Rule 144A Transfers. If the transfer is being effected in
accordance with Rule 144A:
(i) the Specified Securities are being transferred to a person
that the Owner and any person acting on its behalf reasonably believe
is a "qualified institutional buyer" within the meaning of Rule 144A,
acquiring for its own account or for the account of a qualified
institutional buyer; and
(ii) the Owner and any person acting on its behalf have taken
reasonable steps to ensure that the Transferee is aware that the Owner may
be relying on Rule 144A in connection with the transfer; and
(b) Rule 904 Transfers. If the transfer is being effected in accordance
with Rule 904:
(i) the Owner is not a distributor of the Securities, an
affiliate of the Company or any such distributor or a person acting in
behalf of any of the foregoing;
(ii) the offer of the Specified Securities was not made to
a person in the United States;
(iii) either;
(A) at the time the buy order was
originated, the Transferee was outside the United States or
the Owner and any person acting on its behalf reasonably
believed that the Transferee was outside the United States, or
(B) the transaction is being executed in, on
or through the facilities of the Eurobond market, as regulated
by the Association of International Bond Dealers, or another
designated offshore securities market and neither the Owner
nor any person acting on its behalf know that the transaction
has been prearranged with a buyer in the United States;
(iv) no directed selling efforts within the meaning of Rule
902 of Regulation S have been made in the United States by or on behalf of
the Owner or any affiliate thereof; and
(v) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act.
(c) Rule 144 Transfers. If the transfer is being effected pursuant to
Rule 144:
(i) the transfer is occurring after a holding period of at
least one year (computed in accordance with paragraph (d) of Rule 144) has
elapsed since the date the Specified Securities were acquired from the
Company or from an affiliate (as such term is defined in Rule 144) of the
Company, whichever is later, and is being effected in accordance with the
applicable amount, manner of sale and notice requirements of paragraphs
(e), (f) and (h) of Rule 144;
(ii) the transfer is occurring after a holding period by the
Owner of at least two years has elapsed since the date the Specified
Securities were acquired from the Company or from an affiliate (as such
term is defined in Rule 144) of the Company, whichever is later, and the
Owner is not, and during the preceding three months has not been, an
affiliate of the Company; or
<PAGE>
(iii) the Owner is a Qualified Institutional Buyer under Rule
144A or has acquired the Securities otherwise in accordance with Sections
(a), (b) or (c) hereof and is transferring the Securities to an
institutional accredited investor in a transaction exempt from the
requirements of the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and the Initial Purchasers (as defined in
the Trust Agreement relating to the Issuer Trust to which the Securities were
initially issued).
(Print the name of the Undersigned, as such term is defined in the
second paragraph of this certificate)
Dated: By:
-----------------------------------
Name:
Title:
(If the Undersigned is a corporation, partnership or fiduciary, the title of the
person signing on behalf of the Undersigned must be stated.)
<PAGE>
Exhibit 4.2
Form of Amended and Restated Trust Agreement
<PAGE>
AMENDED AND RESTATED
TRUST AGREEMENT
Among
FIRST UNITED CORPORATION
(as Depositor)
BANKERS TRUST COMPANY
(as Property Trustee)
and
BANKERS TRUST (DELAWARE)
as Delaware Trustee
dated as of
____________, 1999
FIRST UNITED CAPITAL TRUST
<PAGE>
FIRST UNITED CAPITAL TRUST
Certain Sections of this Trust Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Trust Agreement
Act Section Section
- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Section 310 (a)(1).......................................................8.7
(a)(2).......................................................8.7
(a)(3).......................................................8.9
(a)(4).......................................................2.7(a)(ii)
(b)..........................................................8.8, 10.10(b)
Section 311 (a)..........................................................8.13, 10.10(b)
(b)..........................................................8.13, 10.10(b)
Section 312 (a)..........................................................10.10(b)
(b)..........................................................10.10(b), (f)
(c)..........................................................5.7
Section 313 (a)..........................................................8.15(a)
(a)(4).......................................................10.10(c)
(b)..........................................................8.15(c), 10.10(c)
(c)..........................................................10.8, 10.10(c)
(d)..........................................................10.10(c)
Section 314 (a)..........................................................8.16, 10.10(d)
(b)..........................................................Not Applicable
(c)(1).......................................................8.17, 10.10(d), (e)
(c)(2).......................................................8.17, 10.10(d), (e)
(c)(3).......................................................8.17, 10.10(d), (e)
(e)..........................................................8.17, 10.10(e)
Section 315 (a)..........................................................8.1(d)
(b)..........................................................8.2
(c)..........................................................8.1(c)
(d)..........................................................8.1(d)
(e)..........................................................Not Applicable
Section 316 (a)..........................................................Not Applicable
(a)(1)(A)....................................................Not Applicable
(a)(1)(B)....................................................Not Applicable
(a)(2).......................................................Not Applicable
(b)..........................................................5.13
(c)..........................................................6.7
Section 317 (a)(1).......................................................Not Applicable
(a)(2).......................................................8.14
(b)..........................................................5.10
Section 318 (a)..........................................................10.10(a)
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Trust
Agreement.
</TABLE>
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C>
ARTICLE I DEFINITIONS.......................................................................................... 1
Section 1.1. Definitions.......................................................................... 1
ARTICLE II CONTINUATION OF THE ISSUER TRUST.................................................................... 12
Section 2.1. Name................................................................................. 12
Section 2.2. Office of the Delaware Trustee; Principal Place of Business.......................... 13
Section 2.3. Initial Contribution of Trust Property; Organizational Expenses...................... 13
Section 2.4. Issuance of the Preferred Securities................................................. 13
Section 2.5. Issuance of the Common Securities; Subscription and Purchase of
Junior Subordinated Debentures....................................................... 14
Section 2.6. Declaration of Trust................................................................. 15
Section 2.7. Authorization to Enter into Certain Transactions..................................... 15
Section 2.8. Assets of Trust...................................................................... 19
Section 2.9. Title to Trust Property.............................................................. 19
ARTICLE III PAYMENT ACCOUNT.................................................................................... 19
Section 3.1. Payment Account...................................................................... 19
ARTICLE IV DISTRIBUTIONS; REDEMPTION........................................................................... 20
Section 4.1. Distributions........................................................................ 20
Section 4.2. Redemption........................................................................... 21
Section 4.3. Subordination of Common Securities................................................... 23
Section 4.4. Payment Procedures................................................................... 24
Section 4.5. Tax Returns and Reports.............................................................. 24
Section 4.6. Payment of Taxes; Duties, Etc. of the Issuer Trust................................... 24
Section 4.7. Payments under Indenture or Pursuant to Direct Actions............................... 25
Section 4.8. Liability of the Holder of Common Securities......................................... 25
ARTICLE V TRUST SECURITIES CERTIFICATES........................................................................ 25
Section 5.1. Initial Ownership.................................................................... 25
Section 5.2. The Trust Securities Certificates.................................................... 25
Section 5.3. Execution and Delivery of Trust Securities Certificates.............................. 26
Section 5.4. Global Preferred Security............................................................ 26
Section 5.5. Registration of Transfer and Exchange Generally; Certain
Transfers and Exchanges; Preferred Securities Certificates........................... 27
Section 5.6. Mutilated, Destroyed, Lost or Stolen Trust Securities Certificates................... 29
Section 5.7. Persons Deemed Holders............................................................... 29
Section 5.8. Access to List of Holders' Names and Addresses....................................... 29
Section 5.9. Maintenance of Office or Agency...................................................... 30
Section 5.10. Appointment of Paying Agent.......................................................... 30
Section 5.11. Ownership of Common Securities by Depositor.......................................... 31
Section 5.12. Notices to Clearing Agency........................................................... 31
- i -
<PAGE>
Page
Section 5.13. Rights of Holders.................................................................... 31
ARTICLE VI ACTS OF HOLDERS; MEETINGS; VOTING................................................................... 33
Section 6.1. Limitations on Holder's Voting Rights................................................ 33
Section 6.2. Notice of Meetings....................................................................... 34
Section 6.3. Meetings of Holders...................................................................... 35
Section 6.4. Voting Rights........................................................................ 35
Section 6.5. Proxies, etc......................................................................... 35
Section 6.6. Holder Action by Written Consent..................................................... 36
Section 6.7. Record Date for Voting and Other Purposes............................................ 36
Section 6.8. Acts of Holders...................................................................... 36
Section 6.9. Inspection of Records................................................................ 37
ARTICLE VII REPRESENTATIONS AND WARRANTIES..................................................................... 37
Section 7.1. Representations and Warranties of the Property Trustee and the
Delaware Trustee..................................................................... 37
Section 7.2. Representations and Warranties of the Depositor...................................... 38
ARTICLE VIII THE ISSUER TRUSTEES; THE ADMINISTRATORS........................................................... 39
Section 8.1. Certain Duties and Responsibilities.................................................. 39
Section 8.2. Certain Notices...................................................................... 41
Section 8.3. Certain Rights of Property Trustee................................................... 42
Section 8.4. Not Responsible for Recitals or Issuance of Securities............................... 43
Section 8.5. May Hold Securities.................................................................. 43
Section 8.6. Compensation; Indemnity; Fees........................................................ 44
Section 8.7. Corporate Property Trustee Required; Eligibility of Trustees and
Administrators....................................................................... 45
Section 8.8. Conflicting Interests................................................................ 45
Section 8.9. Co-Trustees and Separate Trustee..................................................... 46
Section 8.10. Resignation and Removal; Appointment of Successor.................................... 47
Section 8.11. Acceptance of Appointment by Successor............................................... 48
Section 8.12. Merger, Conversion, Consolidation or Succession to Business.......................... 49
Section 8.13. Preferential Collection of Claims Against Depositor or Issuer
Trust................................................................................ 49
Section 8.14. Trustee May File Proofs of Claim..................................................... 49
Section 8.15. Reports by Property Trustee.......................................................... 50
Section 8.16. Reports to the Property Trustee...................................................... 50
Section 8.17. Evidence of Compliance with Conditions Precedent..................................... 51
Section 8.18. Number of Issuer Trustees............................................................ 51
Section 8.19. Delegation of Power.................................................................. 51
Section 8.20. Appointment of Administrators........................................................ 51
- ii -
<PAGE>
Page
ARTICLE IX DISSOLUTION, LIQUIDATION AND MERGER................................................................. 52
Section 9.1. Dissolution Upon Expiration Date..................................................... 52
Section 9.2. Early Dissolution.................................................................... 52
Section 9.3. Termination.......................................................................... 53
Section 9.4. Liquidation.......................................................................... 53
Section 9.5. Mergers, Consolidations, Amalgamations or Replacements of the
Issuer Trust......................................................................... 55
ARTICLE X MISCELLANEOUS PROVISIONS............................................................................. 56
Section 10.1. Limitation of Rights of Holders...................................................... 56
Section 10.2. Amendment............................................................................ 56
Section 10.3. Separability......................................................................... 57
Section 10.4. Governing Law........................................................................ 57
Section 10.5. Payments Due on Non-Business Day..................................................... 58
Section 10.6. Successors........................................................................... 58
Section 10.7. Headings............................................................................. 58
Section 10.8. Reports, Notices and Demands......................................................... 58
Section 10.9. Agreement Not to Petition............................................................ 59
Section 10.10. Trust Indenture Act; Conflict with Trust Indenture Act................................. 59
Section 10.11. Acceptance of Terms of Trust Agreement, Guarantee and
Indenture........................................................................... 61
Section 10.12. Counterparts........................................................................... 61
EXHIBITS
EXHIBIT A Certificate of Trust................................................................. 1
EXHIBIT B Form of Certificate Depositary Agreement............................................. 1
EXHIBIT C Form of Common Securities Certificate................................................ 1
EXHIBIT D Form of Preferred Securities Certificate............................................. 1
- iii -
</TABLE>
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT
THIS AMENDED AND RESTATED TRUST AGREEMENT, dated as of ______, 1999
(this "Trust Agreement"), is among (a) FIRST UNITED CORPORATION, a Maryland
corporation (including any permitted successors or assigns, the "Depositor"),
(b) BANKERS TRUST COMPANY, a New York banking corporation, as property trustee
(in such capacity, the "Property Trustee" and, in its separate corporate
capacity and not in its capacity as Property Trustee, the "Bank"), and (c)
BANKERS TRUST (DELAWARE), a Delaware banking corporation, as Delaware trustee
(the "Delaware Trustee") (the Property Trustee and the Delaware Trustee are
referred to collectively herein as the "Issuer Trustees") and (d) the several
Holders, as hereinafter defined.
RECITALS
WHEREAS, the Depositor and the Delaware Trustees have heretofore duly
declared and established a business trust pursuant to the Delaware Business
Trust Act by the entering into a certain Trust Agreement, dated as of ________,
1999 (the "Original Trust Agreement"), and by the execution and filing by the
Delaware Trustee with the Secretary of State of the State of Delaware of the
Certificate of Trust, filed on _________, 1999 (the "Certificate of Trust"), a
copy of which is attached hereto as Exhibit A; and
WHEREAS, the Depositor and the Delaware Trustee desire to amend and
restate the Original Trust Agreement in its entirety as set forth herein to
provide for, among other things, (a) the issuance of the Common Securities by
the Issuer Trust to the Depositor, (b) the issuance and sale of the Preferred
Securities by the Issuer Trust pursuant to the Underwriting Agreement, (c) the
acquisition by the Issuer Trust from the Depositor of all of the right, title
and interest in the Junior Subordinated Debentures and (d) the appointment of
the Administrators, and (e) the addition of the Property Trustee as a party to
the Original Trust Agreement.
NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each party, for the benefit of the
other parties and for the benefit of the Holders, hereby amends and restates the
Original Trust Agreement in its entirety and agrees, intending to be legally
bound, as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions
For all purposes of this Trust Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article I have the meanings assigned to
them in this
<PAGE>
Article and include the plural as well as the singular;
(b) all other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(c) the words "include," "includes" and "including" shall be deemed to
be followed by the phrase "without limitation";
(d) all accounting terms used but not defined herein have the meanings
assigned to them in accordance with United States generally accepted accounting
principles as in effect at the time of computation;
(e) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may be,
of this Trust Agreement;
(f) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision; and
(g) all references to the date the Preferred Securities were originally
issued shall refer to the date the ____% Preferred Securities were originally
issued.
"25% Capital Limitation" means the limitation imposed by the Federal
Reserve that the proceeds of certain qualifying securities similar to the Trust
Securities will qualify as Tier 1 capital of the issuer up to an amount not to
exceed 25% of the issuer's Tier 1 capital, or any subsequent limitation adopted
by the Federal Reserve.
"Act" has the meaning specified in Section 6.8.
"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or for a given period, the amount of Additional Interest
(as defined in the Indenture) paid by the Depositor on a Like Amount of Junior
Subordinated Debentures for such period.
"Additional Sums" has the meaning specified in Section 10.6 of the
Indenture.
"Administrators" means each Person appointed in accordance with Section
8.20 solely in such Person's capacity as Administrator of the Issuer Trust
heretofore formed and continued hereunder and not in such Person's individual
capacity, or any successor Administrator appointed as herein provided; with the
initial Administrators being William B. Grant and Robert W. Kurtz.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the
- 2 -
<PAGE>
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Preferred Security or beneficial interest
therein, the rules and procedures of the Depositary for such Preferred Security,
in each case to the extent applicable to such transaction and as in effect from
time to time.
"Bank" has the meaning specified in the preamble to this Trust
Agreement.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction in
the premises judging such Person a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjudication or
composition of or in respect of such Person under any applicable federal or
state bankruptcy, insolvency, reorganization or other similar law, or appointing
a receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of such Person or of any substantial part of its property or ordering
the winding up or liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive days; or
(b) the institution by such Person of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable federal or
State bankruptcy, insolvency, reorganization or other similar law, or the
consent by it to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or similar official) of
such Person or of any substantial part of its property or the making by it of an
assignment for the benefit of creditors, or the admission by it in writing of
its inability to pay its debts generally as they become due and its willingness
to be adjudicated a bankrupt, or the taking of corporate action by such Person
in furtherance of any such action.
"Bankruptcy Laws" has the meaning specified in Section 10.9.
"Board of Directors" means the board of directors of the Depositor or
the Executive Committee of the board of directors of the Depositor (or any other
committee of the board of directors of the Depositor performing similar
functions) or, for purposes of this Trust Agreement, a committee designated by
the board of directors of the Depositor (or any such committee), comprised of
two or more members of the board of directors of the Depositor or officers of
the Depositor, or both.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Depositor to have been duly adopted
by the Depositor's Board of Directors, or such committee of the Board of
Directors or officers of the Depositor to which authority to act on behalf of
the Board of Directors has been delegated, and to be in full force and effect on
the date of such certification, and delivered to the Issuer Trustees.
- 3 -
<PAGE>
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a
day on which banking institutions in the State of Maryland or in the City of New
York, are authorized or required by law or executive order to remain closed or
(c) a day on which the Property Trustee's Corporate Trust Office or the Delaware
Trustee's Corporate Trust Office or the Corporate Trust Office of the Debenture
Trustee is closed for business.
"Capital Treatment Event" means, in respect of the Issuer Trust, the
reasonable determination by the Depositor that, as a result of the occurrence of
any amendment to, or change (including any announced prospective change) in, the
laws (or any rules or regulations thereunder) of the United States or any
political subdivision thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement, action or decision is announced on or after the date of the
issuance of the Preferred Securities of the Issuer Trust, there is more than an
insubstantial risk that the Depositor will not be entitled to treat an amount
equal to the Liquidation Amount of such Preferred Securities as "Tier 1 Capital"
(or the then equivalent thereof), except as otherwise restricted under the 25%
Capital Limitation, for purposes of the risk-based capital adequacy guidelines
of the Board of Governors of the Federal Reserve System, as then in effect and
applicable to the Depositor.
"Cede" means Cede & Co.
"Certificate Depositary Agreement" means the agreement among the Issuer
Trust, the Depositor and the Depositary, as the initial Clearing Agency, dated
as of the Closing Date, substantially in the form attached hereto as Exhibit B,
as the same may be amended and supplemented from time to time.
"Certificate of Trust" has the meaning specified in the preamble to
this Trust Agreement.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act. The Depositary shall be the
initial Clearing Agency.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means the Time of Delivery for the Firm Securities,
which date is also the date of execution and delivery of this Trust Agreement.
"Code" means the Internal Revenue Code of 1986, as amended or any
successor statute, in each case as amended from time to time.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under
- 4 -
<PAGE>
the Trust Indenture Act, then the body performing such duties at such time.
"Common Securities Certificate" means a certificate evidencing
ownership of Common Securities, substantially in the form attached hereto as
Exhibit C.
"Common Security" means an undivided beneficial interest in the assets
of the Issuer Trust, having a Liquidation Amount of $__ and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Corporate Trust Office" means (a) with respect to the Property Trustee
or the Debenture Trustee, the principal office of the Property Trustee located
in the City of New York, New York, which at the time of the execution of this
Trust Agreement is located at Four Albany Street, New York, New York 10006;
Attention: Corporate Trust and Agency Group - Corporate Market Services, and (b)
with respect to the Delaware Trustee, the principal office of the Delaware
Trustee located at 1011 Center Road, Suite 200, Wilmington, Delaware,
19805-1266.
"Debenture Event of Default" means an "Event of Default" as defined in
the Indenture.
"Debenture Redemption Date" means, with respect to any Junior
Subordinated Debentures to be redeemed under the Indenture, the date fixed for
redemption of such Junior Subordinated Debentures under the Indenture.
"Debenture Trustee" means Bankers Trust Company, a New York banking
corporation and any successor, as trustee under the Indenture.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. 3801, et seq., as it may be amended from time to time.
"Delaware Trustee" means the corporation identified as the "Delaware
Trustee" in the preamble to this Trust Agreement solely in its capacity as
Delaware Trustee of the Issuer Trust continued hereunder and not in its
individual capacity, or its successor in interest in such capacity, or any
successor trustee appointed as herein provided.
"Depositary" means The Depository Trust Company or any successor
thereto.
"Depositor" has the meaning specified in the preamble to this Trust
Agreement.
"Direct Action" has the meaning specified in Section 5.13(c).
"Distribution Date" has the meaning specified in Section 4.1(a).
"Distributions" means amounts payable in respect of the Trust
Securities as provided in Section 4.1.
- 5 -
<PAGE>
"Early Termination Event" has the meaning specified in Section 9.2.
"Event of Default" means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the occurrence of a Debenture Event of Default;
(b) default by the Issuer Trust in the payment of any Distribution when
it becomes due and payable, and continuation of such default for a period of 30
days;
(c) default by the Issuer Trust in the payment of any Redemption Price
of any Trust Security when it becomes due and payable; or
(d) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Issuer Trust in this Trust Agreement (other than
a covenant or warranty a default in the performance of which or the breach of
which is dealt with in clause (b) or (c) above) and continuation of such default
or breach for a period of 60 days after there has been given, by registered or
certified mail, to the Issuer Trustees and the Depositor by the Holders of at
least 25% in aggregate Liquidation Amount of the Outstanding Preferred
Securities, a written notice specifying such default or breach and requiring it
to be remedied and stating that such notice is a "Notice of Default" hereunder;
or
(e) the occurrence of any Bankruptcy Event with respect to the Property
Trustee or all or substantially all of its property if a successor Property
Trustee has not been appointed within a period of 90 days thereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor statute thereto, in each case as amended from time to
time.
"Expiration Date" has the meaning specified in Section 9.1.
"Extension Period" has the meaning specified in Section 4.1.
"Firm Securities" means an aggregate Liquidation Amount of $20,000,000
of the Issuer Trust's _____% preferred securities.
"Global Preferred Securities Certificate" means a Preferred Securities
Certificate evidencing ownership of Global Preferred Securities.
"Global Preferred Security" means a Preferred Security, the ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 5.4.
"Guarantee Agreement" means the Guarantee Agreement executed and
delivered by the
- 6 -
<PAGE>
Depositor and Bankers Trust Company, as guarantee trustee, contemporaneously
with the execution and delivery of this Trust Agreement, for the benefit of the
Holders of the Preferred Securities, as amended from time to time.
"Holder" means a Person in whose name a Trust Security or Trust
Securities is registered in the Securities Register; any such Person shall be
deemed to be a beneficial owner within the meaning of the Delaware Business
Trust Act.
"Indemnified Person" has the meaning specified in Section 8.6(c).
"Indenture" means the Junior Subordinated Indenture, dated as of
______, 1999, between the Depositor and the Debenture Trustee (as amended or
supplemented from time to time) relating to the issuance of the Junior
Subordinated Debentures.
"Investment Company Act" means the Investment Company Act of 1940, as
amended or any successor statute, in each case as amended from time to time.
"Investment Company Event" means the receipt by the Issuer Trust of an
Opinion of Counsel, rendered by counsel experienced in such matters, to the
effect that, as a result of the occurrence of a change in law or regulation or a
written change (including any announced prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more than an insubstantial risk that
the Issuer Trust is or will be considered an "investment company" that is
required to be registered under the Investment Company Act, which change or
prospective change becomes effective or would become effective, as the case may
be, on or after the date of the issuance of the Preferred Securities.
"Issuer Trust" means First United Capital Trust.
"Issuer Trustees" means, collectively, the Property Trustee and the
Delaware Trustee.
"Junior Subordinated Debentures" means the aggregate principal amount
of the Depositor's ______% junior subordinated deferrable interest debentures,
due ______, 2029 which date may be shortened once at any time by the Depositor
to any date not earlier than ______, 2004 issued pursuant to the Indenture.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of Trust
Securities, Trust Securities having a Liquidation Amount equal to that portion
of the principal amount of Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with the Indenture, allocated to the
Common Securities and to the Preferred Securities based upon the relative
Liquidation Amounts of such classes and (b) with respect to a distribution of
Junior Subordinated Debentures to
- 7 -
<PAGE>
Holders of Trust Securities in connection with a dissolution or liquidation of
the Issuer Trust, Junior Subordinated Debentures having a principal amount equal
to the Liquidation Amount of the Trust Securities of the Holder to whom such
Junior Subordinated Debentures are distributed.
"Liquidation Amount" means the stated amount of $__ per Trust Security.
"Liquidation Date" means the date on which Junior Subordinated
Debentures on the Liquidation Distributions are to be distributed to Holders of
Trust Securities in connection with a dissolution and liquidation of the Issuer
Trust pursuant to Section 9.4.
"Liquidation Distribution" has the meaning specified in Section 9.4(d).
"Majority in Liquidation Amount of the Preferred Securities" or
"Majority in Liquidation Amount of the Common Securities" means, except as
provided by the Trust Indenture Act, Preferred Securities or Common Securities,
as the case may be, representing more than 50% of the aggregate Liquidation
Amount of all then Outstanding Preferred Securities or Common Securities, as the
case may be.
"Officers' Certificate" means, a certificate signed by the Chairman of
the Board, Chief Executive Officer, President or a Vice President and by the
Chief Financial Officer, the Treasurer, an Associate Treasurer, an Assistant
Treasurer, the Secretary, or an Assistant Secretary, of the Depositor, and
delivered to the appropriate Issuer Trustee. Any Officers' Certificate delivered
with respect to compliance with a condition or covenant provided for in this
Trust Agreement shall include:
(a) a statement by each officer signing the Officers' Certificate that
such officer has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by such officer in rendering the Officers' Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for or an employee of the Depositor or any Affiliate of the Depositor.
"Option Closing Date" shall have the meaning provided in the
Underwriting Agreement.
"Option Securities" means an aggregate Liquidation Amount of $3,000,000
of the Issuer Trust's 9.12% Preferred Securities, issuable to the Underwriters,
at their option, exercisable within
- 8 -
<PAGE>
30 days after the date of the Prospectus, solely to cover over-allotments, if
any.
"Option Preferred Securities Certificate" means the certificate
evidencing ownership of Preferred Securities issued if the Underwriters exercise
their option described in Section 2.4, which certificate shall be substantially
in the form attached hereto as Exhibit D.
"Original Trust Agreement" has the meaning specified in the preamble to
this Trust Agreement.
"Outstanding," with respect to Trust Securities, means, as of the date
of determination, all Trust Securities theretofore executed and delivered under
this Trust Agreement, except:
(a) Trust Securities theretofore canceled by the Property Trustee or
delivered to the Property Trustee for cancellation;
(b) Trust Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Property Trustee or any
Paying Agent for the Holders of such Preferred Securities, provided that if such
Trust Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Trust Agreement; and
(c) Trust Securities which have been paid or in exchange for or in lieu
of which other Trust Securities have been executed and delivered pursuant to
Sections 5.4, 5.5, 5.6 and 5.13;
provided, however, that in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Preferred Securities have given any
request, demand, authorization, direction, notice, consent, or waiver hereunder,
Preferred Securities owned by the Depositor, any Issuer Trustee, any
Administrator, or any Affiliate of the Depositor shall be disregarded and deemed
not to be Outstanding, except that (i) in determining whether any Issuer Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Preferred Securities that such Issuer
Trustee or such Administrator, as the case may be, knows to be so owned shall be
so disregarded and (ii) the foregoing shall not apply at any time when all of
the outstanding Preferred Securities are owned by the Depositor, one or more of
the Issuer Trustees, one or more of the Administrators and/or any such
Affiliate. Preferred Securities so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction of
the Administrators the pledgee's right so to act with respect to such Preferred
Securities and that the pledgee is not the Depositor or any Affiliate of the
Depositor.
"Owner" means each Person who is the beneficial owner of Global
Preferred Securities as reflected in the records of the Clearing Agency or, if a
Clearing Agency Participant is not the Owner, then as reflected in the records
of a Person maintaining an account with such Clearing Agency, directly or
indirectly, in accordance with the rules of such Clearing Agency.
"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 5.10 and shall initially be the Property Trustee.
- 9 -
<PAGE>
"Payment Account" means a segregated non-interest-bearing corporate
trust account maintained by the Property Trustee in its trust department for the
benefit of the Holders in which all amounts paid in respect of the Junior
Subordinated Debentures will be held and from which the Property Trustee,
through the Paying Agent, shall make payments to the Holders in accordance with
Sections 4.1 and 4.2.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, company,
limited liability company, trust, unincorporated organization or government or
any agency or political subdivision thereof, or any other entity of whatever
nature.
"Preferred Securities Certificate" means a certificate evidencing
ownership of Preferred Securities, substantially in the form attached hereto as
Exhibit D.
"Preferred Security" means a Firm Security or an Option Security, each
constituting a preferred undivided beneficial interest in the assets of the
Issuer Trust, having a Liquidation Amount of $___ and having the rights provided
therefor in this Trust Agreement, including the right to receive Distributions
and a Liquidation Distribution as provided herein.
"Property Trustee" means the Person identified as the "Property
Trustee" in the first paragraph to this Trust Agreement solely in its capacity
as Property Trustee of the Issuer Trust formed and continued hereunder and not
in its individual capacity, or its successor in interest in such capacity, or
any successor property trustee appointed as herein provided.
"Prospectus" means the final prospectus covering the Preferred
Securities, Junior Subordinated Debentures and the Guarantee Agreement.
"Redemption Date" means, with respect to any Trust Security to be
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Junior Subordinated Debenture Redemption Date and
the stated maturity of the Junior Subordinated Debentures shall be a Redemption
Date for a Like Amount of Trust Securities, including but not limited to any
date of redemption pursuant to the occurrence of any Special Event.
"Redemption Price" means with respect to a redemption of any Trust
Security, the Liquidation Amount of such Trust Security, together with
accumulated but unpaid Distributions to but excluding the date fixed for
redemption, plus the related amount of the premium, if any, paid by the
Depositor upon the concurrent redemption of a Like Amount of Junior Subordinated
Debentures.
"Relevant Trustee" has the meaning specified in Section 8.10.
"Responsible Officer" when used with respect to the Property Trustee
means any officer assigned to the Corporate Trust Office, including any managing
director, principal, vice president, assistant vice president, assistant
treasurer, assistant secretary or any other officer of the Property Trustee
customarily performing functions similar to those performed by any of the above
- 10 -
<PAGE>
designated officers and having direct responsibility for the administration of
this Trust Agreement, and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.
"Securities Act" means the Securities Act of 1933, as amended, and any
successor statute thereto, in each case as amended from time to time.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 5.5.
"Special Event" means any Tax Event, Capital Treatment Event, or
Investment Company Event.
"Successor Securities Certificate" of any particular Preferred
Securities Certificate means every Preferred Securities Certificate issued
after, and evidencing all or a portion of the same beneficial interest in the
Issuer Trust as that evidenced by, such particular Preferred Securities
Certificate; and, for the purposes of this definition, any Preferred Securities
Certificate executed and delivered under Section 5.6 in exchange for or in lieu
of a mutilated, destroyed, lost or stolen Preferred Securities Certificate shall
be deemed to evidence the same beneficial interest in the Issuer Trust as the
mutilated, destroyed, lost or stolen Preferred Securities Certificate.
"Successor Security" has the meaning specified in Section 9.5.
"Tax Event" means the receipt by the Issuer Trust of an Opinion of
Counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement, action or decision is announced on or after
the date of issuance of the Preferred Securities, there is more than an
insubstantial risk that (a) the Issuer Trust is, or will be within 90 days of
the delivery of such Opinion of Counsel, subject to United States federal income
tax with respect to income received or accrued on the Junior Subordinated
Debentures, (b) interest payable by the Depositor on the Junior Subordinated
Debentures is not, or within 90 days of the delivery of such Opinion of Counsel
will not be, deductible by the Depositor, in whole or in part, for United States
federal income tax purposes, or (c) the Issuer Trust is, or will be within 90
days of the delivery of such Opinion of Counsel, subject to more than a de
minimis amount of other taxes, duties or other governmental charges.
"Time of Delivery" means 9:00 a.m. Eastern Standard Time, either (a)
with respect to the Firm Securities or the Common Securities, on the fourth
Business Day (unless postponed in accordance with the provisions of Section 4 of
the Underwriting Agreement) following the date of execution of the Underwriting
Agreement, or such other time not later than ten Business Days after such date
as shall be agreed upon by the Underwriters, the Issuer Trust and the Company,
or (b) with respect to the Option Securities, the Option Closing Date.
- 11 -
<PAGE>
"Trust Agreement" means this Amended and Restated Trust Agreement, as
the same may be modified, amended or supplemented in accordance with the
applicable provisions hereof, including (a) all Exhibits hereto, and (b) for all
purposes of this Amended and Restated Trust Agreement and any such modification,
amendment or supplement, the provisions of the Trust Indenture Act that are
deemed to be a part of and govern this Amended and Restated Trust Agreement and
any modification, amendment or supplement, respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
by the Trust Indenture Reform Act of 1990, or any successor statute, in each
case as amended from time to time.
"Trust Property" means (a) the Junior Subordinated Debentures, (b) any
cash on deposit in, or owing to, the Payment Account, and (c) all proceeds and
rights in respect of the foregoing and any other property and assets for the
time being held or deemed to be held by the Property Trustee pursuant to the
trusts of this Trust Agreement.
"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.
"Trust Security" means any one of the Common Securities or the
Preferred Securities.
"Underwriters" has the meaning specified in the Underwriting Agreement.
"Underwriting Agreement" means the Underwriting Agreement, dated as of
_______, 1999, among the Issuer Trust, the Depositor and the Underwriters, as
the same may be amended from time to time.
ARTICLE II
CONTINUATION OF THE ISSUER TRUST
Section 2.1. Name.
The Issuer Trust continued hereby shall be known as "First United
Capital Trust," as such name may be modified from time to time by the
Administrators following written notice to the Holders of Trust Securities and
the other Issuer Trustees, in which name the Administrators and the Issuer
Trustees may engage in the transactions contemplated hereby, make and execute
contracts and other instruments on behalf of the Issuer Trust and sue and be
sued.
- 12 -
<PAGE>
Section 2.2. Office of the Delaware Trustee; Principal Place of Business.
The address of the Delaware Trustee in the State of Delaware is Bankers
Trust (Delaware), 1011 Center Road, Suite 200, Wilmington, Delaware, 19805-1266,
Attention: Lisa Wilkins, or such other address in the State of Delaware as the
Delaware Trustee may designate by written notice to the Holders and the
Depositor. The principal executive office of the Issuer Trust is in care of
First United Corporation, 19 South Second Street, Oakland, Maryland 21550,
Attention: Office of the Secretary.
Section 2.3. Initial Contribution of Trust Property; Organizational
Expenses.
The Issuer Trustees acknowledge receipt in trust from the Depositor in
connection with this Trust Agreement of the sum of $10, which constitutes the
initial Trust Property. The Depositor shall pay all organizational expenses of
the Issuer Trust as they arise or shall, upon request of any Issuer Trustee,
promptly reimburse such Issuer Trustee for any such reasonable expenses paid by
such Issuer Trustee. The Depositor shall make no claim upon the Trust Property
for the payment of such expenses.
Section 2.4. Issuance of the Preferred Securities.
On ___________, 1999, the Depositor, both on its own behalf and on
behalf of the Issuer Trust pursuant to the Original Trust Agreement, executed
and delivered the Underwriting Agreement. Contemporaneously with the execution
and delivery of this Trust Agreement, an Administrator, on behalf of the Issuer
Trust, shall manually execute in accordance with Section 5.3 and the Property
Trustee shall authenticate in accordance with Section 5.3 and deliver to the
Underwriters, Firm Securities Certificates, registered in the names requested by
the Underwriters, in an aggregate amount of ____________ Firm Securities having
an aggregate Liquidation Amount of $20,000,000, against receipt of the aggregate
purchase price of such Preferred Securities of $20,000,000, by the Property
Trustee.
At the option of the Underwriters, within 30 days of the date of the
Prospectus, and solely for the purpose of covering an over-allotment, if any, an
Administrator, on behalf of the Issuer Trust, shall manually execute in
accordance with Section 5.3 and the Property Trustee shall authenticate in
accordance with Section 5.3 and deliver to the Underwriters, Option Preferred
Securities Certificates, registered in the names requested by the Underwriters,
representing up to __________ Option Securities having an aggregate Liquidation
Amount of up to $3,000,000 against receipt of the aggregate purchase price of
such Option Securities of up to $3,000,000 by the Property Trustee.
- 13 -
<PAGE>
Section 2.5. Issuance of the Common Securities; Subscription and Purchase
of Junior Subordinated Debentures.
Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrator, on behalf of the Issuer Trust, shall manually
execute in accordance with Section 5.3 and the Property Trustee shall
authenticate in accordance with Section 5.3 and deliver to the Depositor, Common
Securities Certificates, registered in the name of the Depositor, in an
aggregate amount of _______ Common Securities having an aggregate Liquidation
Amount of $__________ against receipt by the Property Trustee of the aggregate
purchase price of such Common Securities of $_____________ by the Property
Trustee. In the event of any exercise of an over-allotment option requiring
issuance of additional Option Preferred Securities Certificates, as described in
Section 2.4 above, a proportionate number of additional Common Securities
Certificates, with corresponding aggregate Liquidation Amount, shall be
delivered to the Depositor. Contemporaneously with the executions, and
deliveries of any Common Securities Certificates and any Preferred Securities
Certificates, an Administrator, on behalf of the Issuer Trust, shall subscribe
for and purchase from the Depositor, corresponding amounts of Junior
Subordinated Debentures, registered in the name of the Issuer Trust and having
an aggregate principal amount equal to $____________, plus, in the event of any
exercise of the over-allotment option (a) a corresponding additional number of
Junior Subordinated Debentures not exceeding an aggregate principal amount of
$_____________ and (b) a corresponding number of Junior Subordinated Debentures
not exceeding an aggregate principal amount equal to the aggregate Liquidation
Amount of Common Securities issued pursuant to such exercise of an
over-allotment option; and, in satisfaction of the purchase price for such
Junior Subordinated Debentures, the Property Trustee, on behalf of the Issuer
Trust, shall deliver to the Depositor the sum of $__________, plus any
corresponding over-allotment option amount (being the sum of the amounts
delivered to the Property Trustee pursuant to (a) the second sentence of Section
2.4 and (b) the first and second sentences of this Section 2.5) and receive the
Junior Subordinated Debentures on behalf of the Issuer Trust.
- 14 -
<PAGE>
Section 2.6. Declaration of Trust.
The exclusive purposes and functions of the Issuer Trust are to (a)
issue and sell Trust Securities and use the proceeds from such sale to acquire
the Junior Subordinated Debentures, and (b) engage in only those other
activities necessary, convenient, or incidental thereto. The Depositor hereby
appoints the Issuer Trustees as trustees of the Issuer Trust, to have all the
rights, powers and duties to the extent set forth herein, and the Issuer
Trustees hereby accept such appointment. The Property Trustee hereby declares
that it will hold the Trust Property in trust upon and subject to the conditions
set forth herein for the benefit of the Issuer Trust and the Holders. The
Depositor hereby appoints the Administrators (as agents of the Issuer Trust),
with such Administrators having all rights, powers, and duties set forth herein
with respect to accomplishing the purposes of the Issuer Trust, and the
Administrators hereby accept such appointment, provided, however, that it is the
intent of the parties hereto that such Administrators shall not be trustees or
fiduciaries with respect to the Issuer Trust and , to the fullest extent
permitted by applicable law, this Trust Agreement shall be construed in a manner
consistent with such intent. The Property Trustee shall have the right, power
and authority to perform those duties assigned to the Administrators. The
Delaware Trustee shall not be entitled to exercise any powers, nor shall the
Delaware Trustee have any of the duties and responsibilities, of the Property
Trustee or the Administrators set forth herein. The Delaware Trustee shall be
one of the trustees of the Issuer Trust for the sole and limited purpose of
fulfilling the requirements of Section 3807 of the Delaware Business Trust Act
and for taking such actions as are required to be taken by a Delaware trustee
under the Delaware Business Trust Act.
Section 2.7. Authorization to Enter into Certain Transactions.
(a) The Issuer Trustees and the Administrators shall conduct the
affairs of the Issuer Trust in accordance with the terms of this Trust
Agreement. Subject to the limitations set forth in paragraph (b) of this Section
2.7 and in accordance with the following provisions (i) and (ii), the Issuer
Trustees and the Administrators shall act as follows:
(i) Each Administrator shall have the power and authority and
is hereby authorized and directed to act on behalf of the Issuer Trust
with respect to the following:
(A) the compliance with the Underwriting Agreement
regarding the issuance and sale of the Trust Securities;
(B) the compliance with the Securities Act,
applicable state securities or blue sky laws, and the Trust
Indenture Act;
(C) the execution of the Trust Securities on behalf
of the Issuer Trust in accordance with this Trust Agreement;
(D) the listing of the Preferred Securities upon such
securities exchange or exchanges or upon the Nasdaq National
Market as shall be determined by the Depositor, with the
registration of the Preferred Securities under the Exchange
- 15 -
<PAGE>
Act, if required, and the preparation and filing of all
periodic and other reports and other documents pursuant to the
foregoing;
(E) the application for a taxpayer identification
number for the Issuer Trust;
(F) the preparation of a registration statement and a
prospectus in relation to the Preferred Securities, including
any amendments thereto and the taking of any action necessary
or desirable to sell the Preferred Securities in a transaction
or series of transactions subject to the registration
requirements of the Securities Act;
(G) causing the Issuer Trust to enter into, and
execute, deliver and perform on behalf of the Issuer Trust all
agreements, instruments, certificates or other documents as
such Administrator deems necessary or incidental to the
purposes and functions of the Issuer Trust; and
(H) any action incidental to the foregoing as the
Administrators may from time to time determine is necessary or
advisable to give effect to the terms of this Trust Agreement.
(ii) The Property Trustee shall have the power and authority,
and is hereby authorized and directed, to act on behalf of the Issuer
Trust with respect to the following matters:
(A) establishing and maintaining the Payment Account;
(B) receiving, taking title to, and exercising all of
the rights, powers and privileges of the holder of the Junior
Subordinated Debentures;
(C) receiving and collecting interest, principal and
any other payments made in respect of the Junior Subordinated
Debentures in the Payment Account;
(D) distributing amounts owed to the Holders in
respect of the Trust Securities in accordance with the terms
of this Trust Agreement;
(E) acting as Paying Agent and/or Securities
Registrar to the extent appointed as such hereunder;
(F) sending notices of default and other information
regarding the Trust Securities and the Junior Subordinated
Debentures to the Holders in accordance with this Trust
Agreement;
(G) distributing the Trust Property in accordance
with the terms of this Trust Agreement;
- 16 -
<PAGE>
(H) to the extent provided in this Trust Agreement,
winding up the affairs of and liquidating the Issuer Trust and
preparing, executing and filing the certificate of
cancellation with the Secretary of State of the State of
Delaware;
(I) after an Event of Default (other than under
paragraph (b), (c) or (d) of the definition of such term if
such Event of Default is by or with respect to the Property
Trustee), complying with the provisions of this Trust
Agreement and taking any action to give effect to the terms of
this Trust Agreement and protecting and conserving the Trust
Property for the benefit of the Holders (without consideration
of the effect of any such action on any particular Holder);
and
(J) taking any action incidental or convenient to the
foregoing as the Property Trustee may from time to time
determine is necessary or advisable to give effect to the
terms of this Trust Agreement;
provided, however, that nothing in this Section 2.7(a)(ii) shall require the
Property Trustee to take any action that is not otherwise required in this Trust
Agreement.
(b) So long as this Trust Agreement remains in effect, the Issuer Trust
(or the Issuer Trustees or Administrators acting on behalf of the Issuer Trust)
shall not undertake any business, activities or transaction except as expressly
provided herein or contemplated hereby. In particular, neither the Issuer
Trustees nor the Administrators (in each case acting on behalf of the Issuer
Trust) shall (i) acquire any investments or engage in any activities not
authorized by this Trust Agreement, (ii) sell, assign, transfer, exchange,
mortgage, pledge, set-off, or otherwise dispose of any of the Trust Property or
interests therein, including to Holders, except as expressly provided herein,
(iii) take any action that would reasonably be expected to cause the Issuer
Trust to become taxable as a corporation for United States federal income tax
purposes, (iv) incur any indebtedness for borrowed money or issue any other
debt, or (v) take or consent to any action that would result in the placement of
a Lien on any of the Trust Property. The Property Trustee shall defend all
claims and demands of all Persons at any time claiming any Lien on any of the
Trust Property adverse to the interest of the Issuer Trust or the Holders in
their capacity as Holders.
- 17 -
<PAGE>
(c) In connection with the issue and sale of the Preferred Securities,
the Depositor shall have the power and authority to assist the Issuer Trust with
respect to, or effect on behalf of the Issuer Trust, the following (and any
actions taken by the Depositor in furtherance of the following prior to the date
of this Trust Agreement are hereby ratified and confirmed in all respects):
(i) the preparation and filing by the Issuer Trust with the
Commission, and the execution and delivery on behalf of the Issuer
Trust, of a registration statement and a prospectus in relation to the
Preferred Securities, including any amendments thereto, and the taking
of any action necessary or desirable to sell the Preferred Securities
in a transaction or a series of transactions subject to the
registration requirements of the Securities Act;
(ii) the determination of the states in which to take
appropriate action to qualify or register for sale all or part of the
Preferred Securities and the determination of any and all such acts,
other than actions that must be taken by or on behalf of the Issuer
Trust, and the advice to the Issuer Trustees of actions they must take
on behalf of the Issuer Trust, and the preparation for execution and
filing of any documents to be executed and filed by the Issuer Trust or
on behalf of the Issuer Trust, as the Depositor deems necessary or
advisable in order to comply with the applicable laws of any such
states in connection with the offer and sale of the Preferred
Securities;
(iii) the negotiation of the terms of, and the execution and
delivery of, the Underwriting Agreement providing for the sale of the
Preferred Securities;
(iv) the preparation and filing by the Issuer Trust with the
Commission and the execution on behalf of the Issuer Trust of a
registration statement on Form 8-A relating to the registration of the
Preferred Securities under Section 12(b) or 12(g) of the Exchange Act,
as amended, including any amendments thereto;
(v) compliance with the listing requirements of the Preferred
Securities upon such securities exchange or exchanges, or upon the
Nasdaq National Market, as shall be determined by the Depositor, the
registration of the Preferred Securities under the Exchange Act, if
required, and the preparation and filing of all periodic and other
reports and other documents pursuant to the foregoing; and
(vi) the taking of any other actions necessary or desirable to
carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the Administrators
and the Property Trustee are authorized and directed to conduct the affairs of
the Issuer Trust and to operate the Issuer Trust so that the Issuer Trust will
not be deemed to be an "investment company" required to be registered under the
Investment Company Act, and will not be taxable as a corporation for the United
States federal income tax purposes and so that the Junior Subordinated
Debentures will be treated as indebtedness of the Depositor for United States
- 18 -
<PAGE>
federal income tax purposes. In this connection, the Property Trustee, the
Administrators, and the Holders of Common Securities are authorized to take any
action, not inconsistent with applicable law, the Certificate of Trust, or this
Trust Agreement, that the Property Trustee, the Administrators, and Holders of
Common Securities determine in their discretion to be necessary or desirable for
such purposes, as long as such action does not adversely affect in any material
respect the interests of the Holders of the Outstanding Preferred Securities. In
no event shall the Administrators or the Issuer Trustees be liable to the Issuer
Trust or the Holders for any failure to comply with this section that results
from a change in law or regulations or in the interpretation thereof.
Section 2.8. Assets of Trust.
The assets of the Issuer Trust shall consist solely of the Trust
Property.
Section 2.9. Title to Trust Property.
Legal title to all Trust Property shall be vested at all times in the
Issuer Trust and shall be held and administered by the Property Trustee (in its
capacity as such) for the benefit of the Issuer Trust and the Holders in
accordance with this Trust Agreement.
ARTICLE III
PAYMENT ACCOUNT
Section 3.1. Payment Account.
(a) On or prior to the Closing Date, the Property Trustee shall
establish the Payment Account. The Property Trustee and its agents shall have
exclusive control and sole right of withdrawal with respect to the Payment
Account for the purpose of making deposits in and withdrawals from the Payment
Account in accordance with this Trust Agreement. All monies and other property
deposited or held from time to time in the Payment Account shall be held by the
Property Trustee in the Payment Account for the exclusive benefit of the Holders
and for distribution as herein provided, including (and subject to) any priority
of payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments or proceeds with respect to, the Junior Subordinated Debentures.
Amounts held in the Payment Account shall not be invested by the Property
Trustee pending distribution thereof.
- 19 -
<PAGE>
ARTICLE IV
DISTRIBUTIONS; REDEMPTION
Section 4.1. Distributions.
(a) The Trust Securities represent undivided beneficial interests in
the Trust Property, and Distributions (including Distributions of Additional
Amounts) will be made on the Trust Securities at the rate and on the dates that
payments of interest (including payments of Additional Interest, as defined in
the Indenture) are made on the Junior Subordinated Debentures.
Accordingly:
(i) Distributions on the Trust Securities shall be cumulative
and will accumulate whether or not there are funds of the Issuer Trust
available for the payment of Distributions. Distributions shall
accumulate from _______, 1999, and, except in the event (and to the
extent) that the Depositor exercises its right to defer the payment of
interest on the Junior Subordinated Debentures pursuant to the
Indenture, shall be payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year, commencing on ________,
1999. If any date on which a Distribution is otherwise payable on the
Trust Securities is not a Business Day, then the payment of such
Distribution shall be made on the next succeeding day that is a
Business Day (without any interest or other payment in respect of any
such delay), except that, if such Business Day is in the next
succeeding calendar year, payment of such Distributions shall be made
on the immediately preceding Business Day, in either case with the same
force and effect as if made on the date on which such payment was
originally payable (each date on which distributions are payable in
accordance with this Section 4.1(a), a "Distribution Date").
(ii) The Trust Securities shall be entitled to Distributions
payable at a rate of ________% per annum of the Liquidation Amount of
the Trust Securities. The amount of Distributions payable for any
period less than a full Distribution period shall be computed on the
basis of a 360-day year of twelve 30-day months and the actual number
of days elapsed in a partial month in a period. Distributions payable
for each full Distribution period will be computed by dividing the rate
per annum by four. The amount of Distributions payable for any period
shall include any Additional Amounts in respect of such period.
(iii) So long as no Debenture Event of Default has occurred
and is continuing, the Depositor has the right under the Indenture to
defer the payment of interest on the Junior Subordinated Debentures at
any time and from time to time for a period not exceeding 20
consecutive quarterly periods (an "Extension Period"), provided that no
Extension Period may extend beyond _______, 2029. As a consequence of
any such deferral, quarterly Distributions on the Trust Securities by
the Issuer Trust will also be deferred (and the amount of Distributions
to which Holders of the Trust Securities are entitled will accumulate
additional Distributions thereon at the rate per annum of _____%
- 20 -
<PAGE>
per annum, compounded quarterly) from the relevant payment date for
such Distributions, computed on the basis of a 360-day year of twelve
30-day months and the actual days elapsed in a partial month in such
period. Additional Distributions payable for each full Distribution
period will be computed by dividing the rate per annum by four (4). The
term "Distributions" as used in Section 4.1 shall include any such
additional Distributions provided pursuant to this Section 4.1(a)(iii).
(iv) Distributions on the Trust Securities shall be made by
the Property Trustee from the Payment Account and shall be payable on
each Distribution Date only to the extent that the Issuer Trust has
funds then on hand and available in the Payment Account for the payment
of such Distributions.
(b) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they appear on the
Securities Register for the Trust Securities at the close of business on the
relevant record date, which shall be at the close of business on the 15th day of
March, June, September or December (whether or not a Business Day).
Section 4.2. Redemption.
(a) On each Debenture Redemption Date and on the stated maturity of the
Junior Subordinated Debentures, the Issuer Trust will be required to redeem a
Like Amount of Trust Securities at the Redemption Price.
(b) Notice of redemption shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days
prior to the Redemption Date to each Holder of Trust Securities to be redeemed,
at such Holder's address appearing in the Security Register. All notices of
redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price, or if the Redemption Price cannot
be calculated prior to the time the notice is required to be sent, the
estimate of the Redemption Price provided pursuant to the Indenture
together with a statement that it is an estimate and that the actual
Redemption Price will be calculated on the third Business Day prior to
the Redemption Date (and if an estimate is provided, a further notice
shall be sent of the actual Redemption Price on the date, or as soon as
practicable thereafter, that notice of such actual Redemption Price is
received pursuant to the Indenture);
(iii) the CUSIP number or CUSIP numbers of the Preferred
Securities affected;
(iv) if less than all the Outstanding Trust Securities are
to be redeemed, the identification and the total Liquidation Amount of
the particular Trust Securities to be redeemed;
(v) that, on the Redemption Date, the Redemption Price will
become due and
- 21 -
<PAGE>
payable upon each such Trust Security to be redeemed and that
Distributions thereon will cease to accumulate on and after said date,
except as provided in Section 4.2(d) below; and
(vi) the place or places where Trust Securities are to be
surrendered for the payment of the Redemption Price.
The Issuer Trust in issuing the Trust Securities shall use "CUSIP"
numbers, and the Property Trustee shall indicate the "CUSIP" numbers of the
Trust Securities in notices of redemption and related materials as a convenience
to Holders; provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Trust
Securities or as contained in any notice of redemption and related material.
(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the applicable proceeds from the
contemporaneous redemption of Junior Subordinated Debentures. Redemptions of the
Trust Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Issuer Trust has funds then on hand
and available in the Payment Account for the payment of such Redemption Price.
(d) If the Property Trustee gives a notice of redemption in respect of
any Preferred Securities, then, by 12:00 noon, New York City time, on the
Redemption Date, subject to Section 4.2(c), the Property Trustee will, with
respect to Preferred Securities held in global form, irrevocably deposit with
the Clearing Agency for such Preferred Securities, to the extent available
therefor, funds sufficient to pay the applicable Redemption Price and will give
such Clearing Agency irrevocable instructions and authority to pay the
Redemption Price to the Holders of the Preferred Securities. With respect to
Preferred Securities that are not held in global form, the Property Trustee,
subject to Section 4.2(c), will irrevocably deposit with the Paying Agent, to
the extent available therefor, funds sufficient to pay the applicable Redemption
Price and will give the Paying Agent irrevocable instructions and authority to
pay the Redemption Price to the Holders of the Preferred Securities upon
surrender of their Preferred Securities Certificates. Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date for any
Trust Securities called for redemption shall be payable to the Holders of such
Trust Securities as they appear on the Securities Register for the Trust
Securities on the relevant record dates for the related Distribution Dates. If
notice of redemption shall have been given and funds deposited as required,
then, upon the date of such deposit, all rights of Holders holding Trust
Securities so called for redemption will cease, except the right of such Holders
to receive the Redemption Price and any Distributions payable in respect of the
Trust Securities on or prior to the Redemption Date, but without interest, and
such Trust Securities will cease to be Outstanding. In the event that any date
on which any applicable Redemption Price is payable is not a Business Day, then
payment of the applicable Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
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 date. In the event that payment of the Redemption Price in
respect of any Trust Securities called for redemption is improperly withheld or
refused
- 22 -
<PAGE>
and not paid either by the Issuer Trust or by the Depositor pursuant to the
Guarantee Agreement, Distributions on such Trust Securities will continue to
accumulate, as set forth in Section 4.1, from the Redemption Date originally
established by the Issuer Trust for such Trust Securities to the date such
applicable Redemption Price is actually paid, in which case the actual payment
date will be the date fixed for redemption for purposes of calculating the
applicable Redemption Price.
(e) Subject to Section 4.3(a), if less than all the Outstanding Trust
Securities are to be redeemed on a Redemption Date, then the particular
Preferred Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Property Trustee from the Outstanding
Preferred Securities not previously called for redemption in such a manner as
the Property Trustee shall deem fair and appropriate.
Section 4.3. Subordination of Common Securities.
(a) Payment of Distributions (including Additional Amounts, if
applicable) on, the Redemption Price of, and the Liquidation Distribution in
respect of, the Trust Securities, as applicable, shall be made, subject to
Section 4.2(e), pro rata among the Common Securities and the Preferred
Securities based on the Liquidation Amount of such Trust Securities; provided,
however, that if on any Distribution Date or Redemption Date any Event of
Default resulting from a Debenture Event of Default in Section 5.1(a) or 5.1(b)
of the Indenture shall have occurred and be continuing, no payment of any
Distribution (including any Additional Amounts, if applicable) on, or Redemption
Price of, or Liquidation Distribution in respect of, any Common Security, and no
other payment on account of the redemption, liquidation, or other acquisition of
Common Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions (including Additional Amounts, if
applicable) on all Outstanding Preferred Securities for all Distribution periods
terminating on or prior thereto, or, in the case of payment of the Redemption
Price, the full amount of such Redemption Price on all Outstanding Preferred
Securities then called for redemption, or in the case of payment of the
Liquidation Distribution the full amount of such Liquidation Distribution on all
Outstanding Preferred Securities, shall have been made or provided for, and all
funds immediately available to the Property Trustee shall first be applied to
the payment in full in cash of all Distributions (including any Additional
Amounts, if applicable) on, or the Redemption Price of, or Liquidation
Distribution in respect of Preferred Securities then due and payable. The
existence of an Event of Default does not entitle the Holders of Preferred
Securities to accelerate the maturity thereof.
(b) In the case of the occurrence of any Event of Default resulting
from any Debenture Event of Default, the Holder of the Common Securities shall
have no right to act with respect to any such Event of Default under this Trust
Agreement until the effects of all such Events of Default with respect to the
Preferred Securities have been cured, waived, or otherwise eliminated. Until all
such Events of Default under this Trust Agreement with respect to the Preferred
Securities have been so cured, waived, or otherwise eliminated, the Property
Trustee shall act solely on behalf of the Holders of the Preferred Securities
and not on behalf of the Holder of the Common Securities, and only the Holders
of the Preferred Securities will have the right to direct the Property Trustee
to act on their behalf.
- 23 -
<PAGE>
Section 4.4. Payment Procedures.
Payments of Distributions (including any Additional Amounts, if
applicable) in respect of the Preferred Securities shall be made by check mailed
to the address of the Person entitled thereto as such address shall appear on
the Securities Register or, if the Preferred Securities are held by a Clearing
Agency, such Distributions shall be made to the Clearing Agency in immediately
available funds, which will credit the relevant accounts on the applicable
Distribution Dates. Payments of Distributions to Holders of $1,000,000 or more
in aggregate Liquidation Amount of Preferred Securities may be made by wire
transfer of immediately available funds upon written request of such Holder of
Preferred Securities to the Securities Registrar not later than 15 calendar days
prior to the date on which the Distribution is payable. Payments in respect of
the Common Securities shall be made in such manner as shall be mutually agreed
between the Property Trustee and the Holder of the Common Securities.
Section 4.5. Tax Returns and Reports.
(a) The Administrators shall prepare and file (or cause to be prepared
and filed), at the Depositor's expense, all United States federal, state, and
local tax and information returns and reports required to be filed by or in
respect of the Issuer Trust. In this regard, the Administrators shall (i)
prepare and file (or cause to be prepared and filed) all Internal Revenue
Service forms required to be filed in respect of the Issuer Trust in each
taxable year of the Issuer Trust and (ii) prepare and furnish (or cause to be
prepared and furnished) to each Holder all Internal Revenue Service forms
required to be provided by the Issuer Trust. The Administrators shall provide
the Depositor and the Property Trustee with a copy of all such returns and
reports promptly after such filing or furnishing. The Issuer Trustees and the
Administrators shall comply with United States federal withholding and backup
withholding tax laws and information reporting requirements with respect to any
payments to Holders under the Trust Securities.
(b) On or before December 15 of each year during which any Preferred
Securities are outstanding, the Administrators shall furnish to the Paying Agent
such information as may be reasonably requested by the Property Trustee in order
that the Property Trustee may prepare the information which it is required to
report for such year on Internal Revenue Service Forms 1096 and 1099 pursuant to
Section 6049 of the Code. Such information shall include the amount of original
issue discount includible in income for each outstanding Preferred Security
during such year.
Section 4.6. Payment of Taxes; Duties, Etc. of the Issuer Trust.
Upon receipt under the Junior Subordinated Debentures of Additional
Sums, the Property Trustee shall promptly pay any taxes, duties or governmental
charges of whatsoever nature (other than withholding taxes) imposed on the
Issuer Trust by the United States or any other taxing authority.
- 24 -
<PAGE>
Section 4.7. Payments under Indenture or Pursuant to Direct Actions.
Any amount payable hereunder to any Holder of Preferred Securities
shall be reduced by the amount of any corresponding payment such Holder (or any
owner related thereto) has directly received pursuant to Section 5.8 of the
Indenture or Section 5.13 of this Trust Agreement.
Section 4.8. Liability of the Holder of Common Securities.
The Holder of Common Securities shall be liable for the debts and
obligations of the Issuer Trust as set forth in Section 6.7(c) of the Indenture
regarding allocation of expenses.
ARTICLE V
TRUST SECURITIES CERTIFICATES
Section 5.1. Initial Ownership.
Upon the contribution by the Depositor pursuant to Section 2.3 and
until the issuance of the Trust Securities, and at any time during which no
Trust Securities are outstanding, the Depositor shall be the sole beneficial
owner of the Issuer Trust.
Section 5.2. The Trust Securities Certificates.
(a) The Trust Securities Certificates shall be executed on behalf of
the Issuer Trust by manual or facsimile signature of at least one Administrator,
except as provided in Section 5.3. Trust Securities Certificates bearing the
signatures of individuals who were, at the time when such signatures shall have
been affixed, authorized to sign on behalf of the Issuer Trust, shall be validly
issued and entitled to the benefits of this Trust Agreement, notwithstanding
that such individuals or any of them shall have ceased to be so authorized prior
to the delivery of such Trust Securities Certificates or did not hold such
offices at the date of delivery of such Trust Securities Certificates. A
transferee of a Trust Securities Certificate shall become a Holder, and shall be
entitled to the rights and subject to the obligations of a Holder hereunder,
upon due registration of such Trust Securities Certificate in such transferee's
name pursuant to Section 5.5.
(b) Upon their original issuance, Preferred Securities Certificates
shall be issued in the form of one or more fully registered Global Preferred
Securities Certificates which will be deposited with or on behalf of Cede as the
Depositary's nominee and registered in the name of Cede as the Depositary's
nominee. Unless and until it is exchangeable in whole or in part for the
Preferred Securities in definitive form, a global security may not be
transferred except as a whole by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor of such
Depositary or a nominee of such successor.
(c) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive Common
Securities Certificate.
- 25 -
<PAGE>
Section 5.3. Execution and Delivery of Trust Securities Certificates.
On the Closing Date, and on the Option Closing Date if applicable, an
Administrator shall cause Trust Securities Certificates, in an aggregate
Liquidation Amount as provided in Sections 2.4 and 2.5, as the case may be, to
be executed on behalf of the Issuer Trust and delivered to the Property Trustee
and upon such delivery the Property Trustee shall authenticate such Trust
Securities Certificates and deliver such Trust Securities Certificates upon the
written order of the Issuer Trust, executed by an Administrator thereof, without
further corporate action by the Issuer Trust, in authorized denominations, and
whereupon the Trust Securities evidenced by such Trust Securities Certificates
shall be duly and validly issued undivided beneficial interests in the assets of
the Issuer Trust and entitled to the benefits of this Trust Agreement.
Section 5.4. Global Preferred Security.
(a) Any Global Preferred Security issued under this Trust Agreement
shall be registered in the name of the Clearing Agency or its nominee and
delivered to it or its custodian therefor, and such Global Preferred Security
shall constitute a single Preferred Security for all purposes of this Trust
Agreement.
(b) Notwithstanding any other provision in this Trust Agreement, a
Global Preferred Security may not be exchanged in whole or in part for Preferred
Securities registered, and no transfer of the Global Preferred Security in whole
or in part may be registered, in the name of any Person other than the Clearing
Agency or its nominee for such Global Preferred Security, Cede, or other nominee
thereof unless (i) such Clearing Agency advises the Depositor and the Issuer
Trustees in writing that such Clearing Agency is no longer willing or able to
properly discharge its responsibilities as Clearing Agency with respect to such
Global Preferred Security, and the Depositor is unable to locate a qualified
successor within 90 days of receipt of such notice from the Depositary, (ii) the
Depositor at its option advises the Depositary in writing that it elects to
terminate the book-entry system through the Clearing Agency, or (iii) there
shall have occurred and be continuing an Event of Default.
(c) If a Preferred Security is to be exchanged in whole or in part for
a beneficial interest in a Global Preferred Security, then either (i) such
Global Preferred Security shall be so surrendered for exchange as provided in
this Article V or (ii) the Liquidation Amount thereof shall be reduced or
increased by an amount equal to the portion thereof to be so exchanged, or equal
to the Liquidation Amount of such other Preferred Security to be so exchanged
for a beneficial interest therein, as the case may be, by means of an
appropriate adjustment made on the records of the Security Registrar, whereupon
the Property Trustee, in accordance with the Applicable Procedures, shall
instruct the Clearing Agency or its authorized representative to make a
corresponding adjustment to its records. Upon any such surrender or adjustment
of a Global Preferred Security by the Clearing Agency, accompanied by
registration instructions, the Property Trustee shall, subject to Section 5.4(b)
and as otherwise provided in this Article V, authenticate and deliver and an
Administrator shall execute any Preferred Securities issuable in exchange for
such Global Preferred Security (or any portion thereof) in accordance with the
instructions of the Clearing Agency. The Property Trustee shall not be liable
for any delay in delivery of such
- 26 -
<PAGE>
instructions and may conclusively rely on, and shall be fully protected in
relying on, such instructions.
(d) Every Preferred Security authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Global
Preferred Security or any portion thereof, whether pursuant to this Article V or
Article IV or otherwise, shall be authenticated and delivered in the form of,
and shall be, a Global Preferred Security, unless such Global Preferred Security
is registered in the name of a Person other than the Clearing Agency for such
Global Preferred Security or a nominee thereof.
(e) The Clearing Agency or its nominee, as the registered owner of a
Global Preferred Security, shall be considered the Holder of the Preferred
Securities represented by such Global Preferred Security for all purposes under
this Trust Agreement and the Preferred Securities, and owners of beneficial
interests in such Global Preferred Security shall hold such interests pursuant
to the Applicable Procedures and, except as otherwise provided herein, shall not
be entitled to receive physical delivery of any such Preferred Securities in
definitive form and shall not be considered the Holders thereof under this Trust
Agreement. Accordingly, any such owner's beneficial interest in the Global
Preferred Security shall be shown only on, and the transfer of such interest
shall be effected only through, records maintained by the Clearing Agency or its
nominee. Neither the Property Trustee, the Securities Registrar nor the
Depositor shall have any liability in respect of any transfers effected by the
Clearing Agency.
(f) The rights of owners of beneficial interests in a Global Preferred
Security shall be exercised only through the Clearing Agency and shall be
limited to those established by law and agreements between such owners and the
Clearing Agency.
Section 5.5. Registration of Transfer and Exchange Generally; Certain
Transfers and Exchanges; Preferred Securities Certificates.
(a) The Property Trustee shall keep or cause to be kept at its
Corporate Trust Office a register or registers for the purpose of registering
Preferred Trust Securities Certificates and transfers and exchanges of Preferred
Securities Certificates in which the registrar and transfer agent with respect
to the Preferred Securities (the "Securities Registrar"), subject to such
reasonable regulations as it may prescribe, shall provide for the registration
of Preferred Securities Certificates and Common Securities Certificates (subject
to Section 5.11 in the case of Common Securities Certificates) and registration
of transfers and exchanges of Preferred Securities Certificates as herein
provided. Such register is herein sometimes referred to as the "Securities
Register." The Property Trustee is hereby appointed "Securities Registrar" for
the purpose of registering Preferred Securities and transfers of Preferred
Securities as herein provided.
Upon surrender for registration of transfer of any Preferred Security
at the offices or agencies of the Property Trustee designated for that purpose,
an Administrator shall execute and the Property Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Preferred Securities of the same series of any authorized
- 27 -
<PAGE>
denominations of like tenor and aggregate Liquidation Amount and bearing such
legends as may be required by this Trust Agreement.
At the option of the Holder, Preferred Securities may be exchanged for
other Preferred Securities of any authorized denominations, of like tenor and
aggregate Liquidation Amount and bearing such legends as may be required by this
Trust Agreement, upon surrender of the Preferred Securities to be exchanged at
such office or agency. Whenever any Preferred Securities are so surrendered for
exchange, an Administrator shall execute and the Property Trustee shall
authenticate and deliver the Preferred Securities that the Holder making the
exchange is entitled to receive.
All Preferred Securities issued upon any transfer or exchange of
Preferred Securities shall be the valid obligations of the Issuer Trust,
evidencing the same interest, and entitled to the same benefits under this Trust
Agreement, as the Preferred Securities surrendered upon such transfer or
exchange.
Every Preferred Security presented or surrendered for transfer or
exchange shall (if so required by the Property Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Property Trustee and the Securities Registrar, duly executed by the Holder
thereof or such Holder's attorney duly authorized in writing.
No service charge shall be made to a Holder for any transfer or
exchange of Preferred Securities, but the Property Trustee may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Preferred Securities.
Neither the Issuer Trust nor the Property Trustee shall be required,
pursuant to the provisions of this Section, (i) to issue, register the transfer
of, or exchange any Preferred Security during a period beginning at the opening
of business 15 days before the day of selection for redemption of Preferred
Securities pursuant to Article IV and ending at the close of business on the day
of mailing of the notice of redemption, or (ii) to register the transfer of or
exchange any Preferred Security so selected for redemption in whole or in part,
except, in the case of any such Preferred Security to be redeemed in part, any
portion thereof not to be redeemed.
(b) Certain Transfers and Exchanges. Trust Securities may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Trust Agreement. To the fullest extent permitted by applicable
law, any transfer or purported transfer of any Trust Security not made in
accordance with this Trust Agreement shall be null and void.
(i) Non-Global Security to Non-Global Security. A Trust
Security that is not a Global Preferred Security may be transferred, in
whole or in part, to a Person who takes delivery in the form of another
Trust Security that is not a Global Preferred Security as provided in
Section 5.5(a).
(ii) Free Transferability. Subject to this Section 5.5,
Preferred Securities shall
- 28 -
<PAGE>
be freely transferable.
(iii) Exchanges Between Global Preferred Security and
Non-Global Preferred Security. A beneficial interest in a Global
Preferred Security may be exchanged for a Preferred Security that is
not a Global Preferred Security as provided in Section 5.4.
Section 5.6. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates.
If (a) any mutilated Trust Securities Certificate shall be surrendered
to the Securities Registrar, or if the Securities Registrar shall receive
evidence to its satisfaction of the destruction, loss, or theft of any Trust
Securities Certificate and (b) there shall be delivered to the Securities
Registrar and the Administrators such security or indemnity as may be required
by them to save each of them harmless, then in the absence of notice that such
Trust Securities Certificate shall have been acquired by a bona fide purchaser
or a protected purchaser, the Administrators, or any one of them, on behalf of
the Issuer Trust shall execute and make available for delivery, and the Property
Trustee shall authenticate, in exchange for or in lieu of any such mutilated,
destroyed, lost, or stolen Trust Securities Certificate, a new Trust Securities
Certificate of like class, tenor and denomination. In connection with the
issuance of any new Trust Securities Certificate under this Section, the
Administrators or the Securities Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Trust Securities Certificate issued pursuant
to this Section shall constitute conclusive evidence of an undivided beneficial
interest in the assets of the Issuer Trust corresponding to that evidenced by
the lost, stolen or destroyed Trust Securities Certificate, as if originally
issued, whether or not the lost, stolen or destroyed Trust Securities
Certificate shall be found at any time.
Section 5.7. Persons Deemed Holders.
The Issuer Trustees, the Administrators, the Securities Registrar, or
the Depositor shall treat the Person in whose name any Trust Securities are
registered in the Securities Register as the owner of such Trust Securities for
the purpose of receiving Distributions and for all other purposes whatsoever,
and none of the Issuer Trustees, the Administrators, the Securities Registrar
nor the Depositor shall be bound by any notice to the contrary.
Section 5.8. Access to List of Holders' Names and Addresses.
Each Holder and each Owner shall be deemed to have agreed not to hold
the Depositor, the Property Trustee, or the Administrators accountable by reason
of the disclosure of its name and address, regardless of the source from which
such information was derived.
- 29 -
<PAGE>
Section 5.9. Maintenance of Office or Agency.
The Property Trustee shall designate, with the consent of the
Administrators, which consent shall not be unreasonably withheld, an office or
offices or agency or agencies where Preferred Securities Certificates may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Issuer Trustees in respect of the Trust Securities
Certificates may be served. The Property Trustee initially designates its
Corporate Trust Office for such purposes. The Property Trustee shall give prompt
written notice to the Depositor, the Administrators and the Holders of any
change in the location of the Securities Register or any such office or agency.
Section 5.10. Appointment of Paying Agent.
The Paying Agent shall make Distributions to Holders from the Payment
Account and shall report the amounts of such Distributions to the Property
Trustee and the Administrators. Any Paying Agent shall have the revocable power
to withdraw funds from the Payment Account solely for the purpose of making the
Distributions referred to above. The Property Trustee may revoke such power and
remove any Paying Agent in its sole discretion. The Paying Agent shall initially
be the Property Trustee. Any Person acting as Paying Agent shall be permitted to
resign as Paying Agent upon 30 days' written notice to the Administrators and
the Property Trustee. In the event that the Property Trustee shall no longer be
the Paying Agent or a successor Paying Agent shall resign or its authority to
act be revoked, the Property Trustee shall appoint a successor (which shall be a
bank or trust company) that is reasonably acceptable to the Administrators to
act as Paying Agent. Such successor Paying Agent appointed by the Property
Trustee, or any additional Paying Agent appointed by the Administrators, shall
execute and deliver to the Issuer Trustees an instrument in which such successor
Paying Agent or additional Paying Agent shall agree with the Issuer Trustees
that as Paying Agent, such successor Paying Agent or additional Paying Agent
will hold all sums, if any, held by it for payment to the Holders in trust for
the benefit of the Holders entitled thereto until such sums shall be paid to
such Holders. The Paying Agent shall return all unclaimed funds to the Property
Trustee and upon removal of a Paying Agent such Paying Agent shall also return
all funds in its possession to the Property Trustee. The provisions of Sections
8.1, 8.3 and 8.6 herein shall apply to the Bank also in its role as Paying
Agent, for so long as the Bank shall act as Paying Agent and, to the extent
applicable, to any other paying agent appointed hereunder. Any reference in this
Trust Agreement to the Paying Agent shall include any co-paying agent chosen by
the Property Trustee unless the context requires otherwise.
- 30 -
<PAGE>
Section 5.11. Ownership of Common Securities by Depositor.
On the Closing Date, and on the Option Closing Date if applicable, the
Depositor shall acquire and retain beneficial and record ownership of the Common
Securities. Neither the Depositor nor any successor Holder of the Common
Securities may transfer less than all of the Common Securities, and the
Depositor or any successor Holder may transfer the Common Securities only (a) in
connection with a consolidation or merger of the Depositor into another
corporation or any conveyance, transfer or lease by the Depositor of its
properties and assets substantially as an entirety to any Person, pursuant to
Section 8.1 of the Indenture, or (b) a transfer to an Affiliate of the Depositor
in compliance with applicable law (including the Securities Act and applicable
state securities and blue sky laws). To the fullest extent permitted by law, any
other attempted transfer of the Common Securities shall be void. The
Administrators shall cause each Common Securities Certificate issued to the
Depositor to contain a legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE
EXCEPT TO A SUCCESSOR IN INTEREST TO THE DEPOSITOR OR AN AFFILIATE OF THE
DEPOSITOR IN COMPLIANCE WITH APPLICABLE LAW AND SECTION 5.11 OF THE TRUST
AGREEMENT."
Section 5.12. Notices to Clearing Agency.
To the extent that a notice or other communication to the Holders is
required under this Trust Agreement, for so long as Preferred Securities are
represented by a Global Preferred Securities Certificate, the Administrators and
the Issuer Trustees shall give all such notices and communications specified
herein to be given to the Clearing Agency, and shall have no obligations to the
Owners.
Section 5.13. Rights of Holders.
(a) The legal title to all Trust Property shall be vested at all times
in the Issuer Trust and shall be held and administered by the Property Trustee
(in its capacity as such) in accordance with Section 2.9, and the Holders shall
not have any right or title therein other than the undivided beneficial interest
in the assets of the Issuer Trust conferred by their Trust Securities and they
shall have no right to call for any partition or division of property, profits,
or rights of the Issuer Trust except as described below. The Trust Securities
shall be personal property giving only the rights specifically set forth therein
and in this Trust Agreement. The Trust Securities shall have no preemptive or
similar rights and when issued and delivered to Holders against payment of the
purchase price therefor will be validly issued, fully paid and, subject to
Section 4.8 hereof, nonassessable undivided beneficial interests in the Trust
Property. Subject to Section 4.8 hereof, the Holders of the Trust Securities, in
their capacities as such, shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
(b) For so long as any Preferred Securities remain Outstanding, if,
upon a Debenture Event of Default, the Debenture Trustee fails, or the holders
of not less than 25% in principal amount of the outstanding Junior Subordinated
Debentures fail, to declare the principal of all of
- 31 -
<PAGE>
the Junior Subordinated Debentures to be immediately due and payable, the
Holders of at least 25% in Liquidation Amount of the Preferred Securities then
Outstanding shall have such right to make such declaration by a notice in
writing to the Property Trustee, the Depositor and the Debenture Trustee.
At any time after such a declaration of acceleration with respect to
the Junior Subordinated Debentures has been made and before a judgment or decree
for payment of the money due has been obtained by the Debenture Trustee as
provided in the Indenture, the Holders of a Majority in Liquidation Amount of
the Preferred Securities, by written notice to the Property Trustee, the
Depositor, and the Debenture Trustee, may rescind and annul such declaration and
its consequences if:
(i) the Depositor has paid or deposited with the Debenture
Trustee a sum sufficient to pay:
(A) all overdue installments of interest on all of the
Junior Subordinated Debentures,
(B) any accrued Additional Interest on all of the
Junior Subordinated Debentures,
(C) the principal of (and premium, if any, on) any
Junior Subordinated Debentures which have become due otherwise
than by such declaration of acceleration and interest and
Additional Interest thereon at the rate borne by the Junior
Subordinated Debentures, and
(D) all sums paid or advanced by the Debenture
Trustee under the Indenture and the reasonable compensation,
expenses, disbursements and advances of the Debenture Trustee
and the Property Trustee, their agents and counsel; and
(ii) all Events of Default with respect to the Junior
Subordinated Debentures, other than the non-payment of the principal of
the Junior Subordinated Debentures which has become due solely by such
acceleration, have been cured or waived as provided in Section 5.13 of
the Indenture.
The Holders of at least a Majority in Liquidation Amount of the
Preferred Securities may, on behalf of the Holders of all the Preferred
Securities, waive any past default under the Indenture, except a default in the
payment of principal or interest (unless such default has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee) or
a default in respect of a covenant or provision which under the Indenture cannot
be modified or amended without the consent of the holder of each outstanding
Junior Subordinated Debentures affected thereby. No such rescission shall affect
any subsequent default or impair any right consequent thereon.
Upon receipt by the Property Trustee of written notice declaring such
an acceleration, or
- 32 -
<PAGE>
rescission and annulment thereof, by Holders of the Preferred Securities all or
part of which is represented by Global Preferred Securities, a record date shall
be established for determining Holders of Outstanding Preferred Securities
entitled to join in such notice, which record date shall be at the close of
business on the day the Property Trustee receives such notice. The Holders on
such record date, or their duly designated proxies, and only such Persons, shall
be entitled to join in such notice, whether or not such Holders remain Holders
after such record date; provided, that, unless such declaration of acceleration,
or rescission and annulment, as the case may be, shall have become effective by
virtue of the requisite percentage having joined in such notice prior to the day
which is 90 days after such record date, such notice of declaration of
acceleration, or rescission and annulment, as the case may be, shall
automatically and without further action by any Holder be canceled and of no
further effect. Nothing in this paragraph shall prevent a Holder, or a proxy of
a Holder, from giving, after expiration of such 90-day period, a new written
notice of declaration of acceleration, or rescission and annulment thereof, as
the case may be, that is identical to a written notice which has been canceled
pursuant to the proviso to the preceding sentence, in which event a new record
date shall be established pursuant to the provisions of this Section 5.13(b).
(c) For so long as any Preferred Securities remain Outstanding, to the
fullest extent permitted by law and subject to the terms of this Trust Agreement
and the Indenture, upon a Debenture Event of Default specified in Section 5.1(a)
or 5.1(b) of the Indenture, any Holder of Preferred Securities shall have the
right to institute a proceeding directly against the Depositor, pursuant to
Section 5.8 of the Indenture, for enforcement of payment to such Holder of the
principal amount of or interest on Junior Subordinated Debentures having an
aggregate principal amount equal to the aggregate Liquidation Amount of the
Preferred Securities of such Holder (a "Direct Action"). Except as set forth in
Sections 5.13(b) and 5.13(c) of this Trust Agreement, the Holders of Preferred
Securities shall have no right to exercise directly any right or remedy
available to the holders of, or in respect of, the Junior Subordinated
Debentures.
ARTICLE VI
ACTS OF HOLDERS; MEETINGS; VOTING
Section 6.1. Limitations on Holder's Voting Rights.
(a) Except as provided in this Trust Agreement and in the Indenture and
as otherwise required by law, no Holder of Preferred Securities shall have any
right to vote or in any manner otherwise control the administration, operation,
and management of the Issuer Trust or the obligations of the parties hereto, nor
shall anything herein set forth or contained in the terms of the Trust
Securities Certificates be construed so as to constitute the Holders from time
to time as members of an association.
(b) So long as any Junior Subordinated Debentures are held by the
Property Trustee on behalf of the Issuer Trust, the Property Trustee shall not
(i) direct the time, method, and place of conducting any proceeding for any
remedy available to the Property Trustee, or executing any trust or power
conferred on the Debenture Trustee with respect to such Junior Subordinated
- 33 -
<PAGE>
Debentures, (ii) waive any past default that may be waived under Section 5.13 of
the Indenture, (iii) exercise any right to rescind or annul a declaration that
the principal of all the Junior Subordinated Debentures shall be due and
payable, or (iv) consent to any amendment, modification, or termination of the
Indenture or the Junior Subordinated Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of the Holders of
at least a Majority in Liquidation Amount of the Preferred Securities; provided,
however, that where a consent under the Indenture would require the consent of
each holder of Junior Subordinated Debentures affected thereby, no such consent
shall be given by the Property Trustee without the prior written consent of each
Holder of Preferred Securities. The Property Trustee shall not revoke any action
previously authorized or approved by a vote of the Holders of Preferred
Securities, except by a subsequent vote of the Holders of Preferred Securities.
The Property Trustee shall notify all Holders of the Preferred Securities of any
notice of default received with respect to the Junior Subordinated Debentures.
In addition to obtaining the foregoing approvals of the Holders of the Preferred
Securities, prior to taking any of the foregoing actions, the Property Trustee
shall, at the expense of the Depositor, obtain an Opinion of Counsel experienced
in such matters to the effect that such action will not cause the Issuer Trust
to be taxable as a corporation for United States federal income tax purposes.
(c) If any proposed amendment to the Trust Agreement provides for, or
the Issuer Trust otherwise proposes to effect, (i) any action that would
adversely affect in any material respect the interests, powers, preferences, or
special rights of the Preferred Securities, whether by way of amendment to the
Trust Agreement or otherwise, or (ii) the dissolution of the Issuer Trust, other
than pursuant to the terms of this Trust Agreement, then the Holders of
Outstanding Trust Securities as a class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of the Holders of at least a Majority in Liquidation
Amount of the Preferred Securities. Notwithstanding any other provision of this
Trust Agreement, no amendment to this Trust Agreement may be made if, as a
result of such amendment, it would cause the Issuer Trust to be taxable as a
corporation for United States federal income tax purposes.
Section 6.2. Notice of Meetings.
Notice of all meetings of the Holders, stating the time, place, and
purpose of the meeting, shall be given by the Property Trustee pursuant to
Section 10.8 to each Holder of record, at his registered address, at least 15
days and not more than 90 days before the meeting. At any such meeting, any
business properly before the meeting may be so considered whether or not stated
in the notice of the meeting. Any adjourned meeting may be held as adjourned
without further notice.
- 34 -
<PAGE>
Section 6.3. Meetings of Holders.
(a) No annual meeting of Holders is required to be held. The Property
Trustee, however, shall call a meeting of Holders to vote on any matter upon the
written request of the Holders of record of 25% of the aggregate Liquidation
Amount of the Preferred Securities and the Administrators or the Property
Trustee may, at any time in their discretion, call a meeting of Holders of
Preferred Securities to vote on any matters as to which Holders are entitled to
vote.
(b) Holders of at least a Majority in Liquidation Amount of the
Preferred Securities, present in person or represented by proxy, shall
constitute a quorum at any meeting of Holders of Preferred Securities.
(c) If a quorum is present at a meeting, an affirmative vote by the
Holders of record present, in person or by proxy, holding Preferred Securities
representing at least a Majority in Liquidation Amount of the Preferred
Securities held by the Holders present, either in person or by proxy, at such
meeting shall constitute the action of the Holders of Preferred Securities,
unless this Trust Agreement requires a greater number of affirmative votes.
Section 6.4. Voting Rights.
Holders shall be entitled to one vote for each $ of Liquidation Amount
represented by their Outstanding Trust Securities in respect of any matter as to
which such Holders are entitled to vote.
Section 6.5. Proxies, etc.
At any meeting of Holders, any Holder entitled to vote thereat may vote
by proxy, provided that no proxy shall be voted at any meeting unless it shall
have been placed on file with the Property Trustee, or with such other officer
or agent of the Issuer Trust as the Property Trustee may direct, for
verification prior to the time at which such vote shall be taken. Pursuant to a
resolution of the Property Trustee, proxies may be solicited in the name of the
Property Trustee or one or more officers of the Property Trustee. Only Holders
of record shall be entitled to vote. When Trust Securities are held jointly by
several persons, any one of them may vote at any meeting in person or by proxy
in respect of such Trust Securities, but if more than one of them shall be
present at such meeting in person or by proxy, and such joint owners or their
proxies so present disagree as to any vote to be cast, such vote shall not be
received in respect of such Trust Securities. A proxy purporting to be executed
by or on behalf of a Holder shall be deemed valid unless challenged at or prior
to its exercise, and the burden of proving invalidity shall rest on the
challenger. No proxy shall be valid more than three years after its date of
execution.
- 35 -
<PAGE>
Section 6.6. Holder Action by Written Consent.
Any action which may be taken by Holders at a meeting may be taken
without a meeting if Holders holding at least a Majority in Liquidation Amount
of all Trust Securities entitled to vote in respect of such action (or such
larger proportion thereof as shall be required by any other provision of this
Trust Agreement) shall consent to the action in writing.
Section 6.7. Record Date for Voting and Other Purposes.
For the purposes of determining the Holders who are entitled to notice
of and to vote at any meeting or by written consent, or to participate in any
Distribution on the Trust Securities in respect of which a record date is not
otherwise provided for in this Trust Agreement, or for the purpose of any other
action, the Administrators (or the Property Trustee) may from time to time fix a
date, not more than 90 days prior to the date of any meeting of Holders or the
payment of a Distribution or other action, as the case may be, as a record date
for the determination of the identity of the Holders of record for such
purposes.
Section 6.8. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver, or other action provided or permitted by this Trust Agreement to be
given, made, or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by an agent duly appointed in writing; and, except as otherwise expressly
provided herein, such action shall become effective when such instrument or
instruments are delivered to the Property Trustee. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Trust
Agreement and (subject to Section 8.1) conclusive in favor of the Issuer
Trustees, if made in the manner provided in this Section 6.8.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which any Issuer Trustee or Administrator receiving the same
deems sufficient.
(c) The ownership of Trust Securities shall be proved by the Securities
Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver, or other Act of the Holder of any Trust Security shall bind every future
Holder of the same Trust Security and
- 36 -
<PAGE>
the Holder of every Trust Security issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done,
omitted, or suffered to be done by the Issuer Trustees, the Administrators, or
the Issuer Trust in reliance thereon, whether or not notation of such action is
made upon such Trust Security.
(e) Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Trust Security may do so with
regard to all or any part of the Liquidation Amount of such Trust Security or by
one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such Liquidation Amount.
(f) If any dispute shall arise among the Holders, the Administrators or
the Issuer Trustees with respect to the authenticity, validity or binding nature
of any request, demand, authorization, direction, consent, waiver or other Act
of such Holder or Issuer Trustee under this Article VI, then the determination
of such matter by the Property Trustee shall be conclusive with respect to such
matter.
(g) A Holder may institute a legal proceeding directly against the
Depositor under the Guarantee Agreement to enforce its rights under the
Guarantee Agreement without first instituting a legal proceeding against the
Guarantee Trustee (as defined in the Guarantee Agreement), the Issuer Trust, any
Issuer Trustee, any Administrator or any other Person.
Section 6.9. Inspection of Records.
Upon reasonable notice to the Administrators and the Property Trustee,
the records of the Issuer Trust shall be open to inspection by Holders during
normal business hours for any purpose reasonably related to such Holder's
interest as a Holder.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.1. Representations and Warranties of the Property Trustee and the
Delaware Trustee.
The Property Trustee and the Delaware Trustee, each severally on behalf
of and as to itself, hereby represents and warrants for the benefit of the
Depositor and the Holders that:
(a) The Property Trustee is a banking corporation with trust powers
duly organized, validly existing and in good standing under the laws of New
York, with trust power and authority to execute and deliver, and to carry out
and perform its obligations under the terms of this Trust Agreement.
(b) The execution, delivery, and performance by the Property Trustee of
this Trust Agreement has been duly authorized by all necessary corporate action
on the part of the Property Trustee; and this Trust Agreement has been duly
executed and delivered by the Property Trustee,
- 37 -
<PAGE>
and constitutes a legal, valid, and binding obligation of the Property Trustee,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, reorganization, moratorium, insolvency, and other similar laws
affecting creditors' rights generally and to general principles of equity and
the discretion of the court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law).
(c) The execution, delivery and performance of this Trust Agreement by
the Property Trustee does not conflict with or constitute a breach of the
certificate of incorporation or by-laws of the Property Trustee.
(d) At the Time of Delivery, the Property Trustee has not knowingly
created any Liens or encumbrances on the Trust Securities.
(e) No consent, approval, or authorization of, or registration with or
notice to, any New York State or federal banking authority is required for the
execution, delivery, or performance by the Property Trustee, of this Trust
Agreement.
(f) The Delaware Trustee is duly organized, validly existing, and in
good standing under the laws of the State of Delaware, with trust power and
authority to execute and deliver, and to carry out and perform its obligations
under the terms of, the Trust Agreement.
(g) The execution, delivery and performance by the Delaware Trustee of
this Trust Agreement has been duly authorized by all necessary corporate action
on the part of the Delaware Trustee; and this Trust Agreement has been duly
executed and delivered by the Delaware Trustee, and constitutes a legal, valid
and binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' right
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law).
(h) The execution, delivery and performance of this Trust Agreement by
the Delaware Trustee does not conflict with or constitute a breach of the
certificate of incorporation or by-laws of the Delaware Trustee.
(i) No consent, approval or authorization of, or registration with or
notice to any state or Federal banking authority is required for the execution,
delivery, or performance by the Delaware Trustee, of this Trust Agreement.
(j) The Delaware Trustee is an entity which has its principal place of
business in the State of Delaware.
Section 7.2. Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants for the benefit of the
Holders that:
- 38 -
<PAGE>
(a) the Trust Securities Certificates issued at the Time of Delivery on
behalf of the Issuer Trust have been duly authorized and will have been duly and
validly executed, and, subject to payment therefor, issued and delivered by the
Issuer Trustees pursuant to the terms and provisions of, and in accordance with
the requirements of, this Trust Agreement, and the Holders will be, as of each
such date, entitled to the benefits of this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges payable by
the Issuer Trust (or the Issuer Trustees on behalf of the Issuer Trust) under
the laws of the State of Delaware or any political subdivision thereof in
connection with the execution, delivery and performance by either the Property
Trustee or the Delaware Trustee, as the case may be, of this Trust Agreement.
ARTICLE VIII
THE ISSUER TRUSTEES; THE ADMINISTRATORS
Section 8.1. Certain Duties and Responsibilities.
(a) The duties and responsibilities of the Issuer Trustees and the
Administrators shall be as provided by this Trust Agreement and, in the case of
the Property Trustee, by the Trust Indenture Act. Notwithstanding the foregoing,
no provision of this Trust Agreement shall require the Issuer Trustees or the
Administrators to expend or risk their own funds or otherwise incur any
financial liability in the performance of any of their duties hereunder, or in
the exercise of any of their rights or powers, if they shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it or them. Whether or not
therein expressly so provided, every provision of this Trust Agreement relating
to the conduct or affecting the liability of or affording protection to the
Issuer Trustees or the Administrators shall be subject to the provisions of this
Section. Nothing in this Trust Agreement shall be construed to release an
Administrator or the Issuer Trustees from liability for his or its own negligent
action, his or its own negligent failure to act, or his or its own willful
misconduct. To the extent that, at law or in equity, an Issuer Trustee or
Administrator has duties and liabilities relating to the Issuer Trust or to the
Holders, such Issuer Trustee or Administrator shall not be liable to the Issuer
Trust or to any Holder for such Issuer Trustee's or Administrator's good faith
reliance on the provisions of this Trust Agreement. The provisions of this Trust
Agreement, to the extent that they restrict the duties and liabilities of the
Issuer Trustees and Administrators otherwise existing at law or in equity, are
agreed by the Depositor and the Holders to replace such other duties and
liabilities of the Issuer Trustees and Administrators.
(b) All payments made by the Property Trustee or a Paying Agent in
respect of the Trust Securities shall be made only from the revenue and proceeds
from the Trust Property and only to the extent that there shall be sufficient
revenue or proceeds from the Trust Property to enable the Property Trustee or a
Paying Agent to make payments in accordance with the terms hereof. Each Holder,
by his or its acceptance of a Trust Security, agrees that he or it will look
solely to the revenue and proceeds from the Trust Property to the extent legally
available for distribution to it or him as herein provided and that neither the
Issuer Trustees nor the Administrators are personally liable to it or him for
any amount distributable in respect of any
- 39 -
<PAGE>
Trust Security or for any other liability in respect of any Trust Security. This
Section 8.1(b) does not limit the liability of the Issuer Trustees expressly set
forth elsewhere in this Trust Agreement or, in the case of the Property Trustee,
in the Trust Indenture Act.
(c) The Property Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Trust Agreement (including pursuant to Section 10.10), and no implied covenants
shall be read into this Trust Agreement against the Property Trustee. If an
Event of Default has occurred (that has not been cured or waived pursuant to
Section 5.13 of the Indenture), the Property Trustee shall enforce this Trust
Agreement for the benefit of the Holders and shall exercise such of the rights
and powers vested in it by this Trust Agreement, and use the same degree of care
and skill in its exercise thereof, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Trust Agreement shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Property
Trustee shall be determined solely by the express provisions
of this Trust Agreement (including pursuant to Section 10.10),
and the Property Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Trust Agreement (including pursuant to
Section 10.10); and
(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Property Trustee and conforming to the
requirements of this Trust Agreement; but in the case of any
such certificates or opinions that by any provision hereof or
of the Trust Indenture Act are specifically required to be
furnished to the Property Trustee, the Property Trustee shall
be under a duty to examine the same to determine whether or
not they conform to the requirements of this Trust Agreement;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by an authorized officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of at least a Majority in
Liquidation Amount of the Preferred Securities relating to the time,
method and place of conducting any proceeding for any remedy available
to the Property
- 40 -
<PAGE>
Trustee, or exercising any trust or power conferred upon the Property
Trustee under this Trust Agreement;
(iv) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Junior
Subordinated Debentures and the Payment Account shall be to deal with
such Property in a similar manner as the Property Trustee deals with
similar property for its own account, subject to the protections and
limitations on liability afforded to the Property Trustee under this
Trust Agreement and the Trust Indenture Act;
(v) the Property Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree with the
Depositor; and money held by the Property Trustee need not be
segregated from other funds held by it except in relation to the
Payment Account maintained by the Property Trustee pursuant to Section
3.1 and except to the extent otherwise required by law;
(vi) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrators or the Depositor with
their respective duties under this Trust Agreement, nor shall the
Property Trustee be liable for the default or misconduct of any other
Issuer Trustee, the Administrators or the Depositor; and
(vii) no provision of this Trust Agreement shall require the
Property Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if the Property Trustee
shall have reasonable grounds for believing that the repayment of such
funds or liability is not reasonably assured to it under the terms of
this Trust Agreement or adequate indemnity against such risk or
liability is not reasonably assured to it.
(e) The Administrators shall not be responsible for monitoring the
compliance by the Issuer Trustees or the Depositor with their respective duties
under this Trust Agreement, nor shall either Administrator be liable for the
default or misconduct of any other Administrator, the Issuer Trustees or the
Depositor.
Section 8.2. Certain Notices.
(a) Within five Business Days after the occurrence of any Event of
Default actually known to a Responsible Officer of the Property Trustee, the
Property Trustee shall transmit, in the manner and to the extent provided in
Section 10.8, notice of such Event of Default to the Holders and the
Administrators, unless such Event of Default shall have been cured or waived.
(b) Within five Business Days after the receipt of notice of the
Depositor's exercise of its right to defer the payment of interest on the Junior
Subordinated Debentures pursuant to the Indenture, the Property Trustee shall
transmit, in the manner and to the extent provided in Section 10.8, notice of
such exercise to the Holders and the Administrators, unless such exercise shall
have been revoked.
- 41 -
<PAGE>
(c) In the event the Property Trustee receives notice of the
Depositor's exercise of its right to shorten the stated maturity of the Junior
Subordinated Debentures as provided in Section 3.16 of the Indenture, the
Property Trustee shall give notice of such shortening of the stated maturity to
the Holders at least 30 but not more than 60 days before the effective date
thereof.
Section 8.3. Certain Rights of Property Trustee.
Subject to the provisions of Section 8.1:
(a) the Property Trustee may rely and shall be fully protected in
acting or refraining from acting in good faith upon any resolution, Opinion of
Counsel, certificate, written representation of a Holder or transferee,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any direction or act of the Depositor contemplated by this Trust
Agreement shall be sufficiently evidenced by an Officers' Certificate;
(c) the Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
re-recording, refiling or re-registration thereof;
(d) the Property Trustee may consult with counsel of its own choosing
(which counsel may be counsel to the Depositor or any of its Affiliates, and may
include any of its employees) and the advice of such counsel shall be full and
complete authorization and protection in respect of any action taken suffered or
omitted by it hereunder in good faith and in reliance thereon and in accordance
with such advice; the Property Trustee shall have the right at any time to seek
instructions concerning the administration of this Trust Agreement from any
court of competent jurisdiction;
(e) the Property Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Holders pursuant to this Trust Agreement, unless such
Holders shall have offered to the Property Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction; provided that,
nothing contained in this Section 8.3(e) shall be taken to relieve the Property
Trustee, upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Trust Agreement;
(f) the Property Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other evidence of indebtedness or other paper or document,
unless requested in writing to do so by one or more Holders, but the Property
- 42 -
<PAGE>
Trustee may make such further inquiry or investigation into such facts or
matters as it may see fit;
(g) the Property Trustee may execute any of the trusts or powers
hereunder or perform any of its duties hereunder either directly or by or
through its agents or attorneys, provided that the Property Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder;
(h) whenever in the administration of this Trust Agreement the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the Property
Trustee (i) may request instructions from the Holders (which instructions may
only be given by the Holders of the same proportion in Liquidation Amount of the
Trust Securities as would be entitled to direct the Property Trustee under the
terms of the Trust Securities in respect of such remedy, right or action), (ii)
may refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be fully protected in
acting in accordance with such instructions; and
(i) except as otherwise expressly provided by this Trust Agreement, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Trust Agreement.
No provision of this Trust Agreement shall be deemed to impose any duty
or obligation on any Issuer Trustee or Administrator to perform any act or acts
or exercise any right, power, duty or obligation conferred or imposed on it, in
any jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to any Issuer Trustee or
Administrator shall be construed to be a duty.
Section 8.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Trust Securities Certificates
shall be taken as the statements of the Issuer Trust, and the Issuer Trustees
and the Administrators do not assume any responsibility for their correctness.
The Issuer Trustees and the Administrators shall not be accountable for the use
or application by the Depositor of the proceeds of the Junior Subordinated
Debentures.
Section 8.5. May Hold Securities.
Except as provided in the definition of the term "Outstanding" in
Article I, the Administrators, any Issuer Trustee or any other agent of any
Issuer Trustee or the Issuer Trust, in its individual or any other capacity, may
become the owner or pledgee of Trust Securities and, subject to Sections 8.8 and
8.13, may otherwise deal with the Issuer Trust with the same rights it would
have if it were not an Administrator, Issuer Trustee or such other agent.
- 43 -
<PAGE>
Section 8.6. Compensation; Indemnity; Fees.
The Depositor agrees:
(a) to pay to the Issuer Trustees from time to time reasonable
compensation for all services rendered by them hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(b) to reimburse the Issuer Trustees and the Administrators upon
request for all reasonable expenses, disbursements, and advances incurred or
made by the Issuer Trustees in accordance with any provision of this Trust
Agreement (including the reasonable compensation, expenses and disbursements of
its agents and counsel), except any such expense, disbursement, or advance as
may be attributable to the Issuer Trustees' bad faith, negligence or willful
misconduct; and
(c) to the fullest extent permitted by applicable law, to indemnify and
hold harmless (i) each Issuer Trustee, (ii) each Administrator, (iii) any
Affiliate of any Issuer Trustee, (iv) any officer, director, shareholder,
employee, representative or agent of any Issuer Trustee, and (v) any employee or
agent of the Issuer Trust, (referred to herein as an "Indemnified Person") from
and against any loss, damage, liability, tax (excluding income taxes, other than
taxes referred to in Sections 4.5 and 4.6 hereunder), penalty, expense or claim
of any kind or nature whatsoever incurred by such Indemnified Person arising out
of or in connection with the creation, operation, or dissolution of the Issuer
Trust or any act or omission performed or omitted by such Indemnified Person in
good faith on behalf of the Issuer Trust and in a manner such Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Indemnified Person by this Trust Agreement, except that no Indemnified Person
shall be entitled to be indemnified in respect of any loss, damage or claim
incurred by such Indemnified Person by reason of bad faith, negligence or
willful misconduct with respect to such acts or omissions.
The provisions of this Section 8.6 shall survive the termination of
this Trust Agreement.
No Issuer Trustee may claim any lien or charge on any Trust Property as
a result of any amount due pursuant to this Section 8.6.
The Depositor, any Administrator and any Issuer Trustee may engage in
or possess an interest in other business ventures of any nature or description,
independently or with others, similar or dissimilar to the business of the
Issuer Trust, and the Issuer Trust and the Holders of Trust Securities shall
have no rights by virtue of this Trust Agreement in and to such independent
ventures or the income or profits derived therefrom, and the pursuit of any such
venture, even if competitive with the business of the Issuer Trust, shall not be
deemed wrongful or improper. Neither the Depositor, any Administrator, nor any
Issuer Trustee shall be obligated to present any particular investment or other
opportunity to the Issuer Trust even if such opportunity is of a character that,
if presented to the Issuer Trust, could be taken by the Issuer Trust, and the
Depositor, any Administrator or any Issuer Trustee shall have the right to take
for its own account (individually or as a partner or fiduciary) or to recommend
to others any such particular
- 44 -
<PAGE>
investment or other opportunity. Any Issuer Trustee may engage or be interested
in any financial or other transaction with the Depositor or any Affiliate of the
Depositor, or may act as depository for, trustee or agent for, or act on any
committee or body of holders of, securities or other obligations of the
Depositor or its Affiliates.
Section 8.7. Corporate Property Trustee Required; Eligibility of Trustees
and Administrators.
(a) There shall at all times be a Property Trustee hereunder with
respect to the Trust Securities. The Property Trustee shall be a Person that is
a national or state chartered bank and eligible pursuant to the Trust Indenture
Act to act as such and has a combined capital and surplus of at least
$50,000,000. If any such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of its supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Property Trustee with respect to the Trust Securities shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article VIII. At the time of appointment, the Property Trustee must have
securities rated in one of the three highest rating categories by a nationally
recognized statistical rating organization.
(b) There shall at all times be one or more Administrators hereunder.
Each Administrator shall be either a natural person who is at least 21 years of
age or a legal entity that shall act through one or more persons authorized to
bind that entity. An employee, officer, or Affiliate of the Depositor may serve
as an Administrator.
(c) There shall at all times be a Delaware Trustee. The Delaware
Trustee shall either be (i) a natural person who is at least 21 years of age and
a resident of the State of Delaware or (ii) a legal entity with its principal
place of business in the State of Delaware and that otherwise meets the
requirements of applicable Delaware law that shall act through one or more
persons authorized to bind such entity.
Section 8.8. Conflicting Interests.
(a) If the Property Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Property Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Trust
Agreement.
(b) The Guarantee Agreement and the Indenture shall be deemed to be
specifically described in this Trust Agreement for the purposes of clause (i) of
the first proviso contained in Section 310(b) of the Trust Indenture Act.
- 45 -
<PAGE>
Section 8.9. Co-Trustees and Separate Trustee.
(a) Unless an Event of Default shall have occurred and be continuing,
at any time or times, for the purpose of meeting the legal requirements of the
Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property may at the time be located, the Property Trustee shall have power to
appoint, and upon the written request of the Property Trustee, the Depositor and
the Administrators shall for such purpose join with the Property Trustee in the
execution, delivery, and performance of all instruments and agreements necessary
or proper to appoint, one or more Persons approved by the Property Trustee
either to act as co-trustee, jointly with the Property Trustee, of all or any
part of such Trust Property, or to the extent required by law to act as separate
trustee of any such property, in either case with such powers as may be provided
in the instrument of appointment, and to vest in such Person or Persons in the
capacity aforesaid, any property, title, right or power deemed necessary or
desirable, subject to the other provisions of this Section 8.9. Any co-trustee
or separate trustee appointed pursuant to this Section 8.9 shall either be (i) a
natural person who is at least 21 years of age and a resident of the United
States or (ii) a legal entity with its principal place of business in the United
States that shall act through one or more persons authorized to bind such
entity.
(b) Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right, or power, any and
all such instruments shall, on request, be executed, acknowledged and delivered
by the Depositor.
(c) Every co-trustee or separate trustee shall, to the extent permitted
by law, but to such extent only, be appointed subject to the following terms,
namely:
(i) The Trust Securities shall be executed by one or more
Administrators, and the Trust Securities shall be executed and delivered and all
rights, powers, duties, and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Property Trustees specified hereunder, shall be
exercised, solely by the Property Trustee and not by such co-trustee or separate
trustee.
(ii) The rights, powers, duties, and obligations hereby
conferred or imposed upon the Property Trustee in respect of any property
covered by such appointment shall be conferred or imposed upon and exercised or
performed by the Property Trustee and such co-trustee or separate trustee
jointly, as shall be provided in the instrument appointing such co-trustee or
separate trustee, except to the extent that under any law of any jurisdiction in
which any particular act is to be performed, the Property Trustee shall be
incompetent or unqualified to perform such act, in which event such rights,
powers, duties, and obligations shall be exercised and performed by such
co-trustee or separate trustee.
(iii) The Property Trustee at any time, by an instrument in
writing executed by it, with the written concurrence of the Depositor, may
accept the resignation of or remove any co-trustee or separate trustee appointed
under this Section, and, in case a Debenture Event of Default has occurred and
is continuing, the Property Trustee shall have power to accept the
- 46 -
<PAGE>
resignation of, or remove, any such co-trustee or separate trustee without the
concurrence of the Depositor. Upon the written request of the Property Trustee,
the Depositor shall join with the Property Trustee in the execution, delivery
and performance of all instruments and agreements necessary or proper to
effectuate such resignation or removal. A successor to any co-trustee or
separate trustee so resigned or removed may be appointed in the manner provided
in this Section 8.9.
(iv) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Property Trustee or
any other trustee hereunder.
(v) The Property Trustee shall not be liable by reason of any
act of a co-trustee or separate trustee.
(vi) Any Act of Holders delivered to the Property Trustee
shall be deemed to have been delivered to each such co-trustee and separate
trustee.
Section 8.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of any Issuer Trustee (the "Relevant
Trustee") and no appointment of a successor Issuer Trustee pursuant to this
Article VIII shall become effective until the acceptance of appointment by the
successor Issuer Trustee in accordance with the applicable requirements of
Section 8.11.
(b) Subject to Section 8.10(a), a Relevant Trustee may resign at any
time by giving written notice thereof to the Holders. The Relevant Trustee shall
appoint a successor by requesting from at least three Persons meeting the
eligibility requirements its expenses and charges to serve as the successor
Issuer Trustee on a form provided by the Administrators, and selecting the
Person who agrees to the lowest expenses and charges, subject to the prior
consent of the Depositor which consent shall not be unreasonably withheld. If
the instrument of acceptance by the successor Issuer Trustee required by Section
8.11 shall not have been delivered to the Relevant Trustee within 60 days after
the giving of such notice of resignation, the Relevant Trustee may petition, at
the expense of the Issuer Trust, any court of competent jurisdiction for the
appointment of a successor Issuer Trustee.
(c) The Property Trustee or the Delaware Trustee may be removed at any
time by Act of the Holders of at least a Majority in Liquidation Amount of the
Preferred Securities, delivered to the Relevant Trustee (in its individual
capacity and on behalf of the Issuer Trust) (i) for cause, or (ii) if a
Debenture Event of Default shall have occurred and be continuing at any time.
(d) If a resigning Relevant Trustee shall fail to appoint a successor,
or if a Relevant Trustee shall be removed or become incapable of acting as
Issuer Trustee, or if any vacancy shall occur in the office of any Issuer
Trustee for any cause, the Holders of the Preferred Securities, by Act of the
Holders of record of not less than 25% aggregate Liquidation Amount of the
Preferred Securities then Outstanding delivered to such Relevant Trustee, shall
promptly appoint a successor Issuer Trustee or Trustees, and such successor
Issuer Trustee shall comply with the
- 47 -
<PAGE>
applicable requirements of Section 8.11. If no successor Issuer Trustee shall
have been so appointed by the Holders of the Preferred Securities and accepted
appointment in the manner required by Section 8.11, any Holder, on behalf of
himself and all others similarly situated, or any other Issuer Trustee, may
petition any court in the State of Delaware for the appointment of a successor
Issuer Trustee.
(e) The Property Trustee shall give notice of each resignation and each
removal of a Relevant Trustee and each appointment of a successor Issuer Trustee
to all Holders in the manner provided in Section 10.8 and shall give notice to
the Depositor and to the Administrators. Each notice shall include the name of
the Relevant Trustee and the address of its Corporate Trust Office if it is the
Property Trustee.
(f) Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Delaware Trustee who is a natural person dies or
becomes, in the opinion of the Holders of the Common Securities, incompetent or
incapacitated, the vacancy created by such death, incompetence or incapacity may
be filled by the Property Trustee following the procedures regarding expenses
and charges set forth above (with the successor in each case being a Person who
satisfies the eligibility requirement for Delaware Trustee set forth in Section
8.7).
Section 8.11. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Issuer Trustee,
the retiring Relevant Trustee and each such successor Issuer Trustee with
respect to the Trust Securities shall execute, acknowledge and deliver an
instrument wherein each successor Issuer Trustee shall accept such appointment
and which shall contain such provisions as shall be necessary or desirable to
transfer and confirm to, and to vest in, each successor Issuer Trustee all the
rights, powers, trusts and duties of the retiring Relevant Trustee with respect
to the Trust Securities and the Issuer Trust, and upon the execution and
delivery of such instrument the resignation or removal of the retiring Relevant
Trustee shall become effective to the extent provided therein and each such
successor Issuer Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the Relevant
Trustee; but, on request of the Issuer Trust or any successor Issuer Trustee
such Relevant Trustee shall duly assign, transfer and deliver to such successor
Issuer Trustee all Trust Property, all proceeds thereof and money held by such
Relevant Trustee hereunder with respect to the Trust Securities and the Issuer
Trust.
(b) Upon request of any such successor Issuer Trustee, the Issuer Trust
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Issuer Trustee all such rights, powers and
trusts referred to in the first or second preceding paragraph, as the case may
be.
(c) No successor Issuer Trustee shall accept its appointment unless at
the time of such acceptance such successor Issuer Trustee shall be qualified and
eligible under this Article VIII.
- 48 -
<PAGE>
Section 8.12. Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Property Trustee or the Delaware Trustee may
be merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which such Relevant
Trustee shall be a party, or any Person succeeding to all or substantially all
the corporate trust business of such Relevant Trustee, shall be the successor of
such Relevant Trustee hereunder, provided that such Person shall be otherwise
qualified and eligible under this Article VIII, without the execution or filing
of any paper or any further act on the part of any of the parties hereto.
Section 8.13. Preferential Collection of Claims Against Depositor or Issuer
Trust.
If and when the Property Trustee shall be or become a creditor of the
Depositor (or any other obligor upon Junior Subordinated Debentures or the Trust
Securities), the Property Trustee shall be subject to the provisions of the
Trust Indenture Act regarding the collection of claims against the Depositor or
the Issuer Trust (or any such other obligor) as is required by the Trust
Indenture Act.
Section 8.14. Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition, or other similar judicial
proceeding relative to the Issuer Trust or any other obligor upon the Trust
Securities or the property of the Issuer Trust or of such other obligor, the
Property Trustee (irrespective of whether any Distributions on the Trust
Securities shall then be due and payable and irrespective of whether the
Property Trustee shall have made any demand on the Issuer Trust for the payment
of any past due Distributions) shall be entitled and empowered, to the fullest
extent permitted by law, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of any Distributions
owing and unpaid in respect of the Trust Securities and to file such other
papers or documents as may be necessary or advisable in order to have the claims
of the Property Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Property Trustee, its agents and
counsel) and of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Property Trustee and, in the event the Property Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Property Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Property Trustee, its agents and counsel, and
any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property
Trustee to authorize
- 49 -
<PAGE>
or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or compensation affecting the Trust
Securities or the rights of any Holder thereof or to authorize the Property
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 8.15. Reports by Property Trustee.
(a) Within 60 days of January 31 of each year commencing with January
31, 2000, the Property Trustee shall transmit to all Holders in accordance with
Section 10.8, and to the Depositor, a brief report dated as of the immediately
preceding January 31 with respect to:
(i) its eligibility under Section 8.7 or, in lieu thereof, if
to the best of its knowledge it has continued to be eligible under said
Section, a written statement to such effect; and
(ii) any change in the property and funds in its possession as
Property Trustee since the date of its last report and any action taken
by the Property Trustee in the performance of its duties hereunder
which it has not previously reported and which in its opinion
materially affects the Trust Securities.
(b) In addition, the Property Trustee shall transmit to Holders such
reports concerning the Property Trustee and its actions under this Trust
Agreement as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto as set forth in Section 10.10 of
this Trust Agreement.
(c) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Property Trustee with the Depositor.
Section 8.16. Reports to the Property Trustee.
The Depositor and the Administrators on behalf of the Issuer Trust
shall provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust Indenture Act and the compliance
certificate required by Section 314(a) of the Trust Indenture Act in the form,
in the manner and at the times required by Section 314 of the Trust Indenture
Act, as set forth in Section 10.10 of this Trust Agreement. The Depositor and
the Administrators shall annually file with the Property Trustee a certificate
specifying whether such Person is in compliance with all the terms and covenants
applicable to such Person hereunder.
- 50 -
<PAGE>
Section 8.17. Evidence of Compliance with Conditions Precedent.
Each of the Depositor and the Administrators on behalf of the Issuer
Trust shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Trust Agreement that relate
to any of the matters set forth in Section 314(c) of the Trust Indenture Act as
set forth in Section 10.10 of this Trust Agreement. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) of the Trust
Indenture Act shall be given in the form of an Officers' Certificate.
Section 8.18. Number of Issuer Trustees.
(a) The number of Issuer Trustees shall be two. The Property Trustee
and the Delaware Trustee may be the same Person, in which event the number of
Issuer Trustees shall be one.
(b) If an Issuer Trustee ceases to hold office for any reason, a
vacancy shall occur. The vacancy shall be filled with an Issuer Trustee
appointed in accordance with Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of an Issuer Trustee shall not
operate to dissolve, terminate or annul the Issuer Trust or terminate this Trust
Agreement.
Section 8.19. Delegation of Power.
(a) Any Administrator may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
2.7(a) or making any governmental filing.
(b) The Administrators shall have power to delegate from time to time
to such of their number the doing of such things and the execution of such
instruments either in the name of the Issuer Trust or the names of the
Administrators or otherwise as the Administrators may deem expedient, to the
extent such delegation is not prohibited by applicable law or contrary to the
provisions of this Trust Agreement.
Section 8.20. Appointment of Administrators.
(a) The Administrators (other than the initial Administrators) shall be
appointed by the Holders of a Majority in Liquidation Amount of the Common
Securities and all Administrators (including the initial Administrators) may be
removed by the Holders of a Majority in Liquidation Amount of the Common
Securities or may resign at any time. Each Administrator shall sign an agreement
agreeing to comply with the terms of this Trust Agreement. If at any time there
is no Administrator, the Property Trustee or any Holder who has been a Holder of
Trust Securities for at least six months may petition any court of competent
jurisdiction for the appointment of one or more Administrators.
- 51 -
<PAGE>
(b) Whenever a vacancy in the number of Administrators shall occur,
until such vacancy is filled by the appointment of an Administrator in
accordance with this Section 8.20, the Administrators in office, regardless of
their number (and notwithstanding any other provision of this Trust Agreement),
shall have all the powers granted to the Administrators and shall discharge all
the duties imposed upon the Administrators by this Trust Agreement.
(c) Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrator or a Delaware Trustee who is a natural
person dies or becomes, in the opinion of the Holders of a Majority in
Liquidation Amount of the Common Securities, incompetent, or incapacitated, the
vacancy created by such death, incompetence or incapacity may be filled by the
remaining Administrators, if there were at least two of them prior to such
vacancy and by the Depositor, if there were not two such Administrators
immediately prior to such vacancy (with the successor in each case being a
Person who satisfies the eligibility requirement for Administrators or Delaware
Trustee, as the case may be, set forth in Section 8.7).
(d) Except as otherwise provided in this Trust Agreement or by
applicable law, any one Administrator may execute any document or otherwise take
any action which the Administrators are authorized to take under this Trust
Agreement.
ARTICLE IX
DISSOLUTION, LIQUIDATION AND MERGER
Section 9.1. Dissolution Upon Expiration Date.
Unless earlier dissolved, the Issuer Trust shall automatically dissolve
on _________, 2030 (the "Expiration Date"), following the distribution of the
Trust Property in accordance with Section 9.4.
Section 9.2. Early Dissolution.
The first to occur of any of the following events is an "Early
Termination Event," upon the occurrence of which the Issuer Trust shall
dissolve:
(a) the occurrence of any Bankruptcy Event with respect to the
Depositor, unless the Depositor shall transfer the Common Securities as provided
by Section 5.11, in which case this provision shall refer instead to any
Bankruptcy Event with respect to the successor Holder of the Common Securities;
(b) delivery of the written direction to the Property Trustee from the
Holder of the Common Securities at any time to dissolve the Issuer Trust and,
after satisfaction of liabilities to creditors of the Issuer Trust as provided
by applicable law, to distribute the Junior Subordinated Debentures to Holders
in exchange for the Preferred Securities (which direction, subject to Section
9.4(a), is optional and wholly within the discretion of the Holder of the Common
Securities);
- 52 -
<PAGE>
(c) the redemption of all of the Preferred Securities in connection
with the redemption of all the Junior Subordinated Debentures; and
(d) the entry of an order for dissolution of the Issuer Trust by a
court of competent jurisdiction.
Section 9.3. Termination.
The respective obligations and responsibilities of the Issuer Trustees,
the Administrators and the Issuer Trust created and continued hereby shall
terminate upon the latest to occur of the following: (a) the distribution by the
Property Trustee to Holders of all amounts required to be distributed hereunder
upon the liquidation of the Issuer Trust pursuant to Section 9.4, or upon the
redemption of all of the Trust Securities pursuant to Section 4.2, (b) the
payment of any expenses owed by the Issuer Trust, (c) the discharge of all
administrative duties of the Administrators, including the performance of any
tax reporting obligations with respect to the Issuer Trust or the Holders, and
(d) the filing of a certificate of cancellation with the Delaware Secretary of
State pursuant to Section 3810 of the Delaware Business Trust Act.
Section 9.4. Liquidation.
(a) If an Early Termination Event specified in clause (a), (b) or (d)
of Section 9.2 occurs or upon the Expiration Date, the Issuer Trust shall be
liquidated by the Property Trustee as expeditiously as the Property Trustee
determines to be possible by distributing, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, to each Holder a
Like Amount of Junior Subordinated Debentures, subject to Section 9.4(d). Notice
of liquidation shall be given by the Property Trustee by first-class mail,
postage prepaid, mailed not later than 15 nor more than 45 days prior to the
Liquidation Date to each Holder of Trust Securities at such Holder's address
appearing in the Securities Register. All notices of liquidation shall:
(i) state the Liquidation Date;
(ii) state that, from and after the Liquidation Date, the
Trust Securities will no longer be deemed to be Outstanding and any
Trust Securities Certificates not surrendered for exchange will be
deemed to represent a Like Amount of Junior Subordinated Debentures;
and
(iii) provide such information with respect to the mechanics
by which Holders may exchange Trust Securities Certificates for Junior
Subordinated Debentures, or if Section 9.4(d) applies receive a
Liquidation Distribution, as the Administrators or the Property Trustee
shall deem appropriate.
(b) Except where Section 9.2(c) or 9.4(d) applies, in order to effect
the liquidation of the Issuer Trust and distribution of the Junior Subordinated
Debentures to Holders, the Property Trustee shall establish a record date for
such distribution (which shall be not more than 30 days
- 53 -
<PAGE>
prior to the Liquidation Date) and, either itself acting as exchange agent or
through the appointment of a separate exchange agent, shall establish such
procedures as it shall deem appropriate to effect the distribution of Junior
Subordinated Debentures in exchange for the Outstanding Trust Securities
Certificates.
(c) Except where Section 9.2(c) or 9.4(d) applies, after the
Liquidation Date, (i) the Trust Securities will no longer be deemed to be
Outstanding, (ii) the Clearing Agency for the Preferred Securities or its
nominee, as the registered Holder of the Global Preferred Securities
Certificate, shall receive a registered global certificate or certificates
representing the Junior Subordinated Debentures to be delivered upon such
distribution with respect to Preferred Securities held by the Clearing Agency or
its nominee, and (iii) any Trust Securities Certificates not held by the
Clearing Agency for the Preferred Securities or its nominee as specified in
clause (ii) above will be deemed to represent Junior Subordinated Debentures
having a principal amount equal to the stated Liquidation Amount of the Trust
Securities represented thereby and bearing accrued and unpaid interest in an
amount equal to the accumulated and unpaid Distributions on such Trust
Securities until such certificates are presented to the Securities Registrar for
transfer or reissuance.
(d) If, notwithstanding the other provisions of this Section 9.4,
whether because of an order for dissolution entered by a court of competent
jurisdiction or otherwise, distribution of the Junior Subordinated Debentures is
not practical, or if any Early Termination Event specified in clause (c) of
Section 9.2 occurs, the Trust Property shall be liquidated, and the Issuer Trust
shall be liquidated by the Property Trustee in such manner as the Property
Trustee determines. In such event, on the date of the dissolution of the Issuer
Trust, Holders will be entitled to receive out of the assets of the Issuer Trust
available for distribution to Holders, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, an amount equal to
the aggregate of the Liquidation Amount per Trust Security plus accumulated and
unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If, upon any such dissolution, the Liquidation
Distribution can be paid only in part because the Issuer Trust has insufficient
assets available to pay in full the aggregate Liquidation Distribution, then,
subject to the next succeeding sentence, the amounts payable by the Issuer Trust
on the Trust Securities shall be paid on a pro rata basis (based upon
Liquidation Amounts). The Holders of the Common Securities will be entitled to
receive Liquidation Distributions upon any such liquidation pro rata (determined
as aforesaid) with Holders of Preferred Securities, except that, if a Debenture
Event of Default has occurred and is continuing, the Preferred Securities shall
have a priority over the Common Securities as provided in Section 4.3.
(e) Following the dissolution of the Issuer Trust and after the
completion of the winding up of the affairs of the Issuer Trust, one of the
Issuer Trustees shall file a certificate of cancellation with the Delaware
Secretary of State.
- 54 -
<PAGE>
Section 9.5. Mergers, Consolidations, Amalgamations or Replacements of the
Issuer Trust.
The Issuer Trust may not merge with or into, consolidate, amalgamate,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any entity, except pursuant to this Section 9.5
and Section 9.4. At the request of the Holders of the Common Securities, and
with the consent of the Holders of at least a Majority in Liquidation Amount of
the Preferred Securities but without the consent of the Delaware Trustee or the
Property Trustee, the Issuer Trust may merge with or into, consolidate,
amalgamate, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to a trust organized as such under the laws
of any state; provided, however, that (a) such successor entity either (i)
expressly assumes all of the obligations of the Issuer Trust with respect to the
Securities or (ii) substitutes for the Preferred Securities other securities
having substantially the same terms as the Preferred Securities (the "Successor
Securities") so long as the Successor Securities have the same priority as the
Preferred Securities with respect to distributions and payments upon
liquidation, redemption and otherwise, (b) a trustee of such successor entity
possessing the same powers and duties as the Property Trustee is appointed to
hold the Junior Subordinated Debentures, (c) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Preferred Securities (including any Successor Securities) to be downgraded by
any nationally recognized statistical rating organization if the Preferred
Securities were rated by any nationally recognized statistical rating
organization immediately prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, (d) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the Holders of the Preferred
Securities (including any Successor Securities) in any material respect, (e)
such successor entity has a purpose substantially identical to that of the
Issuer Trust, (f) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Issuer Trustee has received an
Opinion of Counsel from independent counsel experienced in such matters to the
effect that (i) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights preferences
and privileges of the holders of the Preferred Securities (including any
Successor Securities) in any material respect, and (ii) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, neither
the Issuer Trust nor such successor entity will be required to register as an
"investment company" under the Investment Company Act, and (g) the Depositor or
any permitted transferee to whom it has transferred the Common Securities
hereunder owns all of the common securities of such successor entity and
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee Agreement.
Notwithstanding the foregoing, the Issuer Trust shall not, except with the
consent of Holders of 100% in Liquidation Amount of the Preferred Securities,
consolidate, amalgamate, merge with or into, or be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Issuer Trust or the successor
entity to be taxable as a corporation for United States federal income tax
purposes. Any merger or similar agreement shall be executed by the
Administrators on behalf of the Issuer Trust.
- 55 -
<PAGE>
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1. Limitation of Rights of Holders.
Except as set forth in Section 9.2, the bankruptcy, dissolution,
termination, death or incapacity of any Person having an interest, beneficial or
otherwise, in Trust Securities shall not operate to terminate this Trust
Agreement or dissolve, terminate or annul the Issuer Trust, nor entitle the
legal representatives or heirs of such Person or any Holder for such Person, to
claim an accounting, take any action or bring any proceeding in any court for a
partition or winding-up of the arrangements contemplated hereby, nor otherwise
affect the rights, obligations and liabilities of the parties hereto or any of
them.
Section 10.2. Amendment.
(a) This Trust Agreement may be amended from time to time by the
Property Trustee, the Administrators or the Holders of a Majority in Liquidation
Amount of the Common Securities, without the consent of any Holder of the
Preferred Securities, (i) to cure any ambiguity, correct or supplement any
provision herein which may be inconsistent with any other provision herein, or
to make any other provisions with respect to matters or questions arising under
this Trust Agreement; provided, however, that such amendment shall not adversely
affect in any material respect the interests of any Holder or (ii) to modify,
eliminate, or add to any provisions of this Trust Agreement to such extent as
shall be necessary to ensure that the Issuer Trust will not be taxable as a
corporation for United States federal income tax purposes at any time that any
Trust Securities are Outstanding or to ensure that the Issuer Trust will not be
required to register as an "investment company" under the Investment Company
Act.
(b) Except as provided in Section 6.1(c) or Section 10.2(c), any
provision of this Trust Agreement may be amended by the Property Trustee, the
Administrators, and the Holders of a Majority in Liquidation Amount of the
Common Securities with (i) the consent of Holders of at least a Majority in
Liquidation Amount of the Preferred Securities and (ii) receipt by the Issuer
Trustees of an Opinion of Counsel to the effect that such amendment or the
exercise of any power granted to the Issuer Trustees in accordance with such
amendment will not cause the Issuer Trust to be taxable as a corporation for
United States federal income tax purposes or affect the Issuer Trust's exemption
from status of an "investment company" under the Investment Company Act.
(c) In addition to and notwithstanding any other provision in this
Trust Agreement, without the consent of each affected Holder (such consent being
obtained in accordance with Section 6.3 or 6.6 hereof), this Trust Agreement may
not be amended to (i) change the amount or timing of any Distribution on the
Trust Securities or otherwise adversely affect the amount of any Distribution
required to be made in respect of the Trust Securities as of a specified date or
(ii) restrict the right of a Holder to institute suit for the enforcement of any
such payment on or after such date. Notwithstanding any other provision herein,
without the unanimous consent of
- 56 -
<PAGE>
the Holders (such consent being obtained in accordance with Section 6.3 or 6.6),
this Section 10.2(c) may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement, no
Issuer Trustee shall enter into or consent to any amendment to this Trust
Agreement which would cause the Issuer Trust to fail or cease to qualify for the
exemption from status as an "investment company" under the Investment Company
Act or be taxable as a corporation for United States federal income tax
purposes.
(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Depositor and the Administrators, this Trust
Agreement may not be amended in a manner which imposes any additional obligation
on the Depositor or the Administrators.
(f) In the event that any amendment to this Trust Agreement is made,
the Administrators or the Property Trustee shall promptly provide to the
Depositor a copy of such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be
required to enter into any amendment to this Trust Agreement which affects its
own rights, duties or immunities under this Trust Agreement. The Property
Trustee shall be entitled to receive an Opinion of Counsel and an Officers'
Certificate stating that any amendment to this Trust Agreement is in compliance
with this Trust Agreement.
(h) Any amendments to this Trust Agreement pursuant to Section 10.2(a)
shall become effective when notice of such amendment is given to the Holders of
the Trust Securities.
Section 10.3. Separability.
In case any provision in this Trust Agreement or in the Trust
Securities Certificates shall be invalid, illegal or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 10.4. Governing Law.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
HOLDERS, THE ISSUER TRUST, THE DEPOSITOR, THE ISSUER TRUSTEES, AND THE
ADMINISTRATORS WITH RESPECT TO THIS TRUST AGREEMENT AND THE TRUST SECURITIES
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
DELAWARE, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
- 57 -
<PAGE>
Section 10.5. Payments Due on Non-Business Day.
If the date fixed for any payment on any Trust Security shall be a day
that is not a Business Day, then such payment need not be made on such date but
may be made on the next succeeding day that is a Business Day (except as
otherwise provided in Sections 4.2(d)), except that, if such Business Day is in
the next succeeding calendar year, payment on any Trust Security shall be made
on the immediately preceding Business Day, in each case, with the same force and
effect as though made on the date fixed for such payment, and no Distributions
shall accumulate on such unpaid amount for the period after such date.
Section 10.6. Successors.
This Trust Agreement shall be binding upon and shall inure to the
benefit of any successor to the Depositor, the Issuer Trust, the Administrators,
and any Issuer Trustee, including any successor by operation of law. Except in
connection with a consolidation, merger or sale involving the Depositor that is
permitted under Article VIII of the Indenture and pursuant to which the assignee
agrees in writing to perform the Depositor's obligations hereunder, the
Depositor shall not assign its obligations hereunder.
Section 10.7. Headings.
The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement.
Section 10.8. Reports, Notices and Demands.
(a) Any report, notice, demand or other communication that by any
provision of this Trust Agreement is required or permitted to be given or served
to or upon any Holder or the Depositor may be given or served in writing by
deposit thereof, first class postage prepaid, in the United States mail, hand
delivery or facsimile transmission, in each case, addressed, (i) in the case of
a Holder of Preferred Securities, to such Holder as such Holder's name and
address may appear on the Securities Register; and (ii) in the case of the
Holder of Common Securities or the Depositor, to First United Corporation, 19
South Second Street, Oakland, Maryland 21550 Attention: Office of the Secretary,
facsimile no.: (301) 334-2318 or to such other address as may be specified in a
written notice by the Depositor to the Property Trustee. Such notice, demand or
other communication to or upon a Holder shall be deemed to have been
sufficiently given or made, for all purposes, upon hand delivery, mailing or
transmission. Such notice, demand or other communication to or upon the
Depositor shall be deemed to have been sufficiently given or made only upon
actual receipt of the writing by the Depositor.
(b) Any notice, demand or other communication which by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
the Issuer Trust, the Property Trustee, the Delaware Trustee, the
Administrators, or the Issuer Trust shall be given in writing addressed (until
another address is published by the Issuer Trust) as follows: (i) with respect
to the Property Trustee to Bankers Trust Company, Four Albany Street, 4th Floor,
New York, NY
- 58 -
<PAGE>
10006, Attention: Corporate Trust and Agency Group Corporate Market Services;
(ii) with respect to the Delaware Trustee to Bankers Trust (Delaware), 1011
Centre Road, Suite 200, Trust Department, Wilmington, Delaware 19805-1266,
Attention: Lisa Wilkins, and (iii) with respect to the Administrators, to them
at the address above for notices to the Depositor, marked "Attention: Office of
the Secretary." Such notice, demand or other communication to or upon the Issuer
Trust or the Property Trustee shall be deemed to have been sufficiently given or
made only upon actual receipt of the writing by the Issuer Trust, the Property
Trustee, or such Administrator.
Section 10.9. Agreement Not to Petition.
Each of the Issuer Trustees, the Administrators and the Depositor agree
for the benefit of the Holders that, until at least one year and one day after
the Issuer Trust has been terminated in accordance with Article IX, they shall
not file, or join in the filing of, a petition against the Issuer Trust under
any bankruptcy, insolvency, reorganization or other similar law (including,
without limitation, the United States Bankruptcy Code) (collectively,
"Bankruptcy Laws") or otherwise join in the commencement of any proceeding
against the Issuer Trust under any Bankruptcy Law. In the event the Depositor
takes action in violation of this Section 10.9, the Property Trustee agrees, for
the benefit of Holders, that at the expense of the Depositor, it shall file an
answer with the bankruptcy court or otherwise properly contest the filing of
such petition by the Depositor against the Issuer Trust or the commencement of
such action and raise the defense that the Depositor has agreed in writing not
to take such action and should be estopped and precluded therefrom and such
other defenses, if any, as counsel for the Issuer Trustee or the Issuer Trust
may assert. If any Issuer Trustee or Administrator takes action in violation of
this Section 10.9, the Depositor agrees, for the benefit of the Holders, that at
the expense of the Depositor, it shall file an answer with the bankruptcy court
or otherwise properly contest the filing of such petition by such Person against
the Depositor or the commencement of such action and raise the defense that such
Person has agreed in writing not to take such action and should be estopped and
precluded therefrom and such other defenses, if any, as counsel for the
Depositor or the Issuer Trust may assert. The provisions of this Section 10.9
shall survive the termination of this Trust Agreement.
Section 10.10. Trust Indenture Act; Conflict with Trust Indenture Act.
(a) Trust Indenture Act; Application. (i) This Trust Agreement is
subject to the provisions of the Trust Indenture Act that are required to be a
part of this Trust Agreement and shall, to the extent applicable, be governed by
such provisions; (ii) if and to the extent that any provision of this Trust
Agreement limits, qualifies or conflicts with the duties imposed by Sections 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control; (iii) for purposes of this Trust Agreement, the Property Trustee, to
the extent permitted by applicable law and/or the rules and regulations of the
Commission, shall be the only Issuer Trustee which is a trustee for the purposes
of the Trust Indenture Act; and (iv) the application of the Trust Indenture Act
to this Trust Agreement shall not affect the nature of the Preferred Securities
and the Common Securities as equity securities representing undivided beneficial
interests in the assets of the Issuer Trust.
- 59 -
<PAGE>
(b) Lists of Holders of Preferred Securities. (i) Each of the Depositor
and the Administrators on behalf of the Issuer Trust shall provide the Property
Trustee with such information as is required under Section 312(a) of the Trust
Indenture Act at the times and in the manner provided in Section 312(a) and (ii)
the Property Trustee shall comply with its obligations under Sections 310(b),
311 and 312(b) of the Trust Indenture Act.
(c) Reports by the Property Trustee. Within 60 days after January 31 of
each year, commencing January 31, 2000, the Property Trustee shall provide to
the Holders of the Trust Securities such reports as are required by Section 313
of the Trust Indenture Act, if any, in the form, in the manner and at the times
provided by Section 313 of the Trust Indenture Act. The Property Trustee shall
also comply with the requirements of Section 313(d) of the Trust Indenture Act.
(d) Periodic Reports to Property Trustee. Each of the Depositor and the
Administrators on behalf of the Issuer Trust shall provide to the Property
Trustee, the Commission and the Holders of the Trust Securities, as applicable,
such documents, reports and information as required by Section 314(a)(1)-(3) (if
any) of the Trust Indenture Act and the compliance certificates required by
Section 314(a)(4) and (c) of the Trust Indenture Act (provided that any
certificate to be provided pursuant to Section 314(a)(4) of the Trust Indenture
Act shall be provided within 120 days of the end of each fiscal year of the
Issuer Trust).
(e) Evidence of Compliance with Conditions Precedent. Each of the
Depositor and the Administrators on behalf of the Issuer Trust shall provide to
the Property Trustee such evidence of compliance with any conditions precedent,
if any, provided for in this Trust Agreement which relate to any of the matters
set forth in Section 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given pursuant to Section 314(c) shall comply with
Section 314(e) of the Trust Indenture Act.
(f) Disclosure of Information. The disclosure of information as to the
names and addresses of the Holders of Trust Securities in accordance with
Section 312 of the Trust Indenture Act, regardless of the source from which such
information was derived, shall not be deemed to be a violation of any existing
law or any law hereafter enacted which does not specifically refer to Section
312 of the Trust Indenture Act, nor shall the Property Trustee be held
accountable by reason of mailing any material pursuant to a request made under
Section 312(b) of the Trust Indenture Act.
- 60 -
<PAGE>
Section 10.11. Acceptance of Terms of Trust Agreement, Guarantee and Indenture.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN
BY OR ON BEHALF OF A HOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR
FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE
BY THE HOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY
OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT, THE GUARANTEE AGREEMENT
AND THE INDENTURE, AND THE AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER
TERMS OF THE GUARANTEE AGREEMENT AND THE INDENTURE, AND SHALL CONSTITUTE THE
AGREEMENT OF THE ISSUER TRUST, SUCH HOLDER AND SUCH OTHERS THAT THE TERMS AND
PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS
BETWEEN THE ISSUER TRUST AND SUCH HOLDER AND SUCH OTHERS.
Section 10.12. Counterparts
.
This Trust Agreement may contain more than one counterpart of the
signature page and this Trust Agreement may be executed by the affixing of the
signature of each of the Issuer Trustees to one of such counterpart signature
pages. All of such counterpart signature pages shall be read as though one, and
they shall have the same force and effect as though all of the signers had
signed a single signature paper.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
- 61 -
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amended and Restated
Trust Agreement to be duly executed as of the day and year first above written.
FIRST UNITED CORPORATION
as Depositor
By:
------------------------------------
William B. Grant
Chairman of the Board
and Chief Executive Officer
BANKERS TRUST COMPANY,
as Property Trustee
By:
-----------------------------------
Marc J. Parilla
Assistant Vice President
BANKERS TRUST (DELAWARE),
as Delaware Trustee
By:
-----------------------------------
M. Lisa Wilkins
Assistant Secretary
Subscribed to and Accepted by,
as the Initial Administrators:
- --------------------------------------
William B. Grant
- --------------------------------------
Robert W. Kurtz
F7745a.600
- 62 -
<PAGE>
EXHIBIT A
[INSERT CERTIFICATE OF TRUST FILED WITH DELAWARE SECRETARY OF
STATE]
<PAGE>
EXHIBIT B
[INSERT FORM OF CERTIFICATE DEPOSITARY AGREEMENT]
<PAGE>
EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO A
SUCCESSOR IN INTEREST TO THE DEPOSITOR OR AN AFFILIATE
OF THE DEPOSITOR IN COMPLIANCE WITH APPLICABLE LAW
AND SECTION 5.11 OF THE TRUST AGREEMENT
Certificate Number Number of Common Securities
C-__
Certificate Evidencing Common Securities
of
First United Capital Trust
_____% Common Securities
(liquidation amount $__ per Common Security)
First United Capital Trust, a statutory business trust created under
the laws of the State of Delaware (the "Issuer Trust"), hereby certifies that
First United Corporation (the "Holder"), is the registered owner of _________
(___) common securities of the Issuer Trust representing undivided beneficial
interests in the assets of the Issuer Trust and has designated the First United
Capital Trust ____% Common Securities (liquidation amount $__ per Common
Security) (the "Common Securities"). Except in accordance with Section 5.11 of
the Trust Agreement (as defined below), the Common Securities are not
transferable and any attempted transfer hereof other than in accordance
therewith shall be void. The designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities are set
forth in, and this certificate and the Common Securities represented hereby are
issued and shall in all respects be subject to the terms and provisions of, the
Amended and Restated Trust Agreement of the Issuer Trust, dated as of ______,
1999, as the same may be amended from time to time (the "Trust Agreement") among
First United Corporation, as Depositor, Bankers Trust Company, as Property
Trustee, Bankers Trust (Delaware), as Delaware Trustee, and the Holders of Trust
Securities, including the designation of the terms of the Common Securities as
set forth therein. The Issuer Trust will furnish a copy of the Trust Agreement
to the Holder without charge upon written request to the Issuer Trust at its
principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
Terms used but not defined herein have the meanings set forth in the
Trust Agreement.
<PAGE>
IN WITNESS WHEREOF, one of the Administrators of the Issuer Trust has
executed this certificate this ___ day of ______________, 1999.
FIRST UNITED CAPITAL TRUST
By:
------------------------------------
Name:
Administrator
AUTHENTICATED AND REGISTERED:
BANKERS TRUST COMPANY,
as Property Trustee and Securities Registrar
By:
---------------------------------
Name:
Signatory Officer
- 2 -
<PAGE>
EXHIBIT D
[IF THE PREFERRED SECURITIES CERTIFICATE IS TO BE A GLOBAL PREFERRED
SECURITIES CERTIFICATE, INSERT - This Preferred Securities Certificate is a
Global Preferred Securities Certificate within the meaning of the Trust
Agreement hereinafter referred to and is registered in the name of a Depositary
or a nominee of a Depositary. This Preferred Securities Certificate is
exchangeable for Preferred Securities Certificates registered in the name of a
person other than the Depositary or its nominee only in the limited
circumstances described in the Trust Agreement and may not be transferred except
as a whole by the Depositary to a nominee of the Depositary or by a nominee of
the Depositary to the Depositary or another nominee of the Depositary, except in
the limited circumstances described in the Trust Agreement.
Unless this Preferred Securities Certificate is presented by an
authorized representative of The Depository Trust Company, a New York
Corporation ("DTC"), to First United Capital Trust or its agent for registration
of transfer, exchange or payment, and any Preferred Securities Certificate
issued is registered in the name of such nominee as is requested by an
authorized representative of DTC (and any payment is made to such entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO A PERSON IS WRONGFUL inasmuch as the
registered owner hereof, has an interest herein.]
<PAGE>
CERTIFICATE NUMBER NUMBER OF PREFERRED SECURITIES
P-__
CUSIP NO. ________________________
CERTIFICATE EVIDENCING PREFERRED SECURITIES
OF
FIRST UNITED CAPITAL TRUST
______% PREFERRED SECURITIES
(LIQUIDATION AMOUNT $____ PER PREFERRED SECURITY)
First United Capital Trust, a statutory business trust created under
the laws of the State of Delaware (the "Issuer Trust"), hereby certifies that
_______________ (the "Holder") is the registered owner of $___________ ( )
aggregate liquidation amount of preferred securities of the Issuer Trust
representing a preferred undivided beneficial interest in the assets of the
Issuer Trust and has designated the First United Capital Trust _____% Preferred
Securities (liquidation amount $_________ per Preferred Security) (the
"Preferred Securities"). The Preferred Securities are transferable on the books
and the records of the Issuer Trust, in person or by a duly authorized attorney,
upon surrender of this certificate duly endorsed and in proper form for transfer
as provided in Section 5.5 of the Trust Agreement (as defined below). The
designations, rights, privileges, restrictions, preferences and other terms and
provisions of the Preferred Securities are set forth in, and this certificate
and the Preferred Securities represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Amended and Restated
Trust Agreement of the Issuer Trust, dated as of ________, 1999 as the same may
be amended from time to time (the "Trust Agreement"), among First United
Corporation as Depositor, Bankers Trust Company, as Property Trustee, Bankers
Trust (Delaware), as Delaware Trustee, and the Holders of Trust Securities,
including the designation of the terms of the Preferred Securities as set forth
therein. The Holder is entitled to the benefits of the Guarantee Agreement
entered into by First United Corporation, a Maryland corporation, and Bankers
Trust Company, as Guarantee Trustee, dated as of ___________, 1999 as the same
may be amended from time to time (the "Guarantee Agreement"), to the extent
provided therein. The Issuer Trust will furnish a copy of the Trust Agreement
and the Guarantee Agreement to the Holder without charge upon written request to
the Issuer Trust at its principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
<PAGE>
IN WITNESS WHEREOF, one of the Administrators of the Issuer Trust has
executed this certificate this _______ day of ____________, 1999.
FIRST UNITED CAPITAL TRUST
By:
--------------------------------------
Name:
Administrator
AUTHENTICATED AND REGISTERED:
BANKERS TRUST COMPANY,
as Property Trustee and Securities Registrar
By: ______________________________
Name:
Authorized Signatory
- 2 -
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Securities Certificate to:
- --------------------------------------------------------------------------------
(Insert assignee's name and social security or tax
identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Preferred Securities Certificate on the books of the
Issuer Trust. The agent may substitute another to act for him or her.
Date: ____________________
Signature: ________________________________________________
(Sign exactly as your name appears on
the other side of this Preferred Securities
Certificate)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
F7745A.600 L:1
<PAGE>
Exhibit 4.3
Form of Guarantee by First United Corporation
<PAGE>
GUARANTEE AGREEMENT
Between
FIRST UNITED CORPORATION
(as Guarantor)
and
BANKERS TRUST COMPANY
(as Guarantee Trustee)
dated as of
________________________, 1999
<PAGE>
FIRST UNITED CAPITAL TRUST
Certain Sections of this Guarantee Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
Trust Indenture Guarantee Agreement
Act Section Section
----------- -------
Section 310 (a) (1)...........................................4.1 (a)
(a) (2)...........................................4.1 (a)
(a) (3)...........................................Not Applicable
(a) (4)...........................................Not Applicable
(b)...............................................2.8, 4.1 (c)
Section 311 (a)...............................................Not Applicable
(b)...............................................Not Applicable
Section 312 (a)...............................................2.2 (a)
(b)...............................................2.2 (b)
(c)...............................................Not Applicable
Section 313 (a)...............................................2.3
(a) (4)...........................................2.3
(b)...............................................2.3
(c)...............................................2.3
(d)...............................................2.3
Section 314 (a)...............................................2.4
(b)...............................................2.4
(c) (1)...........................................2.5
(c) (2)...........................................2.5
(c) (3)...........................................2.5
(e)...............................................1.1, 2.5, 3.2
Section 315 (a)...............................................3.1 (d)
(b)...............................................2.7
(c)...............................................3.1 (c)
(d)...............................................3.1 (d)
(e)...............................................Not Applicable
Section 316 (a)...............................................1.1, 2.6, 5.4
(a) (1) (A).......................................5.4
(a) (1) (B).......................................5.4
(a) (2)...........................................Not Applicable
(b)...............................................5.3
(c)...............................................Not Applicable
Section 317 (a) (1)...........................................Not Applicable
(a) (2)...........................................Not Applicable
(b)...............................................Not Applicable
Section 318 (a)...............................................2.1
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Guarantee Agreement.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I. DEFINITIONS
Section 1.1. Definitions......................................... 2
ARTICLE II. TRUST INDENTURE ACT
Section 2.1. Trust Indenture Act; Application.................... 5
Section 2.2. List of Holders..................................... 5
Section 2.3. Reports by the Guarantee Trustee.................... 6
Section 2.4 Periodic Reports to Guarantee
Trustee........................................... 6
Section 2.5 Evidence of Compliance with
Conditions Precedent.............................. 6
Section 2.6. Events of Default; Waiver........................... 6
Section 2.7. Event of Default; Notice............................ 7
Section 2.8. Conflicting Interests............................... 7
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE
TRUSTEE
Section 3.1. Powers and Duties of the Guarantee
Trustee............................................ 7
Section 3.2. Certain Rights of Guarantee Trustee................. 9
Section 3.3. Indemnity...........................................11
Section 3.4. Expenses............................................11
ARTICLE IV. GUARANTEE TRUSTEE
Section 4.1. Guarantee Trustee; Eligibility......................11
Section 4.2 Appointment, Removal and Resignation
of the Guarantee Trustee..........................12
ARTICLE V. GUARANTEE
Section 5.1. Guarantee...........................................13
Section 5.2. Waiver of Notice and Demand.........................13
Section 5.3. Obligations Not Affected............................13
Section 5.4. Rights of Holders...................................14
Section 5.5. Guarantee of Payment................................14
Section 5.6. Subrogation.........................................15
Section 5.7. Independent Obligations.............................15
ARTICLE VI. COVENANTS AND SUBORDINATION
Section 6.1. Subordination.......................................15
Section 6.2. Pari Passu Guarantees...............................15
i
<PAGE>
ARTICLE VII. TERMINATION
Section 7.1 Termination........................................16
ARTICLE VIII. MISCELLANEOUS
Section 8.1. Successors and Assigns.............................16
Section 8.2. Amendments.........................................16
Section 8.3. Notices............................................17
Section 8.4. Benefit............................................18
Section 8.5. Interpretation.....................................18
Section 8.6. Governing Law......................................19
Section 8.7. Counterparts.......................................19
ii
<PAGE>
GUARANTEE AGREEMENT
THIS GUARANTEE AGREEMENT, dated as of _________________, 1999 (this
"Guarantee Agreement"), is executed and delivered by FIRST UNITED CORPORATION, a
Maryland corporation (the "Guarantor"), having its principal office at 19 South
Second Street, Oakland, Maryland 21550 and BANKERS TRUST COMPANY, a New York
banking corporation, having its principal office at Four Albany Street, Fourth
Floor, New York, New York 10006, as trustee, for the benefit of the Holders (as
defined herein) from time to time of the Preferred Securities (as defined
herein) of First United Capital Trust, a Delaware statutory business trust (the
"Issuer Trust").
RECITALS
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the
"Trust Agreement"), dated as of _________________, 1999, among First United
Corporation, as Depositor, Bankers Trust Company, as Property Trustee (the
"Property Trustee"), Bankers Trust (Delaware), as Delaware Trustee (the
"Delaware Trustee") (collectively, the "Issuer Trustees") and the Holders from
time to time of preferred undivided beneficial ownership interests in the assets
of the Issuer Trust, the Issuer Trust is issuing up to $____________ aggregate
Liquidation Amount (as defined herein) of its ______% Preferred Securities,
Liquidation Amount $_________ per preferred security (the "Preferred
Securities"), representing preferred undivided beneficial ownership interests in
the assets of the Issuer Trust and having the terms set forth in the Trust
Agreement;
WHEREAS, the Preferred Securities will be issued by the Issuer Trust
and the proceeds thereof, together with the proceeds from the issuance of the
Issuer Trust's Common Securities (as defined herein), will be used to purchase
the Junior Subordinated Debentures due _________________, 2029 (as defined in
the Trust Agreement) (the "Junior Subordinated Debentures") of the Guarantor
which will be deposited with Bankers Trust Company, as Property Trustee under
the Trust Agreement, as trust assets; and
WHEREAS, as incentive for the Holders to purchase Preferred Securities,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth herein, to pay to the Holders of the Preferred Securities the
Guarantee Payments (as defined herein) and to make certain other payments on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase of the Preferred
Securities by each Holder, which purchase the Guarantor hereby acknowledges
shall benefit the Guarantor, and intending to be legally bound hereby, the
Guarantor executes and delivers this Guarantee Agreement for the benefit of the
Holders from time to time of the Preferred Securities.
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.1. Definitions.
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings. Capitalized
terms used but not otherwise defined herein shall have the meanings assigned to
such terms in the Trust Agreement as in effect on the date hereof.
"Additional Amount" has the meaning specified in the Trust Agreement.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer Trust.
"Delaware Trustee" shall have the meaning specified in the first
recital of this Guarantee Agreement.
"Distributions" means preferential cumulative cash distributions
accumulating from _________________, 1999 and payable quarterly in arrears on
March 31, June 30, September 30, and December 31 of each year, commencing
_________________, 1999 at the annual rate of _______% of the Liquidation
Amount.
"Event of Default" means (a) a default by the Guarantor in any of its
payment obligations under this Guarantee Agreement, or (b) a default by the
Guarantor in any other obligation hereunder that remains unremedied for 30 days.
"Guarantee Agreement" means this Guarantee Agreement, as modified,
amended or supplemented from time to time.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by or on behalf of the Issuer Trust: (a) any accrued and unpaid
Distributions (as defined in the Trust Agreement) required to be paid on the
Preferred Securities, to the extent the Issuer Trust shall have funds on hand
available therefor at such time, (b) the Redemption Price, with respect to the
Preferred Securities called for redemption by the Issuer Trust to the extent
that the Issuer
2
<PAGE>
Trust shall have funds on hand available therefor at such time, and (c) upon a
voluntary or involuntary termination, winding-up or liquidation of the Issuer
Trust, unless the Junior Subordinated Debentures are distributed to the Holders,
the lesser of (i) the aggregate of the Liquidation Amount and all accumulated
and unpaid Distributions to the date of payment to the extent the Issuer Trust
shall have funds on hand available to make such payment at such time and (ii)
the amount of assets of the Issuer Trust remaining available for distribution to
Holders in liquidation of the Issuer Trust (in either case, the "Liquidation
Distribution").
"Guarantee Trustee" means Bankers Trust Company, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee Agreement and thereafter means each such
Successor Guarantee Trustee.
"Guarantor" shall have the meaning specified in the first paragraph of
this Guarantee Agreement.
"Holder" means any holder, as registered on the books and records of
the Issuer Trust, of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor, the Guarantee Trustee, or any Affiliate of the
Guarantor or the Guarantee Trustee.
"Indenture" means the Junior Subordinated Indenture dated as of
_________________, 1999, between First United Corporation and Bankers Trust
Company, as trustee, as may be modified, amended or supplemented from time to
time.
"Issuer Trust" shall have the meaning specified in the first paragraph
of this Guarantee Agreement.
"Issuer Trustees" shall have the meaning specified in the first recital
of this Guarantee Agreement.
"Junior Subordinated Debentures" shall have the meaning specified in
the first recital of this Guarantee Agreement.
"Like Amount" means (a) with respect to a redemption of Preferred
Securities, Preferred Securities having a Liquidation Amount equal to the
principal amount of Junior Subordinated Debentures to be contemporaneously
redeemed in accordance with the Indenture, the proceeds of which will be used to
pay the Redemption Price of such Preferred Securities, (b) with respect to a
distribution of Junior Subordinated Debentures to Holders of Preferred
Securities in connection with a dissolution or liquidation of the Issuer Trust,
Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of the Preferred Securities of the Holder to whom such Junior
Subordinated Debentures are distributed, and (c) with respect to any
distribution of an Additional Amount to Holders of Preferred Securities, Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount
3
<PAGE>
of the Preferred Securities in respect of which such distribution is made.
"Liquidation Amount" means the stated amount of $_________ per
Preferred Security.
"Majority in Liquidation Amount of the Preferred Securities" means,
except as provided by the Trust Indenture Act, Preferred Securities representing
more than 50% of the aggregate Liquidation Amount of all then outstanding
Preferred Securities issued by the Issuer Trust.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board, Chief Executive Officer,
President or a Vice President, and by the Chief Financial Officer, Treasurer, an
Associate Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary of such Person, and delivered to the Guarantee Trustee. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee Agreement shall include:
(a) a statement by each officer signing the Officers'
Certificate that such officer has read the covenant or condition and the
definitions relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by such officer in rendering the
Officers' Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of such officer,
such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Securities" shall have the meaning specified in the first
recital of this Guarantee Agreement.
"Property Trustee" shall have the meaning specified in the first
recital of this Guarantee Agreement.
"Redemption Date" means, with respect to any Preferred Security to be
redeemed, the date fixed for such redemption by or pursuant to the Trust
Agreement; provided that each Junior Subordinated Debenture Redemption Date (as
such term is defined in the Indenture) and the stated maturity of the Junior
Subordinated Debentures shall be a Redemption Date for a Like Amount of
Preferred Securities.
4
<PAGE>
"Redemption Price" shall have the meaning specified in the Trust
Agreement.
"Responsible Officer" means, when used with respect to the Guarantee
Trustee, any officer assigned to the Corporate Trust Office, including any
managing director, principal, vice president, assistant vice president,
assistant treasurer, assistant secretary or any other officer of the Guarantee
Trustee customarily performing functions similar to those performed by any of
the above designated officers and having direct responsibility for the
administration of this Guarantee Agreement, and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
"Senior Indebtedness" shall have the meaning specified in the
Indenture.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Agreement" means the Amended and Restated Trust Agreement, dated
_________________, 1999, executed by First United Corporation, as depositor,
Bankers Trust (Delaware), as Delaware Trustee, and Bankers Trust Company, as
Property Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
by the Trust Indenture Reform Act of 1990, or any successor statute, in each
case as amended from time to time.
ARTICLE II
TRUST INDENTURE ACT
Section 2.1. Trust Indenture Act; Application.
If any provision hereof limits, qualifies or conflicts with a provision
of the Trust Indenture Act that is required under such Act to be a part of and
govern this Guarantee Agreement, the provision of the Trust Indenture Act shall
control. If any provision of this Guarantee Agreement modifies or excludes any
provision of the Trust Indenture Act that may be so modified or excluded, the
latter provision shall be deemed to apply to this Guarantee Agreement as so
modified or excluded, as the case may be.
5
<PAGE>
Section 2.2. List of Holders.
(a) The Guarantor will furnish or cause to be furnished to the
Guarantee Trustee:
(i) quarterly, not more than 15 days after March 15, June 15,
September 15 and December 15 in each year, a list, in such form as the
Guarantee Trustee may reasonably require, of the names and addresses of
the Holders as of such date; and
(ii) at such other times as the Guarantee Trustee may request
in writing, within 30 days after the receipt by the Guarantor of any
such request, a list of similar form and content as of a date not more
than 15 days prior to the time such list is furnished.
(b) The Guarantee Trustee shall comply with the requirements of Section
312(b) of the Trust Indenture Act.
Section 2.3. Reports by the Guarantee Trustee.
Within 60 days of January 31 of each year commencing January 31, 2000,
the Guarantee Trustee shall provide to the Holders such reports, if any, as are
required by Section 313 of the Trust Indenture Act in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The Guarantee Trustee shall
also comply with the requirements of Section 313(d) of the Trust Indenture Act.
Section 2.4. Periodic Reports to the Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee and the Holders
such documents, reports and information, if any, as required by Section 314 of
the Trust Indenture Act and the compliance certificate required by Section 314
of the Trust Indenture Act, in the form, in the manner and at the times required
by Section 314 of the Trust Indenture Act.
Section 2.5. Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this
Guarantee Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of an
Officers' Certificate.
6
<PAGE>
Section 2.6. Events of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Preferred
Securities may, by vote, on behalf of the Holders, waive any past Event of
Default and its consequences. Upon such waiver, any such Event of Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Guarantee Agreement, but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent therefrom.
Section 2.7. Event of Default; Notice.
(a) The Guarantee Trustee shall, within 90 days after the occurrence of
an Event of Default, transmit by mail, first class postage prepaid, to the
Holders, notices of all Events of Default known to the Guarantee Trustee, unless
such Events of Default have been cured before the giving of such notice;
provided that, except in the case of a default in the payment of a Guarantee
Payment, the Guarantee Trustee shall be protected in withholding such notice if
and so long as the Board of Directors, the executive committee or a trust
committee of directors and/or Responsible Officers of the Guarantee Trustee in
good faith determines that the withholding of such notice is in the interests of
the Holders.
(b) The Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default unless (i) a Responsible Officer charged with the
administration of this Guarantee Agreement shall have received written notice of
such Event of Default, or (ii) a Responsible Officer of the Guarantee Trustee
charged with administration of the Trust Agreement shall have obtained actual
knowledge thereof.
Section 2.8. Conflicting Interests.
The Trust Agreement shall be deemed to be specifically described in
this Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
7
<PAGE>
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE
GUARANTEE TRUSTEE
Section 3.1. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee Trustee for
the benefit of the Holders, and the Guarantee Trustee shall not transfer this
Guarantee Agreement to any Person except to a Holder exercising his or her
rights pursuant to Section 5.4(d) or to a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act as
Successor Guarantee Trustee hereunder. The right, title and interest of the
Guarantee Trustee, as such, hereunder shall automatically vest in any Successor
Guarantee Trustee, upon acceptance by such Successor Guarantee Trustee of its
appointment hereunder, and such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and delivered
pursuant to the appointment of such Successor Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the
Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall be obligated to perform only such duties as are specifically set forth in
this Guarantee Agreement (including pursuant to Section 2.1), and no implied
covenants shall be read into this Guarantee Agreement against the Guarantee
Trustee. If an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6), the Guarantee Trustee shall exercise such of the
rights and powers vested in it by this Guarantee Agreement, and use the same
degree of care and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(d) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action, its
own negligent failure to act or its own bad faith or willful misconduct, except
that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Guarantee
Trustee shall be determined solely by the express provisions
of this Guarantee Agreement (including pursuant to Section
2.1), and the Guarantee Trustee shall not be liable except for
the performance of such duties and obligations as are
specifically set forth in this Guarantee Agreement (including
those set forth in Section 2.1); and
8
<PAGE>
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or
opinions furnished to the Guarantee Trustee and conforming to
the requirements of this Guarantee Agreement; but in the case
of any such certificates or opinions that by any provision
hereof or of the Trust Indenture Act are specifically required
to be furnished to the Guarantee Trustee, the Guarantee
Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the
Guarantee Trustee, unless it shall be proved that the Guarantee Trustee
was negligent in ascertaining the pertinent facts upon which such
judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in Liquidation Amount of the Preferred Securities relating to
the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee, or exercising any trust or power
conferred upon the Guarantee Trustee under this Guarantee Agreement;
and
(iv) no provision of this Guarantee Agreement shall require
the Guarantee Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers if the
Guarantee Trustee shall have reasonable grounds for believing that the
repayment of such funds or liability is not assured to it under the
terms of this Guarantee Agreement or adequate indemnity against such
risk or liability is not reasonably assured to it.
Section 3.2. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) the Guarantee Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document reasonably
believed by it to be genuine and to have been signed, sent or presented
by the proper party or parties;
(ii) any direction or act of the Guarantor contemplated by
this Guarantee Agreement shall be sufficiently evidenced by an
Officers' Certificate unless otherwise
9
<PAGE>
prescribed herein;
(iii) whenever, in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting to take
any action hereunder, the Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on its
part, request and conclusively rely upon an Officers' Certificate
which, upon receipt of such request from the Guarantee Trustee, shall
be promptly delivered by the Guarantor;
(iv) the Guarantee Trustee may consult with legal counsel, and
the advice or written opinion of such legal counsel with respect to
legal matters shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or opinion.
Such legal counsel may be legal counsel to the Guarantor or any of its
Affiliates and may be one of its employees. The Guarantee Trustee shall
have the right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of competent
jurisdiction;
(v) the Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee
Agreement at the request or direction of any Holder, unless such Holder
shall have provided to the Guarantee Trustee such security and
indemnity as would satisfy a reasonable person in the position of the
Guarantee Trustee, against the costs, expenses (including attorneys'
fees and expenses) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable
advances as may be requested by the Guarantee Trustee; provided,
however, that nothing herein shall relieve the Guarantee Trustee of its
obligations upon the occurrence of an Event of Default that has not
been cured or waived to exercise the rights and powers vested in the
Guarantee Trustee by this Guarantee, and to use the same degree of care
and skill in exercising such rights and powers as a reasonably prudent
person would use under the circumstances in the conduct of his own
affairs;
(vi) the Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit;
(vii) the Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through its agents or attorneys, and the Guarantee Trustee shall not
be responsible for any negligence or willful misconduct on the part of
any such agent or attorney appointed with due care by it
10
<PAGE>
hereunder. Nothing herein shall be construed as limiting or restricting
the right of the Guarantor to bring any action directly against any
agent or attorney appointed by the Guarantee Trustee for any negligence
or willful misconduct on the part of such agent or attorney; and
(viii) whenever in the administration of this Guarantee
Agreement the Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking
any other action hereunder, the Guarantee Trustee (A) may request
instructions from the Holders, (B) may refrain from enforcing such
remedy or right or taking such other action until such instructions are
received and (C) shall be fully protected in acting in accordance with
such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to impose
any duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty to act in accordance with such power and
authority.
Section 3.3. Indemnity.
The Guarantor agrees to indemnify the Guarantee Trustee (which for
purposes of this Section 3.3 shall include its directors, officers, and
employees) for, and to hold the Guarantee Trustee harmless against, any loss,
liability or expense incurred without negligence, willful misconduct or bad
faith on the part of the Guarantee Trustee, arising out of or in connection with
the acceptance or administration of this Guarantee Agreement, including the
reasonable costs and expenses of defending against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The Guarantee Trustee will not claim or exact any lien or charge on
any Guarantee Payments as a result of any amount due to it under this Guarantee
Agreement.
Section 3.4. Expenses.
The Guarantor shall from time to time reimburse the Guarantee Trustee
for its reasonable expenses and costs (including reasonable attorneys' or
agents' fees) incurred in connection with the performance of its duties
hereunder.
11
<PAGE>
ARTICLE IV
GUARANTEE TRUSTEE
Section 4.1. Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of
at least $50,000,000, and shall be a corporation meeting the
requirements of Section 310(a) of the Trust Indenture Act. If such
corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining
authority, then, for the purposes of this Section and to the extent
permitted by the Trust Indenture Act, the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Guarantee Trustee shall cease to be eligible to
so act under Section 4.1(a), the Guarantee Trustee shall immediately resign in
the manner and with the effect set out in Section 4.2(b).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
Section 4.2. Appointment, Removal and Resignation of the Guarantee Trustee.
(a) No resignation or removal of the Guarantee Trustee and no
appointment of a Successor Guarantee Trustee pursuant to this Article IV shall
become effective until the acceptance of appointment by the Successor Guarantee
Trustee by written instrument executed by the Successor Guarantee Trustee and
delivered to the Holders and the Guarantee Trustee.
(b) Subject to Section 4.2(a), a Guarantee Trustee may resign at any
time by giving written notice thereof to the Holders. The Guarantee Trustee
shall appoint a successor by requesting from at least three Persons meeting the
eligibility requirements such Person's expenses and charges to serve as the
Guarantee Trustee, and selecting the Person who agrees to the lowest expenses
and charges. If the instrument of acceptance by the Successor Guarantee Trustee
shall not have been delivered to the Guarantee Trustee within 60 days after the
giving of such notice of resignation, the Guarantee Trustee may petition, at the
expense of the Guarantor, any court of competent jurisdiction for the
appointment of a Successor Guarantee Trustee.
12
<PAGE>
(c) The Guarantee Trustee may be removed for cause at any time by Act
(within the meaning of Section 6.8 of the Trust Agreement) of the Holders of at
least a Majority in Liquidation Amount of the Preferred Securities, delivered to
the Guarantee Trustee.
(d) If a resigning Guarantee Trustee shall fail to appoint a successor,
or if a Guarantee Trustee shall be removed or become incapable of acting as
Guarantee Trustee, or if any vacancy shall occur in the office of any Guarantee
Trustee for any cause, the Holders of the Preferred Securities, by Act of the
Holders of record of not less than 25% in aggregate Liquidation Amount of the
Preferred Securities then outstanding delivered to such Guarantee Trustee, shall
promptly appoint a successor Guarantee Trustee. If no Successor Guarantee
Trustee shall have been so appointed by the Holders of the Preferred Securities
and such appointment accepted by the Successor Guarantee Trustee, any Holder, on
behalf of himself and all others similarly situated, may petition any court of
competent jurisdiction for the appointment of a Successor Guarantee Trustee.
ARTICLE V
GUARANTEE
Section 5.1. Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full on
a subordinated basis as set forth in Section 6.1 hereof to the Holders the
Guarantee Payments (without duplication of amounts theretofore paid by or on
behalf of the Issuer Trust), as and when due, regardless of any defense, right
of set-off or counterclaim which the Issuer Trust may have or assert, except the
defense of payment. The Guarantor's obligation to make a Guarantee Payment may
be satisfied by direct payment of the required amounts by the Guarantor to the
Holders or by causing the Issuer Trust to pay such amounts to the Holders. The
Guarantor shall give prompt written notice to the Guarantee Trustee in the event
it makes any direct payment hereunder.
Section 5.2. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of the Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the
Guarantee Trustee, the Issuer Trust or any other Person before proceeding
against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice
of redemption and all other notices and demands.
13
<PAGE>
Section 5.3. Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee Agreement shall in no way be affected or impaired by reason
of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer Trust of any express or implied
agreement, covenant, term or condition relating to the Preferred Securities to
be performed or observed by the Issuer Trust;
(b) the extension of time for the payment by the Issuer Trust of all or
any portion of the Distributions (other than an extension of time for payment of
Distributions that results from the extension of any interest payment period on
the Junior Subordinated Debentures as so provided in the Indenture), Redemption
Price, Liquidation Distribution or any other sums payable under the terms of the
Preferred Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Preferred
Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Issuer Trust granting indulgence or extension of
any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer Trust or any of the assets of
the Issuer Trust;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor (other than payment of
the underlying obligation), it being the intent of this Section 5.3 that the
obligations of the Guarantor hereunder shall be absolute and unconditional under
any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain the consent of, the Guarantor with respect to the happening of any of the
foregoing.
14
<PAGE>
Section 5.4. Rights of Holders.
The Guarantor expressly acknowledges that: (a) this Guarantee Agreement
will be deposited with the Guarantee Trustee to be held for the benefit of the
Holders; (b) the Guarantee Trustee has the right to enforce this Guarantee
Agreement on behalf of the Holders; (c) the Holders of a Majority in Liquidation
Amount of the Preferred Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of this Guarantee Agreement or exercising any trust or power
conferred upon the Guarantee Trustee under this Guarantee Agreement; and (d) any
Holder may institute a legal proceeding directly against the Guarantor to
enforce its rights under this Guarantee Agreement, without first instituting a
legal proceeding against the Guarantee Trustee, the Issuer Trust or any other
Person.
Section 5.5. Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment of
the Guarantee Payments in full (without duplication of amounts theretofore paid
by the Issuer Trust) or upon the distribution of Junior Subordinated Debentures
to Holders as provided in the Trust Agreement.
Section 5.6. Subrogation.
The Guarantor shall be subrogated to all rights (if any) of the Holders
against the Issuer Trust in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement; provided, however, that the Guarantor
shall not (except to the extent required by mandatory provisions of law) be
entitled to enforce or exercise any rights which it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Guarantee Agreement, if at the time of any such
payment, any amounts are due and unpaid under this Guarantee Agreement. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.
Section 5.7. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer Trust with respect to the Preferred
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
Agreement notwithstanding the occurrence of any event referred to in subsections
(a) through (g), inclusive, of Section 5.3 hereof.
15
<PAGE>
ARTICLE VI
COVENANTS AND SUBORDINATION
Section 6.1. Subordination.
This Guarantee Agreement will constitute an unsecured obligation of the
Guarantor and will rank subordinate and junior in right of payment to all Senior
Indebtedness of the Guarantor to the extent and in the manner set forth in the
Indenture with respect to the Junior Subordinated Debentures, and the provisions
of Article XIII of the Indenture will apply, mutatis mutandis, to the
obligations of the Guarantor hereunder. The obligations of the Guarantor
hereunder do not constitute Senior Indebtedness of the Guarantor.
Section 6.2. Pari Passu Guarantees.
The obligations of the Guarantor under this Guarantee Agreement shall
rank pari passu with any similar guarantee agreements issued by the Guarantor on
behalf of the holders of preferred or capital securities issued by the Issuer
Trust and with any other security, guarantee or other obligation that is
expressly stated to rank pari passu with the obligations of the Guarantor under
this Guarantee Agreement.
ARTICLE VII
TERMINATION
Section 7.1. Termination.
This Guarantee Agreement shall terminate and be of no further force and
effect upon (a) full payment of the Redemption Price of all Preferred
Securities, (b) the distribution of Junior Subordinated Debentures to the
Holders in exchange for all of the Preferred Securities or (c) full payment of
the amounts payable in accordance with Article IX of the Trust Agreement upon
liquidation of the Issuer Trust. Notwithstanding the foregoing, this Guarantee
Agreement will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder is required to repay any sums paid with respect to
the Preferred Securities or this Guarantee Agreement.
16
<PAGE>
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Successors and Assigns.
All guarantees and agreements contained in this Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding. Except in connection with a consolidation, merger
or sale involving the Guarantor that is permitted under Article VIII of the
Indenture and pursuant to which the assignee agrees in writing to perform the
Guarantor's obligations hereunder, the Guarantor shall not assign its
obligations hereunder, and any purported assignment that is not in accordance
with these provisions shall be void.
Section 8.2. Amendments.
Except with respect to any changes that do not materially adversely
affect the rights of the Holders (in which case no consent of the Holders will
be required), this Guarantee Agreement may only be amended with the prior
approval of the Holders of not less than a Majority in Liquidation Amount of the
Preferred Securities. The provisions of Article VI of the Trust Agreement
concerning meetings of the Holders shall apply to the giving of such approval.
Section 8.3. Notices.
Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied (confirmed by delivery of the original) or
mailed by first class mail as follows:
(a) if given to the Guarantor, to the address or telecopy number set
forth below or such other address or telecopy number or to the attention of such
other Person as the Guarantor may give notice to the Holders:
First United Corporation
19 South Second Street
Oakland, Maryland 21550
Facsimile No.: (301) 334-2318
Attention: Office of the Secretary
17
<PAGE>
(b) if given to the Issuer Trust, in care of the Guarantee Trustee, at
the Issuer Trust's (and the Guarantee Trustee's) address set forth below or such
other address or telecopy number or to the attention of such other Person as the
Guarantee Trustee on behalf of the Issuer Trust may give notice to the Holders:
First United Capital Trust
First United Corporation
19 South Second Street
Oakland, Maryland 21550
Facsimile No.: (301) 334-2318
Attention: Office of the Secretary
with a copy to:
Bankers Trust Company
Four Albany Street - 4th Floor
New York, New York 10006
Facsimile No.: (212) 250-6961
Attention: Corporate Trust and Agency Group;
Corporate Market Services
(c) if given to the Guarantee Trustee:
Bankers Trust Company
Four Albany Street - 4th Floor
New York, New York 10006
Facsimile No.: (212) 250-6961
Attention: Corporate Trust and Agency Group
Corporate Market Services
(d) if given to any Holder, at the address set forth on the books and
records of the Issuer Trust.
All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
Section 8.4. Benefit.
This Guarantee Agreement is solely for the benefit of the Holders and
is not separately transferable from the Preferred Securities.
18
<PAGE>
Section 8.5. Interpretation.
In this Guarantee Agreement, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not defined
in the preamble hereto have the respective meanings assigned to them in Section
1.1;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or amended
from time to time;
(d) all references in this Guarantee Agreement to Articles and Sections
are to Articles and Sections of this Guarantee Agreement unless otherwise
specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa; and
(g) the masculine, feminine or neuter genders used herein shall include
the masculine, feminine and neuter genders.
Section 8.6. Governing Law.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
Section 8.7. Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Guarantee
Agreement to be duly executed, and their respective seals to be hereunto
affixed, all as of the day and year first above written.
FIRST UNITED CORPORATION
as Guarantor
By:
---------------------------
William B. Grant
Chairman of the Board and
Chief Executive Officer
BANKERS TRUST COMPANY,
as Guarantee Trustee
and not in its individual capacity
By:
---------------------------
Marc J. Parilla
Assistant Vice President
F7747a.600 Y:1
20
<PAGE>
Exhibit 5.1
Opinion of Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC
<PAGE>
LAW OFFICES
GORDON, FEINBLATT, ROTHMAN, HOFFBERGER & HOLLANDER, LLC
THE GARRETT BUILDING
233 EAST REDWOOD STREET
BALTIMORE, MARYLAND 21202-3332
410-576-4000
____________
Telex 908041 BAL
Fax 410-576-4246
410-576-4067
[email protected]
July 28, 1999
First United Corporation
19 South Second Street
Oakland, Maryland 21550
Re: First United Capital Trust
Preferred Securities Offering
Ladies and Gentlemen:
We have acted as counsel to First United Corporation (the "Company"), a
Maryland corporation, in connection with the preparation and filing by the
Company and First United Capital Trust (the "Trust") of a registration statement
(the "Registration Statement") on Form S-3 under the Securities Act of 1933, as
amended (the "Act"), with respect to the offer and sale of certain of the
Trust's Preferred Securities (liquidation amount $10 per Preferred Security (the
"Preferred Securities")) and certain of the Company's Junior Subordinated
Debentures (the "Debentures") and the related Guarantee Agreement by and between
the Company and Bankers Trust Company, as trustee (the "Guarantee"). In
connection therewith, you have requested our opinion as to certain matters
referred to below.
In our capacity as such counsel, we have familiarized ourselves with
the actions taken by the Company in connection with the registration of the
Debentures and the Guarantee. We have examined the originals or certified copies
of such other documents, including the Registration Statement and the amendments
thereto, as we have deemed relevant and necessary as a basis for the opinions
hereinafter expressed. In such examination, we have assumed the genuineness of
all signatures on original documents and the authenticity of all documents
submitted to us as conformed or photostatic copies, and the authenticity of the
originals of such latter documents.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation which has been duly formed and is
validly existing under the laws of the State of Maryland. The Company has full
power and authority to issue the Debentures and enter into the Guarantee.
2. When issued (with respect to the Debentures), or executed and
delivered (with respect to the Guarantee), as set forth in the Registration
Statement, the Debentures and the Guarantee will be valid and binding
obligations of the Company.
<PAGE>
The foregoing opinion is limited to the laws of the State of Maryland
and the United States of America and we do not express any opinion herein
concerning any other law. We assume no obligation to supplement this opinion if
any applicable law changes after the date hereof or if we become aware of any
fact that might change the opinion expressed herein after the date hereof. The
opinion may be relied upon exclusively by you and not by any other person
without our prior written consent.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of the name of our Firm therein. In giving
this opinion, we do not admit that we are within the category of persons whose
consent is required by Section 7 of the Securities Act of 1933, as amended.
Very truly yours,
GORDON, FEINBLATT, ROTHMAN,
HOFFBERGER & HOLLANDER, LLC
/s/ Abba David Poliakoff
----------------------------------------
Abba David Poliakoff, Member
f7992.600
<PAGE>
Exhibit 5.2
Opinion of Richards, Layton & Finger
<PAGE>
[Richards, Layton & Finger, PA Letterhead]
July 26, 1999
First United Capital Trust
c/o First United Corporation
19 South Second Street
Oakland, MD 21550
Re: First United Capital Trust
Ladies and Gentlemen:
We have acted as special Delaware counsel for First United
Corporation, a Maryland corporation (the "Company"), and First United Capital
Trust, a Delaware business trust (the "Trust"), in connection with the matters
set forth herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, as filed with the
Secretary of State on July 19, 1999;
(b) The Trust Agreement of the Trust, dated as of July 19,
1999, among the Company and the trustees of the Trust named therein;
(c) The Registration Statement (the "Registration Statement")
on Form S- 3, including a preliminary prospectus with respect to the Trust (the
"Prospectus"), relating to the Preferred Securities of the Trust representing
preferred beneficial interests in the Trust (each, a "Preferred Security" and
collectively, the "Preferred Securities"), as filed by the Company and the Trust
with the Securities and Exchange Commission on July 28, 1999;
(d) A form of Amended and Restated Trust Agreement for the
Trust, to be entered into between the Company, the trustees of the Trust named
therein, and the
<PAGE>
holders, from time to time, of the undivided beneficial interests in the assets
of the Trust (including Exhibits A and B thereto) (the "Trust Agreement"),
attached as an exhibit to the Registration Statement; and
(e) A Certificate of Good Standing for the Trust, dated July
26, 1999, obtained from the Secretary of State.
With respect to all documents examined by us, we have assumed
(i) the authenticity of all documents submitted to us as authentic originals,
(ii) the conformity with the originals of all documents submitted to us as
copies or forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the
Trust Agreement and the Certificate of Trust are in full force and effect and
have not been amended, (ii) except to the extent provided in paragraph 1 below,
the due organization or due formation, as the case may be, and valid existence
in good standing of each party to the documents examined by us under the laws of
the jurisdiction governing its creation, organization or formation, (iii) the
legal capacity of natural persons who are parties to the documents examined by
us, (iv) that each of the parties to the documents examined by us has the power
and authority to execute and deliver, and to perform its obligations under, such
documents, (v) the due authorization, execution and delivery by all parties
thereto of all documents examined by us, (vi) the receipt by each Person to whom
a Preferred Security is to be issued by the Trust (collectively, the "Preferred
Security Holders") of a Preferred Securities Certificate for such Preferred
Security and the payment for such Preferred Security, in accordance with the
Trust Agreement and the Registration Statement, and (vii) that the Preferred
Securities are issued and sold to the Preferred Security Holders in accordance
with the Trust Agreement and the Registration Statement. We have not
participated in the preparation of the Registration Statement and assume no
responsibility for its contents.
This opinion is limited to the laws of the State of Delaware,
and we have not considered and express no opinion on the laws of any other
jurisdiction, including federal laws and rules and regulations relating thereto.
Our opinions are rendered only with respect to Delaware laws and rules,
regulations and orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such
questions of law and statutes of the State of Delaware as we have considered
necessary or appropriate, and subject to the assumptions, qualifications,
limitations and exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Business Trust Act.
2. The Preferred Securities of the Trust will represent valid
and, subject to the qualifications set forth in paragraph 3 below, fully paid
and nonassessable undivided beneficial interests in the assets of the Trust.
<PAGE>
3. The Preferred Security Holders, as beneficial owners of the
Trust, will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Trust Agreement.
We consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement. We hereby
consent to the use of our name under the heading "Validity of Securities" in the
Prospectus. In giving the foregoing consents, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Richards, Layton & Finger, P.A.
EAM/rmc
F8000.600 T
<PAGE>
Exhibit 8.1
Tax opinion of Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC
<PAGE>
LAW OFFICES
GORDON, FEINBLATT, ROTHMAN, HOFFBERGER & HOLLANDER, LLC
THE GARRETT BUILDING
233 EAST REDWOOD STREET
BALTIMORE, MARYLAND 21202-3332
410-576-4000
____________
Telex 908041 BAL
Fax 410-576-4246
410-576-4014
[email protected]
July 28, 1999
First United Corporation
19 South Second Street
Oakland, Maryland 21550
Re: First United Corporation
First United Capital Trust
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to First United Corporation ("First United"),
a Maryland corporation, in connection with the registration statement of First
United and First United Capital Trust (the "Trust") on Form S-3, as amended (the
"Registration Statement"), of which a prospectus (the "Prospectus") is a part,
filed by First United and the Trust with the United States Securities and
Exchange Commission under the Securities Act of 1933, as amended. This opinion
is furnished pursuant to the requirements of Item 601(b)(8) of Regulation S-K.
In connection with the opinion set forth below, we have examined the
Registration Statement and certain other documents that we have deemed necessary
to examine in order to issue the opinion set forth below. In rendering our
opinion, we have assumed that each of the documents referenced above (a) has
been duly authorized, executed, and delivered; (b) is authentic, if an original,
or accurate, if a copy; and (c) has not been amended after execution thereof
subsequent to our review.
We express no opinions except as set forth below and our opinion is
based solely upon the facts as set forth in the Registration Statement.
Accordingly, we express no opinion as to tax matters that may arise if, for
example, the facts are not as set forth in the Prospectus.
Our opinion is also based on the representations of First United
described in the Prospectus and the current provisions of the Internal Revenue
Code of 1986, as amended, applicable Treasury Regulations promulgated
thereunder, and rulings, procedures and other pronouncements published by the
United States Internal Revenue Service. Such laws, regulations, rulings and
pronouncements, and judicial and administrative interpretations thereof, are
subject to change at any time, and any such change may adversely affect the
continuing validity of the opinion set forth below.
<PAGE>
Based on the foregoing, the statements of law or legal conclusions and
opinions set forth in the Prospectus under the caption "Certain Federal Income
Tax Consequences," subject to the assumptions and conditions described therein,
constitute our opinion.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the use of our name in the Prospectus
under the caption "Certain Federal Income Tax Consequences."
The foregoing opinion is limited to the federal income tax matters
addressed herein, and no other opinions are rendered with respect to other
federal tax matters or to any issues arising under the tax laws of any state,
locality, or foreign country. We undertake no obligation to update the opinions
expressed herein after the date of this letter.
Very truly yours,
GORDON, FEINBLATT, ROTHMAN,
HOFFBERGER & HOLLANDER, LLC
By: /s/ Lester D. Bailey
-------------------------------
Lester D. Bailey
Member
f7991.600
<PAGE>
Exhibit 23.1
Consent of Ernst & Young LLP
<PAGE>
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement Form S-3 and related Prospectus of First United
Corporation and First United Capital Trust for the registration of $20,000,000
of Junior Subordinated Deferrable Interest Debentures and Preferred Securities
and to the incorporation by reference therein of our report dated February 5,
1999, with respect to the consolidated financial statements of First United
Corporation included in its Annual Report (Form 10-K) for the year ended
December 31, 1998, filed with the Securities and Exchange Commission.
Baltimore, Maryland
July 23, 1999
/s/ Ernst & Young LLP
<PAGE>
Exhibit 24.1
Powers of Attorney of certain directors of First United Corporation
<PAGE>
POWER OF ATTORNEY
Each of the undersigned directors of First United Corporation (the
"Company") whose signature appears below constitutes and appoints each of
William B. Grant and Robert W. Kurtz as his or her true and lawful
attorney-in-fact and agent, with full power of substitution and re-substitution,
for him or her and in his or her name, place and stead, in any and all
capacities, to sign any and all Registration Statements of the Company, and all
amendments thereto, relating to or in connection with the registration by the
Company of the securities of the First United Capital Trust and the guarantee by
the Company thereof, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto each of said attorneys-in-fact and agents full power and authority
to do and perform each and every act and thing necessary or advisable to be done
in connection therewith, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitutes, may lawfully do or cause to
be done by virtue thereof. This power of attorney may be executed in
counterparts.
/s/ David J. Beachy
- ------------------------------ June 16, 1999
David J. Beachy
/s/ Donald M. Browning
- ------------------------------ June 16, 1999
Donald M. Browning
/s/ Rex W. Burton
- ------------------------------ June 16, 1999
Rex W. Burton
/s/ Paul Cox, Jr.
- ------------------------------ June 16, 1999
Paul Cox, Jr.
/s/ Richard D. Dailey, Jr.
- ------------------------------ June 16, 1999
Richard D. Dailey, Jr.
/s/ William B. Grant
- ------------------------------ June 16, 1999
William B. Grant
/s/ Maynard G. Grossnickle
- ------------------------------ June 16, 1999
Maynard G. Grossnickle
/s/ Raymond F. Hinkle
- ------------------------------ June 16, 1999
Raymond F. Hinkle
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
/s/ Robert W. Kurtz
- ----------------------------- June 16, 1999
Robert W. Kurtz
/s/ Dr. Andrew E. Mance
- ----------------------------- June 16, 1999
Dr. Andrew E. Mance
/s/ Elaine L. McDonald
- ----------------------------- June 16, 1999
Elaine L. McDonald
/s/ Donald L. Moran
- ----------------------------- June 16, 1999
Donald E. Moran
/s/ Karen F. Myers
- ----------------------------- June 16, 1999
Karen F. Myers
/s/ I. Robert Rudy
- ----------------------------- June 16, 1999
I. Robert Rudy
/s/ James F. Scarpelli, Sr.
- ----------------------------- June 16, 1999
James F. Scarpelli, Sr.
/s/ Richard G. Stanton
- ----------------------------- June 16, 1999
Richard G. Stanton
/s/ Robert G. Stuck
- ----------------------------- June 16, 1999
Robert G. Stuck
/s/ Frederick A. Thayer, III
- ----------------------------- June 16, 1999
Frederick A. Thayer, III
g:\f600\f7782.600
<PAGE>
Exhibit 25.1
Statement of Eligibility under the Trust Indenture Act of
1939, and any amendments, of Bankers Trust Company, as trustee
under the Junior Subordinated
Indenture, the Amended and Restated Trust Agreement and the Guarantee
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT
OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2) ___________
------------------------------
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
a U.S. national bank) Identification no.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
Bankers Trust Company
Legal Department
130 Liberty Street, 31st Floor
New York, New York 10006
(212) 250-2201
(Name, address and telephone number of agent for service)
---------------------------------
First United Corporation MARYLAND 52-1380770
First United Capital Trust DELAWARE 51-6513713
(Exact name of Registrants as (State or other jurisdiction of (I.R.S. employer
specified in its Charter) Incorporation or organization identification
no.)
First United Corporation
19 South Second Street
Oakland, Maryland 21550
(301) 334-9471
(Address, including zip code, and telephone number of
Registrants principal executive offices)
<PAGE>
Preferred Securities of First United Corporation
Junior Subordinated Deferrable Interest Debentures of First United Corporation
First United Corporation Guarantee with respect to Preferred Securities
(Title of the indenture securities)
Item 1. General Information.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising authority to
which it is subject.
Name Address
---- -------
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the Trustee, describe each such
affiliation.
None.
Item 3.-15. Not Applicable
Item 16. List of Exhibits.
Exhibit 1 - Restated Organization Certificate of Bankers Trust
Company dated August 7, 1990, Certificate of
Amendment of the Organization Certificate of Bankers
Trust Company dated June 21, 1995 - Incorporated
herein by reference to Exhibit 1 filed with Form T-1
Statement, Registration No. 33-65171, Certificate of
Amendment of the Organization Certificate of Bankers
Trust Company dated March 20, 1996, incorporate by
referenced to Exhibit 1 filed with Form T-1
Statement, Registration No. 333-25843 and Certificate
of Amendment of the Organization Certificate of
Bankers Trust Company dated June 19, 1997, copy
attached.
Exhibit 2 - Certificate of Authority to commence business -
Incorporated herein by reference to Exhibit 2 filed
with Form T-1 Statement,
2
<PAGE>
Registration No. 33-21047.
Exhibit 3 - Authorization of the Trustee to exercise corporate
trust powers - Incorporated herein by reference to
Exhibit 2 filed with Form T1 Statement, Registration
No. 33-21047.
Exhibit 4 - Existing By-Laws of Bankers Trust Company, as amended
on November 18, 1997. Copy attached.
Exhibit 5 - Not applicable.
Exhibit 6 - Consent of Bankers Trust Company required by Section
321(b) of the Act. - Incorporated herein by reference
to Exhibit 4 filed with Form T1 Statement,
Registration No. 22-18864.
Exhibit 7 - The latest report of condition of Bankers Trust
Company dated as of March 31, 1999. Copy attached.
Exhibit 8 - Not Applicable.
Exhibit 9 - Not Applicable.
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on this 21st day
of July, 1999
BANKERS TRUST COMPANY
By: /s/ Marc J. Parilla
------------------------------------
Marc J. Parilla
Assistant Vice President
4
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on this 21st day
of July, 1999.
BANKERS TRUST COMPANY
/s/ Marc J. Parilla
---------------------------------------
By: Marc J. Parilla
Assistant Vice President
5
<PAGE>
State of New York,
Banking Department
I, MANUEL KURSKY, Deputy Superintendent of Banks of the State of New
York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY Under Section
8005 of the Banking Law," dated June 19, 1997, providing for an increase in
authorized capital stock from $1,601,666,670 consisting of 100,166,667 shares
with a par value of $10 each designated as Common Stock and 600 shares with a
par value of $1,000,000 each designated as Series Preferred Stock to
$2,001,666,670 consisting of 100,166,667 shares with a par value of $10 each
designated as Common Stock and 1,000 shares with a par value of $1,000,000 each
designated as Series Preferred Stock.
Witness, my hand and official seal of the Banking Department at the City of New
York, this 27th day of June in the Year of our Lord one thousand nine hundred
and ninety-seven.
Manuel Kursky
------------------------------
Deputy Superintendent of Banks
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
-----------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing
Director and an Assistant Secretary of Bankers Trust Company, do hereby certify:
(a) The name of the corporation is Bankers Trust Company.
(b) The organization certificate of said corporation was filed
by the Superintendent of Banks on the 5th of march, 1903.
(c) The organization certificate as heretofore amended is
hereby amended to increase the aggregate number of shares which the corporation
shall have authority to issue and to increase the amount of its authorized
capital stock in conformity therewith.
(d) Article III of the organization certificate with reference
to the authorized capital stock, the number of shares into which the capital
stock shall be divided, the par value of the shares and the capital stock
outstanding, which reads as follows:
"III. The amount of capital stock which the corporation is
hereafter to have is One Billion, Six Hundred and One Million,
Six Hundred Sixty-Six Thousand, Six Hundred Seventy Dollars
($1,601,666,670), divided into One Hundred Million, One
Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven
(100,166,667) shares with a par value of $10 each designated
as Common Stock and 600 shares with a par value of One Million
Dollars ($1,000,000) each designated as Series Preferred
Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is
hereafter to have is Two Billion One Million, Six Hundred
Sixty-Six Thousand, Six Hundred Seventy Dollars
($2,001,666,670), divided into One Hundred Million, One
Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven
(100,166,667) shares with a par value of $10 each designated
as Common Stock and 1000 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series
Preferred Stock."
(e) The foregoing amendment of the organization certificate
was authorized
<PAGE>
by unanimous written consent signed by the holder of all outstanding shares
entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this
certificate this 19th day of June, 1997.
James T. Byrne, Jr.
----------------------------------------
James T. Byrne, Jr.
Managing Director
Lea Lahtinen
----------------------------------------
Lea Lahtinen
Assistant Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is an
Assistant Secretary of Bankers Trust Company, the corporation described in the
foregoing certificate; that she has read the foregoing certificate and knows the
contents thereof, and that the statements herein contained are true.
Lea Lahtinen
-------------------------
Lea Lahtinen
Sworn to before me this 19th day of June, 1997.
Sandra L. West
- -----------------------------------
Notary Public
SANDRA L. WEST
Notary Public State of New York
No. 31-4942101
Qualified in New York County
Commission Expires September 19, 1998
<PAGE>
BY-LAWS
NOVEMBER 18, 1997
Bankers Trust Company
New York
<PAGE>
BY-LAWS
of
Bankers Trust Company
ARTICLE XI
MEETINGS OF STOCKHOLDERS
SECTION (a) The annual meeting of the stockholders of this Company shall be held
at the office of the Company in the Borough of Manhattan, City of New York, on
the third Tuesday in January of each year, for the election of directors and
such other business as may properly come before said meeting.
SECTION (b) Special meetings of stockholders other than those regulated by
statute may be called at any time by a majority of the directors. It shall be
the duty of the Chairman of the Board, the Chief Executive Officer or the
President to call such meetings whenever requested in writing to do so by
stockholders owning a majority of the capital stock.
SECTION (c) At all meetings of stockholders, there shall be present, either in
person or by proxy, stockholders owning a majority of the capital stock of the
Company, in order to constitute a quorum, except at special elections of
directors, as provided by law, but less than a quorum shall have power to
adjourn any meeting.
SECTION (d) The Chairman of the Board or, in his absence, the Chief Executive
Officer or, in his absence, the President or, in their absence, the senior
officer present, shall preside at meetings of the stockholders and shall direct
the proceedings and the order of business. The Secretary shall act as secretary
of such meetings and record the proceedings.
ARTICLE XII
DIRECTORS
SECTION (a) The affairs of the Company shall be managed and its corporate powers
exercised by a Board of Directors consisting of such number of directors, but
not less than ten nor more than twenty-five, as may from time to time be fixed
by resolution adopted by a majority of the directors then in office, or by the
stockholders. In the event of any increase in the number of directors,
additional directors may be elected within the limitations so fixed, either by
the stockholders or within the limitations imposed by law,
<PAGE>
by a majority of directors then in office. One-third of the number of directors,
as fixed from time to time, shall constitute a quorum. Any one or more members
of the Board of Directors or any Committee thereof may participate in a meeting
of the Board of Directors or Committee thereof by means of a conference
telephone or similar communications equipment which allows all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at such a meeting.
All directors hereafter elected shall hold office until the next annual meeting
of the stockholders and until their successors are elected and have qualified.
No person who shall have attained age 72 shall be eligible to be elected or
re-elected a director. Such director may, however, remain a director of the
Company until the next annual meeting of the stockholders of Bankers Trust New
York Corporation (the Company's parent) so that such director's retirement will
coincide with the retirement date from Bankers Trust New York Corporation.
No Officer-Director who shall have attained age 65, or earlier relinquishes his
responsibilities and title, shall be eligible to serve as a director.
SECTION (b) Vacancies not exceeding one-third of the whole number of the Board
of Directors may be filled by the affirmative vote of a majority of the
directors then in office, and the directors so elected shall hold office for the
balance of the unexpired term.
SECTION (c) The Chairman of the Board shall preside at meetings of the Board of
Directors. In his absence, the Chief Executive Officer or, in his absence, such
other director as the Board of Directors from time to time may designate shall
preside at such meetings.
SECTION (d) The Board of Directors may adopt such Rules and Regulations for the
conduct of its meetings and the management of the affairs of the Company as it
may deem proper, not inconsistent with the laws of the State of New York, or
these By-Laws, and all officers and employees shall strictly adhere to, and be
bound by, such Rules and Regulations.
SECTION (e) Regular meetings of the Board of Directors shall be held from time
to time on the third Tuesday of the month. If the day appointed for holding such
regular meetings shall be a legal holiday, the regular meeting to be held on
such day shall be held on the next business day thereafter. Special meetings of
the Board of Directors may be called upon at least two day's notice whenever it
may be deemed proper by the Chairman of the Board or, the Chief Executive
Officer or, in their absence, by such other director as the Board of Directors
may have designated pursuant to Section 3 of this Article, and shall be called
upon like notice whenever any three of the directors so request in writing.
2
<PAGE>
SECTION (f) The compensation of directors as such or as members of committees
shall be fixed from time to time by resolution of the Board of Directors.
ARTICLE XIII
COMMITTEES
SECTION (a) There shall be an Executive Committee of the Board consisting of not
less than five directors who shall be appointed annually by the Board of
Directors. The Chairman of the Board shall preside at meetings of the Executive
Committee. In his absence, the Chief Executive Officer or, in his absence, such
other member of the Committee as the Committee from time to time may designate
shall preside at such meetings.
The Executive Committee shall possess and exercise to the extent permitted by
law all of the powers of the Board of Directors, except when the latter is in
session, and shall keep minutes of its proceedings, which shall be presented to
the Board of Directors at its next subsequent meeting. All acts done and powers
and authority conferred by the Executive Committee from time to time shall be
and be deemed to be, and may be certified as being, the act and under the
authority of the Board of Directors.
A majority of the Committee shall constitute a quorum, but the Committee may act
only by the concurrent vote of not less than one-third of its members, at least
one of whom must be a director other than an officer. Any one or more directors,
even though not members of the Executive Committee, may attend any meeting of
the Committee, and the member or members of the Committee present, even though
less than a quorum, may designate any one or more of such directors as a
substitute or substitutes for any absent member or members of the Committee, and
each such substitute or substitutes shall be counted for quorum, voting, and all
other purposes as a member or members of the Committee.
SECTION (b) There shall be an Audit Committee appointed annually by resolution
adopted by a majority of the entire Board of Directors which shall consist of
such number of directors, who are not also officers of the Company, as may from
time to time be fixed by resolution adopted by the Board of Directors. The
Chairman shall be designated by the Board of Directors, who shall also from time
to time fix a quorum for meetings of the Committee. Such Committee shall conduct
the annual directors' examinations of the Company as required by the New York
State Banking Law; shall review the reports of all examinations made of the
Company by public authorities and report thereon to the Board of Directors; and
shall report to the Board of Directors such other matters as it
3
<PAGE>
deems advisable with respect to the Company, its various departments and the
conduct of its operations.
In the performance of its duties, the Audit Committee may employ or retain, from
time to time, expert assistants, independent of the officers or personnel of the
Company, to make studies of the Company's assets and liabilities as the
Committee may request and to make an examination of the accounting and auditing
methods of the Company and its system of internal protective controls to the
extent considered necessary or advisable in order to determine that the
operations of the Company, including its fiduciary departments, are being
audited by the General Auditor in such a manner as to provide prudent and
adequate protection. The Committee also may direct the General Auditor to make
such investigation as it deems necessary or advisable with respect to the
Company, its various departments and the conduct of its operations. The
Committee shall hold regular quarterly meetings and during the intervals thereof
shall meet at other times on call of the Chairman.
SECTION (c) The Board of Directors shall have the power to appoint any other
Committees as may seem necessary, and from time to time to suspend or continue
the powers and duties of such Committees. Each Committee appointed pursuant to
this Article shall serve at the pleasure of the Board of Directors.
ARTICLE XIV
OFFICERS
SECTION (a) The Board of Directors shall elect from among their number a
Chairman of the Board and a Chief Executive Officer; and shall also elect a
President, and may also elect a Senior Vice Chairman, one or more Vice Chairmen,
one or more Executive Vice Presidents, one or more Senior Managing Directors,
one or more Managing Directors, one or more Senior Vice Presidents, one or more
Principals, one or more Vice Presidents, one or more General Managers, a
Secretary, a Controller, a Treasurer, a General Counsel, one or more Associate
General Counsels, a General Auditor, a General Credit Auditor, and one or more
Deputy Auditors, who need not be directors. The officers of the corporation may
also include such other officers or assistant officers as shall from time to
time be elected or appointed by the Board. The Chairman of the Board or the
Chief Executive Officer or, in their absence, the President, the Senior Vice
Chairman or any Vice Chairman, may from time to time appoint assistant officers.
All officers elected or appointed by the Board of Directors shall hold their
respective offices during the pleasure of the Board of Directors, and all
assistant officers shall hold office at the pleasure of the Board or the
Chairman of the Board or the Chief Executive Officer or, in their absence, the
President, the Senior Vice Chairman or any Vice Chairman. The Board of Directors
may require any and all officers and employees to give security for the
4
<PAGE>
faithful performance of their duties.
SECTION (b) The Board of Directors shall designate the Chief Executive Officer
of the Company who may also hold the additional title of Chairman of the Board,
President, Senior Vice Chairman or Vice Chairman and such person shall have,
subject to the supervision and direction of the Board of Directors or the
Executive Committee, all of the powers vested in such Chief Executive Officer by
law or by these By-Laws, or which usually attach or pertain to such office. The
other officers shall have, subject to the supervision and direction of the Board
of Directors or the Executive Committee or the Chairman of the Board or, the
Chief Executive Officer, the powers vested by law or by these By-Laws in them as
holders of their respective offices and, in addition, shall perform such other
duties as shall be assigned to them by the Board of Directors or the Executive
Committee or the Chairman of the Board or the Chief Executive Officer.
The General Auditor shall be responsible, through the Audit Committee, to the
Board of Directors for the determination of the program of the internal audit
function and the evaluation of the adequacy of the system of internal controls.
Subject to the Board of Directors, the General Auditor shall have and may
exercise all the powers and shall perform all the duties usual to such office
and shall have such other powers as may be prescribed or assigned to him from
time to time by the Board of Directors or vested in him by law or by these
By-Laws. He shall perform such other duties and shall make such investigations,
examinations and reports as may be prescribed or required by the Audit
Committee. The General Auditor shall have unrestricted access to all records and
premises of the Company and shall delegate such authority to his subordinates.
He shall have the duty to report to the Audit Committee on all matters
concerning the internal audit program and the adequacy of the system of internal
controls of the Company which he deems advisable or which the Audit Committee
may request. Additionally, the General Auditor shall have the duty of reporting
independently of all officers of the Company to the Audit Committee at least
quarterly on any matters concerning the internal audit program and the adequacy
of the system of internal controls of the Company that should be brought to the
attention of the directors except those matters responsibility for which has
been vested in the General Credit Auditor. Should the General Auditor deem any
matter to be of special immediate importance, he shall report thereon forthwith
to the Audit Committee. The General Auditor shall report to the Chief Financial
Officer only for administrative purposes.
The General Credit Auditor shall be responsible to the Chief Executive Officer
and, through the Audit Committee, to the Board of Directors for the systems of
internal credit audit, shall perform such other duties as the Chief Executive
Officer may prescribe, and shall make such examinations and reports as may be
required by the Audit Committee. The General Credit Auditor shall have
unrestricted access to all records and may delegate such authority to
subordinates.
5
<PAGE>
SECTION (c) The compensation of all officers shall be fixed under such plan or
plans of position evaluation and salary administration as shall be approved from
time to time by resolution of the Board of Directors.
SECTION (d) The Board of Directors, the Executive Committee, the Chairman of the
Board, the Chief Executive Officer or any person authorized for this purpose by
the Chief Executive Officer, shall appoint or engage all other employees and
agents and fix their compensation. The employment of all such employees and
agents shall continue during the pleasure of the Board of Directors or the
Executive Committee or the Chairman of the Board or the Chief Executive Officer
or any such authorized person; and the Board of Directors, the Executive
Committee, the Chairman of the Board, the Chief Executive Officer or any such
authorized person may discharge any such employees and agents at will.
ARTICLE XV
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
SECTION (a) The Company shall, to the fullest extent permitted by Section 7018
of the New York Banking Law, indemnify any person who is or was made, or
threatened to be made, a party to an action or proceeding, whether civil or
criminal, whether involving any actual or alleged breach of duty, neglect or
error, any accountability, or any actual or alleged misstatement, misleading
statement or other act or omission and whether brought or threatened in any
court or administrative or legislative body or agency, including an action by or
in the right of the Company to procure a judgment in its favor and an action by
or in the right of any other corporation of any type or kind, domestic or
foreign, or any partnership, joint venture, trust, employee benefit plan or
other enterprise, which any director or officer of the Company is servicing or
served in any capacity at the request of the Company by reason of the fact that
he, his testator or intestate, is or was a director or officer of the Company,
or is serving or served such other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise in any capacity, against
judgments, fines, amounts paid in settlement, and costs, charges and expenses,
including attorneys' fees, or any appeal therein; provided, however, that no
indemnification shall be provided to any such person if a judgment or other
final adjudication adverse to the director or officer establishes that (i) his
acts were committed in bad faith or were the result of active and deliberate
dishonesty and, in either case, were material to the cause of action so
adjudicated, or (ii) he personally gained in fact a financial profit or other
advantage to which he was not legally entitled.
SECTION (b) The Company may indemnify any other person to whom the Company is
permitted to provide indemnification or the advancement of expenses by
applicable law, whether pursuant to rights granted pursuant to, or provided by,
the New
6
<PAGE>
York Banking Law or other rights created by (i) a resolution of stockholders,
(ii) a resolution of directors, or (iii) an agreement providing for such
indemnification, it being expressly intended that these By-Laws authorize the
creation of other rights in any such manner.
SECTION (c) The Company shall, from time to time, reimburse or advance to any
person referred to in Section 1 the funds necessary for payment of expenses,
including attorneys' fees, incurred in connection with any action or proceeding
referred to in Section 1, upon receipt of a written undertaking by or on behalf
of such person to repay such amount(s) if a judgment or other final adjudication
adverse to the director or officer establishes that (i) his acts were committed
in bad faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or (ii) he
personally gained in fact a financial profit or other advantage to which he was
not legally entitled.
SECTION (d) Any director or officer of the Company serving (i) another
corporation, of which a majority of the shares entitled to vote in the election
of its directors is held by the Company, or (ii) any employee benefit plan of
the Company or any corporation referred to in clause (i) in any capacity shall
be deemed to be doing so at the request of the Company. In all other cases, the
provisions of this Article V will apply (i) only if the person serving another
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise so served at the specific request of the Company, evidenced by
a written communication signed by the Chairman of the Board, the Chief Executive
Officer or the President, and (ii) only if and to the extent that, after making
such efforts as the Chairman of the Board, the Chief Executive Officer or the
President shall deem adequate in the circumstances, such person shall be unable
to obtain indemnification from such other enterprise or its insurer.
SECTION (e) Any person entitled to be indemnified or to the reimbursement or
advancement of expenses as a matter of right pursuant to this Article V may
elect to have the right to indemnification (or advancement of expenses)
interpreted on the basis of the applicable law in effect at the time of
occurrence of the event or events giving rise to the action or proceeding, to
the extent permitted by law, or on the basis of the applicable law in effect at
the time indemnification is sought.
SECTION (f) The right to be indemnified or to the reimbursement or advancement
of expense pursuant to this Article V (i) is a contract right pursuant to which
the person entitled thereto may bring suit as if the provisions hereof were set
forth in a separate written contract between the Company and the director or
officer, (ii) is intended to be retroactive and shall be available with respect
to events occurring prior to the adoption hereof, and (iii) shall continue to
exist after the rescission or restrictive modification hereof with respect to
events occurring prior thereto.
7
<PAGE>
SECTION (g) If a request to be indemnified or for the reimbursement or
advancement of expenses pursuant hereto is not paid in full by the Company
within thirty days after a written claim has been received by the Company, the
claimant may at any time thereafter bring suit against the Company to recover
the unpaid amount of the claim and, if successful in whole or in part, the
claimant shall be entitled also to be paid the expenses of prosecuting such
claim. Neither the failure of the Company (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of or
reimbursement or advancement of expenses to the claimant is proper in the
circumstance, nor an actual determination by the Company (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant is
not entitled to indemnification or to the reimbursement or advancement of
expenses, shall be a defense to the action or create a presumption that the
claimant is not so entitled.
SECTION (h) A person who has been successful, on the merits or otherwise, in the
defense of a civil or criminal action or proceeding of the character described
in Section 1 shall be entitled to indemnification only as provided in Sections 1
and 3, notwithstanding any provision of the New York Banking Law to the
contrary.
ARTICLE XVI
SEAL
SECTION (a) The Board of Directors shall provide a seal for the Company, the
counterpart dies of which shall be in the charge of the Secretary of the Company
and such officers as the Chairman of the Board, the Chief Executive Officer or
the Secretary may from time to time direct in writing, to be affixed to
certificates of stock and other documents in accordance with the directions of
the Board of Directors or the Executive Committee.
SECTION (b) The Board of Directors may provide, in proper cases on a specified
occasion and for a specified transaction or transactions, for the use of a
printed or engraved facsimile seal of the Company.
8
<PAGE>
ARTICLE XVII
CAPITAL STOCK
SECTION (a) Registration of transfer of shares shall only be made upon the books
of the Company by the registered holder in person, or by power of attorney, duly
executed, witnessed and filed with the Secretary or other proper officer of the
Company, on the surrender of the certificate or certificates of such shares
properly assigned for transfer.
ARTICLE XVIII
CONSTRUCTION
SECTION (a) The masculine gender, when appearing in these By-Laws, shall be
deemed to include the feminine gender.
ARTICLE XIX
AMENDMENTS
SECTION (a) These By-Laws may be altered, amended or added to by the Board of
Directors at any meeting, or by the stockholders at any annual or special
meeting, provided notice thereof has been given.
I, Marc J. Parilla, Assistant Vice President of Bankers Trust Company, New York,
New York, hereby certify that the foregoing is a complete, true and correct copy
of the By-Laws of Bankers Trust Company, and that the same are in full force and
effect at this date.
/s/ Marc J. Parilla
---------------------------
Marc J. Parilla
Assistant Vice President
DATED: July 21,1999
9
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: Bankers Trust Company Call Date: 03/31/99 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-1
City, State ZIP: New York, NY 10006 11
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for March 31, 1999
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, reported the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
---------------
C400
<S> <C> <C> <C> <C> <C> <C>
Dollar Amounts in Thousands RCFD Bil Mil Thou
ASSETS / / / / / / / / / / / / / / / /
1. Cash and balances due from depository institutions (from Schedule RC-A): / / / / / / / / / / / / / / / /
a. Noninterest-bearing balances and currency and coin (1) ............................... 0081 1,695,000 1.a.
b. Interest-bearing balances (2) ........................................................ 0071 1,308,000 1.b.
2. Securities: / / / / / / / / / / / / / / / /
a. Held-to-maturity securities (from Schedule RC-B, column A) ....................... 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)...................... 1773 6,150,000 2.b.
3. Federal funds sold and securities purchased under agreements to resell................. 1350 29,512,000 3.
4. Loans and lease financing receivables: / / / / / / / / / / / / / / / /
a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 18,869,000 / / / / / / / 4.a.
b. LESS: Allowance for loan and lease losses........................RCFD 3123 571,000 / / / / / / / / 4.b.
c. LESS: Allocated transfer risk reserve ...........................RCFD 3128 0 / / / / / / / / / 4.c.
d. Loans and leases, net of unearned income, / / / / / / / / /
allowance, and reserve (item 4.a minus 4.b and 4.c) ................................ 2125 18,298,000 4.d.
5. Trading Assets (from schedule RC-D) ..................................................... 3545 34,815,000 5.
6. Premises and fixed assets (including capitalized leases) ................................. 2145 916,000 6.
7. Other real estate owned (from Schedule RC-M) ............................................. 2150 88,000 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) 2130 883,000 8.
9. Customers' liability to this bank on acceptances outstanding ............................. 2155 307,000 9.
10. Intangible assets (from Schedule RC-M) .................................................... 2143 302,000 10.
11. Other assets (from Schedule RC-F) ......................................................... 2160 4,645,000 11.
12. Total assets (sum of items 1 through 11) .................................................. 2170 98,919,000 12.
-----------------------------
</TABLE>
- --------------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
10
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: Bankers Trust Company Call Date: 03/31/99 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-2
City, StateZip: New York, NY 10006 12
FDIC Certificate No.: 0 0 6 2 3
Schedule RC--Continued ___________________________________
Dollar Amounts in Thousands / / / / / / / / Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES / / / / / / / / / / / / / / / / / / / / / / / /
13. Deposits: / / / / / / / / / / / / / / / / / / / / / / /
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part I) RCON 2200 17,829,000 13.a.
<S> <C> <C> <C> <C> <C> <C>
(1) Noninterest-bearing(1) ............................RCON 6631 2,939,000.... / / / / / / / / / / / 13.a.(1)
(2) Interest-bearing ............................ .....RCON 6636 14,890,000.... / / / / / / / / / / / 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E / / / / / / / / / / / / / /
part II) RCFN 2200 20,634,000 13.b.
(1) Noninterest-bearing ............................. RCFN 6631 1,878,000 / / / / / / / / / / / / / / 13.b.(1)
(2) Interest-bearing ........................RCFN 6636 18,756,000 / / / / / / / / / / / / / 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase RCFD 2800 13,513,000 14.
15. a. Demand notes issued to the U.S. Treasury ............................. RCON 2840 0 15.a.
b. Trading liabilities (from Schedule RC-D)............................ RCFD 3548 22,010,000 15.b.
16. Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases): / / / / / / / / / / / / /
a. With a remaining maturity of one year or less .................................RCFD 2332 6,400,000 16.a.
b. With a remaining maturity of more than one year through three years........... A547 2,347,000 16.b.
c. With a remaining maturity of more than three years.............................. A548 2,321,000 16.c
17. Not Applicable. / / / / / / / / / / / / / / / /
17.
18. Bank's liability on acceptances executed and outstanding .............................RCFD 2920 307,000 18.
19. Subordinated notes and debentures (2).................................................RCFD 3200 438,000 19.
20. Other liabilities (from Schedule RC-G) ...............................................RCFD 2930 6,129,000 20.
21. Total liabilities (sum of items 13 through 20) .......................................RCFD 2948 91,928,000 21.
22. Not Applicable / / / / / / / / / / / / / / /
/ / / / / / / / / / / / / / / 22.
EQUITY CAPITAL / / / / / / / / / / / / / / /
23. Perpetual preferred stock and related surplus ........................................RCFD 383 1,500,000 23.
24. Common stock .........................................................................RCFD 3230 2,127,000 24.
25. Surplus (exclude all surplus related to preferred stock) .............................RCFD 3839 541,000 25.
26. a. Undivided profits and capital reserves ..........................................RCFD 3632 3,291,000 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities ........RCFD 8434 ( 59,000)26.b.
c. Accumulated net gains (losses) on cash flow hedges...................................RCFD 4336 0 | 26.c.
27. Cumulative foreign currency translation adjustments .................................. RCFD 3284 (409,000)27.
28. Total equity capital (sum of items 23 through 27) .................................... RCFD 3210 6,991,000 28.
29. Total liabilities and equity capital (sum of items 21 and 28).........................RCFD 3300 98,919,000 29
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the
most comprehensive level of auditing work performed for the bank by independent external Number
auditors as of any date during 1998 ........................................................ .... RCFD 6724 1 M.1
------------------------------
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed
with generally accepted auditing standards by a certified by other external auditors (may be required by
public accounting firm which submits a report on the bank state chartering authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by
conducted in accordance with generally accepted auditing external auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by
submits a report on the consolidated holding company external auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
- ----------------------
(1) Including total demand deposits and noninterest-bearing time and savings
deposits.
11
<PAGE>
(2) Includes limited-life preferred stock and related surplus.
F7998.600
12
<PAGE>
